Exhibit (e)(1)
DISTRIBUTION AGREEMENT
AGREEMENT made as of August __, 2007, between The Coventry Group (the
"Company"), an Ohio business trust, having an office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, and BISYS Fund Services Limited Partnership
("Distributor"), having an office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
WHEREAS, the Company is an open-end management investment company,
organized as an Ohio 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 GendeX Fund, a series of the Company
managed by ▇▇▇▇▇▇▇▇ Capital Management, LLC, ("▇▇▇▇▇▇▇▇") as now in existence
and listed on Schedule A to this Agreement or such other series of the Company
as hereafter may from time to time be created and managed by ▇▇▇▇▇▇▇▇ so long as
agreed to by BISYS in writing (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 Company on behalf of each Fund for the
distribution of the Shares covered by the registration statement of 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
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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 obligations to other investment companies shall not be deemed in
conflict with its obligations to the Company under this Section 1.2.
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, including without limitation entering into
dealer agreements and other selling agreements with broker-dealers and other
intermediaries; 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 shall have no obligation to make any payments to any
third parties, whether as financing of commissions, sales concessions or similar
payments; 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
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prepared by the Company, and (b) 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: (a) 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; (b) all Company-related advertisement or sales literature
shall be prepared in conformity with requirements of applicable laws and
regulations; (c) the registration statement, Prospectus and advertisement or
sales literature shall contain all statements required to be stated therein in
conformity with said Acts, laws and regulations and the rules and regulations of
the Commission thereunder or other applicable regulatory authority, and all
statements of fact contained in any such registration statement, Prospectus and
advertisement or sales literature are true and correct in all material respects;
(d) neither any registration statement nor any Prospectus nor any advertisement
or sales literature 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; (e) no portfolio
securities transactions of the Funds, or commissions in connection therewith,
shall be directed to any dealer by the Funds, the Adviser, or any of their
respective affiliates, in connection with any fees that are not permitted by
Rule 12b-1 under the 1940 Act ("Non-Rule 12b-1 Fees") payable to any dealer; (f)
each Fund or the Adviser has implemented policies and procedures required by
Rule 12b-1(h)(2)(ii) under the 1940 Act and has determined that the criteria
used to select broker-dealers that both execute Fund portfolio transactions and
promote or sell the Shares is reasonable; and (g) each Fund's Prospectus
contains such disclosure with respect to fees paid and charges imposed in
connection with the sale of the Shares as is necessary to comply with all laws,
rules and regulations, including, without limitation, disclosure of all Non-Rule
12b-1 Fees as required by Rule 2830(l) of the NASD Conduct Rules, as well as the
nature and extent of the Non-Rule 12b-1 Fees, or such Non-Rule 12b-1 fees and
charges will be in compliance with the rules and regulations of the NASD,
including, without limitation, Rule 2830 of the NASD Conduct Rules.
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
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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 obligations under this Agreement, from reckless disregard by
the Distributor of its obligations 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 officers, partners, employees,
subsidiaries, affiliates, 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, 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, arising
out of or based upon: (a) the Distributor acting as distributor of the Funds;
(b) the Distributor or any subsidiary or affiliate of the Distributor acting as
a member of the National Securities Clearing Corporation (or any successor or
other entity performing similar functions) ("NSCC") on behalf of the Company;
(c) the Distributor or any subsidiary or affiliate of the Distributor entering
into selling agreements, dealer agreements, participation agreements, NSCC Trust
SERV or Networking agreements or similar agreements (collectively, "Dealer
Agreements") with financial intermediaries on behalf of the Company; (d) any of
the following: (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
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reasonable care in the preparation or review thereof by the Distributor; (e) the
breach by the Company of any provision of this Agreement, including without
limitation a breach by the Company of its obligations with respect to any Fund's
transfer agent as set forth in Section 1.15 of this Agreement, to the extent
applicable; or (f) 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 (d) 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
obligations under this Agreement or the Distributor's reckless disregard of its
obligations 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 fully and promptly
advise the Company in writing of all pertinent facts concerning such Claim, but
failure to do so in good faith shall not affect the Company's indemnification
obligations under this Agreement except to the extent that the Company is
materially prejudiced thereby. 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 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, trustees, directors, 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
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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 obligations under
this Agreement, or the Distributor's reckless disregard of its obligations 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 Fund-related advertisements or sales literature that fail to
comply with applicable laws despite the Distributor's exercise of reasonable
care in the preparation and review thereof); provided, however, that the
Distributor's agreement to indemnify the Company Indemnitees pursuant to this
Section 1.12 shall not be construed to cover any Claims (A) arising out of or
based upon the willful misfeasance, bad faith or gross negligence of the Company
in the performance of its obligations under this Agreement or the Company's
reckless disregard of its obligations under this Agreement; or (B) arising out
of or based upon the Company'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 Company Indemnitees may be entitled
to indemnification hereunder, the Company shall fully and promptly advise the
Distributor in writing of all pertinent facts concerning such Claim, but failure
to do so in good faith shall not affect the Distributor's indemnification
obligations under this Agreement except to the extent that the Distributor is
materially prejudiced thereby. 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.
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
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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 Declaration of
Trust, or By-laws.
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 other event which could reasonably be expected to have a
material adverse impact upon the offering of Shares or the
Distributor's provision of services under this Agreement.
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 During any period for which a party other than Distributor or one of
its affiliates acts as any Fund's transfer agent ("Transfer Agent"), the
following provisions shall apply:
(a) The Company shall ensure that the Transfer Agent complies with all
requirements of law and all provisions of Dealer Agreements that are applicable
to the Transfer Agent or the services provided by Transfer Agent, or that are
within the control of the Transfer Agent, including without limitation laws and
Dealer Agreement provisions with respect to: (i) providing shareholder account
data to the dealer or other third parties; (ii) facilitating the transfer of
Shares held directly with the Transfer Agent; (iii) indemnifying a dealer
against claims to which the dealer may become subject insofar as any Claim
arises out of or is based on any error or alleged error made in the calculation
of any Fund's net asset value per Share, to the extent that the Transfer Agent
is
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responsible for such error or alleged error; (iv) providing to Distributor such
information required by Distributor to facilitate payment of Rule 12b-1 fees to
dealers in a timely and accurate manner; (v) transmitting purchase and
redemption orders for Shares through the NSCC Fund/SERV system ("Fund/SERV") or
in certain circumstances through such other means; (vi) making payment for
purchases and redemptions of Shares on the settlement date and as otherwise
required by the dealer through Fund/SERV; (vii) notifying the dealer whenever an
error is made in the calculation of any Fund's net asset value; (viii) rejecting
transactions in Shares originating in states or jurisdictions in which the Fund
shares are not qualified for sale; and (ix) complying with applicable
escheatment requirements.
(b) The Company will ensure that the Transfer Agent provides to Distributor
at least quarterly (or more frequently to the extent required by law applicable
to the Distributor) certifications of the Transfer Agent in a form reasonably
acceptable to the Distributor with respect to the Funds' compliance with
anti-money laundering laws, sales caps, breakpoints, and such other
certifications as Distributor shall reasonably request from time to time.
1.16 The Company will ensure that any service provider to the Company
and/or the Funds other than Distributor or one of its affiliates provides to
Distributor such cooperation and information as the Distributor shall reasonably
request from time to time, including, without limitation, information to
facilitate the Distributor's compliance with federal securities laws, as defined
within Rule 38a-1(e)(1) under the 1940 Act..
1.17 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.
2. Fees.
2.1 (a) 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
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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.
(b) It is expected as of the date of this Agreement that the services
to be provided by the Distributor under this Agreement may be provided at "less
than cost" (i.e., the compensation and reimbursements paid to the Distributor
will be less than the cost of providing such services). The Distributor has
estimated its costs based on certain assumptions about the level of service that
will be provided to the Company and the Funds, and there can be no guarantee
that Distributor's estimate will be accurate. The Distributor will review its
costs to provide services under this Agreement periodically, and the Distributor
reserves the right to adjust its compensation and reimbursements, after the
initial term, if the Distributor determines that such compensation and
reimbursements are not approximately equal to the cost of providing such
services.
2.2 In the event that the Distributor is requested or authorized by the
Company or is required by governmental regulation, summons, subpoena,
investigation, examination or other legal or regulatory process to produce
documents or personnel with respect to services provided by the Distributor to
the Company or any Fund, the Company will, so long as the Distributor is not the
subject of the investigation or proceeding in which the information is sought,
pay the Distributor for its professional time (at its standard billing rates)
and reimburse the Distributor for its out-of-pocket expenses (including
reasonable attorneys fees) incurred in responding to such requests or
requirements.
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
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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 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 same-day 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) 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 (a
"Commitment") from the Company or a CDSL Financing Entity satisfactory to
the Distributor, which Commitment shall cover all initial and ongoing
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
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conditions of any agreement with a CDSL Financing Entity to finance the
costs 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 as of the date launch of the first
Fund, which is anticipated to be on or about May 1, 2007 (the "Effective Date")
(and with respect to any other Fund that 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 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 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 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.)
11
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
obligations 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
12
officer shall have no access to any of Distributor's AML Operations, books or
records pertaining to other clients of Distributor.
9. Notices.
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail, or by nationally recognized overnight courier, to
the party required to be served with such notice at the following address: if to
the Company, to it at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, with a copy to
▇▇▇▇▇▇▇▇ at ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; and if to Distributor,
to it at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Broker
Dealer Chief Compliance Officer, with a copy to BISYS Distribution Services,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, 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 of 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 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.
13
10. Governing Law .
This Agreement shall be construed in accordance with the laws of the State
of New York, without regard to New York's conflicts of laws principles, and the
applicable provisions of the 1940 Act.
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 an Ohio 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 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 property of the Company.
* * * * * *
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:
------------------------------
14
BISYS Fund Services Limited Partnership
By: BISYS Fund Services, Inc.,
its General Partner
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
15
SCHEDULE A
FUNDS
GendeX Fund
16
SCHEDULE B
DISTRIBUTION PLAN
[COMPANY TO INSERT COPIES]
17
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 Board meeting
preparation, maintenance of selling agreements, clearance of advertising and
sales literature with regulators, ordinary supervisory services, overhead, the
Distributor shall receive an annual fee of [$_____], billed monthly.
2. SPECIAL DISTRIBUTION SERVICES. For special distribution services, including
those set forth on Schedule D to this Agreement, such as 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, 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 fees and 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.
18
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 this 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.
6. FEES AND EXPENSES. Except as expressly set forth in this Agreement,
out-of-pocket fees and expenses incurred by Distributor in the performance of
its services under this Agreement are not included in the fees set forth in this
Agreement. Such out-of-pocket fees and expenses may include, without limitation:
- reasonable travel and entertainment costs;
- fees of auditors and accountants;
- 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;
- 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;
- 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; and
- amounts paid to the NASD based on Distributor's revenue and/or the
number of Distributor's registered representatives.
19
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 Wholesaling Personnel employed by the
wholesalers. Distributor pursuant to this Agreement,
the Distributor shall receive annually
an amount equal to the sum of:
Services include soliciting support
of the Funds with selling broker (i) all compensation paid annually by
dealers; participating in promotional the Distributor to the employee; plus
meetings, presentations, conferences
and other and forums; identifying (ii) a management oversight fee equal
high potential personnel of the to:
Adviser and selling broker dealers;
and assisting with mail solicitations (a) if one to four Wholesaling
and literature fulfillment. 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.
20
2. REGISTRATION OF PERSONNEL: REGISTRATION OF PERSONNEL FEES:
Services include filing appropriate $5,000 per registration per year, plus
documentation for advisory out-of-pocket expenses.
representatives to qualify as
registered representatives of the $5,000 per Office of Supervisory
Distributor (provided that the Jurisdiction per year
Adviser is solely responsible for its
representatives' meeting examination
requirements) and their related
registrations and fees.
3. 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 Performance Reporting
other initiatives; collaboration on
initiating, researching, developing, Monthly Reports
and delivering appropriate sales and
marketing materials; and management Monthly Updating and Typesetting --
of marketing and advertising $850 - $1,000 per sheet per month
projects. (for an All-in-One style report)
Performance Reporting: services Initial Design and Setup (1-time
include creation of templates for charge) -- $500 per sheet
monthly fact sheets and quarterly
fact sheets; populating templates Quarterly Reports
with performance data obtained from
third parties; and coordinating steps Quarterly Updating and Typesetting
needed for final printing and -- $300 - $350 per Fund sheet per
distribution. Share Class per quarter
Creative Communication and Editorial Initial Design and Setup per Fund
Services: services include preparing sheet (1-time charge) -- $500 per
drafts of textual commentary and Fund sheet
management discussion and analysis
for annual; and semi-annual reports, Annual & Semi-Annual Reports
including portfolio manager
interviews; providing creative design Coordination:
and direction; and coordinating
production, including typesetting - $3,000 Initial Fee (includes
(initial composition and changes to Chairman's Letter and 1st
composition), charts and ancillary Fund)
items.
- $500 for each additional Fund
Production Timing:
NOTE: The above charges do not
- No timing guarantees can be made include the typesetting, printing,
for completion of monthly and shipping, fulfillment, ▇▇▇▇▇ filing
quarterly fact sheets where any or quick-turnaround charges that
of the information needed to may be incurred from the financial
produce the reports is generated printer. The above fees are for
by service providers other than coordinating the project only.
the Distributor. However, a
basic estimate of turnaround
time may be given based upon
when the unit receives all
necessary data in good order.
Under normal conditions, the
Performance Reporting unit
expects to make proofs ready for
review (either printed or
electronic PDF format) by the
4th business day after the final
piece of data is received. If
compliance review is necessary
(e.g., when Morningstar ratings
data is used) an additional 2
days may be required for review.
21
Creative Communication and Editorial
Services
- Printing turnaround (once the Quote available upon request.
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.
4. FRC SERVICES FRC SERVICES FEES
FRC's program components include: Mutual Fund Views on the News and
Monitor Publications: $7,650.00
- Mutual Fund Views on the News
and Monitor Publications Market Analytics Publications: Quote
available upon request.
- Market Analytics Publications
Advanced Research Publications:
- Advanced Research Publications
- White Papers - FRC Vision
- Subject Matter Expert Direct (typical cost is approximately
Access $2,500)
The Company acknowledges that certain - Research Studies (costs vary,
FRC publications may be provided only however typically range between
to parties that have entered into a $6,000 and $12,500)
written agreement or addendum that
sets forth the terms of use of such Subject Matter Expert Direct Access:
publications and the associated fee. Quote available upon request
The Company will notify the
Distributor whether the Company or Other FRC Fees:
the Adviser or both will enter into
such an agreement or addendum. The - All subsequent content and support
Company acknowledges that if only one hours may be purchased at a 20%
of the Company or the Adviser enters discount from standard pricing.
into such agreement or addendum, the
other party will be prohibited from
receiving or using such publications.
22
