EXHIBIT NO. 4
INVESTMENT ADVISORY AGREEMENT
This Agreement ("Advisory Agreement") made as of the 1st day of December,
1998/1/ between Xxxxxxxx-Xxxxx Government Fund, Inc., a Maryland corporation
(the "Company"), and J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc., a Kentucky corporation
("Adviser"),
WHEREAS, the Company is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, Adviser is engaged in the business of rendering investment
advisory services and is registered as an Investment Adviser under the
Investment Advisers Act of 1940; and
WHEREAS, Company desires to retain Adviser as its investment adviser and
Adviser is willing to render such services to Company;
NOW, THEREFORE, this Agreement
WITNESSETH:
that in consideration of the payment to Adviser of the sum of $1.00, the
receipt of which is hereby acknowledged, and in further consideration of the
premises and the promises and covenants hereinafter set forth, the parties
hereto agree as follows:
1. Adviser shall manage the investment and reinvestment of the assets of
Company for the period and on the terms set forth in this Agreement, subject to
the overall control of the Board of Directors of Company. Adviser shall for all
purposes be deemed to be an independent contractor and not an agent of Company
and shall, unless otherwise expressly provided or authorized, have no authority
to act for or represent Company in any way.
2. Adviser at its own expense shall furnish office space to Company and all
necessary office facilities, equipment, and personnel for managing the assets of
Company. Adviser shall pay the compensation of Directors who are affiliated with
Adviser. Adviser shall also assume and pay all other expenses incurred by it in
connection with managing the assets of Company, including, but not limited to,
the cost and expense of research, analysis and supervision of the investment
portfolio. Adviser shall pay all expenses in determination of daily pricing of
the shares of Company and related bookkeeping expenses (other than for such
services as are provided by the Company's custodian), the Company's organization
expenses, and one-half of the fees of any trade association of which the
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/1/ The Agreement shall be executed and become effective upon the later of
(a) the closing of the transactions contemplated by the Agreement and Plan of
Merger by and between Xxxxxxxx-Xxxxx, Inc. and PNC Bank Corp. or (b) approval by
the shareholders of the Company.
Company may be a member. Adviser will pay all costs and expenses incurred in
connection with the initial registration for offer and sale of Company's shares
under the Securities Act of 1933 and under applicable state securities laws and
the initial registration under the 1940 Act.
3. Company shall pay all charges of depositories, custodians, and other
agencies for the safekeeping and servicing of its cash, securities, and other
property, and of its transfer, shareholder recordkeeping, dividend disbursing,
and redemption agents; all charges of legal counsel and of independent auditors;
all compensation of directors other than those affiliated with Adviser;
interest expense; all expenses of notices, proxy solicitation material, reports
to its shareholders and of all prospectuses furnished from time to time to
existing shareholders or used for regulatory purposes; all expenses of printing
and mailing Company stock certificates; all expenses of bond and insurance
coverage required by law; all brokers' commissions and other normal charges
incident to the purchase and sale of portfolio securities; all taxes and
corporate fees payable to Federal, state, or other governmental agencies,
domestic or foreign; all stamp or other transfer taxes; all expenses of
complying with Federal, state, and other laws regulating the issue or sale of
shares except for those expenses attributable to initial Federal and state
securities law compliance and those deemed to be sales or promotional expenses;
one-half of the fees of any trade association of which Company may be a member;
all extraordinary expenses as may arise including expenses incurred in
connection with litigation, proceedings and claims and the legal obligations of
Company to indemnify its Directors, employees, shareholders and agents with
respect thereto; all expenses of meetings of the Board of Directors and
shareholders; and all other expenses incidental to its organization and
operations not specifically assumed by Adviser pursuant to paragraphs 2 and 5.
4. For all services rendered by Adviser hereunder, Company shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual gross investment advisory fee equal to 1/2 of 1%
of the first $200 million of the average daily net assets of Company; 3/8 of 1%
of the next $100 million of average daily net assets, and 1/4 of 1% of average
daily net assets in excess of $300 million. Such fee shall be accrued daily and
shall be paid to Adviser on the last day of each month. For the purpose of
computing the advisory fee, monies deposited with the Federal Reserve pursuant
to the Credit Control Act will be excluded from the Company's net assets. [TO BE
INCLUDED IF THIS AGREEMENT IS IMPLEMENTED PRIOR TO ITS APPROVAL BY THE COMPANY'S
SHAREHOLDERS--Any fees payable by the Company under this Agreement during the
period commencing on the effective date of this Agreement and ending on the date
of the initial approval of this Agreement by a majority of the outstanding
voting securities of the Company shall be paid into an interest-bearing escrow
account with an unaffiliated financial institution, as the Company and the
Adviser may establish, to be released to the Adviser only upon such initial
approval of this Agreement, or, if such approval shall not occur within the 60
days following consummation of the merger, to the Company.]
5. The total expenses of Company exclusive of taxes, of interest, of all
brokers' and any bank commissions and other normal charges incident to the
purchase and sale of portfolio securities, and (with the prior written consent
of the necessary state securities commissions) of any extraordinary expenses of
Directors and Adviser, but including fees paid to Adviser, shall not exceed on
an annual basis 1-1/2% of the first $30,000,000 of average net assets and 1% of
average net assets over $30,000,000, and Adviser agrees to reimburse Company for
any sums expended for such expenses
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in excess of that amount. Such expense reimbursements, if any, will be
reimbursed to Company by Adviser monthly as an offset against any amounts
receivable by Adviser from Company. All such reimbursements and offsets will be
subject to adjustment as of the end of each fiscal year of the Company.
6. The services of Adviser to Company hereunder are not to be deemed
exclusive, and Adviser shall be free to render similar services to others.
Adviser may employ or contract with such other person, persons, corporation or
corporations at its own cost and expense as it shall determine in order to
assist it in carrying out this Agreement.
7. Neither Adviser nor any of its officers, directors, agents or
employees shall be liable or responsible to Company or its shareholders for any
error of judgment, mistake of law or any loss arising out of any investment, or
for any other act or omission in the performance by Adviser of its duties under
this Agreement, except for liability resulting from willful misfeasance, bad
faith or gross negligence on the Adviser's part or from reckless disregard by
Adviser of its obligations and duties under this Agreement.
8. This Agreement may not be amended without the affirmative votes (a) of
a majority of the Board of Directors, including a majority of those directors
who are not "interested persons" of Company or of Adviser, voting in person at a
meeting called for the purpose of voting on such approval, and (b) of a
"majority of the outstanding shares" of Company. The terms "interested person"
and "vote of a majority of the outstanding shares" shall be construed in
accordance with their respective definitions in sections 2(a)(19) and 2(a)(42)
of the 1940 Act.
9. This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of Company, or by a vote of a majority of the
outstanding shares of Company upon at least sixty (60) days' written notice to
Adviser. This Agreement may be terminated by Adviser at any time upon at least
sixty (60) days' written notice to Company. This Agreement shall terminate
automatically in the event of its assignment (as defined in Section 2(a)(4) of
the Act). Unless terminated as hereinbefore provided, this Agreement shall
continue in effect until two years from the date on which this Agreement is
executed, and thereafter from year to year only so long as such continuance is
specifically approved at least annually (a) by a majority of those directors
who are not interested persons of Company or of Adviser, voting in person at a
meeting called for the purpose of voting on such approval, and (b) by either the
Board of Directors of Company or by a vote of a majority of the outstanding
shares of Company.
10. The Company may use the name "Xxxxxxxx-Xxxxx Government Fund, Inc." or
any other name derived from the name "J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc." only
for so long as this Agreement or any extension, renewal or amendment hereof
remains in effect, including any similar agreement with any organization which
shall have succeeded to the business of the Adviser as investment adviser. At
such time as this Agreement or such other agreement shall no longer be in
effect, the Fund will (by corporate action, if necessary) cease to use any name
derived from the name "J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.", any name similar
thereto or any other name indicating that it is advised by or otherwise
connected with the Adviser or with any organization which shall have succeeded
to the Adviser's business.
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Dated: November 30, 1998 XXXXXXXX-XXXXX GOVENMENT FUND, INC
___________________________
By: /s/ Xxxxxx X. Xxxxx, Xx.
____________________________________
J.J.B. XXXXXXXX, X.X. XXXXX, INC.
By: /s/ Xxxxxx Xxxxxx
____________________________________
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