SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
▇▇▇▇▇▇▇+▇▇▇▇▇▇▇+▇▇▇▇▇, ▇▇
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇(▇▇▇ "Adviser") (the "Adviser") and ▇▇▇▇▇▇▇+▇▇▇▇▇▇▇+▇▇▇▇▇, ▇▇, a
Delaware limited partnership with its principal office and place of business at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated
the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser is authorized to
exercise full discretion and act for the
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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, including voting of
proxies with respect to securities owned by the Fund, subject to such proxy
voting policies as approved by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provides research services. Subject to compliance with Section 28(e), the
Adviser may cause Fund to pay to a broker-dealer who provides research services
a commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The Adviser will provide reasonable notice to the Subadviser of any material
changes to the Trust's policies and procedures applicable to the Fund and the
Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser
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acknowledges receipt of the Form ADV and is cognizant of actual and/or potential
conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
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(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the
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Adviser or the Trust; (ii) the advice of counsel to the Trust; and (iii) any
written instruction or certified copy of any resolution of the Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, directors, officers or employees
to engage in any other business or to devote time and
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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
entity.
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 10. 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 approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
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(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
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(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 9 and 10 shall survive any termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
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Name:
Title:
▇▇▇▇▇▇▇+▇▇▇▇▇▇▇+▇▇▇▇▇, ▇▇
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Name:
Title:
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SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND ▇▇▇▇▇▇▇+▇▇▇▇▇▇▇+▇▇▇▇▇, ▇▇
Appendix A
Series of the Trust:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND ▇▇▇▇▇▇▇+▇▇▇▇▇▇▇+▇▇▇▇▇, ▇▇
Appendix B
Strategy Fees
--------------------------- -------------------------
Dollar-Neutral Long/Short: 1.00% on Allocated Assets
Minimum initial investment: $25 million
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
▇▇▇▇▇▇▇▇ CAPITAL ADVISORS
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇(▇▇▇ "Adviser") (the "Adviser") and ▇▇▇▇▇▇▇▇ Capital Advisors, a
California corporation with its principal office and place of business at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated
the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser 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
-2-
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, including voting of proxies with
respect to securities owned by the Fund, subject to such proxy voting policies
as approved by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provides research services. Subject to compliance with Section 28(e), the
Adviser may cause Fund to pay to a broker-dealer who provides research services
a commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The Adviser will provide reasonable notice to the Subadviser of any material
changes to the Trust's policies and procedures applicable to the Fund and the
Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser
-3-
acknowledges receipt of the Form ADV and is cognizant of actual and/or potential
conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the
-5-
Adviser or the Trust; (ii) the advice of counsel to the Trust; and (iii) any
written instruction or certified copy of any resolution of the Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, directors, officers or employees
to engage in any other business or to devote time and
-6-
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
entity.
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 10. 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 approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
-7-
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
-8-
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 9 and 10 shall survive any termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
Title:
▇▇▇▇▇▇▇▇ CAPITAL ADVISORS
----------------------------------------
Name:
Title:
-9-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
▇▇▇▇▇▇▇▇ CAPITAL ADVISORS
Appendix A
Series of the Trust:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
▇▇▇▇▇▇▇▇ CAPITAL ADVISORS
Appendix B
Appendix B
Strategy Fees
----------------- --------------------
Small Cap Equity: .70% on the first $10 million
.60% on amounts over $10 million
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
CONTRAVISORY RESEARCH & MANAGEMENT CORP.
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇(▇▇▇ "Adviser") and Contravisory Research & Management Corp., a
Massachusetts corporation with its principal office and place of business at ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated
the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser is authorized to
exercise full discretion and act for the
-2-
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, including voting of
proxies with respect to securities owned by the Fund, subject to such proxy
voting policies as approved by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provides research services. Subject to compliance with Section 28(e), the
Adviser may cause Fund to pay to a broker-dealer who provides research services
a commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The Adviser will provide reasonable notice to the Subadviser of any material
changes to the Trust's policies and procedures applicable to the Fund and the
Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser
-3-
acknowledges receipt of the Form ADV and is cognizant of actual and/or potential
conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the
-5-
Adviser or the Trust; (ii) the advice of counsel to the Trust; and (iii) any
written instruction or certified copy of any resolution of the Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, directors, officers or employees
to engage in any other business or to devote time and
-6-
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
entity.
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 10. 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 approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
-7-
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
-8-
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 9 and 10 shall survive any termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
Title:
CONTRAVISORY RESEARCH &
MANAGEMENT CORP.
----------------------------------------
Name:
Title:
-9-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
CONTRAVISORY RESEARCH & MANAGEMENT CORP.
Appendix A
Series of the Trust:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
CONTRAVISORY RESEARCH & MANAGEMENT CORP.
Appendix B
Strategy Fees
------------------ -------------------
Long Short Equity: .75% on the first $10 million
.60%on amounts over $10 million
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇(▇▇▇ "Adviser") and Grantham, Mayo, Van Otterloo & Co. LLC, a
Massachusetts limited liability company with its principal office and place of
business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated
the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act ("Plan") and
each current shareholder service plan or similar document adopted by the Trust
on behalf of the Fund ("Service Plan"); and (v) all policies and procedures
adopted by the Trust with respect to the Fund (e.g., repurchase agreement
procedures), and shall promptly furnish the Subadviser with all amendments of or
supplements to the foregoing. The Adviser shall deliver to the Subadviser: (w) a
certified copy of the resolution of the Board, including a majority of the
Trustees who are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) appointing
the Adviser and Subadviser and authorizing the execution and delivery of this
Agreement; (x) a certified copy of the resolution of the Fund's shareholders
appointing the Adviser and Subadviser; (y) a copy of all proxy statements and
related materials relating to the Fund; and (z) a certified copy of the
resolution of the Adviser and the Board appointing the officers of the Adviser
and/or the Trust and any other documents, materials or information that the
Subadviser shall reasonably request to enable it to perform its duties pursuant
to this Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser (i) shall cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required and (ii) shall ensure that the Subadviser has reasonable access to all
records and documents maintained by the Trust, the Adviser or any service
provider to the Trust and (iii) shall deliver to the Subadviser all materials it
provides to the Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Adviser has specifically directed that the Allocated Assets be
invested in certain investment companies registered under the Investment Company
Act of 1940, as amended, for which the Subadviser serves as investment manager
(the "Underlying Mutual Funds") as agreed upon from time to time and set forth
in the Client Mandate Form. Notwithstanding anything in this Agreement to the
contrary, this Agreement contemplates the granting of asset allocation authority
to the Subadviser to allocate the Allocated Assets among certain Underlying
Mutual Funds. The authority of the Subadviser to so move assets among the
-2-
Underlying Mutual Funds shall be subject to this Agreement and the Client
Mandate Form, as in effect from time to time, which shall indicate the
Underlying Mutual Funds approved for investment by the Adviser, applicable
limitations on investment in specific Underlying Mutual Funds, and any other
related information. The submission by the Adviser of the Client Mandate Form
shall constitute acknowledgement by the Adviser that it has reviewed the current
GMO Trust Prospectus relating to the Underlying Mutual Funds, including
information regarding fees and expenses of such Underlying Mutual Funds
(including applicable purchase premiums and redemption fees which are accessed
and retained by a particular Mutual Fund) and has approved such Underlying
Mutual Funds for use by the Subadviser in its asset allocation process.
(b) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser 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. The Adviser shall have the power and the
responsibility with respect to the voting of any proxies that may arise with
respect to shares of the Underlying Mutual Funds in which the Allocated Assets
are invested.
(c) Consistent with Section 28(e) of the Securities Exchange Act of 1934,
as amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provides research services. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account. To the
extent the Allocated Assets are invested in Underlying Mutual Funds, this
section shall not apply.
(d) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities
-3-
and other investment assets for the Fund, the Subadviser will comply with the
policies set from time to time by the Board as well as the limitations imposed
by the Trust's or the Fund's policies and procedures, the Registration
Statement, the 1940 Act, the Securities Act, the 1934 Act, the Internal Revenue
Code of 1986, as amended, and other applicable laws. The Adviser will provide
reasonable notice to the Subadviser of any material changes to the Trust's
policies and procedures applicable to the Fund and the Prospectus. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The foregoing notwithstanding, the Subadviser shall not be responsible for
monitoring the Fund's compliance with the limitations set forth in Sections
12(d)(1)(A)(ii) and (iii) of the 1940 Act.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser acknowledges
receipt of the Form ADV and is cognizant of actual and/or potential conflicts of
interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to transactions with
respect to the Allocated Assets as are required to be maintained by the Trust
under the 1940 Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be
prepared and maintained by the Subadviser or the Trust pursuant to applicable
law. To the extent required by law, the books and records pertaining to the
Allocated Assets, which are in possession of the Subadviser, shall be the
property of the Trust. The Adviser and the Trust, or their respective
representatives, shall have access to such books and records at all times during
the Subadviser's normal business hours. Upon the reasonable request of the
Adviser or the Trust, copies of any such books and records shall be provided
promptly by the Subadviser to the Adviser and the Trust, or their respective
representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund's custodian and fund accountant on
each business day with such information relating to all transactions concerning
the Allocated Assets as the custodian and fund accountant may reasonably
require. To the extent that the Allocated
-4-
Assets are invested in the Underlying Mutual Funds, the Allocated Assets shall
consist of, and the Fund's custodian shall take possession of, only the Mutual
Fund shares. The direct investments of the Underlying Mutual Funds shall not
constitute part of the Allocated Assets and shall remain in the custody of the
Underlying Mutual Funds. The shares of the Underlying Mutual Funds shall be
valued in accordance with the Prospectus relating to the Underlying Mutual Funds
in effect from time to time.
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
SECTION 4. COMPENSATION; EXPENSES
(a) The Subadviser will earn only its customary fees from the Underlying
Mutual Funds in which the Allocated Assets are invested as set forth in the GMO
Trust Prospectus in effect from time to time.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's reasonable judgment and
efforts in rendering its services hereunder. The Subadviser shall not be liable
hereunder to the Adviser of the Trust for any mistake of judgment or mistake of
law or for any loss arising out of any investment or for any act or omission
taken or in any event whatsoever with respect to the Trust, the Fund or any of
the Fund's shareholders in the absence of bad faith, willful misfeasance or
gross negligence in the performance of the Subadviser's duties or obligations
under this Agreement or by reason of the Subadviser's reckless disregard of its
duties and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the Adviser or the Trust; (ii)
the advice of counsel to the Trust; and (iii) any written instruction or
certified copy of any resolution of the Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is
-5-
entitled pursuant to this Agreement, and that the Trust is entitled to all of
the rights and privileges associated with such third-party-beneficiary status.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval 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) and, if required by applicable law, by a vote of
a majority of the outstanding voting securities of the Fund.
(b) This Agreement shall remain in effect with respect to the 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 the Fund, the Subadviser 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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser'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 entity.
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
-6-
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 10. 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 approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
-7-
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be the subject to the direction and
control of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
-8-
(o) The provisions of Sections 5, 6, and 8 shall survive any termination of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
Title:
GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC
----------------------------------------
Name:
Title:
-9-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC
Appendix A
Series of the Trust:
Absolute Strategies Fund
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
HORIZON ASSET MANAGEMENT, INC.
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇(▇▇▇ "Adviser") and Horizon Asset Management, Inc., a New York
corporation with its principal office and place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated as
of the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser 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
-2-
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, including voting of proxies with
respect to securities owned by the Fund, subject to such proxy voting policies
as approved by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provides research services. Subject to compliance with Section 28(e), the
Adviser may cause Fund to pay to a broker-dealer who provides research services
a commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund,
other than with Kinetics Asset Management, Inc. The Adviser will provide
reasonable notice to the Subadviser of any material changes to the Trust's
policies and procedures applicable to the Fund and the Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser
-3-
acknowledges receipt of the Form ADV and is cognizant of actual and/or potential
conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the
-5-
Adviser or the Trust; (ii) the advice of counsel to the Trust; and (iii) any
written instruction or certified copy of any resolution of the Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, directors, officers or employees
to engage in any other business or to devote time and
-6-
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
entity.
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 10. 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 approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
-7-
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
-8-
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 9 and 10 shall survive any termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
HORIZON ASSET MANAGEMENT, INC.
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-9-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND HORIZON ASSET MANAGEMENT, INC.
Appendix A
Series of the Trust:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
HORIZON ASSET MANAGEMENT, INC.
Appendix B
Strategies Fees
--------------------- ---------------------
Synthetic Short Sale: 1.00% on the first: $5 million
Spin-off .75% on the next: $5 million
Fixed Income .60% on the next: $5 million
Special Opportunity .50% on amounts over $15 million
Fees will be calculated based upon the combined assets in all strategies.
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
KINETICS ASSET MANAGEMENT, INC.
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇(▇▇▇ "Adviser") and Kinetics Asset Management, Inc., a New York
corporation with its principal office and place of business at ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated
the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
A-1
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser 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
-2-
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, including voting of proxies with
respect to securities owned by the Fund, subject to such proxy voting policies
as approved by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provides research services. Subject to compliance with Section 28(e), the
Adviser may cause Fund to pay to a broker-dealer who provides research services
a commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The Adviser will provide reasonable notice to the Subadviser of any material
changes to the Trust's policies and procedures applicable to the Fund and the
Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser
-3-
acknowledges receipt of the Form ADV and is cognizant of actual and/or potential
conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the
-5-
Adviser or the Trust; (ii) the advice of counsel to the Trust; and (iii) any
written instruction or certified copy of any resolution of the Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, directors, officers or employees
to engage in any other business or to devote time and
-6-
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
entity.
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 10. 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 approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
-7-
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
-8-
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 9 and 10 shall survive any termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
Title:
KINETICS ASSET MANAGEMENT, INC.
----------------------------------------
Name:
Title:
-9-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
KINETICS ASSET MANAGEMENT, INC.
Appendix A
Series of the Trust:
Absolute Strategies Fund
-10-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
KINETICS ASSET MANAGEMENT, INC.
Appendix B
Fees and Expenses
Strategy Fees
------------ --------------------
CORE Equity: .75% on the first $10 million
.60% on amounts over $10 million
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, L.P.
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇(▇▇▇ "Adviser") and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, L.P., a Delaware
partnership with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇-▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated
the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser 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
-2-
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, including voting of proxies with
respect to securities owned by the Fund, subject to such proxy voting policies
as approved by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provide research services. Subject to compliance with Section 28(e), the Adviser
may cause Fund to pay to a broker-dealer who provides research services a
commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The Adviser will provide reasonable notice to the Subadviser of any material
changes to the Trust's policies and procedures applicable to the Fund and the
Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser
-3-
acknowledges receipt of the Form ADV and is cognizant of actual and/or potential
conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser. Prior
to any such investment the Subadviser shall provide the Adviser (who shall
provide the Fund) with the current prospectus of any such investment company.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral
-5-
or written, with respect to the Fund made to the Subadviser by a duly authorized
officer of the Adviser or the Trust; (ii) the advice of counsel to the Trust;
and (iii) any written instruction or certified copy of any resolution of the
Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
-6-
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, 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 entity.
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 10. 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 approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
-7-
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby
-8-
consents to the disclosure to third parties of investment results and other Fund
data in connection with providing composite investment results and related
information of the Sub-Adviser. The Sub-Adviser also consents to the disclosure
of Fund data to the Fund's other service providers so that those providers may
perform the services they are contractually obligated to render to the Trust.
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 9 and 10 shall survive any termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, L.P.
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-9-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC AND
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, L.P.
Appendix A
Series of the Trust:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND ▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, L.P.
Appendix B
Strategy Fees
--------------------------------- ---------------------
High Yield Full Discretion: .50%
Minimum initial investment: $20 million
Investment Grade Full Discretion: .40% on the first $20 million
.30% on the next $80 million
.20% on amounts over: $100 million
Minimum initial investment: $20 million
TIPS: .20% on Allocated Assets
Minimum initial investment: $5 million
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
▇▇▇▇▇ ▇▇▇▇▇▇▇ PARTNERS, LLC
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (the "Adviser") and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Partners, LLC, a Delaware limited
liability company with its principal office and place of business at ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated
the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases
and sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser 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
-2-
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, including voting of proxies with
respect to securities owned by the Fund, subject to such proxy voting policies
as approved by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provides research services. Subject to compliance with Section 28(e), the
Adviser may cause Fund to pay to a broker-dealer who provides research services
a commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The Adviser will provide reasonable notice to the Subadviser of any material
changes to the Trust's policies and procedures applicable to the Fund and the
Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser
-3-
acknowledges receipt of the Form ADV and is cognizant of actual and/or potential
conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the
-5-
Adviser or the Trust; (ii) the advice of counsel to the Trust; and (iii) any
written instruction or certified copy of any resolution of the Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, directors, officers or employees
to engage in any other business or to devote time and
-6-
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
entity.
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 10. 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 approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
-7-
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
-8-
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 9 and 10 shall survive any termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ PARTNERS, LLC
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-9-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND ▇▇▇▇▇ ▇▇▇▇▇▇▇ PARTNERS, LLC
Appendix A
Series of the Trust:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND ▇▇▇▇▇ ▇▇▇▇▇▇▇ PARTNERS, LLC
Appendix B
Strategy Fees
-------------- --------------------
Focused Value: .65%
Midcap .65% on the first $10 million
.55% on amounts over $10 million
Smallcap: .65% on the first $10 million
.55% on amounts over $10 million
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
METROPOLITAN WEST ASSET MANAGEMENT LLC
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advises LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇(▇▇▇ "Adviser") and Metropolitan West Asset Management LLC, a
California limited liability company with its principal office and place of
business at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated
the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser is authorized to
exercise full discretion and act for the
-2-
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, including voting of
proxies with respect to securities owned by the Fund, subject to such proxy
voting policies as approved by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provide research services. Subject to compliance with Section 28(e), the Adviser
may cause Fund to pay to a broker-dealer who provides research services a
commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The Adviser will provide reasonable notice to the Subadviser of any material
changes to the Trust's policies and procedures applicable to the Fund and the
Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser
-3-
acknowledges receipt of the Form ADV and is cognizant of actual and/or potential
conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the Adviser or the Trust; (ii)
the advice of counsel to the Trust; and (iii) any written instruction or
certified copy of any resolution of the Board.
-5-
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, 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 entity.
-6-
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 10. 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 approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
-7-
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
-8-
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 9 and 10 shall survive any termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
Title:
METROPOLITAN WEST ASSET MANAGEMENT LLC
----------------------------------------
Name:
Title:
-9-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND METROPOLITAN WEST ASSET MANAGEMENT LLC
Appendix A
Series of the Trust:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND METROPOLITAN WEST ASSET MANAGEMENT LLC
Appendix B
Strategy Fees
------------- --------------------
Total Return: .35% on the first $25 million
.25% on amounts over $25 million.
High Yield .55% on the first $100 million
.45% on amounts over $100 million
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
SCOUT INVESTMENT ADVISORS, INC.
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (the "Adviser") and Scout Investment Advisors, Inc., a Missouri
corporation, with its principal office and place of business at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated
the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser 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
-2-
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, including voting of proxies with
respect to securities owned by the Fund, subject to such proxy voting policies
as approved by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provides research services. Subject to compliance with Section 28(e), the
Adviser may cause Fund to pay to a broker-dealer who provides research services
a commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The Adviser will provide reasonable notice to the Subadviser of any material
changes to the Trust's policies and procedures applicable to the Fund and the
Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser
-3-
acknowledges receipt of the Form ADV and is cognizant of actual and/or potential
conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the
-5-
Adviser or the Trust; (ii) the advice of counsel to the Trust; and (iii) any
written instruction or certified copy of any resolution of the Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. INDEMNIFICATION
(a) The Adviser agrees to defend, indemnify and hold harmless the
Sub-Adviser, and its partners, managers, members, shareholders, directors,
officers and employees (the "Subadviser Indemnitees") against any loss,
liability, claim, damage or expense (including, without limitation 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 Adviser's willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations or duties hereunder;
provided, however, that nothing herein shall be deemed to indemnify any
Subadviser Indemnitee against any liability to which the Subadviser Indemnitees
would otherwise be subject by reason of their negligence in the performance of
the obligations and duties under this Agreement.
(b) The Subadviser agrees to defend, indemnify and hold harmless the
Adviser and the Trust, and the partners, managers, members, shareholders,
trustees, directors, officers and employees of each of them (the "Adviser
Indemnitees") against any loss, liability, claim, damage or expense (including
without limitation 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 Subadviser's willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations or duties hereunder; provided, however, that nothing herein shall be
deemed to indemnify any Adviser Indemnitee against any liability to which the
Adviser Indemnitees would otherwise be subject by reason of their negligence in
the performance of the obligations and duties under this Agreement.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
-6-
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 8. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, 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 entity.
SECTION 9. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
-7-
SECTION 10. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 11. 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 approved by the Trust in the manner set forth in Section 7(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
-8-
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
-9-
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 10 and 11 shall survive any
termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
Title:
SCOUT INVESTMENT ADVISORS, INC.
----------------------------------------
Name:
Title:
-10-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND SCOUT INVESTMENT ADVISORS, INC.
Appendix A
Series of the Trust:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND SCOUT INVESTMENT ADVISORS, INC.
Appendix B
Strategy Fees
------------------------------------------------------
Small Cap Equity .70% on the first: $10 million
.60% on amounts over: $10 million
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
SSI INVESTMENT MANAGEMENT, INC.
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (the "Adviser") and SSI Investment Management, Inc., a California
Corporation with its principal office and place of business at ▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated as
of the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein. To the extent practicable, the Adviser will seek to provide 30
days notice before any material reallocation of assets away from the Subadviser.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing and provide reasonable and
specific written notice to the Subadviser of any material changes to any of the
foregoing. The Adviser shall deliver to the Subadviser: (v) a certified copy of
the resolution of the Board, including a majority of the Trustees who are not
interested persons (as defined in the ▇▇▇▇ ▇▇▇) appointing the Adviser and
Subadviser and approving the Trust's advisory agreement with the Adviser and
this Agreement; (w) a certified copy of the resolution of the Fund's
shareholder(s), if applicable, appointing the Adviser and Subadviser; (x) a copy
of all proxy statements and related materials relating to the Fund; and (y) a
certified copy of the resolution from the Trust and the Adviser identifying the
officers of the Adviser and/or the Trust; and (z) any other documents, materials
or information that the Subadviser shall reasonably request to enable it to
perform its duties pursuant to this Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments
-2-
in the Allocated Assets, the Subadviser 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, including voting of proxies with respect to securities owned by
the Fund, subject to such proxy voting policies, and any material changes
thereto, as approved by the Board. The Subadviser may, however, change its proxy
voting designee without prior Board approval.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provides research services. Subject to compliance with Section 28(e), the
Subadviser may cause Fund to pay to a broker-dealer who provides research
services a commission that exceeds the commission the Fund might have paid to a
different broker-dealer for the same transaction if the Subadviser determines,
in good faith, that such amount of commission is reasonable in relationship to
the value of such brokerage or research services provided viewed in terms of
that particular transaction or the Subadviser's overall responsibilities to the
Fund or its other advisory clients. The Subadviser may aggregate sales and
purchase orders of the assets of the Fund with similar orders being made
simultaneously for other accounts advised by the Subadviser or its affiliates.
Whenever the Subadviser simultaneously places orders to purchase or sell the
same asset on behalf of the Fund and one or more other accounts advised by the
Subadviser, the Subadviser will allocate the order as to price and amount among
all such accounts in a manner believed to be equitable over time to each
account. The Adviser and the Trust will not require the Subadviser to direct
brokerage with respect to Allocated Assets serviced by the Subadviser.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties
-3-
hereunder, the cost of performance of such duties to be borne and paid by the
Subadviser. No obligation may be incurred on the Trust's or Adviser's behalf in
any such respect. The Adviser acknowledges receipt of the Form ADV and is
cognizant of actual and/or potential conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the
-5-
Adviser or the Trust; (ii) the advice of counsel to the Trust; and (iii) any
written instruction or certified copy of any resolution of the Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. INDEMNIFICATION
(a) The Adviser agrees to defend, indemnify and hold harmless the
Sub-Adviser, and its partners, managers, members, shareholders, directors,
officers and employees (the "Subadviser Indemnitees") against any loss,
liability, claim, damage or expense (including, without limitation 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 Adviser's willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations or duties hereunder;
provided, however, that nothing herein shall be deemed to indemnify any
Subadviser Indemnitee against any liability to which the Subadviser Indemnitees
would otherwise be subject by reason of their gross negligence in the
performance of the obligations and duties under this Agreement.
(b) The Subadviser agrees to defend, indemnify and hold harmless the
Adviser and the Trust, and the partners, managers, members, shareholders,
trustees, directors, officers and employees of each of them (the "Adviser
Indemnitees") against any loss, liability, claim, damage or expense (including
without limitation 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 Subadviser's willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations or duties hereunder; provided, however, that nothing herein shall be
deemed to indemnify any Adviser Indemnitee against any liability to which the
Adviser Indemnitees would otherwise be subject by reason of their gross
negligence in the performance of the obligations and duties under this
Agreement.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
-6-
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 8. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's shareholders, 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 entity.
SECTION 9. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
-7-
SECTION 10. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 11. 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 approved by the Trust in the manner set forth in Section 7(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
-8-
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 10 and 11 shall survive any
termination of this Agreement.
-9-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
Title:
SSI INVESTMENT MANAGEMENT, INC.
By:
------------------------------------
Name:
Title:
-10-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND SSI INVESTMENT MANAGEMENT, INC.
Appendix A
Series of the Trust:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND SSI INVESTMENT MANAGEMENT, INC.
Appendix B
Strategy Fees
-----------------------------------------------------------------------
Long/Short Equity Market Neutral Strategy: 1.00% on Allocated Assets
Hedged Convertible Market Neutral Strategy: 1.00% on Allocated Assets
(assumes $10,000,000.00 minimum allocation)
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
TT INTERNATIONAL INVESTMENT MANAGEMENT
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (the "Adviser") and TT International Investment Management, a
partnership organized under the laws of England and Wales with its principal
office and place of business at ▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ (the
"Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated as
of the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets as specified in accordance with the Subadviser's Investment Guidelines
and Restrictions as agreed upon from time to time.
The Subadviser accepts this appointment and agrees to render its services for
the compensation set forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
-2-
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser 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, including voting of proxies with respect to
securities owned by the Fund, subject to such proxy voting policies as approved
by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provide research services. Subject to compliance with Section 28(e), the Adviser
may cause Fund to pay to a broker-dealer who provides research services a
commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The Adviser will provide reasonable notice to the Subadviser of any material
changes to the Trust's policies and procedures applicable to the Fund and the
Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties
-3-
hereunder, the cost of performance of such duties to be borne and paid by the
Subadviser. No obligation may be incurred on the Trust's or Adviser's behalf in
any such respect. The Adviser acknowledges receipt of the Form ADV and is
cognizant of actual and/or potential conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the Adviser or the Trust; (ii)
the advice of counsel to the Trust; and (iii) any written instruction or
certified copy of any resolution of the Board.
-5-
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, 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 entity.
-6-
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Investment Advisers Act of
1940, as amended from performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 10. 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 approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
-7-
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
-8-
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 9 and 10 shall survive any termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
Title:
TT INTERNATIONAL INVESTMENT MANAGEMENT
----------------------------------------
Name:
Title:
-9-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND TT INTERNATIONAL INVESTMENT MANAGEMENT
Appendix A
Series of the Trust:
Absolute Strategies Fund
▇-▇
▇▇▇▇▇▇▇▇ ▇
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
TT INTERNATIONAL INVESTMENT MANAGEMENT
Strategy Fees
------------------------------- ------------------
International Europe Long Only: 1.00% on the first $20 million
.60% on the next: $65 million
.55% on the next: $75 million
.50% on the next: $150 million
.45% on the next: $200 million
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
TWIN CAPITAL MANAGEMENT, INC.
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advises LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇ (the "Adviser") and TWIN Capital Management, Inc, a Pennsylvania
corporation with its principal office and place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated
the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser 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
-2-
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, including voting of proxies with
respect to securities owned by the Fund, subject to such proxy voting policies
as approved by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provides research services. Subject to compliance with Section 28(e), the
Adviser may cause Fund to pay to a broker-dealer who provides research services
a commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The Adviser will provide reasonable notice to the Subadviser of any material
changes to the Trust's policies and procedures applicable to the Fund and the
Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser
-3-
acknowledges receipt of the Form ADV and is cognizant of actual and/or potential
conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the
-5-
Adviser or the Trust; (ii) the advice of counsel to the Trust; and (iii) any
written instruction or certified copy of any resolution of the Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. INDEMNIFICATION
(a) The Adviser agrees to defend, indemnify and hold harmless the
Sub-Adviser, and its partners, managers, members, shareholders, directors,
officers and employees (the "Subadviser Indemnitees") against any loss,
liability, claim, damage or expense (including, without limitation 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 Adviser's willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations or duties hereunder;
provided, however, that nothing herein shall be deemed to indemnify any
Subadviser Indemnitee against any liability to which the Subadviser Indemnitees
would otherwise be subject by reason of their negligence in the performance of
the obligations and duties under this Agreement.
(b) The Subadviser agrees to defend, indemnify and hold harmless the
Adviser and the Trust, and the partners, managers, members, shareholders,
trustees, directors, officers and employees of each of them (the "Adviser
Indemnitees") against any loss, liability, claim, damage or expense (including
without limitation 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 Subadviser's willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations or duties hereunder; provided, however, that nothing herein shall be
deemed to indemnify any Adviser Indemnitee against any liability to which the
Adviser Indemnitees would otherwise be subject by reason of their negligence in
the performance of the obligations and duties under this Agreement.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
-6-
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 8. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, 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 entity.
SECTION 9. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
-7-
SECTION 10. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 11. 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 approved by the Trust in the manner set forth in Section 7(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
-8-
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
-9-
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 10 and 11 shall survive any
termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
Title:
TWIN CAPITAL MANAGEMENT, INC
----------------------------------------
Name:
Title:
-10-
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND TWIN CAPITAL MANAGEMENT, INC
Appendix A
Series of the Trust:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND TWIN CAPITAL MANAGEMENT, INC
Appendix B
Strategy Fees
------------------------ ---------------------
Twin Momentum Long Short 1.00% on the first $15 million
.90% on the next $10 million.
.80% on amounts over $25 million
B-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
YACKTMAN ASSET MANAGEMENT CO.
AGREEMENT made as of the 5th day of May, 2005, by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇(▇▇▇ "Adviser") and Yacktman Asset Management Co., an Illinois
corporation with its principal office and place of business at.1110 ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated
the 5th day of May, 2005 ("Advisory Agreement") with Forum Funds, a Delaware
statutory trust, with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (the "Trust");
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, in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust (the "Board"), the Adviser
acts as investment adviser for the series of the Trust listed on Appendix A
hereto (the "Fund");
WHEREAS, it is intended that the Trust be a third-party beneficiary under
this Agreement; and
WHEREAS, Adviser desires to retain the Subadviser to perform investment
advisory services for the Fund for that portion of the Fund's assets that the
Adviser allocates to the Sub-Adviser on or after the date of this Agreement as
set forth above ("Allocated Assets") and Subadviser is willing to provide such
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 Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Adviser hereby appoints Subadviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of Allocated
Assets to provide other services as specified herein. The Subadviser accepts
this appointment and agrees to render its services for the compensation set
forth herein.
(b) In connection therewith, the Adviser has delivered to the Subadviser
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 (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information for the
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each plan of distribution or similar document adopted by the
Trust on behalf of the Fund under Rule 12b-1 under the 1940 Act and each current
shareholder service plan or similar document adopted by the Trust on behalf of
the Fund; and (v) all policies and procedures adopted by the Trust with respect
to the Fund (e.g., repurchase agreement procedures, Rule 17a-7 Procedures and
Rule 17e-1 Procedures), and shall promptly furnish the Subadviser with all
amendments of or supplements to the foregoing. The Adviser shall deliver to the
Subadviser: (v) a certified copy of the resolution of the Board, including a
majority of the Trustees who are not interested persons (as defined in the ▇▇▇▇
▇▇▇) appointing the Adviser and Subadviser and approving the Trust's advisory
agreement with the Adviser and this Agreement; (w) a certified copy of the
resolution of the Fund's shareholder(s), if applicable, appointing the Adviser
and Subadviser; (x) a copy of all proxy statements and related materials
relating to the Fund; and (y) a certified copy of the resolution from the Trust
and the Adviser identifying the officers of the Adviser and/or the Trust; and
(z) any other documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a copy of
its Form ADV as most recently filed with the SEC and (ii) a copy of its code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the
"Code"). The Subadviser shall promptly furnish the Adviser and Trust with all
amendments of or supplements to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
In order for the Subadviser to perform the services required by this
Agreement, the Adviser shall (i) cause all service providers to the Trust to
furnish information to the Subadviser and assist the Subadviser as may be
required; (ii) ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, the Adviser or any service provider to
the Trust; and (iii) deliver to the Subadviser all materials it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases and
sales of securities and other investment assets of the Allocated Assets. To
carry out such decisions, the Subadviser 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 the
Allocated Assets. In all purchases, sales and other transactions in securities
and other investments in the Allocated Assets, the Subadviser 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
-2-
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, including voting of proxies with
respect to securities owned by the Fund, subject to such proxy voting policies
as approved by the Board.
Consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act") and applicable regulations and interpretations, the
Subadviser may allocate brokerage on behalf of the Fund to a broker-dealer who
provides research services. Subject to compliance with Section 28(e), the
Adviser may cause Fund to pay to a broker-dealer who provides research services
a commission that exceeds the commission the Fund might have paid to a different
broker-dealer for the same transaction if the Subadviser determines, in good
faith, that such amount of commission is reasonable in relationship to the value
of such brokerage or research services provided viewed in terms of that
particular transaction or the Subadviser's overall responsibilities to the Fund
or its other advisory clients. The Subadviser may aggregate sales and purchase
orders of the assets of the Fund with similar orders being made simultaneously
for other accounts advised by the Subadviser or its affiliates. Whenever the
Subadviser simultaneously places orders to purchase or sell the same asset on
behalf of the Fund and one or more other accounts advised by the Subadviser, the
Subadviser will allocate the order as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
reasonably requested by the Adviser or the Board all material changes in the
Fund since the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Fund and the Subadviser, and on its own
initiative, or as reasonably requested by the Adviser or the Board, will furnish
the Board from time to time with such information as the Subadviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Fund's holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Fund maintains investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Fund as the Subadviser may believe appropriate or as the
Adviser or the Board reasonably may request. In making purchases and sales of
securities and other investment assets for the Fund, the Subadviser will comply
with the directions and policies set from time to time by the Board as well as
the limitations imposed by the Trust's or the Fund's policies and procedures,
the Registration Statement, the 1940 Act, the Securities Act, the 1934 Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws. In making
purchases and sales of securities and other investment assets for the Fund, the
Sub-Adviser is prohibited from consulting with other Sub-Advisers to the Fund.
The Adviser will provide reasonable notice to the Subadviser of any material
changes to the Trust's policies and procedures applicable to the Fund and the
Prospectus.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect. The Adviser
-3-
acknowledges receipt of the Form ADV and is cognizant of actual and/or potential
conflicts of interest set forth therein.
(d) The Subadviser will report to the Board all matters related to the
Subadviser that are material to the Sub-Adviser's performance of this Agreement.
On an annual basis, the Subadviser shall report on its compliance with its Code
to the Adviser and to the Board. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes in the key
personnel who are either the portfolio manager(s) of the Allocated Assets or
senior management of the Subadviser, in each case prior to or promptly after
such change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders with respect to the
Allocated Assets as are required to be maintained by the Trust under the 1940
Act. The Subadviser 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 Subadviser pursuant to this Agreement required to be prepared
and maintained by the Subadviser or the Trust pursuant to applicable law. To the
extent required by law, the books and records pertaining to the Allocated
Assets, which are in possession of the Subadviser, shall be the property of the
Trust. The Adviser and the Trust, or their respective representatives, shall
have access to such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser or the Trust,
copies of any such books and records shall be provided promptly by the
Subadviser to the Adviser and the Trust, or their respective representatives.
(f) The Subadviser will cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Fund and the Fund's custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Allocated Assets as the Fund and the Fund's
custodian and fund accountant may reasonably require, including but not limited
to information required to be provided under the Trust's Portfolio Securities
Valuation Procedures.
-4-
(h) The Subadviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period that the Adviser has not allocated any portion of
the Fund's assets to the Sub-Adviser for management.
(i) The Subadviser may invest Allocated Assets in registered, open-end,
management investment companies for which the Subadviser serves as investment
adviser or subadviser upon the prior notice to and consent of the Adviser.
(j) The Subadviser may effect transactions with respect to the Allocated
Assets pursuant to Rules 17a-7 and 17e-1 of the 1940 if such transactions are
effected in accordance with the Trust's Rule 17a-7 Procedures and Rule 17e-1
Procedures.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to the Allocated Assets, a fee at an annual rate as
listed in Appendix B hereto. Such fees shall be accrued by the Adviser daily and
shall be payable monthly in arrears on the first business 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 the Fund, the Adviser shall pay to
the Subadviser such compensation as shall be payable prior to the effective date
of termination.
(b) No fee shall be payable hereunder with respect to that portion of the
Allocated Assets which are invested in registered, open-end, management
investment companies for which the Subadviser serves as investment adviser or
subadviser and for which Subadviser already receives an advisory fee.
SECTION 5. STANDARD OF CARE
(a) The Adviser shall expect of the Subadviser, and the Subadviser will
give the Adviser the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be liable hereunder
to the Adviser or the Trust for any mistake of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission taken or in
any event whatsoever with respect to the Trust, the Fund or any of the Fund's
shareholders in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Subadviser's duties or obligations under
this Agreement or by reason of the Subadviser's reckless disregard of its duties
and obligations under this Agreement.
(b) The Subadviser shall not be liable to the Adviser or the Trust for any
action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to the Fund made
to the Subadviser by a duly authorized officer of the
-5-
Adviser or the Trust; (ii) the advice of counsel to the Trust; and (iii) any
written instruction or certified copy of any resolution of the Board.
(c) The Subadviser 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 Subadviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(d) The parties hereto acknowledge and agree that the Trust is a
third-party beneficiary as to the covenants, obligations, representations and
warranties undertaken by the Subadviser under this Agreement and as to the
rights and privileges to which the Adviser is entitled pursuant to this
Agreement, and that the Trust is entitled to all of the rights and privileges
associated with such third-party-beneficiary status.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to the Fund
immediately upon the later of approval by a majority of the Trust's Trustees who
are not interested persons (as defined in the ▇▇▇▇ ▇▇▇) and, if required by
applicable law, by a vote of a majority of the outstanding voting securities of
the Fund.
(b) This Agreement shall remain in effect with respect to the 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 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 interested
persons (as defined in the 1940 Act); provided further, however, that if the
continuation of this Agreement is not approved as to the Fund, the Subadviser
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 the Fund at any time,
without the payment of any penalty, (i) by the Board, by a vote of a majority of
the outstanding voting securities of the Fund or by the Adviser on 60 days'
written notice to the Subadviser or (ii) by the Subadviser on 60 days' written
notice to the Trust. This Agreement shall terminate immediately (x) upon its
assignment or (y) upon termination of the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's partners, directors, officers or employees
to engage in any other business or to devote time and
-6-
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
entity.
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants to the Adviser that:
(a) 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;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It 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 by the Subadviser in order to perform its services contemplated by this
Agreement; and
(d) It will promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of the Fund shall not be
personally liable for any obligations of the Trust or of the Fund under this
Agreement, and the Subadviser 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 Subadviser'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 Fund.
SECTION 10. 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 approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(c) 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 Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
-7-
(e) 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.
(f) 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. This Agreement shall be construed as if drafted jointly by both the
Adviser and Subadviser and no presumptions shall arise favoring any party by
virtue of authorship of any provision of this Agreement.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, as indicated above, or
at such other address as a party may have designated in writing, shall be deemed
to have been properly given.
(i) No affiliated person, employee, agent, director, partner, officer or
manager of the Subadviser shall be liable at law or in equity for the
Subadviser's obligations under this Agreement.
(j) 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.
(k) 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.
(l) Any information and advice furnished by either party to this Agreement
to the other shall be treated as confidential and shall not be disclosed to
third parties without the consent of the other party hereto except as required
by law, rule or regulation. The Sub-Adviser hereby consents to the disclosure to
third parties of investment results and other Fund data in connection with
providing composite investment results and related information of the
Sub-Adviser. The Sub-Adviser also consents to the disclosure of Fund data to the
Fund's other service providers so that those providers may perform the services
they are contractually obligated to render to the Trust.
-8-
(m) The Sub-Adviser may from time to time make available without charge to
the Adviser or the Trust any marks or symbols owned by the Sub-Adviser (the
"▇▇▇▇"), including marks or symbols containing the ▇▇▇▇ or any variation
thereof, to use in the Fund's Registration Statement and/or Fund sales
literature. Any use of the Marks shall be subject to the direction and control
of the Sub-Adviser.
(n) The Sub-Adviser shall not use the name of the Trust or any Fund on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Trust prior thereto in writing; provided however,
that the approval of the Trust shall not be required for the use of the Trust's
or Fund's name which merely refers in accurate and factual terms to the Trust or
Fund in connection with Sub-Adviser's role hereunder or which is required by any
appropriate regulatory, governmental or judicial authority; and further provided
that in no event shall such approval be unreasonably withheld or delayed.
(o) The provisions of Sections 5, 6, 9 and 10 shall survive any termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
ABSOLUTE INVESTMENT ADVISERS LLC
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
YACKTMAN ASSET MANAGEMENT CO
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
YACKTMAN ASSET MANAGEMENT CO.
Appendix A
Series of the Trust:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
YACKTMAN ASSET MANAGEMENT CO.
Appendix B
Strategy Fees
------------------------ ---------------------
Taxable Focus Composite: .75% on the first: $25 million
.50% on amounts over: $25 million
B-1