INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of
the 27th day of December 2007, by and among Xxxxxxxxxx Global
Investors, Inc. a Delaware corporation located at 000 Xxxx Xxx Xxxx Xxxxxxxxx,
Xxxxx 0000, Xxxx Xxxxxxxxxx, XX 00000 (the “Sub-Adviser”), and FundQuest
Incorporated, a Delaware corporation located at 000 Xxxx Xxxxxx, Xxxxxx, XX
00000 (the “Manager”).
WHEREAS, the Manager and the
Sub-Adviser are each registered as investment advisers under the Investment
Advisers Act of 1940; and
WHEREAS, the Advisors Series
Trust, a Delaware statutory Trust located at 000 Xxxx Xxxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000 (the “Trust”) is engaged in business
as an open-end investment company with one or more series of shares and is
registered under the Investment Company Act of 1940, as amended (the “1940
Act”); and
WHEREAS, the Trust has
retained the Manager to perform investment advisory services for the certain
funds within the Trust (the “Funds”) under the terms of an investment advisory
agreement, dated December 24, 2007, between the Manager and the Trust on behalf
of the Funds (the “Management
Agreement”); and
WHEREAS, the Manager, acting
pursuant to the Management Agreement, wishes to retain the Sub-Adviser, and the
Trust’s Board has approved the retention of the Sub-Adviser, to provide
investment advisory services to a portion of the assets (the “Allocated Portion”) the
Fund(s) listed on Schedule A (as it may be amended from time to
time);
WHEREAS, each Fund listed in
Schedule A is a separate series of the Trust having separate assets and
liabilities; and
WHEREAS, the Trust and the
Fund(s) are third party beneficiaries of such arrangements;
NOW, THEREFORE, WITNESSETH:
That the parties, which shall include the Trust on behalf of the Fund(s) for the
purposes of the indemnification provisions of section 6, hereby agree as
follows:
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1.
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APPOINTMENT OF
SUB-ADVISER.
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(a)
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Acceptance. The
Sub-Adviser is hereby appointed and the Sub-Adviser hereby accepts the
appointment, on the terms herein set forth and for the compensation herein
provided, to act as investment adviser to the
Fund.
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(b)
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Independent
Contractor. The Sub-Adviser 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 be deemed an agent of the Fund.
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(c)
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The Sub-Adviser’s
Representations. The Sub-Adviser represents, warrants
and agrees that it has all requisite power and authority to enter into and
perform its obligations under this Agreement, and has taken all necessary
corporate action to authorize its execution, delivery and performance of
this Agreement. The Sub-Adviser represents, warrants and agrees
that it is registered as an investment adviser
under the Investment Advisers Act of 1940, as
amended.
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(d)
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The Manager’s
Representations. The Manager represents, warrants and
agrees that it has all requisite power and authority to enter into and
perform its obligations under this Agreement, and has taken all necessary
corporate action to authorize its execution, delivery and performance of
this Agreement. The Manager further represents, warrants and
agrees that it has the authority under the Management Agreement to appoint
the Sub-Adviser. The Manager further represents and
warrants that it has received a copy of Part II of the
Sub-Adviser’s Form ADV more
than 48 hours before executing this Agreement. The
Manager further represents and warrants that the Fund is
either (i) excluded from the definition of the term “pool” under Section
4.5 of the General Regulations under the Commodity Exchange Act (“Rule 4.5”), or (ii) a
qualifying entity under Rule 4.5(b) for which a notice of eligibility has
been filed.
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(e)
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Plenary authority of
the Board of Trustees. The Sub-Adviser and Manager both
acknowledge that the Fund is a mutual fund that operates as a series of
the Trust under the authority of the Board of
Trustees.
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2.
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PROVISION OF INVESTMENT
SUB-ADVISORY SERVICES.
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The
Sub-Adviser will provide for the Fund a continuing and suitable investment
program consistent with the investment policies, objectives and restrictions of
the Fund, as established by the Fund and the Manager and provided to the
Sub-Adviser in writing. The current policies, objectives and
restrictions are attached hereto as Exhibit
A. From time to time, the Manager or the Fund may provide the
Sub-Adviser with written copies of additional or amended investment policies,
guidelines and restrictions, which shall become effective at such time as agreed
upon by both parties. The Sub-Adviser will manage the investment and
reinvestment of the assets in the Fund, and perform the functions set forth
below, subject to the overall supervision, direction, control and review of the
Manager, consistent with the applicable investment policies, guidelines and
restrictions, or any directions or instructions delivered to the Sub-Adviser in
writing by the Manager or the Fund from time to time, and further subject to the
plenary authority of the Fund’s Board of Trustees. Consistent with
Exhibit A, or
unless otherwise directed in writing by the Manager or the Fund, the Sub-Adviser
shall have full discretionary authority to manage the investment of the assets
in the Fund, including the authority to purchase, sell, cover open positions,
and generally to deal in securities, financial and commodity futures contracts,
options, short-term investment vehicles and other property comprising or
relating to the Fund.
In
addition, the Sub-Adviser will, at its own expense:
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(a)
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advise
the Manager and the Fund in connection with investment policy decisions to
be made by it regarding the Fund and, upon reasonable request, furnish the
Manager and the Fund with information reasonably requested by
the Manager and the Fund as necessary for the Manager and the Fund to
monitor the Sub-Adviser’s investment policy decisions made under this
Agreement;
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(b)
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submit
such reports and information as the Manager or the Fund may reasonably
request to assist the Fund’s custodian (the “Custodian”) in its
determination of the market value of securities held in the
Fund;
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(c)
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place
orders for purchases and sales of portfolio investments for the
Fund;
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(d)
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give
instructions to the Custodian concerning the delivery of securities and
transfer of cash for the Fund for the purpose of settling
securities transactions;
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(e)
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maintain
and preserve the records relating to its activities hereunder required by
applicable law to be maintained and preserved by the Manager, to the
extent not maintained by the Manager or another agent of the Fund, and the
Sub-Adviser hereby agrees that all records which it maintains for the Fund
are the property of the Fund and further agrees to surrender promptly to
the Fund copies of any such records upon the Fund’s request, provided, however, that the
Sub-Advisor may retain any copies or original records that may be
necessary or desirable to meet its own record retention
requirements;
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(f)
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as
soon as practicable after the close of business each day but no later than
11:00 a.m. Eastern time the following business day, provide the Custodian
with copies of trade tickets for each transaction effected for the Fund,
provide copies to the Manager and the Fund upon request, and promptly
forward or cause to be forwarded to the Custodian copies of all brokerage
or dealer confirmations;
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(g)
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as
soon as practicable following the end of each calendar month, provide the
Manager and the Fund with written statements showing all transactions
effected for the Fund during the month, a summary listing all investments
held in the Fund as of the last day of the month, and such other
information as the Manager or the Fund may reasonably request in
connection with any accounting or marketing services that the Manager
provides for the Fund. The Manager and the Fund acknowledges
that Sub-Adviser and Custodian may use different pricing vendors, which
may result in valuation
discrepancies;
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(h)
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absent
specific instructions to the contrary provided to it by the Manager or the
Fund, and subject to its receipt of all necessary voting materials, vote
all proxies with respect to investments of the Fund in accordance with the
Sub-Adviser’s proxy voting policy as most recently provided to the Manager
and approved by the Trust; The Manager hereby delegates to the
Sub-Adviser the Manager’s discretionary authority to exercise voting
rights with respect to the securities and investments of the Allocated
Portion of the Fund. The Sub-Adviser’s proxy voting policies shall comply
with any rules or regulations promulgated by the Securities and Exchange
Commission . The Sub-Adviser shall supply updates of this
record to the Manager or any authorized representative of the Manager, or
to the Fund on an annual basis (or more frequently, if required by
law). The Sub-Adviser shall provide the Manager and the Fund
with information regarding the policies and procedures that the
Sub-Adviser uses to determine how to vote proxies relating to the
Allocated Portion.
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(i)
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To
the extent reasonably requested by the Trust, use its best efforts to
assist the Chief Compliance Officer of the Trust in respect of Rule 38a-1
under the 1940 Act, as amended (the “1940 Act”) including,
without limitation, providing the Chief Compliance Officer of the Trust
with (a) current copies of the compliance policies and procedures of the
Sub-Adviser in effect from time to time (including prompt notice of any
material changes thereto), (b) a summary of the results of the
Sub-Adviser’s annual compliance review, as performed pursuant to SEC Rule
206(4)-7 under the Investment Advisers Act of 1940, as amended, and (c)
upon request, a certificate of the chief compliance officer of the
Sub-Adviser to the effect that the policies and procedures of the
Sub-Adviser are reasonably designed to prevent violation of the Federal
Securities Laws (as such term is defined in Rule
38a-1).
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(j)
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Except
as permitted by the Trust’s policies and procedures, not disclose but
shall treat confidentially all information in respect of the portfolio
investments of the Fund, including, without limitation, the identification
and market value or other pricing information of any and all portfolio
securities or other financial instruments held by the Fund, and any and
all trades of portfolio securities or other transactions effected for the
Fund (including past, pending and proposed trades). The Trust and the Manager
acknowledge and agree, however, (x) that the Sub-Advisor may manage other
accounts with similar investment objectives and policies, (y) that the
Sub-Advisor’s investment management decisions regarding those accounts be
similar or substantially the same as those made with respect to the Fund,
and (z) that the Sub-Adviser may disclose information respecting all those
investment management decisions as necessary to implement those decisions
for all of its accounts.
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The Fund
or its agent will provide timely information to the Sub-Adviser regarding such
matters as inflows to and outflows from the Fund and the cash requirements of,
and cash available for investment in, the Fund. The Fund or its agent
will timely provide the Sub-Adviser with copies of monthly accounting statements
for the Fund, and such other information as may be reasonably necessary or
appropriate in order for the Sub-Adviser to perform its responsibilities
hereunder.
Manager
will be responsible for all class actions and lawsuits involving the Fund or
securities held, or formerly held, in the Fund. Sub-Adviser is not
required to take any action or to render investment-related advice with respect
to lawsuits involving the Fund, including those involving securities presently
or formerly held in the Fund, or the issuers thereof, including actions
involving bankruptcy. In the case of notices of class action suits
received by Sub-Adviser involving issuers presently or formerly held in the
Fund, Sub-Adviser shall promptly forward such notices to Manager and, with the
consent of the Manager, may provide information about the Fund to third parties
for purposes of participating in any settlements relating to such class
actions.
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3.
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ALLOCATION OF
EXPENSES.
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Each
party to this Agreement shall bear the costs and expenses of performing its
obligations hereunder. In this regard, the Manager specifically
agrees that the Fund shall assume the expense of:
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(a)
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brokerage
commissions for transactions in the portfolio investments of the Fund and
similar fees and charges for the acquisition, disposition, lending or
borrowing of such portfolio
investments;
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(b)
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custodian
fees and expenses;
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(c)
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all
taxes, including issuance and transfer taxes, and reserves for taxes
payable by the Fund to federal, state or other government agencies;
and
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(d)
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interest
payable on any Fund borrowings.
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The
Sub-Adviser specifically agrees that with respect to the operation of the Fund,
the Sub-Adviser shall be responsible for (i) providing the personnel, office
space and equipment reasonably necessary to provide its sub-advisory services to
the Fund hereunder, and (ii) the costs of any special Board of Trustees meetings
or shareholder meetings convened for the primary benefit of the Sub-Adviser. If
the Manager has agreed to limit the operating expenses of the Fund,
the Manager shall also be solely responsible on a monthly basis for any
operating expenses that exceed the agreed upon expense limit. Nothing
in this Agreement shall alter the allocation of expenses and costs agreed upon
between the Fund and the Manager in the Management Agreement or any other
agreement to which they are parties.
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4.
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SUB-ADVISORY
FEES.
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For all
of the services rendered with respect to the Fund as herein provided, the
Manager shall pay to the Sub-Adviser a fee (for the payment of which the Fund
shall have no obligation or liability), based on the Current Net Assets of the
Fund (as defined below), at the
rate or rates set forth in Schedule A attached hereto and made a part
hereof. Such fee shall be accrued daily and payable monthly, as soon
as practicable after the last day of each calendar month. In the case
of termination of this Agreement with respect to the Fund during any calendar
month, the fee with respect to such Portfolio accrued to, but excluding, the
date of termination shall be paid promptly following such
termination. For purposes of computing the amount of advisory fee
accrued for any day, “Current Net Assets” shall mean the Fund’s net assets,
managed by the Sub-Adviser, as of the most recent preceding day for which the
Fund’s net assets were computed.
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5.
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PORTFOLIO
TRANSACTIONS.
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In
connection with the investment and reinvestment of the assets of the Fund, the
Sub-Adviser is authorized to select the brokers or dealers that will execute
purchase and sale transactions for the Fund’s portfolio (the “Portfolio”) and to use all
reasonable efforts to obtain the best available price and most favorable
execution with respect to all such purchases and sales of portfolio securities
for said Portfolio. The Sub-Adviser may take 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; the value
of the expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis; and such other factors as the Sub-Adviser, in
the exercise of its fiduciary duties, may deem relevant. The
Sub-Adviser shall maintain records adequate to demonstrate compliance with the
requirements of this section. Subject to the policies as the Board of
Trustees of the Fund may determine and consistent with Section 28(e) of the
Securities Exchange Act of 1934, as amended, the Sub-Adviser shall have the
right to follow a policy of selecting brokers who furnish brokerage and research
services to the Fund or to the Sub-Adviser, and who charge a higher commission
rate to the Fund than may result when allocating brokerage solely on the basis
of seeking the most favorable price and execution. The Sub-Adviser
shall determine in good faith that such higher cost was reasonable in relation
to the value of the brokerage and research services provided and shall make
reasonable reports regarding such determination and description of the products
and services obtained if so requested by the Fund.
The
Manager and the Fund authorize and empower the Sub-Adviser to direct the
Custodian to open and maintain brokerage accounts for securities and other
property (all such accounts hereinafter called “brokerage accounts”) for and
in the name of the Fund and to execute for the Fund as its agent and
attorney-in-fact standard customer agreements with such broker or brokers as the
Sub-Adviser shall select as provided above. The Sub-Adviser may,
using such of the securities and other property in the Fund as the Sub-Adviser
deems necessary or desirable, direct the Custodian to deposit for the Fund
original and maintenance brokerage and margin deposits and otherwise direct
payments of cash, cash equivalents and securities and other property into such
brokerage accounts and to such brokers as the Sub-Adviser deems desirable or
appropriate. The Sub-Adviser shall cause all securities and other
property purchased or sold for the Fund to be settled at the place of business
of the Custodian or as the Custodian shall direct. All securities and
other property of the Fund shall remain in the direct or indirect custody of the
Custodian. The Sub-Adviser shall notify the Custodian as soon as
practicable of the necessary information to enable the Custodian to effect such
purchases and sales.
The
Sub-Adviser further shall have the authority to instruct the Custodian (i) to
pay cash for securities and other property delivered to the Custodian for the
Fund, (ii) to deliver securities and other property against payment for the
Fund, and (iii) to transfer assets and funds to such brokerage accounts as the
Sub-Adviser may designate, all consistent with the powers, authorities and
limitations set forth herein. The Sub-Adviser shall not have
authority to cause the Custodian to deliver securities and other property, or
pay cash to the Sub-Adviser except as expressly provided herein.
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6.
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LIABILITY;
STANDARD OF CARE.
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The
Sub-Adviser, its affiliates, agents and employees, shall be indemnified by the
Manager against all liabilities, losses or claims (including reasonable expenses
arising out of defending such liabilities, losses or claims):
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(a)
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arising
from Fund’s or the Manager’s directions to the Sub-Adviser or Custodian,
or brokers, dealers or others with respect to the making, retention or
sale of any investment or reinvestment hereunder;
or
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(b)
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arising
from the acts or omissions of the Manager, the Custodian or the Fund,
their respective affiliates, agents or
employees;
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except
for any such liability or loss which is due to the gross negligence, willful
misconduct, or lack of good faith of the Sub-Adviser, its affiliates, agents and
employees, or the Sub-Adviser’s reckless disregard of its duties and
obligations. The Sub-Adviser shall also be without liability
hereunder for any action taken or omitted by it in good faith and without
negligence.
The
Sub-Adviser shall comply with all applicable laws and regulations in the
discharge of its duties under this Agreement; shall (as provided in Section 2
above) comply with the investment policies, guidelines and restrictions of the
Fund; shall act at all times in the best interests of the Fund; and shall
discharge its duties with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a like capacity
and familiar with such matters would use in the conduct of a similar
enterprise. The Sub-Adviser shall be liable to the Fund for any loss
(including brokerage charges) incurred by the Fund as a result of any investment
made by the Sub-Adviser in material violation of the investment policies,
guidelines, and restrictions set forth in Section 2 hereof.
However,
the Sub-Adviser shall not be obligated to perform any service not described in
this Agreement, and shall not be deemed by virtue of this Agreement to have made
any representation or warranty that any level of investment performance or level
of investment results will be achieved.
Except as
otherwise provided in this Agreement, each party to this Agreement (as an
“Indemnifying Party”), including the Trust on behalf of the Fund, 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 expense and reasonable counsel fees incurred in connection
therewith) arising out of the Indemnifying Party’s performance or
non-performance of any duties under this Agreement, provided, however, that
indemnification shall not be paid hereunder with respect to any matter to the
extent to which the loss, liability, claim, damage, or expense was determined by
a court of competent jurisdiction to have been caused by the Indemnified Party’s
willful misfeasance, bad faith, or negligence in the performance of duties
hereunder or reckless disregard of obligations and duties under this Agreement,
and provided further, however, that the Sub-Adviser shall only be required to
indemnify and hold harmless an Indemnified Party to the extent the loss,
liability, claim, damage, or expense of such Indemnified Party was attributable
to the willful misfeasance, bad faith, gross negligence, or reckless disregard
of the Sub-Adviser’s obligations or duties hereunder.
If
indemnification is to be sought hereunder, then the Indemnified Party shall
promptly notify the Indemnifying Party of the assertion of any claim or the
commencement of any action or proceeding in respect thereof; provided, however,
that the failure so to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability that it may otherwise have to the
Indemnified Party provided such failure shall not affect in a material adverse
manner the position of the Indemnifying Party or the Indemnified Party with
respect to such claim. Following such notification, the Indemnifying Party may
elect in writing to assume the defense of such action or proceeding and, upon
such election, it shall not be liable for any legal costs incurred by the
Indemnified Party (other than reasonable costs of investigation previously
incurred) in connection therewith, unless (i) the Indemnifying Party has failed
to provide counsel reasonably satisfactory to the Indemnified Party in a timely
manner or (ii) counsel which has been provided by the Indemnifying Party
reasonably determines that its representation of the Indemnified Party would
present it with a conflict of interest. Notwithstanding the foregoing, the
Indemnified Party shall be entitled to employ separate counsel at its own
expense and, in such event, the Indemnified Party may participate in such
defense as it deems necessary.
The
provisions of this paragraph 6 shall not apply in any action where the
Indemnified Party is the party adverse, or one of the parties adverse, to the
other party.
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7.
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TERM
AND TERMINATION OF THIS AGREEMENT; NO
ASSIGNMENT
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(a) This
Agreement shall go into effect as to the Fund on the date set forth above and
shall, unless terminated as hereinafter provided, continue in effect for a
period of two years from the date of approval by shareholders of the Fund at a
meeting called for the purpose of such approval. This Agreement shall
continue in effect thereafter for additional periods not exceeding one (l) year
so long as such continuation is approved for the Fund 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 the 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 1940
Act;
(b) This
Agreement may be terminated by the Trust on behalf of the Fund at any time
without payment of any penalty, by the Board of Trustees of the Trust, by the
Manager, or by vote of a majority of the outstanding voting securities of a Fund
without the payment of any penalties, upon sixty (60) days’ written notice to
the Sub-Adviser, and by the Sub-Adviser upon sixty (60) days’ written notice to
the Fund and the Manager. In the event of a termination, the
Sub-Adviser shall cooperate in the orderly transfer of the Fund’s affairs and,
at the request of the Board of Trustees or the Manager, transfer any and all
books and records of the Fund maintained by the Sub-Adviser on behalf of the
Fund; and
(c) This
Agreement shall terminate automatically in the event of any transfer or
assignment thereof, as defined in the 1940 Act. This Agreement will
also terminate in the event that the Management Agreement is
terminated.
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8.
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SERVICES
NOT EXCLUSIVE
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The
services of the Sub-Adviser to the Manager and the Fund are not to be deemed
exclusive and it shall be free to render similar services to others so long as
its services hereunder are not impaired thereby. It is specifically
understood that directors, officers and employees of the Sub-Adviser and of its
subsidiaries and affiliates may continue to engage in providing portfolio
management services and advice to other investment advisory
clients. The Manager agrees that Sub-Adviser may give advice and take
action in the performance of its duties with respect to any of its other clients
which may differ from advice given or the timing or nature of action taken with
respect to the Fund. Nothing in this Agreement shall be deemed to
require Sub-Adviser, its principals, affiliates, agents or employees to purchase
or sell for the Fund any security which it or they may purchase or sell for its
or their own account or for the account of any other client.
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9.
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AGGREGATION
OF ORDERS
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Nothing
in this Agreement, shall preclude the combination of orders for the sale or
purchase of portfolio securities of the Fund with those for other accounts
managed by the Sub-Adviser or its affiliates, if orders are allocated in a
manner deemed equitable by the Sub-Adviser among the accounts and at a price
approximately averaged. The Sub-Adviser agrees that (i) it will not
aggregate transactions unless aggregation is consistent with its duty to seek
best execution; (ii) no account will be favored over any other account; each
account participating in an aggregated order will participate at the average
share price for all transactions in that security or a given business day, with
transaction costs shared pro-rata based on each account’s participation in the
transaction; and (iii) allocations will be made in accordance with the
Sub-Adviser’s compliance policies and procedures. Sub-Adviser may increase or reduce the
amounts of securities allocated to each account if necessary to avoid having odd
or small numbers of shares held for the account of any
client.
The Fund may be offered the opportunity
to participate in initial public offerings (“IPOs”) and other offerings if
Sub-Adviser believes that such investments are consistent with the investment
objective and policies of the Fund. The Trust understands that other factors may
also be taken into consideration in connection with allocation of IPOs and other
offerings including that the Sub-Adviser may choose to offer participation to
only a small group of suitable clients or to no clients. Sub-Adviser’s
allocation policies and procedures are subject to amendment from time to
time.
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10.
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NO
SHORTING; NO BORROWING
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The
Sub-Adviser 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
Sub-Adviser 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 1940 Act. The Manager agrees that neither it nor any of its officers or
employees shall borrow from the Fund or pledge or use the Fund's assets in
connection with any borrowing not directly for the Fund's benefit. For this
purpose, failure to pay any amount due and payable to the Fund for a period of
more than thirty (30) days shall constitute a borrowing.
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11.
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AMENDMENT
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No
provision of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by all parties.
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12.
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NONPUBLIC
INFORMATION.
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(a)
Notwithstanding any provision herein to the contrary, the Sub-Adviser hereto
agrees on behalf of itself and its directors, trustees, shareholders, officers,
and employees (1) to treat confidentially and as proprietary information of the
Fund (a) all records and other information relative to the Fund’s 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
Sub-Adviser. Such written approval shall not be unreasonably withheld
by the Trust and may not be withheld where the Sub-Adviser 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.
(b)
Sub-Adviser provides a variety of
services to its customers. In connection with providing these services,
Sub-Adviser may, from time to time, come into possession of confidential and
material, nonpublic information that Sub-Adviser is prohibited from improperly
disclosing or using such information for Sub-Adviser’s benefit or for the
benefit of any other person, regardless of whether such other person is a
client. Sub-Adviser maintains and enforces written policies and
procedures that prohibit the communication of such information to persons who do
not have a legitimate need to know such information and to assure that it is
meeting its obligations to customers and remains in compliance with applicable
law. The Manager and the Trust understand and agree that these policies and
procedures are necessary and appropriate and recognize that, in certain
circumstances, we may be prohibited from communicating such information to the
Manger or the Trust or using it for their benefit.
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13.
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CONFLICTS
OF INTEREST AND RISS OF INTERNATIONAL
INVESTING.
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The Trust recognizes that there are
certain inherent and potential conflicts of interest between Sub-Adviser's
management of the Fund and the activities of other accounts, some of which are
affiliates for which Adviser acts as an investment adviser. In
particular, some of these entities may seek to acquire securities of the same
issuer as the Fund or to dispose of investments the Fund is seeking to
acquire. In addition, because some of Sub-Adviser's staff are also
officers, directors and/or employees of such affiliates, Sub-Adviser may have
conflicts of interest in the allocation of management and staff time, services
and functions among the Plan and other entities.
Other accounts and persons advised by
Sub-Adviser have different investment objectives or considerations than the
Fund; thus decisions as to purchases of and sales for each managed account are
made separately and independently in light of the objectives and purposes of
such account. In addition, Sub-Adviser does not devote its full time
to the management of any one account and will only be required to devote such
time and attention to the Fund as it, in its sole discretion, deems necessary
for the management of the Fund.
There may also be a conflict of
interest in the allocation of investment opportunities between the Fund and
other accounts that Sub-Adviser advises. Although Sub-Adviser will
allocate investment opportunities in a manner which it believes in good faith to
be in the best interests of all the accounts involved and will in general
allocate investment opportunities believed to be appropriate for both the Fund
and one or more of its other accounts among the Fund and such other accounts on
an equitable basis as determined by Sub-Adviser in good faith, there can be no
assurance that a particular investment opportunity that comes to the attention
of Sub-Adviser will be allocated in any particular manner.
Sub-Adviser may from time to time hold
on behalf of its clients positions of more than 5% of the debt or
equity securities of several issuers. If Sub-Adviser were to decide
or be required for any reason to sell one or more of these positions over a
short period of time, the Fund might suffer a greater loss due to the
concentration of such positions than would be the case if Sub-Adviser did not
take significant interests in any particular issuer.
Investment in securities of foreign
issuers and in foreign branches of domestic banks, involves some risks different
from, or in addition to, those affecting investments in securities of
U.S.issuers, including, but not limited to
the following:
Publicly available information about
foreign issuers and economies may be limited. Foreign issuers are not
generally subject to uniform accounting, auditing and financial and other
reporting standards and requirements comparable to those applicable to
U.S.companies. There may be less
government supervision and regulation of foreign securities exchanges, brokers
and listed companies than in the U.S. Many foreign securities
markets have substantially less volume than U.S.national securities
exchanges. Available investments in emerging countries may be highly
concentrated in a small number of issuers, or the issuers may be unseasoned
and/or have significantly smaller market capitalization than in the U.S.or more developed
countries. Consequently, securities of foreign issuers may be less
liquid and more volatile than those of comparable domestic
issuers. Dividends and interest paid by foreign issuers may be
subject to withholding and other foreign taxes, which may decrease the net
return on foreign investments as compared to dividends and interest paid by
U.S.companies on investments in the
Fund. Political and economic developments may present
risks. A foreign jurisdiction might impose or change withholding
taxes on income payable in connection with foreign securities. There
are risks of seizure, nationalization or expropriation of a foreign issuer or
foreign deposits, and adoption of foreign governmental restrictions such as
exchange controls. Many emerging or developing countries have less
stable political and economic environments than some more developed countries,
and may face external stresses (including war) as well as internal ones
(including hyperinflation, currency depreciation, limited resource
self-sufficiency, and balance of payments issues and associated social
unrest). It may be more difficult to obtain a judgment in a court
outside the U.S. Securities of foreign issuers are frequently denominated in
foreign currencies, and the Fund may temporarily hold uninvested reserves in
bank deposits in foreign currencies. The exchange rates between the
U.S. dollar and the currencies of emerging markets countries may be volatile,
and changes in currency rates and exchange control regulations may affect
(favorably or unfavorably) the value of the Fund in U.S. dollars. The
Fund may incur costs in converting between currencies. Foreign
governments may delay or restrict repatriation of the Account’s investment
income or other assets.
|
14.
|
CERTIFICATIONS;
DISCLOSURE CONTROLS AND PROCEDURES
|
The
Sub-Adviser acknowledges that, in compliance with the Xxxxxxxx-Xxxxx Act of 2002
(the “Xxxxxxxx-Xxxxx
Act”), and the implementing regulations promulgated thereunder, the Trust
and the Fund are required to make certain certifications and have adopted
disclosure controls and procedures. To the extent reasonably requested by the
Trust, the Sub-Adviser agrees to use its best efforts to assist the Trust and
the Fund in complying with the Xxxxxxxx-Xxxxx Act and implementing the Trust’s
disclosure controls and procedures. The Sub-Adviser agrees to inform
the Trust of any material development related to the Fund that the Sub-Adviser
reasonably believes is relevant to the Fund’s certification obligations under
the Xxxxxxxx-Xxxxx Act.
|
15.
|
REPORTS
AND ACCESS
|
The
Sub-Adviser agrees to supply such information to the Manager and to permit such
compliance inspections by the Manager or the Fund as shall be reasonably
necessary to permit the Fund’s administrator to satisfy its obligations and
respond to the reasonable requests of the Trust.
|
16.
|
NOTIFICATION
OF CHANGES IN THE
SUB-ADVISER
PERSONNEL
|
The
Sub-Adviser agrees that it will provide prompt notice to the Manager and Fund
about material changes in the employment status of key investment management
personnel involved in the management of the Fund, material changes in the
investment process used to manage the Fund and any changes in senior management,
operations or ownership of the Sub-Adviser’s Firm.
|
17.
|
NOTICES
|
Notices
and other communications required or permitted under this Agreement shall be in
writing, shall be deemed to be effectively delivered when actually received, and
may be delivered by US mail (first class, postage prepaid), by facsimile
transmission, by hand or by commercial overnight delivery service, addressed as
follows:
The Manager and the Trust agree that
Sub-Adviser may designate the manner in which the Manager and the Trust must
send different types of communications (including changes in your contact
information) to Sub-Adviser and the addresses to be used for that purpose.
Sub-Adviser need not act upon any communications that are transmitted in a
manner that is inconsistent with these designations. Sub-Adviser will
have no liability whatsoever for relying on any direction from, or document
signed by, any person that it reasonably believes to be from the Manager or the
Trust or to be authorized by the Manager or the Trust to give the direction or
sign the document, whether or not the person actually has authority to do
so.
A list of persons authorized to give
instructions to the Sub-Adviser hereunder with specimen signatures, is set out
in Schedule B to this Agreement. The Manager or the Trust may revise
the list of authorized persons from time to time by sending the Sub-Adviser a
revised list which has been certified either by the Manager or the Trust or by a
duly authorized agent of the Trust.
|
MANAGER:
|
FundQuest
Incorporated
000
Xxxx Xxxxxx 00xx
Xx
Xxxxxx
Xxxxxx Xxxxx
Xxxxxx,
XX 00000
Attn:
Compliance Officer
|
|
SUB-ADVISER:
|
Xxxxxxxxxx
Global Investors, Inc.
000
Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx
Xxxxxxxxxx, XX 00000
Attn: General
Counsel
|
|
FUND:
|
On
behalf of ActivePassive Emerging Markets Equity Fund
000
Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Attn:
Secretary
|
|
18.
|
ASSIGNMENT
|
This
Agreement may not be assigned by any party, either in whole or in part, without
the prior written consent of each other party.
|
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
caption in this Agreement are not 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 Delaware without giving effect to the conflict of laws principles
of Delaware or any other jurisdiction; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act and the Investment Advisers Act of 1940, as
amended, and any rules and regulations promulgated thereunder.
[SIGNATURE
PAGE FOLLOWS]
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the day first set
forth above.
|
FUNDQUEST
INCORPORATED:
By:
/s/Xxxxxxx X.
Xxxxx
Name:
Xxxxxxx X. Xxxxx
Title:
CIO
|
|
Xxxxxxxxxx
Global Investors, Inc.
By: /s/Xxxxxx X.
Xxxxxxx
Name:
Xxxxxx X. Xxxxxxx
Title:
Managing Director
|
|
As
a Third Party Beneficiary, and as a party for purposes of
Section 6
|
|
On
behalf of ActivePassive Emerging Markets Equity Fund
By: /s/Xxxxxxx X.
Xxxx
Name:
Xxxxxxx X. Xxxx
Title:
President
|
EXHIBIT
A
INVESTMENT
GUIDELINES
Investment Objectives and
Policies
As
described in Fund’s current prospectus and SAI provided by Manager and as agreed
to by Sub-adviser.
Investment
Restrictions
As
described in Fund’s current prospectus and SAI provided by Manager and as agreed
to by Sub-adviser.
SCHEDULE
A
FUNDS
AND FEES
|
Series of Advisors Series
Trust
|
Annual Fee Rate
|
|
ActivePassive
Emerging Markets Equity Fund
|
60
bps for the first $50m
50
bps for the next $200m
40
bps thereafter
|
SCHEDULE
B
AUTHORIZED
PERSONS
The
individuals listed below are hereby authorized to give instructions to the
Sub-Adviser. Sub-Adviser may rely on this information and these
specimen signatures:
Xxxxxxxxx X.
Xxxxx
Name
/s/Xxxxxxxxx X.
Xxxxx
Signature
Xxxxxxx X.
Xxxxx
Name
/s/Xxxxxxx X.
Xxxxx
Signature
