ADVISORS SERIES TRUST INVESTMENT ADVISORY AGREEMENT Pacific Income Advisers, Inc.
Pacific Income Advisers,
Inc.
THIS INVESTMENT ADVISORY
AGREEMENT is made as of the 13th day of September, 2004, by and between
Advisors Series Trust, a Delaware business trust (hereinafter called the
“Trust”), on behalf of the following series of the Trust, PIA Short-Term
Government Securities Fund, PIA Equity Fund, PIA Total Return Bond Fund and PIA
BBB Bond Fund (collectively, the “Funds”) and Pacific Income Advisers, Inc., a
Delaware corporation (hereinafter called the “Advisor”).
WITNESSETH:
WHEREAS, the Trust is an
open-end management investment company, registered as such under the Investment
Company Act of 1940 (the “Investment Company Act”); and
WHEREAS, the Fund is a
separate series of the Trust having separate assets and liabilities;
and
WHEREAS, the Advisor is
registered as an investment adviser under the Investment Advisers Act of 1940
(the “Advisers Act”) (or is exempt from registration) and is engaged in the
business of supplying investment advice as an independent contractor;
and
WHEREAS, the Trust desires to
retain the Advisor to render advice and services to the Fund pursuant to the
terms and provisions of this Agreement, and the Advisor desires to furnish said
advice and services;
NOW, THEREFORE, in
consideration of the covenants and the mutual promises hereinafter set forth,
the parties to this Agreement, intending to be legally bound hereby, mutually
agree as follows:
1. APPOINTMENT
OF ADVISOR. The Trust hereby employs the Advisor and the Advisor hereby
accepts such employment, to render investment advice and related services with
respect to the assets of the Fund for the period and on the terms set forth in
this Agreement, subject to the supervision and direction of the Trust’s Board of
Trustees.
2. DUTIES OF ADVISOR.
(a) GENERAL
DUTIES. The
Advisor shall act as investment adviser to the Funds and shall supervise
investments of the Funds on behalf of the Funds in accordance with the
investment objectives, policies and restrictions of the Fund as set forth in the
Funds’ and Trust’s governing documents, including, without limitation, the
Trust’s Agreement and Declaration of Trust and By-Laws; the Funds’ prospectuses,
statements of additional information and undertakings; and such other
limitations, policies and procedures as the Trustees may impose from time to
time in writing to the Advisor. In providing such services, the Advisor shall at
all times adhere to the provisions and restrictions contained in the federal
securities laws, applicable state securities laws, the Internal Revenue Code,
the Uniform Commercial Code and other applicable law.
Without
limiting the generality of the foregoing, the Advisor shall: (i) furnish
the Funds with advice and recommendations with respect to the investment of the
Funds’ assets and the purchase and sale of portfolio securities for the Funds,
including the taking of such steps as may be necessary to implement such advice
and recommendations (i.e., placing the orders); (ii) manage and oversee the
investments of the Funds, subject to the ultimate supervision and direction of
the Trust’s Board of Trustees; (iii) vote proxies for the Funds, file
ownership reports under Section 13 of the Securities Exchange Act of 1934
for the Funds, and take other actions on behalf of the Funds; (iv) maintain
the books and records required to be maintained by the Funds except to the
extent arrangements have been made for such books and records to be maintained
by the administrator or another agent of the Funds; (v) furnish reports,
statements and other data on securities, economic conditions and other matters
related to the investment of the Funds’ assets which the Funds’ administrator or
distributor or the officers of the Trust may reasonably request; and
(vi) render to the Trust’s Board of Trustees such periodic and special
reports with respect to each Fund’s investment activities as the Board may
reasonably request, including at least one in-person appearance annually before
the Board of Trustees.
(b) BROKERAGE.
The Advisor shall be responsible for decisions to buy and sell securities for
the Funds, for broker-dealer selection, and for negotiation of brokerage
commission rates, provided that the Advisor shall not direct order to an
affiliated person of the Advisor without general prior authorization to use such
affiliated broker or dealer for the Trust’s Board of Trustees. The Advisor’s
primary consideration in effecting a securities transaction will be execution at
the most favorable price. In selecting a broker-dealer to execute each
particular transaction, the Advisor may take the following into consideration:
the best net price available; the reliability, integrity and financial condition
of the broker-dealer, the size of and difficulty in executing the order, and the
value of the expected contribution of the broker-dealer to the investment
performance of the Funds on a continuing basis. The price to the Funds in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered.
Subject
to such policies as the Board of Trustees of the Trust may determine, the
Advisor shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Funds to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Advisor an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Advisor’s overall responsibilities with respect to
the Trust. The Advisor is further authorized to allocate the orders placed by it
on behalf of the Funds to such brokers or dealers who also provide research or
statistical material, or other services, to the Trust, the Advisor, or any
affiliate of either. Such allocation shall be in such amounts and proportions as
the Advisor shall determine, and the Advisor shall report on such allocations
regularly to the Trust, indicating the broker-dealers to whom such allocations
have been made and the basis therefor. The Advisor is also authorized to
consider sales of shares as a factor in the selection of brokers or dealers to
execute portfolio transactions, subject to the requirements of best execution,
i.e., that such brokers or dealers are able to execute the order promptly and at
the best obtainable securities price.
On
occasions when the Advisor deems the purchase or sale of a security to be in the
best interest of one or more of the Funds as well as of other clients, the
Advisor, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Advisor in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Funds and to such other clients.
3. REPRESENTATIONS OF THE
ADVISOR.
(a) The
Advisor shall use its best judgment and efforts in rendering the advice and
services to the Funds as contemplated by this Agreement.
(b) The
Advisor shall maintain all licenses and registrations necessary to perform its
duties hereunder in good order.
(c) The
Advisor shall conduct its operations at all times in conformance with the
Advisers Act, the Investment Company Act, and any other applicable state and/or
self-regulatory organization regulations.
(d) The
Advisor shall maintain errors and omissions insurance in an amount at least
equal to that disclosed to the Board of Trustees in connection with their
approval of this Agreement.
4. INDEPENDENT
CONTRACTOR. The Advisor shall, for all purposes herein, be deemed to be
an independent contractor, and shall, unless otherwise expressly provided and
authorized to do so, have no authority to act for or represent the Trust or the
Funds in any way, or in any way be deemed an agent for the Trust or for the
Fund. It is expressly understood and agreed that the services to be rendered by
the Advisor to the Funds under the provisions of this Agreement are not to be
deemed exclusive, and the Advisor shall be free to render similar or different
services to others so long as its ability to render the services provided for in
this Agreement shall not be impaired thereby.
5. ADVISOR’S
PERSONNEL. The Advisor shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it shall
from time to time determine to be necessary to the performance of its
obligations under this Agreement. Without limiting the generality of
the foregoing, the staff and personnel of the Advisor shall be deemed to include
persons employed or retained by the Advisor to furnish statistical information,
research, and other factual information, advice regarding economic factors and
trends, information with respect to technical and scientific developments, and
such other information, advice and assistance as the Advisor or the Trust’s
Board of Trustees may desire and reasonably request.
6. EXPENSES.
(a) With
respect to the operation of the Funds, the Advisor shall be responsible for
(i) providing the personnel, office space and equipment reasonably
necessary for the operation of the Funds, (ii) the expenses of printing and
distributing extra copies of the Funds’ prospectuses, statements of additional
information, and sales and advertising materials (but not the legal, auditing or
accounting fees attendant thereto) to prospective investors (but not to existing
shareholders), and (iii) the costs of any special Board of Trustees
meetings or shareholder meetings convened for the primary benefit of the
Advisor, if the Advisor has agreed to limit the operating expenses of the Funds,
the Advisor shall also be responsible on a monthly basis for any operating
expenses that exceed the agreed upon expense limit.
(b) The
Funds are responsible for and have assumed the obligation for payment of all of
their expenses, other than as stated in Subparagraph 6(a) above, including but
not limited to: fees and expenses incurred in connection with the issuance,
registration and transfer of their shares; brokerage and commission expenses;
all expenses of transfer, receipt, safekeeping, servicing and accounting for the
cash, securities and other property of the Trust for the benefit of the Funds
including all fees and expenses of their custodian, shareholder services agent
and accounting services agent; interest charges on any borrowings; costs and
expenses of pricing and calculating their daily net asset value and of
maintaining their books of account required under the Investment Company Act;
taxes, if any; a pro rata portion of expenditures in connection with meetings of
the Funds’ shareholders and the Trust’s Board of Trustees that are properly
payable by the Funds; salaries and expenses of officers and fees and expenses of
members of the Trust’s Board of Trustees or members of any Advisory board or
committee who are not members of; affiliated with or interested persons of the
Advisor, insurance premiums on property or personnel of each Fund which inure to
its benefit, including liability and fidelity bond insurance; the cost of
preparing and printing reports, proxy statement, prospectuses and statements of
additional information of the Funds or other communications for distribution to
existing shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of registering and maintaining
registration of its shares for sale under federal and applicable state and
foreign securities laws; all expenses of maintaining and servicing shareholder
accounts, including all charges for transfer, shareholder recordkeeping,
dividend disbursing, redemption, and other agents for the benefit of the Funds,
if any and all other charges and costs of its operation plus any extraordinary
and non-recurring expenses, except as herein otherwise prescribed.
(c) The
Advisor may voluntarily absorb certain Fund expenses or waive the Advisor’s own
advisory fee.
(d) To
the extent the Advisor incurs any costs by assuming expenses which are an
obligation of a Fund as set forth herein, the Fund shall promptly reimburse the
Advisor for such costs and expenses, except to the extent the Advisor has
otherwise agreed to bear such expenses. To the extent the services for which a
Fund is obligated to pay are performed by the Advisor, the Advisor shall be
entitled to recover from such Fund to the extent of the Advisor’s actual costs
for providing such services. In determining the Advisor’s actual costs, the
Advisor may take into account an allocated portion of the salaries and overhead
of personnel performing such services.
7. INVESTMENT ADVISORY AND MANAGEMENT
FEE.
(a) The
Funds shall pay to the Advisor, and the Advisor agrees to accept, as full
compensation for all investment management and advisory services furnished or
provided to such Fund pursuant to this Agreement, an annual management fee at
the rate set forth in Schedule A to this Agreement.
(b) The
management fee shall be accrued daily by each Fund and paid to the Advisor on
the first business day of the succeeding month.
(c) The
initial fee under this Agreement shall be payable on the first business day of
the first month following the effective date of this Agreement and shall be
prorated as set forth below. If this Agreement is terminated prior to
the end of any month, the fee to the Advisor shall be prorated for the portion
of any month in which this Agreement is in effect which is not a complete month
according to the proportion which the number of calendar days in the month
during which the Agreement is in effect bears to the number of calendar days in
the month, and shall be payable within ten (10) days after the date of
termination.
(d) The
fee payable to the Advisor under this Agreement will be reduced to the extent of
any receivable owed by the Advisor to the Fund and as required under any expense
limitation applicable to a Fund.
(e) The
Advisor voluntarily may reduce any portion of the compensation or reimbursement
of expenses due to it pursuant to this Agreement and may agree to make payments
to limit the expenses which are the responsibility of a Fund under this
Agreement. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to the Advisor hereunder or to
continue future payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and reconciled and
paid on a monthly basis.
(f) Any
such reductions made by the Advisor in its fees or payment of expenses which are
the Funds’ obligation are subject to reimbursement by the Funds to the Advisor,
if so requested by the Advisor, in subsequent fiscal years if the aggregate
amount actually paid by the Fund toward the operating expenses for such fiscal
year (taking into account the reimbursement) does not exceed the applicable
limitation on Fund expenses. The Advisor is permitted to be reimbursed only for
fee reductions and expense payments made in the previous three fiscal years, but
is permitted to look back five years and four years, respectively, during the
initial six years and seventh year of the Funds’ operations. Any such
reimbursement is also contingent upon Board of Trustees review and approval at
time the reimbursement is made. Such reimbursement may not be paid prior to the
Funds’ payment of current ordinary operating expenses.
(g) The
Advisor may agree not to require payment of any portion of the compensation or
reimbursement of expenses otherwise due to it pursuant to tins
Agreement. Any such agreement shall be applicable only with respect
to the specific items covered thereby and shall not constitute an agreement not
to require payment of any future compensation or reimbursement due to the
Advisor hereunder.
8. NO
SHORTING; NO BORROWING. The Advisor agrees that neither it nor any of its
officers or employees shall take any short position in the shares of the Funds.
This prohibition shall not prevent the purchase of such shares by any of the
officers or employees of the Advisor or any trust, pension, profit-sharing or
other benefit plan for such persons or affiliates thereof; at a price not less
than the net asset value thereof at the time of purchase, as allowed pursuant to
rules promulgated under the Investment Company Act. The Advisor agrees that
neither it nor any of its officers or employees shall borrow from the Funds or
pledge or use the Funds’ assets in connection with any borrowing not directly
for the Funds’ benefit. For this purpose, failure to pay any amount due and
payable to the Funds for a period of more than thirty (30) days shall constitute
a borrowing.
9. CONFLICTS
WITH TRUST’S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Funds to take any
action contrary to the Trust’s Agreement and Declaration of Trust, By-Laws, or
any applicable statute or regulation, or to relieve or deprive the Board of
Trustees of the Trust of its responsibility for and control of the conduct of
the affairs of the Trust and Funds. In this connection, the Advisor acknowledges
that the Trustees retain ultimate plenary authority over the Funds and may take
any and all actions necessary and reasonable to protect the interests of
shareholders.
10. REPORTS
AND ACCESS. The Advisor agrees to supply such information to the Funds’
administrator and to permit such compliance inspections by the Funds’
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the
Trustees.
11. ADVISOR’S LIABILITIES AND
INDEMNIFICATION.
(a) The
Advisor shall have responsibility for the accuracy and completeness (and
liability for the lack thereof of the statements in the Funds’ offering
materials (including the prospectuses, the statements of additional information,
advertising and sales materials), except for information supplied by the
administrator or the Trust or another third party for inclusion
therein.
(b) The
Advisor shall be liable to the Funds for any loss (including brokerage charges)
incurred by the Funds as a result of any improper investment made by the
Advisor.
(c) In
the absence of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the obligations or duties hereunder on the part of the Advisor, the
Advisor shall not be subject to liability to the Trust or the Funds or to any
shareholder of the Funds for any act or omission in the course of or connected
with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security by the Funds.
(d) Each
party to this Agreement shall indemnify and hold harmless the other party and
the shareholders, directors, officers and employees of the other party (any such
person, an “Indemnified Party”) against any loss, liability, claim, damage or
expense (including the reasonable cost of investigating and defending any
alleged loss, liability, claim, damage or expenses and reasonable counsel fees
incurred in connection therewith) arising out of the Indemnified Party’s
performance or non-performance of any duties under this Agreement provided,
however, that nothing herein shall be deemed to protect any Indemnified Party
against any liability to which such Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
under this Agreement.
(e) No
provision of this Agreement shall be construed to protect any Trustee or officer
of the Trust, or officer of the Advisor, from liability in violation of Sections
17(h) and (i) of the Investment Company Act.
12. NON-EXCLUSIVITY:
TRADING FOR ADVISOR’S OWN ACCOUNT. The Trust’s employment of the Advisor
is not an exclusive arrangement. The Trust may from time to time employ other
individuals or entities to furnish it with the services provided for herein.
Likewise, the Advisor may act as investment adviser for any other person, and
shall not in any way be limited or restricted from buying, selling or trading
any securities for its or their own accounts or the accounts of others for whom
it or they may be acting, provided, however, that the Advisor expressly
represents that it will undertake no activities which will adversely affect the
performance of its obligations to the Funds under this Agreement; and provided
further that the Advisor will adhere to a code of ethics governing employee
trading and trading for proprietary accounts that conforms to the requirements
of the Investment Company Act and the Advisers Act and has been approved by the
Trust’s Board of Trustees.
13. TERM.
This Agreement shall become effective
at the time the Funds commence operations pursuant to an effective amendment to
the Trust’s Registration Statement under the Securities Act of 1933 and shall
remain in effect for a period of two (2) years, unless sooner terminated as
hereinafter provided. This Agreement shall continue in effect thereafter for
additional periods not exceeding one (1) year so long as such continuation is
approved for the Funds at least annually by (i) the Board of Trustees of
the Trust or by the vote of a majority of the outstanding voting securities of
each Fund and (ii) the vote of a majority of the Trustees of the Trust who
are not parties to this Agreement nor interested persons thereof cast in person
at a meeting called for the purpose of voting on such approval. The terms
“majority of the outstanding voting securities” and “interested persons” shall
have the meanings as set forth in the Investment Company Act.
14. RIGHT
TO USE NAME
The
Advisor warrants that the Fund’s name is not deceptive or misleading and that
the Advisor has rights to any distinctive name used by the Fund. The Fund
acknowledges that its use of any distinctive name is derivative of its
relationship with the Advisor. The Fund may use the name “PIA Funds” or any name
derived from or using the name Pacific Income Advisers only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect.
Within sixty (60) days from such time as this Agreement shall no longer be in
effect, the Fund shall cease to use such a name or any other name connected with
the Advisor.
15. TERMINATION; NO
ASSIGNMENT.
(a) This
Agreement may be terminated by the Trust on behalf of the Funds at any time
without payment of any penalty, by the Board of Trustees of the Trust or by vote
of a majority of the outstanding voting securities of a Fund, upon sixty (60)
days’ written notice to the Advisor, and by the Advisor upon sixty (60) days’
written notice to a Fund. In the event of a termination, the Advisor shall
cooperate in the orderly transfer of the Funds’ affairs and, at the request of
the Board of Trustees, transfer any and all books and records of the Funds
maintained by the Advisor on behalf of the Funds.
(b) This
Agreement shall terminate automatically in the event of any transfer or
assignment thereof; as defined in the Investment Company Act.
16. SEVERABILITY. If any provision of this
Agreement shall be held or made invalid by a court decision, statute or rule, or
shall be otherwise rendered invalid, the remainder of this Agreement shall not
be affected thereby.
17. CAPTIONS.
The captions in this Agreement arc included for convenience of reference only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
18. GOVERNING
LAW. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of California without giving effect to the conflict of laws principles
thereof; provided that nothing herein shall be construed to preempt, or to be
inconsistent with, any federal law, regulation or rule, including the Investment
Company Act and the Advisers Act and any rules and regulations promulgated
thereunder.
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their duly
authorized officers, all on the day and year first above written.
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on
behalf of the
PIA
Short-Term Government Securities Fund
PIA
Equity Fund
PIA
Total Return Bond Fund
PIA
BBB Bond Fund
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Pacific Income Advisers,
Inc.
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By: /s/ Xxxx
Xxxxxxx
Print
name: Xxxx
Xxxxxxx
Title: President
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By: /s/ Xxxx X.
Xxxxx
Print
name: Xxxx X.
Xxxxx
Title: Senior Vice President
- COO
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SCHEDULE
A
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Series
or Fund of Advisors Series Trust
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Annual
Fee Rate
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PIA
Short-Term Government Securities Fund
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0.20%
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PIA
Equity Fund
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0.00%
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PIA
Total Return Bond Fund
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0.30%
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PIA
BBB Bond Fund
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0.00%
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