EX-99.B5(d)
SUB-ADVISORY AGREEMENT
NATIONS FUND PORTFOLIOS, INC.
THIS AGREEMENT is made this 1st day of January, 1996, by and
among NationsBanc Advisors, Inc., a North Carolina corporation (the
"Adviser"), Nations Gartmore Investment Management, a general
partnership organized under the laws of the State of Delaware (the
"Sub-Adviser"), and Nations Fund Portfolios, Inc. (the "Company"), on
behalf of the portfolios of the Company as now or hereafter may be
identified on Schedule I hereto (each a "Fund" and collectively, the
"Funds").
RECITALS
WHEREAS, the Company is a Maryland corporation registered under
the Investment Trust Act of 1940, as amended (the "1940 Act") as an
open-end, series management investment company; and
WHEREAS, the Adviser is a national bank that serves as investment
adviser to other registered investment companies and various investment
accounts; and
WHEREAS, the Sub-Adviser is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as an investment
adviser and engages in the business of acting as an investment adviser,
and is regulated by the Investment Management Regulatory Organization
Limited ("IMRO") of the United Kingdom in the conduct of its investment
business and is a member of IMRO; and
WHEREAS, the Adviser and the Company have entered into an
Investment Advisory Agreement of even date herewith (the "Investment
Advisory Agreement"), pursuant to which the Adviser shall act as
investment adviser with respect to the Funds; and
WHEREAS, pursuant such Investment Advisory Agreement, the
Adviser, with the approval of the Company, wishes to retain the
Sub-Adviser for purposes of rendering advisory services to the Adviser
and the Company 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 whereof
is hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Sub-Adviser. The Adviser hereby appoints,
and the Company hereby approves, the Sub-Adviser to render investment
research and advisory services to the Adviser and the Company with
respect to the Funds, under the supervision of the Adviser and subject
to the policies and control of the Company's Board of Directors, and the
Sub-Adviser hereby accepts such appointment, all subject to the terms
and conditions contained herein.
1
2. Investment Services. The specific duties of the Adviser
delegated to the Sub-Adviser shall be the following:
(a) obtaining and evaluating 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 or Sub-Adviser considers desirable for
inclusion in the Funds;
(b) investing and reinvesting, 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
Company 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 Board of Directors of the Company and the Adviser, selecting
brokers and dealers to execute portfolio transactions for the Funds
and selecting the markets on or in which the transactions will be
executed;
(d) voting, either in person or by general or limited proxy,
or refraining from voting, any securities held in the Funds for any
purposes; exercising or selling any subscription or conversion
rights; consenting to and joining in or opposing any voting trusts,
reorganizations, consolidations, mergers, foreclosures and
liquidations and in connection therewith, depositing securities, and
accepting and holding other property received therefor; and
(e) performing other acts necessary or appropriate in
connection with the proper management of the Funds, consistent with
its obligations hereunder, and as may be directed by the Adviser
and/or the Company's Board of Directors.
3. Control by Board of Directors. 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 Funds, shall at all times be subject to any
directives of the Board of Directors of the Company.
4. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times
conform to:
(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
2
(b) the provisions of the registration statement of the
Company applicable to the Funds, as the same may be amended from
time to time, under the Securities Act of 1933 and the 1940 Act;
(c) the provisions of the Articles of Incorporation of the
Company, as the same may be amended from time to time;
(d) the provisions of the By-Laws of the Company, as the
same may be amended from time to time;
(e) any other applicable provisions of state or federal law;
and
(f) the Conduct of Business Rules of IMRO ("IMRO Rules") to
the extent that the IMRO Rules are not inconsistent with any
applicable requirements under the 1940 Act, the Advisers Act or
other United States federal or state law.
In addition, any code of ethics adopted by the Sub-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 amended from time to time.
5. Compensation. The Adviser shall pay the Sub-Adviser, as
compensation for services rendered hereunder, fees, payable monthly, at
the annual rates indicated on Schedule I hereto, as such Schedule may be
supplemented and amended from time to time. 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 Company or the Fund with respect to compensation under this
Agreement.
The average daily net asset value of the Funds shall be
determined in the manner set forth in the Articles of Incorporation and
registration statement of the Company, as amended from time to time.
6. Expenses of the Funds. All of the ordinary business expenses
incurred by the Sub-Adviser 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,
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.
3
7. Expense Limitation. If, for any fiscal year a Fund, the
amount of the aggregate advisory fee which the Company would otherwise
be obligated to pay with respect to the Fund 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.
8. Non-Exclusivity. The services of the Sub-Adviser to the
Adviser and the Company with respect to the Fund are not to be deemed to
be exclusive, and the Sub-Adviser shall be free to render investment
advisory and administrative or other services to others (including other
investment companies) and to engage in other activities. It is
understood and agreed that the officers and directors of the Sub-Adviser
are not prohibited from engaging in any other business activity or from
rendering services to any the person, or from serving as partners,
officers, directors or trustees of any other firm or trust, including
other investment advisory companies.
9. Records. The Sub-Adviser shall provide to the Adviser, with
respect to the orders the Sub-Adviser places for the purchases and sales
of portfolio securities of the Funds, 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 Sub-Adviser will promptly notify
the Adviser and the Fund's administrator if it experiences any
difficulty in providing the records in an accurate and complete manner.
10. Term and Approval. This Agreement shall become effective
with respect to each Fund as of the date first set forth above and shall
thereafter continue in force and effect for two years, and may be
continued from year to year with respect to each Fund thereafter,
provided that the continuation of the Agreement is specifically approved
at least annually:
(a)(i) by the Company's Board of Directors or (ii) by the
vote of "a majority of the outstanding voting securities" of the
Fund (as defined in Section 2(a)(42) of the 0000 Xxx); and
(b) by the affirmative vote of a majority of the Directors
of the Company 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 Directors of the Company), by votes cast in person at
a meeting specifically called for such purpose.
11. Termination. This Agreement may be terminated at any
time with respect to a Fund, without the payment of any penalty, by vote
of the Company's Board of Directors or by vote of a majority of the
Fund's outstanding voting securities, or by the Adviser, or by the
Sub-Adviser on sixty (60) days' written notice to the other parties to
this Agreement. Any party entitled to notice may waive the notice
provided for herein. This Agreement shall automatically terminate in
the event of its assignment, the term "assignment" for purposes of this
paragraph
4
having the meaning defined in Section 2(a)(4) of the 1940 Act.
12. Liability of Sub-Adviser. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Sub-Adviser or any of
its officers, directors, employees or agents, the Sub-Adviser shall not
be subject to liability to the Adviser or to the Company for any act or
omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
13. Indemnification. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of duties hereunder on the
part of the Sub-Adviser, or any officers, directors, employees or agents
thereof, the Company hereby agrees to indemnify and hold harmless the
Sub-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, agents 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.
14. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to such address
as may be designated for the receipt of such notice, with a copy to the
Company. Until further notice, it is agreed that the address of the
Company shall be 000 Xxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000; that of
the Sub-Adviser shall be Xxx XxxxxxxXxxx Xxxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000; and that of the Adviser shall be Xxx XxxxxxxXxxx Xxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000.
15. 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 shall be
resolved by reference to such term or provision of the 1940 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 Securities and Exchange Commission issued
pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement
is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
16. IMRO Rules. Addendum A attached hereto sets forth certain
requirements under the IMRO Rules which are applicable to the
Sub-Adviser, that are expressly incorporated herein and made a part
hereof, but only to the extent that such requirements are not
inconsistent with any applicable requirements under the 1940 Act, the
Advisers Act or other United States federal or state law.
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in triplicate by their respective officers on the day and
year first written above.
NATIONS FUND PORTFOLIOS, INC.,
on behalf of the Funds
Attest:
By: /S/ A. Xxx Xxxxxx
Name:
A. Xxx Xxxxxx
President
NATIONSBANC ADVISORS, INC.
Attest:
By: /S/ Xxxx X. Xxxxxxxxxx
Name:
Xxxx X. Xxxxxxxxxx
President and Director
NATIONS GARTMORE INVESTMENT
MANAGEMENT
Attest:
By: /S/ Xxxxxxx X. Xxxxx XX
Name:
Xxxxxxx X. Xxxxx XX
President
6
SCHEDULE I
Fund Rate of Compensation
1. Nations Emerging Markets Fund 0.85% of average daily net assets
2. Nations Pacific Growth Fund 0.70% of average daily net assets
3. Nations Global Government Income 0.54% of average daily net assets
Fund
7
ADDENDUM A
1. To the extent that the Sub-Adviser receives any commissions or other
forms of remuneration, directly or indirectly, in connection with
Fund transactions, no portion of the Sub-Adviser's accrued investment
advisory fee shall be abated thereby.
2. Subject to the supervision of the Adviser and the policies and
ultimate control of the Company's Board of Directors, the Sub-Adviser
shall advise the Company and the Adviser on the management of the
Funds' investments in accordance with the terms of this Agreement and
in accordance with the investment parameters (including, inter alia,
percentage limitations, quality standards, investment selection
criteria and types of permissible investments and investment
techniques, such as borrowing, options and futures transactions,
portfolio securities lending, etc.) established pursuant to the
investment objectives, policies and restrictions specifically
embodied in the Company's Registration Statement on Form N-1A, and
any amendments thereto, under the Securities Act of 1933 and the 1940
Act (the "Fund's Registration Statement").
3. The Sub-Adviser shall not have or maintain custody of any securities,
cash or other assets of the Funds. Custody of the Funds' assets will
be maintained by the custodian bank pursuant to an agreement approved
by the Funds' Board of Directors. It is expected that such
custodian, or any successor thereto, will not be an "Associate" of
the Sub-Adviser as that term is defined under IMRO Rules.
4. In the event the Funds or the Adviser has a significant complaint
regarding the services provided by the Sub-Adviser under the
Sub-Advisory Agreement by and among the Company, the Adviser and the
Sub-Adviser, a Fund officer should communicate such complaint to the
Sub-Adviser, whereupon such complaint will be recorded on a standard
form prepared by the Sub-Adviser for such purposes. The
Sub-Adviser's complaints procedure requires that if a complaint has
not been cleared within twenty-one (21) days, the Sub-Adviser must so
advise IMRO and the Fund also must be advised that it has the right
to issue its complaint directly with a referee appointed by IMRO.
5. The Sub-Adviser will provide to the Funds' Board of Directors written
financial reports and analyses on the Funds' securities transactions
and the operations of comparable investment companies on a quarterly
basis or more frequently as requested by the Board of Directors.
Such reports and analyses shall include information as at the last
day of an applicable reporting period.
6. The Funds may from time to time request or instruct the Sub-Adviser,
directly or through the Adviser, to act or not to act regarding
certain Fund-related investment and/or operational matters. Such
request or instructions will be communicated orally or in writing to
the Sub-Adviser, directly or through the Adviser and will be
acknowledged in the same manner in which they are communicated. To
the extent that a particular request or instruction is, or may be,
refused (i.e., because it (a) is in contravention of (i) a law or
regulation, (ii) an investment policy of the Fund, or (iii) a
provision of this Agreement or (b) is not operationally feasible),
such refusal shall be communicated by the Sub-Adviser, including
through the Adviser, and the Fund
8
and the Sub-Adviser, upon advice of counsel, shall discuss
alternatives and determine an appropriate course of action which will
be reported to the full Board at the next meeting of the Fund's Board
of Directors for its approval.
7. Notwithstanding that all required disclosure concerning the risks
associated with the Funds' permissible investments and investment
techniques is included in the Funds' Registration Statement, which
Statement is intended for review by the investors in the Funds and to
be retained by them for future reference, with respect to the Funds'
specified use of options and futures transactions, the following
shall be specifically noted herein:
"Options and futures markets can be highly volatile and
transactions of this type carry a high risk of loss. Moreover, a
relatively small adverse market movement with respect to these
types of transactions may result not only in loss of the original
investment but also in unquantifiable further loss exceeding any
margin deposited."
Further, in managing the Funds' assets, the Sub-Adviser shall
consider the risks associated with the Fund's permissible investments
and investment techniques.
8. The Sub-Adviser or its representatives may from time to time
recommend to the Funds or effect on behalf of the Funds with respect
to Fund transactions in securities the subject of a recent new issue,
the price of which transactions may have been influenced by bids made
or transactions effected for the purpose of stabilizing the price of
those securities. Such transactions would at all times be effected
in accordance with the provisions of IMRO Rule 14 and, in particular,
with the conditions of the IMRO Rule 14.02, including the requirement
that the Sub-Adviser, with respect to any specific transaction,
communicate to the Fund orally or in writing a statement in a form
substantially similar to that which is set forth in IMRO Rule
14.02(c). In addition, with respect to these transactions, it is
understood when executing this Agreement and thereafter when
approving the continuance of this Agreement in accordance with its
terms, that management of the Fund has carefully read the following
paragraphs in order to enable Fund management to judge whether it
wishes a Fund's assets to be invested at all in such securities or,
if so, whether it wishes to authorize the Sub-Adviser generally to
effect transactions in such securities on behalf of the Fund without
further reference to Fund management or whether Fund management
wishes to be consulted before any particular transaction is effected
on behalf of the Fund.
Stabilization is a process whereby the market price of a security is
pegged or fixed during the period in which a new issue of securities
is sold to the public. Stabilization may take place in the new issue
or in other securities related to the new issue in such a way that
the price of the other securities may affect the price of the new
issue or vice versa.
The reason stabilization is permitted is that when a new issue is
brought to market the sudden glut will sometimes force the price
lower for a period of time before buyers are found for the securities
on offer. As long as it obeys a strict set of rules, the
"stabilizing manager," normally the issuing house chiefly responsible
for bringing a new issue to market, is entitled to buy securities in
the market that it has previously sold to investors or allotted to
institutions who were included in the new issue but who have decided
not to continue participating. The effect of this
9
may be to keep the price at a higher level than would otherwise be
the case during the period of stabilizing. The rules referred to
above in the immediately preceding paragraph limit the period in
which the stabilizing manager may stabilize, fix the price at which
it may stabilize (in the case of shares and warrants but not bonds),
and require the stabilizing manager to disclose that it may be (but
not that it is) stabilizing. The fact that a new issue or a related
security is being stabilized does not in itself mean that investors
are not interested in the issue, but neither should the existence of
transactions in an issue where the stabilizing may take place be
relied upon as an indication that investors are interested in the new
issue or interested in purchasing at the price at which transactions
are taking place.
9. A report containing the Funds' financial statements (including the
contents and valuation of the Funds) shall be submitted to
shareholders and to the Securities and Exchange Commission at least
semi-annually. Such reports shall include information as at the last
day of any semi-annual period for which such reports relate. To the
extent that any performance information is included in such report,
it shall conform to the standards set forth in the Funds'
Registration Statement.
10. Except as permitted by or pursuant to Section 17 of the 1940 Act and
the Rules promulgated thereunder, the Sub-Adviser, or an "affiliate"
thereof (as that term is defined in the 1940 Act), may not effect
transactions: (i) with or for the Funds in which the Sub-Adviser or
such affiliate has directly or indirectly a material interest or a
relationship of any kind with another party which may involve a
conflict with the Sub-Adviser's responsibilities to the Funds as a
sub-investment adviser; or (ii) with or through the agency or
another person with whom the Sub-Adviser or such affiliate maintains
an arrangement as described in Rule 6.01 of Chapter IV of the IMRO
Rules.
11. Upon termination of the Sub-Advisory Agreement by and among the
Company, the Adviser and the Sub-Adviser, unless otherwise directed
by the Fund's Board of Directors, all securities positions and other
portfolio transactions then in progress shall be transferred to the
successor investment adviser selected by the Board of Directors.
12. The Sub-Adviser shall be entitled at its discretion to disclose any
information known to it relating to the Fund's business or affairs
to the Securities and Investment Board or to IMRO on the terms that
the information so disclosed shall not without its consent be
further disclosed otherwise than is permitted in respect of
Restricted Information under the provisions of Part VIII of the
Financial Services Act of 1986.
10
