FORM OF INVESTMENT MANAGERS SERIES TRUST OPERATING EXPENSES LIMITATION AGREEMENT
FORM
OF
THIS
OPERATING EXPENSES LIMITATION AGREEMENT (this “Agreement”) is effective as of
March __, 2008, by and between Investment
Managers Series Trust,
a
Delaware statutory trust (the “Trust”), on behalf of the Insight
Small Cap Growth Fund
(the
“Fund”), a series of the Trust, and the investment adviser of the Fund,
Insight
Capital Research & Management, Inc.®
(the
“Advisor”).
WITNESSETH:
WHEREAS,
the Advisor renders (or will render) advice and services to the Fund pursuant
to
the terms and provisions of an Investment Advisory Agreement between the Trust
on behalf of the Fund and the Advisor dated as of March __, 2008, (the
“Investment Advisory Agreement”); and
WHEREAS,
pursuant to the Investment Advisory Agreement the Fund is responsible for,
and
has assumed the obligation for, payment of all expenses of the Fund that have
not been specifically and expressly assumed by the Advisor thereunder;
and
WHEREAS,
the Trust anticipates having a new Fund prospectus effective under the
Securities Act of 1933, as amended (the “Securities Act”), on or about ________,
2008 (the “Prospectus”); and
WHEREAS,
the Advisor desires to limit the Fund’s Operating Expenses for the Expense
Limitation Period (as each term is defined in Paragraph 2 of this Agreement)
pursuant to the terms and provisions of this Agreement, and the Trust (on behalf
of the Fund) desires to allow the Advisor to implement those
limits;
NOW
THEREFORE, in consideration of the covenants and the mutual promises hereinafter
set forth, the parties, intended to be legally bound hereby, mutually agree
as
follows:
1. Limit
on Operating Expenses.
a. The
Advisor hereby agrees to limit during the Expense Limitation Period the Fund’s
Operating Expenses for each Class of its shares to an annual rate, expressed
as
a percentage of the average annual net assets of such Class, to the amount
listed in Appendix
A
(each
the “Annual Limit”) by (i) waiving all or a portion of the Advisor’s investment
advisory fee payable pursuant to the Investment Advisory Agreement and (ii)
to
the extent such fee waiver by itself is insufficient reimbursing the Fund all
or
a portion of such expenses, to the extent that the Fund’s Operating Expenses for
such Class exceed the Annual Limit for such Class in accordance with this
Paragraph 1.
b. To
determine the amount of each Class’ Operating Expenses in excess of the Annual
Limit for each day during the Expense Limitation Period (the “Day”), the
amount
of
allowable Expense Limitation Period-to-date expenses shall be computed on the
Day by (i) prorating the Annual Limit based on the number of calendar days
actually elapsed within the Expense Limitation Period prior to the Day (the
"Prorated Limitation") and (ii) multiplying the Prorated Limitation by the
average net assets of the Class for all days during the Expenses Limitation
Period prior to the Day in order to produce the allowable expenses to be
recorded and accrued for the Day based on the daily prorated Annual Limit and
Class net assets for the Day (the "Allowable Expenses").
If
the
Operating Expenses incurred for the Class (net of previous Advisor investment
advisory fee waivers and reimbursements for that Class not already repaid
pursuant to Paragraph 3 hereof) that will be estimated and accrued for the
Day
exceed the Class’ Allowable Expenses for the Day (the “Excess”), the Advisor
agrees (i) first to waive its investment advisory fee for the Class for the
Day
to the extent of the Excess, and (ii) second, and to the extent such waiver
pursuant to clause (i) by itself is less the Excess for the Day, reimburse
the
Class to the extent necessary for the aggregate investment advisory fee waiver
and expense reimbursement to equal the Excess for the Class for the Day within
thirty (30) days after the Trust notifies the Advisor in writing that a partial
Excess reimbursement is due.
2. Definition. For
purposes of this Agreement with respect to the Fund and each Class of shares
thereof:
a. Subject
to Paragraph 2.b hereof and the exclusions set forth in this Paragraph 2.a,
the
term “Operating Expenses” of a Class is defined as the expenses of the Class
that are appropriately reflected in the Class’ “Ratio of Expenses to Average
Annual Net Assets” in the Fund’s prospectus pursuant to Item 8(a) “Financial
Highlights” of Form N-1A in accordance with Instructions 4.a and 4.b thereto, as
each such Item and Instruction is in effect of the date hereof, including
expenses such as the Class’ share of advisory and administrative fees, audit
expenses, Trust Board meeting costs, legal costs for ordinary operations, costs
of preparing, and filing post
effective amendments, annual and semiannual reports to shareholders, and any
proxy materials,
and printing and distributing prospectuses, SAIs, shareholder reports and any
proxy materials
for current shareholders, and other expenses that would be part of the expenses
borne by a
registered investment company in the ordinary course of business
but
excluding any front-end or contingent deferred loads, redemption fees, taxes,
leverage interest, brokerage fees (including commissions, markups and
markdowns), acquired fund fees and expenses (within the meaning of Item 3 of
Form N-1A), [annual account fees for margin accounts,] foreign tax withholdings;
expenses incurred in connection with any merger or reorganization, extraordinary
expenses under generally accepted accounting principles such as litigation
expenses and costs; and, to avoid any conflict of interest or appearance
thereof, fees and expenses of trustees who are deemed not to be interested
persons of the Trust pursuant to Section
2(a)(19) of the Investment Company Act of 1940, as amended (the “1940
Act”).
b. Notwithstanding
Paragraph 2.a, the term “Operating Expenses” of the Fund or a Class shall be
deemed not to include any expenses of the Fund or Class to the extent that
such
expenses of the Fund or a Class are directly attributable to fees and expenses
of the Trust’s various services providers, including without limitation,
administrators, transfer agents, fund accountants, shareholder services
providers or distributors, in excess of the fees and expenses rates set forth
for such services providers in Schedules
1
through
5
attached
hereto. Any fees and expenses of the services providers in respect of the Fund
or a Class thereof that are in excess of the fees and expenses rates set forth
in Schedules
1
through
5
shall be
the sole responsibility of the Trust and not of the Advisor without in each
case
the express prior written consent of the Advisor.
c. The
term
“Expense Limitation Period” is defined as the one (1) year period commencing of
the date the Prospectus becomes effective under the Securities Act, and each
subsequent one (1) year period for which this Agreement automatically is renewed
pursuant to Paragraph 4 hereof.
3. Repayment
of Waived Fees and Reimbursed Expenses.
The Fund shall carry forward, for a period not to exceed three (3) years from
the day on which the Advisor waives all or a portion of its investment advisory
fee and/or reimburses any Excess pursuant to Paragraph 1.b hereof (any such
waived and/or reimbursed Excess a “Paid Excess”), and the Fund (on a first
in-first out basis) shall (i) credit each Paid Excess against each subsequent
day’s Excess determined in accordance with Paragraph 1.b hereof that is greater
than zero (0) and (ii) if on a subsequent day’s Excess is zero (0), credit the
Paid Excess to an account for the benefit of the Advisor (the “Repayment
Account”), the balance of such account to be paid to the Advisor monthly in
arrears, in each case until such Paid Excess is recovered in full for the
benefit of the Advisor; provided;
however,
in case
that the Fund may effect such credit and payment and still remain in compliance
with Paragraph 1 hereof. Any positive balance in the Repayment Account for
a
calendar month may be used to offset the Advisor’s reimbursement obligations
pursuant to Paragraph 1.a(ii) hereof during such month.
4. Term. This
Agreement shall become effective on the date hereof and shall remain in effect
through the end of the Expense Limitation Period, and shall automatically
renewed for an additional one (1) year period following the end of an Expense
Limitation Period unless sooner terminated as provided in Paragraph 5 of this
Agreement.
5. Termination. This
Agreement may be terminated at any time, and without payment of any penalty,
by
the Board of Trustees of the Trust, on behalf of the Fund, upon sixty (60)
days’
written notice to the Advisor. This Agreement may be terminated by
the Advisor without payment of any penalty upon at least sixty (60) days written
notice prior to the end of any Expense Limitation Period. This
Agreement will automatically terminate, with respect to the Fund or Class listed
in Appendix
A,
if the
Investment Advisory Agreement for that Fund is terminated, with such termination
effective upon the effective date of the Investment Advisory Agreement’s
termination for that Fund or Class. The termination of this Agreement shall
not
affect any obligation of a party that has accrued or is outstanding prior to
such termination.
6. Assignment. This
Agreement and all rights and obligations hereunder may not be assigned without
the written consent of the other party.
7. 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.
8. 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 1940
Act
and the Investment Advisers Act of 1940, as amended, and any rules and
regulations promulgated thereunder.
9.
Entire
Agreement.
This
Agreement, including its appendices and schedules (each of which is incorporated
herein and made a part hereof by these references), represents the entire
agreement and understanding of the parties hereto, and shall supersede any
prior
agreements between the parties, relating to the subject matter hereof, and
all
such prior agreements shall be deemed terminated upon the effectiveness of
this
Agreement.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and attested by their duly authorized officers, all on the day and
year
first above written.
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INSIGHT
CAPITAL RESEARCH & MANAGEMENT, INC.®
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By:
______________________________________
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By:
______________________________________
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Print
Name: ________________________________
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Print
Name: ________________________________
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Title: President
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Title: President
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Appendix
A
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Fund
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Operating
Expense Limit
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Insight
Small Cap Growth Fund
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Class
A
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1.75%
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Schedule
1
Fund
Administration Fees
Schedule
2
Transfer
Agent Services Fee Schedule
Schedule
3
Fund
Accounting Fees
Schedule
4
Domestic
Custody Fees
Schedule
5
Distributor
Fees
