Exhibit (d)(5)
FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 1st day of May, 2001, by and between Forum
Funds, a Delaware business trust, with its principal office and place of
business at Two ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Trust"), and ▇▇▇▇▇
Advisory Incorporated, a Maryland corporation, with its principal office and
place of business at ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, management investment company
and may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust listed in Appendix A hereto (each, a
"Fund" and collectively, the "Funds"), and the Adviser is willing to provide
those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Adviser hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby employs the Adviser, subject to the
direction and control of the Board, to manage the investment and reinvestment of
the assets in each Fund and, without limiting the generality of the foregoing,
to provide other services as specified herein. The Adviser accepts this
employment and agrees to render its services for the compensation set forth
herein.
(b) In connection therewith, the Trust has delivered to the
Adviser copies of: (i) the Trust's Trust Instrument and Bylaws (collectively, as
amended from time to time, "Organic Documents"); (ii) the Trust's Registration
Statement and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the 1940 Act with respect to the Funds (the "Registration
Statement"); (iii) the Trust's current Prospectuses and Statements of Additional
Information for the Funds (collectively, as currently in effect and as amended
or supplemented, the "Prospectus"); and (iv) all procedures adopted by the Trust
with respect to the Funds (e.g., repurchase agreement procedures), and shall
promptly furnish the Adviser with all amendments of or supplements to the
foregoing. The Trust shall deliver to the Adviser: (x) a certified copy of the
resolution of the Board of Trustees of the Trust (the "Board") appointing the
Adviser and authorizing the execution and delivery of this Agreement; (y) a copy
of all proxy statements and related materials relating to the Funds; and (z) any
other documents, materials or information that the Adviser shall reasonably
request to enable it to perform its duties pursuant to this Agreement.
(c) The Adviser has delivered, or will deliver within 45 days,
to the Trust a copy of its code of ethics complying with the requirements of
Rule 17j-1 under the 1940 Act (the "Code"). The Adviser shall promptly furnish
the Trust with all amendments of or supplements to the foregoing at least
annually.
SECTION 2. DUTIES OF THE TRUST
In order for the Adviser to perform the services required by this
Agreement, the Trust: (i) shall cause all service providers to the Trust to
furnish information to the Adviser and to assist the Adviser as may be required;
and (ii) shall ensure that the Adviser has reasonable access to all records and
documents maintained by the Trust or any service provider to the Trust.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser will make decisions with respect to all
purchases and sales of securities and other investment assets in each Fund. To
carry out such decisions, the Adviser is hereby authorized, as agent and
attorney-in-fact for the Trust, for the account of, at the risk of and in the
name of the Trust, to place orders and issue instructions with respect to those
transactions of the Funds. In all purchases, sales and other transactions in
securities and other investments for the Funds, the Adviser is authorized to
exercise full discretion and act for the Trust in the same manner and with the
same force and effect as the Trust might or could do with respect to such
purchases, sales or other transactions, as well as with respect to all other
things necessary or incidental to the furtherance or conduct of such purchases,
sales or other transactions.
Consistent with Section 28(e) of the Securities Exchange Act of 1934,
as amended, the Adviser may allocate brokerage on behalf of the Funds to
broker-dealers who provide research services. The Adviser may aggregate sales
and purchase orders of the assets of the Funds with similar orders being made
simultaneously for other accounts advised by the Adviser or its affiliates.
Whenever the Adviser simultaneously places orders to purchase or sell the same
asset on behalf of a Fund and one or more other accounts advised by the Adviser,
the orders will be allocated as to price and amount among all such accounts in a
manner believed to be equitable over time to each account.
(b) The Adviser will report to the Board at each meeting thereof
as requested by the Board all material changes in each Fund since the prior
report, and will also keep the Board informed of important developments
affecting the Trust, the Funds and the Adviser, and on its own initiative, will
furnish the Board from time to time with such information as the Adviser may
believe appropriate for this purpose, whether concerning the individual
companies whose securities are included in the Funds' holdings, the industries
in which they engage, the economic, social or political conditions prevailing in
each country in which the Funds maintain investments, or otherwise. The Adviser
will also furnish the Board with such statistical and analytical information
with respect to investments of the Funds as the Adviser may believe appropriate
or as the Board reasonably may request. In making purchases and sales of
securities and other
2
investment assets for the Funds, the Adviser will bear in
mind the policies set from time to time by the Board as well as the limitations
imposed by the Organic Documents and Registration Statement, the limitations in
the 1940 Act, the Securities Act, the Internal Revenue Code of 1986, as amended,
and other applicable laws and the investment objectives, policies and
restrictions of the Funds.
(c) The Adviser will from time to time employ or associate with
such persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(d) The Adviser will report to the Board all material matters
related to the Adviser. On an annual basis, the Adviser shall report on its
compliance with its Code to the Board and upon the written request of the Trust,
the Adviser shall permit the Trust, or its representatives to examine the
reports required to be made to the Adviser under the Code. The Adviser will
notify the Trust of any change of control of the Adviser and any changes in the
key personnel who are either the portfolio manager(s) of the Fund or senior
management of the Adviser, in each case prior to or promptly after such change.
(e) The Adviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders as are required to
be maintained by the Trust under the 1940 Act. The Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Adviser or the Trust
pursuant to applicable law. To the extent required by law, the books and records
pertaining to the Trust which are in possession of the Adviser shall be the
property of the Trust. The Trust, or its representatives, shall have access to
such books and records at all times during the Adviser's normal business hours.
Upon the reasonable request of the Trust, copies of any such books and records
shall be provided promptly by the Adviser to the Trust or its representatives.
(f) The Adviser will cooperate with each Fund's independent
public accountants and shall take reasonable action to make all necessary
information available to those accountants for the performance of the
accountants' duties.
(g) The Adviser will provide the Funds' custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Funds' assets as the custodian and fund accountant
may reasonably require. In accordance with procedures adopted by the Board, the
Adviser is responsible for assisting in the fair valuation of all Fund assets
and will use its reasonable efforts to arrange for the provision of prices from
parties who are not affiliated persons of the Adviser for each asset for which
the Funds' fund accountant does not obtain prices in the ordinary course of
business.
3
(h) The Adviser shall authorize and permit any of its directors,
officers and employees who may be duly elected as Trustees or officers of the
Trust to serve in the capacities in which they are elected.
(i) The Adviser shall have no duties or obligations pursuant to
this Agreement (other than the continuation of its preexisting duties and
obligations) during any period in which the Fund invests all (or substantially
all) of its investment assets in a registered, open-end management investment
company, or separate series thereof, in accordance with Section 12(d)(1)(E)
under the 1940 Act.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Trust shall pay the
Adviser, with respect to each Fund, a fee at an annual rate as listed in
Appendix A hereto. Such fees shall be accrued by the Trust daily and shall be
payable monthly in arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month. If fees begin to accrue in
the middle of a month or if this Agreement terminates before the end of any
month, all fees for the period from that date to the end of that month or from
the beginning of that month to the date of termination, as the case may be,
shall be prorated according to the proportion that the period bears to the full
month in which the effectiveness or termination occurs. Upon the termination of
this Agreement with respect to a Fund, the Trust shall pay to the Adviser such
compensation as shall be payable prior to the effective date of termination.
(b) The Adviser shall reimburse expenses of each Fund or waive
its fees to the extent necessary to maintain a Fund's expense ratio at an
agreed-upon amount for a period of time specified in a separate letter of
agreement. The Adviser's reimbursement of a Fund's expenses shall be estimated
and paid to the Trust monthly in arrears, at the same time as the Trust's
payment to the Adviser for such month.
(c) No fee shall be payable hereunder with respect to a Fund
during any period in which the Fund invests all (or substantially all) of its
investment assets in a registered, open-end, management investment company, or
separate series thereof, in accordance with Section 12(d)(1)(E) under the 1940
Act.
(d) The Trust shall be responsible for and assumes the
obligation for payment of all of its expenses, including: (i) the fee payable
under this Agreement; (ii) the fees payable to each administrator under an
agreement between the administrator and the Trust; (iii) expenses of issue,
repurchase and redemption of Shares; (iv) interest charges, taxes and brokerage
fees and commissions; (v) premiums of insurance for the Trust, its trustees and
officers, and fidelity bond premiums; (vi) fees and expenses of third parties,
including the Trust's independent public accountant, custodian, transfer agent,
dividend disbursing agent and fund accountant; (vii) fees of pricing, interest,
dividend, credit and other reporting services; (viii) costs of membership in
trade associations; (ix) telecommunications expenses; (x) funds' transmission
expenses; (xi) auditing, legal and compliance expenses; (xii) costs of forming
the Trust and maintaining its existence; (xiii) costs of preparing, filing and
printing the Trust's Prospectuses, subscription application
4
forms and
shareholder reports and other communications and delivering them to existing
shareholders, whether of record or beneficial; (xiv) expenses of meetings of
shareholders and proxy solicitations therefor; (xv) costs of maintaining books
of original entry for portfolio and fund accounting and other required books and
accounts, of calculating the net asset value of Shares and of preparing tax
returns; (xvi) costs of reproduction, stationery, supplies and postage; (xvii)
fees and expenses of the Trust's trustees and officers; (xviii) the costs of
personnel (who may be employees of the Adviser, an administrator or their
respective affiliated persons) performing services for the Trust; (xix) costs of
Board, Board committee, shareholder and other corporate meetings; (xx) SEC
registration fees and related expenses; (xxi) state, territory or foreign
securities laws registration fees and related expenses; and (xxii) all fees and
expenses paid by the Trust in accordance with any distribution or service plan
or agreement related to similar matters.
SECTION 5. STANDARD OF CARE
(a) The Trust shall expect of the Adviser, and the Adviser will
give the Trust the benefit of, the Adviser's best judgment and efforts in
rendering its services to the Trust. The Adviser shall not be liable hereunder
for mistake of judgment or mistake of law or in any event whatsoever, except for
lack of good faith, provided that nothing herein shall be deemed to protect, or
purport to protect, the Adviser against any liability to the Trust or to the
Trust's security holders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties hereunder, or by reason of the Adviser's reckless
disregard of its obligations and duties hereunder.
(b) The Adviser shall not be responsible or liable for any
failure or delay in performance of its obligations under this Agreement arising
out of or caused, directly or indirectly, by circumstances beyond its reasonable
control including, without limitation, acts of civil or military authority,
national emergencies, labor difficulties (other than those related to the
Adviser's employees), fire, mechanical breakdowns, flood or catastrophe, acts of
God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund on the
date above after approval by (1) a majority of the outstanding voting securities
of that Fund (if required) and (2) a majority of the Board who are not
interested parties of the Trust.
(b) This Agreement shall remain in effect with respect to a Fund
for a period of two years from the date of its effectiveness and shall continue
in effect for successive annual periods with respect to the Fund; provided that
such continuance is specifically approved at least annually: (i) by the Board or
by the vote of a majority of the outstanding voting securities of the Fund, and,
in either case; (ii) by a majority of the Trust's trustees who are not parties
to this Agreement or interested persons of any such party (other than as
trustees of the Trust); provided further, however, that if the continuation of
this Agreement is not approved as to a Fund, the
5
Adviser may continue to render
to that Fund the services described herein in the manner and to the extent
permitted by the 1940 Act and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Fund at
any time, without the payment of any penalty: (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to the Adviser; or (ii) by the Adviser on 60 days' written notice to the
Trust. This Agreement shall terminate immediately upon its assignment.
SECTION 7. ACTIVITIES OF THE ADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's directors, officers or employees to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, trust, firm, individual or
association.
SECTION 8. REPRESENTATIONS OF ADVISER.
The Adviser represents and warrants that: (i) it is either registered
as an investment adviser under the Investment Advisers Act of 1940, as amended
("Advisers Act") (and will continue to be so registered for so long as this
Agreement remains in effect) or exempt from registration under the Advisers Act;
(ii) is not prohibited by the 1940 Act or the Advisers Act from performing the
services contemplated by this Agreement; (iii) has met, and will seek to
continue to meet for so long as this Agreement remains in effect, any other
applicable federal or state requirements, or the applicable requirements of any
self-regulatory agency, necessary to be met in order to perform the services
contemplated by this Agreement; and (iv) will promptly notify the Trust of the
occurrence of any event that would disqualify the Adviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the 1940
Act or otherwise.
SECTION 9. SUBADVISERS
At its own expense, the Adviser may carry out any of its obligations
under this Agreement by employing, subject to the direction and control of the
Board, one or more persons who are registered as investment advisers pursuant to
the Advisers Act or who are exempt from registration thereunder ("Subadvisers").
Each Subadviser's employment will be evidenced by a separate written agreement
approved by the Board and, if required, by the shareholders of the applicable
Fund. The Adviser shall not be liable hereunder for any act or omission of any
Subadviser, except to exercise good faith in the employment of the Subadviser
and except with respect to matters as to which the Adviser assumes
responsibility in writing.
6
SECTION 10. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Adviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Adviser's rights or claims relate in settlement of such rights
or claims, and not to the Trustees of the Trust or the shareholders of the
Funds.
SECTION 11. RIGHTS TO NAME
If the Adviser ceases to act as investment adviser to the Trust or any
Fund whose name includes the term "BrownIA" (the "▇▇▇▇") or if the Adviser
requests in writing, the Trust shall take prompt action to change the name of
the Trust or any such Fund to a name that does not include the ▇▇▇▇. The Adviser
may from time to time make available without charge to the Trust for the Trust's
use any marks or symbols owned by the Adviser, including marks or symbols
containing the ▇▇▇▇ or any variation thereof, as the Adviser deems appropriate.
Upon the Adviser's request in writing, the Trust shall cease to use any such
▇▇▇▇ or symbol at any time. The Trust acknowledges that any rights in or to the
▇▇▇▇ and any such marks or symbols which may exist on the date of this Agreement
or arise hereafter are, and under any and all circumstances shall continue to
be, the sole property of the Adviser. The Adviser may permit other parties,
including other investment companies, to use the ▇▇▇▇ in their names without the
consent of the Trust. The Trust shall not use the ▇▇▇▇ in conducting any
business other than that of an investment company registered under the 1940 Act
without the permission of the Adviser.
SECTION 12. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified
in any manner except by a written agreement properly authorized and executed by
both parties hereto and, if required by the 1940 Act, by a vote of a majority of
the outstanding voting securities of any Fund thereby affected.
(b) No amendment to this Agreement or the termination of this
Agreement with respect to a Fund shall affect this Agreement as it pertains to
any other Fund, nor shall any such amendment require the vote of the
shareholders of any other Fund.
(c) Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement.
(d) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of New York.
(e) This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement between those parties with
respect to the subject matter hereof, whether oral or written.
7
(f) This Agreement may be executed by the parties hereto on any
number of counterparts, and all of the counterparts taken together shall be
deemed to constitute one and the same instrument.
(g) If any part, term or provision of this Agreement is held to
be illegal, in conflict with any law or otherwise invalid, the remaining portion
or portions shall be considered severable and not be affected, and the rights
and obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
(h) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(i) Notices, requests, instructions and communications received
by the parties at their respective principal places of business, or at such
other address as a party may have designated in writing, shall be deemed to have
been properly given.
(j) Notwithstanding any other provision of this Agreement, the
parties agree that the assets and liabilities of each Fund of the Trust are
separate and distinct from the assets and liabilities of each other Fund and
that no Fund shall be liable or shall be charged for any debt, obligation or
liability of any other Fund, whether arising under this Agreement or otherwise.
(k) No affiliated person, employee, agent, director, officer or
manager of the Adviser shall be liable at law or in equity for the Adviser's
obligations under this Agreement.
(l) The terms "vote of a majority of the outstanding voting
securities", "interested person", "affiliated person," "control" and
"assignment" shall have the meanings ascribed thereto in the 1940 Act.
(m) Each of the undersigned warrants and represents that they
have full power and authority to sign this Agreement on behalf of the party
indicated and that their signature will bind the party indicated to the terms
hereof and each party hereto warrants and represents that this Agreement, when
executed and delivered, will constitute a legal, valid and binding obligation of
the party, enforceable against the party in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
FORUM FUNDS
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇▇ ADVISORY INCORPORATED
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Treasurer
9
FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
Appendix A
Fee as a % of the Annual
Funds of the Trust Average Daily Net Assets of the Fund
BrownIA Small-Cap Growth Fund 1.00%
BrownIA Growth Equity Fund 0.75%
FORUM FUNDS
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇▇ ADVISORY INCORPORATED
By:/s/ ▇▇▇▇▇ ▇. Churchill_
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Treasurer