SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 31st day of March, 1995, between GNA CAPITAL
MANAGEMENT, INC., a corporation organized under the laws of the state of
Washington and having its principal place of business in Seattle, Washington
(the "Adviser") and BlackRock Financial Management, Inc., a corporation
organized under the laws of the state of Delaware and having its principal place
of business in New York, New York ("Sub-Adviser").
WHEREAS, the Adviser is engaged principally in the business of
rendering investment management services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"); and
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment management services and is registered as an investment
adviser under the Advisers Act; and
WHEREAS, INVESTORS TRUST, a Massachusetts business trust (the
"Trust"), proposes to engage in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial
interest in separate series, with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust currently offers shares in a series, the Government
Fund, such series together with all other series currently or subsequently
established by the Trust with respect to which the Sub-Adviser renders
management and investment advisory services pursuant to the terms of this
Agreement, being herein collectively referred to as the "Funds" and individually
as a "Fund"; and
WHEREAS, pursuant to the Investment Advisory Agreement, as of even
date herewith, between the Trust and the Adviser (the "Advisory Agreement"), the
Adviser is required to perform investment advisory services for the Funds.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
1. APPOINTMENT OF SUB-ADVISER.
1. (a) Government Fund. The Adviser hereby employs the Sub-
Adviser to provide investment advisory services to the Government Fund for
the period and on the terms herein set forth. The Sub-Adviser accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
(b) Additional Funds. In the event that the Trust establishes
one or more series of shares other than the Government Fund with respect to
which the Adviser desires to retain the Sub-Adviser to render investment
advisory services hereunder, the Adviser shall so notify the Sub-Adviser in
writing, indicating the advisory fee to be payable with respect to the
additional series of shares. If the Sub-Adviser is willing to render such
services on the terms provided for herein, it shall so notify the Adviser
in writing, whereupon such series shall become a Fund hereunder.
2. DUTIES OF ADVISER AND SUB-ADVISER.
(i) Delivery of Documents. The Adviser has furnished the Sub-Adviser
with true copies of each of the following:
(a) The Trust's Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts and all amendments
thereto (such Declaration of Trust, as presently in effect and as it
shall from time to time be amended, is herein called the
"Declaration");
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(b) The Trust's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as it shall from time to time be amended, is
herein called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Adviser and Sub-Adviser and approving the Advisory
Agreement and this Agreement and copies of the minutes of the initial
meeting of shareholders of the Government Fund;
(d) The Trust's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange Commission on
December 19, 1986 and all amendments thereto;
(e) The Fund's most recent Registration Statement on Form N-1A
under the Securities Act of 1933 as amended ("1933 Act") and the 1940
Act (File No. 10976) as filed with the Securities and Exchange
Commission (the "Registration Statement");
(f) All resolutions of the Board of Trustees of the Trust
pertaining to the management of the assets of the Funds; and
The Adviser will furnish the Sub-Adviser from time to time with
copies of all amendments of or supplements to the foregoing, but, with
respect to items (a), (b) or (h), only if such amendments or
supplements relate to or affect the obligations of the Sub-Adviser
hereunder.
(ii) The Sub-Adviser, at its own expense, shall furnish the following
services to the Trust:
(a) Investment Program. The Sub-Adviser is hereby authorized and
directed and hereby agrees, subject to the stated investment objective
and policies of the Funds as set forth in the Trust's current
Registration Statement and subject to the supervision of the Adviser
and the Board of Trustees of the Trust, to (i) develop and furnish an
investment program and strategy for each Fund as may from time to time
in the circumstances appear most appropriate to the achievement of the
investment objective of each Fund as stated in the aforesaid
Registration Statement, (ii) provide research and analysis relative to
the investment program and investments of each Fund, (iii) determine
from time to time what securities and other investments will be
purchased, held, sold or exchanged by each Fund and what portion, if
any, of the assets of each Fund shall be held in cash or cash
equivalents, and (iv) make changes on behalf of the Trust in the
investments of each Fund. In accordance with paragraph 2(ii)(b), the
Sub-Adviser shall arrange for the placing of all orders for the
purchase and sale of securities and other investments for each Fund's
account. The Sub-Adviser will make its officers and employees
available to meet with the Adviser's officers and directors on due
notice at reasonable times to review the investments and investment
program of each Fund in the light of current and prospective economic
and market conditions.
In the performance of its duties hereunder, the Sub-Adviser is
and shall be an independent contractor and unless otherwise expressly
provided or authorized shall have no authority to act for or represent
any Fund or the Trust in any way or otherwise be deemed to be an agent
of any Fund, the Trust or of the Adviser.
(b) Portfolio Transactions. In connection with the management of
the investment and reinvestment of each Fund, the Sub-Adviser, acting
by its own officers, directors or employees or by a duly authorized
subcontractor, is authorized to select the broker or dealers that will
execute purchase and sale transactions for the Trust.
In executing portfolio transactions and selecting brokers or
dealers, if any, the Sub-Adviser will use its best efforts to seek on
behalf of a Fund the best overall terms available. In assessing the
best overall terms available for any transaction, the Sub-Adviser
shall consider all factors it deems relevant, including the breadth of
the market and the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness
of the commission, if any (for the specific transaction and on a
continuing basis). In evaluating the best overall terms available,
and in selecting the broker or dealer, if any, to execute a particular
transaction, the Sub-Adviser may also consider the
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brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) provided to the Sub-
Adviser with respect to the Government Fund and/or other accounts over
which the Sub-Adviser exercises investment discretion. With the prior
approval of the Trustees, the Sub-Adviser may pay to a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction 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-Adviser determines
in good faith that such commission was reasonable in relating to the
value of the brokerage and research services provided. Such prior
approval may be obtained from the Trustees with respect to the Sub-
Adviser's investment program and need not be obtained on a
transaction-by-transaction basis.
The Sub-Adviser will advise the Funds' custodian and the Adviser
promptly of each purchase and sale of a portfolio security, specifying
the name of the issuer, the description and amount or number of shares
of the security purchased, the market price, the commission and gross
or net price, the trade date and settlement date and the identity of
the effecting broker or dealer.
The Sub-Adviser shall, upon due notice from the Adviser, provide
such periodic and special reports describing any such research, advice
or other services received and the incremental commissions, net price
or other consideration to which they relate.
Notwithstanding the foregoing, the Sub-Adviser agrees that the
Adviser shall have the right by written notice to identify securities
that may not be purchased on behalf of any Fund and/or brokers and
dealers through which portfolio transaction on behalf of the Funds may
not be effected, including, without limitation, brokers or dealers
affiliated with the Adviser. The Sub-Adviser shall refrain from
purchasing such securities for the Fund or directing any portfolio
transaction to any such broker or dealer on behalf of the Fund, unless
and until the written approval of the Adviser to do so is obtained,
but the Sub-Adviser shall not be liable to the Government Fund for so
acting. In addition, the Sub-Adviser agrees that it shall not direct
portfolio transactions for the Fund through any broker or dealer that
is an "affiliated person" of the Sub-Adviser (as that term is defined
in the Act or interpreted under applicable rules and regulations of
the Securities and Exchange Commission) without the prior written
approval of the Adviser and in no event shall the Sub-Adviser direct
portfolio transactions on behalf of the Fund to any broker/dealer in
recognition of sales of shares of any investment company or receipt of
research or other service without prior written approval of the
Adviser.
(c) Reports. The Sub-Adviser shall render to the Board of
Trustees of the Trust such periodic and special reports as the Board
of Trustees may request with respect to matters relating to the duties
of the Sub-Adviser set forth herein.
3. SUB-ADVISORY FEE.
For the services to be provided by the Sub-Adviser as provided in Paragraph
2 hereof, the Adviser shall pay to the Sub-Adviser an annual gross sub-advisory
fee based upon the Fund's average daily net assets equal to .15% of the first
$500 million of average daily net assets; .10% of the next $250 million; .05% of
average daily net assets over $750 million; and .04% of average daily net assets
over $1.25 billion. Such fee shall be accrued daily and paid as soon as
practicable after the last day of each calendar month.
The Sub-Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation hereunder to the extent the Sub-Adviser may,
by notice to the Adviser, voluntarily declare.
In the case of commencement or termination of this Agreement with respect
to any Fund during any calendar month, the fee with respect to such Fund for
that month shall be reduced proportionately based upon the number of calendar
days during which it is in effect, and the fee shall be computed during the
average daily net assets of such Fund for the days during which it is in effect.
4. EXPENSES.
During the term of this Agreement, the Sub-Adviser will bear all expenses
incurred by it in the performance of its duties hereunder.
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5. COMPLIANCE WITH APPLICABLE REGULATIONS.
In performing its duties hereunder, the Sub-Adviser
(i) shall establish compliance procedures (copies of which shall be
provided to the Adviser, and shall be subject to review and approval
by the Adviser) reasonably calculated to ensure compliance at all
times with: all applicable provisions of the 1940 Act and the
Advisers Act, and any rules and regulations adopted thereunder;
Subchapter M of the Internal Revenue Code of 1986, as amended; the
provisions of the Registration Statement; the provisions of the
Declaration and the By-Laws of the Trust, as the same may be amended
from time to time; and any other applicable provisions of state,
federal or foreign law.
(ii) acknowledges that the Trust has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the Act and that
the Sub-Adviser and certain of its employees, officers and directors
may be subject to reporting requirements thereunder and, accordingly,
agrees that it shall, on a timely basis, furnish, and shall cause its
employees, officers and directors to furnish, to the Adviser and/or to
the Trust, all reports and information required to be provided under
such code of ethics with respect to such persons.
(iii) agrees that all records it maintains for the Trust are the
property of the Trust and further agrees to surrender promptly to the
Trust any such records upon the Trust's request all in accordance with
Rule 31a-3 under the 1940 Act.
6. LIABILITY OF SUB-ADVISER.
Neither the Sub-Adviser nor the officers, directors, employees, agents,
legal representatives or controlling persons (collectively, "Related Persons")
of the Sub-Adviser shall be liable for any error of judgment or mistake of law,
or for any loss suffered by any Fund or its shareholders in connection with the
matters to which this Agreement relates; provided that, except as set forth in
the succeeding paragraph, no provision of this Agreement shall be deemed to
protect the Sub-Adviser or its Related Persons against any liability to which it
might otherwise be subject by reason of any willful misfeasance, bad faith or
gross negligence or the reckless disregard of the Sub-Adviser's obligations and
duties under this Agreement (each of which is hereby referred to as a "Culpable
Act").
Neither the Sub-Adviser nor its Related Persons shall be liable for any
error of judgment or mistake of law, or for any loss suffered by the Adviser or
its Related Persons in connection with the matters to which this Agreement
relates; provided that this provision shall not be deemed to protect the Sub-
Adviser or its Related Persons against any liability to which it might otherwise
be subject by reason of any Culpable Act by the Sub-Adviser or its Related
Persons.
The Sub-Adviser and its Related Persons shall incur no liability arising
from the failure of any service provider to provide complete and accurate
information to the Sub-Adviser, it being the intention that, in performing
hereunder, the Sub-Adviser and its Related Persons may rely on the accuracy of
all information received from the Trust, the Adviser or from any service
provider and on all instructions and directions received from the Adviser or the
Trust.
In any event, Sub-Adviser shall have no liability and shall be fully
reimbursed for any loss, costs or expenses (including reasonable attorney's
fees) arising entirely from facts and circumstances existing at or prior to the
date of this Agreement.
7. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
Government Fund on the date hereof and, with respect to any additional Fund, on
the date of receipt by the Adviser of notice from the Sub-Adviser in accordance
with Paragraph 1(b) hereof that the Sub-Adviser is willing to serve as Sub-
Adviser with respect to such Fund. Unless terminated as herein provided, this
Agreement shall remain in full force and effect for two years from the date
hereof with respect to the Government Fund and, with respect to each additional
Fund, for two years from the date on which such Fund becomes a Fund hereunder.
Subsequent to such initial periods of effectiveness, this Agreement shall
continue in full force and effect for periods of one year thereafter with
respect to each Fund so long as such continuance
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with respect to any such Fund is approved at least annually (a) by either the
Trustees of the Trust or by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of such Fund, and (b), in either event,
by the 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 any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(b) Amendment. This Agreement may be amended by agreement of the parties,
provided that the amendment shall be approved both by the vote of a majority of
the Trustees of the Trust, including a majority of the Trustees who are not
parties to this Agreement or interested persons of any such party to this
Agreement cast in person at a meeting called for that purpose, and by the
holders of a majority of the outstanding voting securities of the Trust.
(c) Termination. This Agreement may be terminated with respect to any
Fund at any time, without payment of any penalty, by vote of the Trustees of the
Trust or by vote of a majority of the outstanding voting securities (as defined
in the 0000 Xxx) of that Fund, or by the Sub-Adviser, in each case on sixty (60)
days' prior written notice to the other party. Upon the effective date of
termination of this Agreement, the Sub-Adviser shall deliver all books and
records of the Trust or any Fund held by it (i) to such entity as the Trust may
designate as a successor sub-adviser, or (ii) to the Adviser.
(d) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).
(e) Approval, Amendment or Termination by Individual Fund. Any approval,
amendment or termination of this Agreement by the holders of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of any Fund shall be
effective to continue, amend or terminate this Agreement with respect to any
such Fund notwithstanding (i) that such action has not been approved by the
holders of a majority of the outstanding voting securities of any other Fund
affected thereby, and (ii) that such action has not been approved by the vote of
a majority of the outstanding voting securities of the Trust, unless such action
shall be required by any applicable law or otherwise.
8. SERVICES NOT EXCLUSIVE.
The services of the Sub-Adviser to the Adviser in connection with the Funds
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be free to
render similar services to others so long as its services hereunder are not
impaired thereby. It is understood that the persons employed by the Sub-Adviser
to assist in the performance of its duties hereunder will not devote their full
time to such services and nothing hereunder contained shall be deemed to limit
or restrict the right of the Sub-Adviser to engage in or devote time and
attention to other businesses or to render services of whatever kind or nature.
9. MISCELLANEOUS.
(a) Notices. All notices or other communications given under this
Agreement shall be made by guaranteed overnight delivery, telecopy or certified
mail; notice is effective when received. Notice shall be given to the parties
at the following addresses:
The Adviser: Xxxxxxx X. Xxxxx, President and CEO
GNA Capital Management, Inc.
Investors Trust
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Sub-Adviser: BlackRock Financial Management, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx, Chief Operating Officer
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(b) Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
shall not be thereby affected.
(c) Applicable Law. This Agreement shall be construed in accordance with
and governed by the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Agreement to be executed as of the date first set forth above.
ATTEST: GNA CAPITAL MANAGEMENT, INC.
/s/ Xxxxxx Plales, Jr. /s/ Xxxxxxx X. Xxxxx
By:___________________________ By:___________________________
Xxxxxxx X. Xxxxx
VP & Counsel President and CEO
Its:__________________________ Its:__________________________
ATTEST: BLACKROCK FINANCIAL MANAGEMENT, INC.
/s/ Xxxxx Xxxx
By:___________________________ By:___________________________
Its:__________________________ Its:__________________________
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