FORUM FUNDS
MANAGEMENT AGREEMENT
WITH
XXXXXX ASSET MANAGEMENT LLC
TO: Xxxxxx Asset Management LLC
5000 X.X. Xxxxxxx Road, Suite 000
Xxxx Xxxxxx, XX 00000-2224
Dear Sirs:
Forum Funds (the "Trust") herewith confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is the Xxxxxx Focus Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows effective upon the date of the execution of this
Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment advice as
you in your discretion deem advisable and will furnish a continuous investment
program for the Fund consistent with the Fund's investment objectives and
policies. You will determine the securities to be purchased for the Fund, the
portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board of Trustees for the Trust (the "Board") may from time to time establish.
You will advise and assist the officers of the Trust in taking such steps as are
necessary or appropriate to carry out the decisions of the Board and the
appropriate committees of the Board regarding the conduct of the business of the
Fund. You are also authorized to vote proxies with respect to securities owned
by the Fund, subject to such proxy voting policies as approved by the Board.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, including expenses incurred by the Fund in
connection with the organization and initial registration of shares of the Fund;
insurance expenses; fees and expenses of the custodian, transfer agent, dividend
disbursing agent, shareholder service agent, plan agent, administrator,
accounting and pricing services agent and underwriter of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
of the Fund; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or
preparing prospectuses and statements of additional information for delivery to
the Fund's current and prospective shareholders; the cost of printing or
preparing stock certificates or any other documents, statements or reports to
shareholders; expenses of shareholders' meetings and proxy solicitations;
advertising, promotion and other expenses incurred directly or indirectly in
connection with the sale or distribution of the Fund's shares excluding expenses
which the Fund is authorized to pay pursuant to Rule 12b-l under the Investment
Company Act of 1940, as amended (the "1940 Act"); and all other operating
expenses not specifically assumed by the Fund.
The Fund will pay all brokerage fees and commissions, taxes,
borrowing costs (such as (a) interest and (b) dividend expenses on securities
sold short), fees and expenses of the non-interested person trustees and such
extraordinary or non-recurring expenses as may arise, including litigation to
which the Fund may be a party and indemnification of the Trustees and officers
with respect thereto. The Fund will also pay expenses which it is authorized to
pay pursuant to Rule 12b-1 under the 1940 Act. You may obtain reimbursement from
the Fund, at such time or times as you may determine in your sole discretion,
for any of the expenses advanced by you, which the Fund is obligated to pay, and
such reimbursement shall not be considered to be part of your compensation
pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made as
provided in this Agreement, as of the last business day of each month, the Fund
will pay you a fee at the annual rate of 1.35% of the average value of its daily
net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Trust Instrument or a
resolution of the Board, if required. If, pursuant to such provisions, the
determination of net asset value of the Fund is suspended for any particular
business day, then for the purposes of this paragraph, the value of the net
assets of the Fund as last determined shall be deemed to be the value of the net
assets as of the close of the business day, or as of such other time as the
value of the Fund's net assets may lawfully be determined, on that day. If the
determination of the net asset value of the Fund has been suspended for a period
including such month, your compensation payable at the end of such month shall
be computed on the basis of the value of the net assets of the Fund as last
determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities for
the account of the Fund, it is understood that you will arrange for the placing
of all orders for the purchase and sale of portfolio securities for the Fund
with brokers or dealers selected by you, subject to review of this selection by
the Board from time to time. You will be responsible for the negotiation and the
allocation of principal business and portfolio brokerage. In the selection of
brokers or dealers and placing of orders, you are directed at all times to seek
for the Fund the best qualitative execution, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer.
You should generally seek favorable prices and commission rates
that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services to the Fund and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
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broker or dealer who provides such brokerage and research services a commission
for executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the va1ue of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise investment
discretion. The Fund and you understand and acknowledge that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
Subject to the provisions of the 1940 Act, and other applicable
law, you, any of your affiliates or any affiliate of your affiliates may retain
compensation in connection with effecting the Fund's portfolio transactions,
including transactions effected through others. If any occasion should arise in
which you give any advice to clients of yours concerning shares of the Fund, you
will act solely as investment counsel for such client and not in any way on
behalf of the Fund. Your services to the Fund pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that you may render investment
advice, management and other services to others, including other registered
investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the 1940 Act or
the rules thereunder, neither you nor your shareholders, members, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee,
member, shareholder or agent of you, who may be or become an officer, director,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with your duties hereunder), to be rendering
such services to or acting solely for the Trust and not as a director, officer,
employee, member, shareholder or agent of you, or one under your control or
direction, even though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution, and
shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority of the outstanding voting securities of
the Fund, provided that in either event continuance is also approved by a
majority of the Trustees who are not interested persons of you or the Trust, by
a vote cast in person at a meeting called for the purpose of voting such
approval.
If the shareholders of the Fund fail to approve the Agreement in
the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you
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or a different adviser or other definitive action; provided that the
compensation to be paid by the Fund to you for your services to and payments on
behalf of the Fund will be equal to the lesser of your actual costs incurred in
furnishing such services and payments or the amount you would have received
under this Agreement for furnishing such services and payments.
This Agreement may, on sixty days written notice, be terminated
with respect to the Fund, at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting securities of the Fund,
or by you. This Agreement shall automatica1ly terminate in the event of its
assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name "Xxxxxx"
or any variation thereof belong to you, and that the Trust is being granted a
limited license to use such words in its Fund name or in any class name. In the
event you cease to be the adviser to the Fund, the Trust's right to the use of
the name "Xxxxxx" shall automatically cease on the ninetieth day following the
termination of this Agreement. The right to the name may also be withdrawn by
you during the term of this Agreement upon ninety (90) days' written notice to
the Trust. Nothing contained herein shall impair or diminish in any respect,
your right to use the name "Xxxxxx" in the name of, or in connection with, any
other business enterprises with which you are or may become associated. There is
no charge to the Trust for the right to use this name.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged
or terminated orally, and no amendment of this Agreement shall be effective
until approved by the Board, including a majority of the Trustees who are not
interested persons of you or of the Trust, cast in person at a meeting called
for the purpose of voting on such approval, and (if required under
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "Trustees" means and refers to the Forum Funds trustees
from time to time servicing under the Trust's Trust Instrument as the same may
be amended from time to time. It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the trustees, shareholders,
nominees, officers, agents or employees of the Trust personally, but bind only
the trust property of the Trust, as provided in the Trust Instrument. The
execution and delivery of this Agreement have been authorized by the Trustees
and shareholders of the Trust and signed by officers of the Trust, acting as
such, and neither such authorization by such Trustees and shareholders nor such
execution and delivery by such officers shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust as provided in its Trust
Instrument. A copy of the Trust Instrument is retained at the office of the
Trust.
10. SEVERABILITY
In the event any provision of this Agreement is determined to be
void or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
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11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State of New
York.
(b) For the purpose of this Agreement, the terms "majority of the
outstanding voting securities", "control" and "interested person" shall
have their respective meanings as defined in the 1940 Act and rules and
regulations thereunder, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under the 1940 Act; and
the term "brokerage and research services" shall have the meaning given in
the Securities Exchange Act of 1934, as amended.
(c) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the
United States courts or in the absence of any controlling decision of any
such court, by the Securities and Exchange Commission or its staff. In
addition, where the effect of a requirement of the 1940 Act, reflected in
any provision of this Agreement, is revised by rule, regulation, order or
interpretation of the Securities and Exchange Commission or its staff, such
provision shall be deemed to incorporate the effect of such rule,
regulation, order or interpretation.
12. NOTICES
Any notices under this Agreement shall be in writing, addressed
and delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust is Two Portland
Square, Portland, ME 04101 and your address for this purpose shall be 0000 X.X.
Meadows Road, Suite 000, Xxxx Xxxxxx, XX 00000-2224.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that he
has the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the form
of acceptance below and return it to the Trust, whereupon this letter shall
become a binding contract upon the date thereof.
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Yours very truly,
FORUM FUNDS
Dated: As of December 10, 2004 By:/S/ XXXX X. XXXXXX
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Name: XXXX X. XXXXXX
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Title: VICE PRESIDENT
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ACCEPTANCE:
The foregoing Agreement is hereby accepted.
XXXXXX ASSET MANAGEMENT LLC
Dated: As of December 10, 2004 By: /S/ XXXXXXX XXXXXX
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Name: XXXXXXX XXXXXX
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Title: PRESIDENT
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