INVESTMENT SUB-ADVISORY AGREEMENT
NATIONS ANNUITY TRUST
THIS AGREEMENT is made as of this 12th day of April, 2001, by and
between BANC OF AMERICA ADVISORS, LLC, a North Carolina limited liability
company (the "Adviser"), XXXXXXX CAPITAL MANAGEMENT, LLC, a Delaware limited
liability corporation (the "Sub-Adviser"), and NATIONS ANNUITY TRUST, a Delaware
business trust (the "Trust"), 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 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 Portfolio 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
Portfolios;
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
Portfolio 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 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;
-1-
(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, or making determinations under authority
delegated by the Adviser or the Trust, 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;
provided, however, that the Sub-Adviser shall be given reasonable prior
notice should the Adviser or the Trust determine to direct the
Sub-Adviser in its exercise of such rights;
(e) Making recommendations to the Adviser and the Board with respect to
Portfolio 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 within its possession or control to the Adviser, the Board
or to the Portfolios' 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 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 reasonably determines to be
necessary 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
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;
-2-
(c) Not make loans to any person for the purpose of purchasing or carrying
Portfolio interests;
(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 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 Portfolio 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; and
(e) Adhere to the investment objective, strategies, policies and procedures
of the Trust adopted on behalf of each Portfolio.
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 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. 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
Portfolio or the size of the position obtainable for or disposed of by a
Portfolio.
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
-3-
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 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 Portfolio 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 Portfolios. 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 Portfolios.
Ordinary operating expenses include, but are not limited to, brokerage
commissions and other transaction charges, taxes, legal, auditing, printing, or
governmental fees, other Portfolio 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 and the cost of preparing and distributing reports and
notices to shareholders. The Sub-Adviser shall pay all other expenses incurred
by it in connection with its services under this Agreement.
9. Compensation. Except as otherwise provided herein, for the services provided
to each Portfolio 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 Portfolio with respect to compensation under this Agreement.
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,
employees or agents, in connection with the performance of their duties under
this Agreement, from reckless
-4-
disregard by it or its officers, directors, employees or agents 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, employees or agents.
11. 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 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.
12. 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 other parties to this Agreement;
or
(b) the Adviser or the Sub-Adviser with respect to a Portfolio, 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.
-5-
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 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 c/o Stephens Inc., 000 Xxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx
00000, Attention: Secretary, that of the Adviser shall be Xxx Xxxx xx Xxxxxxx
Xxxxx, 00xx Xxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000,
Attention: President, and that of the Sub-Adviser shall be 0000 00xx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxx. 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
of a Portfolio; (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 Portfolio; and
(vi) any material violation of the Sub-Adviser's code of ethics.
19. 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 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.
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.
-6-
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.
23. Use of the Name "Marsico". Sub-Adviser hereby consents to and grants a
non-exclusive license for the use by the Trust to the phrase "Xxxxxxx Capital",
the identifying word "Marsico" in the name of the Portfolios and any logo or
symbol authorized by the Sub-Adviser. Such consent is conditioned upon the
Trust's employment of Sub-Adviser or its affiliates as sub-investment adviser to
the Portfolios. Sub-Adviser may from time to time use the phrase "Xxxxxxx
Capital" or the identifying word "Marsico" or logos or symbols used by
Sub-Adviser in other connections and for other purposes, including without
limitation in the names of other investment companies, corporations or
businesses that it may manage, advise, sponsor or own or in which it may have a
financial interest. Sub-Adviser may require the Trust to cease using the phrase
"Xxxxxxx Capital" or the identifying word "Marsico" in the name of the
Portfolios or any logo or symbol authorized by Sub-Adviser if the Trust ceases
to employ Sub-Adviser or an affiliate thereof as sub-investment adviser.
24. Use of the Name "Nations Funds". The Sub-Adviser agrees that it will not use
the name "Nations Funds", any derivative thereof, or the name of the Adviser,
the Trust or any Portfolio except in accordance with such policies and
procedures as may be mutually agreed to in writing. The parties hereto agree
that the Sub-Adviser shall be permitted to include in its promotional or
marketing literature statements to the effect that it manages the portfolio
investments of any Nations Fund(s) with respect to which it serves as investment
sub-adviser.
-7-
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, LLC
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
President
XXXXXXX CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Xxxxxxx X. Xxxxx
President and General Counsel
-8-
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
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 Effective Date
--------- ------------ --------------
Nations Marsico Focused Equities Portfolio 0.45% 04/12/01
Nations Xxxxxxx Growth & Income Portfolio 0.45% 04/12/01
Nations Marsico International Opportunities Portfolio 0.45% 05/01/01
Nations Marsico 21st Century Portfolio 0.45% 05/01/01
Approved: August 23, 2000
Last updated: May 1, 2001
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the 1st day of May, 2001.
NATIONS SEPARATE ACCOUNT TRUST
(formerly 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, LLC
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
President
XXXXXXX CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Xxxxxxx X. Xxxxx
President and General Counsel
-9-
