EXHIBIT (h)(3)
COMPLIANCE SERVICES AGREEMENT
AGREEMENT effective as of December 1, 2005, between The Coventry Group
(the "Company"), a Massachusetts business trust having its principal place of
business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, and BISYS Fund Services
Ohio, Inc. ("BISYS"), an Ohio corporation having its principal place of business
at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000.
WHEREAS, the Company is a registered investment company, and will become
subject to the requirements of Rule 38a-1 under the 1940 Act, which requires
each registered investment company to adopt policies and procedures that are
reasonably designed to prevent it from violating the federal securities laws;
WHEREAS, BISYS performs certain management and administration services,
under a Master Services Agreement between BISYS and the Company dated December
1, 2005 (the "Master Services Agreement"), for certain series of the Company for
which Xxxxx Xxxxxx Asset Management Company acts as investment adviser;
WHEREAS, BISYS offers compliance services through its ComplianceEDGE
program, which may be tailored to create a compliance program for the Company;
WHEREAS, the Company desires that BISYS provide its Compliance EDGE
program services in connection with the institution of a more comprehensive
compliance program for the Company;
WHEREAS, BISYS is willing to perform the services enumerated in this
Agreement on the terms and conditions set forth in this Agreement; and
WHEREAS, BISYS and the Company wish to enter into this Agreement in order
to set forth the terms under which BISYS will perform the services enumerated
herein on behalf of the Company, and to supplement and clarify certain
provisions of the Master Services Agreement.
NOW, THEREFORE, in consideration of the covenants herein contained, the
Company and BISYS hereby agree as follows:
1. Compliance Services.
(a) The parties mutually agree to coordinate and cooperate in connection
with the creation and implementation of written compliance polices and
procedures which, in the aggregate, shall be deemed by the Board of Trustees of
the Company (the "Board") to be reasonably designed to prevent the Company from
violating the provisions of the Federal securities laws applicable to the
Company (the "Applicable Securities Laws"), as required under Rule 38a-1 under
the 0000 Xxx.
(b) The Company agrees to provide BISYS with copies of its current
compliance policies and procedures and furnish (and cause its investment
advisers and other service
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providers to furnish) all such additional information as may reasonably relate
to the design and implementation of the Fund Compliance Program. Such additional
information shall include compliance and related information pertaining to the
investment adviser and any other service providers to the Company other than
BISYS. BISYS shall review and evaluate all such existing information and
coordinate the creation of a written document or documents designed to embody
the overall fund compliance program and the oversight of the compliance programs
of the service providers to the Company as provided in Rule 38a-1 ("Service
Providers"). Drafts shall be prepared by BISYS in consultation with the Company
and its counsel and shall be submitted for review and comment. Upon approval by
the Board, such documents or documents shall become effective as the fund
compliance program required under Rule 38a-1 (as amended from time to time upon
the approval of the Board, the "Fund Compliance Program").
(c) BISYS will provide the following services in relation to the Fund
Compliance Program during the term of this Agreement: (i) make an individual
acceptable to the Board available to serve as the Company's Chief Compliance
Officer to administer the Fund Compliance Program, to the extent provided in
Section 2(a) below; (ii) through the Chief Compliance Officer, develop and
implement the written policies and procedures comprising the Fund Compliance
Program, as contemplated above and as may be necessary in connection with
amendments from time to time; (iii) through the Chief Compliance Officer,
prepare and evaluate the results of annual reviews of the compliance policies
and procedures of Service Providers; (iv) provide support services to the Chief
Compliance Officer of the Company, including support for conducting an annual
review of the Fund Compliance Program; (v) through the Chief Compliance Officer
and otherwise in support of the Fund Compliance Program, develop standards for
reports to the Board by BISYS and other Service Providers; (vi) through the
Chief Compliance Officer, develop standards for reports to the Board by the
Chief Compliance Officer; and (vii) through the Chief Compliance Officer and
otherwise in support of the Fund Compliance Program, prepare or provide
documentation for the Board to make findings and conduct reviews pertaining to
the Fund Compliance Program and compliance programs and related policies and
procedures of Service Providers.
In connection with the services set forth above in clauses (ii), (iii),
(v),(vi) and (vii) of this Section 1(c), in the event that the Board retains a
Chief Compliance officer that is not provided by BISYS, the services in relation
to the Chief Compliance Officer shall consist of providing the appropriate level
of support to the Chief Compliance Officer to reasonably enable him or her to
fulfill the duties set forth therein.
2. Provision of Chief Compliance Officer
(a) At the election of the Company, in connection with the compliance
services to be rendered by BISYS pursuant to Section 1 above, and subject to the
provisions of this Section 2(a) and to Section 2(b) below, BISYS agrees to make
available to the Company a person to serve as the Company's chief compliance
officer responsible for administering the Fund Compliance Program as provided in
paragraph (a)(4) of Rule 38a-1 (the "Chief Compliance Officer"). BISYS'
obligation in this regard shall be met by
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providing an appropriately qualified employee or agent of BISYS (or its
affiliates) who, in the exercise of his or her duties to the Company, shall act
in good faith and in a manner reasonably believed by him or her to be in the
best interests of the Company. In the event that the employment relationship or
independent contractor agency relationship between BISYS and any person made
available by BISYS to serve as Chief Compliance Officer terminates for any
reason, BISYS shall have no further responsibility to provide the services of
that particular person, and shall have no responsibility whatsoever for the
services to the Company or other activities of such person provided or occurring
after such termination regardless of whether or not the Board terminates such
person as Chief Compliance Officer. In such event, upon the request of the
Company, BISYS will employ reasonable good faith efforts to make another person
available to serve as the Chief Compliance Officer.
In connection with BISYS' commitment to make an appropriately qualified
person available to serve as Chief Compliance Officer, BISYS shall pay a level
of total compensation to such person as is consistent with BISYS' compensation
of employees having similar duties, similar seniority, and working at the same
or similar geographical location. BISYS shall not be obligated to pay any
compensation to a Chief Compliance Officer which exceeds that set forth in the
previous sentence.
The Company will provide copies of the Fund Compliance Program, related
policies and procedures, and all other books and records of the Company as the
Chief Compliance Officer deems necessary or desirable in order to carry out his
or her duties hereunder on behalf of the Company. The Company shall cooperate
with the Chief Compliance Officer and ensure the cooperation of the investment
adviser, the custodian and any other Service Providers to the Company, as well
as Company counsel, independent Trustee counsel and the Company's independent
accountants (collectively, the "Other Providers"), and assist the Chief
Compliance Officer and BISYS in preparing, implementing and carrying out the
duties of the Chief Compliance Officer under the Fund Compliance Program and
Rule 38a-1. In addition, the Company shall provide the Chief Compliance Officer
with appropriate access to the executive officers and trustees of the Company,
and to representatives of and to any records, files and other documentation
prepared by, Service Providers and Other Providers, which are or may be related
to the Fund Compliance Program.
Each party agrees to provide promptly to the other party (and to the Chief
Compliance Officer), upon request, copies of other records and documentation
relating to the compliance by such party with Applicable Securities Laws (as
related to the Fund Compliance Program of the Company), and each party also
agrees otherwise to assist the other party (and the Chief Compliance Officer) in
complying with the requirements of the Fund Compliance Program and Applicable
Securities Laws.
BISYS agrees to provide the services set forth in Section 1 pertaining to
the Fund Compliance Program, whether or not the person serving as Chief
Compliance Officer is an employee or agent of BISYS. In the event that the
employment relationship or independent contractor agency relationship between
BISYS and a person made available by BISYS serving as Chief Compliance Officer
terminates for any reason, BISYS shall
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have no further responsibility to make that particular person available, and
shall have no responsibility concerning such person's services after the date
the Company is notified of such termination. In such event, upon the request of
the Company, BISYS will employ reasonable good faith efforts to make another
person available to serve as the Chief Compliance Officer.
(b) It is mutually agreed and acknowledged by the parties that the Chief
Compliance Officer will be an executive officer of the Company. The provisions
of Section 2(a) are subject to the internal policies of BISYS concerning the
activities of its employees and their service as officers of funds (the "BISYS
Policies"), a copy of which shall be provided to the Company upon request. The
Company's governing documents (including its Declaration of Trust and By-Laws)
and/or resolutions of its Board shall contain mandatory indemnification
provisions that are applicable to the Chief Compliance Officer, that are
designed and intended to have the effect of fully indemnifying him or her and
holding him or her harmless with respect to any claims, liabilities and costs
arising out of or relating to his or her service in good faith in a manner
reasonably believed to be in the best interests of the Company, except to the
extent he or she would otherwise be liable to the Company by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
The Company shall provide coverage to the Chief Compliance Officer under
its directors and officers liability policy that is appropriate to the Chief
Compliance Officer's role and title, and consistent with coverage applicable to
the other officers holding positions of executive management.
In appropriate circumstances, the Chief Compliance Officer shall have the
discretion to resign from his or her position, in the event that he or she
reasonably determines that there has been or is likely to be (a) a material
deviation from the BISYS Policies, (b) an ongoing pattern of conduct involving
the continuous or repeated violation of Applicable Securities Laws, or (c) a
material deviation by the Company from the terms of this Agreement governing the
services of such Chief Compliance Officer that is not caused by such Chief
Compliance Officer or BISYS. In addition, the Chief Compliance Officer shall
have reasonable discretion to resign from his or her position in the event that
he or she determines that he or she has not received sufficient cooperation from
the Company or its Other Providers to make an informed determination regarding
any of the matters listed above.
Each Executive Officer may, and the Company shall, promptly notify BISYS
of any issue, matter or event that would be reasonably likely to result in any
claim by the Company, one or more Company shareholder(s) or any third party
which involves an allegation that any Executive Officer failed to exercise his
or her obligations to the Company in a manner consistent with applicable laws.
Notwithstanding any provision of the Master Services Agreement or any
other agreement or instrument that expressly or by implication provides to the
contrary, (a) it is expressly agreed and acknowledged that BISYS cannot ensure
that the Company
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complies with the Applicable Securities Laws, and (b) whenever an employee or
agent of BISYS serves as Chief Compliance Officer of the Company, as long as
such Chief Compliance Officer acts in good faith and in a manner reasonably
believed to be in the best interests of the Company (and would not otherwise be
liable to the Company by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office), the Company shall indemnify the Chief Compliance Officer and BISYS
and hold the Chief Compliance Officer and BISYS harmless from any loss,
liability, expenses (including reasonable attorneys fees) and damages incurred
by them arising out of or related to the service of such employee or agent of
BISYS as Chief Compliance Officer of the Company.
3. Fees and Expenses
(a) BISYS shall be entitled to receive from the Company the amounts set
forth on Schedule A hereto, reflecting the amounts charged by BISYS for the
performance of services under this Agreement. The fees hereunder shall be in
addition to all fees and expenses charged by BISYS under the Master Services
Agreement.
(b) In addition to paying BISYS the fees set forth in Schedule A, the
Company agrees to reimburse BISYS for all of its actual out-of-pocket expenses
reasonably incurred in providing services under this Agreement, including but
not limited to the following:
(i) All out of pocket costs incurred in connection with BISYS'
provision of Executive Officers to the Company in connection
with compliance services, including travel costs for attending
Board meetings, conducting due diligence of Service Providers,
and attending training conferences and seminars (plus the
costs of training);
(ii) If applicable initially or from time to time hereafter,
upon the approval of the Company, costs to recruit a Chief
Compliance Officer; and
(iii) The costs incurred by BISYS in connection with the Fund
Compliance Program, including those incurred by or with
respect to Other Providers, in providing reports to the Chief
Compliance Officer under the Fund Compliance Program.
(c) All rights of compensation under this Agreement for services performed
and for expense reimbursement shall survive the termination of this Agreement.
4. Information to be Furnished by the Company
(a) The Company has furnished or shall promptly furnish to BISYS copies of
the following, as amended and current as of the date of this Agreement:
The Fund Compliance Program or the various policies and procedures
of the Company that have been adopted through the date hereof which
pertain to compliance matters that are required to be covered by the
Fund Compliance
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Program, including the compliance programs of Service
Providers other than BISYS, as necessary under Rule 38a-1
for inclusion in the Fund Compliance Program; and
(b) The Company shall furnish BISYS written copies of any amendments to,
or changes in, any of the items referred to in Section 4(a) hereof, forthwith
upon such amendments or changes becoming effective. In addition, the Company
agrees that no amendments will be made to the Fund Compliance Program, which
might have the effect of changing the procedures employed by BISYS in providing
the services agreed to hereunder or which amendment might affect the duties of
BISYS hereunder unless the Company first obtains BISYS's approval of such
amendments or changes, which approval shall not be withheld unreasonably.
(c) BISYS may rely on all documents furnished to it by the Company and its
agents in connection with the services to be provided under this Agreement,
including any amendments to or changes in any of the items to be provided by the
Company pursuant to Section 4(a), and shall be entitled to indemnification in
accordance with Section 6 below with regard to such reliance.
The Company represents and warrants that (i) the provision of certain
officers of the Company by BISYS, as provided in Section 2 of this Agreement,
has been approved by the Board, and (ii) the individual nominated by BISYS as
the Company's Chief Compliance Officer has been approved and appointed as an
officer of the Company by the Board.
5. Term and Termination
(a) The compliance services to be rendered by BISYS under this Agreement
(the "Compliance Services") shall commence upon the date of this Agreement and
shall continue in effect for one year from the date of this Agreement, unless
earlier terminated pursuant to the terms of this Agreement. During such one year
term, the Compliance Services may be terminated upon 30 days notice in the event
there is "cause," as defined in the Master Services Agreement. Following the one
year anniversary of the date of this Agreement, the Compliance Services may be
terminated by either party for "cause," as provided above, or by providing the
other party with 90 days written notice of termination.
(b) Notwithstanding anything in this Agreement to the contrary, including
but not limited to the provisions of Section 5(a), all of the obligations of
BISYS hereunder shall terminate automatically upon any termination of the Master
Services Agreement.
6. Notice
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address: if to the Company, at 0000 Xxxxxxx Xxxx, Xxxxxxxx,
Xxxx; Attn: President, ; and if to BISYS, at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx
00000; Attn: President, or at
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such other address as such party may from time to time specify in writing to the
other party pursuant to this Section.
7. Governing Law and Matters Relating to the Company as a Massachusetts
Business Trust
This Agreement shall be construed in accordance with the laws of the State
of New York and the applicable provisions of the 1940 Act. To the extent that
the applicable laws of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act of 1940,
as amended, the latter shall control. It is expressly agreed that the
obligations of the Company hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of the Company
personally, but shall bind only the company property of the Company. The
execution and delivery of this Agreement have been authorized by the Board, and
this Agreement has been signed and delivered by an authorized officer of the
Company, acting as such, and neither such authorization by the Board nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on them personally, but shall
bind only the company property of the Company as provided in the Company's
Declaration of Trust.
8. Representations and Warranties
Each party represents and warrants to the other that this Agreement has
been duly authorized and, when executed and delivered by it, will constitute a
legal, valid and binding obligation of it, enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the rights and remedies of
creditors and secured parties.
9. Miscellaneous
(a) Except as expressly provided in this Agreement, the terms of the
Master Services Agreement shall apply to the services rendered under this
Agreement and the general provisions thereof shall be used on a residual basis
to construe any issues arising under this Agreement that are not addressed by
the express terms of this Agreement. Except as provided in this Agreement, the
provisions of the Master Services Agreement remain in full force and effect.
(b) The provisions set forth in this Agreement supersede all prior
negotiations, understandings and agreements bearing upon the subject matter
covered herein, including any conflicting provisions of the Master Services
Agreement.
(c) No amendment or modification to this Agreement shall be valid unless
made in writing and executed by both parties hereto.
(d) Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
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(e) This Agreement may be executed in counterparts, each of which shall be
an original but all of which, taken together, shall constitute one and the same
agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE COVENTRY GROUP
By: ___________________________________
Name:
Title:
BISYS FUND SERVICES OHIO, INC.
By: ___________________________________
Name: Xxxx Xxxxxxx
Title: President
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SCHEDULE A
TO COMPLIANCE SERVICES AGREEMENT
FEES
Fees for Compliance Services provided under this Agreement:
$ 20,000 annual fee
All annual fees set forth above shall be payable in equal monthly installments.
All recurring fees set forth above shall be subject to adjustment annually
commencing on the one-year anniversary of the date of this Agreement by 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.
OUT OF POCKET EXPENSES
Out of pocket expenses are not included in the above fees and shall also be paid
to BISYS in accordance with the provisions of this Agreement.
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