EXHIBIT (7)(a)
DISTRIBUTION AGREEMENT
Distribution Agreement made as of February 11, 1997, and
revised as of August 12, 1998, between THE INFINITY MUTUAL FUNDS, INC., a
Maryland corporation having its principal office and place of business at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (herein called the "Fund"), and BISYS
FUND SERVICES LIMITED PARTNERSHIP, an Ohio limited partnership having its
principal office and place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇-▇▇▇▇ (herein called the "Distributor").
WHEREAS, the Fund is an open-end, management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), and consisting of the portfolios set forth on Schedule
1 hereto, as such Schedule may be revised from time to time (each, a "Series");
and
WHEREAS, the Fund desires to retain the Distributor as
distributor for certain Series' shares of common stock, par
value $.001 per share (the "Shares"), and the Distributor is
willing to render such services;
NOW THEREFORE, in consideration of the premises and mutual
covenants set forth herein the parties hereto agree as follows:
I. DELIVERY OF DOCUMENTS
The Fund has delivered to the Distributor copies of
the following documents and will deliver to the Distributor all
future amendments and supplements thereto, if any:
(a) The Fund's Articles of Incorporation and all amendments
and supplements thereto (as presently in effect and as from time to time amended
or supplemented, herein called the
"Charter");
(b) The Fund's By-laws (as presently in effect and as from
time to time amended, herein called the "By-laws");
(c) Resolutions of the Board of Directors of the Fund
authorizing the execution and delivery of this Agreement;
(d) The Fund's Registration Statement under the Securities Act
of 1933, as amended (the "1933 Act"), and the 1940 Act on Form N-1A most
recently filed with the Securities and Exchange Commission (the "Commission")
relating to the Shares, and all subsequent amendments or supplements thereto
(the "Registration Statement");
(e) The Fund's Notification of Registration under the 1940 Act
on Form N-8A as filed with the Commission; and
(f) The Fund's current Prospectuses and Statements of
Additional Information of the Series (as presently in effect and as from time to
time amended and supplemented, herein called individually the "Prospectus" and
collectively the "Prospectuses").
II. DISTRIBUTION
1. APPOINTMENT OF DISTRIBUTOR. The Fund hereby appoints the
Distributor as principal distributor of the Series' Shares and the Distributor
hereby accepts such appointment and agrees to render the services and duties set
forth in this Section II.
2. SERVICES AND DUTIES.
(a) The Fund agrees to sell through the Distributor, as
agent, from time to time during the term of this Agreement, Shares of the Series
(whether authorized but unissued or treasury shares, in the Fund's sole
discretion) upon the terms and at the current offering price as described in the
applicable Prospectus. The Distributor will act only in its own behalf as
principal in making agreements with selected dealers or others for the sale and
redemption of Shares, and shall sell Shares only at the offering price thereof
as set forth in the applicable Prospectus. The Distributor shall devote its best
efforts to effect the sale of Shares of each Series, but shall not be obligated
to sell any certain number of Shares.
(b) In all matters relating to the sale and redemption
of Shares, the Distributor will act in conformity with the Fund's Charter,
By-laws and Prospectuses and with the instructions and directions of the Fund's
Board of Directors and will conform to and comply with the requirements of the
1933 Act, the 1940 Act, the regulations of the National Association of
Securities Dealers, Inc. and all other applicable Federal or state laws and
regulations. In connection with the sale of Shares, the Distributor acknowledges
and agrees that it is not authorized to provide any information or make any
representation other than as contained in the Fund's Registration Statement or
Prospectuses and any sales literature specifically approved by the Fund.
(c) Unless the Fund has adopted with respect to the
Series a plan pursuant to Rule 12b-1 under the 1940 Act which provides
otherwise, the Distributor will bear the costs and expenses of (i) printing and
distributing to prospective investors copies of any Prospectus (including any
supplement thereto) and annual and interim reports of the Series (after such
items have been prepared and set in type by the Fund) which are used in
connection with the offering of Shares of a Series; and (ii) preparing, printing
and distributing any other literature used by the Distributor in connection with
the sale of the Shares; PROVIDED, HOWEVER, that the Distributor shall not be
obligated to bear the expenses incurred by the Fund in connection with the
preparation and printing Prospectuses used for regulatory purposes and for
distribution to existing shareholders.
(d) All Shares of the Series offered for sale by the
Distributor shall be offered for sale to the public at a price per Share (the
"offering price") equal to (i) their net asset value (determined in the manner
set forth in the Fund's Charter and then-current Prospectuses) plus, (ii) a
sales charge (if any) which shall be the percentage of the offering price of
such Shares as set forth in the Fund's then-current Prospectuses. The offering
price, if not an exact multiple of one cent, shall be adjusted to the nearest
cent. If a sales charge is in effect, the Distributor shall have the right to
pay a portion of the sales charge to broker-dealers and other persons who have
sold shares of the Series. Concessions by the Distributor to broker-dealers and
other persons shall be set forth in either the selling agreements between the
Distributor and such broker-dealers and persons or, if such concessions are
described in the then-current Prospectuses, shall be as so set forth. No broker-
dealer or other person who enters into a selling agreement with the Distributor
shall be authorized to act as agent for the Fund in connection with the offering
or sale of its Shares to the public or otherwise. The Fund reserves the right to
reject any order but will not do so without reasonable cause.
(e) If any Shares sold by the Distributor under the
terms of this Agreement are redeemed or repurchased by the Fund or by the
Distributor as agent or are tendered for redemption within seven business days
after the date of confirmation of the original purchase of said Shares, the
Distributor shall forfeit the amount (if any) above the net asset value received
by it in respect of such Shares, provided that the portion, if any, of such
amount (if any) re-allowed by the Distributor to broker-dealers or other persons
shall be repayable to the Fund only to the extent recovered by the Distributor
from the broker-dealer or other person concerned. The Distributor shall include
in the forms of agreement with such broker-dealers and persons a corresponding
provision for the forfeiture by them of their concession with respect to Shares
sold by them or their principals and redeemed or repurchased by the Fund or by
the Distributor as agent (or tendered for redemption) within seven business days
after the date of confirmation of such initial purchases.
3. SALES AND REDEMPTIONS.
(a) The Fund shall pay all costs and expenses in
connection with the registration of the Shares under the 1933 Act, and all
expenses in connection with maintaining facilities for the issue and transfer of
the Shares and for supplying information, prices and other data to be furnished
by the Fund hereunder, and all expenses in connection with preparing, printing
and distributing any Prospectus, except as set forth in subsection 2(c) of
Section II hereof.
(b) The Fund shall execute all documents, furnish all
information and otherwise take all actions which may be reasonably necessary in
the discretion of the Fund's officers in connection with the qualification of
the Shares for sale in such states as the Distributor may designate to the Fund
and the Fund may approve, and the Fund shall pay all fees which may be incurred
in connection with such qualification. The Distributor shall pay all expenses
connected with its qualification as a dealer under state or Federal laws and,
except as otherwise specifically provided in this Agreement, all other expenses
incurred by the Distributor in connection with the sale of the Shares as
contemplated in this Agreement. It is understood that certain advertising,
marketing, shareholder servicing, administration and/or distribution expenses to
be incurred in connection with the Shares may be paid as provided in any plan
which may be adopted by the Fund in accordance with Rule 12b-1 under the 1940
Act.
(c) The Fund shall have the right to suspend the sale
of Shares of any Series at any time in response to conditions in the securities
markets or otherwise, and to suspend the redemption of Shares of any Series at
any time permitted by the 1940 Act or the rules of the Commission.
(d) The Fund reserves the right to reject any order for
Shares.
(e) No Shares shall be offered by either the Fund or
the Distributor under any of the provisions of this Agreement and no orders for
the purchase or sale of Shares hereunder shall be accepted by the Fund if and so
long as the effectiveness of the Registration Statement shall be suspended under
any of the provisions of the 1933 Act, or if and so long as a Prospectus as
required by Section 10 of the 1933 Act is not on file with the Commission;
provided, however, that nothing contained in this sub-paragraph shall in any way
restrict or have any application to or bearing upon the Fund's obligation to
repurchase any Shares from any shareholder in accordance with the provisions of
the Charter or Prospectuses.
4. CONFIDENTIALITY. The Distributor will treat confidentially
and as proprietary information of the Fund all records and other information
relative to the Fund and each Series' prior or present shareholders or those
persons or entities who respond to inquiries concerning investment in a Series
and, except as provided below, will not use such records or information for any
other purpose other than for the performance of its responsibilities and duties
with regard to the Series which now exist or which may be added in the future.
Any other use by the Distributor of the records and information referred to
above may be made only after prior notification to and approval in writing by
the Fund. Such approval shall not be unreasonably withheld and may not be
withheld where (i) the Distributor may be exposed to civil or criminal contempt
proceedings for failure to divulge such information; (ii) the Distributor is
requested to divulge such information by duly constituted authorities; or (iii)
the Distributor is so requested by the Fund.
III. LIMITATION OF LIABILITY
The Distributor shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund or any Series in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the
Distributor's part in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement. Any person, even
though also an officer, director, partner, employee or agent of the Distributor,
who may be or become an officer, director, employee or agent of the Fund, shall
be deemed, when rendering services to the Fund or to any Series, or acting on
any business of the Fund or of any Series (other than services or business in
connection with the Distributor's duties as distributor hereunder), to be
rendering such services to or acting solely for the Fund or a Series and not as
an officer, director, partner, employee or agent or one under the control or
direction of the Distributor even though paid by the Distributor.
IV. INDEMNIFICATION
1. FUND REPRESENTATIONS. The Fund represents and warrants to
the Distributor that at all times the Registration Statement and Prospectuses
will in all material respects conform to the applicable requirements of the 1933
Act and the rules and regulations thereunder and will not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty in this subsection shall apply to statements or
omissions made in reliance upon and in conformity with written information
furnished to the Fund by, or on behalf of, and with respect to, the Distributor
expressly for use in the Registration Statement or Prospectuses.
2. DISTRIBUTOR'S REPRESENTATIONS. The Distributor represents
and warrants to the Fund that it is duly organized as a Delaware corporation and
is and at all times will remain duly authorized and licensed to carry out its
services as contemplated herein.
3. FUND INDEMNIFICATION. The Fund will indemnify, defend and
hold harmless the Distributor, its several officers and directors, and any
person who controls the Distributor within the meaning of Section 15 of the 1933
Act, from and against any losses, claims, damages or liabilities, joint or
several, to which any of them may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectuses or in any application or other document
executed by or on behalf of the Fund, or arise out of, or are based upon,
information furnished by or on behalf of the Fund filed in any state in order to
qualify the Shares under the securities or blue sky laws thereof ("Blue Sky
Application"), or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Distributor, its several officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, for any legal or
other expenses reasonably incurred by any of them in investigating, defending or
preparing to defend any such action, proceeding or claim; PROVIDED, HOWEVER,
that the Fund shall not be liable in any case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, any untrue
statement, alleged untrue statement, or omission or alleged omission made in the
Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Fund in reliance
upon and in conformity with written information furnished to the Fund by or on
behalf of and with respect to the Distributor specifically for inclusion
therein.
The Fund shall not indemnify any person pursuant to this
subsection 3 unless the court or other body before which the proceeding was
brought has rendered a final decision on the merits that such person was not
liable by reason of his willful misfeasance, bad faith or gross negligence in
the performance of his duties, or his reckless disregard of obligations and
duties, under this Agreement ("disabling conduct") or, in the absence of such a
decision, a reasonable determination (based upon a review of the facts) that
such person was not liable by reason of disabling conduct has been made by the
vote of a majority of a quorum of Directors of the Fund who are neither
"interested persons" of the Fund (as defined in the ▇▇▇▇ ▇▇▇) nor parties to the
proceeding, or by an independent legal counsel in a written opinion.
The Fund shall advance attorneys' fees and other expenses
incurred by any person in defending any claim, demand, action or suit which is
the subject of a claim for indemnification pursuant to this subsection 3, so
long as such person shall: (i) undertake to repay all such advances unless it is
ultimately determined that he is entitled to indemnification hereunder; and (ii)
provide security for such undertaking, or the Series shall be insured against
losses arising by reason of any lawful advances, or a majority of a quorum of
the disinterested, non-party Directors of the Fund (or an independent legal
counsel in a written opinion) shall determine based on a review of readily
available facts (as opposed to a full trial-type inquiry) that there is reason
to believe that such person ultimately will be found entitled to indemnification
hereunder.
4. DISTRIBUTOR'S INDEMNIFICATION. The Distributor will
indemnify, defend and hold harmless the Fund, each Series, the Fund's several
officers and Directors and any person who controls the Fund or any Series within
the meaning of Section 15 of the 1933 Act, from and against any losses, claims,
damages or liabilities, joint or several, to which any of them may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect hereof) arise out of, or
are based upon, any breach of its representations and warranties in subsection 2
hereof or its agreements in subsection 2 of Section II of this Agreement, or
which arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectuses, any Blue Sky Application or any application or other document
executed by or on behalf of the Fund, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, which statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Fund or any of its several officers and Directors by or on behalf of and with
respect to the Distributor specifically for inclusion therein, and will
reimburse the Fund, each Series, the Fund's several officers and Directors, and
any person who controls the Fund or any Series within the meaning of Section 15
of the 1933 Act, for any legal or other expenses reasonably incurred by any of
them in investigating, defending or preparing to defend any such action,
proceeding or claim.
5. GENERAL INDEMNITY PROVISIONS. No indemnifying party shall be
liable under its indemnity agreement contained in subsection 3 or 4 hereof with
respect to any claim made against such indemnifying party unless the indemnified
party shall have notified the indemnifying party in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the indemnified party (or after
the indemnified party shall have received notice of such service on any
designated agent), but failure to notify the indemnifying party of any such
claim shall not relieve it from any liability which it may otherwise have to the
indemnified party. The indemnifying party will be entitled to participate at its
own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, and if the indemnifying party elects
to assume the defense, such defense shall be conducted by counsel chosen by it
and reasonably satisfactory to the indemnified party. In the event the
indemnifying party elects to assume the defense of any such suit and retain such
counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by the indemnified party.
V. TERM
This Agreement shall continue automatically for successive
annual periods ending on December 31 of each year, provided such continuance is
specifically approved at least annually by (a) the Fund's Board of Directors or
(b) vote of a majority (as defined in the ▇▇▇▇ ▇▇▇) of the Fund's outstanding
voting securities, provided that in either event its continuance also is
approved by a majority of the Fund's Directors who are not "interested persons"
(as defined in the ▇▇▇▇ ▇▇▇) of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable without penalty, on 60 days' written notice to the Distributor, by
vote of a majority of the Fund's outstanding voting securities or, as to each
Series, by the Fund's Board of Directors or, on 90 days' written notice to the
Fund, by the Distributor. This Agreement will automatically terminate, as to the
relevant Series, in the event of its assignment (as defined in the 1940 Act).
VI. MISCELLANEOUS
1. AMENDMENTS. No provision of this Agreement may be changed,
waived, discharged or terminated except by an instrument in writing signed by
the party against which an enforcement of the change, waiver, discharge or
termination is sought.
2. CONSTRUCTION. 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. Subject to the provisions of Section IV hereof, 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; PROVIDED,
HOWEVER, that nothing herein shall be construed in a manner inconsistent with
the 1940 Act or any rule or regulation thereunder.
3. NOTICE. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Fund shall be
sufficiently given if addressed to the Fund and mailed or delivered to it at its
office at the address first above written, or at such other place as the Fund
may from time to time designate in writing. Any notice or other instrument in
writing, authorized or required by this Agreement to be given to the Distributor
shall be sufficiently given if addressed to the Distributor and mailed or
delivered to it at its office at the address first above written, or at such
other place as the Distributor may from time to time designate in writing.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below as of the day and
year first above written.
THE INFINITY MUTUAL FUNDS, INC.
By:___________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President and Chairman of
the Board
Attest:_______________________
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By:___________________________
Attest:________________________
SCHEDULE 1
NAME OF SERIES DATE ESTABLISHED
---------------- ------------------
ISG Aggressive Growth Portfolio August 12, 1998
ISG Capital Growth Portfolio February 15, 1994
ISG Core Income Portfolio February 15, 1994
ISG Current Income Portfolio August 12, 1998
ISG Dividend Growth Portfolio February 15, 1994
ISG Equity Value Portfolio May 14, 1998
ISG Government Income Portfolio May 14, 1998
ISG Government Money Market May 14, 1998
Portfolio
ISG Growth Portfolio August 12, 1998
ISG Growth and Income Portfolio August 12, 1998
ISG International Equity May 14, 1998
Portfolio
ISG Large Cap Equity Portfolio May 14, 1998
ISG Limited Duration Income February 15, 1994
Portfolio
ISG Limited Duration February 11, 1997
Tennessee Tax Free Portfolio
ISG Limited Duration U.S. February 11, 1997
Government Portfolio
ISG Mid Cap Portfolio May 14, 1998
ISG Moderate Growth and Income August 12, 1998
Portfolio
ISG Municipal Income May 14, 1998
Portfolio
ISG Prime Money Market February 15, 1994
Portfolio
ISG Small Cap Opportunity Portfolio May 14, 1998
ISG Tax Free Money Market May 14, 1998
Portfolio
ISG Tennessee Tax Exempt February 15, 1994
Bond Portfolio
ISG U.S. Treasury February 15, 1994
Money Market Portfolio
Correspondent Cash Reserves October 30, 1990
Money Market Portfolio
Correspondent Cash Reserves October 30, 1990
Tax Free Money Market Portfolio