Exhibit (d)(21)
FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of August 8, 2006, by and between Forum Funds, a Delaware
business trust, with its principal office and place of business at Two Xxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxx 00000 (the "Trust"), and Xxxxx Investment Advisory
Incorporated, a Maryland corporation, with its principal office and place of
business at 000 X. Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 (the
"Adviser").
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 (the "Shares"), in
separate series; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust listed in Appendix A hereto (each, a
"Fund" and collectively, the "Funds"), and the Adviser is willing to provide
those 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 Trust and the Adviser hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby employs the Adviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of the assets
in each Fund and, without limiting the generality of the foregoing, to provide
other services as specified herein. The Adviser accepts this employment and
agrees to render its services for the compensation set forth herein.
(b) In connection therewith, the Trust has delivered to the Adviser 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") with respect to each
Fund; (iii) the Trust's current Prospectuses and Statements of Additional
Information of each Fund (collectively, as currently in effect and as amended
or supplemented, the "Prospectus"); and (iv) all procedures adopted by the
Trust with respect to the Funds (i.e., repurchase agreement procedures), and
shall promptly furnish the Adviser with all amendments of or supplements to the
foregoing. The Trust shall deliver to the Adviser: (x) a certified copy of the
resolution of the Board of Trustees of the Trust (the "Board") appointing the
Adviser and authorizing the execution and delivery of this Agreement; (y) a
copy of all proxy statements and related materials relating to the Funds; and
(z) any other documents, materials or information that the Adviser shall
reasonably request to enable it to perform its duties pursuant to this
Agreement.
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(c) The Adviser has delivered, or will deliver within 45 days, to the Trust
a copy of its code of ethics complying with the requirements of Rule 17j-1
under the 1940 Act (the "Code"). The Adviser shall promptly furnish the Trust
with all amendments of or supplements to the foregoing at least annually.
SECTION 2. DUTIES OF THE TRUST
In order for the Adviser to perform the services required by this Agreement,
the Trust: (i) shall cause all service providers to the Trust to furnish
information to the Adviser and to assist the Adviser as may be required; and
(ii) shall ensure that the Adviser has reasonable access to all records and
documents maintained by the Trust or any service provider to the Trust.
SECTION 3. DUTIES OF THE ADVISER
Subject to the delegation of any of the following duties to one or more
persons as permitted by Section 9 of this Agreement, the Adviser, at its own
expense, shall render the following services to the Trust:
(a) The Adviser will make decisions with respect to all purchases and sales
of securities and other investment assets on behalf of each Fund consistent
with a Fund's investment objectives, policies and restrictions. To carry out
such decisions, the Adviser 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 those transactions of
the Funds. In all purchases, sales and other transactions in securities and
other investments 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, including voting of proxies with respect to securities owned by
the Fund.
Consistent with Section 28(e) of the Securities and Exchange Act of 1934, as
amended, the Adviser may allocate brokerage on behalf of the Funds to
broker-dealers who provide research services. The Adviser may aggregate sales
and purchase orders of the assets of the Funds with similar orders being made
simultaneously for other accounts advised by the Adviser or its affiliates.
Whenever the Adviser simultaneously places orders to purchase or sell the same
asset on behalf of a Fund and one or more other accounts advised by the
Adviser, the orders will be allocated as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Adviser will report to the Board at each meeting thereof as
requested by the Board all material changes in each Fund 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, the economic,
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social or political conditions prevailing in each country in which the Funds
maintain investments, or otherwise. The Adviser will also furnish the Board
with such statistical and analytical information with respect to investments of
the Funds as the Adviser may believe appropriate or as the Board reasonably may
request. In making purchases and sales of securities and other investment
assets for the Funds, the Adviser will bear in mind the policies set from time
to time by the Board as well as the limitations imposed by the Organic
Documents and Registration Statement, the limitations in the 1940 Act, the
Securities Act, the Internal Revenue Code of 1986, as amended, and other
applicable laws and the investment objectives, policies and restrictions of the
Funds.
(c) 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.
(d) On an annual basis, the Adviser shall report on its compliance with its
Code to the Board and upon the written request of the Trust, the Adviser shall
permit the Trust, or its representatives to examine the reports required to be
made to the Adviser under the Code. The Adviser will notify the Trust of any
change of control of the Adviser and any changes in the key personnel who are
either the portfolio manager(s) of the Fund or senior management of the
Adviser, in each case prior to or promptly after such change.
(e) The Adviser will maintain records relating to its portfolio transactions
and placing and allocation of brokerage orders as are required to be maintained
by the Trust under the 1940 Act. 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 Adviser or the Trust pursuant to
applicable law. To the extent required by law, the books and records pertaining
to the Trust in possession of the Adviser shall be the property of the Trust.
The Trust, or its 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 its representatives.
(f) The Adviser will cooperate with each Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to those accountants for the performance of the accountants' duties.
(g) The Adviser will provide the Funds' custodian and fund accountant on
each business day with such information relating to all transactions concerning
the Funds' assets as the custodian and fund accountant may reasonably require.
In accordance with procedures adopted by the Board, the Adviser is responsible
for assisting in the fair valuation of all Fund assets and will use its
reasonable efforts to arrange for the provision of prices from parties who are
not affiliated persons of the Adviser for each asset for which the Funds' fund
accountant does not obtain prices in the ordinary course of business.
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(h) The Adviser shall authorize and permit any of its directors, officers
and employees who may be duly elected as Trustees or officers of the Trust to
serve in the capacities in which they are elected.
(i) The Adviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period in which the Fund invests all (or substantially
all) of its investment assets in a registered, open-end management investment
company, or separate series thereof, in accordance with Section 12(d)(1)(E)
under the 1940 Act.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Trust shall pay the Adviser, with
respect to each Fund, a fee at an annual rate as listed in sub-section (a) of
Appendix A hereto. Such 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. Out-of-pocket
reimbursements listed in sub-section (b) of Appendix A hereto, shall be payable
monthly in arrears on the fist day of each calendar month for services
performed under this Agreement 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 a Fund, the Trust shall pay
to the Adviser such compensation as shall be payable prior to the effective
date of termination.
(b) The Adviser shall reimburse expenses of each Fund or waive its fees to
the extent necessary to maintain a Fund's expense ratio at an agreed-upon
amount for a period of time specified in a separate letter of agreement. The
Adviser's reimbursement of a Fund's expenses shall be estimated and paid to the
Trust monthly in arrears, at the same time as the Trust's payment to the
Adviser for such month.
(c) No fee shall be payable hereunder with respect to a Fund during any
period in which the Fund invests all (or substantially all) of its investment
assets in a registered, open-end, management investment company, or separate
series thereof, in accordance with Section 12(d)(1)(E) under the 1940 Act.
(d) The Trust shall be responsible for and assumes the obligation for
payment of all of its expenses, including: (i) the fee payable under this
Agreement; (ii) the fees payable to each administrator under an agreement
between the administrator and the Trust; (iii) expenses of issue, repurchase
and redemption of Shares; (iv) interest charges, taxes and brokerage fees and
commissions; (v) premiums of insurance for the Trust, its trustees and
officers, and fidelity bond premiums; (vi) fees and expenses of third parties,
including the Trust's independent public accountant, custodian, transfer agent,
dividend disbursing agent and fund accountant; (vii) fees of
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pricing, interest, dividend, credit and other reporting services; (viii) costs
of membership in trade associations; (ix) telecommunications expenses;
(x) funds' transmission expenses; (xi) auditing, legal and compliance expenses;
(xii) costs of forming the Trust and maintaining its existence; (xiii) costs of
preparing, filing and printing the Trust's Prospectuses, subscription
application forms and shareholder reports and other communications and
delivering them to existing shareholders, whether of record or beneficial;
(xiv) expenses of meetings of shareholders and proxy solicitations therefor;
(xv) costs of maintaining books of original entry for portfolio and fund
accounting and other required books and accounts, of calculating the net asset
value of Shares and of preparing tax returns; (xvi) costs of reproduction,
stationery, supplies and postage; (xvii) fees and expenses of the Trust's
trustees and officers; (xviii) the costs of personnel (who may be employees of
the Adviser, an administrator or their respective affiliated persons)
performing services for the Trust; (xix) costs of Board, Board committee,
shareholder and other corporate meetings; (xx) SEC registration fees and
related expenses; (xxi) state, territory or foreign securities laws
registration fees and related expenses; and (xxii) all fees and expenses paid
by the Trust in accordance with any distribution or service plan or agreement
related to similar matters.
SECTION 5. STANDARD OF CARE
(a) 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. The Adviser shall not be liable hereunder for mistake of
judgment or mistake of law or in any event whatsoever, except for lack of good
faith, provided that nothing herein shall be deemed to protect, or purport to
protect, the Adviser against any liability to the Trust or to the Trust's
security holders to which the Adviser would otherwise be subject by reason of
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.
(b) The Adviser 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 Advisor's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund on the date
above after approval by (1) a majority of the outstanding voting securities of
that Fund, if required by the 1940 Act, and (2) a majority of the Board who are
not interested parties of the Trust.
(b) This Agreement shall remain in effect with respect to a Fund for a
period of one year 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
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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 a Fund, the Adviser 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 a Fund 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 Fund on 60 days' written notice to
the Adviser; or (ii) by the Adviser on 60 days' written notice to the Trust.
This Agreement shall terminate immediately upon its assignment.
SECTION 7. ACTIVITIES OF THE ADVISOR
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 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 corporation, trust, firm, individual or
association.
SECTION 8. REPRESENTATIONS OF ADVISOR
The Adviser represents and warrants that: (i) 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); (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement;
(iii) 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 in
order to perform the services contemplated by this Agreement; and (iv) will
promptly notify the Trust of the occurrence of any event that would disqualify
the Adviser from serving as an investment adviser of an investment company
pursuant to Section 9(a) of the 1940 Act or otherwise.
SECTION 9. SUBADVISERS
(a) At its own expense, the Adviser may carry out any of its obligations
under this Agreement by employing, subject to the direction and control of the
Board, one or more persons who are registered as investment advisers pursuant
to the Advisers Act ("Subadvisers"). The Adviser may with respect to a Fund:
(i) evaluate, select, and recommend Subadvisers to manage all or a portion of
the Fund's assets; (ii) allocate and, when appropriate, reallocate the Fund's
assets among multiple Subadvisers; (iii) terminate any Fund Subadviser;
(iv) monitor and evaluate each Subadviser's performance; and (v) implement
procedures reasonably designed to seek to ensure that Subadvisers comply with
the Fund's investment objective, policies, and restrictions. Despite the
Advisor's ability to employ Subadvisers to perform the duties set forth in
Section 3 of this Agreement, the Advisor shall retain overall supervisory
responsibility for the general management and investment of each Fund's assets.
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(b) Each Subadviser's employment will be evidenced by a separate written
agreement approved by the Board and, if required, by the shareholders of the
applicable Fund.
(c) The Adviser may, if authorized by applicable law or an exemptive order
issued by the SEC to the Adviser and the Trust, and upon approval of the Board,
(i) enter into and amend Sub-Advisory Agreements with new or current
Subadvisers with respect to a Fund; and (ii) replace any Subadviser with
respect to that Fund without seeking approval of Fund Shareholders ("Manager of
Managers Structure"). The Adviser may not employ a Manager of Managers
Structure with respect to a Fund without seeking prior approval of that Fund's
shareholders.
SECTION 10. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders 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 shareholders of
the Funds.
SECTION 11. RIGHTS TO NAME
If the Adviser ceases to act as Investment Adviser to the Trust or any Fund
whose name includes the term "BrownIA" (the "Xxxx") or if the Adviser requests
in writing, the Trust shall take prompt action to change the name of the Trust
or any such Fund to a name that does not include the Xxxx. 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 Xxxx 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 Xxxx
and any such marks or symbols that 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 Xxxx in their names without
the consent of the Trust. The Trust shall not use the Xxxx in conducting any
business other than that of an investment company registered under the 1940 Act
without the permission of the Adviser.
SECTION 12. 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, if required by the 1940 Act, by a vote of a majority of the
outstanding voting securities of any Fund thereby affected.
(b) No amendment to this Agreement or the termination of this Agreement with
respect to a Fund shall affect this Agreement as it pertains to any other Fund,
nor shall any such amendment require the vote of the shareholders of any other
Fund.
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(c) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(d) 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 New York.
(e) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement between those parties with respect to
the subject matter hereof, whether oral or written.
(f) 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.
(g) 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.
(h) Section headings in this Agreement are included for convenience only and
are not to be used to construe or interpret this Agreement.
(i) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(j) Notwithstanding any other provision of this Agreement, the parties agree
that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of
any other Fund, whether arising under this Agreement or otherwise.
(k) No affiliated person, employee, agent, director, officer or manager of
the Adviser shall be liable at law or in equity for the Advisor's obligations
under this Agreement.
(l) 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.
(m) 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,
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insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
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/ Xxxxx X. Xxxxxxx
-----------------------------
Xxxxx X. Xxxxxxx
President
XXXXX INVESTMENT ADVISORY
INCORPORATED
/s/ Xxxxx X. Xxxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxxx
Chief Financial Officer
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FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
Appendix A
August 8, 2006
(A) FEES
FEE AS A % OF THE ANNUAL
FUNDS OF THE TRUST AVERAGE DAILY NET ASSETS OF THE FUND
------------------ ------------------------------------
Xxxxx Advisory Growth Equity Fund 0.75%
Xxxxx Advisory Value Equity Fund 0.75%
Xxxxx Advisory Small-Cap Growth Fund 1.00%
Xxxxx Advisory Small-Cap Value Fund 1.00%
Xxxxx Advisory Opportunity Fund 1.00%
Xxxxx Advisory Real Estate Fund 1.00%
Xxxxx Advisory International Fund 1.05%
Xxxxx Advisory Intermediate Income Fund 0.35%
Xxxxx Advisory Maryland Bond Fund 0.50%
(B) OUT-OF-POCKET EXPENSES
Xxxxx Advisory International Fund will reimburse the Adviser for the amounts
paid to an independent consultant to evaluate the performance of new and
current Subadvisers up to an annual maximum of 0.05% of the Fund's average
daily net assets. No reimbursements will be permitted unless the Board has
authorized the retention of the independent consultant.
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