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Exhibit 5
MANAGEMENT AGREEMENT
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This Management Agreement is made as of this September 5,
1995 between TIME HORIZON FUNDS, a Delaware business trust (herein called the
"Company"), and Bank of America National Trust and Savings Association (herein
called the "Manager").
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 Manager under this
Agreement to render investment advisory and management services to the
portfolios of the Company known as Time Horizon 1, Time Horizon 2 and Time
Horizon 3 (the "Initial Fund(s)", together with any other Company portfolios
which may be established later and served by the Manager hereunder, being
herein referred to collectively as the "Funds" and individually as a "Fund");
and
WHEREAS, pursuant to a Distribution Agreement of even date
herewith (the "Distribution Agreement") between the Company and Concord
Financial Group, 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 Manager to provide
management and administrative services for the Funds, and the Manager 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 Manager.
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(A) The Company hereby appoints the
Manager as manager of each Fund on the terms and for the period set forth in
this Agreement and the Manager hereby accepts such appointment and agrees to
perform the services and duties set forth herein on the terms herein provided.
The Manager 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
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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 Manager.
(B) In the event that the Company
establishes one or more portfolios other than the Initial Fund(s) with respect
to which it desires to retain the Manager to render investment advisory and
management services hereunder, it shall notify the Manager in writing. If the
Manager 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.
2. ADMINISTRATIVE SERVICES AND DUTIES. Subject
to the supervision and control of the Company's Board of Trustees, the Manager
shall provide to the Company facilities, equipment, statistical and research
data, clerical, accounting and bookkeeping services, internal auditing and
legal services, and personnel to carry out all management services required for
operation of the business and affairs of the Funds other than those services to
be performed by the Distributor pursuant to the Distribution Agreement, those
services to be performed by PNC Bank, N.A., pursuant to the Company's Custody
Agreement, those services to be performed by BISYS Fund Services Ohio, Inc.
pursuant to the Company's Transfer Agency Agreement, those services to be
provided by BISYS Fund Services Ohio, Inc. pursuant to the Company's Fund
Accounting Agreement and those services normally performed by the Company's
counsel and auditors.
(A) The Manager's oversight responsibilities
shall include:
(1) Overseeing the performance of
PNC Bank, N.A. (the "Custodian") under the Custody Agreement with
respect to the Funds; and
(2) Overseeing the performance of
BISYS Fund Services Ohio, Inc. (the "Transfer Agent") under the
Transfer Agency Agreement with respect to the Funds.
(B) The Manager's other responsibilities shall
include without limitation the following services:
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(1) Providing a facility to
receive purchase and redemption orders for Shares via toll-free
telephone lines;
(2) Making available information
concerning each Fund to its shareholders; distributing written
communications to each Fund's shareholders such as periodic listings
of each Fund's securities, annual and semi-annual reports, and
prospectuses and supplements thereto; and handling shareholder
problems and calls relating to administrative matters; and
(3) Providing and supervising
the services of employees whose principal responsibility and function
shall be to preserve and strengthen each Fund's relationships with its
shareholders.
(C) The Manager shall assure that
persons are available to transmit redemption requests for Shares to the
Company's Transfer Agent as promptly as practicable.
(D) The Manager shall assure that
persons are available to transmit orders accepted for the purchase of Shares to
the Transfer Agent of the Company as promptly as practicable.
(E) The Manager shall participate in the
periodic updating of the Funds' prospectuses and statements of additional
information and shall accumulate information for and, subject to approval by
the Company's Treasurer and legal counsel, coordinate the preparation, filing,
printing and dissemination of reports to the Funds' shareholders and the
Securities and Exchange Commission (the "Commission"), including but not
limited to annual reports and semi-annual reports on Form N-SAR, notices
pursuant to Rule 24f-2 and proxy materials pertaining to the Funds.
(F) The Manager shall calculate
dividends and capital gain distributions to be paid by each Fund in conformity
with subchapter M of the Internal Revenue Code of 1986, as amended.
(G) The Manager shall pay all costs and
expenses of maintaining the offices of the Company, wherever located, and shall
arrange for payment by the Company of all expenses payable by the Company.
(H) The Manager, after consultation
with legal counsel for the Company, shall determine the
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jurisdictions in which the Shares shall be registered or qualified for sale
and, in connection therewith, shall be responsible for the maintenance of the
registration or qualification of the Shares for sale under the securities laws
of any state. Payment of Share registration fees and any fees for qualifying
or continuing the qualification of the Company shall be made by the Company.
(I) The Manager shall maintain such
other books and records with respect to the Funds as may be required by law or
may be required for the proper operation of the business and affairs of the
Funds, other than those required to be maintained under the Fund Accounting
Agreement and by the Manager under Section 3 of this Agreement. Without
limiting the foregoing, the Manager shall be responsible for the proper
maintenance of the records to be maintained by it, throughout the term of this
Agreement.
(J) The Manager shall prepare the Funds'
federal, state and local income tax returns.
(K) The Manager shall prepare and,
subject to approval of the Company's Treasurer, disseminate to the Company's
trustees each Fund's quarterly financial statements and schedules of
investments, and shall prepare such other reports relating to the business and
affairs of the Funds (not otherwise appropriately prepared by the Company's
counsel, auditors or other Company service providers) as the officers and
trustees of the Company may from time to time reasonably request in connection
with performance of their duties.
(L) The Manager shall assist the
Custodian, Transfer Agent, counsel and auditors as required to carry out the
business and operations of the Funds.
3. Investment Services and Duties. Subject to
the supervision of the Company's Board of Trustees, the Manager 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 Manager 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 Manager shall provide the services under this
Section 3 in accordance with the Funds' investment objectives, policies and
restrictions as stated in the
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Funds' then current registration statement and resolutions of the Company's
Board of Trustees.
(A) The Manager 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 Manager 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 Manager. In executing portfolio
transactions and selecting brokers or dealers, the Manager 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 Manager
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 Manager 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 Manager or any affiliate of the Manager
exercise investment discretion. The Manager 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 Manager 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
Manager to that Fund and to the Company. In no instance may portfolio
securities be purchased from or sold to the Manager, 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
Manager 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
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in the Company's registration statement. In such event, the Manager 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.
(C) In performing the investment
advisory services hereunder, the Manager is authorized to purchase, sell or
otherwise deal with securities or other instruments for which (i) the Manager,
(ii) any affiliate of the Manager, (iii) an entity in which the Manager 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 Manager, to the extent its actions
are authorized under this paragraph.
(D) The Manager 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 Manager shall maintain a policy
and practice of conducting its investment advisory operations independently of
its commercial banking operations. When the Manager 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 commercial
department. In dealing with commercial customers, the Manager'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 Manager 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
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sub-adviser in connection with the Fund's continuous investment program.
4. COMPLIANCE WITH GOVERNING INSTRUMENTS AND
LAWS. In performing its duties as Manager for the Funds, the Manager 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 Manager 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.
5. SERVICES NOT EXCLUSIVE. The Manager 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 Manager hereunder are not deemed exclusive, and the Manager shall be free
to furnish similar services to others so long as its services under this
Agreement are not impaired thereby.
6. BOOKS AND RECORDS. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Manager 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 Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
7. SUBCONTRACTORS. It is understood that the
Manager may from time to time employ or associate with itself such person or
persons as the Manager may believe to be particularly fitted to assist in the
performance of this Agreement; provided, however, that the compensation of such
person or persons shall be paid by the Manager and that the Manager shall be as
fully responsible to the Company for the acts and omissions of any
subcontractor as it is for its own acts and omissions. Without limiting the
generality of the foregoing, it is understood that the Manager and the Company
intend to enter into an agreement with the Fund Accountant under which said
institution will provide certain accounting, bookkeeping, pricing and dividend
and distribution
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calculation services with respect to the Funds at the expense of the Funds.
8. EXPENSES ASSUMED AS MANAGER. Except as
otherwise stated in this Agreement, the Manager shall pay all expenses incurred
by it in performing its services and duties hereunder as Manager including the
cost of any independent pricing service used in connection with the Funds
(other than the cost of securities purchased for the Company). 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
Manager 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.
9. COMPENSATION. For the services provided and
the expenses assumed pursuant to this Agreement, the Company shall pay the
Manager a fee, computed daily and payable monthly, at the annual rate of 0.60%
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. Notwithstanding anything to the contrary herein, if in any
fiscal year the aggregate expenses of any Fund (as defined under the securities
regulations of any state having jurisdiction over such Fund) exceed the expense
limitations of any such state, the Company may deduct from the fees to be paid
pursuant to this Agreement, or the Manager shall bear such excess, to the
extent required by state law. Such deduction or
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payment, if any, will be estimated and accrued daily and paid on a monthly
basis. The Company shall reduce the advisory fee to be paid to the Manager by
the amount of any advisory fees paid to other investment companies relating to
the Funds' investment in such investment companies' securities.
10. CONFIDENTIALITY. The Manager 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 Manager 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 Manager 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 with respect to the Funds.
11. LIMITATIONS OF LIABILITY. Subject to the
provisions of Section 7 hereof concerning the Manager's responsibility for the
acts and omissions of persons employed or associated with the Manager, the
Manager 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 Manager, 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
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Company or of any Fund (other than services or business in connection with the
Manager's duties as Manager 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 Manager even though paid by the Manager.
The Manager 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.
12. 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, 1996.
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 Manager, or by the Manager 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.
13. 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
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principal office of the Company. The trustees, officers, employees and agents
of the Company shall 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.
14. NOTICES. Notices of any kind to be given to
the Company hereunder by the Manager shall be in writing and shall be duly
given if mailed or delivered to the Company at the following:
BEFORE SEPTEMBER 5, 1995:
BISYS Fund Services Ohio, Inc.
0000 Xxxx Xxxxxx-Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: President
AFTER SEPTEMBER 5, 1995:
BISYS Fund Services Ohio, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
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 Manager. Notices of any kind to be given to the Manager
hereunder by the Company shall be in writing and shall be duly given if mailed
or delivered to the Manager at:
Bank of America National Trust and
Savings Association
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx XxXxxxx-Xxxxxx
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With a copy to:
Bank of America National Trust and Savings Association
000 Xxxxx Xxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
or at such other address or to such individual as shall be so specified by the
Manager to the Company.
15. 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
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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:/s/J. Xxxxx Xxxxx
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J. Xxxxx Xxxxx
President
Attest:/s/W. Xxxxxx Spurbuck
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(name) W. Eugene Spurbuck
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Secretary
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:/s/Xxxxx XxXxxxx-Xxxxxx
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(name) Xxxxx XxXxxxx-Xxxxxx
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(title) Senior Vice President
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Attest:/s/Xxxxxx X. Xxxxx
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(name) Xxxxxx X. Xxxxx
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(title) Vice President
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