FORWARD FUNDS, INC.
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, effective as of March 2, 1998, among Barclays Global Fund
Advisors ("Barclays" 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 investment of its assets in a portfolio of equity
securities traded on U.S. exchanges and derivatives ("Portfolio") 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 Portfolio 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 Portfolio; and (c) place orders to
purchase and sell investments in the Portfolio for the Fund.
Barclays' duties shall not include and Barclays shall have no
responsibility for the following: tax reporting; securities lending and cash
collateral; allocation, diversification, management and investment of the
overall assets of the Fund; management and investment of the liquidity account;
and management, investment, and compliance with respect to any assets of the
fund not allocated by the Board of Directors to Barclays.
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.
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 Portfolio so that the Fund will
qualify, and continue to qualify, as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder; provided, however,
Barclays 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 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 Portfolio. In addition, the Investment
Manager will keep the Corporation, the Business Manager and the Directors
informed of developments materially affecting the 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 Portfolio 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 to the Portfolio 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 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 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 Portfolio, 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. 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: (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.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING
COMMISSION (THE "COMMISSION") IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE
CLIENTS, THIS BROCHURE OR ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT
BEEN, FILED WITH THE COMMISSION. THE COMMISSION DOES NOT PASS UPON THE MERITS OF
PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY
TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE COMMISSION HAS NOT REVIEWED OR
APPROVED THIS TRADING PROGRAM OR THIS BROCHURE OR ACCOUNT DOCUMENT.
The Fund represents and warrants that it is a "qualified
eligible client" within the meaning of CFTC Regulations Section 4.7 and, as
such, consents to treat the Portfolio in accordance with the exemption contained
in CFTC Regulations Section 4.7(b).
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
Portfolio.
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 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 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 0.375%
of the first $100 million of Fund assets managed by the Investment Manager,
0.30% on the next $400 million under management, and 0.25% on all assets above
$500 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 will be
surrendered promptly to the Corporation upon its request except that the
Investment Manager may return copies of such documents as may be required by
law. 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.
a. Neither Investment Manager nor its officers, directors, employees,
affiliates, agents or controlling persons shall be liable to the Corporation,
the Fund, its 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 Fund.
b. Neither the Investment Manager 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 and/or for any loss
suffered by the Corporation, the Fund, its 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 Investment Manager
against any liability to the Corporation, the Fund and/or its 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 Corporation on behalf of the Fund, hereby agrees to indemnify
and hold harmless the Investment Manager, its directors, officers and employees
and agents and each person, if any, who controls the Investment Manager
(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 Corporation or 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 "1940
Act") or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (1) any act, omission, error
and/or mistake of any other fiduciary and/or any other person; or (2) any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission to state a material fact required to be stated or necessary to
make the statements made not misleading in (a) the Registration Statement, the
prospectus or any other filing, (b) any advertisement or sales literature
authorized by the Corporation for use in the offer and sale of shares of the
Fund, or (c) any application or other document filed in connection with the
qualification of the Corporation or shares of the Fund under the Blue Sky or
securities laws of any jurisdiction, except insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any such untrue statement or omission or alleged untrue statement or
omission (i) in a document prepared by the Investment Manager, or (ii) made in
reliance upon and in conformity with information furnished to the Corporation by
or on behalf of the Investment Manager pertaining to or originating with the
Investment Manager for use in connection with any document referred to in
clauses (a), (b) or (c).
d. It is understood, however, that nothing in this paragraph 10 shall
protect any Indemnified Party against, or entitle any Indemnified Party to,
indemnification against any liability to the Corporation, Fund and/or its
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.
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.
The Investment Manager provides investment advisory services to
numerous other funds and bank collective funds and may give advice and take
action which may differ from the timing or nature of action taken by the
Investment Manager with respect to the Fund. Nothing in this Agreement shall
impose upon the Investment Manager any obligations other than those imposed by
law to purchase, sell or recommend for purchase or sale, with respect to the
Fund, any security which the Investment Manager, or the shareholders, officers,
directors, employees or affiliates may purchase or sell for their own account or
for the account of any client.
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 the Portfolio. 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:
Barclays Global Fund Advisors
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
16. 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.
17. 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
BARCLAYS GLOBAL FUND ADVISORS
By: ______________________________
Name:
Title:
XXXXXX PLACE MANAGEMENT CO., INC.
By: ____________________________
Name: ____________________________
Title: ____________________________
