EXPENSE LIMITATION AGREEMENT
FOR
FORWARD XXXXXX SMALL CAP EQUITY FUND
(INVESTOR CLASS SHARES)
THIS AGREEMENT, dated as of May 1, 2003, is made and entered into by
and between Forward Funds, Inc., a Maryland corporation (the "Company"), on
behalf of its series, Forward Xxxxxx Small Cap Equity Fund (the "Fund"), and
Forward Management, LLC (the "Investment Advisor").
WHEREAS, the Investment Advisor has been appointed the investment
adviser of the Fund pursuant to an Amended and Restated Investment Management
Agreement dated June 6, 2002, between the Company, on behalf of the Fund, and
the Investment Advisor (the "Advisory Agreement"); and
WHEREAS, the Company and the Investment Advisor desire to enter into
the arrangements described herein relating to certain expenses of the Investor
Class Shares of the Fund;
NOW, THEREFORE, the Company and the Investment Advisor hereby agree as
follows:
1. Until further notice from the Investment Advisor to the Company, the
Investment Advisor agrees, subject to Section 2 hereof, to reduce the fees
payable to it under the Advisory Agreement (but not below zero) to the extent
necessary to limit the operating expenses of the Investor Class Shares of the
Fund (exclusive of brokerage costs, interest, taxes and dividend and
extraordinary expenses) as follows:
For the period from the date of this Agreement until January 1,
2004, the Investment Advisor shall limit its fee so that the
operating expenses of the Investor Class Shares of the Fund shall
be limited to an annual rate (as a percentage of average daily
net assets) of 1.78%.
2. The Fund agrees to pay to the Investment Advisor the amount of fees
that, but for Section 1 hereof, would have been payable by the Fund to the
Investment Advisor pursuant to the Advisory Agreement (the "Deferred Fees") for
a period of three years following the end of the period provided for in Section
1 (the "Recoupment Period"), subject to the limitations provided in this
Section. Such repayment shall be made monthly, but only if the operating
expenses of the Investor Class Shares of the Fund (exclusive of brokerage costs,
interest, taxes and dividend and extraordinary expenses), without regard to such
repayment, are at an annual rate (as a percentage of the average daily net
assets) of 1.78% or less. Furthermore, the amount of Deferred Fees paid by the
Fund in any month shall be limited so that the sum of (a) the amount of such
payment and (b) the other operating expenses of the Investor Class Shares of the
Fund (exclusive of brokerage costs, interest, taxes and extraordinary expenses)
do not exceed the
foregoing annual percentage rate. In no event will the Fund be obligated to pay
any fees waived or deferred by the Investment Advisor with respect to any other
series of the Company.
3. The Investment Advisor may by notice in writing to the Company
terminate, in whole or in part, its obligation under Section 1 to reduce its
fees with respect to the Investor Class Shares of the Fund in any period
following the date specified in such notice (or change the percentage specified
in Section 1), but no such change shall affect the obligation (including the
amount of the obligation) of the Fund to repay amounts of Deferred Fees with
respect to periods prior to the date specified in such notice.
4. A copy of the Agreement and Certificate of Incorporation
establishing the Company is on file with the Secretary of State of Maryland, and
notice is hereby given that this Agreement is executed by the Company on behalf
of the Fund by an officer of the Company as an officer and not individually and
that the obligations of or arising out of this Agreement are not binding upon
any of the Directors, officers or shareholders individually but are binding only
upon the assets and property belonging to the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Forward Funds, Inc.
on behalf of its series
Forward Xxxxxx Small Cap Equity Fund Forward Management, LLC
(Investor Class Shares)
By: /s/ J. Xxxx Xxxx, Jr. By: /s/ Xxxx X. XxXxxxx
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Name: J. Xxxx Xxxx, Jr. Name: Xxxx X. XxXxxxx
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Title: President Title: COO
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