INVESTMENT ADVISORY AGREEMENT BETWEEN INVESTMENT MANAGERS SERIES TRUST AND RWN3 LLC
BETWEEN
AND
RWN3
LLC
THIS
INVESTMENT ADVISORY AGREEMENT (the “Agreement”), dated as of March 30, 2010,
between the Investment Managers
Series Trust, a Delaware statutory trust (the “Trust”), on behalf of its
series listed in Appendix A, as amended from time to time (the “Fund”), and RWN3
LLC, a Colorado Limited Liability Company (the “Advisor”).
WHEREAS,
the Advisor has agreed to furnish investment advisory services to the Fund, a
series of the Trust which is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the “1940
Act”);
WHEREAS,
this Agreement has been approved in accordance with the provisions of the 1940
Act, and the Advisor is willing to furnish such services upon the terms and
conditions herein set forth;
NOW,
THEREFORE, in consideration of the mutual premises and covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. In General. The
Advisor agrees, all as more fully set forth herein, to act as investment advisor
to the Fund with respect to the investment of the Fund’s assets and to supervise
and arrange for the day-to-day operations of the Fund and the purchase of
securities for and the sale of securities held in the investment portfolio of
the Fund.
2. Duties and Obligations of the Advisor
with Respect to Investment of Assets of the Fund. Subject to
the succeeding provisions of this section and subject to the direction and
control of the Trust’s Board of Trustees, the Advisor shall (i) act as
investment advisor for and supervise and manage the investment and reinvestment
of the Fund’s assets and, in connection therewith, have complete discretion in
purchasing and selling securities and other assets for the Fund and in voting,
exercising consents and exercising all other rights appertaining to such
securities and other assets on behalf of the Fund; (ii) supervise the investment
program of the Fund and the composition of its investment portfolio; and (iii)
arrange, subject to the provisions of paragraph 3 hereof, for the purchase and
sale of securities and other assets held in the investment portfolio of the
Fund. In performing its duties under this Section 2, the Advisor may
delegate some or all of its duties and obligations under this Agreement to one
or more investment sub-advisors, including but not limited to delegating the
voting of proxies relating to the Fund’s portfolio securities in accordance with
the proxy voting policies and procedures of such investment sub-advisor;
provided, however, that any such delegation shall be pursuant to an agreement
with terms agreed upon by the Trust and approved in a manner consistent with the
1940 Act and provided, further, that no such delegation shall relieve the
Advisor from its duties and obligations of management and supervision of the
management of the Fund’s assets pursuant to this Agreement and to applicable
law.
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3. Covenants. In the
performance of its duties under this Agreement, the Advisor:
(a) shall
at all times conform to, and act in accordance with, any requirements imposed
by: (i) the provisions of the 1940 Act and the Investment Advisers
Act of 1940, as amended (the “Advisers Act”), and all applicable Rules and
Regulations of the Securities and Exchange Commission (the “SEC”); (ii) any
other applicable provision of law; (iii) the provisions of the Agreement and
Declaration of Trust and By-Laws of the Trust, as such documents are amended
from time to time; (iv) the investment objectives and policies of the Fund as
set forth in its Registration Statement on Form N-1A; and (v) compliance
policies and procedures of the Trust adopted by the Board of Trustees of the
Trust;
(b) will
place orders either directly with the issuer or with any broker or
dealer. Subject to the other provisions of this paragraph, in placing
orders with brokers and dealers, the Advisor will attempt to obtain the best
price and the most favorable execution of its orders. In placing
orders, the Advisor will consider the experience and skill of the firm’s
securities traders as well as the firm’s financial responsibility and
administrative efficiency. Consistent with this obligation, the
Advisor may select brokers on the basis of the research, statistical and pricing
services they provide to the Fund and other clients of the
Advisor. Information and research received from such brokers will be
in addition to, and not in lieu of, the services required to be performed by the
Advisor hereunder. A commission paid to such brokers may be higher
than that which another qualified broker would have charged for effecting the
same transaction, provided that the Advisor determines in good faith that such
commission is reasonable in terms either of the transaction or the overall
responsibility of the Advisor to the Fund and its other clients and that the
total commissions paid by the Fund will be reasonable in relation to the
benefits to the Fund over the long-term. In no instance, however,
will the Fund’s securities be purchased from or sold to the Advisor, or any
affiliated person thereof, except to the extent permitted by the SEC or by
applicable law;
(c) will
treat confidentially and as proprietary information of the Fund all records and
other information relative to the Fund, and the Fund’s prior, current or
potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where the
Advisor may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Fund;
(d) will
maintain errors and omissions insurance in an amount at least equal to that
disclosed to the Board of Trustees in connection with its approval of this
Agreement;
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(e) will
supply such information to the Fund’ co-administrators and permit such
compliance inspections by the Fund’s co-administrators as shall be reasonably
necessary to permit the co-administrators to satisfy their obligations and
respond to the reasonable requests of the Board of Trustees;
(f) will
not pay fees in addition to any Fund distribution or servicing fees to financial
intermediaries 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 Board of Trustees and, if the Board of Trustees authorizes
such payments, the Advisor shall report regularly to the Trust on the amounts
paid and the relevant financial intermediary; and
(g) will
use its best efforts to assist the Trust and the Fund in implementing the
Trust’s disclosure controls and procedures, and will from time to time provide
the Trust a written assessment of its compliance policies and procedures that is
reasonably acceptable to the Trust to enable the Trust to fulfill its
obligations under Rule 38a-1 under the 1940 Act.
4. Services Not
Exclusive. Nothing in this Agreement shall prevent the Advisor
or any officer, employee or affiliate thereof from acting as investment advisor
for any other person, firm or corporation, or from engaging in any other lawful
activity, and shall not in any way limit or restrict the Advisor or any of its
officers, employees or agents from buying, selling or trading any securities for
its or their own accounts or for the accounts of others for whom it or they may
be acting; provided, however, that the Advisor will undertake no activities
which, in its judgment, will adversely affect the performance of its obligations
under this Agreement.
5. Books and
Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Advisor hereby agrees that all records which it
maintains for the Fund are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust’s
request. The Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act. Notwithstanding anything
in this Agreement to the contrary, and to the extent permitted by applicable
law, the Trust will not object to the Advisor maintaining copies of any such
records, including the performance records of the Fund, and will not object to
the Advisor using such performance records to promote its services to other
accounts, including other fund accounts.
6. Agency Cross
Transactions. From time to time, the Advisor or brokers or
dealers affiliated with it may find themselves in a position to buy for certain
of their brokerage clients (each an “Account”) securities which the Advisor’s
investment advisory clients wish to sell, and to sell for certain of their
brokerage clients securities which advisory clients wish to
buy. Where one of the parties is an advisory client, the Advisor or
the affiliated broker or dealer cannot participate in this type of transaction
(known as a cross transaction) on behalf of an advisory client and retain
commissions from one or both parties to the transaction without the advisory
client’s consent. This is because in a situation where the Advisor is
making the investment decision (as opposed to a brokerage client who makes his
own investment decisions), and the Advisor or an affiliate is receiving
commissions from both sides of the transaction, there is a potential conflicting
division of loyalties and responsibilities on the Advisor’s part regarding the
advisory client. The SEC has adopted a rule under the Advisers Act
which permits the Advisor or its affiliates to participate on behalf of an
Account in agency cross transactions if the advisory client has given written
consent in advance. By execution of this Agreement, the Trust
authorizes the Advisor or its affiliates to participate in agency cross
transactions involving an Account. The Advisor agrees that it will
not arrange purchases or sales of securities between the Fund and an Account
advised by the Advisor unless (a) the purchase or sale is in accordance with
applicable law (including Rule17a-7 under the 0000 Xxx) and the Trust’s policies
and procedures, (b) the Advisor determines that the purchase or sale is in the
best interests of the applicable Fund, and (c) the Trust’s Board of Trustees has
approved these types of transactions. The Trust may revoke its
consent at any time by written notice to the Advisor.
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7. Expenses. During
the term of this Agreement, the Advisor will bear all costs and expenses of its
employees and any overhead incurred in connection with its duties
hereunder.
8. Compensation of the
Advisor. The Fund agrees to pay to the Advisor and the Advisor
agrees to accept as full compensation for all services rendered by the Advisor
as such, a fee accrued daily and paid monthly in arrears at an annual rate
listed in Appendix
A with respect to the Fund’s average daily net assets. For any
period less than a month during which this Agreement is in effect, the fee shall
be prorated according to the proportion which such period bears to a full month
of 28, 29, 30 or 31 days, as the case may be. The fee payable to the
Advisor under this Agreement will be reduced to the extent required by any
expense limitation agreement. The Advisor may voluntarily absorb
certain Fund expenses or waive all or a portion of its fee.
9. Advisor’s
Liability. 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, and advertising and sales materials), except for
information supplied by the co-administrators or the Trust or another third
party for inclusion therein. The Advisor will not be liable for any
error of judgment or mistake of law or for any loss suffered by Advisor or by
the Trust in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its duties under this Agreement.
10. Duration and
Termination. This Agreement shall become effective as of the
date hereof and, unless sooner terminated with respect to a Fund as provided
herein, shall continue in effect for a period of two years as to such
Fund. Thereafter, if not terminated, this Agreement shall continue in
effect with respect to the Fund for successive periods of 12 months, provided
such continuance is specifically approved at least annually by both (a) the vote
of a majority of the Trust’s Board of Trustees or the vote of a majority of the
outstanding voting securities of the Fund at the time outstanding and entitled
to vote, and (b) the vote of a majority of the Trustees who are not parties to
this Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such
approval. Notwithstanding the foregoing, this Agreement may be
terminated by the Trust at any time as to a Fund, without the payment of any
penalty, upon giving the Advisor 60 days’ notice (which notice may be waived by
the Advisor), provided that such termination by the Trust shall be directed or
approved by the vote of a majority of the Trustees of the Trust in office at the
time or by the vote of the holders of a majority of the voting securities of the
Fund at the time outstanding and entitled to vote, or by the Advisor on 60 days’
written notice (which notice may be waived by the Trust). This
Agreement will also immediately terminate in the event of its
assignment. (As used in this Agreement, the terms “majority of the
outstanding voting securities,” “interested person” and “assignment” shall have
the same meanings of such terms in the 1940 Act.)
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11. Notices. Any notice
under this Agreement shall be in writing to the other party at such address as
the other party may designate from time to time for the receipt of such notice
and shall be deemed to be received on the earlier of the date actually received
or on the fourth day after the postmark if such notice is mailed first class
postage prepaid.
12. Amendment of this
Agreement. This Agreement may only be amended by an instrument
in writing signed by the parties hereto. Any amendment of this
Agreement shall be subject to the 1940 Act.
13. Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware for contracts to be performed entirely therein without
reference to choice of law principles thereof and in accordance with the
applicable provisions of the 1940 Act.
14. Use of the Names of the
Fund. The Advisor has consented to the use by the Fund of the
name or identifying word “RWN3” in the name of the Fund. Such consent
is conditioned upon the employment of the Advisor as the investment advisor to
the Fund. The name or identifying word “RWN3” may be used from time
to time in other connections and for other purposes by the Advisor and any of
its affiliates. The Advisor may require the Fund to cease using
“RWN3” in the name of the Fund and in connection with the Fund’s operations if
the Fund ceases to employ, for any reason, the Advisor, any successor thereto or
any affiliate thereof as investment advisor.
15. Additional Limitation of
Liability. The parties hereto are expressly put on notice that
a Certificate of Trust, referring to the Trust’s Agreement and Declaration of
Trust (the “Certificate”), is on file with the Secretary of the State of
Delaware. The Certificate was executed by a trustee of the Trust on
behalf of the Trust as trustee, and not individually, and, as provided in the
Trust’s Agreement and Declaration of Trust, the obligations of the Trust are not
binding on the Trust’s trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust, or the particular series
in question, as the case may be.
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16. Miscellaneous. The
captions in this Agreement are included for convenience of reference only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding on, and shall inure to the benefit of the parties
hereto and their respective successors.
17. Counterparts. This
Agreement may be executed in counterparts by the parties hereto, each of which
shall constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
IN
WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be
executed by their duly authorized officers, all as of the day and the year first
above written.
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THE
TRUST:
INVESTMENT
MANAGERS SERIES TRUST on behalf of the RWN3 Conservative Allocation
Fund
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By:
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Name:
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Title:
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THE
ADVISOR:
RWN3
LLC
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By:
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Name:
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Title:
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Appendix
A
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Fund/Class
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Advisor Fee
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Effective Date
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RWN3
Conservative Allocation Fund
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1.00%
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March
31, 2010
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