Exhibit (d)(12)
ARMADA FUNDS
ADVISORY AGREEMENT
AGREEMENT made as of June 28, 2002 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 Small/Mid Cap Value Fund (the "Fund");
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
(f) The Trust's most recent prospectuses and statements of
additional information with respect to the Fund (such
prospectuses and statements of
-1-
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 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.
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 and investments 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 under this Agreement in accordance
with the Fund's investment objective, policies, and restrictions as
stated in the Prospectus and resolutions of the Trust's Board of
Trustees applicable to the 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 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
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
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:
-2-
(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 management activities independently of the
Commercial Departments of all banking affiliates. 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 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 Fund;
(e) 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
-3-
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
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 investment portfolios of Armada 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;
(f) will maintain all books and records with respect to the
securities transactions for the Fund 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
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).
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 with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund.
-4-
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
annual rate of 1.00% 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, 2002. 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 the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the 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 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.
-5-
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: /s/ Xxxxxxx X. Xxxxxxx
-----------------------
Title: President
NATIONAL CITY INVESTMENT
MANAGEMENT COMPANY
By: /s/ Xxxxxx X. Xxxx
-------------------
Title:
-6-
