INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 18th day of April, 1997 by and between
MATRIX/LMH VALUE FUND, LTD. a Maryland corporation (hereinafter referred to as
the "Fund"), and MATRIX ASSET ADVISORS, INC., a Maryland corporation
(hereinafter referred to as the "Advisor").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as a diversified
open-end management investment company registered under the Investment Company
Act of 1940, as amended (hereinafter referred to as the "Investment Company
Act"); and
WHEREAS, the Advisor is engaged principally in rendering
management and investment advisory services and is registered as an investment
Advisor under the Investment Advisors Act of 1940; and
WHEREAS, the Fund desires to retain the Advisor to provide
management and investment advisory services to the Fund in the manner and on the
terms hereinafter set forth; and
WHEREAS, the Advisor is willing to provide management and
investment advisory services to the Fund on the terms and conditions hereafter
set forth;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, the Fund and the Advisor hereby agree as
follows:
ARTICLE I
Duties of the Advisor
The Fund hereby employs the Advisor to act as investment
advisor of the Fund and to furnish the management and investment advisory
services described below, subject to the policies of the Fund and the review by,
and overall consent of, the Board of Directors of the Fund, for the period and
on the terms and conditions set forth in this Agreement. The Advisor hereby
accepts such employment and agrees during such period, at its own expense, to
render, or arrange for the rendering of, such services and to assume the
obligations herein set forth for the compensation provided for herein. The
Advisor shall for all purposes herein be deemed to be an independent contractor
and shall, unless otherwise expressly provided or authorized, have no authority
to act for, or represent the Fund in any way or otherwise be deemed an agent of
the
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Fund.
(a) Management Services. The Advisor shall perform the
management services necessary for the operation of the Fund as hereinafter
provided. The Advisor shall generally monitor the Fund's compliance with
investment policies and restrictions as set forth in its currently effective
Prospectus and Statement of Additional Information relating to the shares of the
Fund under the Securities Act of 1933, as amended (each a "Prospectus" and
"Statement of Additional Information," respectively). The Advisor shall provide
the Fund with such other services as the Advisor, subject to review by the
Directors, shall from time to time determine to be necessary or useful to
perform its obligations under this Agreement. The Advisor shall make reports to
the Directors of its performance of obligations hereunder and furnish advice and
recommendations with respect to such other aspects of the business and affairs
of the Fund as it shall determine to be desirable.
(b) Investment Advisory Services. With respect to the Fund:
(1) The Advisor shall provide such investment
research, advice and supervision as the Fund may from time to time consider
necessary for the proper supervision of the assets of the Fund, shall furnish
continuously an investment program for the Fund, and shall determine from time
to time which securities shall be purchased, sold or exchanged and what portion
of the assets of the Fund shall be held in the various securities in which the
Fund invests, options, futures, options on futures or cash, subject always to
the restrictions of the Articles of Incorporation and By-Laws of the Fund, as
amended from time to time, the provisions of the Investment Company Act and the
statements relating to the Fund's investment objectives, investment policies and
investment restrictions as the same are set forth in the Fund's currently
effective Prospectus and Statement of Additional Information. Should the
Directors at any time, however, make any definite determination as to investment
policy and notify the Advisor thereof in writing, the Advisor shall be bound by
such determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked.
(2) To the extent applicable, the Advisor shall also
make decisions for the Fund as to foreign currency matters and make
determinations as to foreign exchange contracts.
(3) The Advisor shall make decisions for the Fund as
to the manner in which voting rights, rights to consent to corporate action and
any other rights pertaining to the Fund's portfolio securities shall be
exercised.
(4) The Advisor shall take, on behalf of the Fund,
all actions which it deems necessary to implement the Fund's investment
policies, and in particular to place all orders for the purchase or sale of
portfolio securities for the Fund's account with brokers or dealers selected by
it, and to that end, the Advisor is authorized as the agent of the Fund to give
instructions to the custodian of the Fund as to deliveries of securities and
payments of cash for the account of the Fund.
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(5) In connection with the selection of such brokers
or dealers and the placing of such orders with respect to assets of the Fund,
the Advisor is directed at all times to seek to obtain execution and prices
within the policy guidelines determined by the Directors and set forth in the
Fund's Prospectus and Statement of Additional Information. Subject to this
requirement and the provisions of the Investment Company Act, the Securities
Exchange Act of 1934, as amended, and other applicable provisions of law, the
Advisor may select brokers or dealers with which it or the Fund is affiliated
(if any).
ARTICLE II
Allocation of Charges and Expenses
(a) The Advisor. The Advisor assumes and shall pay for
maintaining the staff and personnel necessary to perform its obligations under
this Agreement, shall pay all compensation relating to service to the Fund of
Officers and Directors of the Fund who are affiliated persons of the Advisor,
and shall pay the expenses of the Fund incurred in connection with the
continuous offering of Fund shares.
(b) The Fund. Except as described in paragraph (a) hereof, the
Fund assumes and shall pay all other Fund expenses, including, but not limited
to: taxes, expenses for legal and auditing services, costs of printing proxies,
stock certificates, shareholder reports, Prospectuses and Statements of
Additional Information, charges of the custodian, any sub-custodian and transfer
agent, expenses of portfolio transactions, expenses of redemption of shares,
Securities and Exchange Commission fees, expenses of registering the shares
under federal laws, making state filings and registering or qualifying under
foreign laws, fees and actual out-of-pocket expenses of Directors who are not
affiliated persons of the Advisor, accounting and pricing costs (including the
daily calculation of the net asset value), insurance, interest, brokerage costs,
litigation and other extraordinary or non-recurring expenses, and other expenses
properly payable by the Fund.
ARTICLE III
Compensation of the Advisor
(a) Investment Advisory Fee. For the services rendered, the
facilities furnished and expenses assumed by the Advisor, the Fund shall pay to
the Advisor at the end of each calendar month a fee, commencing on the day
following effectiveness hereof, based upon the average daily value of the net
assets of the Fund, as determined and computed in accordance with the
description of the determination of net asset value contained in the Prospectus
and Statement of Additional Information. The fee is payable by the Fund at the
annual rate of 1.00% of the Fund's average daily net assets.
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If this Agreement becomes effective subsequent to the first
day of a month or shall terminate before the last day of a month, compensation
for that part of the month that this Agreement is in effect shall be prorated in
a manner consistent with the calculation of the fee as set forth above. Subject
to the provisions of subsection (b) hereof, payment of the Advisor's
compensation for the preceding month shall be made as promptly as possible after
completion of the computations contemplated by subsection (b) hereof. During any
period when the determination of net asset value is suspended by the Directors,
the net asset value of a share as of the last business day prior to such
suspension shall for this purpose be deemed to be the net asset value at the
close of each succeeding business day until it is again determined.
ARTICLE IV
Limitation of Liability of the Advisor
The Advisor shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in the management of the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties hereunder. As used in this
Article IV, the term "Advisor" shall include any directors, officers and
employees of the Advisor.
ARTICLE V
Activities of the Advisor
The services of the Advisor to the Fund are not to be deemed
to be exclusive, and the Advisor is free to render services to other investment
advisory clients. It is understood that Directors, officers, employees and
shareholders of the Fund may become interested in the Advisor, as directors,
officers, employees and shareholders or otherwise, and that directors, officers,
employees and shareholders of the Advisor are or may become similarly interested
in the Fund.
ARTICLE VI
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first
above written and shall remain in force with respect to the Fund until April 18,
1999 and thereafter, but only so long as such continuance is specifically
approved with respect to the Fund at least annually by: (i) the Directors, or by
the vote of a majority of the outstanding voting securities of the Fund, and
(ii) a majority of those Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
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This Agreement may be terminated at any time without the
payment of any penalty, by the Directors or by the vote of a majority of the
outstanding voting securities of the Fund, or by the Advisor, on sixty days'
written notice to the other party. This Agreement shall automatically terminate
in the event of its assignment.
ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such
amendment is specifically approved by: (i) the vote of a majority of outstanding
voting securities of the Fund, and (ii) a majority of those Directors who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
ARTICLE VIII
Definitions of Certain Terms
The terms "vote of a majority of the outstanding voting
securities," "assignment," "affiliated person" and "interested person," when
used in this Agreement, shall have the respective meanings specified in the
Investment Company Act and the rules thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act.
ARTICLE IX
Governing Law
This Agreement shall be construed in accordance with laws of
the State of New York and the applicable provisions of the Investment Company
Act. To the extent that the applicable laws of the State of New York, or any of
the provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
MATRIX/LMH VALUE FUND, INC.
By:
Name:
Title:
MATRIX ASSET ADVISORS, INC.
By:
Name:
Title:
