23(d)(2)
SUB-ADVISORY AGREEMENT
AGREEMENT dated April 29th, 2003, between XXXXXX CAPITAL CORPORATION, a Kansas
corporation (the "Advisor"), located in Minot, North Dakota, and ANCORA ADVISORS
LLC, a Nevada Limited Liability Company, located in Beachwood, OH, and the
Canandaigua Equity Fund & Canandaigua Bond Fund.
WHEREAS, Integrity plans to effect a name change of the Canandaigua
Equity Fund and Canandaigua Bond Fund to The Integrity Equity Fund and The
Integrity Income Fund (the Integrity Funds) respectively.
WHEREAS, the Integrity Funds are diversified, open-end management
investment companies under the Investment Company Act of 1940, as amended ("xxx
0000 Xxx").
WHEREAS, the advisor is the investment advisor to the Integrity Funds
which are organized under the laws of the state of Delaware.
WHEREAS, the Advisor and Sub-Advisor are each registered as an
investment advisor under the Investment Advisors Act of 1940;
WHEREAS, the Advisor wishes to retain the Sub-Advisor to assist the
Advisor in providing investment advisory services in connection with such Funds,
as amended from time to time with the written consent of the parties hereto; and
WHEREAS, the Sub-Advisor is willing to provide such services to the
Advisor upon the terms and conditions and for the compensation set forth below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
therein contained, and intending to be legally bound hereby, it is agreed
between the parties hereto as follows:
1. APPOINTMENT. The Advisor hereby appoints the Sub-Advisor its
sub-advisor with respect to the Funds as provided for in the
Investment Advisory Agreement between the Advisor and the Funds.
The Sub-Advisor accepts such appointment and agrees to render
the services herein set forth for the compensation herein
provided.
2. DELIVERY OF DOCUMENTS. The Advisor shall provide to the
Sub-Advisor copies of the Trust's most recent prospectus and
statement of additional information (including all supplements
thereto) which relate to any class of shares representing
interests in the Fund (each such prospectus and statement of
additional information as presently in effect, and as they shall
from time to time be amended and supplemented, is herein
respectively called a "Prospectus" and a "Statement of
Additional Information").
3. SUB-ADVISORY SERVICES TO THE FUND(S).
(a) Subject to the supervision of the Advisor, the Sub-Advisor will
perform the following services: (i) provide investment research
and credit analysis concerning the Fund's investments; (ii)
conduct a continual program of investment of the Fund's assets;
(iii) place orders for all purchases and sales of the
investments made for the Funds; (iv) maintain the books and
records required in connection with its duties hereunder; and
(v) keep the Advisor informed of developments materially
affecting the Fund.
(b) The Sub-Advisor will use the same skill and care in providing
such services as it uses in providing services to other accounts
for which it has investment responsibilities; provided that,
notwithstanding the Paragraph 3(b), the liability of the
Sub-Advisor for actions taken and non-actions with respect to
the performance of services under this Agreement shall be
subject to the limitations set forth in Paragraph 10(a) of this
Agreement.
(c) The Sub-Advisor will communicate to the Advisor and to the
Trust's custodian and fund accountants as instructed by the
Advisor on each day that a purchase or sale of a security is
effected for the Fund (i) the name of the issuer, (ii) the
amount of the purchase or sale, (iii) the name of the broker or
dealer, if any, through which the purchase or sale has been
affected, (iv) the CUSIP number of the security, if any, and (v)
such other information as the Advisor may reasonably require for
purposes of fulfilling its obligations to the Trust under the
Advisory Agreement.
(d) The Sub-Advisor will provide the services rendered by it
hereunder in accordance with the Fund's investment objectives,
policies and restrictions as stated in the Prospectus and
Statement of Additional Information.
(e) The Sub-Advisor will maintain records of the information set
forth in Paragraph 3(c) hereof with respect to the securities
transactions of the Fund and will furnish the Trust's Board of
Trustees and the Advisor with such periodic and special reports
as the Board and Advisor may reasonably request.
(f) The Sub-Advisor will promptly review all (1) reports of current
security holdings in the Fund, (2) summary reports of
transactions and pending maturities (including the principal,
cost and accrued interest on each portfolio security in maturity
date order) and (3) current cash position reports (including
cash available from portfolio sales and maturities and sales of
Fund's shares less cash needed for redemptions and settlement of
portfolio purchasers), all within a reasonable time after
receipt there of from the Trust and will promptly report any
errors or discrepancies in such reports of which it is aware to
the Trust or its designee and Advisor.
4. BROKERAGE.
(a) The Sub-Advisor may place orders pursuant to its investment
determinations for the Fund either directly with the issuer or
with any broker or dealer. In selecting brokers or dealers
through which to place orders, the Sub-Advisor will consider the
factors it considers relevant, including, but not limited to the
experience and skill of the fit's securities traders, as well as
the firm's financial responsibility and administrative
efficiency. The Sub-Advisor will attempt to obtain the best
price and the most favorable execution of its orders. Consistent
with these obligations, the Sub-Advisor is authorized to select
brokers on the basis of the research, statistical and pricing
services they provide to the Fund. A commission paid to such
brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided
that the Sub-Advisor determines in good faith that such
transaction is reasonable in relation to the benefits in the
Fund over the long term. In no instance will portfolio
securities be purchased from or sold, on a principal basis, to
the Trust's principal underwriter, the Advisor or any affiliated
person thereof (as the term "affiliated person" is defined in
the 1940 Act), except to the extent permitted by SEC exemptive
order or by applicable law.
5. COMPLIANCE WITH LAWS; CONFIDENTIALITY; CONFLICTS OF INTEREST.
(a) The Sub-Advisor agrees that it will comply with all applicable
laws, rules and regulations of all federal and state regulatory
agencies having jurisdiction over the Sub-Advisor in performance
of its duties hereunder (herein called the "Rules").
(b) The Sub-Advisor will treat confidentially and as proprietary
information of the Trust and the advisor all records and
information relative to the Trust and the Advisor and prior,
present or potential shareholders (other than information that
has been made public by the performance of its responsibilities
and duties hereunder, except after prior notification to and
approval in writing by the Trust or Advisor as appropriate,
which approval shall not be unreasonably withheld and may not be
withheld where the Sub-Advisor may be exposed to civil or
criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted
authorities, or when so requested by the Trust. The terms of
this section 5(b) shall survive the termination of this
Agreement.
6. CONTROL BY TRUST'S BOARD OF TRUSTEES. Any recommendations
concerning the Fund's investment program proposed by the
Sub-Advisor to the Fund and the Advisor pursuant to this
Agreement, as well as any other activities undertaken by the
Sub-Advisor on behalf of the Fund pursuant thereto shall at all
times be subject to any applicable directives of the Board of
Trustees of the Trust.
7. BOOKS AND RECORDS. The Sub-Advisor shall maintain and preserve
such records related to the Funds' portfolio transactions as
required under the 1940 Act. The Advisor shall maintain and
preserve all books and other records not related to the Funds'
portfolio transactions as required under the 1940 Act. The
Sub-Advisor agrees that all records that it maintains for the
Funds are the property of the Trust and further agrees to
surrender copies of such records to the Trust promptly upon the
Trust's request. The terms of this section 7 shall survive the
termination of this Agreement.
8. EXPENSES. During the term of this Agreement, the Sub-Advisor
will bear all expenses incurred by it in connection with the
performance of its services under this Agreement other than the
cost of securities, brokerage commissions, custodian fees,
auditors' fees, taxes, interest, extraordinary expense items,
and other expenses related to the operation of the Trust or any
Fund.
9. AUDIT/COOPERATION.
(a) Advisor and Trust shall have their right to audit and inspect
the records, policies, procedures and premises of Sub-Advisor as
reasonably required to ensure compliance with the terms of this
Agreement and the Rules.
(b) Sub-Advisor shall cooperate fully with Advisor and Trust in
regards to any inquiry, examination or request for information
from any federal or state regulatory agencies having authority
over the Trust, Advisor or Funds.
10. COMPENSATION.
(a) For the services provided and the expenses borne by the
Sub-Advisor pursuant to this Agreement, the Advisor will pay the
Sub-Advisor the advisory fee as determined by this Agreement.
Payment of this compensation shall be the sole responsibility of
the Advisor and shall in no way be an obligation of the Fund or
of the Trust.
(b) For the period beginning with the day on which this Agreement
becomes effective and ending with the last day of the month
prior to the completion of four full calendar quarters of
performance under this Agreement, the fee payable to the
Sub-Advisor shall be calculated at an annual rate of 0.35% of
the Fund's total assets.
11. LIMITATION OF LIABILITY.
(a) The Sub-Advisor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Advisor, the
Trust or the Fund in connection with the matters to which this
Agreement relates, except that Sub-Advisor shall be liable to
the Advisor for a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of Sub-Advisor in the
performance of its duties or from reckless disregard by it of
its obligations or duties under this Agreement. In no case shall
the Sub-Advisor be liable for actions taken or non-actions with
respect to the performance of services under this Agreement
based upon specific information, instructions or requests given
or made to the Sub-Advisor by the Advisor.
(b) The Advisor shall be responsible at all times for supervising
the Sub-Advisor, and this Agreement does not in any way limit
the duties and responsibilities that the Advisor has agreed to
under the Advisory Agreement.
12. INDEMNIFICATION. The Sub-Advisor shall indemnify and hold
harmless the Advisor and each of its officers, directors,
employees and controlling persons from and against any losses,
expenses, (including reasonable attorneys' fees and court cost),
damages or liabilities to which the Advisor becomes subject in
so much as such losses, expenses, damages or liabilities (or
actions in respect thereof) arise out of or are based upon the
willful misfeasance, bad faith, gross negligence or breach of
this Agreement by the Sub-Advisor. The terms of this section 12
shall survive the termination of this Agreement.
13. DURATION AND TERMINATION. This Agreement shall become effective
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as of the date hereof provided that it shall have been approved
by vote of a majority of the outstanding voting securities of
the Fund and, unless sooner terminated as provided herein, shall
continue with respect to the Fund until April 29th, 2004.
Thereafter, if not terminated, this Agreement shall continue in
effect for successive 12-month periods ending on April 29th of
each year, provided such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of
the Board of Trustees of the Trust who are not parties to this
Agreement or interested person of the Trust or any such party,
cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Board of Trustees of the Trust or
by vote of a majority of the outstanding voting securities of
the Fund; PROVIDED, HOWEVER, that this Agreement may be
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terminated with respect to the Fund (i) by the Trust at any time
upon 60 days' prior notice without the payment of any penalty by
the Board of Trustees of the Trust; (ii) by the Advisor on 180
days written notice to the Sub-Advisor or (iv) by the
Sub-Advisor on 180 days written notice to the Advisor. This
Agreement will also immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of
the outstanding voting securities," "interested person" and
"assignment" shall have the same meaning as such terms have in
the 1940 Act.)
14. TRADEMARKS. The Sub-Advisor hereby expressly authorizes the
Trust and the Advisor to the use (Ancora Advisors LLC) in its
sales literature and advertising pertaining to the Fund and/or
the Trust. The Sub-Advisor agrees to submit any proposed sales
literature for the Trust or for itself or its affiliates which
mentions the Trust or Fund to the Trust's distributor and the
Advisor for review and approval or disapproval.
15. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, discharged or terminated orally, but only by an
instrument in writing signed by the party against which
enforcement of the change, discharge or termination is sought.
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.
(SEAL) XXXXXX CAPITAL CORPORATION
By:
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Title:
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(SEAL) ANCORA ADVISORS LLC.
XXXXXXX X. XXXXXX
By:
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Title:
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SCHEDULE A
To the Sub-Advisory Agreement
Dated as of April 29th, 2003
Between Xxxxxx Capital Corporation and Ancora Advisors LLC,
Xxxxxxx X. Xxxxxx
Canandaigua Equity Fund
Canandaigua Bond Fund
