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Exhibit (5)(m)
ARMADA FUNDS
TAX MANAGED EQUITY, AGGRESSIVE ALLOCATION, BALANCED
ALLOCATION, CONSERVATIVE ALLOCATION, EMERGING MARKETS,
MID CAP GROWTH, MICHIGAN MUNICIPAL BOND
AND TREASURY II FUNDS
ADVISORY AGREEMENT
AGREEMENT made as of ___________, 1998 between ARMADA FUNDS, a
Massachusetts business trust, located in Oaks, Pennsylvania (the "Trust") and
NATIONAL CITY BANK 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 Tax Managed Equity, Aggressive Allocation, Balanced Allocation,
Conservative Allocation, Emerging Markets, Mid Cap Growth, Michigan Municipal
Bond and Treasury II (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
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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
(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 each Fund,
including investment research and management with respect to all
securities and investments and cash equivalents in each Fund. The
Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by each Fund. The
Adviser will provide the services under this Agreement in accordance
with each Fund's investment objective, policies, and restrictions as
stated in the Prospectus and resolutions of the Trust's Board of
Trustees applicable to such Fund.
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 or the foregoing, it is agreed that
investment advisory service to any Fund may be provided by a
subcontractor agreeable to the
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Adviser and approved in accordance with the provision 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 Fund 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 fund; (b) review investments
in each fund on a periodic basis for compliance with its fund's
investment objective, 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. Pursuant to this paragraph, on
the date hereof, the Adviser has entered into a Sub-Advisory Agreement
with Wellington Management Company, LLP with respect to the Small Cap
Growth Fund.
4. COVENANTS BY ADVISER. The Adviser agrees with respect to the
services provided to each Fund 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
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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
executing portfolio transactions and selecting
brokers or dealers, the Adviser will use its best
efforts to seek on behalf of the Trust and each
Fund 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 any Fund 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 Fund 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 to the
particular Fund and to the Trust. In no instance
will fund securities be purchased from or sold to
the Adviser, any Sub-Adviser, SEI Investments
Distribution Co. ("SEI") (or any other principal
underwriter to the Trust) or an affiliated person
of either the Trust, the Adviser, Sub-Adviser, or
SEI (or such other principal underwriter) unless
permitted by an order of the SEC or applicable
rules. In executing portfolio transactions for
any Fund, the Adviser may, but shall not be
obligated to, to the extent permitted by
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applicable laws and regulations, aggregate the
securities to be sold or purchased with those of
other Funds 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;
(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.
7. EXPENSES. During the term of this Agreement, the
Adviser will pay all expenses incurred by it in connection
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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 and the expenses assumed
pursuant to this Agreement, the Trust will pay the Adviser from the
assets belonging to the Fund and the Adviser will accept as full
compensation therefor fees, computed daily and paid monthly, at the
following annual rates: .75% of the average daily net assets of the Tax
Managed Equity Fund; ____% of the average daily net assets of the
Aggressive Allocation Fund; ____% of the Average daily net assets of
the Balanced Allocation Fund; ____% of the average daily net assets of
the Conservative Allocation Fund; ____% of the average daily net assets
of the Emerging Markets Fund; ____% of the average daily net assets of
the Mid Cap Growth Fund; ____% of the average daily net assets of the
Michigan Municipal Bond Fund; and ____% of the average daily net assets
of the Treasury II Fund.
The fee attributable to each Fund shall be the several (and
not joint or joint and several) obligation of each Fund.
If in any fiscal year the aggregate expenses of a Fund (as
defined under the securities regulations of any state having
jurisdiction over the Fund) exceed the expense limitations of any such
state, the Adviser will reimburse the Trust for such excess expenses to
the extent described in any written undertaking provided by the Adviser
to such state.
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 each Fund upon approval of this Agreement by vote of a
majority of the outstanding voting securities of each such Fund, and,
unless sooner terminated as provided herein, shall continue in effect
until _________, 1999. Thereafter, if not terminated, this Agreement
shall continue in effect with respect to a particular Fund for
successive twelve month periods ending on ____________, PROVIDED such
continuance is specifically
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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 the Funds. Notwithstanding the foregoing, this Agreement may be
terminated as to any Fund at any time, 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 the particular 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 that
Fund.
12. MISCELLANEOUS. The Adviser expressly agrees that notwithstanding
the termination of or failure to continue this Agreement with respect
to a particular Fund, the Adviser shall continue to be legally bound to
provide the services required herein for the other Funds for the period
and on the terms set forth in this Agreement. 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 "ARMADA FUNDS" and "Trustees of ARMADA 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 "ARMADA FUNDS" entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents are
made not
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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.
ARMADA FUNDS
By:
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Title:
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NATIONAL CITY BANK
By:
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Title:
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