Exhibit 5(a)(i)
THE LEGENDS FUND. INC.
MANAGEMENT AGREEMENT
Agreement, made this 10th day of July, 1998 between The Legends Fund,
Inc., a Maryland corporation (the FUND), and Integrity Capital Advisors, Inc., a
Delaware corporation (the MANAGER).
W I T N E S S E T H
WHEREAS, the Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the 1940 ACT); and
WHEREAS, the shares of beneficial interest of the Fund are divided into
separate series or portfolios (each, a PORTFOLIO), each of which is established
pursuant to a resolution of the Board of Directors of the Fund, and the Board of
Directors may from time to time terminate such Portfolios or establish and
terminate additional Portfolios; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the ADVISERS ACT); and
WHEREAS, the Fund desires to retain the Manager to render or contract to
obtain as hereinafter provided investment advisory and-supervisory services to
the Fund and the Fund also desires to avail itself of the facilities available
from the Manager with respect to the administration of the Fund's day to day
business affairs, and the Manager is willing to render or contract for such
investment advisory, supervisory and administrative services;
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF MANAGER. The Fund hereby appoints the Manager to act as
manager of the Fund and administrator of its business affairs for the
period and on the terms set forth in this Agreement. The Manager accepts
such appointment and agrees to render the services herein described, for
the compensation herein provided. The Manager is authorized to enter into
sub-advisory agreements (SUB-ADVISORY AGREEMENTS) with registered
investment advisers (each a SUB-ADVISER and collectively the SUB-ADVISERS)
pursuant to which the Manager delegates to the Sub-Advisers its obligations
for providing investment advisory and certain other services in connection
with one or more of the Portfolios; provided, that the Manager, and not the
Fund, shall be responsible for any compensation payable under the
Sub-Advisory Agreements. Any such Sub-Advisory Agreement may be entered
into by the Manager on such terms and in such manner as may
be permitted by the 1940 Act and the rules thereunder. For each
Portfolio for which the Manager has entered into a Sub-Advisory
Agreement, the Sub-Adviser shall have the primary responsibility for
providing investment advisory services as setforth in Section 2 and
shall be responsible for broker-dealer selection as set forth in Section
3 and maintaining books and records as set forth in Section 4, and the
Manager will have supervisory responsibility for investment advisory
services furnished by the Sub-Adviser pursuant to the Sub-Advisory
Agreement. The Manager will review the performance of each Sub-Adviser
and make recommendations to the Board of Directors of the Fund with
respect to the retention and renewal of Sub-Advisory Agreements.
2. Investment Advisory Services. Subject to the supervision of the Fund's
Board of Directors, the Manager will provide a continuous investment
program for each Portfolio and determine the composition of the assets of
each Portfolio, including determination of the purchase, retention or sale
of the securities, cash, and other investments contained in such
Portfolio's holdings. The Manager will provide investment research and
conduct a continuous program of evaluation, investment, sales, and
reinvestment of each Portfolio's assets by determining the securities and
other investments that shall be purchased, entered into, sold, closed, or
exchanged for such Portfolio, when these transactions should be executed,
and what portion of the assets of such Portfolio should be held in the
various securities and other investments in which it may invest, and the
Manager is hereby authorized to execute and perform such services, or to
arrange for execution and performance of such services, on behalf of each
Portfolio. To the extent, if any, permitted by the investment policies of a
Portfolio, the Manager shall make determinations as to and execute and
perform futures contracts and options on behalf of such Portfolio. The
Manager will provide the services under this Agreement in accordance with
each Portfolio's investment objective or objectives, policies, procedures
and restrictions as stated in the Fund's Registration Statement, as amended
from time to time (the REGISTRATION STATEMENT), filed with the Securities
and Exchange Commission (the SEC) and any other documents that set forth
investment policies, procedures or restrictions governing the Portfolio.
The Manager further agrees as follows:
(a) The Manager will manage each Portfolio (i) so that it will
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the CODE), and
(ii) so as to ensure compliance by such Portfolio with the
diversification requirements of Section 817(h) of the Code and
regulations issued thereunder. In managing the Portfolio in
accordance with these requirements, the Manager shall be entitled
to receive and act upon advice of counsel.
(b) In undertaking its duties under this Agreement, the Manager will
comply
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with the 1940 Act and all rules and regulations thereunder,
all other applicable federal and state laws and regulations,
with any applicable procedures adopted by the Fund's Board of
Directors of which it has notice and the provisions of the
Registration Statement.
(c) On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of a Portfolio as well as of
the Manager's or the Manager's affiliates' other investment
advisory clients, the Manager may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to,
aggregate the securities to be so sold or purchased with those of
its other clients where such aggregation is not inconsistent with
the policies set forth in the Registration Statement. In such
event, the Manager will allocate the securities so purchased or
sold, as well as the expenses incurred in the transaction, in a
manner that is fair and equitable in the Manager's judgment in
the exercise of the Manager's fiduciary obligations to the Fund
and to such other clients.
(d) In connection with the purchase and sale of securities for each
Portfolio, the Manager will arrange for the transmission to the
custodian, transfer agent, dividend disbursing agent and
recordkeeping agent for the Fund (such custodian and agent or
agents hereinafter referred to as the AGENT), on a daily basis,
such confirmations, trade tickets (which shall state industry
classifications unless the Manager has previously furnished a
list of classifications for portfolio securities), and other
documents and information, including, but not limited to, Cusip
or other numbers that identify securities to be purchased or sold
on behalf of each Portfolio and, with respect to mortgage
derivative and asset-backed securities purchased by the Manager
for a Portfolio, 1066Q reports and supplemental information as
required to be available pursuant to IRS Publication 938, as may
be reasonably necessary to enable the Agent to perform its
administrative and recordkeeping responsibilities with respect to
such Portfolio. With respect to portfolio securities to be
purchased or sold through the Depository Trust Company, the
Manager will arrange for the automatic transmission of the
confirmation of such trades to the Fund's Agents.
(e) The Manager will monitor on a daily basis, by review of daily
pricing reports provided by the Agent to the Manager, the
determination by the Agent for the Fund of the valuation of
portfolio securities and other investments of each Portfolio. The
Manager shall not be obligated to independently verify the
Agent's pricing determinations, and the Agent's responsibility
for accurate pricing determinations of the value of the
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Portfolio's securities shall not be reduced by the Manager's duty
to monitor such determinations. The Manager will assist the Agent
in determining or confirming, consistent with the procedures and
policies stated in the Registration Statement, the value of any
portfolio securities or other assets of each Portfolio for which
the Agent seeks assistance from or identifies for review by the
Manager.
(f) The Manager will make available to the Fund, promptly upon
request, all of each Portfolio's investment records and ledgers
maintained by the Manager as are necessary to assist the Fund to
comply with requirements of the 1940 Act and the Advisers Act, as
well as other applicable laws. The Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with its services which may
be requested in order to ascertain whether the operations of the
Fund are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Manager will provide reports, which may be prepared by the
Agent, to the Fund's Board of Directors for consideration at
meetings of the Board on the investment program for each
Portfolio and the issuers and securities represented in each
Portfolio's securities holdings, including a schedule of the
investments and other assets held in such Portfolio and a
statement of all purchases and sales for the Portfolio since the
last such statement, and will furnish the Fund's Board of
Directors with periodic and special reports with respect to the
Portfolio as the Directors may reasonably request, including
statistical information with respect to the Portfolio's
securities.
3. BROKER-DEALER SELECTION. The Manager is responsible for decisions to buy or
sell securities and other investments for each Portfolio, broker-dealer and
futures commission merchants' selection, and negotiation of brokerage
commission and futures commission merchants' rates. As a general matter, in
executing portfolio transactions, the Manager may employ or deal with such
broker-dealers or futures commission merchants as may, in the Manager's
best judgment, provide prompt and reliable execution of the transactions at
favorable prices and reasonable commission rates. In selecting such
broker-dealers or futures commission merchants, the Manager shall consider
all relevant factors, including price (including the applicable brokerage
commission, dealer spread or futures commission merchant rate), the size of
the order, the nature of the market for the security or other investment,
the timing of the transaction, the reputation, experience and financial
stability of the broker-dealer or futures commission merchant involved, the
quality of the service, the difficulty of execution, and the execution
capabilities and operational
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facilities of the firm involved, and, in the case of securities, the
firm's risk in positioning a block of securities. Subject to such
policies as the Board of Directors may determine and consistent with
Section 28(e) of the Securities Exchange Act of 1934, as amended (the
1934 ACT), the Manager shall not be deemed to have acted unlawfully or
to have breached any duty created by this Agreement or otherwise solely
by reason of the Manager's having caused a Portfolio to pay a member of
an exchange, broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission another
member of an exchange, broker or dealer would have charged for effecting
that transaction, if the Manager determines in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member of an exchange,
broker or dealer viewed in terms of either that particular transaction
or the Manager's overall responsibilities with respect to such Portfolio
and to the other clients as to which the Manager exercises investment
discretion. In accordance with Section 11(a) of the 1934 Act and Rule
lla2-2('I') thereunder, and subject to any other applicable laws and
regulations including Section 17(e) of the 1940 Act and Rule 17e-1
thereunder, the Manager may engage its affiliates, or any Sub-Adviser to
the Fund and its respective affiliates, as broker-dealers or futures
commission merchants to effect portfolio transactions in securities and
other investments for a Portfolio.
4. BOOKS AND RECORDS. The Manager shall keep the Fund's books and records
required to be maintained by it pursuant to this Agreement, the 1940 Act or
otherwise. The Manager agrees that all records which it maintains for the
Fund are the property of the Fund and it will surrender promptly to the
Fund any such records upon the Fund's request, provided however that the
Manager may retain a copy of such records. The Manager further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any
such records as are required to be maintained by the Manager hereunder.
5. ADMINISTRATIVE AND SUPERVISORY SERVICES.
(a) The Manager will coordinate all matters relating to the functions of
the Portfolios' Sub-Advisers, Agents, accountants, attorneys, and
other parties performing services or operational functions for the
Portfolios.
(b) The Manager will furnish without cost to the Fund, or pay the cost of,
such office space, office equipment and office facilities as are
adequate for the Fund's needs.
(c) The Manager will provide, without remuneration from or other cost to
the Fund, the services of a sufficient number of individuals competent
to perform all of the Fund's executive, administrative and clerical
functions as are necessary to ensure compliance with federal
securities laws as well as other applicable laws and to provide
effective supervision and administration of the Portfolios and which
are not performed by employees or other agents engaged by the Fund or
by the
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Manager acting in some other capacity pursuant to a separate
agreement or arrangement with the Fund. The Manager shall authorize
and permit any of its directors, officers and employees who may be
elected as Directors or officers of the Fund to serve in the
capacities in which they are elected without any remuneration from the
Fund.
(d) The Manager will assist in the preparation of all periodic reports to
the shareholders of the Fund and all reports and filings required to
maintain the registration and qualification of the Fund's shares, or
to meet other regulatory or tax requirements applicable to the Fund,
under federal and state securities and tax laws.
(e) The Manager shall prepare and, after approval by the Fund, file and
arrange for the distribution of proxy materials and periodic reports
to Fund shareholders as required by applicable law.
(f) The Manager shall prepare, or cause the preparation of, and, after
approval by the Fund, arrange for the filing of such registration
statements and other documents with the SEC and other federal and
state regulatory authorities as may be required by applicable law.
(g) The Manager shall take such other action with respect to the
Portfolios, after approval by the Fund, as may bc required by
applicable law, including without limitation the rules and regulations
of the SEC and of state securities or insurance commissions and other
regulatory agencies.
(h) The Manager shall make its officers and employees available to the
Board of Directors and officers of the Fund and Sub-Advisers for
consultation and discussions regarding the supervision and
administration of the Portfolios.
6. EXPENSES.
(a) During the term of this Agreement, the Manager shall pay, or cause a
Sub-Adviser to pay, the-following expenses:
(i) The salaries and expenses of all personnel of the Fund and the
Manager except the fees and expenses of Directors who are not
"interested persons" (within the meaning of the 0000 Xxx) of the
Fund, the Manager, National Integrity Life Insurance Company
("National Integrity"), or any Sub-Adviser;
(ii) All expenses reasonably incurred by the Manager in connection
with
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providing the services described above, including the provision
of office space, office equipment, office facilities, and
executive, administrative and clerical personnel in accordance
with paragraph 2(i) hereof, but excluding the expenses described
below to be assumed by the Fund;
(iii) The fees of the Sub-Advisers pursuant to the Sub-Advisory
Agreements; and
(iv) The costs and expenses payable by the Sub-Advisers pursuant to
the Sub-Advisory Agreements.
(b) Each Portfolio is responsible for and bears all expenses incurred in
its operation that are not specifically assumed by the Manager or
Integrity Financial Services, Inc., the Fund's distributor, pursuant
to the Distribution Agreement with the Fund. General expenses of the
Fund not readily identifiable as belonging to one of the Portfolios
will be allocated among the Portfolios by or under the direction of
the Fund's Board of Directors in such manner as the Board shall
determine to be fair and equitable. Expenses borne by each Portfolio
include, but are not limited to, the following (or the Portfolio's
allocated share of the following):
(i) The cost (including brokerage commissions, if any) of
securities purchased or sold by the Portfolio and any losses
incurred in connection therewith;
(ii) Investment management fees due hereunder (but not sub-advisory
fees, which are payable by the Manager);
(iii) Organizational expenses;
(iv) Filing fees and expenses relating to the registration and
qualification of the Fund or the shares of a Portfolio under
federal or state securities laws and maintenance of such
registrations and qualifications;
(v) Fees and expenses payable to the Directors who are not
"interested persons" of the Fund or the Manager, National
Integrity or any Sub-Adviser;
(vi) Taxes (including any income or franchise taxes) and
governmental fees;
(vii) Costs of any liability, directors' and officers', uncollectible
items of deposit and other insurance and fidelity bonds;
(viii) Legal, accounting and auditing expense;
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(ix) Charges of custodians, transfer agents and other agents;
(x) Expenses of setting in type and providing a camera-ready
copy of prospectuses and supplements thereto, expenses of
setting in type and printing or otherwise reproducing
statements of additional information and supplements thereto
and reports and proxy materials for existing shareholders;
(xi) Any extraordinary expenses (including fees and disbursements of
counsel) incurred by the Fund or Portfolio;
(xii) Fees, voluntary assessments and other expenses incurred in
connection with membership in investment company organizations;
and
(xiii) Costs of meetings of shareholders.
(c) In the event the expenses of the Fund for any fiscal year (including
the fees payable to the Manager but excluding interest, taxes,
brokerage commissions and litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of
the Fund's business) exceed the lowest applicable annual expense
limitation established and enforced pursuant to the statute or
regulations of any applicable jurisdictions, the compensation due the
Manager hereunder will be reduced by the amount of such excess. If
such excess amount exceeds the compensation payable to the Manager
hereunder, the Manager will not be required to make any additional
payments to the Fund in reimbursement of such expenses.
7. COMPENSATION. For the services provided and the expenses assumed pursuant
to this Agreement, each Portfolio will pay to the Manager as full
compensation therefor a fee as set forth below. This fee will be deducted
from the assets of the respective Portfolio and paid to the Manager
monthly, but will be accrued daily for purposes of determining the value of
each Portfolio on each day the New York Stock Exchange is open for trading.
Any reduction in the fee payable pursuant to paragraph 6(c) shall be made
monthly, and will be subject to readjustment during the year.
Annual Percentage of
Average Net Assets Paid By
Name of Portfolio Portfolio to Manager
----------------- --------------------
Xxxxx Asset Allocation Portfolio .90%
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Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxx Equity Growth Portfolio .65%
Xxxxxxx Xxxxxx Value Portfolio .65%
Xxxxx Equity (Small Cap) Portfolio 1.05%
8. LIABILITY. Except as may otherwise be required by the 1940 Act and the
rules and regulations thereunder, the Manager, any of its affiliated
persons and each person, if any, who, within the meaning of Section 15 of
the Securities Act of 1933, as amended, controls the Manager, shall not be
liable for, or subject to any damages, expenses, or losses in connection
with, any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful misfeasance, bad
faith or gross negligence on the part of the Manager in the performance of
its duties or from reckless disregard of its duties and obligations under
this Agreement.
9. TERM. Unless sooner terminated, this Agreement shall continue in effect for
two years and thereafter for successive one year periods, provided that
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 the Fund or any Portfolio thereof (with
respect to such Portfolio) at any time, without the payment of any penalty,
by the Board of Directors of the Fund or by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of a Portfolio,
or by the Manager at any time, without the payment of any penalty, upon not
less than 60 days' prior written notice to the other party. This Agreement
shall terminate automatically in the event of its assignment (as defined in
the 1940 Act).
10. NON-EXCLUSIVITY. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Manager who may also be a
Director, officer or employee of the Fund to engage in any other business
or to devote his or her time and attention in part to the management or
other aspects of any business, whether of a similar or dissimilar nature,
nor limit or restrict the right of the Manager to engage in any other
business or to render services of any kind to any other corporation, firm,
individual or association.
11. AMENDMENTS. This Agreement may be amended by mutual consent in writing, but
the consent of the Fund must be obtained in conformity with the
requirements of the 1940 Act.
12. NOTICES. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (I) to the Manager at 000 Xxxx Xxxxxx
Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, XX 00000,
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Attention: President; or (2) to the Fund at 000 Xxxx Xxxxxx Xxxxxx, 0xx
Xxxxx, Xxxxxxxxxx, XX 00000, Attention: President.
13. CHOICE OF LAW. This Agreement is made and to be principally performed in
the State of New York, and except insofar as the 1940 Act or other federal
laws and regulations may be controlling, this Agreement shall be governed
by, and construed and enforced in accordance with, the internal laws of the
State of New York.
14. SEPARATE SERIES. The Fund is a corporation organized under the Maryland
General Corporation Law on July 22, 1992. The Fund is a corporation with
separate series, or Portfolios, and all debts, liabilities, obligations and
expenses of a particular Portfolio shall be enforceable only against the
assets of that Portfolio and not against the assets of any other Portfolio
or of the Fund as a whole.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties hereto and supersedes any prior agreement with respect to the
subject matter hereof whether oral or written.
16. COUNTERPARTS. This Agreement may be executed in counterparts, and each
counterpart shall for all purposes be deemed an original, and all such
counterparts shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE LEGENDS FUND, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------- INTEGRITY CAPITAL ADVISORS,
INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------
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