Exhibit 99(e)(1)
DISTRIBUTION AGREEMENT
AGREEMENT made as of December 1, 2005 between The Coventry Group (the
"Company"), having an office at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, and
BISYS Fund Services Limited Partnership ("Distributor"), having an office at 000
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
WHEREAS, the Company is an open-end management investment company,
organized as a Massachusetts business trust and registered with the Securities
and Exchange Commission (the "Commission") under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
shares of beneficial interest ("Shares") of the Xxxxx Xxxxxx series listed on
Schedule A to this Agreement, and such Xxxxx Xxxxxx series of the Company as are
hereafter created (all of the foregoing series individually referred to herein
as a "Fund" and collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Distributor.
1.1 Distributor will act as agent of the Company on behalf of each Fund for
the distribution of the Shares covered by the registration statement of the
Company then in effect under the Securities Act of 1933, as amended (the
"Securities Act") and the 1940 Act. As used in this Agreement, the term
"registration statement" shall mean the registration statement of the Company
and any amendments thereto, then in effect, including Parts A (the Prospectus),
B (the Statement of Additional Information) and C of each registration
statement, as filed on Form N-1A, or any successor thereto, with the Commission,
together with any amendments thereto. The term "Prospectus" shall mean the
then-current form of Prospectus and Statement of Additional Information used by
the Funds, in accordance with the rules of the Commission, for delivery to
shareholders and prospective shareholders after the effective dates of the
above-referenced registration statements, together with any amendments and
supplements thereto. The Company will notify Distributor in advance of any
proposed changes to Schedule A to this Agreement.
1.2 Consistent with the understanding between the Funds and the
Distributor, Distributor may solicit orders for the sale of the Shares and may
undertake such advertising and promotion as it believes reasonable in connection
with such solicitation. The Company understands that Distributor is now and may
in the future be the distributor of the shares of many other investment
companies or series, including investment companies having investment objectives
similar to those of the Company. The Company further understands that
shareholders and potential shareholders in the Company may invest in shares of
such other investment companies. The Company agrees that Distributor's duties to
other investment companies shall not be deemed in conflict with its duties to
the Company under this Section 1.2.
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1.3 Consistent with the understanding between the Funds and the
Distributor, and subject to the last sentence of this Section 1.3, Distributor
may engage in such activities as it deems appropriate in connection with the
promotion and sale of the Shares, which may include advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
Prospectuses to prospective shareholders other than current shareholders, and
the printing and mailing of sales literature. Distributor may enter into dealer
agreements and other selling agreements with broker-dealers and other
intermediaries; provided, however, that Distributor shall have no obligation to
make any payments to any third parties, whether as finder's fees, compensation
or otherwise, unless (i) Distributor has received a corresponding payment from
the applicable Fund's Distribution Plan (as defined in Section 2 of this
Agreement), the Fund's investment adviser (the "Adviser") or from another source
as may be permitted by applicable law, and (ii) such corresponding payment has
been approved by the Company's Board of Trustees (the "Board").
1.4 In its capacity as distributor of the Shares, all activities of the
Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the 1940
Act, all applicable rules and regulations promulgated by the Commission
thereunder, and all applicable rules and regulations adopted by any securities
association registered under the Securities Exchange Act of 1934.
1.5 Whenever in their judgment such action is warranted by unusual market,
economic or political conditions or by abnormal circumstances of any kind, the
Company's officers may upon reasonable notice instruct the Distributor to
decline to accept any orders for or make any sales of the Shares until such time
as those officers deem it advisable to accept such orders and to make such
sales.
1.6 The Company agrees to inform the Distributor from time to time of the
states in which the Fund or its administrator has registered or otherwise
qualified shares for sale, and the Company agrees at its own expense to execute
any and all documents and to furnish any and all information and otherwise to
take all actions that may be reasonably necessary in connection with the
qualification of the Shares for sale in such states as the Distributor may
designate.
1.7 The Company shall furnish from time to time, for use in connection with
the sale of the Shares, such supplemental information with respect to the Funds
and the Shares as Distributor may reasonably request; and the Company warrants
that the statements contained in any such supplemental information will fairly
show or represent what they purport to show or represent. The Company shall also
furnish Distributor upon request with: (a) unaudited semi-annual statements of
the Funds' books and accounts prepared by the Company, (b) monthly balance
sheets as soon as practicable after the end of each month, and (c) from time to
time such additional information regarding the Funds as the Distributor may
reasonably request.
1.8 The Company represents and warrants to Distributor that all
registration statements, and each Prospectus, filed by the Company with the
Commission under the Securities Act and the 1940 Act shall be prepared in
conformity with requirements of said Acts and rules and regulations of the
Commission thereunder. The registration statement
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and Prospectus shall contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of the Commission
thereunder, and all statements of fact contained in any such registration
statement and Prospectus are true and correct in all material respects.
Furthermore, neither any registration statement nor any Prospectus includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
to a purchaser of the Shares. The foregoing representations and warranties shall
continue throughout the term of this Agreement and be deemed to be of a
continuing nature, applicable to all Shares distributed hereunder. The Company
may, but shall not be obligated to, propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any Prospectus as, in the light of future developments, may, in the opinion of
the Company's counsel, be necessary or advisable. If the Company shall not
propose any amendment or amendments and/or supplement or supplements within 15
days after receipt by the Company of a written request from Distributor to do
so, Distributor may, at its option, terminate this Agreement. In such case, the
Distributor will be held harmless from, and indemnified by Company for, any
liability or loss resulting from the failure to implement such amendment. The
Company shall not file any amendment to any registration statement or supplement
to any Prospectus without giving Distributor reasonable notice thereof in
advance; provided, however, that nothing contained in this Agreement shall in
any way limit the Company's right to file at any time such amendments to any
registration statement and/or supplements to any Prospectus, of whatever
character, as the Company may deem advisable, such right being in all respects
absolute and unconditional.
1.9 The Company authorizes the Distributor and dealers to use any
Prospectus in the form furnished by the Company from time to time in connection
with the sale of the Shares.
1.10 The Distributor may utilize agents in its performance of its services
and, with prior notice to the Company, appoint in writing other parties
qualified to perform specific administration services reasonably acceptable to
the Company (individually, a "Sub-Agent") to carry out some or all of its
responsibilities under this Agreement; provided, however, that a Sub-Agent shall
be the agent of the Distributor and not the agent of the Company, and that the
Distributor shall be fully responsible for the acts of such Sub-Agent and shall
not be relieved of any of its responsibilities hereunder by the appointment of a
Sub-Agent.
1.11 The Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the Distributor's part in the
performance of its duties, from reckless disregard by the Distributor of its
obligations and duties under this Agreement, or from the Distributor's failure
to comply with laws, rules and regulations applicable to it in connection with
its activities hereunder. The Company agrees to indemnify, defend and hold
harmless the Distributor, its directors, officers, partners, employees, and any
person who controls the Distributor within the meaning of Section 15 of the
Securities Act (collectively, "Distributor Indemnitees"), from and against any
and all claims, demands,
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liabilities and expenses (including the reasonable cost of investigating or
defending such claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) (collectively, "Claims") which the Distributor
Indemnitees may incur under the Securities Act or under common law or otherwise
(a) as the result of the Distributor acting as distributor of the Funds and
entering into selling agreements, participation agreements, shareholder
servicing agreements or similar agreements with financial intermediaries on
behalf of the Company; (b) arising out of or based upon (i) any untrue
statement, or alleged untrue statement, of a material fact contained in any
registration statement or any Prospectus, (ii) any omission, or alleged
omission, to state a material fact required to be stated in any registration
statement or any Prospectus or necessary to make the statements therein not
misleading, or (iii) any untrue statement, or alleged untrue statement, of a
material fact in any Company-related advertisement or sales literature, or any
omission, or alleged omission, to state a material fact required to be stated
therein to make the statements therein not misleading, in either case
notwithstanding the exercise of reasonable care in the preparation or review
thereof by the Distributor; or (c) arising out of or based upon the electronic
processing of orders over the internet at the Company's request; provided,
however, that the Company's agreement to indemnify the Distributor Indemnitees
pursuant to this Section 1.11 shall not be construed to cover any Claims (A)
pursuant to subsection (b) above to the extent such untrue statement, alleged
untrue statement, omission, or alleged omission, was furnished in writing, or
omitted from the relevant writing furnished, as the case may be, to the Company
by the Distributor for use in the registration statement or in corresponding
statements made in the Prospectus, advertisement or sales literature; (B)
arising out of or based upon the willful misfeasance, bad faith or gross
negligence of the Distributor in the performance of its duties or the
Distributor's reckless disregard of its obligations and duties under this
Agreement; or (C) arising out of or based upon the Distributor's failure to
comply with laws, rules and regulations applicable to it in connection with its
activities hereunder.
In the event of a Claim for which the Distributor Indemnitees may be
entitled to indemnification hereunder, the Distributor shall provide the Company
with written notice of the Claim, identifying the persons against whom such
Claim is brought, promptly following receipt of service of the summons or other
first legal process, and in any event within 10 days of such receipt. The
Company will be entitled to assume the defense of any suit brought to enforce
any such Claim if such defense shall be conducted by counsel of good standing
chosen by the Company and approved by the Distributor, which approval shall not
be unreasonably withheld. In the event any such suit is not based solely on an
alleged untrue statement, omission, or wrongful act on the Company's part, the
Distributor shall have the right to participate in the defense. In the event the
Company elects to assume the defense of any such suit and retain counsel of good
standing so approved by the Distributor, the Distributor Indemnitees in such
suit shall bear the fees and expenses of any additional counsel retained by any
of them, but in any case where the Company does not elect to assume the defense
of any such suit or in case the Distributor reasonably withholds approval of
counsel chosen by the Company, the Company will reimburse the Distributor
Indemnitees named as defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them to the extent related to a Claim
covered under this Section 1.11. The Company's indemnification agreement
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contained in this Section 1.11 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Distributor
Indemnitees, and shall survive the delivery of any Shares.
1.12 The Distributor agrees to indemnify, defend and hold harmless the
Company, its officers, partners, managers, trustees, employees, and any person
who controls the Company within the meaning of Section 15 of the Securities Act
(collectively, "Company Indemnitees"), from and against any and all Claims which
the Company Indemnitees may incur under the Securities Act or under common law
or otherwise, arising out of or based upon (a) any untrue statement, or alleged
untrue statement, of a material fact contained in any registration statement,
Prospectus, or Company-related advertisement or sales literature, or upon any
omission, or alleged omission, to state a material fact in such materials that
would be necessary to make the information therein not misleading, which untrue
statement, alleged untrue statement, omission, or alleged omission, was
furnished in writing, or omitted from the relevant writing furnished, as the
case may be, to the Company by the Distributor for use in the registration
statement or in corresponding statements made in the Prospectus, or
advertisement or sales literature; (b) the willful misfeasance, bad faith or
gross negligence of the Distributor in the performance of its duties, or the
Distributor's reckless disregard of its obligations and duties under this
Agreement, or (c) the Distributor's failure to comply with laws, rules and
regulations applicable to it in connection with its activities hereunder (other
than in respect of Company-related advertisements or sales literature that fails
to comply with applicable laws notwithstanding the exercise of reasonable care
in the preparation and review thereof by the Distributor).
In the event of a Claim for which the Company Indemnitees may be entitled
to indemnification hereunder, the Company shall provide the Distributor with
written notice of the Claim, identifying the persons against whom such Claim is
brought, promptly following receipt of service of the summons or other first
legal process, and in any event within ten (10) days of such receipt. The
Distributor will be entitled to assume the defense of any suit brought to
enforce any such Claim if such defense shall be conducted by counsel of good
standing chosen by the Distributor and approved by the Company, which approval
shall not be unreasonably withheld. In the event any such suit is not based
solely on an alleged untrue statement, omission, or wrongful act on the
Distributor's part, the Company shall have the right to participate in the
defense. In the event the Distributor elects to assume the defense of any such
suit and retain counsel of good standing so approved by the Company, the Company
Indemnitees in such suit shall bear the fees and expenses of any additional
counsel retained by any of them, but in any case where the Distributor does not
elect to assume the defense of any such suit or in case the Company reasonably
withholds approval of counsel chosen by the Distributor, the Distributor will
reimburse the Company Indemnitees named as defendants in such suit, for the
reasonable fees and expenses of any counsel retained by them to the extent
related to a Claim covered under this Section 1.12. The Distributor's
indemnification agreement contained in this Section 1.12 shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of the Company Indemnitees, and shall survive the delivery of any Shares.
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1.13 No Shares shall be offered by either the Distributor or the Company
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Company if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act or if and so long as a current Prospectus as required by Section
10(b)(2) of said Securities Act is not on file with the Commission; provided,
however, that: (a) the Distributor will not be obligated to cease offering
shares until it has received from the Company written notice of such events, and
(b) nothing contained in this Section 1.13 shall in any way restrict or have an
application to or bearing upon the Company's obligation to repurchase Shares
from any shareholder in accordance with the provisions of the Company's
Prospectus, Agreement and Articles of Incorporation or Bylaws.
1.14 The Company agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor:
(a) of any request by the Commission for amendments to the
registration statement or Prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or
Prospectus then in effect or the initiation by service of process
on the Company of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of
a material fact made in the registration statement or Prospectus
then in effect or which requires the making of a change in such
registration statement or Prospectus in order to make the
statements therein not misleading; and
(d) of any action of the Commission with respect to any amendment to
any registration statement or Prospectus which may from time to
time be filed with the Commission, which could reasonably be
expected to have a material negative impact upon the offering of
Shares.
For purposes of this section, informal requests by or acts of the Staff of
the Commission shall not be deemed actions of or requests by the Commission
unless they would reasonably be expected to have a material negative impact upon
the offering of Shares.
1.15 NOTWITHSTANDING ANY PROVISION IN THIS AGREEMENT TO THE CONTRARY, UNDER
NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL,
INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR SIMILAR DAMAGES, INCLUDING LOST
REVENUE, LOST PROFITS OR LOST OR DAMAGED DATA, EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SUCH DAMAGES.
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2. Fees.
2.1 Attached as Schedule B to this Agreement are all plans of distribution
under Rule 12b-1 under the 1940 Act approved by the Funds and in effect
(collectively, the "Distribution Plan"). The Funds will deliver to Distributor
promptly after any changes thereto updated copies of the Distribution Plan. For
its services under this Agreement, the Distributor shall be compensated and
reimbursed for its expenses as set forth on Schedules C and D to this Agreement.
If the Funds have a Distribution Plan that permits and authorizes them to
compensate and reimburse the Distributor and required board approvals have been
given, then the Funds shall be responsible for all such compensation and
reimbursements or such portions of it as have been permitted and authorized
under the Distribution Plan. It is contemplated by the Distributor that the
Adviser shall compensate and reimburse the Distributor for its provision to the
Funds of any distribution services for which the Funds are not authorized to
compensate and reimburse the Distributor. The fees set forth on Schedules C and
D are subject to change by Distributor upon 30 days advance notice.
2.2 If: (i) the Distributor properly receives fees from the Funds under the
Distribution Plan, other than for services rendered or expenses incurred, that
the Distributor is not obligated to pay to third party broker-dealers, plan
administrators or others ("Retained Fees"), and (ii) the Funds have authority
under the Distribution Plan to pay for some or all of the Distributor's services
under this Agreement ("Permitted Services"), then all of the Retained Fees will
either be (a) returned to the funds and/or (b) credited against the compensation
payable by the funds to the Distributor for Permitted Services.
3. Sale and Payment.
3.1 Shares of a Fund may be subject to a sales load and may be subject to
the imposition of a distribution fee pursuant to the Distribution Plan referred
to above. To the extent that Shares of a Fund are sold at an offering price
which includes a sales load or subject to a contingent deferred sales load with
respect to certain redemptions (either within a single class of Shares or
pursuant to two or more classes of Shares), such Shares shall hereinafter be
referred to collectively as "Load Shares" (and in the case of Shares that are
sold with a front-end sales load, "Front-end Load Shares", or Shares that are
sold subject to a contingent deferred sales load, "CDSL Shares"). Funds that
issue Front-End Load Shares shall hereinafter be referred to collectively as
"Front-End Load Funds." Funds that issue CDSL Shares shall hereinafter be
referred to collectively as "CDSL Funds." Front-end Load Funds and CDSL Funds
may individually or collectively be referred as "Load Funds." Under this
Agreement, the following provisions shall apply with respect to the sale of, and
payment for, Load Shares.
3.2 The Distributor shall have the right to offer Load Shares at their net
asset value and to sell such Load Shares to the public against orders therefor
at the applicable public offering price, as defined in Section 4 hereof. The
Distributor shall also have the right to sell Load Shares to dealers against
orders therefor at the public offering price less a concession determined by the
Distributor, which concession shall not exceed the
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amount of the sales charge or underwriting discount, if any, referred to in
Section 4 below.
3.3 Prior to the time of delivery of any Load Shares by a Load Fund to, or
on the order of, the Distributor, the Distributor shall pay or cause to be paid
to the Load Fund or to its order an amount in New York cleared funds equal to
the applicable net asset value of such Shares. The Distributor may retain so
much of any sales charge or underwriting discount as is not allowed by the
Distributor as a concession to dealers.
3.4 With respect to CDSL Funds, the following provisions shall be
applicable:
(a) The Distributor shall be entitled to receive all contingent
deferred sales load charges, 12b-1 payments and all distribution and
service fees set forth in the Distribution Plan adopted by a CDSL Fund
(collectively, the "CDSL Payments") with respect to CDSL Shares. The
Distributor may assign or sell to a third party (a "CDSL Financing Entity")
all or a part of the CDSL Payments on CDSL Shares that the Distributor is
entitled to receive under this Agreement. The Distributor's right to the
CDSL Payments on such CDSL Shares, if assigned or sold to a CDSL Financing
Entity, shall continue after termination of this Agreement.
(b) The Distributor may assign or sell to a CDSL Financing Entity all
or part of the CDSL Payments the Distributor is entitled to receive. The
Distributor's right to payment of CDSL Payments, if assigned or sold to a
CDSL Financing Entity, shall continue after termination of this Agreement.
Otherwise, (unless the Distributor is legally entitled to receive such fees
as the financing entity) the right to receive all CDSL Payments in respect
of periods subsequent to the termination of this Agreement shall terminate
upon termination of this Agreement. In the event Distributor assigns or
sells all or a part of the CDSL Payments to a CDSL Financing Entity and
this Agreement is subsequently terminated, Distributor shall have no
obligation to assist the CDSL Financing Entity in connection with such CDSL
Financing Entity's right to receive such CDSL Payments subsequent to such
termination.
(c) The Distributor shall not be required to offer or sell CDSL Shares
of a CDSL Fund unless and until it has received a binding commitment from a
CDSL Financing Entity (a "Commitment") satisfactory to the Distributor
which Commitment shall cover all expenses and fees related to the offer and
sale of such CDSL Shares including, but not limited to, dealer
reallowances, financing commitment fees, and legal fees. If at any time
during the term of this Agreement the then-current CDSL financing is
terminated through no fault of the Distributor, the Distributor shall have
the right to immediately cease offering or selling CDSL Shares until
substitute financing becomes effective.
(d) The Distributor and the Company hereby agree that the terms and
conditions set forth herein regarding the offer and sale of CDSL Shares may
be amended upon approval of both parties in order to comply with the terms
and conditions of any agreement with a CDSL Financing Entity to finance the
costs
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for the offer and sale of CDSL Shares so long as such terms and conditions
are in compliance with the Distribution Plan.
4. Public Offering Price.
The public offering price of a Load Share shall be the net asset value of
such Load Share next determined, plus any applicable sales charge, all as set
forth in the current Prospectus of the Load Fund. The net asset value of Load
Shares shall be determined in accordance with the then-current Prospectus of the
Load Fund.
5. Issuance of Shares.
The Company reserves the right to issue, transfer or sell Load Shares at
net asset values (a) in connection with the merger or consolidation of the
Company or the Load Fund(s) with any other investment company or the acquisition
by the Company or the Load Fund(s) of all or substantially all of the assets or
of the outstanding Shares of any other investment company; (b) in connection
with a pro rata distribution directly to the holders of Shares in the nature of
a stock dividend or split; (c) upon the exercise of subscription rights granted
to the holders of Shares on a pro rata basis; (d) in connection with the
issuance of Load Shares pursuant to any exchange and reinvestment privileges
described in any then-current Prospectus of the Load Fund; and (e) otherwise in
accordance with any then-current Prospectus of the Load Fund.
6. Term, Duration and Termination.
This Agreement shall become effective with respect to each Fund as of the
date first written above (the "Effective Date") (or, if a particular Fund is not
in existence on such date, on the earlier of the date an amendment to Schedule A
to this Agreement relating to that Fund is executed or the Distributor begins
providing services under this Agreement with respect to such Fund) and, unless
sooner terminated as provided herein, shall continue for a two year period
following the Effective Date. Thereafter, if not terminated, this Agreement
shall continue with respect to a particular Fund automatically for successive
one-year terms, provided that such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Company's Board
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting for the purpose of voting on such approval and (b)
by the vote of the Company's Board or the vote of a majority of the outstanding
voting securities of such Fund. This Agreement is terminable without penalty
with 60 days' prior written notice, by the Company's Board, by vote of a
majority of the outstanding voting securities of the Company, or by the
Distributor. This Agreement will also terminate automatically in the event of
its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning as ascribed to such terms in the 1940 Act.)
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7. Privacy.
Nonpublic personal financial information relating to consumers or customers
of the Funds provided by, or at the direction of, the Company to the
Distributor, or collected or retained by the Distributor to perform its duties
as distributor, shall be considered confidential information. The Distributor
shall not disclose or otherwise use any nonpublic personal financial information
relating to present or former shareholders of the Funds other than for the
purposes for which that information was disclosed to the Distributor, including
use under an exception in Rules 13, 14 or 15 of Securities and Exchange
Commission Regulation S-P in the ordinary course of business to carry out those
purposes. The Distributor shall have in place and maintain physical, electronic
and procedural safeguards reasonably designed to protect the security,
confidentiality and integrity of, and to prevent unauthorized access to or use
of, records and information relating to consumers and customers of the Funds.
The Company represents to the Distributor that it has adopted a Statement of its
privacy policies and practices as required by Securities and Exchange Commission
Regulation S-P and agrees to provide the Distributor with a copy of that
statement annually.
8. Anti-Money Laundering Compliance.
8.1 Each of Distributor and the Company acknowledges that it is a financial
institution subject to the USA Patriot Act of 2001 and the Bank Secrecy Act
(collectively, the "AML Acts"), which require, among other things, that
financial institutions adopt compliance programs to guard against money
laundering. Each represents and warrants to the other that it is in compliance
with and will continue to comply with the AML Acts and applicable regulations in
all relevant respects. The Distributor shall also provide written notice to each
person or entity with which it entered an agreement prior to the date hereof
with respect to sale of the Company's Shares, such notice informing such person
of anti-money laundering compliance obligations applicable to financial
institutions under applicable laws and, consequently, under applicable
contractual provisions requiring compliance with laws.
8.2 The Distributor shall include specific contractual provisions regarding
anti-money laundering compliance obligations in agreements entered into by the
Distributor with any dealer that is authorized to effect transactions in Shares
of the Company.
8.3 Each of Distributor and the Company agrees that it will take such
further steps, and cooperate with the other as may be reasonably necessary, to
facilitate compliance with the AML Acts, including but not limited to the
provision of copies of its written procedures, policies and controls related
thereto ("AML Operations"). Distributor undertakes that it will grant to the
Company, the Company's anti-money laundering compliance officer and regulatory
agencies, reasonable access to copies of Distributor's AML Operations, books and
records pertaining to the Company only. It is expressly understood and agreed
that the Company and the Company's compliance officer shall have no access to
any of Distributor's AML Operations, books or records pertaining to other
clients of Distributor.
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9. Notices.
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address: if to the Company, to it at 0000 Xxxxxxx Xxxx,
Xxxxxxxx, Xxxx 00000; and if to Distributor, to it at 000 Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Broker Dealer Chief Compliance Officer, with a
copy to BISYS Distribution Services, 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000,
Attention: President, or at such other address as such party may from time to
time specify in writing to the other party pursuant to this Section.
10. Confidentiality.
During the term of this Agreement, the Distributor and the Company may have
access to confidential information relating to such matters as either party's
business, trade secrets, systems, procedures, manuals, products, contracts,
personnel, and clients. As used in this Agreement, "Confidential Information"
means information belonging to the Distributor or the Company which is of value
to such party and the disclosure of which could result in a competitive or other
disadvantage to either party, including, without limitation, financial
information, business practices and policies, know-how, trade secrets, market or
sales information or plans, customer lists, business plans, and all provisions
of this Agreement. Confidential Information includes information developed by
either party in the course of engaging in the activities provided for in this
Agreement, unless: (i) the information is or becomes publicly known without
breach of this Agreement, (ii) the information is disclosed to the other party
by a third party not under an obligation confidentiality to the party whose
Confidential Information is at issue of which the party receiving the
information should reasonably be aware, or (iii) the information is
independently developed by a party without reference to the other's Confidential
Information. Each party will protect the other's Confidential Information with
at least the same degree of care it uses with respect to its own Confidential
Information, and will not use the other party's Confidential Information other
than in connection with its duties and obligations hereunder. Notwithstanding
the foregoing, a party may disclose the other's Confidential Information if (i)
required by law, regulation or legal process or if requested by any Agency; (ii)
it is advised by counsel that it may incur liability for failure to make such
disclosure; (iii) requested to by the other party; provided that in the event of
(i) or (ii) the disclosing party shall give the other party reasonable prior
notice of such disclosure to the extent reasonably practicably and cooperate
with the other party (at such other party's expense) in any efforts to prevent
such disclosure.
10. Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of New York and the applicable provisions of the 1940 Act.
11
11. Prior Agreements.
This Agreement constitutes the complete agreement of the parties as to the
subject matter covered by this Agreement, and supersedes all prior negotiations,
understandings and agreements bearing upon the subject matter covered by this
Agreement.
12. Amendments.
No amendment to this Agreement shall be valid unless made in writing and
executed by both parties hereto.
13. Matters Relating to the Company as a Massachusetts Business Trust.
It is expressly agreed that the obligations of the Company hereunder shall
not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Company personally, but shall bind only the Company
property of the Company. The execution and delivery of this Agreement have been
authorized by the Board, and this Agreement has been signed and delivered by an
authorized officer of the Company, acting as such, and neither such
authorization by the Board nor such execution and delivery by such officer shall
be deemed to have been made by any of them individually or to impose any
liability on them personally, but shall bind only the Company property of the
Company as provided in the Company's Articles of Incorporation.
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 written
above.
THE COVENTRY GROUP
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.
its General Partner
By:
------------------------------------
Name: Xxxx Xxxxxxx
Title: President
12
SCHEDULE A
FUNDS
PathMaster Domestic Equity Fund
13
SCHEDULE B
DISTRIBUTION PLAN
PATHMASTER DOMESTIC EQUITY FUND
(the "Fund")
a series of
The Coventry Group
(the "Trust")
SERVICE AND DISTRIBUTION PLAN
FOR CLASS A AND CLASS C SHARES
Introduction: It has been determined that the Fund, which is a series of The
Coventry Group, will pay for certain costs and expenses incurred in connection
with the distribution of certain classes of its shares and servicing of
shareholders of certain classes, and adopts this Service and Distribution Plan
for Class A and Class C Shares (the "Plan") as set forth herein pursuant to Rule
12b-1 under the Investment Company Act of 1940 (the "Act").
The Board of Trustees, in considering whether the Fund should implement the
Plan, has requested and evaluated such information as it deemed necessary to
make an informed determination as to whether the Plan should be implemented and
has considered such pertinent factors as it deemed necessary to form the basis
for a decision to use assets of the Fund for such purposes.
In voting to approve the implementation of the Plan, the Trustees have
concluded, in the exercise of their reasonable business judgment and in light of
their respective fiduciary duties, that there is a reasonable likelihood that
the Plan will benefit the Fund and the shareholders of each of its classes of
shares.
The Plan: The material aspects of the financing by the Fund of distribution
expenses to be incurred in connection with securities of which it is the issuer
are as follows:
1. The Fund will compensate the distributor for services provided and expenses
incurred in connection with the distribution and marketing of shares of Class A
and Class C of the Fund and servicing of shareholders of each such class.
Distribution and servicing costs and expenses may include: (1) printing and
advertising expenses; (2) payments to employees or agents of the distributor who
engage in or support distribution of the Fund's shares, including salary,
commissions, travel and related expenses; (3) the costs of preparing, printing
and distributing prospectuses and reports to prospective investors; (4) expenses
of organizing and conducting sales seminars; (5) expenses related to selling and
servicing efforts, including processing new account applications, transmitting
customer transaction information to the Fund's transfer agent and answering
questions of shareholders; (6) payments of fees to one or more broker-dealers
(which may include the distributor itself), financial institutions or other
industry professionals, such as investment advisers, accountants and estate
planning firms (severally, a "Service
14
Organization"), based on the average daily value of the Fund's shares owned by
shareholders for whom the Service Organization is the dealer of record or holder
of record, or owned by shareholders with whom the Service Organization has a
servicing relationship; (7) costs and expenses incurred in implementing and
operating the Plan; and (8) such other similar services as the Board of Trustees
determines to be reasonably calculated to result in the sale of the Fund's
shares. Subject to the limitations of applicable law and regulation, including
rules of the National Association of Securities Dealers ("NASD"), the
distributor will be compensated monthly for such costs, expenses or payments at
an annual rate of up to but not more than 0.25% of the average daily net assets
of Class A shares of the Fund and 1.00% of the average daily net assets of Class
C shares of the Fund, provided however, that up to 0.25% of each such amount may
be used as a "service fee" as defined in applicable rules of the NASD.
2. The distributor may periodically pay to one or more Service Organizations
(which may include the distributor itself) a fee in respect of the Fund's shares
owned by shareholders for whom the Service Organizations are the dealers of
record or holders of record, or owned by shareholders with whom the Service
Organizations have servicing relationships. Such fees will be computed daily and
paid quarterly by the distributor at an annual rate not exceeding 0.25% of the
average net asset value of shares of each class of the Fund owned by
shareholders for whom the Service Organizations are the dealers of record or
holders of record, or owned by shareholders with whom the Service Organizations
have servicing relationships. Subject to the limits herein and the requirements
of applicable law and regulations, including rules of the NASD, the distributor
may designate as "service fees," as that term is defined by applicable rules and
regulatory interpretations applicable to payments under a plan such as the Plan,
some or all of any payments made to Service Organizations (including the
distributor itself) for services that may be covered by "service fees," as so
defined. The payment to a Service Organization is subject to compliance by the
Service Organization with the terms of a Service Agreement or Dealer Agreement
between the Service Organization and the distributor (the "Agreement"). If a
shareholder of a Fund ceases to be a client of a Service Organization that has
entered into an Agreement with the distributor, but continues to hold shares of
the Fund, the distributor will be entitled to receive a similar payment in
respect of the servicing provided to such investors. For the purposes of
determining the fees payable under the Plan, the average daily net asset value
of the Fund's shares shall be computed in the manner specified in the
Declaration of Trust of The Coventry Group and current prospectus for the
computation of the value of the Fund's net asset value per share.
3. The Plan will become effective immediately upon approval by a majority of the
Board of Trustees, including a majority of the Trustees who are not "interested
persons" (as defined in the Act) of the Funds and have no direct or indirect
financial interest in the operation of the Plan or in any agreements entered
into in connection with the Plan (the "Plan Trustees"), pursuant to a vote cast
in person at a meeting called for the purpose of voting on the approval of the
Plan, or upon such later date as the Trustees determine.
15
4. The Plan shall continue with respect to each applicable class of shares of
the Fund for a period of one year from its effective date, unless earlier
terminated in accordance with its terms, and thereafter shall continue
automatically with respect to each applicable class of shares of the Fund for
successive annual periods, provided such continuance is approved by a majority
of the Board of Trustees, including a majority of the Plan Trustees pursuant to
a vote cast in person at a meeting called for the purpose of voting on the
continuance of the Plan.
5. The Plan may be amended at any time by the Board of Trustees provided that
(a) any amendment to increase materially the costs which a class may bear for
distribution pursuant to the Plan shall be effective only upon approval by a
vote of a majority of the outstanding voting securities of that class and (b)
any material amendments of the terms of the Plan shall become effective only
upon approval as provided in paragraph 3 hereof.
6. The Plan is terminable without penalty at any time by (a) vote of a majority
of the Plan Trustees, or (b) vote of a majority of the outstanding voting
securities of the Fund.
7. Any person authorized to direct the disposition of monies paid or payable by
the Fund pursuant to the Plan or any agreement entered into in connection with
the Plan shall provide to the Board of Trustees, and the Board of Trustees shall
review, at least quarterly, a written report of the amounts expended pursuant to
the Plan and the purposes for which such expenditures were made.
8. While the Plan is in effect, the selection and nomination of Trustees who are
not "interested persons" (as defined in the Act) of the Funds shall be committed
to the discretion of the Trustees who are not "interested persons".
* * * *
The Fund shall preserve copies of the Plan, any agreement in connection with the
Plan, and any report made pursuant to paragraph 7 hereof, for a period of not
less than six years from the date of the Plan or such agreement or report, the
first two years in an easily accessible place.
Date: December 1, 2005
16
SCHEDULE C
COMPENSATION OF THE DISTRIBUTOR
1. BASIC DISTRIBUTION SERVICES. For providing the distribution entity and
related infrastructure and platform, including requisite registrations and
qualifications, premises, personnel, compliance, ordinary fund board meeting
preparation, maintenance of selling agreements, clearance of advertising and
sales literature with regulators, filing appropriate documentation for advisory
representatives to qualify as registered representatives of the Distributor
(provided that the Adviser is solely responsible for its representatives'
meeting examination requirements) and their related registrations and fees,
ordinary supervisory services, overhead, Financial Research Corporation's Mutual
Fund Views on the News and Monitor publications, and return on investment, the
Distributor shall receive an annual fee of $15,000, billed monthly.
2. SPECIAL DISTRIBUTION SERVICES. For special distribution services, including
those set forth on Schedule D to this Agreement, such as additional personnel,
registrations, marketing services, printing and fulfillment, website services,
proprietary distribution expertise for particular circumstances, and any other
services in addition to the basic distribution services covered by Paragraph 1
above, the Distributor shall be reimbursed promptly upon invoicing its expenses
for such services, including: (a) all costs to support additional personnel; (b)
regulatory fees including NASD CRD costs associated with marketing materials;
and (c) printing, postage and fulfillment costs, and (d) amounts payable under
additional agreements to which Distributor is a party.
3. SPECIAL CONDUIT SITUATIONS. If the Distribution Plan, or any other Fund plans
of distribution under Rule 12b-1 that contemplate up front and/or recurring
commission and/or service payments to broker dealers, retirement plan
administrators or others by the Distributor with respect to back-end loads,
level loads, or otherwise, unless expressly agreed otherwise in writing between
the parties, all such payments shall be made to the Distributor, which shall act
as a conduit for making such payments to such broker-dealers, retirement plan
administrators or others.
4. OTHER PAYMENTS BY THE DISTRIBUTOR. If the Distributor is required to make any
payments to third parties in respect of distribution, which payments are
contemplated by the parties to the distribution agreement or otherwise arise in
the ordinary course of business, the Distributor shall be promptly reimbursed
for such payments upon invoicing them.
5. FEE ADJUSTMENTS. The fixed fees and other fees expressed as stated dollar
amounts in this Schedule C and in this Agreement are subject to annual
increases, commencing on the one-year anniversary date of the date of this
Agreement, in an amount equal to the percentage increase in consumer prices for
services as measured by the United States Consumer Price Index entitled "All
Services Less Rent of Shelter," or a similar index should such index no longer
be published, since such one-year anniversary or since the date of the last fee
increase, as applicable.
17
SCHEDULE D
SPECIAL DISTRIBUTION SERVICES AND FEES
SERVICES FEES
-------- ----
1. WHOLESALING PERSONNEL SERVICES WHOLESALING PERSONNEL SERVICES FEES
Wholesaling Personnel may be external For each individual constituting the
wholesalers and/or internal wholesalers. Wholesaling Personnel employed by the
Distributor pursuant to this Agreement,
Services include soliciting support of the the Distributor shall receive annually an
Funds with selling broker dealers; amount equal to the sum of:
participating in promotional meetings,
presentations, conferences and other and (i) all compensation paid annually by the
forums; identifying high potential personnel Distributor to the employee; plus
of the Adviser and selling broker dealers;
and assisting with mail solicitations and (ii) a management oversight fee equal to:
literature fulfillment.
(a) if one to four Wholesaling
Personnel are employed, 30% of
the salary compensation and 5%
of the bonus or commission
compensation, or
(b) if five or more Wholesaling
Personnel are employed, 25% of
the salary compensation and 5%
of the bonus or commission
compensation;
plus
(iii) 18% of the total compensation
(covering costs of the Distributor's
employee benefits that are provided by
the Distributor).
In addition, the Distributor shall be
reimbursed for all related costs to
support, educate and train and maintain
compliance oversight of Wholesaling
Personnel and other personnel such as
sales management, marketing and
performance reporting personnel
(including time and expenses, continuing
education, seminars, rent, supplies,
phone, computers, firm element, license,
registration)
Upon any termination of Wholesaling
Personnel at the request of the Funds or
upon termination of this Agreement by
the Funds for any reason other than
cause, the Distributor will be
reimbursed its severance costs with
respect to such terminated Wholesaling
Personnel.
18
2. MARKETING AND RELATED SERVICES MARKETING AND RELATED SERVICES FEES
Marketing Execution: services include Marketing Execution: Quote available
identification and development of upon request.
appropriate marketing and communications
programs, projects and other initiatives; Performance Reporting
collaboration on initiating, researching,
developing, and delivering appropriate sales Monthly Reports
and marketing materials; and management of
marketing and advertising projects. Monthly Updating and Typesetting
-- $850 - $1,000 per sheet per
Performance Reporting: services include month (for an All-in-One style
creation of templates for monthly fact report)
sheets and quarterly fact sheets; populating
templates with performance data obtained Initial Design and Setup (1-time
from third parties; and coordinating steps charge) -- $500 per sheet
needed for final printing and distribution.
Quarterly Reports
Creative Communication and Editorial
Services: services include preparing drafts Quarterly Updating and Typesetting
of textual commentary and management -- $300 - $350 per Fund sheet per
discussion and analysis for annual; and Share Class per quarter
semi-annual reports, including portfolio
manager interviews; providing creative Initial Design and Setup per Fund
design and direction; and coordinating sheet (1-time charge) -- $500 per
production, including typesetting (initial Fund sheet
composition and changes to composition),
charts and ancillary items. Annual & Semi-Annual Reports
Production Timing: Coordination:
- No timing guarantees can be made for - $3,000 Initial Fee (includes
completion of monthly and quarterly Chairman's Letter and 1st Fund)
fact sheets where any of the
information needed to produce the - $500 for each additional Fund
reports is generated by service
providers other than the Distributor. NOTE: The above charges do not
However, a basic estimate of turnaround include the typesetting, printing,
time may be given based upon when the shipping, fulfillment, Xxxxx filing
unit receives all necessary data in or quick-turnaround charges that may
good order. Under normal conditions, be incurred from the financial
the Performance Reporting unit expects printer. The above fees are for
to make proofs ready for review (either coordinating the project only.
printed or electronic PDF format) by
the 4th business day after the final Creative Communication and Editorial
piece of data is received. If Services
compliance review is necessary (e.g.,
when Morningstar ratings data is used) Quote available upon request.
an additional 2 days may be required
for review.
- Printing turnaround (once the factsheets
are signed-off by the client) is usually
approximately 4-5 calendar days with
most jobs shipping by the 5th day.
- If requested, final electronic PDF files
may be generated and e-mailed on the day
the job is signed-off on by the client.
These PDFs may be distributed and
printed as necessary until the final
printed pieces arrive.
-
19
3. FRC SERVICES FRC SERVICES FEES
FRC's program components include: Market Analytics Publications: Quote
available upon request.
-Market Analytics Publications
-Advanced Research Publications Advanced Research Publications:
-Analyst Support
-SME Direct Access - Topic Briefs
The Company acknowledges that certain FRC - FRC Focus (typical cost is
publications may be provided only to parties approximately $1,500)
that have entered into a written agreement
or addendum that sets forth the terms of use White Papers - FRC Vision (typical
of such publications and the associated cost is approximately $2,500)
fee. The Company will notify the
Distributor whether the Company or the - Research Studies (costs vary,
Adviser or both will enter into such an however typically range between
agreement or addendum. The Company $3,500 and $12,500)
acknowledges that if only one of the Company
or the Adviser enters into such agreement or Analyst Support: Quote available upon
addendum, the other party will be prohibited request
from receiving or using such publications.
SME Direct Access: Quote available upon
request
Other FRC Fees:
- Client participation in funding
FRC Franchise Level program: $12,500
- All subsequent content and
support hours may be purchased at a
20% discount from standard pricing.
Expenses Applicable to Special Distribution Services
Except as expressly set forth above, out-of-pocket expenses incurred by
Distributor in the performance of its services under this Agreement are not
included in the above fees. Such out-of-pocket expenses may include, without
limitation:
- reasonable travel and entertainment costs;
- expenses incurred by the Distributor in qualifying, registering and
maintaining the registration of the Distributor and each individual
comprising Wholesaling Personnel as a registered representative of the
Distributor under applicable federal and state laws and rules of the NASD,
e.g., CRD fees and state fees;
- Sponsorships, Promotions, Sales Incentives;
- any and all compensation to be paid to a third party as paying agent for
distribution activities (platform fees, finders fees, sub-TA fees, 12b-1
pass thru, commissions, etc.);
- costs and expenses incurred for telephone service, photocopying and office
supplies;
20
- advertising costs;
- costs for printing, paper stock and costs of other materials, electronic
transmission, courier, talent utilized in sales materials (e.g. models),
design output, photostats, photography, and illustrations;
- packaging, shipping, postage, and photocopies; and
- taxes that are paid or payable by the Distributor or its affiliates in
connection with its services hereunder, other than taxes customarily and
actually imposed upon the income that the Distributor receives hereunder.
21
