FORWARD FUNDS, INC.
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, effective as of March 2, 1998, among Pacific Investment
Management Company ("PIMCO" or the "Investment Manager"), Xxxxxx Place
Management Co., Inc. (the "Business Manager") and Forward Funds, Inc. (the
"Corporation") on behalf of The Global Fund (the "Fund").
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
Fund is a series of the Corporation; and
WHEREAS, the Business Manager is responsible for managing the business
affairs of the Corporation and coordinating the activities of service providers
to the Fund; and
WHEREAS, the Corporation and the Business Manager wish to retain the
Investment Manager to render investment advisory services to the Fund with
regard to the Fund's investments in fixed income and other debt securities as
further described in the Corporation's registration statement on Form N-1A (the
"Registration Statement"), and the Investment Manager is willing to furnish such
services to the Fund; and
WHEREAS, the Investment Manager 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 Business Manager, the Corporation and
the Investment Manager as follows:
1. Appointment. The Investment Manager is hereby appointed to act as
investment adviser to the Fund 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 Fund with regard to the Fund's
investments in fixed income and other debt securities 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
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
Fund with regard to the Fund's investments in fixed income and other debt
securities; and (c) place orders to purchase and sell fixed income and other
debt securities for the Fund.
In performing its investment management services to the Fund under the
terms of this Agreement, the Investment Manager will provide the Fund with
ongoing investment guidance and policy direction, including oral and written
research, analysis, advice, statistical and economic data and judgments
regarding individual investments, general economic conditions and trends and
long-range investment policy.
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 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;
(c) place orders pursuant to its investment determinations for the Fund
in accordance with applicable policies expressed in the Fund's 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 and/or the Business Manager whatever
statistical information the Corporation and/or the Business Manager may
reasonably request with respect to the Fund's assets or contemplated
investments. In addition, the Investment Manager will keep the Corporation, the
Business Manager and the Directors informed of developments materially affecting
the Fund's portfolio 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"), the Business Manager and
the Corporation, promptly upon their request, such copies of its investment
records and ledgers with respect to the Fund as may be required to assist the
Administrator, the Business Manager and the Corporation in their compliance with
applicable laws and regulations. The Investment Manager will furnish the
Business Manager and the Directors with such periodic and special reports
regarding the Fund as they may reasonably request;
(f) meet quarterly with the Business Manager and the Corporation's Board
of Directors to explain its investment management activities, and any reports
related thereto as may reasonably be requested by the Business Manager and/or
the Corporation;
(g) immediately notify the Corporation in the event that the Investment
Manager: (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 Fund, 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 Fund, use no inside
information that may be in its possession or in the possession of any of its
affiliates, nor will the Adviser seek to obtain any such information.
3. Futures and Options. The Investment Manager'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 Investment Manager will assist the Business Manager 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 the Fund; and (ii) execute for and on behalf of the Brokerage
Account, standard customer agreements with a broker or brokers. The Investment
Manager may, using such of the securities and other property in the Brokerage
Account as the Investment Manager deems necessary or desirable, direct the
custodian to deposit on behalf of the 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
Investment Manager deems desirable or appropriate.
The Investment Manager has delivered to the Business Manager
and the Corporation a copy of its Disclosure Document, as amended, dated July 3,
1997, on file with the Commodity Futures Trading Commission. The Business
Manager and the Corporation hereby acknowledge receipt of such copy.
4. Investment Guidelines. The Corporation shall supply the Investment
Manager with such information as the Investment Manager shall reasonably require
concerning the Fund's investment policies, restrictions, limitations, tax
position, liquidity requirements and other information useful in managing the
Fund's assets.
5. 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 hereafter 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 Fund, 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 Fund 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 Fund. Unless otherwise
directed by the Corporation or the Business Manager 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.
6. Compensation. For its services specified in this Agreement, the
Corporation agrees to pay annual fees to the Investment Manager equal to 0.35%
of the first $200 million of Fund assets managed by the Investment Manager and
0.30% of all assets above $200 million managed by the Investment Manager. Fees
shall be computed and accrued daily and paid monthly based on the average daily
net asset value of shares of the Fund as determined according to the manner
provided in the then-current prospectus of the Fund.
7. Fees and Expenses. The Investment Manager shall not be required to
pay any expenses of the Fund other than those specifically allocated to the
Investment Manager in this section 7. In particular, but without limiting the
generality of the foregoing, the Investment Manager shall not be responsible for
the following expenses of the Fund: organization and certain offering expenses
of the Fund (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 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 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 Fund's Administrator or of any custodian, subcustodian, transfer
agent, registrar, or dividend disbursing agent of the Fund; payments to the
Administrator for maintaining the 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 the Fund; expenses relating to investor and public relations; expenses
of registering and qualifying shares of the Fund for sale; freight, insurance
and other charges in connection with the shipment of the Fund's portfolio
securities; brokerage commissions or other costs of acquiring or disposing of
any portfolio securities or other assets of the Fund, or of entering into other
transactions or engaging in any investment practices with respect to the Fund;
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 Fund's business) 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
Fund, or any committees thereof or advisers thereto.
8. Books and Records. The Investment Manager agrees to maintain such
books and records with respect to its services to the Fund 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 original and
correct copies 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 Fund are being conducted in accordance
with applicable laws and regulations.
9. Aggregation of Orders. Provided the investment objectives, policies
and restrictions of the Fund are adhered to, the Corporation agrees that the
Investment Manager may aggregate sales and purchase orders of securities held in
the Fund 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 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 Fund by the Investment Manager represents the Investment
Manager's evaluation that the Fund is benefited by relatively better purchase or
sales prices, lower commission expenses and beneficial timing of transactions or
a combination of these and other factors.
10. 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 Fund 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.
11. 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 Fund) 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 Fund 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 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 the Fund, 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 Fund, the Investment Manager shall act
solely as investment counsel for such clients and not in any way on behalf of
the Corporation or the Fund.
12. Duration and Termination. This Agreement shall continue until
February 6, 2000, 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 the 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 the Fund upon the vote of a majority of the Directors or by
vote of the majority of the 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 Fund 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.
13. Amendments. This Agreement may be amended at any time but only by
the mutual agreement of the parties.
14. 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 which assets of the Fund may be
invested. 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 Fund's
shareholders.
15. 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 Business Manager:
Xxxxxx Place Management Co., Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxxxx
If to the Investment Manager:
Pacific Investment Management Company
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
000-000-0000 (fax)
Attention: Xxxx X. Xxxxxx, Executive Vice President
Confidential Information. The Investment Manager shall
maintain the strictest confidence regarding the business affairs of the Fund.
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 Business Manager and the Corporation a copy of Part
II of its Form ADV, as revised, on file with the Securities and Exchange
Commission. The Business Manager and 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 Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of March 2, 1998.
FORWARD FUNDS, INC.
By:
President
PACIFIC INVESTMENT MANAGEMENT COMPANY
By: PIMCO Management, Inc.,
a general partner
By: ______________________________
Name: Xxxxx Xxxxx
Title: Managing Director
XXXXXX PLACE MANAGEMENT CO., INC.
By: ____________________________
Name: ____________________________
Title: ____________________________
