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Exhibit (d)(7)
INTERIM
INVESTMENT SUB-ADVISORY AGREEMENT
This Agreement is made as of October 6, 2000, by and between XXXXXXXXXX
XXXXXX & COMPANY LLC, a Pennsylvania limited liability company (the "Advisor"),
and XXXXXXX PARTNERS, INC., a Delaware corporation (the "Sub-Advisor").
WHEREAS, Governor Funds, a Delaware business trust (the "Trust"), is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, pursuant to an Interim Investment Advisory Agreement dated as
of October 6, 2000, by and between the Trust and the Advisor (the "Advisory
Agreement"), the Advisor has agreed to furnish investment advisory services to
the Trust with respect to each of its investment portfolios; and
WHEREAS, the Advisory Agreement expressly authorizes the Advisor to
employ or associate itself with one or more investment sub-advisers provided
that the retention of any such sub-adviser shall be approved in accordance with
the provisions of the 1940 Act; and
WHEREAS, the Advisor desires to appoint the Sub-Advisor as investment
sub-adviser to the International Equity Fund, an investment portfolio of the
Trust, and to each additional investment portfolio of the Trust as may from time
to time be identified on Schedule A hereto (each, a "Fund," collectively, the
"Funds"), and the Sub-Advisor wishes to accept such appointment; and
WHEREAS, the Sub-Advisor has been providing advisory services to the
Trust under a separate agreement, which terminated as of the date hereof in
connection with a change in control involving Advisor, and will continue as
investment sub-advisor provided the conditions of Rule 15a-4 under the 1940 Act
are met;
WHEREAS, the Board of Trustees of the Trust has approved this Agreement
and the appointment of the Sub-Advisor as investment sub-adviser to such Fund.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
SECTION 1. APPOINTMENT. The Advisor hereby appoints the Sub-Advisor to
act as investment sub-adviser to the Funds for the period and on the terms set
forth in this Agreement. The Sub-Advisor accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
Additional investment portfolios may from time to time be added to those
covered by this Agreement by the parties executing a new Schedule A which shall
become effective upon its execution and shall supersede any Schedule A having
an earlier date.
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SECTION 2. DELIVERY OF DOCUMENTS. The Trust or Advisor has furnished
the Sub-Advisor 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 on September 3, 1998, as amended or
restated to the date hereof;
(b) the Trust's Declaration of Trust, as amended or restated to
the date hereof (such Declaration, as presently in effect and as it
shall from time to time be amended and restated, is herein called the
"Declaration of Trust");
(c) the Trust's By-Laws and any amendments thereto;
(d) resolutions of the Trust's Board of Trustees authorizing the
appointment of the Sub-Advisor and approving this Agreement;
(e) the Trust's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange Commission on
October 1, 1998 and all amendments thereto;
(f) all of the Trust's procedures and guidelines and all
resolutions of the Trust's Board relevant to the services to be
provided by the Sub-Advisor hereunder;
(g) the Trust's Registration Statement on Form N-lA under the
Securities Act of 1933, as amended ("1933 Act"), (File No. 333-65213),
and under the 1940 Act as filed with the Securities and Exchange
Commission and the most recent amendment thereto; and
(h) the most recent Prospectus and Statement of Additional
Information of each of the Funds (such Prospectus and Statement of
Additional Information, as presently in effect, and all amendments and
supplements thereto, are herein collectively called the "Prospectus").
The Trust will furnish the Sub-Advisor from time to time with
copies of all amendments of or supplements to the foregoing.
SECTION 3. MANAGEMENT. Subject to the supervision of the Advisor and
the Trust's Board of Trustees, the Sub-Advisor will provide a continuous
investment program for each of the Funds, including investment research and
management with respect to all securities and investments and cash equivalents
in the Funds. The Sub-Advisor will determine from time to time what securities
and other investments will be purchased, retained or sold by the Trust with
respect to the Funds and will implement such determinations through the
placement, in the name of the Funds, of orders for the execution of portfolio
transactions with or through such brokers or dealers as it may select. The
Sub-Advisor will provide the services under this Agreement in accordance with
each of the Fund's investment objectives, policies, and restrictions
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as stated in the Prospectus, as the same may be amended, supplemented or
restated from time to time, and resolutions of the Trust's Board of Trustees.
In fulfilling its responsibilities hereunder, the Sub-Advisor further
agrees that it will:
(a) use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and in addition will conduct its
activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment
advisory activities of the Sub-Advisor;
(c) not make loans to any person to purchase or carry shares of
beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to its investment determinations for
the Funds either directly with the issuer or with any broker or dealer.
In placing orders with brokers and dealers, the Sub-Advisor will
attempt to obtain prompt execution of orders in an effective manner at
the most favorable price. In assessing the best execution available for
any transaction, the Sub-Advisor shall consider all factors 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-dealer and the reasonableness of the commission, if any
(for the specific transaction and on a continuing basis). Consistent
with this obligation, the Sub-Advisor may, in its discretion and to the
extent permitted by law, purchase and sell portfolio securities to and
from brokers and dealers who provide brokerage and research services
(within the meaning of Section 28(e) of the Securities Exchange Act of
1934) to or for the benefit of the Funds and/or other accounts over
which the Sub-Advisor exercises investment discretion. Subject to the
review of the Advisor and the Trust's Board of Trustees from time to
time with respect to the extent and continuation of the policy, the
Sub-Advisor is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for effecting a securities
transaction for any of the Funds which is in excess of the amount of
commission another broker or dealer would have charged for effecting
that transaction if, but only if, the Sub-Advisor determines in good
faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of the Sub-Advisor with respect to the accounts as to
which it exercises investment discretion. In placing orders with
brokers and dealers, consistent with applicable laws, rules and
regulations, the Sub-Advisor may consider the sale of shares of the
Trust. Except as otherwise permitted by
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applicable laws, rules and regulations, in no instance will portfolio
securities be purchased from or sold to BISYS Fund Services Ohio Inc.,
the Advisor, the Sub-Advisor or any affiliated person of the Trust,
BISYS Fund Services Ohio Inc., the Advisor or the Sub-Advisor. In
executing portfolio transactions for any Fund, the Sub-Advisor may, but
shall not be obligated to, to the extent permitted by applicable laws
and regulations, aggregate the securities to be sold or purchased with
those of other Funds and its other clients where such aggregation is
not inconsistent with the policies set forth in the Trust's
registration statement. In such event, the Sub-Advisor will allocate
the securities so purchased or sold, and the expenses incurred in the
transaction, pursuant to any applicable law or regulation and in the
manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Funds and such other clients.
(e) will maintain all books and records with respect to the
securities transactions of the Funds and will furnish the Advisor and
the Trust's Board of Trustees such periodic and special reports as the
Advisor or the Board may request;
(f) will treat confidentially and as proprietary information of
the Trust all records and other information relative to the Trust and
the Funds and prior, present, or potential shareholders, and will not
use such records and information for any purpose other than performance
of its responsibilities and duties hereunder, except where the
Sub-Advisor may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust; and
(g) will maintain its policy and practice of conducting its
fiduciary functions independently. In making investment recommendations
for the Funds, the Sub-Advisor's personnel will not inquire or take
into consideration whether the issuers of securities proposed for
purchase or sale for the Trust's account are customers of the
Sub-Advisor or of its parents, subsidiaries or affiliates. In dealing
with such customers, the Sub-Advisor and its parents, subsidiaries, and
affiliates will not inquire or take into consideration whether
securities of those customers are held by the Trust.
SECTION 4. SERVICES NOT EXCLUSIVE. The Sub-Advisor will for all
purposes herein be deemed to be an independent contractor and will, unless
otherwise expressly provided herein or authorized by the Board from time to
time, have no authority to act for or represent the Trust in any way or
otherwise be deemed its agent. The investment management services furnished by
the Sub-Advisor hereunder are not to be deemed exclusive, and the Sub-Advisor
shall be free to furnish similar services to others so long as its services
under this Agreement are not impaired thereby.
SECTION 5. BOOKS AND RECORDS. In compliance with the requirements of
Rule 3la-3 under the 1940 Act, the Sub-Advisor hereby agrees that all records
which it maintains for the Funds are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the Trust's
request. The Sub-Advisor further agrees to preserve for the periods prescribed
by Rule 3la-2 under the 1940 Act the records required to be maintained by Rule
3la-1 under the 1940 Act.
SECTION 6. EXPENSES. During the term of this Agreement, the Sub-Advisor
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Funds.
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SECTION 7. COMPENSATION. For the services provided and the expenses
assumed pursuant to this Agreement, the Advisor will pay the Sub-Advisor and the
Sub-Advisor will accept as full compensation therefor a fee as set forth on
Schedule A hereto. The obligations of the Advisor to pay the above-described fee
to the Sub-Advisor will begin as of the date first above written; provided,
however, that the Sub-Advisor may from time to time voluntarily waive any or all
such fees. Upon any termination of this Agreement before the end of any month,
the fee for such part of a month shall be prorated according to the proportion
which such period bears to the full monthly period and shall be payable upon the
date of termination of this Agreement.
For the purpose of determining fees payable to the Sub-Advisor, the
value of the net assets of a particular Fund shall be computed in the manner
described in the Trust's Declaration of Trust or in the Prospectus or Statement
of Additional Information respecting that Fund as from time to time is in effect
for the computation of the value of such net assets in connection with the
determination of the liquidating value of the shares of such Fund.
SECTION 8. LIMITATION OF LIABILITY. Notwithstanding anything herein to
the contrary, the Sub-Advisor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Funds or the Advisor in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Sub-Advisor in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
SECTION 9. DURATION AND TERMINATION. The term of this Agreement shall
begin on the date first above written and shall terminate without penalty upon
the earlier of (i) 150 days from the date hereof, (ii) 10 calendar days' written
notice by the Trust to the Sub-Advisor or Advisor, provided that the Trust's
Board of Trustees or a Majority (as defined below) of the outstanding voting
securities of the particular Fund have voted to terminate the Agreement; (iii)
an event of assignment (as defined in the 1940 Act); and (iv) upon the effective
date of a Sub-Advisory Agreement between the Sub-Advisor and the Advisor that
has received the approval of the vote of a Majority of the Fund's outstanding
voting securities. For purposes of the foregoing, "Majority" is defined as the
lesser of (a) 67% of the shares of the Fund represented at a meeting if holders
of more than 50% of the outstanding shares of the Fund are present in person or
by proxy or (b) more than 50% of the outstanding shares of the Fund. Subject to
Section 14, termination of this Agreement shall not affect the right of the
Sub-Advisor to receive payments on any unpaid balance of the compensation to
which it is entitled under this Agreement earned prior to such termination.
SECTION 10. SUB-ADVISOR'S REPRESENTATIONS. The Sub-Advisor hereby
represents that it is willing and possesses all requisite legal authority to
provide the services contemplated by this Agreement without violation of
applicable laws and regulations.
SECTION 11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument
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in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
SECTION 12. YEAR 2000 COMPLIANT. The Sub-Advisor represents and
warrants that all services rendered and all computer systems licensed,
maintained or controlled by the Sub-Advisor as well as the Sub-Advisor's
interfaces with third parties (provided that the foregoing does not represent or
warrant that the third party's systems are Year 2000 compliant) utilized in the
performance of the Sub-Advisor's obligations under this Agreement are Year 2000
Compliant. "Year 2000 Compliant" means that the services and systems are
designed to and:
(a) operate in the year 2000 and later with four digit year date
capability;
(b) operate fault-free in the processing of date and date-dependent
data before, during and after January 1, 2000, including but not limited to
accepting date input, providing date output, and performing date calculations,
comparison and sequencing;
(c) function accurately and without interruption before, during, and
after January 1, 2000, without any adverse effect on operations and associated
with the advent of the new century;
(d) store and provide output of date information in ways that are
unambiguous as to century.
The representations and warranties contained herein may not be disclaimed or
limited by operation of law.
SECTION 13. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
Governor Funds is a business trust organized under Delaware law and under a
Declaration of Trust, to which reference is hereby made and a copy of which is
on file at the Office of the Secretary of State of Delaware as required by law,
and to any and all amendments thereto so filed or hereafter filed. The
obligations of "Governor Funds" entered into in the name or on behalf thereof by
any of the Trustees, officers, employees or agents are made not individually,
but in such capacities, and are not binding upon any of the Trustees, officers,
employees, agents or shareholders of the Trust personally, but bind only the
assets of the Trust, and all persons dealing with any of the Funds of the Trust
must look solely to the assets of the Trust belonging to such Fund for the
enforcement of any claims against the Trust.
SECTION 14. ESCROW PROVISIONS. (a) Notwithstanding any other provision
of this Agreement, in no event shall compensation paid to the Sub-Advisor
hereunder exceed the amount permitted by Rule 15a-4 under the 1940 Act. All
compensation paid to the Sub-Advisor hereunder shall be held in an
interest-bearing escrow account with the Trust's custodian (the "Escrow
Account"). Funds held in the Escrow Account, including interest earned ("Escrow
Money"), shall be paid to the Sub-Advisor promptly after approval of a
Sub-Advisory Agreement between the Advisor and the Sub-Advisor by the vote of a
Majority of the Fund's outstanding voting securities in accordance with the 1940
Act, provided that such approval is obtained no later than 150 days after the
date of this Agreement.
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(b) If a Sub-Advisory Agreement between the Advisor and the Sub-Advisor
is not approved by a vote of a majority of a Fund's outstanding voting
securities within the time period stated above, the Sub-Advisor shall receive
from the Escrow Account as full compensation for its services hereunder the
lesser of: (x) the sum of the amount of any costs incurred by the Sub-Advisor in
performing its duties under this Agreement prior to such termination plus any
interest earned on that amount, or (y) the sum of the amount deposited in the
Escrow Account plus any interest earned on that amount.
SECTION 15. MISCELLANEOUS. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. 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. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of the State of Delaware; provided that nothing herein shall
be construed in a manner inconsistent with the 1940 Act, the Investment Advisers
Act of 1940, as amended, or any rule or regulation of the Securities and
Exchange Commission thereunder. This Agreement may be executed in two or more
counterparts which together shall constitute a single Agreement.
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.
XXXXXXXXXX XXXXXX & COMPANY LLC XXXXXXX PARTNERS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx Xx. By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
-------------------------------- -----------------------------
Name: Xxxxxxx X. Xxxxxxxxxx Xx. Name: Xxxxxxxx X. Xxxxxxxx, Xx.
Title: CEO Title: President & CEO
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: Secretary
Dated: October 6, 2000
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Xxxxxxxxxx Xxxxxx & Company LLC
and
Xxxxxxx Partners, Inc.
dated as of October 6, 2000
NAME OF FUND COMPENSATION* DATE
------------ ------------- ----
International Equity Fund Annual Rate of .40% of the first $50 October 6, 2000
million of such Fund's average daily
net assets, .35% of the next $150
million of such Fund's average daily
net assets, and .30% of such Fund's
average daily net assets in excess
of $200 million
*All Fees are computed daily and paid monthly.
XXXXXXXXXX XXXXXX & COMPANY LLC XXXXXXX PARTNERS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx Xx. By: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
------------------------------- -----------------------------
Name: Xxxxxxx X. Xxxxxxxxxx Xx. Name: Xxxxxxxx X. Xxxxxxxx, Xx.
Title: CEO Title: President & CEO
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Name: Xxxx X. Xxxxxx
Title: Secretary
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