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Exhibit (d)(8)
SUB-ADVISORY AGREEMENT
This Agreement is made as of the twenty-sixth day of February, 1999 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 those portions of the assets of the Fund designated as the GROWTH &
INCOME PORTFOLIO and the SMALL CAP GROWTH 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 and Small Cap Growth Portfolios 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 "Portfolios").
The Fund is the owner of all cash, securities and other assets in the
Portfolios, 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 Portfolios with full authority
to buy, sell and otherwise deal in securities and other intangible investments
and contracts relating to the same for the Portfolios.
(b) All activities by the Sub-Adviser on behalf of the Adviser and the
Portfolios shall be in accordance with the investment objectives, policies and
restrictions set forth in the 1940 Act and in the Fund's
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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 Portfolios 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 Portfolios 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 Portfolios, 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 Portfolios or are under
consideration for inclusion therein; (2) formulate and implement a continuous
investment program for the Portfolios consistent with the investment objectives
and related investment policies and restrictions for each 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 Portfolios,
the Sub-Adviser shall arrange for the transmission to the Adviser and the
Portfolios' 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 Portfolios. 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 Portfolios' custodian.
(f) In connection with the placement of orders for the execution of the
Portfolios' securities transactions, the Sub-Adviser shall create and maintain
all necessary records of the Portfolios 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 Portfolios 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 Portfolios 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.
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(b) The Fund shall bear all expenses of the Portfolios' 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
Portfolios, expenses of offering interests in the Portfolios 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 Portfolios' 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 Portfolios.
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 rates of (a) 0.60% of the first one hundred million dollars
($100,000,000) of the average daily net assets of the Growth & Income Portfolio
during the month preceding each payment, 0.55% of the next one hundred million
dollars ($100,000,000), and 0.50% of the average daily net assets of the Growth
& Income Portfolio in excess of two hundred million dollars ($200,000,000), and
(b) 0.64% of the first one hundred million dollars ($100,000,000) of the average
daily net assets of the Small Cap Growth Portfolio during the month preceding
each payment, 0.60% of the next one hundred million dollars ($100,000,000), and
0.55% of the average daily net assets of the Small Cap Growth Portfolio in
excess of two hundred million dollars ($200,000,000) (the "Sub-Advisory Fees").
The Sub-Advisory Fees 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 each Portfolio as of the close of business each day. The net market value of
securities held short by each 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 month or terminates on a date
other than the last day of a month, the Sub-Advisory Fees payable with respect
to either such month 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 Fees.
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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 Portfolios, 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 a 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
that Portfolio.
(b) In the event the Sub-Adviser is assessed any Taxation in respect of the
assets, income or activities of the Portfolios, 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 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.
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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 Portfolios and the allocation of investment
opportunities among accounts (including the Portfolios) 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 Portfolios. While information, recommendations and actions
which the Sub-Adviser supplies to and does on behalf of the Portfolios 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 Portfolios 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 Portfolios 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 Portfolios. 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 a 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 Portfolios may, in many
instances, be effected substantially simultaneously 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 Portfolios 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.
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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
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 each Portfolio, at a meeting to take
place not more than 120 days after the date above first written. 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 each 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, as to either Portfolio, by vote of a majority of the voting securities
of that 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 11. Notices
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(a) The Sub-Adviser agrees to promptly notify the Adviser of the occurrence of
any of the following events: (1) any change in a 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
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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 a 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
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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 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
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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: s/Xxxxxx X. Xxxx
--------------------------------
Xxxxxx X. Xxxx, President
XXXXXXXXX XXXXXXXX INVESTMENT MANAGEMENT, L.P.
By: s/Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx, President
Accepted and Agreed:
OHIO NATIONAL FUND, INC.
By: s/Xxxx X. Xxxxxx
-------------------------------
Xxxx X. Xxxxxx, President
