EXHIBIT (D)(26)
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
GMB CAPITAL MANAGEMENT, LLC
AGREEMENT made as of the 12th day of October, 2007 by and between Absolute
Investment Advisers LLC, a Massachusetts limited liability company with its
principal office and place of business at 000 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx, XX, 00000 (the "Adviser") (the "Adviser") and GMB Capital Management,
LLC, a Delaware limited liability company with its principal office and place
of business at Xxx Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX, 00000 (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 Xxx
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000, (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 0000 Xxx) 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
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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
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
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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 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. The Fund acknowledges that it is ultimately responsible
for pricing Portfolio Securities.
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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 within 15 days 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 0000 Xxx) 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
"Xxxx"), including marks or symbols containing the Xxxx 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
/s/ Xxx Xxxxxxx
-------------------------------------
Name: Xxx Xxxxxxx
Title: Principal
GMB CAPITAL MANAGEMENT, LLC
/s/ Marco Bitram
-------------------------------------
Name: Marco Bitram
Title: Managing Member
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SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
AND GMB CAPITAL MANAGEMENT, LLC
APPENDIX A
SERIES OF THE TRUST:
Absolute Strategies Fund
A-1
SUBADVISORY AGREEMENT
BETWEEN
ABSOLUTE INVESTMENT ADVISERS LLC
AND
GMB CAPITAL MANAGEMENT, LLC
APPENDIX B
STRATEGY FEES
-------- ----
Global Alpha 1.00%
Fee calculated as a percentage of the annual average daily net Allocated Assets
B-1
