INVESTMENT SUB-ADVISORY AGREEMENT
COLUMBIA FUNDS VARIABLE INSURANCE TRUST I
THIS AGREEMENT is made as of September 30, 2005, by and between COLUMBIA
MANAGEMENT ADVISORS, LLC (formerly, BANC OF AMERICA CAPITAL MANAGEMENT, LLC), a
Delaware limited liability company (the "Adviser"), MACKAY XXXXXXX LLC, a
Delaware limited liability company (the "Sub-Adviser"), and COLUMBIA FUNDS
VARIABLE INSURANCE TRUST I (formerly NATIONS SEPARATE ACCOUNT TRUST), a Delaware
statutory trust (the "Trust"), on behalf of those series of the Trust now or
hereafter identified on Schedule I (each a "Fund" and collectively, the
"Funds").
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 Sub-Adviser is also registered with the Commission as an
investment adviser under the Advisers Act;
WHEREAS, the Adviser and the Trust have entered into an investment advisory
agreement (the "Investment Advisory Agreement"), pursuant to which the Adviser
manages the investment operations of each Fund and may delegate certain duties
of the Adviser to one or more investment sub-adviser(s); and
WHEREAS, the Adviser, with the approval of the Board of Trustees of the
Trust (the "Board"), including a majority of the Trustees who are not
"interested persons" (defined herein) of any party to this Agreement, desires to
delegate to the Sub-Adviser the duty to manage the portfolio investments of the
Funds;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT OF SUB-ADVISER. The Adviser hereby appoints the Sub-Adviser
and the Sub-Adviser hereby agrees to manage the portfolio investments of each
Fund subject to the terms of this Agreement and subject to the supervision of
the Adviser and the Board.
2. SERVICES OF SUB-ADVISER. The Sub-Adviser shall perform all services
necessary for the management of the portfolio investments of each Fund,
including but not limited to:
(a) Managing the investment and reinvestment of all assets, now or
hereafter acquired by each Fund, including determining what
securities and other
-1-
investments are to be purchased or sold for each Fund and
executing transactions accordingly;
(b) Transmitting trades to each Fund's custodian for settlement in
accordance with each Fund'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, or making determinations under authority
delegated by the Adviser or the Trust, as to the manner in which
voting rights, rights to consent to Fund action and any other
rights pertaining to each Fund's portfolio securities shall be
exercised;
(e) Making recommendations to the Adviser and the Board with respect
to Fund investment policies and procedures, and carrying out such
investment policies and procedures as are approved by the Board
or by the Adviser under authority delegated by the Board to the
Adviser;
(f) Supplying reports, evaluations, analyses, statistical data and
information to the Adviser, the Board or to the Funds' officers
and other service providers as the Adviser or 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 books and records with respect to the investment
decisions and securities transactions for each Fund required by
applicable law;
(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 the
Investment Advisory Agreement or as the Board may reasonably
request from time to time.
3. RESPONSIBILITIES OF SUB-ADVISER. In carrying out its obligations under
this Agreement, the Sub-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 Fund 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;
-2-
(c) The Sub-Adviser acknowledges that the Funds may engage in
transactions with certain investment sub-advisers in the Columbia
Funds Family (and their affiliated persons) in reliance on
exemptions under Rule 10f-3, Rule 12d3-1, Rule 17a-10 and Rule
17e-1 under the 1940 Act. Accordingly, the Sub-Adviser hereby
agrees that it will not consult with any other investment
sub-adviser of a Columbia Fund in the Columbia Funds Family
concerning transactions for a Fund in securities or other
investments, other than for purposes of complying with the
conditions of Rule 12d3-1(a) and (b). With respect to a Fund with
one or more investment sub-advisers in addition to the
Sub-Adviser, the Sub-Adviser shall be limited to providing
investment advice only with respect to the portion of the Fund's
assets as the Adviser may determine from time to time, and shall
not consult with any other investment sub-adviser to the Fund
that is a principal underwriter or an affiliated person of a
principal underwriter concerning transactions for the Fund in
securities or other investments.
(d) Not make loans to any person for the purpose of purchasing or
carrying Fund shares;
(e) Place, or arrange for the placement of, all orders pursuant to
its investment determinations for the Funds either directly with
the issuer or with any broker or dealer (including any affiliated
broker or dealer). In executing portfolio transactions and
selecting brokers or dealers, the Sub-Adviser will use its best
efforts to seek on behalf of each Fund the best overall terms
available. In assessing the best overall terms available for any
transaction, the Sub-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 Sub-Adviser may also
consider whether such broker or dealer furnishes research and
other information or services to the Sub-Adviser;
(f) Adhere to the investment objective, strategies and policies and
procedures of the Trust adopted on behalf of each Fund; and
(g) Meet the service level performance standards that the parties may
agree to from time to time.
4. CONFIDENTIALITY OF INFORMATION. Each party agrees that it will treat
confidentially all information provided by another party regarding such other
party's business and operations, including without limitation the investment
activities or holdings of a Fund. 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
-3-
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. SERVICES NOT EXCLUSIVE. The services furnished by the Sub-Adviser
hereunder are deemed not to be exclusive, and the Sub-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
Sub-Adviser to be suitable for two or more accounts managed by the Sub-Adviser,
the available securities or investments may be allocated in a manner believed by
the Sub-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. DELIVERY OF DOCUMENTS. The Trust will provide the Sub-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 Fund (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 Sub-Adviser with copies of any and all
amendments of or additions or supplements to the foregoing.
7. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records that it
maintains for each Fund under this Agreement are the property of the Trust and
further agrees to surrender promptly to the Trust or the Adviser any of such
records upon request. The Sub-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.
8. EXPENSES OF THE FUNDS. Except to the extent expressly assumed by the
Sub-Adviser and except to any extent required by law to be paid or reimbursed by
the Sub-Adviser, the Sub-Adviser shall have no duty to pay any ordinary
operating expenses incurred in the organization and operation of the Funds.
Ordinary operating expenses include, but are not limited to, brokerage
commissions and other transaction charges, taxes, legal, auditing, printing,
-4-
or governmental fees, other Fund service providers' fees and expenses, including
those related to third party pricing of portfolio securities, expenses of issue,
sale, redemption and repurchase of shares, expenses of registering and
qualifying shares for sale, expenses relating to Board and shareholder meetings,
and the cost of preparing and distributing reports and notices to shareholders.
The Sub-Adviser shall pay all other expenses directly incurred by it in
connection with its services under this Agreement.
9. COMPENSATION. Except as otherwise provided herein, for the services
provided to each Fund and the expenses assumed pursuant to this Agreement, the
Adviser will pay the Sub-Adviser and the Sub-Adviser will accept as full
compensation therefor a fee determined in accordance with Schedule I attached
hereto. It is understood that the Adviser shall be solely responsible for
compensating the Sub-Adviser for performing any of the duties delegated to the
Sub-Adviser and the Sub-Adviser agrees that it shall have no claim against the
Trust or any Fund with respect to compensation under this Agreement. To the
extent that the advisory fee that the Trust would be obligated to pay to the
Adviser with respect to a Fund pursuant to the Investment Advisory Agreement is
reduced or reimbursed, the fee that the Sub-Adviser would otherwise receive
pursuant to this Agreement shall be reduced or reimbursed proportionately.
10. LIABILITY OF SUB-ADVISER. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Adviser or
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, from willful misfeasance, bad faith or
negligence on the part of the Sub-Adviser or any of its officers, directors or
employees, in connection with the performance of their duties under this
Agreement, from reckless disregard by it or its officers, directors or employees
of any of their obligations and duties under this Agreement, or from any
violations of securities laws, rules, regulations, statutes and codes, whether
federal or state, by the Sub-Adviser or any of its officers, directors or
employees.
11. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Funds and the Adviser from and against any and all direct or indirect claims,
losses, liabilities or damages (including reasonable attorney's fees and other
related expenses) resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services, from willful misfeasance, bad faith or
negligence on the part of the Sub-Adviser or any of its officers, directors, or
employees, in connection with the performance of their duties under this
Agreement, from reckless disregard by it or its officers, directors, or
employees of any of their obligations and duties under this Agreement, or
resulting from any violations of securities laws, rules, regulations, statutes,
and codes, whether federal or state, by the Sub-Adviser or any of its officers,
directors, or employees; provided, however, that the Sub-Adviser shall not be
required to indemnify or otherwise hold the Funds or the Adviser harmless under
this Section 11 where the claim against, or the loss, liability, or damage
experienced by the Funds or the Adviser, is caused by or is otherwise directly
related to the Funds' or the Adviser's own willful misfeasance, bad faith or
negligence, or to the reckless disregard by the Funds or the Adviser of their
duties under this Agreement.
-5-
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 Fund as of the date set forth on Schedule I when each
such Fund is added thereto. The Agreement shall continue in effect for a Fund
after the second anniversary of the effective date for successive annual periods
ending on each anniversary of such date, provided that the continuation of the
Agreement is specifically approved for the Fund at least annually:
(a)(i) by the Board or (ii) by the vote of "a majority of the
outstanding voting securities" of the Fund (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 Fund, by vote of the Board or by vote
of a majority of a Fund's outstanding voting securities, upon
sixty (60) days' written notice to the other parties to this
Agreement; or
(b) the Adviser or the Sub-Adviser with respect to a Fund, upon 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, 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. CODE OF ETHICS. The Sub-Adviser represents that it has adopted a
written code of ethics complying with the requirements of Rule 17j-1 under the
1940 Act and will provide the Adviser or the Trust with a copy of such code, any
amendments or supplements thereto, and its policies and/or procedures
implemented to ensure compliance therewith.
15. INSURANCE. The Sub-Adviser shall maintain for the term of this
Agreement and provide evidence thereof to the Trust or the Adviser a blanket
bond and professional liability (error and omissions) insurance in an amount
reasonably acceptable to Adviser.
16. REPRESENTATIONS AND WARRANTIES. Each party to this Agreement represents
and warrants that the execution, delivery, and performance of its obligations
under this Agreement
-6-
are within its powers, have been duly authorized by all necessary actions and
that this Agreement constitutes a legal, valid, and binding obligation
enforceable against it in accordance with its terms. The Sub-Adviser further
represents and warrants that it is duly registered as an investment adviser
under the Advisers Act.
17. 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.
18. 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 Xxx Xxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, 00000, Attention: Secretary, that of the Adviser shall be Xxx
Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000, Attention: President, and that
of the Sub-Adviser shall be MacKay Xxxxxxx LLC, 0 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: General Counsel. The Sub-Adviser agrees to promptly
notify the Adviser and the Trust in writing of the occurrence of any event which
could have a material impact on the performance of its duties under this
Agreement, including but not limited to (i) the occurrence of any event which
could disqualify the Sub-Adviser from serving as an investment adviser pursuant
to Section 9 of the 1940 Act; (ii) any material change in the Sub-Adviser's
business activities; (iii) any event that would constitute a change in control
of the Sub-Adviser; (iv) any change in the portfolio manager or portfolio
management team of a Fund; (v) the existence of any pending or threatened audit,
investigation, examination, complaint or other inquiry (other than routine
audits or regulatory examinations or inspections) relating to any Fund; and (vi)
any material violation of the Sub-Adviser's code of ethics.
19. RELEASE. The names "Columbia Funds Variable Insurance Trust I" and
"Trustees of Columbia Funds Variable Insurance Trust I" 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 liable for any such
liabilities. All persons dealing with any Fund of the Trust must look solely to
the property belonging to such Fund for the enforcement of any claims against
the Trust.
20. 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.
21. 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.
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
-7-
23. USE OF THE NAME "COLUMBIA FUNDS". The Sub-Adviser agrees that it will
not use the name "Columbia Funds", any derivative thereof, or the name of the
Adviser, the Trust, or any Fund except in accordance with such policies and
procedures as may be mutually agreed to in writing.
-8-
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.
COLUMBIA FUNDS VARIABLE INSURANCE
TRUST I
on behalf of the Funds
By: /s/ Xxxxxxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxxxxxx X. Xxxxxx
President
COLUMBIA MANAGEMENT ADVISORS, LLC
By: /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
Executive Vice President
MACKAY XXXXXXX LLC
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
-9-
SCHEDULE I
The Adviser shall pay the Sub-Adviser as, full compensation for services
provided and expenses assumed hereunder, a sub-advisory fee for each Fund,
computed daily and payable monthly at the annual rates listed below as a
percentage of the average daily net assets of the Fund:
FUND RATE OF COMPENSATION EFFECTIVE DATE
---- --------------------------- --------------
Columbia High Yield Fund, Variable Series 0.40% of average daily net 7/03/00
assets up to and including
$100 million; 0.375% of
average daily net assets in
excess of $100 million and
up to and including $200
million; and 0.35% of
average daily net assets in
excess of $200 million
Current as of the 2nd day of October, 2006.
COLUMBIA FUNDS VARIABLE INSURANCE TRUST
I on behalf of the Funds
By: /s/ Xxxxxxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxxxxxx X. Xxxxxx
President
COLUMBIA MANAGEMENT ADVISORS, LLC
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxxx
Managing Director
MACKAY XXXXXXX LLC
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior Managing Director
-10-
