Exhibit 99.23H(2)
SUB-ADMINISTRATION AGREEMENT
NATIONS FUNDS TRUST
This SUB-ADMINISTRATION AGREEMENT (the "Agreement") is made as of
February 14, 2000 by and among THE BANK OF NEW YORK ("BNY"), BANC OF AMERICA
ADVISORS, INC. ("BAAI") and NATIONS FUNDS TRUST (the "Trust").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, BAAI serves as the Co-Administrator for the investment
portfolios of the Trust pursuant to a separate Co-Administration Agreement; and
WHEREAS, BAAI desires to retain BNY to render certain
sub-administrative services to the Trust and to BAAI, as Co-Administrator of the
Trust, and BNY is willing to render such services.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed among the parties hereto as follows:
1. Appointment and Duties as Sub-Administrator.
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(a) BAAI hereby appoints BNY to act as Sub-Administrator of the Trust
and to render sub-administrative services for each portfolio of the Trust listed
on Schedule I (individually, a "Fund" and collectively, the "Funds") and BNY
hereby accepts such appointment and agrees to render the services and duties set
forth in Schedule II as it may be amended from time to time, for the
compensation and on the terms herein provided. Each new investment portfolio
established in the future by the Trust or BAAI will become a "Fund" for all
purposes hereunder when BNY receives a revised Schedule I from BAAI or the Trust
that includes such new portfolio.
(b) Subject to the other provisions of this Section 1, in performing
all services under this Agreement, BNY shall (i) act in conformity with the
Trust's Declaration of Trust, the 1940 Act and the rules thereunder, including
but not limited to Rules 31a-1 to 31a-3, and other applicable laws and
regulations, as the same may be amended from time to time, and the Trust's
Registration Statement (defined below) as such Registration Statement may be
amended from time to time; (ii) consult and coordinate with BAAI and the Trust,
as necessary and appropriate; and (iii) advise and report to BAAI and the Trust,
as necessary or appropriate, with respect to any compliance matters that come to
its attention. In performing all services under this Agreement BNY shall meet
the minimum quality of service standards set forth on Schedule III.
(c) The Trust has furnished BNY and BAAI with copies properly certified
or authenticated of each of the following: (i) the Trust's Declaration of Trust
or other organizational document and all amendments thereto (the "Declaration");
(ii) votes of the Trust's Board of Trustees or other governing body (the
"Board") authorizing the execution, delivery and
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performance of this Agreement by the Trust; (iii) the Trust's Registration
Statement on Form N-1A (the "Registration Statement") under the Securities Act
of 1933, as amended, and under the 1940 Act (File Nos. 333-89661 and 881-09645),
as filed with the Securities and Exchange Commission (the "SEC") relating to the
Funds' shares of beneficial interest (the "Shares"); (iv) the Funds' current
prospectus(es); (v) the Funds' current statement(s) of additional information;
and (v) the pricing procedures applicable to the calculation of the Funds' net
asset values as approved by the Trust's Board (the "Pricing Procedures"). It is
solely the Trust's responsibility to furnish BNY from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, and BNY will not be held to have knowledge of any such amendments or
supplements until the same are actually received by BNY. Furthermore, the Trust
will provide BNY with any other documents that BNY and BAAI may reasonably
request and will notify BNY and BAAI as soon as possible of any matter
materially affecting either BNY's or BAAI's performance of its services under
this Agreement.
(d) Subject to the direction and approval of the Trust's Board and
appropriate officers and the provisions of this Agreement, BNY shall provide to
each Fund the administrative services set forth on Schedule II attached hereto.
In performing such services hereunder, BNY shall provide, at its expense, office
space, facilities, equipment and personnel. BNY shall not provide any services
relating to the management, investment advisory or sub-advisory functions of any
Fund, distribution of shares of any Fund, maintenance of any Fund's financial
records (except as otherwise agreed by the parties) or any services normally
performed by the Funds' counsel or independent accountants. Upon receipt of the
Trust's prior written consent, BNY may delegate any of its duties and
obligations hereunder to any delegee or agent whenever and on such terms and
conditions as it deems necessary or appropriate. Unless expressly agreed in
writing, BNY shall not be relieved of liability or responsibility for the
performance of any duties or obligations delegated to a delegee or agent,
provided that BNY shall have no liability for duties or obligations that are
delegated to a delegee or agent at the instruction of the Trust or BAAI. The
Trust and BAAI shall cause their respective officers, and shall use reasonable
efforts to cause the Trust's or BAAI's legal counsel, independent accountants,
and transfer agent to cooperate with BNY and to provide BNY, upon BNY's
reasonable written request, such information, documents and advice relating to
such Fund as is within the possession or knowledge of such persons, in order to
enable BNY to perform its duties hereunder. Such cooperation or provision of
information, documents or advice shall be at no cost to BNY, provided BNY's
request is reasonable and BAAI shall have been notified of the request. In
connection with its duties hereunder, BNY shall be entitled to reasonably rely
upon any documents relating to a Fund provided to BNY by any of the
aforementioned persons. BNY may apply to the Trust or BAAI for written
instructions with respect to any matter arising in connection with BNY's
performance hereunder. If, after a reasonable period of time, BNY receives no
response to any such application, BNY may then notify the Trust or BAAI of
reasonable action that BNY shall take if written instructions are not received
within a stated period of time after such notice, and then BNY shall not be
liable for taking such reasonable action as if written instructions had been
provided. BNY is entitled to reasonably rely and act in accordance with written
instructions believed to have been given by authorized persons and shall incur
no costs for such reasonable reliance. BNY shall have no duties or
responsibilities whatsoever except such duties and responsibilities as are
specifically set forth in this Agreement
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and Schedule II hereto, and no covenant or obligation shall be implied against
BNY in connection with this Agreement.
(e) The Trust and BAAI, for itself and not for the others, hereby
represents and warrants to BNY, which representations and warranties shall be
deemed to be continuing, that: (i) it is duly organized and existing under the
laws of the jurisdiction of its organization, with full power to carry on its
business as now conducted, to enter into this Agreement and to perform its
obligations hereunder; (ii) this Agreement has been duly authorized, executed
and delivered by it in accordance with all requisite action and constitutes a
valid and legally binding obligation, enforceable in accordance with its terms;
(iii) it is conducting its business substantially in compliance with all
applicable laws and regulations, both state and federal, and has obtained all
regulatory licenses, approvals and consents necessary to carry on its business
as now conducted; (iv) there is no statute, regulation, rule, order or judgment
binding on it and no provision of its Declaration, nor of any mortgage,
indenture, credit agreement or other contract binding on it or affecting its
property which would prohibit its execution or performance of this Agreement;
and (v) the Trust and BAAI will use reasonable efforts to promptly notify BNY of
any errors or omissions contained in any reports, calculations, valuations and
other items of information, provided that any failure by the Trust or BAAI to
detect any such errors or omissions shall not relieve BNY of any resulting
liability therefrom. To the extent that BAAI has actual knowledge of any such
error or omission and fails to use reasonable efforts to promptly notify BNY,
BNY shall be relieved of any liability that BNY may have mitigated had BAAI
provided notice of such error or omission to BNY.
(f) BNY hereby represents and warrants to the Trust and BAAI, which
representations and warranties shall be deemed to be continuing, that: (i) it is
duly organized and existing under the laws of the jurisdiction of its
organization, with full power to carry on its business as now conducted, to
enter into this Agreement and to perform its obligations hereunder; (ii) this
Agreement has been duly authorized, executed and delivered by it in accordance
with all requisite action and constitutes a valid and legally binding
obligation, enforceable in accordance with its terms; and (iii) it is conducting
its business substantially in compliance with all applicable laws and
regulations, both state and federal, and has obtained all regulatory licenses,
approvals and consents necessary to carry on its business as now conducted;
there is no statute, regulation, rule, order or judgment binding on it and no
provision of its Charter, nor of any mortgage, indenture, credit agreement or
other contract binding on it or affecting its property which would prohibit its
execution or performance of this Agreement.
2. Compensation. For the services to be rendered, the facilities to be
furnished and the compensation and other expenses to be borne by BNY, as
provided for in this Agreement, BNY shall be entitled to receive a monthly fee
from BAAI and reimbursement for out-of-pocket expenses as set forth in Schedule
IV to this Agreement. It is understood that BAAI shall be responsible for BNY's
monthly fee for its services hereunder, and BNY agrees that it shall have no
claim against the Trust or the Funds with respect to compensation under this
Agreement.
3. Recordkeeping. BNY shall, as agent for the Trust, and subject to the
direction and approval of the Trust's Board and the provisions of this
Agreement, maintain and keep current the books, accounts and other documents, if
any, pursuant to the services and duties provided by BNY as set forth in
Schedule II of this Agreement, and preserve any such books,
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accounts and other documents in accordance with the applicable provisions of
Rule 31a-2 of the 1940 Act. Such books, accounts and other documents shall be
made available upon reasonable request for inspection by officers, employees and
auditors of the Trust and BAAI during BNY's normal business hours. All records
maintained and preserved by BNY pursuant to this Agreement which the Trust is
required to maintain and preserve in accordance with Rule 31a-2 of the 1940 Act
shall be and remain the property of the Trust and shall be surrendered to the
Trust promptly upon request in the form in which such records have been
maintained and preserved. Upon reasonable request of the Trust, BNY shall
provide in data files or hard copy, whichever the Trust shall reasonably elect,
any records included in any such delivery which are maintained by BNY on a
computer disc, or are similarly maintained, and the Trust shall reimburse BNY
for its expenses of providing such hard copy.
4. Standard of Care; Indemnification.
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(a) BNY shall at all times act in good faith and agrees to use its best
efforts to fulfill its obligations under this Agreement, but assumes no
responsibility for loss or damage to the Trust unless such loss or damage is
caused by BNY's own negligence, bad faith or willful misconduct or that of its
directors, officers or employees. BNY shall be responsible hereunder for all
direct damages resulting from its own negligence, bad faith or willful
misconduct, provided however that it shall not be responsible for lost profits
or lost business arising under or in connection with this Agreement. It is
understood and agreed that for purposes of this Section 4(a), "direct damages"
shall include, but shall not be limited to, all legal costs, penalties,
reimbursement for excess distribution and redemption payments, repurchasing
costs for servicing agents and reimbursement to the Funds for net asset value
breaks (as calculated under the Pricing Procedures).
(b) The Trust, on behalf of each Fund, will indemnify BNY against and
hold it harmless from any and all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses of a defense against
any claim, demand, action or suit), relating to the particular Fund and arising
from any one or more of the following: (i) errors in records or instructions,
explanations, information, specifications or documentation of any kind, as the
case may be, supplied to BNY by any person described in Section 1 hereof or by
any third party described in Section 5; (ii) action or inaction taken or omitted
to be taken by BNY pursuant to written or oral instructions described in this
Agreement (or otherwise without bad faith, negligence or willful misconduct);
(iii) any action taken or omitted to be taken by BNY in good faith in accordance
with the advice or opinion of counsel for a Fund, the Trust, BAAI (obtained in
accordance with the procedures set forth in this Agreement) or its own counsel;
(iv) any improper use by the Fund, the Trust, BAAI or their respective agents,
of any valuations or computations supplied by BNY pursuant to this Agreement;
(v) the method of valuation of the securities and the method of computing a
Fund's net asset value or any other amount computed by BNY hereunder, provided
BNY has followed the Pricing Procedures; and (vi) any valuation of securities,
net asset value or other amount provided by a Fund or BAAI. BNY will not confess
any claim or settle or make any compromise in any instance in which the Trust
will be asked to provide indemnification, except with the Trust's prior written
consent. Any amounts payable by the Trust under this Section 4(b) shall be
satisfied only against the assets of the Fund involved in the claim, demand,
action or suit and not against the assets of any other investment portfolio of
the Trust.
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5. Fund Accounting Services.
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(a) BNY, in performing the services required of it under the terms of
this Agreement, shall be entitled to rely fully on the accuracy and validity of
any and all instructions, explanations, information, specifications and
documentation furnished to it by a Fund and shall have no duty or obligation to
review the accuracy, validity or propriety of such instructions, explanations,
information, specifications or documentation, including, without limitation,
evaluations of securities; the amounts or formula for calculating the amounts
and times of accrual of Fund's liabilities and expenses; the amounts receivable
and the amounts payable on the sale or purchase of securities; and amounts
receivable or amounts payable for the sale or redemption of Fund shares effected
by or on behalf of the Fund. In the event BNY's computations hereunder rely, in
whole or in part, upon information, including, without limitation, bid, offer or
market values of securities or other assets, or accruals of interest or earnings
thereon, from a pricing or similar service utilized, or subscribed to, by BNY
which BNY in its judgment deems reliable, or any other third party pricing
source designated by the Trust, BNY shall not be responsible for, under any duty
to inquire into, or deemed to make any assurances with respect to, the accuracy
or completeness of such information. BNY shall not be required to inquire into
any valuation of securities or other assets by the Fund or any third party
described in this Section, even though BNY in performing services similar to the
services provided pursuant to this Agreement for others may receive different
valuations of the same or different securities of the same issuers.
(b) Subject to the provisions of this Agreement and the direction and
approval of the Trust's Board, BNY shall perform the computations described in
Schedule II at such times and dates and in the manner specified or described in
the then-current prospectus(es) of a Fund. To the extent valuation of securities
or a computation specified or described in a Fund's Pricing Procedures or
then-current effective prospectus(es) is at any time inconsistent with any
applicable laws or regulations, the Trust or BAAI shall immediately so notify
BNY in writing and thereafter shall furnish BNY at all appropriate times with
the values of such securities and such Fund's net asset value or other amounts
otherwise to be calculated by BNY, or, subject to the prior approval of BNY,
instruct BNY in writing to value securities and make such computations in a
manner which the Trust or BAAI then represents in writing to be consistent with
all applicable laws and regulations. The Trust or BAAI may also from time to
time, subject to the prior approval of BNY, instruct BNY in writing to make
computations other than as specified in this Section of this Agreement. By
giving such instruction, the Trust or BAAI shall be deemed to have represented
that such instruction is consistent with all applicable laws and regulations and
the then-current effective prospectus(es) of the particular Fund. The Trust or
BAAI shall have sole responsibility for determining the method of valuation of
securities and the method of computations, and all computations, valuation of
securities and the method of computing each Fund's net asset value shall be
subject to approval by the Trust and BAAI. BNY shall not be liable for relying
on any price provided by any pricing service believed by BNY to be reliable, and
the Trust or BAAI shall furnish values when the same are not available from a
pricing service utilized by BNY, with such furnishing to constitute an
instruction to BNY to rely on the provided values.
(c) BNY shall be responsible for determining and properly reflecting in
the computations made by it under this Agreement: (i) the taxable nature of any
distribution or amount received or deemed received by, or payable to, a Fund;
(ii) the taxable nature or effect on
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a Fund or its shareholders of any corporate actions, class actions, tax
reclaims, tax refunds, or similar events; (iii) the taxable nature or taxable
amount of any distribution or dividend paid, payable or deemed paid, by a Fund
to its shareholders; (iv) the effect under any federal, state, or foreign income
tax laws of a Fund making or not making any distribution or dividend payment, or
any election with respect thereto; or (v) any tax accounting; provided, however,
that if BNY is not certain of the taxable nature, amount or effect of any such
item, it may seek instructions regarding the proper treatment of such item from
the Trust or BAAI in accordance with the procedures set forth in Section 1(e),
above, and shall have no liability for acting in reliance on such instructions.
6. Termination of Agreement.
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(a) This Agreement shall become effective as of the date first set
forth above and shall remain in full force and effect unless terminated pursuant
to the provisions of Section 6(b).
(b) This Agreement may be terminated at any time without payment of any
penalty, upon 60 days' written notice to BNY, by BAAI or by vote of the Board of
the Trust, or upon 180 days' written notice to BAAI and the Trust, by BNY. Upon
any such termination, BNY will cooperate with and assist the Trust, BAAI, their
agents and any successor administrator(s) or sub-administrator(s) in the
substitution/conversion process. In connection with any termination of this
Agreement, unless BNY is in breach of this Agreement, the Funds and BAAI agree
to pay BNY any compensation and reimbursement for out-of-pocket expenses as may
then be due and payable, as well as agreed-upon out-of-pocket expenses incurred
in connection with a termination. If BNY is in breach of this Agreement, the
Funds and BAAI may offset any compensation or reimbursement amounts owed to BNY
by the amount of damages, costs and expenses incurred as a result of BNY's
breach, including costs, expenses and reasonable incremental fees for a period
not to exceed one year incurred in connection with a conversion by the Trust and
BAAI to a successor service provider. In the event of a dispute as to the amount
of such damages, the Funds and BAAI agree to escrow the set-off amount.
(c) Sections 4 and 8 shall survive this Agreement's termination.
7. Amendments. Except as expressly provided in the first paragraph of
Section 1, no provision of this Agreement may be amended or modified orally, but
only by an instrument in writing signed by the party against which enforcement
of the amendment or modification is sought.
8. Confidentiality. All books, records, information and data pertaining
to the business of the Trust, or its prior, present or potential shareholders
that are exchanged or received in connection with the performance of BNY's
duties under this Agreement shall remain confidential and shall not be disclosed
to any other person, except as specifically authorized by the Trust or as may be
required by law, and shall not be used for any purpose other than performance of
its responsibilities and duties hereunder, and except that BNY retains the right
to disclose matters subject to confidentiality to its examiners, regulators,
internal or external auditors, its accountants, its internal and external
counsel, and to any other entity whenever it is advised by its internal or
external counsel that it is reasonably likely that BNY would be liable for a
failure to do so. BNY will endeavor to provide written notice to the Trust and
BAAI at
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least five business days prior to any disclosures pursuant to this Section 8,
but, provided it shall have provided as much notice as is reasonably practicable
under the circumstances, BNY shall have no liability for any failure to do so.
9. Service to Other Companies. The Trust and BAAI acknowledge that BNY
now provides, will continue to provide and may in the future provide
administrative or other services to other investment companies or series of
investment companies, and the Trust and BAAI have no objection to BNY so doing.
The Trust and BAAI further acknowledge that the persons employed by BNY to
assist in the performance of BNY's duties under this Agreement may not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or restrict the right of BNY or any affiliate of BNY to engage
in and devote time and attention to other businesses or to render services of
whatever kind or nature.
10. Miscellaneous.
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(a) This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflict of laws principles thereof.
Each Fund, the Trust and BAAI hereby consent to the jurisdiction of a state or
federal court situated in New York City, New York in connection with any dispute
arising hereunder. To the extent that in any such jurisdiction any of the
aforementioned persons may now or hereafter be entitled to claim, for itself or
its assets, immunity from suit, execution, attachment (before or after judgment)
or other legal process, each irrevocably agrees not to claim, and it hereby
waives, such immunity.
(b) In case any provision in or obligation under this Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations shall not in any
way be affected or impaired thereby, and if any provision is inapplicable to any
person or circumstances, it shall nevertheless remain applicable to all other
persons and circumstances.
(c) Each and every right granted to BNY, the Trust or BAAI hereunder or
under any other document delivered hereunder or in connection herewith, or
allowed it by law or equity, shall be cumulative and may be exercised from time
to time. No failure on the part of BNY, the Trust or BAAI to exercise, and no
delay in exercising, any right will operate as a waiver thereof, nor will any
single or partial exercise by BNY, the Trust or BAAI of any right preclude any
other or future exercise thereof or the exercise of any other right.
(d) BNY shall not be responsible for delays or errors that occur by
reason of circumstances beyond its reasonable control in the performance of its
duties under this Agreement, provided that reasonable back-up and disaster
recovery systems are in place, including, without limitation, labor
difficulties, mechanical breakdowns, computer breakdowns or malfunctions
(hardware or software), flood or catastrophe, acts of God, failures of
transportation, communication or power supply, or other similar circumstances.
Nor shall BNY be responsible for delays or failures to supply the information or
services specified in this Agreement where such delays or failures are caused by
the failure of any person(s) other than BNY to supply any instructions,
explanations, information, specifications or documentation deemed necessary by
BNY in the performance of its duties under this Agreement.
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(e) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Trust, BNY and/or BAAI shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Trust:
Nations Funds Trust
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
To BAAI:
Banc of America Advisors, Inc.
One Bank of America Plaza
000 Xxxxx Xxxxx Xxxxxx, XX0-000-00-00
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx
To BNY:
The Bank of New York
00 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Grunston
(f) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement may not be assigned by BNY, nor may BNY delegate
responsibility for the performance of any of its duties hereunder, without the
written consent of the other parties hereto.
(g) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
(h) The captions of 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.
(i) This Agreement constitutes the entire agreement between the parties
hereto with respect to the provision by BNY of sub-administrative services and
the receipt of fees therefor, and supersedes all prior arrangements or
understandings, written or oral, with respect to the provision by BNY of such
services and the receipt of fees therefor.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed and delivered by their duly authorized officers as of the date
first written above.
THE BANK OF NEW YORK
By: /s/ Xxxxxxx X. Grunston
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Xxxxxxx X. Grunston
Vice President
BANC OF AMERICA ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Senior Vice President and
Chief Operating Officer
NATIONS FUNDS TRUST
By: /s/ Xxxxx X. Xxxxx, Xx.
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Xxxxx X. Xxxxx, Xx.
Assistant Secretary
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SCHEDULE I
1. Nations High Yield Bond Fund
2. Nations Kansas Municipal Income Fund
3. Nations MidCap Index Fund
4. Nations Xxxxxxx 21st Century Fund
5. Nations Xxxxxxx International Opportunities Fund
Approved: December 9, 1999
Last Amended: August 1, 2000
IN WITNESS WHEREOF, the parties hereto have caused this amended
Schedule I to be executed by their officers designated below as of the 1st day
of August, 2000.
THE BANK OF NEW YORK
By: /s/ Xxxxxxx X. Grunston
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Xxxxxxx X. Grunston
Vice President
NATIONS FUNDS TRUST
on behalf of the Funds
By: /s/ Xxxxxxx X. Xxxxx, Xx.
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Xxxxxxx X. Xxxxx, Xx.
Secretary
BANC OF AMERICA ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
Senior Vice President and
Chief Operating Officer
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SCHEDULE II
FUND ADMINISTRATION SERVICES
BNY shall perform the following sub-administrative services, in
addition to any other services agreed to from time to time:
o Monitor and document compliance by the Funds with their policies and
restrictions as delineated in their prospectuses and statements of
additional information, including any supplements or amendments thereto,
and with the rules and regulations under the 1940 Act utilizing Xxxxxxx
River Development's compliance monitoring system or by such other means as
the parties may agree. BAAI shall be responsible for communicating such
policies and restrictions, including any changes thereto, to BNY by such
means as the parties agree.
o Provide income attribution summary schedules necessary for year-end tax
reporting, including the attached examples. Provide a gross up for foreign
taxes on a per share basis and the redesignation of income and capital
gains on a per share basis.
o Prepare federal, state, excise and local income tax returns for the Funds
and file such returns upon the approval of the Funds' independent
accountants; monitor, report on and prepare periodic worksheet and tax
provision packages with respect to Sub-Chapter M qualifications; prepare
and file all Form 1099s with respect to the Funds' Trustees; monitor
compliance with Section 4982 of the Internal Revenue Code; calculate and
maintain records pertaining to original issue discount and premium
amortization as required; identify wash sales and all other book/tax
differences, and report results to the Funds' independent accountants and
Funds management; and such other duties relating to federal and/or state
tax compliance as the parties may agree. BNY shall be responsible for
providing all pertinent tax information to the Funds' independent
accountants.
o Prepare Return of Capital Statement of Position 93-2 adjustments.
o Support BAAI in its preparation of the schedules and provide BAAI unaudited
quarterly and semi-annual and audited annual financial statements and
schedules of Fund investments by providing, without limitation, each Funds'
schedule of investments and general ledger in electronic format and/or hard
copy, as required, and such other information as may be necessary to
complete such financial reports.
o Prepare statistical reports for outside information services (referenced in
Schedule V), and such other information services as the parties may agree,
including the ICI expense survey.
o Prepare calculations for capital gains pursuant to IRS rules in conjunction
with BAAI and the Funds' independent accountant.
o Attend Fund shareholder and Board of Trustees meetings as requested by
BAAI, including making such presentations as are appropriate, and, with
respect to the Fund administration services described herein, provide such
periodic and special reports to the Trust and BAAI as the Trust and BAAI
shall reasonably request.
II-1
FUND ACCOUNTING SERVICES
BNY shall provide all accounting and recordkeeping services necessary
and appropriate for the business of the Funds, including but not limited to
those set forth below.
Required Records; Ledgers and Journals
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BNY shall keep current the following accounts and records relating to
the business of the Funds, in such form as is required by the 1940 Act and the
rules thereunder, and generally accepted accounting principles, to support all
filings under applicable federal and state tax laws and regulations and as may
be mutually agreed to among the Trust, BAAI and BNY, and shall make available to
BAAI and/or the Trust upon request:
1. Cash Receipts Journal
2. Cash Disbursements Journal
3. Dividends Paid and Payable Schedule (book vs. tax basis)
4. Purchase and Sales Journals - Portfolio Securities
5. Realized/Unrealized Gain (Loss) Reports
6. Subscription and Redemption Journals
7. Security Ledgers - Transaction Report and Tax Lot Holdings Report
8. Broker Ledger - Commission Report
9. Daily Expense Accruals
10. Daily Interest Accruals
11. Daily Trial Balance
12. Portfolio Interest Receivable and Income Journal
13. Portfolio Dividend Receivable and Income Register
14. Listing of Portfolio Holdings - showing cost, market value and
percentage of portfolio comprised of each security
15. Aged Receivables (dividends, interest, tax reclaiming)
16. Portfolio Turnover Rate
17. Cash reconciliations
18. Position reconciliations
BNY will be responsible for maintaining, in accordance with Section 31
and the rules thereunder of the 1940 Act, all books and records so required and
generated in the course of performing their duties under this agreement.
Further, at a minimum, BNY shall maintain on-site the above referenced reports
as of each month end for the most recent fiscal year-ended and the current
fiscal year.
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Daily Accounting Services
-------------------------
BNY shall perform the following services on each Business Day:
1. Calculate Net Asset Value (NAV), and Public Offering Price (POP) Per
--------------------------------------------------------------------
Share Pursuant to SEC formulas:
----------------------------------------
o Update the valuation of security positions held by each Fund's
portfolio in accordance with the Fund's Pricing Procedures and any
other appropriate procedures established by the Board and BAAI as
BAAI shall provide BNY in writing
o When instructed by BAAI, enter manual prices supplied by broker and
link to pricing procedures
o Calculate each Fund's NAV/POP in accordance with the applicable
Pricing Procedures approved by the Trust's Board of Trustees and
prepare NAV proof sheet. Review components of change in NAV for
reasonableness based on the tolerance levels as BAAI shall direct
BNY in writing
o Review variance reporting for price changes in individual securities
using variance levels established by Fund and report to Fund
portfolio managers and to BAAI
o Review for ex-dividend items indicated by pricing sources; trace to
general ledger for agreement o Communicate required pricing and
yield information (NAV/POP), as appropriate, to BAAI, the Funds'
transfer agent and sub-transfer agent and, electronically, to NASDAQ
and to such other third parties as designated by the Funds with
respect to its various distribution channels. In addition, provide
Fund share activity to BAAI.
2. Dividend Rates/Yields/Dollar Weighted Average Maturity:
---------------------------------------------------------
o Calculate, subject to the approval of BAAI, net investment income
available for distribution daily as appropriate
o Calculate daily dividend rate, and 1, 7, 30-day yields/SEC yields
o Calculate dollar weighted average maturity
3. Determine and Report Cash Availability:
---------------------------------------
o Receive daily cash and transaction statements from the Funds'
custodian
o Complete daily bank cash reconciliations (including documentation of
any reconciling items) and notify the Funds' custodian
o Report investable cash to BAAI and Fund sub-advisers
4. Daily Expense Accruals:
----------------------
o Accrue individual expenses on a daily basis based on Instructions
provided by BAAI, except for those instances where such an
adjustment would cause a full xxxxx break in NAV, in which case such
adjustment will be included in the calculation of NAV on the day
received
o If applicable, accrue daily amortization of organization expense as
instructed by BAAI
II-3
o If applicable, accrue daily Rule 12b-1 Plan expenses
o Adjust expense accruals as instructed by BAAI and provide reports as
requested by XXXX
0. Verify and Record All Daily Income Accruals for Debt Issues:
------------------------------------------------------------
o Track income and provide year end tax schedules
o Review and verify all interest and amortization reports
o Periodic tie-out of receivables
o Ensure security masters denote proper interest and amortization
methods as per the fund set up sheets as instructed by BAAI
6. Monitor Securities:
--------------------
o Review each Fund's portfolio holdings and current day's security
trades for dividend activity
o Interface with Funds' custodian for timely collection and postings
of corporate actions, dividends and interest pre-payments
7. Enter All Security Trades:
--------------------------
o Review verification of trade and interest calculations
o Verify settlement through custodian statements
o Maintain security ledger transaction reporting o Maintain tax lot
holdings
o Determine realized gains or losses on security trades
o Provide broker commission information
8. Enter All Fund Share Transactions:
----------------------------------
o Periodically reconcile dividend payable amounts with the Funds'
transfer agent
o Process activity identified on transfer agent reports
o Verify settlement through custodian statements
o Reconcile to transfer agency report balances
o Process and track capital stock gain/loss activity
9. Prepare Daily Trial Balance:
------------------------------------
o Post manual entries to general ledger
o Post custodian bank activity
o Require automated settled transactions between custody and activity
records (prepare, clear and post)
o Post shareholder and security transactions o Post and verify income
and expense accruals and resolve differences
o Prepare general ledger
o Post corporate action activity
II-4
10. Review and Reconcile Custodian Statements:
-------------------------------------------
o Verify all posted interest, dividends, expenses, and shareholder and
security payments/receipts, etc. when requested
o Post all cash settlement activity to trial balance
o Reconcile to ending cash balance accounts
o Report to BAAI the status of past due items and failed trades with
the custodian
o Reconcile cash exception Income items, tax reclaims and past due
income items with custody area
11. Preparation of Accounting Reports:
----------------------------------
o Price Variance Report
o Trial Balance
o Portfolio Valuation
o NAV Calculation Report
o Cash Availability
o Change in NAV
o Non-standard entries
o Stale Price Report
o Other such reports as may be reasonably requested by BAAI
Monthly/Quarterly Services
--------------------------
BNY shall provide the following services on a monthly or quarterly
basis, within such timeframe as may be mutually agreed upon by BNY, the Trust
and BAAI:
1. Submission of Monthly Accounting Reports as mutually agreed upon
-----------------------------------------------------------------
2. Reconcile Asset Listing to Custodian Asset Listing
--------------------------------------------------
3. Provide Monthly Analysis and Reconciliation of Trial Balance Accounts
---------------------------------------------------------------------
4. Prepare Documentation Supporting the Preparation of:
----------------------------------------------------
o SEC yield reporting
o Income by state reporting
o Standard Industry Code Valuation Report (please provide BAAI's
industry code classifications/is there a standard for all Funds)
o Alternative Minimum Tax Income segregation schedule
II-5
5. Provide Upon Request Broker Commission and Net Trade Reports
------------------------------------------------------------
Annual (and Semi-Annual) Accounting Services
--------------------------------------------
BNY shall provide the following services on an annual and semi-annual
basis:
1. Supply auditors InvestOne reports supporting securities and shareholder
transactions, income and expense accruals, etc. during the year in
accordance with standard audit assistance requirements
2. Provide BAAI with information to assist BAAI in the preparation of NSAR
-----------------------------------------------------------------------
filings
--------
Other Core Services
-------------------
BNY shall provide the following services:
o Accrete discounts and amortize premiums to put and call events as
directed by BAAI and in a manner acceptable under generally accepted
accounting principles
o Process principal repayments on mortgage backed securities
o Update variable securities with current rates
o Process corporate action events through a primary vender feed, and
monitor results via Reuters, Bloomberg, or other available sources
as the parties may agree
o Perform automated portfolio pricing with a second vendor as
requested by BAAI
o Produce documents and respond to inquiries during account and SEC
examinations
Money Market Funds: Prepare daily xxxx to market reports and
analysis in compliance with Rule 2a-7 including:
o Calculating the daily portfolio weighted average maturity
o Report portfolio diversification based on trade/security information
provided by BAAI by: Country, State, Tier, Liquidity, Asset Backed
Securities, Industry, Letter of Credit
o Listing percentage of portfolio maturing in specified intervals
(i.e., number of days)
o Providing issuer and guarantor diversification exception reporting
International Funds: BNY shall provide the following services:
-------------------
o Report in base and local currency
II-6
o Processing of tax liability on foreign income subject to approval of
BAAI
o Daily variance analysis performed on FX rates for security position
held
o Produce automated bifurcation reporting in compliance with IRC
Section 988
o Xxxx to market security receivables and payables on a daily basis
o Determine portfolio exposure by country and currency
In addition to the above, BNY will provide additional support as
agreed upon from time to time (i.e., financial statement production).
II-7
SCHEDULE III
SERVICE LEVEL PERFORMANCE STANDARDS
------------------------------------------------------------ ---------------------------------------------------------------
SERVICE STANDARD
------------------------------------------------------------ ---------------------------------------------------------------
1. Daily Cash Availability |_| 100% accuracy and delivery by 9:00 a.m. EST for
Money Market Funds and 9:30 a.m. EST for all
others
|_| Compensation for univested cash at Nations Cash
Reserves' Mill rate
------------------------------------------------------------ ---------------------------------------------------------------
2. Calculation of daily NAVs |_| 100% accuracy by 5:00 p.m. EST including pricing,
expense accruals, cash activity, manual entries,
S/H activity. Delivery by 5:45 p.m. EST
------------------------------------------------------------ ---------------------------------------------------------------
3. Review of daily NAVs |_| 100% review by 5:30 p.m. EST
|_| Review of NAV components for reasonableness
including analysis of the change in the NAV and
the change in mill rates.
|_| Review of price variance report
|_| Review of manual proof
------------------------------------------------------------ ---------------------------------------------------------------
4. NASDAQ Reporting |_| 100% accuracy and communication by 5:45 p.m. EST
------------------------------------------------------------ ---------------------------------------------------------------
5. Daily Pricing and Rate Report (DPRR) |_| 100% accuracy in nightly transmission of DPRRs
|_| Money Market Funds-5:30 p.m. EST
|_| All other Funds- 6:00 p.m. EST
------------------------------------------------------------ ---------------------------------------------------------------
6. FundStation Report (SubM) |_| 100% accuracy and nightly transmission by 7:00 p.m.
EST
------------------------------------------------------------ ---------------------------------------------------------------
7. Processing of trade tickets |_| 100% accuracy and processed by T+1 if received by
the following cut-off times:
|_| All Funds (except International) - 10:00 am (T+1)
|_| International - 12:00 p.m. (T+1)
|_| Same day settlements - 1:30 p.m.
------------------------------------------------------------ ---------------------------------------------------------------
III-1
------------------------------------------------------------ ---------------------------------------------------------------
SERVICE STANDARD
------------------------------------------------------------ ---------------------------------------------------------------
8. Problem Resolution (general) |_| NAV impact analysis within 1 day
|_| Clear and timely communication of 100% of issues
|_| Ongoing Tracking
------------------------------------------------------------ ---------------------------------------------------------------
9. Cash reconciliations |_| Performed daily and sent daily to BAAI (Money Market
Funds) and sent weekly to BAAI (all other funds)
|_| Issues communicated to BAAI same day
|_| Outstanding items addressed within 1 business day
------------------------------------------------------------ ---------------------------------------------------------------
10. Position Reconciliations |_| Performed daily and sent weekly to BAAI
|_| Issues communicated to BAAI same day
|_| Open issues addressed within 2 business days
------------------------------------------------------------ ---------------------------------------------------------------
11. Tax reporting
|_| Federal, state, tax returns |_| Tax provision package prepared within time
parameters as set by BAAI/Independent tax
|_| Tax provision packages including Sub-M and excise personnel (PWC)
tax amounts/ distributions
|_| Estimates of tax requirements prepared as required
|_| Identification of all book/tax differences by BAAI for proper tax planning
|_| Capital gain estimate preparations
------------------------------------------------------------ ---------------------------------------------------------------
12. Statistical Reports |_| Filed within the time parameters as set forth by
each statistical service
------------------------------------------------------------ ---------------------------------------------------------------
13. Expense accruals/payments |_| Payments made on the business day written
instructions from an authorized signator received
|_| Expense accruals made with 100% accuracy based upon
written instructions from BAAI
------------------------------------------------------------ ---------------------------------------------------------------
14. Management Reports |_| Provided to BAAI within 10 business days of month end
------------------------------------------------------------ ---------------------------------------------------------------
III-2
------------------------------------------------------------ ---------------------------------------------------------------
SERVICE STANDARD
------------------------------------------------------------ ---------------------------------------------------------------
15. Year end tax reports |_| Provided to BAAI within the time frame agreed to
------------------------------------------------------------ ---------------------------------------------------------------
16. Annual/Semi-Annual Reports |_| Provide Trial Balance within 5 business days after
annual/semi-annual period
|_| Provide additional financial statement support as
agreed to
------------------------------------------------------------ ---------------------------------------------------------------
17. Daily Reports |_| To be provided on the following day
|_| Provide detailed portfolio valuation
|_| Trial Balance
------------------------------------------------------------ ---------------------------------------------------------------
18. Daily Cash Sweep |_| 100% accuracy and communication by 2:00 p.m. EST
|_| AIM
|_| Nuveen
------------------------------------------------------------ ---------------------------------------------------------------
19. Post Dividends / Corporate Actions |_| 100% accuracy and posted on effective date
------------------------------------------------------------ ---------------------------------------------------------------
20. Monthly Reconciliations |_| Complete reconciliations within 10 business days
------------------------------------------------------------ ---------------------------------------------------------------
21. Reporting to Sub-Advisors |_| Provide nightly and other periodic reporting to
Nations Funds Sub-Advisors
------------------------------------------------------------ ---------------------------------------------------------------
22. Compliance |_| Provide compliance reports as requested by BAAI
------------------------------------------------------------ ---------------------------------------------------------------
III-3
SCHEDULE IV
(Attached)
IV-1
SCHEDULE V
All Database Companies Quarterly List
---------------------- --------------
AMG Data Services Lipper
Xxxxxx'x Morningstar
Bloomberg CDA Wiesenberger
CDA Wiesenberger Investment Company Institute
Commerce Clearing House (CCH) S&P Micropal
Forbes Institute for Economic Research
Institute for Economic Research Value Line
Interactive Data Services Media General Financial Services
Investment Company Institute LCG Associates
LCG Associates Closed End Fund Digest (Closed End Only)
Lipper Lipper - International (Closed End Only)
Media General
Xxxxx'x Investors Service
Morningstar
S&P Micropal
Strategic Insights
Value Line
VI-1
