Xxxxx Asset Management, Inc.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Re: Advisory Agreement
Ladies and Gentlemen:
Xxxxx Family of Real Estate Funds (the "Trust") is an open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"), and subject to the rules and regulations
promulgated thereunder. The Trust currently offers one series of shares to
investors, the Xxxxx S&P REIT Index Fund (the "Fund"). Each share of the Fund
represents an undivided interest in the assets, subject to the liabilities, of
the Fund.
1. APPOINTMENT AS ADVISER. The Trust being duly authorized hereby
appoints and employs Xxxxx Asset Management, Inc. (the "Adviser") to manage the
investment and reinvestment of the assets of the Fund, on the terms and
conditions set forth herein.
2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE. The Adviser
accepts the appointment and agrees to render the services and assume the
obligations set forth herein.
3. PORTFOLIO MANAGEMENT SERVICES OF THE ADVISER. The Adviser shall have
overall supervisory responsibility for the general management and investment of
the assets and portfolio securities of the Fund subject to and in accordance
with the
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investment objectives and policies of the Fund, and any directions which the
Trust's Board of Trustees may issue to the Adviser from time to time. The
Adviser shall provide overall investment programs and strategies for the Fund,
shall revise such programs as necessary and shall monitor and report
periodically to the Board of Trustees concerning the implementation of the
programs.
The Adviser, with the approval of the Board of Trustees of the Trust as
to particular appointments, intends to (i) appoint one or more persons or
companies (the "Sub-Adviser") and, subject to the terms and conditions of this
Agreement, the Sub-Adviser shall have full investment discretion and shall make
all determinations with respect to the investment of the Fund's assets and the
purchase and sale of portfolio securities with those assets, and (ii) take such
steps as may be necessary to implement such appointments. The Adviser shall be
solely responsible for paying the fees and expenses of the Sub-Adviser for its
services to the Fund. The Adviser shall not be responsible or liable for the
investment merits of any decision by the Sub-Adviser to purchase, hold or sell a
portfolio security for the Fund.
The Adviser shall evaluate sub-advisers and shall recommend to the
Board of Trustees the Sub-Adviser which the Adviser believes is best suited to
invest the assets of the Fund; shall monitor and evaluate the investment
performance of the Fund's Sub-Adviser; shall recommend changes in the
Sub-Adviser when appropriate; shall coordinate the investment activities of the
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Sub-Adviser to ensure compliance with applicable restrictions and limitations
applicable to the Fund; and shall compensate the Sub-Adviser.
The Adviser will make available and provide financial, accounting and
statistical information required by the Fund in the preparation of registration
statements, reports and other documents required by federal and state securities
laws, and such information as the Fund may reasonably request for use in the
preparation of registration statements, reports and other documents required by
federal and state securities laws.
In providing such services to the Fund, the Adviser shall be subject to
such investment restrictions as are set forth in the Act and the rules
thereunder, the Internal Revenue Code of 1986, as amended (the "Code"),
applicable state securities laws, the supervision and control of the Trustees of
the Trust, such specific instructions as the Trustees may adopt and communicate
to the Adviser and the investment objectives, policies and restrictions of the
Fund furnished pursuant to paragraph 4. The Adviser is not authorized by the
Trust to take any action, including the purchase or sale of securities for the
Fund, in contravention of any restriction, limitation, objective, policy or
instruction described in the previous sentence.
4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Trust will
provide the Adviser with the statement of investment objectives, policies and
restrictions applicable to the Fund as contained in the Trust's registration
statement under the Act and the Securities Act of 1933, and any instructions
adopted by the
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Trustees supplemental thereto. The Trust will provide the Adviser with such
further information concerning the investment objectives, policies and
restrictions applicable thereto as the Adviser may from time to time reasonably
request. The Trust retains the right, on written notice to the Adviser from the
Trust, to modify any such objectives, policies or restrictions in any manner at
any time.
5. ALLOCATION OF BROKERAGE. The Sub-Adviser, subject to the limitations
contained in this paragraph 5, shall place on behalf of the Fund, orders for the
execution of portfolio transactions. The Sub-Adviser is not authorized by the
Trust to take any action, including the purchase or sale of securities for the
Fund's account, (a) in contravention of (i) any investment restrictions set
forth in the Act and the rules thereunder, (ii) specific instructions adopted by
the Board of Trustees and communicated to the Sub-Adviser, or (iii) the
investment objectives, policies and restrictions of the Fund as set forth in the
Trust's Registration Statement, or (b) which would have the effect of causing
the Fund to fail to qualify or to cease to qualify as a regulated investment
company under the Code or any succeeding statute.
Subject to the foregoing, the Sub-Adviser shall have authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by the Sub-Adviser and to select the markets on or in which the
transactions will be executed. In doing so, the Sub-Adviser will give primary
consideration to securing the best execution, taking into account such factors
as
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price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. Consistent with this policy, the Sub-Adviser may select brokers or
dealers who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) to the other
accounts over which it exercises investment discretion. It is understood that
neither the Trust, the Adviser nor the Sub-Adviser has adopted a formula for
allocation of the Fund's investment transaction business. It is also understood
that it is desirable for the Fund that the Sub-Adviser have access to
supplemental investment and market research and security and economic analyses
provided by certain brokers who may execute brokerage transactions at a higher
commission to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the lowest commission. Therefore, the
Sub-Adviser is authorized to place orders for the purchase and sale of
securities for the Fund with such certain brokers, subject to review by the
Trust's Trustees from time to time with respect to the extent and continuation
of this practice, provided that the Sub-Adviser determines in good faith that
the amount of the commission is reasonable in relation to the value of the
brokerage and research services provided by the executing broker or dealer. The
determination may be viewed in terms of either a particular transaction or the
Sub-Adviser's overall responsibilities with respect to the Fund and to other
accounts
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over which it exercises investment discretion. It is understood that although
the information may be useful to the Trust and the Sub-Adviser, it is not
possible to place a dollar value on such information. Consistent with the Rules
of Fair Practice of the National Association of Securities Dealers, Inc., and
subject to seeking best execution, the Sub-Adviser may give consideration to
sales of shares of the Fund as a factor in its selection of brokers and dealers
to execute portfolio transactions of the Fund.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients, the
Sub-Adviser, to the extent permitted by applicable laws and regulations, may,
but shall be under no obligation to, aggregate the securities to be sold or
purchased in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the securities
so purchased or sold, as well as expenses incurred in the transaction, will be
made by the Sub-Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Trust and to such other
clients.
For each fiscal quarter of the Trust, the Sub-Adviser shall prepare and
render reports to the Trust's Trustees of the total brokerage business placed
and the manner in which the allocation has been accomplished. Such reports shall
set forth at a minimum the information required to be maintained by Rule
31a-1(b)(9) under the Act.
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The Sub-Adviser will not execute any portfolio transactions for the
Fund's account with a broker or dealer which is an "affiliated person" (as
defined in the Act) of the Trust, the Adviser or the Sub-Adviser without the
prior written approval of the Adviser. The Adviser agrees that it will provide
the Sub-Adviser with a list of brokers and dealers which are "affiliated
persons" of the Trust, the Adviser or the Sub- Adviser.
6. TRANSACTION PROCEDURES. All transactions will be consummated by
payment to or delivery by the Trust's custodian (the "Custodian"), or such
depositories or agents as may be designated by the Custodian in writing, as
custodian for the Trust, of all cash and/or securities due to or from the Fund,
and the Adviser shall not have possession or custody thereof.
7. PROXIES. The Trust will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Fund may be invested
from time to time. At the request of the Trust, the Adviser shall provide the
Trust with its recommendations as to the voting of such proxies.
8. REPORTS TO THE ADVISER. The Trust will provide the Adviser with such
periodic reports concerning the status of the Fund as the Adviser may reasonably
request.
9. FEES FOR SERVICES. For all of the services to be rendered and
payments made as provided in this Agreement, the Fund will pay the Adviser a
fee, computed and accrued daily and paid monthly, at the annual rate of 0.50% of
its average daily net assets.
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10. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall employ or
provide and compensate the executive, administrative, secretarial and clerical
personnel necessary to provide the services set forth herein, and shall bear the
expense thereof. The Adviser shall compensate all Trustees, officers and
employees of the Trust who are also employees of the Adviser. The Adviser will
pay all expenses incurred in connection with the sale or distribution of the
Fund's shares to the extent such expenses are not assumed by the Fund under the
Trust's Plan of Distribution Pursuant to Rule 12b-1.
The Fund will be responsible for the payment of all operating expenses
of the Fund, including fees and expenses incurred by the Fund in connection with
membership in investment company organizations, brokerage fees and commissions,
legal, auditing and accounting expenses, expenses of registering shares under
federal and state securities laws, insurance expenses, taxes or governmental
fees, fees and expenses of the custodian, the transfer, shareholder service and
dividend disbursing agent and the accounting and pricing agent of the Fund,
expenses including clerical expenses of the issue, sale, redemption or
repurchase of shares of the Fund, the fees and expenses of Trustees of the Trust
who are not interested persons of the Trust, the cost of preparing, printing and
distributing prospectuses, statements, reports and other documents to
shareholders, expenses of shareholders' meetings and proxy solicitations, and
such extraordinary or non-recurring expenses
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as may arise, including litigation to which the Trust may be a party and
indemnification of the Trust's officers and Trustees with respect thereto, or
any other expense not specifically described above incurred in the performance
of the Trust's obligations. All other expenses not expressly assumed by the
Adviser herein incurred in connection with the organization, registration of
shares and operations of the Fund will be borne by the Fund.
11. OTHER INVESTMENT ACTIVITIES OF THE ADVISER. The Trust acknowledges
that the Adviser or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Adviser, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, the
Trust agrees that the Adviser or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Fund, provided that the Adviser acts
in good faith, and provided further, that it is the Adviser's policy to
allocate, within its reasonable discretion, investment opportunities to the Fund
over a period of time on a fair and equitable basis relative to the Affiliated
Accounts, taking into account the investment objectives and policies of the Fund
and any specific investment restrictions
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applicable thereto. The Trust acknowledges that one or more of the Affiliated
Accounts may at any time hold, acquire, increase, decrease, dispose of or
otherwise deal with positions in investments in which the Fund may have an
interest from time to time, whether in transactions which involve the Fund or
otherwise. The Adviser shall have no obligation to acquire for the Fund a
position in any investment which any Affiliated Account may acquire, and the
Trust shall have no first refusal, co-investment or other rights in respect of
any such investment, either for the Fund or otherwise.
12. CERTIFICATE OF AUTHORITY. The Trust and the Adviser shall furnish
to each other from time to time certified copies of the resolutions of their
Trustees or Board of Directors or executive committees, as the case may be,
evidencing the authority of officers and employees who are authorized to act on
behalf of the Trust, the Fund and/or the Adviser.
13. LIMITATION OF LIABILITY. The Adviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its reasonable judgment,
in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement, or in accordance with (or
in the absence of) specific directions or instructions from the Trust, provided,
however, that such acts or omissions shall not have resulted from the Adviser's
willful misfeasance, bad faith or gross negligence. Nothing in this paragraph 13
shall be construed in a manner inconsistent with Sections 17(h) and (i) of the
Act.
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14. CONFIDENTIALITY. Subject to the duty of the Adviser and the Trust
to comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of the Adviser and the
Trust in respect thereof.
15. ASSIGNMENT. No assignment of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in the event of such
assignment. The Adviser shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with the Adviser.
16. REPRESENTATION, WARRANTIES AND AGREEMENTS OF THE TRUST. The Trust
represents, warrants and agrees that:
A. The Adviser has been duly appointed by the Trustees of the
Trust to provide investment advisory services to the Fund as contemplated
hereby.
B. The Trust will deliver to the Adviser true and complete
copies of its then current prospectuses and statements of additional information
as effective from time to time and such other documents or instruments governing
the investments of the Fund and such other information as is necessary for the
Adviser to carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at all
times comply with the requirements imposed upon the Trust by applicable law
and regulations.
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17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
ADVISER. The Adviser represents, warrants and agrees that:
A. The Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940.
B. The Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the Act and will provide the Trust
with a copy of the code of ethics and evidence of its adoption. Within
forty-five (45) days of the end of the last calendar quarter of each year while
this Agreement is in effect, an executive officer 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, its employees or its agents to examine the
reports required to be made to the Adviser by Rule 17j-1(c)(1).
C. The Adviser will, promptly after filing with the
Securities and Exchange Commission an amendment to its Form ADV, furnish a
copy of such amendment to the Trust.
D. Upon request of the Trust, the Adviser will provide
assistance to the Custodian in the collection of income due or payable to the
Fund.
E. The Adviser will immediately notify the Trust of the
occurrence of any event which would disqualify the Adviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the Act
or otherwise.
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18. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Trust, which amendment is subject
to the approval of the Trustees and the shareholders of the Fund in the manner
required by the Act and the rules thereunder, subject to any applicable
exemptive order of the Securities and Exchange Commission modifying the
provisions of the Act with respect to approval of amendments to this Agreement.
19. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date of its execution and shall remain in force for a period of two (2) years
from such date, and from year to year thereafter but only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees who are not interested persons of the Trust or the Adviser, cast
in person at a meeting called for the purpose of voting on such approval, and by
a vote of the Board of Trustees or of a majority of the outstanding voting
securities of the Fund. The aforesaid requirement that this Agreement may be
continued "annually" shall be construed in a manner consistent with the Act and
the rules and regulations thereunder.
20. TERMINATION. This Agreement may be terminated by either party
hereto, without the payment of any penalty, immediately upon written notice to
the other in the event of a breach of any provision thereof by the party so
notified, or otherwise upon sixty (60) days' written notice to the other, but
any such termination shall not affect the status, obligations or liabilities of
any party hereto to the other.
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21. OBLIGATIONS OF THE TRUST. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees of the Trust and
signed by an officer of the Trust, acting as such, and neither such
authorization by such trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust.
22. USE OF NAME. The name "Xxxxx" is a property right of the Adviser.
The Adviser may use the name "Xxxxx" in other connections and for other
purposes, including without limitation in the name of other investment
companies, corporations or businesses that it may manage, advise, sponsor or
own, or in which it may have a financial interest. The Trust will discontinue
any use of the name "Xxxxx" if the Adviser ceases to be employed as the Trust's
portfolio manager.
23. DEFINITIONS. As used in paragraphs 15 and 19 of this Agreement, the
terms "assignment," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
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24. APPLICABLE LAW. To the extent that state law is not preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of Ohio.
XXXXX FAMILY OF REAL ESTATE FUNDS
By: __________________________
Title:
Date: ___________, 1997
ACCEPTANCE
The foregoing Agreement is hereby accepted.
XXXXX ASSET MANAGEMENT, INC.
By: __________________________
Title:
Date: __________, 1997
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