INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT dated May 16, 2005, between RMR
Hospitality and Real Estate Fund (the Fund), a Massachusetts business
trust, and RMR Advisors,Inc. (the Advisor), a Massachusetts corporation.
RECITALS
WHEREAS, the Fund is registered under the Investment Company Act
of 1940, as amended (the 1940 Act), as a closedend, nondiversified
management investment company;
WHEREAS, the Advisor is registered under the Investment Advisors
Act of 1940, as amended (the Advisors Act), as an investment advisor and
engages in the business of acting as an investment advisor;
WHEREAS, the Fund and the Advisor were previously parties to an
investment advisory agreement dated April 2, 2004 (the Initial Agreement
Date);
WHEREAS, the Fund desires to employ the Advisor for, and the
Advisor desires to provide, investment advisory services to the Fund
upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Investment Description, Appointment. The Fund desires to
employ its capital by investing and reinvesting in investments of the
kind and in accordance with the investment objectives, policies and
limitations specified in its Agreement and Declaration of Trust, as
amended from time to time (Charter), its prospectus (Prospectus) and
statement of additional information (Statement) filed with the Securities
and Exchange Commission (SEC) as part of the Funds Registration Statement
on FormN2, as amended from time to time (Registration Statement), and in
the manner and to the extent as may from time to time be approved by the
Board of Trustees of the Fund (the Board). Copies of the Prospectus, the
Statement and the Charter have been or will be submitted to the Advisor.
The Fund agrees to provide copies of all amendments to the Registration
Statement and the Charter to the Advisor on an ongoing basis. The Fund
hereby appoints the Advisor to act as the investment manager to the Fund.
The Advisor accepts the appointment and agrees to furnish the services
for the compensation set forth below.
2. Services as Investment Advisor. Subject to the supervision,
direction and approval of the Board, the Advisor will (a)manage the Funds
holdings in accordance with the Funds investment objectives and policies
as stated in the Charter and the Registration Statement; (b)make
investment decisions for the Fund; (c)place purchase and sale orders
for portfolio transactions for the Fund; and (d)provide research services
to the Fund. In providing those services, the Advisor will conduct a
continual program of investment, evaluation and, if appropriate, sale and
reinvestment of the Funds assets. In compliance with applicable law, the
Advisor is hereby authorized to retain third parties and to delegate some
or all of its duties and obligations under this paragraph2 to such persons
provided that such persons shall remain under the general supervision of
the Advisor.
3. Standard of Care. The Advisor shall give the Fund the benefit
of its best judgment and effort in rendering services. The Advisor shall
not be liable for any act or omission or for any loss sustained by the
Fund in connection with the matters to which this Agreement relates,
except those involving the Advisors willful misfeasance, bad faith or
gross negligence in the performance of its duties, or the reckless
disregard of its obligations and duties under this Agreement.
4. Services to Other Companies and Accounts. The Fund understands
that the Advisor and its affiliates now act, will continue to act and may
in the future act as investment advisor or fiduciary to other managed
accounts and as investment advisor or property manager to other investment
companies or trusts. Nothing in this Agreement shall prevent the Advisor
or any director, officer, employee or other affiliate of the Advisor from
acting as investment advisor, property manager, fiduciary or administrator
for any other person, firm or corporation, or from engaging in any lawful
activity, and shall not in any way limit or restrict the Advisor or any
of its directors, officers, employees or agents from buying, selling or
trading any securities for its or their own accounts or for the accounts
of others for whom it or they may be acting; provided, however, that the
Advisor will undertake no activities which, in its judgment, will adversely
affect the performance of its obligations under this Agreement and further
provided that that whenever the Fund and one or more other clients advised
by the Advisor have available funds for investment, investments suitable
and appropriate for each will be allocated in accordance with a formula
believed to be equitable to each client. The Fund recognizes that in some
cases this procedure may adversely affect the size of the position
obtainable for the Fund. In addition, the Fund understands that the
persons employed by the Advisor to assist in the performance of the
Advisors duties under this Agreement will not devote their full time
to such service and nothing contained in this Agreement shall be deemed
to limit or restrict the right of the Advisor or any affiliate of the
Advisor to engage in and devote time and attention to other businesses or
to render services of whatever kind or nature.
5. Portfolio Transactions and Brokerage. Subject to the
supervision of the Board, the Advisor is authorized, for the purchase and
sale of the Funds portfolio securities, to employ such securities dealers
and brokers and to negotiate brokerage commissions on behalf of the Fund
as may, in the judgment of the Advisor, implement the policy of the Fund
to obtain the best net results taking into account such factors as: the
net price available; the reliability, integrity and financial condition
of the broker; the size of and difficulty in executing the order; and the
value of the expected contribution of the broker to the Funds investment
performance on a continuing basis. The Fund understands that the cost of
the brokerage commissions in any transaction may be greater than that
available from other brokers if the difference is reasonably justified by
other aspects of the services offered. Subject to such policies and
procedures as the Board may determine, the Advisor may cause the Fund to
pay a broker that provides research services to the Advisor an amount of
commission for effecting a portfolio investment transaction in excess of
the amount of commission another broker would have charged for effecting
that transaction, if the Advisor determines in good faith that such amount
of commission was reasonable in relation to the value of the research
service provided by such broker viewed in terms of either that particular
transaction or the Advisors ongoing responsibilities under this Agreement.
The Fund understands that research and investment information provided at
no cost to the Advisor by brokers that are paid by the Fund will be
available to benefit other accounts advised by the Advisor and its
affiliates. In the allocation of the Funds brokerage business the Advisor
is authorized to consider (i)its use of statistical, research and other
services furnished by brokers and (ii)payments made by brokers effecting
transactions for the Fund to other persons on the Funds behalf for
services (such as custodial or professional fees).
6. Compensation of the Advisor. In consideration of the
advisory services pursuant to this Agreement, the Fund agrees to pay to
the Advisor, on the first business day of each month a fee (Advisory Fee)
for the previous month, and the Advisor agrees to accept as full
compensation for all services rendered by the Advisor, computed at the
annual rate of .85% of the sum of the Funds net asset value attributable
to the Funds outstanding common shares, plus the liquidation preference
of the Funds outstanding preferred shares plus the principal amount of
any borrowings evidenced by notes, commercial paper or other similar
instruments issued by the Fund (Average Daily Managed Assets). The value
of the Funds Average Daily Managed Assets shall be computed at the times
and in the manner specified by the Registration Statement. For any period
less than a month during which this Agreement is in effect, the fee shall
be prorated according to the proportion which such period bears to a full
month of 28, 29, 30 or 31days, as the case may be.
7. Fee Waiver. Notwithstanding the provisions of the above
Section6, during the five year period following the closing of the Funds
first public offering of common shares, the Advisor agrees to waive a
portion of its Advisory Fee equal to an annual rate of .25% of Average
Daily Total Assets.
8. Duration and Termination. This Agreement shall become
effective on the date first set forth and above and continue until the
second anniversary of the Initial Agreement Date. Thereafter, this
Agreement will continue from year to year, or for such longer terms as
may be approved by Board (including a majority of the Trustees who are
not interested persons of the Advisor, as defined by the 0000 Xxx) and
as may be permitted by the 1940 Act, but only so long as such continuation
is specifically approved at least as often as required by the 1940 Act,
as it may be amended from time to time.
So long as the 1940 Act requires these provisions respectively: (i)this
Agreement may be terminated by the Fund at any time without penalty upon
giving the Advisor sixty days notice and payment of any unpaid
compensation to the Advisor described in Section6, above, earned prior
to such termination, provided that such termination by the Fund shall
be directed or approved by the vote of a majority of the Trustees of
the Fund in office at the time or by the vote of the holders of a majority
(as defined in the 0000 Xxx) of the voting securities of the Fund at the
time outstanding and entitled to vote; (ii)this Agreement shall terminate
automatically in the event of its assignment (as assignment is defined
in the 1940 Act).
9. Amendment. No amendment of this Agreement shall be effective
unless it is in writing and signed by the party against which enforcement
of the amendment is sought.
10. NonLiability of Shareholders, Trustees, etc. The Charter
is on file with the Secretary of State of The Commonwealth of
Massachusetts. This Agreement is executed on behalf of the Fund, by the
Trustees or by an officer or officers of the Fund in their capacity as
such and not individually, and neither the shareholders nor the Funds
Trustees nor any officers, employees or agents shall be liable thereunder
and the Advisor shall look solely to the Funds estate for the payment of
any claim hereunder or for the performance of the Funds duties created by
this Agreement.
11. Expenses. The Advisor will bear all the expenses in
connection with the performance of its advisory services under this
Agreement. The Fund will bear all other expenses incurred in the
operations of the Fund including, but not limited to the fees payable
under this Agreement, brokerage commissions, taxes, interest,
distributions, legal, auditing, SEC, blue sky qualification or other
governmental fees, rating agency fees, the cost of preparing share
certificates, custodian, transfer and shareholder service agent costs,
accounting costs, administration services costs (including those fees
charged by any party under any administration or subadministration
agreements approved by the Board) expenses of issue, sale, redemption
and repurchase of shares, dividend disbursing expenses, expenses of
registering and qualifying shares for sale, the Funds and its Board
members proportionate share of insurance premiums, fees of the Board
members of the Fund who are not affiliated persons (as defined in the
0000 Xxx) of the Advisor or any affiliate of the Advisor, expenses
relating to Board and shareholder meetings, the cost of preparing and
distributing reports, notices and proxy statements to shareholders,
the fees and other expenses incurred related to the Funds membership
in investment company organizations and the cost of printing copies
of prospectuses and statements of additional information for regulatory
purposes and for distribution to the Funds shareholders and any
extraordinary expenses.
12. Governing Law. This Agreement shall be construed in
accordance with the laws of The Commonwealth of Massachusetts for
contracts to be performed entirely therein without reference to choice
of law principles and in accordance with the applicable provisions of
the 1940 Act.
13. Notices. Any notice under this Agreement shall be in
writing to the other party at such address as the other party may
designate from time to time for the receipt of notices and shall be
deemed to be received on the earlier of the date actually received or
on the fourth day after the postmark if such notice is mailed first
class postage prepaid.
14. License Agreement. The Fund shall have the nonexclusive
right to use the name RMR Hospitality and Real Estate Fund to designate
any current or future series of shares and may use the term RMR,
including marks and symbols containing such term or variations thereof
as considered appropriate, only so long as RMR Advisors,Inc. serves as
investment manager or advisor to the Fund.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their
respective seals to be hereunto affixed, all as of the day and the
year first above written.
RMR HOSPITALITY AND REAL ESTATE FUND
By:
Xxxxxx X. XXxxxx, President
RMR ADVISORS, INC.
By:
Xxxx X. Xxxxxxxx, Treasurer
