FORM OF INVESTMENT ADVISORY AGREEMENT BETWEEN INVESTMENT MANAGERS SERIES TRUST AND
FORM
OF INVESTMENT ADVISORY AGREEMENT
BETWEEN
AND
X.X. XXXXXXX & CO.,
INC.
THIS
INVESTMENT ADVISORY AGREEMENT (the “Agreement”), dated as of November 30, 2009,
between the Investment Managers
Series Trust, a Delaware statutory trust (the “Trust”), on behalf of its
series listed in Appendix A, as amended from time to time (the “Fund”), and X.X.
Xxxxxxx & Co., Inc., a Delaware corporation (the “Advisor”).
WHEREAS,
the Advisor has agreed to furnish investment advisory services to the Fund, a
series of the Trust which is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the “1940
Act”);
WHEREAS,
this Agreement has been approved in accordance with the provisions of the 1940
Act, and the Advisor is willing to furnish such services upon the terms and
conditions herein set forth;
NOW,
THEREFORE, in consideration of the mutual premises and covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. In General. The
Advisor agrees, all as more fully set forth herein, to act as investment advisor
to the Fund with respect to the investment of the Fund’s assets and the purchase
of securities for and the sale of securities held in the investment portfolio of
the Fund.
2. Duties and Obligations of the Advisor
with Respect to Investment of Assets of the Fund. Subject to
the succeeding provisions of this section and subject to the direction and
control of the Trust’s Board of Trustees, the Advisor shall (i) act as
investment advisor for and supervise and manage the investment and reinvestment
of the Fund’s assets and, in connection therewith, have complete discretion in
purchasing and selling securities and other assets for the Fund and in voting,
exercising consents and exercising all other rights appertaining to such
securities and other assets on behalf of the Fund; (ii) supervise the investment
program of the Fund and the composition of its investment portfolio; and (iii)
arrange, subject to the provisions of paragraph 3 hereof, for the purchase and
sale of securities and other assets held in the investment portfolio of the
Fund. In performing its duties under this Section 2, the Advisor may
delegate some or all of its duties and obligations under this Agreement to one
or more investment sub-advisors, including but not limited to delegating the
voting of proxies relating to the Fund’s portfolio securities in accordance with
the proxy voting policies and procedures of such investment sub-advisor;
provided, however, that any such delegation shall be pursuant to an agreement
with terms agreed upon by the Trust and approved in a manner consistent with the
1940 Act and provided, further, that no such delegation shall relieve the
Advisor from its duties and obligations of management and supervision of the
management of the Fund’s assets pursuant to this Agreement and to applicable
law.
3. Covenants. In the
performance of its duties under this Agreement, the Advisor:
(a) shall
at all times conform to, and act in accordance with, any requirements imposed
by: (i) the provisions of the 1940 Act and the Investment Advisers
Act of 1940, as amended (the “Advisers Act”), and all applicable Rules and
Regulations of the Securities and Exchange Commission (the “SEC”); (ii) any
other applicable provision of law; (iii) the provisions of the Agreement and
Declaration of Trust and By-Laws of the Trust, as such documents are amended (as
provided with reasonable notice to the Advisor) from time to time; (iv) the
investment objectives and policies of the Fund as set forth in its Registration
Statement on Form N-1A as of the date hereof and as amended (as provided with
reasonable notice to the Advisor); and (v) any policies and determinations of
the Board of Trustees of the Trust (as provided with reasonable notice to the
Advisor);
(b) will
place orders for the purchase or sale of securities either directly with the
issuer or with any broker or dealer. Subject to the other provisions
of this paragraph, in placing orders with brokers and dealers, the Advisor will
attempt to obtain the best price and the most favorable execution of its
orders. In placing orders, the Advisor will consider the experience
and skill of the firm’s securities traders as well as the firm’s financial
responsibility and administrative efficiency. Consistent with this
obligation, the Advisor may select brokers on the basis of the research,
statistical and pricing services they provide to the Fund and other clients of
the Advisor. Information and research received from such brokers will
be in addition to, and not in lieu of, the services required to be performed by
the Advisor hereunder. A commission paid to such brokers may be
higher than that which another qualified broker would have charged for effecting
the same transaction, provided that the Advisor determines in good faith that
(i) such commission is reasonable in terms of either the transaction or the
overall responsibility of the Advisor to the Fund and its other clients or
otherwise complies with Section 28(e) of the Securities Exchange of 1934, as
amended, and (ii) that the total commissions paid by the Fund will be reasonable
in relation to the benefits to the Fund over the long-term. In no
instance, however, will the Fund’s securities be purchased from or sold to the
Advisor, or any affiliated person thereof, except to the extent permitted by the
SEC or by applicable law. Notwithstanding anything herein to the
contrary, the Fund acknowledges and agrees that the Advisor may place any or all
of the Fund’s securities orders with a broker-dealer affiliated with the
Advisor, provided that the Advisor complies with its duty of best execution and
all other applicable law (including the 1940 Act);
(c) except
as required by law or requested by a regulatory authority or the Fund, will
treat confidentially and as proprietary information of the Fund all records and
other information relative to the Fund, and the Fund’s prior, current or
potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld, provided that the foregoing shall
not limit the ability of the Advisor or its affiliates to contact prior, current
or potential shareholders for any reason unless otherwise prohibited by
applicable law;
(d) will
maintain errors and omissions insurance in an amount at least equal to that
disclosed to the Board of Trustees in connection with its approval of this
Agreement;
(e) will
supply such information to the Fund’s co-administrators and permit such
compliance inspections (during reasonable business hours) by the Fund’s
co-administrators (in each case upon reasonable notice to the Advisor) as shall
be reasonably necessary to permit the co-administrators to satisfy their legal
and regulatory obligations with respect to the Fund and their contractual
obligations to the Fund and to respond to the reasonable requests of the Board
of Trustees;
(f) to
the extent permitted by law, may pay fees in addition to any Fund distribution
or servicing fees to financial intermediaries for sub-administration,
sub-transfer agency or any other shareholder servicing or distribution services
associated with shareholders whose shares are held in omnibus or other group
accounts, provided that
the Advisor shall annually report to the Board of Trustees the amounts paid to
each such financial intermediary; and
(g) will
use its commercially reasonable efforts to assist the Trust and the Fund in
implementing the Trust’s disclosure controls and procedures, and will reasonably
cooperate with the Trust, in a manner consistent with general market practice,
to enable the Trust to fulfill its obligations under Rule 38a-1 under the 1940
Act (including by annually providing to the Trust a written report, which
complies with the requirements of such Rule 38a-1, concerning the Advisor’s
compliance program with respect to the Fund).
4. Services Not
Exclusive. Nothing in this Agreement shall prevent the Advisor
or any officer, employee or affiliate thereof from acting as investment advisor
for any other person, firm or corporation, or from engaging in any other lawful
activity, and shall not in any way limit or restrict the Advisor or any of its
officers, employees or agents from buying, selling or trading any securities for
its or their own accounts or for the accounts of others for whom it or they may
be acting; provided, however, that the Advisor will undertake no activities
which, in its judgment, will materially and adversely affect the performance of
its obligations under this Agreement.
5. Books and
Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Advisor hereby agrees that all records which it
maintains for the Fund are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust’s
request. The Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records with respect to the Fund
required to be maintained by the Fund by Rules 31a-1(b)(1)–(3), (5)–(9) under
the 1940 Act. Notwithstanding anything in this Agreement to the
contrary, and to the extent permitted by applicable law, the Advisor may
maintain copies of any such records, including the performance records of the
Fund, and may use such performance records to promote its services to other
accounts, including other fund accounts.
6. Agency Cross
Transactions. From time to time, the Advisor or brokers or
dealers affiliated with it may find themselves in a position to buy for certain
of their brokerage or other clients (each an “Account”) securities which the
Advisor’s investment advisory clients wish to sell, and to sell for certain of
their Accounts securities which advisory clients wish to buy. Under
currently applicable law, where one of the parties is an advisory client and the
Advisor has recommended the transaction to such client, the Advisor or the
affiliated broker or dealer cannot participate in this type of transaction
(known as an agency cross transaction) on behalf of the advisory client and
retain commissions from one or both parties to the transaction without the
advisory client’s consent. This is because in a situation where the
Advisor is making the investment decision (as opposed to a brokerage client who
makes his own investment decisions), and the Advisor or an affiliate is also
receiving brokerage commissions as part of the transaction, there is a potential
conflicting division of loyalties and responsibilities on the Advisor’s part
regarding the advisory client. The SEC has adopted a rule under the
Advisers Act which permits the Advisor or its affiliates to participate on
behalf of an Account in agency -cross transactions if the advisory client has
given written consent in advance. By execution of this Agreement, the
Trust authorizes the Advisor or its affiliates to effect agency -cross
transactions involving the Fund and an Account. The Advisor agrees
that it will not arrange purchases or sales of securities between the Fund and
an Account advised by the Advisor unless (a) the purchase or sale is in
accordance with applicable law (including Rule 17a-7 under the 0000 Xxx) and the
Trust’s policies and procedures, (to the extent
provided to the Advisor with reasonable notice) and (b) the Advisor determines
that the purchase or sale is in the best interests of the Fund. The
Trust may revoke the foregoing consent at any time by written notice to the
Advisor.
7. Expenses. During
the term of this Agreement, the Advisor will bear all costs and expenses of its
employees and any overhead incurred by it in connection with its duties
hereunder.
8. Compensation of the
Advisor. The Fund agrees to pay to the Advisor and the Advisor
agrees to accept as full compensation for all services rendered by the Advisor
as such, a fee accrued daily and paid monthly in arrears at an annual rate
listed in Appendix A with respect to the Fund’s average daily net assets during
such month. For any period less than a month during which this
Agreement is in effect, the fee shall be prorated according to the proportion
which such period bears to the full month in which such period
falls. The fee payable to the Advisor under this Agreement will be
reduced to the extent required by any written expense limitation agreement
between the Advisor and the Fund. The Advisor, in its sole
discretion, may voluntarily pay for certain Fund expenses or waive all or a
portion of its fee.
9. Limitation
of Advisor’s Liability; Indemnification.
(a) Limitation of Advisor’s
Liability. The Advisor will not be liable for any error of
judgment or mistake of law or for any loss or other Claim (as defined below)
suffered by Advisor, the Trust, or the Fund in connection with the performance
of this Agreement, except a loss resulting from (a) a breach by the Advisor of
fiduciary duty with respect to its receipt of compensation for the services it
provides hereunder (but only to the extent required by Section 36(b) of the 0000
Xxx) or (b) willful misfeasance, bad faith or gross negligence on the part of
the Advisor in the performance of its duties or from reckless disregard by it of
its duties under this Agreement (provided that the Advisor shall be entitled to
rely upon written or oral instructions, communications, data, documents or
information (without investigation or verification) received by the Advisor from
an authorized officer, representative or agent of the Trust). Certain
federal and state laws may impose liabilities under certain circumstances on
persons who act in good faith, and nothing herein shall in any way constitute a
waiver or limitation of any rights which the Trust or Fund may have under any
such applicable law.
(b) Indemnification of Advisor
Indemnified Parties. The Fund agrees to
indemnify and hold harmless the Advisor, its employees, agents, officers,
directors, affiliates, and nominees (collectively, the “Advisor Indemnified
Parties”) from and against any and all claims, demands, actions and suits and
from and against any and all judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character which may be asserted against or incurred by any Indemnified Party or
for which any Advisory Indemnified Party may be held liable (a “Claim”) arising
out of or in any way relating to (i) the Advisor’s performance of it duties
hereunder, except to the extent such Claim resulted from an action or omission
for which the Advisor would not be entitled to exculpation pursuant to Section
9(a) hereof or (ii) actions or omissions of the Trust, the Fund or any of their
other agents or service providers.
(c) This
Section 9 shall survive the termination of this Agreement indefinitely or until
the latest date permitted by law.
10. Duration and
Termination. This Agreement shall become effective as of the
date hereof and, unless sooner terminated with respect to the Fund as provided
herein, shall continue in effect for a period of two
years. Thereafter, if not terminated, this Agreement shall continue
in effect with respect to the Fund for successive periods of 12 months, provided
such continuance is specifically approved (a) at least annually by both (i) the
vote of a majority of the Trust’s Board of Trustees or the vote of a majority of
the outstanding voting securities of the Fund at the time outstanding and
entitled to vote, and (ii) the
vote of a majority of the Trustees who are not parties to this Agreement or
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval or (b) as otherwise may by
permitted by the 1940 Act, the rules and regulations thereunder, and the SEC’s
interpretations thereof. Notwithstanding the foregoing, this
Agreement may be terminated by the Trust at any time as to the Fund, without the
payment of any penalty, upon giving the Advisor 60 days’ notice (which notice
may be waived by the Advisor), provided that such termination by the Trust shall
be directed or approved by the vote of a majority of the Trustees of the Trust
in office at the time or by the vote of the holders of a majority of the voting
securities of the Fund at the time outstanding and entitled to vote, or by the
Advisor on 60 days’ written notice (which notice may be waived by the
Trust). This Agreement will also immediately terminate in the event
of its assignment. (As used in this Agreement, the terms “majority of
the outstanding voting securities,” “interested person” and “assignment” shall
have the same meanings of such terms in the 1940 Act.)
11. Notices. Any notice
under this Agreement shall be in writing to the other party at such address as
the other party may designate from time to time for the receipt of such notice
and shall be deemed to be received on the earlier of the date actually received
or on the fourth day after the postmark if such notice is mailed first class
postage prepaid.
12. Amendment of this
Agreement. This Agreement may only be amended by an instrument
in writing signed by the parties hereto. Any amendment of this
Agreement shall be subject to the 1940 Act.
13. Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware for contracts to be performed entirely therein without
reference to choice of law principles thereof and in accordance with the
applicable provisions of the 1940 Act.
14. Use of the Name of the
Advisor. The parties hereto acknowledge that the Fund’s use of
the Advisor’s name is governed by, and subject to, that certain License
Agreement, dated as of the date hereof, between the Advisor and the
Trust.
15. Additional Limitation of
Liability. The parties hereto are expressly put on notice that
a Certificate of Trust, referring to the Trust’s Agreement and Declaration of
Trust (the “Certificate”), is on file with the Secretary of the State of
Delaware. The Certificate was executed by a trustee of the Trust on
behalf of the Trust as trustee, and not individually, and, as provided in the
Trust’s Agreement and Declaration of Trust, the obligations of the Trust are not
binding on the Trust’s trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust, or the particular series
in question, as the case may be.
16. Miscellaneous. The
captions in this Agreement are included for convenience of reference only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. 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 thereby. This
Agreement shall be binding on, and shall inure to the benefit of the parties
hereto and their respective successors.
17. Counterparts. This
Agreement may be executed in counterparts by the parties hereto, each of which
shall constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
IN
WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be
executed by their duly authorized officers, all as of the day and the year first
above written.
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THE
TRUST:
INVESTMENT
MANAGERS SERIES
TRUST
on behalf of the
X.X.
XXXXXXX & CO. GROWTH FUND
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By:
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Name:
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Title:
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THE
ADVISOR:
X.X.
XXXXXXX & CO., INC.
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By:
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Name:
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Title:
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Appendix
A
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Fund/Class
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Advisor
Fee
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Effective
Date
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X.X.
Xxxxxxx Growth Fund
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1.0%
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11/30/2009
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