EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT,
effective as of June 2, 2009 by and between ADVISORSHARES INVESTMENTS, LLC (the
“Adviser”) and ADVISORSHARES TRUST (the “Trust”) (the “Agreement”), on behalf of
each series of the Trust set forth in Schedule A attached hereto (each a “Fund,”
and collectively, the “Funds”).
WITNESSETH
WHEREAS, the Trust is a
Delaware statutory trust organized under an Agreement and Declaration of Trust,
dated July 30, 2007 (the “Declaration of Trust”), and is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end
management company of the series type, and each Fund is a series of the
Trust;
WHEREAS, the Trust and the
Adviser have entered into an Investment Advisory Agreement dated June 2, 2009
(the “Advisory Agreement”), pursuant to which the Adviser provides investment
advisory services to each Fund for compensation based on the value of the
average daily net assets of each such Fund;
WHEREAS, the Trust and the
Adviser have determined that it is appropriate and in the best interests of each
Fund and its shareholders to maintain the expenses of each Fund at a level below
the level to which each such Fund would normally be subject in order to maintain
each Fund’s expense ratios at the Maximum Annual Operating Expense Limit (as
hereinafter defined) specified for such Fund in Schedule A hereto;
NOW THEREFORE, the parties
hereto agree as follows:
1. Expense
Limitation.
1.1. Applicable
Expense Limit. To
the extent that the aggregate expenses of every character incurred by a Fund in
any fiscal year, including but not limited to investment advisory fees of the
Adviser (but excluding interest, taxes, brokerage commissions, acquired fund
fees and expenses, other expenditures which are capitalized in accordance with
generally accepted accounting principles, other extraordinary expenses not
incurred in the ordinary course of such Fund’s business and amounts payable
pursuant to any plan adopted in accordance with Rule 12b-1 under the 0000 Xxx)
and expenses for which payment has been made through the use of all or a portion
of brokerage commissions (or markups or markdowns) generated by that Fund (“Fund
Operating Expenses”), exceed the Maximum Annual Operating Expense Limit, as
defined in Section 1.2 below, such excess amount (the “Excess Amount”) shall be
the liability of the Adviser.
1.2. Maximum
Annual Operating Expense Limit. The Maximum Annual Operating
Expense Limit with respect to each Fund shall be the amount specified in
Schedule A based on a percentage of the average daily net assets of each Fund.
That Maximum Annual Operating Expense Limit for each Fund contemplates that
certain expenses for each Fund may be paid through the use of all or a portion
of brokerage commissions (or markups or markdowns) generated by that
Fund.
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1.3. Method of
Computation. To determine the
Adviser’s liability with respect to the Excess Amount, each month the Fund
Operating Expenses for each Fund shall be annualized as of the last day of the
month. If the annualized Fund Operating Expenses for any month of a Fund exceed
the Maximum Annual Operating Expense Limit of such Fund, the Adviser shall first
waive or reduce its investment advisory fee for such month by an amount
sufficient to reduce the annualized Fund Operating Expenses to an amount no
higher than the Maximum Annual Operating Expense Limit. If the amount of the
waived or reduced investment advisory fee for any such month is insufficient to
pay the Excess Amount, the Adviser may also remit to the appropriate Fund or
Funds an amount that, together with the waived or reduced investment advisory
fee, is sufficient to pay such Excess Amount.
1.4. Year-End
Adjustment. If necessary, on
or before the last day of the first month of each fiscal year, an adjustment
payment shall be made by the appropriate party in order that the amount of the
investment advisory fees waived or reduced and other payments remitted by the
Adviser to the Fund or Funds with respect to the previous fiscal year shall
equal the Excess Amount.
2. Reimbursement of Fee Waivers
and Expense Reimbursements.
2.1. Reimbursement. If in any year in
which the Advisory Agreement is still in effect and the estimated aggregate Fund
Operating Expenses of such Fund for the fiscal year are less than the Maximum
Annual Operating Expense Limit for that year, subject to approval by the Trust’s
Board of Trustees as provided in Section 2.2 below, the Adviser shall be
entitled to reimbursement by such Fund, in whole or in part as provided below,
of the investment advisory fees waived or reduced and other payments remitted by
the Adviser to such Fund pursuant to Section 1 hereof. The total amount of
reimbursement to which the Adviser may be entitled (“Reimbursement Amount”)
shall equal, at any time, the sum of all investment advisory fees previously
waived or reduced by the Adviser and all other payments remitted by the Adviser
to the Fund, pursuant to Section 1 hereof, during any of the previous three (3)
fiscal years, less any reimbursement previously paid by such Fund to the
Adviser, pursuant to this Section 2, with respect to such waivers, reductions,
and payments. The Reimbursement Amount shall not include any additional charges
or fees whatsoever, including, e.g., interest accruable on the Reimbursement
Amount.
2.2. Board
Approval. No
reimbursement shall be paid to the Adviser with respect to any Fund pursuant to
this Section 2 unless the Trust’s Board of Trustees has determined in advance
that the payment of such reimbursement to the Adviser is in the best interests
of such Fund and its shareholders.
2.3. Method of
Computation. To
determine each Fund’s accrual, if any, to reimburse the Adviser for the
Reimbursement Amount, each month the Fund Operating Expenses of each Fund shall
be annualized as of the last day of the month. If the annualized Fund Operating
Expenses of a Fund for any month are less than the Maximum Annual Operating
Expense Limit of such Fund, such Fund shall accrue into its net asset value an
amount payable to the Adviser sufficient to increase the annualized Fund
Operating Expenses of that Fund to an amount no greater than the Maximum Annual
Operating Expense Limit of that Fund, provided that such amount paid to the
Adviser will in no event exceed the total Reimbursement Amount. For accounting
purposes, amounts accrued pursuant to this Section 2 shall be a liability of the
Fund for purposes of determining the Fund’s net asset value.
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2.4. Payment
and Year-End Adjustment. Amounts accrued
pursuant to this Agreement shall be payable to the Adviser as of the last day of
each month. If necessary, on or before the last day of the first month of each
fiscal year, an adjustment payment shall be made by the appropriate party in
order that the actual Fund Operating Expenses of a Fund for the prior fiscal
year (including any reimbursement payments hereunder with respect to such fiscal
year) do not exceed the Maximum Annual Operating Expense Limit.
3. Term and Termination of
Agreement.
This Agreement shall continue in
effect with respect to
each Fund for one year following the effective date of the respective Fund’s registration statement and shall thereafter continue in effect
from year to year for successive one-year periods, provided that this Agreement
may be terminated, without
payment of any penalty, with respect to any Fund:
(i) by the Trust, for any reason and at
any time; and
(ii) by the Adviser, for any reason,
upon ninety (90) days’ prior written notice to the Trust at
its principal place of business, such termination to be effective as of the close of
business on the last day of the then-current one-year period; or at such earlier
time provided that such termination is approved by majority vote of the Trustees
and the Independent Trustees voting separately.
4. Miscellaneous.
4.1. Captions. The captions in this
Agreement are included for convenience of reference only and in no other way
define or delineate any of the provisions hereof or otherwise affect their
construction or effect.
4.2. Interpretation. Nothing herein
contained shall be deemed to require the Trust or the Funds to take any action
contrary to the Trust’s Declaration of Trust or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Trust’s Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Trust or the
Funds. The parties to this Agreement acknowledge and agree that all litigation
arising hereunder, whether direct or indirect, and of any and every nature
whatsoever shall be satisfied solely out of the assets of the affected Fund and
that no Trustee, officer or holder of shares of beneficial interest of the Fund
shall be personally liable for any of the foregoing liabilities. The
Trust’s Declaration of Trust, as amended from time to time, is on file in the
Office of the Secretary of State of the State of Delaware. Such
Declaration of Trust describes in detail the respective responsibilities and
limitations on liability of the Trustees, officers, and holders of shares of
beneficial interest.
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4.3. Definitions. Any question of
interpretation of any term or provision of this Agreement, including but not
limited to the investment advisory fee, the computations of net asset values,
and the allocation of expenses, having a counterpart in or otherwise derived
from the terms and provisions of the Advisory Agreement or the 1940 Act, shall
have the same meaning as and be resolved by reference to such Advisory Agreement
or the 0000 Xxx.
4.4. Enforceability. Any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms or provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction.
IN WITNESS WHEREOF, the
parties have caused this Agreement to be signed by their respective officers
thereunto duly authorized, as of the day and year first above
written.
on behalf
of each series of the Trust set forth in Schedule A
/s/ Xxx Xxxxxx
Name: Xxx
Xxxxxx
Title:
Secretary & Treasurer
ADVISORSHARES
INVESTMENTS, LLC
/s/ Xxx Xxxxxx
Name: Xxx
Xxxxxx
Title:
Executive Vice President
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SCHEDULE
A
to
the
EXPENSE
LIMITATIONS AGREEMENT
dated
June 2, 2009, amended as of July 9, 2010
between
AND
ADVISORSHARES INVESTMENTS, LLC
MAXIMUM
ANNUAL OPERATING EXPENSE LIMITS
This
Agreement relates to the following Funds of the Trust:
|
Name
of Fund
|
Maximum
Annual
|
|
Operating
Expense Limit
|
|
|
Dent
Tactical ETF
|
1.50%
|
|
WCM
/ BNY Mellon Focused Growth ADR ETF
|
1.25%
|
|
Mars
Hill Global Relative Value ETF
|
1.50%
|
|
Peritus
High Yield ETF
|
1.35%
|
|
Emerald
Rock Low-Priced Focused Growth ETF
|
1.50%
|
|
Emerald
Rock Dividend Growth ETF
|
1.50%
|
|
Cambria
Global Tactical ETF
|
1.35%
|
|
Active
Bear ETF
|
1.85%
|
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