FORM OF
PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT, between New World Fund, Inc., a Maryland
corporation (the "Fund"), and AMERICAN FUNDS DISTRIBUTORS, INC., a California
corporation ("AFD").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end diversified investment company which
offers shares of common stock and it is a part of the business of the Fund, and
affirmatively in the interest of the Fund, to offer shares of the Fund in an
initial offering during a period that shall terminate on the settlement date,
June 17, 1999, and thereafter either from time to time or continuously as
determined by the Fund's officers subject to authorization by its Board of
Directors; and
WHEREAS, AFD is engaged in the business of promoting the distribution of shares
of investment companies through securities broker-dealers; and
WHEREAS, the Fund and AFD wish to enter into an agreement with each other to
promote the distribution of the shares of the Fund and of all series of the
Fund which may be established in the future;
NOW, THEREFORE, the parties agree as follows:
1. (a) AFD shall be the exclusive principal underwriter for the sale of the
shares of the Fund and of each series of the Fund which may be established in
the future, except as otherwise provided pursuant to the following subsection
(b). The terms "shares of Fund" or "shares" as used herein shall mean shares
of common stock of the Fund and each series which may be established in the
future and become covered by this Agreement in accordance with Section 21 of
this Agreement..
(b) The Fund may, upon 60 days' written notice to AFD, from time to time
designate other principal underwriters of its shares with respect to areas
other than the North American continent, Hawaii, Puerto Rico, and such
countries or other jurisdictions as to which the Fund may have expressly waived
in writing its right to make such designation. In the event of such
designation, the right of AFD under this Agreement to sell shares in the areas
so designated shall terminate, but this Agreement shall remain otherwise in
full force and effect until terminated in accordance with the other provisions
hereof.
2. In the sale of shares of the Fund, AFD shall act as agent of the Fund except
in any transaction in which AFD sells such shares as a dealer to the public, in
which event AFD shall act as principal for its own account.
3. The Fund shall sell shares only through AFD, except that the Fund may, to
the extent permitted by the 1940 Act and the rules and regulations promulgated
thereunder or pursuant thereto, at any time:
(a) issue shares to any corporation, association, trust, partnership or other
organization, or its, or their, security holders, beneficiaries or members, in
connection with a merger, consolidation or reorganization to which the Fund is
a party, or in connection with the acquisition of all or substantially all the
property and assets of such corporation, association, Fund, partnership or
other organization;
(b) issue shares at net asset value to the holders of shares of capital stock
or beneficial interest of other investment companies served as investment
adviser by any affiliated company or companies of The Capital Group Companies,
Inc., to the extent of all or any portion of amounts received by such
shareholders upon redemption or repurchase of their shares by the other
investment companies;
(c) issue shares at net asset value to its shareholders in connection with the
reinvestment of dividends paid and other distributions made by the Fund;
(d) issue shares at net asset value to persons entitled to purchase shares at
net asset value without sales charge or contingent deferred sales charge as
described in the current prospectus which is part of the Fund's Registration
Statement in effect under the Securities Act of 1933, as amended, for each
series issued by the Fund at the time of such offer or sale (the "Prospectus").
4. AFD shall devote its best efforts to the sale of shares of the Fund and
shares of any other mutual funds served as investment adviser by affiliated
companies of The Capital Group Companies, Inc., and insurance contracts funded
by shares of such mutual funds, for which AFD has been authorized to act as a
principal underwriter for the sale of shares. AFD shall maintain a sales
organization suited to the sale of shares of the Fund and shall use its best
efforts to effect such sales in jurisdictions as to which the Fund shall have
expressly waived in writing its right to designate another principal
underwriter pursuant to subsection 1(b) hereof, and shall effect and maintain
appropriate qualification to do so in all those jurisdictions in which it sells
or offers shares for sale and in which qualification is required.
5. Within the United States of America, all dealers to whom AFD shall offer and
sell shares must be duly licensed and qualified to sell shares of the Fund.
Shares sold to dealers shall be for resale by such dealers only at the public
offering price set forth in the current Prospectus. AFD shall not, without the
consent of the Fund, sell or offer for sale any shares of a series issued by
the Fund other than as principal underwriter pursuant to this Agreement.
6. In its sales to dealers, it shall be the responsibility of AFD to insure
that such dealers are appropriately qualified to transact business in the
shares under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of shares shall be the price which is
equal to the net asset value per share as shall be determined by the Fund in
the manner and at the time or times set forth in and subject to the provisions
of the Prospectus of the Fund.
8. All orders for shares received by AFD shall, unless rejected by AFD or the
Fund, be accepted by AFD immediately upon receipt and confirmed at an offering
price determined in accordance with the provisions of the Prospectus and the
1940 Act, and applicable rules in effect thereunder. AFD shall not hold orders
subject to acceptance nor otherwise delay their execution. The provisions of
this Section shall not be construed to restrict the right of the Fund to
withhold shares from sale under Section 16 hereof.
9. The Fund or its transfer agent shall be promptly advised of all orders
received, and shall cause shares to be issued upon payment therefor in New York
or Los Angeles Clearing House Funds.
10. AFD shall adopt and follow procedures as approved by the officers of the
Fund for the confirmation of sales to dealers, the collection of amounts
payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
Commission or the National Association of Securities Dealers, Inc. ("NASD"), as
such requirements may from time to time exist.
11. The compensation for the services of AFD as a principal underwriter under
this Agreement shall be (i) that part of the sales charge which is retained by
AFD after allowance of discounts to dealers as set forth in the effective
prospectus which is part of the Fund's Registration Statement in effect under
the Securities Act of 1933, as amended, and (ii) amounts payable to AFD as
reimbursement of distribution expenses pursuant to the Fund's Plan of
Distribution under Rule 12b-1 under the 1940 Act.
12. The Fund agrees to use its best efforts to maintain its registration as a
diversified open-end management investment company under the 0000 Xxx.
13. The Fund agrees to use its best efforts to maintain an effective Prospectus
under the Securities Act of 1933, as amended, and warrants that such Prospectus
will contain all statements required by and will conform with the requirements
of such Securities Act of 1933 and the rules and regulations thereunder, and
that no part of any such Prospectus, at the time the Registration Statement of
which it is a part becomes effective, will contain any 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. AFD agrees and
warrants that it will not in the sale of shares use any Prospectus, advertising
or sales literature not approved by the Fund or its officers nor make any
untrue statement of a material fact nor omit the stating of a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they are made, not misleading. AFD agrees to
indemnify and hold the Fund harmless from any and all loss, expense, damage and
liability resulting from a breach of the agreements and warranties in this
Section contained, or from the use of any sales literature, information,
statistics or other aid or device employed in connection with the sale of
shares.
14. The expense of each printing of each Prospectus and each revision thereof
or addition thereto deemed necessary by the Fund's officers to meet the
requirements of applicable laws shall be divided between the Fund, AFD and any
other principal underwriter of the shares of the Fund as follows:
(a) the Fund shall pay the typesetting and make-ready charges;
(b) the printing charges shall be prorated between the Fund, AFD, and any other
principal underwriter(s) in accordance with the number of copies each receives;
and
(c) expenses incurred in connection with the foregoing, other than to meet the
requirements of the Securities Act of 1933, as amended, or other applicable
laws, shall be borne by AFD, except in the event such incremental expenses are
incurred at the request of any other principal underwriter(s) in which case
such incremental expenses shall be borne by the principal underwriter(s) making
the request.
15. The Fund agrees to use its best efforts to qualify and maintain the
qualification of an appropriate number of the shares of each series it offers
for sale under the securities laws of such states as AFD and the Fund may
approve. Any such qualification for any series may be withheld, terminated or
withdrawn by the Fund at any time in its discretion. The expense of
qualification and maintenance of qualification shall be borne by the Fund, but
AFD shall furnish such information and other material relating to its affairs
and activities as may be required by the Fund or its counsel in connection with
such qualifications.
16. The Fund may withhold shares of any series from sale in any jurisdiction
temporarily or permanently if, in the opinion of its counsel, such offer or
sale would be contrary to law or if the Directors or the President or any Vice
President of the Fund determines that such offer or sale is not in the best
interest of the Fund. The Fund will give prompt notice to AFD of any
withholding and will indemnify it against any loss suffered by AFD as a result
of such withholding by reason of nondelivery of shares of any series after a
good faith confirmation by AFD of sales thereof prior to receipt of notice of
such withholding.
17. (a) This Agreement may be terminated at any time, without payment of any
penalty, as to the Fund or any series on sixty (60) days' written notice by AFD
to the Fund.
(b) This Agreement may be terminated as to the Fund or any series by either
party upon five (5) days' written notice to the other party in the event that
the Securities and Exchange Commission has issued an order or obtained an
injunction or other court order suspending effectiveness of the Registration
Statement covering the shares of the Fund or such series.
(c) This Agreement may be terminated as to any series upon five (5) days'
written notice to AFD provided either of the following events has occurred:
(i) The NASD has expelled AFD or suspended its membership in that
organization;
(ii) the qualification, registration, license or right of AFD to sell shares
of any series in a particular state has been suspended or canceled by the State
of California or any other state in which sales of the shares of the Fund or
such series during the most recent 12-month period exceeded 10% of all shares
of such series sold by AFD during such period.
(d) This Agreement may be terminated as to the Fund or any series at any time
on sixty (60) days' written notice to AFD without the payment of any penalty,
by vote of a majority of the members of the Board of Directors of the Fund who
are not interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Plan of Distribution or this Agreement or any
other agreements related to the Plan of Distribution (the "Independent
Directors") or by vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of the Fund or such series.
18. This Agreement shall not be assignable by either party hereto and in the
event of assignment shall automatically terminate forthwith. The term
"assignment" shall have the meaning set forth in the 1940 Act.
19. No provision of this Agreement shall protect or purport to protect AFD
against any liability to the Fund or holders of its shares for which AFD would
otherwise be liable by reason of willful misfeasance, bad faith, or gross
negligence.
20. This Agreement shall become effective on April 16, 1999. Unless sooner
terminated in accordance with the other provisions hereof, this Agreement shall
continue in effect until December 31, 2000, and shall continue in effect from
year to year thereafter but only so long as such continuance is specifically
approved at least annually by (i) the vote of a majority of the Independent
Directors of the Fund cast in person at a meeting called for the purpose of
voting on such approval, and (ii) the vote of either a majority of the entire
Board of Directors of the Fund or a majority (within the meaning of the 0000
Xxx) of the outstanding voting securities of the Fund.
21. If the Fund shall at any time issue shares in more than one series, this
Agreement shall take effect with respect to such series of the Fund which may
be established in the future at such time as it has been approved as to such
series by vote of the Board of Directors and the Independent Directors in
accordance with Section 20. The Agreement as approved with respect to any
series shall specify the compensation payable to AFD pursuant to Section 11, as
well as any provisions which may differ from those herein with respect to such
series, subject to approval in writing by AFD.
This Agreement may be approved, amended, continued or renewed with respect to a
series as provided herein notwithstanding such approval, amendment, continuance
or renewal has not been effected with respect to any one or more other series
of the Fund.
This Agreement shall be construed under and shall be governed by the laws of
the State of California, and the parties hereto agree that proper venue of any
action with respect hereto shall be Los Angeles County, California.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunto duly authorized, as
of ______________.
AMERICAN FUNDS DISTRIBUTORS, INC. NEW WORLD FUND, INC.
By By
Chairman of the Board Chairman of the Board
By By
Secretary Secretary
