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Exhibit (d)(1)
SUB-ADVISORY AGREEMENT
This Agreement is made as of the third day of April, 2000 by and between OHIO
NATIONAL INVESTMENTS, INC., an Ohio corporation (the "Adviser"), and FIRST TRUST
ADVISORS L.P., an Illinois limited partnership (the "Sub-Adviser").
WHEREAS, THE DOW(SM) TARGET VARIABLE FUND LLC (the "Fund"), is an Ohio limited
liability company 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 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 Fund that
the Adviser shall from time to time place under the supervision of the
Sub-Adviser.
(b) All activities by the Sub-Adviser on behalf of the Adviser and the Fund
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 Managers of
the Fund and by the Adviser. All activities of the Sub-Adviser on behalf of the
Adviser and the Fund 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 and dealers for the execution of transactions of the Fund 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.
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(d) In carrying out its obligations to manage the investments and reinvestments
of the assets of the Fund, the Sub-Adviser shall:
(1) obtain and evaluate pertinent statistical, financial and other information
affecting the individual companies the securities of which are included in the
Fund or are under consideration for inclusion therein; (2) formulate and
implement a continuous investment program for the Fund consistent with its
investment objectives and related investment policies and restrictions 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 Fund, the
Sub-Adviser shall arrange for the transmission to the Adviser and the Fund'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 Fund. With respect to Fund 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 Fund's custodian.
(f) In connection with the placement of orders for the execution of the Fund's
securities transactions, the Sub-Adviser shall create and maintain all necessary
records of the Fund 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 Fund 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 Managers of the Fund concerning the investment activity and composition of
the Fund 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 its 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
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transactions with owners of the Fund's membership interests, expenses of
offering interests in the Fund 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 legal counsel, expenses of preparing, printing and
distributing all prospectuses, proxy material, reports and notices to owners of
the Fund, and all other costs incident to the Fund'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, 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.
SECTION 4. SUB-ADVISORY FEES
In consideration of the Sub-Adviser's services to the Fund hereunder, the
Sub-Adviser shall be entitled to a sub-advisory fee, payable monthly, at the
annual rate of 0.35% of the average daily net assets of each portfolio of the
Fund during the month preceding each payment (the "Sub-Advisory Fee"). The
Sub-Advisory Fee shall be accrued for each calendar day and the sum of the daily
Sub-Advisory Fee 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 Fund's
portfolios as of the close of business each day. The Sub-Advisory Fee shall be
payable solely by the Adviser, and the Fund shall not be liable to the
Sub-Adviser for any unpaid Sub-Advisory Fee.
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 owners of the Fund or to the
Adviser. The Sub-Adviser shall not be liable to the Fund or to any owner 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, or for
any tax of any kind, including without limitation any statutory, governmental,
state, 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").
(b) In the event the Sub-Adviser is assessed any taxation in respect of the
assets, income or activities of the Fund, 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,
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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 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. While
information, recommendations and actions which the Sub-Adviser supplies to and
does on behalf of the Fund 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 Fund 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.
(b) On occasions when the Sub-Adviser deems the purchase or sale of a security
to be in the best interest of the Fund 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.
(c) 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.
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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. TERM OF AGREEMENT
Provided that this Agreement shall have first been approved by the Board of
Managers 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 effective on the date hereof. Unless earlier terminated as
hereinafter provided, this Agreement shall continue in effect for an initial
term ending September 30, 2000. Thereafter, this Agreement shall continue in
effect from year to year, subject to approval annually by the Board of Managers
of the Fund or by vote of a majority of the voting securities of the Fund 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 Managers 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 Managers of the Fund
or by vote of a majority of the voting securities of the Fund. 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 any of the Sub-Adviser's
executive officers or any portfolio manager who is providing advisory services
pursuant to this agreement; (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
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equity, before or by any court, public board or body, involving the affairs
of the Fund; 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:
Ohio National Investments, Inc.
X.X. Xxx 000
Xxxxxxxxxx, Xxxx 00000
Fax No. (000) 000-0000
With a copy to:
Xxxxxx X. Xxxx, President
Ohio National Investments, Inc.
X.X. Xxx 000
Xxxxxxxxxx, Xxxx 00000
If to the Sub-Adviser:
Xxxxxx XxXxxxxxx, President
First Trust Advisors, L.P.
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Fax No. (000) 000-0000
With a copy to:
Xxxxx Xxxxxxx
Senior Vice President & General Counsel
Nike Securities L.P.
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
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.
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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: /s/Xxxxxxxxxxx X. Xxxxxxx
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Xxxxxxxxxxx X. Xxxxxxx
President
FIRST TRUST ADVISORS L.P.
By /s/Xxxxxx XxXxxxxxx
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Xxxxxx XxXxxxxxx
President
Accepted and Agreed:
THE DOW (SM) TARGET VARIABLE FUND, LLC
By: /s/Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, President
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