Exhibit (h)(2)(a)
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT, dated as of this 1st day of April, 1998, the
"Agreement"), between FIRST DATA INVESTOR SERVICES GROUP, INC., a Massachusetts
corporation ("Investor Services Group"), and the FORWARD FUNDS, INC., a Maryland
corporation (the "Fund").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund desires to retain Investor Services Group to render
certain administrative services with respect to each investment portfolio listed
in Schedule A hereto, as the same may be amended from time to time by the
parties hereto (collectively, the "Portfolios"), and Investor Services Group is
willing to render such services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended from
time to time.
(b) "Authorized Person" shall be deemed to include (i) any officer of
the Fund; or (ii) any person, whether or not such person is an officer or
employee of the Fund, duly authorized to give Oral Instructions or Written
Instructions on behalf of the Fund as indicated in writing to Investor
Services Group from time to time.
(c) "Board Members" shall mean the Directors or Trustees of the
governing body of the Fund, as the case may be,
(d) "Board of Directors" shall mean the Board of Directors or Board of
Trustees of the Fund, as the case may be.
(e) "Commission" shall mean the Securities and Exchange Commission.
(f) "Custodian" refers to any custodian or subcustodian of securities
and other property which the Fund may from time to time deposit, or cause
to be deposited or held under the name or account of such a custodian
pursuant to a Custody Agreement.
(g) "1933 Act" shall mean the Securities Act of 1933 and the rules and
regulations promulgated thereunder, all as amended from time to time.
(h) "1940 Act" shall mean the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, all as amended from time to
time.
(i) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by Investor Services Group from a person
reasonably believed by Investor Services Group to be an Authorized Person.
(j) "Portfolio" shall mean each separate series of shares offered by
the Fund representing interests in a separate portfolio of securities and
other assets.
(k) "Prospectus" shall mean the most recently dated Fund Prospectus
and Statement of Additional Information, including any supplements thereto
if any, which has become effective under the 1933 Act and the 1940 Act.
(l) "Shares" refers collectively to such shares of capital stock or
beneficial interest, as the case may be, or class thereof, of each
respective Portfolio of the Fund as may be issued from time to time.
(m) "Shareholder" shall mean a record owner of Shares of each
respective Portfolio of the Fund.
(n) "Written Instructions" shall mean a written communication signed
by a person reasonably believed by Investor Services Group to be an
Authorized Person and actually received by Investor Services Group. Written
Instructions shall include manually executed originals and authorized
electronic transmissions, including telefacsimile of a manually executed
original or other process.
Article 2 Appointment of Investor Services Group.
The Fund hereby appoints Investor Services Group to act as Administrator of
the Fund on the terms set forth in this Agreement. Investor Services Group
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
Article 3 Duties of Investor Services Group.
3.1 Investor Services Group shall be responsible for the following:
performing the certain services of an administrator, including corporate
secretarial, treasury and blue sky services, and fund accounting agent for the
Fund, as more fully described in the written schedule of Duties of Investor
Services Group annexed hereto as Schedule B and incorporated herein, and subject
to the supervision and direction of the Board of Directors of the Fund.
3.2 In performing its duties under this Agreement, Investor Services Group:
(a) will act in accordance with the Articles of Incorporation, By-Laws,
Prospectuses and with the Oral Instructions and Written Instructions of the Fund
and will conform to and comply with the requirements of the 1940 Act and all
other applicable federal or state laws and regulations; and
(b) will consult with legal counsel to the Fund, as necessary and appropriate.
Furthermore, Investor Services Group shall not have or be required to have any
authority to supervise the investment or reinvestment of the securities or other
properties which comprise the assets of the Fund or any of its Portfolios and
shall not provide any investment advisory services to the Fund or any of its
Portfolios.
3.3 Investor Services Group agrees to provide the services set forth herein
in accordance with the Performance Standards annexed hereto as Exhibit 1 of
Schedule B and incorporated herein (the "Performance Standards"). Such
Performance Standards may be amended from time to time by the parties.
3.4 In addition to the duties set forth herein, Investor Services Group
shall perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Fund
and Investor Services Group.
Article 4 Recordkeeping and Other Information.
4.1 Investor Services Group shall create and maintain all records required
of it pursuant to its duties hereunder and as set forth in Schedule B in
accordance with all applicable laws, rules and regulations, including records
required by Section 31(a) of the 1940 Act. Where applicable, such records shall
be maintained by Investor Services Group for the periods and in the places
required by Rule 31 a-2 under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, Investor Services
Group agrees that all such records prepared or maintained by Investor Services
Group relating to the services to be performed by Investor Services Group
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such section, and will be surrendered promptly
to the Fund on and in accordance with the Fund's request.
Article 5 Fund Instructions.
5.1 Investor Services Group will have no liability when acting upon Written
or Oral Instructions believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Fund.
5.2 At any time, Investor Services Group may request Written Instructions
from the Fund and may seek advice from legal counsel for the Fund, or its own
legal counsel, with respect to any matter arising in connection with this
Agreement, and it shall not be liable for any action taken or not taken or
suffered by it in good faith in accordance with such Written Instructions or in
accordance with the opinion of counsel for the Fund or for Investor Services
Group. Written Instructions requested by Investor Services Group will be
provided by the Fund within a reasonable period of time.
5.3 Investor Services Group, its officers, agents or employees, shall
accept Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Fund only if said representative is an
Authorized Person. The Fund agrees that all Oral Instructions shall be followed
within one business day by confirming Written Instructions, and
that the Fund's failure to so confirm shall not impair in any respect Investor
Services Group's right to rely on Oral Instructions.
Article 6 Compensation.
6.1 Investor Services Group will from time to time employ or associate with
itself such person or persons as Investor Services Group may believe to be
particularly suited to assist it in performing services under this Agreement.
Such person or persons may be officers and employees who are employed by both
Investor Services Group and the Fund. The compensation of such person or persons
shall be paid by Investor Services Group and no obligation shall be incurred on
behalf of the Fund in such respect.
6.2 Investor Services Group shall not be required to pay any of the
following expenses incurred by the Fund: membership dues in the Investment
Company Institute or any similar organization; investment advisory expenses;
costs of printing and mailing stock certificates, prospectuses, reports and
notices; interest on borrowed money; brokerage commissions; stock exchange
listing fees; taxes and fees payable to Federal, state and other governmental
agencies; fees of Board Members of the Fund who are not affiliated with Investor
Services Group; outside auditing expenses; outside legal expenses; Blue Sky
registration or filing fees; or other expenses not specified in this Section 6.2
which may be properly payable by the Fund. Investor Services Group shall not be
required to pay any Blue Sky registration or filing fees unless and until it has
received the amount of such fees from the Fund.
6.3 The Fund on behalf of each of the Portfolios will compensate Investor
Services Group for the performance of its obligations hereunder in accordance
with the fees set forth in the written Fee Schedule annexed hereto as Schedule C
and incorporated herein.
6.4 In addition to those fees set forth in Section 6.3 above, the Fund on
behalf of each of the Portfolios agrees to pay, and will be billed separately
for, out-of-pocket expenses incurred by Investor Services Group in the
performance of its duties hereunder. Out-of-pocket expenses shall include, but
shall not be limited to, the items specified in the written schedule of
out-of-pocket charges annexed hereto as Schedule D and incorporated herein.
Schedule D may be modified by written agreement between the parties. Unspecified
out-of-pocket expenses shall be limited to those out-of-pocket expenses
reasonably incurred by Investor Services Group in the performance of its
obligations hereunder.
6.5 Investor Services Group will xxxx the Fund as soon as practicable after
the end of each calendar month, and said xxxxxxxx will be detailed in accordance
with the out-of-pocket schedule. The Fund will pay to Investor Services Group
the amount of such billing by Federal Funds Wire within fifteen (15) business
days after the Fund's receipt of said xxxx. In addition, Investor Services Group
may charge a service fee equal to the lesser of (a) one and one half percent
(1-1/2%) per month or (b) the highest interest rate legally permitted on any
past due billed amount.
6.6 Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule C a revised Fee Schedule executed and dated by the
parties hereto.
6.7 The Fund acknowledges that the fees that Investor Services Group
charges the Fund under this Agreement reflect the allocation of risk between the
parties, including the disclaimer of warranties in Section 9.3 and the
limitations on liability and exclusion of remedies in Section 11.2 and Article
12. Modifying the allocation of risk from what is stated here would affect the
fees that Investor Services Group charges, and in consideration of those fees,
the Fund agrees to the stated allocation of risk.
Article 7 Documents.
In connection with the appointment of Investor Services Group, the Fund
shall, on or before the date this Agreement goes into effect, but in any case
within a reasonable period of time for Investor Services Group to prepare to
perform its duties hereunder, deliver or caused to be delivered to Investor
Services Group the documents set forth in the written schedule of Fund Documents
annexed hereto as Schedule E.
Article 8 Fund Accounting System.
8.1 Investor Services Group shall retain title to and ownership of any and
all data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights developed by Investor Services Group in
connection with the services provided by Investor Services Group to the Fund
herein (the "Investor Services Group System").
8.2 Investor Services Group hereby grants to the Fund a limited license to
the Investor Services Group System for the sole and limited purpose of having
Investor Services Group provide the services contemplated hereunder and nothing
contained in this Agreement shall be construed or interpreted otherwise and such
license shall immediately terminate with the termination of this Agreement.
8.3 In the event that the Fund, including any affiliate or agent of the
Fund or any third party acting on behalf of the Fund is provided with direct
access to the Investor Services Group System, such direct access capability
shall be limited to direct entry to the Investor Services Group System by means
of on-line mainframe terminal entry or PC emulation of such mainframe terminal
entry and any other non-conforming method of transmission of information to the
Investor Services Group System is strictly prohibited without the prior written
consent of Investor Services Group.
Article 9 Representations and Warranties.
9.1 Investor Services Group represents and warrants to the Fund that:
(a) it is a corporation duly organized, existing and in good standing
under the laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) all requisite corporate proceedings have been taken to authorize
it to enter into this Agreement; and
(d) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
9.2 The Fund represents and warrants to Investor Services Group that:
(a) it is duly organized, existing and in good standing under the laws
of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, ByLaws and applicable laws have been taken to authorize
it to enter into this Agreement; and
(d) a registration statement under the 1933 Act and the 1940 Act on
behalf of each of the Portfolios is currently effective and will
remain effective.
9.3 THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, INVESTOR SERVICES GROUP DISCLAIMS ALL OTHER REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE COMPANY OR ANY OTHER PERSON,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, SUITABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF
ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) OF ANY SERVICES OR ANY GOODS
PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS AGREEMENT. INVESTOR SERVICES
GROUP DISCLAIMS ANY WARRANTY OF TITLE OR NONINFRINGEMENT EXCEPT AS OTHERWISE SET
FORTH IN THIS AGREEMENT.
Article 10 Indemnification.
10.1 The Fund shall indemnify and hold Investor Services Group harmless
from and against any and all claims, costs, expenses (including reasonable
attorneys' fees), losses, damages, charges, payments and liabilities of any sort
or kind which may be asserted against Investor Services Group or for which
Investor Services Group may be held to be liable in connection with this
Agreement or Investor Services Group's performance hereunder (a "Claim"), unless
such Claim resulted from a neg1igent act or omission to act or bad faith by
Investor Services Group in the performance of its duties hereunder.
10.2 In any case in which the Fund may be asked to indemnify or hold
Investor
Services Group harmless, Investor Services Group will notify the Fund promptly
after identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Fund although the failure to do
so shall not prevent recovery by Investor Services Group and shall keep the Fund
advised with respect to all developments concerning such situation. The Fund
shall have the option to defend Investor Services Group against any Claim which
may be the subject of this indemnification, and, in the event that the Fund so
elects, such defense shall be conducted by counsel chosen by the Fund and
satisfactory to Investor Services Group, and thereupon the Fund shall take over
complete defense of the Claim and Investor Services Group shall sustain no
further legal or other expenses in respect of such Claim. Investor Services
Group will not confess any Claim or make any compromise in any case in which the
Fund will be asked to provide indemnification, except with the Fund's prior
written consent. The obligations of the parties hereto under this Article 10
shall survive the termination of this Agreement.
10.3 Any claim for indemnification under this Agreement must be made prior
to the earlier of:
(a) one year after the Fund becomes aware of the event for which
indemnification is claimed; or
(b) one year after the earlier of the termination of this Agreement or
the expiration of the term of this Agreement.
10.4 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
Investor Services Group's sole and exclusive remedy for claims or other actions
or proceedings to which the Fund's indemnification obligations pursuant to this
Article 10 may apply.
Article 11 Standard of Care.
11.1 Investor Services Group shall at all times act in good faith and
agrees to use its best efforts within commercially reasonable limits to ensure
the accuracy of all services performed under this Agreement, but assumes no
responsibility for loss or damage to the Fund unless said errors are caused by
Investor Services Group's own negligence, bad faith or willful misconduct or
that of its employees.
11.2 Each party shall have the duty to mitigate damages for which the other
party may become responsible.
11.3 Without in any way limiting the foregoing, in the event Investor
Services Group shall provide Blue Sky services to the Fund, Investor Services
Group shall have no liability for failing to file on a timely basis any material
to be provided by the Fund or its designee that it has not received on a timely
basis from the Fund or its designee, nor shall Investor Services Group have any
responsibility to review the accuracy or adequacy of materials it receives from
the Fund or its designee for filing or bear any liability arising out of the
timely filing of such materials; nor shall Investor Services Group have any
liability for monetary damages for the sale of securities
in jurisdictions where Shares are not properly registered, or in jurisdictions
where Shares are sold in excess of the lawfully registered amount unless such
failure of proper registration or excess sales is due to the willful
misfeasance, bad faith or negligence of Investor Services Group. Investor
Services Group shall not be liable for any errors which result from inaccurate
or inadequate information reported to Investor Services Group directly or
indirectly from the Fund's transfer agent. Investor Services Group shall be
under no obligation to investigate or confirm the accuracy or adequacy of any
information provided to Investor Services Group by the Fund's transfer agent.
Article 12 Consequential Damages.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL INVESTOR SERVICES GROUP, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF
TORT, CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST
PROFITS, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL
DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS
OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Article 13 Term and Termination.
13.1 This Agreement shall be effective on the date first written above and
shall continue for a period of five (5) years (the "Initial Term").
13.2 Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of two (2) years ("Renewal Terms")
each, unless the Fund or Investor Services Group provides written notice to the
other of its intent not to renew. Such notice must be received not less than
ninety (90) days and not more than one-hundred eighty (180) days prior to the
expiration of the Initial Term or the then current Renewal Term.
13.3 In the event a termination notice is given by the Fund, all expenses
associated with movement of records and materials and conversion thereof to a
successor administrator will be borne by the Fund.
13.4 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If Investor Services Group is the Non-Defaulting Party,
its termination of this Agreement shall not constitute a waiver of any other
rights or remedies of Investor Services Group with respect to services performed
prior to such termination of rights of Investor Services Group to be reimbursed
for out-of-pocket expenses. In all cases, termination by the Non-Defaulting
Party shall not constitute a waiver by the Non-Defaulting Party of any other
rights it might have under this Agreement or otherwise against the Defaulting
Party.
13.5 Notwithstanding anything contained in this Agreement to the contrary,
in the event that a merger, acquisition or change in control of the Fund or an
affiliate (as defined under the 0000 Xxx) of the Fund results, either directly
or indirectly, in the termination of this Agreement (an "Early Termination")
during the Initial Term of this Agreement, the Fund shall pay to Investor
Services Group within 30 days of the notice of termination the fee set forth in
Schedule C (the "Early Termination Fee"). Such Early Termination Fee shall not
be payable if Investor Services Group provides to a successor in interest of the
Fund services substantially similar to those services provided to the Fund
hereunder. A liquidation of the Fund or a Portfolio thereof (a "Liquidation")
shall not be deemed a termination of the Agreement subject to the Early
Termination Fee so long as such Liquidation did not result from a merger or
acquisition of the Fund or Portfolio; provided, however, that in the event of
the Liquidation of the Fund, the Fund shall pay to Investor Services Group
within 30 days of the notice of termination the fee set forth in Schedule C (the
"Liquidation Fee").
Article 14 Additional Portfolios
14.1 In the event that the Fund establishes one or more Portfolios in
addition to those identified in Schedule A, with respect to which the Fund
desires to have Investor Services Group render services as administrator under
the terms hereof, the Fund shall so notify Investor Services Group in writing,
and if Investor Services Group agrees in writing to provide such services,
Schedule A shall be amended to include such additional Portfolios.
Article 15 Confidentiality.
15.1 The parties agree that the Proprietary Information (defined below) and
the contents of this Agreement (collectively "Confidential Information") are
confidential information of the parties and their respective licensors. The Fund
and Investor Services Group shall exercise at least the same degree of care, but
not less than reasonable care, to safeguard the confidentiality of the
Confidential Information of the other as it would exercise to protect its own
confidential information of a similar nature. The Fund and Investor Services
Group shall not duplicate, sell or disclose to others the Confidential
Information of the other, in whole or in part, without the prior written
permission of the other party. The Fund and Investor Services Group may,
however, disclose Confidential Information to their respective parent
corporation, their respective affiliates, their subsidiaries and affiliated
companies and employees, provided that each shall use reasonable efforts to
ensure that the Confidential Information is not duplicated or disclosed in
breach of this Agreement. The Fund and Investor Services Group may also disclose
the Confidential Information to independent contractors, auditors, and
professional advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 15.1.
Notwithstanding the previous sentence, in no event shall either the Fund or
Investor Services Group disclose the Confidential Information to any competitor
of the other without specific, prior written consent.
15.2 Proprietary Information means:
(a) any data or information that is competitively sensitive material,
and not generally known to the public, including, but not limited to,
information about product
plans, marketing strategies, finance, operations, customer relationships,
customer profiles, sales estimates, business plans, and internal
performance results relating to the past, present or future business
activities of the Fund or Investor Services Group, their respective
subsidiaries and affiliated companies and the customers, clients and
suppliers of any of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and secret
in the sense that its confidentiality affords the Fund or Investor Services
Group a competitive advantage over its competitors; and
(c) all confidential or proprietary concepts, documentation, reports,
data, specifications, computer software, source code, object code, flow
charts, databases, inventions, know-how, show-how and trade secrets,
whether or not patentable or copyrightable.
15.3 Confidential Information includes, without limitation, all documents,
inventions, substances, engineering and laboratory notebooks, drawings,
diagrams, specifications, bills of material, equipment, prototypes and models,
and any other tangible manifestation of the foregoing of either party which now
exist or come into the control or possession of the other.
15.4 The obligations of confidentiality and restriction on use herein shall
not apply to any Confidential Information that a party proves:
(a) Was in the public domain prior to the date of this Agreement or
subsequently came into the public domain through no fault of such party; or
(b) Was lawfully received by the party from a third party free of any
obligation of confidence to such third party; or
(c) Was already in the possession of the party prior to receipt
thereof, directly or indirectly, from the other party; or
(d) Is required to be disclosed in a judicial or administrative
proceeding after all reasonable legal remedies for maintaining such
information in confidence have been exhausted including, but not limited
to, giving the other party as much advance notice of the possibility of
such disclosure as practical so the other party may attempt to stop such
disclosure or obtain a protective order concerning such disclosure; or
(e) Is subsequently and independently developed by employees,
consultants or agents of the party without reference to the Confidential
Information disclosed under this Agreement.
Article 16 Force Majeure.
No party shall be liable for any default or delay in the performance of its
obligations under this Agreement if and to the extent such default or delay is
caused, directly or indirectly,
by (i) fire, flood, elements of nature or other acts of God; (ii) any outbreak
or escalation of hostilities, war, riots or civil disorders in any country,
(iii) any act or omission of the other party or any governmental authority; (iv)
any labor disputes (whether or not the employees' demands are reasonable or
within the party's power to satisfy); or (v) nonperformance by a third party or
any similar cause beyond the reasonable control of such party, including without
limitation, failures or fluctuations in telecommunications or other equipment.
In any such event, the non-performing party shall be excused from any further
performance and observance of the obligations so affected only for as long as
such circumstances prevail and such party continues to use commercially
reasonable efforts to recommence performance or observance as soon as
practicable.
Article 17 Assignment and Subcontracting.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or otherwise transferred
by either party hereto, without the prior written consent of the other party,
which consent shall not be unreasonably withheld; provided, however, that
Investor Services Group may, in its sole discretion, assign all its right, title
and interest in this Agreement to an affiliate, parent or subsidiary, or to the
purchaser of substantially all of its business. Investor Services Group may, in
its sole discretion, engage subcontractors to perform any of the obligations
contained in this Agreement to be performed by Investor Services Group.
Article 18 Notice.
Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or Investor Services Group,
shall be sufficiently given if addressed to that party and received by it
at its office set forth below or at such other place as it may from time to
time designate in writing.
To the Fund:
Forward Funds, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention:
To Investor Services Group:
First Data Investor Services Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
with a copy to Investor Services Group's General Counsel
Article 19 Governing Law/Venue.
The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement of
this agreement. All actions arising from or related to this Agreement shall be
brought in the state and federal courts sitting in the City of Boston, and
Investor Services Group and the Fund hereby submit themselves to the exclusive
jurisdiction of those courts.
Article 20 Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
Article 21 Captions.
The captions of 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.
Article 22 Publicity.
Neither Investor Services Group nor the Fund shall release or publish news
releases, public announcements, advertising or other publicity relating to this
Agreement or to the transactions contemplated by it without the prior review and
written approval of the other party; provided, however, that either party may
make such disclosures as are required by legal, accounting or regulatory
requirements after making reasonable efforts in the circumstances to consult in
advance with the other party.
Article 23 Relationship of Parties/Non-Solicitation.
23.1 The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
23.2 During the term of this Agreement and for one (1) year afterward, the
Fund shall not recruit, solicit, employ or engage, for the Fund or others,
Investor Services Group's employees.
Article 24 Entire Agreement; Severability.
24.1 This Agreement, including Schedules, Addenda, and Exhibits hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of the Agreement
shall be valid unless in writing signed by each party. No such writing shall be
effective as against Investor Services Group unless said writing is executed by
a Senior Vice President, Executive Vice President, or President of Investor
Services Group. A party's waiver of a breach of any term or condition in the
Agreement shall not be deemed a waiver of any subsequent breach of the same or
another term or condition.
24.2 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.
Article 25 Miscellaneous.
The Fund and Investor Services Group agree that the obligations of the Fund
under the Agreement shall not be binding upon any of the Board Members,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Fund individually, but are binding only upon the assets and
property of the Fund, as provided in the Articles of Incorporation. The
execution and delivery of this Agreement have been authorized by the Board
Members of the Fund, and signed by an authorized officer of the Fund, acting as
such, and neither such authorization by such Board Members nor such execution
and delivery by such officer shall be deemed to have been made by any of them or
any shareholder of the Fund individually or to impose any liability on any of
them or any shareholder of the Fund personally, but shall bind only the assets
and property of the Fund as provided in the Articles of Incorporation.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed and delivered by their duly authorized officers as of the date
first written above.
FORWARD FUNDS, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: President
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ Xxxxx X. Xxx
----------------------------------------
Name: Xxxxx X. Xxx
Title: Chief Operating Officer
SCHEDULE A
LIST OF PORTFOLIOS
The Global Fund
The Money Market Fund
SCHEDULE B
DUTIES OF INVESTOR SERVICES GROUP
(a) Furnishing data processing services and clerical services and standard
stationery and office supplies;
(b) Performing fund accounting and bookkeeping services (including the
maintenance of such accounts, books and records of the Fund as may be required
by Section 31(a) of the 0000 Xxx) as follows:
. Daily, Weekly, and Monthly Reporting
. Portfolio and General Ledger Accounting
. Daily Valuation of all Portfolio Securities
. Daily Valuation and NAV Calculation
. Comparison of NAV to market movement
. Review research of price tolerance/fluctuation report to market
movements and events
. Research of items appearing on the price exception report
. Weekly cost monitoring along with market-to-market valuations in
accordance with Rule 2a-7
. Security trade processing
. Daily cash and position reconciliation with the custodian bank
. Daily updating of price and distribution rate information to the
Transfer Agent/Insurance Agent
. Daily support and report delivery to Portfolio Management
. Daily calculation of Portfolio adviser fees and waivers
. Daily calculation of distribution rates
. Daily investable cash call
. Monitor and research aged receivables
. Collect aged income items and perform reclaims
. Update NASDAQ reporting
. Daily maintenance of each Portfolio's general ledger including expense
accruals
. Daily NAV per share notification to other vendors as required
. Calculation of 30-day SEC yields and total returns
. Preparation of month-end reconciliation package
. Monthly reconciliation of Portfolio expense records
. Application of monthly pay down gain/loss
. Preparation of all annual and semi-annual audit work papers
(c) Performing all functions ordinarily performed by the office of a
corporate treasurer, and furnishing the services and facilities ordinarily
incident thereto, as follows:
. Expense Accrual Monitoring
. Determination of Dividends
. Preparation materials for review by the Board, e.g., Rules 2a-7,lOf-3,
17a-7, 17e-1 and 144A
. Tax and Financial Counsel
. Creation of expense pro formas for new Portfolios/classes
. Reporting to investment company reporting agencies (i.e., Lipper)
. Compliance Testing including Section 817(h) (daily, weekly or monthly)
(d) Preparing reports to the Fund's Shareholders and the SEC including, but
not necessarily limited to, Annual Reports and Semi-Annual Reports on Form
N-SAR;
(e) Preparing and filing the Fund's tax returns and providing shareholder
tax information to the Fund's transfer agent;
(f) Assisting the Adviser, at the Adviser's request, in monitoring and
developing compliance procedures for the Fund which will include, among other
matters, procedures to assist the Adviser in monitoring compliance with each
Portfolio's investment objective, policies, restrictions, tax matters and
applicable laws and regulations;
(g) Performing "Blue Sky" compliance functions, as follows:
. Effecting and maintaining, as the case may be, the registration of
Shares of the Fund for sale under the securities laws of the
jurisdictions listed in the Written Instructions of the Fund, which
instructions will include the amount of Shares to be registered as
well as the warning threshold to be maintained. Any Written
Instructions not received at least 45 days prior to the date the Fund
intends to offer or sell its Shares cannot be guaranteed a timely
notification to the states. In addition, Investor Services Group shall
not be responsible for providing to any other service provider of the
Fund a list of the states in which the Fund may offer and sell its
Shares.
. Filing with each appropriate jurisdiction the appropriate materials
relating to the Fund. The Fund shall be responsible for providing such
materials to Investor Services Group, and Investor Services Group
shall make such filings promptly after receiving such materials.
. Providing to the Fund quarterly reports of sales activity in each
jurisdiction in accordance with the Written Instructions of the Fund.
Sales will be reported by shareholder residence. NSCC trades and order
clearance will be reported by the state provided by the dealer at the
point of sale. Trades by omnibus accounts will be reported by trustee
state of residence in accordance with the Written Instructions of the
Fund outlining the entities which are permitted to maintain omnibus
positions with the Fund.
. In the event sales of Shares in a particular jurisdiction reach or
exceed the warning levels provided in the Written Instructions of the
Fund, Investor Services Group will promptly notify the Fund with a
recommendation of the amount of Shares to be registered in such
jurisdiction and the fee for such registration. Investor Services
Group will not register additional Shares in such jurisdiction unless
and until Investor Services Group shall have received written
instructions from the Fund to do so.
(h) Performing the following legal services:
. Prepare and file annual Post-Effective Amendment
. Prepare and file Rule 24f-2 Notice
. Review and file Form N-SAR
. Review, Edgarize and file Annual and Semi-Annual Financial Reports
. Communicate significant regulatory or legislative developments to Fund
management and directors and provide related planning assistance where
needed
. Consult with Fund management regarding portfolio compliance and Fund
corporate and regulatory issues as needed
. Coordinate the printing and mailing process with outside printers for
all shareholder publications
. Arrange D&O/E&O insurance and fidelity bond coverage for Fund
. Assist in monitoring Fund Code of Ethics reporting and provide such
reports to the person designated under the Fund's Code
(i) Performing, in accordance with the Written Instructions of the Fund,
the following Special Legal Services in accordance with the pricing structure
listed on the Fee Schedule attached to this Agreement as Schedule C:
. Assist in managing SEC audits of Funds
. Assist in conversion
Coordinate time and responsibility schedules
Draft notice, agenda, memoranda, resolutions and background
materials for board approval
. Assist in new Portfolio start-up (to the extent requested)
Coordinate time and responsibility schedules
Prepare Fund corporate documents (MTA/by-laws)
Draft/file registration statement (including investment
objectives/policies and prospectuses)
Respond to and negotiate SEC comments
Draft notice, agenda and resolutions for organizational meeting;
attend board meeting; make presentations where appropriate;
prepare minutes and follow up on issues
. Assist in developing compliance guidelines and procedures to improve
overall compliance by Fund and service providers
. Prepare notice, agenda, memoranda and background materials for special
board meetings, make presentations where appropriate, prepare minutes
and follow up on issues
. Prepare proxy material for special meetings (including fund merger
documents)
. Prepare Post-Effective Amendments for special purposes (e.g., new
funds or classes, changes in advisory relationships, mergers,
restructurings)
. Prepare special Prospectus supplements where needed
. Assist in extraordinary non-recurring projects, including providing
consultative legal services, e.g., Arrange CDSC financial programs
Prospectus simplification
Profile prospectuses
Exemptive order applications
EXHIBIT 1
TO
SCHEDULE B
PERFORMANCE STANDARDS
Fund Accounting
The following standards will be met 95% of the time.
. NAV's calculated accurately, provided all information from external
vendors or Fund Manager is correct
. Information to NASDAQ is reported within timeframes
. Daily bulletin is released by 7:00 P.M. EST, provided all information
from external vendors of Fund Managers is received on a timely basis
Penalties
The penalty for missing the same standard in one (1) quarter is written notice.
The penalty for missing the same standard two (2) quarters in succession is 5%
reduction of Investor Services Group's quarterly fee for that service.
The penalty for missing the same standard three (3) quarters in a rolling six
(6) quarter period is 10% reduction in Investor Services Group's quarterly fee
for that service.
Measurement standards will commence after a one (1) quarter grace period.
SCHEDULE C
FEE SCHEDULE
For the services to be rendered, the facilities to be furnished and the
payments to be made by Investor Services Group, as provided for in this
Agreement, the Fund, on behalf of each Portfolio, will pay Investor Services
Group on the first business day of each month a fee for the previous month at
the rates listed below.
. Legal and Fund Administration Fees:
Fund assets less than $500 million 20 basis points
Fund assets $500 million to $1 billion 17 basis points
Fund assets greater than $1 billion 12.5 basis points
. Fund Accounting Fees:
Per Fund Domestic International
-------- -------- -------------
Each additional class $35,000 $55,000
Plus out of pockets $ 5,000 $ 5,000
. Early Termination Fee; Liquidation Fee: The Early Termination Fee
shall be an amount equal to the lesser of (a) the previous month's fee
multiplied by the number of months remaining on the Initial Term of
the Agreement, or (b) the previous month's fee multiplied by twelve to
reflect one year's fee. If a Liquidation (as such term is defined in
Section 13.5 hereof) occurs during the first year of this Agreement,
the Liquidation Fee shall be an amount equal to the fees paid to
Investor Services Group by the Fund under this Agreement for the
previous month annualized to reflect one year's fee (the "Annual
Fee"). If such Liquidation occurs during the second year of this
Agreement, the Liquidation Fee shall equal two-thirds of the Annual
Fee. If such Liquidation occurs during the third year of this
Agreement, the Liquidation Fee shall equal one-third of the Annual
Fee.
. Investor Services Group shall be entitled to the following fee for the
performance of any Special Legal Services as described in Schedule B
in accordance with the Written Instructions of the Fund: $185 per hour
subject to certain project caps as may be agreed to by Investor
Services Group and the Fund. Services and charges may vary based on
volume.
. Investor Services Group shall be entitled to collect all out-of-pocket
fees described in Schedule D.
SCHEDULE D
OUT-OF-POCKET EXPENSES
Out-of-pocket expenses include, but are not limited to, the following:
. Courier services
. Delivery costs of Board meetings materials and other materials to the
Fund's Board members and service providers (including overnight or
other courier services)
. Telecommunications charges (including FAX) with respect to
communications with the Fund's Board Members, officers and service
providers
. Duplicating charges with respect to filings with Federal and state
authorities and Board meeting materials
. Travel to and from Board meetings and other meetings with Fund
management
. Pricing services (or services used to determine Fund NAV)
. Forms and supplies for the preparation of Board meetings and other
materials for the Fund
. Vendor set-up charges for Blue Sky services
. Customized programming requests
. Blue Sky filing or registration fees
. SAS 70
. Cold Storage
. Document Retrieval
. Vendor pricing comparison
. Manual pricing
. Such other expenses as are agreed to by Investor Services Group and
the Fund
SCHEDULE E
FUND DOCUMENTS
. Certified copy of the Articles of Incorporation of the Fund, as
amended
. Certified copy of the By-laws of the Fund, as amended,
. Copy of the resolution of the Board of Directors authorizing the
execution and delivery of this Agreement
. Copies of all agreements between the Fund and its service providers.
. All notices issued by the Fund with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation or
By-laws of the Fund or as required by law and shall perform such other
specific duties as are set forth in the Articles of Incorporation
including the giving of notice of any special or annual meetings of
shareholders and any other notices required thereby.
