SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made this 8th day of September, 1995 by and between
TRANS FINANCIAL BANK, N.A., a national banking association organized under the
laws of the United States (the "Adviser"), and XXXXXXXXXXXX & ASSOCIATES, INC.,
a Tennessee corporation (the "Sub-Adviser"), on behalf of Trans Adviser Funds,
Inc. (the "Company"), 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 Sub-Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and engages in the business of
acting as investment adviser; and
WHEREAS, the Adviser serves as Adviser to the Company pursuant to an
Advisory Agreement between the Adviser and the Company of even date herewith
(the "Advisory Agreement"); and
WHEREAS, the Adviser and the Sub-Adviser desire to enter into an
agreement to provide investment advisory services with respect to the funds
listed on Schedule A (the "Funds") on the terms and conditions hereinafter set
forth;
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. Appointment. The Adviser hereby appoints the Sub-Adviser to act as
investment adviser to the Company for the period and on the terms set forth in
this Agreement. The Sub-Adviser accepts such appointment and agrees to render
the services herein set forth for the compensation herein provided.
2. Investment Sub-Advisory Services. The Sub-Adviser agrees that it
will:
(i) (a) with respect to the Company's Growth/Value Fund and
Aggressive Growth Fund (collectively, the "Equity Funds"), obtain
and evaluate information the Sub-Adviser considers pertinent
concerning: (i) significant developments and economic,
statistical and financial data, domestic, foreign or otherwise,
whether affecting the economy generally or a portfolio of one of
the Equity Funds; (ii) the individual issuers whose securities
are included in a portfolio of one of the Equity Funds or the
activities in which they engage; or (iii) securities which the
Sub- Adviser considers desirable for inclusion in a portfolio of
one of the Equity Funds;
(b) determine which issuers and securities shall be represented
in a portfolio of one of the Equity Funds;
(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 Equity Funds, all
actions which appear to the Company and the Adviser necessary to
carry into effect such purchase and sale programs as aforesaid;
(e) consult with the Adviser as necessary concerning the
Company's investable cash and furnish the Adviser with reports of
purchases and sales of portfolio securities for the Equity Funds
in order for the Adviser to fulfill its responsibilities under
the Advisory Agreement; and
(f) furnish the Company's Board of Directors and the Adviser with
such periodic and special reports as the Board of Directors or
the Adviser may reasonably request.
(ii) (a) with respect to the Company's Intermediate Bond Fund,
Kentucky Tax-Free Fund, Tennessee Tax-Free Fund and Money Market
Fund (collectively, the "Fixed Income Funds"), provide, obtain
and evaluate information the Adviser considers pertinent
concerning significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether affecting
the economy generally or a portfolio of one of the Fixed Income
Funds;
(b) furnish the Company's Board of Directors and the Adviser with
such periodic and special reports as the Board of Directors or
the Adviser may reasonably request.
3. Broker-Dealer Relationships. The Sub-Adviser is responsible for
decisions to buy and sell securities for the Equity Funds, broker-dealer
selection, and negotiation of brokerage commission rates for such Funds. The
Sub-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 Sub-Adviser may make
purchases of underwritten issues at prices which include underwriting fees. In
selecting a broker-dealer to execute each particular transaction, the
Sub-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 Sub-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 Sub-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 Sub-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 Sub-Adviser's overall responsibilities with
respect to a Fund. The Sub-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 Sub-Adviser shall determine and the Sub-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.
4. Control by Board of Directors. Any activities undertaken by the
Sub-Adviser pursuant to this Agreement shall at all times be subject to any
directives of the Board of Directors of the Company.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-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;
(d) the provisions of the By-laws of the Company, as amended; and
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(e) any other applicable provisions of state and federal law.
6. Expenses.
During the term of this Agreement, the Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions) purchased
for the Company, including the expense of maintaining a trading function in
order to carry out its obligations under subparagraph (d) of paragraph 2 hereof
to place orders for the purchase and sale of portfolio instruments for the
Company's Equity Funds.
7. Delegation of Responsibilities. Upon the request of the Company's
Board of Directors or the Adviser, the Sub-Adviser may, but should be under no
duty to, perform services on behalf of the Company which are not required by
this Agreement. Such services will be performed on behalf of the Company and the
Sub-Adviser's cost in rendering such services may be billed monthly to the
Adviser. Payment or assumption by the Sub-Adviser of any such expense that the
Sub-Adviser is not required to pay or assume under this Agreement shall not
relieve the Sub-Adviser of any of its obligations to the Adviser or the Company
nor obligate the Sub-Adviser to pay or assume any similar expense on any
subsequent occasions.
8. Compensation. For the services to be rendered and the expenses
assumed by the Sub-Adviser, the Adviser shall pay to the Sub-Adviser the annual
fee, payable monthly, set forth opposite each Fund's 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. Payment of the Sub-Adviser's compensation for the preceding month shall
be made as promptly as possible after completion of the computations.
9. Expense Limitation; Fee Waivers. Reductions of advisory fees by the
Adviser as a result of any applicable expense limitation or fee waiver will not
reduce any sub-advisory fee due the Sub-Adviser under this Agreement.
10. Non-Exclusivity. The services of the Sub-Adviser to the Company are
not to be deemed to be exclusive, and the Sub-Adviser shall be free to render
investment advisory and management 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
the officers and directors of the Sub-Adviser are not prohibited from engaging
in any other business activity or from rendering services to any other person,
or from serving as partners, officers or directors of any other firm or
corporation, including other investment companies.
11. Term and Approval. This Agreement shall become effective at the
close of business on the date hereof and shall remain in force and effect,
subject to Paragraph 12 hereof, 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.
12. 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 the
Investment Company Act of 1940, as amended), by the Adviser or by the
Sub-Adviser, on sixty (60)
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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.
13. Limitation of Liability of Sub-Adviser. In the absence of willful
misfeasance, bad faith or gross negligence on the part of the Sub-Adviser or its
officers, directors or employees, or reckless disregard by the Sub-Adviser of
its duties under this Agreement, the Sub-Adviser shall not be liable to the
Adviser, 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.
14. 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
Adviser and the Sub-Adviser shall be 000 Xxxx Xxxx Xxxxxx, Xxxxxxx Xxxxx,
Xxxxxxxx 00000.
15. 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.
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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 FINANCIAL BANK, N.A.
By /s/ Xxxxxxx X. Xxxxxx
----------------------------
Xxxxxxx X. Xxxxxx, President
Attest:
/s/ Xxx Sjezner
---------------
XXXXXXXXXXXX & ASSOCIATES, INC.
By /s/ Xxxxx Xxxxxxxxxxxx
-----------------------------
Xxxxx Xxxxxxxxxxxx, President
Attest:
/s/ Xxxxxx X. Xxxxxxx
---------------------
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SCHEDULE A
NAME OF FUND ANNUAL FEE
The Adviser shall pay to
the Sub-Adviser:
1. Equity Funds: .50% on the first $100 million of the Equity Funds'
combined average daily net assets plus .25% of the
Equity Funds' combined average daily net assets in
excess of $100 million.
2. Fixed Income Funds: .03% of each Fixed Income Fund's average daily net
assets.
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