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EXHIBIT (5)(g)
SUB-ADVISORY AGREEMENT (FOR THE GROWTH &
INCOME PORTFOLIO) BETWEEN OHIO NATIONAL
INVESTMENTS, INC.
AND XXXXXXXXX XXXXXXXX INVESTMENT MANAGEMENT, L.P.,
DATED JANUARY 3, 1997
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SUB-ADVISORY AGREEMENT
This Agreement is made as of the third day of January, 1997 by and between OHIO
NATIONAL INVESTMENTS, INC., an Ohio corporation (the "Adviser"), and XXXXXXXXX
XXXXXXXX INVESTMENT MANAGEMENT, L.P., a California limited partnership (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 that portion of the assets of the Fund designated as the GROWTH &
INCOME 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 Growth &
Income 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"). The Fund is the
owner of all cash, securities and other assets in the Portfolio, and there are
no restrictions on the pledge, hypothecation, transfer or sale of such cash,
securities or assets. To enable the Sub-Adviser to exercise fully its discretion
hereunder, the Adviser hereby appoints the Sub-Adviser as agent and
attorney-in-fact for the Portfolio with full authority to buy, sell and
otherwise deal in securities and other intangible investments and contracts
relating to the same for 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 and discretion to select members of securities
exchanges, brokers, dealers and futures commission merchants for the execution
of transactions of the Portfolio and, when applicable, shall
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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) in its discretion,
obtain and evaluate pertinent economic, statistical, financial and other
information affecting the economy generally and individual companies or
industries the securities of which are included in the Portfolio or are 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 such Portfolio as set forth
in the Prospectus; and (3) take such steps as it deems necessary, in its sole
discretion, 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,
settlement charges 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 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.
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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 a sub-advisory fee, payable quarterly, at the
annual rate of 0.60% of the first one hundred million dollars ($100,000,000) of
the average daily net assets of the Portfolio during the quarter preceding each
payment, 0.55% of the next one hundred million dollars ($100,000,000) of the
average daily net assets of the Portfolio, and 0.50% of the average daily net
assets of the Portfolio in excess of two hundred million dollars ($200,000,000)
(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
quarterly to the Sub-Adviser on or before the fifth business day of the next
succeeding quarter. 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 net market value of securities held short by the Portfolio shall
be treated as a liability of the account and, together with the amount of any
margin or other loans owed by the account, shall be subtracted in determining
net market value. If this Agreement begins on a date other than the first day of
a quarter or terminates on a date other than the last day of a quarter, the
Sub-Advisory Fee payable with respect to either such quarter shall be prorated.
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 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, including, but not limited to, any error in
judgment with respect to buying or selling securities for the Portfolio, 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 for any failure of the Portfolio to
qualify as a regulated investment company under Subchapter M 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 as such
expenditures are incurred. The Sub-Adviser
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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 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.
(c) The Sub-Adviser shall have no responsibility for and shall incur no
liability to the Fund, any shareholder of the Fund or the Adviser relating to
(1) the selection or establishment by the Fund of its investment objectives,
fundamental policies and restrictions, (2) the Fund's registration or duty to
register with any government or agency, (3) the administration of any plans,
trusts or accounts investing through the Fund, or (4) the Fund's compliance with
the requirements of the 1940 Act or Subchapter M of the Internal Revenue Code
except as otherwise specified in subsection (a) of this Section 5. The Adviser
shall indemnify and defend the Sub-Adviser and its partners and employees and
hold them harmless from and against any and all claims, losses, damages,
liabilities and expenses, as they are incurred, by reason of any act or omission
of the Adviser or any custodian, broker, agent or other party selected by the
Adviser, except such as arise from the Sub-Adviser's breach of this contract or
of the Sub-Adviser's fiduciary duty to the Adviser or the Fund.
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 other entities registered under the 0000 Xxx. This may
create conflicts of interest with the Portfolio over the Sub-Adviser's time
devoted to managing the Portfolio and the allocation of investment opportunities
among accounts (including the Portfolio) managed by the Sub-Adviser. The
Sub-Adviser shall use its best efforts to resolve all such conflicts in a manner
that is generally fair to all of its clients without prejudice to the Portfolio.
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 shall, to the extent practicable, allocate investment opportunities
to the Portfolio over a period of time on a fair and equitable basis relative to
its other clients. Nothing in this Agreement shall be deemed to obligate the
Sub-Adviser to acquire for the Portfolio any security that the Sub-Adviser or
its partners, employees or affiliated persons may acquire for its or their own
accounts or for the account of any other client if, in the absolute discretion
of the Sub-Adviser, it is not practical or desirable to acquire a position in
that security for the Portfolio. 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 Portfolio as well as other customers of the
Sub-Adviser, 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, beneficial timing of transactions 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. The purchase or sale of securities for the Portfolio may, in many
instances, be effected substantially simultaneously
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with the purchase or sale of like securities for the accounts of other clients
of the Sub-Adviser and its affiliated persons. Such transactions may be made at
slightly different prices due to the volume of securities purchased or sold. In
that event, the average price of all securities purchased or sold in such
transactions may be determined and the Portfolio may be charged or credited, as
the case may be, the average transaction price.
(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.
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
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 effective on the date hereof. Unless earlier terminated as
hereinafter provided, this Agreement shall continue in effect until approved by
a majority vote of the voting securities of the Portfolio, at a meeting to take
place not more than one year after the effective date of the Fund's registration
statement relating to the Portfolio. Thereafter, 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. Confidentiality
Except as required by law, the Adviser agrees to maintain in strict confidence
all investment advice and information furnished to the Adviser or the Fund by
the Sub-Adviser.
SECTION 10. 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 the 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).
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(c) Termination of this Agreement for any reason shall not affect rights of the
parties that have accrued prior thereto.
SECTION 11. 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:
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:
Xxxxx X. Xxxxxxx, Vice President
Xxxxxxxxx Xxxxxxxx & Company
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Fax No. (000) 000-0000
With a copy to:
Xxxx X. Xxxxx, Esq.
Xxxxxxxxx Xxxxxxxx & Company
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
SECTION 12. Arbitration
The parties waive their right to seek remedies in court, including any right to
a jury trial. The parties agree that any dispute between the parties arising out
of, relating to, or in connection with, this
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Agreement, shall be resolved exclusively by arbitration to be conducted only in
the county and state of the principal office of the Adviser at the time of such
dispute in accordance with the rules of the American Arbitration Association
("AAA") applying the laws of Ohio. The parties agree that such arbitration shall
be conducted by a retired judge who is experienced in dispute resolution
regarding the securities industry, that discovery shall not be permitted except
as required by the rules of AAA, that the arbitration award shall not include
factual findings or conclusions of law, and that no punitive damages shall be
awarded. The parties understand that any party's right to appeal or to seek
modification of any ruling or award of the arbitrator is severely limited. Any
award rendered by the arbitrator shall be final and binding, and judgment may be
entered upon it in any court of competent jurisdiction in the county and state
of the principal office of the Adviser at the time the award is rendered or as
otherwise provided by law.
SECTION 13. Delivery of Information
The Adviser acknowledges that it has received the Sub-Adviser's brochure
required to be delivered under the Advisers Act (including the information in
Part II of the Sub-Adviser's Form ADV). If the Adviser received such information
less than forty-eight hours prior to signing this Agreement, this Agreement may
be terminated by the Adviser without penalty within five business days from the
effective date. The Sub-Adviser agrees to deliver annually without charge the
Sub-Adviser's brochure required by the Advisers Act and any and all amendments
to its Form ADV whenever filed.
SECTION 14. Use of Name
The Sub-Adviser hereby agrees that the Adviser may use the Sub-Adviser's name
and logo in its marketing or advertising materials, provided that the
Sub-Adviser has reviewed and approved any such materials prior to their use.
SECTION 15. Entire Agreement; Severability
This Agreement is the entire agreement of the parties and supersedes all prior
or contemporaneous written or oral negotiations, correspondence, agreements and
understandings regarding the subject matter hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any and all other provisions hereof.
SECTION 16. No Third-Party Beneficiaries
Neither party intends for this Agreement to benefit any third-party not
expressly named in this Agreement.
SECTION 17. 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 18. 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.
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SECTION 19. 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:_______________________________
Xxxxxx X. Xxxx, President
XXXXXXXXX XXXXXXXX INVESTMENT MANAGEMENT, L.P.
By:_______________________________
Xxxxxxx X. Xxxxxxxxx, Chairman
Accepted and Agreed:
OHIO NATIONAL FUND, INC.
By:_______________________________
Xxxxxx X. Xxxxxxxxx, President
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