ADVISORS SERIES TRUST INVESTMENT ADVISORY AGREEMENT Phocas Financial Corporation
Phocas
Financial Corporation
THIS
INVESTMENT ADVISORY AGREEMENT
is made as of the 29th day of September, 2006, by and between Advisors Series
Trust, a Delaware statutory trust (hereinafter called the "Trust"), on behalf
of
the following series of the Trust, Phocas Real Estate Fund and Phocas Small
Cap
Value Fund (the "Funds") and Phocas Financial Corporation, a California
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 Funds are each a 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") 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
Funds 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 Funds 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 Funds 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’ prospectus,
statement 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 Fund 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 orders 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 and
consistent with Section 28(e) of the Securities and Exchange Act of 1934, as
amended, 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. Subject to the same policies and legal provisions, the Advisor is
further authorized to allocate the orders placed by it on behalf of the Fund
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.
On
occasions when the Advisor deems the purchase or sale of a security to be in
the
best interest 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 Fund 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 Fund 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 Funds. 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 and any compliance staff and personnel required by the
Advisor.
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
to
fulfill its obligations under this Agreement, (ii) the expenses of printing
and distributing extra copies of the Funds’ prospectus, statement 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 its 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 its daily net asset value and of maintaining
its 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 of the Trust, including without
limitation the Trust’s Chief Compliance Officer, 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 statements, prospectuses and statements
of
additional information of the Funds or other communications for distribution
to
existing shareholders; legal, auditing and accounting fees; all or any portion
of trade association dues or education program expenses determined appropriate
by the Board of Trustees; fees and expenses (including legal fees) of
registering and maintaining registration of their 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 their
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 the Funds as set forth herein, the Funds 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.
(e)
The Advisor may not pay fees in addition to any Fund distribution or servicing
fees to financial intermediaries, including without limitation banks,
broker-dealers, financial advisors, or pension administrators, 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, except with the prior authorization of the
Trust’s Board of Trustees. Where such arrangements are authorized by the Trust’s
Board of Trustees, the Advisor shall report regularly to the Trust on the
amounts paid and the relevant financial institutions.
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 Funds 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 the Funds 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 Funds toward the operating expenses for
such fiscal year (taking into account the reimbursement) does not exceed the
applicable limitation on Fund expenses. Under the expense limitation agreement,
the Advisor may recoup reimbursements made in any fiscal year of the Funds
over
the following three fiscal years. 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 Fund's 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 this 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 Fund. 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 Fund sor 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 Fund 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 prospectus, the statement 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, 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 Fund. Notwithstanding
the
foregoing, federal securities laws and certain state laws impose liabilities
under certain circumstances on persons who have acted in good faith, and
therefore nothing herein shall in any way constitute a waiver or limitation
of
any rights which the Trust, the Funds or any shareholder of the Funds may have
under any federal securities law or state law.
(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
advisor 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 (l)
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 Funds’ name is not deceptive or misleading and that
the Advisor has rights to any distinctive name used by the Funds. The Funds
acknowledge that their use of any distinctive name is derivative of their
relationship with the Advisor. The Funds may use the names “Advisors Series
Trust” and “Phocas” or any name derived from or using the name “Phocas” 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 Funds 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 the Funds. 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 cannot be assigned without the consent of the Board of Trustees.
This Agreement shall terminate automatically in the event of any transfer or
assignment thereof, as defined in the Investment Company Act.
16.
NONPUBLIC
PERSONAL INFORMATION.
Notwithstanding
any provision herein to the contrary, the Advisor hereto agrees on behalf of
itself and its directors, trustees, shareholders, officers, and employees (1)
to
treat confidentially and as proprietary information of the Trust (a) all records
and other information relative to the Funds’ prior, present, or potential
shareholders (and clients of said shareholders) and (b) any Nonpublic Personal
Information, as defined under Section 248.3(t) of Regulation S-P (“Regulation
S-P”), promulgated under the Xxxxx-Xxxxx-Xxxxxx Act (the “G-L-B Act”), and (2)
except after prior notification to and approval in writing by the Trust, not
to
use such records and information for any purpose other than the performance
of
its responsibilities and duties hereunder, or as otherwise permitted by
Regulation S-P or the G-L-B Act, and if in compliance therewith, the privacy
policies adopted by the Trust and communicated in writing to the Advisor. Such
written approval shall not be unreasonably withheld by the Trust and may not
be
withheld where the Advisor may be exposed to civil or criminal contempt or
other
proceedings for failure to comply after being requested to divulge such
information by duly constituted authorities.
17.
ANTI-MONEY LAUNDERING COMPLIANCE. The
Advisor acknowledges that, in compliance with the Bank Secrecy Act, as amended,
the USA PATRIOT Act, and any implementing regulations thereunder (together,
“AML
Laws”), the Trust has adopted an Anti-Money Laundering Policy. The Advisor
agrees to comply with the Trust’s Anti-Money Laundering Policy and the AML Laws,
as the same may apply to the Advisor, now and in the future. The Advisor further
agrees to provide to the Trust and/or the Administrator such reports,
certifications and contractual assurances as may be reasonably requested by
the
Trust. The Trust may disclose information regarding the Advisor to governmental
and/or regulatory or self-regulatory authorities to the extent required by
applicable law or regulation and may file reports with such authorities as
may
be required by applicable law or regulation.
18.
CERTIFICATIONS; DISCLOSURE CONTROLS AND PROCEDURES. The
Advisor acknowledges that, in compliance with the Xxxxxxxx-Xxxxx Act, and the
implementing regulations promulgated thereunder, the Trust and the Funds are
required to make certain certifications and have adopted disclosure controls
and
procedures. To the extent reasonably requested by the Trust, the Advisor agrees
to use its best efforts to assist the Trust and the Funds in complying with
the
Xxxxxxxx-Xxxxx Act and implementing the Trust’s disclosure controls and
procedures. The Advisor agrees to inform the Trust of any material development
related to the Fund that the Advisor reasonably believes is relevant to the
Funds’ certification obligations under the Xxxxxxxx-Xxxxx Act.
19.
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.
20.
CAPTIONS.
The captions in this Agreement are 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.
21.
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.
|
on
behalf of the
Phocas
Real Estate Fund and
Phocas
Small Cap Value Fund
|
PHOCAS
FINANCIAL CORPORATION
|
| By: /s/ Xxxxxxx X. Xxxx | By: /s/Xxxxxxx Xxxxxx |
| Name: Xxxxxxx X. Xxxx | Name: Xxxxxxx Xxxxxx |
|
Title:
Treasurer
|
Title:
CEO
|
SCHEDULE
A
|
Series
or Fund of Advisors Series Trust
|
Annual
Fee Rate
|
|
Phocas
Real Estate Fund
|
0.75%
of average net assets
|
|
Phocas
Small Cap Value Fund
|
0.75%
of average net assets
|
