AGREEMENT
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THIS AGREEMENT (the "Agreement") is made as of April 17, 1998 by and
between:
1. OXFORD ADVISORS LTD, an exempted company incorporated under the laws of the
Cayman Islands ("Oxford"); and
2. OVERSEAS PARTNERS LTD., a company organized under the laws of Bermuda
("OPL").
W I T N E S S E T H
WHEREAS, Oxford wishes to form an exempted Cayman Islands company (the
"Fund") known as the "Oxford Strategic Income Fund," which shall be an
investment fund structured as a multi-manager fund with several portfolio
managers (the "Portfolio Managers");
WHEREAS, Oxford will be engaged as the Investment Manager of the Fund to
assist the Board of Directors of the Fund in the management of the Fund and the
selection of Portfolio Managers and will be compensated pursuant to the terms of
an Investment Management Agreement by and between Oxford and the Fund;
WHEREAS, Oxford will use its best efforts to attract additional investments
in the Fund according to a schedule agreed to between Oxford and OPL;
WHEREAS, the parties have agreed that OPL shall make an initial investment
in the Fund of US$400 million; and
WHEREAS, the parties have agreed that Oxford shall compensate OPL for its
investment in the Fund, according to the terms set forth herein, which
compensation shall be adjusted based upon the results of efforts to attract new
investments in the Fund.
NOW, THEREFORE, in consideration of premises and mutual agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Formation and Structure of Cayman Islands Fund
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(a) The parties agree that Oxford shall establish the Fund, to be formed
as an exempted company under the laws of the Cayman Islands, and
Oxford shall use its best efforts to name the Fund the "Oxford
Strategic Income Fund" or such other similar name as shall be
available.
(b) The Fund will enter into Portfolio Management Agreements with each of
(i) Colonial Advisory Services, Inc., (ii) Xxxxx Xxxxx Management,
(iii) Galliard
Capital Management and (iv) Lord, Xxxxxx & Co. or such other portfolio
managers selected by the Board of Directors (each a "Portfolio
Manager"), whereby each Portfolio Manager will be paid a portfolio
management fee (the "Portfolio Management Fee"), based upon the amount
of assets of the Fund under the management of such Portfolio Manager,
ranging from 0.15% to 0.50%, not to exceed 0.33% on average. Such
Portfolio Management Fee will be paid by the Fund out of the assets of
the Fund.
(c) Xxxxxx Xxxxxxx Xxxx Xxxxxx Discover will serve as Investment
Consultant to the Fund pursuant to an Investment Consulting Services
Agreement to be entered into by the Fund and the Investment
Consultant, whereby the Investment Consultant will be paid an annual
investment consulting fee (the "Investment Consulting Fee") of 0.10%,
payable monthly in arrears, calculated on the net assets of the Fund.
Such Investment Consulting Fee will be paid by the Fund out of the
assets of the Fund.
(d) State Street Bank & Trust Co., located in Toronto, Canada (the
"Custodian"), will serve as the Custodian and Banker to the Fund. The
Custodian will be responsible for the custody of the Fund's assets,
including all cash, pursuant to a Custody Agreement to be entered into
by and between the Fund and the Custodian, on terms reasonably
satisfactory to the Custodian and the Fund, whereby the Custodian will
be paid usual and customary custody fees (the "Custody Fees") for the
custody of the Fund's assets. The Custody Fees will be paid to the
Custodian by the Fund out of the Fund's assets.
(e) Bridgewater Administration Limited, located in Guernsey, Channel
Islands (the "{Administrator"), will serve as the Fund's Administrator
pursuant to an Administration Agreement by and between the Fund and
the Administrator, whereby the Administrator will be paid an annual
administration fee (the "Administration Fee"), payable monthly in
arrears, calculated on the net assets of the Fund. Such
Administration Fee will be paid by the fund out of the assets of the
Fund. The Administrator will be responsible for the day to day
administration of the Fund, including receipt of all subscription and
redemption requests from shareholders of the Fund, and will coordinate
such requests with the Fund's Custodian.
(f) Coopers & Xxxxxxx will be appointed by the Board to serve as the
Fund's independent auditors, and will be responsible for the
preparation of the Fund's annual financial statements which will be
distributed to shareholders.
(g) Oxford shall be appointed as Investment Manager of the Fund pursuant
to an Investment Management Agreement by and between the Fund and
Oxford (the "Investment Management Agreement"), whereby Oxford shall
receive from the Fund as compensation for its services, an annual
investment management fee calculated in accordance with Exhibit "A"
attached (the "Oxford Management Fee"). Such Oxford Management Fee
shall also be described in the Fund's Offering Circular, as may be
amended from time to time with the agreement of the parties hereto.
The Fund shall not pay management fees in excess of 1.0%, in the
aggregate, to Oxford and the Fund's portfolio managers with respect to
those assets of the Fund representing OPL's initial $400 million
investment in the Fund.
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(h) The organizational expenses of the Fund, including legal expenses,
shall be the obligations of the Fund and will be amortized over a
five-year period, beginning with the commencement date of operations
of the Fund.
(i) The Fund will be structured as an open-end fund, with Dealing Dates
occurring on a monthly basis.
(j) The Fund will maintain investments which, on a weighted average basis,
will have an average rating of "investment grade" or higher.
2. Preparation of Documents for the Fund
-------------------------------------
Oxford shall prepare the organizational documents for the Fund, including
the Memorandum of Association and Articles of Association of the Fund,
Offering Circular, resolutions, and any contracts with third-party service
providers, including any Portfolio Management Agreements, Distribution
Agreements, Custody Agreements, Investment Consulting Agreements, marketing
materials, and any other appropriate documentation. The commitment of OPL
to invest US$400 million in the Fund shall be subject to the satisfactory
completion, in OPL's opinion, of all legal documentation regarding this
Agreement and all other organizational documents for the Fund. Oxford and
OPL agree and acknowledge that each of the parties hereto has a duty to act
in good faith in connection with this Agreement and the preparation,
inspection and approval of all legal and organizational documentation
described herein.
3. OPL Investment in the Fund
--------------------------
(a) OPL hereby agrees to invest US$400 million of seed capital in the Fund
prior to the commencement of the Fund's operations, but in no event
later than thirty (30) business days after the Fund is established as
an exempted company in the Cayman Islands. The shares in the Fund
received by OPL as a result of its investment shall be voting shares
with voting rights at least equal to any other Fund shares.
(b) In consideration of OPL's initial investment of US$400 million in the
Fund, and subject to the further conditions and adjustments contained
in Sections 2 and 4 herein, Oxford will pay to OPL each year in
perpetuity an annual commitment fee (the "Commitment Fee") equal to
80% of the Oxford Management Fee received for that year. The
Commitment Fee shall be paid monthly in arrears, and shall consist of
80% of the Oxford Management Fee actually received by Oxford for the
preceding month. Such Commitment Fee may be adjusted as described in
Section 4 herein.
(c) Any payments of the Commitment Fee to be made by Oxford to OPL
pursuant to this Agreement shall be made as soon as practicable after
receipt by Oxford of the
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Oxford Management Fee, but in no event later than five (5) business
days after receipt of the Oxford Management Fee.
(d) The Fund shall bear the reasonable legal and other expenses in
connection with the preparation and negotiation of this Agreement.
Reasonable legal fees and disbursements of the Fund's counsel selected
by Oxford and approved by OPL relating to the formation of the Fund,
including the preparation of customary and usual documentation in
respect of the transactions contemplated in this Agreement shall be
subject to prior authorization and approval by Oxford and OPL.
An estimate of the non-legal costs and expenses expected to be
incurred by Oxford on behalf of the Fund shall be submitted by Oxford
to OPL for approval on a monthly basis, beginning May 1, 1998.
If OPL, in its discretion, does not invest at least US$400 million in
the Fund as contemplated by this Agreement, OPL hereby agrees to pay
the legal fees and disbursements and non-legal costs and expenses it
has previously authorized or approved, not to exceed US $175,000.
4. Adjustments to Commitment Fee paid to OPL. The Commitment Fee provided for
-----------------------------------------
in Section 3(b) shall be adjusted as follows:
(a) If the net amount of new subscriptions to the Fund (other than
the OPL subscriptions) exceeds US$300 million, but is less than
US $400 million (the "Target Amount"), the Commitment Fee paid to
OPL shall be reduced to 75% of the Oxford Management Fee. The
net amount of new subscriptions shall be calculated without
regard to declines in the market value of the Fund's investments
or subsequent redemptions of all or part of such subscriptions.
However, if the net amount of new subscriptions falls below US
$300 million at any time before the Target Amount is achieved as
a result of redemptions of all or part of such subscriptions,
then the Commitment Fee shall be increased immediately to 80% of
the Oxford Management Fee.
(b) If the net amount of new subscriptions (other than OPL
subscriptions) at any time exceeds the Target Amount, then the
Commitment Fee, on an annual basis, shall be reduced to 60% of
the Oxford Management Fee. The reduction of the Commitment Fee
to 60% of the Oxford Management Fee shall become permanent once
the net amount of such new subscriptions (other than OPL
subscriptions) exceeds the Target Amount for a period of ninety
(90) days.
(c) The Commitment Fee shall be paid monthly in arrears.
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5. Maintenance of OPL Investment
-----------------------------
Notwithstanding any provision contained in this Agreement, OPL shall have
the right to redeem or withdraw all or any part of its initial investment
of US$400 million in the Fund, together with earnings thereon, at any time
with five (5) days prior written notice to the Fund. Any redemption
proceeds payable to OPL shall be transmitted by wire transfer in federal
funds to such account and pursuant to such wire instructions as may be
delivered in writing to Oxford by OPL from time to time.
6. Use of Name
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The parties agree that neither Oxford, the Fund nor any of the Fund's
service providers will use the names "Overseas Partners Ltd.", "Overseas",
"OPL" or any derivation thereof in the Fund's offering documents or
connection with the marketing of shares of the Fund.
7. Indemnification
---------------
Oxford agrees to indemnify and hold harmless, OPL, its Board, officers,
employees, shareholders and agents and each of them against any liability,
actions, proceedings, claims, demands, costs, expenses, settlements, losses
or damages whatsoever ("Losses") which they or any of them may incur or be
subject to as a consequence of this Agreement or as a result of the
performance of the functions and services provided for hereunder, except to
the extent that such Losses arise by reason of OPL's material breach of its
obligations under this Agreement.
8. OPL Right of First Offer. Xxxxxxx Xxxxxxxx and Oxford, its affiliates,
------------------------
successors and assigns (the "Oxford Group"), hereby grant to OPL a right of
first offer with respect to future investment products. Pursuant to this
right, the Oxford Group shall offer such products to OPL before offering
such products to others.
9. Representations and Warranties of Oxford. Oxford represents and warrants
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to OPL that:
(a) it is an exempted company duly organized, validly existing and in good
standing under the laws of the Cayman Islands, and is not in
bankruptcy, liquidation, or moratorium; and that no lawsuit is pending
or, to its knowledge, threatened against it, the outcome of which
would prevent or impair the performance of its obligations under this
Agreement;
(b) it has the requisite corporate power and authority to execute and
deliver, and perform its obligations under this Agreement;
(c) all requisite corporate action has been taken by it to authorize the
execution, delivery and performance of this Agreement;
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(d) this Agreement has been duly executed and delivered for and on behalf
of it and constitutes a legal, valid and binding agreement of it,
enforceable against it in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws of general applicability relating to or affecting
creditor's rights;
(e) the person executing this Agreement for and on behalf of it has full
power and authority to do so;
(f) the execution and delivery of this Agreement and the performance of
the obligations under this Agreement by it do not violate any contract
or other agreement to which it is a party or by which it is bound;
(g) it has all governmental, regulatory and self-regulatory licenses,
registrations or approvals, if any, required by applicable law to
perform its obligations under this Agreement;
(h) this Agreement represents an arms-length agreement between the parties
to this Agreement;
(i) all activities of Oxford contemplated by the execution and delivery of
this Agreement will at all times comply with the requirements imposed
by any provisions of applicable law;
(j) the representations and warranties of it set out in this Agreement
will be continuing during the term of this Agreement, and if at any
time during the term of this Agreement any event has occurred that
would make any of those representations and warranties untrue or
inaccurate in any material respect, it will promptly notify OPL of the
event and the parties related to the event.
10. Representations and Warranties of OPL. OPL represents and warrants to
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Oxford that:
(a) it is a company duly organized, validly existing and in good standing
under the laws of Bermuda, and is not in bankruptcy, liquidation, or
moratorium; and that, except as disclosed in OPL's financial
statements, no lawsuit is pending or, to its knowledge, threatened
against it, the outcome of which would prevent or impair the
performance of its obligations under this Agreement;
(b) it has the requisite corporate power and authority to execute and
deliver, and perform its obligations under this Agreement;
(c) all requisite corporate action has been taken by it to authorize the
execution, delivery and performance of this Agreement;
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(d) this Agreement has been duly executed and delivered by it and
constitutes a legal, valid and binding agreement of it, enforceable
against it in accordance with its terms;
(e) the person executing this Agreement for and on behalf of it has full
power and authority to do so;
(f) the execution and delivery of this Agreement and the performance of
the obligations under this Agreement by it do not violate any contract
or other agreement to which it is a party or by which it is bound;
(g) it has all governmental, regulatory and self-regulatory licenses,
registrations or approvals, if any, required by applicable law to
perform its obligations under this Agreement;
(h) this Agreement represents an arms-length agreement between the parties
to this Agreement;
(i) all activities of OPL contemplated by the execution and delivery of
this Agreement will at all times comply with the requirements imposed
by any provisions of applicable law; and
(j) the representations and warranties of it set out in this Agreement
will be continuing during the term of this Agreement, and if at any
time during the term of this Agreement any event has occurred that
would make any of those representations and warranties untrue or
inaccurate in any material respect, it will promptly notify the Oxford
of the event and the parties related to the event.
11. Term and Termination
--------------------
This Agreement shall come into force as of the date hereof and continue in
effect until the Fund has been liquidated, except that the provisions
contained in Sections 2, 3, 4 and 7 shall survive the termination of this
Agreement.
12. Notices
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All notices given hereunder to any party shall be deemed sufficient if
contained in a written instrument delivered by facsimile with a hard copy
delivered via courier the following business day. All such notices herein
described shall be addressed to the other party as follows:
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(a) If to Oxford, to:
Xx. Xxxxxxx X. Xxxxxxxx
Managing Director
Oxford Advisors Ltd
P.O. Box 1043
Caledonian House, Xxxx Street
Xxxxxx Town, Grand Cayman
Cayman Islands
(b) If to OPL, to:
Overseas Partners Ltd.
Mintflower Place
P.O. Box HM1581
0 Xxx-Xx-Xxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx
Attn: Secretary
All notices delivered pursuant to this Section shall be deemed to have been
received on the date of such delivery via facsimile provided however that
if such date does not fall on a business day, such notice shall be deemed
to have been received on the first business day following such delivery via
facsimile. For purposes of this Agreement, "business day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in the Cayman Islands are authorized or obligated by
law to close.
13. Severability
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The parties intend every provision of this Agreement to be severable. If a
court of competent jurisdiction determines that any term or provision is
illegal or invalid for any reason, the illegality or invalidity shall not
affect the validity of the remainder of this Agreement. In such case, the
parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality
of this paragraph, if a court determines that any remedy stated in this
Agreement has failed of its essential purpose, then all other provisions of
this Agreement, including the limitations on liability and exclusion of
damages, shall remain fully effective.
14. No Partnership
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Nothing herein shall be construed as causing or effecting a partnership
between or among all or any of the parties hereto in the Cayman Islands or
in any other jurisdiction.
15. Governing Law/Choice of Forum
-----------------------------
This Agreement shall be governed by, and construed in accordance with, the
laws of the Cayman Islands. Oxford and OPL hereby submit to the non-
exclusive jurisdiction of the
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courts of the Cayman Islands regarding any suit, action or proceeding out
of or relating to this Agreement.
16. Miscellaneous
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(a) Neither Party may assign, transfer or in any manner hypothecate this
Agreement or any right or interest herein without the consent of the
other party, which consent shall not be unreasonably refused, and any
such attempt to transfer, assign or hypothecate without the consent of
the other party shall be null and void and without force and effect.
(b) This Agreement shall inure to the benefit of and shall bind the
parties hereto and their respective successors and assigns.
(c) This Agreement may be amended or modified only by a writing signed by
each of the parties hereto.
(d) This Agreement may be executed in counterparts, each of which, when
executed and delivered, shall be deemed to be an original, and all of
which when taken together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
OVERSEAS PARTNERS LTD. OXFORD ADVISORS LTD
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
---------------- -----------------------
Name: Xxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: President and Title: Managing Director
Chief Executive Officer
XXXXXXX XXXXXXXX
(with respect to Section 8 herein)
__________________________
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EXHIBIT A
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The Oxford Management Fee, together with the Portfolio Management Fees, will not
exceed 1.0% in the aggregate. There may be instances where certain large
investors may negotiate a reduced investment management/portfolio management fee
on their portion of assets invested in the Fund. In those instances, Oxford
shall consult with OPL and obtain OPL's prior approval of any such reduction in
investment management/portfolio management fees for those certain investors. A
separate class of shares will be created to facilitate the reduced
management/portfolio management fees for those investors. The Commitment Fee
payable to OPL will continue to be based upon a percentage of the Oxford
Management Fee actually received by Oxford for all classes of shares of the
Fund.
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