SUBADVISORY AGREEMENT
THIS AGREEMENT is made and entered into effective the 26th day of
February, 2008, by and among NATIONWIDE MUTUAL FUNDS (the "Trust"), a Delaware
statutory trust, NATIONWIDE FUND ADVISORS (the "Adviser") a Delaware business
trust registered under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and DIAMOND HILL CAPITAL MANAGEMENT, INC., a corporation
organized under the laws of the State of Ohio (the "Subadviser"), and also
registered under the Advisers Act.
W I T N E S S E T H:
WHEREAS, the Trust is registered with the U.S. Securities and Exchange
Commission (the "SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser has, pursuant to an Investment Advisory Agreement
with the Trust dated of the 1st day of May, 2007 (the "Advisory Agreement"),
been retained to act as investment adviser for certain of the series of the
Trust that are listed on Exhibit A to this Agreement (each, a "Fund");
WHEREAS, the Adviser represents that it is willing and possesses legal
authority to render such services subject to the terms and conditions set forth
in this Agreement;
WHEREAS, the Trust and the Adviser each represent that the Advisory
Agreement permits the Adviser to delegate certain of its duties under the
Advisory Agreement to other investment advisers, subject to the requirements of
the 1940 Act; and
WHEREAS, the Adviser desires to retain Subadviser to assist it in the
provision of a continuous investment program for that portion of each Fund's
assets that the Adviser will assign to the Subadviser, and Subadviser is willing
to render such services subject to the terms and conditions set forth in this
Agreement,
NOW, THEREFORE, the parties do mutually agree and promise as follows
with respect to each Fund:
1. APPOINTMENT AS SUBADVISER. The Adviser hereby appoints the
Subadviser to act as investment adviser for and to manage that portion or all of
the assets of the Fund that the Adviser from time to time upon reasonable prior
notice allocates to, and puts under the control of, the Subadviser (the
"Subadviser Assets") subject to the supervision of the Adviser and the Board of
Trustees of the Trust and subject to the terms of this Agreement. The Subadviser
hereby accepts such appointment and, in such capacity, agrees to be responsible
for the investment management of the Subadviser Assets. It is recognized that
the Subadviser and certain of its affiliates now act, and that from time to time
hereafter may act, as investment adviser to one or more other investment
companies and to fiduciary or other managed accounts and that the Adviser and
the Trust cannot object to such activities.
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2. DUTIES OF SUBADVISER.
(a) INVESTMENTS. The Subadviser is hereby authorized and
directed and hereby agrees, subject to the stated investment policies
and restrictions of the Fund as set forth in the Fund's prospectus and
statement of additional information as currently in effect and, as soon
as practical after the Trust, the Fund or the Adviser notifies the
Subadviser thereof, as supplemented or amended from time to time
(collectively referred to hereinafter as the "Prospectus") and subject
to the directions of the Adviser and the Trust's Board of Trustees, to
monitor on a continuous basis the performance of the Subadviser Assets
and to conduct a continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of the Subadviser Assets. The
Adviser agrees to provide the Subadviser with such assistance as may be
reasonably requested by the Subadviser in connection with the
Subadviser's activities under this Agreement, including, without
limitation, providing information concerning the Fund, its funds
available or to become available for investment, and generally as to
the conditions of the Fund's or the Trust's affairs.
(b) COMPLIANCE WITH APPLICABLE LAWS AND GOVERNING
DOCUMENTS. In the performance of its services under this Agreement, the
Subadviser shall act in conformity with the Prospectus and the Trust's
Agreement and Declaration of Trust and By-Laws as currently in effect
and, as soon as practical after the Trust, the Fund or the Adviser
notifies the Subadviser thereof, as supplemented, amended and/or
restated from time to time (referred to hereinafter as the "Declaration
of Trust" and "By-Laws," respectively) and with the instructions and
directions received in writing from the Adviser or the Trustees of the
Trust and will conform to, and comply with, the requirements of the
1940 Act, the Internal Revenue Code of 1986, as amended (the "Code"),
and all other applicable federal and state laws and regulations.
Without limiting the preceding sentence, the Adviser promptly shall
notify the Subadviser as to any act or omission of the Subadviser
hereunder that the Adviser reasonably deems to constitute or to be the
basis of any noncompliance or nonconformance with any of the Trust's
Declaration of Trust and By-Laws and the Prospectus, the instructions
and directions received in writing from the Adviser or the Trustees of
the Trust or the 1940 Act, the Code, and all other applicable federal
and state laws and regulations. Notwithstanding the foregoing, the
Adviser shall remain responsible for ensuring the Fund's and the
Trust's overall compliance with the 1940 Act, the Code and all other
applicable federal and state laws and regulations and the Subadviser is
only obligated to comply with this subsection (b) with respect to the
Subadviser Assets. The Adviser timely will provide the Subadviser with
a copy of the minutes of the meetings of the Board of Trustees of the
Trust to the extent they may affect the Fund or the services of the
Subadviser, copies of any financial statements or reports made by the
Fund to its shareholders, and any further materials or information
which the Subadviser may reasonably request to enable it to perform its
functions under this Agreement.
The Adviser shall perform quarterly and annual tax compliance
tests to ensure that the Fund is in compliance with Subchapter M and,
if applicable, Section 817(h) of the Code. In connection with such
compliance tests, the Adviser shall inform the Subadviser at least ten
(10) business days prior to a calendar quarter end if the Subadviser
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Assets are out of compliance with the diversification requirements
under either Subchapter M or, if applicable, Section 817(h). If the
Adviser notifies the Subadviser that the Subadviser Assets are not in
compliance with such requirements noted above, the Subadviser will take
prompt action to bring the Subadviser Assets back into compliance
within the time permitted under the Code thereunder.
The Adviser will provide the Subadviser with reasonable
advance notice of any change in the Fund's investment objectives,
policies and restrictions as stated in the Prospectus, and the
Subadviser shall, in the performance of its duties and obligations
under this Agreement, manage the Subadviser Assets consistent with such
changes, provided that the Subadviser has received prompt notice of the
effectiveness of such changes from the Trust or the Adviser. In
addition to such notice, the Adviser shall provide to the Subadviser a
copy of a modified Prospectus reflecting such changes. The Adviser
acknowledges and will ensure that the Prospectus will at all times be
in compliance with all disclosure requirements under all applicable
federal and state laws and regulations relating to the Trust or the
Fund, including, without limitation, the 1940 Act, and the rules and
regulations thereunder, and that the Subadviser shall have no liability
in connection therewith, except as to the accuracy of material
information furnished in writing by the Subadviser to the Trust or to
the Adviser specifically for inclusion in the Prospectus. The
Subadviser hereby agrees to provide to the Adviser in a timely manner
such information relating to the Subadviser and its relationship to,
and actions for, the Trust as may be required to be contained in the
Prospectus or in the Trust's Registration Statement on Form N-1A.
(c) VOTING OF PROXIES. The Adviser hereby delegates to
the Subadviser the Adviser's discretionary authority to exercise voting
rights with respect to the securities and other investments in the
Subadviser Assets and authorizes the Subadviser to delegate further
such discretionary authority to a designee identified in a notice given
to the Trust and the Adviser. The Subadviser, including without
limitation its designee (for which the Subadviser shall remain liable),
shall have the power to vote, either in person or by proxy, all
securities in which the Subadviser Assets may be invested from time to
time, and shall not be required to seek or take instructions from, the
Adviser, the Fund or the Trust or take any action with respect thereto.
If both the Subadviser and another entity managing assets of the Fund
have invested the Fund's assets in the same security, the Subadviser
and such other entity will each have the power to vote its pro rata
share of the Fund's security.
The Subadviser will establish a written procedure for proxy
voting in compliance with current applicable rules and regulations,
including but not limited to Rule 30b1-4 under the 1940 Act. The
Subadviser will provide the Adviser or its designee, a copy of such
procedure and establish a process for the timely distribution of the
Subadviser's voting record with respect to the Fund's securities and
other information necessary for the Fund to complete information
required by Form N-1A under the 1940 Act and the Securities Act of
1933, as amended (the "Securities Act"), Form N-PX under the 1940 Act,
and Form N-CSR under the Xxxxxxxx-Xxxxx Act of 2002, as amended,
respectively.
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(d) AGENT. Subject to any other written instructions of
the Adviser or the Trust, the Subadviser is hereby appointed the
Adviser's and the Trust's agent and attorney-in-fact for the limited
purposes of executing account documentation, agreements, contracts and
other documents as the Subadviser shall be requested by brokers,
dealers, counterparties and other persons in connection with its
management of the Subadviser Assets. The Subadviser agrees to provide
the Adviser and the Trust with copies of any such agreements executed
on behalf of the Adviser or the Trust.
(e) BROKERAGE. The Subadviser is authorized, subject to
the supervision of the Adviser and the plenary authority of the Trust's
Board of Trustees, to establish and maintain accounts on behalf of the
Fund with, and place orders for the investment and reinvestment,
including without limitation purchase and sale of the Subadviser Assets
with or through, such persons, brokers (including, to the extent
permitted by applicable law, any broker affiliated with the Subadviser)
or dealers (collectively "Brokers") as Subadviser may elect and
negotiate commissions to be paid on such transactions. The Subadviser,
however, is not required to obtain the consent of the Adviser or the
Trust's Board of Trustees prior to establishing any such brokerage
account. The Subadviser shall place all orders for the purchase and
sale of portfolio investments for the Fund's account with Brokers
selected by the Subadviser. In the selection of such Brokers and the
placing of such orders, the Subadviser shall seek to obtain for each
Fund the most favorable price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions for
brokerage and research services, as provided below. In using its
reasonable efforts to obtain for the Fund the most favorable price and
execution available, the Subadviser, bearing in mind the best interests
of the Fund at all times, shall consider all factors it deems relevant,
including price, the size of the transaction, the breadth and nature of
the market for the security, the difficulty of the execution, the
amount of the commission, if any, the timing of the transaction, market
prices and trends, the reputation, experience and financial stability
of the Broker involved, and the quality of service rendered by the
Broker in other transactions. Notwithstanding the foregoing, neither
the Trust, the Fund nor the Adviser shall instruct the Subadviser to
place orders with any particular Broker(s) with respect to the
Subadviser Assets. Subject to such policies as the Trustees may
determine, or as may be mutually agreed to by the Adviser and the
Subadviser, the Subadviser is authorized but not obligated to cause,
and shall not be deemed to have acted unlawfully or to have breached
any duty created by this Agreement or otherwise solely by reason of its
having caused, the Fund to pay a Broker that provides brokerage and
research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934) to the Subadviser an amount of
commission for effecting a Subadviser Assets' investment transaction
that is in excess of the amount of commission that another Broker would
have charged for effecting that transaction if, but only if, the
Subadviser determines in good faith that such commission was reasonable
in relation to the value of the brokerage and research services
provided by such Broker viewed in terms of either that particular
transaction or the overall responsibility of the Subadviser with
respect to the accounts as to which it exercises investment discretion.
It is recognized that the services provided by such Brokers
may be useful to the Subadviser in connection with the Subadviser's
services to other clients. On occasions when the Subadviser deems the
purchase or sale of a security to be in the best interests of
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the Fund with respect to the Subadviser Assets as well as other clients
of the Subadviser, the Subadviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be sold or purchased in order to obtain
the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of securities so sold or
purchased, as well as the expenses incurred in the transaction, will be
made by the Subadviser in the manner the Subadviser considers to be the
most equitable and consistent with its fiduciary obligations to each
Fund and to such other clients. It is recognized that in some cases,
this procedure may adversely affect the price paid or received by the
Fund or the size of the position obtainable for, or disposed of by, the
Fund with respect to the Subadviser Assets.
(f) SECURITIES TRANSACTIONS. The Subadviser and any
affiliated person of the Subadviser will not purchase securities or
other instruments from or sell securities or other instruments to the
Fund; provided, however, the Subadviser or any affiliated person of the
Subadviser may purchase securities or other instruments from or sell
securities or other instruments to the Fund if such transaction is
permissible under applicable laws and regulations, including, without
limitation, the 1940 Act and the Advisers Act and the rules and
regulations promulgated thereunder.
The Subadviser, on its own behalf and with respect to its
Access Persons (as defined in subsection (e) of Rule 17j-1 under the
1940 Act), agrees to observe and comply with Rule 17j-1 and its Code of
Ethics (which shall comply in all material respects with Rule 17j-1),
as the same may be amended from time to time. On at least an annual
basis, the Subadviser will comply with the reporting requirements of
Rule 17j-1, which may include either (i) certifying to the Adviser that
the Subadviser and its Access Persons have complied with the
Subadviser's Code of Ethics with respect to the Subadviser Assets or
(ii) identifying any violations which have occurred with respect to the
Subadviser Assets. The Subadviser will have also submitted its Code of
Ethics for its initial approval by the Board of Trustees no later than
the date of execution of this agreement and subsequently within six
months of any material change thereto.
(g) BOOKS AND RECORDS. The Subadviser shall maintain
separate detailed records as are required by applicable laws and
regulations of all matters hereunder pertaining to the Subadviser
Assets (the "Fund's Records"), including, without limitation, brokerage
and other records of all securities transactions. The Subadviser
acknowledges that the Fund's Records are property of the Trust; except
to the extent that the Subadviser is required to maintain the Fund's
Records under the Advisers Act or other applicable law and except that
the Subadviser, at its own expense, is entitled to make and keep a copy
of the Fund's Records for its internal files. The Fund's Records shall
be available to the Adviser or the Trust at any time upon reasonable
request during normal business hours and shall be available for
telecopying promptly to the Adviser during any day that the Fund is
open for business as set forth in the Prospectus.
(h) INFORMATION CONCERNING SUBADVISER ASSETS AND
SUBADVISER. From time to time as the Adviser or the Trust reasonably
may request in good faith, the Subadviser will furnish the requesting
party reports on portfolio transactions and reports on the Subadviser
Assets, all in such reasonable detail as the parties may reasonably
agree in
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good faith. The Subadviser will also inform the Adviser in a timely
manner of material changes in portfolio managers responsible for
Subadviser Assets, any changes in the ownership or management of the
Subadviser, or of material changes in the control of the Subadviser.
Upon the Trust's or the Adviser's reasonable request, the Subadviser
will make available its officers and employees to meet with the Trust's
Board of Trustees to review the Subadviser Assets via telephone on a
quarterly basis and in person on a less frequent basis as agreed upon
by the parties.
Subject to the other provisions of this Agreement, the
Subadviser will also provide such information or perform such
additional acts with respect to the Subadviser Assets as are reasonably
required for the Trust or the Adviser to comply with their respective
obligations under applicable laws, including without limitation, the
Code, the 1940 Act, the Advisers Act, and the Securities Act, and any
rule or regulation thereunder.
(i) CUSTODY ARRANGEMENTS. The Trust or the Adviser shall
notify the Subadviser of the identities of its custodian banks and the
custody arrangements therewith with respect to the Subadviser Assets
and shall give the Subadviser written notice of any changes in such
custodian banks or custody arrangements. The Subadviser shall on each
business day provide the Adviser and the Trust's custodian such
information as the Adviser and the Trust's custodian may reasonably
request in good faith relating to all transactions concerning the
Subadviser Assets. The Trust shall instruct its custodian banks to (A)
carry out all investment instructions as may be directed by the
Subadviser with respect to the Subadviser Assets (which instructions
may be orally given if confirmed in writing); and (B) provide the
Subadviser with all operational information necessary for the
Subadviser to trade the Subadviser Assets on behalf of the Fund. The
Subadviser shall have no liability for the acts or omissions of the
authorized custodian(s), unless such act or omission is required by and
taken in reliance upon instructions given to the authorized
custodian(s) by a representative of the Subadviser properly authorized
(pursuant to written instruction by the Adviser) to give such
instructions.
3. INDEPENDENT CONTRACTOR. In the performance of its services
hereunder, the Subadviser is and shall be an independent contractor and unless
otherwise expressly provided herein or otherwise authorized in writing, shall
have no authority to act for or represent the Fund, the Trust or the Adviser in
any way or otherwise be deemed an agent of the Fund, the Trust or the Adviser.
4. EXPENSES. During the term of this Agreement, Subadviser will
pay all expenses incurred by it in connection with its activities under this
Agreement. The Subadviser shall, at its sole expense, employ or associate itself
with such persons as it believes to be particularly fitted to assist it in the
execution of its duties under this Agreement. The Subadviser shall not be
responsible for the Trust's, the Fund's or Adviser's expenses, which shall
include, but not be limited to, the cost of securities, commodities and other
investments (including brokerage commissions and other transaction charges, if
any) purchased for the Fund and any losses incurred in connection therewith,
expenses of holding or carrying Subadviser Assets, including, without
limitation, expenses of dividends on stock borrowed to cover a short sale and
interest, fees or other charges incurred in connection with leverage and related
borrowings with respect to
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the Subadviser Assets, organizational and offering expenses (which include, but
are not limited to, out-of-pocket expenses, but not overhead or employee costs
of the Subadviser); expenses for legal, accounting and auditing services; taxes
and governmental fees; dues and expenses incurred in connection with membership
in investment company organizations; costs of printing and distributing
shareholder reports, proxy materials, prospectuses, stock certificates and
distribution of dividends; charges of the Fund's custodians and sub-custodians,
administrators and sub-administrators, registrars, transfer agents, dividend
disbursing agents and dividend reinvestment plan agents; payment for portfolio
pricing services to a pricing agent, if any; registration and filing fees of the
SEC; expenses of registering or qualifying securities of the Fund for sale in
the various states; freight and other charges in connection with the shipment of
the Fund's portfolio securities; fees and expenses of non-interested Trustees;
salaries of shareholder relations personnel; costs of shareholders meetings;
insurance; interest; brokerage costs; and litigation and other extraordinary or
non-recurring expenses. The Trust or the Adviser, as the case may be, shall
reimburse the Subadviser for any expenses of the Fund or the Adviser as may be
reasonably incurred by such Subadviser on behalf of the Fund or the Adviser. The
Subadviser shall keep and supply to the Trust and the Adviser reasonable records
of all such expenses.
5. COMPENSATION. For the services provided pursuant to this
Agreement, the Subadviser is entitled to the fee listed for the Fund on Exhibit
A hereto. Such fees will be computed daily and paid no later than the seventh
(7th) business day following the end of each month, from the Adviser, calculated
at an annual rate based on the Subadviser Assets' average daily net assets.
The method of determining the net asset value of the Subadviser Assets
for purposes hereof shall be the same as the method of determining net asset
value for purposes of establishing the offering and redemption price of the
shares of the Trust as described in the Fund's Prospectus. If this Agreement
shall be effective for only a portion of a month with respect to the Fund, the
aforesaid fee shall be prorated for the portion of such month during which this
Agreement is in effect for the Fund.
6. REPRESENTATIONS AND WARRANTIES OF SUBADVISER. The Subadviser
represents and warrants to the Adviser and the Trust as follows:
(a) The Subadviser is registered as an investment adviser
under the Advisers Act;
(b) The Subadviser is registered as a Commodity Trading
Advisor under the Commodity Exchange Act, as amended (the "CEA"), with
the Commodity Futures Trading Commission (the "CFTC"), or is not
required to file such registration;
(c) The Subadviser is a corporation duly organized and
properly registered and operating under the laws of the State of Ohio
with the power to own and possess its assets and carry on its business
as it is now being conducted and as proposed to be conducted hereunder;
(d) The execution, delivery and performance by the
Subadviser of this Agreement are within the Subadviser's powers and
have been duly authorized by all
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necessary actions of its directors or shareholders, and no action by,
or in respect of, or filing with, any governmental body, agency or
official is required on the part of the Subadviser for execution,
delivery and performance by the Subadviser of this Agreement, and the
execution, delivery and performance by the Subadviser of this Agreement
do not contravene or constitute a violation of, or a material default
under, (i) any provision of applicable law, rule or regulation, (ii)
the Subadviser's governing instruments, or (iii) any agreement,
judgment, injunction, order, decree or other instrument binding upon
the Subadviser; and
(e) The Form ADV of the Subadviser previously provided to
the Adviser and the Trust is a true and complete copy of the form,
including that part or parts of the Form ADV filed with the SEC, that
part or parts maintained in the records of the Adviser, and/or that
part or parts provided or offered to clients, in each case as required
under the Advisers Act and rules thereunder, and the information
contained therein is accurate and complete in all material respects and
does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were
made, not misleading.
7. REPRESENTATIONS AND WARRANTIES OF ADVISER. The Adviser
represents and warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser
under the Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant
to Rule 4.14 under the CEA with the CFTC and the National Futures
Association or is not required to file such exemption;
(c) The Adviser is a business trust duly organized and
validly existing under the laws of the State of Delaware with the power
to own and possess its assets and carry on its business as it is now
being conducted and as proposed to be conducted hereunder;
(d) The execution, delivery and performance by the
Adviser of this Agreement are within the Adviser's powers and have been
duly authorized by all necessary action on the part of its directors,
shareholders or managing unitholder, and no action by, or in respect
of, or filing with, any governmental body, agency or official is
required on the part of the Adviser for the execution, delivery and
performance by the Adviser of this Agreement, and the execution,
delivery and performance by the Adviser of this Agreement do not
contravene or constitute a violation of, or a material default under,
(i) any provision of applicable law, rule or regulation, (ii) the
Adviser's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Adviser;
(e) The Form ADV of the Adviser previously provided to
the Subadviser and the Trust is a true and complete copy of the form,
including that part or parts of the Form ADV filed with the SEC, that
part or parts maintained in the records of the Adviser, and/or that
part or parts provided or offered to clients, in each case as required
under the Advisers Act and rules thereunder, and the information
contained therein is accurate and
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complete in all material respects and does not omit to state any
material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading;
(f) The Adviser acknowledges that it received a copy of
the Subadviser's Form ADV prior to the execution of this Agreement; and
(g) The Adviser and the Trust have duly entered into the
Advisory Agreement pursuant to which the Trust
authorized the Adviser to delegate certain of its
duties under the Advisory Agreement to other
investment advisers, including without limitation,
the appointment of a subadviser with respect to
assets of each of the Trust's mutual fund series,
including without limitation the Adviser's entering
into and performing this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF THE TRUST. The Trust
represents and warrants to the Adviser and the Subadviser as follows:
(a) The Trust is a statutory trust duly formed and
validly existing under the laws of the State of Delaware with the power
to own and possess its assets and carry on its business as it is now
being conducted and as proposed to be conducted hereunder;
(b) The Trust is registered as an investment company
under the 1940 Act and has elected to qualify and has qualified,
together with the Fund, as a regulated investment company under the
Code, and the Fund's shares are registered under the Securities Act;
(c) The execution, delivery and performance by the Trust
of this Agreement are within the Trust's powers and have been duly
authorized by all necessary action on the part of the Trust and its
Board of Trustees, and no action by, or in respect of, or filing with,
any governmental body, agency or official is required on the part of
the Trust for the execution, delivery and performance by the Adviser of
this Agreement, and the execution, delivery and performance by the
Trust of this Agreement do not contravene or constitute a default under
(i) any provision of applicable law, rule or regulation, (ii) the
Trust's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Trust;
and
(d) The Trust acknowledges that it received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE
INFORMATION. All representations and warranties made by the Subadviser, the
Adviser and the Trust pursuant to the recitals above and Sections 6, 7 and 8,
respectively, shall survive for the duration of this Agreement and the parties
hereto shall promptly notify each other in writing upon becoming aware that any
of the foregoing representations and warranties are no longer true or accurate
in all material effects.
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10. LIABILITY AND INDEMNIFICATION.
(a) LIABILITY. The Subadviser shall exercise its best
judgment in rendering its services in accordance with the terms of this
Agreement, but otherwise, in the absence of willful misfeasance, bad
faith or gross negligence on the part of the Subadviser or a reckless
disregard of its duties hereunder, the Subadviser, each of its
affiliates and all respective partners, officers, directors and
employees ("Affiliates") and each person, if any, who within the
meaning of the Securities Act controls the Subadviser ("Controlling
Persons"), if any, shall not be subject to any expenses or liability to
the Adviser, any other subadviser to the Fund, the Trust or the Fund or
any of the Fund's shareholders, in connection with the matters to which
this Agreement relates, including without limitation for any losses
that may be sustained in the purchase, holding or sale of Subadviser
Assets. The Adviser shall exercise its best judgment in rendering its
obligations in accordance with the terms of this Agreement, but
otherwise (except as set forth in Section 10(c) below), in the absence
of willful misfeasance, bad faith or gross negligence on the part of
the Adviser or a reckless disregard of its duties hereunder, the
Adviser, any of its Affiliates and each of the Adviser's Controlling
Persons, if any, shall not be subject to any liability to the
Subadviser, for any act or omission in the case of, or connected with,
rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of Subadviser Assets. Notwithstanding the
foregoing, nothing herein shall relieve the Adviser and the Subadviser
from any of their obligations under applicable law, including, without
limitation, the federal and state securities laws and the CEA.
(b) INDEMNIFICATION. The Subadviser shall indemnify the
Adviser, the Trust and the Fund, and their respective Affiliates and
Controlling Persons for any liability and expenses, including without
limitation reasonable attorneys' fees and expenses, which the Adviser,
the Trust and/or the Fund and their respective Affiliates and
Controlling Persons may sustain as a result of the Subadviser's willful
misfeasance, bad faith, gross negligence, reckless disregard of its
duties hereunder or violation of applicable law, including, without
limitation, the federal and state securities laws or the CEA. The
Adviser shall indemnify the Subadviser, its Affiliates and its
Controlling Persons, for any liability and expenses, including without
limitation reasonable attorneys' fees and expenses, which may be
sustained as a result of the Adviser's willful misfeasance, bad faith,
gross negligence, reckless disregard of its duties hereunder or
violation of applicable law, including, without limitation, the federal
and state securities laws or the CEA.
The Trust shall indemnify the Subadviser, its Affiliates and
its Controlling Persons, for any liability and expenses, including
without limitation reasonable attorneys' fees and expenses, which may
be sustained as a result of the Trust's willful misfeasance, bad faith,
gross negligence, reckless disregard of its duties hereunder or
violation of applicable law, including, without limitation, the federal
and state securities laws or the CEA.
(c) The Subadviser shall not be liable to the Adviser for
(i) any acts of the Adviser or any other subadviser to the Fund with
respect to the portion of the assets of
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the Fund not managed by Subadviser, or (ii) acts of the Subadviser
which result from acts of the Adviser, including, but not limited to, a
failure of the Adviser to provide accurate and current information with
respect to any records maintained by the Adviser or any other
subadviser to the Fund, which records are not also maintained by or
otherwise available to the Subadviser upon reasonable request. The
Adviser agrees that Subadviser shall manage the Subadviser Assets as if
they were a separate operating Fund as set forth in Section 2(b) of
this Agreement. The Adviser shall indemnify the Subadviser, its
Affiliates and Controlling Persons from any liability arising from the
conduct of the Adviser and any other subadviser with respect to the
portion of the Fund's assets not allocated to the Subadviser.
11. DURATION AND TERMINATION.
(a) DURATION. Unless sooner terminated, this Agreement
shall continue until May 1, 2009 with respect to any Fund covered by
this Agreement initially and, for any Fund subsequently added to this
Agreement, an initial period of no more than two years that terminates
on the second May 1st that occurs following the effective date of this
Agreement with respect to such Fund, and thereafter shall continue
automatically for successive annual periods with respect to each such
Fund, provided such continuance is specifically approved at least
annually by the Trust's Board of Trustees or vote of the lesser of (a)
67% of the shares of the Fund represented at a meeting if holders of
more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (b) more than 50% of the outstanding shares of
the Fund; provided that in either event its continuance also is
approved by a majority of the Trust's Trustees who are not "interested
persons" (as defined in the 0000 Xxx) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on
such approval.
(b) TERMINATION. Notwithstanding whatever may be provided
herein to the contrary, this Agreement may be terminated at any time
with respect to the Fund, without payment of any penalty:
(i) By vote of a majority of the Trust's Board
of Trustees, or by "vote of a majority of the outstanding voting
securities" of the Fund (as defined in the 1940 Act), or by the
Adviser, in each case, upon not more than 60 days' written notice to
the Subadviser;
(ii) By any party hereto immediately upon written
notice to the other parties in the event of a breach of any provision
of this Agreement by either of the other parties; or
(iii) By the Subadviser upon not more than 60
days' written notice to the Adviser and the Trust.
This Agreement shall not be assigned (as such term is defined
in the 0000 Xxx) and shall terminate automatically in the event of its
assignment or upon the termination of the Advisory Agreement.
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12. DUTIES OF THE ADVISER. The Adviser shall continue to have
responsibility for all services to be provided to the Fund pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement. Nothing contained in this Agreement shall
obligate the Adviser to provide any funding or other support for the purpose of
directly or indirectly promoting investments in the Fund.
13. REFERENCE TO ADVISER AND SUBADVISER.
(a) Neither the Adviser nor any Affiliate or agent of the
Adviser shall make reference to or use the name of Subadviser or any of
its Affiliates, or any of their clients, except references concerning
the identity of and services provided by the Subadviser to the Fund,
which references shall not differ in substance from those included in
the Prospectus and this Agreement, in any advertising or promotional
materials without the prior approval of Subadviser, which approval
shall not be unreasonably withheld or delayed. The Adviser hereby
agrees to make all reasonable efforts to cause the Fund and any
Affiliate thereof to satisfy the foregoing obligation.
(b) Neither the Subadviser nor any Affiliate or agent of
it shall make reference to or use the name of the Adviser or any of its
Affiliates, or any of their clients, except references concerning the
identity of and services provided by the Adviser to the Fund or to the
Subadviser, which references shall not differ in substance from those
included in the Prospectus and this Agreement, in any advertising or
promotional materials without the prior approval of Adviser, which
approval shall not be unreasonably withheld or delayed. The Subadviser
hereby agrees to make all reasonable efforts to cause any Affiliate of
the Subadviser to satisfy the foregoing obligation.
14. AMENDMENT. This Agreement may be amended by mutual consent of
the parties, provided that the terms of any material amendment shall be approved
by: (a) the Trust's Board of Trustees or by a vote of a majority of the
outstanding voting securities of the Fund (as required by the 1940 Act), and (b)
the vote of a majority of those Trustees of the Trust 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, if such approval is required by
applicable law.
15. CONFIDENTIALITY. Subject to the duties of the Adviser, the
Trust and the Subadviser to comply with applicable law, including any demand of
any regulatory or taxing authority having jurisdiction, the parties hereto shall
treat as confidential and shall not disclose any and all information pertaining
to the Fund and the actions of the Subadviser, the Adviser and the Fund in
respect thereof; except to the extent:
(a) AUTHORIZED. The Adviser or the Trust has authorized
such disclosure;
(b) COURT OR REGULATORY AUTHORITY. Disclosure of such
information is expressly required or requested by a court or other
tribunal of competent jurisdiction or applicable federal or state
regulatory authorities;
(c) PUBLICLY KNOWN WITHOUT BREACH. Such information
becomes known to the general public without a breach of this Agreement
or a similar confidential disclosure agreement regarding such
information;
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(d) ALREADY KNOWN. Such information already was known by
the party prior to the date hereof;
(e) RECEIVED FROM THIRD PARTY. Such information was or is
hereafter rightfully received by the party from a third party
(expressly excluding the Fund's custodian, prime broker and
administrator) without restriction on its disclosure and without breach
of this Agreement or of a similar confidential disclosure agreement
regarding them; or
(f) INDEPENDENTLY DEVELOPED. The party independently
developed such information.
16. NOTICE. Any notice that is required to be given by the parties
to each other under the terms of this Agreement shall be in writing,
delivered, or mailed postpaid to the other parties, or transmitted by
facsimile with acknowledgment of receipt, to the parties at the
following addresses or facsimile numbers, which may from time to time
be changed by the parties by notice to the other party:
(a) If to the Subadviser:
Diamond Hill Capital Management, Inc.
000 Xxxx X. XxXxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
(b) If to the Adviser:
Nationwide Fund Advisors
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Legal Department
Facsimile: (000) 000-0000
(c) If to the Trust:
Nationwide Mutual Funds
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Legal Department
Facsimile: (000) 000-0000
17. JURISDICTION. This Agreement shall be governed by and
construed in accordance with substantive ------------ laws of the State of
Delaware without reference to choice of law principles thereof and in accordance
with the 1940 Act. In the case of any conflict, the 1940 Act shall control.
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18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which shall
together constitute one and the same instrument.
19. CERTAIN DEFINITIONS. For the purposes of this Agreement and
except as otherwise provided herein, "interested person," "affiliated person,"
and "assignment" shall have their respective meanings as set forth in the 1940
Act, subject, however, to such exemptions as may be granted by the SEC.
20. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
21. SEVERABILITY. If any provision of this Agreement shall be held
or made invalid by a court decision or applicable law, the remainder of the
Agreement shall not be affected adversely and shall remain in full force and
effect.
22. ENTIRE AGREEMENT. This Agreement, together with all exhibits,
attachments and appendices, contains the entire understanding and agreement of
the parties with respect to the subject matter hereof
23. NATIONWIDE MUTUAL FUNDS AND ITS TRUSTEES. The terms
"Nationwide Mutual Funds" and the "Trustees of Nationwide Mutual Funds" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Amended and
Restated Agreement and Declaration of Trust made and dated as of October 28,
2004, as has been or may be amended and/or restated from time to time, and to
which reference is hereby made.
24. MULTI-MANAGER FUNDS. In connection with securities
transactions for the Fund, the Subadviser that is (or whose affiliated person
is) entering into the transaction, and any other investment manager that is
advising an affiliate of the Fund (or portion of the Fund) (collectively, the
"Managers" for the purposes of this section) entering into the transaction are
prohibited from consulting with each other concerning transactions for the Fund
in securities or other assets and, if both Managers are responsible for
providing investment advice to the Fund, the Manager's responsibility in
providing advice is expressly limited to a discrete portion of the Fund's
portfolio that it manages.
This prohibition does not apply to communications by the Adviser in
connection with the Adviser's (i) overall supervisory responsibility for the
general management and investment of the Fund's assets; (ii) determination of
the allocation of assets among the Manager(s), if any; and (iii) investment
discretion with respect to the investment of Fund assets not otherwise assigned
to a Manager.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
TRUST
NATIONWIDE MUTUAL FUNDS
By: /S/XXX X. XXXXXXXX
-----------------------
Name: Xxx X. Xxxxxxxx
Title: Assistant Secretary
ADVISER
NATIONWIDE FUND ADVISORS
By: /S/XXX X. XXXXXXXX
-------------------------
Name: Xxx X. Xxxxxxxx
Title: Senior Vice President
SUBADVISER
DIAMOND HILL CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
15
EXHIBIT A
SUBADVISORY AGREEMENT
AMONG
NATIONWIDE MUTUAL FUNDS,
NATIONWIDE FUND ADVISORS
AND DIAMOND HILL CAPITAL MANAGEMENT, INC.
Effective February 26, 2008*
FUNDS OF THE TRUST SUBADVISORY FEES
--------------------------------------------------------------------------------
Nationwide Value Fund 0.35% on Subadviser Assets up to $25 million;
0.30% on Subadviser Assets of more than $25 million
but less than $250 million;
0.275% on Subadviser Assets of more than $250 million
but less than $500 million;
0.25% on Subadviser Assets of more than $500 million
but less than $1 billion;
0.20% on Subadviser Assets of $1 billion and more.
----------
* As approved at the Board of Trustees Meeting held on December 3, 2007.
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