CENTURA FUNDS, INC.
on behalf of
CENTURA CORPORATE BOND FUND
SUB-ADVISORY AGREEMENT
AGREEMENT, effective commencing on , 1999 between Centura Bank ("Adviser")
and Sovereign Advisers ("Sub-Adviser") on behalf of Centura Corporate Bond Fund
("Fund"), a series of Centura Funds, Inc. ("Company").
WHEREAS, the Company is a Maryland corporation of the series type
organized under Articles of Incorporation dated March 1, 1994, ("Articles") and
is registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end, diversified management investment company, and the Fund
is a new series of the Company;
WHEREAS, the Adviser wishes to retain the Sub-Adviser to render
sub-investment advisory services to the Fund, and the Sub-Adviser is willing to
furnish such services to the Fund;
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Adviser and the Sub-Adviser as
follows:
1. Appointment. The Adviser hereby appoints the Sub-Adviser to act as
sub-investment adviser to the Fund for the periods and on the terms set forth in
this Agreement. The Sub-Adviser accepts such appointment and agrees to furnish
the services herein set forth, for the compensation herein provided.
2. Sub-Investment Advisory Duties. Subject to the supervision of the Adviser,
the Sub-Adviser will (a) provide a program of continuous investment management
for the Fund in accordance with the Fund's investment objectives, policies and
limitations as stated in the Fund's prospectus and Statement of Additional
Information included as part of the Company's Registration Statement filed with
the Securities and Exchange Commission, as they may be amended from time to
time, copies of which shall be provided to the Sub-Adviser by the Adviser; (b)
make investment decisions for the Fund; and (c) place orders to purchase and
sell securities for the Fund.
In performing its investment management services to the Fund hereunder,
the Sub-Adviser, in accordance with the directions of the Adviser, will provide
the Fund with ongoing investment guidance and policy direction, including oral
and written research, analysis, advice, statistical and economic data and
judgments regarding individual investments, general economic conditions and
trends and long-range investment policy. Subject to the Fund's investment
objective and policies, the Sub-Adviser will determine the securities,
instruments, repurchase agreements, options and other investments and techniques
that the Fund will purchase, sell, enter into or use, and will provide an
ongoing evaluation of the Fund's portfolio. The Sub-Adviser will determine what
portion of the Fund's portfolio shall be invested in securities and other
assets, and what portion if any, should be held uninvested.
The Sub-Adviser further agrees that, in performing its duties hereunder,
it will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
Advisers Act, the Internal Revenue Code (the "Code") and all other applicable
federal and state laws and regulations, and with any applicable procedures
adopted by the Company's Board of Directors ("Directors");
(b) use reasonable efforts to manage the Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder;
(c) place orders pursuant to its investment determinations for the Fund directly
with the issuer, or with any broker or dealer, in accordance with applicable
policies expressed in the Fund's prospectus and/or Statement of Additional
Information and in accordance with applicable legal requirements;
(d) furnish to the Company, the Adviser, or to the Fund's administrator, BISYS
Fund Services, ("Administrator") if so directed, whatever statistical
information the Company, Adviser or Administrator may reasonably request with
respect to the Fund's assets or contemplated investments. In addition, the
Sub-Adviser will keep the Adviser, the Company and the Directors informed of
developments materially affecting the Fund's portfolio and shall, on the
Sub-Adviser's own initiative, furnish to the Adviser and the Company from time
to time whatever information the Sub-Adviser believes appropriate for this
purpose;
(e) make available to the Adviser, the Administrator, and the Company, promptly
upon their request, such copies of its investment records and ledgers with
respect to the Fund as may be required to assist the Adviser, the Administrator
or the Company in their compliance with applicable laws and regulations. The
Sub-Adviser will furnish the Adviser and the Directors with such periodic and
special reports regarding the Fund as they may reasonably request;
(f) immediately notify the Adviser and the Company in the event that the
Sub-Adviser or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Sub-Adviser from serving as
sub-investment adviser pursuant to this Agreement; or (2) becomes aware that it
is the subject of an administrative proceeding or enforcement action by the
Securities and Exchange Commission ("SEC") or other regulatory authority. The
Sub-Adviser further agrees to notify the Adviser and the Company immediately of
any material fact known to the Sub-Adviser respecting or relating to the
Sub-Adviser that is not contained in the Company's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but that is required
to be disclosed therein, and of any statement contained therein that becomes
untrue in any material respect;
(g) in making investment decisions for the Fund, use no inside information that
may be in its possession or in the possession of any of its affiliates, nor will
the Sub-Adviser seek to obtain any such information.
3. Allocation of Charges and Expenses. Except as otherwise specifically provided
in this section 3, the Sub-Adviser shall pay the compensation and expenses of
all its directors, officers and employees who serve as officers and executive
employees of the Company or Fund (including the Company's or Fund's share of
payroll taxes), and the Sub-Adviser shall make available, without expense to the
Company or the Fund, the service of its directors, officers and employees who
may be duly elected officers of the Company or Fund, subject to their individual
consent to serve and to any limitations imposed by law.
The Sub-Adviser shall not be required to pay any expenses of the Fund or
Company other than those specifically allocated to the Sub-Adviser in this
section 3. In particular, but without limiting the generality of the foregoing,
the Sub-Adviser shall not be responsible, except to the extent of the reasonable
compensation of such of the Company's or Fund's employees as are officers or
employees of the Sub-Adviser whose services may be involved, for any expenses of
other series of the Company or for the following expenses of the Fund or
Company: organization and certain offering expenses (including out-of-pocket
expenses, but not including the Sub-Adviser's overhead and employee costs); fees
payable to the Adviser and Sub-Adviser and to any other Fund or Company advisers
or consultants; legal expenses; auditing and accounting expenses; interest
expenses; telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses incurred by or
with respect to the Fund or the Company in connection with membership in
investment company trade organizations; cost of insurance relating to fidelity
coverage for the Company's or Fund's officers and employees; fees and expenses
of the Company's or Fund's Administrator or of any custodian, subcustodian,
transfer agent, fund accounting agent, registrar, or dividend disbursing agent
of the Company or the Fund; payments for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if any; expenses
of preparing share certificates, if any; other expenses in connection with the
issuance, offering, distribution or sale of securities issued by the Company or
the Fund; expenses relating to investor and public relations; expenses of
registering shares of the Company or the Fund for sale and of compliance with
applicable state notice filing requirements; freight, insurance and other
charges in connection with the shipment of the Company's or Fund's portfolio
securities; brokerage commissions or other costs of acquiring or disposing of
any portfolio securities or other assets of the Company or the Fund, or of
entering into other transactions or engaging in any investment practices with
respect to the Company or the Fund; expenses of printing and distributing
prospectuses, Statements of Additional Information, reports, notices and
dividends to shareholders; costs of stationery or other office supplies; any
litigation expenses; costs of shareholders' and other meetings; the compensation
and all expenses (specifically including travel expenses relating to the
Company's or the Fund's business) of officers, Directors and employees of the
Company or Fund who are not interested persons of the Sub-Adviser; and travel
expenses (or an appropriate portion thereof) of officers or Directors of the
Fund or Company who are officers, directors or employees of the Sub-Adviser to
the extent that such expenses relate to attendance at meetings of the Directors
with respect to matters concerning the Company or the Fund, or any committees
thereof or advisers thereto.
4. Compensation. As compensation for the services provided and expenses assumed
by the Sub-Adviser under this Agreement, the Adviser will pay to the
Sub-Adviser, out of the Adviser's own resources at no additional cost to the
Company or the Fund, on the first business day of each calendar month a
sub-advisory fee computed daily at an annual rate equal to 0.30% of the Fund's
average daily net assets (as determined on each business day at the time set
forth in the Prospectus for determining the Fund's net asset value per share).
The value of net assets of the Fund shall always be determined pursuant to the
applicable provisions of the Articles and the Registration Statement. If,
pursuant to such provisions, the determination of net asset value is suspended
for any particular business day, then for the purposes of this section 4, the
value of the net assets of the Fund as last determined shall be deemed to be the
value of its net assets as of the close of the New York Stock Exchange, or as of
such other time as the value of the net assets of the Fund's portfolio may
lawfully be determined, on that day. If the determination of the net asset value
of the shares of the Fund has been so suspended for a period including any month
end when the Sub-Adviser's compensation is payable pursuant to this section,
then the Sub-Adviser's compensation payable at the end of such month shall be
computed on the basis of the value of the net assets of the Fund as last
determined (whether during or prior to such month). If the Fund determines the
value of the net assets of its portfolio more than once on any day, then the
last such determination thereof on that day shall be deemed to be the sole
determination thereof on that day for the purposes of this section 4.
5. Books and Records. The Sub-Adviser agrees to maintain such books and records
with respect to its services to the Fund as are required by Section 31 under the
1940 Act, and rules adopted thereunder, and by other applicable legal
provisions, and to preserve such records for the periods and in the manner
required by that Section, and those rules and legal provisions. The Sub-Adviser
also agrees that records it maintains and preserves pursuant to Rules 31a-1 and
Rule 31a-2 under the 1940 Act and otherwise in connection with its services
hereunder are the property of the Company and will be surrendered promptly to
the Company upon its request. And the Sub-Adviser further agrees that it will
furnish to regulatory authorities having the requisite authority any information
or reports in connection with its services hereunder which may be requested in
order to determine whether the operations of the Fund or the Company are being
conducted in accordance with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Sub-Adviser shall exercise
its best judgment in rendering the services provided by it under this Agreement.
The Sub-Adviser shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Company, the Fund or the holders of the Fund's
shares in connection with the matters to which this Agreement relates, provided
that nothing in this Agreement shall be deemed to protect or purport to protect
the Sub-Adviser against any liability to the Company, the Fund or to holders of
the Fund's shares to which the Sub-Adviser would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Sub-Adviser's reckless disregard
of its obligations and duties under this Agreement. As used in this Section 6,
the term "Sub-Adviser" shall include any officers, directors, employees or other
affiliates of the Sub-Adviser performing services with respect to the Fund.
7. Services Not Exclusive. It is understood that the services of the Sub-Adviser
are not exclusive, and that nothing in this Agreement shall prevent the
Sub-Adviser from providing similar services to other investment companies or to
other series of investment companies, including other series of the Company
(whether or not their investment objectives and policies are similar to those of
the Fund) or from engaging in other activities, provided such other services and
activities do not, during the term of this Agreement, interfere in a material
manner with the Sub-Adviser's ability to meet its obligations to the Fund
hereunder. When the Sub-Adviser recommends the purchase or sale of a security
for other investment companies and other clients, and at the same time the
Sub-Adviser recommends the purchase or sale of the same security for the Fund,
it is understood that in light of its fiduciary duty to the Fund, such
transactions will be executed on a basis that is fair and equitable to the Fund.
In connection with purchases or sales of portfolio securities for the account of
the Fund, neither the Sub-Adviser nor any of its directors or officers (or
persons acting in similar capacities) or employees shall act as a principal or
agent or receive any commission. If the Sub-Adviser provides any advice to its
clients concerning the shares of the Fund, the Sub-Adviser shall act solely as
investment counsel for such clients and not in any way on behalf of the Company
or the Fund.
8. Duration and Termination. This Agreement shall continue until , 2001, and
thereafter shall continue automatically for successive annual periods, provided
such continuance is specifically approved at least annually by (i) the Directors
or (ii) a vote of a "majority of the Fund's outstanding voting securities" (as
defined in the 1940 Act), provided that in either event the continuance is also
approved by a majority of the Directors who are not parties to this Agreement or
"interested persons" (as defined in the 0000 Xxx) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. Notwithstanding the foregoing, this Agreement may be
terminated: (a) at any time without penalty by the Adviser or by the Fund upon
the vote of a majority of the Directors or by vote of the majority of the Fund's
outstanding voting securities, upon sixty (60) days' written notice to the
Sub-Adviser or (b) by the Sub-Adviser at any time without penalty, upon sixty
(60) days' written notice to the Adviser. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act).
9. Proxies. Unless the Company or the Adviser gives written instructions to the
contrary, the Sub-Adviser shall vote all proxies solicited by or with respect to
the issuers of securities in which assets of the Fund may be invested. The
Sub-Adviser shall use its best good faith judgment to vote such proxies in a
manner which best serves the interests of the Fund's shareholders.
10. Name Reservation. The Sub-Adviser acknowledges and agrees that the Adviser
has property rights relating to the use of the term "Centura" and has permitted
the use of such term by the Company and the Fund. The Sub-Adviser agrees that,
unless otherwise authorized by the Adviser: (i) it will use the term "Centura"
only as a component of the name of the Fund and for no other purposes; (ii) it
will not purport to grant to any third party any rights in such name; and (iii)
the Adviser may use or grant to others the right to use the term, or any
abbreviation thereof, as all or a portion of a corporate or business name or for
any commercial purpose, including a grant of such right to any other investment
company. Upon termination of this Agreement, the Sub-Adviser shall, at the
request of the Adviser, cease to use the term "Centura" in any of its materials
or in any manner except with the consent of the Adviser, which shall not be
unreasonably withheld. In the event of any such request by the Adviser that use
by the Sub-Adviser of the term "Centura" shall cease and in the absence of any
such consent, the Sub-Adviser shall cause its officers, directors and employees
to take any and all such actions which the Adviser may reasonably request to
effect such request.
11. Miscellaneous.
a. This Agreement shall be governed by the laws of the State of North Carolina,
provided that nothing herein shall be construed in a manner inconsistent with
the 1940 Act, the Advisers Act, or rules or orders of the SEC thereunder.
b. The captions of this Agreement are included for convenience only and in no
way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
c. 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 hereby and, to this extent, the provisions of this Agreement shall
be deemed to be severable.
d. Nothing herein shall be construed as constituting the Sub-Adviser as an agent
of the Adviser, the Company or the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of , 1999.
CENTURA BANK SOVEREIGN ADVISERS
By:_______________________ By:__________________________
