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Exhibit 5(j)
SUBADVISORY AGREEMENT
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This Subadvisory Agreement (this "Agreement") is entered into as of the first
day of May, 1998, by and between OHIO NATIONAL INVESTMENTS, INC., an Ohio
corporation(the "Adviser") and FEDERATED INVESTMENT COUNSELING, a Delaware
business trust ("FIC").
WHEREAS, the Adviser has entered into an advisory agreement dated May
1, 1996, (the "Advisory Agreement") with OHIO NATIONAL FUND, INC., a Maryland
corporation (the "Company"), pursuant to which the Adviser provides portfolio
management services to the HIGH INCOME BOND PORTFOLIO, EQUITY INCOME PORTFOLIO
and BLUE CHIP PORTFOLIO (the "Funds"), three series of the Company;
WHEREAS, the Advisory Agreement provides that the Adviser may delegate
any or all of its portfolio management responsibilities under the Advisory
Agreement to one or more subadvisers; and
WHEREAS, the Adviser and the Board of directors (the "Board") of the
Company desire to retain FIC to render portfolio management services in the
manner and on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Adviser and FIC agree as follows:
1. APPOINTMENT OF SUBADVISER. The Adviser hereby appoints FIC as subadviser for
each of the Funds and authorizes FIC, in its discretion and without prior
consultation with the Adviser, to buy, sell, lend and otherwise trade in any
stocks, bonds, instruments, financial contracts and other investment assets
("Securities") on behalf of the Funds. Subject to the supervision of the Adviser
and the Board, FIC will manage the investment operations of the Funds and the
composition of the Funds' respective portfolios, including the purchase,
retention and disposition of, and exercise of all rights pertaining to, the
Securities comprising the Funds. FIC may invest the Funds in such proportions of
stocks, bonds, instruments, financial contracts, cash and other investment
assets as FIC shall determine, and may dispose of Securities without regard to
the length of time the Securities have been held, the resulting rate of
portfolio turnover or any tax considerations, provided that all investments
shall conform with:
(a) the Funds' investment objectives, policies, limitations,
procedures and guidelines set forth in the documents listed on
Schedule 1 to this Agreement;
(b) any additional objectives, policies or guidelines established
by the Adviser or by the Board that have been furnished in
writing to FIC;
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(c) the provisions of Section 851 of the Internal Revenue Code
("IRC") applicable to "regulated investment companies";
(d) the diversification requirements specified in Section 817(h)
of the IRC, and the regulations thereunder; and
(e) the provisions of the Investment Company Act of 1940 (the
"1940 Act") and the rules and regulations thereunder
applicable to the Funds.
2. REPRESENTATIONS AND WARRANTIES.
(a) FIC hereby represents and warrants to the Adviser that: (i) it
is a business trust duly formed and validly existing under the
laws of Delaware, (ii) it is duly authorized to execute and
deliver this Agreement and to perform its obligations
hereunder and has taken all necessary action to authorize such
execution, delivery and performance, (iii) it is registered
with the Securities and Exchange Commission ("SEC") as an
investment adviser under the Investment Advisers Act of 1940
(the "Advisers Act") and is registered or licensed as an
investment adviser under the laws of all jurisdictions in
which its activities require it to be so registered or
licensed, except where the failure to be so licensed would not
have a material adverse effect on its business and (iv) it has
furnished to the Adviser true and complete copies of all the
documents listed on Schedule 2 to this Agreement.
(b) The Adviser hereby represents and warrants to FIC that: (i) it
is a corporation duly formed and validly existing under the
laws of Ohio, (ii) it is duly authorized to execute and
deliver this Agreement and to perform its obligations
hereunder and has taken all necessary action to authorize such
execution, delivery and performance, (iii) it is registered
with the SEC as an investment adviser under the Advisers Act
and is registered or licensed as an investment adviser under
the laws of all jurisdictions in which its activities require
it to be so registered or licensed, except where the failure
to be so licensed would not have a material adverse effect on
its business and (iv) it has furnished to FIC true and
complete copies of all the documents listed on Schedule 1 to
this Agreement.
3. INFORMATION AND REPORTS.
(a) The Adviser will promptly notify FIC of any material change in
any of the documents listed on Schedule 1 to this Agreement
and will provide FIC with copies of any such modified
document. The Adviser will also provide FIC with a list, to
the best of the Adviser's knowledge, of all affiliated persons
of Adviser (and any affiliated person of such an affiliated
person) and will promptly update the list
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whenever the Adviser becomes aware of any additional
affiliated persons.
(b) FIC will maintain books and records relating to its management
of the Funds under its customary procedures and in compliance
with applicable regulations under the 1940 Act and the
Advisers Act. All such records pertaining to the Funds shall
be the property of the Company and FIC will permit the
Adviser, the Company and the SEC to inspect such books and
records at all reasonable times during normal business hours,
upon reasonable notice. Prior to each Board meeting, FIC will
provide the Adviser and the Board with reports regarding its
management of the Funds during the interim period, in such
form as may be mutually agreed upon by FIC and the Adviser.
FIC will also provide the Adviser with any information
regarding its management of the Fund required for any
shareholder report, amended registration statement or
prospectus supplement filed by the Company with the SEC.
4. CONDITIONS TO AGREEMENT. FIC's and the Adviser's obligations under this
Agreement are subject to the satisfaction of the following conditions precedent:
(a) Receipt by FIC of a certificate of an officer of the Company
stating that (i) this Agreement and the Advisory Agreement
have been approved by the vote of a majority of the directors,
who are not interested persons of FIC or the Adviser, cast in
person at a meeting of the Board called for the purpose of
voting on such approval, and (ii) this Agreement and the
Advisory Agreement have been approved by the vote of a
majority of the outstanding voting securities of each of the
Funds;
(b) Receipt by FIC of certified copies of instructions from the
Company to its custodian designating the persons specified by
FIC as "Authorized Persons" under the Company's custody
agreement;
(c) The Company's execution and delivery of a limited power of
attorney in favor of FIC, in a form mutually agreeable to FIC,
the Adviser and the Board;
(d) Receipt by FIC of Board resolutions, certified by an officer
of the Company, adopting all procedures and guidelines
required by any exemptive order listed on Schedule 2 to this
Agreement; and
(e) Any other documents, certificates or other instruments that
FIC or the Adviser may reasonable request from the Company.
5. COMPENSATION. For the services provided under this Agreement, the Adviser
will pay to FIC a fee at an annual rate of (a) 0.50% of the first $30 million,
0.40% of the next $20 million, 0.30% of the next $25 million and 0.25% of the
High Income
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Bond Portfolio's assets in excess of $75 million and (b) 0.50% of the first $35
million, 0.35% of the next $65 million and 0.25% of the average daily net assets
in excess of $100 million of each of the Equity Income Portfolio and the Blue
Chip Portfolio. Such fees will accrue daily and will be paid monthly. If this
Agreement is effective for only a portion of a month, the fees will be prorated
for the portion of such month during which this Agreement is in effect.
6. ALLOCATION OF TRANSACTIONS AND BROKERAGE.
(a) To the extent consistent with applicable law, FIC may
aggregate purchase or sell orders for each of the Funds with
contemporaneous purchase or sell orders of the other Funds or
of other clients of FIC or its affiliated persons. In such
event, allocation of the Securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made
by FIC in the manner FIC considers to be the most equitable
and consistent with its and its affiliates' fiduciary
obligations to the Funds and to such other clients. The
Adviser hereby acknowledges that such aggregation of orders
may not result in a more favorable price or lower brokerage
commissions in all instances.
(b) FIC will place purchase and sell orders for the Funds with or
through such banks, brokers, dealers, futures commission
merchants or other firms dealing in Securities ("Brokers") as
it determines, which may include Brokers that are affiliated
persons of FIC, provided such orders are exempt from the
provisions of Section 17(a), (d) and (e) of the 1940 Act. FIC
will use its best efforts to obtain execution of transactions
for the Funds at prices which are advantageous to the Funds
and at commission rates that are reasonable in relation to the
services received. FIC may, however, select Brokers on the
basis that they provide brokerage or research services or
research products to the Funds and/or other advisory clients
of FIC and its affiliated investment advisers as to which FIC
and those affiliated investment advisers exercise investment
discretion. In selecting Brokers, FIC may also consider the
reliability, integrity and financial condition of the Broker,
and the size of and difficulty in executing the order.
(c) To the extent consistent with applicable law, and subject to
review by the Board, FIC may pay a Broker an amount of
commission for effecting a Securities transaction in excess of
the amount of commission or dealer spread another Broker would
have charged for effecting that transaction, if FIC determines
in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research products
and/or research services provided by such Broker to the Funds
and/or other clients of FIC and its affiliated investment
advisers as to which FIC and those affiliated investment
advisers exercise investment discretion. This determination,
with respect to brokerage and research services or research
products, may
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be viewed in terms of either that particular transaction or
the overall responsibilities which FIC has with respect to the
Funds or its other clients as to which FIC exercises
investment discretion, and may include services or products
that FIC does not use in managing the Funds.
7. NONEXCLUSIVE AGREEMENT. The investment management services provided by FIC
hereunder are not to be deemed to be exclusive, and FIC shall be free to render
similar services to other advisers, investment companies, and other types of
clients.
8. LIMITATION OF LIABILITY. In the absence of willful misfeasance, bad faith or
gross negligence on the part of FIC, or of reckless disregard by FIC of its
obligations and duties hereunder, FIC, shall not be subject to any liability to
the Adviser, the Funds, the Company, any shareholder or the Funds, or to any
person, firm or organization. Subject to the above-stated standard of care, FIC
shall be liable for any taxes or tax penalties incurred by a Fund for any
failure of a Fund to qualify as a regulated investment company under Section 851
of the IRC as a result of FIC's management of the Funds. The Adviser is hereby
expressly put on notice of the limitation of liability as set forth in the
Declaration of Trust of FIC and agrees that the obligations assumed by FIC
pursuant to this Agreement will be limited in any case to FIC and its assets and
the Adviser shall not seek satisfaction of any such obligations from the
shareholders of FIC, the trustees of FIC, officers, employees or agents of FIC,
or any of them.
9. PRICING. The Adviser hereby acknowledges that FIC is not responsible for
pricing portfolio Securities, and that the Adviser and FIC will rely on the
pricing agent chosen by the Board of the Company for prices of Securities, for
any purposes.
10. LIMITED POWER OF ATTORNEY. Subject to any other written instructions of the
Adviser or the Company, FIC is hereby appointed the Company's agent and
attorney-in-fact for the limited purposes of executing account documentation,
agreements, contracts and other documents as FIC shall be requested by brokers,
dealers, counter parties and other persons in connection with its management of
the Funds' assets. The Adviser and the Company hereby ratify and confirm as good
and effectual, at law or in equity, all that FIC and its officers and employees,
may do in its capacity as attorney-in-fact. However, nothing herein shall be
construed as imposing a duty on FIC to act or assume responsibility for any
matters in its capacity as attorney-in-fact for the Company. Any person,
partnership, corporation or other legal entity dealing with FIC in its capacity
as attorney-in-fact hereunder for the Company is hereby expressly put on notice
that FIC is acting solely in the capacity as an agent of the Company and that
any such person, partnership, corporation or other legal entity must look solely
to the Company for enforcement of any claim against the Company as FIC assumes
no personal liability whatsoever for obligations of the Company entered into by
FIC in its capacity as attorney-in-fact for the Company. FIC agrees to provide
the Adviser and the Company with copies of any such agreements executed on
behalf of the Company.
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11. TERM. This Agreement shall begin as of the date of its execution and shall
continue in effect for a period of two years from the date hereof and thereafter
for successive periods of one year, subject to the provisions for termination
and all of the other terms and conditions hereof if such continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act; provided, however, that this Agreement may be terminated by one or
more of the Funds at any time, without the payment of any penalty, by the Board
or by vote of a majority of the outstanding voting securities (as defined in the
0000 Xxx) of one or more of the Funds, or by the Adviser or FIC at any time,
without the payment of any penalty, on not more than 60 days' nor less that 30
days' written notice to the other party. This Agreement will terminate
automatically as to any Fund in the event of its assignment (as defined in the
0000 Xxx) or upon the termination of the Adviser's Advisory Agreement as to that
Fund.
12. COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
13. GOVERNING LAW AND CONSTRUCTION. This Agreement will be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania. Any
terms defined in 1940 Act, and not otherwise defined in this Agreement, are used
with the same meaning in this Agreement.
14. USE OF FIC'S NAME. FIC hereby agrees that the Adviser, the Company, their
affiliated broker-dealers and affiliated life insurance companies may use FIC's
name and logo in advertising and marketing materials for the Company and any
variable insurance products through which one or more of the Funds may be
offered as funding vehicles, provided, that FIC has reviewed and approved any
such materials prior to their use.
15. MISCELLANEOUS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed
on their behalf by their duly authorized officers as of the date first above
written.
For OHIO NATIONAL INVESTMENTS, INC.: For FEDERATED INVESTMENT COUNSELING:
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Date: Date:
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Accepted and Agreed by
OHIO NATIONAL FUND, INC.:
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DATE:
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SCHEDULE 1 - FUND DOCUMENTATION
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1. The Company's Articles of Incorporation (as amended) and Bylaws.
2. 10 copies of the most current Prospectus and Statement of Additional
Information for each class of the Funds' shares.
3. Information regarding the Custody Agreement between the Company and
Star Bank, NA, as Custodian for the Funds' securities, including
information as to:
- the Funds' nominee,
- the Federal tax identification numbers of the Funds and their
nominee,
- all routing, bank, participant and account numbers and other
information necessary to provide proper instructions for transfer
and delivery of Securities to the Funds' accounts at the Custodian,
- the name, address, phone and fax numbers of the Custodian's
employees responsible for the Funds' accounts, and
- the Funds' pricing service and contact persons.
4. All policies, procedures, guidelines and codes adopted by the Board
under the 1940 Act or any regulation thereunder, including:
- Rule 10f-3 (relating to affiliated underwriting syndicates).
- Rule 17a-7 (relating to interfund transactions),
- Rule 17e-1 (relating to transactions with affiliated Brokers),
- Rule 17f-4 (relating to securities held in securities
depositories), and
- Rule 17j-1 (relating to a code of ethics).
5. All SEC exemptive orders applicable to the Funds, and all procedures
and guidelines adopted by the Board under the terms of such orders.
6. All procedures and guidelines adopted by the Board regarding:
- Repurchase agreements,
- Evaluating the liquidity of securities, include restricted
securities, municipal leases and stripped U.S. government
securities,
- Segregation of liquid assets in connection with reverse repurchase
agreements, firm commitments, standby commitments, short sales,
options and futures agreements,
- Derivative contracts and securities, and
- Affiliated bank procedures.
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7. Any master agreements that the Company has entered into on behalf of
the Funds, including:
- Master Repurchase Agreement,
- Master Futures and Options Agreements,
- Master Foreign Exchange Netting Agreements, and
- Master Swap Agreements.
8. CFTC Rule 4.5 letter.
9. Schedule of the current year's Board meetings, and the reports needed
by the Board.
10. Pricing and performance calculation entities and contact persons.
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SCHEDULE 2 - SUBADVISER DOCUMENTATION
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1. Part II of FIC's Form ADV most recently filed with the SEC.
2. All exemptive orders granted by the SEC that will become applicable to
the Funds, and the procedures and guidelines followed by FIC in
accordance therewith.
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