Exhibit (d)(18)
ALLEGIANT FUNDS
ADVISORY AGREEMENT
AGREEMENT made as of September 28, 2005 between ALLEGIANT FUNDS, a
Massachusetts business trust, located in King of Prussia, Pennsylvania (the
"Trust") and ALLEGIANT ASSET MANAGEMENT COMPANY, located in Cleveland, Ohio (the
"Adviser").
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Adviser as investment adviser
to the Multi-Factor Small Cap Core Fund, Multi-Factor Small Cap Growth Fund and
Multi-Factor Small Cap Value Fund (the "Funds");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed among the parties hereto as follows:
1. DELIVERY OF DOCUMENTS. The Adviser acknowledges that it has received
copies of each of the following:
(a) The Trust's Declaration of Trust, as filed with the State
Secretary of the Commonwealth of Massachusetts on January 29,
1986 and all amendments thereto (such Declaration of Trust, as
presently in effect and as it shall from time to time be
amended, is herein called the "Declaration of Trust");
(b) The Trust's Code of Regulations, and amendments thereto (such
Code of Regulations, as presently in effect and as it shall
from time to time be amended, is herein called the "Code of
Regulations");
(c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Adviser and approving this Agreement;
(d) The Trust's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange
Commission ("SEC") on September 26, 1985 and all amendments
thereto;
(e) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act") (File No.
33-488) and under the 1940 Act as filed with the SEC on
September 26, 1985 and all amendments thereto; and
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(f) The Trust's most recent prospectuses and statements of
additional information with respect to the Funds (such
prospectuses and statements of additional information, as
presently in effect and all amendments and supplements thereto
are herein called individually, a "Prospectus," and
collectively, the "Prospectuses").
The Trust will furnish the Adviser from time to time with execution
copies of all amendments of or supplements to the foregoing.
2. SERVICES. The Trust hereby appoints the Adviser to act as investment
adviser to the Funds for the period and on the terms set forth in this
Agreement. Intending to be legally bound, the Adviser accepts such
appointment and agrees to furnish the services required herein to the
Funds for the compensation hereinafter provided.
Subject to the supervision of the Trust's Board of Trustees,
the Adviser will provide a continuous investment program for the Funds,
including investment research and management with respect to all securities
and investments and cash equivalents in the Funds. The Adviser will
determine from time to time what securities and other investments will be
purchased, retained or sold by the Funds. The Adviser will provide the
services under this Agreement in accordance with the Funds' investment
objectives, policies, and restrictions as stated in the Prospectus and
resolutions of the Trust's Board of Trustees applicable to the Funds.
3. SUBCONTRACTORS. It is understood that the Adviser may from time to
time employ or associate with itself such person or persons as the
Adviser may believe to be particularly fitted to assist in the
performance of this Agreement; provided, however, that the compensation
of such person or persons shall be paid by the Adviser and that the
Adviser shall be as fully responsible to the Trust for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
Without limiting the generality of the foregoing, it is agreed that
investment advisory services to the Funds may be provided by a
sub-adviser agreeable to the Adviser and approved in accordance with
the provisions of the 1940 Act. Any such sub-advisers are hereinafter
referred to as the "Sub-Advisers." In the event that any Sub-Adviser
appointed hereunder is terminated, the Adviser may provide investment
advisory services pursuant to this Agreement to the Funds involved
without further shareholder approval. Notwithstanding the employment of
any Sub-Adviser, the Adviser shall in all events: (a) establish and
monitor general investment criteria and policies for the Funds; (b)
review investments in the Funds on a periodic basis for compliance with
their investment objectives, policies and restrictions as stated in the
Prospectus; (c) review periodically any Sub-Adviser's policies with
respect to the placement of orders for the purchase and sale of
portfolio securities; (d) review, monitor, analyze and report to the
Board of Trustees on the performance of any Sub-Adviser; (e) furnish to
the Board of Trustees or any Sub-Adviser, reports, statistics and
economic information as may be reasonably requested; and (f) recommend,
either in its sole discretion or in conjunction with any Sub-Adviser,
potential changes in investment policy.
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4. COVENANTS BY ADVISER. The Adviser agrees with respect to the
services provided to the Funds that it:
(a) will comply with all applicable Rules and Regulations of the
SEC and will in addition conduct its activities under this
Agreement in accordance with other applicable law;
(b) will use the same skill and care in providing such services as
it uses in providing services to similar fiduciary accounts
for which it has investment responsibilities;
(c) will not make loans to any person to purchase or carry shares
in the Funds, or make interest-bearing loans to the Trust or
the Funds;
(d) will maintain a policy and practice of conducting its
investment management activities independently of the
commercial departments of all banking affiliates. In making
investment recommendations for the Funds, personnel will not
inquire or take into consideration whether the issuers (or
related supporting institutions) of securities proposed for
purchase or sale for the Funds' accounts are customers of the
Commercial Department. In dealing with commercial customers,
the Commercial Department will not inquire or take into
consideration whether securities of those customers are held
by the Funds;
(e) will place orders pursuant to its investment determinations
for the Funds either directly with the issuer or with any
broker or dealer. In selecting brokers or dealers for
executing portfolio transactions, the Adviser will use its
best efforts to seek on behalf of the Trust and the Funds the
best overall terms available. In assessing the best overall
terms available for any transaction the Adviser shall consider
all factors it deems relevant, including the breadth of the
market in the security, the price of the security, the
financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both
for the specific transaction and on a continuing basis. In
evaluating the best overall terms available, and in selecting
the broker or dealer to execute a particular transaction, the
Adviser may also consider the brokerage and research services
(as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to the Funds and/or
other accounts over which the Adviser or any affiliate of the
Adviser exercises investment discretion. The Adviser is
authorized, subject to the prior approval of the Board, to
negotiate and pay to a broker or dealer who provides such
brokerage and research services a commission for executing a
portfolio transaction for any of the Funds which is in excess
of the amount of commission another broker or dealer would
have charged for effecting that transaction if, but only if,
the Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer viewed in
terms of that particular transaction or in terms of the
overall responsibilities of the Adviser with respect to the
accounts as to which it exercises investment discretion. In no
instance will any of the Funds' securities be purchased from
or sold to the Adviser, any Sub-Adviser, Professional Funds
Distributors, LLC ("PFD") (or any other principal underwriter
to the Trust) or an affiliated person of either the Trust, the
Adviser, Sub-Adviser, or PFD (or such other principal
underwriter) unless permitted by an order of the SEC or
applicable rules. In executing portfolio transactions for the
Funds, the Adviser may, but shall not be obligated to, to the
extent permitted by applicable laws and regulations, aggregate
the securities to be sold or purchased with those of other
investment portfolios of the Trust and its other clients where
such aggregation is not inconsistent with the policies set
forth in the Trust's registration statement. In such event,
the Adviser will allocate the securities so purchased or sold,
and the expenses incurred in the transaction, in the manner it
considers to be the most equitable and consistent with its
fiduciary obligations to the Funds and such other clients;
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(f) will maintain all books and records with respect to the
securities transactions for the Funds and furnish the Trust's
Board of Trustees such periodic and special reports as the
Board may request; and
(g) will treat confidentially and as proprietary information of
the Trust all records and other information relative to the
Funds and prior, present or potential shareholders, and will
not use such records and information for any purpose other
than performance of its responsibilities and duties hereunder
(except after prior notification to and approval in writing by
the Trust, which approval shall not be unreasonably withheld
and may not be withheld and will be deemed granted where the
Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so
requested by the Trust).
5. SERVICES NOT EXCLUSIVE. The services furnished by the Adviser
hereunder are deemed not to be exclusive, and the Adviser shall be free
to furnish similar services to others so long as its services under
this Agreement are not impaired thereby.
6. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the
Trust's request. The Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
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7. EXPENSES. During the term of this Agreement, the 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, if any) purchased for the Funds.
8. COMPENSATION. For the services provided to the Funds and the
expenses assumed pursuant to this Agreement, the Trust will pay the
Adviser from the assets belonging to each Fund and the Adviser will
accept as full compensation therefor fees, computed daily and paid
monthly, at annual rates based on the average daily net assets of each
Fund as follows:
1.00% - $0 to less than $500 million
0.95% - $500 million to less than $1 billion
0.90% - $1 billion and over.
9. LIMITATION OF LIABILITY. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the performance of this Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser
in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement.
10. DURATION AND TERMINATION. This Agreement will become effective with
respect to a Fund upon approval of this Agreement by vote of a majority
of the outstanding voting securities of such Fund, and, unless sooner
terminated as provided herein, shall continue in effect until September
30, 2006. Thereafter, if not terminated, this Agreement shall continue
in effect with respect to a Fund for successive twelve month periods
ending on September 30, PROVIDED such continuance is specifically
approved at least annually (a) by the vote of a majority of those
members of the Trust's Board of Trustees who are not interested persons
of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the Trust's Board of
Trustees or by vote of a majority of the outstanding voting securities
of such Fund. Notwithstanding the foregoing, this Agreement may be
terminated at any time with respect to a Fund, without the payment of
any penalty, by the Trust (by the Trust's Board of Trustees or by vote
of a majority of the outstanding voting securities of such Fund), or by
the Adviser on 60 days' written notice. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement,
the terms "majority of the outstanding voting securities," "interested
persons" and "assignment" shall have the same meaning of such terms in
the 1940 Act.)
11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought. No amendment of
this Agreement shall be effective with respect to a Fund until approved
by vote of a majority of the outstanding voting securities of such
Fund.
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12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by Delaware law.
13. NAMES. The names "ALLEGIANT FUNDS" and "Trustees of ALLEGIANT
FUNDS" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time
under a Declaration of Trust dated January 28, 1986 which is hereby
referred to and a copy of which is on file at the office of the State
Secretary of the Commonwealth of Massachusetts and the principal office
of the Trust. The obligations of "ALLEGIANT FUNDS" entered into in the
name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not
binding upon any of the Trustees, shareholders, or representatives of
the Trust personally, but bind only the Trust property, and all persons
dealing with any class of shares of the Trust must look solely to the
Trust property belonging to such class for the enforcement of any
claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
ALLEGIANT FUNDS
BY: /s/ Xxxxxxx X. Xxxxxxx, Xx.
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Title: President and Chief
Executive Officer
ALLEGIANT ASSET
MANAGEMENT COMPANY
BY: /s/ Xxxxxx X. Xxxxx
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Title: Managing Director
