EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
Security Capital Employee REIT Fund Incorporated
April __, 1997
Security Capital Investment Research Group Incorporated
00 Xxxxx XxXxxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Dear Sirs:
We, the undersigned Security Capital Employee REIT Fund Incorporated,
herewith confirm our agreement with you as follows:
1. We are an open-end, non-diversified management investment company. We
are currently authorized to issue 50,000,000 shares of common stock and 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 the prospectus and the statement of additional
information. We propose to 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
our assets as above specified and, without limiting the generality of the
foregoing, to provide management and other services specified below.
(b) You will make decisions with respect to all purchases and sales of
our portfolio securities. 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 our
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 our 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 our portfolio, the industries in which they
engage, or the conditions
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prevailing in the economy generally. You will also furnish us with such
statistical and analytical information with respect to our portfolio securities
as you may believe appropriate or as we reasonably may request. In making such
purchases and sales of our portfolio securities, you will bear in mind the
policies set from time to time by our Board of Directors as well as the
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.
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 Investment Research Group Incorporated.
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4. It is further agreed that you shall be responsible for the portion of
our net expenses (except interest, taxes, brokerage, expenditures which are
capitalized in accordance with generally accepted accounting principles and
extraordinary expenses, all to the extent permitted by applicable state law and
regulation) incurred by us during each of our fiscal years or portion thereof
that this agreement is in effect between us which, in any such year exceeds the
limits applicable to us under the laws or regulations of any state in which our
shares are qualified for sale (reduced pro rata for any portion of less than a
year). 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) cost 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 (l) upon
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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 mistake 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 .85 of 1% of our average daily net assets. 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. You shall hereby commit to waive any fees, payable by us to you, in
connection with paragraph 6 above, to the extent that any such fees exceed 1.20%
of the average daily net assets
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of the Fund; provided, however, that such fee limitation shall expire upon the
first anniversary of this Agreement.
8. This agreement shall become effective on the date on which the first
meeting of our shareholders takes place and, if approved by the vote of a
majority of the outstanding voting securities, as defined in the Act, at such
meeting, 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 each 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 the
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.
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9. 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 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.
10. 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, form, individual or association.
11. 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, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
Security Capital Employee REIT Fund
Incorporated
By:
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Xxxxxxx X. Xxxxx, Xx.
President
Agreed to and accepted
as of the date first set forth above
By:
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President
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