INTERIM INVESTMENT SUB-ADVISORY AGREEMENT
NATIONS RESERVES
THIS AGREEMENT is made as of April 30, 2000, by and between BANC OF
AMERICA ADVISORS, INC. (formerly NationsBanc Advisors, Inc.), a North Carolina
corporation (the "Adviser"), CHICAGO EQUITY PARTNERS, LLC, a Delaware
corporation (the "Sub-Adviser"), and NATIONS RESERVES (formerly Nations
Institutional Reserves), a Massachusetts business trust (the "Trust"), on behalf
of those series of the Trust now or hereafter identified on Schedule I (each a
"Fund" and collectively, the "Funds").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission ("Commission") under the Investment Company Act of 1940, as amended
("1940 Act") as an open-end, management investment company;
WHEREAS, the Adviser is registered with the Commission under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") and engages in
the business of acting as an investment adviser;
WHEREAS, the Sub-Adviser is also registered with the Commission under
the Advisers Act as an investment adviser and engages in the business of acting
as an investment adviser;
WHEREAS, the Adviser and the Trust have entered into an Investment
Advisory Agreement (the "Investment Advisory Agreement"), pursuant to which the
Adviser acts as investment adviser with respect to the Funds; and
WHEREAS, pursuant to such Investment Advisory Agreement, the Adviser,
with the approval of the Trust, wishes to retain the Sub-Adviser for purposes of
rendering advisory services to the Adviser and the Trust in connection with the
Funds upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed between the parties hereto as follows:
1. Appointment of Sub-Adviser. The Adviser hereby appoints the
Sub-Adviser to act as investment sub-adviser or co-investment sub-adviser with
respect to the Funds, under the supervision of the Adviser and subject to the
policies and control of the Trust's Board of Trustees, and the Sub-Adviser
hereby accepts such appointment, all subject to the terms and conditions
contained herein.
2. Services of Sub-Adviser. Subject to the oversight and supervision of
the Adviser and the Trust's Board of Trustees, the Sub-Adviser will provide a
continuous investment program for the Funds, including investment research and
management with respect to all equity securities and investments; provided,
however, that with respect to Nations Asset Allocation
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Fund, the Sub-Adviser will manage such Fund's equity investments, as a
percentage of such Fund as may be determined from time-to-time by Banc of
America Capital Management, Inc. (formerly TradeStreet Investment Associates,
Inc.). Pursuant to the foregoing, the Sub-Adviser will determine from time to
time what securities and other investments will be purchased, retained or sold
by the Funds. The Sub-Adviser will provide the services rendered by it under
this Agreement in accordance with the investment criteria and policies
established from time to time for the Funds by the Adviser, the Funds'
investment objectives, strategies and restrictions as stated in the Funds'
prospectuses and statement of additional information, the operating policies and
procedures of the Funds, and resolutions of the Trust's Board of Trustees.
The Sub-Adviser further agrees that it will:
(a) Provide information to the Funds' accountant for the
purpose of updating the Funds' cash availability
throughout the day as required;
(b) Maintain historical tax lots for each portfolio security
held by the Funds;
(c) Transmit trades to the Trust's custodian for proper
settlement in accordance with the Trust's procedures and
as may be directed by the Trust or the Adviser;
(d) Maintain all books and records with respect to the Funds
that are required to be maintained under Rule 31a-l(f)
under the 1940 Act;
(e) Supply the Adviser, the Trust and the Trust's Board of
Trustees with reports, statistical data and economic
information as requested; and
(f) Prepare a quarterly broker security transaction summary
and, if requested in advance, monthly security
transaction listing for the Funds.
3. Control by Board of Trustees. As is the case with respect to the
Adviser under the Investment Advisory Agreement, any investment activities
undertaken by the Sub-Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Sub-Adviser with respect to the Trust, shall at all
times be subject to any directives of the Board of Trustees of the Trust.
4. Other Covenants. In carrying out its obligations under this
Agreement, the Sub-Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of
the Commission and will in addition conduct its
activities under this Agreement in accordance with other
applicable law, including but not limited to the 1940
Act and the Advisers Act;
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(b) will use the same skill and care in providing such
services as it uses in providing services to fiduciary
accounts for which it has investment responsibilities;
(c) will not make loans to any person to purchase or carry
Fund shares;
(d) will place orders pursuant to its investment
determinations for the Funds either directly with the
issuer or with any broker or dealer. Subject to the
other provisions of this paragraph, in executing
portfolio transactions and selecting brokers or dealers,
the Sub-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 Sub-Adviser shall consider all factors
that 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/dealer to execute a particular transaction, the
Sub-Adviser may also consider any brokerage and research
services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934, as amended)
provided to the Fund and/or other accounts over which
the Sub-Adviser or an affiliate of the Sub-Adviser
exercises investment discretion. The Sub-Adviser is
authorized, subject to prior approval of the Trust'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
Sub-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 Sub-Adviser to its clients, including the
particular Fund and to the Trust. In addition, the
Sub-Adviser is authorized to take into account the sale
of shares of the Trust in allocating purchase and sale
orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with
the Sub-Adviser or the Trust's principal underwriter),
provided that the Sub-Adviser believes that the quality
of the transaction and the commission are comparable to
what they would be with other qualified firms. In no
instance, however, will portfolio securities be
purchased from or sold to the Adviser, Sub-Adviser or
the Trust's principal underwriter for the Funds or an
affiliated person of either acting as principal or
broker, except as permitted by the Commission or
applicable law;
(e) will adhere to the policies and procedures of the Trust
adopted on behalf of the Funds;
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(f) will maintain a policy and practice of conducting its
investment advisory services hereunder independently of
the commercial banking operations of its affiliates. In
making investment recommendations for a Fund, its
investment advisory personnel will not inquire or take
into consideration whether the issuer (or related
supporting institution) of securities proposed for
purchase or sale for the Fund's account are customers of
the commercial departments of its affiliates;
(g) will use reasonable efforts to perform its duties and
obligations under this Agreement without: (a) any
failure of its computer systems, or those used by it in
the performance of its duties hereunder, properly to
record, store, process, calculate or present calendar
dates falling on and after, and time spans including,
September 9, 1999, January 1, 2000 or February 29, 2000
(the "Subject Dates") as a result of the occurrence, or
use of data containing any such Subject Dates; (b) any
failure of its computer systems, or those used by it in
the performance of its duties hereunder, to calculate
any information dependent on or relating to dates on or
after the Subject Dates; or (c) any loss of
functionality or performance with respect to the
maintenance of records or processing of data containing
dates falling on or after the Subject Dates ((a), (b),
and (c) above shall be referred to as "Y2K Failures").
Notwithstanding the above, the Sub-Adviser shall not be
liable for any Y2K Failures caused by Y2K Failures in a
third party system with which the Sub-Adviser interfaces
or from which the Sub-Adviser receives data in
connection with the performance of its duties hereunder;
and
(h) will treat confidentially and as proprietary information
of the Trust all records and other information relative
to the Trust and prior, present or potential
shareholders, and will not use such records and
information for any purpose other than performance of
its responsibilities and duties hereunder (except after
prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld
and may not be withheld and will be deemed granted where
the Sub-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
Trust).
5. Services Not Exclusive. The services furnished by the Sub-Adviser
hereunder are deemed not to be exclusive, and the Sub-Adviser shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. To the extent that the purchase or sale of securities
or other investments of the same issuer may be deemed by the Sub-Adviser to be
suitable for two more accounts managed by the Sub-Adviser, the available
securities or investments may be allocated in a manner believed by the
Sub-Adviser to be equitable to each account. It is recognized that in some cases
this procedure may adversely affect the price paid or received by a Fund or the
size of the position obtainable for or disposed of by a Fund.
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6. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for each Fund are the property of the Trust and further agrees to
surrender promptly to the Adviser or the Trust any of such records upon request.
The Sub-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 31a-1
under the 1940 Act.
7. Expenses. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased or sold for the Funds.
8. Compensation. Except as provided in Section 9 of this agreement, for
the services provided to each Fund and the expenses assumed pursuant to this
Agreement, the Adviser will pay the Sub-Adviser and the Sub-Adviser will accept
as full compensation therefor, a fee for that Fund determined in accordance with
Schedule I attached hereto. The Adviser and the Sub-Adviser may, from time to
time, agree to reduce, limit or waive the amounts payable hereunder with respect
to one or more Funds for such period or periods they deem advisable. It is
understood that the Adviser shall be responsible for the Sub-Adviser's fee for
its services hereunder, and the Sub-Adviser agrees that it shall have no claim
against the Trust or the Fund with respect to compensation under this Agreement.
9. Escrow of Fees. During the period of time commencing on the
effective date of the Agreement, and continuing until the earlier of: (a) such
time as an investment sub-advisory agreement among the Adviser, Chicago Equity
Partners Corporation, and Nations Reserves is approved by a majority of the
outstanding voting securities of the Fund (the "New Investment Sub-Advisory
Agreement"); or (b) the 150th day following the termination of the investment
sub-advisory agreement dated May 21, 1999 among NationsBanc Advisors, Inc.,
Chicago Equity Partners Corporation and Nations Institutional Reserves (the
"Prior Investment Sub-Advisory Agreement"), the fees payable to the Sub-Adviser
under the Agreement shall be paid into an interest-bearing escrow account (the
"Account") which shall be maintained by an escrow agent. Such escrow agent shall
be the custodian to the Funds or another bank that shall not be an affiliated
party (as defined in the 0000 Xxx) of any of the parties hereto. All amounts
paid into the Account (including interest earned on such moneys) may be paid to
the Sub-Adviser only upon the approval, by a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act), of the New Investment
Sub-Advisory Agreement. In the event that the shareholders of the Fund fail to
approve the New Investment Sub-Advisory Agreement prior to the earlier of the
date specified in subpart (b) above, all moneys in the Account shall be paid to
the Fund less any amounts to be paid to the Sub-Advisor which shall be the
lesser of: (1) any costs incurred in performing the Agreement (plus interest
earned on such amount); or (2) the total amount of moneys in the Account (plus
interest earned). All parties hereto expressly acknowledge that the escrow agent
may release the moneys in the Account only upon receipt of a certificate from an
officer of the Trust (who shall not be an interested person of the Sub-Adviser
(as defined in the 0000 Xxx) stating that the moneys are to be delivered to the
Sub-Adviser and that the New Investment Sub-Advisory Agreement has been approved
by a majority of the
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outstanding voting securities of the Fund (as defined in the 0000 Xxx) or, in
the event that the shareholders of the Fund failed to approve the New Investment
Sub-Advisory Agreement prior to the earlier of the date specified in subpart (b)
above, that the moneys in the Account are to be delivered to the Fund.
10. Liability of Sub-Adviser. The Sub-Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Adviser
or the Trust 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 Sub-Adviser in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
11. Duration and Termination. This Agreement shall become effective
upon the termination date of the Prior Investment Sub-Advisory Agreement, and
shall continue in effect until the earlier of: (a) such time as the New
Investment Sub-Advisory Agreement is approved by a majority of the outstanding
voting securities of the Fund; or (b) the 150th day following the termination of
the Prior Investment Sub-Advisory Agreement.
Notwithstanding the foregoing, this Agreement may be terminated as to
any Fund at any time, without the payment of any penalty, by the Trust (by vote
of the Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the particular Fund) on not more than ten (10) calendar
days' written notice to the other parties to this Agreement, or by the
Sub-Adviser or Adviser on sixty (60) days' written notice to the other parties
to this Agreement. The notice provided for herein may be waived by the party
entitled to receipt thereof. 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.
12. 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 affecting a
Fund shall be effective until approved by vote of a majority of the outstanding
voting securities of such Fund. However, this shall not prevent the Sub-Adviser
from reducing, limiting or waiving its fee.
13. Release. The names "Nations Reserves" and "Trustees of Nations
Reserves" refer respectively 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 January 22, 1990, which is hereby referred to and a copy of which
is on file at the office of the Secretary of The Commonwealth of Massachusetts
and the principal office of the Trust. The obligations of "Nations Reserves"
entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, shareholders, or representatives of
the Trust personally, but bind only the Trust property, and all persons dealing
with any class of shares of the Trust must look solely to the property belonging
to such class for the enforcement of any claims against the Trust.
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14. 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. 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.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
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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.
NATIONS RESERVES
on behalf of the Funds
By: /s/ A. Xxx Xxxxxx
-------------------------------
A. Xxx Xxxxxx
President and Chairman of
the Board of Trustees
BANC OF AMERICA ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
President
CHICAGO EQUITY PARTNERS LLC
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Xxxxx X. Xxxxxx
President
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SCHEDULE I
The Adviser shall pay the Sub-Adviser as, full compensation for
services provided and expenses assumed hereunder, a sub-advisory fee for each
Fund, computed daily and payable monthly at the annual rates listed below as a
percentage of the average daily net assets of the Fund under the Sub-Adviser's
management:
Rate of
Fund Compensation
---- ------------
Nations Asset Allocation Fund (equity portion) 0.25%
Approved: March 2, 2000
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