THE GALAXY FUND
SUB-ADVISORY AGREEMENT
INTERNATIONAL EQUITY FUND
AGREEMENT made as of October 8, 1998 between FLEET INVESTMENT ADVISORS
INC., a New York corporation (the "Adviser"), and XXXXXXX INTERNATIONAL
ADVISORS, LLC, a Delaware limited liability company ("Oechsle").
WHEREAS, The Galaxy Fund ("Galaxy") is registered as an open-end,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, the Adviser has been appointed investment adviser to Galaxy's
International Equity Fund (the "Fund");
WHEREAS, the Adviser previously has retained Xxxxxxx International
Advisors, L.P. ("Xxxxxxx X.X.") to assist it in the provision of a continuous
investment program for the Fund and Xxxxxxx X.X. currently is providing such
assistance pursuant to a Sub-Advisory Agreement dated as of August 12, 1996;
WHEREAS, Xxxxxxx X.X. is this day recapitalizing and reorganizing into
Oechsle (the "Transaction"); and
WHEREAS, the Adviser desires to retain Oechsle to assist it in the
provision of a continuous investment program for the Fund following the
Transaction, and Oechsle is willing to do so;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Adviser hereby appoints Oechsle to act as
sub-adviser to the Fund as permitted by the Adviser's Advisory Agreement with
Galaxy pertaining to the Fund. Intending to be legally bound, Oechsle accepts
such appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. SUB-ADVISORY SERVICES. Subject to the supervision of Galaxy's
Board of Trustees, Oechsle will assist the Adviser in providing a continuous
investment program for the Fund, including research and management with respect
to all securities and investments and cash equivalents in the Fund. Oechsle
will provide services under this Agreement in accordance with the Fund's
investment objective, policies and restrictions as stated in the Fund's
prospectuses and statement of additional information and resolutions of Galaxy's
Board of Trustees applicable to the Fund.
Without limiting the generality of the foregoing, Oechsle further
agrees that it will:
(a) prepare, subject to the Adviser's approval, lists of foreign
countries for investment by the Fund and determine from time to time what
securities and other investments will be purchased, retained or sold for
the Fund, including, with the assistance of the Adviser, the Fund's
investments in futures and forward currency contracts;
(b) manage in consultation with the Adviser the Fund's temporary
investments in securities;
(c) place orders for the Fund either directly with the issuer or
with any broker or dealer;
(d) manage the Fund's overall cash position, and determine from
time to time what portion of the Fund's assets will be held in different
currencies;
(e) provide the Adviser with foreign broker research, a
quarterly review of international economic and investment developments, and
occasional "White Papers" on international investment issues;
(f) attend regular business and investment-related meetings with
Galaxy's Board of Trustees and the Adviser if requested to do so by Galaxy
and/or the Adviser; and
(g) maintain books and records with respect to the securities
transactions for the Fund, furnish to the Adviser and Galaxy's Board of
Trustees such periodic and special reports as they may request with respect
to the Fund, and provide in advance to the Adviser all reports to the Board
of Trustees for examination and review within a reasonable time prior to
Galaxy Board meetings.
3. COVENANTS BY SUB-ADVISER. Oechsle agrees with respect to the
services provided to the Fund that it:
(a) will conform with all Rules and Regulations of the
Securities and Exchange Commission ("SEC") applicable to it;
(b) will use the same skill and care in providing such services
as it uses in providing services to other investment companies;
(c) will telecopy trade information to the Adviser on the first
business day following the day of the trade and cause broker confirmations to be
sent directly to the Adviser. In executing portfolio transactions and selecting
brokers or dealers, Oechsle will use its best efforts to seek on behalf of the
Fund the best overall terms available. In assessing the best overall terms
available for any transaction, Oechsle shall consider all factors it deems
relevant,
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including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis. In evaluating the best overall terms available, and
in selecting the broker or dealer to execute a particular transaction, Oechsle
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which Oechsle or any affiliate of Oechsle
exercises investment discretion. Oechsle is authorized, subject to the prior
approval of Galaxy's Board of Trustees, to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, Oechsle determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer--viewed in terms of that particular
transaction or in terms of the overall responsibilities of Oechsle to the Fund
and to Galaxy.
Except to the extent permitted by the SEC or by applicable law,
portfolio securities will not be purchased from or sold to the Adviser, Oechsle,
the Fund's distributor (the "Distributor"), or any affiliated person of either
Galaxy, the Adviser, Oechsle, or the Distributor.
(d) will treat confidentially and as proprietary information of
Galaxy all records and other information relative to the Fund and prior, present
or potential shareholders, and will not 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 and will be
deemed granted where Oechsle 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);
(e) will notify Galaxy of any change in its membership within a
reasonable time after such change.
4. SERVICES NOT EXCLUSIVE. (a) The services furnished by Oechsle
hereunder are deemed not to be exclusive, and nothing in this Agreement shall
(i) prevent Oechsle or any affiliated person (as defined in the 0000 Xxx) of
Oechsle from acting as investment adviser or manager for any other person or
persons, including other management investment companies with investment
objectives and policies the same as or similar to those of the Fund or (ii)
limit or restrict Oechsle or any such affiliated person from buying, selling or
trading any securities or other investments (including any securities or other
investments which the Fund is eligible to buy) for its or their own accounts or
for the accounts of others for whom it or they may be acting; PROVIDED, HOWEVER,
that Oechsle agrees that it will not undertake any activities which, in its
judgment, will adversely affect the performance of its obligations to the Fund
under this Agreement.
(b) Nothing contained herein, however, shall prohibit Oechsle
from advertising or soliciting the public generally with respect to other
products or services, regardless
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of whether such advertisement or solicitation may include prior, present or
potential shareholders of Galaxy.
5. PORTFOLIO TRANSACTIONS. Investment decisions for the Fund shall
be made by Oechsle independently from those for any other investment companies
and accounts advised or managed by Oechsle. The Fund and such investment
companies and accounts may, however, invest in the same securities. When a
purchase or sale of the same security is made at substantially the same time on
behalf of the Fund and/or another investment company or account, the transaction
will be averaged as to price, and available investments allocated as to amount,
in a manner which Oechsle believes to be equitable to the Fund and such other
investment company or account. In some instances, this investment procedure may
adversely affect the price paid or received by the Fund or the size of the
position obtained or sold by the Fund. To the extent permitted by law, Oechsle
may aggregate the securities to be sold or purchased for the Fund with those to
be sold or purchased for other investment companies or accounts in order to
obtain best execution.
6. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, Oechsle hereby agrees that all records which it
maintains for Galaxy are the property of Galaxy and further agrees to surrender
promptly to Galaxy any of such records upon Galaxy's request. Oechsle further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act.
7. EXPENSES. During the term of this Agreement, Oechsle will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Fund.
8. COMPENSATION. For the services provided and the expenses assumed
with respect to the Fund pursuant to this Agreement, the Adviser will pay
Oechsle and Oechsle will accept as full compensation therefor fees, computed
daily and paid quarterly, at the annual rate of .40% of the first $50 million of
the Fund's average daily net assets, plus .35% of average daily net assets in
excess of $50 million.
9. LIMITATION OF LIABILITY OF OECHSLE. Oechsle shall not be liable
for any error of judgment or mistake of law or for any loss suffered by Galaxy
or the Adviser, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Oechsle in the
performance of its duties or from reckless disregard of its obligations and
duties under this Agreement.
10. REFERENCE TO OECHSLE. Neither the Adviser nor any affiliate or
agent of it shall make reference to or use the name of Oechsle or any of its
affiliates, or any of their clients, except references concerning the identify
of and services provided by Oechsle to the Fund, which references shall not
differ in substance from those included in the current registration statement
pertaining to the Fund, this Agreement and the Advisory Agreement between the
Adviser and Galaxy with respect to the Fund, in any advertising or promotional
materials without the prior
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approval of Oechsle, which approval shall not be unreasonably withheld or
delayed. The Adviser hereby agrees to make all reasonable efforts to cause
Galaxy and any affiliate thereof to satisfy the foregoing obligation.
11. DURATION AND TERMINATION. This Agreement shall become effective
on the date of the consummation of the Transaction, provided that the
shareholders of the Fund have previously approved the Agreement in accordance
with the requirements of the 1940 Act. Unless sooner terminated as provided
herein, this Agreement shall continue in effect until August 10, 1999.
Thereafter if not terminated, this Agreement shall continue in effect for
successive twelve-month periods ending on August 10, PROVIDED such continuance
is specifically approved at least annually (a) by the vote of a majority of
those members of Galaxy's Board of Trustees who are not parties to this
Agreement, or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by Galaxy's Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Fund. Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by the Adviser or by Galaxy (by
Galaxy's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund) on 60 days' written notice to Oechsle (which notice may
be waived by the party entitled to receive the same) and will automatically
terminate upon the termination of the Advisory Agreement between the Adviser and
Galaxy with respect to the Fund. This Agreement may be terminated by Oechsle at
any time, without payment of any penalty, on 90 days' written notice to Galaxy
and the Adviser (which notice may be waived by the party entitled to receive the
same). This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested persons" and "assignment" shall have the same
meanings as such terms in the 1940 Act.)
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective with respect to the Fund until approved by the vote of a majority of
the outstanding voting securities of the Fund.
13. NOTICE. Any notice, advice or report to be given pursuant to
this Agreement shall be delivered or mailed:
To Oechsle at:
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
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With a copy to:
Xxxxxxxxxxx X. Xxxxxx, Esq.
Xxxx and Xxxx
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
To the Adviser at:
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X'Xxxxx
To Galaxy at:
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
With a copy to:
W. Xxxxx XxXxxxxx, III, Esq.
Drinker Xxxxxx & Xxxxx LLP
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by New
York law.
15. NAMES. 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 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
Galaxy personally, but bind only the property of Galaxy, and all persons dealing
with any class of shares of Galaxy must look solely to the property of Galaxy
belonging to such class for the enforcement of any claims against Galaxy.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
FLEET INVESTMENT ADVISORS INC.
By: /s/ Xxxxxx X. X'Xxxxx
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Name: Xxxxxx X. X'Xxxxx
Title: President
XXXXXXX INTERNATIONAL
ADVISORS, LLC
By: Oechsle Group, LLC,
Member Manager
By: /s/ Xxxxxx X. Xxxx
-------------------------
Name: Xxxxxx X. Xxxx
Title: Managing Principal
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