INVESTMENT SUB-ADVISORY AGREEMENT By and Between RE Advisers Corporation and
Sub-Item 77Q1(d) - Investment
Sub-advisory Agreement
By and Between
RE
Advisers Corporation
and
▇. ▇▇▇▇ Price Associates,
Inc.
INVESTMENT SUB-ADVISORY
AGREEMENT, made as of the 5th day of December, 2008, (“Effective Date”) by and among
RE Advisers Corporation,
a corporation organized and existing under the laws of Virginia (“Adviser”), and ▇. ▇▇▇▇ Price,
Associates, Inc., a corporation organized and existing under the laws of
Maryland (“Sub-adviser”).
WHEREAS, Adviser has entered
into an Investment Management Agreement dated as of the 5th day of December,
2008 (“Management
Agreement”) with Homestead Funds, Inc. (“Company”), on behalf of its
Growth Fund (“Fund”),
which is a series of the Company. The Company is engaged in business as an
open-end investment company registered under the Investment Company Act of 1940,
as amended (“1940 Act”);
and
WHEREAS, Adviser, under the
Management Agreement, has agreed to provide certain investment advisory and
related administrative services to the Fund; and
WHEREAS, the Management
Agreement permits the Adviser to delegate certain of its investment advisory
duties under the Management Agreement to a sub-adviser; and
WHEREAS, Sub-adviser is
engaged principally in the business of rendering investment management services
and is registered as an investment adviser under the Investment Advisers Act of
1940, as amended (“Advisers
Act”); and
WHEREAS, Adviser desires to
retain Sub-adviser to furnish certain investment advisory services to the Fund
and Sub-adviser is willing to furnish such services;
NOW, THEREFORE, in
consideration of the premises and mutual promises herein set forth, the parties
hereto agree as follows:
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I.
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Appointment. (A) Adviser
hereby appoints Sub-adviser to provide certain investment advisory
services to the Fund for the period and on the terms set forth in this
Agreement, and (B) Sub-adviser hereby accepts such appointment and agrees
to render the services herein set forth for the compensation herein
provided.
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II.
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Additional Series. In
the event that the Company has established or establishes one or more
series of shares other than the Fund with respect to which Adviser and the
Board of Directors of the Company (the “Board”) desires to
retain Sub-adviser to render
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investment
advisory services hereunder, Adviser shall so notify Sub-adviser in
writing, indicating the advisory fee to be payable with respect to the
additional series of shares. If Sub-adviser is willing to render such
services on the terms provided for herein, it shall so notify Adviser in
writing, whereupon such series shall become a Fund hereunder and shall be
added to Schedule 1 of the Agreement.
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III.
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Duties of
Sub-adviser.
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A.
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Sub-adviser
is hereby authorized and directed and hereby agrees to (i) furnish
continuously an investment program for the Fund, and (ii) determine from
time to time what investments shall be purchased, sold or exchanged and
what portion of the assets of the Fund shall be held uninvested.
Sub-adviser shall perform these duties subject always to (1) the overall
supervision of Adviser and the Board, (2) the Company’s Articles of
Incorporation and By-laws (as defined below), as amended from time to
time, (3) the stated investment objectives, policies and restrictions of
the Fund as set forth in the Company’s then current Registration Statement
(as defined below), (4) any additional policies or guidelines established
by Adviser or the Board that have been furnished in writing to
Sub-adviser, (5) applicable provisions of law, including, without
limitation, all applicable provisions of the 1940 Act and the rules and
regulations thereunder, and (6) the provisions of the Internal Revenue
Code of 1986, as amended (“Code”) applicable to
“regulated investment companies” (as defined in Section 851 of the Code),
as amended from time to time.
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B.
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Sub-adviser
shall have no responsibility with respect to maintaining custody of the
Fund’s assets. Sub-adviser shall affirm security transactions with central
depositories and advise the custodian of the Fund (“Custodian”), as
identified in the Company’s Registration Statement, or such depositories
or agents as may be designated by Custodian and Adviser, promptly of each
purchase and sale of a Fund security, specifying the name of the issuer,
the description and amount or number of shares of the security purchased,
the market price, the commission and gross or net price, the trade date
and settlement date and the identity of the effecting broker or dealer.
Upon reasonable request of Custodian, Adviser and/or Company, Sub-adviser
shall from time to time provide Custodian and Adviser with evidence of
authority of its personnel who are authorized to give instructions to
Custodian.
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C.
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Unless
Adviser advises Sub-adviser in writing that the right to vote proxies has
been expressly reserved to Adviser or the Company or otherwise delegated
to another party, Sub-adviser shall exercise voting rights incident to any
securities held in the Fund without consultation with Adviser or the
Company, provided such materials have been forwarded to the Sub-adviser in
a timely fashion by the Custodian and provided that Sub-adviser will
follow any written instructions received from Adviser or the Company with
respect to voting as to particular issues. Sub-adviser shall further
respond to all corporate action matters incident to the securities held in
the Fund including, without limitation, proofs of claim
in
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bankruptcy
and class action cases and shelf registrations, provided such materials
have been forwarded to the Sub-adviser in a timely fashion by the
Custodian. Sub-adviser shall provide to Adviser and the Company the Fund’s
proxy voting procedures (or summary thereof) and proxy voting records as
may be required to comply with all applicable regulatory disclosure and
filing requirements.
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D.
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Sub-adviser
shall timely provide such reports, evaluations, information, analyses and
data as may be reasonably requested by Adviser or the Company regarding
Sub-adviser’s management of the Fund’s assets, including, but not limited
to, semiannual written portfolio manager commentary and analysis,
portfolio holdings and positions, and country and industry diversification
tables.
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E.
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Upon
request of Custodian, Adviser and/or the Company, Sub-adviser shall
provide reasonable assistance in connection with the determination of the
fair value of securities in the Fund for which market quotations are not
readily available.
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F.
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In
the performance of its duties hereunder, Sub-adviser is and shall be an
independent contractor and except as expressly provided for herein or
otherwise expressly provided or authorized shall have no authority to act
for or represent the Fund or the Company in any way or otherwise be deemed
to be an agent of the Fund, the Company or of
Adviser.
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IV.
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Compensation. For the
services provided pursuant to this Agreement, Sub-adviser shall receive an
investment management fee from Adviser computed as set forth in Schedule 1
attached hereto and incorporated herein by reference. The management fee
shall be payable monthly in arrears to Sub-adviser on or before the 30th
day of the next succeeding calendar month and shall be calculated based on
the average daily net assets of the Fund during the month to which the
payment relates. If this Agreement becomes effective or terminates before
the end of any month, the investment management fee for the period from
the effective date to the end of such month or from the beginning of such
month to the date of termination, as the case may be, shall be prorated
according to the proration which such period bears to the full month in
which such effectiveness or termination occurs.
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In
calculating the investment management fee, ▇. ▇▇▇▇ Price shall waive the
first breakpoint of 0.50% (50 bps) due it under the attached Schedule 1 of
this Agreement. This fee waiver allows RE Advisers to realize the second
breakpoint of 0.40% (40 bps) until such time as the assets in the Fund
reach the next breakpoint.
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V.
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Expenses. During the
term of this Agreement, Sub-adviser will bear all expenses incurred by it
in the performance of its duties hereunder, other than those expenses
specifically assumed by the Company hereunder. The Company shall assume
and shall pay all brokers’ and underwriting commissions chargeable to the
Company in connection with the securities transactions to which the Fund
is a party.
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VI.
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Duties
of Adviser.
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A.
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Adviser
has furnished or made available to Sub-adviser copies of each of the
following documents and will furnish to Sub-adviser at its principal
office all future amendments and supplements to such documents, if any, as
soon as practicable after such documents become
available:
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(1)
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The
Articles of Incorporation of the Company, as filed with the State of
Maryland, as in effect on the date hereof and as amended from time to time
(“Articles”);
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(2)
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The
by-laws of the Company as in effect on the date hereof and as amended from
time to time (“By-Laws”);
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(3)
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Resolutions
of the Board authorizing the appointment of Adviser and Sub-adviser and
approving the form of the Management Agreement and this
Agreement;
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(4)
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The
Company’s Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended (the “1933 Act”) on Form N-1A,
as filed with the Securities and Exchange Commission (“SEC”) relating to the
Fund and its shares and all amendments thereto (“Registration
Statement”);
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(5)
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The
Notification of Registration of the Company under the 1940 Act on Form
N-8A as filed with the SEC and any amendments thereto;
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(6)
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The
Fund’s most recent prospectus (the “Prospectus”);
and
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(7)
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Copies
of reports made by the Fund to its
shareholders.
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Adviser
shall furnish Sub-adviser with any further documents, materials or
information that Sub-adviser may reasonably request to enable it to
perform its duties pursuant to this Agreement.
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B.
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During
the term of this Agreement, the Adviser shall furnish by electronic mail
or otherwise to the Subadviser at its principal office all prospectuses,
proxy statements, reports to shareholders, sales literature, or other
material prepared for distribution to shareholders of the Fund or the
public, which refer to the Subadviser or its clients in any way, at a
reasonable time prior to the use thereof. The Adviser shall not use any
prospectuses if the Subadviser reasonably objects in writing ten business
days (or such other time as may be mutually agreed) after receipt thereof,
and shall not use any other such materials if the Subadviser reasonably
objects in writing five business days (or such other time as may be
mutually agreed) after receipt thereof. The Adviser shall ensure that
materials prepared by employees or agents of the Adviser or its affiliates
that refer to the
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Subadviser
or its clients in any way are consistent with those materials previously
approved by the Subadviser as referenced in the preceding sentence. Upon
termination of this agreement for any reason, the Adviser shall as soon as
practicable cease and cause the Fund to cease all use of the name “▇. ▇▇▇▇
Price.”
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C.
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The
Adviser shall provide (or cause the Fund custodian to provide) timely
information to the Sub-Adviser regarding such matters as the composition
of the assets of the Fund, borrowings, cash requirements and cash
available for investment in the Fund, any applicable investment
restrictions imposed by state insurance laws and regulations, and all
other reasonable information as may be necessary for the Sub-Adviser to
perform its duties and responsibilities
hereunder.
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VII.
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Fund
Transactions.
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A.
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Sub-adviser
shall arrange for the execution of all orders for the purchase and sale of
securities and other investments for the Fund’s account and will exercise
full discretion and act for the Company in the same manner and with the
same force and effect as the Company might or could do with respect to
such purchases, sales, or other transactions, as well as with respect to
all other things necessary or incidental to the furtherance or conduct of
such purchases, sales, or other transactions, including without
limitation, management of cash balances in the Fund. Sub-adviser agrees
that, in executing Fund transactions and selecting brokers or dealers, if
any, it shall 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, Sub-adviser shall consider all factors it deems relevant,
including the breadth of the market in and the price of the security, the
financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, with respect to the specific
transaction and on a continuing basis. It is understood that none of the
Funds, the Trust, the Manager nor the Subadviser has adopted a formula for
allocation of a Fund’s investment transaction business. It is also
understood that it is desirable for each Fund that the Subadviser have
access to supplemental investment and market research and security and
economic analyses provided by certain brokers who may execute brokerage
transactions at a higher cost to a Fund than may result when allocating
brokerage to other brokers on the basis of seeking the most favorable
price and efficient execution. Therefore, in evaluating the best overall
terms available, and in selecting the broker or dealer, if any, to execute
a particular transaction, 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 (“1934 Act”)) provided to
Sub-adviser with respect to the Fund and/or other accounts over which
Sub-adviser exercises investment discretion. Sub-adviser may, in its
discretion, agree to pay a broker or dealer that furnishes such brokerage
or research services a higher commission than that which might have been
charged by another broker-dealer for effecting the same transactions, if
Sub-adviser determines in good faith that such commission is reasonable in
relation to
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the
brokerage and research services provided by the broker or dealer, viewed
in terms of either that particular transaction or the overall
responsibilities of Sub-adviser with respect to the accounts as to which
it exercises investment discretion (as such term is defined under Section
3(a)(35) of the 1934 Act). Sub-adviser shall, upon reasonable request from
Adviser, provide such periodic and special reports describing any such
brokerage and research services received and the incremental commissions,
net price or other consideration to which they relate.
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B.
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In
no instance will Fund securities be purchased from or sold to Sub-adviser,
or any affiliated person thereof, except in accordance with the federal
securities laws and the rules and regulations
thereunder.
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C.
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Sub-adviser
is hereby authorized to execute account documentation, agreements,
contracts and other documents requested by brokers, dealers,
counterparties and other persons solely in connection with its management
of the assets of the Fund. In such respect, and only for this limited
purpose, the Sub-adviser shall act as the Adviser’s agent and
attorney-in-fact. The Adviser shall provide such assistance to the
Sub-adviser in setting up and maintaining brokerage accounts, futures and
options accounts, and other accounts as the Sub-adviser shall reasonably
request to allow for the purchase or sale of various forms of securities
pursuant to this Sub-Advisory Agreement.
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D.
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Sub-adviser
may buy securities for the Fund at the same time it is selling such
securities for another client account and may sell securities for the Fund
at the time it is buying such securities for another client account. In
such cases, subject to Rule 17a-7 under the 1940 Act, and in compliance
with such procedures of the Fund as may be in effect from time to time,
Sub-adviser may effectuate cross transactions between the Fund and such
other account if it deems this to be advantageous. Adviser acknowledges
that, in the event of any such cross transaction, Sub-adviser may have a
potentially conflicting division of loyalties and responsibilities
regarding the Fund and such other client account, and Adviser consents to
any such cross transaction. THE FOREGOING CONSENT TO CROSS TRANSACTIONS
EFFECTUATED BY SUB-ADVISER MAY BE REVOKED AT ANY TIME BY ADVISER OR THE
COMPANY BY WRITTEN NOTICE TO SUBADVISER.
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E.
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On
occasions when Sub-adviser deems the purchase or sale of a security to be
in the best interest of the Company as well as other clients of
Sub-adviser, Sub-adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold to attempt to obtain a more favorable
price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by Sub-adviser in the
manner Sub-adviser considers to be the most equitable and consistent with
its fiduciary obligations to the Company and to its other
clients.
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VIII.
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Ownership of Records.
Sub-adviser shall maintain all books and records required to be
maintained by Sub-adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to investment portfolio
transactions on behalf of the Fund. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, Sub-adviser hereby agrees (A) that all
records that it maintains for the Fund are the property of the Company,
(B) to preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any records that it maintains for the Company and that are required to
be maintained by Rule 31a-1 under the 1940 Act, and (C) to surrender
promptly to the Company or Adviser any records that it maintains for the
Company upon request by the Company or Adviser; provided, however,
Sub-adviser may retain copies of such records.
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IX.
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Reports
and Meetings.
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A.
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Sub-adviser
shall timely furnish to the Board or Adviser, or both, as appropriate,
such information, reports, evaluations, analyses and opinions as are
required by law or that the Board or Adviser, as appropriate, may
reasonably mutually agree upon, including, without limitation, compliance
reporting and certification with respect
to:
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1.
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Affiliated
Brokerage Transactions
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2.
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Affiliated
Underwritings
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3.
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Cross
Transactions
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4.
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Bunched
Trades
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5.
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Prospectus
Compliance
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6.
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Code
of Ethics
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7.
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Soft
Dollar Usage
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8.
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Price
Overrides/Fair Valuation Determinations.
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9.
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Annual
Review of Fund Pursuant to Rule 38a-1 under the 1940
Act
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B.
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Sub-adviser
shall from time to time make available in person to the Board and to
Adviser personnel of Sub-adviser as the Board or Adviser may reasonably
request to review the investments and the investment program of the Fund
and the services provided by Sub-adviser
hereunder.
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X.
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Services to Other Clients.
Nothing contained in this Agreement shall limit or restrict (i) the
freedom of Sub-adviser, or any affiliated person thereof, to render
investment management and corporate administrative services to other
investment companies, to act as investment manager or investment counselor
to other persons, firms, or corporations, or to engage in any other
business activities, or (ii) the right of any director, officer, or
employee of Sub-adviser, who may also be a director, officer, or employee
of the Company, to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar
nature.
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XI.
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Sub-adviser’s Use of the
Services of Others. Sub-adviser may, at its cost, employ, retain,
or otherwise avail itself of the services or facilities of other persons
or
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organizations
for the purpose of providing Sub-adviser or the Company or Fund, as
appropriate, with such statistical and other factual information, such
advice regarding economic factors and trends, such advice as to occasional
transactions in specific securities, or such other information, advice, or
assistance as Sub-adviser may deem necessary, appropriate, or convenient
for the discharge of its obligations hereunder or otherwise helpful to the
Company or the Fund, as appropriate, or in the discharge of Sub-adviser’s
overall responsibilities with respect to the other accounts that it serves
as investment manager or counselor.
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XII.
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Prohibited Conduct. In
providing the services described in this agreement, the Sub-Advisor will
not consult with any other investment advisory firm that provides
investment advisory services to any investment company sponsored by the
Adviser regarding transactions for the Fund in securities or other
assets.
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XIII.
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Liability of Sub-adviser;
Indemnification. Neither Sub-adviser nor any of its directors,
officers, partners, or employees, agents, or affiliates, nor any person
performing executive, administrative, trading, or other functions for the
Company, the Fund (at the direction or request of Sub-adviser) or
Sub-adviser in connection with Sub-adviser’s discharge of its obligations
undertaken or reasonably assumed with respect to this Agreement
(collectively, “Related
Persons”), shall be liable for (i) any error of judgment or mistake
of law or for any loss suffered by the Company or Fund or (ii) any error
of fact or mistake of law contained in any report or data provided by
Sub-adviser, except for any error, mistake or loss resulting from willful
misfeasance, bad faith, or gross negligence in the performance by
Sub-adviser or such Related Person of Sub-adviser’s duties on behalf of
the Company or Fund or from reckless disregard by Sub-adviser or any such
Related Person of the duties of Sub-adviser pursuant to this Agreement
(each of which is referred to as a “Culpable
Act”).
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Notwithstanding
the foregoing, any stated limitations on liability shall not constitute a
waiver or limitation of any rights which the Adviser or the Company may
have under any applicable federal securities laws, and shall not relieve
Sub-adviser from any responsibility or liability for errors committed by
Sub-adviser in connection with the execution of trade
orders.
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Adviser
shall indemnify Subadviser and its Related Persons from and against any
Damages arising directly or indirectly out of or in connection with the
performance of services by Adviser or its Related Persons under this
Agreement or the Management Agreement, in each case, to the extent such
Damages result from any willful misfeasance, bad faith, gross negligence
or reckless disregard of its duties by Adviser or any of its Related
Persons.
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XIV.
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Liability of Adviser and
Company; Indemnification. Neither the Adviser or Company, nor any
of their directors, officers, partners, employees, agents, or affiliates,
nor any person performing executive, administrative, trading, or other
functions for the Adviser or Company in connection with the Adviser’s and
Company’s discharge of their obligations undertaken or reasonably assumed
with respect to this Agreement
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(collectively,
“Adviser/Company Related
Persons”), shall be liable for (i) any error of judgment or mistake
of law or for any loss suffered by the Sub-Adviser or (ii) any error of
fact or mistake of law contained in any report or data provided by the
Adviser or Company, except for any error, mistake or loss resulting from
willful misfeasance, bad faith, or gross negligence in the performance by
the Adviser or Fund or such Adviser/Company Related Person of their duties
hereunder or from reckless disregard by the Adviser or Company or any
Adviser/Company Related Person of their duties pursuant to this Agreement
(each of which is referred to as a “Culpable
Act”).
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Notwithstanding
the foregoing, any stated limitations on liability shall not constitute a
waiver or limitation of any rights which the Sub-Adviser may have under
any applicable federal securities laws, and shall not relieve Adviser from
any responsibility or liability for errors committed by Adviser in
connection with the execution of trade orders.
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Subadviser
shall indemnify Adviser and its Related Persons and hold them harmless
from and against any and all losses, damages, costs, charges, reasonable
counsel fees, payments, expenses and liabilities (collectively, “Damages”) arising
directly or indirectly out of or in connection with the performance of
services by Subadviser or its Related Persons hereunder to the extent such
Damages result from a Culpable Act of Subadviser or its Related
Persons.
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XV.
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Representations of Sub-adviser.
Sub-adviser represents, warrants, and agrees as
follows:
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A.
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Sub-adviser
(i) is registered as an investment adviser under Advisers Act and will
continue to be so registered for so long as this Agreement remains in
effect; (ii) is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement; (iii) has met, and
will continue to meet for so long as this Agreement remains in effect, any
other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency,
necessary to be met in order to perform the services contemplated by this
Agreement; (iv) has the authority to enter into and perform the services
contemplated by this Agreement; and (v) will immediately notify Adviser of
the occurrence of any event that would disqualify Sub-adviser from serving
as an investment adviser of an investment company pursuant to Section 9(a)
of the 1940 Act or otherwise.
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B.
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Sub-adviser
has adopted a written code of ethics (the “Sub-adviser Code”)
complying with the requirements of Rule 17j-1 under the 1940 Act, as may
be amended from time to time, and, has provided the Adviser and the
Company with a copy of the Sub-adviser Code, together with evidence of its
adoption. The Sub-adviser certifies that it has adopted procedures
reasonably necessary to prevent “access persons” as defined in Rule 17j-1
(“Access Persons”)
from violating the Sub-adviser Code. On a quarterly basis, Sub-adviser
will either: (i) certify to Adviser that Sub-adviser and its Access
Persons have complied with the Sub-adviser Code with respect to the Fund,
or (ii) identify any material violations
of
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the
Sub-adviser Code which have occurred with respect to the Fund. In
addition, Sub-adviser will furnish at least annually to Adviser and the
Board a written report that (a) describes any issues arising under the
Sub-adviser Code since the last report to the Board, including, but not
limited to, information about material violations of the Sub-adviser Code
with respect to the Fund and sanctions imposed in response to the material
violations and (b) certifies that the Sub-adviser has adopted procedures
reasonably necessary to prevent Access Persons from violating the
Sub-adviser Code.
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C.
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Sub-adviser
has provided Adviser and the Company, and Adviser and the Company
acknowledge having received, a copy of Sub-adviser’s Form ADV as most
recently filed with the SEC and, if not so filed, the most recent Part 2
of its Form ADV, and Sub-adviser will, promptly after filing any material
amendment to its Form ADV with the SEC, and, if not so filed, any material
amendment to Part 2 of its Form ADV, furnish a copy of such amendment to
Adviser and the Company.
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D.
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Sub-adviser
has provided Adviser and the Company, and Adviser and Company acknowledge
having received, a description or copy of Sub-adviser’s policies and
procedures for voting proxies relating to client securities and
information concerning how they can obtain information concerning how
Sub-adviser has voted proxies relating to securities held by the
Fund.
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E.
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Sub-Adviser
has provided Adviser and the Company, and Adviser and the Company
acknowledge having received, a copy of the Sub-adviser’s compliance
policies and procedures relevant to Sub-Adviser’s investment advisory
activities that were adopted pursuant to Rule 206(4)-7 under the Advisers
Act.
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XVI.
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Compliance with Applicable
Regulations. In anticipation of performing its duties hereunder,
Sub-adviser has established compliance procedures (copies of which have
been provided to Adviser, receipt of which is hereby acknowledged by
Adviser, and which are subject to review and approval by Adviser and the
Board) reasonably designed to ensure compliance at all times with all
applicable provisions of the 1940 Act and the Advisers Act, and any rules
and regulations adopted thereunder; Subchapter M of the Code; all
applicable anti-money laundering laws and regulations; the provisions of
the Registration Statement; the provisions of the Articles and the By-Laws
of the Company, as the same may be amended from time to time; and any
other applicable provisions of state, federal or foreign
law.
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XVII.
|
Term of Agreement. This
Agreement shall become effective with respect to the Fund on the Effective
Date and, with respect to any additional Fund, on the date of receipt by
the Adviser of notice from the Sub-adviser in accordance with Section II
hereof that the Subscriber is willing to serve as Sub-adviser with respect
to such Fund. Unless sooner terminated as provided herein, this Agreement
shall continue in effect for two years from the Effective Date with
respect to the Fund and, with respect to each additional Fund, for two
years from the date on which this Agreement becomes effective with respect
to such
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10
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Fund.
Thereafter, this Agreement shall continue in effect from year to year,
with respect to the Fund, subject to the termination provisions and all
other terms and conditions hereof, so long as (a) such continuation shall
be specifically approved at least annually (i) by either the Board or vote
of a majority of the outstanding voting securities of the Fund; (ii) in
either event, by the vote of a majority of the Directors of the Company
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) Sub-adviser shall not have notified Adviser and the Company, in
writing, at least 60 days prior to such approval that it does not desire
such continuation. Sub-adviser shall furnish to the Company, upon its
request, such information as may reasonably be necessary to evaluate the
terms of this Agreement or any extension, renewal, or amendment
hereof.
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||
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XVIII.
|
Termination of Agreement.
Notwithstanding the foregoing, this Agreement may be terminated
with respect to a Fund at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of such Fund on 90 days’ prior written notice to Sub-adviser.
This Agreement may also be terminated by Adviser (i) with respect to a
Fund, on 90 days’ prior written notice to Sub-adviser, without the payment
of any penalty; (ii) upon material breach by Sub-adviser of any of the
representations and warranties set forth in Section XIII of this
Agreement, if such breach shall not have been cured within a 20-day period
after notice of such breach; or (iii) if Sub-adviser becomes unable to
discharge its duties and obligations under this Agreement. Sub-adviser may
terminate this Agreement with respect to a Fund at any time, without the
payment of any penalty, on 90 days’ prior notice to Adviser. This
Agreement shall terminate automatically in the event of its “assignment”,
as such term is defined in the 1940 Act, or upon termination of the
Management Agreement. Any approval, amendment, or termination of this
Agreement with respect to a Fund by the holders of a majority of the
outstanding voting securities of such Fund shall be effective to continue,
amend or terminate this Agreement with respect to any such Fund
notwithstanding (i) that such action has not been approved by the holders
of a majority of the outstanding voting securities of any other Fund
affected thereby, and/or (ii) that such action has not been approved by
the vote of a majority of the outstanding voting securities of the
Company, unless such action shall be required by any applicable law or
otherwise.
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XIX.
|
Amendments, Waivers, etc.
Provisions of this Agreement may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or termination is
sought. This Agreement (including any exhibits hereto) may be amended at
any time by written mutual consent of the parties, subject to the
requirements of the 1940 Act and rules and regulations promulgated and
orders granted thereunder.
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XX.
|
Notification.
Sub-adviser will notify Adviser within three (3) business days of
any change in the key personnel of Sub-adviser with responsibility for
making investment decisions in relation to the Fund or who have been
authorized to give instructions to Custodian. Sub-adviser shall notify the
Adviser and the Company of any change in
its
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11
|
ownership
that would constitute a change of control within the meaning of the
Advisers Act or 1940 Act.
|
|
XXI.
|
Confidentiality. All
information furnished by one party to the other party (including their
respective agents, employees and representatives) hereunder shall be
treated as confidential and shall not to third parties, except as may be
necessary to comply with applicable laws, rules and regulations, subpoenas
or court orders. Without limiting the foregoing, the Adviser acknowledges
that the securities holdings of the Fund constitute information of value
to the Sub-Adviser, and agrees: (1) not to use for any purpose, other than
for the Adviser or the Fund, or their agents, to supervise or monitor the
Sub-Adviser, the holdings or other trading-related information of the
Fund; and (2) not to disclose the Fund’s holdings, except: (a) as required
by applicable law or regulation; (b) as required by state or federal
regulatory authorities; (c) to the Board of Directors of the Fund, counsel
to the Board, counsel to the Fund, the administrator or any
sub-administrator, the independent accountants and any other agent of the
Fund; or (d) as otherwise agreed to by the parties hereto in writing.
Further, the Adviser agrees that information supplied by the Sub-Adviser,
including approved lists, internal procedures, compliance procedures and
any board materials, is valuable to the Sub-Adviser, and the Adviser
agrees not to disclose any of the information contained in such materials,
except: (i) as required by applicable law or regulation; (ii) as required
by state or federal regulatory authorities; (iii) to the Board of
Directors of the Fund, counsel to the Board, counsel to the Fund, the
administrator or any sub-administrator, the independent accountants and
any other agent of the Fund; or (iv) as otherwise agreed to by the parties
hereto in writing.
|
|
|
Without
limiting the foregoing, the Sub-Adviser agrees that any and all
information that it obtains pursuant to this Sub-Advisory Agreement
regarding the Adviser or its customers including, but not limited to,
approved lists, internal procedures, compliance procedures and any board
materials, is valuable to the Adviser and will be used exclusively to
fulfill the Sub-Adviser’s obligations hereunder, and will not be disclosed
to any other party, including any affiliate of the Sub-Adviser or agent of
the Fund, except (i) as necessary for the Sub-Adviser to fulfill its
obligations pursuant to this Sub-Advisory Agreement, (ii) as required by
applicable law or regulation; (iii) as required by state or federal
regulatory authorities; or (iv) as otherwise agreed to by the parties
hereto in writing. Notwithstanding the foregoing, the Adviser agrees that
the Sub-Adviser may identify it or the Fund as a client in promotional
materials.
|
||
|
XXII.
|
Miscellaneous.
|
|
A.
|
Governing Law. This
Agreement shall be construed in accordance with the laws of Virginia
without giving effect to the conflicts of laws principles thereof and the
1940 Act. To the extent that the applicable laws of Virginia conflict with
the applicable provisions of the 1940 Act, the latter shall
control.
|
||
|
B.
|
Insurance. Sub-adviser
agrees to maintain errors and omissions or professional liability
insurance coverage in an amount that is reasonable in light of the nature
and scope of Sub-adviser’s business
activities.
|
12
|
C.
|
Captions. The captions
contained 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.
|
||
|
D.
|
Entire Agreement. This
Agreement represents the entire agreement and understanding of the parties
hereto and shall supersede any prior agreements between the parties
relating to the subject matter hereof, and all such prior agreements shall
be deemed terminated upon the effectiveness of this
Agreement.
|
||
|
E.
|
Interpretation. Nothing
herein contained shall be deemed to require the Company to take any action
contrary to its Articles or By-Laws, or any applicable statutory or
regulatory requirement to which it is subject or by which it is bound, or
to relieve or deprive the Board of its responsibility for and control of
the conduct of the affairs of the Fund.
|
||
|
F.
|
Definitions. Any
question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of
the 1940 Act shall be resolved by reference to such term or provision of
the 1940 Act and to interpretations thereof, if any, by the United States
courts or, in the absence of any controlling decision of any such court,
by rules, regulations, or orders of the SEC validly issued pursuant to the
1940 Act. As used in this Agreement, the terms “majority of the
outstanding voting securities,” “affiliated person,” “interested person,”
“assignment,” broker,” “investment adviser,” “net assets,” “sale,” “sell,”
and “security” shall have the same meaning as such terms have in the 1940
Act, subject to such exemption as may be granted by the SEC by any rule,
regulation, or order. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Agreement is made less
restrictive by a rule, regulation, or order of the SEC, whether of special
or general application, such provision shall be deemed to incorporate the
effect of such rule, regulation, or order.
|
||
|
G.
|
Notice. Any notice under
this Agreement shall be in writing, addressed and delivered or mailed
postage pre-paid to the other party at such address as such other party
may designate for the receipt of such notices. Until further notice to the
other party, it is agreed that the address of the Sub-Adviser for this
purpose shall be ▇. ▇▇▇▇ Price Associates, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Chief Legal
Counsel.
|
13
IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
by their duly authorized signatories as of the date and year first above
written.
|
RE
ADVISERS CORPORATION
|
||||||||||
|
Attest:
|
/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
|
By:
|
/s/
Stuart Teach
|
|||||||
|
Name:
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
|
Name:
|
Stuart
Teach
|
|||||||
|
Title:
|
Vice
President
|
|||||||||
|
▇.
▇▇▇▇ PRICE ASSOCIATES, INC.
|
||||||||||
|
Attest:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇▇
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|||||||
|
Name:
|
▇▇▇▇▇
▇▇▇▇▇▇▇
|
Name:
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
|||||||
|
Title:
|
Vice
President
|
|||||||||
14
Schedule 1toInvestment Sub-Advisory
AgreementBy and
BetweenRE
Advisers Corporationand ▇. ▇▇▇▇ Price Associates,
Inc.
Dated as
of December 5, 2008
Sub-Advisory Fees
0.50% of
first $50 million
0.40% of
next $50 million
When
assets exceed $100 million, the fee is 0.40% on all assets.*
When
assets exceed $250 million, the fee is 0.375% on all assets above $250
million.
*A
transitional credit is applied to the fee schedule
as assets
approach or fall below this breakpoint.
15