LMH FUND, LTD.
560 Hudson St., 2nd floor
Hackensack, NJ 07601
(212) 486-2004
March 21, 1997
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of LMH
FUND, LTD. on April 18, 1997 at 2:00 p.m. Eastern time at the offices of Matrix
Asset Advisors, 444 Madison Ave., Suite 302, New York, NY 10022.
The matters to be acted upon at the meeting are described in the enclosed Notice
of Meeting and Proxy Statement. We urge you to consider these matters carefully
and to complete, sign, and return the enclosed proxy card(s) in the accompanying
postage paid envelope.
Your vote is very important. Please complete, sign and return the enclosed proxy
form so that your shares will be represented. By doing so promptly, you will
help avoid the expense of follow-up solicitations that may otherwise be
necessary to obtain a quorum. If you later decide to attend the meeting, you may
revoke your proxy at that time and vote your shares in person.
Sincerely,
David A. Katz, Vice President, Chief Investment Officer, and Secretary
<PAGE>
QUESTIONS AND ANSWERS
Q. What is the purpose of this proxy solicitation?
A. The purpose of this proxy is to ask you to vote on two issues: (1) to
approve a new investment advisory agreement with Matrix Asset Advisors
("Matrix"), the Fund's current Sub-Advisor and (2) to elect a Board of five
directors.
Q. What changes in directors and officers will occur if the proposals are
approved?
A. Mr. Leonard Heine, Chairman and President of the Fund and of Heine
Management Group ("Heine Management"), the Fund's investment advisor since its
inception in 1983, is retiring from management of the Fund and the Advisor is
ceasing operations. Mr. David A. Katz, President of Matrix, the Fund's
Sub-Advisor, and Vice President, Secretary, and Chief Investment Officer of the
Fund, is standing for election as a Director, and if elected, it is anticipated
that he will become President and Treasurer of the Fund. Mr. Heine will retire
as a director of the Fund.
Mr. Robert Rosencrans, currently a director, is standing for re-election,
and two new candidates for director are proposed. Mr. Richard S. Harman is not
standing for re-election.
Q. Are there changes in the proposed investment advisory agreement?
A. The terms of the proposed investment advisory agreement do not
materially differ from the existing investment advisory agreement. The proposed
agreement will be between the Fund and Matrix and the investment advisory fee
will be paid to Matrix as investment advisor. Heine Management will cease
operations. It is proposed that the fee rate payable will remain the same, i.e.,
1.00% of the Fund's average daily net assets annually. If the Proposed Agreement
is approved, it is anticipated that the Fund's name will be changed to
"Matrix/LMH Value Fund."
Q. Will the Fund's operating expenses be changed as a result of the
proposed agreement?
A. The Fund's operating expense ratio has continued to decline,
dropping from 2.50% of average net assets at the end of the June 30,1994 fiscal
year, to 1.84% at the close of the June 30, 1996 fiscal year, to an estimated
1.35% as of December 31, 1996 (reflecting advisory and sub-advisory fee
reductions described below). No fee rate or expense items are proposed to be
changed. Since Matrix became Sub-Advisor in July, 1996, it has waived its
Sub-Advisory fee and Heine Management has waived all but 25% of its advisory
fee. If the Agreement is approved, Matrix will be entitled to receive an
investment advisory fee at the rate of 1.00% annually. This fee rate is
identical to the fee rate payable to the Advisor under the current agreement.
However, Matrix has undertaken to waive its fees and limit Fund operating
expenses so that they will not exceed 1.65% annually for the remainder of
calendar year 1997. This is a voluntary undertaking on the part of Matrix. If
expenses were to exceed that amount, Matrix would waive all or a portion of its
advisory fee or pay certain Fund operating expenses to assure that the
limitation is not exceeded. While it is expected that if the Fund increases in
size, operating expenses will continue to decline, a decrease in assets or other
circumstances could cause expenses to increase, but not beyond 1.65% during
1997.
<PAGE>
LMH FUND, LTD.
560 Hudson St., 2nd floor
Hackensack, NJ 07601
(212) 486-2004
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held on
April 18, 1997
TO THE SHAREHOLDERS:
A Special Meeting of Shareholders of the LMH Fund, Ltd. (the "Fund") will be
held on April 18, 1997 at 2:00 pm Eastern time at the offices of Matrix Asset
Advisors, 444 Madison Ave., Suite 302, New York, NY 10022 for the following
purposes:
1. To consider approval of a proposed Investment Advisory Agreement between
the Fund and Matrix Asset Advisors, Inc.;
2. To elect four members of the Board of Directors to serve indefinite terms;
3. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on March 18, 1997 are entitled
to notice of the meeting and to vote at the meeting or any adjournment thereof.
Shareholders who attend the meeting may vote in person. Shareholders who do not
expect to attend the meeting are urged by the Board of Trustees to complete,
date, sign, and return the enclosed proxy card(s) in the enclosed postage-paid
envelope. It is important that you return your signed proxy promptly so that a
quorum may be ensured.
David A. Katz, Vice President, Chief Investment Officer, and Secretary
March 21, 1997
<PAGE>
LMH FUND, LTD.
560 Hudson St., 2d floor
Hackensack, NJ 07601
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
to be held on April 18, 1997
This Proxy Statement is being furnished to shareholders of LMH Fund, Ltd. (the
"Fund") in connection with the solicitation of proxies by the Board of Directors
(the "Board") of the Fund. Proxies solicited will be used at the Special Meeting
of shareholders of the Fund to be held on April 18, 1997 and any adjournment
thereof. This Proxy Statement describes matters to be voted upon at the meeting.
Shareholders of record of the Fund at the close of business on March 18, 1997
(the "Record Date") will be entitled to vote at the meeting. On the Record Date,
the Fund had net assets of $8,358,905.55 and there were 304,624.838 shares of
the Fund outstanding. It is expected that this proxy statement and accompanying
proxy card will first be sent to shareholders of the Fund on or about March 24,
1997.
Each shareholder will be entitled to one vote for each share of the Fund held on
the Record Date; any fractional share is entitled to a proportional fractional
vote. If the accompanying Proxy Card is properly executed and returned, shares
represented by it will not be counted but will be voted at the meeting. The
persons named as proxies on the enclosed proxy card will vote shares represented
by such proxy cards in accordance with your direction as indicated thereon. If
no voting instructions are indicated, shares will be voted in favor of the
Proposals. However, abstentions and broker non-votes will be counted in
determining whether a quorum is present and thus will have the same effect as a
vote against the Proposals. Shares will be voted in accordance with the
recommendation of the Board with regard to any matters not known at this time to
be presented at the meeting that properly come before it, election of persons as
directors, if any of the nominees named herein are unable to serve, and matters
incident to the conduct of the meeting.
A shareholder may revoke a proxy previously given by executing another, later
dated, proxy, by giving written notice of revocation to the Fund at the address
indicated above prior to the time the proxy is voted or by attending the meeting
and voting in person at that meeting. More than 50% of the total outstanding
shares of the Fund must be present (in person or by proxy) in order to conduct
business at the meeting. The affirmative vote of the holders of a majority of
the outstanding voting securities of the Fund on the Record Date is necessary to
approve Proposal 1. As defined by the Investment Company Act of 1940 (the "1940
Act"), a "majority of the outstanding voting securities" of the Fund means the
lesser of (1) 67% of the shares of the Fund present at a meeting of shareholders
if the owners of more than 50% of the shares of the Fund then outstanding are
present in person or by proxy or (2) more than 50% of the outstanding voting
securities of the Fund.
The solicitation of proxies will be made primarily by mail. Employees or agents
of Matrix Asset Advisors, Inc.("Matrix") the Fund's Sub-Advisor and proposed
Investment Advisor, may also solicit
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proxies by telephone or other electronic means, or in person, but will not
receive any special compensation for these activities. The cost of soliciting
proxies in connection with the meeting will be paid by the Fund. Persons holding
shares of the Fund as nominees will, upon request, be reimbursed for their
reasonable expenses incurred in sending soliciting materials to their
principals. In the event that a quorum is not present at the meeting, or in the
event that a quorum is present but sufficient votes to approve the Proposals are
not received, the persons named as proxies may propose one or more adjournments
to permit further solicitation of proxies. In determining whether to adjourn the
meeting, the following factors may be considered: the nature of the proposals
that are the subject of the meeting, the percentage of votes actually cast, the
percentage of negative votes actually cast, the nature of any further
solicitation, and the information to be provided to shareholders with respect to
the reasons for the further solicitation. Approval of any such proposal to
adjourn will require the affirmative vote of a majority of those shares
represented at the meeting in person or by proxy. A vote may, however, be taken
on any proposal in this proxy statement prior to any adjournment, if sufficient
votes have been received for approval. Proxies received which voted in favor of
the proposals will be voted in favor of any such adjournment and proxies
received which voted against such proposals will be voted against such
adjournment.
PROPOSAL 1: APPROVAL OF AN INVESTMENT ADVISORY AGREEMENT WITH
MATRIX ASSET ADVISORS, INC.
Since the Fund's inception in 1983, Heine Management has served as the Fund's
investment advisor pursuant to an Investment Advisory Agreement ("current
agreement"). During the past year, Mr. Leonard Heine, who has owned and
controlled the Advisor from its inception and has been the Fund's portfolio
manager, informed the Board of Directors that he intended to retire from active
management of the Fund on or about year-end 1996, and recommended to the current
Board of Directors that it consider possible replacement Advisors. The Advisor
recommended that Matrix Asset Advisors, Inc. be appointed as Sub-Advisor to the
Fund for an interim period, during which time Matrix agreed to waive any
sub-advisory fees payable from the Advisor and the Advisor agreed to waive
payment of fees payable under the current Investment Advisory Agreement in
excess of 25% of the net advisory fees due thereunder. The Board of Directors
reviewed the qualifications of Matrix and the terms of the proposed Sub-Advisory
Agreement and at a meeting held on July 3, 1996, approved the Sub- Advisory
Agreement whereby Matrix became Sub-Advisor to the Fund and Mr. David A. Katz,
President and co-owner of Matrix, was appointed as Vice President, Secretary,
and Chief Investment Officer of the Fund and became co-manager of the Fund's
portfolio. Since that date Matrix has served, and continues to serve, as
Sub-Advisor to the Fund without charge.
The Advisor's recommendation to the Board that Matrix be retained as Sub-Advisor
stemmed principally from the Advisor's belief that in view of the Fund's small
size and Mr. Katz' familiarity with the Fund and with Heine Management's
investment approach, in light of his previous association with principals of
Heine Management early in his career in the investment management business, it
would be beneficial, in light of Matrix's willingness to provide such
assistance, to have access to its experienced professional staff and greater
resources. Among the factors the Board considered were the experience of
Matrix's key investment management personnel, its investment performance record
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and the quality of services expected to be provided to the Fund by Matrix. In
addition, the Board considered the agreements of Matrix and Heine Management
with respect to fee waivers.
Based on the factors listed above, principally the familiarity with and
consistency of Matrix's investment management approach with that of the Fund,
and the experience to date with Matrix serving as Sub-Advisor, including its
continuing willingness to consider fee reductions, the Board of Directors at a
meeting held on February 11, 1997 approved an Investment Advisory Agreement
between the Fund and Matrix as Investment Advisor, subject to approval by
shareholders at this meeting as Proposal No. 1. The Proposed Agreement is set
forth at Exhibit A.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
PROPOSAL NO. 1.
The terms of the proposed Investment Advisory Agreement ("proposed agreement")
with Matrix do not differ materially from the existing Investment Advisory
Agreement with the Advisor. Both agreements provide in essence that the Advisor
(i) furnishes the Fund with a continuous investment program and strategy with
respect to the investment of the Fund's assets, including the provision of
advice on buying and selling securities and other investments and, management of
the investments of the Fund, (ii) furnishes the Fund with office space (iii)
provides or arranges for the provision of administrative services and most of
the personnel needed by the Fund. Both the current and proposed Agreements
provide that the Fund is to pay the Advisor a monthly management fee (accrued
daily) based on the average daily net assets of the Fund at the rate of 1.00%
annually.
Matrix has waived any fees payable to it under the Sub-Advisory Agreement from
its inception on July 3, 1996 to date, and the Advisor has waived all but 25% of
the net advisory fees otherwise due to it from July 3, 1996 to date. If the
proposed agreement is approved, the full advisory fee rate will be accrued and
payable to Matrix as Investment Advisor. However, Matrix has voluntarily
undertaken to limit the Fund's annual ratio of operating expenses to average net
assets ("expense ratio") to 1.65% for the remainder of calendar year 1997, and
as a result may waive all or a portion of the advisory fees to which it would
otherwise be entitled, and may in addition reimburse the Fund for other
operating expenses in order to meet this limitation.
Both the current and proposed agreements further provide that the Fund bears all
expenses incurred in the operation of the Fund that are not specifically assumed
by the Advisor under the Advisory Agreement. These expenses include, but are not
limited to, custodial and transfer agency fees, brokerage commissions,
registration fees under the Federal securities laws and notice filing fees
payable to states, taxes, legal, accounting, and auditing expenses. The current
and proposed agreements are terminable at any time, without the payment of any
penalty by the Fund, upon the vote of the Board or a majority of the outstanding
voting securities of the Fund and on 60 days' written notice to the Advisor, or
by the Advisor at any time, without payment of any penalty, on 60 days' written
notice to the Fund. In addition, the Agreements terminate in the event of
assignment as such term is defined in the 1940 Act.
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Matrix and the Advisor. Matrix is a registered investment advisor which was
founded in 1986. It provides investment advisory services to individuals,
endowment, and pension accounts with a value totaling over $400 million. The two
principal shareholders of Matrix are Mr. David A. Katz, Vice President, Chief
Investment Officer and Secretary of the Fund and Mr. Morley Goldberg. Matrix is
located at 444 Madison Avenue, New York, NY 10022. The Adviser has provided
investment advisory services to the Fund since its inception in 1983 and
formerly provided investment management services to individual and institutional
investors. It is controlled by Mr. Leonard M.
Heine, Jr.
Matrix and Mr. Heine have entered into a consulting agreement which provides
that for a term of forty-two months, Mr.Heine will act as a consultant to
Matrix. As such he will render such services for the beneifit of the Fund to
Matrix as Matrix may request, based on his experience, marketing expertise and
knowledge of the Fund's operations. For such services, Mr. Heine will be
entitled to receive from Matrix a monthly fee equal to (i) an amount equal to
25% of the management fees which would have been payable to the Advisor under
the terms of the existing agreement with the Fund for the first 30 months of the
42 month term and (ii) an amount equal to 20% of such management fees for the
last 12 months of such term. If Matrix receives advisory fees during the initial
thirty month period in excess of the amounts payable to Mr. Heine under this
arrangement, the consulting agreement provides that he shall receive an amount
equal to 35% of such management fees, subject to an overall limit of $57,750 for
any 12 month period.
Section 15(f) of the Investment Company Act of 1940 sets forth certain
conditions regarding the receipt of any amounts or benefits in connection with a
change in control of an investment adviser. Although no change in control,
assignment or sale of an interest in the Adviser will occur as a result of the
proposed arrangements, the Fund will observe the conditions set forth in Section
15(f), i.e., (i ) no "unfair burden" can be imposed on the Fund as a result of
the transaction, or any express or implied terms, conditions or understandings
applicable thereto, and (ii) at least 75% of the Board of Directors must not be
"interested persons" within the meaning of Section 15(f) of the 1940 Act for the
three year period following the consummation of the transaction.
In the event that shareholders do not approve the proposed agreement, the
Advisor and Sub-Advisor will continue to serve as such under the current
agreement pending the Board's negotiation of new agreements with other advisory
or sub-advisory organizaztions or making other appropriate arrangements, in
either event subject to approval by shareholders.
The Board has approved a change in the name of the Fund to "Matrix/LMH Value
Fund" contingent upon approval of the Proposed Agreement.
Set forth below is a table illustrating the current and pro forma fees, assuming
approval of the proposed agreement.
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COMPARATIVE FEE TABLE
Annual Fund Operating Expenses
(as a percentage of average net assets)
Existing Fees Proposed Fees
Management Fees 1.00% 1.00%
12b-1 Fees None None
Other Expenses (after waiver) 0.84 0.65%*
Total Fund Operating 1.84% 1.65%*
Expenses* (after waiver)
1.84% was the Fund's actual operating expense ratio for the fiscal year ended
June 30, 1996. The Fund's annualized operating expense ratio for the semi-annual
period ended December 31, 1996, after waivers of the sub-advisory fee and
partial waiver of the advisory fee, was 1.35%. If Fund assets increase and
operating expenses remain stable, it is expected that the operating expense
ratio will remain at that level or decline, although there can be no assurance
that this will be the case. . However, in the event the new Investment Advisory
Agreement is approved, Matrix has agreed that it will waive its fees and/or
otherwise limit the Fund's operating expenses through the remainder of 1997 so
that in no case will they exceed 1.65% of average net assets.
Example
This table illustrates the net transaction and operating expenses that would be
incurred by an investment in the Fund over different time periods assuming a
$1,000 investment, a 5% annual return, and redemption at the end of each time
period.
1 year 3 years 5 years 10 years
------ ------- ------- --------
Existing Fee $19 $58 $100 $216
Proposed Fee $17 $52 $ 90 $197
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of the Fund.
The example above should not be considered a representation of past or future
expenses of the Fund. Actual expenses may vary from year to year and may be
higher or lower than those shown above.
PROPOSAL 2. ELECTION OF DIRECTORS
The present Board of Directors consists of Mr. Leonard M. Heine, Jr.,
President and Treasurer of the Fund and of the Advisor, and Mr. Richard S.
Harman and Mr. Robert Rosencrans, each of whom
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is not an "interested person" within the meaning of the Investment Company Act
of 1940. It is proposed that the Board of Directors be increased from three to
four persons. Mr. Heine will not stand for re-election and will retire as a
director of the Fund. Mr. Harman is not standing for re-election. Mr. Rosencrans
is standing for re-election. Mr. David A. Katz, President of Matrix and Vice
President, Chief Investment Officer and Secretary of the Fund is a nominee for
Director, together with two additional nominees who are not "interested
persons." It is anticipated that Mr. Katz will be elected as President and
Treasurer of the Fund. Each of the current Board members has been present at the
meetings held during the past fiscal year. The directors who are not interested
persons of the Fund serve as the Fund's audit committee, which met once in the
past fiscal year. The audit committee reviews reports prepared by the Fund's
independent public accountants, including reports on the Fund's internal control
procedures, reviews and makes recommendations for audit services and fees
charged for such services and makes such recommendations as it deems necessary.
The nominees for election as Board members, their ages and a description of
their principal occupations for the past five years are listed in the table
below. All nominees have consented to serve if elected. (*Denotes an "interested
person" within the meaning of the Investment Company Act of 1940.)
*Mr. David A. Katz, Age 35
Mr. Katz is President of Matrix, with which he has been associated since
1986. He has served as Vice President, Chief Investment Officer, and Secretary
of the Fund since July, 1996.
Mr. Robert Rosencrans, Age 69
Mr. Rosencrans has been President of Columbia International, Inc., since 1984.
Mr. T. Michael Tucker, Age 54.
Mr. Tucker is the owner of T. Michael Tucker, a certified public accounting
firm which he established in 1977.
Mr. Larry D. Kieszek, Age 46.
Mr. Kieszek is Managing Partner of Purvis, Gray & Company, a certified public
accounting firm with which he has been associated since 1974.
During the fiscal year ended June 30, 1996 no directors received fees,
compensation, reimbursement of expenses, retirement or other benefits.
The candidates receiving the affirmative vote of a plurality of the votes cast
for election of Board members at the Meeting will be elected, provided that a
quorum is present.
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BENEFICIAL OWNERS
As of the date of this proxy statement, the following persons own of record and
beneficially more than 5% of the Fund's outstanding shares of common stock:
Richton International Corp., Madison, NJ 07940 17.09%; Andrew Levitt, P.
Whalen-Levitt, Jt Ten, Greensboro, NC 27403, 5.32% In addition, directors,
nominees for director and all officers and directors as a group owned less than
1% of the Fund's outstanding shares of common stock.
ANNUAL MEETINGS
As a general matter, the Fund does not hold regular annual or other meetings of
Shareholders. Should such meetings be scheduled, shareholders who wish to
present a proposal for action at any such meeting should submit the proposal to
the Secretary of the Fund, at 444 Madison Ave., New York, NY 10022, to be
considered for inclusion in proxy materials for such a meeting.
The Fund will furnish without charge, a copy of the most recent annual report to
shareholders of the Fund on request. Any requests should be directed to the Fund
at (212) 486- 2004 or sent to the Fund at the address in the preceding
paragraph.
OTHER BUSINESS
Management knows of no business to be presented to the meeting other than the
matters set forth in this proxy statement.
By order of the Board of Directors,
March 21,1997
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Exhibit A
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 Fund.
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(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.
(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
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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.
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.
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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.
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.
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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:
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