EXHIBIT 23(D)(2)
FORWARD FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
This INVESTMENT SUB-ADVISORY AGREEMENT ("Agreement"), to be effective
as of 12:01 a.m. on May 1, 2005, is made by and among: among Forward Management,
LLC (the "Adviser"); Emerald Advisers, Inc. (the "Sub-Adviser"), and the Forward
Funds (also known as the HomeState Group and the Emerald Mutual Funds), a
Delaware statutory trust, (the "Trust"), by and on behalf of its series, the
Forward Emerald Growth Fund, the Forward Emerald Banking and Finance Fund and
the Forward Emerald Technology Fund (each, a "Fund," and collectively, the
"Funds") (each such Fund also previously known by the name listed above without
the word "Forward," respectively).
WHEREAS, the Trust is a Delaware statutory trust of the series type
organized under a Declaration of Trust dated February 1, 2005 (the
"Declaration") 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 Funds are each a series of the Trust; and
WHEREAS, the Adviser has been retained by the Trust to provide
investment advisory services to each of the Funds with regard to each Fund's
investments as further described in the Trust's registration statement on Form
N-1A (the "Registration Statement") pursuant to an Amended and Restated
Investment Management Agreement dated [__________] ("Investment Management
Agreement"); and
WHEREAS, the Funds' Board of Trustees, including a majority of the
trustees who are not "interested persons," as defined in the 1940 Act, and each
Fund's shareholders have approved the appointment of the Sub-Adviser to perform
certain investment advisory services for the Trust, on behalf of each Fund
pursuant to this Subadvisory Agreement and as described in the Registration
Statement and the Sub-Adviser is willing to perform such services for each Fund;
and
WHEREAS, the Sub-Adviser 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, and intending to be legally bound, it is agreed among the
Adviser, the Trust and the Sub-Adviser as follows:
1. Appointment. The Trust and the Adviser hereby appoint the
Sub-Adviser to perform advisory services to the Funds for the periods and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to furnish the services herein set forth, for the compensation herein
provided.
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2. Investment Advisory Duties. Subject to the supervision of the Board
of Trustees of the Funds and the Adviser, the Sub-Adviser will, in coordination
with the Adviser, (a) provide a program of continuous investment management for
each 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, as they may be amended from time to
time, copies of which shall be provided to the Sub-Adviser by the Adviser with
reasonable advance notice of any change to such investment objectives, policies
and limitations; (b) make investment decisions for the Fund; and (c) place
orders to purchase and sell securities for each Fund.
In performing its investment management services for the Funds under
the terms of this Agreement, the Sub-Adviser will provide each Fund with ongoing
investment guidance and policy direction.
The Sub-Adviser 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 U.S. 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 Trustees, as they may be amended
from time to time, copies of which shall be provided to the Sub-Adviser by the
Adviser promptly after adoption or amendment by the Trustees;
(b) use reasonable efforts to manage each 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; provided, however, the Sub-Adviser
shall not be responsible for the tax effect or decisions made by any other
person;
(c) place orders pursuant to its investment determinations for each
Fund, in accordance with applicable policies expressed in the Fund's
then-current Prospectus and/or Statement of Additional Information or otherwise
established through written guidelines established by the Funds and provided in
writing to the Sub-Adviser;
(d) furnish to the Trust and the Adviser whatever statistical
information the Trustees, or the Adviser may reasonably request with respect to
each Fund's assets or contemplated investments. In addition, the Sub-Adviser
will keep the Trust, the Adviser and the Trustees informed of developments that,
in the Sub-Adviser's reasonable judgment, will materially affect each Fund's
portfolio and shall, on the Sub-Adviser's own initiative, furnish to each Fund
from time to time whatever information the Sub-Adviser believes appropriate for
this purpose;
(e) make available to the Funds' administrator (the "Administrator"),
the Adviser and the Trust, promptly upon their request and at the reasonable
expense of the Trust, such copies of its investment records and ledgers with
respect to each Fund as may reasonably be required to assist the Adviser, the
Administrator and the Trust in their compliance with applicable laws and
regulations. The Sub-Adviser will furnish the Trustees, the Administrator, the
Adviser and the Trust with such periodic and special reports regarding the Funds
as they may reasonably request;
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(f) meet quarterly with the Adviser and the Trust's Board of Trustees
to explain its investment management activities, and any reports related to each
Fund as may reasonably be requested by the Adviser and/or the Trust;
(g) immediately notify the Adviser and the Trust if the Sub-Adviser or
any of its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Sub-Adviser from serving as an investment
adviser pursuant to this Agreement; or (2) becomes aware that it is the subject
of an administrative proceeding or enforcement action by the Securities and
Exchange Commission ("SEC") or other regulatory authority.
The Sub-Adviser further agrees to notify each Fund and the Adviser
immediately of any material fact known to the Sub-Adviser respecting or relating
to the Sub-Adviser 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; and
(h) immediately notify the Adviser if the Sub-Adviser suffers a
material adverse change in its business that would materially impair its ability
to perform its relevant duties for the Fund. For the purposes of this paragraph,
a "material adverse change" shall include, but is not limited to, the
termination or failure to renew advisory contracts within any six-month period
with the Sub-Adviser with respect to 20% or more of its assets under management,
or the departure of senior investment professionals involved in the
Sub-Adviser's investment management activities under this Agreement to the
extent such professionals are not replaced promptly with professionals of
comparable experience and quality; and
(i) in making investment decisions for the Fund, not knowingly use
material inside information that may be in its possession or in the possession
of any of its affiliates, unless the Sub-Adviser has "screens" and policies in
place to prevent such knowledge from being imputed from such affiliate to the
Sub-Adviser, nor will the Sub-Adviser seek to obtain any such information.
3. Futures and Options. The Sub-Adviser's investment authority shall
include the authority to purchase, sell, cover open positions, and generally to
deal in financial futures contracts and options thereon.
The Sub-Adviser is authorized to: (i) open and maintain brokerage
accounts for financial futures and options (such accounts hereinafter referred
to as "Brokerage Accounts") on behalf of and in the name of each Fund; and (ii)
execute for and on behalf of the Brokerage Accounts, standard customer
agreements with a broker or brokers. The Sub-Adviser may, using such of the
securities and other property in the Brokerage Accounts as the Sub-Adviser deems
necessary or desirable, direct the custodian to deposit on behalf of each Fund,
original and maintenance brokerage deposits and otherwise direct payments of
cash, cash equivalents and securities and other property into such brokerage
accounts and to such brokers as the Sub-Adviser deems desirable or appropriate.
4. Investment Guidelines. The Trust or the Adviser shall promptly
supply the Sub-Adviser with such other information as the Sub-Adviser shall
reasonably require or request concerning each Fund's investment policies,
restrictions, limitations, tax positions, liquidity requirements and other
information useful in managing each Fund's investments.
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5. Representations, Warranties and Covenants of the Trust, Adviser and
Sub-Adviser. The Trust represents, warrants and covenants that (i) a copy of its
Registration Statement together with all amendments thereto, is on file in the
office of the U.S. Securities and Exchange Commission, (ii) the appointment of
the Adviser has been duly authorized, (iii) the appointment of the Sub-Adviser
has been duly authorized, by the Funds and the shareholders of each, and (iv) it
has acted and will continue to act in conformity with all applicable laws.
The Adviser represents, warrants and covenants that (i) it is
authorized to perform the services herein, (ii) the appointment of the
Sub-Adviser has been duly authorized, by the Board of the Sub-Adviser, and (iii)
it has and will continue to act in conformity with all applicable laws.
The Sub-Adviser represents and warrants that (i) it is registered as an
investment adviser with the SEC, and (ii) it is not barred by operation of law,
or any rule, or order of the SEC or any other regulatory body from acting as an
investment adviser or sub-adviser.
6. Use of Securities Brokers and Dealers. Purchase and sale orders will
usually be placed with brokers which are selected by the Sub-Adviser 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 hereinafter set forth. Whenever the Sub-Adviser places
orders, or directs the placement of orders, for the purchase or sale of
portfolio securities on behalf of a Fund, in selecting brokers or dealers to
execute such orders; the Sub-Adviser is expressly authorized to consider the
fact that a broker or dealer has furnished statistical, research or other
information or services which enhance the Sub-Adviser'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
Sub-Adviser 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 Sub-Adviser 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 Funds or the Sub-Adviser's overall responsibilities to
the Sub-Adviser's discretionary accounts. Neither the Sub-Adviser nor any
parent, subsidiary or related firm shall act as a securities broker with respect
to any purchases or sales of securities which may be made on behalf of a Fund.
Neither the Sub-Adviser nor any parent, subsidiary or related firm
shall act as a securities broker with respect to any purchases or sales of
securities which may be made on behalf of the Fund, except as may be permitted
under the 1940 Act. Unless otherwise directed by the Trust or the Adviser in
writing, the Sub-Adviser 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.
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7. Compensation. For the services specified in this Agreement, the
Trust agrees to pay compensation to the Sub-Adviser equal to the amounts listed
opposite the respective Fund on Exhibit A, calculated as set forth below, to the
Sub-Adviser for services specified in this Agreement (collectively, the "Fees").
The management fees payable to the Adviser will be reduced by the amount of the
Fees. The Fees shall be computed and accrued daily and paid quarterly in arrears
based on the average daily net asset value of the Funds as determined according
to the manner provided in the then-current prospectus of the Funds.
The Adviser shall provide to the Sub-Adviser, promptly following
request therefor, all information reasonably requested by the Sub-Adviser to
support the calculation of the Fees and shall permit the Sub-Adviser or its
agents, upon reasonable notice and at reasonable times and at Sub-Adviser's cost
to inspect the books and records of the Adviser or the Funds pertaining to such
calculation.
8. Fees and Expenses. The Sub-Adviser shall not be required to pay any
expenses of the Funds other than those specifically allocated to the Sub-Adviser
in this section 8. In particular, but without limiting the generality of the
foregoing, the Sub-Adviser shall not be responsible for the following expenses
of the Funds: organization and offering expenses of the Fund; fees payable to
the Sub-Adviser 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 a Fund in
connection with membership in investment company trade organizations; cost of
insurance relating to fidelity coverage for the Trust's officers and employees;
fees and expenses of the Funds' Administrator or of any custodian, subcustodian,
transfer agent, registrar, or dividend disbursing agent of the Funds; payments
to the Administrator for maintaining each 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 a Fund; expenses relating to investor and public relations; expenses
of registering and qualifying shares of a Fund for sale; freight, insurance and
other charges in connection with the shipment of the Funds' portfolio
securities; brokerage commissions or other costs of acquiring or disposing of
any portfolio securities or other assets of a Fund, or of entering into other
transactions or engaging in any investment practices with respect to a Fund;
expenses of printing and distributing prospectuses, Statements of Additional
Information, reports, notices and dividends to shareholders; costs of stationery
or other office supplies; any litigation expenses; costs of shareholders' and
other meetings and proxy solicitations; the compensation and all expenses
(specifically including travel expenses relating to the Fund's business) of
officers, trustees and employees of the Trust who are not interested persons of
the Investment Manager; and travel expenses (or an appropriate portion thereof)
of officers or trustees of the Trust.
9. Books and Records. The Sub-Adviser agrees to maintain such books and
records with respect to its services to the Funds 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 Sub-Adviser
also agrees that records it maintains and preserves pursuant to Rules 31a-1 and
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Rule 31a-2 under the 1940 Act and otherwise in connection with its
services hereunder are the property of the Funds and will be surrendered
promptly to the Trust upon its request except that the Sub-Adviser may retain
copies of such documents as may be required by law. The Sub-Adviser 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 by such authorities in order to determine whether the
operations of the Funds are being conducted in accordance with applicable laws
and regulations.
10. Aggregation of Orders. Provided the investment objectives, policies
and restrictions of the Funds are adhered to, the Funds agree that the
Sub-Adviser may aggregate sales and purchase orders of securities held in the
Funds with similar orders being made simultaneously for other accounts managed
by the Sub-Adviser or with accounts of the affiliates of the Sub-Adviser, if in
the Sub-Adviser's reasonable judgment such aggregation shall result in an
overall economic benefit to the Funds taking into consideration the advantageous
selling or purchase price, brokerage commission and other expenses. The Funds
acknowledge that the determination of such economic benefit to the Funds by the
Sub-Adviser represents the Sub-Adviser's evaluation that the Funds are benefited
by relatively better purchase or sales prices, lower commission expenses and
beneficial timing of transactions or a combination of these and other factors.
11. Liability.
a. Neither the Sub-Adviser nor its officers, trustees or directors,
employees, affiliates, agents or controlling persons shall be liable to the
Trust, the Adviser, the Funds, their shareholders and/or any other person for
the acts, omissions, errors of judgment and/or mistakes of law of any other
fiduciary and/or person with respect to the Funds.
b. Neither the Sub-Adviser nor its officers, trustees or directors,
employees, affiliates; agents or controlling persons or assigns shall be liable
for any act, omission, error of judgment or mistake of law (whether or not
deemed a breach of this Agreement) and/or for any loss suffered by the Trust,
the Adviser, the Funds, their shareholders and/or any other person in connection
with the matters to which this Agreement relates; provided that no provision of
this Agreement shall be deemed to protect the Sub-Adviser against any liability
to the Trust, the Adviser, the Funds and/or their shareholders which it might
otherwise be subject by reason of any willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless disregard of its
obligations and duties under this Agreement.
c. The Trust on behalf of each Fund, hereby agrees to indemnify and
hold harmless the Sub-Adviser, its directors, officers, employees, affiliates,
agents and controlling persons (collectively, the "Indemnified Parties") against
any and all losses, claims damages or liabilities (including reasonable
attorneys fees and expenses), joint or several, relating to the Adviser, the
Trust or a Fund, to which any such Indemnified Party may become subject under
the Securities Act of 1933, as amended (the "1933 Act"), the 1934 Act, the
Investment Advisers Act of 1940, as amended (the "Advisers Act") or other
federal or state statutory law or regulation, at common law or otherwise. It is
understood, however, that nothing in this paragraph 11 shall protect any
Indemnified Party against, or entitle any Indemnified Party to, indemnification
against any liability to the Trust, the Adviser, Funds and/or their shareholders
to which such Indemnified Party is subject, by reason of its willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of any reckless disregard of its obligations and duties under this
Agreement.
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12. Services Not Exclusive. It is understood that the services of the
Sub-Adviser are not exclusive, and that nothing in this Agreement shall prevent
the Sub-Adviser from providing similar services to other advisory clients,
including but not by way of limitation, investment companies or to other series
of investment companies, including the Trust (whether or not their investment
objectives and policies are similar to those of the Funds) or from engaging in
other activities, provided such other services and activities do not, during the
term of this Agreement, interfere in a material manner with the Sub-Adviser's
ability to meet its obligations to each Fund hereunder. When the Sub-Adviser
recommends the purchase or sale of a security for other investment companies and
other clients, and at the same time the Sub-Adviser recommends the purchase or
sale of the same security for a 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 a Fund, neither the Sub-Adviser nor any
of its directors, officers or employees shall act as a principal or agent or
receive any commission. If the Sub-Adviser provides any advice to its clients
concerning the shares of a Fund, the Sub-Adviser shall act solely as investment
counsel for such clients and not in any way on behalf of the Trust or the Fund.
The Sub-Adviser provides investment advisory services to numerous other
investment advisory clients, including but not limited to other funds and may
give advice and take action which may differ from the timing or nature of action
taken by the Sub-Adviser with respect to a Fund. Nothing in this Agreement shall
impose upon the Sub-Adviser any obligations other than those imposed by law to
purchase, sell or recommend for purchase or sale, with respect to a Fund, any
security which the Sub-Adviser, or the shareholders, officers, directors,
employees or affiliates may purchase or sell for their own account or for the
account of any client.
13. Materials. Each of the Adviser, the Trust and the Funds shall not
make any representations regarding the Sub-Adviser or any of its affiliates in
any disclosure document, advertisement, sales literature or other promotional
materials without prior written consent of the Sub-Adviser, which consent shall
not be unreasonably withheld. If the Sub-Adviser has not notified the Adviser of
its disapproval of sample materials within twenty (20) days after its receipt
thereof, such materials shall be deemed approved. The Sub-Adviser will be
provided with any Registration Statements containing references or information
with respect to the Sub-Adviser prior to the filing of same with any regulatory
authority and shall be afforded the opportunity to comment thereon.
14. Duration and Termination. This Agreement shall become effective at
12:01 a.m. on May 1, 2005 and shall continue until April 30, 2007, and
thereafter shall continue automatically for successive annual periods, provided
such continuance is specifically approved at least annually by (i) the Trustees
or (ii) a vote of a "majority" (as defined in the 0000 Xxx) of each Fund's
outstanding voting securities (as defined in the 1940 Act), provided that in
either event the continuance is also approved by a majority of the Trustees who
are not parties to this Agreement or "interested persons" (as defined in the
0000 Xxx) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. Notwithstanding the
foregoing, this Agreement may be terminated: (a) at any time without penalty by
a Fund upon the vote of a majority of the Trustees or by vote of the majority of
the Fund's outstanding voting securities, upon sixty (60) days' written notice
to the Sub-Advise; (b) by the Adviser at any time without penalty, upon sixty
(60) days' written notice to the Sub-Adviser or (c) by the Sub-Adviser at any
time without penalty, upon no more than sixty (60) and no fewer than thirty (30)
days' written notice to the Trust.
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The Agreement will terminate automatically if the Investment Management
Agreement terminates with respect to the Fund. The Adviser agrees to immediately
notify the Sub-Adviser of the giving of or receipt of a notice with respect to
the termination of the Investment Management Agreement with respect to the Fund,
or, in the case of an automatic termination of that Agreement, the Adviser
agrees to immediately notify the Sub-Adviser of that termination.
This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act). Any termination of this Agreement will
be without prejudice to the completion of transactions already initiated by the
Sub-Adviser on behalf of a Fund at the time of such termination. The Sub-Adviser
shall take all steps reasonably necessary after such termination to complete any
such transactions and is hereby authorized to take such steps.
15. Amendments. This Agreement may be amended at any time but only by
the mutual agreement of the parties and, to the extent required by the 1940 Act,
subject to receipt of requisite shareholder approval by the Trust or applicable
Fund.
16. Proxies. Unless the Trust gives written instructions to the
contrary, the Sub-Adviser shall vote all proxies solicited by or with respect to
the issuers of securities invested in by a Fund. The Sub-Adviser agrees to seek
instructions from the Adviser (or its delegate) with respect to how it shall
vote proxies a reasonable period before it is required to vote them. The
Sub-Adviser acknowledges that it will be instructed to vote proxies in a manner
that the Adviser believes best serves the interests of each Fund's shareholders.
17. 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 Trust:
Forward Funds
c/o Forward Management, LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to the Sub-Adviser:
Emerald Advisers, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
00xx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Facsimile: 000-000-0000
If to the Adviser:
Forward Management, LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
18. Confidential Information. The Sub-Adviser shall maintain the
strictest confidence regarding the business affairs of the Funds. Written
reports furnished by the Sub-Adviser to the Trust and the Adviser shall be
treated by all of the parties as confidential and for the exclusive use and
benefit of the Trust and the Funds except as disclosure may be required by
applicable law.
Notwithstanding any provision herein to the contrary, the Sub-Adviser
hereto agrees on behalf of itself and its directors, officers, and employees (1)
to treat confidentially and as proprietary information of the Trust (a) all
records and other information relative to the Fund and their prior, present or
potential shareholders (and clients of said shareholders) and (b) any Nonpublic
Personal Information, as defined under Section 248.3(t) of Regulation S-P
("Regulation S-P)", promulgated under the Xxxxx-Xxxxx-Xxxxxx Act (the "Act"),
and (2) not to use such records and information for any purpose other than the
performance of its responsibilities and duties hereunder, or as otherwise
permitted by the privacy policies adopted by the Trust, Regulation S-P or the
Act, except after prior notification to and approval in writing by the Trust.
Such written approval shall not unreasonably be withheld by the Trust and may
not be withheld where the Sub-Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply after being requested to divulge such
information by duly constituted authorities, or when so requested by the Trust.
The Sub-Adviser may share the confidential and nonpublic information covered by
this paragraph with its employees and affiliates to the extent reasonably
necessary to perform its duties under this Agreement.
19. Miscellaneous.
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(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 Sub-Adviser
is delivering to the Adviser and the Trust a copy of Part II of its Form ADV, as
revised, on file with the Securities and Exchange Commission. The Adviser and
the Trust 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.
(f) Nothing herein shall be construed as constituting the Sub-Adviser
as an agent of the Trust or the Funds.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of May 1, 2005.
FORWARD FUNDS
On behalf of its series Forward Emerald Growth Fund,
Forward Emerald Banking and Finance Fund and
Forward Emerald Technology Fund
By:
---------------------------------------
Name: J. Xxxx Xxxx, Jr.
Title: President
FORWARD MANAGEMENT, LLC (Adviser),
By:
---------------------------------------
Name: J. Xxxx Xxxx, Jr.
Title: President
EMERALD ADVISERS, INC. AND EMERALD MUTUAL FUND ADVISERS TRUST,
ITS ASSIGNEE (Sub-Adviser)
By:
---------------------------------------
Name: Xxxxxxx Xxxxx
Title: President
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EXHIBIT A
SUB-ADVISORY FEE
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FUND NET ASSETS FEE
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Forward Emerald Growth Fund Up to and including $250,000,000 0.40%
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In excess of $250,000,000 up to and including 0.30%
$500,000,000
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In excess of $500,000,000 up to and including 0.20%
$750,000,000
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In excess of $750,000,000 0.10%
---------------------------------------------------------------------------------------------------------------
Forward Emerald Banking and Up to and including $100,000,000 0.65%
Finance Fund
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In excess of 100,000,000 0.55%
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Forward Emerald Technology Up to and including $100,000,000 0.65%
Fund
---------------------------------------------------------------------------------------------------------------
In excess of 100,000,000 0.55%
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FORM OF ADDENDUM TO THE SUB-ADVISORY AGREEMENT
This Addendum is executed by the Parties to that certain
Sub-Advisory Agreement executed on the __ day of ___________, 2005 by and among
Emerald Advisers, Inc., a Pennsylvania corporation with a principal place of
business at 0000 Xxxxxx Xxxx, Xxxxxxxxx, XX 00000 ("Emerald"), Emerald Mutual
Fund Advisers Trust, a Delaware statutory trust with a principal place of
business at 0000 Xxxxxx Xxxx, Xxxxxxxxx, XX 00000 ("EMFAT") and Forward
Management, LLC, a Delaware limited liability company with its principal place
of business at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000 ("Forward").
(Collectively, Emerald, EMFAT and Forward are referred to as the "Parties" and
individually as a "Party").
WHEREAS, Emerald/EMFAT is the adviser to the Emerald Select Technology Fund; and
WHEREAS, pursuant to a shareholder vote solicited via proxy, Forward will become
the Adviser and Emerald or EMFAT will become the Sub-Adviser to the Emerald
Technology Fund, to be renamed the "Forward Emerald Technology Fund"
(hereinafter, the "Tech Fund"); and
WHEREAS, the Parties wish to share in the fees and expenses of the Tech Fund for
a reasonable period of time until the Tech Fund reaches scale;
Now therefore, intending to be legally bound, the Parties
hereto agree as follows:
1. This addendum will continue for a period of 2 years,
subject to renewal if the Sub-Advisory Agreement for the Tech Fund with
Emerald/EMFAT is renewed by the Board of the Tech Fund, or if earlier, when the
Tech Fund shall have reached "cash-flow break even" in any month and shall have
sustained such status for a period of 3 consecutive months.
2. Emerald and Forward will waive a portion of their
sub-advisory and advisory fees, respectively, attributable solely to the Tech
Fund, in amounts proportionate to their respective fees so as to maintain the
expense ratio of the Tech Fund at or below the expense cap stated in the
prospectus of the Tech Fund. If additional amounts need to be reimbursed to the
Tech Fund to maintain the expense cap, in excess of the fee waivers, Forward and
Emerald shall do so on a similar proportionate basis.
3. Should Emerald desire to resign as Sub-Adviser to the Tech
Fund, it may do so at any time on 60 days' prior written notice (the "Emerald
Notice") to Forward and to the Board of Trustees of the Tech Fund, in which case
Emerald will continue to manage the Tech Fund until Forward shall have found a
suitable replacement and the same shall have been qualified by the Board of the
Tech Fund and the shareholders of the Tech Fund as may be required under the
Investment Company Act of 1940; provided, however, that Forward may, in its sole
discretion, determine to terminate the Tech Fund upon 30 days' prior written
notice to Emerald and the shareholders (which 30th day shall be later than the
60th day after Emerald's notice to Forward), in which case Emerald will continue
to manage the Tech Fund until it is terminated in accordance with the
Declaration of Trust to which the Tech Fund is subject, and Emerald will pay all
reasonable fees and expenses related to the termination of the Tech Fund (e.g.,
reasonable legal fees, termination fees for the administrator, custodian, and
transfer agent; expenses related to shareholder notices). If is further
understood and acknowledged by Forward that in all events, Emerald's obligation
to reimburse or waive fees under paragraph two above shall end on the 60th day
following the delivery of the Emerald Notice, and Emerald will be paid its
applicable Sub-Advisory Fee during the carryover period.
IN WITNESS WHEREOF, the Parties hereto have executed this Addendum as
of the date first written above.
EMERALD ADVISERS, INC.
By:
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Title:
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EMERALD MUTUAL FUND ADVISERS TRUST
By:
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Title:
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FORWARD MUTUAL FUNDS, INC.
By:
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Title:
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