<PAGE>
 
                                   AGREEMENT
                                   ---------


     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
    ----------------------------------------------

     (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) Eaton Vance Management,
          (iii) Galliard 
<PAGE>
 
          Capital Management and (iv) Lord, Abbett & 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)  Morgan Stanley Dean Witter 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 & Lybrand 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.

                                       2
<PAGE>
 
     (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 

                                       3
<PAGE>
 
          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.

                                       4
<PAGE>
 
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
     -----------

     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.  Patrick Harrigan 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
     ----------------------------------------                                 
     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;

                                       5
<PAGE>
 
     (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
     --------------------------------------                                
     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;

                                       6
<PAGE>
 
     (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
     -------

     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:

                                       7
<PAGE>
 
          (a)  If to Oxford, to:

               Mr. Patrick D. Harrigan
               Managing Director
               Oxford Advisors Ltd
               P.O. Box 1043
               Caledonian House, Mary Street
               George Town, Grand Cayman
               Cayman Islands

          (b)  If to OPL, to:

               Overseas Partners Ltd.
               Mintflower Place
               P.O. Box HM1581
               8 Par-La-Ville Road
               Hamilton HM08 Bermuda
               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
     ------------

     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
     --------------

     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 

                                       8
<PAGE>
 
     courts of the Cayman Islands regarding any suit, action or proceeding out
     of or relating to this Agreement.

16.  Miscellaneous
     -------------

     (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/ Bruce Barone             By:     /s/ Patrick D. Harrigan
        ----------------                     -----------------------
        Name:   Bruce Barone                 Name:   Patrick D. Harrigan
        Title:  President and                Title:  Managing Director
                Chief Executive Officer


PATRICK HARRIGAN
(with respect to Section 8 herein)


__________________________

                                       9
<PAGE>
 
                                   EXHIBIT A
                                   ---------

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.


                                      10