Exhibit 5(a)
INVESTMENT ADVISORY AGREEMENT
Security Capital Real Estate Mutual Funds Incorporated
Security Capital U.S. Real Estate Shares
March 7, 2002
Security Capital Research & Management Incorporated
00 Xxxxx XxXxxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Dear Sirs:
We, the undersigned Security Capital Real Estate Mutual Funds Incorporated
("Fund"), herewith confirm our agreement with you as follows:
1. We are an open-end, non-diversified management investment company. Our
Directors are authorized to reclassify and issue any unissued shares to any
number of additional classes or series (portfolios), each having its own
investment objective, policies and restrictions, without shareholder approval,
all as more fully described in our prospectus and statement of additional
information.
We engage in the business of investing and reinvesting our assets in
securities of the type and in accordance with the limitations specified in our
Articles of Incorporation, By-Laws and any representations made in our
prospectus and statement of additional information, all in such manner and to
such extent as may from time to time be authorized by our Board of Directors. We
enclose copies of the documents listed above and will from time to time furnish
you with any amendments thereof.
2. (a) We hereby employ you to manage the investment and reinvestment of
Security Capital U.S. Real Estate Shares, a portfolio of the Fund ("Portfolio")
as above specified and, without limiting the generality of the foregoing, to
provide management, investment, advisory and other services specified below.
(b) You will make decisions with respect to all purchases and sales of the
portfolio securities of the Portfolio. To carry out such decisions, you are
hereby authorized, as our agent and attorney-in-fact, for our account and at our
risk and in our name, to place orders for the investment and reinvestment of the
Portfolio's assets. In all purchases, sales and other transactions in our
portfolio securities you are authorized to exercise full discretion and act for
us in the same manner and with the same force and effect as we might or could do
with respect to such purchases, sales or other transactions, as well as with
respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales or other transactions.
(c) You will report to our Board of Directors at each meeting thereof all
changes in our portfolio since the prior report, and will also keep us in touch
with important developments affecting the Portfolio and on your own initiative
will furnish us from time to time with such information as you may believe
appropriate for this purpose, whether concerning the individual issuers whose
securities are included in the Portfolio, the industries in which they engage,
or the conditions prevailing in the economy generally. You will also furnish us
with such statistical and analytical information with respect to the Portfolio's
securities as you may believe appropriate or as we reasonably may request. In
making such purchases and sales of Portfolio securities, you will bear in mind
the policies set from time to time by our Board of Directors as well as the
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limitations imposed by our Articles of Incorporation, the Investment Company Act
of 1940 (the "Act") and the Securities Act of 1933, and of the Internal Revenue
Code of 1986, as amended, in respect of regulated investment companies.
(d) It is understood that you will from time to time employ or associate
with yourselves such persons as you believe to be particularly fitted to assist
you in the execution of your duties hereunder, the cost of performance of such
duties to be borne and paid by you. No obligation may be incurred on our behalf
in any such respect. During the continuance of this Agreement at our request you
will provide us persons satisfactory to our Board of Directors to serve as our
officers.
(e) Subject to our ability to obtain the required initial and periodic
approvals under Section 15(c) of the 1940 Act, you may retain an investment
sub-adviser, at your own cost and expense, for the purpose of executing your
duties hereunder. Your retention of an investment sub-adviser shall in no way
reduce your responsibilities under this Agreement and you shall be responsible
to us for all acts or omissions of such investment sub-adviser in connection
with the performance of your duties hereunder.
3. We propose to retain the services of an administrator, which shall be a
firm acceptable to you, to administer all aspects of our operations except those
which are your responsibility pursuant to this Agreement. We will bear the cost
of and pay the fee of the administrator. Our initial Administrator will be
Security Capital Research & Management Incorporated.
4. It is further agreed that you shall pay the fees and expenses associated
with the printing and mailing of the Fund's prospectus and statement of
additional information, and any other sales literature, to parties other than
existing shareholders.
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We hereby confirm that, subject to the foregoing, we shall be responsible and
hereby assume the obligation for payment of all our other expenses, including:
(a) payment of the fee payable to you under paragraph 6 hereof; (b) charges and
expenses of our administrator, custodian, transfer, and dividend disbursing
agent; (c) fees of directors who are not your affiliated persons; (d) legal and
auditing expenses; (e) compensation of our officers, Directors and employees who
do not devote any part of their time to your affairs or the affairs of your
affiliates other than us; (f) costs of printing our prospectuses and stockholder
reports; (g) costs of proxy solicitation; (h) costs of maintenance of corporate
existence; (i) interest charges, taxes, brokerage fees and commissions; (j)
costs of stationery and supplies; (k) expenses and fees related to registration
and filing with the Securities and Exchange Commission and with state regulatory
authorities; and (1) upon the approval of the Board of Directors, costs of your
personnel or your affiliates rendering clerical, accounting and other office
services.
5. We shall expect of you, and you will give us the benefit of, your best
judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you shall not be liable
hereunder for any mistakes of judgment or in any event whatsoever, except for
lack of good faith, provided that nothing herein shall be deemed to protect, or
purport to protect, you against any liability to us or to our security holders
to which you would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties hereunder.
6. In consideration of the foregoing we will pay you a monthly fee at an
annualized rate of .60 of 1% of the average daily net asset value of each class
of the
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Portfolio's shares. Such fee shall be payable in arrears on the last day of each
calendar month for services performed hereunder during such month. If this
Agreement terminates prior to the end of a month, such fee shall be prorated
according to the proportion which such portion of the month bears to the full
month.
7. This Agreement shall become effective on the date it is approved by the
vote of a majority of the Portfolio's outstanding voting securities, as defined
in the Act, and shall continue in effect until the second anniversary of the
date hereof and may be continued for successive twelve-month periods (computed
from each January 1) with respect to the Portfolio provided that such
continuance is specifically approved at least annually by the Board of Directors
or by majority vote of the holders of the outstanding voting securities of such
portfolio (as defined in the Act), and, in either case, by a majority of the
Board of Directors who are not interested persons, as defined in the Act, of any
party to this Agreement (other than as Directors of our corporation), provided
further, however, that if the continuation of this Agreement is not approved,
you may continue to render the services described herein in the manner and to
the extent permitted by the Act and the rules and regulations thereunder. Upon
the effectiveness of this Agreement, it shall supersede all previous agreements
between us covering the subject matter hereof. This Agreement may be terminated
at any time, without payment of any penalty, by vote of a majority of the
outstanding voting securities (as so defined) or by a vote of a majority of the
Board of Directors on 60 days' written notice to you, or by you on 60 days'
written notice to us.
8. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this Agreement shall terminate automatically
in the
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event of any such transfer, assignment, sale, hypothecation or pledge by you.
The terms "transfer", "assignment" and "sale" as used in this paragraph shall
have the meanings ascribed thereto by governing law and any interpretation
thereof contained in rules or regulations promulgated by the Securities and
Exchange Commission thereunder.
9. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the right of
any of your officers, directors or employees, who may also be a Director,
officer or employee of ours, or persons otherwise affiliated with us (within the
meaning of the Act) to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
trust, corporation, firm, individual or association.
10. This Agreement shall be construed in accordance with the laws of the
State of Illinois, provided, however, that nothing herein shall be construed as
being inconsistent with the Act.
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If the foregoing is in accordance with your understanding, you will kindly so
indicate by signing and returning to us the enclosed copy hereof.
Very Truly Yours,
Security Capital Real Estate
Mutual Funds Incorporated
By: /s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
Vice President
Agreed to and accepted as of the date first set forth above
Security Capital Research
& Management Incorporated
By: /s/ Xxxxxxx X. Xxxxx Xx.
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Xxxxxxx X. Xxxxx Xx.
Managing Director
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