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Exhibit 5(k)
ARMADA FUNDS
SMALL CAP GROWTH FUND
WELLINGTON MANAGEMENT COMPANY, LLP
SUB-ADVISORY AGREEMENT
AGREEMENT made as of July 31, 1997 between NATIONAL CITY BANK (the
"Adviser"), and WELLINGTON MANAGEMENT COMPANY, LLP (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 July 31, 1997 (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 Small Cap Growth Fund 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 Small Cap Growth
Fund (the "Fund") 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
Fund 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.
(b) The Sub-Adviser acknowledges that it has received
copies of the Trust's most recent prospectuses and
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statements of additional information with respect
to the Fund.
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 Fund. 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 such Fund. The
Sub-Adviser will provide the services rendered by
it under this Agreement in accordance with the
Fund's investment objective, policies, and
restrictions as stated in the Trust's respective
Prospectuses and Statements of Additional
Information for the Fund and resolutions of the
Trust's Board of Trustees;
(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 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
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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,
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 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 Fund either
directly with the issuer or with any broker or
dealer. In executing portfolio transactions and
selecting brokers or dealers, the Sub-Adviser will
use its best efforts to seek on behalf of the Fund
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) with respect 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 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 Sub-Adviser determines in good faith
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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 to the
Fund and to the Trust. 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 Fund, 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. 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 Fund and such other clients; and
(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 Sub-Adviser may be exposed to civil or
criminal intent 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
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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 Fund.
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 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
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 Fund.
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, based upon the
following annual rates and calculated based upon the average daily net
assets of the Fund:
Assets Annual Fee
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On First $25 million .75%
On Next $25 million .65%
On Next $50 million .55%
Over $100 million .45%
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
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.
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9. DURATION AND TERMINATION. This Agreement will become effective
as of the date hereof and, unless sooner terminated as provided herein,
shall continue in effect until September 30, 1998. Thereafter, if not
terminated, this Agreement shall automatically continue in effect as to
a particular Fund for successive annual periods, 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 such 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 such 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
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to furnish the Sub-Adviser at its principal office all Prospectus,
proxy statements, reports to shareholders, sales literature or other
materials prepared for distribution to stockholders of the Fund, 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 (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 an
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.
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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.
WELLINGTON MANAGEMENT COMPANY, LLP
BY: _____________________________________
TITLE: __________________________________
NATIONAL CITY BANK
BY: _____________________________________
TITLE: __________________________________
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