INVESTMENT SUB-ADVISORY AGREEMENT
NATIONS MASTER INVESTMENT TRUST
THIS AGREEMENT is made as of January 1, 2003, by and between BANC OF
AMERICA CAPITAL MANAGEMENT, LLC, a North Carolina limited liability company (the
"Adviser"), MACKAY XXXXXXX LLC, a Delaware limited liability company (the
"Sub-Adviser"), and NATIONS MASTER INVESTMENT TRUST, a Delaware statutory trust
(the "Trust"), on behalf of those series of the Trust now or hereafter
identified on Schedule I (each a "Master Portfolio" and collectively, the
"Master 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 Master 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
Master 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 Master 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
Master Portfolio, including but not limited to:
(a) Managing the investment and reinvestment of all
assets, now or hereafter acquired by each Master
Portfolio, including determining what securities
-1-
and other investments are to be purchased or sold for
each Master Portfolio and executing transactions
accordingly;
(b) Transmitting trades to each Master Portfolio's
custodian for settlement in accordance with each
Master Portfolio's procedures and as may be directed
by the Trust;
(c) Assisting in the preparation of all shareholder
communications, including shareholder reports, and
participating in shareholder relations;
(d) Making recommendations as to the manner in which
voting rights, rights to consent to Master Portfolio
action and any other rights pertaining to each Master
Portfolio's portfolio securities shall be exercised;
(e) Making recommendations to the Adviser and the Board
with respect to Master 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 to the Adviser, the Board or to
the Master 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 books and records with respect to the
investment decisions and securities transactions for
each Master Portfolio 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 Master 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 Master Portfolio shares;
(d) Place, or arrange for the placement of, all orders
pursuant to its investment determinations for the
Master 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 Master 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;
(e) Adhere to the investment objective, strategies and
policies and procedures of the Trust adopted on
behalf of each Master Portfolio; and
(f) 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 Master 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 Master Portfolio or the size of the position obtainable for or
disposed of by a Master Portfolio.
-3-
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 most recent prospectus(es) and statement(s) of
additional information relating to each Master
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
(c) 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 Master 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 MASTER 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 Master Portfolios. Ordinary operating expenses include, but are not
limited to, brokerage commissions and other transaction charges, taxes, legal,
auditing, printing, or governmental fees, other Master Portfolio 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 Master 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 Master Portfolio 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
-4-
Master Portfolio 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 Master Portfolios 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 Master
Portfolios or the Adviser harmless under this Section 11 where the claim
against, or the loss, liability or damage experienced by the Master Portfolios
or the Adviser, is caused by or is otherwise directly related to the Master
Portfolios' or the Adviser's own willful misfeasance, bad faith or negligence,
or to the reckless disregard by the Master Portfolios or the Adviser of their
duties under this Agreement.
12. TERM AND APPROVAL. This Agreement will become effective as of
the date set forth herein above, and shall continue in effect until the second
anniversary of its effective date. This Agreement will become effective with
respect to each additional Master Portfolio as of the date set forth on Schedule
I when each such Master Portfolio is added thereto. The Agreement shall continue
in effect for a Master 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
Master Portfolio at least annually:
(a)(i) by the Board or (ii) by the vote of "a majority of
the outstanding voting securities" of the Master
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
-5-
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 Master Portfolio, by vote
of the Board or by vote of a majority of a Master
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
Master 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.
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 Xxx Xxxx xx Xxxxxxx Xxxxx, 00xx Xxxxx,
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Secretary,
that of the Adviser shall be Xxx Xxxx xx Xxxxxxx Xxxxx, 00xx Xxxxx, 000 Xxxxx
Xxxxx
-0-
Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 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 Master 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
Master Portfolio; and (vi) any material violation of the Sub-Adviser's code of
ethics.
19. RELEASE. The names "Nations Master Investment Trust" and
"Trustees of Nations Master Investment 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 Master Portfolio of the Trust must
look solely to the property belonging to such Master 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.
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 "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 Master Portfolio except in accordance with such
policies and procedures as may be mutually agreed to in writing.
-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 MASTER INVESTMENT TRUST
on behalf of the Master Portfolios
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
President
BANC OF AMERICA CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
Senior Vice President
MACKAY XXXXXXX LLC
By: /s/ Xxxxxx X. Nisi
-----------------------------------
Xxxxxx X. Nisi
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
Master Portfolio, computed daily and payable monthly at the annual rates listed
below as a percentage of the average daily net assets of the Master Portfolio:
RATE OF
MASTER PORTFOLIO COMPENSATION EFFECTIVE DATE
---------------- ------------ --------------
Nations High Yield Bond Master Portfolio 0.40% of average daily net assets up to and 2/14/00
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
Approved: November 21, 2002
-9-
