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Exhibit 5(e)
SUB-ADVISORY AGREEMENT
ARMADA FUNDS
CORE EQUITY FUND
TOTAL RETURN ADVANTAGE FUND
SUB-ADVISORY AGREEMENT
AGREEMENT made as of March 6, 1998 between NATIONAL CITY BANK (the
"Adviser"), and NATIONAL ASSET MANAGEMENT CORPORATION (the "Sub-Adviser").
WHEREAS, ARMADA FUNDS, a Massachusetts business trust (the "Trust"), is
registered as an open-end, management investment company under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, pursuant to an Advisory Agreement dated March 6, 1998 (the
"Advisory Agreement") by and between the Trust and the Adviser, the Trust has
appointed the Adviser to furnish the investment advisory and other services to
the Trust for its Core Equity and Total Return Advantage Funds and the Adviser
has agreed thereto; and
WHEREAS, the Advisory Agreement authorizes the Adviser to subcontract
investment advisory services with respect to the Funds to the Sub-Adviser; and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment advisory services to the Trust with respect to the Core Equity and
Total Return Advantage Funds (the "Funds") and the Sub-Adviser is willing to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT AND DELIVERY OF DOCUMENTS.
(a) Intending to be legally bound, the Adviser, with the
approval of the Trust, hereby appoints the
Sub-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
Sub-Adviser accepts such appointment and agrees to
furnish the services herein set forth for the
compensation herein provided.
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(b) The Sub-Adviser acknowledges that it has received
copies of the Trust's most recent prospectuses and
statements of additional information with respect to
the Funds.
2. SERVICES OF SUB-ADVISER. The Sub-Adviser agrees that with
respect to each Fund it shall:
(a) Subject to the supervision of the Trust's Board of
Trustees, assist the Adviser in providing a
continuous investment program for each such Fund,
including investment research and management with
respect to all securities, investments, cash and cash
equivalents in the Funds. The Sub-Adviser will assist
the Adviser in determining from time to time what
securities and other investments will be purchased,
retained or sold by each such Fund. The Sub-Adviser
will provide the services rendered by it under this
Agreement in accordance with each Fund's investment
objective, policies, and restrictions as stated in
the Prospectus and Statement of Additional
Information and resolutions of the Trust's Board of
Trustees applicable to such 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 Funds;
(d) Maintain all books and records with respect to the
Funds' securities transactions effected by it as
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.
3. OTHER COVENANTS. The Sub-Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations
of the Securities and Exchange Commission 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 advisory services hereunder independently
of the commercial banking operations of
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any affiliated person of the Adviser. In making
investment recommendations for the Funds, the
Sub-Adviser's personnel will not inquire or take into
consideration whether the issuers (or related
supporting institutions) of securities proposed for
purchase or sale for each such Fund's account are
customers of the commercial department of any
affiliated person of the Adviser;
(e) in connection with its duties under paragraph 2 of
this Agreement, 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 Sub-Adviser will use its
best efforts to seek on behalf of the Funds the best
overall terms available. In assessing the best
overall terms available for any transaction the
Sub-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
Sub-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 Sub-Adviser or any affiliate
of the Sub-Adviser exercises investment discretion.
The Sub-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 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 Sub-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
Sub-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 Sub-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, 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 Funds, the Sub-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.
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In such event, the Sub-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; and
(f) 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
Sub-Adviser may be exposed to civil or criminal
comtempt proceedings for failure to comply, when
requested to divulge such information by duly
constituted authorities or when so requested by the
Trust).
4. SERVICES NOT EXCLUSIVE. The services furnished by the Sub-Adviser
hereunder are deemed not to be exclusive, and the Sub-Adviser shall be
free to furnish similar services to others so long as its services
under this Agreement are not impaired thereby. The Adviser acknowledges
that the Sub-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 Funds.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records
which it maintains for the Funds 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
Sub-Adviser may retain a copy of such records. The Sub-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.
6. EXPENSES. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction
costs, if any) purchased or sold for any Funds.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Adviser will pay the Sub-Adviser and
the Sub-Adviser will accept as full compensation therefor a fee,
computed daily and payable monthly, of .32% and .16% of the average
daily net assets of the Core Equity Fund and the Total Return Advantage
Fund, respectively.
8. LIMITATION OF LIABILITY. The Sub-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
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misfeasance, bad faith or gross negligence on the part of the
Sub-Adviser in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement.
9. 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, 1999. Thereafter, if not terminated, this Agreement
shall automatically continue in effect as 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 particular Fund. Notwithstanding
the foregoing, this Agreement may be terminated as to any Fund at any
time, without the payment of any penalty, by the Adviser or 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 particular Fund)
on sixty days' written notice to the Sub-Adviser, or by the
Sub-Adviser, on sixty days' written notice to the Trust, provided that
in each such case, notice shall be given simultaneously to the Adviser.
In addition, notwithstanding anything herein to the contrary, in the
event of the termination of the Advisory Agreement with respect to a
particular Fund for any reason (whether by the Trust, by the Adviser or
by operation of law) this Agreement shall terminate with respect to the
same Fund upon the effective date of such termination of the Advisory
Agreement. 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.)
10. 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 as to a particular Fund until
approved by vote of a majority of the outstanding voting securities of
such Fund.
11. MISCELLANEOUS. The Sub-Adviser expressly agrees that
notwithstanding the termination of or failure to continue this
Agreement with respect to a particular Fund, Sub-Adviser shall continue
to be legally bound to provide the services required herein for any
other Funds to which it is Sub-Adviser pursuant to this Agreement for
the period and on the terms set forth in this Agreement.
During the term of this Agreement, the Adviser agrees to
furnish the Sub-Adviser at its principal office all Prospectuses, proxy
statements, reports to shareholders, sales literature or other
materials prepared for distribution to shareholders of the Funds, the
Adviser, broker-dealers or the public that refer to the Sub-Adviser.
Sub-Adviser shall consent to such materials unless it reasonably
objects in writing within five business days
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(or such other period as may be mutually agreed) after receipt thereof.
The Sub-Adviser's right to object to such materials is limited to the
portions of the materials that expressly relate to the Sub-Adviser, its
services and its clients. The Adviser agrees to use its reasonable best
efforts to ensure that materials prepared by its employees or agents or
affiliates that refer to the Sub-Adviser or its clients in any way are
consistent with those materials previously approved by the Sub-Adviser.
The captions in the 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.
12. 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.
SIGNATURES OMITTED
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