Exhibit (e)
DISTRIBUTION AGREEMENT
AGREEMENT made the 1st day of July, 2002, between THE COVENTRY GROUP
(the "Trust"), a Massachusetts business trust having its principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, and BISYS FUND SERVICES
LIMITED PARTNERSHIP d/b/a BISYS FUND SERVICES ("Distributor"), having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Trust 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
units of beneficial interest ("Shares") of each Signal Series of the Trust and
such Signal Series that are hereafter created (individually referred to herein
as a "Fund" and collectively as the "Funds"), except as provided on Schedule A;
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 Trust on behalf of each
Fund for the distribution of the Shares covered by the registration statement
and prospectus of Trust then in effect under the Securities Act of 1933, as
amended (the "Securities Act"). As used in this Agreement, the term
"registration statement" shall mean the registration statement 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.
1.2 Distributor agrees to use appropriate efforts to solicit
orders for the sale of the Shares and will undertake such advertising and
promotion as it believes reasonable in connection with such solicitation. The
Trust understands that Distributor is now and may in the future be the
distributor of the shares of many other investment companies or series
(together, "Companies") including Companies having investment objectives similar
to those of the Trust. The Trust further understands that investors and
potential investors in the Trust may invest in shares of such other Companies.
The Trust agrees that Distributor's duties to such Companies shall not be deemed
in conflict with its duties to the Trust under this paragraph 1.2.
Distributor shall engage in activities which it deems
reasonable, which are primarily intended to result in the sale of the Shares,
including, but not limited to, advertising,
compensation of underwriters, dealers and sales personnel, the printing and
mailing of prospectuses to other than current Shareholders, and the printing and
mailing of sales literature.
1.3 In its capacity as distributor of the Shares, all
activities of Distributor and its partners, agents, and employees shall comply
with all applicable laws, rules and regulations, including, without limitation,
the 1940 Act, all rules and regulations promulgated by the Commission thereunder
and all rules and regulations adopted by any securities association registered
under the Securities Exchange Act of 1934.
1.4 Distributor will provide one or more persons, during
normal business hours, to respond to telephone questions with respect to the
Funds.
1.5 Distributor will transmit any orders received by it for
purchase or redemption of the Shares to the transfer agent and custodian for the
Funds.
1.6 Whenever in their judgment such action is warranted by
unusual market, economic or political conditions, or by abnormal circumstances
of any kind, the Trust'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.
1.7 Distributor will act only on its own behalf as principal
if it chooses to enter into selling agreements with selected dealers or others.
1.8 The Trust 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 Distributor may designate.
1.9 The Trust shall furnish from time to time, for use in
connection with the sale of the Shares, such information with respect to the
Funds and the Shares as Distributor may reasonably request; and the Trust
warrants that the statements contained in any such information shall fairly show
or represent what they purport to show or represent. The Trust shall also
furnish Distributor upon request with: (a) unaudited semi-annual statements of
the Funds' books and accounts prepared by the Trust, (b) a monthly itemized list
of the securities in the Funds, (c) monthly balance sheets as soon as
practicable after the end of each month, and (d) from time to time such
additional information regarding the financial condition of the Funds as
Distributor may reasonably request.
1.10 The Trust represents and warrants to Distributor that,
with respect to the Shares, all registration statements and prospectuses filed
by the Trust with the Commission under the Securities Act have been carefully
prepared in conformity with requirements of said Act and rules and regulations
of the Commission thereunder. The registration statement and prospectus contain
all statements required to be stated therein in conformity with said Act and the
rules and regulations of said Commission and all statements of fact contained in
any such registration statement and prospectus are true and correct.
Furthermore, neither any registration statement nor any prospectus
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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. Trust
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 Trust's counsel, be necessary or advisable. If the Trust shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Trust 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 Trust for, any
liability or loss resulting from the failure to implement such amendment. The
Trust 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 Trust's right to file at any time such amendments to any
registration statement and/or supplements to any prospectus, of whatever
character, as the Trust may deem advisable, such right being in all respects
absolute and unconditional.
1.11 Trust may request Distributor to use an electronic
processing system over the internet in which electronically transmitted orders
are forwarded electronically for processing by a third party known to Trust
under circumstances in which Distributor will not review the orders. Under such
circumstances, Trust acknowledges and agrees that it will independently
determine that the third party is a satisfactory service provider and that
Distributor's review will not be necessary.
Trust authorizes Distributor and dealers to use any prospectus in the form
furnished from time to time in connection with the sale of the Shares.
Distributor shall not be liable for any error of judgment or mistake of law or
for any loss suffered by Trust 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 Distributor of its obligations and duties under this
Agreement, or from Distributor's failure to comply with laws, rules and
regulations applicable to it in connection with its distribution of the Shares.
Trust agrees to indemnify, defend and hold Distributor, its several partners and
employees, and any person who controls Distributor within the meaning of Section
15 of the Securities Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which Distributor, its partners and employees, or any such
controlling person, may incur (a) as the result of acting as distributor of the
Funds; (b) under the Securities Act or under common law or otherwise, 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 in either thereof not misleading or (iii) any Trust-related
advertisement or sales literature that is not in compliance with applicable
laws, rules or regulations (including, but not limited to the Conduct Rules of
the National Association of Securities Dealers, Inc.); or (c) arising out of or
based upon the electronic processing of orders over
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the internet; provided, however, that Trust's agreement to indemnify
Distributor, its partners or employees, and any such controlling person shall
not be deemed to cover any claims, demands, liabilities or expenses (x) arising
out of any statements or representations as are contained in any prospectus,
advertisement or sales literature and in such financial and other statements as
are furnished in writing to Trust by Distributor and used in the registration
statement or in corresponding statements made in the prospectus, advertisement
or sales literature, or (y) arising out of or based upon any omission or alleged
omission to state a material fact in such information furnished by the
Distributor which is required to be stated or necessary to make the information
not misleading; and further provided that Trust's agreement to indemnify
Distributor and Trust's representations and warranties hereinbefore set forth in
paragraph 1.10 shall not be deemed to cover any liability to Trust or its
shareholders to which Distributor would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, by reason of Distributor's reckless disregard of its obligations and
duties under this Agreement, or by Distributor's failure to comply with any
laws, rules or regulations applicable to it in connection with its distribution
of the Shares.
In the event of a formal legal action, the Trust's agreement to
indemnify Distributor, its partners and employees and any such controlling
person, as aforesaid, is expressly conditioned upon Trust being provided with
written notice of an action brought against Distributor, its partners or
employees, or any such controlling person, and identifying the person against
whom such action 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. Any failure to so notify the Trust will not relieve the Trust from
any liability which the Trust may have to the person against whom such action is
brought, or to any other person, by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
the Trust's indemnity obligations under this paragraph 1.11. The Trust will be
entitled to assume the defense of any suit brought to enforce any such claim,
demand or liability if such defense shall be conducted by counsel of good
standing approved by Distributor, which approval shall not be unreasonably
withheld. In the event Trust elects to assume the defense of any such suit and
retain counsel of good standing so approved by Distributor, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in any case where Trust does not elect to
assume the defense of any such suit, or in case Distributor reasonably withholds
approval of counsel chosen by Trust, Trust will reimburse Distributor, its
partners and employees, or the controlling person or persons named as defendant
or defendants in such suit, for the fees and expenses of any counsel retained by
Distributor or them. Trust's indemnification agreement contained in this
paragraph 1.11 and Trust's representations and warranties in this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Distributor, its partners and employees,
or any controlling person, and shall survive the delivery of any Shares.
This Agreement of indemnity will inure exclusively to
Distributor's benefit, to the benefit of its several partners and employees, and
their respective estates, and to the benefit of the controlling persons and
their successors. The Trust agrees promptly to notify Distributor of the
commencement of any litigation or proceedings against Trust or any of its
officers or Trustees which related, directly or indirectly, the issue and sale
of any Shares or which may otherwise form the basis of an obligation for Trust
to indemnify hereunder.
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1.12 Distributor agrees to indemnify, defend and hold the
Trust, its several officers and Trustees, and any person who controls the Trust
within the meaning of Section 15 of the Securities Act free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
costs of investigating or defending such claims, demands, or liabilities and any
reasonable counsel fees incurred in connection therewith) which the Trust, its
officers or Trustees or any such controlling person, may incur but only to the
extent that such liability or expense incurred by HGI, its officers or Directors
or such controlling person resulting from such claims or demands, shall arising
directly out of or based directly upon any untrue, or alleged untrue, statement
of a material fact contained in information furnished in writing by Distributor
to Trust and used in response to required items of the registration statement or
in the corresponding statements made in the prospectus, or any omission, or
alleged omission, to state a material fact required to be stated in such
information or necessary to make such information not misleading.
Distributor's agreement to indemnify Trust, its officers
and Trustees and any such controlling person, as aforesaid, is expressly
conditioned upon Distributor being provided with written notice of an action
brought against Trust, its officers or Trustees, or any such controlling person,
and identifying the person against whom such action is brought, and sent to
Distributor identifying the person against whom such action is brought, promptly
following the indemnified person's receipt of service of the summons or other
first legal process, and in any event within ten (10) days of such receipt.
Distributor will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability to the extent the same is based on
an alleged misstatement or omission on Distributor's part, if such defense shall
be conducted by counsel of good standing approved by Trust, which approval shall
not be unreasonably withheld. In the event any such claim, demand or liability
is not based solely on an alleged misstatement or omission on Distributor's
part, the Trust, its officers and Trustees, or any controlling person, shall
have the right to participate in the defense, and Distributor shall have the
right of first control thereof. In the event Distributor elects to assume the
defense of any such suit and retain counsel of good standing so approved by
Trust, the defendant or defendants in such suit shall bear the fees and expenses
of any additional counsel retained by any of them; but in any case where
Distributor does not elect to assume the defense of any such suit, or in the
case Trust reasonably withholds approval of counsel chosen by Distributor,
Distributor will reimburse Trust, its officers, directors, employees and
controlling persons or other persons named as defendant or defendants in such
suit for the fees and expenses of any counsel retained by Trust or them.
Distributor's indemnification agreement contained in this paragraph 1.12 and
Distributor's representations and warranties in this Agreement shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of Trust, its officers, directors and employees, or any controlling
person.
1.13 No Shares shall be offered by either Distributor or the
Trust under any of the provisions of this Agreement and no orders for the
purchase or sale of Shares hereunder shall be accepted by the Trust 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 Act is not on file with the Commission; provided,
however, that nothing contained in this paragraph 1.13 shall in any
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way restrict or have an application to or bearing upon the Trust's obligation to
repurchase Shares from any Shareholder in accordance with the provisions of the
Trust's prospectus, Agreement and Declaration of Trust, or Bylaws.
1.14 The Trust agrees to advise Distributor as soon as
reasonably practical by a notice in writing delivered to 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 Trust
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 all 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.
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.
1.15 Distributor agrees on behalf of itself and its partners
and employees to treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and its prior,
present or potential Shareholders, and not to use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except, after prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where Distributor may be exposed to civil or criminal liability for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
1.16 This Agreement shall be governed by the laws of the State
of Ohio.
1.17 In the event Distributor purchases the initial shares of
the Trust for purposes of satisfying the minimum net worth requirements set
forth in Section 14(a) of the 1940 Act, and a notice of termination is
subsequently given or this Agreement is otherwise terminated pursuant to Section
6 herein for any reason prior to the time that organizational expenses incurred
by the Trust have been fully amortized, then the Trust shall either (i) cause
the successor distributor of the shares
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(the "Successor Distributor") to pay to Distributor, within ten (10) days prior
to the termination of this Agreement, an amount of cash that is sufficient to
purchase the initial shares that are held by Distributor or (ii) enable
Distributor to redeem the initial shares of the Trust that it holds by causing
the Successor Distributor to contribute to the Trust, within ten (10) days prior
to the termination of this Agreement, any unamortized organizational costs in
the same proportion as the number of initial shares being redeemed bears to the
number of initial shares outstanding at the time of such contribution. In the
latter case, Distributor shall be entitled to redeem any or all of the initial
shares that it holds and receive redemption proceeds without any reduction in
the amount of such proceeds, prior to the termination of this Agreement.
2. FEE.
Distributor shall receive from the Funds identified in the
Service and Distribution Plan attached as Schedule B hereto (the "Distribution
Plan Funds") a distribution fee at the rate and upon the terms and conditions
set forth in such Plan. The distribution fee shall be accrued daily and shall be
paid on the first business day of each month, or at such time(s) as the
Distributor shall reasonably request.
3. SALE AND PAYMENT.
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 Service and
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", and
or Shares that are sold subject to a contingent deferred sales load, "CDSL
Shares"). Funds that contain Front-End Load Shares shall hereinafter be referred
to collectively as "Front-End Load Funds". A Fund that contains CDSL Shares
shall hereinafter be referred to collectively as "CDSL Funds". Front-end Load
Funds and CDSL Funds may individually or collectively be referred to as "Load
Funds". Under this Agreement, the following provisions shall apply with respect
to the sale of, and payment for, Load Shares.
3.1 Distributor shall have the right to purchase 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. 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 Distributor, which concession shall not exceed the amount of the
sales charge or underwriting discount, if any, referred to in Section 4 below.
3.2 Prior to the time of delivery of any Load Shares by a Load
Fund to, or on the order of, Distributor, Distributor shall pay or cause to be
paid to the Load Fund or to its order an amount in Boston or New York clearing
house funds equal to the applicable net asset value of such
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Shares. Distributor may retain so much of any sales charge or underwriting
discount as is not allowed by Distributor as a concession to dealers.
4. PUBLIC OFFERING PRICE.
The public offering price of a Load Share shall be the net
asset value of such Load Share, plus any applicable sales charge, all as set
forth in the current prospectus of the Load Fund. The net asset value of Shares
shall be determined in accordance with the then-current prospectus of the Load
Fund.
5. ISSUANCE OF SHARES.
The Trust reserves the right to issue, transfer or sell Load
Shares at net asset value (a) in connection with the merger or consolidation of
the Trust or the Load Fund(s) with any other investment company or the
acquisition by the Trust 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 date an amendment to
Schedule A to this Agreement relating to that Fund is executed) 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 by (a) by the vote of a majority of those members of the Trust's Board
of Trustees 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 Trust's Board of Trustees or the vote of a
majority of the outstanding voting securities of such Fund. This Agreement is
terminable without penalty, on not less than sixty days' prior written notice,
by the Trust's Board of Trustees, by vote of a majority of the outstanding
voting securities of the Trust 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 meanings as ascribed
to such terms in the 1940 Act.)
7. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust
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personally, but shall bind only the trust property of the Trust. The execution
and delivery of this Agreement have been authorized by the Trustees, and this
Agreement has been signed and delivered by an authorized officer of the Trust,
acting as such, and neither such authorization by the Trustees 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 any of them personally, but
shall bind only the trust property of the Trust as provided in the Trust's
Agreement and Declaration of Trust.
8. PRIVACY.
Nonpublic personal financial information relating to consumers or
customers of the Funds provided by, or at the direction of, Trust 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 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 sections 248.14 or 248.15 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 of the Funds. Trust 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 BISYS with a copy of that statement annually.
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 Trust, at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ Attention: President, with copy to ▇▇▇▇ ▇▇▇▇▇▇▇▇,
President, Signal Capital Management, Inc., ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇; and if to BISYS, at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, Attn: 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.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the
day and year first written above.
THE COVENTRY GROUP BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By: By:
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Title: Title:
------------------------- ----------------------------
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Dated: July 1st, 2002
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SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
BETWEEN
THE COVENTRY GROUP
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Signal Large Cap Growth Fund
Signal Income Fund
Signal Tax-Exempt Income Fund
Signal Tax-Exempt Money Market Fund
Signal Money Market Fund
A-1
SCHEDULE B
TO THE DISTRIBUTION AGREEMENT
BETWEEN
THE COVENTRY GROUP
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
SERVICE AND DISTRIBUTION PLAN
-----------------------------
B-1