Ex-99.(d)(12)
FORM OF
FORWARD FUNDS, INC.
INVESTMENT SUB-ADVISOR AGREEMENT
This INVESTMENT SUB-ADVISOR AGREEMENT (this "Agreement"), effective as of
[ ]among Pictet International Management Ltd., a United Kingdom
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limited liability company, (the "Sub-Adviser"), Forward Funds, Inc. (the
"Company"), on behalf of the Forward Global Emerging Markets Fund, a series of
the Company (the "Fund"), and Forward Management, LLC (the "Adviser").
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 the Fund
is a series of the Company; and
WHEREAS, the Adviser has been retained by the Company to provide investment
advisory services to the Fund with regard to the Fund's 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 June 6, 2002 ("Investment Management Agreement"); 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 the 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 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 (the "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 Company and the Adviser hereby appoint the Sub-Adviser
to perform advisory services to the Fund for the periods and on the terms set
forth in this 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
of the Fund 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 Fund; (b) make investment decisions for the Fund; and (c) place orders to
purchase and sell securities for the Fund in accordance with the Fund's
investment objectives, policies and limitations as stated in the Fund's current
Prospectus and Statement of Additional Information as provided to the
Sub-Adviser by the Adviser, as they may be amended from time to time; provided,
that the Adviser shall provide the Sub-Adviser reasonable advance notice of any
change to such investment objectives, policies and limitations.
The Sub-Adviser further agrees that, in performing its duties hereunder, it
will:
(a) with regard to its activities under this Agreement, use reasonable
efforts to comply in all material respects with the applicable provisions of the
1940 Act, the Advisers Act, and all applicable rules and regulations thereunder,
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,
provided that written copies of such procedures and amendments thereto are
provided to the Sub-Adviser by the Adviser;
(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; provided, however, the Sub-Adviser
shall not be responsible for the tax effect of any decisions made by or any
actions taken by any person other than the Sub-Adviser;
(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 or otherwise established through
written guidelines established by the Fund and provided to the Sub-Adviser by
the Adviser, including without limitation, Section 4 hereof
(d) furnish to the Company and the Adviser whatever statistical
information the Company or the Adviser may reasonably request with respect to
the Fund's assets or investments. In addition, the Sub-Adviser will keep the
Company, the Adviser and the Directors informed of developments which the
Sub-Adviser reasonably believes will materially affect the Fund's portfolio and
shall, on the Sub-Adviser's own initiative, furnish to the Fund from time to
time whatever information the Sub-Adviser believes appropriate for this purpose;
(e) make available to the Fund's administrator, PFPC Inc. (the
"Administrator"), the Adviser and the Company, promptly upon their request, such
copies of its investment records and ledgers with respect to the Fund as may
reasonably 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 periodically with the Adviser and the Directors, in person or
by teleconference, to explain its investment management activities, and any
reports related to the Fund as may reasonably be requested by the Adviser and/or
the Company;
(g) immediately notify the Adviser and the Fund to the extent required
by applicable law in the event that 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
Adviser 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 Fund and the Adviser immediately of any material fact known to the
Sub-Adviser respecting or relating to the Sub-Adviser that would make any
written information previously provided to the Adviser materially inaccurate or
incomplete or if any such written information 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, a
material loss of assets or accounts under management or the departure of senior
investment professionals to the extent such professionals are not replaced
promptly with professionals of comparable experience and quality;
(i) use no inside information that may be in its possession in making
investment decisions for the Fund, nor seek to obtain any such information; and
(j) use its best judgment and efforts in rendering the advice and
services contemplated by this Agreement.
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 may: (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 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 supply
the
Sub-Adviser with such other information as the Sub-Adviser shall reasonably
request concerning the Fund's investment policies, restrictions, limitations,
tax position, liquidity requirements and other information useful in managing
the Fund's investments.
5. Representations, Warranties and Covenants of the Company, Adviser and
Sub-Adviser. The Company represents and warrants to the Sub-Adviser that (i) the
retention of the Sub-Adviser as contemplated by this Agreement is authorized by
the respective governing documents of the Fund; (ii) the execution, delivery and
performance of this Agreement does not violate any obligation by which either
the Fund or its property is bound, whether arising by contract, operation of law
or otherwise; and (iii) this Agreement has been duly authorized by appropriate
action of the Fund and when executed and delivered by the Adviser, on behalf of
the Fund (and assuming due and execution and delivery by the Sub-Adviser), will
be the legal, valid and binding obligation of the Fund, enforceable against the
Fund in accordance with its terms, subject, as to enforcement, to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general equitable principles (regardless of whether enforcement is sought
in a proceeding in equity or law).
The Adviser represents and warrants to the Sub-Adviser that (i) the
execution, delivery and performance of this Agreement does not violate any
obligation by which it or its property is bound, whether arising by contract,
operation of law or otherwise; and (ii) this Agreement has been duly authorized
by appropriate action of the Adviser and when executed and delivered by the
Adviser (and assuming due and execution and delivery by the Sub-Adviser) will be
the legal, valid and binding obligation of the Advisor, enforceable against the
Adviser in accordance with its terms, subject, as to enforcement, to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general equitable principles (regardless of whether enforcement is sought
in a proceeding in equity or law).
The Sub-Adviser represents and warrants to the Adviser and the Fund
that (i) it is authorized to perform the services hereunder; (ii) the execution,
delivery and performance of this Agreement does not violate any obligation by
which the Sub-Adviser or its property is bound, whether arising by contract,
operation of law or otherwise; (iii) this Agreement has been duly authorized by
appropriate action of the Sub-Adviser and when executed and delivered by the
Sub-Adviser (and assuming due execution and delivery by the Adviser and the
Fund) will be the legal, valid and binding obligation of the Sub-Adviser,
enforceable against the Sub-Adviser in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or law); (iv) it is
registered as an investment adviser with the SEC, and (v) 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. In placing purchase and sale
orders for the Fund with brokers or dealers, the Sub-Adviser will attempt to
obtain "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 Fund, 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, 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 Fund's or the Sub-Adviser's overall responsibilities to
the Sub-Adviser's discretionary accounts (the "Section 28(e) Actions");
provided, however, that Sub-Adviser's ability to engage in Section 28(e) Actions
shall be subject to review by the Directors form time to time, and if such
Directors reasonably determine that the Fund does not benefit, directly or
indirectly, from such Section 28(e) Actions, the Sub-Adviser shall be prohibited
from engaging in the same.
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 Fund. 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, and so long as the Sub-Adviser complies with the "best execution"
practices described above.
7. Compensation.
The Company agrees to pay 65 basis points, calculated as set forth below,
to the Sub-Adviser for services specified in this Agreement, subject to
adjustment for the expense cap as set out below (the "Fee," ). The management
fee payable to the Adviser will be reduced by the amount of the Fee.
The Sub-Adviser Fee shall be computed and accrued daily and paid quarterly
in arrears based on the average daily net asset value of the Fund as determined
according to the manner provided in the then-current prospectus of the Fund.
As long as the expense cap of the Fund remains at its present level, the
Adviser and the Sub-Adviser will waive their fees from the Fund proportionately
to maintain this
expense cap; provided, that the minimum net Sub-Adviser fee (i.e., without
regard to expense cap waiver) payable hereunder shall be 30 basis points .
The Adviser shall provide to the Sub-Adviser, promptly following
request therefor, all information reasonably requested by the Sub-Adviser to
support the calculation of the Sub-Adviser Fee and shall permit the Sub-Adviser
or its agents, upon reasonable notice and at reasonable times and at
Sub-Adviser's cost to inspect the books and records of the Adviser pertaining to
such calculation.
8. Expenses
The Sub-Adviser will not be required to pay any expenses of the Fund
except as expressly set forth in this Section 7. The Sub-Adviser will pay the
cost of maintaining the staff and personnel necessary for it to perform its
obligations under this Agreement, the expenses of office rent, telephone,
telecommunications and other facilities it is obligated to provide in order to
perform the services specified in Section 1, and any other expenses incurred by
the Sub-Adviser in the performance of its duties hereunder.
9. Books and Records. The Sub-Adviser 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 to preserve such records
for the periods and in the manner required by that Section, and those rules. The
Sub-Adviser also agrees that records it maintains and preserves pursuant to
Rules 31a-1 and Rule 31a-2 under the 1940 Act with respect to the Fund are the
property of the Fund and will be surrendered promptly to the Company upon its
request, except that the Sub-Adviser may retain copies of such documents as may
be required by law. 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 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 Fund as provided to the Sub-Adviser in accordance with this
Agreement are adhered to, the Fund agrees that the Sub-Adviser may aggregate
sales and purchase orders of securities held in the Fund 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 Fund, taking into consideration the advantageous selling or purchase
price, brokerage commission and other expenses. The Fund acknowledges that the
determination of such economic benefit to the Fund by the Sub-Adviser represents
the Sub-Adviser's evaluation that the Fund may be 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 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.
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 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 Sub-Adviser against any liability to the Company, the Fund
and/or its 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 Fund, 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 the
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 "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 10 shall protect any
Indemnified Party against, or entitle any Indemnified Party to, indemnification
against any liability to the Company, the Fund 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.
12. Services Not Exclusive. The services of the Sub-Adviser are not
exclusive, and 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 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 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 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 Fund, the
Sub-Adviser shall act solely as investment counsel for such clients and not in
any way on behalf of the Company or the Fund.
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 Fund. 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
Fund, 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. Each of the Adviser, the Company and the Fund shall not make
any representations regarding the Sub-Adviser or any of its affiliates in any
disclosure document, advertisement, sales literature or other promotional
materials without prior written consent of the Sub-Adviser, which consent shall
not be unreasonably withheld. 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. The Sub-Adviser will be
provided with any Registration Statements containing references or information
with respect to the Sub-Adviser prior to the filing of same with any regulatory
authority and shall be afforded the opportunity to comment thereon.
14. Duration and Termination. This Agreement shall continue until December
24, 2005, 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 Sub-Adviser; (b) by the Adviser at any time
without penalty, upon sixty (60) days' written notice to the Sub-Adviser or (c)
by the Sub-Adviser at any time without penalty, upon sixty (60) 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 immediately upon written notification from the
Adviser or the Company if the Investment Management Agreement terminates with
respect to the Fund.
15. Amendments. This Agreement may be amended at any time, but only by the
mutual written agreement of the parties.
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 invested in by the Fund. 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 shall use its best good faith judgment
to vote such proxies in a manner which best serves the interests of the Fund's
shareholders.
17. Notices. Any written notice required by or pertaining to this Agreement
shall be personally delivered to the party for whom it is intended or shall be
sent to such party by prepaid first class mail or facsimile, at the address or
number stated below,.
If to the Company:
Forward Funds, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to the Sub-Adviser:
Pictet International Management Ltd.
Xxxxxxx Xxxxxxx
0 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxx Xxxxxxx
Facsimile: 000 00 (000) 0000-0000
If to the Adviser:
Forward Management, LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
18. Confidential Information. Any information supplied by the Company, the
Fund or the Adviser, which is not otherwise in the public domain, in connection
with the Fund or the Adviser is to be regarded as confidential and for use only
by the Sub-Adviser and/or its agents, and only in connection with the
Sub-Adviser's services under this Agreement. Any information supplied by the
Sub-Adviser, which is not otherwise in the
public domain, in connection with the performance of its duties hereunder is to
be regarded as confidential and for use only by the Fund and/or its agents, and
only in connection with the Fund and its investments. Any party in receipt of
confidential information shall use reasonable precautions (substantially
identical to those used in safeguarding of its own confidential information)
that its directors, officers, employees and advisors abide by these
confidentiality provisions.
19. Miscellaneous.
(a) Governing Law. 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) Delivery of Form ADV. 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) Captions. 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) Severability. 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.
(e) Agency Relationship. Nothing herein shall be construed as
constituting the Sub-Adviser as an agent of the Company or the Fund, except as
otherwise contemplated herein.
(f) Prior Agreement. This Agreement supersedes any prior agreement
relating to the subject matter hereof among the parties.
(g) Counterparts. This Agreement may be executed in counterparts and
by the different parties hereto on separate counterparts and by facsimile
signature, each of which when so executed and delivered, shall be deemed an
original and all of which counterparts shall constitute but one and the same
agreement.
(h) Limited Liability of the Company. The Sub-Adviser agrees that the
Company's obligations under this Agreement shall be limited to the Fund and its
assets, and that the Sub-Adviser shall not seek satisfaction of any such
obligation from the shareholders of the Fund nor from any director, officer,
employee or agent of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of [ ].
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FORWARD FUNDS, INC.
On behalf of its series Pictet Global
Emerging Markets Fund
By:
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Name: Xxxx Xxxx
Title: President
PICTET INTERNATIONAL
MANAGEMENT LTD.
By:
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Name: Xxxx Xxxxxx
Title: Head of Compliance
FORWARD MANAGEMENT, LLC,
By:
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Name: Xxxx XxXxxxx
Title: Chief Operating Officer
