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Exhibit (d)(3)
INVESTMENT SUB-ADVISORY AGREEMENT
This Agreement is made as of November 16, 1998, by and between
GOVERNORS GROUP ADVISORS, INC., a Delaware corporation (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 Investment Advisory Agreement dated as
of October 5, 1998, 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 Board of Trustees of the Trust and the
shareholders of each Fund have 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.
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:
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(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-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
(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 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.
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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 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
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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 31a-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
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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 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.
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 respective dates of
the initial public sale of shares in the Funds; 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. 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
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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 parties, without the payment of any penalty, by the Advisor
or 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
Sub-Advisor. This Agreement will immediately terminate in the event of its
assignment and in the event of the termination of the Advisory Agreement. (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 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, including but not limited to the Xxxxx-Xxxxxxxx
Act and the regulations promulgated thereunder.
SECTION 11. 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 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 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 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. 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.
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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.
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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XXXXXXX PARTNERS, INC.
By /s/ Xxxxxx X. Xxxxxxxx
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Name Xxxxxx X. Xxxxxxxx
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Title Vice President
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By /s/ Xxxx X. Xxxxxx
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Name Xxxx X. Xxxxxx
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Title Assistant Secretary
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Dated: November 16, 1998
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Schedule A
to the
Investment Advisory Agreement
between
Governors Group Advisors, Inc.
and
Xxxxxxx Partners, Inc.
dated as of November 16, 1998
NAME OF FUND COMPENSATION* DATE
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International Equity Growth Fund Annual Rate of .40% of the first $50 November 16, 1998
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.
GOVERNORS GROUP ADVISORS, INC. XXXXXXX PARTNERS, INC.
By /s/ Xxxx X. Xxxxxxxxx By /s/ Xxxxxx X. Xxxxxxxx
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Name Xxxx X. Xxxxxxxxx Name Xxxxxx X. Xxxxxxxx
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Title President Title Vice President
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By /s/ Xxxx X. Xxxxxx
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Name Xxxx X. Xxxxxx
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Title Assistant Secretary
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