INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 12th day of December
12, 2002 ("Contract"), between Hillview Investment Trust II, a Delaware business
trust ("Trust"), on behalf of Hillview/REMS Leveraged REIT Fund ("Fund"), and
Real Estate Management Services Group, LLC ("REMS Group") ("Adviser"), a limited
liability company organized under the laws of the State of Florida.
WHEREAS, the Fund is a series of the Trust, an open-end management
investment company registered under the Investment Company Act of 1940, as
amended ("1940 Act");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, Trust and Adviser agree as follows:
1. Appointment. The Trust hereby appoints and employs the Adviser as a
discretionary portfolio manager, on the terms and conditions set forth herein,
of the assets of the Fund.
2. Acceptance of Appointment. The Adviser accepts that appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
3. Duties as Adviser.
(a) Subject to the oversight and direction of the Trust's Board of
Trustees ("Board") and all written guidelines applicable to the Fund, as adopted
by the Trust, the Adviser will provide a continuous investment program with
respect to the Fund, including investment research and management for all
securities and investments and cash equivalents in the Fund. The Adviser will
determine from time to time what securities and other investments in the Fund
will be purchased, retained or sold by the Fund. The Adviser will be responsible
for placing purchase and sell orders for investments and for other related
transactions with respect to the Fund and selecting the brokers and dealers
through whom trades will be executed. The Adviser will provide services under
this Contract in accordance with the Fund's investment objective, policies and
restrictions and the description of its investment strategy and style, all as
stated in the Trust's registration statement under the 1940 Act, and any
amendments or supplements thereto ("Registration Statement"), and in compliance
with the 1940 Act, the rules thereunder, and all applicable federal and state
securities laws and regulations.
(b) The Adviser agrees that, in placing orders with brokers, it will
seek to obtain the best net result in terms of price and execution; provided
that, subject to the appropriate policies and procedures approved by the Board,
on behalf of the Fund, the Adviser may, in its discretion, use brokers
(including brokers that may be affiliates of the Adviser to the extent permitted
by Section 3(c) hereof) who provide the Adviser with research, analysis, advice
and similar services to execute portfolio transactions, and the Adviser may, to
the extent permitted by Section 28(e) of the Securities Exchange Act of 1934,
pay to those brokers in return for brokerage and research services a higher
commission than may be charged by other brokers, subject to the Adviser's
determining in
good faith that such commission is reasonable in terms either of the particular
transaction or of the overall responsibility of the Adviser to the Fund and its
other clients and that the total commissions paid by the Fund will be reasonable
in relation to the benefits to the Fund over the long term. In no instance will
portfolio securities be purchased from or sold to the Adviser, or any affiliated
person thereof, except in accordance with the federal securities laws and the
rules and regulations thereunder and any exemptive orders currently in effect.
Whenever the Adviser simultaneously places orders to purchase or sell the same
security on behalf of the Fund and one or more other accounts advised by the
Adviser, such orders will be allocated as to price and amount among all such
accounts in a manner believed to be fair and equitable to the Fund. The Trust
recognizes that in some cases this procedure may adversely affect the results
obtained for the Fund.
(c) The Adviser will not execute without the prior written approval of
the Trust any portfolio transactions for the Fund with a broker which is (i) an
affiliated person of the Trust; (ii) a principal underwriter of the Fund's
shares; or (iii) an affiliated person of such an affiliated person or principal
underwriter. The Trust agrees that it will provide the Adviser with a list of
such brokers and dealers and will, from time to time, update such list as
necessary.
(d) The Adviser will maintain all books and records required to be
maintained pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to actions by the Adviser on behalf of the Fund, and
will furnish the Board with such periodic and special reports as the Board
reasonably may request. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Adviser hereby agrees that all records that it maintains for
the Fund are the property of the Trust, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records that it maintains for
the Fund and that are required to be maintained by Rule 31a-1 under the 1940
Act, and further agrees to surrender promptly to the Trust a complete set of any
records that it maintains for the Fund upon request by the Trust.
(e) All transactions will be consummated by payment to or delivery by
the custodian designated by the Trust (the "Custodian"), or such depositories or
agents as may be designated by the Custodian in writing, of all cash and/or
securities due to or from the Fund, and the Adviser shall not have possession or
custody thereof. The Adviser shall advise the Custodian and confirm in writing
to the Fund and to any other designated agent of the Fund all investment orders
for the Fund placed by it with brokers and dealers at the time and in the manner
set forth in Rule 31a-1 under the 1940 Act. The Fund shall issue to the
Custodian such instructions as may be appropriate in connection with the
settlement of any transaction initiated by the Adviser. The Fund shall be
responsible for all custodial arrangements and the payment of all custodial
charges and fees, and, upon giving proper instructions to the Custodian, the
Adviser shall have no responsibility or liability with respect to custodial
arrangements or the acts, omissions or other conduct of the Custodian, except
that it shall be the responsibility of the Adviser to communicate it to the
Manager if the Custodian fails to confirm in writing proper execution of the
instructions.
(f) At such times as shall be reasonably requested by the Board, the
Adviser will provide the Board with economic and investment analyses and reports
as well as quarterly reports setting forth the performance of the Fund and make
available to the Board any economic, statistical and investment services that
the Adviser normally makes available to its institutional or other customers.
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(g) In accordance with procedures adopted by the Board, as amended from
time to time, the Adviser is responsible for assisting in the fair valuation of
all portfolio securities and will use its reasonable efforts to arrange for the
prompt and timely provision of valuation information or a price(s) from a
party(ies) independent of the Adviser for each portfolio security for which
market prices are not readily available.
4. Further Duties. In all matters relating to the performance of this
Contract, the Adviser will act in conformity with the Trust's Declaration of
Trust, By-Laws and Registration Statement of which it has received notice and
with the written instructions and written directions of the Board; and will
comply with the requirements of the 1940 Act and the Investment Advisers Act of
1940, as amended ("Advisers Act") and the rules under each, and all other
federal and state laws and regulations applicable to the Trust and the Fund. The
Trust agrees to provide to the Adviser copies of the Trust's Declaration of
Trust, By-Laws, Registration Statement, written instructions and directions of
the Board, and any amendments or supplements to any of these materials as soon
as practicable after such materials become available.
5. Proxies. The Adviser will, unless and until otherwise directed by
the Fund, vote all proxies solicited by or with respect to issuers of securities
in which assets of the Fund may be invested from time to time in accordance with
the Adviser's proxy voting policies and procedures. The Adviser will furnish the
Fund with its policies and procedures for voting proxies. The Fund shall
instruct the Custodian to forward or cause to be forwarded to the Adviser all
relevant proxy solicitation materials.
6. Expenses. During the term of this Contract, the Adviser will bear
all expenses incurred by it in connection with its services under this Contract
other than the cost of securities (including brokerage commissions,
transactional fees and taxes, if any) purchased for the Fund. The Fund shall be
responsible for its expenses.
7. Compensation. The compensation of the Adviser for its services under
this Contract shall be calculated and paid by the Fund in accordance with the
attached Schedule A.
8. Limitation of Liability. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund, the
Trust, or its shareholders in connection with the matters to which this Contract
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Contract. Nothing in
this paragraph shall be deemed a limitation or waiver of any obligation or duty
that may not by law be limited or waived.
9. Indemnification.
(a) The Fund shall indemnify the Adviser or any of its directors,
officers, employees or affiliates for all losses, damages, liabilities, costs
and expenses (including legal) ("Advisor Losses") incurred by the Adviser by
reason of or arising out of any act or omission by the Trust under this
Agreement, or any breach of warranty, representation or agreement hereunder,
except to the extent that such Adviser Losses arise as a result of the
negligence of the Adviser or the Adviser's breach of its fiduciary duty to the
Trust.
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(b) The Adviser shall indemnify the Trust or any of its trustees,
officers, employees or affiliates for all losses, damages, liabilities, costs
and expenses (including legal) (" Fund Losses") incurred by the Trust by reason
of or arising out of any act or omission by the Adviser under this Agreement, or
any breach of warranty, representation or agreement hereunder, except to the
extent that such Fund Losses arise as a result of the negligence of the Trust.
10. Representations, Warranties and Agreements of the Trust. The Trust
represents, warrants and agrees that:
(a) The engagement of the Adviser to provide investment services to the
Fund as contemplated hereby has been approved by the Board of Trustees of the
Trust.
(b) The Trust will deliver to the Adviser a true and complete copy of
the Fund's Registration Statement as effective from time to time and such other
documents or instruments governing the investment of the Fund's assets and such
other information as is necessary for the Adviser to carry out its obligations
under this Contract.
(c) The Trust is currently in compliance and shall at all times make
every effort to comply with the requirements imposed upon the Trust by
applicable law and regulations.
11. Representations of Adviser. The Adviser represents, warrants and
agrees as follows:
(a) The Adviser (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Contract
remains in effect; (ii) is not prohibited by the 1940 Act, the Advisers Act or
other law, regulation or order from performing the services contemplated by this
Contract; (iii) has met and will seek to continue to meet for so long as this
Contract remains in effect, any other applicable federal or state requirements,
or the applicable requirements of any regulatory or industry self-regulatory
agency necessary to be met in order to perform the services contemplated by this
Contract; (iv) has the authority to enter into and perform the services
contemplated by this Contract; and (v) will promptly notify the Trust of the
occurrence of any event that would disqualify the Adviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the 1940
Act or otherwise. The Adviser will also immediately notify the Fund and the
Trust if it is served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board or body, involving the affairs of the Fund.
(b) The Adviser has adopted and will maintain a written code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act and will
provide the Board with a copy of such code of ethics, together with evidence of
its adoption. Within forty-five (45) days of the end of the last calendar
quarter of each year that this Contract is in effect, the president, Chief
Operating Officer or a vice-president of the Adviser shall certify to the Trust
that the Adviser has complied with the requirements of Rule 17j-1 during the
previous year and that there has been no violation of the Adviser's code of
ethics or, if such a violation has occurred, that appropriate action was taken
in response to such violation. Upon the written request of the Trust, the
Adviser shall permit the Trust
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to examine the reports required to be made by the Adviser by Rule 17j-1(c)(1)
and all other records relevant to the Adviser's code of ethics.
(c) The Adviser has provided the Trust with a copy of its Form ADV,
which as of the date of this Agreement is its Form ADV as most recently filed
with the Securities and Exchange Commission ("SEC") and promptly will furnish a
copy of all amendments to the Trust at least annually. Such amendments shall
reflect all changes in the Adviser's organizational structure, professional
staff or other significant developments affecting the Adviser, as required by
the Investment Advisers Act of 1940.
(d) The Adviser will notify the Trust of any change of control of the
Adviser, including any change of its general partners, controlling persons or
25% shareholders, as applicable, and any changes in the key personnel who are
either the portfolio manager(s) of the Fund or senior management of the Adviser,
in each case prior to, or promptly after, such change. The Adviser agrees to
bear all reasonable expenses of the Fund, if any, arising out of such change in
control.
(e) The Adviser agrees to maintain an appropriate level of errors and
omissions or professional liability insurance coverage.
(f) The Adviser agrees that neither it, nor any of its affiliates, will
in any way refer directly or indirectly to its relationship with the Trust, the
Fund, or any of their respective affiliates in offering, marketing or other
promotional materials without the express written consent of the Trust. However,
the Adviser may use the performance of the Fund in its composite performance.
12. Services Not Exclusive. The services furnished by the Adviser
hereunder are not to be deemed to be exclusive, and the Adviser shall be free to
furnish similar services to others, except as prohibited by applicable law or
agreed upon in writing between the Adviser and the Fund.
13. Confidentiality. Subject to the duty of the Adviser to comply with
applicable law, including any demand of any regulatory or taxing authority
having jurisdiction, the parties hereto shall treat as confidential all material
non public information pertaining to the Fund and the actions of the Adviser and
the Fund in respect thereof. Unless such use is required by law, the Trust may
not use Adviser's name, investment performance information, other descriptive
biographical information about the Adviser or its personnel, or other pertinent
information regarding the Adviser in offering documents for the Fund, and in
marketing or advertising materials relating to the Fund or the Trust, without
consent of the Adviser, which will not be unreasonably withheld.
14. Duration and Termination.
(a) This Contract shall become effective upon the date first above
written, provided that this Contract shall not take effect unless it has first
been approved: (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Contract or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by vote of a majority of the Fund's outstanding securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from its effective date. Thereafter, if not
terminated, this Contract shall continue
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automatically for successive periods of twelve months each, provided that such
continuance is specifically approved at least annually: (i) by a vote of a
majority of those trustees of the Trust who are not parties to this Contract or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of the Fund.
(c) Notwithstanding the foregoing, this Contract may be terminated by
any party hereto at any time, without the payment of any penalty, by vote of the
Board or by vote of a majority of the outstanding voting securities of the Fund
on sixty (60) days' written notice to Adviser or by Adviser at any time, without
the payment of any penalty, on sixty (60) days' written notice to the Trust.
This Contract will terminate automatically in the event of its assignment.
15. Amendment of this Contract. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Contract shall be
effective until approved (i) by a vote of a majority of those trustees of the
Trust who are not parties to this Contract or interested persons of any such
party, and (ii) by a vote of a majority of the Fund's outstanding voting
securities (unless the Trust receives an SEC order or no-action letter
permitting it to modify the Contract without such vote or a regulation exists
under the 1940 Act that permits such action without such vote).
16. Limitation of Shareholder Liability. The Adviser is hereby
expressly put on notice of the limitation of shareholder liability as set forth
in the Declaration of Trust of the Trust and agrees that obligations assumed by
the Trust pursuant to this Agreement shall be limited in all cases to the Trust
and its assets, and if the liability relates to one or more series, the
obligations hereunder shall be limited to the respective assets of the Fund. The
Adviser further agrees that they shall not seek satisfaction of any such
obligation from the shareholders or any individual shareholder of the Fund, nor
from the Trustees or any individual Trustee of the Trust.
17. Governing Law. This Contract shall be construed in accordance with
the 1940 Act and the laws of the State of Delaware, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
18. License Agreement. The Trust shall have the non-exclusive right to
use the name "REMS" to designate the Fund so long as REMS Group serves as
adviser to the Fund.
19. Miscellaneous. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "affiliated person,"
"interested person," "assignment," "broker," "investment adviser," "net assets,"
"sale," "sell" and "security" shall have the same meaning as such terms have in
the 1940 Act, subject to such exemption as may be granted by the SEC by any
rule, regulation or order.
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Where the effect of a requirement of the federal securities laws reflected in
any provision of this Contract is made less restrictive by a rule, regulation or
order of the SEC, whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
This Contract and the Schedule(s) attached hereto embody the entire agreement
and understanding among the parties. This Contract may be signed in counterpart.
20. Notices. Any notice herein required is to be in writing and is
deemed to have been given to the Trust or Adviser upon receipt of the same at
their respective addresses set forth below. All written notices required or
permitted to be given under this Contract will be delivered by personal service,
by postage mail - return receipt requested or by facsimile machine or a similar
means of same day delivery which provides evidence of receipt (with a confirming
copy by mail as set forth herein). All notices provided to the Trust will be
sent to the attention of ________________. All notices provided to the Adviser
will be sent to the attention of ___________________.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year first
above written.
HILLVIEW INVESTMENT TRUST II
on behalf of
HILLVIEW/REMS LEVERAGED REIT FUND
Attest: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
--------------------- ----------------------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxxx
Title: Secretary Title: President and Trustee
REAL ESTATE MANAGEMENT SERVICES GROUP LLC
Attest:______________________ By:/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Name: Name: Xxxxxx X. Xxxxxxxx
Title: Title: Managing Director
EXHIBIT A
ADVISORY FEES
This Exhibit A contains the advisory fee information required by
Section 7 of the Advisory Agreement between Hillview Investment Trust II
("Trust") and Real Estate Management Services Group, LLC ("Adviser") relating to
the Hillview/REMS Leveraged REIT Fund series ("Fund") of the Trust.
Fee Schedule. Fees payable to the Adviser pursuant to this Contract
shall be payable within ten (10) days after receipt by the Trust of the
Adviser's xxxx after the end of each calendar quarter for services rendered
during the prior quarter (or billing period, if less than a calendar quarter).
The fees are calculated as of the close of trading on the last business day of
the calendar quarter by applying the applicable fee rate to the average daily
assets of the Fund for that period. For purposes of calculating the fee, the
value of the Fund's assets shall be determined in the same manner as that which
the Fund uses to determine the net asset value of its shares. The applicable
annualized fee rate shall be 1.00% of the Fund's average daily net assets.
