SUB-ADVISORY AGREEMENT
Exhibit (d)(14)
This Agreement is made as of the 18th day of May, 2006, by and between Ohio National
Investments, Inc., an Ohio corporation (the “Adviser”), and Xxxxxxxxx Xxxxxx Management, Inc., a
New York corporation (the “Sub-Adviser”).
WHEREAS, Ohio National Fund, Inc. (the “Fund”), is a Maryland corporation that is registered under
the Investment Company Act of 1940, as amended, (together with the regulations promulgated pursuant
thereto, the “1940 Act”); and
WHEREAS, the Adviser is a registered investment adviser under the Investment Advisers Act of 1940,
as amended, (together with the regulations promulgated pursuant thereto, the “Advisers Act”); and
WHEREAS, the Adviser has been appointed as investment adviser to the Fund in accordance with the
1940 Act and the Advisers Act; and
WHEREAS, the Sub-Adviser is registered as an investment adviser under the Advisers Act and engages
in the business of providing investment advisory services; and
WHEREAS, the Fund has authorized the Adviser to appoint the Sub-Adviser, subject to the
requirements of the 1940 Act and the Advisers Act, as a sub-adviser with respect to those portions
of the assets of the Fund designated as the Discovery Portfolio of the Fund on the terms and
conditions set forth below;
NOW, THEREFORE, IT IS HEREBY AGREED as follows:
SECTION 1. Investment Advisory Services
(a) The Adviser hereby retains the Sub-Adviser, and the Sub-Adviser hereby accepts engagement by
the Adviser, to supervise and manage on a fully-discretionary basis the cash, securities and other
assets of the Discovery Portfolio that the Adviser shall from time to time place under the
supervision of the Sub-Adviser (such cash, securities and other assets initially and as same shall
thereafter be increased or decreased by the investment performance thereof and by additions thereto
and withdrawals therefrom by the Adviser shall hereinafter be referred to as the “Portfolio”).
(b) All activities by the Sub-Adviser on behalf of the Adviser and the Portfolio shall be in
accordance with the investment objectives, policies and restrictions set forth in the 1940 Act and
in the Fund’s prospectus and statement of additional information, as amended from time to time
(together, the “Prospectus”) and as interpreted from time to time by the Board of Directors of the
Fund and by the Adviser. All activities of the Sub-Adviser on behalf of the Adviser and the
Portfolio shall also be subject to the due diligence oversight and direction of the Adviser.
(c) Subject to the supervision of the Adviser, the Sub-Adviser shall have the sole and exclusive
responsibility to select members of securities exchanges, brokers, dealers and futures commission
merchants for the execution of transactions of the Portfolio and, when applicable, shall negotiate
commissions in connection therewith. All such selections shall be made in accordance with the
Fund’s policies and restrictions regarding brokerage allocation set forth in the Prospectus.
| (d) | In carrying out its obligations to manage the investments and reinvestments of the assets of the Portfolio, the Sub-Adviser shall: |
| (1) | obtain and evaluate pertinent economic, statistical, financial and other information affecting sectors and industries and the individual companies included in the Portfolio or under consideration for inclusion therein; | ||
| (2) | formulate and implement a continuous investment program for the Portfolio consistent with the investment objectives and related investment policies and restrictions for the Portfolio as set forth in the Prospectus; and | ||
| (3) | take such steps as are necessary to implement the aforementioned investment program by placing orders for the purchase and sale of securities. |
(e) In connection with the purchase and sale of securities of the Portfolio, the Sub-Adviser shall
arrange for the transmission to the Adviser and the Portfolio’s custodian on a daily basis such
confirmation, trade tickets and other documents as may be necessary to enable them to perform their
administrative responsibilities with respect to the Portfolio. With respect to Portfolio
securities to be purchased or sold through the Depository Trust Company, the Sub-Adviser shall
arrange for the automatic transmission of the I.D. confirmation of the trade to the Portfolio’s
custodian.
(f) In connection with the placement of orders for the execution of the Portfolio’s securities
transactions, the Sub-Adviser shall create and maintain all necessary records of the Portfolio as
are required of an investment adviser of a registered investment company including, but not limited
to, records required by the 1940 Act and the Advisers Act. All such records pertaining to the
Portfolio shall be the property of the Fund and shall be available for inspection and use by the
Securities and Exchange Commission, any other regulatory authority having jurisdiction, the Fund,
the Adviser or any person retained by the Fund or the Adviser. Where applicable, such records
shall be maintained by the Sub-Adviser for the period and in the place required by Rule 31a-2 under
the 0000 Xxx.
(g) The Sub-Adviser shall render such reports to the Adviser and/or to the Board of Directors of
the Fund concerning the investment activity and composition of the Portfolio in such form and at
such intervals as the Adviser or the Board may from time to time reasonably require.
(h) In acting under this Agreement, the Sub-Adviser shall be an independent contractor and not an
agent of the Adviser or the Fund.
SECTION 2. Expenses
(a) The Sub-Adviser shall assume and pay all of its own costs and expenses, including those for
furnishing such office space, office equipment, office personnel and office services as the
Sub-Adviser may require in the performance of its duties under this Agreement.
(b) The Fund shall bear all expenses of the Portfolio’s organization and registration, and the
Fund and Adviser shall bear all of their respective expenses of their operations and businesses not
expressly assumed or agreed to be paid by the Sub-Adviser under this Agreement. In particular, but
without limiting the generality of the foregoing, the Fund shall pay any fees due to the Adviser,
all interest, taxes, governmental charges or duties, fees, brokerage and commissions of every kind
arising hereunder or in connection herewith, expenses of transactions with shareholders of the
Portfolio, expenses of offering interests in the Portfolio for sale, insurance, association
membership dues, all charges of custodians (including fees as custodian and for keeping books,
performing portfolio valuations and rendering other services to the Fund), independent auditors and
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legal counsel, expenses of preparing, printing and distributing all prospectuses, proxy material,
reports and notices to shareholders of the Fund, and all other costs incident to the Portfolio’s
existence.
SECTION 3. Use of Services of Others
The Sub-Adviser may (at its expense except as set forth in Section 2 hereof) employ, retain or
otherwise avail itself of the services or facilities of other persons or organizations for the
purpose of providing the Sub-Adviser with such statistical or factual information, such advice
regarding economic factors and trends or such other information, advice or assistance as the
Sub-Adviser may deem necessary, appropriate or convenient for the discharge of the Sub-Adviser’s
obligations hereunder or otherwise helpful to the Fund and the Portfolio.
SECTION 4. Sub-Advisory Fees
In consideration of the Sub-Adviser’s services to the Fund hereunder, the Sub-Adviser shall be
entitled to sub-advisory fees, payable monthly, at the annual rate of 0.55% of first $150 million
in assets, 0.50% on next $150 million in assets and 0.40% for that amount over $300 million in
assets (the “Sub-Advisory Fees”). The Sub-Advisory Fees shall be accrued for each calendar day and
the sum of the daily Sub-Advisory Fees accruals shall be paid monthly to the Sub-Adviser on or
before the fifth business day of the next succeeding month. The daily fee accruals will be
computed on the basis of the valuations of the total net assets of the Portfolio as of the close of
business each day. The Sub-Advisory Fees shall be payable solely by the Adviser, and the Fund
shall not be liable to the Sub-Adviser for any unpaid Sub-Advisory Fees.
SECTION 5. Limitation of Liability of Sub-Adviser
(a) The Sub-Adviser shall be liable for losses resulting from its own acts or omissions caused by
the Sub-Adviser’s willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder or its reckless disregard of its duties under this Agreement, and nothing herein
shall protect the Sub-Adviser against any such liability to the shareholders of the Fund or to the
Adviser. The Sub-Adviser shall not be liable to the Fund or to any shareholder of the Fund or to
the Adviser for any claim or loss arising out of any investment or other act or omission in the
performance of the Sub-Adviser’s duties under this Agreement, or for any loss or damage resulting
from the imposition by any government of exchange control restrictions which might affect the
liquidity of the Fund’s assets maintained with custodians or securities depositories in foreign
countries, or from any political acts of any foreign governments to which such assets might be
exposed, or for any tax of any kind (other than taxes on the Sub-Adviser’s income), including
without limitation any statutory, governmental, state, provincial, regional, local or municipal
imposition, duty, contribution or levy imposed by any government or governmental agency upon or
with respect to such assets or income earned with respect thereto (collectively “Taxation”).
Notwithstanding the foregoing sentence, the Sub-Adviser shall be liable for taxes or tax penalties
incurred by the Fund, or by any legal or beneficial owner of the Fund’s shares, for any failure of
the Portfolio to qualify as a regulated investment company under Subchapter M, or to meet the
diversification requirements of Section 817(h), of the Internal Revenue Code of 1986, as amended,
as a result of the Sub-Adviser’s management of the Portfolio.
(b) In the event the Sub-Adviser is assessed any Taxation in respect of the assets, income or
activities of the Portfolio, the Adviser and the Fund jointly will indemnify the Sub-Adviser for
all such amounts wherever imposed, together with all penalties, charges, costs and interest
relating thereto and all expenditures, including reasonable attorney’s fees, incurred by the
Sub-Adviser in connection with the defense or settlement of any such assessment. The Sub-Adviser
shall undertake and control the defense or settlement of any such assessment, including the
selection of counsel or other professional advisers, provided that the selection of such counsel
and advisers and the settlement of any assessment shall be subject to the approval of the Adviser
and the Fund, which approvals shall not be unreasonably withheld. The Adviser and the Fund shall
have the right to retain separate counsel and assume the defense or settlement on behalf of the
Adviser and the Fund, as
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the case may be, of any such assessment if representation of the Adviser and the Fund by counsel
selected by the Sub-Adviser would be inappropriate due to actual or potential conflicts of
interest.
SECTION 6. Services to Other Clients and the Fund
(a) Subject to compliance with the 1940 Act, nothing contained in this Agreement shall be deemed
to prohibit the Sub-Adviser or any of its affiliated persons from acting, and being separately
compensated for acting, in one or more capacities on behalf of the Fund. The Adviser and the Fund
understand that the Sub-Adviser may act as investment manager or in other capacities on behalf of
other customers including entities registered under the 1940 Act.
(b) While information, recommendations and actions which the Sub-Adviser supplies to and does on
behalf of the Portfolio shall in the Sub-Adviser’s judgment be appropriate under the circumstances
in light of the investment objectives and policies of the Fund, as set forth in the Prospectus
delivered to the Sub-Adviser from time to time, it is understood and agreed that they may be
different from the information, recommendations and actions the Sub-Adviser or its affiliated
persons supply to or do on behalf of other clients. The Sub-Adviser and its affiliated persons
shall supply information, recommendations and any other services to the Portfolio and to any other
client in an impartial and fair manner in order to seek good results for all clients involved. As
used herein, the term “affiliated person” shall have the meaning assigned to it in the 1940 Act.
(c) On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best
interest of the Portfolio as well as other customers, the Sub-Adviser may, to the extent permitted
by applicable law, aggregate the securities to be so sold or purchased in order to obtain the best
execution or lower brokerage commissions, if any. The Sub-Adviser may also on occasion purchase or
sell a particular security for one or more customers in different amounts. On either occasion, and
to the extent permitted by applicable law and regulations, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction, will be made by the
Sub-Adviser in the manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other customers.
(d) The Sub-Adviser agrees to use the same skill and care in providing services to the Fund as it
uses in providing services to other similar accounts for which it has investment responsibility.
The Sub-Adviser will conform with all applicable rules and regulations of the Securities and
Exchange Commission.
SECTION 7. Reports to the Sub-Adviser
The Adviser shall furnish to the Sub-Adviser the Prospectus, proxy statements, reports and other
information relating to the business and affairs of the Fund as the Sub-Adviser may, at any time or
from time to time, reasonably require in order to discharge the Sub-Adviser’s duties under this
Agreement.
SECTION 8. Proxies
The Adviser shall vote proxies for securities held by the Fund in accordance with the Adviser’s
policies for proxy voting. The Adviser agrees it shall provide the Sub-Adviser a copy of the
Adviser’s policies upon written request.
SECTION 9. Term of Agreement
Provided that this Agreement shall have first been approved by the Board of Directors of the Fund,
including a majority of the members thereof who are not interested persons (as defined in the 0000
Xxx) of either party, by a vote cast in person at a meeting called for the purpose of voting such
approval, then this Agreement shall be
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effective on the date hereof. This Agreement shall continue in effect from year to year, subject
to approval annually by the Board of Directors of the Fund or by vote of a majority of the voting
securities of the Portfolio and also, in either event, by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of the Directors of the Fund who
are not parties to this Agreement or interested persons (as defined in the 0000 Xxx) of any such
person.
SECTION 9. Termination of Agreement; Assignment
(a) This Agreement may be terminated by either party hereto without the payment of any penalty,
upon 90 days’ prior notice in writing to the other party and to the Fund, or upon 60 days’ written
notice by the Fund to the two parties; provided, that in the case of termination by the Fund such
action shall have been authorized by resolution of a majority of the Board of Directors of the Fund
or by vote of a majority of the voting securities of any Portfolio. In addition, this Agreement
shall terminate upon the later of (1) the termination of the Adviser’s agreement to provide
investment advisory services to the Fund or (2) notice to the Sub-Adviser that the Adviser’s
agreement to provide investment advisory services to the Fund has terminated.
(b) This Agreement shall automatically terminate in the event of its assignment (as defined in the
1940 Act).
(c) Termination of this Agreement for any reason shall not affect rights of the parties that have
accrued prior thereto.
SECTION 10. Notices
(a) The Sub-Adviser agrees to promptly notify the Adviser of the occurrence of any of the
following events: (1) any change in the Portfolio’s portfolio manager; (2) the Sub-Adviser fails
to be registered as an investment adviser under the Advisers Act or under the laws of any
jurisdiction in which the Sub-Adviser is required to be registered as an investment adviser in
order to perform its obligations under this Agreement; (3) the Sub-Adviser is the subject of any
action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court,
public board or body, involving the affairs of the Portfolio; or (4) any change in control of the
Sub-Adviser.
(b) Any notice given hereunder shall be in writing and may be served by being sent by telex,
facsimile or other electronic transmission or sent by registered mail or by courier to the address
set forth below for the party for which it is intended. A notice served by mail shall be deemed to
have been served seven days after mailing and in the case of telex, facsimile or other electronic
transmission twelve hours after dispatch thereof. Addresses for notice may be changed by written
notice to the other party.
If to the Adviser:
With a copy to:
Xxxxxxxxxx, Xxxx 00000
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If to the Sub-Adviser:
Xxxxxxxxx Xxxxxx Management, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: General Counsel
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: General Counsel
With a copy to:
[Contact at Sub-Adviser]
SECTION 11. Governing Law
This Agreement shall be governed by and subject to the requirements of the laws of the State of
Ohio without reference to the choice of law provisions thereof.
SECTION 12. Applicable Provisions of Law
The Agreement shall be subject to all applicable provisions of law, including, without limitation,
the applicable provisions of the 1940 Act, and to the extent that any provisions herein contained
conflict with any such applicable provisions of law, the latter shall control.
SECTION 13. Counterparts
This Agreement may be entered into in any number of counterparts, each of which when so executed
and delivered shall be deemed an original, but all such counterparts shall together constitute one
and the same instrument.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of the day and year
first above written.
| Ohio National Investments, Inc. | ||||||||
| By: | ||||||||
| Xxxxxxxxx Xxxxxx Management, Inc. | ||||||||
| By: | ||||||||
| Accepted and Agreed: | ||||||||
| Ohio National Fund, Inc. | ||||||||
By: |
||||||||
| Xxxx X. Xxxxxx, President | ||||||||
Sub Advisory
Discovery
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