LORD ASSET MANAGEMENT TRUST
on behalf of
XXXXXX XXXXX WORLD FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, effective commencing on March 10, 1995, between Lord Asset
Management, Inc. (the "Adviser") and Lord Asset Management Trust (the "Trust")
on behalf of Xxxxxx Xxxxx World Fund (the "Fund").
WHEREAS, the Trust is a Delaware Business Trust of the series type organized
under the trust instrument dated February 9, 1994, (the "Trust Instrument") and
is registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end, diversified management investment company, and the Fund
is the initial series of the Trust;
WHEREAS, the Trust wishes to retain the Adviser to render investment
advisory services to the Fund, and the Adviser is willing to furnish such
services to the Fund;
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act"):
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Trust and the Adviser as follows:
1. Appointment. The Trust hereby appoints the Adviser to act as investment
adviser to the Fund for the periods and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth, for the compensation herein provided.
2. Investment Advisory Duties. Subject to the supervision of the Trustees
of the Trust, the Adviser will (a) provide a program of continuous investment
management for the Fund in accordance with the Fund's investment objectives,
policies and limitations as stated in the Fund's prospectus and Statement of
Additional Information included as part of the Trust's Registration Statement
filed with the Securities and Exchange Commission, as they may be amended from
time to time, copies of which shall be provided to the Adviser by the Trust: (b)
make investment decisions for the Fund: and (c) place orders to purchase and
sell securuties for the Fund.
In performing its investment management services to the Fund hereunder, the
Adviser will provide the Fund with ongoing investment guidance and policy
direction, including oral and written research, analysis, advice, statistical
and economic data and judgments regarding individual investments, general
economic conditions and trends and long-range investment policy. The Adviser
will determine the securities, instruments, repurchase agreements, options
and other investments and techniques that the Fund will purchase, sell, enter
into or use, and will provide an ongoing evaluation of the Fund's portfolio.
The Advisor will determine what portion of the Fund's portfolio shall be
invested in securities and other assets, and what portion, if any, should be
univested.
The Adviser further agrees that, in performing its duties hereunder, it
will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
Advisers Act, the Internal Revenue Code (the "Code") and all other applicable
federal and state laws and regulations, and with any applicable procedures
adopted by the Trustees;
(b) use reasonable efforts to manage the Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder;
(c) place orders pursuant to its investment determinations for the Fund
directly with the issuer, or with any broker or dealer, in accordance with
applicable policies expressed in the Fund's prospectus and/or Statement of
Additional Information and in accordance with applicable legal requirements;
(d) furnish to the Trust whatever statistical information the Trust may
reasonably request with respect to the Fund's assets or contemplated
investments. In addition, the Adviser will keep the Trust and the Trustees
informed of developments materially affecting the Fund's portfolio and shall,
on the Adviser's own initiative, furnish to the Trust from time to time whatever
information the Adviser believes appropriate for this purpose;
(e) make available to the Trust, promptly upon its request, such copies of
its investment records and ledgers with respect to the Fund as may be required
to assist the Trust in its compliance with applicable laws and regulations.
The Adviser will furnish the Trustees with such periodic and special reports
regarding the Fund as they may reasonably request;
(f) immediately notify the Trust in the event that the Adviser or any of
its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Adviser from serving as investment adviser
pursuant to this Agreement; or (2) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and Exchange
Commission ("SEC") or other regulatory authority. The Adviser further agrees to
notify the Trust immediately of any material fact known to the Advisor
respecting or relating to the Adviser that is not contained on the Trust's
Registration Statement regarding the Fund, or any amendment or supplement
thereto, but that is required to be disclosed thereon, and of any statement
contained therein that becomes untrue in any material respect;
(g) in making investment decisions for the Fund, use no inside information
that may be in its possession or in the possession of any of its affiliates, nor
will the Adviser seek to obtain any such information.
3. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 3, the Adviser shall pay the compensation and expenses
of all its directors, officers and employees who serve as officers and executive
employees of the Trust (including the Trust's share of payroll taxes), and the
Adviser shall make available, without expense to the Fund, the service of its
directors, officers and employees who may be duly elected officers of the Trust,
subject to their individual consent to serve and to any limitations imposed by
law;
The Adviser shall not be required to pay any expenses of the Fund other than
those specifically allocated to the Adviser in this section 3. In particular,
but without limiting the generality of the foregoing, the Adviser shall not be
responsible, except to the extent of the reasonable compensation of such of the
Trust's employees as are officers or employees of the Adviser whose services may
be involved, for the following expenses of the Fund: organization and certain
offering expenses of the Fund (including out-of-pocket expenses, but not
including the Adviser's overhead and employee costs) fees payable to the
Adviser and to any other Fund advisers or consultants; legal expenses; auditing
and accounting expenses; interest expenses; telephone, telex, facsimile, postage
and other communications expenses; taxes and governmental fees; fees, dues and
expenses incurred by or with respect to the Fund in connection with membership
in investment company trade organizations; cost of insurance relating to
fidelity coverage for the Trust's officers and employees; fees and expenses of
the Fund's custodian or of any subcustodian, transfer agent, registrar, or
dividend dispursing agent of the Fund; other payments for portfolio pricing or
valuation services to pricing agents, accountants, bankers and other
specialists, if any; expenses of preparing share certificates; other expenses
in connection with the issuance, offering, distribution or sale of securities
issued by the Fund; expenses relating to investor and public relations expenses
of registering and qualifying shares of the Fund for sale; freight, insurance
and other charges in connection with the shipment of the Fund's portfolio
securities; brokerage commissions or other costs of acquiring or disposing of
any portfolio securities or other assets of the Fund, or of entering into other
transactions or engaging in any investment practices with respect to the Fund;
expenses of printing and distributing prospectuses, Statements of Additional
Information, reports, notices and dividends to stockholders; costs of stationery
or other office supplies; any litigation expenses costs of stockholders' and
other meetings; the compensation and all expenses (specifically including
travel expenses relating to the Fund's business) of officers, trustees and
employees of the Trust who are not interested persons of the Advisor; and travel
expenses (or an appropriate portion thereof) of officers, trustees and employees
of the Trust who are not interested persons of the Adviser to the extent that
such expenses relate to attendance at meetings of the Board of Trustees of the
Trust who are officers, directors or employees of the Adviser to the extent that
such expenses relate to attendance at meetings of the Board of Trustees of the
Trust with respect to matters concerning the Fund, or any committees thereof or
advisers thereto, or such expenses that relate to meetings whose primary purpose
is with respect to Fund matters.
4. Compensation. As compensation for the services provided and expenses
assumed by the Adviser under this Agreement, the Trust will arrange for the Fund
to pay the Adviser at the beginning of each calendar month an advisory fee
computed at the rate of 1/12 of 1% (1.00% annually) of the Fund's average daily
net assets. The value of net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Trust Instrument and the
Registration Statement. If, pursuant to such provisions, the determination of
net asset value is suspended for any particular business day, then for the
purposes of this section 4, the value of the net assets of the Fund as last
determined shall be deemed to be the value of its net assets as of the close of
the New York Stock Exchange, or as of such other time as the value of the net
assets of the Fund's portfolio may lawfully be determined, on that day. If the
determination of the net asset value of the shares of the Fund has been so
suspended for a period including any month end when the Adviser's compensation
is computed pursuant to this section, then the Adviser's compensation computed
at the end of such month shall be computed on the basis of the value of the net
assets of the Fund as last determined (whether during or prior to such month).
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 4.
In the event that the Adviser's gross compensation hereunder shall, when
added to the other expenses of the Fund, cause the aggregate expenses of the
Fund to exceed the maximum expenses permitted under the lowest applicable
expense limitation established pursuant to the statutes or regulations of any
jurisdiction in which the shares of the Fund may be qualified for offer or sale,
the total compensation paid or payable to the Adviser shall be reduced (but not
below zero) to the extent necessary to cause the Fund not to exceed such expense
limitation. Except to the extent that such reduction has been reflected in
lowered monthly payments to the Adviser, the Adviser shall refund to the Fund
the amount by which the total payments received by the Adviser are in excess of
such expense limitation as promptly as practicable after the end of such fiscal
year, provided that the Adviser shall not be required to pay the Fund an amount
greater than the fee otherwise payable to the Adviser in respect of such year.
As used in this Section 4, "expenses" shall mean those expenses included in the
applicable expense limitation having the broadest specification thereof, and
"expense limitation" shall mean a limitation on the maximum annual expenses
which may be incurred by an investment company as determined by applicable law.
The words "lowest applicable expense limitation" shall be deemed to be that
which results in the largest reduction of the Adviser's compensation for any
fiscal year of the Fund; provided, however, that nothing in this Agreement shall
limit the Adviser's fees if not required by an applicable statute or regulation
referred to above in this Section 4.
5. Books and Records. The Adviser agrees to maintain such books and records
with respect to its services to the Fund as are required by Section 31 under the
1940 Act, and rules adopted thereunder, and by other applicable legal
provisions, and to preserve such records for the periods and in the manner
required by that Section, and those rules and legal provisions. The Adviser
also agrees that records it maintains and preserves pursuant to Rules 31a-1 and
Rule 31a-2 under the 1940 Act and otherwise in connection with its services
hereunder are the property of the Trust and will be surrendered promptly to the
Trust upon its request. And the Adviser further agrees that it will furnish to
regulatory authorities having the requisite authority any information or reports
in connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Adviser shall exercise
its best judgment in rendering the services provided by it under this Agreement.
The Adviser shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Fund or the holders of the Fund's shares in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Adviser against any liability to the Trust, the Fund or to holders of the Fund's
shares to which the Adviser would otherwise be subject by reason or willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or by reason of the Adviser's reckless disregard of its obligations
and duties under this Agreement. As used in this section 6, the term "Adviser"
shall include any officers, directors, employees or other affiliates of the
Adviser performing services with respect to the Fund.
7. Services Not Exclusive. It is understood that the services of the
Adviser are not exclusive, and that nothing in this Agreement shall prevent the
Adviser from providing similar services to other investment companies or to
other series of investment companies, including the Trust (whether or not their
investment objectives and policies are similar to those of the Fund) or from
engaging in other activities, provided such other services and activities do
not, during the term of this Agreement, interfere in a material manner with the
Adviser's ability to meet its obligations to the Fund hereunder. When the
Adviser recommends the purchase or sale of a security for other investment
companies and other clients, and at the same time the Adviser recommends the
purchase or sale of the same security for the Fund, it is understood that in
light of its fiduciary duty to the Fund, such transactions will be executed on a
basis that is fair and equitable to the Fund. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither the Adviser
nor any of its directors, officers or employees shall act as a principal or
agent or receive any commission. If the Adviser provides any advice to its
clients concerning the shares of the Fund, the Adviser shall act solely as
investment counsel for such clients and not in any way on behalf of the Trust or
the Fund.
8. Duration and Termination. This Agreement shall continue until March 10,
1997, and thereafter shall continue automatically for successive annual periods,
provided such continuance is specifically approved at least annually by (i) the
Trustees or (ii) a vote of a "majority" (as defined in the 0000 Xxx) of the
Fund's outstanding voting securities (as defined in the 1940 Act), provided that
in either event the continuance is also approved by a majority of the Trustees
who are not parties to this Agreement or "interested persons" (as defined by the
0000 Xxx) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. Notwithstanding the
foregoing, this Agreement may be terminated: (a) at any time without penalty by
the Fund upon the vote of a majority of the Trustees or by vote of the majority
of the Fund's outstanding voting securities, upon sixty (60) days' written
notice to the adviser or (b) by the Adviser at any time without penalty, upon
sixty (60) days' written notice to the Trust. This Agreement will also
terminate automatically in the event of its assignment (as defined on the 1940
Act).
9. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) a majority of the outstanding
voting securities of the Fund, and (ii) a majority of the Trustees, including a
majority of Trustees who are not interested persons of any party to this
agreement, cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
10. Proxies. Unless the Trust gives written instructions to the contrary,
the Adviser shall vote all proxies solicited by or with respect to the issuers
of securities in which assets of the Fund may be invested. The Adviser shall
use its best good faith judgment to vote such proxies in a manner which best
serves the interests of the Fund's shareholders.
11. Name Reservation. The Trust acknowledges and agrees that the Adviser
has property rights relating to the use of the terms "Lord Asset Management" and
"Xxxxxx Xxxxx" and has permitted the use of such terms by the Trust and its
Funds. The Trust agrees that: (i) it will use the terms "Lord Asset Management"
and "Xxxxxx Xxxxx" only as a component of the names of the Trust and the Funds
and for no other purposes; (ii) it will not purport to grant to any third party
any rights in such name; (iii) at the request of the Advisor, the Trust will
take such actions as may be required to provide its consent to use of the terms
by the Adviser, or any affiliate of the Adviser to whom the Adviser shall have
granted the right to such use; and (iv) the Adviser may use or grant to others
the right to use the term, or any abbreviation thereof, as all or a portion of a
corporate or business name or for any commercial purpose, including a grant of
such right to any other investment company. Upon termination of this Agreement
as to the Trust or any Fund, the Trust shall, upon request of the Adviser, cease
to use the terms "Lord Asset Management" and "Xxxxxx Xxxxx" as part of the name
of the Trust and its Funds, or of any Fund as to which the Agreement is
is terminated, as applicable. In the event of any such request by the Adviser
that use of the terms "Lord Asset Management" and "Xxxxxx Xxxxx" shall cease,
the Trust shall cause its officers, trustees and stockholders to take any and
all such actions which the Adviser may request to effect such request and to
reconvey to the Adviser any and all rights to the terms "Lord Asset Management"
and "Xxxxxx Xxxxx."
12. Miscellaneous.
a. This Agreement shall be governed by the laws of the State of Illinois,
provided that nothing herein shall be construed in a manner inconsistent with
the 1940 Act, the Advisers Act, or rules or orders of the SEC thereunder.
b. The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
c. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected hereby and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
d. Nothing herein shall be construed as constituting the Adviser as an agent
of the Trust or the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as
LORD ASSET MANAGEMENT TRUST
by /s/ Xxxxxx X. Xxxxx, Xx.
President
LORD ASSET MANAGEMENT, INC.
By /s/ Xxxxxx X. Xxxxx, Xx.
Chairman
