Exhibit (h)(1)
MASTER SERVICES AGREEMENT
This Master Services Agreement ("Agreement") is made as of September __,
2007, (the "Effective Date") between Citi Fund Services Ohio, Inc. ("Citi"), an
Ohio corporation having a place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx
00000 and The Coventry Group (the "Company") an Ohio business trust, having a
place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000.
WHEREAS, the Company desires that Citi perform administration, fund
accounting and transfer agency services for the investment portfolios of the
Company managed by Xxxxxxxx Capital Management, LLC ("Xxxxxxxx") as now in
existence and listed on Schedule A to this Agreement, as well as such additional
investment portfolios as hereafter may be established by the Company from time
to time and managed by Xxxxxxxx so long as agreed to by Citi in writing
(individually referred to herein as a "Fund", and collectively, the "Funds");
WHEREAS, Citi is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in exchange for good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the Company and Citi hereby
agree as follows:
1. Retention of Citi.
The Company hereby retains Citi to act as administrator, fund accountant
and transfer agent of the Company and the Funds, and to furnish the Company and
the Funds with administrative, fund accounting and transfer agency services as
set forth in Sections 2(a) through (c) below. In addition, the Company hereby
appoints Citi Fund Services, Inc. ("CFI"), an affiliate of Citi, as the non-bank
trustee/custodian to the XXX Accounts of the Company (as defined in Section 2(d)
below). The Company hereby retains Citi to provide the non-bank
trustee/custodian services as set forth in Section 2(d) below. Citi will perform
the services upon the terms set forth in this Agreement and the Schedules to
this Agreement.
Citi shall, for all purposes herein, be deemed to be an independent
contractor and, except as otherwise expressly provided or authorized, shall have
no authority to act for or represent the Company or Funds in any way, and shall
not be deemed an agent of the Company or any Funds.
2. Services.
(a) Administration Services. Citi shall perform the administrative
services set forth in Schedule B to this Agreement and, on behalf
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of the Company, shall investigate, and conduct relations with,
custodians, depositories, underwriters, brokers and dealers,
corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Company's
operations. Citi shall provide the Board of Trustees of the
Company (the "Board") with such reports regarding the Fund's
investment performance as it may reasonably request, but shall
have no responsibility for supervising the performance by any
investment adviser or sub-adviser of its responsibilities. Citi
shall perform such other administration services, and furnish
such reports, for the Company and each of the Funds that are
mutually agreed upon by the parties from time to time, for which
the Company will pay Citi the amounts agreed upon between them.
(b) Fund Accounting Services. Citi shall perform for the Company the
fund accounting services set forth in Schedule C to this
Agreement. Citi shall also perform such special accounting
services, and furnish such reports, for the Company and the Funds
to the extent agreed upon by the parties from time to time, for
which the Company will pay Citi the amounts agreed upon between
them.
(c) Transfer Agency Services. Citi shall perform for the Company the
transfer agency services set forth in Schedule D to this
Agreement. Citi also agrees to perform for the Company such
special transfer agency services, and furnish such reports, for
the Company and the Funds to the extent agreed upon by the
parties from time to time, for which the Company will pay Citi
the amounts agreed upon between them.
(d) Trustee/Custodian Services.
(i) CFI has obtained a non-bank Trustee/Custodian Notice of
Approval letter from the Treasury Department, Internal
Revenue Service, dated December 31, 2003. CFI, together with
Citi, has the knowledge and capabilities to act as a passive
non-bank trustee/custodian of Traditional XXX, Xxxx XXX, and
SIMPLE XXX accounts offered by the Company (collectively,
"XXX Accounts"). Citi has the knowledge and capabilities to
perform the services undertaken by Citi under Schedule D-1.
(ii) Citi agrees that CFI shall act as a non-bank
trustee/custodian for the XXX Accounts and Citi shall
perform the services undertaken by Citi under Schedule D-1,
but only as long as (x) Citi continues to act as transfer
agent to the Funds and retains all legal qualifications to
act
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as such, (y) CFI retains all legal qualifications to act as
non-bank trustee/custodian and (z) CFI has not resigned as
non-bank trustee/custodian to the XXX Accounts after
transmitting written notice of resignation as non-bank
trustee/custodian to the XXX Account Holders in accordance
with all XXX Account plan agreements. In this capacity, CFI
will act only as a passive non-bank trustee (within the
meaning of Section 1.408-2(e)(6)(i)(A) of the IRS
regulations), and neither CFI nor Citi will have any
discretion to direct investments within any of the XXX
Accounts.
(iii) In the event that CFI ceases to act as non-bank
trustee/custodian, whether due to loss of legal
qualifications or otherwise, but Citi continues to act as
transfer agent, in which event it performs sub-custodial
services on behalf of another qualified retirement
custodian, Citi shall no longer be entitled to the entire
share of the Custodial Fees (as hereinafter defined and set
forth in Schedule E), but shall be entitled to a
proportionate share of the Custodial Fees taking into
account the period of time during such year that CFI was the
non-bank trustee/custodian for the XXX Accounts and further
taking into account the services (for which the parties
acknowledge an appropriate allocation of a minimum of 80% of
the Custodial Fees per year per tax identification number
for XXX Accounts (whether open or closed)) that Citi
continues to perform with respect to the XXX Accounts
pursuant to Schedule D hereto.
(iv) In the event that CFI ceases to act as non-bank
trustee/custodian whether due to loss of legal
qualifications or otherwise, and Citi ceases to act as
transfer agent, Citi shall be entitled to a proportionate
share of the Custodial Fees based on the portion of the year
for which CFI and Citi provide trustee/custodian and
transfer agent services, respectively.
(v) Citi and CFI shall have the right to review and comment upon
the plan agreements and other documentation relating to or
affecting its services hereunder, and shall have no
liability for any modifications made thereto without its
express written consent. Citi and CFI may rely upon the most
recent versions of the plan agreement and such other
documentation provided to it, and shall render its services
hereunder in a manner consistent with the terms of such plan
agreement and such other documentation.
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(vi) In relation to the XXX Accounts, Citi will perform the
functions described in Schedule D-1 to this Agreement.
Citi shall provide the Company with all necessary office space, equipment,
personnel and facilities (including facilities for shareholders' and Board
meetings) for handling the affairs of the Company and Funds and such other
services as Citi shall, from time to time, reasonably determine to be necessary
to perform its obligations under this Agreement. In addition, at the request of
the Board, Citi shall make reports to the Board concerning the performance of
its obligations hereunder.
Citi shall perform such other services for the Company or the Funds that
are mutually agreed upon by the parties from time to time, for which the Company
will pay Citi the amounts agreed upon between them, from time to time. Except as
explicitly set forth herein, Citi shall only perform additional services as are
set forth in an amendment to this Agreement, in consideration of such fees as
the parties agree.
Citi may use one or more third parties to perform some or all of its
obligations under this Agreement. Citi shall be fully responsible for the acts
of such third parties and shall not be relieved of any of its responsibilities
under this Agreement by virtue of the use of such third parties.
3. Allocation of Charges and Expenses.
Citi shall furnish at its own expense the executive, supervisory and
clerical personnel necessary to perform its obligations under this Agreement.
Citi shall pay all compensation, if any, of officers and trustees of the Company
who are affiliated persons of Citi or any affiliated entity of Citi; provided,
however, that unless otherwise specifically provided, Citi shall not be
obligated to pay the compensation of any employee or agent of the Company (who
is not a Citi employee) retained by the Board to perform services on behalf of
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 Company 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 of record of the Funds ("Shareholders"),
all expenses incurred in connection with issuing and redeeming shares of
beneficial interest in the Funds ("Shares"), the cost 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 Citi or any affiliate of Citi (fees for other "interested
trustees" may be paid by parties other than the Company), insurance, interest,
brokerage costs, litigation and other extraordinary or nonrecurring expenses,
and all fees and charges of investment advisers.
4. Fees and Expenses.
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(a) The Company shall pay Citi for the services to be provided by
Citi under this Agreement in accordance with, and in the manner
set forth in, Schedule E to this Agreement. Fees for any
additional services to be provided by Citi pursuant to an
amendment to any of Schedules B, C or D shall be subject to
mutual agreement at the time such amendment is proposed.
(b) In addition to paying Citi the fees set forth in Schedule E, the
Company agrees to reimburse Citi for all of its actual
out-of-pocket expenses reasonably incurred in providing services
hereunder, including without limitation:
(i) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred in
communication with the Company or the Company's investment
adviser or custodian, broker-dealers, shareholders or others
as required for Citi to perform the services to be provided
hereunder;
(ii) The cost of microfilm or microfiche of records or other
electronic storage of Company records and other materials;
(iii) All freight and other delivery and bonding charges incurred
in delivering materials to and from the Company, its
investment advisers and custodian;
(iv) All printing, production (including graphics support,
copying, and binding) and distribution expenses incurred in
relation to Board meeting materials, tax forms, statements
of average cost, daily confirmations, periodic statements,
new account letters and maintenance letters;
(v) Check and payment processing fees;
(vi) XXX custody and other related fees;
(vii) NSCC and related costs;
(viii) Sales taxes;
(ix) Costs of shareholder correspondence;
(x) Costs of tax data services;
(xi) Costs of rating agency services'
(xii) All out of pocket costs incurred in connection with Citi's
provision (if applicable, under Section 23 of this
Agreement) of Company officers and in connection with
administration services, including, without limitation,
travel and lodging expenses incurred by officers and
employees of Citi in connection with attendance at Board
meetings
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and any other meetings for which such attendance is
requested or agreed upon by the parties; and
(xiii) Any expenses incurred at the written direction of an
officer of the Company; provided however, that such officer
is not an officer or employee of Citi or its affiliates.
(c) In addition, Citi shall be entitled to receive the following
miscellaneous fees and charges:
(i) Ad hoc reporting fees billed, when mutually agreed upon,
according to applicable rate schedules;
(ii) Fees for pricing information used in connection with pricing
the securities and other investments of each Fund, provided
that the Fund shall not be charged an amount greater than
the amount the Fund would be charged if it obtained the
information directly from the relevant vendor or vendors,
including costs incurred by Citi to Fair Value Information
Vendors (as defined in Schedule C) with respect to the
provision of fair value pricing information to Citi for use
in valuing the portfolio holdings of a specific Fund or
Funds that the Company designates as being subject to fair
value determinations and for which services are to be
provided by Citi hereunder (such costs shall be incurred at
the discounted group rate made available to Citi clients, if
applicable);
(iii) To the extent applicable hereunder, a fee for managing and
overseeing the report, print and mail functions performed by
Citi using third-party vendors, not to exceed $.04 per page
for Board meeting materials, tax forms and statements of
average cost, and $.03 per page for daily confirmations,
periodic statements, new account letters and maintenance
letters; fees for programming in connection with creating or
changing the forms of statements, billed at a mutually
agreed upon rate; and costs for postage, couriers, stock
computer paper, computer disks, statements, labels,
envelopes, checks, reports, letters, tax forms, proxies,
notices or other forms of printed material (including the
costs of preparing and printing all printed materials) which
shall be required for the performance of the services to be
provided hereunder;
(iv) Fees and expenses associated with providing the "AML
Services," as defined in Section 23 of this Agreement, and
as set forth in further detail on Schedule E;
(v) System development fees, billed at a mutually agreed upon
rate as approved by the Company, and all systems-related
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expenses, as agreed upon in advance, associated with the
provision of special reports and services;
(vi) Fees for development of any custom interfaces, billed at a
mutually agreed upon rate;
(vii) Interactive Voice Response System fees, charged according
to Citi's standard rate schedule, and applicable to the
level of service (e.g., basic, transaction, premium)
selected; and
(viii) In the event that Citi 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 Citi to the Company or any
Fund, the Company will, so long as Citi is not the subject
of the investigation or proceeding in which the information
is sought, pay Citi for its professional time (at its
standard billing rates) and reimburse Citi for its
out-of-pocket expenses (including reasonable attorneys fees)
incurred in responding to such requests or requirements.
(ix) Blue sky check processing and payment fees.
All rights of compensation under this Agreement for services performed and
for expense reimbursement and for payment of miscellaneous fees and charges
shall survive the termination of this Agreement.
5. Effective Date.
This Agreement shall become effective as of the Effective Date.
6. Term; Liquidated Damages.
(a) This Agreement shall continue in effect for an initial term of three
years from the Effective Date (the "Initial Term"). Thereafter, unless otherwise
terminated pursuant to this Agreement, this Agreement shall be renewed
automatically for successive one year periods ("Rollover Periods"). This
Agreement may be terminated only (i) by provision of a written notice of
non-renewal provided at least 90 days prior to the end of the Initial Term or
any Rollover Period (which notice of non-renewal will cause this Agreement to
terminate as of the end of the Initial Term or such Rollover Period, as
applicable), (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.
(b) For purposes of this Section 6, "cause" shall mean (a) a material
breach of this Agreement that has not been remedied within 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; or (c) financial
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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.
(c) Notwithstanding the foregoing termination provisions, following any
such termination, in the event that Citi in fact continues to perform any one or
more of the services contemplated by this Agreement (or any Schedule or exhibit
to this Agreement) with the consent of the Company, the provisions of this
Agreement, including without limitation the provisions dealing with compensation
and indemnification, shall continue in full force and effect. Fees and
out-of-pocket expenses incurred by Citi but unpaid by the Company upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. The Company shall pay to Citi, in addition to the fees and expenses
provided in Sections 3 and 4 of this Agreement, the amount of all of Citi's
reasonable cash disbursements in connection with Citi's activities in effecting
such termination, including without limitation, the delivery to the Company, its
investment adviser and/or other parties of the Company's property, records,
instruments and documents, such amount to be paid on or before the date of such
termination.
(d) If, for any reason other than (i) non-renewal, (ii) mutual agreement of
the parties or (iii) "cause", the Company terminates this Agreement, or the
Company terminates Citi's services, or Citi is replaced as service provider to
the Company or some or all of the Funds, then the Company shall make a one-time
cash payment to Citi, in consideration of the fee structure and services to be
provided under this Agreement, equal to the balance that would be due Citi for
its services under this Agreement during the lesser of (x) the balance of the
Initial Term or any applicable Rollover Period, as the case may be, or (y) 12
months, assuming for purposes of the calculation of the one-time payment that
the fees that would be earned by Citi for each month would be based upon the
average fees payable to Citi monthly during the 12 months before the date of the
event that triggers such payment.
(e) In the event that the Company or any Fund is, in part or in whole,
liquidated, dissolved, merged into a third party, acquired by a third party, or
involved in any other transaction that materially reduces the assets and/or
accounts serviced by Citi pursuant to this Agreement, the liquidated damages
provision set forth above shall be applicable in those instances in which Citi
is not retained to provide transfer agency, fund accounting and administration
services consistent with this Agreement, including the level of assets subject
to such services. Notwithstanding the foregoing, the liquidated damages
provision set forth above shall not apply in the event that a liquidation or
dissolution is effectuated for legitimate economic or regulatory reasons (and is
evidenced by a resolution of the Trustees of the Company), rather than pursuant
to any express or tacit plan, understanding or arrangement whereby the assets of
the Fund are designed or intended to migrate, directly or indirectly, to another
investment company or other investment vehicle.
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(f) If one of the events described above is partial (e.g., a termination of
Citi as provider of some but not all of the services set forth in this
Agreement, or a liquidation of some but not all of the Funds), the liquidated
damages amount payable by the Company shall be appropriately adjusted on a pro
rata basis.
(g) Any liquidated damages amount payable to Citi shall be paid by the
Company on or before the date of the event that triggers the payment obligation.
(h) The parties further acknowledge and agree that, upon the occurrence of
any of the events described above: (i) a determination of actual damages
incurred by Citi would be extremely difficult, and (ii) the liquidated damages
payment described above is intended to adequately compensate Citi for damages
incurred and is not intended to constitute any form of penalty.
7. Standard of Care; Force Majeure; Limitation of Liability.
(a) Citi shall use reasonable professional diligence in the performance of
services under this Agreement, but shall not be liable to the Company for any
action taken or omitted by Citi in the absence of bad faith, willful
misfeasance, negligence or reckless disregard by it of its obligations and
duties. The duties of Citi shall be confined to those expressly set forth in
this Agreement, and no implied duties are assumed by or may be asserted against
Citi under this Agreement.
(b) Notwithstanding any other provision of this Agreement, Citi assumes no
responsibility hereunder, and shall not be liable for, any damage, loss of data,
delay or any other loss whatsoever caused by events beyond Citi's control.
Events beyond Citi's control include, without limitation, force majeure events,
such as natural disasters, actions or decrees of governmental bodies, and
communication lines failures that are not the fault of either party. In the
event of force majeure, computer or other equipment failures or other events
beyond its control, Citi shall follow applicable procedures in its disaster
recovery and business continuity plan and use all commercially reasonable
efforts to minimize any service interruption.
(c) Citi shall provide the Company, at such times as the Company may
reasonably request, copies of reports rendered by independent auditors on the
internal controls and procedures of Citi relating to the services provided by
Citi under this Agreement.
(d) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL Citi, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR EXEMPLARY, PUNITIVE, SPECIAL,
INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, INCLUDING LOST REVENUE, LOST
PROFITS, AND LOST OR DAMAGED DATA, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT
OF THE PARTIES, REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER A
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
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8. Legal Advice.
Citi may notify the Company if Citi reasonably determines that it is in
need of the advice of counsel to the Company with regard to Citi's
responsibilities and duties pursuant to this Agreement. Citi may rely upon the
advice of counsel to the Company; however, this Agreement shall not obligate
counsel to the Company to render such advice. After so notifying the Company, if
Citi does not obtain the advice of counsel to the Company within a reasonable
period of time, Citi shall be entitled to seek, receive and act upon advice of
legal counsel of its reasonable choosing at the reasonable expense of the
Company unless relating to a matter involving Citi's willful misfeasance, bad
faith, negligence or reckless disregard of Citi's responsibilities and duties
hereunder. Citi shall in no event be liable to the Company or any Fund or any
shareholder or beneficial owner of the Company for any action reasonably taken
pursuant to legal advice rendered in accordance with this paragraph.
9. Instructions / Certain Procedures, etc.
(a) Citi shall be protected in acting upon any document that it reasonably
believes to be genuine and to have been signed or presented by the proper person
or persons. Citi will not be held to have notice of any change of authority of
any officers, employees or agents of the Company until receipt of actual notice
thereof from the Company.
(b) Subject to Section 23(b) of this Agreement, whenever Citi is requested
or authorized to take action hereunder pursuant to instructions from a
shareholder, or a properly authorized agent of a shareholder ("shareholder's
agent"), concerning an account in a Fund, Citi shall be entitled to rely upon
any certificate, letter or other instrument or communication (including
electronic mail), reasonably believed by Citi to be genuine and to have been
properly made, signed or authorized by an officer or other authorized agent of
the Company or by the shareholder or shareholder's agent, as the case may be,
and shall be entitled to receive as conclusive proof of any fact or matter
required to be ascertained by it hereunder a certificate signed by an officer of
the Company or any other person authorized by the Board or by the shareholder or
shareholder's agent, as the case may be.
(c) As to the services to be provided hereunder, Citi may rely conclusively
upon the terms of the relevant then-current Prospectus and Statement of
Additional Information of the Company, to the extent that such services are
described therein unless Citi receives written instructions to the contrary in a
timely manner from the Company.
(d) The parties may amend any procedures adopted, approved or set forth
herein by written agreement as may be appropriate or practical under the
circumstances, and Citi may reasonably assume that any special procedure which
has been approved by an executive officer of the Company (other than an officer
or employee of Citi or its affiliates) does not conflict with or violate any
requirements of the Company's Charter, By-Laws or then-current Prospectus.
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(e) The Company acknowledges receipt of a copy of Citi's policy related to
the acceptance of trades for prior day processing (the "Citi As-of Trading
Policy"). Citi may amend the Citi As-of Trading Policy from time to time in its
sole discretion, but will provide prompt notice to the Company of such
amendment. Citi may apply the Citi As-of Trading Policy whenever applicable,
unless Citi agrees in writing to process trades according to such other as-of
trading policy as may be adopted by the Company and furnished to Citi by the
Company.
(f) The Company acknowledges and agrees that deviations from Citi's written
transfer agent compliance procedures may involve a substantial risk of loss. In
the event an authorized representative of the Company (other than an officer or
employee of Citi or its affiliates) requests that an exception be made from any
written compliance or transfer agency procedures adopted by Citi, or any
requirements of the AML Program (as defined in Section 16 of this Agreement),
Citi may in its sole discretion determine whether to permit such exception. In
the event Citi determines to permit such exception, the same shall become
effective when set forth in a written instrument executed by an authorized
representative of the Company (other than an officer or employee of Citi or its
affiliates) and delivered to Citi (an "Exception"); provided that an Exception
concerning the requirements of the Company's AML Program shall also be
authorized by the Company's AML Compliance Officer (as defined in Section 16 of
this Agreement). An Exception shall be deemed to remain effective until the
relevant instrument expires according to its terms (or if no expiration date is
stated, until Citi receives written notice from the Company that such instrument
has been terminated and the Exception is no longer in effect). Notwithstanding
any provision in this Agreement that expressly or by implication provides to the
contrary, as long as Citi acts in good faith, Citi shall have no liability for
any loss, liability, expenses or damages to the Company resulting from the
Exception, and the Company shall indemnify Citi and hold Citi harmless from any
loss, liability, expenses (including reasonable attorneys fees) and damages
resulting to Citi therefrom.
(g) The Company instructs and authorizes Citi to provide information
pertaining to the Funds' investments to Fair Value Information Vendors (as
defined in Schedule C) in connection with the fair value determinations made
under the Company's Valuation Procedures (as defined in Schedule C) and other
legitimate purposes related to the services to be provided hereunder. The
Company acknowledges that while Citi's services related to fair value pricing
are intended to assist the Company and its Board in its obligations to price and
monitor pricing of Fund investments, Citi does not assume responsibility for the
accuracy or appropriateness of pricing information or methodologies, including
any fair value pricing information or adjustment factors.
10. Indemnification.
(a) The Company shall indemnify and hold harmless Citi, CFI, and its/their
affiliates, subsidiaries and parents, and their employees, agents, directors,
officers and nominees from and against any claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees
and other expenses including reasonable investigation expenses (collectively,
"Losses") resulting directly and
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proximately from CFI's appointment as non-bank trustee/custodian, Citi's
performance of services under this Agreement or based, if applicable, upon
Citi's or CFI's reasonable reliance on information, records, instructions or
requests pertaining to services hereunder, that are given or made to Citi or CFI
by the Company, the investment adviser, or other authorized agents of the
Company with which Citi must interface in providing services; provided that this
indemnification shall not apply to actions or omissions of Citi or CFI involving
bad faith, willful misfeasance, negligence or reckless disregard by Citi or CFI
of its obligations and duties under this Agreement.
(b) Citi shall indemnify, defend, and hold the Company and its affiliates,
subsidiaries and parents, and its trustees, officers, agents and nominees
harmless from and against Losses resulting directly and proximately from Citi's
willful misfeasance, bad faith or negligence in the performance of, or the
reckless disregard of, its duties or obligations hereunder; provided that this
indemnification shall not apply to actions or omissions of the Company involving
bad faith, willful misfeasance, negligence or reckless disregard by the Company
of its obligations and duties.
(c) In order that the indemnification provisions contained herein shall
apply, if in any case a party may be asked to indemnify or hold the other party
harmless, the other party shall fully and promptly advise the indemnifying party
in writing of all pertinent facts concerning the situation in question. The
party seeking indemnification will use all reasonable care to identify and
notify the indemnifying party in writing promptly concerning any situation which
presents or appears likely to present the probability of such a claim for
indemnification against the indemnifying party, but failure to do so in good
faith shall not affect the rights hereunder except to the extent the
indemnifying party is materially prejudiced thereby. As to any matter eligible
for indemnification, an indemnified party shall act reasonably and in accordance
with good faith business judgment and shall not effect any settlement or confess
judgment without the consent of the indemnifying party, which consent shall not
be withheld or delayed unreasonably.
(d) The indemnifying party shall be entitled to participate in at its own
expense or, if it so elects, to assume the defense of any claim or suit subject
to this indemnity provision. If the indemnifying party elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
it and reasonably satisfactory to the indemnified party. In the event that the
indemnifying party elects to assume the defense of any suit and retain counsel,
the indemnified party shall bear the fees and expenses of any additional counsel
retained by it. An indemnifying party shall not effect any settlement without
the consent of the indemnified party (which shall not be withheld or delayed
unreasonably by the indemnified party) unless such settlement imposes no
liability, responsibility or other obligation upon the indemnified party and
relieves it of all fault. If the indemnifying party does not elect to assume the
defense of suit, it will reimburse the indemnified party for the reasonable fees
and expenses of counsel retained by the indemnified party and reasonably
satisfactory to the indemnifying party. The indemnity and defense provisions set
forth herein shall survive the termination of this Agreement.
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(e) The provisions of this Section 10 are subject to the provisions of
Section 9 and Section 23(c) of this Agreement.
11. Record Retention and Confidentiality.
Citi shall keep and maintain on behalf of the Company all books and records
which are customary or which are required to be kept in connection with Citi's
services pursuant to applicable statutes, rules and regulations, including
without limitation Rules 31a-1 and 31a-2 under the Investment Company Act of
1940, as amended (the "1940 Act"). Citi further agrees that all such books and
records shall be the property of the Company and to make such books and records
available for inspection by the Company at reasonable times or by the Securities
and Exchange Commission (the "SEC") promptly.
Citi shall otherwise keep confidential all books and records relating to
the Fund and its shareholders, except when (i) disclosure is required by law,
(ii) Citi is advised by counsel that it may incur liability for failure to make
a disclosure, (iii) Citi is requested to divulge such information by
duly-constituted authorities or court process, (iv) Citi is requested to make a
disclosure by a shareholder or shareholder's agent with respect to information
concerning an account as to which such shareholder has either a legal or
beneficial interest and a legal right to such information at such time
consistent with the Company's Charter, Prospectus and applicable law, or (v) as
requested or authorized by the Company (including pursuant to its policies and
procedures). Citi shall provide the Company with reasonable advance notice of
disclosure pursuant to items (i) - (iii) of the previous sentence, to the extent
reasonably practicable. The provisions of this Section 11 are subject to the
provisions of Section 23(b) of this Agreement (Anti-Money Laundering
Provisions).
12. Reports.
Citi shall furnish to the Company and to its properly-authorized auditors,
investment advisers, examiners, distributors, broker-dealers, underwriters,
salesmen, insurance companies and others designated by the Company in writing,
such reports at such times as are prescribed pursuant to this Agreement (or
schedules to this Agreement), or as subsequently agreed upon by the parties
pursuant to an amendment to this Agreement (or schedules to this Agreement). The
Company agrees to examine each such report or copy provided to it promptly and
will report or cause to be reported to Citi any errors or discrepancies therein.
13. Rights of Ownership.
All computer programs, systems and procedures employed or developed by
Citi, or on behalf of Citi by system providers or vendors used by Citi, to
perform services required to be provided by Citi under this Agreement are the
property of Citi. All records and other data maintained hereunder, excepting
such computer programs, systems and
13
procedures, are the exclusive property of the Company. All such records and
other data which is the property of the Company shall be furnished to the
Company in appropriate form as soon as practicable after termination of this
Agreement for any reason.
14. Return of Records.
Citi shall promptly upon the Company's demand, turn over to the Company and
cease to retain Citi's files, records and documents created and maintained by
Citi pursuant to this Agreement which are no longer needed by Citi in the
performance of its services or for its legal protection. If not so turned over
to the Company, such documents and records shall be retained by Citi, at the
expense of the Company, for six (6) years from the date of creation. At the end
of such six-year period, such records and documents shall be turned over to the
Company unless the Company authorizes in writing the destruction of such records
and documents.
15. Bank Accounts.
Citi is hereby granted such power and authority as may be necessary to
establish one or more bank accounts for the Company with such bank or banks as
are acceptable to the Company, as may be necessary or appropriate from time to
time in connection with the transfer agency services to be performed hereunder.
The Company shall be deemed to be the customer of such bank or banks for
purposes of such accounts. To the extent that the performance of such services
hereunder shall require Citi to disburse amounts from such accounts in payment
of dividends, redemption proceeds or for other purposes hereunder, the Company
shall provide such bank or banks with all instructions and authorizations
necessary for Citi to effect such disbursements.
16. Representations and Warranties of the Company.
The Company represents and warrants to Citi that:
(a) It is a corporation duly incorporated and validly existing under
the laws of the jurisdiction of its formation, and has full
capacity and authority to enter into this Agreement and to carry
out its obligations hereunder;
(b) It has all necessary authorizations, licenses and permits to
carry out its business as currently conducted;
(c) It is in compliance in all material respects with all laws and
regulations applicable to its business and operations;
(d) This Agreement has been duly authorized by the Company and, when
executed and delivered by the Company, will constitute a legal,
valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws
14
of general application affecting the right and remedies of
creditors and secured parties;
(e) By virtue of the Charter, shares of each Fund which are redeemed
by the Company may be resold by the Company;
(f) (i) The Company has adopted a written anti-money laundering
program, which has been provided to Citi pursuant to Section 19
of this Agreement (the "AML Program"), and has appointed an
officer of the Company as the Company's anti-money laundering
compliance officer ("AML Compliance Officer"), (ii) the AML
Program and the designation of the AML Officer have been approved
by the Board, (iii) the delegation of certain services thereunder
to Citi, as provided in Section 23 of this Agreement, has been
approved by the Board, and (iv) the Company will submit any
material amendments to the AML Program to Citi for Citi's review
and consent prior to adoption, in accordance with Section 21 of
this Agreement; and
(g) The Company has entered into a confidentiality agreement, in
accordance with U.S. Department of the Treasury, Financial Crimes
Enforcement Network ("FinCEN") release FIN-2006-G013, dated
October 4, 2006, with Funds' investment adviser, and the Company
hereby authorizes Citi, acting in its capacity as transfer agent,
to provide the investment adviser with information related to
shareholder Suspicious Activity Reports, upon request.
17. Representations and Warranties of Citi.
Citi represents and warrants to the Company that:
(a) It is a corporation duly incorporated and validly existing under
the laws of the state of Ohio, and has full capacity and
authority to enter into this Agreement and to carry out its
obligations hereunder;
(b) It has all necessary authorizations, licenses and permits to
carry out its business as currently conducted;
(c) It is, and shall continue to be, in compliance in all material
respects with all provisions of law applicable to it in
connection with its services hereunder, including Section 17A(c)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act");
(d) The various procedures and systems which it has implemented with
regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other
data
15
of the Company and Citi's equipment, facilities, and other
property used in the performance of its obligations hereunder are
reasonable and adequate and that it will make such changes
therein from time to time as are reasonably required for the
secure performance of its obligations hereunder; and
(e) This Agreement has been duly authorized by Citi and, when
executed and delivered by Citi, will constitute a legal, valid
and binding obligation of Citi, enforceable against Citi in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the right and remedies of creditors and secured
parties.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL REPRESENTATIONS AND
WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY,
SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE
(IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) CONCERNING THE
SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO THE SERVICES PROVIDED UNDER THIS
AGREEMENT BY Citi ARE COMPLETELY DISCLAIMED.
18. Insurance.
Citi shall maintain a fidelity bond covering larceny and embezzlement and
an insurance policy with respect to directors and officers errors and omissions
coverage, in amounts that are appropriate in light of its duties and
responsibilities hereunder. Upon the request of the Company, Citi shall provide
evidence that coverage is in place. Citi shall notify the Company should its
insurance coverage with respect to professional liability or errors and
omissions coverage be reduced or canceled. Such notification shall include the
date of cancellation or reduction and the reasons therefore. Citi shall notify
the Company promptly of any material claims against it with respect to services
performed under this Agreement, whether or not they may be covered by insurance,
and shall notify the Company promptly should the total outstanding claims made
by Citi under its insurance coverage materially impair, or threaten to
materially impair, the adequacy of its coverage.
19. Information to be Furnished by the Company and Funds.
The Company agrees to furnish to Citi the following, upon Citi's request,
each as amended and current as of the Effective Date:
(a) A copy of the Charter and any amendments thereto;
(b) A copy of the Company's By-laws and any amendments thereto;
16
(c) A copy of the resolutions of the Board regarding (i) approval of
this Agreement and authorization of a specified officer of the
Company to execute and deliver this Agreement and authorization
for specified officers of the Company to instruct Citi hereunder;
and (ii) authorization of Citi to act as administrator, fund
accountant and transfer agent for the Company;
(d) A certified list of all officers of the Company, with the
Company's AML Compliance Officer included among the officers
therein, and any other persons (who may be associated with the
Company or the Funds' investment advisor), together with specimen
signatures of those officers and other persons who (except as
otherwise provided herein to the contrary) shall be authorized to
instruct Citi in all matters;
(e) Copies of each of the following documents employed by the
Company:
(i) Prospectuses and Statement of Additional Information;
(ii) Distribution Agreement; and
(iii) All other forms commonly used by the Company or its
distributor with regard to their relationships and
transactions with shareholders of the Funds.
(f) A certificate as to shares of the Company authorized, issued, and
outstanding as of the Effective Date and as to receipt of full
consideration by the Company for all shares outstanding;
(g) Contact information for the Company's financing agent, if
share-class financing is applicable;
(h) A copy of the Company's written AML Program, including any
related policies and procedures;
(i) A copy of the disclosure controls and procedures of the Funds
("Fund DCPs") as contemplated in Item 15 of Schedule B; and
(j) The Company's Valuation Procedures as defined in Schedule C.
20. Information Furnished by Citi.
Citi agrees to furnish to the Company, upon its request, evidence of the
following:
(a) Approval of this Agreement by Citi, and authorization of a
specified officer of Citi to execute and deliver this Agreement;
17
(b) Authorization of Citi to act as Transfer Agent, Fund Accountant
and Administrator for the Company;
(c) The current Citi As-of Trading Policy; and
(d) The current version of Citi written polices and procedures with
respect to its provision on AML Services (as defined in Section
23 below).
Upon request, Citi shall furnish a copy of the relevant provisions of its
internal policies on service of employees as executive officers of funds ("Citi
Policies"), and any material amendments thereto, to the Company.
21. Amendments to Documents.
The Company will provide Citi with advance notice of any material
amendments to the items set forth in Section 19 of this Agreement. Citi will not
be responsible for changing or conforming its services to any such amendments
until Citi has reviewed and accepted responsibility for the relevant changes in
services. Citi will consider such changes in good faith. In the event that any
such amendment, or change in laws applicable to the Company would require Citi
to make specific changes to its service model, Citi will use reasonable good
faith efforts to inform the Company of the changes that would be necessary, and
set out the estimated costs and estimated implementation timetable for any
additional services. The parties shall then in good faith agree to mutually
agreeable terms applicable to such additional service.
22. Reliance on Amendments.
Citi may rely on any amendments to or changes in any of the documents and
other items to be provided by the Company pursuant to Sections 19 and 21 of this
Agreement and the indemnification provisions of Section 10 hereof are applicable
to Citi's reasonable reliance upon such amendments and/or changes. Although Citi
is authorized to rely on the above-mentioned amendments to and changes in the
documents and other items to be provided pursuant to Sections 19 and 21 of this
Agreement, in the event the same relate to services provided by Citi hereunder,
Citi shall have no liability for failure to comply with or take any action in
conformity with such amendments or changes except as provided in Section 21 of
this Agreement or as otherwise agreed upon in writing.
23. Compliance with Laws.
(a) Prospectus and Public Offering. Except for information which is the
obligation of Citi as set forth in Section 11 of this Agreement, and except as
provided in the services listed in the schedules to this Agreement which call
for information to be provided by Citi for inclusion in the Prospectus, the
Company assumes full responsibility for the preparation, contents, and
distribution of each Prospectus of the Company in compliance with all applicable
requirements of the Securities Act of 1933, as amended (the "1933 Act"), the
1940 Act, and any other laws, rules and regulations of
18
governmental authorities having jurisdiction. Subject to its obligations herein
with respect to "blue sky" filings, Citi shall have no obligation to take
cognizance hereunder of laws relating to the sale of the Funds' shares. The
Company represents and warrants that all shares of the Funds that are offered to
the public are covered by an effective registration statement under the 1933 Act
and the 1940 Act.
(b) Anti-Money Laundering Provisions. The Company acknowledges that it is a
financial institution subject to the law entitled Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism ("USA PATRIOT") Act of 2001 and the Bank Secrecy Act (collectively,
the "AML Acts") and shall comply with the AML Acts and applicable regulations
adopted thereunder (collectively, the "Applicable AML Laws") in all relevant
respects, subject to the delegation of certain responsibilities to Citi, as
provided in the next paragraph below.
The Company hereby delegates to Citi the performance, on behalf of the
Company, of the anti-money laundering services set forth under Item 6 of
Schedule D (the "AML Services") with respect to the shareholder accounts
maintained by Citi pursuant to this Agreement, and Citi agrees to the foregoing
delegation and agrees to perform such services in accordance with the Company's
AML Program for the fee set forth on Schedule E to this Agreement. In connection
therewith, Citi agrees to maintain policies and procedures, and related internal
controls, that are consistent with the Company's AML Program and the requirement
that the Company employ procedures reasonably designed to achieve compliance
with the Applicable AML Laws. Citi's obligations under this delegation shall be
subject to Sections 19 and 21 of this Agreement, which require that the AML
Program and any material amendments thereto be submitted to Citi for its review
and consent prior to adoption.
The Company agrees and acknowledges that, notwithstanding the delegation
provided for in the foregoing paragraph, the Company maintains full
responsibility for ensuring that its AML Program is, and shall continue to be,
reasonably designed to ensure compliance with the Applicable AML Laws, in light
of the particular business of the Company, taking into account factors such as
its size, location, activities and risks or vulnerabilities to money laundering.
In connection with the foregoing delegation, the Company also acknowledges
that the performance of the AML Services involves the exercise of discretion
which in certain circumstances may result in consequences to the Company and its
shareholders (such as in the case of the reporting of suspicious activities and
the freezing of shareholder accounts). In this regard, (i) under circumstances
in which the AML Program authorizes the taking of certain actions, Citi is
granted the discretion to take any such action as may be authorized under the
AML Program, and consultation with Company shall not be required in connection
therewith unless specifically required under the AML Program, and (ii) the
Company instructs Citi that it may avail the Company of any safe harbor from
civil liability that may be available under Applicable AML Laws for making a
disclosure or filing a report thereunder.
19
As concerns Networked Level III accounts and omnibus accounts, the AML
Services performed by Citi are subject to a more limited scope, as discussed in
the Release concerning the final rule of the Department of the Treasury, 31 CFR
103 and of the XXX, 00 XXX 000, entitled Customer Identification Programs for
Mutual Funds issued on May 9, 2003 and subsequent guidance issued jointly by
such agencies entitled Question and Answer Regarding the Mutual Fund Customer
Identification Program Rule (31 CFR 103.131) issued on August 11, 2003.
(c) Provision of Certifying Officers.
Subject to the provisions of this Section 23(c) and Section 23(d) of this
Agreement, Citi shall make Citi employees available to the Company to serve,
upon designation as such by the Board, as the Chief Financial Officer of the
Company or under such other title to perform similar functions (each, a
"Certifying Officer"). Citi's obligation in this regard shall be met by
providing an appropriately qualified employee of Citi (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 to be in the best interests of the Company. Citi
shall select, and may replace, the specific employee that it makes available to
serve in the designated capacities as a Certifying Officer, in Citi's reasonable
discretion, taking into account each such person's responsibilities concerning,
and familiarity with, the Company's operations (but the designation of any such
person as a Certifying Officer shall be subject to the approval of the Company).
The obligation of Citi to provide an employee to serve in such capacity is
also subject to, and conditioned upon, the provisions of Item 15 of Schedule B
to this Agreement. Capitalized terms used but not defined in this Section 23(c)
have the respective meanings ascribed to them in Item 15 of Schedule B.
The Fund DCPs shall contain (or the Company and Citi shall otherwise
establish) mutually agreeable procedures governing the certification process,
and the parties shall comply with such procedures in all material respects.
Among other things, the procedures shall provide as follows:
The Company shall establish and maintain a Fund DCP Committee comprised of
persons including (at a minimum) the Company's Principal Executive Officer,
Chief Financial Officer ("CFO") and Chief Legal Officer (if any), at least one
Citi representative other than the CFO or Chief Compliance Officer, (if such
officers are provided by Citi), at least one representative of the investment
adviser, and such other individuals as may be necessary or appropriate for the
Fund DCP Committee to ensure the cooperation of, and to oversee, each of the
Company's agents that records, processes, summarizes, or reports information
contained in Company Reports (or other information from which such information
is derived), including Citi and the Other Service Providers to the Company, such
as the investment adviser and custodian. In connection therewith, the Fund DCP
Committee shall assist the Certifying Officers by requiring that
sub-certifications acceptable to the Certifying Officers be provided by the
Other Service Providers.
20
The Fund DCP Committee shall meet prior to the filing date of each Report
to review the accuracy and completeness of the relevant Report and record its
considerations and conclusions in a written memorandum sufficient to support
conclusions pertaining to Fund DCPs as required by the instructions to Form
N-CSR and Form N-Q. In conducting its review and evaluations, the Fund DCP
Committee shall:
(i) establish a schedule to ensure that all required disclosures in
Form N-CSR and Form N-Q, including the financial statements, for the
Company are identified and prepared in a timeframe sufficient to allow
review;
(ii) review SAS 70 Reports pertaining to Citi and Other Service
Providers, if applicable, or in the absence of any such reports, consider
the adequacy of the sub-certifications supplied by the service provider. In
cases where the SAS 70 Report is dated more than 90 days prior to the
issuance of a Report, the DCP Committee shall request a written
representation from the service provider regarding the continued
application and effectiveness of internal controls described in the report,
or descriptions of any changes in internal control structure, as of the
date of the representation;
(iii) consider whether there are any significant deficiencies or
material weaknesses in the design or operation of the Fund DCPs and
internal control over financial reporting that could adversely affect the
Company's ability to record, process, summarize, and report financial
information, and in the event that any such weaknesses or deficiencies are
identified, disclose them to the Company's Certifying Officers, the
Company's audit committee and its auditors;
(iv) consider whether, to the knowledge of each member of the Fund DCP
Committee, there has been or may have been any fraud, whether or not
material, and in the event that any such occurrence is identified, ensure
that this has been disclosed to the Certifying Officers, so that Certifying
Officers may inform the Company's audit committee and its auditors; and
(v) determine whether there was any change in internal control over
financial reporting that occurred during the Company's second fiscal
quarter of the period covered by the Report (for Reports on Form N-CSR) or
during the most recent fiscal quarter (for Reports on Form N-Q) that has
materially affected or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
A Certifying Officer shall have the full discretion to decline to certify a
particular Report that fails to meet the standards set forth in the
Certification, and to report matters involving fraud or other failures to meet
the standards of applicable law to the audit committee of the Board.
(d) Additional Provisions Concerning Executive Officers.
21
It is mutually agreed and acknowledged by the parties that Certifying
Officers provided by Citi under the provisions of this Section 23 will
constitute executive officers of the Company ("Executive Officers"). The
provisions of Section 23(c) of this Agreement are subject to the internal
policies of Citi concerning the activities of its employees and their service as
officers of funds (the "Citi Policies"), a copy of which shall be provided to
the Company upon request.
The Company's governing documents (including its Agreement and Charter and
By-Laws) and/or resolutions of the Board shall contain mandatory indemnification
provisions that are applicable to each Executive 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 each Executive Officer under its
directors and officers liability policy that is appropriate to the Executive
Officer's role and title, and consistent with coverage applicable to other
officers holding positions of executive management.
In appropriate circumstances, each Executive 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 violation of
Xxxxxxxx-Xxxxx, Applicable AML Laws or other Federal securities laws applicable
to the Company (the "Applicable Securities Laws") by the Company, or (b) a
material deviation by the Company from the terms of this Agreement governing the
services of such Executive Officer, which (in either case) is not primarily
caused by the failure of such Executive Officer or Citi to meet obligations
under applicable laws and this Agreement. In addition, each Executive 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 information
or cooperation from the Company or its other service providers to appropriately
perform his or her duties.
Each Executive Officer may, and the Company shall, promptly notify Citi of
any issue, matter or event that would be reasonably likely to result in any
claim by the Company, the Company's shareholders 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
(including but not limited to any claim that a Report failed to meet the
standards of Xxxxxxxx-Xxxxx and other applicable laws).
Notwithstanding any provision of this Agreement that expressly or by
implication provides to the contrary, (a) it is expressly agreed and
acknowledged that Citi cannot ensure that the Company complies with Applicable
AML Laws, the Applicable Securities Laws or Xxxxxxxx-Xxxxx, and (b) whenever an
employee or agent of Citi serves as an Executive Officer of the Company, as long
as such Executive Officer acts in good faith and in a manner reasonably believed
to be in the best interests of the Company (and
22
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 Executive Officer
and Citi and hold the Executive Officer and Citi harmless from any loss,
liability, expenses (including reasonable attorneys fees) and damages incurred
by them arising out of or resulting to the service of such Employee/Executive
Officer as an Executive Officer of the Company.
24. 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, or at such other address as such party may from time
to time specify in writing to the other party pursuant to this Section 24:
If to the Company:
The Coventry Group
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: President
with a copy to:
Xxxxxxxx Capital Management, LLC
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
If to Citi:
Citi Fund Services Ohio, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: President
with a copy to:
Citigroup Fund Services, LLC
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Legal Department
25. Assignment.
This Agreement and the rights and duties hereunder shall not be assignable
by either of the parties without the prior written consent of the other party;
provided,
23
however, that either party may assign this Agreement to an affiliate of such
party without the need for such consent. This Section 25 shall not limit or in
any way affect Citi's right to use a third party to perform obligations pursuant
to Section 2 of this Agreement. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties and their respective successors and
permitted assigns.
26. Governing Law.
This Agreement shall be governed by and 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. To the extent that
the laws of the State of New York conflict with the applicable provisions of the
1940 Act, the applicable provisions of 1940 Act shall control.
27. Activities of Citi.
The services of Citi rendered to the Company hereunder are not to be deemed
to be exclusive. Citi 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 and/or Fund are or may be or become
interested in Citi, as officers, employees or otherwise and that partners,
officers and employees of Citi and its counsel are or may be or become similarly
interested in the Company and/or Fund, and that Citi may be or become interested
in the Company and/or Fund as a shareholder or otherwise.
28. Privacy.
Nonpublic personal financial information relating to consumers or customers
of the Company provided by, or at the direction of the Company to Citi, or
collected or retained by Citi in the course of performing its duties as transfer
agent, shall be considered confidential information. Citi shall not give, sell
or in any way transfer such confidential information to any person or entity,
other than affiliates of Citi involved in servicing the Company except at the
direction of the Company or as required or permitted by law (including
Applicable AML Laws). Citi represents, warrants and agrees that it has in place
and will 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 or customers of the Company. The Company represents to Citi that it
has adopted a Statement of its privacy policies and practices as required by the
SEC's Regulation S-P and agrees to provide Citi with a copy of that statement
annually.
29. Miscellaneous.
(a) Paragraph headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this
Agreement.
24
(b) 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 herein.
(c) 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.
(d) No amendment to this Agreement shall be valid unless made in
writing and executed by both parties.
(e) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and
not be affected, and the rights and obligations of the parties
shall be construed and enforced as if this Agreement did not
contain such part, term or provision.
[Signature page follows.]
25
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed all as of the date first above written.
THE COVENTRY GROUP
By:
-------------------------------------
Name:
Title:
CITI FUND SERVICES OHIO, INC.
By:
-------------------------------------
Name:
Title:
26
SCHEDULE A
TO THE MASTER SERVICES AGREEMENT BETWEEN
CITI FUND SERVICES OHIO, INC. AND THE COVENTRY GROUP
FUNDS
The Xxxxxxxx GendeX Fund
27
SCHEDULE B
TO THE MASTER SERVICES AGREEMENT BETWEEN
CITI FUND SERVICES OHIO, INC. AND THE COVENTRY GROUP
ADMINISTRATION SERVICES
1. Calculate contractual Fund expenses and make and control all disbursements
for the Funds, subject to review and approval of an officer of the Company
or other authorized person (designated on the list of authorized persons
approved by the Board), including administration of trustee and vendor fees
and compensation on behalf of the Company, and as appropriate;
2. Coordinate: (i) the annual update to the Company's registration statement
on Form N-1A with respect to existing Funds, and (ii) other amendments to
the Company's registration statement and supplements to its Prospectus and
Statement of Additional Information, if any, reflecting developments from
time to time with respect to existing Funds;
3. Coordinate and prepare, with the assistance and approval of the Funds'
investment adviser, counsel and officers, drafts of the annual report to
Shareholders; prepare drafts of the certified semi-annual report for each
Fund; prepare and file the final certified versions thereof on Form N-CSR;
4. Prepare and file the Fund's Form N-SAR and file all required notices
pursuant to Rule 24f-2;
4. Coordinate the printing and distribution of prospectuses, supplements and
proxy materials for meetings of shareholders; and coordinate the record
holder research and tabulation process relating to proxies; file proxy
statements and related solicitation materials with the SEC; prepare scripts
for and attend the Shareholder meetings and record the minutes of the
meetings;
5. Coordinate with the Company's transfer agent with respect to the payment of
dividends and other distributions to Shareholders;
6. Calculate performance data of the Funds for dissemination to up to fifteen
(15) information services covering the investment company industry or to
other parties, as requested and agreed to by Citi;
7. Assist with the layout and printing of prospectuses and assist with and
coordinate layout and printing of the Funds' semi-annual and annual
28
reports to Shareholders. Legal Services will provide input on legal matters
for shareholder reports (e.g., approval of advisory contract and reports on
shareholder voting results);
8. Make available appropriate individuals to serve as Secretary and/or
Assistant Secretary of the Company (to serve only in ministerial or
administrative capacities relevant to Citi's services hereunder), upon
designation as such by the Board;
9. Obtain and maintain fidelity bonds and directors and officers/errors and
omissions insurance policies for the Company in accordance with Rules 17g-1
and 17d-1 under this 1940 Act at the expense of the Company and file the
fidelity bonds and any notices with the SEC as required under Rule 17g-1,
to the extent such policies and bonds are approved by the Board;
10. Monitor and advise the Company and its Funds on their regulated investment
company status under the Internal Revenue Code of 1986, as amended. In
connection with the foregoing, prepare and send quarterly reminder letters
related to such status, and prepare quarterly compliance checklist for use
by investment adviser(s) if requested;
11. Assist the Company in developing portfolio compliance procedures for each
Fund, and provide daily and periodic compliance monitoring services
incorporating certain of those procedures, which will include, among other
matters, compliance with investment restrictions imposed by the 1940 Act,
each Fund's investment objective, defined investment policies, and
restrictions, tax diversification, and distribution and income
requirements, provided such are determinable based upon the Fund's
accounting records, and further provided that the Company provides Citi
timely notification (within one week of security purchase) of a new
non-traditional securities position(1), and timely delivers to Citi the
applicable prospectus or other offering memoranda, including tax
disclosures. In connection with the foregoing, review quarterly compliance
reports that are prepared by the investment adviser(s), if any, and notify
appropriate Fund officers and advisor of xxxx-to-market issues pursuant to
Board-approved procedures, if applicable. Citi will also provide the Board
with quarterly results of compliance reviews;
12. Provide assistance and guidance to the Company with respect to matters
governed by or related to regulatory requirements and developments
including: monitoring regulatory and legislative developments which may
----------
(1) Non-traditional security positions include partnerships (whether or not
publicly traded), grantor trusts, swaps, commodities, commodity based
derivatives or structured notes, derivatives of any type, and passive
foreign investment companies.
29
affect the Company; assisting the Company and providing on-site personnel
in responding to and providing documents for routine regulatory
examinations or investigations; and coordinating with and taking
instructions from counsel to the Company in response to such routine or
non-routine regulatory matters. The assistance to be provided with respect
to SEC inspections includes (i) rendering advice regarding proposed
responses (ii) compiling data and other information in response to SEC
requests for information and (iii) communicating with Fund management and
portfolio managers to provide status updates. In addition, Citi will
provide appropriate assistance with respect to audits conducted by the
Funds' independent auditors including compiling data and other information
as necessary;
13. Provide administrative services for Board meetings by (i) coordinating
Board book preparation, production and distribution, (ii) preparing the
relevant sections of the Board materials required to be prepared or
provided by Citi, (iii) assisting with gathering special materials related
to annual contract renewals and approval of fund-related plans, policies
and procedures (iv) confirming amounts to be paid as Trustees compensation;
and (v) performing such other Board meeting functions as agreed from time
to time, including the preparation of certain memoranda and presentation
materials that are appropriately within the scope of Citi's duties
hereunder;
14. Furnish advice and recommendations with respect to other aspects of the
business and affairs of the Funds as the Company shall request and the
parties shall agree in writing;
15. Assist the Company in connection with its obligations under Sections 302
and 906 of the Xxxxxxxx-Xxxxx Act of 2002 and Rules 30a-2 and Rule 30a-3
under the 1940 Act (collectively, with such other related regulatory
provisions applicable to the Company, "Xxxxxxxx-Xxxxx"), Citi will
internally establish and maintain controls and procedures ("Citi internal
controls") designed to ensure that information recorded, processed,
summarized, or reported by Citi and its affiliates on behalf of the Company
and included in financial information certified by Company officers
("Certifying Officers") on Form N-CSR and Form N-Q ("Reports") is (a)
recorded, processed, summarized, and reported by Citi within the time
periods specified in the SEC's rules and forms and corresponding disclosure
controls and procedures of the Funds ("Fund DCPs"), and (b) accumulated and
communicated to the relevant Certifying Officers consistent with the Fund
DCPs.
If requested by Certifying Officers with respect to a fiscal period during
which Citi serves or served as financial administrator, Citi will provide a
sub-certification consistent with the requirements of Xxxxxxxx-Xxxxx
30
pertaining to Citi's services, solely for the purpose of providing a basis
of support (as to information which has been prepared, processed and
reported by Citi, and as to Citi internal controls) for the Certifying
Officers to render the certifications required by Xxxxxxxx-Xxxxx (or, if
applicable with respect to a Report, inform the Certifying Officers of the
reasons why the statements in such a certification would not be accurate).
In rendering such sub-certifications concerning Company Reports, Citi may
(a) limit its representations to information prepared, processed and
reported by Citi; (b) rely upon and assume the accuracy of the information
provided by officers and other authorized agents of the Company, including
all Other Service Providers to the Company, and compliance by such officers
and agents with the Fund DCPs, including but not limited to, the Company's
investment adviser(s) and custodian; and (c) assume that the Company has
selected the appropriate accounting policies for the Fund(s).
The Company shall assist and cooperate with Citi (and shall use its best
efforts to cause its officers, investment advisers and other service
providers to assist and cooperate with Citi) to facilitate the delivery of
information requested by Citi in connection with the preparation of the
Company's Form N-CSR and Form N-Q, including Company financial statements,
so that Citi may submit a draft Report to the Company's Disclosure Controls
and Procedures Committee ("Fund DCP Committee") prior to the date the
relevant Report is to be filed. The Certifying Officers and the Chief Legal
Officer (if any) of the Company shall be deemed to constitute the Fund DCP
Committee in cases in which no other Fund DCP Committee has been designated
or is operative. In connection with its review and evaluations, the Fund
DCP Committee shall establish a schedule to ensure that all required
disclosures in Form N-CSR and in the financial statements for each Fund are
identified and prepared in a timeframe sufficient to allow review by the
Fund DCP Committee before the date the relevant report is to be filed. At
the request of the Company or its Certifying Officers, Citi shall provide
reasonable administrative assistance to the Company in connection with
obtaining service provider sub-certifications, SAS-70 reports on internal
controls, and any applicable representations to bring such certifications
current to the end of the reporting period, and in preparing summaries of
issues raised in such documents.
The Company shall, in its own capacity, take all reasonably necessary and
appropriate measures to comply with its obligations under Xxxxxxxx-Xxxxx.
Without limitation of the foregoing, except for those obligations which are
expressly delegated to or assumed by Citi in this Agreement, the Company
shall maintain responsibility for, and shall support and facilitate the
role of each Certifying Officer and the Fund DCP Committee in, designing
and maintaining the Fund DCPs in accordance with applicable
31
laws, including (a) ensuring that the Fund DCP Committee and/or Certifying
Officers obtain and review sub-certifications and reports on internal
controls from the Company's investment adviser(s) and other service
providers, if any, sufficiently in advance of the date upon which the
relevant financial statements must be finalized by Citi (in order to print,
distribute and/or file the same hereunder), (b) evaluating of the
effectiveness of the design and operation of the Fund DCP, under the
supervision, and with the participation of, the Certifying Officers, within
the requisite timeframe prior to the filing of each Report, and (c)
ensuring that its Certifying Officers render the requisite certifications
or take such other actions as may be permitted or required under applicable
laws;
17. Coordinate gathering of proxy voting information pertaining to proxy votes
on Fund holdings and coordinate the drafting and filing of the Funds' proxy
voting records (as approved by the investment adviser) on Form N-PX;
18. File holdings reports on Form N-Q as required at the end of the first and
third fiscal quarters of each year;
19. Oversee/coordinate Trustee compensation;
20. Monitor wash sales, annually; and
21. Prepare schedules for use by the Company's auditors in connection with such
auditor's preparation or the Company's tax returns.
32
SCHEDULE C
TO THE MASTER SERVICES AGREEMENT BETWEEN
CITI FUND SERVICES OHIO, INC. AND THE COVENTRY GROUP
FUND ACCOUNTING SERVICES
(a) Citi will keep and maintain the following books and records of each Fund
pursuant to Rule 31a-1 (the "Rule") under the 1940 Act:
1. Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements
of cash and all other debits and credits, as required by
subsection (b)(1) of the Rule;
2. General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, including interest
accrued and interest received, as required by subsection
(b)(2)(i) of the Rule;
3. Separate ledger accounts required by subsection (b)(2)(ii) and
(iii) of the Rule; and
4. A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the
Rule.
(b) In addition to the maintenance of the books and records specified above,
Citi shall perform the following accounting services for each Fund:
1. Allocate income and expense and calculate the net asset value per
share ("NAV") of each class of shares offered by each Fund in
accordance with the relevant provisions of the applicable
Prospectus of each Fund and applicable regulations under the 1940
Act;
2. Apply securities pricing information as required or authorized
under the terms of the valuation policies and procedures of the
Company ("Valuation Procedures"), including (A) pricing
information from independent pricing services, with respect to
securities for which market quotations are readily available, (B)
if applicable to a particular Fund or Funds, fair value pricing
information or adjustment factors from independent fair value
pricing services or other vendors approved by the Company
(collectively, "Fair Value Information Vendors") with respect to
securities for which market quotations are not readily available,
for
33
which a significant event has occurred following the close of the
relevant market but prior to the Fund's pricing time, or which
are otherwise required to be made subject to a fair value
determination under the Valuation Procedures, and (C) prices
obtained from each Fund's investment adviser or other designee,
as approved by the Board;
3. Coordinate the preparation of reports that are prepared or
provided by Fair Value Information Vendors which help the Company
to monitor and evaluate its use of fair value pricing information
under its Valuation Procedures;
4. Verify and reconcile with the Funds' custodian all daily trade
activity;
5. Compute, as appropriate, each Fund's net income and capital
gains, dividend payables, dividend factors, 7-day yields, 7-day
effective yields, 30-day yields, and weighted average portfolio
maturity; (and other yields or standard or non-standard
performance information as mutually agreed);
6. Review daily the net asset value calculation and dividend factor
(if any) for each Fund prior to release to shareholders, check
and confirm the net asset values and dividend factors for
reasonableness and deviations, and distribute net asset values
and yields to NASDAQ; and as agreed, in certain cases, to
newspapers;
7. If applicable, report to the Company the periodic market pricing
of securities in any money market funds, with the comparison to
the amortized cost basis;
8. Determine and report unrealized appreciation and depreciation on
securities held in variable net asset value funds;
9. Amortize premiums and accrete discounts on fixed income
securities purchased at a price other than face value, if
requested by the Company;
10. Update fund accounting system to reflect rate changes, as
received from a Fund's investment adviser, on variable interest
rate instruments;
11. Post Fund transactions to appropriate categories;
12. Accrue expenses of each Fund according to instructions received
from the Company's Administrator, and submit changes to
34
accruals and expense items to authorized officers of the Company
(who are not Citi employees) for review and approval;
13. Determine the outstanding receivables and payables for all (1)
security trades, (2) Fund share transactions and (3) income and
expense accounts;
14. Provide accounting reports in connection with and coordinate with
independent auditors concerning the Company's regular annual
audit, and other audits and examinations by regulatory agencies
(including the SEC); and
15. Provide such periodic reports as the parties shall agree upon, as
set forth in a separate schedule.
16. Provide a representative (in a non-voting capacity) for the
Company's Pricing Committee, if any; and
17. Assist the Company in identifying instances where market prices
are not readily available, or are unreliable, within parameters
set forth in the Company's Valuation Procedures.
(c) Citi shall also perform the following additional accounting services for
each Fund:
1. Provide monthly a hard copy of the unaudited financial statements
described below, upon request of the Company. The unaudited
financial statements will include the following items:
A. Unaudited Statement of Assets and Liabilities,
B. Unaudited Statement of Operations,
C. Unaudited Statement of Changes in Net Assets, and
D. Unaudited Condensed Financial Information
2. Provide accounting information for the following: (in compliance
with Reg. S-X as applicable):
A. federal and state income tax returns and federal excise tax
returns;
B. the Company's semi-annual reports with the SEC on Form N-SAR
and Form N-CSR;
C. the Company's schedules of investments for filing with the
SEC on Form N-Q;
D. the Company's annual and semi-annual shareholder reports and
quarterly Board meetings;
35
E. registration statements on Form N-1A and other filings
relating to the registration of shares;
F. Citi's monitoring of each Fund's status as a regulated
investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended;
3. Calculate turnover and expense ratio.
4. Prepare schedule of Capital Gains and Losses.
5. Provide daily cash report.
6. Maintain and report security positions and transactions in
accounting system.
7. Prepare Broker Commission Report.
8. Monitor expense limitations.
9. Maintain list of failed trades.
10. Provide unrealized gain/loss report.
36
SCHEDULE D
TO THE MASTER SERVICES AGREEMENT BETWEEN
CITI FUND SERVICES OHIO, INC. AND THE COVENTRY GROUP
TRANSFER AGENCY SERVICES
1. Shareholder Transactions
(a) Process shareholder purchase and redemption orders.
(b) Set up account information, including address, dividend option,
taxpayer identification numbers and wire instructions.
(c) Issue confirmations in compliance with Rule 10b-10 under the
Securities Exchange Act of 1934, as amended.
(d) Issue periodic statements for shareholders.
(e) Process transfers and exchanges.
(f) Process dividend payments, including the purchase of new shares,
through dividend reimbursement.
(g) Where applicable, process redemption fee as stated in the Fund
Prospectus.
2. Shareholder Information Services
(a) Produce detailed history of transactions through duplicate or
special order statements upon request.
(b) Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to current
shareholders, upon request.
3. Compliance Reporting
(a) Provide reports to the SEC, the National Association of
Securities Dealers, Inc. and the states in which the Fund is
registered.
(b) Prepare and distribute appropriate Internal Revenue Service forms
for corresponding Fund and shareholder income and capital gains.
(c) Issue tax withholding reports to the Internal Revenue Service.
4. Dealer/Load Processing (if applicable)
37
(a) Where appropriate information is provided, process purchases made
under the rights of accumulation or a Letter of Intent privileges
at the appropriate breakpoint.
(b) Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
(c) Provide for payment of commission on direct shareholder purchases
in a load fund.
5. Shareholder Account Maintenance
(a) Maintain all shareholder records for each account in the Company.
(b) Issue customer statements on scheduled cycle, providing duplicate
second and third party copies if required.
(c) Record shareholder account information changes.
(d) Maintain account documentation files for each shareholder.
6. Anti-Money Laundering Services
(a) Where appropriate and information is available, verify
shareholder identity upon opening new accounts.
(b) Monitor, identify and report shareholder transactions and
identify and report suspicious activities that are required to be
so identified and reported, and provide other required reports to
the SEC, the U.S. Treasury Department, the Internal Revenue
Service or each agency's designated agent, in each case
consistent with the Company's AML Program.
(c) Place holds on transactions in shareholder accounts or freeze
assets in shareholder accounts, as provided in the Company's AML
Program.
(d) Create documentation to provide a basis for law enforcement
authorities to trace illicit funds.
(e) Maintain all records or other documentation related to
shareholder accounts and transactions therein that are required
to be prepared and maintained pursuant to the Company's AML
Program, and make the same available for inspection by (i) the
Company's AML Compliance Officer, (ii) any auditor of the
Company's AML Program or related procedures, policies or controls
that has been designated by the Company in writing, or (iii)
regulatory or law enforcement authorities, and otherwise make
said records or other documents available at the direction of the
Company's AML Compliance Officer.
38
7. Blue Sky Services
Prepare such reports, applications and documents (including reports
regarding the sale and redemption of shares in the Funds as may be required
in order to comply with Federal and state securities laws) as may be
necessary or desirable to register the shares in the Funds ("Shares") with
state securities authorities, monitor the sale of Shares for compliance
with state securities laws, and file with the appropriate state securities
authorities the registration statements and reports for the Funds and the
Shares and all amendments thereto, as may be necessary or convenient to
register and keep effective the registration of the Funds and the Shares
with state securities authorities to enable the Funds to make a continuous
offering of their Shares. State securities ("Blue Sky") exemption services
are made available at an additional standard fee which is earned by Citi
based on exemptions obtained by the Company, including an annual minimum.
TRANSFER AGENCY REPRESENTATION
Following each quarterly period, Citi will provide a representation to the
following effect pertaining to the AML Services rendered by Citi hereunder
during such quarterly period:
1. Performance of good order review for all new and reregistered
accounts;
2. Performance of acceptance review for all monetary instruments
received;
3. Administration of signature guarantee policy in accordance with
prospectus requirements;
4. If applicable, administration of escrow hold policy in accordance with
prospectus requirements;
5. Verification of customer address changes;
6. Verification of customer identification for all new accounts and all
name changes on existing accounts;
7. Monitoring of all purchase transactions made with cash equivalents
totaling in excess of $10,000. The number of Form 8300 reports filed
during the period will be reported;
8. Monitoring of all accounts for suspicious activity. The number of Form
SAR reports filed during the period will be reported;
9. Review of shareholder names against lists of suspected terrorist and
terrorist organizations supplied by various governmental
organizations, such as the Office of Foreign Asset Control. The number
of accounts
39
frozen and otherwise reported to authorities during the period will be
reported;
10. Creation of the documentation necessary to provide a basis for law
enforcement authorities to trace illicit funds; and
11. Maintenance all records and other documentation related to shareholder
accounts and transactions required to be prepared and maintained
pursuant to the Company's AML program for all Citi transfer agent
services.
12. Performance of the required due diligence on any new correspondent
accounts opened during the period.
The following will be provided in such representation if the Company falls
under the related USA PATRIOT Act of 2001 provisions:
13. Performance of the required due diligence to help prevent the opening
of any accounts for foreign shell banks during the period either
directly or through correspondent accounts.
40
SCHEDULE D-1
TO THE MASTER SERVICES AGREEMENT
BETWEEN
CITI FUND SERVICES OHIO, INC.
AND THE COVENTRY GROUP
ADDITIONAL SERVICES RELATED TO XXX ACCOUNTS
CFI will act as the XXX custodian for the Funds' XXX Accounts, and Citi will
perform the additional recordkeeping and administrative functions listed below
with respect to those accounts (in addition to any applicable services already
set forth in the Agreement).
1. Perform good order review by ERISA guidelines of documents required to
open new retirement accounts for fund shareholders. This includes
obtaining an executed retirement application by both the shareholder
and the custodian.
2. Perform good order review by ERISA guidelines and process transfers
specific to retirement accounts. These include transfers from prior
custodian or to successor custodians, direct rollovers from qualified
plans, and Xxxx conversions. This includes obtaining acceptance by an
authorized delegate of the successor custodian.
3. Perform annual population extraction, notification, ERISA good order
review, and processing of required mandatory distributions for
shareholders aged 70 1/2 or older.
4. Record the names of beneficiaries identified by the holder of the XXX
Account (the "Account Holder").
5. Calculate distributions, withdrawals, required withholding and other
payments to Account Holders.
6. Process contributions and distributions for Account Holders.
7. Collect close-out and/or custodial fees when retirement plan assets
are fully liquidated from accounts and disburse revenue in accordance
with prospectus, XXX disclosure, and/or XXX custodial agreement
language.
8. Collect custodial fees from Account Holders who elect prepayment and
disburse revenue in accordance with prospectus, XXX disclosure, and/or
XXX custodial agreement language.
9. Coordinate and execute the annual XXX custodial fee event to collect
fees from active retirement plan Account Holders via asset
liquidation. Disburse revenue in accordance with prospectus, XXX
disclosure, and/or XXX custodial agreement language.
10. Retain all ERISA required Account Holder documents in original form.
These documents will include IRS Form 0000-X, Xxxxx 0000-X, -XX, - XX,
-XX, -SEP, and 403(b)(7) plan agreements.
41
11. Tracking, production, and filing to Account Holders and government
entities of federal and state tax forms specific to retirement plan
accounts (i.e. Forms 1099-R and 5498).
12. Complete annual W4P federal withholding solicitation.
13. Maintain Form W-4P elections for federal and state withholding on
retirement plan distributions for each retirement plan shareholder and
perform withholding accordingly.
14. Respond to Account Holder written and verbal operational inquiries
related to their retirement accounts.
42
SCHEDULE E
TO THE MASTER SERVICES AGREEMENT BETWEEN
CITI FUND SERVICES OHIO, INC. AND THE COVENTRY GROUP
FEES
The Company shall pay Citi on the first business day of each month, or as
otherwise set forth below, fees for administration, fund accounting and transfer
agency services, determined at the annual rates set forth below.
ASSET-BASED ANNUAL FEE
0.06% of the first $1 billion in aggregate net assets of all Funds, plus
0.04% of the aggregate net assets of all Funds in excess of $1 billion.
The asset-based fees are subject to an annual minimum fee equal to the
number of Funds multiplied by $80,000.
ADDITIONAL CLASS ANNUAL FEE
An additional class fee of $5,000 per class per year, applicable to each
additional class of shares over the first three classes of shares per Fund.
TRANSFER AGENCY SERVICES
A per CUSIP fee of $17,000.00 per CUSIP per year; plus
The following per-account fees, applied per year to each shareholder account
(open or closed) on Citi's transfer agency system:
Per Open Non-Networked Accounts $17.00 (waived for first 1,000 accounts)
Per Open Networked Level III Accounts $15.00
Per Closed Accounts $2.00
For these purposes, the following categories constitute an open account on the
Citi system in any one month: open account with balance, open account with zero
balance, or open account with negative balance and closed account with activity.
Closed accounts with no activity in the month are considered a closed account
for billing purposes.
43
AML FEES
Annual Fees
Program servicing: $4,500 for the first 50,000 accounts, plus
$2,500 for accounts in excess of 50,000
(to be billed in equal monthly installments)
Early Warning annual fee: $575.00
Early Warning per record cost: $0.22
Early Warning searches for all accounts except Networked Level III accounts are
conducted and fees applied every three weeks.
Equifax - per request cost: $5.00
FAIR VALUE SUPPORT SERVICES
As compensation for Fair Value Support Services (the services set forth in
subsections (b)2 and (b)3 (as they relate to fair value determinations) of
Schedule C to this Agreement). Citi shall receive the following annual servicing
fee for each Fund that the Company designates as being subject to fair value
determinations and for which Fair Value Support Services are to be provided by
Citi hereunder, as follows:
One-time Development Fee, due upon the execution of this Agreement: $10,000
Annual Fee for Fair Value Support Services to be provided by Citi:
For each Fund with less than 200 securities: $ 5,000
For each Fund with at least 200 securities: $ 7,500
(The Annual Fee is to be billed in equal monthly installments)
The foregoing Citi fee(s) do not include out of pocket costs. Citi will also be
reimbursed by the Company for the actual costs charged by Fair Value Information
Vendors with respect to the provision of fair value pricing information to Citi
for use in valuing the portfolio holdings of a specific Fund or Funds.
TRUSTEE/CUSTODIAN SERVICES.
In addition, as provided in Section 4(a) of this Agreement, Citi shall be
entitled to $15 per social security number, for each plan or account type, per
year (the "Custodial Fee"), to be paid within the month prior to December 31 of
each such year (or, if an XXX Account is closed prior to the closing of such XXX
Account), for the services provided to the XXX
44
Account or XXX Accounts (or, if an XXX Account is closed, prior to the closing
of such XXX Account). Citi will collect the Custodial Fee from each XXX Account.
ANNUAL MINIMUM FEE
The Administrative, Fund Accounting and Transfer Agency Fees set forth above are
subject to an annual complex minimum of $125,000. Fees paid to Citi for AML
Services, XXX Custodian Services, Compliance Services or other services and/or
reimbursement of out-of-pocket expenses shall not count towards satisfying the
complex minimum requirement.
ANNUAL FEE ADJUSTMENT
Commencing on the one-year anniversary of the Effective Date, Citi may annually
increase the fixed fees and other fees expressed as stated dollar amounts in
this Agreement by up to an amount equal to the lesser of (a) the most recent
annual 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, and (b) 5%.
OUT OF POCKET EXPENSES AND MISCELLANEOUS CHARGES
The out of pocket expenses and miscellaneous services fees and charges provided
for under this Agreement are not included in the above fees and shall also be
payable to Citi in accordance with the provisions of this Agreement.
45
