EX.99(d)(14)
FORWARD FUNDS, INC.
SUBADVISORY AGREEMENT
AGREEMENT, effective commencing on March 3, 2005, among Riverbridge Partners,
LLC. (the "Subadvisor"), Forward Management, LLC (the "Investment Advisor") and
Forward Funds, Inc. (the "Company"), on behalf of the Forward Legato Fund (the
"Fund"), a series of the Company.
WHEREAS, the Company is a Maryland corporation of the series type organized
under Articles of Incorporation dated October 3, 1997 (the "Articles") and is
registered under the Investment Company Act of 1940, as amended (the "1940 Act")
as an open-end, diversified management investment company, and the Fund is a
series of the Company; and
WHEREAS, the Investment Advisor has been retained by the Company to provide
investment advisory services to the Fund with regard to the Fund's investments
as further described in the Company's registration statement on Form N-1A (the
"Registration Statement") and pursuant to an Investment Management Agreement
dated March 3, 2005, ("Investment Management Agreement"); and
WHEREAS, the Fund's Board of Directors, including a majority of the directors
who are not "interested persons," as defined in the 1940 Act has approved the
appointment of the Subadvisor to perform certain investment advisory services
for the Company, on behalf of the Fund pursuant to this Subadvisory Agreement
and as described in the Registration Statement and the Subadvisor is willing to
perform such services for the Fund; and
WHEREAS, the Subadvisor is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Investment Advisor and the Subadvisor as
follows:
1. Appointment. The Investment Advisor hereby appoints the Subadvisor to
perform advisory services to the Fund for the periods and on the terms set forth
in this Subadvisory Agreement. The Subadvisor accepts such appointment and
agrees to furnish the services herein set forth, for the compensation herein
provided.
2. Investment Advisory Duties. Subject to the supervision of the Board of
Directors of the Fund and the Investment Advisor, the Subadvisor will, in
coordination with the Investment Advisor, (a) provide a program of continuous
investment management for the Fund in accordance with the Fund's investment
objectives, policies and limitations as stated in the Fund's prospectus and
Statement of Additional Information included as part of the Fund's Registration
Statement filed with the Securities and Exchange Commission ("SEC"), as they may
be amended from time to time, copies of which shall be provided to the
Subadvisor by the Investment Advisor; (b) make investment decisions for the
Fund; and (c) place orders to purchase and sell securities for the Fund.
In performing its investment management services to the Fund hereunder, the
Subadvisor will provide the Fund with ongoing investment guidance and policy
direction, including oral and written research, analysis, advice, statistical
and economic data and judgments regarding individual investments, general
economic conditions and trends and long-range investment policy.
The Subadvisor further agrees that, in performing its duties hereunder, it will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
Advisers Act, the Internal Revenue Code of 1986, as amended (the "Code")
and all other applicable federal and state laws and regulations, and with
any applicable procedures adopted by the Directors;
(b) use reasonable efforts to manage the Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter M
of the Code and regulations issued thereunder;
(c) place orders pursuant to its investment determinations for the Fund in
accordance with applicable policies expressed in the Fund's prospectus
and/or Statement of Additional Information and in accordance with
applicable legal requirements;
(d) furnish to the Company, the Investment Advisor and/or the Fund's
administrator (the "Administrator") whatever statistical information the
Company, the Investment Advisor or the Administrator may reasonably request
with respect to the Fund's assets or contemplated investments. In addition,
the Subadvisor will keep the Company, the Investment Advisor, the
Administrator and the Directors informed of developments materially
affecting the Fund's portfolio and shall, on the Subadvisor's own
initiative, furnish to the Fund from time to time whatever information the
Subadvisor believes appropriate for this purpose;
(e) make available to the Administrator, the Investment Advisor, and the
Company, promptly upon their request, such copies of its investment records
and ledgers with respect to the Fund as may be required to assist the
Investment Advisor, the Administrator, and the Company in their compliance
with applicable laws and regulations. The Subadvisor will furnish the
Directors, the Administrator, the Investment Advisor, and the Company with
such periodic and special reports regarding the Fund as they may reasonably
request;
(f) meet quarterly either in person or by conference call with the
Investment Advisor and the Company's Board of Directors to explain its
investment management activities, and any reports related to the Fund as
may reasonably be requested by the Investment Advisor and/or the Company;
(g) immediately notify the Investment Advisor and the Fund in the event
that the Subadvisor or any of its affiliates: (1) becomes aware that it is
subject to a statutory disqualification that prevents the Subadvisor from
serving as an investment adviser pursuant to this Subadvisory Agreement; or
(2) becomes aware that it is the subject of an administrative proceeding or
enforcement action by the SEC or other regulatory authority. The Subadvisor
further agrees to notify the Fund and the Investment Advisor immediately of
any material fact known to the Subadvisor respecting or relating to the
Subadvisor that is not contained in the Fund's Registration Statement, or
any amendment or supplement thereto, but that is required to be disclosed
therein, and of any statement contained therein that becomes untrue in any
material respect.
3. Investment Guidelines. The Company or the Investment Advisor shall
supply the Subadvisor with such information as the Subadvisor shall reasonably
require concerning the Fund's investment policies, restrictions, limitations,
tax position, liquidity requirements and other information useful in managing
the Fund's assets.
4. Use of Securities Brokers and Dealers. Purchase and sale orders will
usually be placed with brokers which are selected by the Subadvisor as able to
achieve "best execution" of such orders. "Best execution" shall mean prompt and
reliable execution at the most favorable securities price, taking into account
the other provisions hereafter set forth. Whenever the Subadvisor places orders,
or directs the placement of orders, for the purchase or sale of portfolio
securities on behalf of the Fund, in selecting brokers or dealers to execute
such orders, the Subadvisor is expressly authorized to consider the fact that a
broker or dealer has furnished statistical, research or other information or
services which enhance the Subadvisor's research and portfolio management
capability generally. It is further understood in accordance with Section 28(e)
of the Securities Exchange Act of 1934, as amended, that the Subadvisor may
negotiate with and assign to a broker a commission which may exceed the
commission which another broker would have charged for effecting the transaction
if the Subadvisor determines in good faith that the amount of commission charged
was reasonable in relation to the value of brokerage and/or research services
(as defined in Section 28(e)) provided by such broker, viewed in terms either of
the Fund or the Subadvisor's overall responsibilities to the Subadvisor's
discretionary accounts.
The Subadvises and its affiliates are permitted to act as a securities broker
with respect to purchases and sales of securities on behalf of the Fund in
accordance with applicable regulations. Unless otherwise directed by the Company
or the Investment Advisor in writing, the Subadvisor may utilize the service of
whatever independent securities brokerage firm or firms it deems appropriate to
the extent that such firms are competitive with respect to price of services and
execution.
5. Compensation. After March 31, 2006, the Investment Advisor will pay the
Subadvisor at the end of each calendar month an advisory fee computed daily at
an annual rate equal to 0.60 % of the Fund's average daily net assets with
respect to the portion of the Fund's portfolio allocated to the Subadvisor. The
Subadvisor agrees to waive its fee hereunder through March 31, 2006. The
Subadvisor may be reimbursed by the Investment Advisor on or before the fourth
anniversary of the Fund's commencement of operations for the subadvisory fees
waived during the period prior to March 31, 2006 in an amount in proportion to
any amounts recouped from the Fund by the Investment Advisor pursuant to the
expense limitation agreement between the Investment Advisor and the Company with
respect to the Fund for such period.
6. Fees and Expenses. The Subadvisor shall not be required to pay any
expenses of the Fund other than those specifically allocated to the Subadvisor
in this section. In particular, but without limiting the generality of the
foregoing, the Subadvisor shall not be responsible for the following expenses of
the Fund: organization and certain offering expenses of the Fund (including
out-of-pocket expenses, but not including the Subadvisor's overhead and employee
costs); fees payable to the Subadvisor and to any other Fund advisers or
consultants; legal expenses; auditing and accounting expenses; interest
expenses; taxes and governmental fees; fees, dues and expenses incurred by or
with respect to the Fund in connection with membership in investment company
trade organizations; cost of insurance relating to fidelity coverage for the
Company's officers and employees; fees and expenses of the Fund's Administrator
or of any custodian, subcustodian, transfer agent, registrar, or dividend
disbursing agent of the Fund; payments to the Administrator for maintaining the
Fund's financial books and records and calculating its daily net asset value;
other payments for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates; other expenses in connection with the issuance, offering,
distribution or sale of securities issued by the Fund; expenses relating to
investor and public relations; expenses of registering and qualifying shares of
the Fund for sale; freight, insurance and other charges in connection with the
shipment of the Fund's portfolio securities; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities or other assets of
the Fund, or of entering into other transactions or engaging in any investment
practices with respect to the Fund; expenses of printing and distributing
prospectuses, Statements of Additional Information, reports, notices and
dividends to stockholders; costs of stationery or other office supplies; any
litigation expenses; costs of stockholders' and other meetings; the compensation
and all expenses (specifically including travel expenses relating to the Fund's
business) of officers, directors and employees of the Company who are not
interested persons of the Subadvisor; and travel expenses (or an appropriate
portion thereof) of officers or directors of the Company who are officers,
directors or employees of the Subadvisor to the extent that such expenses relate
to attendance at meetings of the Board of Directors of the Company with respect
to matters concerning the Fund, or any committees thereof or advisers thereto.
7. Books and Records. The Subadvisor agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable legal
provisions, and to preserve such records for the periods and in the manner
required by that Section, and those rules and legal provisions. The Subadvisor
also agrees that records it maintains and preserves pursuant to Rules 31a-1 and
Rule 31a-2 under the 1940 Act and otherwise in connection with its services
hereunder are the property of the Fund and will be surrendered promptly to the
Fund upon its request. And the Subadvisor further agrees that it will furnish to
regulatory authorities having the requisite authority any information or reports
in connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable laws and regulations.
8. Aggregation of Orders. Provided the investment objectives, policies and
restrictions of the Fund are adhered to, the Company agrees that the Subadvisor
may aggregate sales and purchase orders of securities held in the Fund with
similar orders being made simultaneously for other accounts managed by the
Subadvisor or with accounts of the affiliates of the Subadvisor, if in the
Subadvisor's reasonable judgment such aggregation shall result in an overall
economic benefit to the Fund taking into consideration the advantageous selling
or purchase price, brokerage commission and other expenses. The Company
acknowledges that the determination of such economic benefit to the Fund by the
Subadvisor represents the Subadvisor's evaluation that the Fund is benefited by
relatively better purchase or sales prices, lower commission expenses and
beneficial timing of transactions or a combination of these and other factors.
9. Standard of Care and Limitation of Liability. The Subadvisor shall
exercise its best judgment in rendering the services provided by it under this
Subadvisory Agreement. The Subadvisor shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the holders
of the Fund's shares in connection with the matters to which this Subadvisory
Agreement relates, provided that nothing in this Subadvisory Agreement shall be
deemed to protect or purport to protect the Subadvisor against any liability to
the Fund or to holders of the Fund's shares to which the Subadvisor would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of the
Subadvisor's reckless disregard of its obligations and duties under this
Subadvisory Agreement. As used in this Section 9, the term "Subadvisor" shall
include any officers, directors, employees or other affiliates of the Subadvisor
performing services for the Fund.
10. Services Not Exclusive. It is understood that the services of the
Subadvisor are not exclusive, and that nothing in this Subadvisory Agreement
shall prevent the Subadvisor from providing similar services to other investment
companies (whether or not their investment objectives and policies are similar
to those of the Fund) or from engaging in other activities, provided such other
services and activities do not, during the term of this Subadvisory Agreement,
interfere in a material manner with the Subadvisor's ability to meet its
obligations to the Fund hereunder. When the Subadvisor recommends the purchase
or sale of a security for other investment companies and other clients, and at
the same time the Subadvisor recommends the purchase or sale of the same
security for the Fund, it is understood that in light of its fiduciary duty to
the Fund, such transactions will be executed on a basis that is fair and
equitable to the Fund. In connection with purchases or sales of portfolio
securities for the account of the Fund, neither the Subadvisor nor any of its
directors, officers or employees shall act as a principal or agent or receive
any commission. If the Subadvisor provides any advice to its clients concerning
the shares of the Fund, the Subadvisor shall act solely as investment counsel
for such clients and not in any way on behalf of the Fund.
11. Duration and Termination. This Subadvisory Agreement shall continue for
a period of two years unless sooner terminated as provided herein.
Notwithstanding the foregoing, this Subadvisory Agreement may be terminated: (a)
at any time without penalty by the Fund upon the vote of a majority of the
Directors or by vote of the majority of the Fund's outstanding voting
securities, upon sixty (60) days' written notice to the Subadvisor, (b) by the
Subadvisor at any time without penalty, upon sixty (60) days' written notice to
the Fund or (c) by the Investment Advisor at any time without penalty, upon
sixty (60) days' written notice to the Subadvisor. This Subadvisory Agreement
will also terminate automatically in the event of its assignment (as defined in
the 0000 Xxx) or the assignment or termination of the Investment Management
Agreement.
12. Amendments. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, and no amendment of this Subadvisory Agreement shall
be effective until approved by an affirmative vote of (i) a majority of the
outstanding voting securities of the Fund, and (ii) a majority of the Directors
of the Fund, including a majority of Directors who are not interested persons of
any party to this Subadvisory Agreement, cast in person at a meeting called for
the purpose of voting on such approval, if such approval is required by
applicable law.
13. Proxies. Unless the Company gives written instructions to the contrary,
the Subadvisor shall vote all proxies solicited by or with respect to the
issuers of securities in which assets of the Fund may be invested. The
Subadvisor shall maintain a record of how the Subadvisor voted and such record
shall be available to the Company upon its request. The Subadvisor shall use its
best good faith judgment to vote such proxies in a manner which best serves the
interests of the Fund's shareholders.
14. Notices. Any written notice required by or pertaining to this Agreement
shall be personally delivered to the party for whom it is intended, at the
address stated below, or shall be sent to such party by prepaid first class mail
or facsimile.
If to the Company:
Forward Funds, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
If to the Investment Advisor:
Forward Management, LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
If to the Subadvisor:
Riverbridge Partners, LLC
1200 Rand Tower
000 Xxxxxxxxx Xxx X
Xxxxxxxxxxx, XX 00000-0000
15. Confidential Information. The Subadvisor shall maintain the strictest
confidence regarding the business affairs of the Fund. Written reports furnished
by the Subadvisor to the Company or the Investment Advisor shall be treated by
such entities as confidential and for the exclusive use and benefit of the
Company except as disclosure may be required by applicable law.
16. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act, the Advisers Act, or rules or
orders of the SEC thereunder.
(b) Concurrently with the execution of this Agreement, the Subadvisor
is delivering to the Investment Advisor and the Company a copy of Part
II of its Form ADV, as revised, on file with the SEC. The Investment
Advisor and the Company hereby acknowledge receipt of such copy.
(c) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(d) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected hereby and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
(e) Nothing herein shall be construed as constituting the Subadvisor
as an agent of the Company or the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of March 3, 2005.
RIVERBRIDGE PARTNERS, LLC
By
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Name:
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Title:
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FORWARD MANAGEMENT, LLC
By
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Name:
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Title:
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FORWARD FUNDS, INC.
By
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Name:
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Title:
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