EXHIBIT 99.B5(c)
SUB-ADVISORY AGREEMENT
NATIONS ANNUITY TRUST
THIS AGREEMENT is made this ___ day of February, 1998, by
and among 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 NATION
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:
(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 of 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
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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.
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. Expenses of the Funds. 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, directors and shareholder meetings, the cost of preparing and
distributing reports and notices to
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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.
7. Expense Limitation. If, for any fiscal year 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.
8. 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.
9. 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 reasonably requests 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 inspection and use by the
Portfolios. The Sub-Adviser will promptly notify the Adviser and the
Portfolio's administrator if it experiences any difficulty in providing
the records in an accurate and complete manner.
10. Term and Approval. This Agreement shall become
effective when approved, and shall continue in effect for a period of
two years from the date first written above. This Agreement shall
thereafter continue from year to year, provided that the continuation of
the Agreement is specifically approved at least annually:
(a) (i) by the Trust's Board of Trustees 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.
11. 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
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of a majority of the Portfolio's outstanding voting securities, 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. This Agreement shall automatically terminate 120 days
after its effectiveness if the Portfolio's shareholders have not
ratified and approved it within such period. The Agreement shall
automatically terminate upon the effectiveness of a Sub-Advisory
Agreement between the Trust on behalf of the Portfolio and Gartmore
Global Partners.
12. 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. For purposes of this paragraph and
paragraph 13, brokers or dealers selected to execute portfolio
transactions for the Portfolio in accordance with Paragraph 2(c) hereof
shall not be considered agents of the Sub-Adviser.
13. 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, directors, 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, directors, employees or affiliates.
14. 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 the Sub-Adviser shall be Xxxxxxxx Xxxxx, 00-00 Xxxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX, Xxxxxxx, Fax No. 00-000-0000; and that of the Adviser
shall be c/o Mutual Fund Group, 00xx Xxxxx, Xxx XxxxxxxXxxx Xxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Fax No. (000) 000-0000.
15. 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
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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.
16. 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.
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
NATIONSBANC ADVISORS, INC.
By:
--------------------------------
Xxxx X. Xxxxxxxxxx
President and Director
GARTMORE GLOBAL PARTNERS
By:
--------------------------------
Xxxxxxx X. Xxxxx XX
President
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SCHEDULE I
Fund Rate of Compensation
1. Nations International Growth Portfolio 0.70% of average daily net assets
Approved: December 9, 1997
ADDENDUM A
1. 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.
2. 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 "Fund's Registration Statement").
3. 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 Portfolios' 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.
4. In the event the Portfolios or the Adviser has 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-one (21) days, the
Sub-Adviser must so advise IMRO and the Portfolios also must be
advised that it has the right to issue its complaint directly with a
referee appointed by IMRO.
5. The Sub-Adviser will provide to the Portfolios' 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 requested by the Board of
Trustees. Such reports and analyses shall include information as at
the last day of an applicable reporting period.
6. 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 investment 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
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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
Portfolio's Board of Trustees for its approval.
7. Notwithstanding that all required disclosure concerning the risks
associated with the Portfolios' permissible investments and
investment techniques is included in the Portfolios' 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, the following shall be specifically noted herein:
"Options and futures markets can be highly volatile and
transactions of this type carry a high risk of loss. Moreover, a
relatively small adverse market movement with respect to these
types of transactions may result not only in loss of the
original investment but also in unquantifiable further loss
exceeding any margin deposited."
Further, in managing the Portfolios' assets, the Sub-Adviser shall
consider the risks associated with the Portfolio's permissible
investments and investment techniques.
8. The Sub-Adviser or its representatives may from time to time
recommend to the Portfolios or effect on behalf of the Portfolios with
respect to Portfolio transactions in securities the subject of a recent
new issue, the price of which transactions may have been influenced by
bids made or transactions effected for the purpose of stabilizing the
price of those securities. Such transactions would at all times be
effected in accordance with the provisions of IMRO Rule 14 and, in
particular, with the conditions of the IMRO Rule 14.02, including the
requirement that the Sub-Adviser, with respect to any specific
transaction, communicate to the Portfolio orally or in writing a
statement in a form substantially similar to that which is set forth in
IMRO Rule 14.02(c). In addition, with respect to these transactions, it
is understood when executing this Agreement and thereafter when
approving the continuance of this Agreement in accordance with its
terms, that management of the Portfolio has carefully read the
following paragraphs in order to enable Fund management to judge
whether it wishes a Portfolio's assets to be invested at all in such
securities or, if so, whether it wishes to authorize the Sub-Adviser
generally to effect transactions in such securities on behalf of the
Fund without further reference to Portfolio management or whether
Portfolio management wishes to be consulted before any particular
transaction is effected on behalf of the Portfolio.
Stabilization is a process whereby the market price of a security is
pegged or fixed during the period in which a new issue of securities is
sold to the public. Stabilization may take place in the new issue or in
other securities related to the new issue in such a way that the price
of the other securities may affect the price of the new issue or vice
versa.
The reason stabilization is permitted is that when a new issue is
brought to market the sudden glut will sometimes force the price lower
for a period of time before buyers are found for the securities on
offer.
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As long as it obeys a strict set of rules, the "stabilizing manager,"
normally the issuing house chiefly responsible for bringing a new issue
to market, is entitled to buy securities in the market that it has
previously sold to investors or allotted to institutions who were
included in the new issue but who have decided not to continue
participating. The effect of this may be to keep the price at a higher
level than would otherwise be the case during the period of
stabilizing.
The rules referred to above in the immediately preceding paragraph
limit the period in which the stabilizing manager may stabilize, fix
the price at which it may stabilize (in the case of shares and warrants
but not bonds), and require the stabilizing manager to disclose that it
may be (but not that it is) stabilizing. The fact that a new issue or a
related security is being stabilized does not in itself mean that
investors are not interested in the issue, but neither should the
existence of transactions in an issue where the stabilizing may take
place be relied upon as an indication that investors are interested in
the new issue or interested in purchasing at the price at which
transactions are taking place.
9. A report containing the Portfolios' financial statements (including
the contents and valuation of the Funds) shall be submitted to
shareholders and to the Commission at least semi-annually. Such reports
shall include information as at the last day of any semi-annual period
for which such reports relate. To the extent that any performance
information is included in such report, it shall conform to the
standards set forth in the Portfolios' Registration Statement.
10. 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 6.01 of Chapter IV of the IMRO Rules.
11. Upon termination of the Sub-Advisory Agreement by and among the
Trust, the Adviser and the Sub-Adviser, unless otherwise directed by
the Portfolio'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.
12. 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 Securities and Investment Board 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.
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