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EXHIBIT (5)(H)
SUB-ADVISORY AGREEMENT (FOR THE STRATEGIC INCOME, STELLAR
AND RELATIVE VALUE PORTFOLIOS) BETWEEN OHIO
NATIONAL INVESTMENTS, INC. AND STAR BANK, N.A.,
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 STAR BANK,
N.A., a national bank (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 authorized to engage in the business of providing
investment advisory services to registered investment companies; 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 STRATEGIC
INCOME PORTFOLIO, the STELLAR PORTFOLIO and the RELATIVE VALUE 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 Strategic
Income Portfolio, the Stellar Portfolio and the Relative Value 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 "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 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 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.
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(d) In carrying out its obligations to manage the investments and reinvestments
of the assets of the Portfolios, the Sub-Adviser shall: (1) 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 each of the Portfolios or are under consideration for inclusion
therein; (2) formulate and implement continuous investment programs for the
Portfolios consistent with the investment objectives and related investment
policies and restrictions for the Portfolios as set forth in the Prospectus; and
(3) take any steps necessary to implement the aforementioned investment programs
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
securities of the Portfolios 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.
(b) The Fund shall bear all expenses of organizing and registering the
Portfolios, and the Fund and Adviser shall bear all of their respective expenses
of their operations and businesses not expressly assumed or agreed to be paid by
the Sub-Adviser under this Agreement. In particular, but without limiting the
generality of the foregoing, the Fund shall pay any fees due to the Adviser, all
interest, taxes, governmental charges or duties, fees, brokerage and commissions
of every kind arising hereunder or in connection herewith, expenses of
transactions with shareholders of the 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 existence of the Portfolios.
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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 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 sub-advisory fees, payable quarterly, at the
annual rates of (a) 0.55% of the first fifty million dollars ($50,000,000) of
the average daily net assets of the Strategic Income Portfolio during the
quarter preceding each payment and 0.50% of the average daily net assets of the
Strategic Income Portfolio in excess of fifty million dollars, (b) 0.75% of the
first fifty million dollars ($50,000,000) of the average daily net assets of the
Stellar Portfolio during the quarter preceding each payment and 0.70% of the
average daily net assets of the Stellar Portfolio in excess of fifty million
dollars and (c) 0.65% of the first fifty million dollars ($50,000,000) of the
average daily net assets of the Relative Value Portfolio during the quarter
preceding each payment and 0.60% of the average daily net assets of the Relative
Value Portfolio in excess of fifty million dollars (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 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 each of the Portfolios as of the close of business each day. The Sub-Advisory
Fees shall be payable solely by the Adviser, and the Fund shall not be liable to
the Sub-Adviser for any unpaid Sub-Advisory Fees.
SECTION 5. Limitation of Liability of Sub-Adviser
(a) The Sub-Adviser shall be liable for losses resulting from its own acts or
omissions caused by the Sub-Adviser's willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or its reckless disregard
of its duties under this Agreement, and nothing herein shall protect the
Sub-Adviser against any such liability to the shareholders of the Fund or to the
Adviser. The Sub-Adviser shall not be liable to the Fund or to any shareholder
of the Fund or to the Adviser for any claim or loss arising out of any
investment or other act or omission in the performance of the Sub-Adviser's
duties under this Agreement, or for any loss or damage resulting from the
imposition by any government of exchange control restrictions which might affect
the liquidity of the Fund's assets maintained with custodians or securities
depositories in foreign countries, or from any political acts of any foreign
governments to which such assets might be exposed, or for any tax of any kind
(other than taxes on the Sub-Adviser's income), including without limitation any
statutory, governmental, state, provincial, regional, local or municipal
imposition, duty, contribution or levy imposed by any government or governmental
agency upon or with respect to such assets or income earned with respect thereto
(collectively "Taxation"). Notwithstanding the foregoing sentence, the
Sub-Adviser shall be liable for taxes or tax penalties incurred by the Fund 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 any 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.
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
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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 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 and its affiliated persons shall supply information, recommendations
and any other services to the Portfolios 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 a Portfolio as well as other customers, the
Sub-Adviser may, with the consent of the Adviser and 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 fiduciary 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 each of the Portfolios, at a meeting
to take place not more than one year after the effective date of the Fund's
registration statement relating to that Portfolio. Thereafter, this Agreement
shall continue in effect from year to year, subject to approval annually by the
Board of
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Directors of the Fund or by vote of a majority of the voting securities of each
of the Portfolios and also, in either event, by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Directors of the Fund who are not parties to this Agreement or interested
persons (as defined in the 0000 Xxx) of any such person.
SECTION 9. Termination of Agreement; Assignment
(a) This Agreement may be terminated by either party hereto without the payment
of any penalty, upon 90 days' prior notice in writing to the other party and to
the Fund, or upon 60 days' written notice by the Fund to the two parties;
provided, that in the case of termination by the Fund such action shall have
been authorized by resolution of a majority of the Board of Directors of the
Fund or by vote of a majority of the voting securities of one or more of the
Portfolios. 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 officers
or portfolio managers; (2) the Sub-Adviser fails to be legally qualified as an
investment adviser to investment companies 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 one or more of the Portfolios; or (4) any change in ownership or 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
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If to the Sub-Adviser:
Star Bank, N.A.
Trust Financial Services
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
With a copy to:
B. Xxxxxxxx Xxxxxxx
Senior Vice President & Chief Investment Officer
Star Bank, N.A.
Trust Financial Services
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 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.
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:_________________________________________
Xxxxxx X. Xxxx, President
STAR BANK, N.A.
By:_________________________________________
B. Xxxxxxxx Xxxxxxx, Senior Vice
President & Chief Financial Officer
Accepted and Agreed:
OHIO NATIONAL FUND, INC.
By:___________________________________
Xxxxxx X. Xxxxxxxxx, President
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