INVESTMENT ADVISORY AGREEMENT
NATIONS ANNUITY TRUST
THIS AGREEMENT is made as of July 3, 2000, by and between NATIONS
ANNUITY TRUST, a Delaware business trust (the "Trust"), and BANC OF AMERICA
ADVISORS, INC., a North Carolina corporation (the "Adviser"), on behalf of those
series of the Trust now or hereafter identified on Schedule I (each, a
"Portfolio" and collectively, the "Portfolios").
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 as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act");
WHEREAS, the Trust desires that the Adviser manage the investment
operations of the Portfolios and the Adviser desires to manage said operations;
and
WHEREAS, the Board of Trustees of the Trust (the "Board"), including a
majority of the Trustees who are not "interested persons" (as defined herein) of
any party to this Agreement, have approved this arrangement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment of Adviser. The Trust hereby appoints the Adviser and
the Adviser hereby agrees to manage the investment operations of each Portfolio
subject to the terms of this Agreement and subject to the supervision of the
Board. The Trust and the Adviser contemplate that certain duties of the Adviser
under this Agreement may be delegated to one or more investment sub-adviser(s)
(the "Sub-Adviser(s)") pursuant to separate investment sub-advisory agreement(s)
(the "Sub-Advisory Agreement(s)"). The Adviser may, in its discretion, provide
services under this Agreement through its own employees or through one or more
affiliated companies that are qualified to act as investment advisers under
applicable law and are under common control of Bank of America Corporation.
2. Services of Adviser. The Adviser shall perform, or arrange for the
performance of, the management services necessary for the investment operations
of each Portfolio, including but not limited to:
(a) Managing the investment and reinvestment of all assets, now or
hereafter acquired by each Portfolio, including determining what
securities and other investments are to be purchased or sold for
each Portfolio and executing transactions accordingly;
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(b) Transmitting trades to each Portfolio's custodian for settlement
in accordance with each Portfolio's procedures and as may be
directed by the Trust;
(c) Assisting in the preparation of all shareholder communications,
including shareholder reports, and participating in shareholder
relations;
(d) Making recommendations as to the manner in which voting rights,
rights to consent to Portfolio action and any other rights
pertaining to each Portfolio's portfolio securities shall be
exercised;
(e) Making recommendations to the Board with respect to Portfolio
investment policies and procedures, and carrying out such
investment policies and procedures as are adopted by the Board;
(f) Supplying reports, evaluations, analyses, statistical data and
information to the Board or to the Portfolios' officers and
other service providers as the Board may reasonably request from
time to time or as may be necessary or appropriate for the
operation of the Trust as an open-end investment company or as
necessary to comply with Section 3(a) of this Agreement;
(g) Maintaining all required books and records with respect to the
investment decisions and securities transactions for each
Portfolio;
(h) Furnishing any and all other services, subject to review by the
Board, that the Adviser from time to time determines to be
necessary or useful to perform its obligations under this
Agreement or as the Board may reasonably request from time to
time.
3. Responsibilities of Adviser. In carrying out its obligations under
this Agreement, the Adviser agrees that it will:
(a) Comply with all applicable law, including but not limited to the
1940 Act and the Advisers Act, the rules and regulations of the
Commission thereunder, and the conditions of any order affecting
the Trust or a Portfolio issued thereunder;
(b) Use the same skill and care in providing such services as it
uses in providing services to other fiduciary accounts for which
it has investment responsibilities;
(c) Not make loans to any person for the purpose of purchasing or
carrying Portfolio shares;
(d) Place, or arrange for the placement of, all orders pursuant to
its investment determinations for the Portfolios either directly
with the issuer or with any
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broker or dealer (including any affiliated broker or dealer). In
executing portfolio transactions and selecting brokers or
dealers, the Adviser will use its best efforts to seek on behalf
of each Portfolio the best overall terms available. In assessing
the best overall terms available for any transaction, the
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 or dealer to execute a
particular transaction, the Adviser may also consider whether
such broker or dealer furnishes research and other information
or services to the Adviser;
(e) Adhere to the investment objective, strategies and policies and
procedures of the Trust adopted on behalf of each Portfolio; and
(f) Maintain a policy and practice of conducting its investment
advisory services hereunder independently of the commercial
banking operations of its affiliates. In making investment
recommendations for a Portfolio, the Adviser's investment
advisory personnel will not inquire or take into consideration
whether the issuers (or related supporting institutions) of
securities proposed for purchase or sale for the Portfolio's
account are customers of the commercial departments of its
affiliates. In dealing with commercial customers, such
commercial departments will not inquire or take into
consideration whether securities of those customers are held by
the Portfolio.
4. Confidentiality of Information. Each party agrees that it will treat
confidentially all information provided by the other party regarding such other
party's business and operations, including without limitation the investment
activities or holdings of a Portfolio. All confidential information provided by
a party hereto shall not be disclosed to any unaffiliated third party without
the prior consent of the providing party. The foregoing shall not apply to any
information that is public when provided or thereafter becomes public or which
is required to be disclosed by any regulatory authority in the lawful and
appropriate exercise of its jurisdiction over a party, by any auditor of the
parties hereto, by judicial or administrative process or otherwise by applicable
law or regulation.
5. Delegation of Duties. Subject to the approval of the Board and, if
required, the shareholders of the Portfolios, the Adviser may delegate to one or
more Sub-Adviser(s) any or all of its duties hereunder, provided that the
Adviser shall continue to supervise and monitor the performance of the duties
delegated to the Sub-Adviser(s) and any such delegation shall not relieve the
Adviser of its duties and obligations under this Agreement. The Adviser shall be
solely responsible for compensating the Sub-Adviser(s) for performing any of the
duties delegated to them. The Adviser may request that the Trust pay directly to
the Sub-Adviser(s) the portion of the Adviser's compensation that the Adviser is
obligated to pay to the Sub-Adviser(s).
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If the Trust agrees to such request, it will pay such portion to the
Sub-Adviser(s) on behalf of the Adviser, thereby reducing the compensation paid
to the Adviser by the amount paid directly to the Sub-Adviser(s). However, such
an arrangement will not relieve the Adviser of its responsibility for
compensating the Sub-Adviser(s). In the event that any Sub-Adviser appointed
hereunder is terminated, the Adviser may provide investment advisory services
pursuant to this Agreement through its own employees or through one or more
affiliated companies that are qualified to act as investment advisers under
applicable law and are under common control of Bank of America Corporation or
through other Sub-Adviser(s) as approved by the Trust in accordance with
applicable law.
6. Services Not Exclusive. The services furnished by the Adviser
hereunder are deemed not to be exclusive, and the Adviser shall be free to
furnish similar services to others so long as its provision of services under
this Agreement is 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
Adviser to be suitable for two or more accounts managed by the Adviser, the
available securities or investments may be allocated in a manner believed by the
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 Portfolio or
the size of the position obtainable for or disposed of by a Portfolio. Nothing
in this Agreement shall limit or restrict the right of any of the Adviser's
partners, officers or employees to engage in any other business or to devote his
or her time and attention in part to the management or other aspects of any
business, whether of a similar or dissimilar nature, nor limit or restrict the
Adviser's right to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
7. Delivery of Documents. The Trust has furnished the Adviser with
copies, properly certified or authenticated, of each of the following:
(a) the Trust's Certificate of Trust, as filed with the Secretary of
State of Delaware, and Declaration of Trust (such Declaration of
Trust, as presently in effect and as from time to time amended,
is herein called the "Declaration of Trust");
(b) the Trust's Bylaws, if any;
(c) the most recent prospectus(es) and statement(s) of additional
information relating to each Portfolio (such prospectus(es)
together with the related statement(s) of additional
information, as presently in effect and all amendments and
supplements thereto, are herein called the "Prospectus"); and
(d) any and all applicable policies and procedures approved by the
Board.
The Trust will promptly furnish the Adviser with copies of any and all
amendments of or additions or supplements to the foregoing.
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8. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Adviser hereby agrees that all records that it maintains
for each Portfolio under this Agreement are the property of the Trust and
further agrees to surrender promptly to the Trust any of such records upon
request. The 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.
9. Expenses of the Portfolios. Except to the extent expressly assumed
by the Adviser and except to any extent required by law to be paid or reimbursed
by the Adviser, the Adviser shall have no duty to pay any ordinary operating
expenses incurred in the organization and operation of the Portfolios. Ordinary
operating expenses include, but are not limited to, brokerage commissions and
other transaction charges, taxes, legal, auditing, printing, or governmental
fees, other service providers' fees and expenses, expenses of issue, sale,
redemption and repurchase of shares, expenses of registering and qualifying
shares for sale, expenses relating to Board and shareholder meetings, the cost
of preparing and distributing reports and notices to shareholders and interest
payments and other fees or charges associated with any credit facilities
established by or on behalf of the Portfolios.
10. Compensation. Except as otherwise provided herein, for the services
provided to each Portfolio and the expenses assumed pursuant to this Agreement,
the Trust will pay the Adviser and the Adviser will accept as full compensation
therefor a fee determined in accordance with Schedule I attached hereto;
provided, however, that the compensation paid to the Adviser shall be reduced by
any amount paid by the Trust directly to the Sub-Advisor(s) pursuant to Section
5 of this Agreement. In addition, BAAI or its affiliated persons may receive
compensation or reimbursement of recordkeeping, bookkeeping, accounting,
administrative and transactional fees or charges incurred in connection with any
credit facilities established by or on behalf of the Portfolios. The fees or
charges attributable to each Portfolio shall be a separate charge to such
Portfolio and shall be the several (and not joint or joint and several)
obligation of each such Portfolio. The Trust and the Adviser may, from time to
time, agree to reduce, limit or waive the amounts payable hereunder with respect
to one or more Portfolios for such period or periods they deem advisable.
11. Liability of Adviser. The 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 its duties under 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 Adviser or any of its officers,
directors, employees or agents, in the performance of their duties under this
Agreement, or from reckless disregard by it or obligations and duties under this
Agreement.
12. Term and Approval. This Agreement will become effective as of the
date set forth herein above, and shall continue in effect until the second
anniversary of its effective date. This Agreement will become effective with
respect to each additional Portfolio as of the date set forth on Schedule I when
each such Portfolio is added thereto. The Agreement shall continue in effect for
a Portfolio after the second anniversary of the effective date for successive
annual
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periods ending on each anniversary of such date, provided that the continuation
of the Agreement is specifically approved for the Portfolio at least annually:
(a)(i) by the Board or (ii) by the vote of "a majority of the
outstanding voting securities" of the Portfolio (as defined
in Section 2(a)(42) of the 0000 Xxx); and
(b) by the affirmative vote of a majority of the Trustees of the
Trust who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of a party to this
Agreement (other than as Trustees of the Trust), by votes
cast in person at a meeting specifically called for such
purpose.
13. Termination. This Agreement may be terminated without payment of
any penalty at any time by:
(a) the Trust with respect to a Portfolio, by vote of the Board
or by vote of a majority of a Portfolio's outstanding voting
securities, upon sixty (60) days' written notice to the
Adviser; or
(b) the Adviser with respect to a Portfolio, upon sixty (60)
days' written notice to the Trust.
Any party entitled to notice may waive the notice provided for herein.
This Agreement shall automatically terminate in the event of its assignment,
unless an order is issued by the Commission conditionally or unconditionally
exempting such assignment from the provisions of Section 15(a) of the 1940 Act,
in which event this Agreement shall remain in full force and effect subject to
the terms of such order. For the purposes of this paragraph, the definitions
contained in Section 2(a) of the 1940 Act and the applicable rules under the
1940 Act shall apply.
14. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, except by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to such address as may be
designated for the receipt of such notice. Until further notice, it is agreed
that the address of the Trust shall be c/o Stephens Inc., 000 Xxxxxx Xxxxxx,
Xxxxxx Xxxx, Xxxxxxxx 00000, Attention: Secretary, and that of the Adviser shall
be Xxx Xxxx xx Xxxxxxx Xxxxx, 00xx Xxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxx Xxxxxxxx 00000, Attention: President.
16. Release. The names "Nations Annuity Trust" and "Trustees of Nations
Annuity Trust" refer respectively to the Trust created by the Declaration of
Trust and the Trustees as Trustees but not individually or personally. All
parties hereto acknowledge and agree that any and all liabilities of the Trust
arising, directly or indirectly, under this Agreement will be satisfied solely
out of the assets of the Trust and that no Trustee, officer or shareholder shall
be personally
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liable for any such liabilities. All persons dealing with any Portfolio of the
Trust must look solely to the property belonging to such Portfolio for the
enforcement of any claims against the Trust.
17. Miscellaneous. This Agreement contains the entire understanding of
the parties hereto. Each provision of this Agreement is intended to be
severable. 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.
18. Governing Law. This Agreement shall be governed by, and construed
in accordance with, Delaware law and the federal securities laws, including the
1940 Act and the Advisers Act.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
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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.
NATIONS ANNUITY TRUST
on behalf of the Portfolios
By: /s/ A. Xxx Xxxxxx
---------------------------------
A. Xxx Xxxxxx
President and Chairman of the
Board of Trustees
BANC OF AMERICA ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
President
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SCHEDULE I
The Trust shall pay the Adviser, as full compensation for services
provided and expenses assumed hereunder, an 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 Effective
Portfolio Compensation Date
--------- ------------ ----------
Nations High Yield Bond Portfolio 0.55% 7/3/00
Nations International Value Portfolio 0.90% 7/3/00
Approved: December 9, 1999
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