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EXHIBIT D
INVESTMENT ADVISORY AGREEMENT
This Investment Advisory Agreement is made as of this July 1, 1998
between TIME HORIZON FUNDS, a Delaware business trust (herein called the
"Company"), and Bank of America National Trust and Savings Association (herein
called the "Adviser").
WHEREAS, the Company is registered as an open-end management
investment company under the Investment Company Act of 1940 (the "1940 Act");
and
WHEREAS, the Company wishes to retain the Adviser under this
Agreement to render investment advisory and management services to the
portfolios of the Company known as Time Horizon 1, Time Horizon 2, Time Horizon
3 and Time Horizon 4 (the "Initial Fund(s)", together with any other Company
portfolios which may be established later and served by the Adviser hereunder,
being herein referred to collectively as the "Funds" and individually as a
"Fund"); and
WHEREAS, pursuant to a Distribution Agreement dated September 15,
1997 (the "Distribution Agreement") between the Company and Provident
Distributors, Inc. (the "Distributor"), the Company has retained the Distributor
to provide for the sale and distribution of shares of beneficial interest of
each Fund (herein collectively called "Shares"); and
WHEREAS, the Company desires to retain the Adviser to provide
investment advisory services for the Funds, and the Adviser is willing to render
such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:
1. Appointment of Adviser.
(A) The Company hereby appoints the Adviser as manager of each
Fund on the terms and for the period set forth in this Agreement and the Adviser
hereby accepts such appointment and agrees to perform the services and duties
set forth herein on the terms 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 provide such services to
the Trust 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
portfolios other than the Initial Funds with respect to which it desires to
retain the Adviser to render investment advisory and management services
hereunder, it shall notify the Adviser in writing. If the Adviser is willing to
render such services, it shall notify the Company in writing whereupon such
portfolio or portfolios shall become a Fund or Funds hereunder.
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2. Investment Services and Duties. Subject to the supervision of
the Company's Board of Trustees, the Adviser shall provide a continuous
investment program for the Funds, including investment research and management
with respect to all securities and investments and cash equivalents in the
Funds. The Adviser shall 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 shall provide the services under this Section 2 in
accordance with the Funds' investment objectives, policies and restrictions as
stated in the Funds' then current registration statement and resolutions of
the Company's Board of Trustees.
(A) The Adviser shall use the same skill and care in providing
services under this Section 3 as it uses in providing services to fiduciary
accounts for which it has investment responsibilities.
(B) The Adviser shall place all orders for the purchase and
sale of portfolio securities for the account of the 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 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) provided to the Fund and/or other accounts
over which the Adviser or any affiliate of the Adviser exercise investment
discretion. The Adviser is authorized, subject to the prior approval of the
Company's Board of Trustees, to 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 that Fund and to the Company. In
no instance may portfolio securities be purchased from or sold to the Adviser,
any sub-adviser, or an affiliated person of any of them acting as principal or
as broker, except as permitted by law. In executing portfolio transactions for
the Funds the Adviser may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to be sold
or purchased with those of other investment portfolios 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 shall allocate the
securities so purchased or sold, and the expenses incurred in the transaction,
in the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Funds and such other clients.
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(C) In performing the investment advisory services hereunder,
the Adviser is authorized to purchase, sell or otherwise deal with securities
or other instruments for which (i) the Adviser, (ii) any affiliate of the
Adviser, (iii) an entity in which the Adviser has a direct or indirect
interest, and (iv) another member of a syndicate or other intermediary (where
an entity referred to in (i), (ii) or (iii) 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.
(D) The Adviser shall maintain books and records with respect
to the securities transactions of the Fund, and furnish the Company's Board of
Trustees such periodic special reports as the Board may request.
(E) The Adviser shall maintain a policy and practice of
conducting its investment advisory operations independently of its affiliate's
commercial banking operations. When the Adviser makes investment
recommendations for a Fund, its investment advisory personnel shall 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 affiliate's
commercial department. In dealing with commercial customers, such affiliate's
commercial department shall not inquire or take into consideration whether
securities of those customers are held by the Funds except as required by law.
(F) The Adviser shall review, monitor and report to the
Board of Trustees regarding the performance and investment procedures of any
sub-adviser appointed by the Board of Trustees, and shall assist and consult
with any sub-adviser in connection with the Fund's continuous investment
program.
3. Compliance with Governing Instruments and Laws. In performing
its duties as Adviser for the Funds, the Adviser shall act in conformity with
the Company's Declaration of Trust, Bylaws, prospectuses and statements of
additional information, and the instructions and directions of the Board of
Trustees of the Company. In addition, the Adviser shall conform to and comply
with the requirements of the 1940 Act, the Rules and Regulations of the
Commission, and all other applicable federal or state laws and regulations.
4. Services Not Exclusive. The Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Board of Trustees from time to
time, have no authority to act for or represent the Company in any way or
otherwise be deemed its agent. The services furnished by the Adviser hereunder
are not deemed exclusive, and the Adviser shall be free to furnish similar
services to others so long as its services under this Agreement are not
impaired thereby.
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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 3la-2
under the 1940 Act the records required to be maintained by Rule 3la-1 under the
1940 Act.
6. Expenses Assumed as Adviser. Except as otherwise stated in this
Agreement, the Adviser shall pay all expenses incurred by it in performing its
services and duties hereunder as Adviser. The Company shall bear other expenses
incurred in the operation of the Funds, including without limitation taxes,
interest, brokerage fees and commissions, if any, fees of trustees who are not
officers, directors, partners, employees or holders of 5 percent or more of the
outstanding voting securities of the Adviser or any of its affiliates,
commission fees and state blue sky registration and qualification fees, charges
of custodians, transfer and dividend disbursing agents' fees, certain insurance
premiums, outside auditing and legal expenses, costs of maintaining trust
existence, costs of preparing and printing prospectuses or any supplements or
amendments thereto necessary for the continued effective registration of the
Shares under federal or state securities laws, costs of printing and
distributing any prospectus, supplement or amendment thereto for existing
shareholders of the Funds described therein, costs of shareholders' reports and
meetings, and any extraordinary expenses. It is understood that certain
advertising, marketing, shareholder servicing, administration and/or
distribution expenses to be incurred in connection with the Shares may be paid
by the Company as provided in any plan which may in the sole discretion of the
Company be adopted in accordance with Rule 12b-1 under the 1940 Act, and that
such expenses shall be paid apart from any fees paid under this Agreement.
7. Compensation. For the services provided and the expenses
assumed pursuant to this Agreement, the Company shall pay the Adviser a fee,
computed daily and payable monthly, at the annual rate of .40% of the average
net assets of each Fund. Such fee as is attributable to each Fund shall be a
separate (and not joint or joint and several) obligation of each such Fund.
8. Confidentiality. The Adviser shall treat confidentially and as
proprietary information of the Company all records and other information
relative to the Company and prior or present shareholders or those persons or
entities who respond to the Distributor's inquiries concerning investment in the
Company, and shall 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
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whether such advertisement or solicitation may coincidentally include prior
or present Company shareholders or those persons or entities who have responded
to inquiries with respect to the Funds.
9. Limitations of Liability. The Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Company
or by any Fund in connection with the matters to which this Agreement relates,
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 its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also an officer, director, employee or agent
of the Adviser, who may be or become an officer, director, employee or agent of
the Company, shall be deemed, when rendering services to the Company or to any
Fund, or acting on any business of the Company or of any Fund (other than
services or business in connection with the Adviser's duties as Adviser
hereunder or under any other agreement with the Company) to be rendering such
services to or acting solely for the Company or Fund and not as an officer,
director, employee or agent or one under the control or direction of the Adviser
even though paid by the Adviser.
The Adviser acknowledges and agrees that the Declaration of Trust of
the Company provides that the Trustees of the Company and the officers of the
Company executing this Agreement on behalf of the Company shall not be
personally bound hereby or liable hereunder, nor shall resort be had to their
private property or the private property of the shareholders of the Company for
the satisfaction of any claim or obligation under this Agreement.
10. Duration or Termination. This Agreement shall become effective
as of the date first written above and, unless sooner terminated as provided
herein, shall continue until October 31, 199_. Thereafter, this Agreement will
be extended with respect to a particular Fund for successive one-year periods
ending on October 31st of each year, provided each such extension is
specifically approved at least annually (a) by vote of a majority of those
members of the Company's Board of Trustees 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 Company's Board of Trustees or by vote
of a majority of the outstanding voting securities of such Fund. This Agreement
may be terminated by the Company at any time with respect to any Fund, without
the payment of any penalty, by vote of a majority of the entire Board of
Trustees of the Company or by a vote of a majority of the outstanding voting
securities of such Fund on 60 days' written notice to the Adviser, or by the
Adviser at any time, without the payment of penalty, on 60 days' written notice
to the Company. 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
meanings as such terms have in the 1940 Act.
11. Names. The name "Time Horizon Funds" refers to the trust
created and the trustees, as trustees but not individually or personally,
acting from time to time under a Declaration of Trust dated April 12, 1995, as
amended, which is hereby referred to and a copy of which is on file at the
principal office of the Company. The trustees, officers, employees and agents
of the Company shall
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not personally be bound by or liable under any written obligation, contract,
instrument, certificate or other interest or undertaking of the Company made by
the trustees or by an officer, employee or agent of the Company, in his or her
capacity as such, nor shall resort be had to their private property for the
satisfaction of any obligation or claim thereunder. All persons dealing with any
series or class of shares of the Company may enforce claims against the Company
only against the assets belonging to such series or class.
12. Notices. Notices of any kind to be given to the Company
hereunder by the Adviser shall be in writing and shall be duly given if mailed
or delivered to the Company at the following:
Time Horizon Funds
c/o PFPC Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxx X. Xxxxxxxx
With a copy to:
Xxxxx X. X'Xxxxx, Esq.
Vedder, Price, Xxxxxxx & Kammholz
000 X. XxXxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
or at such other address or to such individual as shall be so specified by the
Company to the Adviser. Notices of any kind to be given to the Adviser hereunder
by the Company shall be in writing and shall be duly given if mailed or
delivered to the Adviser at:
Bank of America National Trust
and Savings Association
Harbor Bldg., 25th Floor
333 So. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
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With a copy to:
Bank of America National Trust
and Savings Association
000 Xxxxxxxxxx Xx., 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxx Xxxxx, Esq.
or at such other address or to such individual as shall be so specified by the
Adviser to the Company.
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13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit 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 shall not be
affected thereby. Subject to the provisions of Section 12 hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by Delaware law (without
regard to principles of conflicts of law); provided, however, that nothing
herein shall be construed in a manner inconsistent with the 1940 Act or any rule
or regulation of the Commission thereunder.
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.
TIME HORIZON FUNDS
By:
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Xxx Xxxxxxxx
Treasurer
Attest:
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Xxxxx X. X'Xxxxx
Secretary
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
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(name) Xxxxx X. Xxxx
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(title) Executive Vice
President
------------------
Attest:
--------------------------
(name)
------------------
(title)
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