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Exhibit (d)(3)
INTERIM INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of October 6, 2000, by and between GOVERNOR
FUNDS, a Delaware business trust (the "Trust"), and XXXXXXXXXX XXXXXX & COMPANY
LLC, a Pennsylvania limited liability company (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 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 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 and regulations;
WHEREAS, 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
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 Advisor is willing to furnish such services upon the terms
and conditions herein set forth;
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");
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(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;
(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-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
(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:
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(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;
(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
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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 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.
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SECTION 6. BOOKS AND RECORDS. In compliance with the
requirements of Rule 3la-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 3la-2 under the 1940 Act the records required to be
maintained by Rule 3la-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.
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 date first above
written; 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. 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 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 an Advisory Agreement between the Advisor and the Trust that
has received the approval of the
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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 16, termination of this
Agreement shall not affect the right of the 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 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.
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 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;
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(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 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. ESCROW PROVISIONS. (a) Notwithstanding any other
provision of this Agreement, in no event shall compensation paid to the Advisor
hereunder exceed the amount permitted by Rule 15a-4 under the 1940 Act. All
compensation paid to the 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 Advisor promptly after approval of the Advisory Agreement between the
Advisor and the Trust by the vote of a Majority of each 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.
(b) If an Advisory Agreement between the Advisor and
the Trust is not approved by a vote of a Majority of a Fund's outstanding voting
securities within the time period stated above, the 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 Advisor in performing
its duties under this Agreement for such Fund prior to such termination plus any
interest earned on that amount, or (y) the sum of the amount deposited in the
Escrow Account for such Fund plus any interest earned on that amount.
SECTION 17. 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
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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.
GOVERNOR FUNDS
By: /s/ A. Xxxxx Xxxxxx
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Name: A. Xxxxx Xxxxxx
Title: President
XXXXXXXXXX XXXXXX & COMPANY LLC
By: /s/ Xxxxxxx X. Xxxxxxxxxx Xx.
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Name: Xxxxxxx X. Xxxxxxxxxx Xx.
Title: CEO
Dated: October 6, 2000
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Schedule A
to the
Investment Advisory Agreement
between Governor Funds and
Xxxxxxxxxx Xxxxxx & Company LLC
dated as of October 6, 2000
NAME OF FUND COMPENSATION* DATE
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Prime Money Market Fund Annual Rate of .40% of such Fund's October 6, 2000
average net assets
Pennsylvania Annual Rate of .60% of such Fund's October 6, 2000
Municipal Bond average daily net assets
Fund
Established Growth Annual Rate of .75% of such Fund's October 6, 2000
Fund average daily net assets
Intermediate Term Income Annual Rate of .60% of such Fund's October 6, 2000
Fund average daily net assets
Aggressive Growth Annual Rate of 1.00% of such Fund's October 6, 2000
Fund average daily net assets
U.S. Treasury Annual Rate of .40% of such Fund's October 6, 2000
Obligations Money average daily net assets
Market Fund
Limited Duration Annual Rate of .60% of such Fund's October 6, 2000
Government average daily net assets
Securities Fund
Emerging Growth Annual Rate of 1.25% of such Fund's October 6, 2000
Fund average daily net assets
International Equity Fund Annual Rate of 1.25% of such Fund's October 6, 2000
average daily net assets
Lifestyle Conservative Annual Rate of .25% of such Fund's October 6, 2000
Growth Fund average daily net assets
Lifestyle Moderate Annual Rate of .25% of such Fund's October 6, 2000
Growth Fund average daily net assets
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NAME OF FUND COMPENSATION* DATE
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Lifestyle Growth Fund Annual Rate of .25% of such Fund's October 6, 2000
average daily net assets
*All Fees are computed daily and paid monthly.
XXXXXXXXXX XXXXXX & COMPANY LLC GOVERNOR FUNDS
By: /s/ Xxxxxxx X. Xxxxxxxxxx Xx. By: /s/ A. Xxxxx Xxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx Xx. Name: A. Xxxxx Xxxxxx
Title: CEO Title: President
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