Exhibit 99.23(h)(2)
SUB-ADMINISTRATION AGREEMENT
This SUB-ADMINISTRATION AGREEMENT (the "Agreement") is made as of December
1, 1998 by and among THE BANK OF NEW YORK ("BNY"), NATIONSBANC ADVISORS, INC.
("NBAI") and NATIONS ANNUITY TRUST (the "Annuity Trust").
WHEREAS, the Annuity Trust is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, NBAI serves as the Co-Administrator for the investment portfolios
of the Annuity Trust pursuant to a separate Co-Administration Agreement; and
WHEREAS, NBAI desires to retain BNY to render certain sub-administrative
services to the Annuity Trust and to NBAI, as Co-Administrator of the Annuity
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.
-------------------------------------------
(a) NBAI hereby appoints BNY to act as Sub-Administrator of the Annuity
Trust and to render sub-administrative services for each portfolio of the
Annuity 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 Annuity Trust or NBAI will become a
"Fund" for all purposes hereunder when BNY receives a revised Schedule I from
NBAI or the Annuity 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 Annuity
Trust's Declaration of Trust and Bylaws (the "Bylaws"), 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 Annuity Trust's Registration Statement, as such Registration Statement
may be amended from time to time; (ii) consult and coordinate with NBAI and the
Annuity Trust, as necessary and appropriate; and (iii) advise and report to NBAI
and the Annuity 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 Annuity Trust has furnished BNY and NBAI with copies properly
certified or authenticated of each of the following: (i) the Annuity Trust's
Declaration of Trust or other organizational document and all amendments thereto
(the "Declaration"); (ii) the Annuity Trust's
1
Bylaws; (iii) resolutions of the Annuity Trust's Board of Trustees or other
governing body (the "Board") authorizing the execution, delivery and performance
of this Agreement by the Annuity Trust; (iv) the Annuity Trust's most recent
Post-Effective Amendment to its Registration Statement on Form N-1A (the
"Registration Statement") under the Securities Act of 1933, as amended, and
under the 1940 Act (File Nos. 333-40265 and 881-08481), as filed with the
Securities and Exchange Commission (the "SEC") relating to the Funds' shares
(the "Shares"); (iv) the Funds' current Prospectus(es); (v) the Funds' current
Statement(s) of Additional Information; and (vi) the pricing procedures
applicable to the calculation of the Funds' net asset values as approved by the
Annuity Trust's Board (the "Pricing Procedures"). It is solely the Annuity
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
Annuity Trust will provide BNY with any other documents that BNY and NBAI may
reasonably request and will notify BNY and NBAI as soon as possible of any
matter materially affecting either BNY's or NBAI's performance of its services
under this Agreement.
(d)(i) BNY undertakes to report on a regular basis to NBAI and the Annuity
Trust regarding: (A) the readiness of its computer systems, or those used by it
in the performance of its duties hereunder, properly to record, store, process,
calculate or present calendar dates falling on and after, and time spans
including, September 9, 1999, January 1, 2000 or February 29, 2000 (the "Subject
Dates") as a result of the occurrence, or use of data containing any such
Subject Dates; (B) the readiness of its computer systems or those used by it in
the performance of its duties hereunder, to calculate any information dependent
on or relating to dates on or after the Subject Dates; and (C) its ability to
perform the administration and fund accounting services set forth in Schedule II
(the "Services") in accordance with any applicable performance standards set
forth in Schedule III (the "Standards") with respect to the maintenance of
records or processing of data containing dates falling on or after the Subject
Dates, provided that, with respect to computers used but not owned by BNY and
third-party computer systems other than InvestOne, BNY's responsibility shall be
limited to seeking similar reports from such owners or third parties and
promptly forwarding such reports to NBAI. Without limiting the foregoing, BNY
undertakes to notify NBAI and the Annuity Trust, in writing, of any concerns
believed by BNY to be material regarding the events described in this paragraph,
provided that, with respect to computers owned by others and third-party
computer systems other than InvestOne, BNY's responsibility shall be limited to
seeking similar notice from such owners or third parties and promptly forwarding
such notifications to NBAI.
(ii) NBAI or the Annuity Trust shall have the right to terminate this
Agreement if there is a "material failure" by BNY to perform any of the Services
in accordance with the Standards due to a failure by computers owned or used by
BNY in performing its duties hereunder to properly process the occurrence of the
Subject Dates or data containing the Subject Dates. As used in this Section
1(d), the term "material failure" shall be limited to a failure to provide any
of the Services in accordance with the Standards, provided that no such failure
shall be deemed a "material failure" if such failure occurs at or about the time
other major financial institutions similar to BNY providing similar services in
a similar volume to investment
2
companies similar to the Annuity Trust are experiencing similar failures, and,
provided further, that no failure by BNY shall be or be deemed a "material
failure" if BNY substantially provides the Services under a contingency plan, it
being agreed that, to the extent that the parties mutually agree, the time
frames and deadlines set forth in Schedule III of this Agreement and elsewhere
shall not be considered in determining whether BNY is substantially providing
the Services in accordance with the Standards. NBAI and the Annuity Trust agree
to act reasonably and in good faith in considering any request by BNY to extend
time frames and deadlines.
(iii) In the event there is a "material failure" by BNY to provide the
Services and such "material failure" is not cured by BNY within 10 days after
such material failure arises, NBAI or the Annuity Trust shall have the right to
terminate this Agreement upon the giving of 60 days written notice to BNY. BNY
shall, notwithstanding any other provision contained in this Agreement, have no
liability to the Annuity Trust or NBAI under this Agreement if such "material
failure" initially arose out of or was caused by a failure of a computer used
but not owned by BNY or owned by a third party (other than InvestOne) to
properly process the Subject Dates or data containing the Subject Dates, and BNY
shall be entitled to any compensation and reimbursement for out-of-pocket
expense as may then be due and payable, as well as agreed-upon out-of-pocket
expenses incurred in connection with such a termination. If such a termination
is the result of a "material failure" initially arising out of, or caused by a
failure of computers owned by BNY or a failure by InvestOne, then, first, BNY's
liability hereunder for such failure shall, notwithstanding any other provision
contained in this Agreement to the contrary, be limited to the lesser of (x) the
fees paid to a successor service provider during the six months next succeeding
the date of termination to the extent such fees exceed the fees that would have
been paid to BNY hereunder, and (y) $1,000,000; and second, BNY shall not be
entitled to out-of-pocket expenses incurred in connection with such a
termination.
(iv) In the event of conflict between this Section 1(d) and any other
provision contained in this Agreement, this Section 1(d) shall control.
(v) NBAI and the Annuity Trust each agree to hold all of the provisions
of this Section 1(d) in strict confidence and not to disclose, nor permit
disclosure of, such provisions.
(e) Subject to the direction and approval of the Annuity 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 Annuity 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
Annuity Trust or NBAI. The Annuity Trust and NBAI shall cause their
3
respective officers, and shall use reasonable efforts to cause the Annuity
Trust's or NBAI'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 NBAI
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 Annuity Trust or NBAI 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 Annuity Trust or NBAI 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 and Schedule II
hereto, and no covenant or obligation shall be implied against BNY in connection
with this Agreement.
(f) The Annuity Trust and NBAI, 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 or Bylaws, 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 Annuity Trust and NBAI 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 Annuity Trust or NBAI to detect any such errors or omissions
shall not relieve BNY of any resulting liability therefrom. To the extent that
NBAI 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 NBAI provided notice of such error or
omission to BNY.
(g) BNY hereby represents and warrants to the Annuity Trust and NBAI, 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,
4
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 Declaration or Bylaws, 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 NBAI and reimbursement for out-of-pocket expenses as set forth in Schedule
IV to this Agreement. It is understood that NBAI shall be responsible for BNY's
monthly fee for its services hereunder, and BNY agrees that it shall have no
claim against the Annuity Trust or the Funds with respect to compensation under
this Agreement.
3. Recordkeeping. BNY shall, as agent for the Annuity Trust, and subject to
-------------
the direction and approval of the Annuity 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, 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 Annuity Trust and NBAI during BNY's normal business hours. All
records maintained and preserved by BNY pursuant to this Agreement which the
Annuity 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 Annuity Trust and shall
be surrendered to the Annuity Trust promptly upon request in the form in which
such records have been maintained and preserved. Upon reasonable request of the
Annuity Trust, BNY shall provide in data files or hard copy, whichever the
Annuity 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 Annuity Trust shall reimburse BNY for its expenses of providing such hard
copy.
4. Standard of Care; Indemnification.
---------------------------------
(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 Annuity Trust unless such loss or
damages 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).
5
(b) The Annuity 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 Annuity Trust, NBAI
(obtained in accordance with the procedures set forth in this Agreement) or its
own counsel; (iv) any improper use by the Fund, the Annuity Trust, NBAI 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
NBAI. BNY will not confess any claim or settle or make any compromise in any
instance in which the Annuity Trust will be asked to provide indemnification,
except with the Annuity Trust's prior written consent. Any amounts payable by
the Annuity 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 Annuity Trust.
5. Fund Accounting Services.
------------------------
(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 Annuity 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 Annuity Trust's Board, BNY shall perform the computations
described in Schedule II at such
6
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 is at any time inconsistent with any applicable laws or regulations,
the Annuity Trust or NBAI 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
Annuity Trust or NBAI then represents in writing to be consistent with all
applicable laws and regulations. The Annuity Trust or NBAI 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 Annuity Trust or NBAI shall be deemed to have
represented that such instruction is consistent with all applicable laws and
regulations and the then-current effective Prospectus of the particular Fund.
The Annuity Trust or NBAI 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 Annuity Trust and NBAI. BNY
shall not be liable for relying on any price provided by any pricing service
believed by BNY to be reliable, and the Annuity Trust or NBAI 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 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 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 Annuity Trust or NBAI 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.
------------------------
(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 NBAI or by vote of the Board of
the Annuity Trust, or upon 180 days' written notice to NBAI and the Annuity
Trust, by BNY. Upon any such termination, BNY will cooperate with and assist the
Annuity Trust, NBAI, 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 NBAI agree to pay BNY any compensation and reimbursement for
out-of-pocket
7
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 NBAI 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 Annuity Trust and NBAI to a successor service provider. In the
event of a dispute as to the amount of such damages, the Funds and NBAI 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 Annuity 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 Annuity
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 Annuity Trust and NBAI at 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 Annuity Trust and NBAI 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 Annuity Trust and NBAI have no objection to BNY so
doing. The Annuity Trust and NBAI 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. Conversion Schedule. If the Annuity Trust and NBAI, in the exercise of
-------------------
their reasonable judgment, cannot meet the conversion schedule set forth in
Schedule VI as a result of BNY's inability to provide, or to confirm that it is
capable of providing, the services described in Schedule II or to meet the
quality of service standards set forth in Schedule III with respect to one or
more Funds in accordance with the conversion schedule attached as Schedule VI,
then BNY shall be obligated to pay any resulting incremental costs incurred by
the Annuity Trust or NBAI,
8
including any incremental fees payable to First Data Investors Services Group by
the Annuity Trust or NBAI.
11. Miscellaneous.
-------------
(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 Annuity Trust and NBAI 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 Annuity Trust or NBAI
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 Annuity Trust or
NBAI 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 Annuity Trust or
NBAI 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.
(e) Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Annuity Trust, BNY and/or NBAI 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 Annuity Trust:
Nations Annuity Trust
000 Xxxxxx Xxxxxx
0
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
To NBAI:
NationsBanc 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.
10
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
-----------------------
Xxxxxxx X. Grunston
Vice President
NATIONSBANC ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------
Xxxxxx X. Xxxxxx
Senior Vice President and
Chief Operating Officer
NATIONS ANNUITY TRUST
By: /s/ Xxxxx X. Xxxxx, Xx.
-----------------------
Xxxxx X. Xxxxx, Xx.
Assistant Secretary
11
SCHEDULE I
1. Nations Value Portfolio
2. Nations Xxxxxxx International Opportunities Portfolio
3. Nations Xxxxxxx 21st Century Portfolio
4. Nations Xxxxxxx Focused Equities Portfolio
5. Nations Xxxxxxx Growth Portfolio
6. Nations Capital Growth Portfolio
7. Nations Small Company Portfolio
8. Nations Asset Allocation Portfolio
9. Nations International Value Portfolio
10. Nations High Yield Bond Portfolio
11. Nations MidCap Growth Portfolio
Last Amended: May 1, 2002
IN WITNESS WHEREOF, the parties hereto have caused this amended Schedule I
to be executed by their duly authorized officers designated below as of the 1st
day of May, 2002.
THE BANK OF NEW YORK
By: /s/ Xxxxxxx X. Grunston
---------------------------------
Xxxxxxx X. Grunston
Vice President
BANC OF AMERICA ADVISORS, LLC
(formerly, NationsBanc Advisors, Inc.)
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
Senior Vice President and
Chief Operating Officer
NATIONS SEPARATE ACCOUNT TRUST
(formerly Nations Annuity Trust)
By: /s/ Xxxxxxx X. Xxxxx, Xx.
---------------------------------
Xxxxxxx X. Xxxxx, Xx.
Secretary
I-1
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:
.. 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. NBAI shall be responsible for communicating such
policies and restrictions, including any changes thereto, to BNY by such
means as the parties agree.
.. 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.
.. 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.
.. Prepare Return of Capital Statement of Position 93-2 adjustments.
.. Support NBAI in its preparation of the schedules and provide NBAI 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.
.. 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.
.. Attend Fund shareholder and Board of Trustees meetings as requested by
NBAI, 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 Annuity Trust and NBAI as the Annuity
Trust and NBAI 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
--------------------------------------
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 Annuity Trust, NBAI and BNY, and shall make
available to NBAI and/or the Annuity 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.
II-2
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:
------------------------
. 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 NBAI as NBAI
shall provide BNY in writing
. When instructed by NBAI, enter manual prices supplied by broker and
link to pricing procedures
. Calculate each Fund's NAV/POP in accordance with the applicable Pricing
Procedures approved by the Annuity Trust's Board of Trustees and
prepare NAV proof sheet. Review components of change in NAV for
reasonableness based on the tolerance levels as NBAI shall direct BNY
in writing
. Review variance reporting for price changes in individual securities
using variance levels established by Fund and report to Fund portfolio
managers and to NBAI
. Review for ex-dividend items indicated by pricing sources; trace
to general ledger for agreement
. Communicate required pricing and yield information (NAV/POP), as
appropriate, to NBAI, 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 NBAI.
2. Dividend Rates/Yields/Dollar Weighted Average Maturity:
------------------------------------------------------
. Calculate, subject to the approval of NBAI, net investment income
available for distribution daily as appropriate
. Calculate daily dividend rate, and 1, 7, 30-day yields/SEC yields
. Calculate dollar weighted average maturity
3. Determine and Report Cash Availability:
--------------------------------------
. Receive daily cash and transaction statements from the Funds' Custodian
. Complete daily bank cash reconciliations (including documentation of
any reconciling items) and notify the Funds' Custodian
. Report investable cash to NBAI and Fund sub-advisers
4. Daily Expense Accruals:
----------------------
. Accrue individual expenses on a daily basis based on Instructions
provided by NBAI, 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
. If applicable, accrue daily amortization of organization expense as
instructed by NBAI
II-3
. If applicable, accrue daily Rule 12b-1 Plan expenses
. Adjust expense accruals as instructed by NBAI and provide reports as
requested by NBAI
5. Verify and Record All Daily Income Accruals for Debt Issues:
-----------------------------------------------------------
. Track income and provide year end tax schedules
. Review and verify all interest and amortization reports
. Periodic tie-out of receivables
. Ensure security masters denote proper interest and amortization methods
as per the fund set up sheets as instructed by NBAI
6. Monitor Securities:
------------------
. Review each funds portfolio holding and current days security trades
for dividend activity
. Interface with Funds' Custodian for timely collection and postings of
corporate actions, dividends and interest pre-payments
7. Enter All Security Trades:
-------------------------
. Review verification of trade and interest calculations
. Verify settlement through custodian statements
. Maintain security ledger transaction reporting
. Maintain tax lot holdings
. Determine realized gains or losses on security trades
. Provide broker commission information
8. Enter All Fund Share Transactions:
---------------------------------
. Periodically reconcile dividend payable amounts with the Funds'
Transfer Agent
. Process activity identified on transfer agent reports
. Verify settlement through custodian statements
. Reconcile to transfer agency report balances
. Process and track capital stock gain/loss activity
9. Prepare Daily Trial Balance:
---------------------------
. Post manual entries to general ledger
. Post custodian bank activity
. Require automated settled transactions between custody and activity
records (prepare, clear and post)
. Post shareholder and security transactions
. Post and verify income and expense accruals and resolve differences
. Prepare general ledger
. Post corporate action activity
II-4
10. Review and Reconcile Custodian Statements:
-----------------------------------------
. Verify all posted interest, dividends, expenses, and shareholder and
security payments/receipts, etc. when requested
. Post all cash settlement activity to trial balance
. Reconcile to ending cash balance accounts
. Report to NBAI the status of past due items and failed trades with the
custodian
. Reconcile cash exception Income items, tax reclaims and past due income
items with custody area
11. Preparation of Accounting Reports:
---------------------------------
. Price Variance Report
. Trial Balance
. Portfolio Valuation
. NAV Calculation Report
. Cash Availability
. Change in NAV
. Non-standard entries
. Stale Price Report
. Other such reports as may be reasonably be requested by NBAI
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 Annuity Trust
and NBAI:
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:
---------------------------------------------------
. SEC yield reporting
. Income by state reporting
. Standard Industry Code Valuation Report (please provide NBAI's industry
code classifications/is there a standard for all funds)
. 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 NBAI with information to assist NBAI in the preparation of NSAR
-----------------------------------------------------------------------
filings
-------
Other Core Services
-------------------
BNY shall provide the following services:
. Accrete discounts and amortize premiums to put and call events as
directed by NBAI and in a manner acceptable under generally accepted
accounting principles
. Process principal repayments on mortgage backed securities
. Update variable securities with current rates
. Process corporate action events through a primary vender feed, and
monitor results via Reuters, Bloomberg, or other available sources as
the parties may agree
. Perform automated portfolio pricing with a second vendor as requested by
NBAI
. 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:
. Calculating the daily portfolio weighted average maturity
. Report portfolio diversification based on trade/security information
provided by NBAI by:
Country, State, Tier, Liquidity, Asset Backed Securities, Industry,
Letter of Credit
. Listing percentage of portfolio maturing in specified intervals (i.e.,
number of days)
. Providing issuer and guarantor diversification exception reporting
International Funds: BNY shall provide the following services:
-------------------
. Report in base and local currency
II-6
. Processing of tax liability on foreign income subject to approval of NBAI
. Daily variance analysis performed on FX rates for security position held
. Produce automated bifurcation reporting in compliance with IRC Section 988
. Xxxx to market security receivables and payables on a daily basis
. 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
Federal Obligation Percentage
The following is federal obligation information on the Nations Funds portfolio
earnings credited to your account in 1997. This information is provided to
enable you to calculate your state tax liability if you live in a state which
does not tax income from U.S. government obligations. We recommend that you
consult your tax adviser if you have questions regarding the requirements for
reporting this information as the requirements vary from state to state.
---------------------------------------------------------------------------------------------------------
Direct and
Government Non-
Agency Qualifying
FUND Obligations/1/ Income/2/ Total
Nations Balanced Assets Fund 3.30% 96.70% 100.00%
Nations Capital Growth Fund 0.00% 100.00% 100.00%
Nations Cash Reserves 1.26% 98.74% 100.00%
Nations Disciplined Equity Fund 0.00% 100.00% 100.00%
Nations Diversified Income Fund 28.86% 71.14% 100.00%
Nations Emerging Growth Fund 0.00% 100.00% 100.00%
Nations Equity Income Fund 2.36% 97.64% 100.00%
Nations Equity Index Fund 0.09% 99.91% 100.00%
Nations Global Government Income Fund 9.21% 90.79% 100.00%
Nations Government Money Market Fund 99.78% 0.22% 100.00%
Nations Government Reserves 31.19% 68.81% 100.00%
Nations Government Securities Fund 35.09% 64.91% 100.00%
Nations International Growth Fund 0.00% 100.00% 100.00%
Nations LifeGoal Balanced Growth Portfolio 12.65% 87.35% 100.00%
Nations LifeGoal Growth Portfolio 0.10% 99.90% 100.00%
Nations LifeGoal Income and Growth Portfolio 16.36% 83.64% 100.00%
Nations Managed Index Fund 0.33% 99.67% 100.00%
Nations Managed SmallCap Index Fund 0.00% 100.00% 100.00%
Nations Managed SmallCap Value Index Fund 0.00% 100.00% 100.00%
Nations Managed Value Index Fund 0.00% 100.00% 100.00%
Nations Pacific Growth Fund 1.73% 98.27% 100.00%
Nations Prime Fund 5.52% 94.48% 100.00%
Nations Short-Intermediate Government Fund 66.12% 33.88% 100.00%
Nations Short-Term Income Fund 10.64% 89.36% 100.00%
Nations Small Company Growth Fund 0.16% 99.84% 100.00%
Nations Strategic Fixed Income Fund 20.21% 79.79% 100.00%
Nations Treasury Fund 21.25% 78.75% 100.00%
Nations Treasury Reserves 17.46% 82.45% 100.00%
Nations U.S. Government Bond Fund 90.51% 9.49% 100.00%
Nations Value Fund 0.00% 100.00% 100.00%
-------------------------------------------------------------------------------------------------------
/1/"Direct Obligations" include U.S. Treasury bills, notes, and bonds.
"Government Agency" covers those non-mortgage related obligations issued by
federal agencies including but not limited to, the Student Loan Marketing
Association (SLMA), the Federal Farm Credit Bank, the Federal Deposit Insurance
Corporation (FDIC), and the Federal Financing Bank. These obligations are backed
by the full faith and credit of the U.S. government.
II-8
/2/"Non-Qualifying Income" includes earnings derived from repurchase agreements,
money market instruments such as agency-issued commercial paper, other regulated
investment companies, corporate obligations, and obligations issued by the
Government National Mortgage Association (GNMA), the Federal National Mortgage
Association (FNMA), and the Federal Home Loan Mortgage Corp. (FHLMC).
Capital Gains Information For Residents Of South Carolina
For each of the Funds, the amount of capital gains distribution which is from
assets held two or more years can be determined by multiplying each capital gain
distribution from your year-end statement by the appropriate percentages:
----------------------------------------------------------------------------------------------------------------------
FUND May 30, 1997 Distribution November 7, 1997 Distribution
------------------------- -----------------------------
----------------------------------------------------------------------------------------------------------------------
Nations Balanced Assets Fund 5.80% 17.51%
----------------------------------------------------------------------------------------------------------------------
Nations Capital Growth Fund 46.05% 40.53%
----------------------------------------------------------------------------------------------------------------------
Nations Disciplined Equity Fund 0.00% 22.75%
----------------------------------------------------------------------------------------------------------------------
Nations Emerging Growth Fund 33.38% 21.24%
----------------------------------------------------------------------------------------------------------------------
Nations Equity Income Fund 37.09% 51.39%
----------------------------------------------------------------------------------------------------------------------
Nations Equity Index Fund 8.97% 13.84%
----------------------------------------------------------------------------------------------------------------------
Nations Georgia Intermediate Municipal Bond - 99.04%
Fund
----------------------------------------------------------------------------------------------------------------------
Nations Global Government Income Fund 0.00% -
----------------------------------------------------------------------------------------------------------------------
Nations Intermediate Municipal Bond Fund - 100.00%
----------------------------------------------------------------------------------------------------------------------
Nations International Equity Fund - 100.00%
----------------------------------------------------------------------------------------------------------------------
Nations International Growth Fund - 100.00%
----------------------------------------------------------------------------------------------------------------------
Nations Managed Index Fund 0.00% -
----------------------------------------------------------------------------------------------------------------------
Nations Municipal Income Fund - 98.42%
----------------------------------------------------------------------------------------------------------------------
Nations Small Company Growth Fund - 6.12%
----------------------------------------------------------------------------------------------------------------------
Nations South Carolina Intermediate - 79.38%
Municipal Bond Fund
----------------------------------------------------------------------------------------------------------------------
Nations South Carolina Municipal Bond Fund 93.25% -
----------------------------------------------------------------------------------------------------------------------
Nations U.S. Government Bond Fund - 46.40%
----------------------------------------------------------------------------------------------------------------------
Nations Value Fund 61.85% 66.01%
----------------------------------------------------------------------------------------------------------------------
II-9
Percentage Of Municipal Income By State and Territory
Many states do not tax income derived from investments in their own state
obligations or in investments subject to agreements between their state and
other states. The following chart shows the percentage of income excluding
capital gains in the various Nations Funds portfolios derived from investments
in municipal obligations. This percentage indicates the amount that may be
tax-exempt in your state.
Nations Nations Short-Term Nations Intermediate Nations Nations
Tax-Exempt Municipal Income Municipal Bond Fund Municipal Municipal
STATE Fund Fund Income Fund Reserves
-----------------------------------------------------------------------------------------------------------------------
Alabama 2.50% 0.00% 1.00% 2.93% 3.73%
-----------------------------------------------------------------------------------------------------------------------
Alaska 1.18% 4.04% 2.17% 3.38% 0.45%
-----------------------------------------------------------------------------------------------------------------------
Arizona 5.09% 3.42% 3.11% 1.74% 1.22%
-----------------------------------------------------------------------------------------------------------------------
Arkansas 0.17% 0.00% 0.65% 0.99% 0.23%
-----------------------------------------------------------------------------------------------------------------------
California 2.07% 0.00% 0.70% 2.63% 4.83%
-----------------------------------------------------------------------------------------------------------------------
Colorado 3.59% 0.00% 2.11% 1.15% 3.70%
-----------------------------------------------------------------------------------------------------------------------
Connecticut 0.03% 0.00% 1.24% 1.30% 0.00%
-----------------------------------------------------------------------------------------------------------------------
Delaware 2.61% 0.00% 0.02% 0.00% 1.46%
-----------------------------------------------------------------------------------------------------------------------
District of Columbia 1.04% 1.64% 0.89% 1.34% 1.69%
-----------------------------------------------------------------------------------------------------------------------
Florida 7.25% 1.08% 6.75% 7.84% 4.89%
-----------------------------------------------------------------------------------------------------------------------
Georgia 6.06% 2.74% 4.02% 7.64% 8.30%
-----------------------------------------------------------------------------------------------------------------------
Guam 0.00% 3.70% 0.33% 0.52% 0.00%
-----------------------------------------------------------------------------------------------------------------------
Hawaii 0.42% 0.81% 2.17% 1.50% 0.00%
-----------------------------------------------------------------------------------------------------------------------
Idaho 0.25% 0.00% 0.00% 0.00% 0.00%
-----------------------------------------------------------------------------------------------------------------------
Illinois 14.19% 5.49% 8.18% 5.01% 9.66%
-----------------------------------------------------------------------------------------------------------------------
Indiana 2.84% 1.69% 0.94% 3.44% 1.54%
-----------------------------------------------------------------------------------------------------------------------
Iowa 0.25% 0.88% 0.70% 0.00% 0.00%
-----------------------------------------------------------------------------------------------------------------------
Kansas 2.42% 0.42% 0.65% 1.53% 0.00%
-----------------------------------------------------------------------------------------------------------------------
Kentucky 3.80% 0.00% 0.04% 0.22% 2.53%
-----------------------------------------------------------------------------------------------------------------------
Louisiana 2.33% 0.41% 0.07% 0.00% 2.39%
-----------------------------------------------------------------------------------------------------------------------
Maine 0.37% 0.00% 0.61% 0.08% 0.00%
-----------------------------------------------------------------------------------------------------------------------
Maryland 0.80% 1.76% 3.10% 0.00% 0.55%
-----------------------------------------------------------------------------------------------------------------------
Massachusetts 0.12% 2.40% 3.02% 3.85% 0.00%
-----------------------------------------------------------------------------------------------------------------------
Michigan 2.34% 7.12% 1.82% 1.99% 2.99%
-----------------------------------------------------------------------------------------------------------------------
Minnesota 0.86% 0.43% 1.11% 0.14% 0.31%
-----------------------------------------------------------------------------------------------------------------------
Mississippi 0.80% 0.00% 2.11% 1.05% 0.32%
-----------------------------------------------------------------------------------------------------------------------
Missouri 7.88% 0.49% 2.60% 2.02% 1.69%
-----------------------------------------------------------------------------------------------------------------------
Montana 0.56% 0.00% 0.00% 0.00% 0.64%
-----------------------------------------------------------------------------------------------------------------------
Nebraska 0.22% 0.00% 0.22% 0.10% 0.21%
-----------------------------------------------------------------------------------------------------------------------
Nevada 0.00% 3.39% 2.61% 1.74% 0.00%
-----------------------------------------------------------------------------------------------------------------------
New Hampshire 0.00% 0.00% 0.00% 0.00% 0.00%
-----------------------------------------------------------------------------------------------------------------------
New Jersey 0.32% 1.18% 2.76% 0.82% 0.00%
-----------------------------------------------------------------------------------------------------------------------
New Mexico 0.55% 3.04% 0.92% 0.38% 1.82%
-----------------------------------------------------------------------------------------------------------------------
New York 0.22% 3.45% 2.59% 4.28% 0.00%
-----------------------------------------------------------------------------------------------------------------------
II-10
Nations Nations Short-Term Nations Intermediate Nations Nations
Tax-Exempt Municipal Income Municipal Bond Fund Municipal Municipal
STATE Fund Fund Income Fund Reserves
-----------------------------------------------------------------------------------------------------------------------
North Carolina 2.48% 1.16% 2.47% 1.58% 0.42%
-----------------------------------------------------------------------------------------------------------------------
North Dakota 0.00% 0.25% 0.00% 0.00% 0.26%
-----------------------------------------------------------------------------------------------------------------------
Ohio 1.40% 0.15% 0.63% 1.54% 5.85%
-----------------------------------------------------------------------------------------------------------------------
Oklahoma 0.38% 0.42% 0.66% 0.00% 0.11%
-----------------------------------------------------------------------------------------------------------------------
Oregon 1.31% 0.00% 0.80% 1.18% 0.72%
-----------------------------------------------------------------------------------------------------------------------
Pennsylvania 3.17% 4.66% 2.81% 4.39% 2.43%
-----------------------------------------------------------------------------------------------------------------------
Puerto Rico 0.00% 1.07% 0.27% 0.09% 0.00%
-----------------------------------------------------------------------------------------------------------------------
Rhode Island 0.21% 0.00% 0.39% 0.59% 0.00%
-----------------------------------------------------------------------------------------------------------------------
South Carolina 1.94% 2.13% 1.82% 2.79% 4.19%
-----------------------------------------------------------------------------------------------------------------------
South Dakota 0.00% 0.77% 0.00% 0.00% 0.46%
-----------------------------------------------------------------------------------------------------------------------
Tennessee 1.40% 4.86% 1.55% 2.77% 6.35%
-----------------------------------------------------------------------------------------------------------------------
Texas 5.07% 15.58% 11.44% 10.38% 9.72%
-----------------------------------------------------------------------------------------------------------------------
Utah 1.63% 0.00% 0.13% 2.01% 1.70%
-----------------------------------------------------------------------------------------------------------------------
Vermont 0.00% 0.00% 0.00% 0.00% 0.00%
-----------------------------------------------------------------------------------------------------------------------
Virginia 1.22% 2.51% 6.51% 1.48% 4.04%
-----------------------------------------------------------------------------------------------------------------------
Washington 2.17% 11.60% 7.18% 9.47% 1.15%
-----------------------------------------------------------------------------------------------------------------------
West Virginia 1.86% 0.00% 0.22% 0.57% 1.46%
-----------------------------------------------------------------------------------------------------------------------
Wisconsin 2.11% 2.67% 2.24% 0.41% 3.07%
-----------------------------------------------------------------------------------------------------------------------
Wyoming 0.01% 0.00% 0.00% 0.47% 0.85%
-----------------------------------------------------------------------------------------------------------------------
State Specific Tax-Exempt Funds
For residents of the following states, a portion of income (excluding capital
gains) derived from Nations Funds state-specific municipal bond funds for the
year ended December 31, 1997 is exempt from regular federal and state income
taxes. For certain investors, a portion of income may be subject to the federal
Alternative Minimum Tax.
State Exempt Federal Exempt
FUND Percentage Percentage
---------------------------------------------------------------------------------------------------------
Nations Florida Intermediate Municipal Bond Fund 98.26% 100.00%
---------------------------------------------------------------------------------------------------------
Nations Florida Municipal Bond Fund 97.24% 99.71%
---------------------------------------------------------------------------------------------------------
Nations Georgia Intermediate Municipal Bond Fund 98.93% 99.79%
---------------------------------------------------------------------------------------------------------
Nations Georgia Municipal Bond Fund 97.35% 99.13%
---------------------------------------------------------------------------------------------------------
Nations Maryland Intermediate Municipal Bond Fund 95.80% 100.00%
---------------------------------------------------------------------------------------------------------
Nations Maryland Municipal Bond Fund 93.44% 99.48%
---------------------------------------------------------------------------------------------------------
Nations North Carolina Intermediate Municipal Bond Fund 95.53% 99.87%
---------------------------------------------------------------------------------------------------------
II-11
State Exempt Federal Exempt
FUND Percentage Percentage
---------------------------------------------------------------------------------------------------------
Nations North Carolina Municipal Bond Fund 97.69% 99.53%
---------------------------------------------------------------------------------------------------------
Nations South Carolina Intermediate Municipal Bond Fund 98.72% 99.95%
---------------------------------------------------------------------------------------------------------
Nations South Carolina Municipal Bond Fund 93.76% 99.44%
---------------------------------------------------------------------------------------------------------
Nations Tennessee Intermediate Municipal Bond Fund 97.91% 99.89%
---------------------------------------------------------------------------------------------------------
Nations Tennessee Municipal Bond Fund 97.47% 100.00%
---------------------------------------------------------------------------------------------------------
Nations Texas Intermediate Municipal Bond Fund 81.38% 99.99%
---------------------------------------------------------------------------------------------------------
Nations Texas Municipal Bond Fund 83.51% 99.39%
---------------------------------------------------------------------------------------------------------
Nations Virginia Intermediate Municipal Bond Fund 97.87% 99.94%
---------------------------------------------------------------------------------------------------------
Nations Virginia Municipal Bond Fund 95.42% 99.73%
---------------------------------------------------------------------------------------------------------
Alternative Minimum Tax
This information is to be used to calculate your federal Alternative Minimum Tax
liability, if applicable. Multiply the percentage below by the Fund distribution
(excluding capital gains) to give you the distributions to be added to your
Alternative Minimum Taxable income.
FUND Percentage
--------------------------------------------------------------------------------
Nations Florida Intermediate Municipal Bond Fund 5.94%
--------------------------------------------------------------------------------
Nations Florida Municipal Bond Fund 17.79%
--------------------------------------------------------------------------------
Nations Georgia Intermediate Municipal Bond Fund 6.50%
--------------------------------------------------------------------------------
Nations Georgia Municipal Bond Fund 19.17%
--------------------------------------------------------------------------------
Nations Intermediate Municipal Bond Fund 6.28%
--------------------------------------------------------------------------------
Nations Maryland Intermediate Municipal Bond Fund 4.17%
--------------------------------------------------------------------------------
Nations Maryland Municipal Bond Fund 10.55%
--------------------------------------------------------------------------------
Nations Municipal Income Fund 12.44%
--------------------------------------------------------------------------------
Nations Municipal Reserves 9.79%
--------------------------------------------------------------------------------
Nations North Carolina Intermediate Municipal Bond Fund 4.23%
--------------------------------------------------------------------------------
Nations North Carolina Municipal Bond Fund 14.86%
--------------------------------------------------------------------------------
Nations Short-Term Municipal Income Fund 9.96%
--------------------------------------------------------------------------------
Nations South Carolina Intermediate Municipal Bond Fund 6.22%
--------------------------------------------------------------------------------
Nations South Carolina Municipal Bond Fund 15.57%
--------------------------------------------------------------------------------
Nations Tax-Exempt Fund 16.64%
--------------------------------------------------------------------------------
Nations Tennessee Intermediate Municipal Bond Fund 9.53%
--------------------------------------------------------------------------------
Nations Tennessee Municipal Bond Fund 16.04%
--------------------------------------------------------------------------------
Nations Texas Intermediate Municipal Bond Fund 4.09%
--------------------------------------------------------------------------------
Nations Texas Municipal Bond Fund 16.83%
--------------------------------------------------------------------------------
Nations Virginia Intermediate Municipal Bond Fund 6.83%
--------------------------------------------------------------------------------
Nations Virginia Municipal Bond Fund 14.66%
--------------------------------------------------------------------------------
II-12
Corporate Qualifying Dividends
The following information is provided to enable shareholders to calculate the
amount of dividends paid by the Fund which qualify for the corporate dividend
received deduction.
Domestic Domestic & Foreign
FUND Corporations Corporations
--------------------------------------------------------------------------------
Nations Balanced Assets Fund 6.48% 6.82%
--------------------------------------------------------------------------------
Nations Capital Growth Fund 32.82% 34.22%
--------------------------------------------------------------------------------
Nations Disciplined Equity Fund 18.88% 19.50%
--------------------------------------------------------------------------------
Nations Emerging Growth Fund 19.87% 19.95%
--------------------------------------------------------------------------------
Nations Emerging Markets Fund 0.00% 100.00%
--------------------------------------------------------------------------------
Nations Equity Income Fund 30.13% 30.70%
--------------------------------------------------------------------------------
Nations Equity Index Fund 50.88% 52.15%
--------------------------------------------------------------------------------
Nations International Equity Fund 0.00% 100.00%
--------------------------------------------------------------------------------
Nations International Growth Fund 0.00% 100.00%
--------------------------------------------------------------------------------
Nations Managed Index Fund 84.38% 85.49%
--------------------------------------------------------------------------------
Nations Managed SmallCap Index Fund 22.43% 22.46%
--------------------------------------------------------------------------------
Nations Managed SmallCap Value Index Fund 75.88% 75.88%
--------------------------------------------------------------------------------
Nations Managed Value Index Fund 75.78% 75.78%
--------------------------------------------------------------------------------
Nations Pacific Growth Fund 0.00% 100.00%
--------------------------------------------------------------------------------
Nations Value Fund 44.32% 45.23%
--------------------------------------------------------------------------------
Florida Intangibles Tax Percentage/3/
Exempt
FUND Percentage
Equity
Nations Balanced Assets Fund 19.37%
--------------------------------------------------------------------------------
Nations Capital Growth Fund 0.00%
--------------------------------------------------------------------------------
Nations Disciplined Equity Fund 0.00%
--------------------------------------------------------------------------------
Nations Emerging Growth Fund 0.00%
--------------------------------------------------------------------------------
Nations Emerging Markets Fund 0.00%
--------------------------------------------------------------------------------
Nations Equity Income Fund 0.00%
--------------------------------------------------------------------------------
Nations Equity Index Fund 0.11%
--------------------------------------------------------------------------------
Nations International Equity Fund 0.00%
--------------------------------------------------------------------------------
Nations International Growth Fund 0.00%
--------------------------------------------------------------------------------
Nations LifeGoal Growth Portfolio 0.00%
-------------------------------------------------------------------------------
Nations LifeGoal Balanced Growth Portfolio 0.00%
--------------------------------------------------------------------------------
Nations LifeGoal Income and Growth Portfolio 0.00%
--------------------------------------------------------------------------------
II-13
Exempt
FUND Percentage
-------------------------------------------------------------------------------
Nations Managed Index Fund 0.13%
-------------------------------------------------------------------------------
Nations Managed SmallCap Index Fund 0.00%
-------------------------------------------------------------------------------
Nations Managed SmallCap Value Index Fund 0.00%
-------------------------------------------------------------------------------
Nations Managed Value Index Fund 0.00%
-------------------------------------------------------------------------------
Nations Pacific Growth Fund 0.00%
-------------------------------------------------------------------------------
Nations Value Fund 0.00%
-------------------------------------------------------------------------------
Fixed Income
Nations Diversified Income Fund 39.79%
--------------------------------------------------------------------------------
Nations Global Government Income Fund 0.00%
--------------------------------------------------------------------------------
Nations Government Securities Fund 0.00%
--------------------------------------------------------------------------------
Nations Short-Intermediate Government Fund 63.44%
--------------------------------------------------------------------------------
Nations Short-Term Income Fund 8.01%
--------------------------------------------------------------------------------
Nations Strategic Fixed Income Fund 8.28%
--------------------------------------------------------------------------------
Nations U.S. Government Bond Fund 0.00%
--------------------------------------------------------------------------------
Money Market
Nations Cash Reserves 0.46%
--------------------------------------------------------------------------------
Nations Government Money Market Fund 100.00%
--------------------------------------------------------------------------------
Nations Government Reserves 24.61%
--------------------------------------------------------------------------------
Nations Prime Fund 0.00%
--------------------------------------------------------------------------------
Nations Treasury Fund 0.00%
--------------------------------------------------------------------------------
Nations Treasury Reserves 12.56%
--------------------------------------------------------------------------------
Municipal
Nations Florida Intermediate Municipal Bond Fund 100.00%
--------------------------------------------------------------------------------
Nations Florida Municipal Bond Fund 100.00%
-------------------------------------------------------------------------------
Nations Georgia Intermediate Municipal Bond Fund 0.72%
-------------------------------------------------------------------------------
Nations Georgia Municipal Bond Fund 0.00%
-------------------------------------------------------------------------------
Nations Intermediate Municipal Bond Fund 0.18%
-------------------------------------------------------------------------------
Nations Maryland Intermediate Municipal Bond Fund 1.30%
-------------------------------------------------------------------------------
Nations Maryland Municipal Bond Fund 9.92%
-------------------------------------------------------------------------------
Nations Municipal Income Fund 0.00%
-------------------------------------------------------------------------------
Nations North Carolina Intermediate Municipal Bond Fund 0.93%
-------------------------------------------------------------------------------
Nations North Carolina Municipal Bond Fund 2.06%
-------------------------------------------------------------------------------
Nations Short-Term Municipal Income Fund 2.44%
-------------------------------------------------------------------------------
Nations South Carolina Intermediate Municipal Bond Fund 0.00%
-------------------------------------------------------------------------------
Nations South Carolina Municipal Bond Fund 5.29%
-------------------------------------------------------------------------------
Nations Tax-Exempt Fund 0.00%
-------------------------------------------------------------------------------
II-14
Exempt
FUND Percentage
--------------------------------------------------------------------------------
Nations Municipal Reserves 0.00%
--------------------------------------------------------------------------------
Nations Tennessee Intermediate Municipal Bond Fund 4.25%
--------------------------------------------------------------------------------
Nations Tennessee Municipal Bond Fund 7.81%
--------------------------------------------------------------------------------
Nations Texas Intermediate Municipal Bond Fund 0.26%
--------------------------------------------------------------------------------
Nations Texas Municipal Bond Fund 3.06%
--------------------------------------------------------------------------------
Nations Virginia Intermediate Municipal Bond Fund 0.00%
--------------------------------------------------------------------------------
Nations Virginia Municipal Bond Fund 0.00%
--------------------------------------------------------------------------------
/3/If any portion of a fund's shares is subject to the Florida Intangibles Tax,
then only U.S. government obligations will retain their tax-exempt status.
Obligations issued by Florida would lose their exempt status and be subject to
the intangibles tax.
Additional Information:
As a shareholder of Nations International Equity Fund, Nations Emerging Markets
Fund, Nations Pacific Growth Fund and or Nations Global Government Income Fund
who received dividends, you are entitled to receive your choice of either a
foreign tax credit or an itemized deduction for foreign taxes paid by the Fund.
Your portion of the foreign taxes paid by the Fund in 1997 is reported in Box 3
of your Form 1099-DIV.
To take an itemized deduction for your share of the foreign taxes paid by the
Fund, include the amount in Box 3 of Form 1099-DIV on Schedule A, Line 8 of your
Form 1040.
The TaxPayer Relief Act of 1997 has modified the flow-through status of Foreign
Tax Credits ("FTCs"). As a result, a percentage of FTC might not be eligible for
credit. In order to assist you in determining the amount of Foreign Tax Paid
which is not eligible for a credit, multiply the percentage listed in Column A
below, by the Foreign Tax Paid ("FTP") amount reported on Form 1099-DIV, box 3.
For each fund, deduct this amount from the FTP (box 3) and report the total
resulting amounts in Form 1040, Line 43.
To compute the allowable credit, individual shareholders must complete IRS Form
1116 and attach it to their Form 1040. Corporate shareholders should complete
Form 1118. The chart below should be used to prepare either of these Forms.
Although it will generally be more advantageous to claim a credit for the
foreign taxes paid, the ability to claim a credit depends on your individual tax
situation. We suggest that you consult your tax adviser to determine your best
course of action.
II-15
(A) Amount Not (B) Foreign Source
Fund Eligible For Foreign Income Factor
Tax Credit
Nations Emerging Markets Fund 0.00% .38792129
Nations International Equity Fund 0.00% .51953104
Nations Pacific Growth Fund 0.00% .48509903
Foreign Tax Factor (C) and Foreign Income Factor (D)
------------------------------------------------------------------------------------------------------------
Nations Nations Emerging Nations Pacific
International Equity Markets Fund Growth Fund
Country Fund
C D C D C D
Argentina 0.00% 0.42% 0.00% 5.08% 0.00% 0.00%
Australia 2.83% 5.71% 0.00% 0.00% 22.12% 10.08%
Belgium 2.22% 1.65% 0.00% 0.00% 0.00% 0.00%
Brazil 1.05% 3.15% 21.05% 28.62% 0.00% 0.00%
Egypt 0.00% 0.00% 0.00% 1.40% 0.00% 0.00%
Switzerland 4.80% 4.68% 0.00% 0.00% 0.00% 0.00%
Chile 1.68% 1.38% 15.27% 7.20% 0.00% 0.00%
Germany 4.00% 4.46% 0.00% 0.00% 0.00% 0.00%
Spain 3.46% 2.60% 0.00% 0.00% 0.00% 0.00%
France 10.81% 8.22% 0.00% 0.00% 0.00% 0.00%
Great Britain 33.23% 26.80% 2.78% 1.05% 0.00% 0.00%
Greece 0.00% 0.00% 12.75% 3.69% 0.00% 0.00%
Hungary 0.00% 0.00% 0.00% 0.52% 0.00% 0.00%
Hong Kong 0.00% 9.85% 0.00% 8.65% 0.00% 65.32%
Indonesia 0.06% 0.39% 6.10% 4.01% 11.61% 5.07%
Israel 0.00% 0.00% 0.48% 0.64% 0.00% 0.00%
India 0.00% 0.19% 0.11% 2.33% 0.00% 0.00%
Italy 2.44% 1.82% 0.00% 0.00% 0.00% 0.00%
Japan 12.01% 8.95% 0.00% 0.00% 0.00% 0.00%
Korea 0.90% 1.10% 0.93% 1.55% 11.09% 4.59%
Malaysia 2.25% 0.84% 20.78% 5.18% 35.89% 8.45%
Mexico 0.00% 4.81% 0.00% 8.74% 0.00% 0.00%
Netherlands 9.91% 7.29% 0.00% 0.00% 0.00% 0.00%
Norway 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Peru 0.00% 0.38% 0.00% 3.50% 0.00% 0.00%
Philippines 0.04% 0.03% 3.24% 0.97% 1.60% 0.44%
Portugal 0.48% 0.48% 5.91% 3.94% 0.00% 0.00%
Russia 0.00% 0.00% 0.00% 0.28% 0.00% 0.00%
Sweden 3.45% 2.57% 0.00% 0.00% 0.00% 0.00%
Singapore 3.84% 1.62% 0.00% 0.00% 16.17% 5.02%
Thailand 0.54% 0.61% 0.99% 0.74% 1.52% 1.03%
Taiwan 0.00% 0.00% 0.00% 1.11% 0.00% 0.00%
South Africa 0.00% 0.00% 9.61% 10.80% 0.00% 0.00%
100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
II-16
Instructions For Calculating Foreign Tax and Foreign Source Income by
Country:
1. To calculate your foreign tax by country, multiply the total
foreign taxes (Form 1099-DIV, Box 3) by the applicable Foreign Tax Factor
percentage (Column C) indicated in the chart to the left.
2. To calculate the total foreign source income, multiply the amount
in Box 1b on Form 1099-DIV by the appropriate factor in column B.
3. To calculate the total foreign source income by country, multiply
the total foreign source income determined in step 2 by the applicable
Foreign Income Factor percentage (Column D) presented in the chart to the
left.
II-17
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 uninvested 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 NBAI (Money Market
Funds) and sent weekly to NBAI (all other funds)
[_] Issues communicated to NBAI same day
[_] Outstanding items addressed within 1 business day
----------------------------------------------------------------------------------------------------------------
10. Position Reconciliations [_] Performed daily and sent weekly to NBAI
[_] Issues communicated to NBAI 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 NBAI/Independent tax personnel (PWC)
[_] Tax provision packages including
Sub-M and excise tax amounts/ [_] Estimates of tax requirements prepared as required
distributions by NBAI for proper tax planning
[_] Identification of all book/tax
differences
[_] 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 NBAI
----------------------------------------------------------------------------------------------------------------
14. Management Reports [_] Provided to NBAI within 10 business days of month end
----------------------------------------------------------------------------------------------------------------
III-2
----------------------------------------------------------------------------------------------------------------
SERVICE STANDARD
----------------------------------------------------------------------------------------------------------------
15. Year end tax reports [_] Provided to NBAI 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
[_] Nations Cash Reserves
[_] 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 NBAI
----------------------------------------------------------------------------------------------------------------
III-3
SCHEDULE IV
(Attached)
IV-1
PORTFOLIO PRICING, FUND ACCOUNTING
AND SUB-FUND ADMINISTRATION FEE SCHEDULE
FOR NATIONSBANC MANAGED PORTFOLIOS
Effective 12/1/98
Money Market Funds
------------------
1 1/4 basis point per annum on the first $3 billion of each portfolio's
average net assets;
1 basis point on the next $3 billion;
1/2 of one basis point on the next $4 billion;
1/4 of one basis point on the excess.
Domestic Equity
---------------
6 basis points per annum on the first $1 billion of each portfolio's
average net assets;
4 basis points on the next $500 million;
2 basis points on the next $500 million;
1 basis point on the excess.
Domestic Fixed Income
---------------------
5 basis points per annum on the first $1 billion of each portfolio's
average net assets.
3 basis points on the next $500 million.
1 1/2 basis point on the next $500 million.
1/2 of one basis point on the excess.
International Funds
-------------------
7 basis points per annum on the first $1 billion of each portfolio's
average net assets;
5 basis points on the next $500 million;
3 basis points on the next $500 million;
1 basis point on the excess.
IV-2
PORTFOLIO PRICING, FUND ACCOUNTING
AND SUB-FUND ADMINISTRATION FEE SCHEDULE
FOR NATIONSBANC MANAGED PORTFOLIOS
Effective 12/1/98
Multiple Class Charges
----------------------
$500 per month, per portfolio, for each additional class in excess of nine (9)
classes.
System Development/Usage/Spectra Report Writer
----------------------------------------------
There will be no charges for developing systems interfaces with the Bank or for
on-going usage of any Bank systems related to fund accounting or administration
services.
Accounting Out-of-Pocket Expenses
---------------------------------
The cost of prices for securities exclusively held by Nations obtained from
third party pricing vendors will be in addition to the above fees.
Administration Out-of-Pocket Expenses
-------------------------------------
These expenses are billed as they are incurred at cost. Out-of-pocket expenses
traditionally include, but are not limited to, cost associated with attendance
at Board Presentations, printing of shareholders reports, express mail charges,
etc.
Billing Cycle
-------------
The above fees will be billed on a monthly basis.
NationsBanc Advisors, Inc. The Bank of New York
Approved by: Approved by: /s/ Xxx Xxxxxx
---------------
Name: Name: Xxx Xxxxxx
----------
Title: Title: Vice President
--------------
Date: Date: May 7, 1999
-----------
IV-3
NationsBanc Managed Portfolios
------------------------------
Fund Accounting and Sub Administration Fee Schedule
---------------------------------------------------
When Aggregate Assets Exceed $100 billion
-----------------------------------------
Fund Type Basis Points
--------- ------------
Money Market
------------
First $2 billion 0.000100
Next $1 billion 0.000075
On excess (>$3.0 billion) 0.000025
Domestic Equity
---------------
First $500 million 0.000550
Next $500 million 0.000450
Next $500 million 0.000250
Next $500 million 0.000150
On excess (>$2.0 billion) 0.000050
Domestic Fixed Income
---------------------
First $500 million 0.000450
Next $500 million 0.000350
Next $250 million 0.000225
Next $250 million 0.000100
On excess (>$1.5 billion) 0.000050
International
-------------
First $500 million 0.00060
Next $500 million 0.00050
Next $250 million 0.00040
Next $250 million 0.00030
On excess (>$1.5 billion) 0.00005
IV-4
PORTFOLIO PRICING, FUND ACCOUNTING
AND SUB-FUND ADMINISTRATION FEE SCHEDULE
FOR
NATIONSBANC MANAGED PORTFOLIOS
(Multi Managers)
Multi-Managers
--------------
$22,000 per annum for each multi-manager going to a single feeder. These fees
will be in addition to the following fee schedule now in effect.
For each new multi-manager account with assets less than $20 million, we will
waive our fees for the first three months.
Money Market Funds
------------------
1 1/4 basis point per annum on the first $3 billion of each portfolio's
average net assets;
1 basis point on the next $3 billion;
1/2 of one basis point on the next $4 billion;
1/4 of one basis point on the excess.
Domestic Equity
---------------
6 basis points per annum on the first $1 billion of each portfolio's
average net assets;
4 basis points on the next $500 million;
2 basis points on the next $500 million;
1 basis point on the excess.
Domestic Fixed Income
---------------------
5 basis points per annum on the first $1 billion of each portfolio's
average net assets.
3 basis points on the next $500 million.
1 1/2 basis point on the next $500 million.
1/2 of one basis point on the excess.
International Funds
-------------------
7 basis points per annum on the first $1 billion of each portfolio's
average net assets;
5 basis points on the next $500 million;
3 basis points on the next $500 million;
1 basis point on the excess.
IV-5
PORTFOLIO PRICING, FUND ACCOUNTING
AND SUB-FUND ADMINISTRATION FEE SCHEDULE
FOR
NATIONSBANC MANAGED PORTFOLIOS
(Multi Managers)
Multiple Class Charges
----------------------
$500 per month, per portfolio, for each additional class in excess of nine (9)
classes.
System Development/Usage/Spectra Report Writer
----------------------------------------------
There will be no charges for developing systems interfaces with the Bank or for
on-going usage of any Bank systems related to fund accounting or administration
services.
Accounting Out-of-Pocket Expenses
---------------------------------
The cost of prices for securities exclusively held by Nations obtained from
third party pricing vendors will be in addition to the above fees.
Administration Out-of-Pocket Expenses
-------------------------------------
These expenses are billed as they are incurred at cost. Out-of-pocket expenses
traditionally include, but are not limited to, cost associated with attendance
at Board Presentations, printing shareholders reports, express mail charges,
etc.
Billing Cycle
-------------
The above fees will be billed on a monthly basis.
NationsBanc Advisors, Inc. The Bank of New York
Approved by: Approved by: /s/ Xxx Xxxxxx
---------------
Name: Name: Xxx Xxxxxx
----------
Title: Title: Vice President
--------------
Date: Date: May 7, 1999
-----------
IV-6
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
V-1
SCHEDULE VI
Conversion Schedule
--------------------------------------------------------------------------------
Fund Type Number of Funds No Later Than
--------------------------------------------------------------------------------
Money Market Funds 9 Funds 12/1/98
--------------------------------------------------------------------------------
Variable Annuity Funds 8 Funds 12/31/98
--------------------------------------------------------------------------------
International Funds: 8 Funds 12/31/98
- Global Government
- Emerging Markets
- Pacific Growth
- International Equity
- International Growth
- International Value
- 2 Xxxxxxx Funds
--------------------------------------------------------------------------------
All Remaining Funds 44 Funds 2/15/99
--------------------------------------------------------------------------------
VI-1
