Exhibit (d)(6)
FORWARD FUNDS, INC.
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT, effective as of December 31, 2002, among Xxxxxx, Xxxxxxx Xxxxxxxx &
Xxxxx L.L.C. (the "Sub-Adviser"), Forward Management, LLC (the "Adviser") and
Forward Funds, Inc. (the "Company"), on behalf of each of the Sierra Club Equity
Fund (the "Stock Fund") and the Sierra Club Balanced Fund (the "Balanced Fund"
and, together with the Stock Fund, the "Funds"), each a series of the Company.
WHEREAS, the Company 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 each Fund is a
series of the Company; and
WHEREAS, the Adviser has been retained by the Company to provide investment
advisory services to the Funds with regard to the Funds' investments as further
described in the Company's registration statement on Form N-1A (the
"Registration Statement") and pursuant to an Investment Management Agreement
dated December 31, 2002 ("Investment Management Agreement"); and
WHEREAS, the Adviser has entered into a Securities Industry Licensing Agreement
dated August 19, 2002 with the Sierra Club (the "Sierra Club Agreement") to
operate certain mutual funds that use the Sierra Club's investment screen, marks
and other content; and
WHEREAS, the Funds have been organized to serve as the first exclusive
environmentally branded mutual fund products of the Company for which the
investment activities will be conducted in a manner consistent with the
principles and standards espoused by the Sierra Club; and
WHEREAS, the Company's Board of Directors (the "Directors"), including a
majority of the directors who are not "interested persons," as defined in the
1940 Act, and each Fund's stockholders have approved the appointment of the
Sub-Adviser to perform certain investment advisory services for the Company, on
behalf of the Fund pursuant to this Sub-Advisory Agreement and as described in
the Registration Statement and the Sub-Adviser is willing to perform such
services for the 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, it is agreed among the Adviser, the Company and the Sub-Adviser as
follows:
1. Appointment. The Adviser hereby appoints the Sub-Adviser to perform advisory
services to the Funds for the periods and on the terms set forth in this
Sub-Advisory Agreement. The Sub-Adviser 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 and
the Adviser, the Sub-Adviser will, in coordination with the Adviser as described
below, (a) provide a program of continuous investment management for the Funds;
(b) make investment decisions for the Funds; and (c) place orders to purchase
and sell securities for the Funds. The Sub-Adviser will provide the Adviser with
a list of any potential investments not already on the then-current list of
Environmentally Qualified Investments, as defined below. The Adviser will then
evaluate those potential investments using applicable environmental screens and
other criteria used by the Adviser or required by the Sierra Club for the
purpose of preliminarily determining which investments the Adviser believes are
acceptable. The Adviser will then submit those preliminary investments to the
Sierra Club to review and approve or reject based on the Sierra Club's
application of its proprietary environmental screens and criteria. The
investments that pass the Adviser's and the Sierra Club's environmental
screening for use by the Sub-Adviser are referred to as "Environmentally
Qualified Investments." In performing its sub-advisory responsibilities under
this Agreement for each Fund, the Sub-Adviser agrees to manage each Fund's
investments according to 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 then-current Registration Statement
filed with the Securities and Exchange Commission, as it may be amended from
time to time (the "Registration Statement"). The Sub-Adviser agrees to select
among only those investments contained on the then-current list of
Environmentally Qualified Investments, or investments that are government
securities (within the meaning of Section 2(a)(16) of the 1940 Act, "Government
Securities"). The Adviser agrees to make available to the Sub-Adviser an updated
list of Environmentally Qualified Investments, which may be revised from time to
time, promptly after the list is revised. Notwithstanding anything to the
contrary in this paragraph, the Sub-Adviser will submit to the Adviser for
consideration or purchase only those potential investments that the Sub-Adviser
reasonably believes in good faith are not environmentally offensive.
In performing its investment management services to the Funds under the terms of
this Agreement, the Sub-Adviser will provide the Funds 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 Directors, 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 by the Directors;
(b) use reasonable efforts to manage the Funds so that they 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 the Funds, in
accordance with applicable policies expressed in the Funds' then-current
Prospectus and/or Statement of Additional Information, established through
written guidelines determined by the Funds and provided in writing to the
Sub-Adviser;
(d) furnish to the Company and the Adviser whatever statistical information and
other reports the Company or the Adviser may reasonably request with respect to
the Funds' assets or
contemplated investments. In addition, the Sub-Adviser will keep the Adviser
informed of developments that, in the Sub-Adviser's reasonable judgment,
materially affect the Funds' portfolios and shall, on the Sub-Adviser's own
initiative, furnish to the Adviser from time to time whatever information the
Sub-Adviser believes appropriate for this purpose;
(e) make available to the Funds' administrator, PFPC Inc. (the "Administrator"),
the Adviser and the Company, promptly upon their request and at the reasonable
expense of the Company, such copies of their investment records and ledgers with
respect to the Funds as may be required to assist the Adviser, the Administrator
and the Company in their compliance with applicable laws and regulations. The
Sub-Adviser will furnish the Directors, the Administrator, the Adviser and the
Company with such periodic and special reports regarding the Funds as they may
reasonably request;
(f) meet quarterly with the Adviser and the Company's Board of Directors to
explain its investment management activities, and any reports related to the
Funds as may reasonably be requested by the Adviser and/or the Company;
(g) immediately notify the Adviser and the Company 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 Sub-Advisory 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 the Company 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 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;
(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 Funds. 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 Funds, not knowingly use material
inside information that may be in its possession or in the possession of any of
its affiliates, nor will the Sub-Adviser seek to obtain any such information.
3. Futures and Options. The Sub-Adviser's investment authority shall include,
to the extent permitted under Section 2, 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 names of the Funds; and (ii)
execute for and on behalf of the Funds' 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 the Funds,
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. In addition to the information to be provided to the
Sub-Adviser under Section 2 hereof, the Company or the Adviser shall promptly
supply the Sub-Adviser with such other information as the Sub-Adviser shall
reasonably require or request concerning the Funds' investment policies,
restrictions, limitations, tax positions, liquidity requirements and other
information useful in managing the Funds' investments.
The Sub-Adviser, from time to time in its discretion, may suggest additional
securities and issuers to the Adviser. Notwithstanding anything to the contrary
in this paragraph, the Sub-Adviser will submit to the Adviser for consideration
only those potential investments that the Sub-Adviser reasonably believes in
good faith are not environmentally offensive. The Adviser will inform the
Sub-Adviser as to the appropriateness of such investments for addition to the
list of Environmentally Qualified Investments.
5. Representations, Warranties and Covenants of the Company, Adviser and
Sub-Adviser. The Company 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, 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, 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.
6. Use of Securities Brokers and Dealers. Purchase and sale orders will be
placed with brokers that 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 the Funds, 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 (the "1934 Act"), 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 the Funds, except as may be permitted under the 1940
Act. Unless otherwise directed by the Company 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.
7. Compensation. For the services specified in this Agreement, the Company
agrees to pay compensation to the Sub-Adviser equal to an annual rate specified
below for the applicable Fund's assets managed by the Sub-Adviser (the
"Sub-Advisory Fee"). The Sub-Advisory Fee 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 Sub-Adviser agrees to reduce the Sub-Advisory fee
for each Fund by 50% until the first anniversary of that Fund's commencement of
operations. The Sub-Adviser may be reimbursed, on or before the fourth
anniversary of each Fund's commencement of operations, for the Sub-Advisory Fee
reduction made during that first year subject to approval of the Directors and
subject to the Fund's ability to maintain total operating expenses at or below
any expense limitation applicable to the Fund and stated in its prospectus.
Total Assets of the Funds Managed by the Sub-Adviser
(annual rates apply to the portion of assets at the corresponding level)
Stock Fund Assets (annual rates) Balanced Fund Assets (annual rates)
Less than $100 million 0.45% 0.41%
$100 million to less than $250 million 0.40% 0.32%
$250 million to less than $500 million 0.35% 0.27%
$500 million and over 0.30% 0.24%
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 Funds; 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 the Funds in
connection with membership in investment company trade organizations; cost of
insurance relating to fidelity coverage for the Company'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 daily net asset values; 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; and the compensation and
all expenses (specifically
including travel expenses relating to the Funds' business) of officers,
directors and employees of the Company.
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
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
Company upon its request except that the Sub-Adviser may retain copies of such
documents. 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. Neither the Sub-Adviser nor its officers, directors, employees,
affiliates, agents or controlling persons shall be liable to the Company, 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.
Neither the Sub-Adviser nor its officers, 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 Company, 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 Company, the
Funds and/or their shareholders to 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.
The Company, on behalf of the Funds, 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 Company or Funds, 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 Company, the Funds 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.
12. Limited Exclusivity. The Sub-Adviser agrees that it will not provide similar
services to any other mutual fund which holds itself out to the public as
"Environmentally Qualified" or otherwise "Socially Responsible" within the
common meanings of those terms. Other than that, 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
investment advisory clients, including but not by way of limitation, investment
companies or to other series of investment companies, including the Company
(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 the
Funds 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 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 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 the
Funds, the Sub-Adviser shall act solely as investment counsel for such clients
and not in any way on behalf of the Company or the Funds.
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 the Funds. 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 the
Funds, 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. The Adviser shall not publish or distribute or allow the Funds to
publish or distribute any advertising or promotional material regarding the
provision of investment advisory services by the Sub-Adviser pursuant to this
Agreement, without the prior written consent of the Sub-Adviser, which consent
shall not be unreasonably withheld or delayed. 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.
Materials substantially similar to materials approved on an earlier occasion
shall also be deemed approved. The Sub-Adviser will be provided with any
Registration Statements containing references or information with respect to the
Sub-Adviser at least three business days before filing of same with any
regulatory authority and afforded the opportunity to comment thereon. The
Company agrees to make any changes to the information in any Registration
Statement with respect to the Sub-Adviser as may be necessary so that there are
no untrue statements of a material fact or omissions to state a material fact
regarding the Sub-Adviser and its duties with respect to the Funds.
The Sub-Adviser shall not use any proprietary markings or materials of the
Sierra Club, including, without limitation, the Sierra Club Marks (as defined
below), without the prior written approval of the Adviser and the Sierra Club.
"Sierra Club Marks" means the Sierra Club's
trademarks (including wordmarks, designs and logos), service marks, tradedress,
taglines and tradenames used, adopted or otherwise protected by the Sierra Club.
14. Duration and Termination. This Agreement shall continue until December 31,
2004 with respect to each Fund, 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 that 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 with respect to
a Fund: (a) at any time without penalty by that Fund upon the vote of a majority
of the Directors or by vote of the majority of that Fund's outstanding voting
securities, upon no more than sixty (60) and no fewer than twenty-five (25)
days' written notice to the Sub-Adviser; (b) by the Adviser at any time without
penalty, upon no more than sixty (60) and no fewer than twenty-five (25) 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 Company. This Agreement will also terminate automatically
in the event of its assignment (as defined in the 1940 Act).
The Agreement will terminate automatically with respect to a Fund if the
Investment Management Agreement terminates with respect to that 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 a Fund, or, in the case of an automatic termination of
that Agreement, the Adviser agrees to immediately notify the Sub-Adviser of that
termination.
Further, the Adviser may terminate this Agreement with respect to a Fund upon
the instruction or request by the Sierra Club at any time, notwithstanding the
notice period stated above, based on past, present or future conduct of the
Sub-Adviser in respect of environmental issues that the Sierra Club determines
(i) constitutes a Termination Default (as defined below), (ii) violates Sierra
Club environmental principles or standards, or (iii) results in an affiliation,
relationship or dealings with an entity engaged in conduct, acts or omissions
that are environmentally offensive in the judgment of the Sierra Club.
Any termination of this Agreement with respect to a Fund will be without
prejudice to the completion of transactions already initiated by the Sub-Adviser
on behalf of that 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.
"Termination Default" means (a) the purchase by a Fund of a security, other than
a Government Security, (i) issued by an entity that was not on the then-current
list of Environmentally Qualified Investments provided to the Sub-Adviser at or
before the time of purchase, or (ii) not included among securities the Sierra
Club or the Adviser has otherwise indicated in writing would be added to such a
list, if such purchase of a security under (i) or (ii) is not promptly cured at
no cost to the Fund within thirty (30) days after the Sub-Adviser receives
notice of that improper purchase, or (b) except to the extent the Sub-Adviser
has taken reasonable efforts to dispose of the affected security, the continued
holding by a Fund of a security, other than a Government Security, issued by an
entity that the Sierra Club has removed from the list of Environmentally
Qualified Investments, provided the Sierra Club or the Adviser has given thirty
(30) days' prior
written notice of such removal to the Sub-Adviser, if any such holding after
removal from the list is not promptly cured at no cost to the Fund, or (c)
events that are part of a sequence of violations of these prohibitions.
If there occurs an affiliation, relationship or dealing by the Sub-Adviser with
an entity engaged in conduct, acts or omissions that are environmentally
offensive in the judgment of the Sierra Club, and the Sierra Club gives the
Adviser notice that the Sierra Club intends to exercise (or has exercised) its
right to withdraw the license under the Sierra Club Agreement with respect to a
Fund or the Sub-Adviser, the Adviser agrees to promptly notify the Sub-Adviser
accordingly. After the Sub-Adviser receives that notice, the Sub-Adviser shall
have the choice to do either of the following: (a) give written notice to the
Adviser of termination of this Agreement with respect to that Fund at least
twenty-five (25) days in advance, which will so terminate this Agreement at the
conclusion of that 25-day period; or (b) waive its Sub-Advisory Fee with respect
to that Fund and/or remit to Adviser amounts equal to the compensation payable
by the Adviser to the Sierra Club under the Sierra Club Agreement with respect
to a withdrawal of the license for that reason, which will be either the
compensation that otherwise would have been payable by the Adviser to the Sierra
Club for one (1) year had no termination occurred (based on assets upon
termination), or the compensation payable by the Adviser to the Sierra Club
under the Sierra Club Agreement with respect to a withdrawal of the license for
that reason, which is one-half of the compensation that otherwise would have
been payable by the Adviser to the Sierra Club for the term of the Sierra Club
Agreement with respect to that Fund.
Subject to subparagraph (a) above, these requirements to waive the Sub-Advisory
Fee and/or pay the Adviser as a result of the termination of this Agreement with
respect to a Fund shall survive the termination of this Agreement.
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 stockholder approval by the Company or applicable Fund.
16. Proxies. Unless the Company gives written instructions to the contrary, the
Sub-Adviser shall vote all proxies solicited by or with respect to the issuers
of securities held by the Funds. The Sub-Adviser shall maintain a record of how
the Sub-Adviser voted and such record shall be available to the Company upon its
request. 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 the Funds' shareholders and that is consistent with the principles
and standards espoused by the Sierra Club.
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 Company:
Forward Funds, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
If to the Sub-Adviser:
Xxxxxx, Xxxxxxx Xxxxxxxx & Xxxxx, L.L.C.
Xxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
If to the Adviser:
Forward Management, LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
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 Company and the Adviser shall be treated by
all of the parties as confidential and for the exclusive use and benefit of the
Company and the Funds except as disclosure may be required by applicable law.
Further, the Sub-Adviser shall not specifically disclose the list of
Environmentally Qualified Investments to any third party without the express
written permission of the Adviser and the Sierra Club, except as shall be
required by law and, if reasonably possible, with prior notice to the Adviser
and the Sierra Club.
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 Company (a) all
records and other information relative to the Funds 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 Company, Regulation S-P or the
Act, except after prior notification to and approval in writing by the Company.
Such written approval shall not unreasonably be withheld by the Company 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
Company. 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. Third Party Beneficiary. The Adviser and Sub-Adviser agree that the Sierra
Club is a third party beneficiary to this Agreement.
20. 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 Sub-Adviser is
delivering to the Adviser and the Company a copy of Part II of its Form ADV, as
revised, on file with the SEC. The Adviser and the Company 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 thereby and, to this extent, the provisions of this Agreement shall
be deemed to be severable.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of December 31, 2002.
FORWARD FUNDS, INC.
By: /s/ J. Xxxx Xxxx, Jr.
President
XXXXXX, XXXXXXX XXXXXXXX & XXXXX, L.L.C.
By: /s/ Xxxxx X. Xxxxxx Xxxxx
Name: Xxxxx X. Xxxxxx Xxxxx
Title: President
FORWARD MANAGEMENT, LLC
By: /s/ J. Xxxx Xxxx, Jr.
Name: J. Xxxx Xxxx, Jr.
Title: President
