DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 31st day of March, 1995 by and among THE
GALAXY FUND, a Massachusetts business trust ("Galaxy"), The Shareholder
Services Group, Inc., d/b/a 440 Financial, a Massachusetts corporation ("440
Financial"), and 440 Financial Distributors, Inc., a Massachusetts corporation
(the "Distributor") and a wholly-owned subsidiary of 440 Financial.
W I T N E S S E T H
WHEREAS, Galaxy is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940; and
WHEREAS, Galaxy is currently offering units of beneficial interest, par value
$.001 (the "Shares"), representing interests in the following investment
portfolios: Money Market Fund, Government Fund, Equity Value Fund,
Intermediate Bond Fund, Tax-Exempt Fund, U.S. Treasury Fund, International
Equity Fund, Equity Growth Fund, Equity Income Fund, High Quality Bond Fund,
Short-Term Bond Fund, Tax-Exempt Bond Fund, Asset Allocation Fund, Small
Company Equity Fund, New York Municipal Bond Fund, Connecticut Municipal Bond
Fund, Massachusetts Municipal Bond Fund, Rhode Island Municipal Bond Fund,
Institutional Treasury Money Market Fund and Corporate Bond Fund (individually
a "Fund" and collectively the "Funds"); and
WHEREAS, a sales charge may be imposed on the sale of certain Shares of one
or more of the Funds ("Load Shares"); and
WHEREAS, the Distributor currently serves as distributor for the Funds
pursuant to a Distribution Agreement dated as of FebruaryE28, 1994; and
WHEREAS, all of the issued and outstanding stock of the Distributor is this
day being acquired by 440 Financial (the "Acquisition"); and
WHEREAS, Galaxy desires to retain the Distributor as distributor for the
Funds to provide for the sale and distribution of the Shares following the
Acquisition, and 440 Financial and the Distributor are prepared to provide such
services through the Distributor;
NOW THEREFORE, in consideration of the premises and mutual covenants set
forth herein and intending to be legally bound hereby the parties hereto agree
as follows:
1. Service as Distributor.
1.1 The Distributor will act as Galaxy's disclosed agent for the
distribution of the Shares covered by the registration statement and prospectus
then in effect under the Securities Act of 1933 (the "1933 Act"). The
Distributor will have no liability for payment for the purchase of Shares sold
pursuant to this Agreement or with respect to redemptions or repurchases of
Shares.
1.2 The Distributor agrees to use appropriate efforts to solicit orders for
the sale of the Shares and will undertake such advertising and promotion as it
believes reasonable in connection with such solicitation. Galaxy understands
that the Distributor is the distributor, and may in the future be the
distributor, of the shares of other investment companies' portfolios
("Portfolios") including Portfolios having investment objectives similar to
those of the Funds. Galaxy further understands that investors and potential
investors in the Funds may invest in shares of such other Portfolios. Galaxy
agrees that the Distributor's duties to such Portfolios shall not be deemed in
conflict with its duties to Galaxy under this paragraph 1.2.
1.3 The Distributor shall, at its own expense, finance appropriate
activities which it deems reasonable which are primarily intended to result in
the sale of the Shares, including, but not limited to, advertising,
compensation of underwriters, dealers and sales personnel, the printing and
mailing of prospectuses to other than current shareholders, and the printing
and mailing of sales literature.
1.4 All activities by the Distributor and its agents and employees as
distributor of the Shares shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940 by the Securities and
Exchange Commission or any securities association registered under the
Securities Exchange Act of 1934.
1.5 The Distributor will provide one or more persons, during normal business
hours, to respond to telephone questions with respect to the Funds.
1.6 The Distributor will transmit any orders received by it for purchase or
redemption of the Shares to Galaxy's transfer agent and custodian.
1.7 Whenever in their judgment such action is warranted by unusual market,
economic or political conditions, or by abnormal circumstances of any kind,
Galaxy's officers may decline to accept any orders for, or make any sales of,
the Shares until such time as those officers deem it advisable to accept such
orders and to make such sales.
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1.8 The Distributor may enter into selling agreements with selected dealers
or other institutions with respect to the offering of the Shares to the public.
Each such selling agreement will provide (i) that all payments for purchases of
Shares will be sent directly from the dealer or such other institution to the
Funds' transfer agent and (ii) that, if payment is not made with respect to
purchases of Shares at the customary or required time for settlement of the
transaction, the Distributor will have the right to cancel the sale of the
Shares ordered by the dealer or such other institution, in which case the
dealer or such other institution will be responsible for any loss suffered by
any Fund or the Distributor resulting from such cancellation. The Distributor
may also act as disclosed agent for a Fund and sell Shares of that Fund to
individual investors, such transactions to be specifically approved by an
officer of that Fund.
1.9 The Distributor will send a confirmation to each purchaser of Shares
under this Agreement. Such confirmations will comply with all applicable
Federal and state laws and rules and regulations of authorized regulatory
bodies and will clearly state that the Distributor is acting as agent in the
transaction and that all remittances, registration instructions and
certifications for redemption should be sent directly to the Funds' transfer
agent. Such confirmations will also set forth the mailing address and delivery
address of the Funds' transfer agent.
1.10 All Load Shares offered for sale by the Distributor shall be offered
for sale to the public at a price per share (the "offering price") equal to (a)
their net asset value (determined in the manner set forth in Galaxy's
Declaration of Trust and the then current prospectus) plus, except with respect
to certain classes of persons set forth in the then current prospectus, (b) a
sales charge which shall be the percentage of the offering price of such Load
Shares as set forth in the then current prospectus. The offering price, if not
an exact multiple of one cent, shall be adjusted to the nearest cent.
Concessions by the Distributor to dealers and other institutions shall be set
forth in either the selling agreements between the Distributor and such dealers
and institutions as from time to time amended, or if such concessions are
described in the then current prospectus, shall be as so set forth. No dealer
or other institution who enters into a selling agreement with the Distributor
shall be authorized to act as agent for Galaxy in connection with the offering
or sale of the Load Shares to the public or otherwise.
1.11 If any Load Shares sold by Galaxy are redeemed or repurchased by Galaxy
or by the Distributor as disclosed agent or
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are tendered for redemption within seven business days after the date
of confirmation of the original purchase of said Load Shares, the
Distributor shall forfeit the sales charge received by the Distributor
in respect of such shares, provided that the portion, if any, of such
amount re-allowed by the Distributor to dealers or other institutions shall be
repayable to Galaxy only to the extent recovered by the Distributor from the
dealer or other institution involved. The Distributor shall include in each
selling agreement with such dealers and other institutions a corresponding
provision for the forfeiture by them of their concession with respect to the
Load Shares sold by them or their principals and redeemed or repurchased by
Galaxy or by the Distributor as disclosed agent (or tendered for redemption)
within seven business days after the date of confirmation of such initial
purchases.
1.12 Galaxy agrees at its own expense to execute any and all documents and
to furnish any and all information and otherwise to take all actions that may
be reasonably necessary in connection with the qualification of the Shares for
sale in such states as the Distributor may designate.
1.13 Galaxy shall furnish from time to time, for use in connection with the
sale of the Shares, such written information with respect to the Funds and the
Shares as the Distributor may reasonably request; and Galaxy warrants that the
statements contained in any such information shall fairly show or represent
what they purport to show or represent. Galaxy shall also furnish the
Distributor upon request with: (a) unaudited semi-annual statements of the
Funds' books and accounts, (b) quarterly earnings statements of the Funds, (c)
a monthly itemized list of the securities in the Funds, (d) monthly balance
sheets as soon as practicable after the end of each month, and (e) from time to
time such additional information regarding the Funds' financial condition as
the Distributor may reasonably request.
1.14 Galaxy represents to the Distributor that all registration statements
and prospectuses filed by Galaxy with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, with respect to the Shares have
been prepared in conformity with the requirements of said Act and the rules and
regulations of the Securities and Exchange Commission thereunder. As used in
this agreement the terms "registration statement" and "prospectus" shall mean
any registration statement and prospectus filed with the Securities and
Exchange Commission and any amendments and supplements thereto, including
statements of additional information incorporated therein by reference, which
at any time shall have been filed with the Securities and Exchange Commission.
Galaxy represents and warrants to the Distributor that any registration
statement and prospectus, when such registration statement becomes effective,
will contain all statements required to be stated therein in conformity with
said
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Act and the rules and regulations of the Securities and Exchange Commission;
that all statements of fact contained in any such registration statement
and prospectus will be true and correct when such registration
statement becomes effective; and that neither any registration
statement nor any prospectus when such registration statement becomes
effective will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of the Shares. Galaxy may,
but shall not be obligated to, propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus, as, in the light of future developments, may, in the opinion of
Galaxy's counsel, be necessary or advisable. Galaxy shall promptly notify the
Distributor of any advice given to it by Galaxy's counsel regarding the
necessity or advisability so to amend or supplement such registration statement
or prospectus. If Galaxy shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by Galaxy of a
written request from the Distributor to do so, the Distributor may, at its
option, terminate this agreement. Galaxy shall not file any amendment to any
registration statement or supplement to any prospectus without giving the
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this agreement shall in any way limit Galaxy's right to
file at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as Galaxy may deem
advisable, such right being in all respects absolute and unconditional.
1.15 Galaxy authorizes the Distributor and dealers to use any prospectus in
the form furnished from time to time in connection with the sale of the Shares.
Galaxy agrees to indemnify, defend and hold the Distributor, its several
officers and directors, and any institution who controls the Distributor within
the meaning of Section 15 of the 1933 Act, as amended, free and harmless from
and against any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or liabilities and
any counsel fees incurred in connection therewith) which the Distributor, its
officers and directors, or any such controlling person, may incur under the
1933 Act, as amended, or under common law or otherwise, arising out of or based
upon any untrue statement, or alleged untrue statement, of a material fact
contained in any registration statement or any prospectus or arising out of or
based upon any omission, or alleged omission, to state a material fact required
to be stated in either any registration statement or any prospectus or
necessary to make the statements in either thereof not misleading; provided,
however, that Galaxy's agreement to indemnify the Distributor, its officers or
directors, and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of
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any statements or representations contained in any registration
statement or in any prospectus that were furnished in writing to Galaxy
or its counsel by the Distributor and used in the answers to the
registration statement or in the corresponding statements made in the
prospectus, or arising out of or based upon any omission or alleged omission to
state a material fact in connection with the giving of such information
required to be stated in such answers or necessary to make the answers not
misleading; and further provided that Galaxy's agreement to indemnify the
Distributor and Galaxy's representations and warranties hereinbefore set forth
in paragraph 1.14 shall not be deemed to cover any liability to Galaxy or its
shareholders to which the Distributor would otherwise be subject by reason of
willful misfeasance, bad faith or negligence in the performance of its duties,
or by reason of the Distributor's reckless disregarding of its obligations and
duties under this agreement. Galaxy's agreement to indemnify the Distributor,
its officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon Galaxy's being notified of any action brought
against the Distributor, its officers or directors, or any such controlling
person, such notification to be given by letter or by telegram addressed to
Galaxy at its principal office in Worcester, Massachusetts and sent to Galaxy
by the person against whom such action is brought, within 10 days after the
summons or other first legal process shall have been served. The failure so to
notify Galaxy of any such action shall not relieve Galaxy from any liability
which Galaxy may have to the person against whom such action is brought by
reason of any such untrue, or allegedly untrue, statement or omission, or
alleged omission, otherwise than on account of Galaxy's indemnity agreement
contained in this paragraph 1.15. Galaxy will be entitled to assume the
defense of any suit brought to enforce any such claim, demand or liability,
but, in such case, such defense shall be conducted by counsel of good standing
chosen by Galaxy and approved by the Distributor, which approval shall not
unreasonably be withheld. In the event Galaxy elects to assume the defense of
any such suit and retain counsel of good standing approved by the Distributor,
the defendant or defendants in such suit shall bear the fees and expenses of
any additional counsel retained by any of them; but in case Galaxy does not
elect to assume the defense of any such suit, or in case the Distributor
reasonably does not approve of counsel chosen by Galaxy, Galaxy will reimburse
the Distributor, its officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for
the fees and expenses of any counsel retained by the Distributor or them.
Galaxy's indemnification agreement contained in this paragraph 1.15 and
Galaxy's representations and warranties in this agreement shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Distributor, its officers and directors, or any controlling
person, and shall survive the delivery of any Shares. This agreement of
indemnity
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will inure exclusively to the Distributor's benefit, to the benefit
of its several officers and directors, and their respective estates,
and to the benefit of the controlling persons and their successors.
Galaxy agrees promptly to notify the Distributor of the commencement
of any litigation or proceedings against Galaxy or any of its
officers or trustees in connection with the issue and sale of any Shares.
1.16 440 Financial and the Distributor agree to indemnify, defend and hold
Galaxy, its several officers and trustees, and any person who controls Galaxy
within the meaning of Section 15 of the 1933 Act, as amended, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the costs of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
Galaxy, its officers or trustees or any such controlling person, may incur
under the 1933 Act, as amended, or under common law or otherwise, but only to
the extent that such liability or expense incurred by Galaxy, its officers or
trustees, or such controlling person resulting from such claims or demands,
shall arise out of or be based upon any untrue, or alleged untrue, statement of
a material fact contained in information furnished in writing by the
Distributor to Galaxy or its counsel and used in the answers to any of the
items of the registration statement or in the corresponding statements made in
the prospectus, or shall arise out of or be based upon any omission, or alleged
omission, to state a material fact in connection with such information
furnished in writing by the Distributor to Galaxy or its counsel required to be
stated in such answers or necessary to make such information not misleading.
The agreement of 440 Financial and the Distributor to indemnify Galaxy, its
officers and trustees, and any such controlling person, as aforesaid, is
expressly conditioned upon 440 Financial's and the Distributor's being notified
of any action brought against Galaxy, its officers or trustees, or any such
controlling person, such notification to be given by letter or telegram
addressed to 440 Financial and the Distributor at their principal offices in
Worcester, Massachusetts and sent to 440 Financial and the Distributor by the
person against whom such action is brought, within 10 days
after the summons or other first legal process shall have been served. 440
Financial and the Distributor shall have the right of first control of the
defense of such action, with counsel of their own choosing, satisfactory to
Galaxy, if such action is based solely upon such alleged misstatement or
omission on the Distributor's part, and in any other event Galaxy, its officers
or trustees or such controlling person shall each have the right to participate
in the defense or preparation of the defense of any such action. The failure so
to notify 440 Financial and the Distributor of any such action shall not
relieve 440 Financial and the Distributor from any liability which 440
Financial and the Distributor may have to Galaxy, its officers or trustees, or
to such controlling
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person by reason of any such untrue or alleged untrue statement, or omission or
alleged omission, otherwise than on account of 440 Financial's and the
Distributor's indemnity agreement contained in this paragraph 1.16.
1.17 No Shares shall be offered by either the Distributor or Galaxy under
any of the provisions of this agreement and no orders for the purchase or sale
of Shares hereunder shall be accepted by Galaxy if and so long as effectiveness
of the registration statement then in effect or any necessary amendments
thereto shall be suspended under any of the provisions of the 1933 Act, as
amended, or if and so long as a current prospectus as required by Section
10(a)(2) of the 1933 Act, as amended, is not on file with the Securities and
Exchange Commission; provided, however, that nothing contained in this
paragraph 1.17 shall in any way restrict or have any application to or bearing
upon Galaxy's obligation to repurchase Shares from any shareholder in
accordance with the provisions of Galaxy's prospectus or Declaration of Trust.
1.18 Galaxy agrees to advise the Distributor as soon as reasonably practical
by a notice in writing delivered to the Distributor:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the
registration statement or prospectus then in effect or the initiation by
service of process on Galaxy of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of a
material fact made in the registration statement or prospectus then in
effect or which requires the making of a change in such registration
statement or prospectus in order to make the statements therein not
misleading; and
(d) of all action of the Securities and Exchange Commission with respect
to any amendment to any registration statement or prospectus which may from
time to time be filed with the Securities and Exchange Commission.
For purposes of this section, informal requests by or acts of the Staff of
the Securities and Exchange Commission shall not be deemed actions of or
requests by the Securities and Exchange Commission.
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1.19 The Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of Galaxy all records and other
information relative to Galaxy and its prior, present or potential
shareholders, and not to use such records and information for any purpose other
than performance of its responsibilities and duties hereunder, except after
prior notification to and approval in writing by Galaxy, which approval shall
not be unreasonably withheld and may not be withheld where the Distributor may
be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by Galaxy.
1.20 This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts.
1.21 The names "The Galaxy Fund" and "Trustees of The Galaxy Fund" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated March 31, 1986 which is hereby referred to and a copy of which is
on file at the office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of the Trust. The obligations of
"The Galaxy Fund" entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, Shareholders, or
representatives of the Trust personally, but bind only the Trust Property, and
all persons dealing with any class of Shares of the Trust must look solely to
the Trust Property belonging to such class for the enforcement of any claims
against the Trust.
1.22 440 Financial and the Distributor shall not be liable for any error of
judgment or mistake of law or for any loss suffered by Galaxy in connection
with the performance by the Distributor of its services hereunder, except for a
loss resulting from willful misfeasance, bad faith or negligence on the part of
the Distributor in the performance of its duties or from reckless disregard by
it of its obligations and duties under this Agreement.
2. Term.
This agreement shall become effective on the date of the consummation of the
Acquisition and, unless sooner terminated as provided herein, shall continue
until February 28, 1996 and thereafter shall continue automatically for
successive annual periods ending on February 28 of each year, provided such
continuance is specifically approved at least annually by (i) Galaxy's Board of
Trustees or (ii) by a vote of a majority (as defined in the Investment Company
Act of 1940) of the outstanding voting securities of Galaxy, provided that in
either event the
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continuance is also approved by a majority of Galaxy's trustees
who are not parties to this agreement and who are not interested persons (as
defined in the Investment Company Act of 1940) of any party to this agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. This agreement is terminable without penalty, on sixty days' notice,
by Galaxy's Board of Trustees, by vote of a majority (as defined in the
Investment Company Act of 1940) of the outstanding voting securities of Galaxy,
or by the Distributor. This agreement will also terminate automatically in the
event of its assignment (as defined in the Investment Company Act of 1940).
3. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE GALAXY FUND
By:/s/ Xxxxxx X. Xxxxxxxxx
Attest:/s/ W. Xxxxx XxXxxxxx, III Vice President
Secretary
THE SHAREHOLDER SERVICES
GROUP, INC., d/b/a
440 FINANCIAL
By:___________________________
Attest:_______________________
440 FINANCIAL DISTRIBUTORS, INC.
By:______________________________
Attest:________________________
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