EXHIBIT 5(c)
-120-
FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
WITH
QUADRA CAPITAL PARTNERS, L.P.
AGREEMENT made the 20th day of December, 1996, between Forum Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
with its principal place of business at Two Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx
00000, and Quadra Capital Partners, L.P. (the "Adviser "), a limited partnership
organized under the laws of the State of Delaware with its principal place of
business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "Act") as an open-end management investment company and is
authorized to issue its shares in separate series and classes;
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for the investment portfolios of the Trust listed on Schedule A hereto
(the "Funds"), each a separate series of the Trust, and the Adviser is willing
to provide those services on the terms and conditions set forth in this
Agreement;
NOW THEREFORE, the Trust and the Adviser agree as follows:
SECTION 1. APPOINTMENT AND DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Adviser as investment adviser for the Funds
for the period and on the terms set forth in this Agreement. Adviser accepts
this appointment and agrees to render its services as investment adviser for the
compensation set forth herein.
(b) The Trust has delivered copies of each of the following documents and
will from time to time furnish Adviser with any supplements or amendments to
such documents:
(i) the Trust Instrument of the Trust, as filed with the Secretary of
State of the State of Delaware, as in effect on the date hereof and as amended
from time to time ("Trust Instrument");
(ii) the Bylaws of the Trust as in effect on the date hereof and as
amended from time to time ("Bylaws");
(iii) the Registration Statement under the Act and, if applicable, the
Securities Act of 1933 (the "Securities Act"), as filed with the Securities and
Exchange Commission (the "Commission"), relating to the Fund and its shares and
all amendments thereto ("Registration Statement");
(iv) the prospectus and statement of additional information relating
to the Fund ("Prospectus"); and,
(v) all proxy statements, reports to shareholders, advertising or
other materials prepared for distribution to shareholders of the Fund or the
public, that refer to Adviser or its clients.
The Trust shall furnish Adviser with any further documents, materials or
information that Adviser may reasonably request to enable it to perform its
duties pursuant to this Agreement.
-121-
SECTION 2. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in the Funds. To carry out such
decisions, the Adviser is hereby authorized, as agent and attorney-in-fact for
the Trust, for the account of, and in the name of the Trust, to place orders and
issue instructions with respect to those transactions of the Funds. In all
purchases, sales and other transactions in securities for the Funds, the Adviser
is authorized to exercise full discretion and act for the Trust in the same
manner and with the same force and effect as the Trust might or could do with
respect to such purchases, sales or other transactions, as well as with respect
to all other things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all
changes in the Funds since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Funds and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in the
Funds' holdings, the industries in which they engage, or the economic, social or
political conditions prevailing in each country in which the Funds maintain
investments. The Adviser will also furnish the Board with such statistical and
analytical information with respect to securities in the Funds as the Adviser
may believe appropriate or as the Board reasonably may request.
(c) In making purchases and sales of securities for the Funds, and
otherwise performing its duties hereunder, the Adviser will comply with the Act
and the rules and regulations thereunder, all other applicable Federal and state
laws and regulations, the policies set from time to time by the Board as well as
the limitations imposed by the Trust's Trust Instrument, Bylaws, Registration
Statement under the Act and the Securities Act, the limitations in the Act and
in the Internal Revenue Code of 1986, as amended, in respect of regulated
investment companies and the investment objectives, policies and restrictions of
the Funds. Without limiting the foregoing, Sub-Adviser agrees that, in placing
orders with broker-dealers for the purchase or sales of portfolio securities, it
shall attempt to obtain quality execution at favorable security prices; provided
that, consistent with section 28(e) of the Securities and Exchange Act, the
exercise of Quadra's fiduciary duties under its Investment Advisory agreement
with the Trust, and any other applicable law, Quadra may allocate brokerage on
behalf of the Trust to broker-dealers who provide research services and may
cause the Fund to pay these broker-dealers a higher amount of commission than
may be charged by other broker-dealers.
(d) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on
the Trust's behalf in any such respect.
(e) The Adviser shall maintain records relating to Fund transactions and
the placing and allocation of brokerage orders as are required to be maintained
by the Trust under the Act and the rules and regulations thereunder. The
Adviser shall prepare and maintain, or cause to be prepared and maintained, in
such form, for such periods and in such locations as may be required by
applicable law, all documents and records relating to the services provided by
the Adviser pursuant to this Agreement required to be prepared and maintained by
the Trust pursuant to the Act and the rules and regulations thereunder, the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Commission and the Internal Revenue
Service. The books and records pertaining to the Trust which are in possession
of the Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Adviser's normal business hours. Upon the reasonable request
of the Trust, copies of any such books and records shall be provided promptly by
the Adviser to the Trust or the Trust's authorized representatives.
(f) The Adviser shall provide the Funds' custodian and fund accountant on
each business day with information relating to all transactions concerning the
Funds' assets.
-122-
(g) The Adviser shall authorize and permit any of its Trustees, officers
and employees who may be elected as Trustees or officers of the Trust to serve
in the capacities in which they are elected.
SECTION 3. EXPENSES
(a) The Adviser shall waive its fee to ensure that the Funds' expense
ratios do not exceed any expense limit described in the prospectus or applicable
to the Funds under the laws or regulations of any state in which shares of the
Funds are qualified for sale (reduced pro rata for any portion of less than a
year).
(b) If the Funds' expense ratio exceeds the expense limits described in
subsection (a) above after the Adviser has waived its fees, the Adviser shall be
responsible for that portion of the net expenses of the Funds that exceed any
expense limit described in the prospectus and the net expenses of the Funds
(except interest, taxes, brokerage, fees and other expenses paid by the Funds in
accordance with an effective plan pursuant to Rule 12b-1 under the Act and
organization expenses, all to the extent such exceptions are permitted by
applicable state law and regulation) incurred by the Funds during each of the
Funds' fiscal years or portion thereof that this Agreement is in effect which,
as to the Funds, in any such year exceeds any expense limits applicable to the
Funds under the laws or regulations of any state in which shares of the Funds
are qualified for sale (reduced pro rata for any portion of less than a year).
(c) The Trust hereby confirms that, subject to the foregoing, the Trust
shall be responsible and shall assume the obligation for payment of all the
Trust's other expenses, including: (i) interest charges, taxes, brokerage fees
and commissions; (ii) certain insurance premiums; (iii) fees, interest charges
and expenses of the Trust's custodian, transfer agent and dividend disbursing
agent; (iv) telecommunications expenses; (v) the fees and expenses of the
Trust's independent auditors and of the outside legal counsel appointed by the
Board; (vi) costs of the Trust's formation and maintaining its existence; (vii)
costs of preparing and printing the Trust's prospectuses, statements of
additional information, account application forms and shareholder reports and
delivering them to existing and prospective shareholders; (viii) costs of
maintaining books of original entry for portfolio and fund accounting and other
required books and accounts and of calculating the net asset value of shares of
the Trust; (ix) costs of reproduction, stationery and supplies; (x) compensation
of the Trust's Trustees, officers, employees and other personnel performing
services for the Trust who are not officers of the Adviser, of Forum Financial
Services, Inc. or of affiliated persons of either; (xi) costs of corporate
meetings; (xii) registration fees and related expenses for registration with the
Commission and the securities regulatory authorities of other countries in which
the Trust's shares are sold; (xiii) state securities law registration fees and
related expenses; (xiv) the fee payable hereunder and fees and out-of-pocket
expenses payable to Forum Financial Services, Inc. under any distribution,
management or similar agreement; (xv) and all other fees and expenses paid by
the Trust pursuant to any distribution or shareholder service plan adopted
pursuant to Rule 12b-1 under the Act or otherwise.
SECTION 4. STANDARD OF CARE
The Trust shall expect of the Adviser, and the Adviser will give the Trust
the benefit of, the Adviser's best judgment and efforts in rendering its
services to the Trust, and as an inducement to the Adviser's undertaking these
services the Adviser shall not be liable hereunder for any mistake of judgment
or in any event whatsoever, except for lack of good faith, breach of fiduciary
duty, willful misfeasance, bad faith or gross negligence in the performance of
the Adviser's duties hereunder, or by reason of the Adviser's reckless disregard
of its obligations and duties hereunder and except as otherwise provided by law.
SECTION 5. COMPENSATION
In consideration of the foregoing, the Trust shall pay the Adviser, with
respect to each of the Funds, a fee at an annual rate as listed in Appendix A
hereto. These fees shall be accrued by the Trust daily and shall be payable
monthly in arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month. The Adviser's
reimbursement, if any, of the Funds' expenses as provided in
-123-
Section 4 hereof, shall be estimated and accrued daily and paid to the Trust
monthly in arrears, at the same time as the Trust's payment to the Adviser for
such month.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) With respect to the Funds, this Agreement shall become effective
immediately upon approval by a majority of the Trust's Trustees, including a
majority of the Trustees who are not interested persons of the Trust.
(b) This Agreement shall remain in effect for a period of twenty four
months from the date of its effectiveness and shall continue in effect for
successive twelve-month periods (computed from each anniversary date of
approval) or for such shorter period as may be specified by the Board in giving
its approval as provided below; 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 Funds, 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 this Agreement or the continuation of this
Agreement is not approved, the Adviser may continue to render the services
described herein in the manner and to the extent permitted by the Act and the
rules and regulations thereunder. The annual approvals provided for herein
shall be effective to continue this Agreement from year to year (or such shorter
period referred to above) if given within a period beginning not more than sixty
(60) days prior to such anniversary, notwithstanding the fact that more than
three hundred sixty-five (365) days may have elapsed since the date on which
such approval was last given.
(c) This Agreement may be terminated at any time, without the payment of
any penalty, (i) by the Board or by a vote of a majority of the outstanding
voting securities of the Funds on 30 days' written notice to the Adviser or (ii)
by the Adviser on 90 days' written notice to the Trust, with copies to each of
the Trust's Trustees at their respective addresses set forth in the Trust's
Registration Statement or at such other address as such persons may specify to
the Adviser and to legal counsel to the Trust. This agreement shall terminate
automatically and immediately upon assignment.
SECTION 7. ACTIVITIES OF THE ADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's officers, directors, trustees or employees who may
also be a Trustee, officer or employee of the Trust, or persons otherwise
affiliated with the Trust, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, trust, firm, individual or association.
SECTION 8. SUB-ADVISERS
At its own expense, the Adviser may carry out any of its obligations under
this Agreement by employing, subject to the Adviser's supervision, one or more
persons who are registered as investment advisers pursuant to the Investment
Advisers Act of 1940, as amended, or who are exempt from registration thereunder
("Sub-advisers"). Each Sub-adviser's employment will be evidenced by a separate
written agreement approved by the Board and, if required, by the shareholders of
the applicable Fund.
-124-
SECTION 9. NOTICES
Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given, if to the Trust, at:
Forum Funds
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Secretary
and if to the Adviser, at:
Quadra Capital Partners, L.P.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxx
SECTION 10. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interest holders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Adviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Adviser's rights or claims relate in settlement of such rights
or claims, and not to the Trustees of the Trust or the interest holders of the
Funds.
SECTION 11. "QUADRA" NAME
If the Adviser ceases to act as investment adviser to the Trust or any Fund
whose name includes the word "Quadra," or if the Adviser requests in writing,
the Trust shall take prompt action to change the name of the Trust any such Fund
to a name that does not include the word "Quadra." The Adviser may from time to
time make available without charge to the Trust for the Trust's use any marks or
symbols owned by the adviser, including marks or symbols containing the word
"Quadra" or any variation thereof, as the Adviser deems appropriate. Upon the
Adviser's request in writing, the Trust shall cease to use any such xxxx or
symbol at any time. The Trust acknowledges that any rights in or to the word
"Quadra" and any such marks or symbols which may exist on the date of this
Agreement or arise hereafter are, and under any and all circumstances shall
continue to be, the sole property of the Adviser. The Adviser may permit other
parties, including other investment companies, to use the word "Quadra" in their
names without the consent of the Trust. The Trust shall not use the word
"Quadra" in conducting any business other than that of an investment company
registered under the Act without the permission of the Adviser.
SECTION 12. MISCELLANEOUS
(a) No provision of this Agreement with respect to any of the Funds may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and, if required by the Act, by a
vote of a majority of the outstanding voting securities of the Funds.
(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(c) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
-125-
(d) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
FORUM FUNDS
/s/ Xxxx X. Xxxxxx
------------------------
Xxxx X. Xxxxxx
President
QUADRA CAPITAL PARTNERS, L.P.
/s/ Xxxxxx X. Xxxx
------------------------
Xxxxxx X. Xxxx
Managing Director
-126-
FORUM FUNDS
ADVISORY AGREEMENT WITH QUADRA CAPITAL PARTNERS, L.P.
SCHEDULE A
AS OF DECEMBER 20, 1996
Fee as a % of the
Annual Average Daily Net Assets
Funds of the Trust of the Fund
------------------ -----------
Quadra Value Equity Fund 1.00%
Quadra International Equity Fund 1.25%
Quadra Opportunistic Bond Fund 0.70%
Quadra Restricted Maturity Treasury Fund 0.45%
-127-
