XXXXX XXXXXX WORLD FUNDS, INC.
DISTRIBUTION AGREEMENT
October 8, 1998
CFBDS, Inc.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the above-named investment company (the "Fund")
has agreed that you shall be, for the period of this Agreement, the non-
exclusive principal underwriter and distributor of shares of the Fund and
each Series of the Fund set forth on Exhibit A hereto, as such Exhibit may
be revised from time to time (each, including any shares of the Fund not
designated by series, a "Series"). For purposes of this Agreement, the
term "Shares" shall mean shares of the each Series, or one or more
Series, as the context may require.
1. Services as Principal Underwriter and Distributor
1.1 You will act as agent for the distribution of Shares
covered by, and in accordance with, the registration statement,
prospectus and statement of additional information then in effect under
the Securities Act of 1933, as amended (the "1933 Act"), and the
Investment Company Act of 1940, as amended (the "1940 Act"), and will
transmit or cause to be transmitted promptly any orders received by you or
those with whom you have sales or servicing agreements for purchase or
redemption of Shares to the Transfer and Dividend Disbursing Agent for the
Fund of which the Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit orders for
the sale of Shares. It is contemplated that you will enter into sales or
servicing agreements with registered securities dealers and banks and into
servicing agreements with financial institutions and other industry
professionals, such as investment advisers, accountants and estate
planning firms. In entering into such agreements, you will act only on
your own behalf as principal underwriter and distributor. You will not be
responsible for making any distribution plan or service fee payments
pursuant to any plans the Fund may adopt or agreements it may enter into.
1.3 You shall act as principal underwriter and distributor of
Shares in compliance with all applicable laws, rules, and regulations,
including, without limitation, all rules and regulations made or adopted
from time to time by the Securities and Exchange Commission (the "SEC")
pursuant to the 1933 Act or the 1940 Act or by any securities association
registered under the Securities Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted for
any reason, including, without limitation, market, economic or political
conditions, the Fund's officers may decline to accept any orders for, or
make any sales of, any Shares until such time as those officers deem it
advisable to accept such orders and to make such sales and the Fund shall
advise you promptly of such determination.
2. Duties of the Fund
2.1 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the 1933 Act, and all
expenses in connection with maintaining facilities for the issue and
transfer of Shares and for supplying information, prices and other data to
be furnished by the Fund hereunder, and all expenses in connection with
the preparation and printing of the Fund's prospectuses and statements of
additional information for regulatory purposes and for distribution to
shareholders; provided however, that nothing contained herein shall be
deemed to require the Fund to pay any of the costs of advertising or
marketing the sale of Shares.
2.2 The Fund agrees to execute any and all documents and to
furnish any and all information and otherwise to take any other actions
that may be reasonably necessary in the discretion of the Fund's officers
in connection with the qualification of Shares for sale in such states and
other U.S. jurisdictions as the Fund may approve and designate to you from
time to time, and the Fund agrees to pay all expenses that may be incurred
in connection with such qualification. You shall pay all expenses
connected with your own qualification as a securities broker or dealer
under state or Federal laws and, except as otherwise specifically provided
in this Agreement, all other expenses incurred by you in connection with
the sale of Shares as contemplated in this Agreement.
2.3 The Fund shall furnish you from time to time, for use in
connection with the sale of Shares, such information reports with respect
to the Fund or any relevant Series and the Shares as you may reasonably
request, all of which shall be signed by one or more of the Fund's duly
authorized officers; and the Fund warrants that the statements contained
in any such reports, when so signed by the Fund's officers, shall be true
and correct. The Fund also shall furnish you upon request with (a) the
reports of annual audits of the financial statements of the Fund for each
Series made by independent certified public accountants retained by the
Fund for such purpose; (b) semi-annual unaudited financial statements
pertaining to each Series; (c) quarterly earnings statements prepared by
the Fund; (d) a monthly itemized list of the securities in each Series'
portfolio; (e) monthly balance sheets as soon as practicable after the end
of each month; (f) the current net asset value and offering price per
share for each Series on each day such net asset value is computed and (g)
from time to time such additional information regarding the financial
condition of each Series of the Fund as you may reasonably request.
3. Representations and Warranties
The Fund represents to you that all registration statements,
prospectuses and statements of additional information filed by the Fund
with the SEC under the 1933 Act and the 1940 Act with respect to the
Shares have been prepared in conformity with the requirements of said Acts
and the rules and regulations of the SEC thereunder. As used in this
Agreement, the terms "registration statement", "prospectus" and
"statement of additional information" shall mean any registration
statement, prospectus and statement of additional information filed by the
Fund with the SEC and any amendments and supplements thereto filed by the
Fund with the SEC. The Fund represents and warrants to you that any
registration statement, prospectus and statement of additional
information, when such registration statement becomes effective and as
such prospectus and statement of additional information are amended or
supplemented, will include at the time of such effectiveness, amendment or
supplement all statements required to be contained therein in conformance
with the 1933 Act, the 1940 Act and the rules and regulations of the SEC;
that all statements of material fact contained in any registration
statement, prospectus or statement of additional information will be true
and correct when such registration statement becomes effective; and that
neither any registration statement nor any prospectus or statement of
additional information 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 Fund's Shares.
The Fund 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 or statement of additional
information as, in the light of future developments, may, in the opinion
of the Fund, be necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Fund of a written request from you to do
so, you may, at your option, terminate this Agreement or decline to make
offers of the Fund's Shares until such amendments are made. The Fund
shall not file any amendment to any registration statement or supplement
to any prospectus or statement of additional information without giving
you reasonable notice thereof in advance; provided, however, that nothing
contained in this Agreement shall in any way limit the Fund's right to
file at any time such amendments to any registration statement and/or
supplements to any prospectus or statement of additional information, of
whatever character, as the Fund may deem advisable, such right being in
all respects absolute and unconditional.
4. Indemnification
4.1 The Fund authorizes you to use any prospectus or
statement of additional information furnished by the Fund from time to
time, in connection with the sale of Shares. The Fund agrees to
indemnify, defend and hold you, your several officers and directors, and
any person who controls you within the meaning of Section 15 of the 1933
Act, 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 such counsel fees incurred in
connection therewith) which you, your officers and directors, or any such
controlling person, may incur under the 1933 Act 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, any prospectus or any statement of additional information or
arising out of or based upon any omission, or alleged omission, to state a
material fact required to be stated in any registration statement, any
prospectus or any statement of additional information or necessary to make
the statements in any of them not misleading; provided, however, that the
Fund's agreement to indemnify you, your officers or directors, and any
such controlling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any statements or representations
made by you or your representatives or agents other than such statements
and representations as are contained in any prospectus or statement of
additional information and in such financial and other statements as are
furnished to you pursuant to paragraph 2.3 of this Agreement; and further
provided that the Fund's agreement to indemnify you and the Fund's
representations and warranties herein before set forth in paragraph 3 of
this Agreement shall not be deemed to cover any liability to the Fund or
its shareholders to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
your duties, or by reason of your reckless disregard of your obligations
and duties under this Agreement. The Fund's agreement to indemnify you,
your officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being notified of any
action brought against you, your officers or directors, or any such
controlling person, such notification to be given by letter or by telegram
addressed to the Fund at its principal office in New York, New York and
sent to the Fund by the person against whom such action is brought, within
ten days after the summons or other first legal process shall have been
served. The failure so to notify the Fund of any such action shall not
relieve the Fund from any liability that the Fund may have to the person
against whom such action is brought by reason of any such untrue, or
alleged untrue, statement or omission, or alleged omission, otherwise than
on account of the Fund's indemnity agreement contained in this paragraph
4.1. The Fund 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 the Fund.
In the event the Fund elects to assume the defense of any such suit and
retains counsel of good standing, the defendant or defendants in such suit
shall bear the fees and expenses of any additional counsel retained by any
of them; but if the Fund does not elect to assume the defense of any such
suit, the Fund will reimburse you, your 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 you or them.
The Fund's indemnification agreement contained in this paragraph 4.1 and
the Fund'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 you, your officers and directors, or any
controlling person, and shall survive the delivery of any of the Fund's
Shares. This agreement of indemnity will inure exclusively to your
benefit, to the benefit of your several officers and directors, and their
respective estates, and to the benefit of the controlling persons and
their successors. The Fund agrees to notify you promptly of the
commencement of any litigation or proceedings against the Fund or any of
its officers or Board members in connection with the issuance and sale of
any of the Fund's Shares.
4.2 You agree to indemnify, defend and hold the Fund, its
several officers and Board members, and any person who controls the Fund
within the meaning of Section 15 of the 1933 Act, 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) that
the Fund, its officers or Board members or any such controlling person may
incur under the 1933 Act, or under common law or otherwise, but only to
the extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting from such
claims or demands shall arise out of or be based upon (a) any unauthorized
sales literature, advertisements, information, statements or
representations or (b) any untrue, or alleged untrue, statement of a
material fact contained in information furnished in writing by you to the
Fund and used in the answers to any of the items of the registration
statement or in the corresponding statements made in the prospectus or
statement of additional information, 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 you to the Fund
and required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the Fund, its
officers or Board members, and any such controlling person, as aforesaid,
is expressly conditioned upon your being notified of any action brought
against the Fund, its officers or Board members, or any such controlling
person, such notification to be given by letter or telegram addressed to
you at your principal office in Boston, Massachusetts and sent to you by
the person against whom such action is brought, within ten days after the
summons or other first legal process shall have been served. You shall
have the right to control the defense of such action, with counsel of your
own choosing, satisfactory to the Fund, if such action is based solely
upon such alleged misstatement or omission on your part or with the Fund's
consent, and in any event the Fund, its officers or Board members or such
controlling person shall each have the right to participate in the defense
or preparation of the defense of any such action with counsel of its own
choosing reasonably acceptable to you but shall not have the right to
settle any such action without your consent, which will not be
unreasonably withheld. The failure to so notify you of any such action
shall not relieve you from any liability that you may have to the Fund,
its officers or Board members, or to such controlling person by reason of
any such untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of your indemnity agreement contained
in this paragraph 4.2. You agree to notify the Fund promptly of the
commencement of any litigation or proceedings against you or any of your
officers or directors in connection with the issuance and sale of any of
the Fund's Shares.
5. Effectiveness of Registration
No Shares shall be offered by either you or the Fund under any of
the provisions of this Agreement and no orders for the purchase or sale of
such Shares under this Agreement shall be accepted by the Fund if and so
long as the 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, or if and so long as a current prospectus as
required by Section 5(b) (2) of the 1933 Act is not on file with the SEC;
provided, however, that nothing contained in this paragraph 5 shall in any
way restrict or have an application to or bearing upon the Fund's
obligation to repurchase its Shares from any shareholder in accordance
with the provisions of the Fund's prospectus, statement of additional
information or charter documents, as amended from time to time.
6. Offering Price
Shares of any class of any Series of the Fund offered for sale by
you shall be offered for sale at a price per share (the "offering
price") equal to (a) their net asset value (determined in the manner set
forth in the Fund's charter documents and the then-current prospectus and
statement of additional information) plus (b) a sales charge, if
applicable, which shall be the percentage of the offering price of such
Shares as set forth in the Fund's then-current prospectus relating to such
Series. In addition to or in lieu of any sales charge applicable at the
time of sale, Shares of any class of any Series of the Fund offered for
sale by you may be subject to a contingent deferred sales charge as set
forth in the Fund's then-current prospectus and statement of additional
information. You shall be entitled to receive any sales charge levied at
the time of sale in respect of the Shares without remitting any portion to
the Fund. Any payments to a broker or dealer through whom you sell Shares
shall be governed by a separate agreement between you and such broker or
dealer and the Fund's then-current prospectus and statement of additional
information
7. Notice to You
The Fund agrees to advise you immediately in writing:
(a) of any request by the SEC for
amendments to the registration statement,
prospectus or statement of additional
information then in effect or for additional
information;
(b) in the event of the issuance by the
SEC of any stop order suspending the
effectiveness of the registration statement,
prospectus or statement of additional
information then in effect or the initiation 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, prospectus
or statement of additional information then in
effect or that requires the making of a change
in such registration statement, prospectus or
statement of additional
information in order to make the statements
therein not misleading; and
(d) of all actions of the SEC with
respect to any amendment to the registration
statement, or any supplement to the prospectus
or statement of additional information which
may from time to time be filed with the SEC.
8. Term of the Agreement
This Agreement shall become effective on the date hereof, shall have
an initial term of one year from the date hereof, and shall continue for
successive annual periods thereafter so long as such continuance is
specifically approved at least annually by (a) the Fund's Board or (b) by
a vote of a majority (as defined in the 0000 Xxx) of the Fund's
outstanding voting securities, provided that in either event the
continuance is also approved by a majority of the Board members of the
Fund who are not interested persons (as defined in the 0000 Xxx) 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 30 days' notice by the Fund's Board or by vote of
holders of a majority of the relevant Series outstanding voting
securities, or on 90 days' notice by you. This Agreement will also
terminate automatically, as to the relevant Series, in the event of its
assignment (as defined in the 1940 Act and the rules and regulations
thereunder).
9. Arbitration
Any claim, controversy, dispute or deadlock arising under this
Agreement (collectively, a "Dispute") shall be settled by arbitration
administered under the rules of the American Arbitration Association
("AAA") in New York, New York. Any arbitration and award of the
arbitrators, or a majority of them, shall be final and the judgment upon
the award rendered may be entered in any state or federal court having
jurisdiction. No punitive damages are to be awarded.
10. Miscellaneous
So long as you act as a principal underwriter and distributor of
Shares, you shall not perform any services for any entity other than
investment companies advised or administered by Citigroup Inc. or its
subsidiaries. The Fund recognizes that the persons employed by you to
assist in the performance of your duties under this Agreement may not
devote their full time to such service and nothing contained in this
Agreement shall be deemed to limit or restrict your or any of your
affiliates right to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature. This
Agreement and the terms and conditions set forth herein shall be governed
by, and construed in accordance with, the laws of the State of New York.
11. Limitation of Liability (Massachusetts business trusts only)
The Fund and you agree that the obligations of the Fund under this
Agreement shall not be binding upon any of the Trustees, shareholders,
nominees, officers, employees or agents, whether past, present or future,
of the Fund, individually, but are binding only upon the assets and
property of the Fund, as provided in the Master Trust Agreement. The
execution and delivery of this Agreement have been authorized by the
Trustees and signed by an authorized officer of the Fund, acting as such,
and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Fund as provided in its Master
Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning to us
the enclosed copy, whereupon this Agreement will become binding on you.
Very truly yours,
XXXXX XXXXXX WORLD FUNDS, INC.
By: _____________________
Authorized Officer
Accepted:
CFBDS, INC.
By: __________________________
Authorized Officer
Tg:\legal\general\forms\agreemts\dist12b1\SBWorldFunds
EXHIBIT A
Xxxxx Xxxxxx World Funds, Inc.
Emerging Markets Portfolio
European Portfolio
Global Government Bond Portfolio
International Balanced Portfolio
International Equity Portfolio
Pacific Portfolio
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