INTERIM SUB-ADVISORY AGREEMENT
NATIONS ANNUITY TRUST
THIS AGREEMENT is made as of March 6, 2000, by and among BANC OF AMERICA
ADVISORS, INC. (formerly NationsBanc Advisors, Inc.), a North Carolina
corporation (the "Adviser"), GARTMORE GLOBAL PARTNERS, a general partnership
organized under the laws of the State of Delaware (the "Sub-Adviser"), and
NATIONS ANNUITY TRUST, a Delaware business trust, (the "Trust") on behalf of the
portfolio or portfolios of the Trust as now or hereafter may be identified on
Schedule I hereto (each a "Portfolio" and collectively, the "Portfolios").
RECITALS
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser is registered with the Commission under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") as an
investment adviser;
WHEREAS, the Sub-Adviser is also registered with the Commission under the
Advisers Act as an investment adviser and is regulated by the Investment
Management Regulatory Organization Limited ("IMRO") of the United Kingdom in the
conduct of its investment business and is a member of IMRO;
WHEREAS, the Adviser and the Trust have entered into an Investment
Advisory Agreement of even date herewith (the "Investment Advisory Agreement"),
pursuant to which the Adviser shall act as investment adviser with respect to
the Portfolios; and
WHEREAS, pursuant to such Investment Advisory Agreement, the Adviser, with
the approval of the Trust, wishes to retain the Sub-Adviser for purposes of
rendering advisory services to the Adviser and the Trust in connection with the
Portfolios upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT OF SUB-ADVISER. The Adviser hereby appoints, and the Trust
hereby approves, the Sub-Adviser to render investment research and advisory
services to the Adviser and the Trust with respect to the Portfolios, under the
supervision of the Adviser and subject to the policies and control of the
Trust's Board of Trustees, and the Sub-Adviser hereby accepts such appointment,
all subject to the terms and conditions contained herein.
2. INVESTMENT SERVICES. The specific duties of the Adviser delegated to
the Sub-Adviser shall be the following:
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(a) obtaining and evaluating pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Portfolios
specifically, and whether concerning the individual issuers whose securities are
included in the Portfolios or the activities in which such issuers engage, or
with respect to securities which the Adviser or Sub-Adviser considers desirable
for inclusion in the Portfolios;
(b) investing and reinvesting, on an ongoing basis, assets held in the
Portfolios in strict accordance with the investment policies of the Portfolios
as set forth in the registration statement of the Trust with respect to the
Portfolios, as the same may be amended from time to time;
(c) in accordance with policies and procedures established by the Board of
Trustees of the Trust and the Adviser, selecting brokers and dealers to execute
portfolio transactions for the Portfolios and selecting the markets on or in
which the transactions will be executed;
(d) voting, either in person or by general or limited proxy, or refraining
from voting, any securities held in the Portfolios for any purposes; exercising
or selling any subscription or conversion rights; consenting to and joining in
or opposing any voting trusts, reorganizations, consolidations, mergers,
foreclosures and liquidations and in connection therewith, depositing
securities, and accepting and holding other property received therefor, all as
may be considered appropriate by the Sub-Adviser; and
(e) performing other acts necessary or appropriate in connection with the
proper management of the Portfolios, consistent with its obligations hereunder,
and as may be directed by the Adviser and/or the Trust's Board of Trustees.
In carrying out its obligations under clauses (b) to (e), inclusive, of
this Paragraph 2, the Sub-Adviser shall act only as agent of the Trust and/or
the Portfolio and shall not act as principal. The Sub-Adviser shall not be
responsible for the administration of the Portfolio, for the execution and
settlement of transactions in securities or derivative instruments nor for the
custody of any such securities or instruments or documents of title and the
Sub-Adviser shall not hold any money or other assets of the Portfolio or the
Trust.
3. CONTROL BY BOARD OF TRUSTEES. As is the case with respect to the
Adviser under the Investment Advisory Agreement, any investment activities
undertaken by the Sub-Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Sub-Adviser with respect to the Portfolios, shall
at all times be subject to any directives of the Board of Trustees of the Trust.
Without limiting the right of the Board of Trustees of the Trust to issue
directives, the Board of Trustees shall take into consideration any views or
opinions that may be expressed by the Adviser or Sub-Adviser in formulating
policies, procedures and directives. The Sub-Adviser shall not be obligated to
conform its activities to any directive of the Board of Trustees of the Trust to
the extent that compliance with such directive would be in contravention of any
law, rule or regulation applicable to the Sub-Adviser.
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4. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust
applicable to the Portfolios, as the same may be amended from time to
time, under the Securities Act of 1933, as amended (the "1933 Act") and
the 1940 Act;
(c) the Conduct of Business Rules of IMRO ("IMRO Rules") to the
extent that the IMRO Rules are not inconsistent with any applicable
requirements under the 1940 Act, the Advisers Act or other United States
federal or state law; and
(d) such policies and procedures that may be established by the
Board of Trustees of the Trust and communicated to the Sub-Adviser from
time to time.
In addition, any code of ethics adopted by the Sub-Adviser pursuant to
Rule 17j-1 under the 1940 Act shall include policies, prohibitions and
procedures which substantially conform to the recommendations regarding personal
investing approved by the Board of Governors of the Investment Company Institute
on June 30, 1994, as such recommendations may amended from time to time.
5. COMPENSATION. The Adviser shall pay the Sub-Adviser, as compensation
for services rendered hereunder, fees, payable monthly, at the annual rates
indicated on Schedule I hereto, as such Schedule may be supplemented and amended
from time to time. It is understood that the Adviser shall be responsible for
the Sub-Adviser's fee for its services hereunder, and the Sub-Adviser agrees
that it shall have no claim against the Trust or the Portfolio with respect to
compensation under this Agreement. The Sub-Adviser's fees shall be pro-rated for
portions of months in which sub-advisory services are provided.
The average daily net asset value of the Portfolios shall be determined in
the manner set forth in the Declaration of Trust and registration statement of
the Trust, as amended from time to time.
6. ESCROW OF FEES. During the period of time commencing on the effective
date of the Agreement, and continuing until the earlier of: (a) such time as an
investment sub-advisory agreement among the Adviser, Gartmore Global Partners
and Nations Annuity Trust is approved by a majority of the outstanding voting
securities of the Portfolio (the "New Investment Sub-Advisory Agreement"); or
(b) the 150th day following the termination of the investment sub-advisory
agreement dated February 25, 1998 among NationsBanc Advisors, Inc., Gartmore
Global Partners and Nations Annuity Trust (the "Prior Investment Sub-Advisory
Agreement"), the fees payable to the Sub-Adviser under the Agreement shall be
paid into an interest-bearing escrow account (the "Account") which shall be
maintained by an escrow agent. Such escrow agent shall be the custodian to the
Portfolios or another bank that shall not be an affiliated party (as defined in
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the 0000 Xxx) of any of the parties hereto. All amounts paid into the Account
(including interest earned on such moneys) may be paid to the Sub-Adviser only
upon the approval, by a majority of the outstanding voting securities of the
Portfolio (as defined in the 1940 Act), of the New Investment Sub-Advisory
Agreement. In the event that the shareholders of the Portfolio fail to approve
the New Investment Sub-Advisory Agreement prior to the earlier of the date
specified in subpart (b) above, all moneys in the Account shall be paid to the
Portfolio less any amounts to be paid to the Sub-Advisor which shall be the
lesser of: (1) any costs incurred in performing the Agreement (plus interest
earned on such amount); or (2) the total amount of moneys in the Account (plus
interest earned). All parties hereto expressly acknowledge that the escrow agent
may release the moneys in the Account only upon receipt of a certificate from an
officer of the Trust (who shall not be an interested person of the Sub-Adviser
(as defined in the 0000 Xxx) stating that the moneys are to be delivered to the
Sub-Adviser and that the New Investment Sub-Advisory Agreement has been approved
by a majority of the outstanding voting securities of the Portfolio (as defined
in the 0000 Xxx) or, in the event that the shareholders of the Portfolio failed
to approve the New Investment Sub-Advisory Agreement prior to the earlier of the
date specified in subpart (b) above, that the moneys in the Account are to be
delivered to the Portfolio.
7. EXPENSES OF THE PORTFOLIOS. All of the ordinary business expenses
incurred by the Sub-Adviser in the operations of the Portfolios and the offering
of their shares shall be borne by the Portfolios unless specifically provided
otherwise in this Agreement. These expenses borne by the Portfolios include but
are not limited to brokerage commissions, taxes, legal, auditing, or
governmental fees, the cost of preparing share certificates, custodian, transfer
agent and shareholder service agent costs, expenses of issue, sale, redemption
and repurchase of shares, Trustee and shareholder meetings, the cost of
preparing and distributing reports and notices to shareholders, the fees and
other expenses incurred by the Portfolios in connection with membership in
investment company organizations and the cost of printing copies of prospectuses
and statements of additional information distributed to the Portfolios'
shareholders.
8. EXPENSE LIMITATION. If, for any fiscal year of a Portfolio, the amount
of the aggregate advisory fee which the Trust would otherwise be obligated to
pay with respect to the Portfolio is reduced pursuant to expense limitation
provisions of the Investment Advisory Agreement, the fee which the Sub-Adviser
would otherwise receive pursuant to this Agreement shall be reduced
proportionately.
9. NON-EXCLUSIVITY. The services of the Sub-Adviser to the Adviser and the
Trust with respect to the Portfolio are not to be deemed to be exclusive, and
the Sub-Adviser shall be free to render investment advisory and administrative
or other services to others (including other investment companies) and to engage
in other activities. It is understood and agreed that the officers and directors
of the Sub-Adviser are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from serving as
partners, officers, directors or trustees of any other firm or trust, including
other investment advisory companies.
10. RECORDS. The Sub-Adviser shall provide to the Adviser, with respect to
the orders the Sub-Adviser places for the purchases and sales of portfolio
securities of the Portfolios, the documents and records required pursuant to
Rule 31a-1 under the 1940 Act as well as such records as the Portfolios'
administrator(s) reasonably request to be maintained, including, but not limited
to, trade tickets and confirmations for portfolio trades. All such records shall
be maintained in a form acceptable to the Portfolios and in compliance with the
provisions of Rule 31a-1. All such records will be the property of the
Portfolios and will be available for
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inspection and use by the Portfolios. The Sub-Adviser will promptly notify the
Adviser and the Portfolios' administrator(s) if it experiences any difficulty in
providing the records in an accurate and complete manner.
11. TERM AND APPROVAL. This Agreement shall become effective upon the
termination date of the Prior Investment Sub-Advisory Agreement, and shall
continue in effect until the earlier of: (a) such time as the New Investment
Sub-Advisory Agreement is approved by a majority of the outstanding voting
securities of the Portfolio; or (b) the 150th day following the termination of
the Prior Investment Sub-Advisory Agreement.
12. TERMINATION. This Agreement may be terminated at any time with respect
to a Portfolio, without the payment of any penalty, by vote of the Trust's Board
of Trustees or by vote of a majority of the Portfolio's outstanding voting
securities on not more than ten (10) calendar days' written notice to the other
parties to this Agreement, or by the Adviser, or by the Sub-Adviser on sixty
(60) days' written notice to the other parties to this Agreement. Any party
entitled to notice may waive the notice provided for herein. This Agreement
shall automatically terminate in the event of its assignment, the term
"assignment" for purposes of this paragraph having the meaning defined in
Section 2(a)(4) of the 1940 Act.
13. LIABILITY OF SUB-ADVISER. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Adviser or any of its officers, directors, employees or
agents, the Sub-Adviser shall not be subject to liability to the Adviser or to
the Trust for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security (including derivatives). For purposes of this
paragraph and paragraph 13, brokers or dealers selected to execute portfolio
transactions for the Portfolios in accordance with Paragraph 2(c) hereof shall
not be considered agents of the Sub-Adviser.
14. INDEMNIFICATION. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of duties hereunder on the part of the
Sub-Adviser, or any officers, directors, employees or agents thereof, the Trust
hereby agrees to indemnify and hold harmless the Sub-Adviser against all claims,
actions, suits or proceedings at law or in equity whether brought by a private
party or a governmental department, commission, board, bureau, agency or
instrumentality of any kind: (a) arising from the advertising, solicitation,
sale, purchase or pledge of securities, whether of the Portfolios or other
securities, undertaken by the Portfolios or the Trust's officers, Trustees,
employees, agents or affiliates, or (b) resulting from any violations of the
securities laws, rules, regulations, statutes and codes, whether federal or of
any state, by the Portfolios, or the Trust's officers, Trustees, employees or
affiliates.
15. NOTICES. Any notices under this Agreement shall be in writing and
shall be duly given if delivered, mailed (postage prepaid, effective upon
receipt) or telegraphed, telexed or transmitted by similar telecommunications
device (effective upon completion of transmission, with a confirming copy
delivered or mailed postage prepaid) to such address or number as may be
designated for the receipt of such notice, with a copy to the Trust. Until
further notice, it is agreed that the address and telefax number of the Trust
shall be 000 Xxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, Fax No. (000) 000-0000;
that of Sub-Adviser and the Adviser respectively shall be Xxx XxxxxxxXxxx Xxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Fax No. (000) 000-0000.
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16. QUESTIONS OF INTERPRETATION. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to such
term or provision of the 1940 Act and to interpretations thereof, if any, by the
United States courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Commission issued pursuant to the
1940 Act. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the Commission, such provision shall be deemed to incorporate the
effect of such rule, regulation or order.
17. IMRO RULES. Addendum A attached hereto sets forth certain requirements
under the IMRO Rules which are applicable to the Sub-Adviser, that are expressly
incorporated herein and made a part hereof, but only to the extent that such
requirements are not inconsistent with any applicable requirements under the
1940 Act, the Advisers Act or other United States Federal or state law.
18. COUNTERPARTS. This Agreement may be executed in any manner of
counterparts, each of which shall be deemed an original.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in triplicate by their respective officers on the day and year first
written above.
NATIONS ANNUITY TRUST,
on behalf of the Portfolios
By: A. Xxx Xxxxxx
--------------------------------
President and Chairman of the
Board of Trustees
BANC OF AMERICA ADVISORS, INC.
By:
--------------------------------
Xxxxxx X. Xxxxxx
President
GARTMORE GLOBAL PARTNERS
By:
-------------------------------
Name:
Title:
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SCHEDULE I
The Trust shall pay the Sub-Adviser as full compensation for services
provided and expenses assumed hereunder a sub-advisory fee for each Portfolio,
computed daily and payable monthly at the annual rates listed below as a
percentage of the average daily net assets of the Portfolio:
RATE OF
PORTFOLIO COMPENSATION
--------- ------------
Nations International Growth Portfolio 0.70%
Approved: March 2, 2000
ADDENDUM A
1. For the purposes of this Agreement, the Trust, the Portfolios and the
Adviser shall each be regarded as a Non-Private Customer under IMRO
Rules.
2. To the extent that the Sub-Adviser receives any commissions or other
forms of remuneration, directly or indirectly, in connection with
portfolio transactions, no portion of the Sub-Adviser's accrued
investment advisory fee shall be abated thereby.
3. Subject to the supervision of the Adviser and the policies and ultimate
control of the Trust's Board of Trustees, the Sub-Adviser shall advise
the Trust and the Adviser on the management of the Portfolios'
investments in accordance with the terms of this Agreement and in
accordance with the investment parameters (including, inter alia,
percentage limitations, quality standards, investment selection criteria
and types of permissible investments and investment techniques, such as
borrowing, options and futures transactions, portfolio securities
lending, etc.) established pursuant to the investment objectives,
policies and restrictions specifically embodied in the Trust's
Registration Statement on Form N-1A, and any amendments thereto, under
the 1933 Act and the 1940 Act (the "Trust's Registration Statement").
4. The Sub-Adviser shall not have or maintain custody of any securities,
cash or other assets of the Portfolios. Custody of the Portfolios' assets
will be maintained by the custodian bank pursuant to an agreement
approved by the Trust's Board of Trustees. It is expected that such
custodian, or any successor thereto, will not be an "Associate" of the
Sub-Adviser as that term is defined under IMRO Rules.
5. In the event the Portfolios or the Adviser have a significant complaint
regarding the services provided by the Sub-Adviser under the Sub-Advisory
Agreement by and among the Trust, the Adviser and the Sub-Adviser, a
Portfolio officer should communicate such complaint to the Sub-Adviser,
whereupon such complaint will be recorded on a standard form prepared by
the Sub-Adviser for such purposes. The Sub-Adviser's complaints procedure
requires that if a complaint has not been cleared within twenty-eight
(28) days, the Sub-Adviser must so advise IMRO and the Portfolios also
must be advised that they have the right to issue the complaint directly
with a referee appointed by IMRO. A statement describing rights to
compensation in the event of the Sub-Advisers' inability to meet any
liabilities to the Trust or the Adviser will be made available on
request.
6. The Sub-Adviser will provide to the Trust's Board of Trustees written
financial reports and analyses on the Portfolios' securities transactions
and the operations of comparable investment companies on a quarterly
basis or more frequently as reasonably requested by the Board of
Trustees. Such reports and analyses shall include information as at the
last day of an applicable reporting period.
7. The Portfolios may from time to time request or instruct the Sub-Adviser,
directly or through the Adviser, to act or not to act regarding certain
portfolio-related investments and/or operational matters. Such request or
instructions will be communicated orally or in writing to the
Sub-Adviser, directly or through the Adviser and will be acknowledged in
the same manner in which they are communicated. To the extent that a
particular request or instruction is, or may be, refused (i.e., because
it: (a) is in contravention of (i) a law or regulation, (ii) an
investment policy of the Portfolio, or (iii) a provision of this
Agreement; or (b) is not operationally feasible), such refusal shall be
communicated by the Sub-Adviser, including through the Adviser, and the
Portfolio and the Sub-Adviser, upon advice of counsel, shall discuss
alternatives and determine an appropriate course of action which will be
reported to the full Board at the next meeting of the Trust's Board of
Trustees for its approval.
8. Notwithstanding that all required disclosure concerning the risks
associated with the Portfolios' permissible investments and investment
techniques is included in the Trust's Registration Statement, which
Statement is intended for review by the investors in the Portfolios and
to be retained by them for future reference, with respect to the
Portfolios' specified use of options and futures transactions, particular
attention is drawn to the risk warnings set out in the Annex-Risk Warning
which receipt of is acknowledged by the Trust and the Adviser. However,
nothing stated therein shall be interpreted to modify any provision of
this Agreement.
9. Except as permitted by or pursuant to Section 17 of the 1940 Act and the
Rules promulgated thereunder, the Sub-Adviser, or an "affiliate" thereof
(as that term is defined in the 1940 Act), may not effect transactions:
(i) with or for the Portfolios in which the Sub-Adviser or such affiliate
has directly or indirectly a material interest or a relationship of any
kind with another party which may involve a conflict with the
Sub-Adviser's responsibilities to the Portfolios as a sub-investment
sub-adviser; or (ii) with or through the agency or another person with
whom the Sub-Adviser or such affiliate maintains an arrangement as
described in Rule 1.7(l) of Chapter II of the IMRO Rules.
10. Upon termination of the Sub-Advisory Agreement by and among the Trust,
the Adviser and the Sub-Adviser, unless otherwise directed by the Trust's
Board of Trustees, all securities positions and other portfolio
transactions then in progress shall be transferred to the successor
investment adviser selected by the Board of Trustees. Such termination
shall be without prejudice to the completion of any transactions in
securities already initiated for the Portfolio.
11. The Sub-Adviser shall be entitled at its discretion to disclose any
information known to it relating to the Portfolio's business or affairs
to the Financial Services Authority or to IMRO on the terms that the
information so disclosed shall not without its consent be further
disclosed otherwise than is permitted in respect of Restricted
Information under the provisions of Part VIII of the Financial Services
Act of 1986.
12. The Sub-Adviser shall be entitled at its discretion to disclose the
identity of the Trust and the Portfolio(s) as may be appropriately
required by Counterparties to transactions properly involving the
Portfolios.
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