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EXHIBIT e.2
SHAREHOLDER AND DISTRIBUTION SERVICES AGREEMENT
OF
TIME HORIZON FUNDS
This Shareholder and Distribution Services Agreement is made as of
___________ __, 1998 between TIME HORIZON FUNDS, a Delaware Business Trust
(herein called the "Company"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (herein called "Bank of America").
WHEREAS, the Company is an open-end, management investment company and
is so registered under the Investment Company Act of 1940; and
WHEREAS, the Company will offer and maintain the following investment
portfolios: Portfolio 1, 2, and 3 (each individually a "Portfolio" and
collectively the "Portfolios");
WHEREAS, the Company has approved a Shareholder Service Plan and a
Distribution Service Plan and desires to make payments to Bank of America
pursuant to the provisions of those plans; and
WHEREAS, Class B Shares of the Portfolios are sold subject to a
contingent deferred sales charge, which the Company desires to have paid to
Bank of America.
NOW, THEREFORE, in consideration of the promises and mutual covenants
set forth herein the parties hereto agree as follows:
1. Bank of America agrees to provide certain distribution
services as set forth in the Distribution Service Plan in connection with the
distribution of Class B shares ("Shares") of one or more of the Portfolios of
the Company. In return for such services, the Company will compensate Bank of
America for certain expenses incurred in connection with such distribution
services including (i) expenses incurred in connection with advertising and
marketing of Shares, including but not limited to, advertising or marketing via
radio, television, newspapers, magazines, telemarketing or direct mail
solicitations; (ii) expenses incurred in connection with preparing, printing
and distributing prospectuses for Shares (except those used for regulatory
purposes or distribution to existing shareholders of the Company; which is
considered a non-12b-1 expense); (iii) periodic payments made by Bank of
America to securities dealers, financial institutions or other industry
professionals such as investment advisers, accountants and estate planning
firms (collectively, "Service Organizations"), for assistance in connection
with the distribution (as the Securities and Exchange Commission construes such
term under Rule 12b-1) of the shares beneficially owned by persons ("Clients")
for whom the Service Organization is the dealer of record or holder of record
or with whom the Service Organization has a servicing relationship; and (iv)
expenses incurred in implementing and operating the Distribution Service Plan.
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2. Bank of America has agreed to provide certain shareholder
services as set forth in the Shareholder Service Plan to Service Organizations
and/or beneficial owners of Shares. In return for such services, the Company
will compensate Bank of America for certain expenses incurred in connection
with such shareholder services including but not limited to shareholder
servicing provided at facilities dedicated for Company use, provided that such
shareholder servicing is not duplicative of the servicing otherwise provided on
behalf of the Portfolios. In addition, the Company will pay Bank of America
for fees paid to Service Organizations (which may include Bank of America) for
the provision of support services to persons who are the beneficial owners of
Portfolio shares ("Clients"). Such services may include: (a) establishing and
maintaining accounts and records relating to Clients that invest in Portfolio
shares; (b) processing dividend and distribution payments from the Portfolios
on behalf of Clients; (c) providing information periodically to Clients
regarding their positions in Portfolio shares; (d) arranging for bank wires;
(e) responding to Client inquiries concerning their investments in Portfolio
shares; (f) providing the information to the Portfolios necessary for
accounting and subaccounting; (g) if required by law, forwarding shareholder
communications from the Portfolios (such as proxies, shareholder reports,
annual and semi-annual financial statements and dividend, distribution and tax
notices) to Clients; (h) assisting in processing exchange and redemption
requests from Clients; (i) assisting Clients in changing dividend options,
account designations and addresses; and (j) providing such other similar
services.
3. Bank of America shall receive and may retain any portion of
any contingent deferred sales load which is imposed on redemption of Shares, as
set forth in the prospectus, for the shares of the Portfolios.
4. Bank of America will act solely as agent for, upon the order
of, and for the account of, its Clients.
5. Bank of America will provide at its own expense such office
space and equipment, telephone facilities and personnel (which may be any part
of the space, equipment and facilities currently used in your business, or any
personnel employed by you) as may be reasonably necessary or beneficial in
order to provide such services.
6. For the purposes of this Agreement, neither Bank of America
nor any of its officers, employees or agents are authorized to make any
representations concerning the Company or the Portfolios except those contained
in the Company's then current prospectuses for such shares, copies of which
will be supplied by us to you, or in such supplemental literature or
advertising as may be authorized by us in writing.
7. For all purposes of this Agreement, Bank of America will be
deemed to be an independent contractor and will have no authority to act as
agent for the Company in any matter or in any respect. Bank of America and its
employees will, upon request, be available during normal business hours to
consult with the Company or its designees concerning the performance of Bank of
America's responsibilities under this Agreement.
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8. In consideration of the services and facilities provided by
Bank of America hereunder, the Company will pay to Bank of America and Bank of
America will accept as full payment therefore, a fee at the annual rate of 1.0%
of the average daily net asset value of a Portfolio's Shares, which fee will be
computed daily and payable monthly. For purposes of determining the fees
payable under this Section 7, the average daily net asset value of the Shares
will be computed in the manner specified in the Company's registration
statement (as the same is in effect from time to time) in connection with the
computation of the net asset value of the Portfolio's Shares for purposes of
purchases and redemptions. The fee rate stated above may be prospectively
increased or decreased by the Company, at any time upon notice to Bank of
America. Further, the Company may, in its discretion and without notice,
suspend or withdraw the sale of Shares of the Portfolios.
9. Bank of America acknowledges that it will provide to the
Company's Board of Trustees, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were made. In
connection with such reviews, Bank of America will furnish the Company or its
designees with such information as the Company or its designees may reasonably
request (including, without limitation, periodic certifications confirming the
provision to Clients of some or all of the services described herein), and will
otherwise cooperate with the Company and its designees (including, without
limitation, any auditors designated by the Company), in connection with the
preparation of reports to the Company's Board of Trustees concerning this
Agreement and the monies paid or payable by us pursuant hereto, as well as any
other reports or filings that may be required by law.
10. The Company may enter into other similar Shareholder and
Distribution Services Agreements with any other person or persons without the
consent of Bank of America.
11. Bank of America represents, warrants and agrees that (i) the
compensation payable to Bank of America hereunder and the receipt of such
compensation by Bank of America hereunder, together with any other compensation
Bank of America receives from Clients in connection with the investment of
their assets in shares of the Portfolios, is permissible under applicable law,
including without limitation the Employee Retirement Income Security Act of
1974, as amended, ("ERISA"), will be disclosed to Bank of America Clients, will
be authorized by Bank of America Clients and will not be excessive or
unreasonable; (ii) all authorizations (if any) required for Bank of America
lawful execution of this Agreement and Bank of America performance hereunder
have been obtained; and (iii) Bank of America is either registered as a
transfer agent or broker-dealer pursuant to the Securities Exchange Act of
1934, as amended, and any applicable state securities law, or is not required
to do so. Bank of America further agrees to abide by all applicable laws,
including without limitation, all applicable provisions of the Investment
Company Act of 1940, as amended, the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended and all applicable rules and
regulations thereunder.
12. This Agreement will become effective as of the date set forth
above. Unless sooner terminated, this Agreement will continue until October
31, 1998, and thereafter will continue
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automatically for successive annual periods, provided such continuance is
specifically approved at least annually by the Company in a manner described in
Section 15. This Agreement is terminable with respect to any Portfolio without
penalty, at any time by the Company (which termination may be by vote of a
majority of the Disinterested Trustees as defined in Section 14 or by vote of
the holders of a majority of the outstanding shares of the Portfolio), by the
Company or by Bank of America upon notice to the other party hereto. This
Agreement will terminate in the event of its assignment (as defined in the
Investment Company Act of 1940).
13. All notices and other communications to either Bank of America
or the Company will be effective upon receipt at such address provided by each
party for such purpose.
14. This Agreement shall be construed in accordance with the
internal laws of the State of Delaware without giving effect to principles of
conflict of laws.
15. This Agreement has been approved by vote of a majority of (i)
the Company's Board of Trustees and (ii) those Trustees who are not "interested
persons" (as defined in the Investment Company Act of 1940) and have no direct
or indirect financial interest in the operation of the Distribution Services
Plan regarding the provision of distribution services to the record or
beneficial owners of shares or in any agreements related thereto
("Disinterested Trustees") cast in person at a meeting called for the purpose
of voting on such approval.
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,
A DELAWARE BUSINESS TRUST
By:
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Its
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BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
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Its
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