ADVISORS SERIES TRUST INVESTMENT ADVISORY AGREEMENT The Edgar Lomax Company
The
Xxxxx Xxxxx Company
THIS
INVESTMENT ADVISORY AGREEMENT is
made as of the 26th
day of
September, 1997, by and between ADVISORS SERIES TRUST, a Delaware business
trust
(hereinafter called the “Trust”), on behalf of the following series of the
Trust, Xxxxx Xxxxx Value
Fund (the “Fund”) and The Xxxxx Xxxxx Company, a
Delaware 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 Fund is 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 (or is exempt
from registration) 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 Fund 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 Fund for the period and 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
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objectives, policies and restrictions of the
Fund
as set forth in the Fund’s and Trust’s governing documents, including, without
limitation, the Trust’s Agreement and Declaration of Trust and By-Laws; the
Fund’s prospectus, statement of additional information and undertakings; and
such other limitations, policies and procedures as the Trustees may reasonably
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.
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Without
limiting the generality of the
foregoing, the Advisor shall (I) furnish the Fund with advice and
recommendations with respect to the investment of the Fund’s assets and the
purchase and sale of portfolio securities for the Fund, 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 Fund, subject to the
ultimate supervision and direction of the Trust’s Board of Trustees; (III) vote
proxies for the Fund, file ownership reports under Section 13 of the Securities
Exchange Act of 1934 for the Fund, and take other actions on behalf of the
Fund;
(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 Fund; (V) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund’s assets which the Fund’s
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
Fund, 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 by 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 relation to the quality and level of service provided
by
the broker-dealer. 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 Fund on a continuing
basis. The price to the Fund 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, 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 Fund 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 to
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-dealer, viewed in terms
of either that particular transaction or the Advisor’s overall responsibilities
with respect to the Trust. 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
therefore. The Advisor is also authorized to consider sales of shares
as a factor in the selection of brokers or dealers to execute portfolio
transactions, subject to the requirements of best execution, i.e., that such brokers
or
dealers are able to execute the order promptly and at the best obtainable
securities price.
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On
occasions when the Advisor deems the
purchase or sale of a security to be in the best interest of the Fund 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
Investment Advisers Act of 1940, the Investment Company Act of 1940, 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 Fund in any way, or in any way be deemed an agent for the Trust
or
for the Fund. It is expressly understood and agreed that the services
to be rendered by the Advisor to the Fund 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.
6.
Expenses.
(a)
With respect to the operation of the Fund, the Advisor shall be responsible
for
(I) providing the personnel, office space and equipment reasonably necessary
for
the operation of the Fund, (II) the expenses of printing and distributing extra
copies of the Fund’s 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 meeting or shareholder
meetings convened for the primary benefit of the Advisor. If the
Advisor has agreed to limit the operating expenses of the Fund, the Advisor
shall also be responsible on a monthly basis for any operating expenses that
exceed the agreed upon expense limit.
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(b)
The Fund is responsible for and has assumed the obligation for payment of all
of
its 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 Fund
including all fees and expenses of its 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 Fund’s
shareholders and the Trust’s Board of Trustees that are properly payable by the
Fund; salaries and expenses of officers and fees and expenses of members of
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 Fund or other communications for distribution to existing
shareholders; legal, auditing and accounting fees; trade association dues;
fees
and expenses (including legal fees) of registering and maintaining registration
of its 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 Fund, if any; and all other
charges and costs of its 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 a Fund as set forth herein, the Fund 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 overheard of personnel performing such services.
7.
Investment Advisory
and Management Fee.
(a)
The Fund 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 Fund 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 Fund 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.
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(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 the 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 fee withheld or voluntarily reduced and any Fund expense absorbed by the
Advisor voluntarily or pursuant to an agreed upon expense cap shall be
reimbursed by the Fund to the Advisor, if so requested by the Advisor, in the
first, second or third (or any combination thereof) fiscal year next succeeding
the fiscal year of the withholding, reduction or absorption if the aggregate
amount actually paid by the Fund toward the operating expenses for such fiscal
year (taking into account the reimbursement) do not exceed the applicable
limitation on Fund expenses. Such reimbursement may be paid prior to the Fund’s
payment of current expenses if so requested by the Advisor even if such practice
may require the Advisor to waive, reduce or absorb current Fund
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 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.
9.
Conflicts with Trust’s
Governing Documents and Applicable Laws. Nothing herein
contained shall be deemed to require the Trust or the Fund to taken 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 Fund and may take
any and all actions necessary and reasonable to protect the interests of
shareholders.
5
10.
Reports and
Access. The Advisor agrees to supply such information to the
Fund’s administrator and to permit such compliance inspections by the Fund’s
administrator and to permit such compliance inspections by the Fund’s
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 Fund’s 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 Fund for any loss (including brokerage
charges) incurred by the Fund as a result of any improper investment made by
the
Advisor.
(c)
In the absence of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the obligations or duties hereunder on the part of the Advisor,
neither the Advisor nor any of its officers, directors or employees shall be
subject to liability to the Trust or the Fund or to any shareholder of the
Fund
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.
(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 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 to furnish it with the services provided for
herein. Notwithstanding the foregoing, however, the employment of the
Advisor by the Trust shall constitute an exclusive arrangement with respect
to
the furnishing of investment advice to the Fund as herein
provided. Likewise, the Advisor may act as investment adviser 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 Fund 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 Investment Advisers Act
of
1940 and has been approved by the Trust’s Board of Trustees.
6
13.
Term.
(a)
This Agreement shall become effective at the time the Fund commences 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 (1) 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 Investment Company Act.
(b)
The Fund may use the name of the fund or any name derived or using the name
of
the advisor 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 Fund shall cease to use such
a
name or any other name connected with the Advisor.
14.
Termination; No
Assignment.
(a)
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 or by
vote
of a majority of the outstanding voting securities of the Fund, upon sixty
(60)
days’ written notice to the Advisor, and by the Advisor upon sixty (60) days’
written notice to the Fund. In the event of a termination, the
Advisor shall cooperate in the order transfer of the Fund’s affairs and, at the
request of the Board of Trustees, transfer any and all books and records of
the
Fund maintained by the Advisor on behalf of the Fund.
(b)
This Agreement shall terminate automatically in the event of any transfer or
assignment thereof, as defined in the Investment Company Act.
15.
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.
16.
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.
17.
Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Arizona 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 Investment Advisors Act
of
1940 and any rules and regulations promulgated thereunder.
7
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.
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The
Xxxxx Xxxxx Company
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on
behalf of the
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Xxxxx
Xxxxx Value Fund
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By:
/s/ Xxxxxx X. Xxxxxxxxx
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By:
/s/ Xxxxxxx X. Xxxx
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Name:
Xxxxxx X. Xxxxxxxxx
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Name:
Xxxxxxx X. Xxxx
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Title: Vice
President
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Title: President
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