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Exhibit (d)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this twelfth day of October, 1998, by and between DOW
TARGET VARIABLE FUND LLC, an Ohio limited liability company (hereinafter called
the "Fund") and OHIO NATIONAL INVESTMENTS, INC., an Ohio corporation
(hereinafter called the "Adviser").
WHEREAS, the Fund and the Adviser wish to enter into an Agreement setting forth
the terms upon which the Adviser will perform certain services for the Fund;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADVISER
The Fund hereby appoints the Adviser to manage the investment and reinvestment
of the assets of the Fund and to perform the other services herein set forth,
subject to the supervision of the Board of Managers of the Fund, for the period
and on the terms herein set forth. The Adviser hereby accepts such appointment
and agrees during such period, to render the services and to assume the
obligations herein set forth for the compensation herein provided. Any
investment program undertaken by the Adviser pursuant to this Agreement and any
other activities undertaken by the Adviser on behalf of the Fund shall at all
times be subject to any directives of the Fund's Board of Managers, any duly
constituted committee thereof or any officer of the Fund acting pursuant to like
authority.
2. DUTIES OF ADVISER
In carrying out its obligations to manage the investment and reinvestment of the
assets of the Fund, the Adviser shall:
(a) obtain and evaluate pertinent statistical and financial data and other
information relevant to the investment policies of the Fund, affecting the
individual companies the securities of which are included in the Fund's
investment portfolios or are under consideration for inclusion therein;
(b) take such steps as are necessary to implement the investment programs
approved by the Fund's Board of Managers by purchase and sale of securities,
including the placing of orders for such purchase and sale; and
(c) regularly report to the Fund's Board of Managers with respect to
implementation of the approved investment program and the Adviser's activities
in connection with the administration of the Fund.
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3. USE OF SUB-ADVISERS
In providing the services and assuming the obligations set forth herein, in
connection with any investment portfolios of the Fund, the Adviser may at its
expense employ one or more Sub-Advisers, or may enter into such service
agreements as the Adviser deems appropriate in connection with the performance
of its duties and obligations hereunder. Reference herein to the duties and
responsibilities of the Adviser shall include any Sub-Adviser employed by the
Adviser to the extent the Adviser shall delegate such duties and
responsibilities to any such Sub-Adviser. Any agreement between the Adviser and
a Sub-Adviser shall be subject to the approval of the Fund, its Board of
Managers, and the owners of interests issued by any portfolio affected thereby,
as required by the Investment Company Act of 1940, as amended (the "1940 Act"),
and any such Sub-Adviser shall at all times be subject to the direction of the
Board of Managers of the Fund or any officer of the Fund acting pursuant to the
Board's authority. Furthermore, the Adviser shall perform ongoing due diligence
oversight of any such Sub-Adviser in order to assure continuing quality of
performance by said Sub-Adviser.
4. TO BE FURNISHED BY THE ADVISER
In addition to performing the obligations set forth in paragraph 2 hereof, the
Adviser shall furnish at its own expense or pay the expenses of the Fund for the
following:
(a) office space in the offices of the Adviser or in such other place as may be
agreed upon from time to time, and all necessary office facilities and
equipment;
(b) necessary executive and other personnel for managing the affairs of the
Fund, including personnel to perform clerical, accounting and other office
functions (exclusive of those related to and to be performed under contract for
custodial, bookkeeping, transfer and dividend disbursing agency services by any
bank or other agents selected to perform such services); and
(c) all information and services, other than services of counsel, required in
connection with the preparation of registration statements, prospectuses and
statements of additional information, including amendments and revisions
thereto; all annual, semi-annual and periodic reports; and notices and proxy
solicitation material furnished to shareholders of the Fund or regulatory
authorities.
5. ITEMS NOT REQUIRED TO BE FURNISHED BY THE ADVISER
Nothing in paragraph 4 hereof shall require the Adviser to bear, or to reimburse
the Fund for:
(a) any of the costs of printing and mailing the items referred to in
subparagraph (c) of paragraph 4;
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(b) the costs of preparation, printing and mailing disclosure documents required
by regulatory authorities;
(c) compensation of Managers of the Fund who are not directors, officers or
employees of the Adviser;
(d) registration, filing and other fees in connection with requirements of
regulatory authorities;
(e) the charges and expenses of any custodian appointed by the Fund for
custodial services;
(f) charges and expenses of independent accountants retained by the Fund;
(g) charges and expenses of any transfer, bookkeeping and dividend disbursing
agent appointed by the Fund;
(h) brokers' commissions and issue and transfer taxes chargeable to the Fund in
connection with securities transactions to which the Fund is a party;
(i) taxes and fees payable by the Fund to federal, state or other governmental
agencies;
(j) the cost of membership interest certificates, if any, representing interests
of the Fund;
(k) legal fees and expenses in connection with the affairs of the Fund,
including registering and qualifying its interests with regulatory authorities;
and
(l) expenses of members' and Managers' meetings.
6. RELATED SERVICES
(a) The services of the Adviser to the Fund hereunder are not to be deemed
exclusive and the Adviser shall be free to render similar services to others so
long as its services hereunder are not impaired or interfered with thereby.
(b) To better enable it to fulfill its obligations hereunder, the Adviser has
entered into a service agreement with The Ohio National Life Insurance Company,
to which the Fund is also a party, under which The Ohio National Life Insurance
Company has agreed to furnish certain personnel and facilities to the Adviser on
a cost reimbursement basis.
(c) The Adviser and any persons performing executive, administrative or trading
functions for the Fund, whose services were made available to the Fund by the
Adviser, are specifically authorized to allocate brokerage business to firms
that provide such
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services or facilities and to cause the Fund to pay a member of a securities
exchange, or any other securities broker, an amount of commission for effecting
a securities transaction in excess of the amount another member of an exchange
or broker would have charged for effecting that transaction, if the Adviser or
such person determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services, as
such services are defined in Section 28(e) of the Securities Exchange Act of
1934 (the "1934 Act"), provided by such member or broker, viewed in terms of
either that particular transaction or the overall responsibilities of the
Adviser with respect to any accounts as to which the Adviser exercises
investment discretion, as that term is defined in Section 3(a)(35) of the 1934
Act.
7. COMPENSATION OF ADVISER
(a) Each investment portfolio of the Fund shall pay the Adviser, as full
compensation for all services rendered and all facilities furnished hereunder, a
fee computed separately for each portfolio of the Fund at the annual rate of
0.60% of the current value of the total net assets of each portfolio of the Fund
or, as to any portfolios added to the Fund after the date first above written,
on any additional Schedules hereto, which rates shall be based on the current
value of the respective portfolio's average total net assets.
(b) Fees shall be payable at such intervals, not more frequently than monthly
and not less frequently than quarterly, as the Board of Managers of the Fund may
from time to time determine and specify in writing to the Adviser. The fees
shall be calculated on the basis of the average of all valuations of the net
assets of each respective portfolio, made as of the time each business day that
the Board of Managers has set for valuing the current net assets of the Fund,
during the period for which the fees are paid.
8. REIMBURSEMENT OF EXCESS EXPENSES
If in any calendar quarter the total of all ordinary business expenses
applicable to any investment portfolio (excluding the fee payable under
paragraph 7 above to the Adviser, taxes, portfolio brokerage commissions and
interest) should exceed one percent of the average net assets of such investment
portfolio as computed above in paragraph 7, the Adviser shall pay such excess.
For the purposes of this paragraph the term "calendar quarter" shall include the
portion of any calendar quarter which shall have lapsed at the date of
termination of this agreement and the expense limitation shall be that part of
1% proportional to the portion of a full calendar quarter lapsed.
9. INTERESTED PERSONS OF THE FUND AND THE ADVISER
It is understood that Managers, officers, agents and members of the Fund are or
may be interested in the Adviser as directors, officers, shareholders, or
otherwise, that directors, officers, agents and shareholders of the Adviser are
or may be interested in the Fund as Managers, officers, members or otherwise,
that the Adviser may be interested in the Fund and that the existence of any
such dual interest shall not affect the validity hereof or of
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any transactions hereunder except as otherwise provided in the Articles of
Organization of the Fund, the Articles of Incorporation of the Adviser, or by
specific provision of applicable law.
10. LIABILITIES OF ADVISER
Neither the Adviser nor any of its directors, officers or employees, nor any
person performing executive, administrative or trading functions shall be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates, except for loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its, his or her duties on behalf of the Fund or from reckless
disregard by the Adviser or any such person of the Adviser's duties under this
Agreement. Without limiting the generality of the foregoing, neither the Adviser
nor any such person shall be deemed to have acted unlawfully or to have breached
any duty to the Fund under state or federal law in effect at the date of the
enactment of Section 28(e) of the 1934 Act solely by reason of having caused the
Fund to pay a member of any securities exchange, or any other securities broker
or dealer, an amount of commission for effecting a securities transaction in
excess of the commission another member of a securities exchange, or another
securities broker or dealer, would have charged for effecting that transaction
if the Adviser or such other person determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such member, broker or dealer, viewed in terms of either
that particular transaction or the overall responsibilities of the Adviser with
respect to any accounts to which the Adviser exercises investment discretion.
11. DURATION, TERMINATION AND AMENDMENT
(a) This Agreement shall become effective as to any portfolio upon its approval
for such portfolio by the Board of Managers of the Fund and the owners of the
class of membership interests designated for that portfolio. This Agreement will
continue in effect for a period more than two years from the date of its
effectiveness as to any portfolio only so long as such continuance is
specifically approved at least annually either by the Board of Managers of the
Fund or by the vote of a majority of the outstanding voting securities of the
portfolio, provided that in either event such continuance shall also be approved
by the vote of a majority of the Managers of the Fund who are not interested
persons (as defined in the 0000 Xxx) of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval. The
required owner's approval of this Agreement or of any continuance of this
Agreement shall be effective with respect to a portfolio if a majority of the
outstanding voting securities of the class (as defined in Rule 18f-2(h) under
the 0000 Xxx) of membership interests of the portfolio votes to approve the
Agreement or its continuance, notwithstanding that this Agreement or its
continuance may not have been approved by a majority of the outstanding voting
securities of the entire Fund.
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(b) If the owners of membership interests of any portfolio fail to approve any
continuance of this Agreement, the Adviser will continue to act as investment
adviser with respect to that portfolio pending the required approval of this
Agreement or its continuance, or of a new contract with the Adviser or a
different investment adviser or other definitive action; provided, that the
compensation received by the Adviser in respect of that portfolio during such
period will be no more than the Adviser's actual costs incurred in furnishing
investment advisory and management services to such portfolio or the amount it
would have received under this Agreement, whichever is less.
(c) This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Managers of the Fund or, with respect to any portfolio,
by the vote of a majority of the outstanding voting securities of that portfolio
on 60 days' written notice to the Adviser, or by the Adviser, on 90 days'
written notice to the Fund. This Agreement will automatically terminate in the
event of its assignment (as defined in the 1940 Act).
(d) This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each affected portfolio and by the vote of a majority of the
Managers of the Fund 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.
12. NOTICES AND GOVERNING LAW
(a) Any notice under the Agreement shall be in writing, addressed and delivered
or mailed postage prepaid to the other party at such address as the other party
may designate for the receipt of notices. Until further notice to the other
party it is agreed that the address of the Fund and that of the Adviser for this
purpose shall be Xxx Xxxxxxxxx Xxx, Xxxxxxxxxx, Xxxx 00000.
(b) This Agreement shall be governed by the law of Ohio.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to be
executed by their duly authorized officers, in Montgomery, Ohio, as of the date
first above written.
DOW TARGET VARIABLE FUND LLC OHIO NATIONAL INVESTMENTS, INC.
By /s/ Xxxx X. Xxxxxx By /s/ Xxxxxx X. Xxxx
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Xxxx X. Xxxxxx, President Xxxxxx X. Xxxx, President
