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Exhibit (h)(1)
ADMINISTRATION AGREEMENT
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THIS AGREEMENT is made as of this 1st day of October, 1999 between THE
COVENTRY GROUP, a Massachusetts business trust (the "Company"), having its
principal place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, and
BISYS FUND SERVICES OHIO, INC. (the "Administrator"), an Ohio corporation
organized under the laws of the State of Ohio and having its principal place of
business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000.
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest ("Shares");
and
WHEREAS, the Company desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
each currently existing series of the Company advised by Proprietary Capital LLC
("Proprietary"), and such additional series advised by Proprietary as the
Company and BISYS may agree on from time to time (individually referred to
herein as a "Fund" and collectively as the "Funds") and as listed on Schedule A
attached hereto and made a party of this Agreement, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Company and the Administrator hereby agree as
follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR. The Company hereby retains
the Administrator to act as the administrator of the Funds and to furnish the
Funds with the management and administrative services as set forth in Article 2
below. The Administrator hereby accepts such employment to perform the duties
set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Company in any way and shall
not be deemed an agent of the Company.
ARTICLE 2. ADMINISTRATIVE SERVICES. The Administrator shall perform or
supervise the performance by others of other administrative services in
connection with the operations of the Funds, and, on behalf of the Company, will
investigate, assist in the selection of and conduct relations with custodians,
depositories, accountants, legal counsel, underwriters, brokers and dealers,
corporate fiduciaries, insurers, banks and persons in any other capacity deemed
to be necessary or desirable for the Funds' operations. The Administrator shall
provide the Board of Trustees of the Company (hereafter referred to as the
"Trustees") with such reports regarding
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investment performance as they may reasonably request but shall have no
responsibility for supervising the performance by any investment adviser or
sub-adviser of its responsibilities.
The Administrator shall provide the Company with regulatory reporting,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' and Trustees' meetings) for handling the
affairs of the Funds and such other services as the Administrator shall, from
time to time, determine to be necessary to perform its obligations under this
Agreement. In addition, at the request of the Trustees, the Administrator shall
make reports to the Company's Trustees concerning the performance of its
obligations hereunder.
Without limiting the generality of the foregoing, the Administrator
shall:
(a) calculate contractual Fund expenses and control all
disbursements for the Company, and as appropriate compute the
Fund's yields, total return, expense ratios, fund turnover
rate and, if required, Fund average dollar-weighted maturity;
(b) assist Company counsel with the preparation of
prospectuses, statements of additional information,
registration statements and proxy materials;
(c) prepare such reports, applications and documents
(including reports regarding the sale and redemption of Shares
as may be required in order to comply with Federal and state
securities law) as may be necessary or desirable to satisfy
state notice filing requirements related to the offer and sale
of Fund Shares, monitor the sale of Fund Shares for compliance
with state securities laws, and file with the appropriate
state securities authorities the registration statements and
reports for the Company and the Funds' Shares and all
amendments thereto, as may be necessary or convenient to
comply with applicable requirements of state securities
authorities to enable the Company to make a continuous
offering of the Funds' Shares;
(d) develop and prepare, with the assistance of the Funds'
investment adviser, communications to Fund Shareholders,
including the annual report to Shareholders, coordinate the
mailing of prospectuses, notices, proxy statements, proxies
and other reports to Shareholders, and supervise and
facilitate the proxy solicitation process for all shareholder
meetings, including the tabulation of shareholder votes;
(e) administer contracts on behalf of the Company with, among
others, the Funds' investment adviser, distributor, custodian,
transfer agent and fund accountant;
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(f) supervise the Company's transfer agent with respect to the
payment of dividends and other distributions to Fund
Shareholders;
(g) calculate performance data of the Funds for dissemination
to information services covering the investment company
industry;
(h) coordinate and supervise the preparation and filing of the
Company's tax returns pertaining to the Funds;
(i) examine and review the operations and performance of the
various organizations providing services to any Fund,
including, without limitation, the Funds' investment adviser,
distributor, custodian, fund accountant, transfer agent,
outside legal counsel and independent public accountants, and
at the request of the Company, report to the Board on the
performance of organizations;
(j) assist with the layout and printing of publicly
disseminated prospectuses and assist with and coordinate
layout and printing of the Company's semi-annual and annual
reports to Fund Shareholders;
(k) assist with the design, development, and operation of the
Funds, including new classes, investment objectives, policies
and structure;
(l) provide individuals reasonably acceptable to the Company's
Trustees to serve as officers of the Company, who will be
responsible for the management of certain of the Company's
affairs as determined by the Company;
(m) advise the Company and its Trustees on matters concerning
the Company and its affairs;
(n) obtain and keep in effect fidelity bonds and trustees and
officers/errors and omissions insurance policies for the
Company in accordance with the requirements of Rules 17g-1 and
17d-1(7) under the 1940 Act as such bonds and policies are
approved by the Company's Trustees;
(o) monitor and advise the Company and the Funds on their
registered investment company status under the Internal
Revenue Code of 1986, as amended;
(p) perform all administrative services and functions of the
Company and each Fund to the extent administrative services
and functions are not provided to the Company or such Fund
pursuant to the Company's or such Fund's investment advisory
agreement, distribution agreement, custodian agreement,
transfer agent agreement and fund accounting agreement;
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(q) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Funds as the
Company and the Administrator shall determine desirable; and
(r) prepare and file with the SEC the semi-annual report for
the Company on Form N-SAR and all required notices pursuant to
Rule 24f-2.
The Administrator shall perform such other services for the Company
that are mutually agreed upon by the parties from time to time. Such services
may include performing internal audit examinations; mailing the annual reports
of the Funds; preparing an annual list of Shareholders; and mailing notices of
Shareholders' meetings, proxies and proxy statements, for all of which the
Company will pay the Administrator's out-of-pocket expenses.
ARTICLE 3. Allocation of Charges and Expenses.
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(A) THE ADMINISTRATOR. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Company as well as all Trustees of the
Company who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Company retained by the Trustees of the
Company to perform services on behalf of the Company.
(B) THE COMPANY. The Company assumes and shall pay or cause to be paid
all other expenses of the Company not otherwise allocated herein, including,
without limitation, organization costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of custodial
services, the cost of initial and ongoing registration of the Shares under
Federal and state securities laws, fees and out-of-pocket expenses of Trustees
who are not affiliated persons of the Administrator or the Investment Adviser to
the Company or any affiliated corporation of the Administrator or the Investment
Adviser, insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, and all fees and charges of investment
advisers to the Company.
ARTICLE 4. Compensation of the Administrator.
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(A) ADMINISTRATION FEE. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Company shall pay to the Administrator compensation at an annual
rate specified in the Omnibus Fee Agreement
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between the Company and the Administrator dated as of October 1, 1999 (the "Fee
Agreement"). The Company shall also reimburse the Administrator for its
reasonable out-of-pocket expenses, including the travel and lodging expenses
incurred by officers and employees of the Administrator in connection with
attendance at Board meetings.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Administrator's
compensation for that part of the month in which this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
(B) SURVIVAL OF COMPENSATION RIGHTS. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. The duties of
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. (As used in this Article 5, the term "Administrator" shall include
directors, officers, employees and other agents of the Administrator as well as
the Administrator itself.)
So long as the Administrator acts in good faith and with due diligence
and without negligence, the Company assumes full responsibility and shall
indemnify the Administrator and hold it harmless from and against any and all
actions, suits and claims, whether groundless or otherwise, and from and against
any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of the
Administrator's actions taken or nonactions with respect to the performance of
services hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Company may be asked to indemnify or hold the
Administrator harmless, the Company shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Company promptly concerning any situation which presents or appears
likely to present the probability of such a
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claim for indemnification against the Company, but failure to do so in good
faith shall not affect the rights hereunder.
The Company shall be entitled to participate at its own expense or, if
it so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Company elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the
Company and satisfactory to the Administrator, whose approval shall not be
unreasonably withheld. In the event that the Company elects to assume the
defense of any suit and retain counsel, the Administrator shall bear the fees
and expenses of any additional counsel retained by it. If the Company does not
elect to assume the defense of a suit, it will reimburse the Administrator for
the reasonable fees and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Company at any time for instructions
and may consult counsel for the Company or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Company until receipt of written notice thereof from the Company.
ARTICLE 6. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Company are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that trustees, officers, employees
and Shareholders of the Company are or may be or become interested in the
Administrator, as officers, employees or otherwise and that partners, officers
and employees of the Administrator and its counsel are or may be or become
similarly interested in the Company, and that the Administrator may be or become
interested in the Company as a Shareholder or otherwise.
ARTICLE 7. DURATION OF THIS AGREEMENT. The Term of this Agreement shall
be as specified in Schedule A hereto.
ARTICLE 8. ASSIGNMENT. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder. The
Administrator shall not, however, be relieved of any of its obligations under
this Agreement by the appointment of such subcontractor and provided further,
that the Administrator shall be responsible, to the extent provided in Article 5
hereof, for all acts
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of such subcontractor as if such acts were its own. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
ARTICLE 9. AMENDMENTS. No provision of this Agreement may be amended or
waived except by an instrument signed by the party against which enforcement of
the amendment or waiver is sought.
ARTICLE 10. CERTAIN RECORDS. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Company shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Company and will be made
available to or surrendered promptly to the Company on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Company and follow the
Company's instructions as to permitting or refusing such inspection; provided
that the Administrator may exhibit such records to any person in any case where
it is advised by its counsel that it may be held liable for failure to do so,
unless (in cases involving potential exposure only to civil liability) the
Company has agreed to indemnify the Administrator against such liability.
ARTICLE 11. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the following address: 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000,
or at such other address as such party may from time to time specify in writing
to the other party pursuant to this Section.
ARTICLE 13. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Ohio and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the State of Ohio, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.
ARTICLE 14. MULTIPLE ORIGINALS. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
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ARTICLE 15. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
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 trust property of
the Company. 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 Company, 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 Company as provided in the Company's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
THE COVENTRY GROUP
By: /s/ Xxxxxx X. Xxxxx
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Title: ____________________
BISYS FUND SERVICES OHIO, INC.
By: /s/ Xxxxxxx Xxxxx
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Title: President
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SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF OCTOBER 1, 1999
BETWEEN
THE COVENTRY GROUP
AND
BISYS FUND SERVICES OHIO, INC.
FUNDS: This Agreement shall apply to all Funds of The Coventry Group
advised by Proprietary Capital LLC ("Proprietary"), either now
or hereafter created (individually, the "Fund", and
collectively, the "Funds"). The current Funds of the Company
advised by Proprietary are set forth below:
The Counter Bond Fund
TERM: Pursuant to Article 7, the term of this Agreement shall
commence on October 1, 1999 and shall remain in effect through
September 30, 2004 ("Initial Term"). Thereafter, unless
otherwise terminated as provided herein, this Agreement shall
be renewed automatically for successive one-year periods
("Rollover Periods"). This Agreement may be terminated without
penalty (i) by provision of a notice of nonrenewal in the
manner set forth below, (ii) by mutual agreement of the
parties or (iii) for "cause," as defined below, upon the
provision of 60 days advance written notice by the party
alleging cause. Written notice of nonrenewal must be provided
at least 60 days prior to the end of the Initial Term or any
Rollover Period, as the case may be.
For purposes of this Agreement, "cause" shall mean (a) a
material breach of this Agreement that has not been remedied
for thirty (30) days following written notice of such breach
from the non-breaching party; (b) a final, unappealable
judicial, regulatory or administrative ruling or order in
which the party to be terminated has been found guilty of
criminal or unethical behavior in the conduct of its business;
(c) financial difficulties on the part of the party to be
terminated which are evidenced by the authorization or
commencement of, or involvement by way of pleading, answer,
consent or acquiescence in, a voluntary or involuntary case
under Title 11 of the United States Code, as from time to time
is in effect, or any applicable law, other than said Title 11,
of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration
of the rights of creditors; (d) any failure on the part of the
Company to collect from Proprietary any payment or
reimbursement that is due and payable by Proprietary to the
Company (including an amount due the Company that directly or
indirectly represents amounts payable to the Administrator in
its capacity as fund administrator to the Company) within 60
days following the due date; or (e) any
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failure on the part of the Company to pay an amount that is
due and payable to the Administrator or any of its affiliates
under any other agreement to which the Company is a party
within 60 days following the due date. For purposes of this
definition of "cause," a material breach shall include, but
not be limited to, any failure on the part of the Company to
pay fees due and payable to the Administrator pursuant to
Article 4 hereunder within 60 days following the due date.
Notwithstanding the foregoing, after such termination for so
long as the Administrator, with the written consent of the
Company, in fact continues to perform any one or more of the
services contemplated by this Agreement or any schedule or
exhibit hereto, the provisions of this Agreement, including
without limitation the provisions dealing with
indemnification, shall continue in full force and effect.
Compensation due the Administrator and unpaid by the Company
upon such termination shall be immediately due and payable
upon and notwithstanding such termination. The Administrator
shall be entitled to collect from the Company, in addition to
the compensation described in the Omnibus Fee Agreement
between the Company and the Administrator dated October 1,
1999, the amount of all of the Administrator's cash
disbursements for services in connection with the
Administrator's activities in effecting such termination,
including without limitation, the delivery to the Company
and/or its designees of the Company's property, records,
instruments and documents.
If, for any reason other than nonrenewal, mutual agreement of
the parties or "cause," as defined above, the Administrator is
replaced as administrator, or if a third party is added to
perform all or a part of the services provided by the
Administrator under this Agreement (excluding any
sub-administrator appointed by the Administrator as provided
in Article 7 hereof), then the Company shall make a one-time
cash payment, in consideration of the fee structure and
services to be provided under this Agreement, and not as a
penalty, to the Administrator equal to the balance due the
Administrator for the remainder of the then-current term of
this Agreement, assuming for purposes of calculation of the
payment that such balance shall be based upon the average
amount of the Company's assets for the twelve months prior to
the date the Administrator is replaced or a third party is
added.
In the event the Funds are merged into another legal entity in
part or in whole pursuant to any form of business
reorganization or is liquidated in part or in whole prior to
the expiration of the then-current term of this Agreement, the
parties acknowledge and agree that the liquidated damages
provision set forth above shall be applicable in those
instances in which the Administrator is not retained to
provide administration services consistent with this
Agreement. The one-time cash payment referenced above shall be
due and payable on the day prior to the first day in which the
Administrator is replaced or a third party is added.
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The parties further acknowledge and agree that, in the event
the Administrator is replaced, or a third party is added, as
set forth above, (i) a determination of actual damages
incurred by the Administrator would be extremely difficult,
and (ii) the liquidated damages provision contained herein is
intended to adequately compensate the Administrator for
damages incurred and is not intended to constitute any form of
penalty.
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