INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT dated May 16, 2005, between RMR
Hospitality and Real Estate Fund (the "Fund"), a Massachusetts business trust,
and RMR Advisors, Inc. (the "Advisor"), a Massachusetts corporation.
RECITALS
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a closed-end, non-diversified management
investment company;
WHEREAS, the Advisor is registered under the Investment Advisors Act of
1940, as amended (the "Advisors Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, the Fund and the Advisor were previously parties to an
investment advisory agreement dated April 2, 2004 (the "Initial Agreement
Date");
WHEREAS, the Fund desires to employ the Advisor for, and the Advisor
desires to provide, investment advisory services to the Fund upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. INVESTMENT DESCRIPTION, APPOINTMENT. The Fund desires to employ its
capital by investing and reinvesting in investments of the kind and in
accordance with the investment objectives, policies and limitations specified in
its Agreement and Declaration of Trust, as amended from time to time
("Charter"), its prospectus ("Prospectus") and statement of additional
information ("Statement") filed with the Securities and Exchange Commission
("SEC") as part of the Fund's Registration Statement on Form N-2, as amended
from time to time ("Registration Statement"), and in the manner and to the
extent as may from time to time be approved by the Board of Trustees of the Fund
(the "Board"). Copies of the Prospectus, the Statement and the Charter have been
or will be submitted to the Advisor. The Fund agrees to provide copies of all
amendments to the Registration Statement and the Charter to the Advisor on an
on-going basis. The Fund hereby appoints the Advisor to act as the investment
manager to the Fund. The Advisor accepts the appointment and agrees to furnish
the services for the compensation set forth below.
2. SERVICES AS INVESTMENT ADVISOR. Subject to the supervision,
direction and approval of the Board, the Advisor will (a) manage the Fund's
holdings in accordance with the Fund's investment objectives and policies as
stated in the Charter and the Registration Statement; (b) make investment
decisions for the Fund; (c) place purchase and sale orders for portfolio
transactions for the Fund; and (d) provide research services to the Fund. In
providing those services, the Advisor will conduct a continual program of
investment, evaluation and, if appropriate, sale and
reinvestment of the Fund's assets. In compliance with applicable law, the
Advisor is hereby authorized to retain third parties and to delegate some or all
of its duties and obligations under this paragraph 2 to such persons provided
that such persons shall remain under the general supervision of the Advisor.
3. STANDARD OF CARE. The Advisor shall give the Fund the benefit of its
best judgment and effort in rendering services. The Advisor shall not be liable
for any act or omission or for any loss sustained by the Fund in connection with
the matters to which this Agreement relates, except those involving the
Advisor's willful misfeasance, bad faith or gross negligence in the performance
of its duties, or the reckless disregard of its obligations and duties under
this Agreement.
4. SERVICES TO OTHER COMPANIES AND ACCOUNTS. The Fund understands that
the Advisor and its affiliates now act, will continue to act and may in the
future act as investment advisor or fiduciary to other managed accounts and as
investment advisor or property manager to other investment companies or trusts.
Nothing in this Agreement shall prevent the Advisor or any director, officer,
employee or other affiliate of the Advisor from acting as investment advisor,
property manager, fiduciary or administrator for any other person, firm or
corporation, or from engaging in any lawful activity, and shall not in any way
limit or restrict the Advisor or any of its directors, officers, employees or
agents from buying, selling or trading any securities for its or their own
accounts or for the accounts of others for whom it or they may be acting;
provided, however, that the Advisor will undertake no activities which, in its
judgment, will adversely affect the performance of its obligations under this
Agreement and further provided that that whenever the Fund and one or more other
clients advised by the Advisor have available funds for investment, investments
suitable and appropriate for each will be allocated in accordance with a formula
believed to be equitable to each client. The Fund recognizes that in some cases
this procedure may adversely affect the size of the position obtainable for the
Fund. In addition, the Fund understands that the persons employed by the Advisor
to assist in the performance of the Advisor's duties under this Agreement will
not devote their full time to such service and nothing contained in this
Agreement shall be deemed to limit or restrict the right of the Advisor or any
affiliate of the Advisor to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
5. PORTFOLIO TRANSACTIONS AND BROKERAGE. Subject to the supervision of
the Board, the Advisor is authorized, for the purchase and sale of the Fund's
portfolio securities, to employ such securities dealers and brokers and to
negotiate brokerage commissions on behalf of the Fund as may, in the judgment of
the Advisor, implement the policy of the Fund to obtain the best net results
taking into account such factors as: the net price available; the reliability,
integrity and financial condition of the broker; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker to
the Fund's investment performance on a continuing basis. The Fund understands
that the cost of the brokerage commissions in any transaction may be greater
than that available from other brokers if the difference is reasonably justified
by other aspects of the services offered. Subject to such policies and
procedures as the Board may determine, the Advisor may cause the Fund to pay a
broker that provides research services to the Advisor an amount of commission
for effecting a portfolio investment transaction in excess of the amount of
commission another broker would have charged for effecting that transaction, if
the Advisor determines in good faith that such amount of commission was
reasonable in relation to the value of
the research service provided by such broker viewed in terms of either that
particular transaction or the Advisor's ongoing responsibilities under this
Agreement. The Fund understands that research and investment information
provided at no cost to the Advisor by brokers that are paid by the Fund will be
available to benefit other accounts advised by the Advisor and its affiliates.
In the allocation of the Fund's brokerage business the Advisor is authorized to
consider (i) its use of statistical, research and other services furnished by
brokers and (ii) payments made by brokers effecting transactions for the Fund to
other persons on the Fund's behalf for services (such as custodial or
professional fees).
6. COMPENSATION OF THE ADVISOR. In consideration of the advisory
services pursuant to this Agreement, the Fund agrees to pay to the Advisor, on
the first business day of each month a fee ("Advisory Fee") for the previous
month, and the Advisor agrees to accept as full compensation for all services
rendered by the Advisor, computed at the annual rate of .85% of the sum of the
Fund's net asset value attributable to the Fund's outstanding common shares,
plus the liquidation preference of the Fund's outstanding preferred shares plus
the principal amount of any borrowings evidenced by notes, commercial paper or
other similar instruments issued by the Fund ("Average Daily Managed Assets").
The value of the Fund's Average Daily Managed Assets shall be computed at the
times and in the manner specified by the Registration Statement. For any period
less than a month during which this Agreement is in effect, the fee shall be
prorated according to the proportion which such period bears to a full month of
28, 29, 30 or 31 days, as the case may be.
7. FEE WAIVER. Notwithstanding the provisions of the above Section 6,
during the five year period following the closing of the Fund's first public
offering of common shares, the Advisor agrees to waive a portion of its Advisory
Fee equal to an annual rate of .25% of Average Daily Total Assets.
8. DURATION AND TERMINATION. This Agreement shall become effective on
the date first set forth and above and continue until the second anniversary of
the Initial Agreement Date. Thereafter, this Agreement will continue from year
to year, or for such longer terms as may be approved by Board (including a
majority of the Trustees who are not "interested persons" of the Advisor, as
defined by the 0000 Xxx) and as may be permitted by the 1940 Act, but only so
long as such continuation is specifically approved at least as often as required
by the 1940 Act, as it may be amended from time to time.
So long as the 1940 Act requires these provisions respectively: (i) this
Agreement may be terminated by the Fund at any time without penalty upon giving
the Advisor sixty days' notice and payment of any unpaid compensation to the
Advisor described in Section 6, above, earned prior to such termination,
provided that such termination by the Fund shall be directed or approved by the
vote of a majority of the Trustees of the Fund in office at the time or by the
vote of the holders of a "majority" (as defined in the 0000 Xxx) of the voting
securities of the Fund at the time outstanding and entitled to vote; (ii) this
Agreement shall terminate automatically in the event of its assignment (as
"assignment" is defined in the 1940 Act).
9. AMENDMENT. No amendment of this Agreement shall be effective unless
it is in writing and signed by the party against which enforcement of the
amendment is sought.
10. NON-LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. The Charter is on
file with the Secretary of State of The Commonwealth of Massachusetts. This
Agreement is executed on behalf of the Fund, by the Trustees or by an officer or
officers of the Fund in their capacity as such and not individually, and neither
the shareholders nor the Fund's Trustees nor any officers, employees or agents
shall be liable thereunder and the Advisor shall look solely to the Fund's
estate for the payment of any claim hereunder or for the performance of the
Fund's duties created by this Agreement.
11. EXPENSES. The Advisor will bear all the expenses in connection with
the performance of its advisory services under this Agreement. The Fund will
bear all other expenses incurred in the operations of the Fund including, but
not limited to the fees payable under this Agreement, brokerage commissions,
taxes, interest, distributions, legal, auditing, SEC, blue sky qualification or
other governmental fees, rating agency fees, the cost of preparing share
certificates, custodian, transfer and shareholder service agent costs,
accounting costs, administration services costs (including those fees charged by
any party under any administration or sub-administration agreements approved by
the Board) expenses of issue, sale, redemption and repurchase of shares,
dividend disbursing expenses, expenses of registering and qualifying shares for
sale, the Fund's and its Board members' proportionate share of insurance
premiums, fees of the Board members of the Fund who are not "affiliated persons"
(as defined in the 0000 Xxx) of the Advisor or any affiliate of the Advisor,
expenses relating to Board and shareholder meetings, the cost of preparing and
distributing reports, notices and proxy statements to shareholders, the fees and
other expenses incurred related to the Fund's membership in investment company
organizations and the cost of printing copies of prospectuses and statements of
additional information for regulatory purposes and for distribution to the
Fund's shareholders and any extraordinary expenses.
12. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of The Commonwealth of Massachusetts for contracts to be performed
entirely therein without reference to choice of law principles and in accordance
with the applicable provisions of the 1940 Act.
13. NOTICES. Any notice under this Agreement shall be in writing to the
other party at such address as the other party may designate from time to time
for the receipt of notices and shall be deemed to be received on the earlier of
the date actually received or on the fourth day after the postmark if such
notice is mailed first class postage prepaid.
14. LICENSE AGREEMENT. The Fund shall have the non-exclusive right to
use the name "RMR Hospitality and Real Estate Fund" to designate any current or
future series of shares and may use the term "RMR", including marks and symbols
containing such term or variations thereof as considered appropriate, only so
long as RMR Advisors, Inc. serves as investment manager or advisor to the Fund.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their respective
seals to be hereunto affixed, all as of the day and the year first above
written.
RMR HOSPITALITY AND REAL ESTATE FUND
By: /s/ Xxxxxx X. X'Xxxxx
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Xxxxxx X. X'Xxxxx, President
RMR ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx, Treasurer
