SUB-ADVISORY AGREEMENT
NATIONS INSTITUTIONAL RESERVES
THIS AGREEMENT is made as of this 1st day of January, 1996, by and between
NATIONSBANC ADVISORS, INC., a North Carolina corporation (the "Adviser"),
TRADESTREET INVESTMENT ASSOCIATES, INC., a Maryland corporation (the
"Sub-Adviser"), and NATIONS INSTITUTIONAL RESERVES, a Massachusetts business
trust (the "Trust"), on behalf of those portfolios of the Trust now or hereafter
identified on Schedule I hereto (each a "Fund" and collectively, the "Funds").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission ("Commission") as an open-end, management investment company under
the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Adviser is registered with the Commission under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") as an
investment adviser; and
WHEREAS, the Sub-Adviser also is registered with the Commission under the
Advisers Act as an investment adviser; and
WHEREAS, the Adviser and the Trust have entered into an Investment
Advisory Agreement (the "Investment Advisory Agreement"), pursuant to which the
Adviser shall act 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,
it is agreed between the parties hereto as follows:
1. APPOINTMENT OF SUB-ADVISER. The Adviser hereby appoints, and the Trust
hereby approves, the Sub-Adviser to render investment research and advisory
services to the Adviser and the Trust 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. INVESTMENT SERVICES. Subject to the supervision of the Adviser and the
Trust's Board of Trustees, the Sub-Adviser will provide a continuous investment
program for each Fund, including investment research and management with respect
to all securities, investments, cash and cash equivalents in each Fund. The
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Funds and will place the
daily orders for the purchase or sale of securities. The Sub-Adviser will
provide the services rendered by it under this Agreement in accordance with each
-1-
Fund's investment objective, policies and restrictions as stated in the
Prospectus and votes of the Trust's Board of Trustees. The Sub-Adviser shall
provide such additional services related to the continuous investment program,
including recordkeeping services, as may reasonably be requested from time to
time by the Trust or Adviser.
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 carry 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;
(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 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 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 Fund and 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 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;
-2-
(e) 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. In dealing with commercial customers, such
commercial departments will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(f) 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).
6. 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.
7. 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.
8. 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. In addition, the Sub-Adviser acknowledges that
the Adviser has agreed, pursuant to the Investment Advisory Agreement, that, if
the aggregate expenses borne by any Fund in any fiscal year exceed the
applicable expense limitations imposed by the securities laws or regulations of
any state in which its shares are registered or qualified for sale to the
-3-
public, the Adviser together with the Fund's administrator(s) shall reimburse
such Fund for such excess in proportion to the fees otherwise payable to them
for such year. If , for any fiscal year of a Fund, the amount of the aggregate
advisory fee which the Trust would otherwise be obligated to pay is reduced
pursuant to expense limitation provisions of the Investment Advisory Agreement,
the fee which the Sub-Adviser would otherwise receive pursuant to this Agreement
shall be reduced proportionately.
9. COMPENSATION. 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.
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 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 gross 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 with
respect to a Fund when approved by the Trustees of the Trust, and if so
approved, this Agreement shall thereafter continue from year to year, provided
that the continuation of the Agreement is specifically approved at least
annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the
vote of "a majority of the outstanding voting securities" of a
Fund (as defined in Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trust's
Trustees who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of a party to this Agreement
(other than as Trustees of the Trust), by votes cast in person at
a meeting specifically called for such purpose.
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), 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.
-4-
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. CAPACITY. The names "Nations Institutional Reserves" and "Trustees of
Nations Institutional 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 Institutional 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.
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.
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 INSTITUTIONAL RESERVES
on behalf of the Funds
By: /s/ A. Xxx Xxxxxx
------------------------
A. Xxx Xxxxxx
President and Chairman of
the Board of Directors
NATIONSBANC ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
------------------------
Xxxx X. Xxxxxxxxxx
President and Director
-5-
TRADESTREET INVESTMENT
ASSOCIATES, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Xxxxxx X. Xxxxxx
President and Director
-6-
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:
Fund Rate of Compensation
---- --------------------
Nations Cash Reserves .033%
Nations Treasury Reserves .033%
Nations Municipal Reserves .033%
Nations Government Reserves .033%
Nations Money Market Reserves .033%
Nations California Tax Exempt Reserves .033%
Nations Capital Income Fund .250%
Nations California Municipal Bond Fund .070%
Nations Asset Allocation Fund (non-equity portion) .250%
Last Amended: May 21, 1999
IN WITNESS WHEREOF, the parties hereto have caused this amended Schedule I
to be executed by their officers designated below as of the 21st day of May,
1999.
NATIONS INSTITUTIONAL RESERVES
on behalf of the Funds
By: /s/ Xxxxx X. Xxxxx, Xx.
-----------------------
Xxxxx X. Xxxxx, Xx.
Assistant Secretary
NATIONSBANC ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------
Xxxxxx X. Xxxxxx
President
TRADESTREET INVESTMENT
ASSOCIATES, INC.
By: /s/ Xxxxx X. Xxxx
-----------------------
Xxxxx X. Xxxx
President and Director
-7-
