MANAGEMENT AGREEMENT
AGREEMENT made as of this 20th day of October, 1993 by and
between LORD XXXXXX INVESTMENT TRUST, a Delaware business trust (hereinafter
called the "Trust"), on behalf of each Series of the Trust (hereinafter called
the "Series") and LORD, XXXXXX & CO., a New York partnership (hereinafter
called the "Investment Manager").
WHEREAS, the Trust, on behalf of each Series thereof, desires
to obtain the investment management services of the Investment Manager and the
Investment Manager is willing to provide services of the nature desired upon
the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and
of other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed as follows:
1. The Trust, on behalf of each Series thereof, hereby employs
the Investment Manager under the terms and conditions of this Agreement, and
the Investment Manager hereby accepts such employment and agrees to perform
supervisory functions of the Trust with respect to the investment and
reinvestment of its property and assets (whether or not held in trust or in the
custody of a bank or trust company subject to the Trust's direction or control)
including, without limitation, the supervision of its investment portfolios and
the recommendation of investment policies and procedures within the limitations
set forth in the Trust's Registration Statement on file with the Securities and
Exchange Commission under the Securities Act of 1933 and the Investment Company
Act of 1940, as amended (the
"Act").
The Investment Manager agrees to maintain an adequate
organization of competent persons to perform the supervisory functions
mentioned herein.
All recommendations with respect to the investment portfolios
will be made to the Trust's trading department which, with the approval of
authorized officers of the Trust, will execute all trades in accordance with
the Trust's investment procedures.
The Investment Manager reserves the right, in its discretion,
to purchase or otherwise obtain statistical information and services from other
sources, including affiliated persons of the Investment Manager.
Notwithstanding the provisions of this paragraph 1, the
investment policies and procedures and all other actions of the Trust are, and
shall at all times be, subject to the control and direction of its trustees.
2. Each Series of the Trust will pay the Investment Manager
for its services under this Agreement and for the expenses assumed an annual
management fee computed and payable monthly, at a percentage of the average
daily net assets of such Series as set forth in an Addendum to this Agreement
between the Investment Manager and the Trust on behalf of such Series. The value
of the net assets of the Series shall include all assets held in trust or in
custody of any bank, savings bank or trust company for the Series, subject to
its control or direction, and shall be determined as provided in the Declaration
and Agreement of Trust of the Trust. The fee shall be paid on the first day of
each month for the preceding month.
While recognizing that principal transactions, including
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riskless principal transactions, are not afforded the protection of the safe
harbor in Section 28 (e) of the Securities Exchange Act of 1934, the Investment
Manager may receive research and other statistical information from
broker-dealers and from other sources and, in accordance with said Section
28(e), a broker-dealer may be paid a commission for a transaction involving
portfolio securities of the Trust exceeding the amount another broker-dealer
would have charged for the same transaction if it is determined by the
Investment Manager in good faith that such amount of commission is reasonable in
relation to the value of the research services provided by the executing
broker-dealer, viewed in terms of either the particular transaction or the
overall responsibilities of the Investment Manager with respect to the Trust and
other accounts (investment companies and other investment clients) with respect
to which it exercises investment discretion. Such research services may be used
by the Investment Manager in serving all its accounts, and not all of such
research services need necessarily be used by the Investment Manager in
connection with its services to the Trust.
It is understood that any supplemental advisory or statistical
services which may be provided to the Trust or to the Investment Manager from
time to time by independent broker-dealers or persons other than the Investment
Manager, for whatever reason, shall not reduce the amount of the fees payable to
the Investment Manager hereunder. It is recognized that such supplementary
advisory or statistical services may be useful to the Investment Manager and the
Trust, but their value is indeterminable and is not to be considered a
substitute for the services provided by the Investment Manager hereunder.
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3. It is understood that the services of the Investment
Manager are not deemed to be exclusive, and nothing in this Agreement shall
prevent the Investment Manager, or any officer, director, partner or employee
thereof, from providing similar services to other investment companies and other
clients (whether or not their investment objectives and policies are similar to
those of the Trust) or to engage in other activities. When other clients of the
Investment Manager desire to purchase or sell the same portfolio security at the
same time as the Trust, it is understood that such purchases and sales will be
made as nearly as practicable on a pro rata basis in proportion to the amounts
desired to be purchased or sold by each client.
4. The Trust, on behalf of each Series thereof, will, at its
own expense, furnish to the Investment Manager periodic (but not less than
semi-annually) statements of its books of account, including balance sheets and
earnings statements, and all other information which may reasonably be required,
from time to time, by the Investment Manager, and will, at its own expense, at
all times keep the Investment Manager fully advised as to the cash, securities
and other property then comprising its assets, and furnish daily detailed price
makeup sheets with respect to its investment portfolio and its shares of
beneficial interests outstanding.
5. The Investment Manager shall be under no obligation to pay
any fees, costs, expenses or other charges of the Trust, except for the
compensation of its officers, the compensation, if any, of its trustees who are
affiliated with the Investment Manager, the rental for its office space, and the
ordinary and necessary office and clerical expenses relating to research,
statistical work and
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supervision of each Series' investment portfolio, to be performed by the
Investment Manager under paragraph 1 of this Agreement. Each Series of the Trust
will pay its own fees, costs, expenses or charges relating to its assets and
operations, including without limitation: office and clerical expenses not
relating to research, statistical work and supervision of its investment
portfolio; fees and expenses of trustees not affiliated with the Investment
Manager; governmental fees; interest charges; taxes; association membership
dues; fees and charges for legal and auditing services; fees and expenses of any
custodians or trustees with respect to custody of its assets; fees, charges and
expenses of dividend disbursing agents, registrars and transfer agents
(including the cost of keeping all necessary shareholder records and accounts,
and of handling any problems relating thereto and the expense of furnishing to
all shareholders statements of their accounts after every transaction including
the expense of mailing); costs and expenses of repurchase and redemption of its
shares; costs and expenses of preparing, printing and mailing to shareholders
ownership certificates, proxy statements and materials, prospectuses, reports
and notices; costs of preparing reports to governmental agencies; brokerage fees
and commissions of every kind and expenses in connection with the execution of
portfolio security transactions (including the cost of any service or agency
designed to facilitate the purchase and sale of portfolio securities); and all
postage, insurance premiums, and any other fee, cost, expense or charge of any
kind incurred by and on behalf of the Trust and not expressly assumed by the
Investment Manager under this Agreement.
Notwithstanding the above, to encourage sales of shares of
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beneficial interest in any Series of the Trust, the Investment Manager
may, but is not required to, waive its fee hereunder attributable to such Series
and directly pay or reimburse the Trust for any portion of the operating
expenses of such Series not expressly assumed by the Investment Manager under
this Agreement. The amount of any such expenses so voluntarily paid or
reimbursed by the Investment Manager shall be paid back to the Investment
Manager by the applicable Series of the Trust without interest to the extent
provided as follows. No such pay-back will be made prior to the first day of the
calendar quarter after the net assets of such Series first reach $50 million
(the "commencement date"). Thereafter, if the ratio of operating expenses of
such Series (determined before taking into account any fee waiver or payment or
reimbursement of expenses by the Investment Manager) to average net assets
("expense ratio") is less than the percentage set forth in an Addendum to this
Agreement between the Investment Manager and the Trust on behalf of such Series,
such Series shall repay the Investment Manager an amount equal in dollars to the
difference between the expenses included in the determination of such expense
ratio and the expenses required to achieve such percentage set forth in the
addendum to this Agreement. The expense ratios will be determined on a full
fiscal year basis and, if the commencement date does not begin at the start of a
fiscal year, the determination will be based on the remaining portion of the
fiscal year annualized. Any such repayments shall be made promptly (but in any
event within 60 days) after the end of the fiscal years of the Series with
respect to which they are payable, and no such repayment shall exceed the amount
of the expenses of the applicable Series paid or reimbursed by the Investment
Manager and not
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previously paid back. The amount of any expenses of a Series paid or reimbursed
that is subject to the repayment provisions of this paragraph and not repaid as
provided above prior to termination of this Agreement, or by the end of the
fifth full fiscal year after the commencement date that shares of the Series are
first publicly sold, whichever first occurs, shall not be repaid to the
Investment Manager.
Notwithstanding any other provision of this Agreement, if
expenses (including management fees hereunder but excluding interest, taxes,
brokerage fees, and where permitted, extraordinary expenses) borne by the Trust
in any fiscal year exceed expense limitations applicable to the Trust imposed by
state securities administrators, as such limitations may be lowered or raised
from time to time, the Investment Manager will reimburse the applicable Series
of the Trust for any such excess. If the Investment Manager pays for other
expenses of the Trust or furnishes without charge to the Trust services the cost
of which is to be borne by the Trust under this Agreement, the Investment
Manager shall not be deemed to have waived its rights under this Agreement to
have the Trust pay for such expenses or provide or pay for such services in the
future. The Investment Manager may also advance the payment of expenses, subject
to reimbursement by the Trust in the ordinary course of business.
6. The Investment Manager agrees that it shall observe and be
bound by all of the provisions of the Declaration and Agreement of Trust
(including any amendments thereto) of the Trust which shall in any way limit or
restrict or prohibit or otherwise regulate any action by the Investment Manager.
7. Other than to abide by the provisions hereof and render
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the services called for hereunder in good faith, the Investment Manager assumes
no responsibility under this Agreement and, having so acted, the Investment
Manager shall not be held liable or accountable for any mistakes of law or fact,
or for any error or omission of its officers, directors, partners or employees,
or for any loss or damage arising or resulting therefrom suffered by the Trust
or any of its shareholders, creditors, trustees or officers; provided however,
that nothing herein shall be deemed to protect the Investment Manager against
any liability to the Trust or to its shareholders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of the reckless disregard of its obligations and duties
hereunder. The Investment Manager shall not be responsible for any action of the
Trustees of the Trust in following or declining to follow any advice or
recommendation of the Investment Manager.
8. Neither this Agreement nor any other transaction between
the parties hereto pursuant to this Agreement shall be invalidated or in any way
affected by the fact that any or all of the trustees, officers, shareholders, or
other representatives of the Trust are or may be interested in the Investment
Manager, or any successor or assignee thereof, or that any or all of the
officers, partners, or other representatives of the Investment Manager are or
may be interested in the Trust, except as otherwise may be provided in the Act.
The Investment Manager in acting hereunder shall be an independent contractor
and not any agent of the Trust.
9. This Agreement shall become effective upon the date hereof
and shall continue in force until January 30, 1995, and is renewable annually
thereafter by specific approval of the trustees of
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the Trust or by vote of a majority of the outstanding voting securities of the
Trust; any such renewal shall be approved by the vote of a majority of the
trustees who are not parties to this Agreement or interested persons of the
Investment Manager or of the Trust, cast in person at a meeting called for the
purpose of voting on such renewal.
This Agreement may be terminated without penalty at any time
by the trustees of the Trust on 60 days' written notice. This Agreement shall
automatically terminate in the event of its assignment. The terms "interested
persons", "assignment" and "vote of a majority of the outstanding voting
securities" shall have the same meaning as those terms are defined in the Act.
10. The Investment Manager reserves the right to grant the use
of the name "LORD XXXXXX" or "LORD, XXXXXX & CO.", or any derivative thereof, or
any other part of the name of the Trust or any Series, to any other investment
company, any series of an investment company or any business enterprise. The
Investment Manager reserves the right to withdraw from the Trust the use of the
name "LORD XXXXXX" and the use of its registered service xxxx; at such time of
withdrawal of the right to use the name "LORD XXXXXX", the Investment Manager
agrees that the question of continuing this Agreement may be submitted to a vote
of the Trust's shareholders. In the event of such withdrawal or the termination
of this Agreement, for any reason, the Trust will, on the written request of the
Investment Manager, take such action as may be necessary to change its name and
eliminate all reference to the words "LORD XXXXXX" in any form, and will no
longer use such registered service xxxx.
11. The obligations of the Trust, including those imposed
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hereby, are not personally binding upon, nor shall resort be had to the private
property of, any of the trustees, shareholders, officers, employees or agents of
the Trust individually, but are binding only upon the assets and property of the
Trust. Any and all personal liability, either at common law or in equity, or by
statute or constitution, of every such trustee, shareholder, officer, employee
or agent for any breach by the Trust of any agreement, representation or
warranty hereunder is hereby expressly waived as a condition of and in
consideration for the execution of this Agreement by the Trust.
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IN WITNESS WHEREOF, the Trust has caused this Agreement to be
executed by its duly authorized officers and its seal to be affixed hereto, and
the Investment Manager has caused this Agreement to be executed by one of its
partners all on the day and year first above written.
LORD XXXXXX INVESTMENT TRUST
By:/s/ Xxxxxx X. Xxxxx
--------------------
Chairman of the Board
/s/ Xxxxxx X. Xxxxx
-------------------
Assistant Secretary
LORD, XXXXXX & CO.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
A Partner
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