FORM OF
SUB-ADVISORY AGREEMENT
NATIONS MASTER INVESTMENT TRUST
THIS AGREEMENT is made this 21st day of May, 1999, 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 MASTER INVESTMENT 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 "Master Portfolio" and
collectively, the "Master Portfolios").
RECITALS
WHEREAS, the Trust is a Delaware business trust registered under
the Investment Trust Act of 1940, as amended (the "1940 Act") as an open-end,
series management investment company; and
WHEREAS, the Adviser is a national bank that serves as investment
adviser to other registered investment companies and various investment
accounts; and
WHEREAS, the Sub-Adviser is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as an investment adviser
and engages in the business of acting 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; and
WHEREAS, the Adviser and the Trust have entered into an Investment
Advisory Agreement (the "Investment Advisory Agreement"), pursuant to which the
Adviser shall act as investment adviser with respect to the Master 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 Master 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 some portion or
all of the assets of the Master Portfolios as the Adviser may determine from
time to time, under the supervision of the Adviser and subject to
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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 Master Portfolios specifically, and whether concerning the
individual issuers whose securities are included in the Master
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 Master Portfolios;
(b) investing and reinvesting, on an ongoing basis, assets
held in the Master Portfolios in strict accordance with the investment
policies of the Master Portfolios as set forth in the registration
statement of the Trust with respect to the Master 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 Master 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 Master
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 Master 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 Master Portfolio and shall not act as principal. The Sub-Adviser shall not
be responsible for the administration of the Master 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 Master 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 Master Portfolios,
shall at all times be subject to any directives of the
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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 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 Master Portfolios, as the same may be amended
from time to time, under the Securities Act of 1933 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
Master 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 Master Portfolios shall
be determined in the manner set forth in the Articles of Incorporation and
registration statement of the Trust, as amended from time to time.
6. EXPENSES OF THE MASTER PORTFOLIOS. All of the ordinary business
expenses incurred by the Sub-Adviser in the operations of the Master Portfolios
and the offering of their shares shall be borne by the Master Portfolios unless
specifically provided otherwise in this
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Agreement. These expenses borne by the Master 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, Trustees and shareholder meetings, the cost of preparing
and distributing reports and notices to shareholders, the fees and other
expenses incurred by the Master 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 Master Portfolios'
shareholders.
7. EXPENSE LIMITATION. If, for any fiscal year a Master Portfolio,
the amount of the aggregate advisory fee which the Trust would otherwise be
obligated to pay with respect to the Master 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 Master 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 Master Portfolios, the documents and records
required pursuant to Rule 31a-1 under the 1940 Act as well as such records as
the Master 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 Master
Portfolios and in compliance with the provisions of Rule 31a-1. All such records
will be the property of the Master Portfolios and will be available for
inspection and use by the Master Portfolios. The Sub-Adviser will promptly
notify the Adviser and the Master 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 until the second anniversary of its
effective date. Thereafter, if not terminated, this Agreement shall continue in
effect for successive annual periods ending on January 1, 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 Master
Portfolio (as defined in Section 2(a)(42) of the 0000 Xxx); and
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(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 Master Portfolio, without the payment of any penalty, by vote of
the Trust's Board of Trustees or by vote of a majority of the Master 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 Master 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 Master 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 Master 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 Master Portfolios or
other securities, undertaken by the Master 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 Master 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 the Sub-Adviser shall be Xxxxxxxx Xxxxx, 00-00 Xxxxxxxx Xxxxxx, Xxxxxx
XX0X 0XX, Xxxxxxx, Fax No. 00-000-0000; and that of the
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Adviser shall be c/o Mutual Fund Group, 33rd Floor, Xxx Xxxx xx Xxxxxxx 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 Securities and
Exchange 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 Securities and Exchange
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 MASTER INVESTMENT TRUST,
on behalf of the Master Portfolios
By:
A. Xxx Xxxxxx
President and Chairman of the
Board of Trustees
NATIONSBANC ADVISORS, INC.
By:
Xxxxxx X. Xxxxxx
President
GARTMORE GLOBAL PARTNERS
By:
Xxxxxx X. Xxxxx
Member, Management Committee
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SCHEDULE I
The Adviser shall pay the Sub-Adviser as full compensation for services
provided and expenses assumed hereunder, a sub-advisory fee for each Fund,
computed daily and payable monthly at the annual rates listed below as a
percentage of the average daily net assets of the Fund under the Sub-Adviser's
management:
Master Portfolio Rate of Compensation
---------------- --------------------
1. Nations International Equity Master 0.70% of average daily net assets
Portfolio
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ADDENDUM A
1. To the extent that the Sub-Adviser receives any commissions or other forms
of remuneration, directly or indirectly, in connection with Master
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 Master 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 Securities Act of 1933 and
the 1940 Act (the "Master Portfolio's Registration Statement").
3. The Sub-Adviser shall not have or maintain custody of any securities, cash
or other assets of the Master Portfolios. Custody of the Master Portfolios'
assets will be maintained by the custodian bank pursuant to an agreement
approved by the Master 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 Master 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 Master 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
Master Portfolio 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 Master Portfolios' Board of Trustees
written financial reports and analyses on the Master 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 Master 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 Master 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 Master Portfolio, or (iii) a provision of this
Agreement or (b) is
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not operationally feasible), such refusal shall be
communicated by the Sub-Adviser, including through the Adviser, and the
Master 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 Master Portfolio's
Board of Trustees for its approval.
7. Notwithstanding that all required disclosure concerning the risks
associated with the Master Portfolios' permissible investments and
investment techniques is included in the Master Portfolios' Registration
Statement, which Statement is intended for review by the investors in the
Master Portfolios and to be retained by them for future reference, with
respect to the Master 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 Master Portfolios' assets, the Sub-Adviser shall
consider the risks associated with the Master Portfolio's permissible
investments and investment techniques.
8. The Sub-Adviser or its representatives may from time to time recommend to
the Master Portfolios or effect on behalf of the Master Portfolios with
respect to Master 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
Master 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 Master Portfolio has
carefully read the following paragraphs in order to enable Master Portfolio
management to judge whether it wishes a Master 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 Master Portfolio without further reference to
Master Portfolio management or whether Master Portfolio management wishes
to be consulted before any particular transaction is effected on behalf of
the Master 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.
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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.
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 Master Portfolios' financial statements (including
the contents and valuation of the Master Portfolios) shall be submitted to
shareholders and to the Securities and Exchange 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 Master 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 Master 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 Master Portfolios as a sub-investment
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 Master
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 Master 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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