XXXXX FAMILY OF REAL ESTATE FUNDS
Xxxxx Asset Management, Inc.
0000 Xxx Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Re: Advisory Agreement
Ladies and Gentlemen:
Xxxxx Family of Real Estate Funds (the "Trust"), an Ohio business trust, is
a diversified open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "Act"), and is subject to the
rules and regulations promulgated thereunder. The Trust has established the
Xxxxx S&P REIT Index Variable Annuity Fund (the "Fund") as a series of shares of
the Trust. 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 Fund's assets and
portfolio securities, subject to and in accordance with the 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 Sub-Adviser to ensure
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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
statements 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, the Internal Revenue Code of 1986 and
applicable state securities laws, (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 price (including the
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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 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 .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 its
Shareholder Servicing Plan.
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 issue, sale, redemption or repurchase of
shares of the Fund, the fees and expenses of Trustees of the Trust who are not
affiliated 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, such
extraordinary or non-recurring expenses as may arise, including litigation to
which the Trust may be a party and indemnification of the Trust's officers and
Trustees
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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 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 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
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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.
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
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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 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
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to Section 9(a) of the Act or otherwise.
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 until January 12, 2003, 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
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party hereto to the other.
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 business 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: President
Date:_______________, 2001
ACCEPTANCE
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The foregoing Agreement is hereby accepted.
XXXXX ASSET MANAGEMENT, INC.
By:
--------------------------
Title: President
Date: _______________, 2001
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