Exhibit 9
SHAREHOLDER AND ADMINISTRATION SERVICES AGREEMENT
THIS SHAREHOLDER AND ADMINISTRATION SERVICES AGREEMENT ("Agreement"),
entered into as of December 12, 2001 by and between the Xxxxxxxx-Xxxxx
Government Fund, Inc. (the "Fund"), a Maryland corporation and an open-end
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), and J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc. (the "Broker"),
a Kentucky corporation with its principal place of business at 000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx Xxxxx Center, Louisville, Kentucky.
WHEREAS, the Broker serves as the investment adviser and distributor
for the Fund;
WHEREAS, the Broker maintains accounts on behalf of customers who
invest in the Fund directly or via an omnibus account (for which Broker is the
record owner) and automatic sweep program administered by the Broker;
WHEREAS, the Broker provides shareholder and administration services,
as described below, with respect to all Fund shareholders ("Clients"), which
services otherwise would have to be performed by the Fund or by another service
provider for the Fund; and
WHEREAS, the Fund desires to retain and compensate the Broker for
providing certain shareholder and administration services to all Fund
shareholders as described below, and Broker desires to accept such compensation
and to provide the shareholder and administration services, as described below;
NOW, THEREFORE, the Fund and the Broker hereby agree as follows:
1. Shareholder Services. The Broker agrees to provide the following
shareholder services to Clients:
(a) prepare and mail monthly statements to shareholders showing
their beneficial share ownership and corresponding dollar
value in the Fund, as well as all of their Fund share
purchases and redemptions, and other account activity, during
that month;
(b) respond to shareholder inquiries relating to the services
performed by the Broker;
(c) respond to inquiries from shareholders concerning their
investments in the Fund, including providing shareholder
account information;
(d) forward shareholder communications from the Fund (such as
proxies, shareholder reports, annual and semi-annual financial
statements and dividend, distribution and tax notices) to
shareholders;
(e) assist shareholders in changing dividend options, account
designations, and addresses; and
(f) provide such other similar services as the Fund may reasonably
request to the extent that the Broker is permitted to do so
under applicable laws or regulations.
2. Administration Services. The Broker agrees to provide the following
administration services:
(a) maintain account information relating to shareholders that
invest in the Fund;
(b) arrange for bank wires;
(c) process purchase, exchange and redemption requests from
shareholders and place such orders and appropriate
documentation, and promptly deliver payment, where applicable,
with the Fund or its service providers, including the Fund's
custodian;
(d) with respect to the transactions in (c) above, the Broker
shall, in addition to executing transactions directly with
shareholders, execute transactions directly with
broker-dealers authorized by the Fund who shall be deemed to
be acting on behalf of the Fund;
(e) in connection with redemption requests, pay over, or cause to
be paid over, to the shareholder in the appropriate manner
such monies as instructed by redeeming shareholders;
(f) hold certain Fund shares in the appropriate accounts of
shareholders;
(g) provide subaccounting, including bookkeeping and
recordkeeping, with respect to the beneficial owners of the
shares of the Fund, including those shares beneficially owned
by Clients;
(h) prepare, process and transmit dividend payments from the Fund
on behalf of shareholders;
(i) process and deliver applicable tax information to
shareholders;
(j) withhold taxes on U.S. residents and non-resident alien
accounts;
(k) prepare and mail confirmation forms, if requested;
(l) prepare shareholder meeting lists;
(m) mail proxies, and receive and tabulate such proxies;
(n) report abandoned property to the various states as authorized
by the Fund per policies and principles agreed upon by the
Fund and the Broker;
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(o) provide a system which will enable the Fund to monitor the
total number of shares of the Fund sold in each State;
(p) record the issuance of shares of the Fund and maintain
pursuant to Rule 17Ad-10(e) under the Securities Exchange Act
of 1934, as amended, a record of the total number of shares of
the Fund which are authorized, issued and outstanding, based
upon data provided to it by the Fund. The Broker shall also
provide the Fund on a regular basis with the total number of
shares that are authorized, issued and outstanding, but shall
have no obligation, when recording the issuance of shares, to
monitor the issuance of such shares or take cognizance of any
laws or rules relating to the issue or sale of such shares,
which functions shall be the sole responsibility of the Fund;
and
(q) provide such other similar services as the Fund may reasonably
request to the extent that the Broker is permitted to do so
under applicable laws or regulations.
3. Compensation. In consideration of the services to be provided by the
Broker, the Fund will pay to the Broker:
(a) a fee for shareholder services, at an annual rate of 0.25% (25
basis points) of the average daily net assets of the Fund,
which fee will be computed daily and paid monthly by the 15th
day of the following month; plus
(b) a fee for administration services, at an annual rate of 0.18%
(18 basis points) of the average daily net assets of the Fund,
which fee will be computed daily and paid monthly by the 15th
day of the following month.
In the event that this Agreement is terminated pursuant to Section 15 prior to
the end of a month, the fee for that month shall be calculated on a pro rated
basis in accordance with the foregoing provisions of this Section 3.
4. Reimbursement for Certain Expenses. In addition to the compensation
paid under Section 3 above, the Fund agrees to reimburse the Broker for
out-of-pocket mailing expenses incurred by the Broker in connection with the
Broker's distribution to Clients of any materials provided by the Fund for such
distribution, including annual reports to shareholders, semi-annual reports to
shareholders, annual prospectus updates, proxy statements and related materials,
and such other materials as the Fund shall disseminate to its shareholders from
time to time. The Fund also agrees to reimburse the Broker for its out-of-pocket
expenses (as reasonably agreed upon by the Broker and the Fund) if the Fund asks
the Broker to provide, and the Broker agrees to provide, additional services to
Clients not otherwise called for under this Agreement. Out-of-pocket expenses
relating to the routine and customary servicing of the Broker's brokerage
accounts with its customers shall be borne by the Broker.
5. Obligations of the Fund. The Fund agrees that it will perform the
following services:
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(a) identify to the Broker in writing those transactions and
assets to be treated as exempt from blue sky reporting for
each State; and
(b) verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily
activities for each State. The responsibility of the Broker
for the Fund's blue sky State registration status is solely
limited to the initial establishment of transactions subject
to blue sky compliance by the Fund and the reporting of such
transactions to the Fund as provided above.
6. Delegation of Services. The Broker reserves the right to delegate
and/or appoint another party to perform any obligations of the Broker pursuant
to this Agreement without the consent of the Fund.
7. Term. This Agreement will become effective as of January 1, 2002 and
will continue for an initial term of three (3) years from such date. This
Agreement will be renewed automatically for successive one (1) year terms,
unless the Agreement is terminated pursuant to Section 15.
8. Equipment and Facilities. The Broker will provide all office space and
equipment, telephone facilities and personnel (which may be part of the space,
equipment and facilities currently used in the Broker's business, or any
personnel employed by the Broker) as may be reasonably necessary or beneficial
in order to fulfill its responsibilities under this Agreement.
9. Communications. Neither the Broker nor any of its officers, employees,
or agents is authorized to make any representations concerning the Fund except
those contained in the Fund's then-current Prospectus or Statement of Additional
Information for the Fund, copies of which will be supplied to the Broker, or in
supplemental sales literature or advertising as may be authorized in writing.
10. Independent Contractor. For purposes of this Agreement, the Broker will
be deemed to be an independent contractor and will have no authority to act as
agent for the Fund in any matter or in any respect related to this Agreement.
11. Representations and Warranties of the Broker. By its written acceptance
of this Agreement, the Broker represents, warrants and agrees that:
(a) the Broker is duly organized and existing and in good standing
under the laws of the Commonwealth of Kentucky;
(b) the Broker is empowered under applicable laws and by its
Articles of Incorporation and By-Laws to enter into and
perform this Agreement, and all requisite corporate
proceedings have been taken to authorize it to enter into and
perform this Agreement;
(c) the Broker is duly registered and licensed as a broker-dealer
and will notify the Fund in the event that its status as a
registered broker-dealer changes;
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(d) the Broker has and will continue to have access to the
necessary facilities, equipment and personnel to perform its
duties and obligations under this Agreement; and
(e) the Broker will comply with applicable laws and regulations as
they relate to this Agreement.
12. Representations and Warranties of the Fund. By its written acceptance
of this Agreement, the Fund represents, warrants and agrees that:
(a) the Fund is duly organized and existing in good standing under
the laws of the State of Maryland;
(b) the Fund is empowered under applicable laws and by its
Articles of Incorporation and By-Laws to enter into and
perform this Agreement, and all requisite corporate
proceedings have been taken to authorize it to enter into and
perform this Agreement;
(c) the Fund is an open-end and diversified investment management
company registered under the 1940 Act;
(d) a registration statement under the Securities Act of 1933, as
amended, is currently effective and will remain effective, and
appropriate State securities law filings have been made and
will continue to be made, with respect to all shares of the
Fund being offered for sale; and
(e) the Fund will comply with applicable laws and regulations as
they relate to this Agreement.
13. Indemnification
A. Fund. The Broker shall not be responsible for, and the Fund
shall indemnify and hold the Broker harmless from and against, any and all
demands, damages, liabilities, and losses, or any pending or completed actions,
claims, suits, complaints, proceedings, or investigations (including reasonable
attorneys fees and other costs, including all expenses of litigation or
arbitration, judgments, fines or amounts paid in any settlement consented to by
the Broker) arising out of: (1) all actions of the Broker or its agents,
officers, employees or subcontractors required to be taken pursuant to this
Agreement, provided that such actions are taken in good faith and without gross
negligence and willful misconduct; (2) the Fund's lack of good faith, negligence
or willful misconduct relating to this Agreement; (3) any breach of the Fund's
representations or warranties in this Agreement; (4) the reliance on or use by
the Broker or its agents, officers, employees or subcontractors of information,
records and documents or services which (a) are received or relied upon by the
Broker or its agents, officers, employees or subcontractors and furnished to it
or performed by or on behalf of the Fund, and (b) have been prepared, maintained
and/or performed
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by the Fund or any other person or firm on behalf of the Fund; (5) the reliance
on, or the carrying out by the Broker or its agents, officers, employees or
subcontractors, of any instructions or requests of the Fund; and (6) the offer
or sale of shares of the Fund in violation of any requirement under the federal
securities laws or regulations or the securities laws or regulations of any
state that such shares be registered in such state, or in violation of any stop
order or other determination or ruling by any federal or state authority with
respect to the offer or sale of such shares.
B. Broker. The Broker shall indemnify and hold the Fund harmless
from and against any and all demands, damages, liabilities, and losses, or any
pending or completed actions, claims, suits, complaints, proceedings, or
investigations (including reasonable attorneys fees and other costs, including
all expenses of litigation or arbitration, judgments, fines or amounts paid in
any settlement consented to by the Broker) arising out of: (1) any action or
failure or omission to act by the Broker or its agents, officers, employees or
subcontractors as a result of such party's lack of good faith, gross negligence
or willful misconduct relating to this Agreement; (2) any breach of the Broker's
representations or warranties in this Agreement; and (3) the failure of the
Broker or its agents, officers, employees or subcontractors to comply with any
of the terms of this Agreement.
C. Notice and Opportunity to Defend. If any action, suit,
proceeding, or investigation is initiated, or any claim or demand is made,
against any party indemnified hereto with respect to which such party
("Indemnified Party") may make a claim against any other party hereto
("Indemnifying Party") pursuant to this Section 13, then the Indemnified Party
shall give prompt written notice of such action, suit, proceeding,
investigation, claim or demand to the Indemnifying Party. Thereafter, the
Indemnifying Party shall have the opportunity, at its own expense and with its
own counsel, to defend or settle such action, suit, proceeding, investigation,
claim or demand; provided, however, that: (1) the Indemnifying Party shall keep
the Indemnified Party informed of all material developments and events relating
to such action, suit, proceeding, investigation, claim or demand; (2) the
Indemnified Party shall have the right to participate, at its own expense in the
defense of such action, suit, proceeding, investigation, claim or demand and
shall cooperate as reasonably requested by the Indemnifying Party in the defense
thereof; and (3) the Indemnifying Party shall not settle such action, suit,
proceeding, investigation, claim or demand without the prior written consent of
the Indemnified Party, which consent shall not be unreasonably withheld.
D. Special Indemnification Provisions. At any time, the Broker
may apply to any officer of the Fund for instructions, and consult with Broker's
legal counsel with respect to any matter arising in connection with the services
to be performed by the Broker under this Agreement, and the Broker and its
agents, officers, employees or subcontractors shall not be liable and shall be
indemnified by the Fund for any action taken or omitted in reliance upon such
instructions or upon the opinion of such counsel. The Broker, its agents,
officers, employees or subcontractors shall be protected and indemnified in
acting upon any paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the proper person
or persons or upon any instruction, information, data, record or document. The
Broker shall not be held to have notice of any change of authority of any person
until receipt of written notice from the Fund.
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14. Notices. All notices and other communications to either the Fund or to
the Broker will be duly given if mailed, telegraphed, faxed, or transmitted by
similar communications device to the appropriate address stated herein, or to
such other address as either party may provide to the other.
15. Amendments and Termination. This Agreement may be amended or modified
upon written agreement of the parties and authorized or approved by a resolution
of the Board of Directors of the Fund. After the initial three (3) year term has
expired, either party to the Agreement may terminate the Agreement, without
cause or penalty, by giving the other party at least 120 days written notice of
its intention to terminate. Nothing herein shall be construed to prohibit the
Broker from taking any actions otherwise permissible under Conduct Rule
2510(d)(2) of the National Association of Securities Dealers, Inc., or any
successor rule thereto. Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund. Additionally, the Broker reserves the right to charge for
any other reasonable expenses associated with such termination.
16. Assignment. Neither this Agreement nor any rights or obligations
hereunder may be subject to an "assignment," as that term is defined in the 1940
Act, by either party without the written consent of the other party. Any
purported assignment in violation of this provision shall be void. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns.
17. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
this subject matter thereof whether written or oral, including the Shareholder
Accounting Agreement, executed on or about September 1997, between the Broker
and the Fund.
18. Severability. In the event that any provision in this Agreement shall
be found by a court of competent jurisdiction to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
19. Governing Law. This Agreement will be construed in accordance with the
laws of the State of Maryland.
20. Force Majeure. Notwithstanding any other provision contained herein, no
party shall be liable for any action taken, or any delay in taking or any
failure to take any action required to be taken hereunder or otherwise to
fulfill its obligations hereunder in the event and to the extent that the taking
of such action, delay or such failure arises out of or is caused by or directly
or indirectly due to war, insurrection, terrorism, riot, labor disputes, civil
commotion, act of God, accident, fire, water damage, explosion, any law, decree,
regulation or order of any government or governmental body (including any court
or tribunal), or any other cause (whether similar or dissimilar to any of the
foregoing) whatsoever beyond its reasonable control. The non-performing party
shall use reasonable efforts to minimize the effect of any force majeure.
21. Books and Records
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A. The Broker shall keep records relating to the services to be
performed by this Agreement, in the form and manner as may be deemed advisable.
To the extent required by the Securities and Exchange Commission and/or other
applicable governmental regulatory bodies, and any applicable rules or
regulations, the Broker agrees that all such books and records prepared or
maintained pursuant to this Agreement are the joint property of the Fund and the
Broker and will be preserved, maintained and made available in accordance with
such applicable laws, rules and regulations, and will be provided promptly to
the Fund on and in accordance with such request.
B. The Broker and Fund agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the provisions of this Agreement shall remain confidential,
and shall not be voluntarily disclosed to any other person except as may be
required by law or regulation, or mutual written consent.
C. In the case of any requests or demands for the inspection of
the shareholder records of the Fund, the Broker will notify the Fund and secure
instructions from an authorized officer of the Fund as to such inspection. The
Broker reserves the right, however, to exhibit the shareholder records to any
person whenever the Broker is advised by its counsel that it may be held liable
for failing to exhibit the shareholder records to such person.
22. Survival. The provisions of Sections 3, 4, 13, 18, 19 and 21 and the
parties' respective obligations thereunder, shall survive any termination of, or
the completion of services contemplated by, this Agreement.
IN WITNESS WHEREOF, the Fund and the Broker have caused this Agreement
to be executed by their duly authorized representatives effective as of the date
first above written.
XXXXXXXX-XXXXX GOVERNMENT FUND, INC.
By:
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Title:
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Address:
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J.J.B. XXXXXXXX, X.X. XXXXX, INC.
By:
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Title:
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Address:
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