INVESTMENT MANAGEMENT AGREEMENT
Between
X. XXXX PRICE REAL ESTATE FUND, INC.
and
X. XXXX PRICE ASSOCIATES, INC.
INVESTMENT MANAGEMENT AGREEMENT, made as of October 29, 1997, by and
between X. XXXX PRICE REAL ESTATE FUND, INC., a Maryland corporation
(hereinafter called the "Fund"), and X. XXXX PRICE ASSOCIATES, INC., a
corporation organized and existing under the laws of the State of Maryland
(hereinafter called the "Manager").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as an open-end management
investment company and is registered as such under the Federal Investment
Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Manager is engaged principally in the business of rendering
investment supervisory services and is registered as an investment adviser
under the federal Investment Advisers Act of 1940, as amended; and
WHEREAS, the Fund desires the Manager to render investment supervisory
services to the Fund in the manner and on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. Duties and Responsibilities of Manager.
A. Investment Management Services. The Manager shall act as
investment manager and shall supervise and direct the investments of the Fund
in accordance with the Fund's investment objectives, program, and restrictions
as provided in its prospectus, as amended from time to time, and such other
limitations as the Fund may impose by notice in writing to the Manager. The
Manager shall obtain and evaluate such information relating to the economy,
industries, businesses, securities markets, and securities as it may deem
necessary or useful in the discharge of its obligations hereunder and shall
formulate and implement a continuing program for the management of the assets
and resources of the Fund in a manner consistent with its investment
objectives. In furtherance of this duty, the Manager, as agent and
attorney-in-fact with respect to the Fund, is authorized, in its discretion
and without prior consultation with the Fund, to:
(i)
buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds, and other securities or assets; and
(ii)
place orders and negotiate the commissions (if any) for the
execution of transactions in securities with or through such
brokers, dealers, underwriters or issuers as the Manager may
select.
B. Financial, Accounting, and Administrative Services. The Manager
shall maintain the corporate existence and corporate records of the Fund;
maintain the registrations and qualifications of Fund shares under federal and
state law; monitor the financial, accounting, and administrative functions of
the Fund; maintain liaison with the various agents employed by the Fund
(including the Fund's transfer agent, custodian, independent accountants and
legal counsel) and assist in the coordination of their activities on behalf of
the Fund.
C. Reports to Fund. The Manager shall furnish to or place at the
disposal of the Fund such information, reports, evaluations, analyses and
opinions as the Fund may, at any time or from time to time, reasonably request
or as the Manager may deem helpful to the Fund.
D. Reports and Other Communications to Fund Shareholders. The
Manager shall assist the Fund in developing all general shareholder
communications, including regular shareholder reports.
E. Fund Personnel. The Manager agrees to permit individuals who
are officers or employees of the Manager to serve (if duly elected or
appointed) as officers, directors, members of any committee of directors,
members of any advisory board, or members of any other committee of the Fund,
without remuneration from or other cost to the Fund.
F. Personnel, Office Space, and Facilities of Manager. The Manager
at its own expense shall furnish or provide and pay the cost of such office
space, office equipment, office personnel, and office services as the Manager
requires in the performance of its investment advisory and other obligations
under this Agreement.
2. Allocation of Expenses.
A. Expenses Paid by Manager.
(1) Salaries and Fees of Officers. The Manager shall pay all
salaries, expenses, and fees of the officers and directors
of the Fund who are affiliated with the Manager.
(2) Assumption of Fund Expenses by Manager. The payment or
assumption by the Manager of any expense of the Fund that
the Manager is not required by this Agreement to pay or
assume shall not obligate the Manager to pay or assume the
same or any similar expense of the Fund on any subsequent
occasion.
B. Expenses Paid by Fund. The Fund shall bear all expenses of its
organization, operations, and business not specifically assumed or
agreed to be paid by the Manager as provided in this Agreement. In
particular, but without limiting the generality of the foregoing,
the Fund shall pay:
(1) Custody and Accounting Services. All expenses of the
transfer, receipt, safekeeping, servicing and accounting
for the Fund's cash, securities, and other property,
including all charges of depositories, custodians, and
other agents, if any;
(2) Shareholder Servicing. All expenses of maintaining and
servicing shareholder accounts, including all charges of
the Fund's transfer, shareholder recordkeeping, dividend
disbursing, redemption, and other agents, if any;
(3) Shareholder Communications. All expenses of preparing,
setting in type, printing, and distributing reports and
other communications to shareholders;
(4) Shareholder Meetings. All expenses incidental to holding
meetings of Fund shareholders, including the printing of
notices and proxy material, and proxy solicitation
therefor;
(5) Prospectuses. All expenses of preparing, setting in type,
and printing of annual or more frequent revisions of the
Fund's prospectus and of mailing them to shareholders;
(6) Pricing. All expenses of computing the Fund's net asset
value per share, including the cost of any equipment or
services used for obtaining price quotations;
(7) Communication Equipment. All charges for equipment or
services used for communication between the Manager or the
Fund and the custodian, transfer agent or any other agent
selected by the Fund;
(8) Legal and Accounting Fees and Expenses. All charges for
services and expenses of the Fund's legal counsel and
independent auditors;
(9) Directors' Fees and Expenses. All compensation of
directors, other than those affiliated with the Manager,
and all expenses incurred in connection with their service;
(10) Federal Registration Fees. All fees and expenses of
registering and maintaining the registration of the Fund
under the Act and the registration of the Fund's shares
under the Securities Act of 1933, as amended (the "'33
Act"), including all fees and expenses incurred in
connection with the preparation, setting in type, printing,
and filing of any registration statement and prospectus
under the '33 Act or the Act, and any amendments or
supplements that may be made from time to time;
(11) State Filing Fees. All fees and expenses imposed on the
Fund, as appropriate, with respect to the sale of the
Fund's shares under securities laws of various states or
jurisdictions, and under all other laws applicable to the
Fund or its business activities (including registering the
Fund as a broker-dealer, or any officer of the Fund or any
person as agent or salesman of the Fund in any state);
(12) Issue and Redemption of Fund Shares. All expenses incurred
in connection with the issue, redemption, and transfer of
Fund shares, including the expense of confirming all share
transactions, and of preparing and transmitting the Fund's
stock certificates;
(13) Bonding and Insurance. All expenses of bond, liability,
and other insurance coverage required by law or deemed
advisable by the Fund's board of directors;
(14) Brokerage Commissions. All brokers' commissions and other
charges incident to the purchase, sale, or lending of the
Fund's portfolio securities;
(15) Taxes. All taxes or governmental fees payable by or with
respect of the Fund to federal, state, or other
governmental agencies, domestic or foreign, including stamp
or other transfer taxes;
(16) Trade Association Fees. All fees, dues, and other expenses
incurred in connection with the Fund's membership in any
trade association or other investment organization; and
(17) Nonrecurring and Extraordinary Expenses. Such nonrecurring
expenses as may arise, including the costs of actions,
suits, or proceedings to which the Fund is a party and the
expenses the Fund may incur as a result of its legal
obligation to provide indemnification to its officers,
directors, and agents.
3. Management Fee. The Fund shall pay the Manager a fee ("Fee") which
will consist of two components: a Group Management Fee ("Group Fee") and an
Individual Fund Fee ("Fund Fee"). The Fee shall be paid monthly to the Manager
on the first business day of the next succeeding calendar month and shall be
calculated as follows:
A. Group Fee. The monthly Group Fee ("Monthly Group Fee") shall be
the sum of the daily Group Fee accruals ("Daily Group Fee Accruals") for
each month. The Daily Group Fee Accrual for any particular day will be
computed by multiplying the Price Funds' group fee accrual as determined
below ("Daily Price Funds' Group Fee Accrual") by the ratio of the
Fund's net assets for that day to the sum of the aggregate net assets of
the Price Funds for that day. The Daily Price Funds' Group Fee Accrual
for any particular day shall be calculated by multiplying the fraction
of one (1) over the number of calendar days in the year by the
annualized Daily Price Funds' Group Fee Accrual for that day as
determined in accordance with the following schedule:
Price Funds
Annual Group Base Fee Rate for Each Level of Assets
__________________________________________
0.480% First $1 billion 0.350% Next $2 billion
0.450% Next $1 billion 0.340% Next $5 billion
0.420% Next $1 billion 0.330% Next $10 billion
0.390% Next $1 billion 0.320% Next $10 billion
0.370% Next $1 billion 0.310% Next $16 billion
0.360% Next $2 billion 0.305% Next $30 billion
0.300% Thereafter
The Price Funds shall include all the mutual funds distributed by
X. Xxxx Price Investment Services, Inc. (other than institutional or "private
label" funds, Equity Index, and the Spectrum Funds). For the purposes of
calculating the Daily Price Funds' Group Fee Accrual for any particular day,
the net assets of each Price Fund shall be determined in accordance with the
Fund's prospectus as of the close of business on the previous business day on
which the Fund was open for business.
B. Fund Fee. The monthly Fund Fee ("Monthly Fund Fee") shall be
the sum of the daily Fund Fee accruals ("Daily Fund Fee Accruals") for
each month. The Daily Fund Fee Accrual for any particular day will be
computed by multiplying the fraction of one (1) over the number of
calendar days in the year by the Fund Fee Rate of 0.30% and multiplying
this product by the net assets of the Fund for that day, as determined
in accordance with the Fund's prospectus as of the close of business on
the previous business day on which the Fund was open for business.
C. Expense Limitation. As part of the consideration for the Fund
entering into this Agreement, the Manager hereby agrees to limit the
aggregate expenses of every character incurred by the Fund, including
but not limited to Fees of the Manager computed as hereinabove set
forth, but excluding interest, taxes, brokerage, and other expenditures
which are capitalized in accordance with generally accepted accounting
principles and extraordinary expenses, ("Manager Limitation"). Under the
Manager Limitation, the Manager agrees that through December 31, 1999,
such expenses shall not exceed 1.00% of the average daily net assets of
the Fund ("1.00% Expense Limitation"). To determine the Manager's
liability for the Fund's expenses over the 1.00% Expense Limitation, the
amount of allowable year-to-date expenses shall be computed daily by
prorating the 1.00% Expense Limitation based on the number of days
elapsed within the fiscal year of the Fund, or limitation period, if
shorter ("Prorated Limitation"). The Prorated Limitation shall be
compared to the expenses of the Fund recorded through the prior day in
order to produce the allowable expenses to be recorded for the current
day ("Allowable Expenses"). If the Fund's Management Fee and other
expenses for the current day exceed the Allowable Expenses, the
Management Fee for the current day shall be reduced by such excess
("Unaccrued Fees"). In the event the excess exceeds the amount due as
the Management Fee, the Manager shall be responsible to the Fund for the
additional excess ("Other Expenses Exceeding Limit"). If at any time up
through and including December 31, 1999, the Fund's Management Fee and
other expenses for the current day are less than the Allowable Expenses,
the differential shall be due to the Manager as payment of cumulative
Unaccrued Fees (if any) or as payment for cumulative Other Expenses
Exceeding Limit (if any). If cumulative Unaccrued Fees or cumulative
Other Expenses Exceeding Limit remain at December 31, 1999, these
amounts shall be paid to the Manager in the future provided that: (1) no
such payment shall be made to the Manager after December 31, 2001; and
(2) such payment shall only be made to the extent that it does not
result in the Fund's aggregate expenses exceeding an expense limit of
1.00% of average daily net assets. The Manager may voluntarily agree to
an additional expense limitation (any such additional expense limitation
hereinafter referred to as an "Additional Expense Limitation"), at the
same or a different level and for the same or a different period of time
beyond December 31, 1999 (any such additional period being hereinafter
referred to an as "Additional Period") provided, however, that: (1) the
calculations and methods of payment shall be as described above; (2) no
payment for cumulative Unaccrued Fees or cumulative Other Expenses
Exceeding Limit shall be made to the Manager more than two years after
the end of an Additional Period; and (3) payment for cumulative
Unaccrued Fees or cumulative Other Expenses Exceeding Limit after the
expiration of the Additional Period shall only be made to the extent it
does not result in the Fund's aggregate expenses exceeding the
Additional Expense Limitation to which the unpaid amounts relate.
D. Proration of Fee. If this Agreement becomes effective or
terminates before the end of any month, the Fee for the period from the
effective date to the end of such month or from the beginning of such
month to the date of termination, as the case may be, shall be prorated
according to the proportion which such period bears to the full month in
which such effectiveness or termination occurs.
4. Brokerage. Subject to the approval of the board of directors of the
Fund, the Manager, in carrying out its duties under Paragraph 1.A., may cause
the Fund to pay a broker-dealer which furnishes brokerage or research services
[as such services are defined under Section 28(e) of the Securities Exchange
Act of 1934, as amended (the "'34 Act")], a higher commission than that which
might be charged by another broker-dealer which does not furnish brokerage or
research services or which furnishes brokerage or research services deemed to
be of lesser value, if such commission is deemed reasonable in relation to the
brokerage and research services provided by the broker-dealer, viewed in terms
of either that particular transaction or the overall responsibilities of the
Manager with respect to the accounts as to which it exercises investment
discretion (as such term is defined under Section 3(a)(35) of the '34 Act).
5. Manager's Use of the Services of Others. The Manager may (at its
cost except as contemplated by Paragraph 4 of this Agreement) employ, retain
or otherwise avail itself of the services or facilities of other persons or
organizations for the purpose of providing the Manager or the Fund with such
statistical and other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in specific
securities or such other information, advice or assistance as the Manager may
deem necessary, appropriate or convenient for the discharge of its obligations
hereunder or otherwise helpful to the Fund, or in the discharge of Manager's
overall responsibilities with respect to the other accounts which it serves as
investment manager.
6. Ownership of Records. All records required to be maintained and
preserved by the Fund pursuant to the provisions of rules or regulations of
the Securities and Exchange Commission under Section 31(a) of the Act and
maintained and preserved by the Manager on behalf of the Fund are the property
of the Fund and will be surrendered by the Manager promptly on request by the
Fund.
7. Reports to Manager. The Fund shall furnish or otherwise make
available to the Manager such prospectuses, financial statements, proxy
statements, reports, and other information relating to the business and
affairs of the Fund as the Manager may, at any time or from time to time,
reasonably require in order to discharge its obligations under this Agreement.
8. Services to Other Clients. Nothing herein contained shall limit the
freedom of the Manager or any affiliated person of the Manager to render
investment supervisory and corporate administrative services to other
investment companies, to act as investment manager or investment counselor to
other persons, firms or corporations, or to engage in other business
activities; but so long as this Agreement or any extension, renewal or
amendment hereof shall remain in effect or until the Manager shall otherwise
consent, the Manager shall be the only investment manager to the Fund.
9. Limitation of Liability of Manager. Neither the Manager nor any of
its officers, directors, or employees, nor any person performing executive,
administrative, trading, or other functions for the Fund (at the direction or
request of the Manager) or the Manager in connection with the Manager's
discharge of its obligations undertaken or reasonably assumed with respect to
this Agreement, shall be liable for any error of judgment or mistake of law or
for any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except for loss resulting from willful misfeasance, bad
faith, or gross negligence in the performance of its or his duties on behalf
of the Fund or from reckless disregard by the Manager or any such person of
the duties of the Manager under this Agreement.
10. Use of Manager's Name. The Fund may use the name "X. Xxxx Price
Real Estate Fund, Inc." or any other name derived from the name "X. Xxxx
Price" only for so long as this Agreement or any extension, renewal, or
amendment hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of the Manager as
investment manager. At such time as this Agreement or any extension, renewal,
or amendment hereof, or such other similar agreement shall no longer be in
effect, the Fund will (by corporate action, if necessary) cease to use any
name derived from the name "X. Xxxx Price," any name similar thereto or any
other name indicating that it is advised by or otherwise connected with the
Manager, or with any organization which shall have succeeded to the Manager's
business as investment manager.
11. Term of Agreement. The term of this Agreement shall begin on
the date first above written, and unless sooner terminated as hereinafter
provided, this Agreement shall remain in effect through April 30, 1998.
Thereafter, this Agreement shall continue in effect from year to year, subject
to the termination provisions and all other terms and conditions hereof, so
long as: (a) such continuation shall be specifically approved at least
annually by the board of directors of the Fund or by vote of a majority of the
outstanding voting securities of the Fund and, concurrently with such approval
by the board of directors or prior to such approval by the holders of the
outstanding voting securities of the Fund, as the case may be, by the vote,
cast in person at a meeting called for the purpose of voting on such approval,
of a majority of the directors of the Fund who are not parties to this
Agreement or interested persons of any such party; and (b) the Manager shall
not have notified the Fund, in writing, at least 60 days prior to April 30,
1998, or prior to April 30th of any year thereafter, that it does not desire
such continuation. The Manager shall furnish to the Fund, promptly upon its
request, such information as may reasonably be necessary to evaluate the terms
of this Agreement or any extension, renewal or amendment hereof.
12. Amendment and Assignment of Agreement. This Agreement may not
be amended or assigned without the affirmative vote of a majority of the
outstanding voting securities of the Fund, and this Agreement shall
automatically and immediately terminate in the event of its assignment.
13. Termination of Agreement. This Agreement may be terminated by
either party hereto, without the payment of any penalty, upon 60 days' prior
notice in writing to the other party; provided, that in the case of
termination by the Fund such action shall have been authorized by resolution
of a majority of the directors of the Fund who are not parties to this
Agreement or interested persons of any such party, or by vote of a majority of
the outstanding voting securities of the Fund.
14. Miscellaneous.
A. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of
the provisions hereof or otherwise affect their construction or effect.
B. Interpretation. Nothing herein contained shall be deemed to
require the Fund to take any action contrary to its Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory
requirement to which it is subject or by which it is bound, or to
relieve or deprive the board of directors of the Fund of its
responsibility for and control of the conduct of the affairs of the
Fund.
C. Definitions. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the Act shall be resolved by reference to
such term or provision of the Act and to interpretations thereof, if
any, by the United States courts or, in the absence of any controlling
decision of any such court, by rules, regulations or orders of the
Securities and Exchange Commission validly issued pursuant to the Act.
Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested person," "assignment," and "affiliated person,"
as used in Paragraphs 2, 8, 10, 11, and 12 hereof, shall have the
meanings assigned to them by Section 2(a) of the Act. In addition, where
the effect of a requirement of the Act reflected in any provision of
this Agreement is relaxed by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or of general
application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
Attest: X. XXXX PRICE REAL ESTATE FUND, INC.
/s/Xxxxxxxx X. Xxxxxxx /s/Xxxxxxx X. Xxxxxxxxx
______________________________ By: _________________________________
Xxxxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxxx
Assistant Secretary President
Attest: X. XXXX PRICE ASSOCIATES, INC.
/s/Xxxxxxx X. Xxx Xxxx /s/Xxxxx X. Xxxxxxx
_________________________________ By: _________________________________
Xxxxxxx X. Xxx Xxxx Xxxxx X. Xxxxxxx
Assistant Secretary Managing Director
