SUB-ADVISORY AGREEMENT
NATIONS ANNUITY TRUST
THIS AGREEMENT is made this 25th 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 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:
(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. 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.
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7. 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.
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(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 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.
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 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.
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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 (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.
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, 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.
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 Sub-Adviser and the Adviser respectively shall be 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 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.
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17. Counterparts. This Agreement may be executed in any manner of
counterparts, each of which shall be deemed an original.
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:/s/ A. Xxx Xxxxxx
-----------------------------------
A. Xxx Xxxxxx
President and Chairman of the
Board of Trustees
NATIONSBANC ADVISORS, INC.
By:/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
Senior Vice President and Chief
Operating Officer
GARTMORE GLOBAL PARTNERS
By:/s/ Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx
Senior Vice President
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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: December 9, 1997
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
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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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