ALLOCATION AGREEMENT
Exhibit B
AGREEMENT made as of the 8th day of March, 2007, by and among Forward Funds, (the “Trust”), a management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”) and Forward Management, LLC (“Forward Management,” and collectively with the Trust, the “Insureds”).
W I T N E S S E T H:
WHEREAS, pursuant to the requirements of Rule 17g-1 under the 1940 Act the Trust is required to maintain a fidelity bond against larceny and embezzlement covering certain of their officers and employees; and
WHEREAS, the Trust is managed by Forward Management, LLC; and
WHEREAS, the Insureds have entered into a Joint Insured Bond issued by ICI Mutual Insurance Company (the “Bond”); and
WHEREAS, the Insureds desire to provide for: (1) the method by which the amount of coverage provided under the Bond will be determined from time to time and (2) an equitable and proportionate allocation of any proceeds received under the Bond in the event that two or more of the Insureds suffer loss and consequently are entitled to recover under the Bond;
NOW THEREFORE, it is hereby agreed among the parties hereto as follows:
1. Amount of Coverage Maintained. The amount of the fidelity coverage under the Bond shall at all times be at least equal in amount to the sum of (i) the total amount of coverage which the Trust would have been required to provide and maintain individually pursuant to the schedule set forth in paragraph (d) of Rule 17g-1 under the 1940 Act had the Trust not been named as an insured under the Bond; plus (ii) the amount of each bond which Forward Management would have been required to provide and maintain pursuant to federal statutes or regulations had it not been a named insured under the Bond. The amount of fidelity coverage under the Bond shall be approved at least annually by the Board of Trustees of the Trust, including a majority of those Trustees who are not “interested persons” of the Trust as defined by Section 2(a)(19) of the 1940 Act.
2. Allocation of Recovery. In the event an actual pecuniary loss is suffered by any two or more of the Insureds under circumstances covered by the terms of the Bond, any recovery under the Bond shall be allocated between such Insureds as follows:
(a) If the total amount of coverage provided under the Bond exceeds or is equal to the amount of the combined total amount of loss suffered by the Insureds suffering loss, then each such Insured shall be entitled to recover the amount of its actual loss.
(b) If the amount of loss suffered by each Insured suffering loss exceeds its minimum coverage requirement as set forth in Section 1 hereof and the amount of such Insureds’ combined actual losses exceeds the total amount of coverage provided under the Bond, then each such Insured shall be entitled to recover (i) its minimum coverage requirement and (ii) to the extent there exists any excess coverage, the proportion of such excess coverage which its minimum coverage requirement bears to the amount of the combined minimum coverage requirements of the Insureds suffering actual loss; provided, however, that if the actual loss of any such Insureds is less than the sum of (i) and (ii) above, then such difference shall be recoverable by the other Insured(s) in proportion to its relative minimum coverage requirement.
(c) If (i) the amount of actual loss suffered by an Insured is less than or equal to its minimum coverage requirement, (ii) the amount of actual loss of the other Insured exceeds its minimum coverage requirement and (iii) the amount of the combined actual losses of the Insureds exceeds the total amount of coverage provided under the Bond, then the Insured which has suffered an amount of actual loss less than or equal to its minimum coverage requirement shall be entitled to recover its actual loss. If the other Insured has suffered actual loss, it shall be entitled to recover the remainder of the amount of the coverage under the Bond.
3. Allocation of Premiums. No premium shall be paid under the Bond unless the Board of Trustees of the Trust, including a majority of those Trustees who are not “interested persons” of the Trust, as defined by Section 2(a)(19) of the 1940 Act, shall approve the portion of the premium to be paid by the Trust. The premium payable on the Bond shall be allocated between the Trust, and Forward Management as determined by the Board of Trustees of the Trust.
4. Amendment. This Agreement may not be amended or modified in any manner except by a written agreement executed by the parties.
5. Filing with the Commission. A copy of this Agreement and any amendment thereto shall be filed with the Securities and Exchange Commission.
6. Applicable Law. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of Delaware.
7. Limitations of Liability of Trustees, Officers and Shareholders. A copy of the Declaration of Trust of Forward Funds is on file with the State of Delaware. It is hereby agreed that this Agreement is executed on behalf of the Trustees of the Trust as Trustees, and not individually. It is further agreed that the obligations of this Agreement are not binding upon any of the Trustees, officers or shareholders of the Trust individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed in its name and behalf by its duly authorized representative as of the day and year first above written.
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| Forward Funds | ||
| By: | /s/ J. Xxxx Xxxx, Jr. | |
| Name: | J. Xxxx Xxxx, Jr. | |
| Title: | President | |
| Forward Management, LLC | ||
| By: | /s/ Xxxxxx X. Xxxxx | |
| Name: | Xxxxxx X. Xxxxx | |
| Title: | Treasurer | |
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