SUB-ADVISORY AGREEMENT
NATIONS MASTER INVESTMENT TRUST
THIS AGREEMENT is made this 19th day of August, 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 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 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.
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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 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 be 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 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.
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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
(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.
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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 Adviser shall be c/o
Mutual Fund Group, 33rd Floor, Xxx Xxxx xx Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000, Fax No. (000) 000-0000.
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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.
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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: /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
President
GARTMORE GLOBAL PARTNERS
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Xxxxx Xxxxxxx
Member of 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 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 under
the Sub-Adviser's management:
Master Portfolio Rate of Compensation
1. Nations International Equity Master 0.70% of average daily net assets
Portfolio
Approved March 31, 1999
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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 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.
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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.
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 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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