EXHIBIT 10(n)
INVESTMENT AND FINANCIAL ADVISORY SERVICES AGREEMENT
THIS INVESTMENT AND FINANCIAL ADVISORY SERVICES AGREEMENT (this "Agreement"),
dated as of the 1st day of January, 1994, is by and between Xxxxxxxxxxxx &
Associates, Inc. ("M&A") and Trans Financial Bank, National Association ("Trans
Financial").
RECITALS
A. Trans Financial is a national banking association that provides
various trust services to its customers, including custodial and agency accounts
for individuals and entities, and employment benefit accounts for employers.
B. M&A is knowledgeable in the securities and investment business and
is willing to provide investment and financial advice to Trans Financial in
order to assist Trans Financial in performing its duties with respect to certain
trust account relationships.
C. The parties hereto desire to set forth the terms and
conditions for the provision of investment and financial advisory services to be
performed by M&A for Trans Financial.
AGREEMENT
THEREFORE, IN CONSIDERATION of the foregoing and the covenants and
promises set forth below, the parties hereto agree as follows:
1 . Definitions. The following terms shall have the meanings indicated
when used in this Agreement:
(a) "Aggregate Balance" shall mean the aggregate of the average monthly
principal balances of all Managed Accounts.
(b) "Excess Balance" shall mean, with respect to any month, the
Aggregate Balance for that month in excess of $41,000,000.00.
(c) "Managed Accounts" shall mean all (i) all custodial accounts of
trust customers of Trans Financial with respect to which M&A is the investment
advisor pursuant to an investment advisory agreement between M&A and the trust
customer, where Trans Financial receives the entire fee from the trust customer
for the services performed by Trans Financial and M&A, (ii) all accounts of
trust customers of Trans Financial with respect to which Trans Financial has
requested that M&A provide account-specific advice to Trans Financial to assist
it in the management of such account, and (iii) any other accounts, as agreed
upon by Trans Financial and M&A from time to time.
2. Advisory Services. M&A shall work with Trans Financial to:
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(a) Establish, modify from time to time as necessary, and articulate an
investment philosophy that can be effectively communicated and marketed to
customers and potential customers of Trans Financial;
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(b) Develop a consistent framework for investing and a disciplined
approach for implementation;
(c) Construct a methodology for selecting appropriate fixed income
and equity instruments, and establish an execution strategy;
(d) Market Trans Financial's philosophy and investment approach to
current and prospective customers; and
(e) Develop an expanded customer base for commingled funds offered
by Trans Financial.
3. Advisory Activities. M&A shall perform the following
activities in furtherance of the goals set forth in
the previous section:
(a) M&A shall participate in weekly conference calls with such
employees of Trans Financial as Trans Financial shall deem appropriate, to
discuss market outlook and strategy, as well as pertinent contemporary issues.
The weekly conference calls shall be scheduled as mutually agreed between the
parties. In addition, M&A shall be reasonably available at other times for
unscheduled calls or discussions, as needed by Trans Financial.
(b) M&A shall assist Trans Financial in establishing, and evaluating on
an ongoing basis, asset allocation models to be used by Trans Financial in
managing trust accounts, and shall advise Trans Financial on the mix of
investments within the parameters of each asset allocation model, based on
current market conditions and outlook.
(c) M&A shall provide a portfolio evaluation service, focusing on the
asset allocation approach with sector emphasis and security selection for those
customers identified by Trans Financial.
(d) M&A shall conduct up to six seminars each year in the markets
served by Trans Financial, to cultivate existing and build additional market
base for Trans Financial's trust services and banking operations, and for the
brokerage services offered by Trans Financial's subsidiary broker-dealer. The
seminars shall be scheduled as mutually agreed between the parties, and the
content of the seminars may be educational, service driven or action oriented,
as directed by Trans Financial.
(e) M&A shall make quarterly presentations to existing and prospective
trust account customers of Trans Financial, which may include an outlook forum
(the economy, bond and stock markets and investment strategy), an education
forum (various aspects of investing, types of investments and managing assets),
or such other topics or formats as are agreed to between the parties.
4. Term. The term of this Agreement shall be from the date hereof
through December 31, 1994, and shall automatically renew for successive one-year
periods, unless either party hereto notifies the other party in writing, at
least 90 days prior to the end of the then current term, of the notifying
party's intention to terminate this Agreement at the end of the then current
term.
5. Fees. For services rendered hereunder, Trans Financial shall pay to
M&A a monthly fee equal to $15,000.00 plus 1/12th of 0.25% of the Excess Balance
(if any). Trans Financial shall receive the entire fee charged to customers with
Managed Accounts (unless otherwise agreed in connection with accounts qualifying
as Managed Accounts under subparagraph (iii) of the definition of Managed
Accounts), and shall pay M&A for its services rendered hereunder by means of the
fee provided for in this section. Monthly fees shall be paid in arrears within
15 days of the end of each month.
6. Relationship. M&A is engaged hereunder as a consultant and
independent contractor, and nothing herein shall be construed as creating an
employment, agency, partnership, or joint venture relationship between the
parties hereto.
7. Miscellaneous. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, and shall be governed by and construed under the laws of the
Commonwealth of Kentucky.
EXECUTED as of the date first set forth above.
XXXXXXXXXXXX & ASSOCIATES
By: /s/Xxxxx Xxxxxxxxxxxx
TRANS FINANCIAL BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxx
Date: February 13, 1996
To: Xxx Xxxxxxx
From: Xxxxx Xxxxxxxxxxxx
Subject: Investment Services Agreement between Trans Financial and
Xxxxxxxxxxxx & Associates
Earlier this week you suggested that I advise you with respect to our monthly
compensation billing that has been in effect since October 1, 1995. In
anticipation of drafting a revised Agreement between Trans Financial and
Xxxxxxxxxxxx & Associates, we revised our billing methodology effective October,
1995 using a mutually agreed upon approach of establishing a "basis point" fee
assessment on total Trust Assets as well as a percentage of Broker Dealer
revenues after certain thresholds were reached. The minimum of $35,000 per month
has been charged to Trans Financial (plus expenses) since October because
asset/revenue levels have been insufficient to warrant charging more than the
minimum monthly fee.
Xxxxxxxx prior to the conversion were running approximately $28,000-$29,000 per
month.
As a follow-up to your recent inquiry, we have calculated January, 1996's
billing if we used the old basis as described in the January 1, 1994 Agreement
between Trans Financial Bank National Association and Xxxxxxxxxxxx & Associates.
Much to our surprise, the amount charged would have been substantially greater
than the $35,000 minimum or approximately $42,000. This reflects a sharp ramp-up
in the number of Trust Accounts being Advised by M&-A since the September, 1995
time-frame which is consistent with Trans Financial's successful efforts in
attracting new money as well as closer, effective coordination with M&A. This
seems to confirm Doug's vision and expectation of growth. The momentum is
continuing into February.
Going forward, we would suggest that until Trans Financial notifies us to the
contrary, we will assume that the terms of the original agreement dated January
1, 1994 remain in effect, with the exception of the compensation formulation.
With respect to compensation, we would agree to adhere to the mutually agreed
upon revised compensation structure (attached) which for now and prospectively
appears to favor Trans Financial.
6. Compensation.
A. In consideration of the services rendered pursuant to this Agreement,
the Bank will pay the Adviser:
[1] a fee, payable monthly, equal to a percentage of the Trust Assets of the
Bank net of any Trust Assets invested in one or more series of the Trans Adviser
Funds and net of any accounts that are part of Trust Assets and are managed and
introduced to Trust by M&A under M&A's sole investment advisory contract,
provided however that such fee shall in all events equal at least $35,000 per
month. The payment levels will be consistent with the following schedule:
Net Trust Assets Applicable Fee
Up to $599,999,999 .095%
$600,000,000 to $799,999,999 .085%
$800,000,000 to $999,999,999 .075%
$1,000,000,000 to $1,199,999,999 .065%
Over $1,200,000,000 .050%
For purposes of this Section 6.A, the "Trust Assets" of the Bank shall mean all
assets held by the Bank as trustee or otherwise in a fiduciary capacity,
including without limitation, as trustee of estates, guardianships, testamentary
trusts, inter vivos trusts, agencies, corporate trusts and employee benefit plan
trusts. The Trust Assets of the Bank shall be as reflected on the monthly Trust
Department Annual Report filed by the Bank with the Comptroller of the Currency;
and
[2] a fee, payable monthly, equal to 3.00% of the Commissions (as Defined
below); provided, however, that the Adviser shall receive no fee under this
Section 6.A[2] if, in any month, the Commissions do not exceed $350,000.
"Commissions" shall mean the gross commissions actually received by, or
discounts or concessions allowed to, TFIS with respect to all securities
transactions which occur at locations of TFIS, less customary direct offsets.
B. The fees set forth in Section 6.A above shall constitute all the fees payable
to the Adviser pursuant to this Agreement. The Bank shall receive all fees
attributable to custodial accounts of the Bank with respect to which the Adviser
serves as the investment adviser pursuant to a joint M&A/Bank investment
advisory agreement with the Trust customer and all fees attributable to all
other Trust accounts of the Bank with respect to which the Bank has requested
the Adviser to provide specific advice.
C. The monthly fees provided for in this Section 6 shall be paid in arrears
within fifteen (15) days following the end of each month. Upon any termination
of this Agreement, the fees payable pursuant to this Section 6 will be prorated
and paid promptly after termination.
Billing Mathematics Using Old Basis Of Calculation
Actively Managed Accounts $ 53,834,657
Asset Allocation Accounts $ 34,914,670
Advisory Accounts $ 58,208,074
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Total Account Management $ 146,957,401
Payment Threshold $ 41,000,000
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Amount Applicable to 25 Basis Points $ 105,957,401
Billing @ 25 Basis Points $ 22,074
Plus Base Level Amount Per Month 20,000
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Total Billing for January, 1996 42,074
