ADVISORY AGREEMENT
THIS AGREEMENT is made this 8th day of September, 1995 by and between
TRANS ADVISER FUNDS, INC., a Maryland corporation (the "Company"), and TRANS
FINANCIAL BANK, N.A., a national banking association organized under the laws of
the United States (the "Adviser"), with respect to the following recital of
fact:
R E C I T A L
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended; and
WHEREAS, the Company and the Adviser desire to enter into an agreement
to provide management and investment advisory services for the funds listed on
Schedule A (individually a "Fund" and collectively, the "Funds") on the terms
and conditions hereinafter set forth; and
WHEREAS, Xxxxxxxxxxxx & Associates, Inc. (the "Sub-Adviser") will serve
as sub-adviser to the Company and its Funds pursuant to a Sub-Advisory Agreement
between the Adviser and the Sub-Adviser of even date herewith;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Management. The Adviser shall manage the Company's affairs,
and shall provide or arrange for all necessary services except as otherwise set
forth herein, including the investment and reinvestment of the cash, securities
or other properties comprising the Funds' assets, subject at all times to the
policies and control of the Company's Board of Directors. The Adviser shall give
the Company the benefit of its best judgment, efforts and facilities in
rendering its services as adviser.
2. Management Duties. In carrying out its obligations the Adviser
shall:
(a) supervise and manage all aspects of the Company's
operations;
(b) provide the Company with such executive, administrative
and clerical services as are deemed advisable by the Company's
Board of Directors;
(c) arrange, but not pay for, the periodic updating of
prospectuses, statements of additional information and
supplements thereto, proxy material, tax returns, reports to each
Fund's shareholders and reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities;
(d) provide the Company with, or obtain for it, adequate
office space and all necessary equipment and services, including
telephone service, heat, utilities, stationery supplies and
similar items for the Company's principal office;
(e) provide the Board of Directors of the Company on a
regular basis with financial reports and analyses of each Fund's
operations and the operations of comparable investment companies;
(f) formulate and implement continuing programs for the
investment and reinvestment of each Fund's cash, securities or
other properties and regularly report thereon to the Company's
Board of Directors; and
(g) take, on behalf of the Company and its Funds, all
actions which appear to the Company necessary to effect such
purchase and sale programs and supervisory functions as
aforesaid, including the placing of orders for the purchase and
sale of portfolio instruments.
3. (i) Appointment. The Company hereby appoints the Adviser to
act as investment adviser to the Company and its Funds for the period and on the
terms set forth in this Agreement. The Adviser accepts such appointment and
agrees to render the services herein set forth for the compensation herein
provided.
(ii) Investment Advisory Services. The Adviser agrees that
it will:
(a) obtain and evaluate information the Adviser considers
pertinent concerning: (i) significant developments and economic,
statistical and financial data, domestic, foreign or otherwise,
whether affecting the economy generally or a Fund; (ii) the
individual issuers whose securities are included in a Fund's
portfolio or the activities in which they engage; or (iii)
securities which the Adviser or any Sub-Adviser considers
desirable for inclusion in a Fund's portfolio;
(b) determine which issuers and securities shall be
represented in a Fund's portfolio or supervise the activities of
any Sub-Adviser responsible to determine which issuers and
securities shall be represented in a Fund's portfolio;
(c) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers.
(d) take, on behalf of the Company and its Funds, all
actions which appear to the Company necessary to carry into
effect such purchase and sale programs as aforesaid; and
(e) furnish the Company's Board of Directors with such
periodic and special reports as the Board of Directors may
reasonably request.
4. Broker-Dealer Relationships. The Adviser is responsible for
decisions to buy and sell portfolio instruments for the Company's Intermediate
Bond Fund, Kentucky Tax-Free Fund, Tennessee Tax-Free Fund and Money Market Fund
(the "Fixed Income Funds"), selection of broker-dealers to effect such
transactions, and negotiation of brokerage commission rates, if any, with
respect to such transactions. The Adviser's primary consideration in effecting a
security transaction will be execution at the most favorable price. The Company
understands that most of the Company's fixed income transactions will be
transacted with issuers or primary market makers acting as principal on a net
basis, with no brokerage commissions being paid by a Fund. Such principal
transactions may, however, result in a profit to the market makers. In certain
instances the Adviser may make purchases of underwritten issues at prices which
include underwriting fees. In selecting a broker-dealer to execute each
particular transaction, the Adviser will take the following into consideration:
the best net price available; the reliability, integrity and financial condition
of the broker-dealer; the size of and difficulty in executing the order; and the
value of the expected contribution of the broker-dealer to the investment
performance of a Fund on a continuing basis. Accordingly, the price to a Fund in
any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Board of
Directors may determine, the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused a Fund to pay a broker or dealer that
provides brokerage and research services to the Adviser an amount of commission
for effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
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 Adviser's overall responsibilities with respect to
a Fund. The Adviser is further authorized to allocate the orders placed by it on
behalf of a Fund to such brokers and dealers who also provide research or
statistical material, or other services to the Company, the Adviser or the
Sub-Adviser. Such allocation shall be in such amounts and proportions as the
Adviser shall determine and
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the Adviser will report on said allocations regularly to the Board of Directors
of the Company indicating the brokers to whom such allocations have been made
and the basis therefor.
5. Control by Board of Directors. Any management or supervisory
activities undertaken by the Adviser pursuant to this Agreement, as well as any
other activities undertaken by the Adviser on behalf of the Company and its
Funds pursuant thereto, shall at all times be subject to any directives of the
Board of Directors of the Company.
6. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Adviser shall at all times conform to:
(a) all applicable provisions of the Investment Company Act
of 1940, as amended, and any rules and regulations adopted
thereunder;
(b) the provisions of the Registration Statement of the
Company under the Securities Act of 1933 and the Investment
Company Act of 1940, as amended;
(c) the provisions of the Articles of Amendment and
Restatement of the Company;
(d) the provisions of the By-laws of the Company, as
amended; and
(e) any other applicable provisions of state and federal
law.
7. Expenses. The expenses connected with the Company shall be
allocable between the Company and the Adviser as follows:
(a) The Adviser shall furnish, at its expense and without
cost to the Company, the services of personnel, office space and
equipment to the extent that such services are required to carry
out its obligations under this Agreement.
(b) The Adviser shall furnish, at its expense and without
cost to the Company, the services of a President, Secretary and
one or more Vice Presidents of the Company, to the extent that
such additional officers may be required by the Company for the
proper conduct of its affairs.
(c) The Adviser shall maintain at its expense and without
cost to the Company, a trading function in order to carry out its
obligations under subparagraph (g) of paragraph 2 hereof to place
orders for the purchase and sale of portfolio instruments for the
Company's Fixed Income Funds.
(d) The Company assumes and shall pay or cause to be paid
all other expenses of the Funds, including, without limitation:
the charges and expenses of any registrar, any custodian or
depository appointed by the Company for the safekeeping of the
Funds' cash, portfolio securities and other property, and any
stock transfer, dividend or accounting agent or agents appointed
by the Company; brokers' commissions chargeable to a Fund in
connection with portfolio securities transactions to which the
Fund is a party; all taxes, including securities issuance and
transfer taxes, and corporate fees payable by the Company to
federal, state or other governmental agencies; the costs and
expenses of engraving or printing of stock certificates
representing shares of the Company; all costs and expenses in
connection with the registration and maintenance of registration
of the Company and its shares with the Securities and Exchange
Commission and various states and other jurisdictions (including
filing and legal fees and disbursements of counsel); the costs
and expenses of preparing (including typesetting) prospectuses
and statements of additional information (including supplements
thereto) of the Company, proxy statements and reports to
shareholders, and of printing and distributing such items to
shareholders of the Funds; all expenses of shareholders'
meetings; all expenses incident to the payment of any
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dividend, distribution, withdrawal or redemption, whether in
shares or in cash; charges and expenses of any outside service
used for pricing of the Company's shares; charges and expenses of
legal counsel, including counsel to the directors of the Company
who are not "interested persons"(as defined in the Investment
Company Act of 1940, as amended) of the Company, and of
independent accountants, in connection with any matter relating
to the Company and its Funds; interest payable on a Fund's
borrowings; postage; insurance premiums on property or personnel
(including officers and directors) of the Company which inure to
its benefit; extraordinary expenses (including but not limited
to, legal claims and liabilities and litigation costs and any
indemnification related thereto); and all other charges and costs
of the Company's operation unless otherwise explicitly provided
herein.
8. Delegation of Responsibilities. The Adviser may, but should be
under no duty to, perform services on behalf of the Company which are not
required by this Agreement upon the request of the Company's Board of Directors.
Such services will be performed on behalf of the Company and the Adviser's
charge in rendering such services may be billed monthly to the Company, subject
to examination by the Company's independent accountants. Payment or assumption
by the Adviser of any Company expense that the Adviser is not required to pay or
assume under this Agreement shall not relieve the Adviser of any of its
obligations to the Company nor obligate the Adviser to pay or assume any similar
Company expense on any subsequent occasions.
9. Compensation. For the services to be rendered and the expenses
assumed by the Adviser, each Fund shall pay to the Adviser the annual fee,
payable monthly, set forth opposite its name on Schedule A annexed to this
Agreement. Except as hereinafter set forth, compensation under this Agreement
shall be calculated and accrued daily and the amounts of the daily accruals
shall be paid monthly. If this Agreement becomes effective subsequent to the
first day of a month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Subject to the provisions of Paragraph 10 hereof, payment of the
Adviser's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by Paragraph 10
hereof.
10. Expense Limitation. In the event the operating expenses of a
Fund, including all investment advisory and management fees, for any fiscal year
ending on a date on which this Agreement is in effect exceed the expense
limitations applicable to the Fund imposed by the securities laws or regulations
thereunder of any state in which the Fund's shares are qualified for sale, as
such limitations may be raised or lowered from time to time, the Adviser shall
reduce its management fee to the extent of its share of such excess expenses
and, if required, pursuant to any such laws or regulations, will reimburse the
Fund for any annual operating expenses (after reductions of all investment
advisory and management fees) in excess of any expense limitation that may be
applicable; provided, however, there shall be excluded from such expenses the
amount of any interest, taxes, brokerage commissions, and extraordinary expenses
(including but not limited to legal claims and liabilities and litigation costs
and any indemnification related thereto) paid or payable by the Fund. Such
reduction, if any, shall be computed and accrued daily, shall be settled on a
monthly basis and shall be based upon the expense limitation applicable to the
Fund as at the end of the last business day of the month. Should two or more
such expense limitations be applicable as at the end of the last business day of
the month, that expense limitation which results in the largest reduction in the
Adviser's fee shall be applicable. For the purposes of this Paragraph, the
Adviser's share of any excess expenses shall be computed by multiplying such
excess expenses by a fraction, the numerator of which is the amount of the
management fee which would otherwise be payable to the Adviser for such fiscal
year were it not for this Paragraph 10 and the denominator of which is the sum
of all advisory and management fees which would otherwise be payable by a Fund
were it not for the expense limitation provisions of any advisory or management
agreement to which the Company is a party.
11. Non-Exclusivity. The services of the Adviser to the Company
are not to be deemed exclusive and the Adviser shall be free to render
investment management and corporate administrative or other services to others
(including other investment companies) and to engage in other activities, so
long as its services under this Agreement are not impaired thereby. It is
understood and agreed that officers and directors of the Adviser are not
prohibited from engaging in any other business activity or from rendering
services to any other
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person, or from serving as partners, officers or directors of any other firm or
corporation, including other investment companies.
12. Term and Approval. This Agreement shall become effective at
the close of business on the date hereof and, unless earlier terminated as
provided in Paragraph 13 hereof, shall remain in force and effect for a period
of two years from the date hereof. The Agreement shall thereafter continue in
force and effect from year to year, provided that such continuance is
specifically approved at least annually:
(a) (i) by the Company's Board of Directors or (ii) by the
vote of a majority of the outstanding voting securities (as
defined in Section 2(a)(42) of the Investment Company Act of
1940, as amended), and
(b) by the affirmative vote of a majority of the directors
who are not parties to this Agreement or interested persons of a
party to this Agreement (other than as Company directors), by
votes cast in person at a meeting specifically called for such
purpose.
13. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by vote of the Company's Board of Directors
or by vote of a majority of a Fund's outstanding voting securities (as defined
in Section 2(a)(42) of the Investment Company Act of 1940, as amended), or by
the Adviser, on sixty (60) days' written notice to the other party. The notice
provided for herein may be waived by either party. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for the purpose having the meaning defined in Section 2(a)(4) of the Investment
Company Act of 1940, as amended.
14. Liability of the Adviser. In the absence of willful
misfeasance, bad faith or gross negligence on the part of the Adviser or its
officers, directors or employees, or reckless disregard by the Adviser of its
duties under this Agreement, the Adviser shall not be liable to the Company or
to any shareholder of the Company for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
15. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other party at
such address as such other party may designate for the receipt of such notice.
Until further notice to the other party, it is agreed that the address of both
the Company and the Adviser shall be 000 Xxxx Xxxx Xxxxxx, Xxxxxxx Xxxxx,
Xxxxxxxx 00000.
16. Questions of Interpretation. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the Investment Company Act of 1940, as
amended, shall be resolved by reference to such term or provision of the Act and
to interpretations thereof, if any, by the United States Courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Act. In
addition, where the effect of a requirement of the Investment Company Act of
1940, as amended, reflected in any provision of this Agreement is revised by
rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
17. Non-Exclusive Use of the Name "Trans Adviser". The Company
acknowledges that it adopted its name through the permission of the Adviser. The
Adviser hereby consents to the non-exclusive use by the Company of the name
"Trans Adviser" only so long as the Adviser serves as the Funds' adviser. The
Company covenants and agrees to protect, exonerate, defend, indemnify and hold
harmless the Adviser, its shareholders, officers, directors, agents and
employees from and against any and all costs, losses, claims, damages or
liabilities, joint or several, including all legal expenses, which may arise or
have arisen out of the Company's use or misuse of the name "Trans Adviser", or
out of any breach of or failure to comply with this Section 17.
If the Adviser or any successor to its business shall cease to
furnish services to the Funds under this Agreement or similar contractual
arrangement, the Company:
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(a) as promptly as practicable, will take all necessary
action to cause its Articles of Amendment and Restatement to be
amended to accomplish a change of name; and
(b) within 90 days after the termination of this Agreement
or such similar contractual arrangement, shall cease to use in
any other manner, including but not limited to use in any
prospectus, sales literature or promotional material, the name
"Trans Adviser" or any name, xxxx or logotype derived from it or
similar to it or indicating that the Funds are managed by or
otherwise associated with the Adviser.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
TRANS ADVISER FUNDS, INC.
By:/s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx, President
Attest:
/s/ Xxxxx Xxxxxxxxxxxx
----------------------
TRANS FINANCIAL BANK, N.A.
By:/s/Xxxxxxx X. Xxxxxx
--------------------
Xxxxxxx X. Xxxxxx, President
Attest:
/s/ Xxx Xxxxxxx
---------------
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SCHEDULE A
Name of Fund Annual Fee*
------------ -----------
1. Growth/Value Fund 1.00%
2. Aggressive Growth Fund 1.00%
3. Intermediate Bond Fund .40%
4. Kentucky Tax-Free Fund .40%
5. Tennessee Tax-Free Fund .40%
6. Money Market Fund .20%
* As a percentage of average daily net assets.
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