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Exhibit (d)(16)
PACIFIC HORIZON FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of __________________, 1998 between PACIFIC
HORIZON FUNDS, INC., a Maryland corporation (herein called the "Company"), and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Adviser").
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Company desires to retain the Adviser to furnish
investment advisory services to the investment portfolios of the Company listed
on Schedule A and any other investment portfolios which may be organized in the
future and listed on Schedule A (the "Funds") ;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) The Company hereby appoints the Adviser to act as
investment adviser to each Fund for the period and on the terms set forth in
this Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided. The Adviser may,
in its discretion, provide such services through its own employees or the
employees of one or more affiliated companies that are qualified to act as
investment adviser to the Company under applicable law and are under the common
control of BankAmerica Corporation provided (i) that all persons, when providing
services hereunder, are functioning as part of an organized group of persons,
and (ii) that such organized group of persons is managed at all times by
authorized officers of the Adviser.
(b) In the event that the Company establishes one or more
investment portfolios other than the Funds with respect to which it desires to
retain the Adviser to act as investment adviser hereunder, it shall notify the
Adviser in writing. If the Adviser is willing to render such services under this
Agreement it shall so notify the Company in writing whereupon such investment
portfolio shall become a "Fund" hereunder and shall be subject to the provisions
of this Agreement to the same extent as the Funds except to the extent that said
provisions (including those relating to the compensation payable by the Funds to
the Adviser) are modified with respect to such Fund in writing by the Company
and the Adviser at the time. The Funds and any additional
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investment portfolios established hereunder in accordance with this paragraph
are sometimes collectively referred to herein as the "Funds" and individually as
a "Fund."
2. SERVICES. Subject to the supervision of the Company's Board of
Directors (the "Board"), the Adviser, in consultation with any Sub-Adviser
appointed pursuant to Section 3 hereof with respect to a particular Fund, will
provide a continuous investment program for each of the Funds, including
investment research and management with respect to all securities and
investments and cash equivalents in the Funds. The Adviser will determine from
time to time what securities and other investments will be purchased, retained
or sold by the Company with respect to each Fund. The Adviser will provide the
services under this Agreement in accordance with each Fund's investment
objective, policies and restrictions as stated in the Company's registration
statement, as from time to time amended, and resolutions of the Board. The
Adviser further agrees that it:
(a) Will conform with all applicable rules and regulations of
the Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with other applicable law,
including but not limited to banking law.
(b) Will review, monitor and report to the Board of Directors
regarding the performance and investment procedures of any Sub-Adviser (as
defined in Section 3 of this Agreement).
(c) Will assist and consult with any Sub-Adviser appointed
with respect to a particular Fund in connection with that Fund's continuous
investment program (as defined in Section 3 of this Agreement).
(d) Will place all orders for the purchase and sale of
portfolio securities for the account of each Fund with brokers or dealers
selected by the Adviser. In executing portfolio transactions and selecting
brokers or dealers, the Adviser will use its best efforts to seek on behalf of
the Company and each Fund the best overall terms available. In assessing the
best overall terms available for any transaction the Adviser shall consider all
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. In evaluating the best
overall terms available, and in selecting the broker or dealer to execute a
particular transaction, the Adviser may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934, as amended) provided to any Fund and/or other accounts over which
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the Adviser or any affiliate of the Adviser exercises investment discretion. The
Adviser is authorized, subject to the prior approval of the Board, to negotiate
and pay to a broker or dealer who provides such brokerage and research services
a commission for executing a portfolio transaction for any Fund which is in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if, but only if, the Adviser determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer viewed in
terms of that particular transaction or in terms of the overall responsibilities
of the Adviser to the particular Fund and to the Company. No prior approval by
the Board, however, shall be required so long as the broker or dealer selected
by the Adviser obtains best price and execution on a particular transaction. In
no instance will portfolio securities be purchased from or sold to the Adviser,
any Sub-Adviser, any administrator, sub-administrator or distributor of the
Company, or an affiliated person of any of them acting as principal or as
broker, except as permitted by law. In executing portfolio transactions for any
Fund, the Adviser may, but shall not be obligated to, to the extent permitted by
applicable laws and regulations, aggregate the securities to be sold or
purchased with those of other Funds and its other clients where such aggregation
is not inconsistent with the policies set forth in the Company's registration
statement. In such event, the Adviser will allocate the securities so purchased
or sold, and the expenses incurred in the transaction, pursuant to any
applicable law or regulation and in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Funds and such
other clients.
In performing the investment advisory services hereunder, the Adviser
is authorized to purchase, sell or otherwise deal with securities or other
instruments for which (a) the Adviser, (b) any affiliate of the Adviser, (c) an
entity in which the Adviser or an affiliate of the Adviser has a direct or
indirect interest, or (d) another member of a syndicate or other intermediary
(where an entity referred to in (a), (b) or (c) above was a member of the
syndicate), has acted, now acts or in the future will act as an underwriter,
syndicate member, market-maker, dealer, broker or in any other similar capacity,
whether the purchase, sale or other dealing occurs during the life of the
syndicate or after the close of the syndicate, provided such purchase, sale or
dealing is permitted under the 1940 Act and the rules thereunder. Insofar as
permitted by law any rules of or under applicable law prohibiting or restricting
in any way an agent or fiduciary from dealing with itself or from dealing with
respect to any matter in which it may or does have a personal interest shall not
apply to the Adviser, to the extent its actions are authorized under this
paragraph.
(e) Will maintain all books and records with respect to the
securities transactions for the Funds, keep books of account
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with respect to such Funds and furnish the Board such periodic special reports
as the Board may request.
(f) Will maintain a policy and practice of conducting its
investment advisory operations independently of its commercial banking
operations. When the Adviser makes investment recommendations for a Fund, its
investment advisory personnel will not inquire or take into consideration
whether the issuer of securities proposed for purchase or sale for the Fund's
account are customers of its commercial department. In dealing with commercial
customers, the Adviser's commercial department will not inquire or take into
consideration whether securities of those customers are held by the Funds.
(g) Will treat confidentially and as proprietary information
of the Company all records and other information relative to the Company and
prior or present Company shareholders or those persons or entities who respond
to inquiries concerning investment in the Company, and will not use such records
and information for any purpose other than performance of its responsibilities
and duties hereunder or under any other agreement with the Company except after
prior notification to and approval in writing by the Company, which approval
shall not be unreasonably withheld and may not be withheld where the Adviser may
be exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or when
so requested by the Company. Nothing contained herein, however, shall prohibit
the Adviser from advertising to or soliciting the public generally with respect
to other products or services, including, but not limited to, any advertising or
marketing via radio, television, newspapers, magazines or direct mail
solicitation, regardless of whether such advertisement or solicitation may
coincidentally include prior or present Company shareholders or those persons or
entities who have responded to inquiries regarding the Company.
3. SUB-ADVISER. It is understood that the Adviser may from time to time
employ or associate with itself such person or persons as the Adviser believes
to be fitted to assist it in the performance of this Agreement (each a
"Sub-Adviser"); provided, however, that the compensation of such person or
persons shall be paid by the Adviser and that the Adviser shall be as fully
responsible to the Company for the acts and omissions of any such person as it
is for its own acts and omissions; and provided further, that the retention of
any Sub-Adviser shall be approved as may be required by the 1940 Act.
Notwithstanding any such employment or association with respect to the
International Equity Fund, the Adviser shall itself (a) establish and monitor
general investment criteria and policies for the Fund involved, (b) review and
analyze on a periodic basis such Fund's portfolio holdings and transactions in
order to determine their appropriateness in light
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of the Fund's shareholder base, and (c) review and analyze on a periodic basis
the policies established by any Sub-Adviser for such Fund with respect to the
placement of orders for the purchase and sale of portfolio securities. In the
event that any Sub-Adviser appointed hereunder is terminated, the Adviser may
provide investment advisory services pursuant to this Agreement to the Funds
without further shareholder approval.
4. SERVICES NOT EXCLUSIVE. The Adviser will for all purposes herein be
deemed to be an independent contractor and will, unless otherwise expressly
provided herein or authorized by the Board from time to time, have no authority
to act for or represent the Company in any way or otherwise be deemed its agent.
The investment management services furnished by the Adviser hereunder are not
deemed exclusive, and the Adviser will be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for the Company are the property of the Company and further agrees to
surrender promptly to the Company any such records upon the Company's request.
The Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31-1 under the
1940 Act.
6. EXPENSES. During the term of this Agreement, the Adviser will pay
all expenses incurred by it in connection with its activities under the
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the Company.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Company will pay the Adviser and the Adviser
will accept as full compensation therefor a fee, computed daily and paid monthly
(in arrears) for the Funds and at the annual rates set forth on Schedule B. Such
fee as is attributable to a Fund will be a separate charge to each such Fund and
will be the several (and not joint or joint and several) obligation of each such
Fund.
8. LIMITATION OF LIABILITY. Subject to the provisions of Section 3
hereof concerning the Adviser's responsibility for the acts and omissions of
persons employed by or associated with the Adviser, the Adviser will not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Company in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or negligence on the part of the
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Adviser in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective with
respect to each Fund as of the date first above written, provided that the
shareholders of each such Fund have previously approved the Agreement in
accordance with the requirements of the 1940 Act. This Agreement will become
effective with respect to any additional Fund on the date of receipt by the
Company of notice from the Adviser in accordance with Section 1(b) hereof that
the Adviser is willing to serve as investment adviser with respect to such Fund,
provided that this Agreement (as supplemented by the terms specified in any
notice and agreement pursuant to Section 1(b) hereof) shall have been approved
by the shareholders of such Fund in accordance with the requirements of the 1940
Act.
Unless sooner terminated as provided herein, this Agreement will
continue in effect until October 31, 1999. Thereafter, if not terminated, this
Agreement shall continue in effect as to a particular Fund for successive annual
periods, provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Board who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Board or by
vote of a majority of the outstanding voting securities of such Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to any Fund
at any time, without the payment of any penalty, by the Company (by vote of the
Board or by vote of a majority of the outstanding voting securities of such
Fund), or by the Adviser, on sixty days' written notice. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning as the meaning
of such terms in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement will be
effective as to a particular Fund until approved by vote of a majority of the
outstanding voting securities of such Fund.
11. NOTICES. Notices of any kind to be given to the Adviser hereunder
by the Company will be in writing and will be duly given if mailed or delivered
to the Adviser at ______________________, or at such other address or to such
individuals as will be so specified by the Adviser to the Company. Notices of
any kind to be
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given to the Company hereunder by the Adviser will be in writing and will be
duly given if mailed or delivered to the Company at 000 Xxxxxxxx Xxxxxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxxx 00000 (with a copy to Association of American
Universities, 0000 Xxx Xxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000,
Attention: Xx. Xxxxxxxxx J. Pings), or at such other address or to such
individual as will be so specified by the Company to the Adviser.
12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. 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 will not be affected
thereby. This Agreement will be binding upon and will inure to the benefit of
the parties hereto and their respective successors and will be governed by the
internal laws, and not the law of conflicts, of the State of Maryland; provided
that nothing herein will be construed in a manner inconsistent with the 1940
Act, the Investment Advisers Act of 1940, as amended, or any rule or regulation
of the Securities and Exchange Commission thereunder. This Agreement may be
executed in two or more parts which together shall constitute a single
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
PACIFIC HORIZON FUNDS, INC.
By:
--------------------------
Name:
Title:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
--------------------------
Name:
Title:
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Schedule A
FUNDS
Prime
Treasury
Treasury Only
Government
Tax-Exempt Money
California Tax-Exempt Money Market
Aggressive Growth
U.S. Government Securities
Capital Income
California Tax-Exempt Bond
Asset Allocation
National Municipal Bond
International Equity
Short-Term Government
Corporate Bond Funds
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Schedule B
FUND FEE AS A PERCENTAGE
OF EACH FUND'S NET ASSETS
Prime, Treasury, Treasury Only, .10% of the first $3 billion;
Government, Tax-Exempt Money .09% of the next $2 billion;
and California Tax-Exempt plus .08% of the amount over $5
Money Market Funds billion
Short-Term Government .25%
California Tax-Exempt Bond .30%
U.S. Government Securities Fund .35%
National Municipal Bond .35%
Asset Allocation .40%
Capital Income Fund .45%
Corporate Bond Fund .45%
Aggressive Growth .60%
International Equity Fund .75%
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