FORWARD FUNDS, INC.
AMENDED AND RESTATED INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, effective as of April 30, 1999, between Xxxxxxx Investment
Management Company LLC ("Xxxxxxx" or the "Investment Manager") and Forward
Funds, Inc. (the "Corporation") on behalf of the series of the Corporation
listed on Exhibit A (the "Funds").
WHEREAS, the Corporation 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
Funds are series of the Corporation; and
WHEREAS, the Corporation retained the Investment Manager to render
investment advisory services to the Equity Fund, International Equity Fund,
Global Bond Fund, Global Asset Allocation Fund and Small Capitalization Stock
Fund with regard to these Funds' investments of their assets (the "Portfolios")
as further described in the Corporation's registration statement on Form N-1A
(the "Registration Statement"), pursuant to an Investment Management Agreement
dated September ___, 1998; and
WHEREAS, the Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended ("Advisers Act"); and
WHEREAS, the Corporation wishes to amend the Investment Management
Agreement to reflect the addition of a new Fund to Exhibit A and certain name
changes to the Funds;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Corporation and the Investment
Manager as follows:
1. Appointment. The Investment Manager is hereby appointed to act as
investment adviser to the Funds for the periods and on the terms set forth in
this Agreement. The Investment Manager 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
Directors of the Corporation, the Investment Manager will (a) provide a program
of continuous investment management for the Funds with regard to the Portfolios
in accordance with the Funds' investment objectives, policies and limitations as
stated in the Funds' Prospectus and Statement of Additional Information included
as part of the 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 Investment Manager by the Corporation; (b) make investment
decisions for the Funds with regard to the Portfolios, including, but not
limited to, the selection and management of investment sub-advisers for the
Funds; (c) place orders to purchase and sell investments in the Portfolios for
the Funds; (d) furnish to the Funds the services of its employees and agents in
the management and conduct of the corporate business and affairs of the Funds;
(e) if requested, provide the services of its officers as administrative
executives of the Funds and the services of any directors of the Fund who are
"interested persons" of the Corporation or its affiliates, as that term is
defined in the 1940 Act, subject in each case to their individual consent to
serve and to applicable legal limitations; and (f) provide office space,
secretarial and clerical services and wire and telephone services (not including
toll charges, which will be reimbursed by the Funds), and monitor and review
Fund contracted services and expenditures pursuant to the distribution plans of
the Funds.
In performing its investment management services to the Funds under the
terms of this Agreement, the Investment Manager will provide the Funds with
ongoing investment guidance and policy direction.
The Investment Manager 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 (the "Code") and all other
applicable federal and state laws and regulations, and with any applicable
procedures adopted by the Board of Directors;
(b) use reasonable efforts to manage the Portfolios so that the Funds
will qualify, and continue to qualify, as regulated investment companies under
Subchapter M of the Code and regulations issued thereunder;
(c) place orders pursuant to its investment determinations for the
Funds in accordance with applicable policies expressed in the Funds' Prospectus
and/or Statement of Additional Information, established through written
guidelines determined by the Corporation and provided to the Investment Manager,
and in accordance with applicable legal requirements;
(d) furnish to the Corporation whatever statistical information the
Corporation may reasonably request with respect to the Portfolios. In addition,
the Investment Manager will keep the Corporation and the Directors informed of
developments materially affecting the Portfolios and shall, on the Investment
Manager's own initiative, furnish to the Corporation from time to time whatever
information the Investment Manager believes appropriate for this purpose;
(e) make available to the Corporation's administrator, First Data
Investor Services Group, Inc. (the "Administrator"), and the Corporation,
promptly upon their request, such copies of its investment records and ledgers
with respect to the Portfolios as may be required to assist the Administrator
and the Corporation in their compliance with applicable laws and regulations.
The Investment Manager will furnish the Directors with such periodic and special
reports regarding the Funds as they may reasonably request;
(f) meet quarterly with the Corporation's Board of Directors to explain
its investment management activities, and any reports related to the Portfolios
as may reasonably be requested by the Corporation;
(g) immediately notify the Corporation in the event that the Investment
Manager or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Investment Manager from serving as
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
Investment Manager further agrees to notify the Corporation immediately of any
material fact known to the Investment Manager respecting or relating to the
Investment Manager that is not contained in the Registration Statement regarding
the Funds, or any amendment or supplement thereto, but that is required to be
disclosed thereon, and of any statement contained therein that becomes untrue in
any material respect; and
(h) in making investment decisions for the Portfolios, use no inside
information that may be in its possession or in the possession of any of its
affiliates, nor will the Investment Manager seek to obtain any such information.
3. Investment Guidelines. The Corporation shall supply the Investment
Manager with such information as the Investment Manager shall reasonably require
concerning the Funds' investment policies, restrictions, limitations, tax
position, liquidity requirements and other information useful in managing the
Portfolios.
4. Use of Securities Brokers and Dealers. Purchase and sale orders will
usually be placed with brokers which are selected by the Investment Manager 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 Investment
Manager places orders, or directs the placement of orders, for the purchase or
sale of portfolio securities on behalf of the Funds, in selecting brokers or
dealers to execute such orders, the Investment Manager is expressly authorized
to consider the fact that a broker or dealer has furnished statistical, research
or other information or services which enhance the Investment Manager'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 Investment Manager 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 Investment Manager 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 Investment
Manager's overall responsibilities to the Investment Manager's discretionary
accounts.
Neither the Investment Manager 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 Funds, provided that this
limitation shall not prevent the Investment Manager from utilizing the services
of a securities broker which is a parent, subsidiary or related firm, provided
such broker effects transactions on a "cost only" or "nonprofit" basis to itself
and provides competitive execution. Unless otherwise directed by the Corporation
in writing, the Investment Manager 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. For its services specified in this Agreement, the
Corporation agrees to pay annual fees to the Investment Manager equal to the
amounts listed opposite the respective Fund on Exhibit A. Fees shall be computed
and accrued daily and paid monthly based on the average daily net asset value of
shares of the Funds as determined according to the manner provided in the
then-current prospectus of the Funds. The Investment Manager shall be
responsible for compensating any investment sub-advisers employed by the Funds.
6. Fees and Expenses. The Investment Manager shall not be required to
pay any expenses of the Funds other than those specifically allocated to the
Investment Manager in this section 6. In particular, but without limiting the
generality of the foregoing, the Investment Manager shall not be responsible for
the following expenses of the Funds: organization and certain offering expenses
of the Funds (including out-of-pocket expenses, but not including the Investment
Manager's overhead and employee costs); fees payable to the Investment Manager
and to any other of the Funds' 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 Corporation'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 the Funds' 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 Funds; expenses relating to investor and public relations;
expenses of registering and qualifying shares of the Funds 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 the Funds, or of
entering into other transactions or engaging in any investment practices with
respect to the Funds; 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 Funds'
businesses) of officers, directors and employees of the Corporation who are not
interested persons of the Investment Manager; and travel expenses (or an
appropriate portion thereof) of officers or directors of the Corporation who are
officers, directors or employees of the Investment Manager to the extent that
such expenses relate to attendance at meetings of the Board of Directors of the
Corporation with respect to matters concerning the Funds, or any committees
thereof or advisers thereto.
7. Books and Records. The Investment Manager 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
Investment Manager 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 Corporation and will be
surrendered promptly to the Corporation upon its request. The Investment Manager
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 Funds are being conducted in accordance with applicable laws and
regulations.
8. Aggregation of Orders. Provided the investment objectives, policies
and restrictions of the Funds are adhered to, the Corporation agrees that the
Investment Manager may aggregate sales and purchase orders of securities held in
the Funds with similar orders being made simultaneously for other accounts
managed by the Investment Manager or with accounts of the affiliates of the
Investment Manager, if in the Investment Manager's reasonable judgment such
aggregation shall result in an overall economic benefit to the respective Fund
taking into consideration the advantageous selling or purchase price, brokerage
commission and other expenses. The Corporation acknowledges that the
determination of such economic benefit to the Funds by the Investment Manager
represents the Investment Manager'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.
9. Liability. The Investment Manager shall not be liable to the
Corporation for the acts or omissions of any other fiduciary or other person
respecting the Funds or for anything done or omitted by the Investment Manager
under the terms of this Agreement if the Investment Manager shall have acted in
good faith and shall have exercised the degree of prudence, competence and
expertise customarily exhibited by managers of institutional portfolios. Nothing
in this Agreement shall in any way constitute a waiver or limitation of any
rights which may not be so limited or waived in accordance with applicable law.
10. Services Not Exclusive. It is understood that the services of the
Investment Manager are not exclusive, and that nothing in this Agreement shall
prevent the Investment Manager from providing similar services to other
investment companies or to other series of investment companies, including the
Corporation (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 Investment Manager's ability to meet its obligations
to the Funds hereunder. When the Investment Manager recommends the purchase or
sale of a security for other investment companies and other clients, and at the
same time the Investment Manager recommends the purchase or sale of the same
security for the Funds, it is understood that in light of its fiduciary duty to
the Funds, such transactions will be executed on a basis that is fair and
equitable to the Funds. In connection with purchases or sales of portfolio
securities for the account of the Funds, neither the Investment Manager nor any
of its directors, officers or employees shall act as a principal or agent or
receive any commission. If the Investment Manager provides any advice to its
clients concerning the shares of the Funds, the Investment Manager shall act
solely as investment counsel for such clients and not in any way on behalf of
the Corporation or the Funds.
11. Duration and Termination. This Agreement shall continue with
respect to each of the Funds, other than the Real Estate Investment Fund, until
September __, 2000, and with the Real Estate Investment Fund until
_________________, 2001, and thereafter shall continue automatically for
successive annual periods, provided such continuance is specifically approved at
least annually by (i) the Directors or (ii) a vote of a "majority" (as defined
in the 0000 Xxx) of a 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 Directors 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 with respect to a Fund upon the vote of a majority of the
Directors or by vote of the majority of that Fund's outstanding voting
securities, upon sixty (60) days' written notice to the Investment Manager or
(b) by the Investment Manager at any time without penalty, upon sixty (60) days'
written notice to the Corporation. 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 Investment Manager on behalf of the Funds
at the time of such termination. The Investment Manager shall take all steps
reasonably necessary after such termination to complete any such transactions
and is hereby authorized to take such steps.
12. Amendments. This Agreement may be amended at any time but only by
the mutual agreement of the parties.
13. Proxies. Unless the Corporation gives written instructions to the
contrary, the Investment Manager shall vote all proxies solicited by or with
respect to the issuers of securities in the Portfolios. The Investment Manager
shall maintain a record of how the Investment Manager voted and such record
shall be available to the Corporation upon its request. The Investment Manager
shall use its best good faith judgment to vote such proxies in a manner which
best serves the interests of the Funds' 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 Corporation:
Forward Funds, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
If to the Investment Manager:
Xxxxxxx Investment Management Co., LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
15. Confidential Information. The Investment Manager shall maintain the
strictest confidence regarding the business affairs of the Funds. Written
reports furnished by the Investment Manager to the Corporation shall be treated
by the Corporation and the Investment Manager as confidential and for the
exclusive use and benefit of the Corporation 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 Investment
Manager is delivering to the Corporation a copy of Part II of its Form ADV, as
revised, on file with the Securities and Exchange Commission. The Corporation
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 Investment
Manager as an agent of the Corporation or the Funds.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of April 30, 1999.
FORWARD FUNDS, INC.
By: _____________________________
President
XXXXXXX INVESTMENT
MANAGEMENT CO., LLC
By: _____________________________
Name:
Title:
EXHIBIT A
Name of Fund Advisory Fee
The Global Asset Allocation Fund 0.05% of average daily net assets
The Global Bond Fund 0.60% of assets under management
less than $200 million and 0.55% of
assets under management over $200
million
The International Equity Fund 0.95% of first $25 million of assets
under management, 0.80% of next $25
million of assets under
management, 0.75% on the next $50
million of assets under management,
0.65% on the next $150 million of
assets under management, 0.60% on
the next $250 million of assets under
management and 0.55% on amounts
over $500 million
The Real Estate Investment Fund 1.00% of first $100 million of assets
under management, 0.85% for the
next $400 million of assets under
management and 0.70% on assets
over $500 million
The Small Capitalization Equity Fund 1.05% of average daily net assets
The U.S. Equity Fund 0.625% for first $100 million of
assets under management; 0.55% for
the next $400 million of assets under
management; 0.50% on assets over
$500 million
