As filed with the Securities and Exchange Commission
on February 23, 1998
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. ___ |_|
Post-Effective Amendment No. ___ |_|
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1940 |_|
Amendment No. ___ |_|
(Check appropriate box or boxes)
------------------------
NATIONS INSTITUTIONAL RESERVES
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
--------------------------
Registrant's Telephone Number, including Area Code: (800) 626-2275
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With copies to:
Robert M. Kurucza, Esq. Jeffrey A. Dalke, Esq.
Marco E. Adelfio, Esq. Drinker Biddle & Reath LLP
Morrison & Foerster LLP Philadelphia National Bank Building
2000 Pennsylvania Ave., N.W. 1345 Chestnut Street
Suite 5500 Philadelphia, PA 19107-2700
Washington, D.C. 20006
It is proposed that this filing will become effective on March 25, 1998 pursuant
to Rule 488.
No filing fee is required under the Securities Act of 1933 because an indefinite
number of shares of beneficial interest in the Registrant, without par value,
has previously been registered pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended. The Registrant filed on June 27, 1997, the
notice required by Rule 24f-2 for its fiscal year ended April 30, 1997 (File No.
33-33144; 811-6030).
<PAGE>
Nations Institutional Reserves
Cross-Reference Sheet
PART A
<TABLE>
<CAPTION>
Item No. Item Caption Prospectus Caption
- -------- ------------ ------------------
<S> <C> <C>
1 Beginning of Registration Statement COVER PAGE OF REGISTRATION STATEMENT;
and Outside Front Cover Page of CROSS-REFERENCE SHEET; FRONT COVER PAGE OF PROXY
Prospectus STATEMENT/PROSPECTUS
2 Beginning and Outside Back Cover TABLE OF CONTENTS
Page of Prospectus
3 Fee Table, Synopsis Information, APPENDIX III -- EXPENSE SUMMARIES OF EMERALD FUNDS
and Risk Factors AND THE CORRESPONDING NATIONS FUNDS; SUMMARY --
PROPOSAL 1 -- APPROVAL OF THE INTERIM ADVISORY
AGREEMENT; SUMMARY -- PROPOSAL 2 -- APPROVAL OF THE
REORGANIZATION AGREEMENT; SUMMARY -- PRINCIPAL RISK
FACTORS
4 Information About the Transaction INFORMATION RELATING TO PROPOSAL 1 -- APPROVAL OF
THE INTERIM ADVISORY AGREEMENT; INFORMATION RELATING
TO PROPOSAL 2 -- APPROVAL OF THE REORGANIZATION
AGREEMENT
5 Information About the Registrant COMPARISON OF EMERALD AND NATIONS; ADDITIONAL
INFORMATION ABOUT NATIONS
6 Information About the Company Being COMPARISON OF EMERALD AND NATIONS; ADDITIONAL
Acquired INFORMATION ABOUT EMERALD
7 Voting Information INFORMATION RELATING TO VOTING MATTERS
</TABLE>
<PAGE>
8 Interest of Certain Persons and NOT APPLICABLE
Experts
9 Additional Information Required for NOT APPLICABLE
Reoffering by Persons Deemed to be
Underwriters
PART B
Statement of Additional
Item No. Item Caption Information Caption
10 Cover Page COVER PAGE
11 Table of Contents TABLE OF CONTENTS
12 Additional Information About the INCORPORATION OF DOCUMENTS BY
Registrant REFERENCE IN STATEMENT
OF ADDITIONAL INFORMATION
13 Additional Information About the NOT APPLICABLE
Company Being Acquired
14 Financial Statements EXHIBITS TO STATEMENT OF
ADDITIONAL INFORMATION
PART C
Item No.
15-17 Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this
Registration Statement.
<PAGE>
- --------------------------------------------------------------------------------
The following items are hereby incorporated by reference:
- --------------------------------------------------------------------------------
Nations Institutional Reserves ("Nations")
From Post-Effective Amendment No. 20 of Reserves Registration Statement, filed
August 28,1997 (SEC File Nos. 33-33144; 811-6030):
Prospectuses for Capital Class Shares of the Nations Treasury Reserves,
dated September 1, 1997.
Statement of Additional Information for Capital Class Shares of the
Nations Treasury Reserves, dated September 1, 1997.
The audited financial statements and related independent accountants' report for
the Nations Treasury Reserves, contained in the Annual Report for the fiscal
year ended April 30, 1997.
The unaudited financial statements for the Nations Treasury Reserves, contained
in the Semi-Annual Report for the six-month period ended October 31, 1997.
Emerald Funds ("Emerald")
From Post-Effective Amendment No. 21 of the Emerald Registration Statement,
filed March 31, 1997 (SEC File Nos. 33-20658; 811-5515):
Prospectuses for the Emerald Prime Advantage Institutional Fund and
Emerald Treasury Advantage Institutional Fund, dated April 1, 1997.
Statement of Additional Information for the Emerald Prime Advantage
Institutional Fund and Emerald Treasury Advantage Institutional Fund,
dated April 1, 1997.
From Post-Effective Amendment No. 22 of the Emerald Registration Statement,
filed January 30,1998 (SEC File Nos. 33-20658; 811-5515):
Prospectuses for the Emerald Prime Advantage Institutional Fund and
Emerald Treasury Advantage Institutional Fund, dated ____________.
Statement of Additional Information for the Emerald Prime Advantage
Institutional Fund and Emerald Treasury Advantage Institutional Fund,
dated ___________.
<PAGE>
The audited financial statements and related independent auditors' report for
the Emerald Prime Advantage Institutional Fund and Emerald Treasury Advantage
Institutional Fund, contained in the Annual Report for the fiscal year ended
November 30, 1997.
<PAGE>
EMERALD FUNDS
Emerald Prime Advantage Institutional Fund
Emerald Treasury Advantage Institutional Fund
3435 Stelzer Road
Columbus, Ohio 43219-3035
March 30, 1998
Dear Shareholder:
On behalf of the Board of Trustees of Emerald Funds ("Emerald"), we are
pleased to invite you to a special meeting of shareholders of the Emerald Funds
named above (each an "Emerald Fund" and together, the "Emerald Funds") to be
held at 10:00 a.m. Eastern time on May 4, 1998 at Emerald's offices located at
3435 Stelzer Road, Columbus, Ohio (the "Meeting"). At the Meeting, you will be
asked:
(1) to ratify and approve an interim investment advisory agreement with
Barnett Capital Advisors, Inc. ("Barnett Capital") for the period from
January 9, 1998 forward (the "Interim Advisory Agreement"); and
(2) to consider a proposed reorganization of your Emerald Fund into a
corresponding portfolio of Nations Institutional Reserves (each a "Nations
Fund" and together, the "Nations Funds"), including the reorganization of
Emerald as a whole.
Background. As you may recall, Barnett Banks, Inc. recently merged into a
wholly-owned subsidiary of NationsBank Corporation ("NationsBank"). As a result
of the merger, Barnett Capital, the investment adviser to the Emerald Funds,
became an indirect wholly-owned subsidiary of NationsBank. The merger
may have caused the existing investment advisory agreement to terminate
automatically. To avoid any potential disruption in advisory services, the Board
of Trustees of Emerald approved the Interim Advisory Agreement with Barnett
Capital, and agreed to submit it to shareholders for their ratification and
approval. The terms and conditions of the Interim Advisory Agreement (including
fee levels) are unchanged from the prior agreement, except for the effective
date and termination date, and the creation of a temporary fee escrow.
At the upcoming Meeting, management also will be asking you to approve a
reorganization of your Emerald Fund into a corresponding Nations Fund. The
Nations Funds are portfolios of an open-end investment company advised by
NationsBanc Advisors, Inc., a subsidiary of NationsBank, N.A. If all approvals
are obtained, the Emerald Funds will be reorganized into the corresponding
Nations Funds in May, 1998.
Nations Institutional Reserves
<PAGE>
EMERALD'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO
APPROVE THE INTERIM ADVISORY AGREEMENT AND THE PROPOSED REORGANIZATION.
Please note that Emerald Shareholders who hold shares of Emerald Funds
other than those listed above will receive additional proxy materials under
separate cover with respect to similar proposals affecting the funds.
Shareholders should fill out the proxy card(s) for each of the Emerald Funds in
which they hold shares in order to vote those shares.
In considering the proposed reorganization, you should note:
o Similar Objectives and Policies
The Emerald Treasury Advantage Institutional Fund is proposed to be
reorganized into a Nations Fund with substantially similar investment
policies and objective. The Emerald Prime Advantage Institutional Fund is
proposed to be reorganized into a new Nations fund portfolio that has been
created for the purpose of the reorganization and that will continue the
investment policies and objective of the Emerald Prime Advantage
Institutional Fund.
o Similar Access Arrangements
Following the reorganization, you will enjoy access to Nations Funds
through distribution, transaction and shareholder servicing arrangements
that are substantially similar to the Emerald Funds' current arrangements.
o Same Value of Shares
The total dollar value of the Nations Fund shares you receive in the
reorganization will be the same as the total dollar value of the Emerald
Fund shares that you held immediately before the reorganization. The
reorganization will be tax-free under federal law, and no sales loads will
be charged in connection with the exchange of Emerald Fund shares for
Nations Fund shares.
o Operating Expense Ratios
The annual fund operating expense ratio (after waivers) for the
corresponding Nations Funds portfolio classes after the reorganization is
expected to be no higher than the annual fund operating expense ratio of
your Emerald Fund.
The proposed reorganization is expected to benefit Emerald Funds shareholders
by:
o offering actual or potential reductions in total operating expense ratios;
o offering shareholders the opportunity to exchange their shares within a
larger and more diverse family of more than 50 mutual fund portfolios; and
o providing opportunities for enhanced returns through combined investment
portfolios.
Nations Institutional Reserves
<PAGE>
The formal Notice of Special Meeting, a Combined Proxy
Statement/Prospectus and a Proxy Ballot are enclosed. If you own shares in more
than one of the Emerald Funds named above, more than one Proxy Ballot
accompanies these materials. If you own shares in one or more of the Emerald
funds not named above, you will be receiving separately a set of proxy materials
(including Proxy Ballot(s)) for the other fund(s).
Whether or not you plan to attend the Special Meeting, you may vote by
proxy in either of the following ways:
1. Mark, sign, date and return the enclosed Proxy Ballot in the enclosed
postage-paid envelope; or
2. Mark, sign, date and fax the enclosed Proxy Ballot to ADP Proxy
Services at (XXX) XXX-XXXX.
Please return your Proxy Ballot or fax it to us so that your vote will be
counted.
YOUR VOTE IS IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN. PLEASE VOTE BY RETURNING YOUR PROXY BALLOT TODAY, EITHER IN THE ENCLOSED
POSTAGE-PAID ENVELOPE OR BY TELEFAX AT (XXX) XXX-XXXX.
The proposed interim investment advisory arrangements with Barnett
Capital, the reorganization and the reasons for the Emerald Board's unanimous
recommendations are discussed in detail in the enclosed materials, which you
should read carefully. If you have any questions about the interim investment
advisory arrangements or the reorganization, please do not hesitate to contact
Emerald Funds toll free at 1-800-XXX-XXXX.
We look forward to seeing you at the Meeting or receiving your proxy so
that your shares may be voted at the Meeting.
Sincerely,
- --------------------
<PAGE>
EMERALD FUNDS
EMERALD PRIME ADVANTAGE INSTITUTIONAL FUND
EMERALD TREASURY ADVANTAGE INSTITUTIONAL FUND
3435 Stelzer Road
Columbus, Ohio 43219
NOTICE OF SPECIAL SHAREHOLDERS MEETING
TO BE HELD ON MAY 4, 1998
To Emerald Funds Shareholders:
NOTICE IS GIVEN THAT a special meeting of the shareholders (the
"Meeting") of the Emerald Prime Advantage Institutional Fund and Emerald
Treasury Advantage Institutional Fund (each an "Emerald Fund" and together the
"Emerald Funds"), each of which is a series of Emerald Funds ("Emerald"), will
be held at the Emerald offices located at 3435 Stelzer Road, Columbus, Ohio, on
May 4, 1998 at 10:00 a.m., Eastern time, for the purpose of considering and
voting upon:
ITEM 1. A proposal to ratify and approve an interim investment advisory
agreement between each Emerald Fund and Barnett Capital Advisors, Inc,
for the period from January 9, 1998 forward.
ITEM 2. A proposal to approve an Agreement and Plan of Reorganization
that provides for the transfer of the assets and liabilities of each
Emerald Fund to a corresponding fund of Nations Institutional Reserves
in exchange for shares of a designated class of the corresponding
Nations fund, and which contemplates the reorganization of Emerald as a
whole.
ITEM 3. Such other business as may properly come before the Meeting or
any adjournment(s).
Item 1 and Item 2 are described in the attached Combined Proxy
Statement/Prospectus. YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR
OF THE PROPOSALS.
Shareholders of record as of the close of business on March 16, 1998
are entitled to notice of, and to vote at, the Meeting or any adjournment(s)
thereof.
<PAGE>
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE EACH ACCOMPANYING PROXY CARD, WHICH IS BEING SOLICITED BY
THE EMERALD BOARD OF TRUSTEES. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE
MEETING. SHAREHOLDERS ALSO MAY RETURN PROXIES BY TELEFAX. PROXIES MAY BE REVOKED
AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO EMERALD A WRITTEN NOTICE
OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE MEETING AND
VOTING IN PERSON.
By Order of the Trustees,
-----------------
Jeffrey A. Dalke
Secretary
2
<PAGE>
COMBINED PROXY STATEMENT/PROSPECTUS
Dated March 30, 1998
EMERALD FUNDS
3435 Stelzer Road
Columbus, Ohio 43219-3035
1-800-637-3759
NATIONS INSTITUTIONAL RESERVES
One NationsBank Plaza, 33rd Floor
Charlotte, North Carolina 28255
1-800-626-2275
In connection with the solicitation of proxies by the Board of Trustees of
Emerald Funds ("Emerald"), this combined proxy statement/prospectus
("Proxy/Prospectus") is furnished to shareholders of the Emerald Treasury
Advantage Institutional Fund and Emerald Prime Advantage Institutional Fund
(each an "Emerald Fund" and collectively the "Emerald Funds"). The Board of
Trustees has called a Special Meeting of Emerald Shareholders (the "Meeting") at
10:00 a.m. (Eastern time) on May 4, 1998 at Emerald's offices located at 3435
Stelzer Road, Columbus, Ohio. At the Meeting, shareholders will be asked:
(1) to ratify and approve an interim investment advisory agreement (the
"Interim Advisory Agreement") with Barnett Capital Advisors, Inc., for the
period from January 9, 1998 forward; and
(2) to approve a proposed Agreement and Plan of Reorganization dated as of
February [insert], 1998 (the "Reorganization Agreement") by and between Emerald
and Nations Institutional Reserves ("Nations"), which also contemplates the
reorganization of Emerald into the Nations Fund Family (as defined below).
Copies of the Interim Advisory Agreement and the Reorganization Agreement
are attached as Appendices I and II, respectively.
Emerald and Nations are both registered open-end management investment
companies (mutual funds). Emerald and the Nations Funds Family offer money
market, bond, equity and international equity investment portfolios. The
Reorganization Agreement provides for the transfer of Fund Assets and
Liabilities (as those terms are defined in the Reorganization Agreement) of each
Emerald Fund to a corresponding investment portfolio of Nations (each a "Nations
Fund" and collectively the "Nations Funds") in exchange for shares ("Shares") of
the designated classes of the corresponding Nations Fund having equal value (the
"Reorganization").
In addition to offering shares in the Nations Funds and Emerald Funds,
Nations and Emerald each also offer shares in other series not part of this
Proxy/Prospectus. Emerald shareholders of those series are voting on similar
agreements and plans of
1
<PAGE>
reorganization that, in a like manner, would provide for the reorganization of
those series of Emerald into designated classes of corresponding portfolios of
two other registered investment companies--Nations Fund Trust and Nations Fund,
Inc. (together with Nations, the "Nations Funds Family"). If the Reorganization
Agreement and the agreements and plans of reorganization affecting the other
series of Emerald are approved and consummated, Emerald will have transferred
all of its assets and liabilities and deregister as a registered investment
company.
As a result of the Reorganization, shareholders of the Emerald Funds will
become shareholders of the Nations Funds. Table I below shows each Emerald Fund
and the designated class of each corresponding Nations Fund:
Table I
Emerald Fund Corresponding Nations Fund/Share Class
- ------------ --------------------------------------
Emerald Prime Advantage Nations Money Market Reserves
Institutional Fund Capital Class Shares
Emerald Treasury Advantage Nations Treasury Reserves
Institutional Fund Capital Class Shares
This Proxy/Prospectus sets forth concisely the information that an Emerald
Fund shareholder should know before voting, and should be retained for future
reference. It is Emerald's proxy statement for the Meeting. It is also a
prospectus for Nations Treasury Reserves, but not for Nations Money Market
Reserves. This is not a prospectus for Nations Money Market Reserves because
this Nations Fund was created to continue the business of the Emerald Prime
Advantage Institutional Fund.
Additional information is set forth in the statement of additional
information relating to this Proxy/Prospectus which is incorporated herein by
reference, and in the prospectus dated April 1, 1997, as supplemented, for the
Emerald Funds and the prospectus dated September 1, 1997 for Nations Treasury
Reserves. Each of these documents is on file with the Securities and Exchange
Commission (the "SEC"), and is available without charge by calling or writing
Emerald or Nations at the respective telephone numbers or addresses stated on
the cover sheet of this Proxy/Prospectus. The information contained in the
Nations Treasury Reserves' and Emerald Funds' prospectuses is incorporated by
reference into this Proxy/Prospectus. In addition, a copy of the current
prospectus for the Capital Class shares of Nations Treasury Reserves, along with
a copy of the most recent Annual Report and Semi-Annual Report for Nations
Treasury Reserves, accompanies this Proxy/Prospectus.
2
<PAGE>
The following summarizes the proposals to be voted on by Emerald Fund
shareholders at the Meeting:
Proposal Shareholders Solicited
- -------- ----------------------
1. To ratify and approve an Interim Advisory Shareholders of each Emerald
Agreement with Barnett Capital Advisors, Inc. Fund voting separately.
for the period from January 9, 1998 forward.
2. To approve a Reorganization Agreement Each Emerald Fund voting
providing for the transfer of the assets and separately on the
liabilities of the Emerald Funds to Reorganization Agreement, and
corresponding Nations Funds in exchange for with respect to the
Shares of the corresponding Nations Funds, and reorganization of Emerald,
which also contemplates the reorganization of shareholders of series of
Emerald into the Nations Funds Family. Emerald voting in the
aggregate.
This Proxy/Prospectus is expected to be first sent to shareholders on or
about March [30], 1998.
THE SECURITIES OF THE NATIONS FUND OFFERED HEREBY HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY/PROSPECTUS AND IN THE
MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY EMERALD, NATIONS OR THEIR RESPECTIVE DISTRIBUTORS.
EACH MONEY MARKET FUND SEEKS TO MAINTAIN A NET ASSET VALUE OF $1.00 PER
SHARE. AN INVESTMENT IN A MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT A MONEY MARKET FUND WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
3
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SHARES OF EMERALD AND NATIONS ARE NOT DEPOSITS OR OBLIGATIONS OF OR
GUARANTEED OR ENDORSED BY, NATIONSBANK, N.A. OR ANY OF ITS AFFILIATES OR ANY
OTHER BANK. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THE DISTRIBUTOR OF THE EMERALD FUNDS IS EMERALD
ASSET MANAGEMENT, INC. THE DISTRIBUTOR OF THE NATIONS FUNDS IS STEPHENS INC.
4
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
FEE TABLES.............................................................................................7
SUMMARY................................................................................................7
PROPOSAL 1--APPROVAL OF THE INTERIM AGREEMENTS....................................................7
Interim Advisory Agreements...................................................................7
Emerald Board Consideration...................................................................8
PROPOSAL 2--APPROVAL OF THE REORGANIZATION AGREEMENT..............................................9
Proposed Reorganization.......................................................................9
Overview of Emerald and Nations...............................................................9
Federal Income Tax Consequences..............................................................10
Nations and Emerald Boards' Consideration....................................................10
Principal Risk Factors.......................................................................11
Voting Information...........................................................................11
INFORMATION RELATING TO PROPOSAL 1--APPROVAL OF THE
INTERIM ADVISORY AGREEMENTS ..........................................................................12
The Merger of Barnett Banks, Inc. into NB Holdings Corporation...............................12
The Interim Advisory Agreement...............................................................12
Information Regarding Barnett Capital........................................................14
Payments to Barnett Capital Affiliates.......................................................15
Affiliated Broker Commissions................................................................15
Approval of Emerald's Board of Trustees......................................................16
INFORMATION RELATING TO PROPOSAL 2--APPROVAL OF THE
REORGANIZATION AGREEMENT..............................................................................17
Description of the Reorganization Agreement..................................................17
Emerald Board Consideration..................................................................19
Capitalization...............................................................................20
Federal Income Tax Considerations............................................................21
Other Information............................................................................23
COMPARISON OF EMERALD AND NATIONS.....................................................................23
Investment Objectives and Policies...........................................................23
Investment Adviser and Other Service Providers...............................................23
Emerald Funds' Advisory Contracts............................................................24
Nations Funds' Advisory Contracts............................................................24
Other Service Providers......................................................................25
Share Structure..............................................................................26
Distribution Plans and Shareholder Servicing Arrangements....................................27
Shareholder Transactions and Services........................................................28
INFORMATION RELATING TO VOTING MATTERS................................................................28
General Information..........................................................................28
Shareholder and Board Approvals..............................................................29
Quorum and Required Vote.....................................................................31
Annual Meetings and Shareholder Meetings.....................................................31
ADDITIONAL INFORMATION ABOUT NATIONS..................................................................31
ADDITIONAL INFORMATION ABOUT EMERALD..................................................................32
FINANCIAL STATEMENTS..................................................................................32
OTHER BUSINESS........................................................................................33
SHAREHOLDER INQUIRIES.................................................................................33
APPENDICES I INTERIM INVESTMENT ADVISORY AGREEMENT
II AGREEMENT AND PLAN OF REORGANIZATION
III EXPENSE SUMMARIES OF EMERALD FUNDS
AND THE CORRESPONDING NATIONS FUNDS
IV INVESTMENT OBJECTIVES, LIMITATIONS AND
CERTAIN SIGNIFICANT INVESTMENT POLICIES
OF THE OPERATING NATIONS FUNDS AND THE
CORRESPONDING EMERALD FUNDS
V SHAREHOLDER TRANSACTIONS AND SERVICES
OF THE NATIONS FUNDS AND THE CORRESPONDING
EMERALD FUNDS
5
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FEE TABLES
Shareholders of each Emerald Fund are expected to experience total fund
operating expenses after the Reorganization that are equal to those total fund
operating expense that they currently experience. Such projections take into
account voluntary fee waivers and/or expense reimbursements, both of which may
be terminated at any time. For detailed information regarding pro forma expense
information, for both Table III and Appendix III to this Proxy/Prospectus..
SUMMARY
The following is a summary of certain information relating to the Interim
Advisory Agreement and the proposed Reorganization, and is qualified by
reference to the more complete information contained elsewhere in this
Proxy/Prospectus, the Prospectuses and Statements of Additional Information of
Emerald and Nations, and the Appendices attached hereto.
PROPOSAL 1--APPROVAL OF THE INTERIM ADVISORY AGREEMENT
Interim Advisory Agreement. On January 9, 1998, Barnett Banks, Inc. merged
with and into NB Holdings Corporation, a subsidiary of NationsBank Corporation
(the "Holding Company Merger"). As a result of the Holding Company Merger,
Barnett Capital Advisors, Inc. ("Barnett Capital"), the investment adviser to
the Emerald Funds, became an indirect wholly-owned subsidiary of NationsBank
Corporation. As of January 9, 1998, Barnett Capital served as the Emerald Funds'
investment adviser pursuant to an investment advisory agreement between Barnett
Capital and Emerald, on behalf of the Emerald Funds. Barnett Capital and Emerald
considered the effect that the Holding Company Merger would have on Emerald, and
the possibility that under Barnett Capital's investment advisory agreement with
the Emerald Funds and under the Investment Company Act of 1940 (the "1940 Act"),
the Holding Company Merger might result in the automatic and immediate
termination of the investment advisory agreement. See "Information Relating to
Proposal 1--Approval of the Interim Advisory Agreement."
To ensure that this potential automatic termination would not disrupt the
investment advisory services provided to the Emerald Funds, Emerald and Barnett
Capital obtained an exemptive order from the SEC (the "Order") permitting
Barnett Capital to continue to act as investment adviser to the Emerald Funds
under the Interim Advisory Agreement. In accordance with the Order, the Interim
Advisory Agreement is subject to ratification and approval by the shareholders
of the Emerald Funds, at a meeting to be held within 120 days after January 9,
1998 (the "Interim Period"), or no later than May 9, 1998.
6
<PAGE>
The Trustees of Emerald propose that the shareholders of each Emerald Fund
ratify and approve the Interim Advisory Agreement. The advisory fee rates
payable under the Interim Advisory Agreement are identical to those under the
corresponding former agreement. Pending ratification and approval of the Interim
Advisory Agreement, all fees payable to Barnett Capital under the Interim
Advisory Agreement are being held in escrow. The fees escrowed for a particular
Emerald Fund will be received by Barnett Capital only if the Interim Advisory
Agreement is ratified and approved by that Fund's shareholders. See "Information
Relating to Proposal 1--Approval of the Interim Agreement--Approval of Emerald's
Board of Trustees.
If the Interim Advisory Agreement is ratified and approved by a Fund's
shareholders, and the Reorganization of that Fund is approved and consummated,
the Interim Advisory Agreement will remain in effect through the consummation of
the Reorganization. If the Interim Advisory Agreement is ratified and approved
by a Fund's shareholders and the Reorganization is not approved or is not
consummated, the Interim Advisory Agreement will remain in effect until November
30, 1998, and thereafter, for so long as the Board of Trustees of Emerald
continues to renew and approve such agreement at least annually. If the Interim
Advisory Agreement for an Emerald Fund is not ratified and approved by that
Fund's shareholders, the fees held in escrow with respect to that Fund will be
returned to the Fund, and Emerald's Board of Trustees will consider what actions
should be taken with respect to management of the assets of the Emerald Fund
involved until new investment advisory arrangements are approved by the Fund's
shareholders.
Emerald Board Consideration. A meeting of the Board of Trustees of Emerald
was held on November 13-14, 1997, at which time the Holding Company Merger and
its implications for the Emerald Funds were discussed. The Board met again on
December 8, 1997, and after a full evaluation unanimously approved the Interim
Advisory Agreement. EMERALD'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS OF THE EMERALD FUNDS APPROVE THE INTERIM ADVISORY AGREEMENT.
At the December 8, 1997 meeting, the Board determined that payment of the
advisory fees to be earned during the Interim Period by Barnett Capital under
the Interim Advisory Agreement would be fair, based on the fact that (1) the
fees payable under the Interim Advisory Agreement, and the services to be
provided therefor, would be unchanged from the fees payable under the former
investment advisory agreement, (2) the fees will be maintained in an
interest-bearing escrow account until payment is approved or disapproved by
shareholders of a particular Emerald Fund, and (3) the nonpayment of fees earned
during that period would constitute an extreme inequity to Barnett Capital in
view of the substantial services to be provided by Barnett Capital to the
Emerald Funds and the expenses incurred in connection with such provision of
services, under the Interim Advisory Agreement.
7
<PAGE>
PROPOSAL 2--APPROVAL OF THE REORGANIZATION AGREEMENT
Proposed Reorganization. The Reorganization Agreement provides for: (1)
the transfer of all of the Fund Assets and Liabilities (as those terms are
defined in the Reorganization Agreement, which is attached hereto as Appendix
II) of each Emerald Fund to a corresponding Nations Fund in exchange for Shares
of the designated classes of the corresponding Nations Fund; and (2) the
distribution of Nations Fund Shares to the shareholders of the Emerald Funds in
liquidation of the Emerald Funds. The Reorganization is subject to a number of
conditions with respect to each Emerald Fund, including Emerald shareholder
approval. As noted above, the Reorganization Agreement also contemplates the
reorganization of Emerald into the Nations Funds Family, so a vote for or
against the approval of the Reorganization Agreement includes a vote for or
against the reorganization of Emerald into the Nations Funds Family. Following
the Reorganization, Emerald will wind up its affairs and deregister as an
investment company under the 1940 Act. It is possible that a majority of an
Emerald Fund's shareholders may approve the Reorganization Agreement while a
sufficient majority of all shareholders of Emerald series voting does not
approve the reorganization of Emerald. In such a case, the Board of Trustees
will contemplate what further action is appropriate action.
As a result of the proposed Reorganization, an Emerald Fund shareholder
will become a shareholder of the corresponding Nations Fund and will hold,
immediately after the Closing(s)(s) (as defined in the Reorganization
Agreement), Shares of the designated classes of the corresponding Nations Fund
having a total dollar value equal to the total dollar value of the shares of the
Emerald Fund that the shareholder held immediately before the Closing(s)(s). The
exchange of each Emerald Fund's Fund Assets and Liabilities is expected to occur
in May, 1998, or such later date as may be provided in the Reorganization
Agreement.
Overview of Emerald and Nations. The investment objectives, policies and
restrictions of the Emerald Treasury Advantage Institutional Fund are
substantially similar to those of the corresponding Nations Treasury Reserves.
Each Fund invests largely in direct obligations issued by the U.S. Treasury or
to which the U.S. Government has pledged its full faith and credit to guarantee
the payment of principal and interest. Because Nations Money Market Reserves is
being created as a new "shell" fund to continue the business of the Emerald
Prime Advantage Institutional Fund, the investment objectives, policies and
restrictions of the Emerald Prime Advantage Institutional Fund are substantially
identical to those of the corresponding Nations Money Market Reserves. For
additional information, see "Comparison of Emerald and Nations--Investment
Objectives and Policies" and Appendix IV to this Proxy/Prospectus.
NationsBanc Advisors, Inc. ("NBAI") currently serves as the investment
adviser to the Nations Funds. TradeStreet Investment Associates, Inc.
("TradeStreet") currently serves as investment sub-adviser to the Nations Funds.
See "Comparison of Emerald and Nations-Investment Adviser and Other Service
Providers."
8
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Table III, under "Comparison of Emerald and Nations--Investment Adviser
and Other Service Providers," shows the current total operating expenses for
each class of shares of each of the Emerald Funds along with the pro forma total
operating expenses that could be expected for each designated class of shares of
the corresponding Nations Fund after the Reorganization. Appendix III to this
Proxy/Prospectus provides additional information about the fees and expenses for
each of the Emerald Funds and corresponding Nations Funds. The Emerald Funds and
Nations Funds have a different administrator, distributor, transfer agent,
independent auditor/accountants and different trustees. See "Comparison of
Emerald and Nations--Investment Adviser and Other Service Providers."
The purchase, redemption, dividend and other policies and procedures of
the Emerald Funds and the Nations Funds are generally similar. The Emerald Funds
only issue one class of shares while the Nations Funds issue multiple classes of
shares, although only Capital Class shares will be issued in connection with the
Reorganization. See "Comparison of Emerald and Nations--Shareholder Transactions
and Services" and Appendix V to this Proxy/Prospectus. Similarly, the Nations
Funds share classes being issued in the Reorganization and Emerald Funds are
sold at net asset value per share, with no front-end or contingent deferred
sales load. No front-end or contingent deferred sales loads will be imposed on
any of the shareholders in connection with the Reorganization.
Federal Income Tax Consequences. The Reorganization is not expected to
result in the recognition, for federal income tax purposes, of gain or loss by
the Emerald Funds, the Nations Funds or their respective shareholders. The sale
of securities by the Emerald Funds prior to the Closing(s)(s), whether in the
ordinary course of business or in anticipation of the Closing(s)(s), could
result in a taxable capital gains distribution prior to the Closing(s)(s). See
"Information Relating to Proposal 2--Approval of the Reorganization
Agreement--Federal Income Tax Considerations" for additional information.
Nations and Emerald Board's Consideration. In considering the
Reorganization Agreement, the Board of Nations, including the non-interested
Trustees thereof, were advised by legal counsel, as well as by separate legal
counsel, as to their fiduciary duties under the 1940 Act and the required
determinations that the Board should make under the 1940 Act in connection with
the Reorganization. After considering the relevant factors, the Nations Board,
on behalf of the Nations Funds, including a majority of the non-interested
Trustees, found that participation in the Reorganization, as contemplated by the
Reorganization Agreement, is in the best interests of the Nations Funds and that
the interests of the shareholders of the Nations Funds will not be diluted as a
result of the Reorganization.
In reviewing the proposed Reorganization, the Board of Emerald considered
the potential impact of the Reorganization on its shareholders, including (1)
the terms and conditions of the Reorganization Agreement, including provisions
intended to avoid the dilution of shareholder interests; (2) the capabilities,
practices and resources of the
9
<PAGE>
organizations that provide investment advisory and certain other services to the
Nations Funds, and the terms on which these services are provided; (3) the
shareholder services provided to Emerald shareholders, compared with the
shareholder services provided to Nations shareholders; (4) the investment
objectives, policies and limitations of the Emerald Funds and the Nations Funds;
(5) the historical Funds' investment performance of the Emerald Funds and the
Nations Funds; (6) the historical and projected operating expenses of the
Emerald Funds and the Nations Funds; and (7) the anticipated tax consequences of
the Reorganization. See "Information Relating to Proposal 2--Approval of the
Reorganization Agreement - Emerald Board Consideration."
Based upon their evaluation of the information presented to them, and in
light of their fiduciary duties under Federal and state law, the Board of
Trustees of Emerald, including all of the non-interested members of the Board,
have determined that the proposed Reorganization is in the best interests of the
shareholders of each class of each Emerald Fund, and that the interests of such
shareholders will not be diluted as a result of the Reorganization. EMERALD'S
BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT EACH EMERALD FUND'S SHAREHOLDERS
APPROVE THE REORGANIZATION AGREEMENT.
Principal Risk Factors. Because of the general similarities of the
investment objectives, policies and restrictions of the Emerald Funds and their
corresponding Nations Funds, an investment in a Nations Fund involves risks that
are similar to those of the corresponding Emerald Fund. These investment risks,
in general, are those typically associated with investing in a portfolio of high
quality, short-term money market instruments. Additionally, while the Emerald
Treasury Advantage Institutional Fund and the corresponding Nations Treasury
Reserves invest in instruments backed by the full faith and credit of the U.S.
Government, shares of neither Fund are themselves issued or guaranteed by the
U.S. Government or any of its agencies.
Voting Information. This Proxy/Prospectus is being furnished in connection
with the solicitation of proxies by Emerald's Board of Trustees at the Meeting.
Only shareholders of record at the close of business on March [16], 1998 will be
entitled to vote at the Meeting. Each whole or fractional share is entitled to a
whole or fractional vote, respectively. Shares represented by a properly
executed proxy will be voted in accordance with the instructions thereon or, if
no specification is made, the persons named as proxies will vote in favor of
each proposal set forth in the Notice of Meeting. Proxies may be revoked at any
time before they are exercised by submitting to Emerald a written notice of
revocation or a subsequently executed proxy or by attending the Meeting and
voting in person. For additional information, see "Information Relating to
Voting Matters."
INFORMATION RELATING TO PROPOSAL 1--APPROVAL OF THE
INTERIM ADVISORY AGREEMENT
10
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The Merger of Barnett Banks, Inc. into NB Holdings Corporation. On January
9, 1998, Barnett Banks, Inc. merged into NB Holdings Corporation, a wholly-owned
subsidiary of NationsBank Corporation. As a result of this Holding Company
Merger, Barnett Capital became an indirect wholly-owned subsidiary of
NationsBank Corporation. Barnett Capital and Emerald considered the effect that
the Holding Company Merger would have on Emerald, and the possibility that under
the terms of the Emerald Funds' investment advisory agreement and under the 1940
Act, the Holding Company Merger might result in the automatic and immediate
termination of those agreements.
Prior to the Holding Company Merger, Barnett Capital served as investment
adviser to the Emerald Funds pursuant to an investment advisory agreement dated
as of June 28, 1991 (as subsequently amended) and was last approved by the
shareholders of the Emerald Funds at a meeting held on October 30, 1996 for the
purpose of increasing Barnett's investment responsibilities and modifying its
fee rate, and was last approved by the Emerald Board of Trustees on November 13,
1997. Under that agreement, Barnett Capital was entitled to receive, and for the
fiscal year ended November 30, 1997 did receive, advisory fees from each Emerald
Fund of 0.10% of the Fund's average daily net assets, representing $144,896 and
$172,480 with respect to the Emerald Prime Advantage Institutional Fund and
Emerald Treasury Advantage Institutional Fund, respectively.
To ensure that the Holding Company merger would not disrupt the investment
advisory services provided to the Emerald Funds, both Emerald and Barnett
Capital obtained an exemptive Order from the SEC permitting Barnett Capital to
continue to act as investment adviser through the Interim Period, but prior to
obtaining the approval of the Interim Advisory Agreement by the shareholders of
the Emerald Funds. The Order also permits Barnett Capital to receive fees for
the Interim Period from each Emerald Fund, subject to approval by the Emerald
Fund shareholders entitled to vote at a meeting to be held during the Interim
Period. In applying for the Order, Barnett Capital agreed to take steps to
ensure that the scope and quality of the investment advisory services will be
the same during the Interim Period as previously provided to the Emerald Funds.
The Interim Advisory Agreement. The terms and conditions of the Interim
Advisory Agreement are the same as those of the former investment advisory
agreement between Barnett Capital and Emerald, on behalf of the Emerald Funds,
except for provisions relating to: (1) the effective date (January 9, 1998), (2)
the termination date (November 30, 1998) and (3) certain escrow provisions, that
are described above.
Under the Interim Advisory Agreement, Barnett is responsible for providing
a continuous investment program for each Emerald Fund, including investment
research and management with respect to all securities, investments, cash and
cash equivalents in the Funds, and is responsible for determining what
securities and other investments will be purchased, retained or sold by each of
the Funds and for maintaining all books and records with respect to each Fund's
securities transactions.
11
<PAGE>
The Interim Advisory Agreement also includes provisions relating to other
matters, such as portfolio trading practices, expenses and standard of care. For
example, the Interim Advisory Agreement provides that in executing portfolio
transactions and selecting brokers or dealers, Barnett Capital is to seek the
best overall terms available, and that investment decisions for the Emerald
Funds are to be made independently from those for other investment companies and
accounts managed by Barnett Capital. Such other investment companies and
accounts may, however, invest in the same securities as the Funds. In such
cases, simultaneous transactions are inevitable. Under the Interim Advisory
Agreement, Barnett Capital may aggregate, to the extent permitted by law, the
securities to be sold or purchased for the Funds with those to be sold or
purchased by other investment companies or accounts in executing transactions.
In addition, the Interim Advisory Agreement provides that to the extent the
purchase or sale of securities or other investments of the same issuer may be
deemed to be suitable for two or more accounts managed by Barnett Capital, the
available securities or investments may be allocated in a manner believed by
Barnett Capital to be equitable to each account. In some instances, this
investment procedure may adversely affect the price paid or received by a Fund
or the size of the position obtainable for or disposed of by a Fund.
Although expected to be infrequent, Barnett Capital is allowed under the
Interim Advisory Agreement to consider the amount of Emerald Fund shares sold by
broker-dealers and others (including those who may be connected with Barnett
Capital) in allocating orders for purchases and sales of portfolio securities.
This allocation may involve the payment of brokerage commissions or dealer
concessions. Barnett Capital will not engage in this practice unless the
execution capability of, and the amount received by, such broker-dealer or other
company is believed to be comparable to what another qualified firm could offer.
Portfolio securities may not be purchased from or sold to Barnett Capital, the
Emerald Funds' distributor, or any affiliated person of either of them or
Emerald, acting as principal in the transaction, except as permitted by the SEC.
The Interim Advisory Agreement provides that Barnett Capital will pay all
expenses incurred by it in connection with its activities under the Agreement
other than the cost of securities and other investments (including brokerage
commissions and other transaction costs, if any) purchased or sold for the
Emerald Funds. Barnett Capital also agrees that it, in any fiscal year, the
aggregate expenses of either Fund (as defined under the securities regulations
of any state having jurisdiction over such Fund) exceed the expense limitations
of any such state, Emerald may deduct from the fees to be paid to Barnett
Capital, or Barnett Capital will bear, a portion of any excess to the extent
required by state law. To Emerald's knowledge, as of the date of this
Proxy/Prospectus, the Emerald Funds are not subject to any state expense
limitations.
The Interim Advisory Agreement provides that Barnett Capital will not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Emerald Funds in connection with the performance of the Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or loss
12
<PAGE>
resulting from willful misfeasance, bad faith or negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties thereunder.
The Interim Advisory Agreement provides that, if approved by the
shareholders of an Emerald Fund, the Interim Advisory Agreement will continue in
effect with respect to that Fund until November 30, 1998. Thereafter, the
Agreement will continue in effect with respect to that Fund for successive
annual periods, provided that its continuance is approved at least annually (1)
by the vote of a majority of those members of Emerald's Board of Trustees who
are not "interested persons" (as that term is defined in the 1940 Act) of any
party to the Agreement cast in person at a meeting called for the purpose of
voting on such approval and (2) by the Board or by vote of a majority of the
outstanding shares of the Fund.
The Interim Advisory Agreement will terminate automatically in the event
of its assignment. The Interim Advisory Agreement also provides that it is
terminable with respect to either Emerald Fund, without payment of any penalty,
by Emerald (by vote of Emerald's Board of Trustees or by vote of a majority of
the outstanding voting securities of such Fund) or by Barnett Capital on 60
days' written notice.
Although the Interim Advisory Agreement permits Barnett Capital (subject
to any shareholder approval required by law) to retain a sub-adviser in
connection with the performance of its advisory services, as stated above,
Barnett Capital intends to provide all of the services stated in the Interim
Advisory Agreement. In addition, the Interim Advisory Agreement expressly
permits the Agreement to be amended without shareholder approval to the extent
allowed by the 1940 Act.
The advisory fees payable by each Emerald Fund under the Interim Advisory
Agreement, as described below, are the separate obligation of that particular
Fund (and not the joint obligation of both Emerald Funds).
Information Regarding Barnett Capital. Prior to the Holding Company
Merger, Barnett Capital was a wholly-owned subsidiary of Barnett Bank, N.A.
which, in turn, was a wholly-owned subsidiary of Barnett Banks, Inc., which was
a publicly-held bank holding company located in Jacksonville, Florida. Upon
consummation of the Holding Company Merger, Barnett Capital became a
wholly-owned subsidiary of NB Holdings Corporation which, in turn, is a
wholly-owned subsidiary of NationsBank Corporation. As of February 15, 1998, no
persons owned beneficially or of record 10% or more of any class of issued and
outstanding voting securities of NationsBank Corporation.
Barnett Capital is organized as a corporation under the laws of the State
of Florida and is registered as an investment adviser with the SEC under the
Investment Advisers Act of 1940. In addition to serving as investment adviser to
the Emerald Funds, Barnett Capital acts as investment adviser to individuals,
trusts, estates and institutions and as investment adviser to Emerald's other
investment portfolios, including the Emerald Prime, Emerald Treasury and Emerald
Tax-Exempt Funds, three other money market portfolios
13
<PAGE>
whose net assets at ____________, 1998 were $________, $__________ and
$___________, respectively. Under the terms of the investment advisory
agreements relating to these portfolios, Barnett Capital is entitled to an
advisory fee at the annual rate of 0.25% of each portfolio's average net assets,
which fees are not subject to reduction as the value of each portfolio's net
assets increases. Barnett Capital has informed Emerald, however, of its
intention to reduce the annual rate of its advisory fees with respect to the
Emerald Treasury Fund and Emerald Prime Fund to the following rates: 0.25% of
the first $600 million of each portfolio's net assets; 0.23% of each portfolio's
net assets over $600 million but not exceeding $1 billion; 0.21% of the next $1
billion of each portfolio's net assets; and 0.19% of each portfolio's net assets
over $2 billion. Barnett Capital has agreed to pay the Emerald Tax-Exempt Fund's
sub-adviser a sub-advisory fee at the annual rate of 0.15% of the portfolio's
net assets. Emerald has been advised that, until further notice, Barnett Capital
will voluntarily waive all advisory fees with respect to the Emerald Tax-Exempt
Fund in excess of the sub-advisory fees payable by it to the portfolio's
sub-adviser.
As of _______________, 1998, Barnett Capital had approximately $ _______
billion of assets under management. Barnett Capital's principal offices are
located at 9000 Southside Boulevard, Building 100, Jacksonville, Florida 32256.
The name and principal occupation of the principal executive officer and each
director of Barnett Capital as of _______________, 1998 were as follows: Jack A.
Ablin, Director, President and Chief Executive Officer; Holly D. Deem, Director
and __________; Martin E. Galt, III, Director and __________; and Richard J.
Gershin, Director and ___________. All of the above persons may be reached c/o
Barnett Capital Advisers, Inc., 9000 Southside Boulevard, Building 100,
Jacksonville, Florida 32256.
At the time of their approval of the Interim Advisory Agreement, three of
the six members of Emerald's Board of Trustees were considered to be
"interested" Trustees within the meaning of the 1940 Act for the following
reasons. Marshall M. Criser, Chairman of the Emerald Board of Trustees, was a
director of Barnett Banks, Inc., owned shares of Barnett Banks, Inc. and
maintained money market deposit accounts with a Barnett Banks, Inc. banking
subsidiary, and is currently of counsel (and was formerly a shareholder) of a
law firm which has represented Barnett Capital and its affiliates within the
preceding two years. John G. Grimsley, Emerald's President and a member of the
Board, is a partner of a law firm which has represented Barnett Capital and its
affiliates within the preceding two years and also owned shares of Barnett
Banks, Inc. Albert D. Ernest, Jr., a member of the Board, owned shares of
Barnett Banks, Inc.
Payments to Barnett Capital Affiliates. During the fiscal year ended
November 30, 1997, the Emerald Funds paid no fees to affiliates of Barnett
Capital.
Affiliated Broker Commissions. During the fiscal year ended November 30,
1997, the Emerald Funds paid no brokerage commissions in connection with
purchases and sales of portfolio securities to any party that would be treated
as an affiliated broker as defined in Item 22(a)(1)(ii) of Schedule 14A under
the Securities Exchange Act of 1934.
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<PAGE>
For the services provided and expenses assumed pursuant to the Interim
Advisory Agreement, Emerald Funds pays Barnett Capital fees, computed daily and
paid monthly, at the annual rate of 0.10% of the average daily net assets of
each Emerald Fund. However, pending ratification and approval of the Interim
Advisory Agreement, all fees payable to Barnett Capital under the Interim
Advisory Agreement are being held in escrow. These escrowed fees will be
received by Barnett Capital only if the Interim Advisory Agreement is ratified
and approved by Emerald Fund shareholders. The fees payable to Barnett Capital
are not subject to reduction as the value of each Fund's net assets increases.
From time to time, however, Barnett Capital may waive fees or reimburse the
Emerald Funds for expenses voluntarily, although there is no guarantee that such
waivers or reimbursements would continue.
Approval of Emerald's Board of Trustees. At a meeting on December 8, 1997,
the Emerald Board of Trustees, including all of the Trustees who are not
"interested persons" (as that term is defined in the 1940 Act) of Emerald (other
than as Trustees), Barnett Capital or NationsBank, N.A. ("NationsBank"),
approved the Interim Advisory Agreement with Barnett Capital that became
effective upon the consummation of the Holding Company Merger on January 9,
1998. In considering whether to approve the Interim Advisory Agreement and to
submit such agreement to shareholders for their approval, the Board of Trustees
considered the following factors: (1) Barnett Capital's representations that it
would provide investment advisory and other services to the Emerald Funds of a
scope and quality at least equivalent, in the Board's judgment, to the scope and
quality of services previously provided to the Emerald Funds; (2) the
substantially identical terms and conditions that are contained in the Interim
Advisory Agreement as compared to the prior investment advisory agreement; and
(3) Barnett Capital's representation that in the event of any material change in
personnel providing services under the Interim Advisory Agreement during the
Interim Period, the Board of Trustees of Emerald would be consulted for the
purpose of assuring themselves that the services provided would not be
diminished in scope or quality. Additionally, the Trustees considered the
benefits that would be obtained by the Emerald Funds in maintaining continuity
in investment advisory services for the Funds during the Interim Period, and
determined that continuity was advantageous to the Funds as it would serve to
minimize uncertainty and confusion, and would minimize any potential disruption
resulting from the Holding Company Merger in the advisory services provided to
the Emerald Funds.
Based upon the foregoing factors, which were considered material by the
Emerald Board of Trustees, the Trustees concluded that approval of the Interim
Advisory Agreement was in the best interests of the Emerald Fund shareholders
and Emerald. The Board of Trustees further concluded that payment of the
advisory fees under the Interim Advisory Agreement would be appropriate and fair
considering that: (1) the fees that are payable under the Interim Advisory
Agreement, and the services to be provided therefor, would be unchanged from the
fees payable under the former investment advisory agreement, (2) the fees will
be maintained in an interest-bearing escrow account until payment is approved or
disapproved by shareholders of a particular Emerald Fund, and (3) the nonpayment
of fees earned during that period would constitute an extreme inequity to
Barnett Capital in view of the substantial services provided by Barnett Capital
to the
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<PAGE>
Emerald Funds during the Interim Period, and the expenses incurred in connection
with such provision of services, under the Interim Advisory Agreement.
With respect to the approval of the Interim Advisory Agreement, each
Emerald Fund will vote separately on a portfolio-by-portfolio basis. EMERALD'S
BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT EACH EMERALD FUND'S SHAREHOLDERS
RATIFY AND APPROVE THE INTERIM ADVISORY AGREEMENT FOR THE PERIOD FROM JANUARY 9,
1998 FORWARD.
INFORMATION RELATING TO PROPOSAL 2-- APPROVAL OF THE
REORGANIZATION AGREEMENT
The terms and conditions of the Reorganization are set forth in the
Reorganization Agreement. Significant provisions of the Reorganization Agreement
are summarized below; however, this description is qualified in its entirety by
reference to the Reorganization Agreement, a copy of which is attached as
Appendix II to this Proxy/Prospectus.
Description of the Reorganization Agreement. The Reorganization Agreement
provides that at the Closing(s)(s) the Fund Assets and Liabilities (as those
terms are defined in the Reorganization Agreement) of the Emerald Funds will be
transferred to Nations, as shown in Table I (see page 2 of this
Proxy/Prospectus), in exchange for full and fractional Shares of the designated
class of the corresponding Nations Funds.
The Shares issued by each Nations Fund in the Reorganization will have an
aggregate dollar value equal to the aggregate dollar value of the shares of the
respective Emerald Fund that are outstanding immediately before the Closing(s).
Immediately after the Closing(s), each Emerald Fund will distribute the Shares
of the Nations Fund received in the Reorganization to its shareholders in
liquidation of the Emerald Fund. Each shareholder owning shares of a particular
Emerald Fund at the Closing(s) will receive Shares of the designated class of
the corresponding Nations Fund, and will receive any unpaid dividends or
distributions that were declared before the Closing(s) on Emerald Fund shares.
Nations will establish an account for each former shareholder of the Emerald
Funds reflecting the appropriate number of Nations Fund Shares distributed to
that shareholder. These accounts will be substantially identical to the accounts
currently maintained by Emerald for each shareholder. Shares of the Nations
Funds are in uncertificated form.
As indicated above, Emerald shareholders of those series of Emerald not
part of this Proxy/Prospectus are voting on similar agreements and plans of
reorganization that, in a like manner, would provide for the reorganization of
those series of Emerald into designated classes of corresponding portfolios of
Nations Fund Trust and Nations Fund, Inc.--other registered investment companies
in the Nations Funds Family. If the
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<PAGE>
Reorganization Agreement and the agreements and plans of reorganization
affecting the other series of Emerald are approved by a majority of all series
of Emerald voting in the aggregate and are consummated, Emerald will have
transferred all of its assets and liabilities as of the Closing(s), and all
outstanding shares of the Emerald Funds will be redeemed and canceled in
exchange for Shares of the Nations Funds distributed, and Emerald will wind up
its affairs and apply to be deregistered as an investment company under the 1940
Act. Emerald would permanently close its stock transfer books as of the close of
business on the business day immediately preceding the Closing(s). Exchange or
redemption requests required after that time will be deemed to be exchange or
redemption requests for Shares of the Nations Funds.
The Reorganization is subject to a number of conditions, including
approval of the Reorganization Agreement and the related matters described in
this Proxy/Prospectus by Emerald shareholders at the Meeting; approval of a
majority of all series of Emerald voting in the aggregate of the reorganization
of Emerald; the receipt of certain legal opinions described in the
Reorganization Agreement (which include an opinion of Nations' counsel addressed
to Emerald that the Nations Fund Shares issued in the Reorganization will be
validly issued, fully paid and non-assessable); the receipt of certain
certificates from the parties concerning the continuing accuracy of the
representations and warranties in the Reorganization Agreement; the receipt of
certain letters from the independent auditors/accountants of Emerald and Nations
regarding various financial matters; any necessary exemptive relief or no-action
assurances requested from the SEC or its Staff with respect to Section 17(a) and
17(d) of the 1940 Act and Rule 17d-1 thereunder; and the parties' performance in
all material respects of their respective covenants and undertakings in the
Reorganization Agreement. The Reorganization Agreement also provides that if the
difference between the per share net asset value of an Emerald Fund and its
corresponding Nations Fund equals or exceeds $.0025 at the close of business on
the day preceding the time at which the Reorganization is to be effective, as
computed using the market values of such Funds' assets, either party may
postpone the Closing(s) with respect to such Fund until such time as the per
share difference is less than $.0025.
The Reorganization Agreement provides that Emerald and Nations will each
be responsible for its own expenses in connection with the Reorganization.
However, NBAI has agreed to assume ordinary expenses associated with the
Reorganization. The Reorganization Agreement also provides, among other things,
that the Reorganization may be abandoned at any time prior to the Closing(s)
upon the mutual consent of both Emerald and Nations, or by either Nations or
Emerald under certain conditions; and that officers of Nations and of Emerald
may amend, modify or supplement the Reorganization Agreement, provided however,
that following the Meeting, no such amendment may have the effect of changing
the provisions for determining the number of Shares of the corresponding Nations
Fund to be issued to the shareholders of any Emerald Fund without obtaining the
Emerald Fund shareholders' further approval.
Emerald Board Consideration. At meetings held on November 13-14, 1997 and
December 8, 1997, the Emerald Board of Trustees was advised that Barnett Capital
and
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NBAI were considering the possibility of recommending a consolidation of Emerald
with the Nations Family of Funds following the Holding Company Merger. The
Emerald Board then met again on January 15, 1998 and on February 12, 1998 to
consider a reorganization proposal by NBAI and its affiliates. In preparation
for the meetings, the Trustees were provided with a variety of information about
the Reorganization, the Nations Funds and NationsBank. These materials
summarized the principal features of the Reorganization including the intention
that the Reorganization be consummated on a tax-free basis for each Fund and its
shareholders. In addition, the Emerald Trustees received comparative information
for the Emerald Funds and their corresponding Nations Funds with respect to the
following matters: (1) investment objectives and policies; (2) advisory,
distribution and other servicing arrangements; (3) expenses (with and without
giving effect to current expense limitations), including pro forma expenses
assuming consummation of the Reorganization and expenses relative to peer
groups, and (4) performance relative to peer groups. The Emerald Trustees were
also provided with information about NationsBank and its investment advisory
organizations, including information regarding those individuals with
responsibility for each Nations Fund.
The proposal that the Emerald Funds be reorganized into the Nations Funds
as set forth in the Reorganization Agreement, including the contemplation that
Emerald would be reorganized into the Nations Funds Family, was unanimously
approved by the Board of Trustees on February 12, 1998. In connection with its
approval of the Reorganization Agreement, and the transactions contemplated
therein, Emerald's Board of Trustees considered that, as a result of the Holding
Company Merger, certain of the shareholders of both the Emerald Funds and
Nations Funds were currently customers of NationsBank and its affiliates. The
Board also considered NBAI's belief that the Reorganization would eliminate
certain duplicative shareholder costs and market overlap, facilitate
consolidation of NBAI's managerial resources and enhance generally operational
efficiencies and focus with respect to the mutual funds advised by NBAI.
During its deliberations, Emerald's Board of Trustees (with the advice and
assistance of counsel) reviewed, among other things: (1) the potential effect of
the Reorganization on the shareholders of the Emerald Funds; (2) the
capabilities, practices and resources of NBAI and Nations' other service
providers; (3) the investment advisory and other fees paid by the Nations Funds,
and the historical and projected expense ratios of the Nations Funds as compared
with those of the Emerald Funds; (4) the expected cost-savings for certain of
the Emerald Funds, including Emerald funds not part of this Proxy/Prospectus, as
a result of the Reorganization; (5) the investment objectives, policies and
limitations of the Nations Funds and their relative compatibility with those of
the Emerald funds; (6) the historical investment performance records of the
Emerald Fund(s), including the Emerald Treasury Advantage Institutional Fund,
moving into operating Nations funds; (7) the shareholder services offered by
Nations; (8) the terms and conditions of the Reorganization Agreement, including
those provisions that were intended to avoid dilution of the interests of
Emerald's shareholders; (9) the anticipated tax consequences of the
Reorganization for the respective Emerald Funds and their shareholders; (10) the
number of investment portfolio options that would be available to
18
<PAGE>
shareholders after the Reorganization; (11) the resolution of matters relating
to Emerald's administration and transfer agency agreements without cost to
Emerald or the Emerald Funds; and (12) the potential benefits of the
Reorganization to other persons, especially NBAI and its affiliates.
In connection with the foregoing, Emerald's Board of Trustees noted that
the management of the Nations Funds Family had undertaken to create a new fund
having the same investment objective and policies as that of its corresponding
Emerald Fund--Nations Money Market Reserves. Emerald's Board of Trustees also
noted that NBAI would assume all ordinary expenses associated with the
Reorganization. With respect to each Nations Fund, Emerald's Trustees noted that
the total operating expense ratios after the Reorganization would be equal to
those of the Emerald Funds before the Reorganization.
After consideration of the foregoing and other factors, the Emerald
Trustees unanimously determined that the Reorganization is in the best interests
of the shareholders of each Emerald Fund, and that the interests of the
shareholders of each Emerald Fund will not be diluted as a result of such
Reorganization.
Capitalization. As proposed, the two Emerald Funds would be reorganized
into the two corresponding Nations Funds. The following table sets forth, as of
November 30, 1997, (1) the capitalization of each of the Emerald Funds; (2) the
capitalization of each of the corresponding Nations Funds; and (3) the pro forma
capitalization of each of the Nations Funds as adjusted to give effect to the
Reorganization of the Emerald Funds. The capitalization of each Emerald Fund and
Nations Fund is likely to be different at the Closing(s) as a result of daily
share purchase and redemption activity in the Emerald Funds and Nations Funds,
as well as the effects of the other ongoing operations of the respective Funds
prior to Closing(s).
19
<PAGE>
Table II
Pro forma Capitalization (as of November 30, 1997)
1. The table below reflects current and pro forma capitalization
information for the combination of the Emerald Prime Advantage Institutional
Fund with Nations Money Market Reserves.
</TABLE>
<TABLE>
<CAPTION>
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------- ------------------ ---------------
<S> <C> <C> <C>
Emerald Prime Advantage Institutional $177,907,787 177,917,523 $ 1.00
Fund
Nations Money Market Reserves N/A N/A N/A
(Capital Class) (Capital Class) (Capital Class)
Pro forma Combined Fund $177,907,787 177,917,523 $ 1.00
(Capital Class) (Capital Class) (Capital Class)
</TABLE>
2. The table below reflects current and pro forma capitalization
information for the combination of the Emerald Treasury Advantage Institutional
Fund with Nations Treasury Reserves.
<TABLE>
<CAPTION>
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------- ------------------ ---------------
<S> <C> <C> <C>
Emerald Treasury Advantage $159,160,769 159,244,945 $ 1.00
Institutional Fund
Nations Treasury Reserves $287,081,652 287,089,070 $ 1.00
(Capital Class) (Capital Class) (Capital Class)
Pro forma Combined Fund $446,242,421 446,334,015 $ 1.00
(Capital Class) (Capital Class) (Capital Class)
</TABLE>
Federal Income Tax Consequences. Each Nations Fund and each Emerald Fund
qualifies and intends to qualify as of the Closing(s)(s), as a separate
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, each Emerald Fund and each corresponding
Nations Fund has been and expects to continue to be, relieved of federal income
tax liability.
20
<PAGE>
Consummation of the Reorganization with respect to each Emerald Fund and
the corresponding Nations Fund is subject to the condition that Emerald and
Nations receive an opinion from Morrison & Foerster LLP to the effect that, for
federal income tax purposes: (i) the transfer of all of the Fund Assets and
Liabilities (as each term is defined in the Reorganization Agreement) of an
Emerald Fund to the corresponding Nations Fund in exchange for the Nations Fund
Shares, and the distribution of those Nations Fund Shares to shareholders of the
Emerald Fund, will constitute a "reorganization" within the meaning of Section
368(a) of the Code, and the Emerald Fund and the Nations Fund will each be a
"party to a reorganization" within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by the Emerald Fund upon the transfer of
its Fund Assets and Liabilities to the Nations Fund solely in exchange for the
Nations Fund Shares; (iii) no gain or loss will be recognized by the Nations
Fund upon the receipt of the assets and assumption of liabilities of the Emerald
Fund solely in exchange for the Nations Fund Shares; (iv) the basis of the
Emerald Fund's assets received by the Nations Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands of the
Emerald Fund immediately prior to the Reorganization; (v) the holding period of
the Emerald Fund's assets in the hands of the Nations Fund will include the
period for which such assets have been held by the Emerald Fund; (vi) no gain or
loss will be recognized by the Emerald Fund on the distribution to its
shareholders of the Nations Fund Shares to be received by the Emerald Fund in
the Reorganization; (vii) no gain or loss will be recognized by the shareholders
of the Emerald Fund upon their receipt of the Nations Fund Shares in exchange
for such shareholders' shares of the Emerald Fund; (viii) the basis of the
Nations Fund Shares received by the shareholders of the Emerald Fund will be the
same as the basis of the Emerald Fund shares surrendered by such shareholders
pursuant to the Reorganization; (ix) the holding period for the Nations Fund
Shares received by the Emerald Fund shareholders will include the period during
which such shareholders held the Emerald Fund shares surrendered in exchange
therefor, provided that such Emerald Fund shares are held as a capital asset in
the hands of the Emerald Fund shareholders on the date of the exchange; and (x)
each Nations Fund will succeed to and take into account the tax attributes
described in Section 381(c) of the Code of the Emerald Fund as of the Closing(s)
Date, subject to the conditions and limitations specified in the Code.
Shareholders of the Emerald Funds should note, however, that the sale of
securities by the Emerald Funds prior to the Closing(s), whether in the ordinary
course of business or in anticipation of the Closing(s), could result in a
taxable capital gains distribution prior to the Closing(s).
Nations and Emerald have not sought, and will not seek, a private ruling
from the Internal Revenue Service ("IRS") with respect to the tax consequences
of the Reorganization. The opinion of Morrison & Foerster LLP with respect to
the tax consequences of the Reorganization is not binding on the IRS and does
not preclude the IRS from adopting a contrary position. Shareholders should
consult their own advisers concerning the potential tax consequences of the
Reorganization to them, including any applicable foreign, state and local income
tax consequences.
Other Information. Information about the similarities and differences
between the Nations Funds and the Emerald Funds to which they correspond
regarding: investment
21
<PAGE>
objectives and policies; the identity and compensation of the investment
adviser; the voting rights of shareholders; any restrictions or material
obligations associated with ownership of Shares; the share structure; the
identity of the principal underwriter; any minimum initial or subsequent
investment; Rule 12b-1 plans, including associated fees and expenses; and
shareholder redemption, repurchase and exchange rights, is included in other
appropriately titled sections within this Proxy/Prospectus and the Appendices
hereto.
COMPARISON OF EMERALD AND NATIONS
Investment Objectives and Policies. The investment objectives, policies
and restrictions of Nations Treasury Reserves are substantially similar to those
of the Emerald Treasury Advantage Institutional Fund. Each Fund invests largely
in U.S. Treasury securities, which are direct obligations issued by the U.S.
Treasury or to which the U.S. Government has pledged its full faith and credit
to guarantee the payment of principal and interest. Such obligations include
Treasury bills, certain Treasury strips, certificates of indebtedness, notes and
bonds, and obligations of other agencies and instrumentalities that are backed
by the full faith and credit of the United States. Each Fund also may invest in
repurchase agreements, lend its securities, invest in the securities of other
mutual funds that invest in the particular instruments in which a Fund may
invest and may make limited borrowings. The investment objectives, policies and
restrictions of the Emerald Prime Advantage Institutional Fund are substantially
identical to those of the corresponding Nations Money Market Reserves because
the Nations Fund is being created as a new "shell" fund to continue the business
of this Emerald Fund.
Investment Advisers and Other Service Providers. Currently, Barnett
Capital serves as investment adviser to the Emerald Funds. NBAI serves as the
investment adviser to the Nations Funds and TradeStreet serves as the investment
sub-adviser to the Nations Funds.
The following table shows, as of November 30, 1997, (i) the current total
expense ratio of the Emerald Funds after fee waivers and/or expense
reimbursements and (ii) the pro forma total expense ratio of the corresponding
Nations Funds, based upon the fee arrangements, after fee waivers and/or expense
reimbursements, that will be in place upon consummation of the Reorganization.
Detailed pro forma expense information for each proposed reorganization is
included in Appendix III to this Proxy/Prospectus.
Table III
Total Expense Information
Total Fund Operating Pro Forma Total Fund
22
<PAGE>
<TABLE>
<CAPTION>
Expenses as of 11/30/97 Operating Expenses
Name of (After Fee Waivers and/or (After Fee Waivers and/or
Emerald Fund Expense Reimbursements) Expense Reimbursements)
- ------------ ------------------------- -------------------------
<S> <C> <C>
Prime Advantage Institutional Fund 0.20% 0.20%
(Capital Class)
Treasury Advantage Institutional 0.20% 0.20%
Fund (Capital Class)
</TABLE>
Emerald Funds' Advisory Contracts. For a description of the Interim
Advisory Agreement see "Information Relating to Proposal 1--Approval of the
Interim Advisory Agreement."
Nations Funds' Advisory Contracts. NBAI serves as investment adviser to
the Nations Funds. Subject to the general supervision of Nations' Board of
Trustees, and in accordance with the investment policies of each Nations Fund,
NBAI has discretionary authority to manage each Nations Fund. The investment
advisory agreement provides that in the absence of willful misfeasance, bad
faith, negligence or reckless disregard of obligations or duties thereunder on
the part of NBAI or any of its officers, directors, employees or agents, NBAI
shall not be subject to liability to Nations or to any shareholder of a Nations
Fund for any act or omission in the course of, or connected with, rendering
services thereunder or for any losses that may be sustained in the purchase,
holding or sale of any security. For the services provided and expenses assumed,
NBAI is entitled to a fee calculated at the annual rate of 0.30% of the average
daily net assets of each Nations Fund. From time to time, however, NBAI and its
affiliates voluntarily may waive fees or reimburse the Nations Funds for
expenses, although there is no guarantee that such waivers or reimbursements
would continue.
TradeStreet serves as investment sub-adviser for the Nations Funds. For
the services provided and expenses assumed by TradeStreet, NBAI pays, out of the
fees it receives from the Nations Funds, fees to TradeStreet at the annual rate
of 0.033% of the average daily net assets of each Nations Fund.
For the fiscal year ended April 30, 1997, after fee waivers, Nations
Treasury Reserves paid NBAI under the current advisory agreement, an advisory
fee of 0.14% of the Fund's average daily net assets. For the fiscal year ended
April 30, 1997, after fee waivers, NBAI paid TradeStreet under the current
sub-advisory agreement, sub-advisory fees of 0.033% of the Nations Treasury
Reserves' average daily net assets.
Both NBAI and TradeStreet are wholly owned subsidiaries of NationsBank,
which in turn is a wholly owned banking subsidiary of NationsBank Corporation, a
bank holding company organized as a North Carolina Corporation. Both NBAI and
TradeStreet have their principal offices at One NationsBank Plaza, Charlotte,
North Carolina 28225.
23
<PAGE>
Morrison & Foerster LLP, counsel to Nations and special counsel to
NationsBank, has advised Nations and NationsBank that NationsBank and its
affiliates may perform the services contemplated by the advisory contracts
described above and in the prospectuses for the Nations Funds without violation
of the Glass-Steagall Act or other applicable laws or regulations. Such counsel
has pointed out, however, that there are no controlling judicial or
administrative interpretations or decisions and the future judicial or
administrative interpretations of, or decisions relating to, present federal or
state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in such statutes, regulations and judicial or
administrative decisions or interpretations, could prevent such entities from
continuing to perform, in whole or in part, such services. If any such entity
were prohibited from performing any of such services, it is expected that the
new agreements would be proposed or entered into with another entity or entities
qualified to perform such services.
Other Service Providers. The other service providers for the Emerald Funds
and the Nations Funds are different, as forth in the table below.
Other Service Providers
for the Emerald Funds and Nations Funds
<TABLE>
<CAPTION>
Emerald Funds Nations Funds
------------- -------------
<S> <C> <C>
Distributor Emerald Asset Management, Inc. Stephens Inc. ("Stephens")
Administrator BISYS Fund Services Limited Stephens
Partnership
Co-Administrator Not Applicable First Data Investor
Services Group, Inc.
("First Data")
Transfer Agent BISYS Fund Services, Inc. First Data
Sub-Transfer Agent Not Applicable Nations Bank of Texas, N.A
Custodian The Bank of New York NationsBank of Texas, N.A.
Sub-Custodian Not Applicable The Bank of New York
Independent Auditors and KPMG Peat Marwick LLP Price Waterhouse LLP
Independent Accountants,
respectively
</TABLE>
Emerald Asset Management Inc. and BISYS Fund Services Limited Partnership
maintain offices at 3435 Stelzer Road, Columbus, Ohio 43219. Stephens Inc.
maintains
24
<PAGE>
offices at 111 Center Street, Little Rock, Arkansas 72201 and First Data
Investor Services Group, Inc. maintains offices at One Exchange Place, Boston,
Massachusetts 02109.
Share Structure. Both Emerald and Nations are registered as open-end
management investment companies under the 1940 Act. Currently, Emerald offers
fourteen funds. The Nations Funds complex, which includes several registered
investment companies will offer over sixty funds immediately after the
Reorganization.
Emerald is organized as a Massachusetts business trust and is subject to
the provisions of its Agreement and Declaration of Trust and Code of
Regulations. Nations also is organized as a Massachusetts business trust and is
subject to the provisions of its Declaration of Trust, as amended and
supplemented, and By-Laws. Shares of the Emerald Funds and Nations Funds have a
par value of $.001. Shares of both the Emerald Funds and Nations Funds are
entitled to one vote for each full share held and fractional votes for
fractional Shares held.
Emerald Fund shareholders will vote in the aggregate and not by portfolio
or class subject to certain notable exceptions. In particular, when a proposal
affects less than all Emerald portfolios or classes, only the affected
portfolios or classes may vote on that proposal. Each portfolio votes separately
with respect to any proposal to approve its investment advisory agreement, to
change its fundamental investment objectives or policies, or to adopt a plan of
reorganization. Similarly, a portfolio or class of a portfolio votes separately
with respect to any proposal to approve a plan of distribution for that
portfolio or class.
In accordance with Nations' Agreement and Declaration of Trust, all shares
of a series of Nations are entitled to vote by individual series, except (1)
when required by the 1940 Act, shares will be voted in the aggregate and not by
individual series, and (2) when the Trustees have determined that the matter
affects only the interests of one or more series, then only shareholders of such
series shall be entitled to vote thereon. There is no cumulative voting in the
election of Trustees for Nations and shares may be voted in person or by proxy.
Shares of the Emerald Funds and Nations Funds have no pre-emptive rights
and have only such conversion and exchange rights as the Board of Trustees of
Emerald or the Board of Trustees of Nations, respectively, may grant in their
discretion. When issued for payment as described in their respective
prospectuses, Nations Fund Shares and Emerald Fund shares are fully paid and
non-assessable by either Nations or Emerald.
Both Emerald and Nations are authorized to create multiple investment
portfolios and to create multiple share classes representing interests in a
single portfolio. Currently, Nations offers Investor A shares, Investor B
shares, Investor C shares, Primary A shares, Primary B Shares and Daily Shares.
Each share class has varying pricing and distribution structures.
25
<PAGE>
Each share of a class of a Nations Fund represents an equal proportionate
interest in a particular portfolio with other shares of the same class and is
entitled to cash dividends and distributions earned on such shares as are
declared in the discretion of the Nations Board of Trustees.
The accrued expenses of the Nations Funds, as well as certain expenses
attributable to each class of shares (including those that are not relevant to
this Proxy/Prospectus), are deducted from accrued income before dividends are
declared. The Nations Funds' expenses include, but are not limited to: fees paid
to NBAI, NationsBank, Stephens and First Data; interest; trustees' fees; federal
and state securities registration and qualification fees; brokerage fees and
commissions; costs of preparing and printing prospectuses for regulatory
purposes and for distribution to existing shareholders; charges of the custodian
and transfer agent; certain insurance premiums; outside auditing and legal
expenses; costs of shareholder reports and shareholder meetings; other expenses
which are not expressly assumed by the NBAI, NationsBank, Stephens or First Data
under their respective agreements with Nations Funds; and any extraordinary
expenses. Each class of Shares may bear certain class specific costs associated
with retail transfer agency, shareholder servicing, sales support and
distribution. Any general expenses of Nations that are not readily identifiable
as belonging to a particular investment portfolio are allocated among all
portfolios in the proportion that the assets of a portfolio bears to the assets
of Nations or in such other manner as the Board of Trustees deems appropriate.
The shares of the Emerald Funds and the Capital Class shares of the
Nations Funds have substantially similar dividend and distribution policies.
Additional information concerning the attributes of the shares issued by
the Emerald Funds and Nations Treasury Reserves is included in their respective
prospectuses, which are incorporated herein by reference.
Distribution Plans and Shareholder Servicing Arrangements. Because the
shares of the Emerald Funds and the Capital Class shares of the Nations Funds
are sold directly to institutions, there are no distribution or shareholder
servicing plans in place for these classes.
The types of administrative services provided to the Emerald Funds and
Nations Funds by their respective Administrators (and, in the case of the
Nations Funds, Co-Administrator) are substantially similar.
Shareholder Transactions and Services. The Emerald Funds and the
corresponding Nations Funds offer generally similar shareholder services and
transactions. The Emerald Funds and the Nations Funds' Capital Class Shares have
identical minimum investment and subsequent investment requirements. Emerald
typically requires that a shareholder maintain a $1,000,000 account balance; if
the balance falls below that amount Emerald reserves the right to redeem those
shares involuntarily, upon written notification. Nations reserves the right to
make such involuntary redemptions if a shareholder's
26
<PAGE>
account balance falls below $500. Additionally, while the Nations Funds Capital
Class Shares offer an exchange privilege, the Emerald Funds do not. For a
detailed comparison of shareholder transactions and services, see Appendix V.
INFORMATION RELATING TO VOTING MATTERS
General Information. This Proxy/Prospectus is being furnished in
connection with the solicitation of proxies for the Meeting by the Board of
Trustees of Emerald. It is expected that the solicitation of proxies will be
primarily by mail. Officers and service contractors of Emerald and Nations also
may solicit proxies by telefacsimile. In this connection, Emerald has retained
ADP Proxy Services to assist in the solicitation of proxies for the
Reorganization. Shareholders may vote (1) by mail, by marking, signing, dating
and returning the enclosed Proxy Ballot in the enclosed postage-paid envelope;
or (2) by telefacsimile, by marking, signing, dating and faxing the enclosed
Proxy Ballot to ADP Proxy Services at [insert]. Any shareholder giving a proxy
may revoke it at any time before it is exercised by submitting to Emerald a
written notice or revocation or a subsequently executed proxy or by attending
the Meeting and voting in person.
Any expenses incurred as a result of hiring ADP Proxy Services or any
other proxy solicitation agent will be borne by NBAI.
Only shareholders of record at the close of business on March [16], 1998
will be entitled to vote at the Meeting. On that date, the following Emerald
Shares were outstanding and entitled to be voted:
Name of Emerald Fund Shares Entitled to Vote
- -------------------- -----------------------
Emerald Prime Advantage Institutional Fund
Emerald Treasury Advantage Institutional Fund
Each whole and fractional share of an Emerald Fund is entitled to a whole
or fractional vote.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting.
Shareholder and Board Approvals. The Interim Advisory Agreement and the
Reorganization Agreement are being submitted for approval at the Meeting by
Emerald's shareholders pursuant to the Order and the provisions of Emerald's
Agreement and
27
<PAGE>
Declaration of Trust. With respect to each Emerald Fund, approval and
ratification of the Interim Advisory Agreement requires the approval of a
majority of the outstanding shares of that Emerald Fund voting separately on a
portfolio-by-portfolio basis. The Reorganization Agreement must be approved by a
majority of the outstanding shares of the Emerald Fund voting separately on a
portfolio-by-portfolio basis and the reorganization of Emerald contemplated
therein must be approved by a majority of the shares outstanding and entitled to
vote, voting in the aggregate, of all of the series of Emerald, including those
funds that are not part of this Proxy/Prospectus. A vote for the Reorganization
Agreement includes a vote for the reorganization of Emerald; correspondingly, a
vote against the Reorganization Agreement includes a vote against the
reorganization of Emerald. Separate proxy solicitation materials are being
mailed to the shareholders of all other series of Emerald seeking the approval
of similar agreements and plans of reorganization and, consequently, also
Emerald's reorganization.
The Reorganization Agreement provides that in the event the Reorganization
Agreement is approved with respect to less than all of the Emerald Funds, the
failure of one Emerald Fund to consummate the transactions contemplated by the
Reorganization Agreement shall not affect the consummation or validity of the
Reorganization with respect to any other Emerald Fund. It is possible that a
majority of the Emerald Fund's shareholders may approve the Reorganization
Agreement while a sufficient majority of all shareholders of Emerald series
voting in the aggregate does not vote to approve the reorganization of Emerald.
In such a case, the Board of Trustees will contemplate what further action is
appropriate.
With respect to the approval of the Interim Advisory Agreement, the term
"majority of the outstanding shares" of an Emerald Fund means the lessor of (i)
67% of the shares of the particular Fund present at the Meeting if the holders
of more than 50% of the outstanding shares of such Fund are present or (ii) more
than 50% of the outstanding shares of the particular Fund. With respect to the
approval of the Reorganization Agreement and the reorganization contemplated
therein, the term "majority of the outstanding shares" of Emerald or an Emerald
Fund means more than 50% of the outstanding shares of Emerald or the particular
Emerald Fund, as applicable. The vote of the shareholders of the Nations Funds
is not being solicited, since their approval or consent is not necessary for the
Reorganization.
The approval of the Interim Advisory Agreement by the Board of Trustees of
Emerald is discussed above under "Information Relating to Proposal 1--Approval
of the Interim Advisory Agreement--Approval by Emerald's Board of Trustees." The
approval of the Reorganization Agreement by the Board of Trustees of Emerald is
discussed above under "Information Relating to Proposal 2--Approval of the
Proposed Reorganization Agreement--Emerald Board Consideration." The
Reorganization Agreement was approved by the Board of Trustees of Nations at a
meeting held on January 16, 1998.
As of March [16], 1998, the officers and Trustees of Emerald as a group
owned less than 1% of any of the Emerald Funds. As of March [16], 1998, the
officers and
28
<PAGE>
Trustees of Nations as a group owned less than 1% of any of the Nations Funds.
Table IV(A) shows the name, address and share ownership of each person known to
Emerald to have beneficial or record ownership with respect to 5% or more of a
class of an Emerald Fund as of March [16], 1998. Table IV(B) shows the name,
address and share ownership of each person known to Nations to have beneficial
or record ownership with respect to 5% or more of a class of a Nations Fund as
of March [16], 1998.
Table IV(A)
Class; Amount of Percentage Percentage Percentage
Name and Shares Owned; of of of Fund
Emerald Fund Address Type of Ownership Class Fund Post-Closing(s)
- ------------ -------- ----------------- ---------- ---------- ---------------
Table IV(B)
Class; Amount of Percentage Percentage Percentage
Name and Shares Owned; of of of Fund
Emerald Fund Address Type of Ownership Class Fund Post-Closing(s)
- ------------ -------- ----------------- ---------- ---------- ---------------
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class, or is identified as the holder of record of
more than 25% of a class and has voting and/or investment power, it may be
presumed to control such class.
Nations and Emerald have been advised by NationsBank that the shares of
each Emerald Fund over which NationsBank and its affiliates have voting power
may be voted: by NationsBank itself in its capacity as fiduciary; by NationsBank
pursuant to instructions from underlying beneficial holders; or by one or more
independent fiduciaries.
Quorum and Required Vote. In the event that a quorum is not present at the
Meeting, or in the event that a quorum is present at the Meeting but sufficient
votes to approve the Interim Advisory Agreement and/or the Reorganization
Agreement are not received by one or both of the Emerald Funds, one or more
adjournment(s) may be proposed to permit further solicitation of proxies. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting. Any such adjournment(s) will require the
affirmative vote of a majority of those shares affected by the adjournment(s)
that are represented at the Meeting in person or by proxy. If a quorum is
present, the persons named as proxies will vote those proxies which they are
entitled to vote FOR the particular proposal for which a quorum exists in favor
of such adjournment(s), and will vote those proxies required to be voted AGAINST
such proposal against any adjournment(s). A shareholder vote may be taken with
respect to one or more
29
<PAGE>
Emerald Funds (but not the other Emerald Funds) on some or all matters before
any such adjournment(s) if sufficient votes have been received for approval. A
quorum is constituted with respect to Emerald or an Emerald Fund by the presence
in person or by proxy of the holders of more than 50% of the outstanding shares
of Emerald or the Emerald Fund entitled to vote at the Meeting. For purposes of
determining the presence of a quorum for transacting business at the Meeting,
abstentions will be treated as shares that are present at the Meeting but which
have not been voted. Abstentions will have the effect of a "no" vote for
purposes of obtaining the requisite approvals. Broker "non-votes" (that is,
proxies from brokers or nominees indicating that such persons have not received
instructions from the beneficial owners or other persons entitled to vote shares
on a particular matter with respect to which the brokers or nominees do not have
discretionary power) will not be treated as shares that are present at the
Meeting and, accordingly, could make it more difficult to obtain the requisite
approvals.
Annual Meeting and Shareholder Meetings. Neither Nations nor Emerald
presently intends to hold annual meetings of shareholders for the election of
trustees and other business unless otherwise required by the 1940 Act. Under
certain circumstances, however, holders of at least 10% of the outstanding
shares of either Emerald or Nations have the right to call a meeting of
shareholders.
ADDITIONAL INFORMATION ABOUT NATIONS
Additional information about Nations Treasury Reserves is included in its
prospectus and statement of additional information dated September 1, 1997, as
supplemented through the date hereof, copies of which, to the extent not
included herewith, may be obtained without charge by writing or calling Nations
at the address and telephone number set forth on the first page of this
Proxy/Prospectus. Nations is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the 1940 Act, and in accordance
therewith it files reports, proxy materials and other information with the SEC.
Reports and other information filed by Nations can be inspected and copied at
the Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the offices of Nations listed above. In addition,
these materials can be inspected and copied at the SEC's Regional Offices at 7
World Trade Center, Suite 1300, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials also can be obtained from the Public Reference Branch,
Office of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
Officers of Nations are elected by, and serve at the pleasure of, the
Board of Trustees. Officers of Nations receive no remuneration from Nations for
their services in such capacities.
30
<PAGE>
Information included in this Proxy/Prospectus concerning Nations was
provided by Nations.
ADDITIONAL INFORMATION ABOUT EMERALD
Additional information about the Emerald Funds is included in their
prospectus and statement of additional information, dated April 1, 1997, as
supplemented through the date hereof, which have been filed with the SEC. Copies
of this prospectus and the related statement of additional information may be
obtained without charge by writing or calling Emerald at the address and
telephone number set forth on the first page of this Proxy/Prospectus. Reports
and other information filed by Emerald can be inspected and copied at the Public
Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the offices of Emerald listed above. In addition,
these materials can be inspected and copied at the SEC's Regional Offices at 7
World Trade Center, Suite 1300, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials also can be obtained from the Public Reference Branch,
Office of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
Information included in this Proxy/Prospectus concerning Emerald was
provided by Emerald.
FINANCIAL STATEMENTS
The unaudited financial statements and financial highlights for Shares of
Nations Treasury Reserves for the semi-annual period ended October 31, 1997 are
included or incorporated by reference in its prospectus or statement of
additional information, or in the statement of additional information related to
this Proxy/Prospectus. The audited financial statements and financial highlights
for Shares of the Emerald Funds for the fiscal year ended November 30, 1997 are
included or incorporated by reference in their prospectuses or statements of
additional information or in the statement of additional information related to
this Proxy/Prospectus, or are included herein.
The annual financial statements and financial highlights of the Nations
Funds have been audited by Price Waterhouse, LLP, independent accountants to the
extent indicated in their reports therein, also incorporated by reference or
included in such prospectuses and statements of additional information, and have
been incorporated herein by reference in reliance upon such reports given upon
the authority of such firms as experts in accounting and auditing.
The audited financial statements and financial highlights of the Nations
Treasury Reserves for the year ended April 30, 1997, have been incorporated by
reference herein and in the statement of additional information in reliance upon
the report of Price Waterhouse LLP, independent accountants, which is also
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
31
<PAGE>
The audited financial statements and financial highlights of the Emerald
Funds for the year ended November 30, 1997, have been incorporated by reference
herein and in the statement of additional information in reliance upon the
report of KPMG Peat Marwick LLP, independent auditors, which is also
incorporated by reference herein, and upon the authority of such firm as experts
in accounting and auditing.
OTHER BUSINESS
Emerald's Board of Trustees knows of no other business to be brought
before the Meeting. However, if any other matters properly come before the
Meeting, it is the intention that proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Emerald or to Nations in writing
at the address(es), or by phone at the phone number(s), on the cover page of
this Proxy/Prospectus.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED
TO MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. SHAREHOLDERS
ALSO MAY RETURN PROXIES BY TELEFACSIMILE.
EMERALD WILL FURNISH, WITHOUT CHARGE, COPIES OF ITS NOVEMBER 30, 1997
ANNUAL REPORTS TO ANY SHAREHOLDER UPON REQUEST ADDRESSED TO: EMERALD FUNDS, 3435
STELZER ROAD, COLUMBUS, OHIO 43219-3035 OR BY TELEPHONE AT 1-800-637-3759.
32
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APPENDIX I
Interim Investment Advisory Agreement
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<PAGE>
INVESTMENT ADVISORY AGREEMENT
(Equity Fund, Short-Term Fixed Income
Fund, U.S. Government Securities Fund, Florida
Tax-Exempt Fund, Small Capitalization Fund, Balanced Fund
Managed Bond Fund, International Equity Fund,
Equity Value Fund, Prime Advantage Institutional Fund
and Treasury Advantage Institutional Fund)
AGREEMENT made as of January 9, 1998 between EMERALD FUNDS, a
Massachusetts business trust (herein called the "Trust"), and BARNETT CAPITAL
ADVISORS, INC., a wholly-owned indirect subsidiary of Barnett Banks, Inc.
(herein called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to
furnish investment advisory and other services to the Trust for certain of the
Trust's portfolios, including its Equity Fund, Short-Term Fixed Income Fund,
U.S. Government Securities Fund, Florida Tax-Exempt Fund, Small Capitalization
Fund, Balanced Fund, Managed Bond Fund, International Equity Fund, Equity Value
Fund, Prime Advantage Institutional Fund and Treasury Advantage Institutional
Fund ("the Funds") and the Investment Adviser is willing to so furnish such
services;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) The Trust hereby appoints the Investment Adviser to act as
investment adviser to the Trust's Equity Fund, Short-Term Fixed Income Fund,
U.S. Government Securities Fund, Florida Tax-Exempt Fund, Small Capitalization
Fund, Balanced Fund, Managed Bond Fund, International Equity Fund, Equity Value
Fund, Prime Advantage Institutional Fund and Treasury Advantage Institutional
Fund, for the period and on the terms set forth in this Agreement. The
Investment Adviser accepts such appointment and agrees to furnish the services
herein set forth for the compensation herein provided.
(b) In the event that the Trust establishes one or more
portfolios other than the Funds with respect to which it desires to retain the
Investment Adviser to act as investment adviser hereunder, it shall notify the
Investment Adviser in writing. If the Investment Adviser is willing to render
such services under this Agreement it shall notify the Trust in writing
whereupon such portfolio shall become a Fund hereunder and shall be subject to
the provisions of this Agreement to the same extent as the Funds named above in
subparagraph (a) except to the
<PAGE>
extent that said provisions (including those relating to the compensation
payable by the Fund to the Investment Adviser) are modified with respect to such
Fund in writing by the Trust and the Investment Adviser at the time.
(c) It is understood that the Investment Adviser may from time
to time employ or associate with such person or persons as the Investment
Adviser may believe to be particularly fitted to assist it in the performance of
this Agreement with respect to the International Equity Fund, Equity Value Fund,
Prime Advantage Institutional Fund and Treasury Advantage Institutional Fund;
provided, however, that the compensation of such person or persons shall be paid
by the Investment Adviser. In addition, notwithstanding any such employment or
association, the Investment Adviser shall itself (i) in the case of all such
Funds (A) establish and monitor general investment criteria and policies for
such Funds, (B) review and analyze on a periodic basis such Funds' portfolio
holdings and transactions in order to determine their appropriateness in light
of such Funds' shareholder base, and (C) review and analyze on a periodic basis
the policies established by any sub-adviser for such Funds with respect to the
placement of orders for the purchase and sale of portfolio securities; and (ii)
in the case of the International Equity Fund and Equity Value Fund (D) provide
for the investment of such Funds' cash balances to the extent not provided for
by any sub-adviser, (E) review, monitor, analyze and report to the Board of
Trustees on the performance of any sub-adviser, (F) recommend, either in its
sole discretion or in conjunction with any sub-adviser, potential changes in
investment policy, (G) furnish to the Board of Trustees or any sub-adviser
reports, statistics and economic information as may be requested, (H) review
investments in such Funds on a periodic basis for compliance with such Funds'
investment objectives, policies and restrictions as stated in their
Prospectuses; and (I) review jointly with any sub-adviser country and regional
investment allocation guidelines for such Funds, as well as investment hedging
guidelines, if any. Subject to the foregoing, it is agreed that investment
advisory services to the International Equity Fund, Equity Value Fund, Prime
Advantage Institutional Fund or Treasury Advantage Institutional Fund may be
provided by a sub-investment adviser (the "Sub-Adviser") pursuant to a
sub-advisory agreement agreeable to the Trust and approved in accordance with
the provisions of the 1940 Act (the "Sub-Advisory Agreement").
2. Delivery of Documents.
The Trust has furnished the Investment Adviser with copies
properly certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as filed
with the State Secretary of the Commonwealth of Massachusetts on
March 16, 1988, and any amendments thereto (such Agreement and
Declaration of Trust, as presently in effect and as it shall from
time to time be amended, is herein called the "Declaration of
Trust");
(b) The Trust's Code of Regulations and any amendments
thereto;
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<PAGE>
(c) Resolutions of the Trust's Board of Trustees authorizing
the appointment of the Investment Adviser and approving this
Agreement;
(d) The Trust's Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange
Commission on March 21, 1988 and any amendments thereto;
(e) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933 as amended ("1933 Act") (File No. 33-20658)
and under the 1940 Act as filed with the Securities and Exchange
Commission on March 21, 1988 and any amendments thereto; and
(f) The most recent prospectuses of the Funds (such
prospectuses together with the related statement of additional
information, as presently filed with the Securities and Exchange
Commission and all amendments and supplements thereto, are herein
called "Prospectuses").
The Trust will furnish the Investment Adviser from time to time with copies of
all amendments of or supplements to the foregoing, if any.
3. Services.
Subject to the supervision of the Trust's Board of Trustees, the
Investment Adviser will be responsible for the management of, and will provide a
continuous investment program for, the investment portfolio of each Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents in the Funds. The Investment Adviser will
determine from time to time what securities and other investments will be
purchased, retained or sold by each of the Funds. The Investment Adviser will
provide the services rendered by it under this Agreement in accordance with each
Fund's investment objective, policies and restrictions as stated in the
Prospectus for each Fund and resolutions of the Trust's Board of Trustees.
Without limiting the generality of the foregoing, the Investment Adviser is
hereby specifically authorized to invest and reinvest the assets of a Fund, in
its discretion as investment adviser, in (i) variable amount demand notes of
corporate borrowers held by the Investment Adviser for the investment of monies
held by the Investment Adviser in its capacity as fiduciary, agent and custodian
and (ii) securities of other investment companies whether or not the same are
advised or managed by the Investment Adviser or another affiliated person of the
Trust. The Investment Adviser further agrees that it will:
(a) Establish and monitor investment criteria and policies for
each Fund;
(b) Update each Fund's cash availability throughout the day as
-3-
<PAGE>
required;
(c) Maintain historical tax lots for each portfolio security
held by the Funds;
(d) Transmit trades to the Trust's custodian for proper
settlement;
(e) Maintain all books and records with respect to each Fund's
securities transactions;
(f) Supply the Trust and its Board of Trustees with reports,
statistical data and economic information as requested; and
(g) Prepare a quarterly broker security transaction summary
and monthly security transaction listing for each Fund.
4. Other Covenants.
The Investment Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of
the Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with other applicable law;
(b) will use the same skill and care in providing such
services as it uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(c) will place orders pursuant to its investment
determinations for each Fund either directly with the issuer or with any broker
or dealer. In executing portfolio transactions and selecting brokers or dealers,
the Investment Adviser will use its best efforts to seek on behalf of the Funds
the best overall terms available. In assessing the best overall terms available
for any transaction, the Investment Adviser shall consider all factors that it
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In evaluating the best overall
terms available, and in selecting the broker-dealer to execute a particular
transaction, the Investment Adviser may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) provided to the Funds and other accounts over which the Investment
Adviser or an affiliate of the Investment Adviser exercises investment
discretion. The Investment Adviser is authorized, subject to the prior approval
of the Trust's Board of Trustees, to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for any of the Funds which is in excess of the amount of commission
another broker or dealer would have charged for effecting that
-4-
<PAGE>
transaction if, but only if, the Investment Adviser determines in good faith
that such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer -- viewed in terms of
that particular transaction or in terms of the overall responsibilities of the
Investment Adviser to the Funds. In addition, the Investment Adviser is
authorized to take into account the sale of shares of the Trust in allocating
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Investment Adviser
or the Trust's principal underwriter), provided that the Investment Adviser
believes that the quality of the transaction and the commission are comparable
to what they would be with other qualified firms. In no instance, however, will
portfolio securities be purchased from or sold to the Investment Adviser, the
Trust's principal underwriter, or any affiliated person of either the Trust, the
Investment Adviser, or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and Exchange
Commission; and
(d) will maintain a policy and practice of conducting its
investment advisory services hereunder independently of the commercial banking
operations of its affiliates. When the Investment Adviser makes investment
recommendations for a Fund, its investment advisory personnel will not inquire
or take into consideration whether the issuer of securities proposed for
purchase or sale for the Fund's account are customers of the commercial
department of any of the Investment Adviser's affiliates. In dealing with
commercial customers, the Investment Adviser's affiliates will not inquire or
take into consideration whether securities of those customers are held by the
Funds.
5. Services Not Exclusive.
The services furnished by the Investment Adviser hereunder are
deemed not to be exclusive, and the Investment Adviser shall be free to furnish
similar services to others so long as its services under this Agreement are not
impaired thereby. To the extent that the purchase or sale of securities or other
investments of the same issuer may be deemed by the Investment Adviser to be
suitable for two or more accounts managed by the Investment Adviser, the
available securities or investments may be allocated in a manner believed by the
Investment Adviser to be equitable to each account. It is recognized that in
some cases this procedure may adversely affect the price paid or received by a
Fund or the size of the position obtainable for or disposed of by a Fund.
6. Books and Records.
In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Investment Adviser hereby agrees that all records which it
maintains for each Fund are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Investment Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act.
-5-
<PAGE>
7. Expenses.
During the term of this Agreement, the Investment Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased or sold for the Funds. In addition, if in any fiscal year the
aggregate expenses of the Equity Fund, U.S. Government Securities Fund or
Florida Tax-Exempt Fund (as defined under the securities regulations of any
state having jurisdiction over such Fund) exceed the expense limitations of any
such state, the Trust may deduct from the fees to be paid hereunder, or the
Investment Adviser will bear, to the extent required by state law, that portion
of the excess which bears the same relation to the total of such excess as the
Investment Adviser's fee hereunder with respect to such Fund bears to the total
fee otherwise payable for the fiscal year by the Trust pursuant to this
Agreement and the administration agreement between the Trust and its
administrator with respect to such Fund. With respect to the other Funds, if in
any fiscal year the aggregate expenses of any Fund (as defined under the
securities regulations of any state having jurisdiction over such Fund) exceed
the expense limitation of any such state, the Trust may deduct from the fees to
be paid hereunder, or the Investment Adviser will bear, to the extent required
by state law, that portion of the excess which bears the same relation to the
total of such excess as the Investment Adviser's fees hereunder with respect to
the Fund bears to the total fees otherwise payable with respect to such Fund for
the fiscal year by the Trust hereunder and under the administration agreement
between the Trust and its administrator. The Investment Adviser's obligation is
not limited to the amount of its fees hereunder. Such deduction or payment, if
any, will be estimated and accrued daily and paid on a monthly basis.
8. Compensation.
For the services provided and the expenses assumed pursuant to
this Agreement, the Trust will pay the Investment Adviser, and the Investment
Adviser will accept as full compensation therefor from the Trust, a fee,
computed daily and payable monthly, at the following annual rates of the average
daily net assets of each respective Fund as follows: Equity Fund -- 0.60%;
Short-Term Fixed Income Fund -- 0.40%; U.S. Government Securities Fund -- 0.40%;
Florida Tax-Exempt Fund -- 0.40%; Small Capitalization Fund -- 1.00%; Balanced
Fund -- 0.60%; Managed Bond Fund -- 0.40%; International Equity Fund - 1.00%;
Equity Value Fund - 0.60%; Prime Advantage Institutional Fund - 0.10%; and
Treasury Advantage Institutional Fund - 0.10%. Such respective fee as is
attributable to each Fund shall be a separate charge to such Fund and shall be
the several (and not joint or joint and several) obligation of each such Fund.
The fees payable by a Fund under this Section 8 for the period beginning on the
date of this Agreement and ending on the date the shareholders of the Fund
approve this Agreement shall be maintained in an interest-bearing escrow account
until such time as such Fund's shareholders approve the payment to the
Investment Adviser. If a Fund's shareholders do not approve the payment to the
Investment Adviser of such fees for such period, the balance in the escrow
account shall be paid to the Fund.
-6-
<PAGE>
9. Limitation of Liability.
The Investment Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the performance of this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or negligence on the part of
the Investment Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
10. Duration and Termination.
This Agreement shall become effective as of the date hereof
with respect to the Funds listed in Section 1(a) hereof, and with respect to any
additional Fund, on the date of receipt by the Trust of notice from the
Investment Adviser in accordance with Section 1(b) hereof that the Investment
Adviser is willing to serve as investment adviser with respect to such Fund,
provided that this Agreement (as supplemented by the terms specified in any
notice and agreement pursuant to Section 1(b) hereof) shall have been approved
by the shareholders of such additional Fund in accordance with the requirements
of the 1940 Act. Unless sooner terminated as provided herein, this Agreement
shall continue in effect until May 9, 1998 and, if approved by the shareholders
of a Fund on or before such date, shall continue in effect as to that Fund for
an additional period ending on November 30, 1998. Thereafter, if not terminated,
this Agreement shall automatically continue in effect as to a particular Fund
for successive annual periods ending on November 30, provided such continuance
is specifically approved at least annually (a) by the vote of a majority of
those members of the Trust's Board of Trustees who are not interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting such approval, and (b) by the Trust's Board of Trustees or by vote of
a majority of the outstanding voting securities of such Fund. Notwithstanding
the foregoing, this Agreement may be terminated as to any Fund at any time,
without the payment of any penalty, by the Trust (by vote of the Trust's Board
of Trustees or by vote of a majority of the outstanding voting securities of
such Fund), or by the Investment Adviser, on sixty days' written notice. This
Agreement will immediately terminate in the event of its assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning as such terms
have in the 1940 Act.)
-7-
<PAGE>
11. Amendment of This Agreement.
No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. No amendment of this Agreement shall be effective as to a
particular Fund (in the case of the International Equity Fund, Equity Value
Fund, Prime Advantage Institutional Fund and Treasury Advantage Institutional
Fund, only to the extent required by the 1940 Act) until approved by vote of a
majority of the outstanding voting securities of such Fund.
12. Miscellaneous.
The captions in 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. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by New York law.
13. Names.
The names "Emerald Funds" and "Trustees of Emerald Funds"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated March 15, 1988, which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "Emerald Funds" entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the Trust Property, and
all persons dealing with any class of shares of the Trust must look solely to
the Trust Property belonging to such class for the enforcement of any claims
against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year first
above written.
EMERALD FUNDS
Attest: (a Massachusetts business trust)
/s/ Jeffrey A. Dalke By /s/ John G. Grimsley
- -------------------- -----------------------------
[Seal]
-8-
<PAGE>
BARNETT CAPITAL ADVISORS, INC.
Attest:
By /s/ Jack A. Ablin
- ------------------------- -------------------------------
[Seal]
9
<PAGE>
APPENDIX II
Agreement and Plan of Reorganization
------------------------------------
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
as of this _____ day of February, 1998, by and between Nations Institutional
Reserves ("Nations Fund"), a Massachusetts business trust, for itself and on
behalf of Nations Money Market Reserves (Shell) and Nations Treasury Reserves
(each an "Acquiring Fund" and collectively the "Acquiring Funds"), both
portfolios of Nations Fund, and Emerald Funds ("Emerald Funds"), a Massachusetts
business trust, for itself and on behalf of the Emerald Prime Advantage
Institutional Fund and Emerald Treasury Advantage Institutional Fund (each an
"Acquired Fund" and collectively the "Acquired Funds"), both portfolios of
Emerald Funds.
In accordance with the terms and conditions set forth in this
Agreement, the parties desire that all of the Fund Assets (as defined in
paragraph 1.2.a.) of each Acquired Fund be transferred to each Acquiring Fund
corresponding thereto, as set forth in the table attached hereto as Schedule A,
in exchange for shares of specified classes of the corresponding Acquiring Fund
("Acquiring Fund Shares") and the assumption by each Acquiring Fund of
Liabilities (as defined in paragraph 1.3) of each corresponding Acquired Fund
("Liabilities"), and that such Acquiring Fund Shares be distributed immediately
after the Closing(s), as defined in this Agreement, by each Acquired Fund to its
shareholders in liquidation of each Acquired Fund. The parties intend that the
following Acquiring Fund -- Nations Money Market Reserves -- shall have nominal
assets and liabilities before the Reorganization(s), as defined in this
Agreement, and shall continue the investment operations of the following
corresponding Acquired Fund -- Emerald Prime Advantage Institutional Fund --
thereafter, and that in this regard certain actions should be taken as described
in this Agreement. This Agreement is intended to be and is adopted as a
reorganization for each Acquired Fund within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
In consideration of the promises and of the covenants and agreements
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
covenant and agree as follows:
1. REORGANIZATION OF ACQUIRED FUNDS
1.1. Subject to the terms and conditions herein set forth, and on the
basis of the representations and warranties contained herein, each
Acquired Fund shall assign, deliver and otherwise transfer its
assets as set forth
1
<PAGE>
in paragraph 1.2.a (the "Fund Assets") to its corresponding
Acquiring Fund identified in Schedule A, and such corresponding
Acquiring Fund shall, as consideration therefor, on the Closing Date
(as defined in paragraph 3.1), (i) deliver to each corresponding
Acquired Fund the full and fractional number of shares of each of
its share classes calculated by dividing the value of the Fund
Assets of the corresponding Acquired Fund, net of the Acquired
Fund's Liabilities that are so conveyed and are attributable to each
of the Acquiring Fund's respective share classes set forth in
Schedule A, computed in the manner and as of the time and date set
forth in this Agreement, by the net asset value of one Acquiring
Fund share of the particular share class that is to be delivered
with respect thereto, computed in the manner and as of the time and
date set forth in this Agreement; and (ii) assume all of such
Acquired Fund's Liabilities. Such transfer, delivery and assumption
shall take place at the closing(s) provided for in paragraph 3.1
(hereinafter sometimes referred to as the "Closing(s)"). Promptly
after the Closing(s), each Acquired Fund shall distribute the
Acquiring Fund Shares to the shareholders of the Acquired Fund in
liquidation of the Acquired Fund as provided in paragraph 1.4
hereof. Such transaction(s) are hereinafter sometimes collectively
referred to as the "Reorganization(s)."
1.2.a. With respect to each Acquired Fund, the Fund Assets shall consist
of all property and assets of any nature whatsoever, including,
without limitation, all cash, cash equivalents, securities, claims
and receivables (including dividend and interest receivables) owned
by each Acquired Fund, and any prepaid expenses shown as an asset on
each Acquired Fund's books on the Closing Date.
1.2.b. At least fifteen (15) business days prior to the Closing Date, each
Acquired Fund will provide the corresponding Acquiring Fund with a
schedule of its securities and other assets and Liabilities of which
it is aware, and such Acquiring Fund will provide the Acquired Fund
with a copy of the current investment objective and policies
applicable to each Acquiring Fund. Each Acquired Fund reserves the
right to sell any of the securities or other assets shown on the
list of the Fund's Assets prior to the Closing Date but will not,
without the prior approval of the corresponding Acquiring Fund,
acquire any additional securities other than securities which the
Acquiring Fund is permitted to purchase in accordance with its
stated investment objective and policies. At least ten (10) business
days prior to the Closing Date, the Acquiring Fund will advise the
corresponding Acquired Fund of any investments of such Acquired Fund
shown on such schedule which the
2
<PAGE>
Acquiring Fund would not be permitted to hold, pursuant to its
stated investment objective and policies or otherwise. In the event
that the Acquired Fund holds any investments that its corresponding
Acquiring Fund would not be permitted to hold under its stated
investment objective or policies, the Acquired Fund, if requested by
the Acquiring Fund and, to the extent permissible and consistent
with the Acquired Fund's own investment objective and policies, will
dispose of such securities prior to the Closing Date. In addition,
if it is determined that the portfolios of the Acquired Fund and the
Acquiring Fund, when aggregated, would contain investments exceeding
certain percentage limitations to which the Acquiring Fund is or
will be subject with respect to such investments, the Acquired Fund,
if requested by the Acquiring Fund and, to the extent permissible
and consistent with the Acquired Fund's own investment objective and
policies, will dispose of and/or reinvest a sufficient amount of
such investments as may be necessary to avoid violating such
limitations as of the Closing Date.
1.3. Each Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. Each
Acquiring Fund will assume all liabilities of the corresponding
Acquired Funds, accrued, absolute, contingent or otherwise existing,
as of the Closing Date, which liabilities shall include any
obligation of the Emerald Funds to indemnify Emerald Funds Trustees
and officers, acting in their capacities as such, to the fullest
extent permitted by law and the Emerald Funds Agreement and
Declaration of Trust, as in effect as of the date of this Agreement
("Liabilities"). The Liabilities assumed by Nations Fund on behalf
of an Acquiring Fund shall be separate Liabilities of such Acquiring
Fund, and not joint or joint and several liabilities of any other
Acquiring Fund.
1.4. Promptly after the Closing(s) with respect to each Acquired Fund,
the Acquired Fund will distribute the shares of the Acquiring Fund
class received by the Acquired Fund pursuant to paragraph 1.1 to its
shareholders of record determined as of the close of business on the
Closing Date ("Acquired Fund Investors") in complete liquidation of
the Acquired Fund. Acquired Fund Investors will be credited with
full and fractional shares of the class that is issued by the
corresponding Acquiring Fund under this Agreement with respect to
the shares of the Acquired Fund that are held by the Acquired Fund
Investors. Such distribution will be accomplished by an instruction,
signed by an appropriate officer of Emerald Funds, to transfer the
Acquiring Fund Shares then credited to the Acquired Fund's account
on the books of the Acquiring
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Fund to open accounts on the books of the Acquiring Fund established
and maintained by the Acquiring Fund's transfer agent in the names
of record of the Acquired Fund Investors and representing the
respective pro rata number of shares of the Acquiring Fund due such
Acquired Fund Investors. In exchange for Acquiring Fund Shares
distributed, all issued and outstanding shares of beneficial
interest of the Acquired Fund will be redeemed and canceled
simultaneously therewith on the Acquired Fund's books; any
outstanding share certificates representing interests in the
Acquired Fund thereafter will represent the right to receive such
number of Acquiring Fund Shares after the Closing(s) as determined
in accordance with Section 1.1.
1.5. If a request shall be made for a change of the registration of
shares of an Acquiring Fund to another person from the account of
the shareholder in which name the shares are registered in the
records of the corresponding Acquired Fund it shall be a condition
of such registration of shares that there be furnished to the
Acquiring Fund an instrument of transfer properly endorsed,
accompanied by appropriate signature guarantees and otherwise in
proper form for transfer and, if any of such shares are outstanding
in certificated form, the certificates representing such shares, and
that the person requesting such registration shall pay to such
Acquiring Fund any transfer or other taxes required by reason of
such registration or establish to the reasonable satisfaction of the
Acquiring Fund that such tax has been paid or is not applicable.
1.6. Following the transfer of assets by each Acquired Fund to the
corresponding Acquiring Fund, the assumption of the Acquired Fund's
Liabilities by the Acquiring Fund, and the distribution by the
Acquired Fund of the Acquiring Fund Shares received by it pursuant
to paragraph 1.4, Emerald Funds shall terminate the qualification,
classification and registration of such Acquired Fund at all
appropriate federal and state agencies. All reporting and other
obligations of Emerald Funds shall remain the exclusive
responsibility of Emerald Funds up to and including the date on
which the particular Acquired Fund is terminated and deregistered,
subject to any reporting or other obligations described in paragraph
4.9.
1.7. The failure of one Acquired Fund to consummate the transactions
contemplated hereby shall not affect the consummation or validity of
a Reorganization with respect to any other Acquired Fund, and the
provisions of this Agreement shall be construed to effect this
intent, including, without limitation, as the context requires,
construing the
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terms "Acquiring Fund" and "Acquired Fund" as meaning only those
series of Nations Fund and Emerald Funds, respectively, which are
involved in a Reorganization as of a Closing Date.
2. VALUATION
2.1.a. With respect to each Acquired Fund, the value of the Fund Assets
shall be the value of such assets computed as of the time at which
its net asset value is calculated on the Closing Date (such time and
date being herein called the "Applicable Valuation Date"). The net
asset value of the Fund Assets to be transferred by the Acquired
Funds shall be computed by Emerald Funds and shall be subject to
adjustment by the amount, if any, agreed to by Nations Fund and the
respective Acquired Funds. In determining the value of the
securities transferred by the Acquired Funds to the Acquiring Funds,
except as provided in sub-paragraph 2.1.b., each security shall be
priced in accordance with the pricing policies and procedures of the
Acquiring Funds as described in its then current prospectuses and
statements of additional information. For such purposes, price
quotations and the security characteristics relating to establishing
such quotations shall be determined by Emerald Funds, provided that
such determination shall be subject to the approval of Nations Fund.
Emerald Funds and Nations Fund agree to use all commercially
reasonable efforts to resolve any material pricing differences
between the prices of portfolio securities determined in accordance
with the pricing policies and procedures of Emerald Funds and those
determined in accordance with the pricing policies and procedures of
the Acquiring Funds prior to the Applicable Valuation Date.
2.1.b. It is understood and agreed that the net asset value of the Fund
Assets of the Emerald Prime Advantage Institutional Fund and Emerald
Treasury Advantage Institutional Fund shall be based on the
amortized cost valuation procedures that have been adopted by the
Board of Trustees of Emerald Funds; provided that if the difference
between the per share net asset values of the Emerald Prime
Advantage Institutional Fund and Emerald Treasury Advantage
Institutional Fund, and the corresponding Acquiring Funds equals or
exceeds $.0025 on the Applicable Valuation Date, as computed by
using market values in accordance with the policies and procedures
established by Nations Fund (or as otherwise mutually determined by
the Boards of Trustees of Emerald Funds and Nations Fund), either
party shall have the right to postpone the Applicable Valuation Date
and Closing Date with
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respect to the Emerald Prime Advantage Institutional Fund and
Emerald Treasury Advantage Institutional Fund until such time as the
per share difference is less than $.0025.
2.2. The net asset value of the share of a class of shares of an
Acquiring Fund shall be the net asset value per share of such class
computed on the Applicable Valuation Date, using the valuation
procedures set forth in the Acquiring Fund's then current prospectus
and statement of additional information.
3. CLOSING(S) AND CLOSING DATE
3.1. The Closing(s) for the Reorganization(s) shall occur on May 15,
1998, and/or on such other date(s) as may be mutually agreed upon in
writing by the officers of the parties hereto (a "Closing Date").
The Closing(s) shall be held at the offices of Stephens Inc., 111
Center Street, Suite 300, Little Rock, Arkansas 72201 or at such
other location as is mutually agreeable to the parties. All acts
taking place at the Closing(s) shall be deemed to take place
simultaneously as of 4:00 p.m. Eastern time on the Closing Date
unless otherwise provided.
3.2. Each Acquiring Fund's custodian shall deliver at the Closing(s) a
certificate of an authorized officer stating that: (a) each Acquired
Fund's portfolio securities, cash and any other assets have been
delivered in proper form to the corresponding Acquiring Fund on the
Closing Date and (b) all necessary taxes including all applicable
federal and state stock transfer stamps, if any, have been paid, or
provision for payment shall have been made, by such Acquired Fund in
conjunction with the delivery of portfolio securities. Proper
delivery of cash shall be by wire to The Bank of New York, the
Acquiring Funds' Sub-Custodian, pursuant to instruction to be
delivered prior to the Closing(s).
3.3. Notwithstanding anything herein to the contrary, in the event that
on the Applicable Valuation Date (a) the New York Stock Exchange
shall be closed to trading or trading thereon shall be restricted or
(b) trading or the reporting of trading on such exchange or
elsewhere shall be disrupted so that, in the judgment of Nations
Fund and Emerald Funds, accurate appraisal of the value of the net
assets of an Acquiring Fund or an Acquired Fund is impracticable,
the Applicable Valuation Date and Closing Date shall be postponed
until the first business day after
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the day when trading shall have been fully resumed without
restriction or disruption and reporting shall have been restored.
3.4. With respect to each Acquired Fund, Emerald Funds shall provide
Nations Fund and its transfer agents with immediate access from and
after the Closing Date to (a) the computer, electronic or such other
forms of records containing the names, addresses and taxpayer
identification numbers of all of the Acquired Fund Investors and the
number and percentage ownership of outstanding Acquired Fund shares
owned by such Acquired Fund Investor, all as of the Applicable
Valuation Date, and (b) all original documentation (including all
applicable Internal Revenue Service forms, certificates,
certifications and correspondence) relating to the Acquired Fund
Investors' taxpayer identification numbers and their liability for
or exemption from back-up withholding. Each corresponding Acquiring
Fund shall issue and deliver to the Secretary or Assistant Secretary
of Emerald Funds, acting on behalf of the Acquired Fund, a
confirmation evidencing the Acquiring Fund Shares credited on the
Closing Date or shall provide evidence satisfactory to each Acquired
Fund that such Acquiring Fund Shares have been credited to each
Acquired Fund's account on the books of each Acquiring Fund. At the
Closing(s), each party shall deliver to the other such bills of
sale, checks, assignments, assumptions of liability share
certificates, if any, receipts or other documents of transfer,
assignment or conveyance as such other party or its counsel may
reasonably request.
3.5. Within thirty (30) days after the Closing Date, each Acquired Fund
shall deliver, in accordance with Article 1 hereof, to the
corresponding Acquiring Fund a statement of the Fund Assets and
Liabilities, together with a list of such Acquired Fund's portfolio
securities and other assets showing the respective adjusted bases
and holding periods thereof for income tax purposes, as of the
Closing Date, certified by an appropriate officer of Emerald Funds.
4. COVENANTS WITH RESPECT TO THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
4.1. Emerald Funds, with respect to the Acquired Funds, has called or
will call a meeting of Emerald Fund shareholders to consider and act
upon this Agreement, and to take such other actions reasonably
necessary to obtain the approval of the transactions contemplated
herein, including approval for each Acquired Fund's liquidating
distribution of the
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Acquiring Fund Shares contemplated hereby, and for Emerald Funds to
terminate each Acquired Fund's qualification, classification and
registration if requisite approvals are obtained with respect to
each Acquired Fund. Nations Fund and Emerald Funds will jointly
prepare the notice of meeting, form of proxy and proxy statement
(collectively, "Proxy Materials") to be used in connection with such
meeting; provided that Nations Fund has furnished or will furnish
Emerald Funds with a current, effective prospectus, including any
supplements, relating to the class of shares of each Acquiring Fund
corresponding to the class of shares of each Acquired Fund then
outstanding for incorporation within and/or distribution with the
Proxy Materials, and with such other information relating to the
Acquiring Funds as is reasonably necessary for the preparation of
the Proxy Materials.
4.2. Emerald Funds, on behalf of each Acquired Fund, covenants that each
Acquired Fund shall not sell or otherwise dispose of any Acquiring
Fund Shares to be received in the transactions contemplated herein,
except in distribution to its shareholders in accordance with the
terms of this Agreement.
4.3. Emerald Funds, on behalf of each Acquired Fund, will assist the
corresponding Acquiring Fund in obtaining such information as the
Acquiring Fund reasonably requests concerning the record and
beneficial ownership of shares of each class of each Acquired Fund.
4.4. Subject to the provisions hereof, Nations Fund, on its own behalf
and on behalf of each Acquiring Fund, and Emerald Funds, on its own
behalf and on behalf of each Acquired Fund, will take, or cause to
be taken, all actions, and do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated herein.
4.5. Emerald Funds, on behalf of each Acquired Fund, shall furnish to its
corresponding Acquiring Fund on the Closing Date, a final statement
of the total amount of each Acquired Fund's assets and Liabilities
as of the Closing Date, which statement shall be certified by an
appropriate officer of Emerald Funds as being determined in
accordance with generally accepted accounting principles
consistently applied and as being valued in accordance with
paragraph 2.1 hereof. As promptly as practicable, but in any case
within sixty (60) days after the Closing Date, Emerald Funds, on
behalf of each Acquired Fund, shall furnish its corresponding
Acquiring Fund, in such form as is reasonably satisfactory to
Nations Fund, on behalf of each Acquiring Fund, a
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<PAGE>
statement certified by an officer of Emerald Funds of such Acquired
Fund's federal income tax attributes and the tax bases in its assets
that will be carried over to the corresponding Acquiring Fund in the
reorganization pursuant to Section 381 of the Code.
4.6. Nations Funds has prepared and filed, or will prepare and file, with
the Securities and Exchange Commission ("SEC") and the appropriate
state securities commissions a post-effective amendment (the "N-1A
Post-Effective Amendment") to its registration statement on Form
N-1A (File Nos. 33-33144; 811-6030), as promptly as practicable so
that all Acquiring Funds and their shares are registered under the
Securities Act of 1933, as amended (the "1933 Act"), the Investment
Company Act of 1940, as amended (the "1940 Act"), and applicable
state securities laws. In addition, Nations Fund, on behalf of each
Acquiring Fund, has prepared and filed, or will prepare and file
with the SEC a registration statement on Form N-14 under the 1933
Act, relating to the Acquiring Fund Shares, which, without
limitation, shall include a proxy statement of Emerald Funds and the
prospectuses of the Acquiring Funds of Nations Fund relating to the
transactions contemplated by this Agreement (the "Registration
Statement"). Emerald Funds, on behalf of each Acquired Fund, has
provided or will provide each corresponding Acquiring Fund with the
materials and information necessary to prepare the N-1A
Post-Effective Amendment and the Proxy Materials for inclusion in
the Registration Statement, prepared in accordance with paragraph
4.1, and with such other information and documents relating to each
Acquired Fund as are requested by the corresponding Acquiring Fund
and as are reasonably necessary for the preparation of the N-1A
Post-Effective Amendment and the Registration Statement.
4.7. As soon after the Closing Date as is reasonably practicable, Emerald
Funds, on behalf of each Acquired Fund shall prepare and file all
federal and other tax returns and reports of each Acquired Fund
required by law to be filed with respect to all periods ending on or
before the Closing Date but not theretofore filed.
4.8. With respect to each Acquiring Fund, Nations Fund agrees to use all
reasonable efforts to operate in accordance with its then current
prospectus and statement of additional information prepared in
accordance with Form N-1A, including qualifying as a "regulated
investment company" under the Code, for at least one (1) year
following the Closing Date.
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4.9. Following the transfer of assets by each Acquired Fund to the
corresponding Acquiring Fund in exchange for Acquiring Fund Shares
and the assumption of all Liabilities of the Acquired Fund as
contemplated herein, Emerald Funds will file any final regulatory
reports, including but not limited to any Form N-SAR and Rule 24f-2
filings with respect to such Acquired Fund(s), promptly after the
Closing Date and also will take all other steps as are necessary and
proper to effect the termination or declassification of such
Acquired Funds of Emerald Funds in accordance with the laws of the
Commonwealth of Massachusetts and other applicable requirements.
5. REPRESENTATIONS AND WARRANTIES
5.1. Nations Fund, on behalf of itself and each Acquiring Fund,
represents and warrants to the Emerald Funds as follows:
5.1.a. Nations Fund was duly created pursuant to its Declaration of
Trust by the Trustees for the purpose of acting as a
management investment company under the 1940 Act and is
validly existing under the laws of the Commonwealth of
Massachusetts, and the Declaration of Trust directs the
Trustees to manage the affairs of Nations Fund and grants them
all powers necessary or desirable to carry out such
responsibility, including administering Nations Fund business
as currently conducted by Nations Fund and as described in the
current prospectuses of Nations Fund; Nations Fund is
registered as an investment company classified as an open-end
management company, under the 1940 Act and its registration
with the SEC as an investment company is in full force and
effect;
5.1.b. The Registration Statement, including the current
prospectuses and statement of additional information of each
Acquiring Fund, conform or will conform, at all times up to
and including the Closing Date, in all material respects to
the applicable requirements of the 1933 Act and the 1940 Act
and the regulations thereunder and do not include or will not
include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
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<PAGE>
5.1.c. Each Acquiring Fund is not in violation of, and the
execution, delivery and performance of this Agreement by
Nations Fund for itself and on behalf of each Acquiring Fund
does not and will not (i) violate Nations Fund's Declaration
of Trust or By-Laws, or (ii) result in a breach or violation
of, or constitute a default under any material agreement or
material instrument, to which Nations Fund is a party or by
which its properties or assets are bound;
5.1.d. Except as previously disclosed in writing to the Emerald
Funds, no litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or, to Nations Fund's knowledge, threatened
against Nations Fund or its business, the Acquiring Funds or
any of their properties or assets, which, if adversely
determined, would materially and adversely affect Nations Fund
or an Acquiring Fund's financial condition or the conduct of
their business, and Nations Fund knows of no facts that might
form the basis for the institution of any such proceeding or
investigation, and no Acquiring Fund is a party to or subject
to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely
affects, or is reasonably likely to materially and adversely
affect, its business or its ability to consummate the
transactions contemplated herein;
5.1.e. All issued and outstanding shares, including shares to be
issued in connection with the Reorganization, of each
Acquiring Fund class will, as of the Closing Date, be duly
authorized and validly issued and outstanding, fully paid and
non-assessable by Nations Fund and the Acquiring Fund does not
have outstanding any option, warrants or other rights to
subscribe for or purchase any of its shares;
5.1.f. The execution, delivery and performance of this Agreement on
behalf of each Acquiring Fund will have been duly authorized
prior to the Closing Date by all necessary action on the part
of Nations Fund and the Trustees, and this Agreement
constitutes a valid and binding obligation of Nations Fund and
each Acquiring Fund enforceable in accordance with its terms,
subject as to enforcement, to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar
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laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
5.1.g. The Acquiring Fund Shares to be issued and delivered to the
corresponding Acquired Fund for the account of the Acquired
Fund Investors, pursuant to the terms hereof, will have been
duly authorized as of the Closing Date and, when so issued and
delivered, will be duly and validly issued, fully paid and
non-assessable, and the shares of the class of the Acquiring
Fund issued and outstanding prior to the Closing Date were
offered and sold in compliance with the applicable
registration requirements, or exemptions therefrom, of the
1933 Act, and all applicable state securities laws, and the
regulations thereunder, and no shareholder of an Acquiring
Fund shall have any preemptive right of subscription or
purchase in respect thereto;
5.1.h. From the effective date of the Registration Statement,
through the time of the meeting of the Acquired Fund
shareholders and on the Closing Date, any written information
furnished by Nations Fund with respect to an Acquiring Fund
for use in the Proxy Materials, the Registration Statement or
any other materials provided in connection with the
Reorganization does not and will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the information provided not misleading;
5.1.i. No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the Securities
Exchange Act of 1934 (the "1934 Act"), the 1940 Act or
Massachusetts law for the execution of this Agreement by
Nations Fund, for itself and on behalf of each Acquiring Fund,
or the performance of the Agreement by Nations Fund, for
itself and on behalf of each Acquiring Fund, except for the
effectiveness of the Registration Statement, any necessary
exemptive relief or no-action assurances requested from the
SEC or its Staff with respect to Sections 17(a) and 17(d) of
the 1940 Act and Rule 17d-1 thereunder, and such other
consents, approvals, authorizations and filings as have been
made or received, and except for such consents, approvals,
authorizations and filings as may be required subsequent to
the Closing Date;
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5.1.j. The Statement of Assets and Liabilities, Statement of
Operations and Statement of Changes in Net Assets of Nations
Treasury Reserves as of and for the year ended April 30, 1997,
audited by Price Waterhouse LLP, and the unaudited Statement
of Assets and Liabilities, Statement of Operations and
Statement of Changes in Net Assets of Nations Treasury
Reserves as of and for the six-month period ended October 31,
1997 (copies of which have been or will be furnished to the
corresponding Acquired Fund), present fairly, in all material
respects, the financial position of Nations Treasury Reserves
as of such date and the results of its operations and the
changes in its Net Assets for the period then ended in
accordance with generally accepted accounting principles
consistently applied and as of such date there were no
Liabilities of Nations Treasury Reserves known to Nations Fund
that were not disclosed therein but that would be required to
be disclosed therein in accordance with generally accepted
accounting principles;
5.1.k. Since the date of the most recent audited financial
statements, there has not been any material adverse change in
any Acquiring Fund's financial position, assets, liabilities
or business, other than changes occurring in the ordinary
course of business, or any incurrence by an Acquiring Fund of
indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed in
writing to and accepted by the corresponding Acquired Fund,
prior to the Closing Date (for the purposes of this
subparagraph (k), neither a decline in an Acquiring Fund's net
asset value per share nor a decrease in an Acquiring Fund's
size due to redemptions shall be deemed to constitute a
material adverse change);
5.1.l. All federal and other tax returns and reports of Nations Fund
and each Acquiring Fund required by law to be filed on or
before the Closing Date have been or will be filed, and all
federal and other taxes owed by Nations Fund on behalf of the
Acquiring Funds have been or will be paid so far as due, and
to the best of Nations Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with
respect to any such return;
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5.1.m. At the Closing Date, the Acquiring Funds will have good and
marketable title to their assets and full right, power and
authority to assign, deliver and otherwise transfer such
assets; and
5.1.n. Each Acquiring Fund intends to qualify as a "regulated
investment company" under the Code, and each Acquiring Fund
that has conducted material investment operations prior to the
Closing Date has elected to qualify and has qualified as a
"regulated investment company" under the Code, as of and since
its first taxable year; has been a "regulated investment
company" under the Code at all times since the end of its
first taxable year when it so qualified; and qualifies and
shall continue to qualify as a "regulated investment company"
under the Code for its current taxable year.
5.2. Emerald Funds, on behalf of itself and each Acquired Fund,
represents and warrants to Nations Fund as follows:
5.2.a. Emerald Funds was duly created pursuant to its Agreement and
Declaration of Trust by the Trustees for the purpose of acting
as a management investment company under the 1940 Act and is
validly existing under the laws of the Commonwealth of
Massachusetts, and the Agreement and Declaration of Trust
provides that the affairs of Emerald Funds shall be managed by
the Trustees and grants them all powers necessary or desirable
to carry out such responsibility, including administering
Emerald Funds business as currently conducted by Emerald Funds
and as described in the current prospectuses of Emerald Funds;
Emerald Funds is registered as an investment company
classified as an open-end management company, under the 1940
Act and its registration with the SEC as an investment company
is in full force and effect;
5.2.b. All of the issued and outstanding shares representing units
of beneficial interest of each Acquired Fund have been offered
and sold in compliance in all material respects with
applicable registration requirements of the 1933 Act and state
securities laws;
5.2.c. The Acquired Funds are not in violation of, and the
execution, delivery and performance of this Agreement by
Emerald Funds for itself and on behalf of each Acquired Fund
does not and
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will not (i) violate Emerald Funds' Agreement and Declaration
of Trust or Code of Regulations, or (ii) result in a breach or
violation of, or constitute a default under any material
agreement or material instrument, to which Emerald Funds is a
party or by which its properties or assets are bound, except
as otherwise previously disclosed in writing to the Acquiring
Funds;
5.2.d. Except as previously disclosed in writing to Nations Fund, no
litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or,
to Emerald Funds' knowledge, threatened against any Acquired
Fund or any of its properties or assets which, if adversely
determined, would materially and adversely affect such
Acquired Fund's financial condition or the conduct of its
business, and Emerald Funds knows of no facts that might form
the basis for the institution of any such proceeding or
investigation, and no Acquired Fund is a party to or subject
to the provisions of any order, decree or judgment of any
court or governmental body that materially and adversely
affects, or is reasonably likely to materially and adversely
affect, its business or its ability to consummate the
transactions contemplated herein;
5.2.e. The Statement of Assets and Liabilities, Statement of
Operations and Statement of Changes in Net Assets of each
Acquired Fund as of and for the year ended November 30, 1997,
audited by KPMG Peat Marwick LLP (copies of which have been or
will be furnished to the corresponding Acquiring Fund) fairly
present, in all material respects, the financial condition of
each Acquired Fund as of such date and its results of
operations for such period in accordance with generally
accepted accounting principles consistently applied, and as of
such date there were no Liabilities of any Acquired Fund known
to Emerald Funds that were not disclosed therein but that
would be required to be disclosed therein in accordance with
generally accepted accounting principles;
5.2.f. Since the date of the most recent audited financial
statements, there has not been any material adverse change in
any Acquired Fund's financial condition, assets, Liabilities
or business, other than changes occurring in the ordinary
course of business, or any incurrence by an Acquired Fund of
indebtedness maturing
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more than one year from the date such indebtedness was
incurred, except as otherwise disclosed in writing to and
accepted by the corresponding Acquiring Fund, prior to the
Closing Date (for the purposes of this subparagraph (f),
neither a decline in an Acquired Fund's net asset value per
share nor a decrease in an Acquired Fund's size due to
redemptions shall be deemed to constitute a material adverse
change);
5.2.g. All federal and other tax returns and reports of Emerald
Funds and each Acquired Fund required by law to be filed on or
before the Closing Date, have been or will be filed, and all
federal and other taxes owed by Emerald Funds on behalf of the
Acquired Funds, have been or will be paid so far as due, and
to the best of Emerald Funds' knowledge, no such return is
currently under audit and no assessment has been asserted with
respect to any such return;
5.2.h. Each Acquired Fund has elected to qualify and has qualified
as a "regulated investment company" under the Code, as of and
since its first taxable year; has been a "regulated investment
company" under the Code at all times since the end of its
first taxable year when it so qualified; and qualifies and
shall continue to qualify as a "regulated investment company"
under the Code for its taxable year ending upon its
liquidation;
5.2.i. All issued and outstanding shares of each Acquired Fund are,
and on the Closing Date will be, duly authorized and validly
issued and outstanding, and fully paid and non-assessable by
Emerald Funds, and all such shares will, at the time of the
Closing(s), be held by the persons and in the amounts set
forth in the list of Acquired Fund Investors provided to each
corresponding Acquiring Fund, pursuant to paragraph 3.4, and
no Acquired Fund has outstanding any options, warrants or
other rights to subscribe for or purchase any of its shares,
nor is there outstanding any security convertible into any of
its shares;
5.2.j. At the Closing Date, each Acquired Fund will have good and
marketable title to its Fund Assets and full right, power and
authority to assign, deliver and otherwise transfer such Fund
Assets hereunder, and upon delivery and payment for such Fund
Assets as contemplated herein, the corresponding Acquiring
Fund will acquire good and marketable title thereto,
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subject to no restrictions on the ownership or transfer
thereof other than such restrictions as might arise under the
1933 Act or state securities laws, and except for any liens or
transfer tax liens arising in connection with the transfer of
Fund Assets pursuant to this Agreement;
5.2.k. The execution, delivery and performance of this Agreement on
behalf of the Acquired Funds will have been duly authorized
prior to the Closing Date by all necessary action on the part
of Emerald Funds and the Trustees, and this Agreement
constitutes a valid and binding obligation of Emerald Funds
and each Acquired Fund enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws
of general applicability relating to or affecting creditors'
rights and to general equity principles;
5.2.l. From the effective date of the Registration Statement,
through the time of the meeting of the Emerald Funds
shareholders, and on the Closing Date, the Registration
Statement insofar as it relates to materials provided by
Emerald Funds or the Acquired Funds, used in connection with
the preparation of the Registration Statement: (i) will comply
in all material respects with the applicable provisions of the
1933 Act, the 1934 Act and the 1940 Act and the regulations
thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and as of such dates and times, any written
information furnished by Emerald Funds, on behalf of the
Acquired Funds, for use in the Registration Statement or in
any other manner that may be necessary in connection with the
transactions contemplated hereby does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the information provided not misleading; and
5.2.m. No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the 1934 Act, the
1940 Act or Massachusetts law for the execution of this
Agreement by Emerald Funds, for itself and on behalf of each
Acquired Fund, or the performance of the Agreement by Emerald
Funds for itself and on behalf of each Acquired Fund, except
for the effectiveness of the Registration Statement, any
necessary
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<PAGE>
exemptive relief or no-action assurances requested from the
SEC or its Staff with respect to Section 17(a) and 17(d) of
the 1940 Act and Rule 17d-1 thereunder, and except for such
other consents, approvals, authorizations and filings as have
been made or received, and such consents, approvals,
authorizations and filings as may be required subsequent to
the Closing Date, it being understood, however, that this
Agreement and the transactions contemplated herein must be
approved by the shareholders of the Acquired Funds as
described in paragraph 8.1.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED FUNDS
The obligations of Emerald Funds to consummate the Reorganization
with respect to each Acquired Fund shall be subject to the performance by
Nations Fund, for itself and on behalf of each Acquiring Fund, of all the
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following conditions with respect to each corresponding
Acquiring Fund:
6.1. All representations and warranties of Nations Fund with respect to
each Acquiring Fund contained herein shall be true and correct in
all material respects as of the date hereof and, except as they may
be affected by the transactions contemplated herein, as of the
Closing Date with the same force and effect as if made on and as of
the Closing Date.
6.2. Nations Fund, on behalf of each Acquiring Fund, shall have delivered
to Emerald Funds at the Closing(s) a certificate executed on behalf
of each corresponding Acquiring Fund by Nations Fund's President,
Secretary, Assistant Secretary, or other authorized officer, in a
form reasonably satisfactory to Emerald Funds and dated as of the
Closing Date, to the effect that the representations and warranties
of Nations Fund with respect to each Acquiring Fund made herein are
true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated herein, and as to such
other matters as such Acquired Fund shall reasonably request.
6.3. Each Acquired Fund shall have received at the Closing(s) a favorable
opinion of Morrison & Foerster LLP, counsel to Nations Fund (based
upon or subject to such representations, assumptions, limitations or
opinions of local counsel as such counsel may deem appropriate or
necessary), dated as of the Closing Date, in a form (including the
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representations, assumptions, limitations or opinions of local
counsel upon which it is based or to which it is subject) reasonably
satisfactory to each Acquired Fund, substantially to the effect
that:
6.3.a. Nations Fund is a duly registered, open-end, management
investment company, and its registration with the SEC as an
investment company under the 1940 Act is in full force and
effect;
6.3.b. each Acquiring Fund is a portfolio of Nations Fund, which is
a company duly created pursuant to its Declaration of Trust,
is validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and the Declaration of Trust
directs the Trustees to manage the affairs of Nations Fund and
grants them all powers necessary or desirable to carry out
such responsibility, including administering Nations Fund's
business as described in the current prospectuses of Nations
Fund;
6.3.c. this Agreement has been duly authorized, executed and
delivered on behalf of Nations Fund and each Acquiring Fund
and, assuming due authorization, execution and delivery of
this Agreement on behalf of the Acquired Funds, is a valid and
binding obligation of Nations Fund enforceable against Nations
Fund in accordance with its terms, subject as to enforcement,
to bankruptcy, insolvency, reorganization, arrangement,
moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and to general
equity principles;
6.3.d. the Acquiring Fund Shares to be issued to the Acquired Funds
Investors pursuant to this Agreement are duly registered under
the 1933 Act on the appropriate form, and are duly authorized
and upon such issuance will be validly issued and outstanding
and fully paid and non-assessable, and no shareholder of an
Acquiring Fund has any preemptive rights to subscription or
purchase in respect thereof;
6.3.e. the N-1A Post-Effective Amendment and the Registration
Statement have become effective with the SEC and, to the best
of such counsel's knowledge, no stop order suspending the
effectiveness thereof has been issued and no proceedings for
that purpose have been instituted or are pending or
threatened;
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6.3.f. no consent, approval, authorization, filing or order of any
court or governmental authority of the United States or any
state is required for the consummation by Nations Fund of the
Reorganization with respect to each Acquiring Fund;
6.3.g. to such counsel's knowledge, the execution and delivery of
the Agreement and the performance of its terms by Nations
Fund, and each Acquiring Fund, do not violate or result in a
violation of the Nations Fund Declaration of Trust or By-Laws,
or any judgment, order or decree known to such counsel, of any
court or arbiter, to which Nations Fund is a party, and, to
such counsel's knowledge, will not constitute a material
breach of the terms, conditions or provisions of, or
constitute a default under, any contract, undertaking,
indenture or other agreement by which Nations Fund is now
bound or to which it is now a party;
6.3.h. to such counsel's knowledge, (a) no legal or governmental
proceedings existing on or before the date of mailing the
combined proxy statement/prospectus ("Combined
Proxy/Prospectus"), involving Nations Fund or the Acquiring
Funds, are required to be described in the Combined
Proxy/Prospectus which are not described as required and (b)
there are no contracts or documents relating to Nations Fund
or the Acquiring Funds, known to such counsel, of a character
required to be described in the Combined Proxy/Prospectus or
to be filed as an exhibit to the Registration Statement that
are not described or filed as required; and
6.3.i. to such counsel's knowledge, except as otherwise disclosed in
the Registration Statement, no litigation or administrative
proceeding or investigation of or before any court or
governmental body is presently pending or threatened against
Nations Fund or an Acquiring Fund or any of their properties
or assets and neither Nations Fund nor any Acquiring Fund is a
party to or subject to the provisions of any order, decree or
judgment of any court or governmental body that materially and
adversely affects, or would materially and adversely affect,
its business.
6.4. As of the Closing Date with respect to the Reorganization of each
Acquired Fund, there shall have been no material change in the
investment objective, policies and restrictions nor any material
change
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in the investment management fees, fee levels payable pursuant to
the 12b-1 plan of distribution, other fees payable for services
provided to the Acquiring Funds, fee waiver or expense reimbursement
undertakings, or sales loads of the Acquiring Funds from those fee
amounts, undertakings and sales load amounts described in the
prospectus of each Acquiring Fund delivered to the corresponding
Acquired Fund pursuant to paragraph 4.1 and in the notice of
meeting, form of proxy and Combined Proxy/Prospectus (collectively,
"Proxy Materials").
6.5. With respect to each Acquiring Fund, the Board of Trustees of
Nations Fund, including a majority of the "non-interested" Trustees,
has determined that the Reorganization is in the best interests of
each Acquiring Fund and that the interests of the existing
shareholders of each Acquiring Fund would not be diluted as a result
of the Reorganization.
6.6. For the period beginning at the Closing Date of the last
Reorganization to occur and ending not less than six years
thereafter, Nations Fund shall provide, or cause to be provided,
liability coverage at least comparable to the liability coverage
currently applicable to the Trustees and officers of Emerald Funds,
covering the actions of the current Trustees and officers of Emerald
Funds for the period they served as such.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUNDS
The obligations of Nations Fund to consummate the Reorganization
with respect to each Acquiring Fund shall be subject to the performance by
Emerald Funds of all the obligations to be performed by it hereunder, with
respect to each corresponding Acquired Fund, on or before the Closing Date and,
in addition thereto, the following conditions:
7.1. All representations and warranties of Emerald Funds with respect to
the Acquired Funds contained herein shall be true and correct in all
material respects as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement, as of
the Closing Date, with the same force and effect as if made on and
as of the Closing Date.
7.2. Emerald Funds, on behalf of each Acquired Fund, shall have delivered
to each corresponding Acquiring Fund at the Closing(s) a certificate
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executed on behalf of each Acquired Fund, by Emerald Funds'
President, Secretary or Assistant Secretary, or other authorized
officer, in form and substance reasonably satisfactory to the
Acquiring Funds and dated as of the Closing Date, to the effect that
the representations and warranties of Emerald Funds with respect to
each Acquired Fund made herein are true and correct at and as of the
Closing Date, except as they may be affected by the transactions
contemplated herein and as to such other matters as each Acquiring
Fund shall reasonably request.
7.3. Each Acquiring Fund shall have received at the Closing(s) a
favorable opinion of Drinker Biddle & Reath LLP, counsel to Emerald
Funds (based upon or subject to such representations, assumptions,
limitations or opinions of local counsel as such counsel may deem
appropriate or necessary), dated as of the Closing Date, in a form
(including the representations, assumptions, limitations or opinions
of local counsel upon which it is based or to which it is subject)
reasonably satisfactory to such Acquiring Fund, substantially to the
effect that:
7.3.a. Emerald Funds is a duly registered, open-end investment
company, and its registration with the SEC as an investment
company under the 1940 Act is in full force and effect;
7.3.b. each Acquired Fund is a portfolio of Emerald Funds, Emerald
Funds is a business trust duly created pursuant to its
Agreement and Declaration of Trust, is validly existing and in
good standing under the laws of the Commonwealth of
Massachusetts, and the Agreement and Declaration of Trust
provides that the affairs of Emerald Funds shall be managed by
the Trustees and grants them all powers necessary or desirable
to carry out such responsibility, including administering
Emerald Funds' business as described in the current
prospectuses of Emerald Funds;
7.3.c. this Agreement has been duly authorized, executed and
delivered by Emerald Funds, for itself and on behalf of the
Acquired Funds and, assuming due authorization, execution and
delivery of this Agreement on behalf of each Acquiring Fund,
is a valid and binding obligation of Emerald Funds,
enforceable against Emerald Funds in accordance with its
terms, subject to the affect of bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar
22
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laws of general applicability relating to or affecting
creditors' rights and court decisions with respect thereto,
and such counsel will express no opinion with respect to the
application of equitable principles in any proceeding, whether
at law or in equity;
7.3.d. no consent, approval, authorization, filing or order of any
court or governmental authority of the United States or any
state is required for the consummation of the Reorganization
by Emerald Funds with respect to each Acquired Fund, except
for such consents, approvals, authorizations and filings as
have been made or received, and except for such consents,
approvals, authorizations and filings as may be required
subsequent to the Closing Date;
7.3.e. to such counsel's knowledge, the execution and delivery of
the Agreement and the performance of its terms by Emerald
Funds, and each Acquired Fund, do not violate or result in a
violation of the Emerald Funds' Agreement and Declaration of
Trust or Code of Regulations, or any judgment, order or decree
known to such counsel, of any court or arbiter, to which
Emerald Funds is a party, and, to such counsel's knowledge,
will not constitute a material breach of the terms, conditions
or provisions of, or constitute a default under, any contract,
undertaking, indenture or other agreement by which Emerald
Funds is now bound or to which it is now a party;
7.3.f. to such counsel's knowledge, (a) no legal or governmental
proceedings existing on or before the date of mailing the
Combined Proxy/Prospectus involving Emerald Funds or the
Acquired Funds, are required to be described in the Combined
Proxy/Prospectus which are not described as required and (b)
there are no contracts or documents relating to Emerald Funds
or the Acquired Funds, known to such counsel, of a character
required to be described in the Combined Proxy/Prospectus or
to be filed as an exhibit to the Registration Statement that
are not described or filed as required; and
7.3.g. to such counsel's knowledge, except as otherwise disclosed in
the Registration Statement, no litigation or administrative
proceeding or investigation of or before any court or
governmental body is presently pending or threatened against
Emerald Funds or an Acquired Fund or any of their properties
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<PAGE>
or assets and neither Emerald Funds nor an Acquired Fund is a
party to or subject to the provisions of any order, decree or
judgment of any court or governmental body that materially and
adversely affects, or would materially and adversely affect,
its business.
7.4. Nations Fund, on behalf of each Acquiring Fund, shall have received
from KPMG Peat Marwick LLP a letter addressed to Nations Fund, on
behalf of each Acquiring Fund, and dated as of the Closing Date with
respect to the Acquired Funds, in form and substance satisfactory to
Nations Fund, to the effect that:
7.4.a. they are independent accountants with respect to Emerald
Funds and each Acquired Fund within the meaning of the 1933
Act and the applicable regulations thereunder;
7.4.b. in their opinion, the audited financial statements and the
per share data provided in accordance with Item 3 in Form N-1A
(the "Per Share Data") of the Acquired Fund included or
incorporated by reference in the Registration Statement
previously reported on by them comply as to form in all
material aspects with the applicable accounting requirements
of the 1933 Act and the published rules and regulations
thereunder;
7.4.c. on the basis of limited procedures agreed upon by Nations
Fund, on behalf of the Acquiring Funds and Emerald Funds, on
behalf of the Acquired Funds, and described in such letter
(but not an examination in accordance with generally accepted
auditing standards), the information relating to the Acquired
Funds appearing in the Registration Statement that is
expressed in dollars or percentages of dollars (with the
exception of performance comparisons) has been obtained from
the accounting records of the Acquired Funds or from schedules
prepared by officers of Emerald Funds having responsibility
for financial and reporting matters and such information is in
agreement with such records, schedules or computations made
therefrom.
7.5. Emerald Funds shall have delivered to the Acquiring Funds, pursuant
to paragraph 5.2(e), copies of financial statements of each Acquired
Fund as of and for the period ended November 30, 1997, audited by
KPMG Peat Marwick LLP.
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<PAGE>
7.6. With respect to each Acquired Fund, the Board of Trustees of Emerald
Funds, including a majority of "non-interested" Trustees, has
determined that the Reorganization is in the best interests of each
Acquired Fund and that the interests of the existing investors in
each Acquired Fund would not be diluted as a result of the
Reorganization.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUNDS AND THE
ACQUIRED FUNDS
The obligations of each Acquiring Fund and of each corresponding
Acquired Fund herein are subject to the further conditions that on or before the
Closing Date with respect to each Acquiring Fund and each corresponding Acquired
Fund:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the
outstanding shares of beneficial interest in each Acquired Fund in
accordance with the provisions of Emerald Funds' Agreement and
Declaration of Trust and the 1940 Act, and certified copies of the
resolutions evidencing such approval shall have been delivered to
each corresponding Acquiring Fund.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or any of the transactions
contemplated herein.
8.3. All consents of other parties and all other consents, orders,
approvals and permits of federal, state and local regulatory
authorities (including, without limitation, those of the SEC and of
state securities authorities) deemed necessary by Nations Fund, on
behalf of the Acquiring Funds or by Emerald Funds, on behalf of the
Acquired Funds, to permit consummation, in all material respects, of
the transactions contemplated herein shall have been obtained,
except where failure to obtain any such consent, order or permit
would not, in the opinion of the party asserting that the condition
to closing has not been satisfied, involve a risk of a material
adverse effect on the assets or properties of any of an Acquiring
Fund or its corresponding Acquired Fund.
8.4. The N-1A Post-Effective Amendment and the Registration Statement
shall have become effective under the 1933 Act, no stop orders
suspending the effectiveness thereof shall have been issued and, to
the best knowledge of the parties hereto, no investigation or
proceeding
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<PAGE>
for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act.
8.5. Except to the extent prohibited by Rule 19b-1 promulgated under the
1940 Act, each Acquired Fund that has conducted material investment
operations prior to the Closing Date shall have declared a dividend
or dividends, with a record date and ex-dividend date prior to the
Applicable Valuation Date, which, together with all previous
dividends, shall have the effect of distributing to each Acquired
Fund's shareholders substantially all of its net investment company
taxable income, if any, for all taxable periods or years ending on
or prior to the Closing Date (computed without regard to any
deduction for dividends paid) and substantially all of its net
capital gain, if any, realized for all taxable periods or years
ending on or prior to the Closing Date (after reduction for any
capital loss carry forward.)
8.6. Nations Fund, on behalf of each Acquiring Fund, and Emerald Funds,
on behalf of each Acquired Fund, shall have received from Price
Waterhouse LLP a letter dated as of the Closing Date, in form and
substance satisfactory to Nations Fund and to Emerald Funds, to the
effect that on the basis of limited procedures agreed upon by
Nations Fund, on behalf of the Acquiring Funds and Emerald Funds, on
behalf of the Acquired Funds (but not an examination in accordance
with generally accepted auditing standards): (a) nothing came to
their attention that caused them to believe that the unaudited pro
forma financial statements included in the Registration Statement do
not comply as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the
pro forma adjustments have not properly been applied to the
historical amounts in the compilation of those amounts, (b) the data
used in the calculation of the current and pro forma expense ratios
of the Acquiring Funds appearing in the Registration Statement agree
with underlying records of the Acquiring Funds or to written
estimates provided by officers of Nations Fund having responsibility
for financial and reporting matters and were found to be
mathematically correct, and (c) the calculation of the net value of
the Acquired Fund Assets and the net asset value of the Acquiring
Fund shares, in each case as of the Applicable Valuation Date, were
determined in accordance with the pricing policies and procedures of
the Acquiring Funds as described in their then current prospectuses
and statements of additional information.
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8.7. Nations Fund and Emerald Funds shall have received an opinion of
Morrison & Foerster LLP addressed to both Nations Fund and Emerald
Funds in a form reasonably satisfactory to them, and dated as of the
Closing Date, substantially to the effect that on the basis of
facts, representations, and assumptions set forth in such opinion:
8.7.a. each Reorganization will constitute a "reorganization" within
the meaning of Section 368(a) of the Code, and each Acquiring
Fund and the corresponding Acquired Fund will each be a "party
to a reorganization" within the meaning of Section 368(b) of
the Code;
8.7.b. no gain or loss will be recognized by an Acquired Fund upon
the transfer of its assets and Liabilities to the
corresponding Acquiring Fund solely in exchange for the
Acquiring Fund Shares;
8.7.c. no gain or loss will be recognized by an Acquiring Fund upon
the receipt of the assets and assumption of Liabilities of the
corresponding Acquired Fund solely in exchange for the
Acquiring Fund Shares;
8.7.d. the basis of an Acquired Fund's assets received by the
corresponding Acquiring Fund pursuant to the Reorganization
will be the same as the basis of those assets in the hands of
the Acquired Fund immediately prior to the Reorganization;
8.7.e. the holding period of an Acquired Fund's assets in the hands
of the corresponding Acquiring Fund will include the period
for which such assets have been held by the Acquired Fund;
8.7.f. no gain or loss will be recognized by an Acquired Fund on the
distribution to its shareholders of the Acquiring Fund Shares
to be received by the Acquired Fund in the Reorganization;
8.7.g. no gain or loss will be recognized by the shareholders of an
Acquired Fund upon their receipt of the corresponding
Acquiring Fund Shares in exchange for such shareholders'
shares of the Acquired Fund;
8.7.h. the basis of the Acquiring Fund Shares received by the
shareholders of the corresponding Acquired Fund will be the
same as the basis of the Acquired Fund shares surrendered by
such shareholders pursuant to the Reorganization;
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<PAGE>
8.7.i the holding period for the Acquiring Fund Shares received by
the Acquired Fund shareholders will include the period during
which such shareholders held the Acquired Fund shares
surrendered therefor, provided that such Acquired Fund shares
are held as a capital asset in the hands of the Acquired Fund
shareholders on the date of the exchange; and
8.7.j each Acquiring Fund will succeed to and take into account the
tax attributes described in Section 381(c) of the Code of the
corresponding Acquired Fund as of the Closing Date, subject to
the conditions and limitations specified in the Code.
8.8. Nations Fund and Emerald Funds shall have received (a) a memorandum
addressed to Nations Fund and the Emerald Funds, in form reasonably
satisfactory to them, prepared by Morrison & Foerster LLP concerning
the filing of notices and/or other documents, and the payment of
fees, in connection with the shares to be issued by Nations Fund
pursuant to this Agreement under applicable state securities laws or
the exemption from such filing and payment requirements under such
laws, and (b) assurance reasonably satisfactory to each of them that
all permits and other authorizations necessary under state
securities laws to consummate the transactions contemplated by this
Agreement have been obtained.
8.9. The SEC shall not have issued any unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceeding seeking
to enjoin consummation of the transactions contemplated by this
Agreement under Section 25(c) of the 1940 Act.
In rendering such opinion described in this paragraph 8.7, Morrison &
Foerster LLP may require and, to the extent they deem necessary and appropriate,
may rely upon representations made in certificates of Nations Fund and Emerald
Funds, their affiliates, and principal shareholders. Notwithstanding anything
herein to the contrary, neither an Acquiring Fund nor its corresponding Acquired
Fund may waive the condition set forth in this paragraph 8.7.
9. BROKERAGE FEES AND EXPENSES
9.1. Nations Fund, for itself and on behalf of the Acquiring Funds and
Emerald Funds, on behalf of itself and on behalf of the Acquired
Funds, represent and warrant that there are no brokers or finders
entitled to receive any payments in connection with the transactions
provided for herein.
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9.2. NationsBanc Advisors, Inc. and/or its affiliates shall bear the
customary expenses associated with the transactions contemplated by
this Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. This Agreement constitutes the entire agreement between the parties
and supersedes any prior or contemporaneous understanding or
arrangement with respect to the subject matter hereof.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the
transactions contemplated herein.
11. TERMINATION
11.1. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
11.1.a. by the mutual written consent of Nations Fund and Emerald
Funds;
11.1.b. by either Nations Fund or Emerald Funds by notice to the
other, without liability to the terminating party on account
of such termination (provided any such termination shall not
excuse the terminating party from any liability arising out of
a default or breach of this Agreement by such terminating
party) if such Closing(s) shall not have occurred on or before
December 31, 1998, or such other date as may be agreed to by
the parties; or
11.1.c. by either of Nations Fund or the Emerald Funds, in writing
without liability to the terminating party on account of such
termination (provided any such termination shall not excuse
the terminating party from any liability arising out of a
material default or breach of this Agreement by such
terminating party), if (i) the other party shall fail to
perform in any material respect its agreements contained
herein required to be performed prior to the Closing Date,
(ii) the other party materially breaches or shall have
materially breached any of its representations, warranties or
covenants contained herein, or (iii) any other
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express condition precedent to the obligations of the
terminating party has not been met and it reasonably appears
that it will not or cannot be met.
11.2. Termination of this Agreement pursuant to paragraphs 11.1(a) or (b)
shall terminate all obligations of the parties hereunder with
respect to the Acquired Fund and Acquiring Fund affected by such
termination, or with respect to Nations Fund and Emerald Funds, as
the case may be, and there shall be no liability for damages on the
part of Nations Fund or Emerald Funds or the Trustees or officers of
Nations Fund or Emerald Funds, on account of termination pursuant to
paragraphs 11.1(a) or (b), except as provided in paragraphs 11.1(a)
or (b); provided, however, that notwithstanding any termination of
this Agreement pursuant to paragraph 11.1, such termination shall
not relieve either party of its respective obligations pursuant to
Section 9.2 hereof.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
Nations Fund, acting on behalf of each Acquiring Fund and the authorized
officers of Emerald Funds, acting on behalf of the shareholders of each Acquired
Fund; provided, however, that following the meeting of the shareholders of the
Acquired Funds, no such amendment may have the effect of changing the provisions
for determining the number of shares of the corresponding Acquiring Funds to be
issued to the Acquired Fund Investors under this Agreement to the detriment of
such Acquired Fund Investors, or otherwise materially and adversely affecting
such Acquired Fund, without the Acquired Fund obtaining the Emerald Fund(s)'
shareholders further approval except that nothing in this paragraph 12 shall be
construed to prohibit any Acquiring Fund and the corresponding Acquired Fund
from amending this Agreement to change the Closing Date or Applicable Valuation
Date by mutual agreement.
At any time prior to or (to the fullest extent permitted by law)
after approval of this Agreement by the shareholders of Emerald Funds either
party may waive any breach by the other party or the failure to satisfy any of
the conditions to its obligations (such waiver to be in writing and authorized
by the Board of Trustees of the waiving party, or any appropriate officer of
either party, with or without the approval of such party's shareholders).
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13. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy, certified mail or overnight express courier addressed to:
For Nations Fund, on behalf of itself and each Acquiring Fund:
Richard H. Blank, Jr.
Secretary
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
With copies to:
Robert M. Kurucza and
Marco E. Adelfio
Morrison & Foerster LLP
2000 Pennsylvania Avenue, N.W., Suite 5500
Washington, D.C. 20006
For Emerald Funds, on behalf of itself and each Acquired Fund:
Marshall M. Criser
McGuire, Woods, Battle & Boothe LLP
3300 Barnett Center
50 N. Laura Street, Suite 3400
Jacksonville, FL 32203
with copies to:
Jeffrey A. Dalke
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1. The article and paragraph headings contained herein are for
reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. All references herein to
articles,
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paragraphs, subparagraphs or Schedules shall be construed as
referring to articles, paragraphs or subparagraphs hereof or
Schedules hereto, respectively. Whenever the terms hereto,
hereunder, herein or hereof are used in this Agreement, they shall
be construed as referring to this entire Agreement, rather than to
any individual article, paragraph, subparagraph or sentence.
14.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
14.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of
the other parties. Nothing herein expressed or implied is intended
or shall be construed to confer upon or give any person, firm or
corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of
this Agreement.
14.5. It is expressly agreed that the obligations of Nations Fund
hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents, or employees of Nations
Fund personally, but shall bind only the assets and the property of
the respective Acquiring Fund of Nations Fund, as provided in its
Declaration of Trust. The execution and delivery by such officers
shall not be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind
only the assets and the property of the respective Acquiring Fund of
Nations Fund as provided in its Declaration of Trust.
14.6. No Acquired Fund shall have any liability for the obligations of any
other Acquired Fund hereunder and no Acquiring Fund shall have any
liability for the obligation of any other Acquiring Fund hereunder.
14.7. The names "Emerald Funds" and "Trustees of Emerald Funds" refer
respectively to the trust created and the Trustees, as trustees but
not individually or personally, acting from time to time under an
Agreement and Declaration of Trust dated March 15, 1988, which is
hereby referred to and a copy of which is on file at the Office of
the State Secretary of the Commonwealth of Massachusetts and at the
principal office of the Trust. The obligations of "Emerald Funds"
32
<PAGE>
entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually, but
in such capacities, and are not binding upon any of the Trustees,
shareholders, or representatives of the Trust personally, but bind
only the trust property, and all persons dealing with any class of
shares of the Trust must look solely to the trust property belonging
to such class for the enforcement of any claims against the Trust.
14.8. Any announcement or similar publicity with respect to this Agreement
or the transactions contemplated herein shall be made only at such
time and in such manner as the parties shall agree; provided that
nothing herein shall prevent either party upon notice to the other
party from making such public announcements as such party's counsel
may consider advisable in order to satisfy the party's legal and
contractual obligations in such regard.
33
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their authorized officers, and attested by their Secretaries
as of the day and year first written above.
NATIONS INSTITUTIONAL RESERVES, for
ATTEST: itself and on behalf of each
Acquiring Fund
By:
- ------------------------------ -----------------------------
Richard H. Blank, Jr. A. Max Walker
Secretary President and Chairman of the
Board of Trustees
EMERALD FUNDS, for itself and on
ATTEST: behalf of each Acquired Fund
By:
- ------------------------------ -----------------------------
34
<PAGE>
SCHEDULE A
Acquired Fund Acquiring Fund
- ------------- --------------
Emerald Prime Advantage Institutional Nations Money Market Reserves (Shell)
Fund Institutional Shares Capital Class
Emerald Treasury Advantage Institutional Nations Treasury Reserves
Fund Institutional Shares Capital Class
35
<PAGE>
APPENDIX III
Expense Summaries of Emerald Funds
and the Corresponding Nations Funds
------------------------------------------
The following tables (a) compare the fees and expenses as of November 30,
1997 for the respective Emerald Funds and their corresponding Nations Funds and
(b) show the estimated fees and expenses for the corresponding Nations Funds on
a pro forma basis after giving effect to the reorganization. The purpose of
these tables is to assist shareholders in understanding the various costs and
expenses that investors in these portfolios will bear as shareholders. The
tables do not reflect any charges that may be imposed by institutions directly
on their customer accounts in connection with investments in the portfolios. The
fund operating expense levels shown in this Proxy/Prospectus assume current net
asset levels; pro forma expense levels shown should not be considered an actual
representation of future expenses or performance. Such pro forma expense levels
project anticipated levels but may be greater or less than those shown.
III-1
<PAGE>
EMERALD PRIME ADVANTAGE INSTITUTIONAL FUND
NATIONS MONEY MARKET RESERVES - CAPITAL CLASS SHARES
<TABLE>
<CAPTION>
Emerald Prime
Advantage
Institutional Nations Money Combined Fund
Fund Market Reserves Pro forma
------------- --------------- -------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................... None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (after waivers) .................... 0.10% 0.10% 0.10%
Other Expenses (after expense reimbursements)....... 0.10% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses:
(after waivers and/or reimbursements)............... 0.20% 0.20% 0.20%
==== ==== ====
</TABLE>
- ----------
Absent expense reimbursements, "Other Expenses" and "Total Operating
Expenses" for the Emerald Prime Advantage Institutional Fund would have been:
0.18% and 0.28%, respectively. Absent fee waivers and expense reimbursements,
"Management Fees", "Other Expenses" and "Total Operating Expenses" for Nations
Money Market Reserves and the Combined Fund would have been 0.30% , 0.17% and
0.47%, respectively.
Example:*
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Emerald Prime
Advantage
Institutional Nations Money Combined Fund
Fund Market Reserves** Pro forma
------------- --------------- -------------
1 year .......................... $ 2 $ 2 $ 2
3 years ......................... 6 6 6
5 years ......................... 11 11 11
10 years ........................ 26 26 26
- ----------
* This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
** Nations Money Market Reserves is a new investment portfolio with
individual assets and liabilities that will commence investment operations
upon the completion of the Reorganization.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly.
III-2
<PAGE>
EMERALD TREASURY ADVANTAGE INSTITUTIONAL FUND
NATIONS TREASURY RESERVES - CAPITAL CLASS SHARES
<TABLE>
<CAPTION>
Emerald
Treasury
Advantage
Institutional Nations Treasury Combined Fund
Fund Reserves Pro forma
------------- ---------------- -------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................... None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (after waivers) .................... 0.10% 0.13% 0.13%
Other Expenses (after expense reimbursements and
interest expense).................................. 0.10% 0.07% 0.07%
---- ---- ----
Total Fund Operating Expenses:
(after waivers and/or reimbursements)............... 0.20% 0.20% 0.20%
==== ==== ====
</TABLE>
- ----------
Absent expense reimbursements and interest expense, "Other Expenses" and
"Total Operating Expenses" for Emerald Treasury Advantage Institutional Fund
would have been: 0.12% and 0.32%, respectively. Absent fee waivers and expense
reimbursements, "Management Fees," "Other Expenses" and "Total Operating
Expenses" for Nations Treasury Reserves and the Combined Fund would have been
0.30%, 0.17% and 0.47%, respectively.
Example:*
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Emerald
Treasury
Advantage
Institutional Nations Treasury Combined Fund
Fund Reserves Pro forma
------------- ---------------- -------------
1 year .......................... $ 2 $ 2 $ 2
3 years ......................... 6 6 6
5 years ......................... 11 11 11
10 years ........................ 26 26 26
- ----------
* This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-3
<PAGE>
APPENDIX IV
Investment Objectives, Limitations and Certain Significant
Investment Policies of the Emerald Treasury Advantage
Institutional Fund and Nations Treasury Reserves
This Appendix sets forth the investment objectives, fundamental and
certain non-fundamental limitations and significant investment policies of the
Emerald Treasury Advantage Institutional Fund and Nations Treasury Reserves. The
following is qualified in its entirety by the more detailed information included
in the prospectus(es) and statements of additional information for each Fund
which are incorporated by reference into this Proxy/Prospectus.
I. EMERALD TREASURY ADVANTAGE INSTITUTIONAL FUND/NATIONS TREASURY RESERVES
A. Investment Objectives.
1. Emerald Treasury Advantage Institutional Fund: to seek to provide a
high level of current income consistent with liquidity, the preservation of
capital and a stable net asset value.
2. Nations Treasury Reserves: to preserve principal value and maintain a
high degree of liquidity while providing current income.
Comment: Each of these Funds is a money market fund and seeks to maintain
a net asset value of $1.00 per share, although there is no assurance that they
will be able to do so. Both Funds invest in obligations that the U.S. Treasury
has issued or to which the U.S. Government has pledged its full faith and credit
to guarantee the payment of principal and interest.
Both Funds, under normal market conditions, will invest 65% or more of
their respective total assets in U.S. Treasury obligations and repurchase
agreements for which such obligations serve as collateral. The Funds also may
invest up to 35% of total assets in obligations to which the U.S. Government has
pledged its full faith and credit to guarantee the payment of principal and
interest. Each Fund may also enter into reverse repurchase agreements, lend its
portfolio securities and invest in shares of other investment companies.
Each Fund is a money market fund and, in accordance with Rule 2a-7 under
the 1940 Act, may invest in instruments with remaining maturities not exceeding
397 days, and each Fund's dollar-weighted average portfolio maturity may not
exceed 90 days. Both Funds limit their investments to "First Tier Securities" as
defined by Rule 2a-7.
IV-1
<PAGE>
APPENDIX V
Shareholder Transactions and Services of the Nations Funds and the
Corresponding Emerald Funds
-----------------------------------------------
This Appendix compares the shareholder transactions and services of the
Emerald Funds and the corresponding Nations Funds. The following is qualified in
its entirety by the more detailed information included in the prospectuses for
the Emerald Funds and Nations Funds which are incorporated by reference into
this Proxy/Prospectus. Unless otherwise indicated, terms used herein and not
otherwise defined have the same meanings as are given to them in such
prospectuses. Please note that after the Reorganization, Nations will continue
to honor any standing instructions regarding the corresponding Emerald Fund
classes, under arrangements such as dividend reinvestment plans. In such cases,
standing instructions will be subject to the same or similar terms (e.g.,
minimum investments, account balances and minimum transaction amounts) currently
in effect, except that there may be exceptions with respect to the timing of
transactions which may need to be altered to comport with Nations procedures.
Shareholders will be notified of any such exceptions. After the Reorganization,
any instructions given with respect to any new account will be subject to the
terms of the applicable Nations Fund class.
I. Emerald Funds - (Emerald Prime Advantage Institutional Fund and Emerald
Treasury Advantage Institutional Fund).
Corresponding Nations Funds - Capital Class Shares (Nations Money Market
Reserves and Nations Treasury Reserves.
A. Sales Charges and Exemptions
There is no sales charge on either the shares of the Emerald Funds or the
Capital Class Shares of the Nations Funds.
V-1
<PAGE>
B. Purchase Policies
<TABLE>
<CAPTION>
Nations Funds Emerald Funds
------------- -------------
<S> <C> <C>
Minimum initial investment $1,000,000 $1,000,000
Minimum subsequent investment None None
Purchase methods Through Servicing Agents and Through BISYS Fund
Selling Agents; by mail; by Services, Inc. --
wire; by telephone. the Funds Distributor;
by telephone.
</TABLE>
C. Redemption Procedures
<TABLE>
<CAPTION>
Nations Funds* Emerald Funds*
------------- -------------
<S> <C> <C>
Through an authorized selling or Yes Yes
servicing agent or the Funds'
Distributor
By mail Yes N/A
By telephone Yes Yes
By wire Yes N/A
</TABLE>
* A shareholder's dividends, capital gains distributions, or both, are
automatically reinvested in additional Shares of a Fund, unless the shareholder
has requested payment in cash.
The Nations Funds may redeem Capital Shares if the balance in a
shareholder's account with the Fund drops below $500 as a result of redemptions,
and the shareholder does not increase the balance to at least $500 on 30 days'
written notice. Share balances also may be redeemed at the direction of an agent
pursuant to arrangements between the agent and its customer. Nations also may
redeem shares of the Nations Funds involuntarily or make payment for redemption
in readily marketable securities or other property under certain circumstances
in accordance with the 1940 Act.
The Emerald Funds may redeem shares involuntarily if the balance of an
account decreases to a value below $1,000,000 due to shareholder redemptions,
and the shareholder does not increase such balance to $1,000,000 upon 60 days'
written notice. Institutions may require their customers to maintain a minimum
balance in their customer
V-2
<PAGE>
accounts and a customer may be required to redeem fund shares in order to
maintain the minimum balance reported in such account.
D. Additional Shareholder Services
None.
E. Share Exchanges
Capital Shares of a Nations Fund may be exchanged for Capital Shares of
another Nations Fund. Exchanges are subject to the minimum investment
requirements imposed.
VI. Dividends and Distributions
Each Nations Fund and Emerald Fund declares dividends daily and
distributes them monthly. Any net capital gains are distributed to shareholders
at least annually.
V-3
<PAGE>
<PAGE>
<PAGE>
Statement of Additional Information
Dated March 30, 1998
Emerald Funds
3435 Stelzer Road
Columbus, Ohio 43219
(800) 637-3759
Nations Institutional Reserves
One NationsBank Plaza
Charlotte, NC 28255
(800) 626-2275
(May 4, 1998 Special Meeting of Shareholders of Emerald Funds)
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Proxy/Prospectus dated the date hereof, for the
Special Meeting of Shareholders of Emerald to be held on May 4, 1998. Copies of
the Proxy/Prospectus may be obtained at no charge by writing or calling Emerald
or Nations at the addresses or telephone numbers set forth above. Unless
otherwise indicated, capitalized terms used herein and not otherwise defined
have the same meanings as are given to them in the Proxy/Prospectus.
Incorporation of Documents by Reference in Statement of Additional Information
Further information about the Capital Class Shares of Nations Treasury
Reserves is contained in and incorporated herein by reference to the statement
of additional information for Capital Class Shares of Nations Treasury Reserves,
dated September 1, 1997.
The audited financial statements and related Report of Independent
Accountants for Nations Treasury Reserves contained in the Annual Report for
Nations Treasury Reserves for the year ended April 30, 1997 are hereby
incorporated herein by reference. No other parts of the Annual Report are
incorporated herein by reference.
The unaudited financial statements for Nations Treasury Reserves contained
in the Semi-Annual Report for Nations Treasury Reserves for the six-month period
ended October 31, 1997 are hereby incorporated herein by reference. No other
part of the Semi-Annual Report are incorporated herein by reference.
Further information about the shares of the Emerald Treasury Advantage
Institutional Fund and the Emerald Prime Advantage Institutional Fund is
contained in and incorporated herein by reference to the statement of additional
information for the Emerald Treasury Advantage Institutional Fund and the
Emerald Prime Advantage Institutional Fund, dated April 1, 1997.
1
<PAGE>
The audited financial statements and related Report of Independent
Auditors for Emerald Treasury Advantage Institutional Fund and the Emerald Prime
Advantage Institutional Fund contained in the Annual Report for Emerald Treasury
Advantage Institutional Fund and the Emerald Prime Advantage Institutional Fund
for the year ended November 30, 1997 are hereby incorporated herein by
reference. No other parts of the Annual Report are incorporated herein by
reference.
2
<PAGE>
Table of Contents
General Information............................................................4
Introductory Note to Pro Forma Financial Information...........................5
3
<PAGE>
General Information
The Reorganization contemplates the transfer of all of the Fund Assets and
Liabilities (as those terms are defined in the Reorganization Agreement) of each
Emerald Fund to a corresponding Nations Fund in exchange for Capital Class
shares of the corresponding Nations Fund.
The Shares issued by Nations will have an aggregate value equal to the
aggregate value of the shares of the respective Emerald Funds that were
outstanding immediately before the Closing.
After the transfer of their Fund Assets and Liabilities in exchange for
Shares of the Nations Funds, the Emerald Funds will distribute the Shares of the
Nations Funds to their shareholders in liquidation of the Emerald Funds. Each
shareholder owning shares of a particular Emerald Fund at the Closing will
receive Shares of the corresponding Nations Fund of equal value, and will
receive any unpaid dividends or distributions that were declared before the
Closing on shares of the Emerald Funds. Nations will establish an account for
each former shareholder of the Emerald Funds reflecting the appropriate number
of Nations Fund Shares distributed to the shareholder. These accounts will be
substantially identical to the accounts maintained by Emerald for each
shareholder. Upon completion of the reorganization with respect to all Emerald
funds, all outstanding shares of the Emerald Funds will be redeemed and
cancelled in exchange for Shares of the Nations Funds distributed, and Emerald
will wind up its affairs and be deregistered as an investment company under the
1940 Act.
4
<PAGE>
Introductory Note to Pro Forma Financial Information
The following unaudited pro forma information gives effect to the proposed
transfer of the Fund Assets and Liabilities (as those terms are defined in the
Reorganization Agreement) of the Emerald Funds to the Nations Funds, accounted
for as if such transfer had occurred as of November 30, 1997 and as if the
Nations Funds had operated for the year then ended. However, it is possible that
one of the Emerald Funds will not approve the merger, in which case the
resulting fund or funds will be comprised of only that Emerald Fund that
approves the merger. In addition, each pro forma combining statement has been
prepared based upon the structure of the proposed fee and expense structure of
the applicable surviving Nations Fund.
The pro forma financial information should be read in conjunction with the
historical financial statements and notes thereto of the Emerald Funds and
Nations Treasury Reserves included or incorporated herein by reference into this
Statement of Additional Information. Each combination of the above Emerald Funds
and Nations Funds will be accounted for as a tax-free reorganization. For more
information concerning this aspect of the Reorganization, see "Information
Relating to Proposal 2-Approval of the Reorganization Agreement-Federal Income
Tax Considerations" in the Proxy/Prospectus.
5
<PAGE>
Nations Money Market Reserves /Emerald Prime Advantage Institutional Fund
Pro Forma Combining Schedule of Investments
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Amount DESCRIPTION Value
- ------------------------------------------------------------------------------------------------------------------------------------
Nations Emerald Nations Emerald
Money Prime Advantage Pro Forma Money Prime Advantage Pro Forma
Market Institutional Combining Market Institutional Combining
Reserves Fund Portfolios Reserves Fund Portfolios
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C> <C> <C>
BANK NOTES - 8.5%
Domestic - 8.5%
$0 $5,000,000 $5,000,000 1st USA Bank, Variable Rate Bank Note, 5.74% 12/17/97* $0 $5,001,908 $5,001,908
0 5,000,000 5,000,000 Compass Bank Floating Rate Bank Note, 5.64% 12/01/97* 0 4,998,335 4,998,335
0 5,000,000 5,000,000 PNC Bank NA., Floating Rate Bank Note, 5.60% 12/01/97* 0 4,997,447 4,997,447
--------------------------------
TOTAL BANK NOTES 0 14,997,690 14,997,690
================================
CERTIFICATES OF DEPOSIT - 24.7%
Domestic - 13.5%
0 5,000,000 5,000,000 Amex Centurian Bank, 5.54% 12/01/97 0 5,000,000 5,000,000
0 5,000,000 5,000,000 CS First Boston, 5.89% 12/02/97* 0 5,000,000 5,000,000
0 4,000,000 4,000,000 Regions Bank CD, 5.60% 12/17/97 0 3,999,998 3,999,998
0 5,000,000 5,000,000 South Trust Bank, 5.65% 12/01/97* 0 4,999,625 4,999,625
0 5,000,000 5,000,000 Union Bank of California, 5.57% 12/18/97 0 5,000,000 5,000,000
--------------------------------
0 23,999,623 23,999,623
--------------------------------
Yankee - 11.2%
0 5,000,000 5,000,000 Abbey National Treasury PLC, New York Branch, 5.65% 12/01/97* 0 4,999,105 4,999,105
0 5,000,000 5,000,000 Bayerishce Hypo-Bank, New York Branch, 5.60% 12/18/97 0 5,000,000 5,000,000
0 5,000,000 5,000,000 Canadian Imperial Bank, New York Branch, 5.58% 12/31/97 0 5,000,123 5,000,123
0 5,000,000 5,000,000 Deutsche Bank AG, New York Branch, 5.57% 12/31/97 0 4,999,999 4,999,999
--------------------------------
0 19,999,227 19,999,227
--------------------------------
TOTAL CERTIFICATES OF DEPOSIT 0 43,998,850 43,998,850
================================
COMMERCIAL PAPER - 30.6%
Domestic - 27.8%
0 5,000,000 5,000,000 Alpine Securitization Corporation, 5.58% 12/04/97 (b) 0 4,997,675 4,997,675
0 5,000,000 5,000,000 Chrysler Financial Corporation, 5.60% 12/23/97 0 4,982,889 4,982,889
0 5,000,000 5,000,000 Countrywide Funding Corporation, 5.58% 12/04/97 0 4,997,675 4,997,675
0 5,000,000 5,000,000 Dakota Finance, 5.53% 12/16/97(b) 0 4,988,479 4,988,479
0 5,000,000 5,000,000 Deer Park Refining LP, 5.65% 12/09/97(b) 0 5,000,000 5,000,000
0 5,000,000 5,000,000 Dynamic Funding Corporation, 5.83% 12/22/97 (b) 0 4,982,996 4,982,996
0 5,590,000 5,590,000 Hasbro, Inc., 5.52% 12/10/97 0 5,582,287 5,582,287
0 4,000,000 4,000,000 Hitachi America, Inc., 5.53% 12/22/97 0 3,987,097 3,987,097
0 5,000,000 5,000,000 Internationale Nederlanden (U.S.) Funding Corporation, 5.56% 12/4/97 0 4,997,683 4,997,683
0 5,000,000 5,000,000 Sanwa Business Credit, Inc., 5.72% 12/23/97 0 4,982,522 4,982,522
--------------------------------
0 49,499,303 49,499,303
--------------------------------
Foreign - 2.8%
0 5,000,000 5,000,000 Pearson, Inc., 5.57% 12/9/97 0 4,993,811 4,993,811
--------------------------------
TOTAL COMMERCIAL PAPER 0 54,493,114 54,493,114
================================
CORPORATE OBLIGATIONS - 11.4%
0 5,000,000 5,000,000 Dean Witter Discover, Variable Rate Medium Term Note, 5.56% 12/17/97* 0 5,001,118 5,001,118
0 5,000,000 5,000,000 Sigma Finance, Inc., Medium Term Note, 5.80% 03/03/98(b) 0 5,000,000 5,000,000
0 5,200,000 5,200,000 Toyota Motor Credit Corporation, Medium Term Note, 13.64% 03/09/98 0 5,302,059 5,302,059
0 5,000,000 5,000,000 U.S. Leasing Capital Corporation, Variable Rate Medium Term Note,
5.86% 01/6/98 0 5,002,146 5,002,146
--------------------------------
TOTAL CORPORATE OBLIGATIONS 0 20,305,323 20,305,323
================================
MASTER NOTE - FOREIGN - 2.8%
0 5,000,000 5,000,000 Lehman Brothers PLC, Foreign Master Note, 5.70% 12/03/97(b) 0 5,000,000 5,000,000
================================
MEDIUM TERM NOTES - PRIVATE PLACEMENT- VARIABLE - 8.5%
0 5,000,000 5,000,000 Absit, Series 1997-A, Variable Rate Medium Term Note, 5.74% 12/15/97* 0 5,000,363 5,000,363
0 5,000,000 5,000,000 CTN Trust, Series 1, Variable Rate Medium Term Note,
5.99% 12/02/97(b)* 0 5,013,083 5,013,083
0 5,000,000 5,000,000 Goldman Sachs, Variable Rate Promissory Note, 5.66% 12/01/97 (b)* 0 5,000,000 5,000,000
--------------------------------
TOTAL MEDIUM TERM NOTES - PRIVATE PLACEMENT - VARIABLE 0 15,013,446 15,013,446
================================
MEDIUM TERM NOTE - VARIABLE - 2.8%
0 5,000,000 5,000,000 Merrill Lynch & Company, Variable Rate Medium Term Note,
5.88% 12/02/97* 0 5,000,000 5,000,000
================================
REPURCHASE AGREEMENT - 10.6%
0 18,906,342 18,906,342 Fuji Securities Tri Party Repurchase Agreement, 5.78% 12/1/97 0 18,906,342 18,906,342
================================
TOTAL INVESTMENTS (Cost $0, $177,714,765 and $177,714,765) 99.9% 0 177,714,765 177,714,765
OTHER ASSETS AND LIABILITIES (Net) 0.1 0 193,022 193,022
--------------------------------
NET ASSETS 100.0% $0 177,907,787 177,907,787
================================
</TABLE>
- ----------
(b) 144A security which is restricted as to resale to institutional investors.
* Variable rate security. Rate represents rate in effect November 30, 1997.
Maturity date reflects the next rate change date.
ABBREVIATION:
LC Letter of Credit
PLC Public Limited Company
<PAGE>
NATIONS MONEY MARKET RESERVES
EMERALD PRIME ADVANTAGE INSTITUTIONAL FUND
Pro Forma Combining Statement of Assets and Liabilities (unaudited)
November 30, 1997
<TABLE>
<CAPTION>
Emerald Prime Pro Forma
Nations Advantage Institutional Adjustments to Combined
Money Market Reserves Fund Pro Forma (Note 1)
--------------------- ----------------------- -------------- ----------
ASSETS:
<S> <C> <C> <C> <C>
Investments at Amortized Cost - $158,808,423 -- $158,808,423
Repurchase Agreements at Amortized Cost - 18,906,342 -- 18,906,342
Income Receivable - 1,002,147 -- 1,002,147
Prepaid and Other Assets - 12,661 -- 12,661
------------ ------------
Total Assets - 178,729,573 -- 178,729,573
------------ ------------
LIABILITIES:
Income Distribution Payable - 771,253 -- 771,253
Accrued Expenses - 50,533 -- 50,533
------------ ------------
Total Liabilities 821,786 821,786
------------ ------------
Net Assets Applicable to Shares Outstanding $177,907,787 $177,907,787
============ ============
Net Assets by Class:
Capital Class/Institutional - $177,907,787 -- $177,907,787
============ ============
Liquidity Class - n/a -- $0
Adviser Class - n/a -- $0
Market Class - n/a -- $0
Shares Outstanding by Class:
Capital Class/Institutional - 177,917,523 -- 177,917,523
============ ============
Liquidity Class - n/a -- 0
Adviser Class - n/a -- 0
Market Class - n/a -- 0
Capital Class Shares:
Net Asset Value per Share - $1.00 $1.00
============ ============
Liquidity Class Shares:
Net Asset Value per Share - n/a n/a
Adviser Class Shares:
Net Asset Value per Share - n/a n/a
Market Class Shares:
Net Asset Value per Share - n/a n/a
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
NATIONS MONEY MARKET RESERVES
EMERALD PRIME ADVANTAGE INSTITUTIONAL FUND
Pro Forma Combining Statement of Operations (unaudited)
For the Twelve Month Period Ending November 30, 1997
<TABLE>
<CAPTION>
Emerald Prime Pro Forma
Nations Advantage Institutional Adjustments to Combined
Money Market Reserves Fund Pro Forma (Note 1)
--------------------- ----------------------- -------------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest - $8,192,300 - $8,192,300
---------- ----------
Total Investment Income - 8,192,300 - 8,192,300
---------- ----------
EXPENSES:
Investment Advisory - 144,896 289,855 (a) 434,751
Administration - 112,302 32,615 (a) 144,917
Transfer Agent - 36,821 (24,500)(b) 12,321
Custodian (d) - 24,348 - 24,348
Legal and Audit Fees - 26,066 (8,000)(b) 18,066
Trustees' Fees - 7,262 (4,000)(b) 3,262
Other expenses - 48,078 - 48,078
---------- ---------- ----------
Subtotal - 399,773 285,970 685,743
Shareholder servicing and distribution fees
Liquidity - - N/A 0
Adviser - - N/A 0
Market - - N/A 0
Fees waived and/or reimbursed by
investment advisor and administrator and transfer agent - (109,503) (286,414)(c) (395,917)
---------- ---------- ----------
Total Expenses - 290,270 (444) 289,826
---------- ---------- ----------
NET INVESTMENT INCOME - 7,902,030 444 7,902,474
---------- ---------- ----------
Net Realized and Unrealized Gain/(Loss)
on Investments: - 36 - 36
---------- ---------- ----------
Net Increase/(Decrease) in net assets
resulting from operations - $7,902,066 $444 $7,902,510
---------- ---------- ----------
</TABLE>
Legend:
(a) Reflects adjustment to the acquiring fund contractual fee obligation.
(b) Adjustment reflects expected savings when the two funds become one.
(c) Reflects adjustment to the level of the acquiring fund's voluntary expense
reimbursement.
(d) Net of expense offset arrangements amounts to less than .01% of average net
assets.
See Notes to Pro Forma Financial Statements
<PAGE>
Nations Money Market Reserves
Emerald Prime Advantage Institutional Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of November 30, 1997 the Trust offers four separate portfolios. The
unaudited Pro Forma Combining Portfolio of Investments and the unaudited
Combining Statement of Assets and Liabilities assumes the exchange described in
the next paragraph occurred as of November 30, 1997 and the unaudited Pro Forma
Combining Statement of Operations assumes the exchange occurred as of December
1, 1996 These statements have been derived from books and records utilized in
calculating daily net asset value of the fund at November 30, 1997 and for the
twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Emerald Prime Advantage Institutional Fund in exchange
for shares of Nations Money Market Reserves. Under generally accepted accounting
principles, the historical cost of investment securities will be carried forward
and the results of operations of the Emerald Prime Advantage Institutional Fund
for pre-combination periods will be carried forward under the name Nations Money
Market Reserves. The pro forma statements do not reflect the expenses of either
fund in carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
<PAGE>
Nations Money Market Reserves
Emerald Prime Advantage Institutional Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
For the twelve month period ended November 30, 1997, the Nations Money Market '
investment advisory fee was computed based on the annual rate of 0.30% of
average daily net assets. The administration fee was computed based on the
annual rate of 0.10% of average daily net assets of the Trust and the investment
portfolios of Nations Fund Trust, Nations Fund Inc. and Nations Fund Portfolios,
Inc. (three other registered open-end investment companies which are part of the
Nations Fund family) on a combined basis.
The Trust has adopted a shares plan pursuant to Rule 12b-1 under the 1940 Act
with respect to Market Class Shares ("Market Class Shares Plan") of the Nations
Money Market Reserves. Under the Market Class Shares Plan, aggregate payments
may not exceed 0.10% on an annualized basis, of the average daily net assets of
the Market Class Shares of the Fund.
The Trust has also adopted a shares servicing plan with respect to Liquidity
Class Shares ("Liquidity Class Servicing Plan"), Adviser Class Shares ("Adviser
Class Servicing Plan") and Market Class Shares ("Market Class Servicing Plan")
of the Nations Money Market Reserves. Under the Liquidity Class Servicing Plan,
Adviser Class Servicing Plan and Market Class Servicing Plan aggregate payments
may not exceed 0.15%, 0.25% and 0.25%, on an annualized basis, of the average
daily net assets of the Liquidity Class Shares, Adviser Class Shares and Market
Class Shares respectively, of the Fund.
2. Portfolio Valuation
Securities of Nations Money Market Reserves are valued on the basis of amortized
cost, which approximates market value. Amortized cost valuation involves
initially valuing an instrument at its cost and thereafter
2
<PAGE>
Nations Money Market Reserves
Emerald Prime Advantage Institutional Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
assuming a constant amortization to maturity of any discount or premium, as long
as the effect of the fluctuating interest rates on the market value of the
instrument is not significant. Restricted securities and other assets are valued
by the Funds' investment adviser under the supervision of the Board of Trustees.
Emerald Prime Advantage Institutional Fund uses similar rules for determining
portfolio valuation.
3. Capital Shares
The pro forma net asset value per share assumes the issuance of additional
shares of Nations Money Market Reserves which would have been issued at November
30, 1997 in connection with the proposed reorganization. The pro forma number of
shares outstanding of 177,917,523 consists of 177,917,523 shares assumed issued
in the reorganization plus 0 shares of Nations Money Market Reserves at November
30, 1997.
3
<PAGE>
NATIONS FUNDS
Nations Treasury Reserves/Emerald Treasury Advantage Institutional Fund
Combined Schedule of Investments (unaudited)
November 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
Emerald Emerald
Treasury Treasury
Nations Advantage Nations Advantage
Treasury Institutional Combined Treasury Institutional Combined
Reserves Fund Portfolios Reserves Fund Portfolios
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C> <C> <C> <C>
Mutual Fund Companies - 3.5%
$16,348,000 $0 $16,348,000 AIM Treasury .................................... $16,348,000 $0 $16,348,000
10,609,000 0 10,609,000 Dreyfus Treasury Cash Management ................ 10,609,000 0 10,609,000
17,631,000 0 17,631,000 Fidelity Institutional Cash ..................... 17,631,000 0 17,631,000
-----------------------------------------
44,588,000 0 44,588,000
-----------------------------------------
U.S. Treasury Instruments - 17.3%
US Treasury Notes - 13.4%
0 10,000,000 10,000,000 7.875% due 01/15/1998 ........................... 0 10,029,234 10,029,234
0 10,000,000 10,000,000 7.250% due 02/15/1998 ........................... 0 10,032,424 10,032,424
15,000,000 10,000,000 25,000,000 6.125% due 03/31/1998 ........................... 15,006,428 10,024,085 25,030,513
10,000,000 10,000,000 20,000,000 5.875% due 04/30/1998 ........................... 10,009,437 10,017,511 20,026,948
0 10,000,000 10,000,000 5.000% due 01/31/1998 ........................... 0 9,991,420 9,991,420
30,000,000 0 30,000,000 5.875% due 10/31/1998 # ......................... 30,054,282 0 30,054,282
10,000,000 0 10,000,000 4.750% due 09/30/1998 # ......................... 9,928,512 0 9,928,512
20,000,000 0 20,000,000 6.000% due 09/30/1998 # ......................... 20,055,904 0 20,055,904
30,000,000 0 30,000,000 6.250% due 07/31/1998 # ......................... 30,108,580 0 30,108,580
5,000,000 0 5,000,000 8.250% due 07/15/1998 # ......................... 5,076,148 0 5,076,148
-----------------------------------------
120,239,291 50,094,674 170,333,965
-----------------------------------------
US Treasury Bills - 2.7%
10,000,000 0 10,000,000 5.305% due 02/05/1998 ........................... 9,902,467 0 9,902,467
0 10,000,000 10,000,000 5.195% due 01/22/1998 ........................... 0 9,924,961 9,924,961
15,000,000 0 15,000,000 0.000% due 01/08/1998 ........................... 14,916,083 0 14,916,083
-----------------------------------------
24,818,550 9,924,961 34,743,511
-----------------------------------------
US Treasury Strips - 1.2%
0 15,000,000 15,000,000 0.000% due 02/15/98 ............................. 0 14,829,414 14,829,414
-----------------------------------------
TOTAL U.S. TREASURY INSTRUMENTS 145,057,841 74,849,049 219,906,890
-----------------------------------------
Repurchase Agreements - 85.2%
270,000,000 0 270,000,000 Bankers Trust 5.740% due 12/01/97 ............... 270,000,000 0 270,000,000
55,000,000 0 55,000,000 Bear Stearns 5.750% due 12/01/97 ................ 55,000,000 0 55,000,000
55,000,000 0 55,000,000 BZW Securities 5.730% due 12/01/97 .............. 55,000,000 0 55,000,000
116,199,000 0 116,199,000 CS First Boston due 01/01/2010 .................. 116,199,000 0 116,199,000
30,000,000 0 30,000,000 Deutche Morgan Grenfel Term 5.520% due 12/01/97.. 30,000,000 0 30,000,000
54,000,000 0 54,000,000 Dresd Klein 5.750% due 12/01/97 ................. 54,000,000 0 54,000,000
0 9,772,229 9,772,229 First Boston 5.670% due 12/01/97 ................ 0 9,772,229 9,772,229
8,151,320 8,151,320 First Boston 5.380% due 12/01/97 ................ 0 8,151,320 8,151,320
54,000,000 0 54,000,000 First Union 5.730% due 12/01/97 ................. 54,000,000 0 54,000,000
0 7,000,000 7,000,000 Goldman Sachs 5.500% due 12/01/97 ............... 0 7,000,000 7,000,000
54,000,000 0 54,000,000 HSBC Sec 5.730% due 12/01/97 .................... $54,000,000 $0 $54,000,000
0 25,000,000 25,000,000 J.P. Morgan 5.530% due 12/01/97 ................. 0 25,000,000 25,000,000
110,000,000 0 110,000,000 J.P. Morgan 5.630% due 12/01/97 ................. 110,000,000 0 110,000,000
40,000,000 0 40,000,000 Mer Gt Sec 5.540% due 12/01/97 .................. 40,000,000 0 40,000,000
0 7,000,000 7,000,000 Morgan Stanley 5.570% due 12/01/97 .............. 0 7,000,000 7,000,000
10,000,000 0 10,000,000 Morgan Stanley 5.750% due 12/01/97 .............. 10,000,000 0 10,000,000
7,155,000 0 7,155,000 Morgan Stanley 5.500% due 12/01/97 .............. 7,155,000 0 7,155,000
40,000,000 0 40,000,000 Morgan (J.P.) 5.740% due 12/01/97 ............... 40,000,000 0 40,000,000
0 20,000,000 20,000,000 Prudential Bach 5.500% due 12/01/97 ............. 0 20,000,000 20,000,000
54,000,000 0 54,000,000 Smith Barney 5.750% due 12/01/97 ................ 54,000,000 0 54,000,000
55,000,000 0 55,000,000 UBS Sec 5.740% due 12/01/97 ..................... 55,000,000 0 55,000,000
-----------------------------------------
1,004,354,000 76,923,549 1,081,277,549
-----------------------------------------
Term - Repurchase Agreement - 2.8%
35,000,000 0 35,000,000 Lehman Brothers 5.670% due 01/20/98 ............. 35,000,000 0 35,000,000
-----------------------------------------
TOTAL INVESTMENTS (Cost: $1,228,999,841,
$151,772,598 and $1,380,772,439) 108.8% 1,228,999,841 151,772,598 1,380,772,439
OTHER ASSETS AND LIABILITIES (Net) (8.8%) (118,847,425) 7,388,171 (111,459,254)
------ -----------------------------------------
NET ASSETS 100.0% $1,110,152,416 $159,160,769 $1,269,313,185
====== =========================================
</TABLE>
# Security segregated as collateral for reverse repurchase agreement.
<PAGE>
NATIONS TREASURY RESERVES
EMERALD TREASURY ADVANTAGE INSTITUTIONAL FUND
Pro Forma Combining Statement of Assets and Liabilities (unaudited)
November 30, 1997
<TABLE>
<CAPTION>
Emerald Treasury Pro Forma
Nations Treasury Advantage Adjustments to Combined
Reserves Institutional Fund Pro Forma (Note 1)
---------------- ------------------ -------------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Amortized Cost $ 189,645,841 $ 74,849,049 -- $ 264,494,890
Repurchase Agreements at amortized
cost 1,039,354,000 76,923,549 -- 1,116,277,549
Cash 843 -- -- 843
Income Receivable 2,380,669 1,144,690 -- 3,525,359
Receivable from Collateral for Reverse Repurchase
Agreements -- 8,365,203 -- 8,365,203
Receivable for Investments Sold -- 6,848,680 -- 6,848,680
Prepaid and Other Assets 23,377 16,472 -- 39,849
-------------- ------------ ----- --------------
Total Assets 1,231,404,730 168,147,643 -- 1,399,552,373
-------------- ------------ ----- --------------
LIABILITIES:
Income Distribution Payable 4,629,088 722,226 -- 5,351,314
Payable for Investments Purchased 116,199,000 -- -- 116,199,000
Payable for Reverse Repurchase Agreement -- 8,215,100 -- 8,215,100
Accrued Expenses and other payables 424,226 49,548 -- 473,774
-------------- ------------ ----- --------------
Total Liabilities 121,252,314 8,986,874 -- 130,239,188
-------------- ------------ ----- --------------
Net Assets Applicable to Shares Outstanding $1,110,152,416 $159,160,769 $ 0 $1,269,313,185
============== ============ ===== ==============
Net Assets by Class:
Capital Class/Institutional $ 287,081,652 $159,160,769 -- $ 446,242,421
============== ============ ===== ==============
Liquidity Class $ 214,363,861 n/a -- $ 214,363,861
============== ============ ===== ==============
Adviser Class $ 373,212,977 n/a -- $ 373,212,977
============== ============ ===== ==============
Market Class $ 235,493,926 n/a -- $ 235,493,926
============== ============ ===== ==============
Shares Outstanding by Class:
Capital Class/Institutional 287,089,070 159,244,945 -- 446,334,015
============== ============ ===== ==============
Liquidity Class 214,369,400 n/a -- 214,369,400
============== ============ ===== ==============
Adviser Class 373,222,620 n/a -- 373,222,620
============== ============ ===== ==============
Market Class 235,500,010 n/a -- 235,500,010
============== ============ ===== ==============
Capital Class Shares:
Net Asset Value per Share $1.00 $1.00 $1.00
===== ===== =====
Liquidity Class Shares:
Net Asset Value per Share $1.00 n/a $1.00
===== ===== =====
Adviser Class Shares:
Net Asset Value per Share $1.00 n/a $1.00
===== ===== =====
Market Class Shares:
Net Asset Value per Share $1.00 n/a $1.00
===== ===== =====
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
<TABLE>
<CAPTION>
NATIONS TREASURY RESERVES
EMERALD TREASURY ADVANTAGE INSTITUTIONAL FUND
Pro Forma Combining Statement of Operations (Unaudited)
For the Twelve Month Period Ending November 30, 1997
Emerald Treasury
Nations Treasury Advantage
Reserves Institutional Fund
-------- ------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $44,881,521 $9,443,214
----------- ----------
Total Investment Income 44,881,521 9,443,214
---------- ---------
EXPENSES:
Investment Advisory 2,385,121 172,480
Administration 795,041 133,668
Transfer Agent 48,023 42,138
Custodian(d) 118,471 25,853
Legal and Audit Fees 35,113 33,691
Trustees' Fees 39,069 7,053
Other expenses 152,353 59,893
------- ------
Subtotal 3,573,191 474,776
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Liquidity Class 145,550 -
Adviser Class 450,924 -
Market Class 414,256 -
Fees waived and/or reimbursed by
investment advisor, administrator and transfer agent (2,010,732) (129,851)
----------- ---------
TOTAL EXPENSES BEFORE INTEREST EXPENSE 2,573,189 344,925
INTEREST EXPENSE - 63,780
- ------
TOTAL EXPENSES 2,573,189 408,705
--------- -------
NET INVESTMENT INCOME 42,308,332 9,034,509
---------- ---------
NET REALIZED GAIN/(LOSS)
ON INVESTMENTS (1) (29,185)
--- --------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $42,308,331 $9,005,324
=========== ==========
<CAPTION>
Adjustments to Pro Forma
Pro Forma Combined (Note 1)
--------- -----------------
INVESTMENT INCOME:
<S> <C> <C>
Interest - $54,324,735
- -----------
Total Investment Income 0 54,324,735
- ----------
EXPENSES:
Investment Advisory 344,880 (a) 2,902,481
Administration 38,784 (a) 967,494
Transfer Agent (42,000)(b) 48,161
Custodian(d) (20,000)(b) 124,324
Legal and Audit Fees (30,000)(b) 38,804
Trustees' Fees (7,053)(b) 39,069
Other expenses (20,000)(b) 192,246
-------- -------
Subtotal 264,611 4,312,579
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Liquidity Class N/A 145,550
Adviser Class N/A 450,924
Market Class N/A 414,256
Fees waived and/or reimbursed by
investment advisor, administrator and transfer agent (237,009)(c) (2,377,592)
------------ -----------
TOTAL EXPENSES BEFORE INTEREST EXPENSE 27,602 2,945,717
INTEREST EXPENSE - 63,780
- ------
TOTAL EXPENSES 27,602 3,009,497
------ ---------
NET INVESTMENT INCOME (27,602) 51,315,238
-------- ----------
NET REALIZED GAIN/(LOSS)
ON INVESTMENTS 0 (29,186)
- --------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ($27,602) $51,286,052
========= ===========
</TABLE>
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION. (B)
ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE. (C) REFLECTS
ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE REIMBURSEMENT.
(D) NET OF EXPENSE OFFSET ARRANGEMENTS AMOUNTS TO LESS THAN .01% OF AVERAGE NET
ASSETS.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
<PAGE>
Nations Treasury Reserves
Emerald Treasury Advantage Institutional Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of November 30, 1997 the Trust offers four separate portfolios. The
unaudited Pro Forma Combining Portfolio of Investments and the unaudited Pro
Forma Combining Statement of Assets and Liabilities assumes the exchange
described in the next paragraph occurred as of November 30, 1997 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of December 1,1996. These statements have been derived from books
and records utilized in calculating daily net asset value of each fund at
November 30, 1997 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Emerald Treasury Advantage Institutional Fund in
exchange for shares of Nations Treasury Reserves. Under generally accepted
accounting principles, the historical cost of investment securities will be
carried forward to the surviving entity and the results of operations of the
Emerald Treasury Advantage Institutional Fund for pre-combination periods will
not be restated. The pro forma statements do not reflect the expenses of either
fund in carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
<PAGE>
Nations Treasury Reserves
Emerald Treasury Advantage Institutional Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
For the twelve month period ended November 30, 1997, the Nations Treasury
investment advisory fee was computed based on the annual rate of 0.30% of
average daily net assets. The administration fee was computed based on the
annual rate of 0.10% of average daily net assets of the Trust and the investment
portfolios of Nations Fund Trust, Nations Fund Inc. and Nations Fund Portfolios,
Inc. (three other registered open-end investment companies which are part of the
Nations Fund family) on a combined basis.
The Trust has adopted a shares plan pursuant to Rule 12b-1 under the 1940 Act
with respect to Market Class Shares ("Market Class Shares Plan") of the Nations
Treasury Reserves. Under the Market Class Shares Plan, aggregate payments may
not exceed 0.10% on an annualized basis, of the average daily net assets of the
Market Class Shares of the Fund.
The Trust has also adopted a shares servicing plan with respect to Liquidity
Class Shares ("Liquidity Class Servicing Plan"), Adviser Class Shares ("Adviser
Class Servicing Plan") and Market Class Shares ("Market Class Servicing Plan")
of the Nations Treasury Reserves. Under the Liquidity Class Servicing Plan,
Adviser Class Servicing Plan and Market Class Servicing Plan aggregate payments
may not exceed 0.15%, 0.25% and 0.25%, on an annualized basis, of the average
daily net assets of the Liquidity Class Shares, Adviser Class Shares and Market
Class Shares respectively, of the Fund.
2. Portfolio Valuation
Securities of Nations Treasury Reserves are valued on the basis of amortized
cost, which approximates market value. Amortized cost valuation involves
initially valuing an instrument at its cost and thereafter
2
<PAGE>
Nations Treasury Reserves
Emerald Treasury Advantage Institutional Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
assuming a constant amortization to maturity of any discount or premium, as long
as the effect of the fluctuating interest rates on the market value of the
instrument is not significant. Restricted securities and other assets are valued
by the Funds' investment adviser under the supervision of the Board of Trustees.
Emerald Treasury Advantage Institutional Fund uses similar rules for determining
portfolio valuation.
3. Capital Shares
The pro forma net asset value per share assumes the issuance of additional
shares of Nations Treasury Reserves which would have been issued at November 30,
1997 in connection with the proposed reorganization. The pro forma number of
shares outstanding of 1,269,426,045 consists of 159,244,945 shares assumed
issued in the reorganization plus 1,110,181,100 shares of Nations Treasury
Reserves at November 30, 1997.
3
<PAGE>
NATIONS INSTITUTIONAL RESERVES
ONE NATIONSBANK PLAZA
33rd Floor
Charlotte, NC 28255
1-800-626-2275
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification.
Article VIII of the Agreement of Declaration of Trust filed as
Exhibit 1 to the Registration Statement is incorporated by reference.
Indemnification of Registrant's administrators, principal underwriter, custodian
and transfer agent is provided for, respectively, in the:
1. Administration Agreement with Stephens Inc.;
2. Co-Administration Agreement with First Data Investors Services
Group, Inc.;
3. Distribution Agreement with Stephens Inc.;
4. Mutual Fund Custody and Sub-Custody Agreement with NationsBank of
Texas, N.A. as Custodian and The Bank of New York as Sub-Custodian;
and
5. Transfer Agency Agreement with First Data Investor Services Group,
Inc.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant by the Registrant pursuant to the Declaration of Trust
or otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, officers or
controlling persons in connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
C-1
<PAGE>
Item 16. Exhibits.
All references to the "Registration Statement" in the following list
of Exhibits refer to the Registrant's Registration Statement on Form N-1A (File
Nos. 33-33144;811-6030). All references to the "Emerald Registration Statement"
in the following list of Exhibits refer to the Emerald Funds' Registration
Statement on Form N-1A (File Nos. 33-20658; 811-5515).
Exhibit Number Description
(1) Declaration of Trust date January 22, 1990, is incorporated
by reference to Form N1-A, filed January 22, 1990.
(2) By-Laws dated January 22, 1990, are incorporated by reference
to Form N-1A, filed January 22, 1990.
(3) Not Applicable.
(4) Form of Agreement and Plan of Reorganization, filed herewith
as Appendix II to the Combined Prospectus/Proxy Statement.
(5) Not Applicable.
(6)(a) Investment Advisory Agreement with NationsBanc Advisors, Inc.
incorporated by reference to Post-Effective Amendment No. 17.
(6)(b) Sub-Advisory Agreement with TradeStreet Investment
Associates, Inc. incorporated by reference to Post-Effective
Amendment No. 17.
(7) Distribution Agreement with Stephens, Inc. incorporated by
reference to Post-Effective Amendment No. 10.
(8) Not Applicable.
(9) Mutual Fund Custody and Sub-Custody Agreement with
NationsBank of Texas, N.A. as Custodian and The Bank of New
York as Sub-Custodian incorporated by reference to
Post-Effective Amendment No. 20.
(10)(a) Shareholder Servicing Plan for Adviser Class Shares
incorporated by reference to Post-Effective Amendment No. 10.
(10)(b) Form of Shareholder Servicing Agreement for Adviser Class
Shares incorporated by reference to Post-Effective Amendment
No. 10.
(10)(c) Form of Shareholder Servicing Agreement for Market Class
Shares incorporated by reference to Post-Effective Amendment
No. 10.
C-2
<PAGE>
(10)(d) Shareholder Servicing Plan for Market Class Shares
incorporated by reference to Post-Effective Amendment No. 12.
(10)(e) Shareholder Servicing Plan for Liquidity Class Shares
incorporated by reference to Post-Effective Amendment No. 14.
(10)(f) Distribution Plan for Liquidity Class Shares incorporated by
reference to Pre-Effective Amendment No. 1.
(10)(g) Distribution Plan for Market Class Shares incorporated by
reference to Post-Effective Amendment No. 12.
(10)(h) Form of Brokerage Agreement incorporated by reference to
Post-Effective Amendment No. 11.
(10)(i) Transfer Agency Agreement with The Shareholder Services
Group, Inc. to be filed by amendment.
(11) Opinion and Consent of Morrison & Foerster LLP, filed
herewith.
(12) See Item 17(3) of this Part C.
(13)(a) Administration Agreement with Stephens Inc. incorporated by
reference to Post-Effective Amendment No. 10.
(13)(b) Co-Administration Agreement with The Boston Company Advisors,
Inc. incorporated by reference to Post-Effective Amendment
No. 10.
(14)(a) Consent of Independent Auditors - Price Waterhouse LLP, filed
herewith.
(14)(b) Consent of Independent Auditors - Price Waterhouse LLP, filed
herewith.
(14)(c) Consent of Independent Auditors - KPMG Peat Marwick LLP,
filed herewith.
(15) Not Applicable.
(16) Powers of Attorney, filed herewith.
(17)(a) Plan entered into by Registrant pursuant to Rule 18f-3 under
the Investment Company Act of 1940, incorporated by reference
to Post-Effective Amendment No. 12.
(17)(b) Form of Proxy Ballot, filed herewith.
C-3
<PAGE>
(17)(c)(i) Prospectus and Statement of Additional Information for
Capital Class Shares for Nations Treasury Reserves,
incorporated by reference to Post-Effective Amendment No. 20
to the Registration Statement, as filed on August 28, 1997.
(17)(c)(ii) Prospectus and Statement of Additional Information for
Emerald Prime Advantage Institutional Fund and Emerald
Treasury Advantage Institutional Fund, incorporated by
reference to Post-Effective Amendment No. 21 to the Emerald
Registration Statement as filed on March 31, 1997.
(17)(c)(iii) Prospectus and Statement of Additional Information for
Emerald Prime Advantage Institutional Fund and Emerald
Treasury Advantage Institutional Fund, incorporated by
reference to Post-Effective Amendment No. 22 to the Emerald
Registration Statement as filed on January 30, 1998.
(17)(c)(iv) Annual Report for Nations Treasury Reserves for the year
ended April 30, 1997, filed on ____________.
(17)(c)(v) Annual Reports for Emerald Prime Advantage Institutional Fund
and Emerald Treasury Advantage Institutional Fund for the
year ended November 30, 1997, filed on ____________.
(17)(c)(vi) Semi-Annual Report for Nations Treasury Reserves for the year
ended October 31, 1997, filed on ____________.
Item 17. Undertakings.
(1) Registrant agrees that, prior to any public reoffering of the
securities registered through the use of a prospectus which is a
part of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act of 1933, the reoffering prospectus will contain the
information called for by the applicable registration form for the
reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as part of an
amendment to the registration statement and will not be used until
the amendment is effective, and that, in determining any liability
under the Securities Act of 1933, each post-effective amendment
shall be deemed to be a new registration statement for the
securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering of
them.
C-4
<PAGE>
(3) The undersigned Registrant agrees to file, by post-effective
amendment, an opinion of counsel or a copy of an IRS ruling
supporting the tax consequences of the Reorganization within a
reasonable time after receipt of such opinion or ruling.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form N-14 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Little
Rock, State of Arkansas on the 5th day of February, 1998.
NATIONS INSTITUTIONAL RESERVES
By: *
-----------------------------------
A. Max Walker
President and Chairman
of the Board of Trustees
By: /s/ Richard H. Blank, Jr.
-----------------------------------
Richard H. Blank, Jr.
*Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the date indicated:
SIGNATURES TITLE DATE
---------- ----- ----
* President and Chairman February 5, 1998
- ------------------------ of the Board of Trustees
(A. Max Walker) (Principal Executive Officer)
* Treasurer February 5, 1998
- ------------------------- Vice President
(Richard H. Rose) (Principal Financial and
Accounting Officer)
* Trustee February 5, 1998
- -------------------------
(Edmund L. Benson, III)
* Trustee February 5, 1998
- -------------------------
(James Ermer)
* Trustee February 5, 1998
- -------------------------
(William H. Grigg)
* Trustee February 5, 1998
- -------------------------
(Thomas F. Keller)
* Trustee February 5, 1998
- -------------------------
(Carl E. Mundy, Jr.)
* Trustee February 5, 1998
- -------------------------
(Charles B. Walker)
* Trustee February 5, 1998
- -------------------------
(Thomas S. Word)
* Trustee February 5, 1998
- -------------------------
(James B. Sommers)
/s/ Richard H. Blank, Jr.
- --------------------------------
Richard H. Blank, Jr.
*Attorney-in-Fact
<PAGE>
Nations Institutional Reserves
File Nos. 33-33144; 811-6030
Exhibit Number Description
- -------------- -----------
Ex-99.11 Opinion and Consent of Morrison &
Foerster LLP
Ex-99.14(a) Opinion and Consent of Auditors -
Price Waterhouse LLP
Ex-99.14(b) Opinion and Consent of Auditors -
Price Waterhouse LLP
Ex-99.14(c) Opinion and Consent of Auditors - KPMG
Peat Marwick LLP
Ex-99.16 Powers of Attorney
Ex-99.17(a) Declaration pursuant to Rule 24f-2
under the Investment Company Act of
1940 of the Registrant
Ex-99.17(b) Form of Proxy Ballot
<PAGE>
Ex-99.11
[MORRISON & FOERSTER LLP LETTERHEAD]
February 23, 1998
Nations Institutional Reserves
One NationsBank Plaza
Charlotte, NC 28255
Re: Units of Beneficial Interest of Nations Institutional Reserves
Ladies/Gentlemen:
We refer to the Registration Statement on Form N-14 (the "Registration
Statement") of Nations Institutional Reserves ("Reserves") relating to the
registration of an indefinite number of units of beneficial interest (the
"Shares"), of certain Funds of Reserves (the "Funds").
We have been requested by Reserves to furnish this opinion as Exhibit
11 to the Registration Statement.
We have examined documents relating to the organization of Reserves and
the authorization and issuance of the Shares. We have also made such inquiries
of Reserves and examined such questions of law as we have deemed necessary for
the purpose of rendering the opinion set forth herein. We have assumed the
genuineness of all signatures and the authenticity of all items submitted to us
as originals and the conformity with originals of all items submitted to us as
copies.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance of the Shares by Reserves has been duly and validly
authorized by all appropriate action and, assuming delivery in accordance with
the description set forth in the Combined Proxy Statement/Prospectus included in
the Registration Statement, the Shares will be legally issued, fully paid and
nonassessable by Reserves.
<PAGE>
Nations Institutional Reserves
February 23, 1998
Page Two
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
In addition, we hereby consent to the use of our name and to the
description of advice rendered by our firm under the headings "Information
Relating to Proposal 2--Approval of the Reorganization Agreement--Federal Income
Tax Considerations" and "Comparison of Nations and Emerald--Nations Funds'
Advisory Contracts" in the Combined Proxy Statement/Prospectus, under the
heading "How The Funds Are Managed" in the Prospectuses, and under the heading
"Counsel" in the Statement of Additional Information, which are incorporated by
reference into the Registration Statement.
Very truly yours,
/s/ MORRISON & FOERSTER LLP
MORRISON & FOERSTER LLP
Exh. 99.14(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Combined Proxy
Statement/Prospectus and Statement of Additional Information constituting parts
of this Registration Statement on Form N-14 (the "Registration Statement") of
our report dated June 18, 1997, relating to the financial statements and
financial highlights of Nations Treasury Reserves appearing in the April 30,
1997 Annual Report to Shareholders of Nations Institutional Reserves, which
financial statements and financial highlights are also incorporated by reference
into the Registration Statement. We also consent to the references to us under
the heading "Financial Statements" and in paragraphs 5.1.j. and 8.6 of the
Agreement and Plan of Reorganization in such Combined Proxy
Statement/Prospectus. We further consent to the references to us under the
headings "Financial Highlights" and "How The Funds Are Managed -- Other Service
Providers" in the Prospectus of Nations Treasury Reserves dated September 1,
1997 and under the heading "Experts and Financial Information" in the Statement
of Additional Information of Nations Treasury Reserves dated September 1, 1997
which are incorporated by reference into the Registration Statement.
/s/ PRICE WATERHOUSE LLP
Boston, Massachusetts
February 17, 1998
Exh. 99.14(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses and
Statements of Additional Information constituting parts of Post-Effective
Amendment No. 21 to the registration statement on Form N-1A (the "Registration
Statement") dated April 1, 1997, of our report dated January 22, 1997, relating
to the financial statements and financial highlights appearing in the November
30, 1996 Annual Report to Shareholders of the Emerald Funds, which are also
incorporated by reference into the Registration Statement and into the combined
Proxy Statement/Prospectus and Statement of Additional Information constituting
parts of the registration statement on Form N-14 for Nations Institutional
Reserves. We also consent to the reference to us under the heading "Financial
Highlights" in the Prospectuses dated April 1, 1997 and under the heading
"Financial Statements" in the Statements of Additional Information dated April
1, 1997.
/s/ Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
February 19, 1998
Exhibit 99.14(c)
Independent Auditors' Consent
The Board of Trustees of
Emerald Funds,
Nations Institutional Reserves,
Nations Fund Trust and
The Board of Directors of
Nations Fund, Inc.:
We consent to the use of our reports dated January 21, 1998 and addressed to the
Shareholders and Board of Trustees of the Emerald Funds which are incorporated
by reference herein and to the reference to our firm under the headings "Other
Service Providers for the Emerald Funds and Nations Funds" and Financial
Statements" in the combined Proxy Statement/Prospectuses for the Nations
Institutional Reserves, Nations Fund Trust and Nations Fund, Inc. (collectively,
Nations) and "Incorporation of Documents by Reference in Statement of Additional
Information" in the Statements of Additional Information for Nations.
/s/ KPMG Peat Marwick LLP
Columbus, Ohio
February 20, 1998
<PAGE>
POWER OF ATTORNEY
Edmund L. Benson, III, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as a trustee of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: February 6, 1998
/s/ Edmund L. Benson, III
----------------------------
Edmund L. Benson, III
<PAGE>
POWER OF ATTORNEY
James Ermer, whose signature appears below, does hereby constitute
and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M. Kurucza, Marco
E. Adelfio and Steven G. Cravath, each individually, his true and lawful
attorneys and agents, with power of substitution or resubstitution, to do any
and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as a trustee of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: February 6, 1998
/s/ James Ermer
----------------------------
James Ermer
<PAGE>
POWER OF ATTORNEY
William H. Grigg, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as a trustee of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: February 10, 1998
/s/ William H. Grigg
----------------------------
William H. Grigg
<PAGE>
POWER OF ATTORNEY
Thomas F. Keller, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as a trustee of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: February 6, 1998
/s/ Thomas F. Keller
----------------------------
Thomas F. Keller
<PAGE>
POWER OF ATTORNEY
A. Max Walker, whose signature appears below, does hereby constitute
and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M. Kurucza, Marco
E. Adelfio and Steven G. Cravath, each individually, his true and lawful
attorneys and agents, with power of substitution or resubstitution, to do any
and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as an officer of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: February 6, 1998
/s/ A. Max Walker
----------------------------
A. Max Walker
<PAGE>
POWER OF ATTORNEY
Charles B. Walker, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as a trustee of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: February 6, 1998
/s/ Charles B. Walker
----------------------------
Charles B. Walker
<PAGE>
POWER OF ATTORNEY
Thomas S. Word, Jr., whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as a trustee of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: February 6, 1998
/s/ Thomas S. Word, Jr.
----------------------------
Thomas S. Word, Jr.
<PAGE>
POWER OF ATTORNEY
Richard H. Rose, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as an officer of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: February 6, 1998
/s/ Richard H. Rose
----------------------------
Richard H. Rose
<PAGE>
POWER OF ATTORNEY
Carl E. Mundy, Jr., whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as an officer of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: February 7, 1998
/s/ Carl E. Mundy, Jr.
----------------------------
Carl E. Mundy, Jr.
<PAGE>
POWER OF ATTORNEY
James B. Sommers, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as an officer of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: February 9, 1998
/s/ James B. Sommers
----------------------------
James B. Sommers
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 24F-2: ANNUAL NOTICE OF SECURITIES SOLD, PURSUANT TO
RULE 24F-2
READ INSTRUCTIONS AT END OF FORM BEFORE PREPARING FORM. PLEASE PRINT OR TYPE.
1. NAME AND ADDRESS OF ISSUER:
Nations Institutional Reserves
111 Center Street
Little Rock, AR 72201
2. NAME OF EACH SERIES OR CLASS OF FUNDS FOR WHICH THIS NOTICE IS FILED:
Nations Cash Reserves-Capital Shares. Nations Cash Reserves-Liquidity Shares.
Nations Cash Reserves-Adviser Shares. Nations Cash Reserves-Market Shares.
Nations Government Reserves-Capital Shares. Nations Government
Reserves-Liquidity Shares. Nations Government Reserves-Adviser Shares. Nations
Government Reserves-Market Shares. Nations Municipal Reserves-Capital Shares.
Nations Municipal Reserves-Liquidity Shares. Nations Municipal
Reserves-Adviser Shares. Nations Municipal Reserves-Market Shares. Nations
Treasury Reserves-Capital Shares. Nations Treasury Reserves-Liquidity Shares.
Nations Treasury Reserves-Adviser Shares. Nations Treasury Reserves-Market
Shares.
3. INVESTMENT COMPANY ACT FILE NUMBER: 811-6030
SECURITIES ACT FILE NUMBER: 33-33144
4. LAST DAY OF FISCAL YEAR FOR WHICH THIS NOTICE IS FILED:
APRIL 30, 1997
5. CHECK BOX IF THIS NOTICE IS BEING FILED MORE THAN 180 DAYS AFTER THE CLOSE
OF THE ISSUER'S FISCAL YEAR END FOR PURPOSES OF REPORTING SECURITIES SOLD
AFTER THE CLOSE OF THE FISCAL YEAR BUT BEFORE TERMINATION OF THE ISSUER'S
24F-2 DECLARATION: [ ]
6. DATE OF TERMINATION OF ISSUER'S DECLARATION UNDER RULE 24F-2(A)(1), IF
APPLICABLE (SEE INSTRUCTION A.6):
N/A
7. NUMBER AND AMOUNT OF SECURITIES OF THE SAME CLASS OR SERIES WHICH HAD BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OTHER THAN PURSUANT TO RULE 24F-2
IN A PRIOR FISCAL YEAR, BUT WHICH REMAINED UNSOLD AT THE BEGINNING OF THE
FISCAL YEAR:
N/A
1
<PAGE>
8. NUMBER AND AMOUNT OF SECURITIES REGISTERED DURING THE FISCAL YEAR OTHER
THAN PURSUANT TO RULE 24F-2:
NUMBER: 202,969,458
SALE PRICE: $202,969,458.00
9. NUMBER AND AGGREGATE SALE PRICE OF SECURITIES SOLD DURING THE FISCAL YEAR:
NUMBER: 21,402,246,728 SHARES
SALE PRICE: $21,402,246,728.00
10. NUMBER AND AGGREGATE SALE PRICE OF SECURITIES SOLD DURING THE FISCAL YEAR
IN RELIANCE UPON REGISTRATION PURSUANT TO RULE 24F-2:
NUMBER: 21,199,277,270 SHARES
SALE PRICE: $21,199,277,270.00
2
<PAGE>
11. NUMBER AND AGGREGATE SALE PRICE OF SECURITIES ISSUED DURING THE FISCAL
YEAR IN CONNECTION WITH DIVIDEND REINVESTMENT PLANS, IF APPLICABLE (SEE
INSTRUCTION B.7):
NUMBER: 41,732,993 SHARES
SALE PRICE: $41,732,993.00
12. CALCULATION OF REGISTRATION FEE:
(i) Aggregate sale price of securities sold during the fiscal year
in reliance on Rule 24f-2 (from Item 10):
$21,199,277,270.00
(ii) Aggregate price of shares issued in connection with
dividend reinvestment plans (from Item 11, if applicable):
+41,732,993.00
(iii) Aggregate price of shares redeemed or repurchased during
the fiscal year (if applicable):
-19,165,857,773.00
(iv) Aggregate price of shares redeemed or repurchased and
previously applied as a reduction to filing fees pursuant to
Rule 24e-2 (if applicable):
+0.00
(v) Net aggregate price of securities sold and issued during
the fiscal year in reliance on Rule 24f-2 [line (i), plus
line (ii), less line (iii), plus line (iv)] (if applicable):
2,075,152,490.00
(vi) Multiplier prescribed by Section 6(b) of the Securities
Act of 1933 or other applicable law or regulation (see
Instruction C.6):
x 1/33 of 1%
(vii) Fee due [line (i) or line (v) multiplied by line (vi)]:
$628,834.09
INSTRUCTION: ISSUERS SHOULD COMPLETE LINES (II), (III), (IV) AND (V) ONLY IF
THE FORM IS BEING FILED WITHIN 60 DAYS AFTER THE CLOSE OF THE ISSUER'S FISCAL
YEAR. See Instruction C.3.
Check box if fees are being remitted to the Commission's lockbox depository as
described in Section 3a of the Commission's Rule of Informal and Other
Procedures (17 CFR 202.3a). [ x ]
3
<PAGE>
Date of mailing or wire transfer of filing fees to the Commission's lockbox
depository:
JUNE 25, 1997
SIGNATURES
This report has been signed below by the following persons on behalf of the
issuer and in the capacities and on the dates indicated.
By: \s\ JAMES EDWARD BANKS, JR.
ASSISTANT SECRETARY
Date: JUNE 26, 1997
4
<PAGE>
[MORRISON & FOERSTER LLP LETTERHEAD]
June 26, 1997
Nations Institutional Reserves
111 Center Street
Little Rock, AR 72201
Re: Issuance and Sale of Shares of Beneficial Interest
of Nations Institutional Reserves; Registration on Form N-1A
Pursuant to Rule 24f-2
Ladies and Gentlemen:
Nations Institutional Reserves (the "Trust") has requested our opinion in
connection with the sale or issuance by the Trust of 21,443,979,721 shares of
beneficial interest (the "Shares"), in the aggregate, of all classes of Shares
of all portfolios of the Trust (collectively, the "Funds").
We have examined documents relating to the organization of the Trust and
the authorization for registration and sale of Shares of each of the Funds. The
opinion given below only relates to the law of the Commonwealth of
Massachusetts, the laws under which the Trust was organized, and is subject to
the condition that the Trust is in compliance with the provisions of any
applicable laws, regulations and permits of any state or foreign country in
which any Shares of any of the Funds are sold.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance and sale of the Shares by the Trust have been duly and
validly authorized by all appropriate action and, assuming delivery by sale or
in accord with the Funds' dividend reinvestment plan was in accordance with the
description set forth in the Trust's current prospectuses under the Securities
Act of 1933, the Shares have been legally issued, fully paid and are
non-assessable.
We consent to the submission of a copy of this opinion to the Securities
and Exchange Commission in connection with the filing of the Trust's Rule 24f-2
Notice, as amended, under the Investment Company Act of 1940, as amended.
Very truly yours,
/S/ MORRISON & FOERSTER LLP
MORRISON & FOERSTER LLP
Prepared by:______________________________
Reviewed by:______________________________
Signed by:________________________________
EX-99.17(b)
PROXY CARD
EMERALD FUNDS
EMERALD PRIME ADVANTAGE INSTITUTIONAL FUND
Special Meeting of Shareholders-May 4, 1998
The undersigned hereby appoints Martin R. Dean and Hugh J. Fanning (the
"Proxies") and each of them, attorneys and proxies of the undersigned, each with
power of substitution and resubstitution, to attend, vote and act for the
undersigned at the Special Meeting of Shareholders of Emerald Funds ("Emerald")
to be held at the offices of Emerald, 3435 Stelzer Road, Columbus, Ohio 43219,
at 10:00 a.m. (Eastern time), on Monday, May 4, 1998, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Emerald Prime Advantage Institutional Fund (the "Fund") which the
undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with all the
powers which the undersigned would possess if personally present. The
undersigned hereby revokes any prior proxy to vote at such meeting, and hereby
ratifies and confirms all that said attorneys and Proxies, or either of them,
may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED MARCH 30,
1998.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF EMERALD, WHICH UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF BOTH PROPOSALS. YOU MAY VOTE BY FAXING THE
PROXY BALLOT TO A.D.P. PROXY SERVICES AT (____) __________ OR BY MAILING IT IN
THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU MARK, SIGN AND DATE
YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSALS.
(1) To ratify and approve an interim investment advisory agreement with
Barnett Capital Advisors, Inc., for the period from January 9, 1998
forward.
|_|YES |_|NO |_|ABSTAIN
(2) To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, that provides for
the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Fund Trust in exchange for Capital Class
Shares of such Nations fund, and which contemplates the reorganization
of Emerald.
|_|YES |_|NO |_|ABSTAIN
THESE PROPOSALS HAVE BEEN PROPOSED BY EMERALD.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1998
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
EMERALD FUNDS
EMERALD TREASURY ADVANTAGE INSTITUTIONAL FUND
Special Meeting of Shareholders-May 4, 1998
The undersigned hereby appoints Martin R. Dean and Hugh J. Fanning (the
"Proxies") and each of them, attorneys and proxies of the undersigned, each with
power of substitution and resubstitution, to attend, vote and act for the
undersigned at the Special Meeting of Shareholders of Emerald Funds ("Emerald")
to be held at the offices of Emerald, 3435 Stelzer Road, Columbus, Ohio 43219,
at 10:00 a.m. (Eastern time), on Monday, May 4, 1998, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Emerald Treasury Advantage Institutional Fund (the "Fund") which
the undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with all the
powers which the undersigned would possess if personally present. The
undersigned hereby revokes any prior proxy to vote at such meeting, and hereby
ratifies and confirms all that said attorneys and Proxies, or either of them,
may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED MARCH 30,
1998.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF EMERALD, WHICH UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF BOTH PROPOSALS. YOU MAY VOTE BY FAXING THE
PROXY BALLOT TO A.D.P. PROXY SERVICES AT (____) __________ OR BY MAILING IT IN
THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU MARK, SIGN AND DATE
YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSALS.
(1) To ratify and approve an interim investment advisory agreement with
Barnett Capital Advisors, Inc., for the period from January 9, 1998
forward.
|_|YES |_|NO |_|ABSTAIN
(2) To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, that provides for
the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Fund Trust in exchange for Capital Class
Shares of such Nations fund, and which contemplates the reorganization
of Emerald.
|_|YES |_|NO |_|ABSTAIN
THESE PROPOSALS HAVE BEEN PROPOSED BY EMERALD.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1998
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
