THE ARMADA ADVANTAGE FUND
ADVISORY AGREEMENT
AGREEMENT made as of the 21st day of October, 2004 between THE ARMADA
ADVANTAGE FUND, a Massachusetts business trust located in King of Prussia,
Pennsylvania (the "Trust"), and NATIONAL CITY INVESTMENT 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 Institutional Money Market Fund (the "Fund");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between 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 May 19, 1993, 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 July 6, 1993, 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. 33-65690) and under the 1940 Act as filed
with the SEC on July 6, 1993, and all amendments
thereto; and
(f) The Trust's most recent prospectus and statement of
additional information with respect to the Fund (such
prospectus and statement of additional information,
as presently in effect and all amendments and
supplements thereto are herein called the
"Prospectus").
-1-
The Trust will furnish the Adviser from time to time with
execution copies of all amendments of or supplements to the foregoing.
2. APPOINTMENT AND SERVICES. The Trust hereby appoints the
Adviser to act as investment adviser to the Fund 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 Fund for the compensation hereinafter provided.
(a) Subject to the supervision of the Trust's Board of
Trustees, the Adviser will provide a continuous
investment program for the Fund, including investment
research and management with respect to all
securities, investments, cash and cash equivalents in
the Fund. The Adviser will determine from time to
time what securities and other investments will be
purchased, retained or sold by the Fund. The Adviser
will provide the services rendered by the Adviser
under this Agreement in accordance with the Fund's
investment objectives, policies, and restrictions as
stated in the Prospectus and resolutions of the
Trust's Board of Trustees applicable to the Fund.
(b) Transmit trades to the Trust's custodian for proper
settlement;
(c) Prepare a quarterly broker security transaction
summary and monthly security transaction listing for
the Fund;
(d) Maintain all books and records with respect to the
Fund's securities transactions effected by it,
including, but not limited to, those required by
subparagraphs (b)(5), (6), (7), (9), (10) and (11)
and paragraph (f) of Rule 31a-1 under the 1940 Act;
and
(e) Supply the Trust and its Board of Trustees with
reports and statistical data as reasonably requested.
-2-
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 Fund 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 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 the Fund on a periodic basis for compliance with its
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.
4. COVENANTS BY ADVISER. The Adviser agrees with respect to the
services provided to the 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 Fund, or make interest-bearing
loans to the Trust or the Fund;
(d) will maintain a policy and practice of conducting its
investment advisory services hereunder independently
of the commercial banking operations of any
affiliated person of the Adviser. In making
investment recommendations for the Fund, personnel
will not inquire or take into consideration whether
the issuers (or related supporting institutions) of
securities proposed for purchase or sale for the
Fund's account are customers of the commercial
department of any affiliated person of the Adviser.
(e) in connection with its duties under Section 2 of this
Agreement, will place orders pursuant to its
investment determinations for the Fund 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 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 the 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 the 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 with respect to the accounts as to which it
exercises investment discretion. Notwithstanding the
foregoing, no prior approval by the Board shall be
required so long as the broker or dealer selected by
the Adviser provides best price and execution on a
particular transaction. In no instance will Fund
securities be purchased from or sold to the Adviser,
any Sub-Adviser, Professional Funds Distributor, 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 Fund, 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 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 Fund and such other clients; and
-3-
(f) will treat confidentially and as proprietary
information of the Trust all records and other
information relative to the Fund 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).
-4-
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. The Trust acknowledges that
the Adviser may give advice and take action in the performance of its
duties with respect to any of its other clients which may differ from
advice given, or the time or nature of action taken, with respect to
the Fund.
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 Fund are the property of the Trust and
further agrees to surrender promptly to the Trust any of such records
upon the Trust's written request; provided, however, that the Adviser
may retain a copy of such records. The Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records required to be maintained by it pursuant to paragraph
2(d) of this Agreement.
7. EXPENSES. During the term of this Agreement, the Adviser will
pay all expenses incurred by it in connection with its activities under
the Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transactions
costs, if any) purchased or sold for the Fund.
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 therefore a fee, computed daily and payable monthly, at
the annual rate of 0.15% of the average daily net assets of the Fund.
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
upon approval of this Agreement by vote of a majority of the
outstanding voting securities of the Fund, and, unless sooner
terminated as provided herein, shall continue in effect until September
30, 2005. Thereafter, if not terminated, this Agreement shall continue
in effect 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 the Fund.
Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by the Trust (by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Fund) on sixty days' written notice to the
Adviser, or by the Adviser on 60 days' written notice to the Trust.
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 as such terms have in the 1940 Act.)
-5-
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 until approved by vote of a majority
of the outstanding voting securities of the Fund.
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 "THE ARMADA ADVANTAGE FUND" and "Trustees of
"THE ARMADA ADVANTAGE FUND" 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 May 18, 1993,
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 "THE ARMADA
ADVANTAGE FUND" 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.
-6-
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.
THE ARMADA ADVANTAGE FUND
By: /s/ XXXXXXX X. XXXXXXX, XX.
-----------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Title: President
NATIONAL CITY INVESTMENT
MANAGEMENT COMPANY
By: /s/XXXXXX X. XXXX
------------------
Xxxxxx X. Xxxx
Title: President
