ARMADA FUNDS
ADVISORY AGREEMENT
AGREEMENT made as of _______, ____ between ARMADA FUNDS, a
Massachusetts business trust, located in Oaks, 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 Aggressive Allocation and Conservative Allocation Funds (individually, a
"Fund" and collectively, 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 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 of the foregoing, it is
agreed that investment advisory services to any 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 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
each Fund; (b) review investments in each 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.
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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 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
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
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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
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
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.
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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 and the expenses assumed pursuant to
this Agreement, the Trust will pay the Adviser from the assets belonging to the
Funds and the Adviser will accept as full compensation therefor fees, computed
daily and paid monthly, at the following annual rates: 0.25% of the average
daily net assets of the Aggressive Allocation Fund; and 0.25% of the average
daily net assets of the Conservative Allocation Fund.
The fee attributable to each Fund shall be the several (and not joint or
joint and several) obligation of each 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 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 September 30, 2002.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to a particular 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 the Fund. 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.
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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 Fund 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 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: _____________________
Title:
NATIONAL CITY INVESTMENT
MANAGEMENT COMPANY
By: _____________________
Title:
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