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Exhibit (d)(1)
INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of November 16, 1998, by and between
GOVERNOR FUNDS, a Delaware business trust (the "Trust"), and GOVERNORS GROUP
ADVISORS, INC., a Delaware corporation (the "Advisor").
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Trust desires to retain the Advisor to provide,
or to arrange for the provision of, investment advisory services to twelve newly
created investment portfolios of the Trust and may retain the Advisor to serve
in such capacity to certain additional investment portfolios of the Trust, all
as now or hereafter may be identified in Schedule A hereto (such new investment
portfolios and any such additional investment portfolios together called the
"Funds") and the Advisor represents that it is willing and possesses legal
authority to so furnish such services without violation of applicable laws
(including the Xxxxx- Xxxxxxxx Act) and regulations;
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 Trust hereby appoints the Advisor
to act as Advisor to the Funds for the period and on the terms set forth in this
Agreement. The 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.
SECTION 2. DELIVERY OF DOCUMENTS. The Trust has furnished the
Advisor with copies properly certified or authenticated of each of the
following:
(a) the Trust's Declaration of Trust (such
Declaration of Trust, as presently in effect and as it shall
from time to time be amended and restated, is herein called
the "Declaration of Trust");
(b) the Trust's By-Laws and any amendments thereto;
(c) resolutions of the Trust's Board of Trustees
authorizing the appointment of the Advisor and approving this
Agreement;
(d) 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;
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(e) 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 Advisor hereunder;
(f) the Trust's Registration Statement on Form N-1A
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
(g) 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 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
Trust's Board of Trustees, the 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
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 Advisor will provide the services
under this Agreement in accordance with each of the Fund's investment
objectives, policies, and restrictions 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 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
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;
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(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 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 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 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
Advisor exercises investment discretion. Subject to the review
of the Trust's Board of Trustees from time to time with
respect to the extent and continuation of the policy, the
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 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 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 Advisor may
consider the sale of shares of the Trust. Except as otherwise
permitted by applicable laws, rules and regulations, in no
instance will portfolio securities be purchased from or sold
to BISYS Fund Services Ohio Inc., the Advisor or any
affiliated person of the Trust, BISYS Fund Services Ohio Inc.
or the Advisor. In executing portfolio transactions for any
Fund, the 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 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 Trust's Board of Trustees such periodic and special
reports as 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
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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 after prior notification to and approval in writing by
the Trust, which approval shall not be withheld where the
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 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 Advisor or of its
parents, subsidiaries or affiliates. In dealing with such
customers, the 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. SUB-ADVISOR. It is understood that the Advisor may
from time to time employ or associate with itself such person or persons as the
Advisor believes to be fitted to assist it in the performance of this Agreement
(each a "Sub-Advisor"); provided, however, that the compensation of such person
or persons shall be paid by the Advisor and that the Advisor shall be as fully
responsible to the Trust for the acts and omissions of any such person as it is
for its own acts and omissions; and provided further, that the retention of any
Sub-Advisor shall be approved as may be required by the 1940 Act. In the event
that any Sub-Advisor appointed hereunder is terminated, the Advisor may provide
investment advisory services pursuant to this Agreement to the Funds without
further shareholder approval.
SECTION 5. SERVICES NOT EXCLUSIVE. The 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 Advisor hereunder are not to be deemed exclusive, and the Advisor shall be
free to furnish similar services to others so long as its services under this
Agreement are not impaired thereby.
SECTION 6. BOOKS AND RECORDS. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the 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 Advisor 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.
SECTION 7. EXPENSES. During the term of this Agreement, the
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 8. COMPENSATION. For the services provided and the
expenses assumed pursuant to this Agreement, each of the Funds will pay the
Advisor and the Advisor will accept as full compensation therefor a fee as set
forth on Schedule A hereto. The obligations of the Funds to pay the
above-described fee to the Advisor will begin as of the respective dates of the
initial public sale of shares in the Funds; provided, however, that the Advisor
may from time to time waive some or all of such fees until such time as it
notifies the Trust that it has terminated such waiver. 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 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 9. LIMITATION OF LIABILITY. Notwithstanding anything
herein to the contrary, the Advisor shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Funds 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 Advisor in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement.
SECTION 10. DURATION AND TERMINATION. This Agreement will
become effective as of the date first written above (or, if a particular Fund is
not in existence on that date, on the date a registration statement or
post-effective amendment to a registration statement relating to that Fund
becomes effective with the Securities and Exchange Commission and Schedule A
hereto is amended to add such Fund), provided that it shall have been approved
by vote of a majority of the outstanding voting securities of such Fund, in
accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, shall continue in effect until June 30, 2000.
Thereafter, if not terminated, this Agreement shall continue
in effect as to a particular Fund for successive periods of twelve months each
ending on June 30 of each year, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Trust's Board of Trustees who are not parties to this Agreement or interested
persons of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the vote of a majority of the
Trust's Board of Trustees or by the vote of a majority of all votes attributable
to the outstanding Shares of such Fund. Notwithstanding the foregoing, this
Agreement may be terminated as to a particular Fund at any time on sixty days'
written notice to the other party, without the payment of any penalty, by the
Trust (by vote of the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of such Fund) or by the Advisor. This Agreement
will immediately terminate in
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the event of its assignment. (As used in this Agreement, the terms "majority of
the outstanding voting securities," "interested persons" and "assignment" shall
have the same meanings as ascribed to such terms in the 1940 Act.)
SECTION 11. ADVISOR'S REPRESENTATIONS. The 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, including but not limited to the Xxxxx-Xxxxxxxx
Act and the regulations promulgated thereunder.
SECTION 12. AMENDMENT OF THIS AGREEMENT. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
SECTION 13. NAME. The Trust hereby acknowledges that the name
"Governor(s)" is a property right of the Advisor. The Advisor agrees that the
Trust and the Funds may, so long as this Agreement remains in effect, use
"Governor(s)" as part of its name. The Advisor may permit other persons, firms
or corporations, including other investment companies, to use such name and may,
upon termination of this Agreement, require the Trust and the Funds to refrain
from using the name "Governor(s)" in any form or combination in its name or in
its business or in the name of any of its Funds, and the Trust shall, as soon as
practicable following its receipt of any such request from the Advisor, so
refrain from using such name.
SECTION 14. YEAR 2000 COMPLIANT. The Advisor represents and
warrants that all services rendered and all computer systems used in the
performance of the Advisor's obligations under this Agreement shall be Year 2000
Compliant. "Year 2000 Compliant" means that the services and systems are
designed to and shall:
(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.
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SECTION 15. 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 16. 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 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.
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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.
GOVERNOR FUNDS
By /s/ Xxxx X. Xxxxxxxxx
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Name Xxxx X. Xxxxxxxxx
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Title President
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GOVERNORS GROUP ADVISORS,
INC.
By /s/ Xxxx X. Xxxxxxxxx
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Name Xxxx X. Xxxxxxxxx
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Title President
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Dated: November 16 , 1998
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Schedule A
to the
Investment Advisory Agreement
between Governor Funds and
Governors Group Advisors, Inc.
dated as of November 16, 1998
NAME OF FUND COMPENSATION* DATE
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Prime Money Market Fund Annual Rate of .40% of such Fund's November 16, 1998
average net assets
Pennsylvania Annual Rate of .60% of such Fund's November 16, 1998
Municipal Bond average daily net assets
Fund
Established Growth Annual Rate of .75% of such Fund's November 16, 1998
Fund average daily net assets
Intermediate Term Income Annual Rate of .60% of such Fund's November 16, 1998
Fund average daily net assets
Aggressive Growth Annual Rate of 1.00% of such Fund's November 16, 1998
Fund average daily net assets
U.S. Treasury Annual Rate of .40% of such Fund's November 16, 1998
Obligations Money average daily net assets
Market Fund
Limited Duration Annual Rate of .60% of such Fund's November 16, 1998
Government average daily net assets
Securities Fund
Emerging Growth Annual Rate of 1.25% of such Fund's November 16, 1998
Fund average daily net assets
International Equity Fund Annual Rate of 1.25% of such Fund's November 16, 1998
average daily net assets
Lifestyle Conservative Annual Rate of .25% of such Fund's November 16, 1998
Growth Fund average daily net assets
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NAME OF FUND COMPENSATION* DATE
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Lifestyle Moderate Annual Rate of .25% of such Fund's November 16, 1998
Growth Fund average daily net assets
Lifestyle Growth Fund Annual Rate of .25% of such Fund's November 16, 1998
average daily net assets
*All Fees are computed daily and paid monthly.
GOVERNORS GROUP ADVISORS, INC. GOVERNOR FUNDS
By /s/ Xxxx X. Xxxxxxxxx By /s/ Xxxx X. Xxxxxxxxx
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Name Xxxx X. Xxxxxxxxx Name Xxxx X. Xxxxxxxxx
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Title President Title President
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