99.B5(d)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 1st day of January, 1996, by and
between Nations Institutional Reserves, formerly known as The Capitol Mutual
Funds, a Massachusetts business trust (the "Trust"), consisting of Nations Cash
Reserves, Nations Treasury Reserves, Nations Government Reserves and Nations
Municipal Reserves; and NationsBanc Advisors, Inc., a North Carolina corporation
(the "Adviser"), on behalf of those portfolios of the Trust now or hereafter
identified on Schedule I hereto (each a "Fund" and, collectively, the "Funds").
RECITALS
WHEREAS, the Trust is registered with the Securities and Exchange
Commission ("Commission") under the Investment Company Act of 1940, as amended
(the "1940 Act") as an open-end, series management investment company; 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 Trust and the Adviser desire to enter into an
agreement to provide for investment advisory services to the Trust upon the
terms and conditions hereinafter set forth; and
WHEREAS, the Trust and the Adviser contemplate that certain duties
of the Adviser under this Agreement will be delegated to one or more
sub-investment adviser(s) (the "Sub-Adviser(s)") pursuant to separate
sub-advisory agreement(s) (the "Sub-Advisory Agreement(s)");
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Advisory Services. The Adviser shall act as investment adviser
for the Funds and shall, in such capacity, manage and supervise the investment
and reinvestment of the cash, securities or other properties comprising the
Funds' assets, subject at all times to the policies and control of the Trust's
Board of Trustees. The Adviser shall give the Funds the benefit of its best
judgment, efforts and facilities in rendering its services as investment
adviser.
2. Investment Analysis and Implementation. In carrying out its
obligations under paragraph 1 hereof, the Adviser shall:
(a) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial
data, domestic, foreign or otherwise, whether affecting the
economy generally or the Funds specifically, and
whether concerning the individual issuers whose securities are
included in the Funds or the activities in which such issuers
engage, or with respect to securities which the Adviser considers
desirable for inclusion in the Funds;
(b) invest and reinvest, on an ongoing basis, assets
held in the Funds in strict accordance with the investment
policies of the Funds as set forth in the registration statement
of the Trust with respect to the Funds, as the same may be amended
from time to time;
(c) in accordance with policies and procedures
established by the Trust's Board of Trustees, select brokers and
dealers to execute portfolio transactions for the Funds and select
the markets on or in which the transactions will be executed;
(d) vote, either in person or by general or limited
proxy, or refrain from voting, any securities held in the Funds
for any purposes; exercise or sell any subscription or conversion
rights; consent to and join in or oppose any voting trusts,
reorganizations, consolidations, mergers, foreclosures and
liquidations and in connection therewith, deposit securities, and
accept and hold other property received therefor;
(e) determine on an ongoing basis the overall
investment strategy with respect to the Funds, and ensure on an
ongoing basis adherence to such strategy;
(f) use the same skill and care in providing
services to the Funds as it uses in providing services to
fiduciary accounts for which it has investment responsibilities;
(g) furnish the Trust's Board of Trustees with such
periodic and special reports as the Board of Trustees may request;
and
(h) take, on behalf of the Funds, all actions which
appear necessary to carry into effect such purchase and sale
programs and supervisory functions set forth in this Paragraph 2.
3. Delegation of Responsibilities. Subject to the approval of the
Trust's Board of Trustees and, if required, the shareholders of the Funds, the
Adviser may, pursuant to the Sub-Advisory Agreement(s), delegate to the
Sub-Adviser(s) those of its duties hereunder identified in the Sub-Advisory
Agreement(s), provided that the Adviser shall continue to supervise and monitor
the performance of the duties delegated to the Sub-Adviser(s) and any such
delegation shall not relieve the Adviser of its duties and obligations under
this Agreement. The Adviser shall be solely responsible for compensating the
Sub-Adviser(s) for services rendered under the Sub-Advisory Agreement(s).
4. Control by Board of Trustees. Any investment activities
undertaken by the Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Adviser on
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behalf of the Funds, shall at all times be subject to any directives of the
Trust's Board of Trustees.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Adviser shall at all times conform to:
(a) all applicable provisions of the 1940 Act, the
Advisers Act and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of
the Trust, as the same may be amended from time to time;
(c) the provisions of the Declaration of Trust of
the Trust, as the same may be amended from time to time;
(d) the provisions of the By-Laws of the Trust, as
the same may be amended from time to time; and
(e) any other applicable provisions of state or
federal law.
In addition, any code of ethics adopted by the Adviser pursuant to
Rule 17j-1 under the 1940 Act shall include policies, prohibitions and
procedures which substantially conform to the recommendations regarding personal
investing approved by the Board of Governors of the Investment Company Institute
on June 30, 1994, as such recommendations may be amended from time to time.
6. Broker-Dealer Relationships. The Adviser is responsible for the
purchase and sale of securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Adviser's primary consideration
in effecting a security transaction will be to obtain the best price and
execution. In selecting a broker-dealer to execute each particular transaction
for a Fund, the Adviser will take the following into consideration: the best net
price available, the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the Fund on a continuing
basis. Accordingly, the price to the Fund in any transaction may be less
favorable than that available from another broker-dealer if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies as the Trust's Board of Trustees may from time
to time determine, the Adviser shall not be deemed to have acted unlawfully or
to have breached any duty created by this Agreement or otherwise solely by
reason of having caused a Fund to pay a broker or dealer that provides brokerage
and research services to the Adviser an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Adviser determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
overall responsibilities of the Adviser with respect to the Fund and to other
clients of the
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Adviser. The Adviser is further authorized to allocate the orders placed by it
on behalf of the Funds to brokers and dealers who also provide research or
statistical material, or other services to the Funds or to the Adviser. Such
allocation shall be in such amounts and proportions as the Adviser shall
determine and the Adviser will report on said allocations regularly to the Board
of Trustees of the Trust indicating the brokers to whom such allocations have
been made and the basis therefor.
7. Compensation. The Trust shall pay the Adviser as compensation
for services rendered hereunder fees, payable monthly, at the annual rates
indicated on Schedule I hereto, as such Schedule may be amended or supplemented
from time to time.
The average daily net asset value of the Funds shall be determined
in the manner set forth in the Trust's Declaration of Trust and registration
statement, as amended from time to time.
8. Expenses of the Funds. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Funds include, but are not limited to, brokerage
commissions, taxes, legal, auditing, or governmental fees, the cost of preparing
share certificates, custodian, transfer agent and shareholder service agent
costs, expenses of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to directors and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
9. Expense Limitation. If, for any fiscal year, the total of all
ordinary business expenses of a Fund, including all investment advisory fees,
but excluding brokerage commissions, fees, taxes, interest and extraordinary
expenses, such as litigation costs, would exceed the applicable expense
limitations imposed by state securities regulations in any state in which the
Funds' shares are qualified for sale, as such limitations may be raised or
lowered from time to time, the aggregate of all such investment advisory fees
shall be reduced by the amount of such excess. The amount of any such reduction
to be borne by the Adviser shall be deducted from the monthly investment
advisory fee otherwise payable to the Adviser during such fiscal year. If
required pursuant to such state securities regulations, the Adviser will, not
later than the last day of the first month of the next succeeding fiscal year,
reimburse the Fund for any such annual operating expenses (after reduction of
all investment advisory fees in excess of such limitation). For the purposes of
this paragraph, the term "fiscal year" shall exclude the portion of the current
fiscal year which shall have elapsed prior to the date hereof and shall include
the portion of the current fiscal year which shall have elapsed at the date of
termination of this Agreement.
10. Non-Exclusivity. The services of the Adviser to the Funds are
not to be deemed to be exclusive, and the Adviser shall be free to render
investment advisory and
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administrative or other services to others (including other investment
companies) and to engage in other activities. It is understood and agreed that
officers or directors of the Adviser may serve as officers and trustees of the
Trust, and that officers or trustees of the Trust may serve as officers or
directors of the Adviser, to the extent that such services may be permitted by
law, and that the officers and directors of the Adviser are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or from serving as partners, officers, directors or trustees of any
other firm or trust, including other investment advisory companies.
11. Records. The Adviser shall, with respect to orders the Adviser
places for the purchase and sale of portfolio securities of the Funds, maintain
or arrange for the maintenance of the documents and records required pursuant to
Rule 31a-1 under the 1940 Act as well as such records as the Funds'
administrator reasonably requests to be maintained, including, but not limited
to, trade tickets and confirmations for portfolio trades. All such records shall
be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1. All such records will be the property of the Funds and
will be available for inspection and use by the Funds. The Adviser will promptly
notify the Funds' administrator if it experiences any difficulty in maintaining
the records in an accurate and complete manner.
12. Term and Approval. This Agreement shall become effective with
respect to a Fund if and 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.
13. Termination. This Agreement may be terminated with respect to a
Fund at any time, without the payment of any penalty, by vote of the Trust's
Board of Trustees or by vote of a majority of a Fund's outstanding voting
securities, or by the Adviser, on sixty (60) days' written notice to the other
party. The notice provided for herein may be waived by the party entitled to
receipt thereof. This Agreement shall automatically terminate in the event of
its assignment, the term "assignment" for purposes of this paragraph having the
meaning defined in Section 2(a)(4) of the 1940 Act.
14. Liability of Adviser. In the absence of willful misfeasance, bad
faith, negligence or reckless disregard of obligations or duties hereunder on
the part of the Adviser or any of its officers, directors, employees or agents,
the Adviser shall not be subject to liability to the Trust or to any shareholder
of the Trust for any act or omission in the course of, or connected
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with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security.
15. Indemnification. In the absence of willful misfeasance, bad
faith, negligence or reckless disregard of duties hereunder on the part of the
Adviser or any of its officers, directors, employees or agents, the Trust hereby
agrees to indemnify and hold harmless the Adviser against all claims, actions,
suits or proceedings at law or in equity whether brought by a private party or a
governmental department, commission, board, bureau, agency or instrumentality of
any kind, arising from the advertising, solicitation, sale, purchase or pledge
of securities, whether of the Funds or other securities, undertaken by the
Funds, their officers, directors, employees or affiliates, resulting from any
violations of the securities laws, rules, regulations, statutes and codes,
whether federal or of any state, by the Funds, their officers, directors,
employees or affiliates. Federal and state securities laws impose liabilities
under certain circumstances on persons who act in good faith, and nothing herein
shall constitute a waiver or limitation of any rights which a Fund may have and
which may not be waived under any applicable federal and state securities laws.
16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
shall be c/o Stephens Inc., 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxx, Xxxxxxxx
00000 and that of the Adviser shall be Xxx XxxxxxxXxxx Xxxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000.
17. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act or the Advisers Act shall be
resolved by reference to such terms or provision of the 1940 Act or the Advisers
Act and to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules, regulations
or orders of the Commission issued pursuant to the 1940 Act or the Advisers Act.
In addition, where the effect of a requirement of the 1940 Act or the Advisers
Act reflected in any provision of this Agreement is revised by rule, regulation
or order of the Commission, such provision shall be deemed to incorporate the
effect of such rule, regulation or order.
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IN WITNESS WHEREOF, the parties hereto have cause this Agreement to
be executed in duplicate by their respective officers on the day and year first
written above.
NATIONS INSTITUTIONAL RESERVES
on behalf of the Funds
By: /s/ A. Xxx Xxxxxx
A. Xxx Xxxxxx
President
NATIONSBANC ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxxxxxx
President and Director
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SCHEDULE I
Fund Rate of Compensation
Nations Cash Reserves 0.30%
Nations Treasury Reserves 0.30%
Nations Government Reserves 0.30%
Nations Municipal Reserves 0.30%
