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Draft - 1/29/96
THE COUNTRYBASKETS INDEX FUND, INC.
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT (the "Agreement") made as of
, 1996, between THE COUNTRYBASKETS INDEX FUND, INC., a
Maryland corporation (the "Fund"), and ALPS MUTUAL FUNDS SERVICES, INC., a
Colorado corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Fund is an open-end management investment company
organized as a series fund and registered under the Investment Company Act
of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund is authorized to issue shares of common
stock, par value $.001 per share (the "Shares"), in one or more series
(each, a "Series"), currently consisting of the Series listed in Annex A
hereto; and
WHEREAS, the Shares of each Series will be listed on the New
York Stock Exchange ("NYSE") and traded under the symbols set forth in
Annex A hereto; and
WHEREAS, the Fund will sell and redeem Shares of each Series
only in aggregations constituting a Creation Unit as such term is used in
the Registration Statement (as defined herein), in accordance with the
terms and conditions set forth therein; and
WHEREAS, the Distributor is a registered broker-dealer under
the Securities Exchange Act of 1934, as amended (the "1934 Act"); and
WHEREAS, the Fund desires to retain the Distributor to act as
distributor with respect to the continuous offering and sale of Shares of
each Series in Creation Unit aggregations as set forth in the Fund's
Registration Statement, to provide for the servicing of stockholder
accounts and to enter into arrangements with dealers; and
WHEREAS, the Distributor desires to render these services to
the Fund; and
WHEREAS, the Board of Directors of the Fund has adopted a Plan
of Distribution pursuant to Rule 12b-1 under the 1940 Act with respect to
each Series (collectively, the
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"12b-1 Plan") and may make payments to the Distributor pursuant to such
12b-1 Plan, subject to and in accordance with the terms and conditions
thereof and any related agreements;
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the Fund and the Distributor hereby agree as
follows:
Section 1
Distribution and Stockholder Services
1.1 Appointment. The Fund hereby appoints the Distributor as
the exclusive distributor for the continuous offering and sale of the
Shares of each Series in Creation Unit aggregations on the terms and for
the periods set forth in this Agreement, and the Distributor hereby accepts
such appointment and agrees to act in such capacity hereunder.
1.2 Definitions.
(a) The term "Registration Statement" shall mean the
registration statement most recently filed from time to time by the
Fund with the Securities and Exchange Commission (the "Commission")
and effective under the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act, as such registration statement is amended by
any amendments thereto at the time in effect.
(b) The term "Prospectus" shall mean the prospectus included
as part of the Fund's Registration Statement, as such prospectus may
be amended or supplemented from time to time.
(c) The term "Statement of Additional Information" shall mean
the Statement of Additional Information included as part of the
Fund's Registration Statement, as such Statement of Additional
Information may be amended or supplemented from time to time.
(d) All capitalized terms used but not defined in this
Agreement shall have the meanings ascribed to such terms in the
Registration Statement.
1.3 Distributor's Duties. The Distributor shall have the
following duties:
(a) The Distributor agrees to sell, as agent for each Series,
from time to time during the term of this
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Agreement, Shares of each Series in Creation Unit size aggregations
specified for such Series in the Registration Statement on the terms
described therein and in accordance with the provisions hereof. Each
Series reserves the right to issue and sell Shares in the event that
the Distributor, either in the exercise of its rights or in breach of
its covenants hereunder, is not selling Creation Unit aggregations of
Shares of such Series.
(b) At the request of the Fund, the Distributor shall enter
into an agreement in the form specified by the Fund (each an
"Authorized Participant Agreement") with selected participants in the
system for book-entry of securities of The Depository Trust Company
("DTC") (or any successor depository thereto) (each an "Authorized
Participant").
(c) Upon commencement of the Fund's operations, the
Distributor will hold itself available to receive notices of
intention to purchase (other than in the case of the US Index Series)
and purchase orders in the form specified by the Fund from Authorized
Participants for the purchase of Creation Unit size aggregations of
Shares of each Series on Business Days designated for such Series and
on the terms and in the manner set forth in the Prospectus and the
Statement of Additional Information. The Distributor will transmit
each such notice of intention and purchase order received to the
Fund's Custodian and Transfer Agent as promptly as practicable. Upon
confirmation by the Custodian of receipt of the Fund Basket and cash
in an amount sufficient to pay the Cash Component and acceptance by
the Fund or by the Distributor as agent on behalf of the Fund of a
purchase order in "proper form," as defined in the Prospectus and
the Statement of Additional Information, the Distributor will
transmit advice of such acceptance to the Transfer Agent and the
Custodian. Upon receipt of advice from the Transfer Agent of the
issuance of Creation Unit aggregations of Shares pursuant to such
purchase order, the Distributor shall confirm the issuance and sale
of such Creation Unit aggregations of Shares to the Authorized
Participant placing the order by mailing a confirmation, together
with copies of the Prospectus and the Statement of Additional
Information. Purchase orders shall be deemed effective only at the
time accepted by the Fund or by the Distributor as agent of the Fund.
The Fund, and the Distributor on behalf of the Fund, each reserves
the right to reject any purchase order until acceptance.
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(d) The offering price of each Creation Unit aggregation of
Shares of a Series shall be the net asset value per Share for such
Series next determined following receipt of a purchase order in
proper form and shall be determined as set forth in the Registration
Statement. The Fund will cause the Custodian to furnish or cause to
be furnished to the Distributor, promptly after 4:00 p.m., New York
time, an advice (i) on each day the NYSE is open of each computation
of net asset value per Share of each Series and (ii) on each Business
Day for a Series on which Creation Unit aggregations of Shares are
sold of the amount of the Cash Component for each Series on such
Business Day.
(e) Based on information provided to it, the Distributor will
make available by 8:00 p.m., New York time, following the computation
of the net asset value of Shares of each Series at the close of
business on the NYSE (presently 4:00 p.m. New York time) on each day
the NYSE is open for business as set forth in the Registration
Statement (i) the list of names and the required number of shares of
each of the portfolio securities constituting the Fund Basket for
each Series, as designated by the Fund's investment adviser (which
shall be the Fund Basket for redemption for such Series on the next
NYSE business day and for purchases on a designated subsequent
Business Day as described in the Registration Statement), and
(ii) the amount of the Cash Component for purchases of Creation Unit
size aggregations of Shares of such Series on such Business Day (or
if such day is not a Business Day, on the previous Business Day), as
designated by the Fund's Custodian.
(f) In performing its duties hereunder, the Distributor shall
act in conformity with the Articles of Incorporation, By-Laws,
Registration Statement and each Prospectus and Statement of
Additional Information relating to Shares of the Fund and with the
instructions and directions of the Board of Directors of the Fund,
and will comply with and conform in all material respects to the
requirements of the 1933 Act, the 1934 Act and the 1940 Act and all
other applicable federal and state laws, regulations and rulings, and
the rules and regulations of the National Association of Securities
Dealers, Inc. ("NASD").
(g) The Distributor shall not be obligated to sell any certain
number of Creation Unit size aggregations of Shares of any Series,
and, subject to
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Section 6.6 hereof, nothing herein contained shall prevent the
Distributor from entering into like distribution arrangements with
other investment companies.
(h) The Distributor may enter into written dealer agreements
("Dealer Agreements") and service agreements ("Service Agreements"),
in each case in the forms approved by the Board of Directors of the
Fund, with registered broker-dealers and other persons, as the case
may be, for distribution, marketing and for stockholder services to
stockholders of one or more Series. Such Dealer Agreements may be
entered into with registered broker-dealers who are members of the
NASD or foreign securities dealers who are not eligible for
membership in the NASD who have agreed to comply with the applicable
provisions of the Rules of Fair Practice of the NASD. Each Dealer
Agreement and Service Agreement shall be subject to annual approval
by the Board of Directors of the Fund and if payments thereunder are
to be made pursuant to the 12b-1 Plans shall comply with the terms
and conditions thereof.
(i) The Distributor agrees to be responsible for implementing
and/or operating the 12b-1 Plans in accordance with the terms
thereof, including maintaining Dealer Agreements and Service
Agreements and processing payments and reimbursements thereunder (in
conjunction with the services provided with respect thereto by the
Fund's administrator).
(j) The Distributor shall provide toll-free lines for direct
investor and stockholder use between the hours of 6:30 a.m. to
7:00 p.m. Mountain time on each day that the NYSE is open for
business, with appropriate NASD licensed order taking and
distribution services staff.
(k) The Distributor shall clear and file all advertising,
sales, marketing and promotional materials of the Fund provided to
the Distributor, or in the preparation of which it has participated,
with the NASD as required by the 1933 Act and the 1940 Act, and the
rules promulgated thereunder, and by the rules of the NASD.
(l) The Distributor will ensure that all direct requests for
Prospectuses and Statements of Additional Information are fulfilled.
In addition, the Distributor will arrange to provide the NYSE (and
any other national stock exchange on which the Shares may
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be listed) with copies of Prospectuses to be provided to purchasers
in the secondary market. The Distributor will generally make it
known in the brokerage community that prospectuses and statements of
additional information are available, [including] by (i) advising the
NYSE on behalf of its member firms of the same, (ii) making such
disclosure in all marketing and advertising materials prepared and/or
filed by the Distributor with the NASD, and (iii) as may otherwise be
required by the Commission.
(m) The Distributor agrees to make available at its own cost
and expense one or more members of its staff to attend all Board
meetings of the Fund in order to provide information with regard to
the ongoing distribution process and for such other purposes as may
be requested by the Board of Directors of the Fund.
(n) The Distributor will provide and maintain a direct
computer communications link with the DTC, the Fund's Transfer Agent
and Custodian and the National Securities Clearing Corporation, Inc.
(the "NSCC"). The Distributor will compare for consistency the Fund
Basket for each Series as made available by the NSCC through its
systems with the composition of the Fund Basket as provided to the
Distributor.
(o) The Distributor shall examine the notices of intention to
purchase and purchase order forms submitted by Authorized
Participants with respect to the representations made therein to
determine whether the beneficial owners of the Creation Unit or Units
if purchased in accordance with such order upon issuance of such
Shares would own or hold 80% or more of the outstanding Shares of
such Series for purposes of compliance with section 351 of the
Internal Revenue Code of 1986, as amended, and shall review the
determination of the Transfer Agent with respect thereto.
(p) The Distributor shall consult with Authorized Participants
with respect to estimating the amount of the Cash Component for
purchase of Creation Unit aggregations of Shares of each Series.
(q) The Distributor shall consult with the Fund with respect
to the production and printing of prospectuses to be used in
connection with purchases by new investors of Creation Unit
aggregations of Shares of each Series.
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(r) The Distributor may, and at the request of the Fund shall,
cause a subsidiary or affiliate to enter into a service contract with
the transfer agent of the Fund to provide certain administrative and
processing services for the transfer agent in order to further the
purposes and procedures set forth in the Prospectus and the Statement
of Additional Information.
(s) In performing its duties hereunder the Distributor shall
be entitled to rely on and shall not be responsible in any way for
information provided to it by the Fund and its service providers and
shall not be liable or responsible for the errors and omissions of
such service providers, provided that the foregoing shall not be
construed to protect the Distributor against any liability to the
Fund or its stockholders to which the Distributor would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
1.4 The Fund's Duties. The Fund shall have the following
duties:
(a) The Fund agrees to sell Creation Unit size aggregations of
Shares of each Series, subject to paragraph (e) of this Section 1.4,
so long as it has Shares of such Series available for sale and to
request the Transfer Agent to record on its books the ownership of
such Shares in accordance with the book-entry system procedures
described in the Prospectus and the Statement of Additional
Information in such amounts as the Distributor has requested in
writing or other means of data transmission, as promptly as
practicable after receipt by Custodian on behalf of the Fund of the
Fund Basket and Cash Component (together with any fees) for such
purchases and acceptance by the Fund or by the Distributor on behalf
of the Fund of a purchase order for such Shares, upon the terms
described in the Registration Statement.
(b) The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers which the
Distributor may reasonably request for use of each Series in
connection with the distribution of Shares, and this shall include
one certified copy, upon request by the Distributor, of all financial
statements for each Series by independent accountants and such
reasonable number of copies of the Prospectus, Statement of
Additional Information and the
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Fund's annual and interim reports as the Distributor may request.
The Fund authorizes the Distributor to use the Prospectus and
Statement of Additional Information, but the Fund shall not be
responsible in any way for any information, statements or
representations given or made by the Distributor or its
representatives or agents other than such information, statements or
representations as are contained in the Prospectus and Statement of
Additional Information or financial reports filed by the Fund or in
any sales literature or advertisements specifically approved by the
Fund in writing.
(c) The Fund shall take, from time to time, such steps,
including payment of the related filing fees, as may be necessary to
register Shares under the 1933 Act and the 1940 Act to the end that
there will be available for sale such number of Creation Unit size
aggregations of Shares of each Series as the Distributor may be
expected to sell. The Fund agrees to file from time to time such
amendments, supplements, reports and other documents as may be
necessary in order that there may be in a Registration Statement,
Prospectus or Statement of Additional Information no (i) untrue
statement of a material fact or (ii) omission to state a material
fact necessary in order to make the statements therein, in the case
of the Prospectus and Statement of Additional Information in light of
the circumstances in which made, not misleading. The Distributor
shall furnish such information and other material relating to its
affairs and activities as may be required by the Fund for inclusion
in the Registration Statement, Prospectus or Statement of Additional
Information.
(d) The Fund shall keep the Distributor informed of the states
and other foreign and domestic jurisdictions in which the Fund has
qualified and maintains the qualification of Shares of the respective
Series for sale under the securities laws thereof. The Distributor
shall furnish such information and other material relating to its
affairs and activities as may be required by the Fund in connection
with such qualifications.
(e) The Fund may reject any purchase order for Creation Unit
aggregations of Shares or stop all sales of Shares at any time or
from time to time upon notice to the Distributor.
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1.5 Representations.
(a) The Distributor represents and warrants to the Fund that
(i) it is duly organized as a Colorado corporation and is and at all
times will remain duly authorized and licensed to carry out its
services as contemplated herein; and (ii) its entering into this
Agreement or providing the services contemplated hereby does not
conflict with or constitute a default or require a consent under or
breach of any provision of any agreement or document to which the
Distributor is a party or by which it is bound (except for any
consent in writing which shall have been obtained by the date hereof,
including the consent of the Mariner Funds Trust and the Mariner
Mutual Funds Trust).
(b) The Fund represents and warrants to the Distributor that
(i) the Registration Statement and the Prospectus have been or will
be, as the case may be, prepared in conformity in all material
respects with the 1933 Act, the 1940 Act and the rules and
regulations of the Commission (the "Rules and Regulations"); (ii)
contain or will contain all statements required to be stated therein
in accordance with the 1933 Act, the 1940 Act and the Rules and
Regulations; and (iii) all statements of fact contained or to be
contained therein are or will be true and correct in all material
respects at the time indicated or the effective date, as the case may
be, and neither the Registration Statement nor the Prospectus, when
it shall become effective under the 1933 Act or be authorized for
use, shall 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, in the case of the Prospectus in light
of the circumstances in which made, not misleading. The Fund shall
from time to time file such amendment or amendments to the
Registration Statement and the Prospectus as, in the light of future
developments, shall, in the opinion of the Fund's counsel, be
necessary in order to have the Registration Statement and the
Prospectus at all times contain all material facts required to be
stated therein or necessary to make the statements therein, in the
case of the Prospectus in light of the circumstances in which made,
not misleading to a purchaser of shares. If the Fund shall not file
such amendment or amendments within 15 days after receipt by the Fund
of a written request from the Distributor to do so, the Distributor
may, at its option, cease to accept orders for the purchase of
Creation Units of Shares until such
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amendment is filed. The Fund shall not file any amendment to the
Registration Statement or the Prospectus without giving the
Distributor reasonable notice thereof in advance, provided that
nothing in this Agreement shall in any way limit the Fund's right to
file at any time such amendments to the Registration Statement or the
Prospectus as the Fund may deem advisable. Notwithstanding the
foregoing, the Fund shall not be deemed to make any representation or
warranty as to any information or statement provided by the
Distributor for inclusion in the Registration Statement or the
Prospectus.
Section 2
Fees and Expenses
2.1 Compensation of the Distributor. Except to the extent
that may be provided in Section 2.2, the Distributor shall not receive any
payment or compensation with respect to the provision of distribution
services under this Agreement; provided, however, that the Distributor
shall be entitled to receive payments, if any, under the 12b-1 Plan in
accordance with the terms thereof.
2.2 Expenses. (a) Each Series shall bear all costs and
expenses of the continuous offering of the Creation Unit size aggregations
of Shares of such Series in connection with: (i) fees and disbursements of
the Fund's counsel and independent accountants, (ii) the preparation,
filing and printing of any registration statements, prospectuses and/or
statements of additional information required to be filed by and under
federal and state securities laws or required to be delivered by dealers in
connection with purchases and sales of Shares on the NYSE, (iii) the
preparation and mailing of annual and interim reports, prospectuses and
proxy materials required to be distributed to stockholders, (iv) any
qualifications of Shares for sale and of the Fund as a broker or dealer
under the securities laws of such states or other foreign or domestic
jurisdictions as shall be selected by the Fund pursuant to Section 1.4(d)
hereof and the cost and expenses payable to each such state for continuing
qualification therein and (v) all fees and expenses incident to the listing
of the Shares of each Series on the NYSE or any other stock exchange.
(b) The Distributor shall bear the following costs and
expenses relating to the distribution of the Shares: (i) the costs (other
than those payable pursuant to the Fund's agreement with its Transfer
Agent) of generating
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and mailing confirmations of purchases of Creation Unit aggregations of
Shares, mailing accompanying Prospectuses and Statements of Additional
Information and generating and transmitting confirmations of redemptions of
Shares, (ii) all costs of maintaining the records required of a
broker/dealer registered under the 1934 Act; (iii) incremental printing and
mailing costs for prospectuses to be used in connection with offers and
sales to prospective investors of Creation Units of Shares up to a maximum
of $25,000 per annum; (iv) the expenses of maintaining its registration or
qualification as a dealer or broker under federal or state laws; (v) the
expenses incurred by the Distributor and its officers for attending regular
and special meetings of the Board of Directors of the Fund held in the
United States (or approximately equivalent amounts in the case of such
meetings held outside of the United States), and (vi) all other expenses
incurred in connection with the distribution services as contemplated
herein, except as otherwise specifically provided in this Agreement.
2.3 Segregation of Fees and Expenses. Amounts paid by each
Series to the Distributor under its 12b-1 Plan either for distribution
related services or stockholder services shall not be used to pay for the
distribution of Shares of, or stockholder servicing in respect of, any
other Series. However, fees under the 12b-1 Plan attributable to the Fund
as a whole shall be allocated to each Series according to the method
adopted by the Fund's Board of Directors. Fees attributable to the Fund as
a whole shall include any amounts payable under the 12b-1 Plans to the
Distributor for its services rendered hereunder. The Distributor's
allocation of such 12b-1 Plan fees shall be subject to review by the Fund's
Board of Directors.
Section 3
Indemnification
3.1 Indemnification of Distributor. The Fund agrees to
indemnify, defend and hold the Distributor, its officers and directors and
any person who controls the Distributor within the meaning of Section 15 of
the 1933 Act (any of the Distributor, its officers and directors or such
control persons, for purposes of this Section 3.1, an "Indemnitee"), free
and harmless from and against any and all claims, demands, liabilities, and
expenses (including costs reasonably incurred in connection with
investigating or defending such claims, demands or liabilities and any
counsel fees reasonably incurred in connection therewith) which the
Indemnitee may incur, under the 1933 Act or under
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common law or otherwise, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in the Fund's
Registration Statement, or the omission or alleged omission to state in
such document a material fact required to be stated therein or necessary to
make the statements therein not misleading or, with respect to the
Prospectus or the Statement of Additional Information or any amendment or
supplement thereto, any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state in such document a
material fact required to be stated therein or necessary to make the
statements therein in the light of the circumstances under which they were
made, not misleading; provided, however, that nothing in this Section 3.1
shall protect the Indemnitee against any liability to the Fund or its
security holders that the Indemnitee would otherwise be subject to (i) by
reason of willful malfeasance, bad faith, or gross negligence in the
performance of its duties, (ii) by reason of the Indemnitee's reckless
disregard of its obligations and duties under this Agreement, or
(iii) where such liability arises out of or is based upon any untrue
statement or omission or alleged untrue statement or omission in the Fund's
Registration Statement, Prospectus or Statement of Additional Information
that was made in reliance upon and in conformity with written information
furnished by the Distributor to the Fund; and provided, further, that the
Fund will not be liable in any such case to the Indemnitee with respect to
any untrue statement or omission or alleged untrue statement or omission
made in the Registration Statement, the Prospectus or the Statement of
Additional Information that is subsequently corrected in such document (or
an amendment thereof or supplement thereto), if a copy of the Prospectus or
Statement of Additional Information (or such amendment thereof or
supplement thereto) was not sent or given to the person asserting any such
claim, demand, liability or expense at or before the written confirmation
of the sale to such person in any case where such delivery is required by
the 1933 Act and the Fund had notified the Distributor of the amendment or
supplement prior to sending of the written confirmation of sale.
Notwithstanding the foregoing, this indemnity of any person who is an
officer or director of the Distributor and who is also a director of the
Fund shall not inure to the benefit of such officer or director unless a
court of competent jurisdiction shall determine, or it shall have been
determined by controlling precedent, that such result would not be against
public policy as expressed in the 1933 Act or the 1940 Act, and in no event
shall anything contained herein be so construed as to protect the
Distributor against any liability to the Fund or its stockholders to which
the Distributor would otherwise be
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subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement. The Fund's obligation to
indemnify the Indemnitee is expressly conditioned upon the Indemnitee's
notification of the Fund of the commencement of any action against the
Indemnitee, which notification shall be given by letter or by facsimile
transmission 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 Indemnitee's failure to so notify the Fund
shall not relieve the Fund of any liability which it may have to the
Indemnitee by reason of any such alleged untrue statement or omission or
alleged untrue statement or omission independent of this indemnification.
The Fund will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability and to retain legal counsel of
good standing chosen by the Fund and approved by the Indemnitee (such
approval not to be unreasonably withheld). If the Fund elects to assume
the defense of any such suit and retain counsel approved by the Indemnitee,
the defendant or defendants in such suit shall bear the fees and expenses
of any additional counsel retained by any of them. In the event the Fund
does not elect to assume the defense of any such suit and retain counsel of
good standing approved by the Indemnitee or the Indemnitee does not approve
of the counsel chosen by the Fund (such approval not to be unreasonably
withheld), the defendant or defendants in such suit shall bear the fees and
expenses of any counsel retained by any of them and the Fund shall
reimburse any Indemnitee named as defendant in such suit for the reasonable
fees and expenses of any such counsel retained by them. The
indemnification agreement contained in this Section 3.1 shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of the Indemnitee and shall survive the sale of any
Creation Units of Shares made pursuant to purchase orders obtained by the
Indemnitee. This indemnification will inure exclusively to the benefit of
the Indemnitee and its successors, assigns and estate. The Fund shall
promptly notify the Indemnitee of the commencement of any litigation or
proceeding against the Fund in connection with the issue and sale of any
Creation Units of Shares.
3.2 Indemnification of the Fund. The Distributor agrees to
indemnify, defend, and hold the Fund, its several officers and directors
and any person who controls the Fund within the meaning of Section 15 of
the 1933 Act (for purposes of this Section 3.2, the Fund, its officers and
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directors, and its controlling persons are collectively referred to as the
"Fund Affiliates"), free and harmless from and against any and all claims,
demands, liabilities, and expenses (including costs reasonably incurred in
investigating or defending such claims, demands or liabilities and any
counsel fees reasonably incurred in connection therewith) which the Fund
Affiliates may incur under the 1933 Act or under common law or otherwise,
but only to the extent that such liability or expense shall arise out of or
be based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in information furnished by the Distributor to the
Fund for use in the Registration Statement, Prospectus or Statement of
Additional Information in effect from time to time under the 1933 Act, or
(ii) any omission or alleged omission, on the part of the Distributor, to
state a material fact in connection with such information required to be
stated in the Registration Statement, Prospectus or Statement of Additional
Information or necessary to make such information not misleading, it being
understood that the Fund will rely upon the information provided by the
Distributor for use in the preparation of the Registration Statement, the
Prospectus and the Statement of Additional Information, or (iii) any
alleged act or omission on the Distributor's part as the Fund's agent that
has not been expressly authorized by the Fund in writing. The
Distributor's obligation to indemnify the Fund Affiliates is expressly
conditioned upon the Distributor being notified of the commencement of any
action brought against the Fund Affiliates, which notification shall be
given by letter or facsimile transmission addressed to the Distributor at
its principal offices in Denver, Colorado, and sent to the Distributor 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 Fund
Affiliates' failure to notify the Distributor of the commencement of any
such action shall not relieve the Distributor from any liability which it
may have to the Fund Affiliates by reason of any such untrue statement or
omission or alleged untrue statement or omission on the part of the
Distributor independent of this indemnification. The Distributor shall
have a right to control the defense of such action, with counsel of its own
choosing, satisfactory to the Fund Affiliates, if such action is based
solely upon such untrue statement or omission or alleged untrue statement
or omission on its part, and in any other event the Distributor and the
Fund Affiliates shall each have the right to participate in the defense or
preparation of the defense of such action at their own expense.
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Section 4
Duration, Termination, and Amendment
4.1 Duration. This Agreement shall become effective on
, 1996 and continue, unless terminated as provided in Section
4.2 or Section 4.5(a), until , 1998. This Agreement shall
thereafter be renewed for successive one-year periods only so long as such
continuance or renewal is specifically approved at least annually with
respect to each Series as to which it is to continue in effect by both
(a) the Fund's Board of Directors or the vote of a majority of the
outstanding voting securities (as such term is defined in the 0000 Xxx) of
the Fund and (b) a majority of the Fund's directors who are not parties to
this Agreement or "interested persons" (as defined in the 0000 Xxx) of
either party hereto cast in person at a meeting called for the purpose of
voting on approval of this Agreement, and, if applicable, as provided in
Section 4.5(a).
4.2 Termination. Subject to Section 4.5(b), this Agreement
may be terminated at any time as to any Series, without penalty, upon 60
days' prior written notice to the other party by the Fund or by the
Distributor. If this Agreement is terminated with respect to any Series,
it shall nevertheless remain in effect with respect to any remaining
Series.
4.3 Assignment. This Agreement shall automatically terminate
in the event of its "assignment." As used in this Agreement, the term
"assignment" shall have the meaning such term has in the 1940 Act.
4.4 Amendment. Subject to Section 4.5(c), this Agreement may
be amended by mutual consent, provided that no provision of this Agreement
may be changed, waived, discharged or terminated except by an instrument in
writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought, and that the Fund's consent to
any material amendment to this Agreement requires the approval provided for
in Section 4.1.
4.5 Rule 12b-1 Requirements. During such period as the
Distributor receives compensation pursuant to the 12b-1 Plan and this
Agreement constitutes a 12b-1 Plan related agreement:
(a) This Agreement shall continue in effect from and after
________, 1997 only if such continuance is specifically approved
annually as to any Series as to which it is to continue in effect by
the vote of both
16
(x) the Fund's Board of Directors or a majority of its outstanding
voting securities (as defined in the 0000 Xxx) and (y) by the
directors who are not "interested persons" (as defined in the 0000
Xxx) of the Fund and have no direct or indirect financial interest in
the operation of the 12b-1 Plan or in any agreements related thereto
(the "Independent Directors"), cast in person at a meeting called for
the purpose of voting on such Plan or related agreements.
(b) This Agreement may be terminated, without the payment of
any penalty, by the Fund as to any Series by vote of a majority of
the Independent Directors or by a vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the
Fund, or by the Distributor, in either case, on sixty days' prior
written notice to the other party.
(c) Any material amendment to this Agreement requires the
approval provided for in Section 4.1(a) with respect to annual
renewals of this Agreement, and any amendment that materially
increases the amount to be spent for distribution services requires
the additional approval of the majority of the Fund's outstanding
voting securities (as defined in the 0000 Xxx) of each affected
Series.
(d) The selection and nomination of those directors who are
not "interested persons" (as defined in the 0000 Xxx) of the Fund
shall be committed to the discretion of the directors of the Fund who
are not such "interested persons" of the Fund.
Section 5
Notice
5.1 Conditions. The Fund shall notify the Distributor
immediately of:
(a) any request by the Commission for amendments to the Fund's
Registration Statement, Prospectus or Statement of Additional
Information or for additional information;
(b) any stop order suspending the effectiveness of the Fund's
Registration Statement or the initiation of any proceeding for that
purpose;
17
(c) all actions of the Commission with respect to any
amendment to the Fund's Registration Statement, Prospectus or
Statement of Additional Information.
5.2 Notification of Parties. Any notice or other
communication required or permitted to be given pursuant to this Agreement
shall be deemed duly given if addressed and delivered, or mailed by
registered mail, postage prepaid, to (1) ALPS Mutual Funds Services, Inc.,
at 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000, Attention: Chief
Financial Officer and (2) The CountryBaskets Index Fund, Inc. at 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Secretary.
Section 6
Miscellaneous
6.1 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
6.2 Captions. The captions in this Agreement are included for
convenience only and in no way define or limit any of the provisions hereof
or otherwise affect their construction.
6.3 Severability. If any provisions of this Agreement shall
be held or made invalid, in whole or in part, then the other provisions of
this Agreement shall remain in force. Invalid provisions shall, in
accordance with this Agreement's intent and purpose, be amended, to the
extent legally possible, by valid provisions in order to effectuate the
intended results of the invalid provisions.
6.4 Seed Money. The Distributor shall not redeem any Shares
which it owns and has invested in as seed money in a Series during the
first five years of the Fund's operations without obtaining approval by the
Fund's Board of Directors prior to any such redemption. Thereafter, the
Distributor may make such a redemption in its sole discretion. In the
event that this Agreement is terminated, the Distributor shall be entitled
to redeem such Shares subject to applicable regulatory requirements.
6.5 Insurance. The Distributor will maintain at its expense
an errors and omissions insurance policy which covers services by the
Distributor hereunder.
6.6 Exclusivity. The Distributor agrees to obtain the prior
written approval of the Board of Directors
18
of the Fund before agreeing to render or rendering any distribution or
marketing services to an investment company, whether directly or through
any affiliate ("distribution services"), if the total number of such
distribution services arrangements to be provided by the Distributor and
its affiliates on behalf of registered investment companies shall be more
than nine (9) in number. None of the nine distribution services
arrangements may be for an investment product substantially similar to the
CB Shares(TM), which involves an investment company registered under the
1940 Act and listing of the securities for trading on the NYSE or on
another securities exchange; provided further that no more than one (1)
such distribution services arrangement may be with a company that is
primarily a registered broker-dealer with more than 24 retail offices
(other than bank branches). The foregoing provisos shall not be
applicable: (i) at any time after April 28, 1997; (ii) if the Distributor
provides services to investment companies which are not distribution
services and (iii) if the total net assets of the Fund are below $1 billion
at any time nine months after the initial issuance of Creation Units of
shares.
6.7 Separate and Additional Series. The Fund is entering into
this Agreement on behalf of the Series listed on Annex A severally and not
jointly. Except as otherwise indicated herein, the responsibilities and
benefits set forth in this Agreement shall refer to each Series severally
and not jointly. Except as provided in Section 2.3 hereof, no individual
Series shall have any responsibility for any obligation, if any, with
respect to any other Series arising out of this Agreement. The Fund will
initially issue and sell Shares of the Series listed in Annex A to this
Agreement. In the event that the Fund is authorized to issue and issues
Shares of one or more additional Series with respect to which it wishes to
retain the Distributor to act as distributor and principal underwriter
hereunder, the Fund shall notify the Distributor in writing. Upon written
acceptance by the Distributor, such Series shall become subject to the
provisions of this Agreement to the same extent as the existing Series,
except to the extent that such provisions may be modified with respect to
each additional Series in writing by the Fund and the Distributor at the
time of the addition of the Series.
19
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day and year first written above.
THE COUNTRYBASKETS INDEX FUND, INC.
By:
Name:
Title:
ALPS MUTUAL FUNDS SERVICES, INC.
By:
Name:
Title:
20
No. of Shares
per NYSE CUSIP
Series Creation Unit Symbol No.
Australia Index Series 100,000 GXA 00000X000
France Index Series 100,000 GXF 00000X000
Germany Index Series 100,000 GXG 00000X000
Hong Kong Index Series 100,000 GXH 00000X000
Italy Index Series 100,000 GXI 00000X000
Japan Index Series 250,000 GXJ 00000X000
South Africa Index 100,000 GXR 00000X000
Series
UK Index Series 100,000 GXK 00000X000
US Index Series 100,000 GXU 00000X000
