EXHIBIT 6(C)
WEBS INDEX FUND, INC.
SALES AND INVESTOR SERVICES AGREEMENT
Date:
Name
Company
Dear Ladies and Gentleman:
WEBS Index Fund, Inc. (the "Fund") is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), organized as a series fund and incorporated under the laws of the
State of Maryland. The Fund will consist initially of seventeen index series
(each, a "WEBS Index Series"), and will issue shares of common stock, par value
$.001 per share, of each WEBS Index Series (such shares are referred to herein
as "World Equity Benchmark Shares(SERVICE XXXX)" or "WEBS(SERVICE XXXX)"). The
Fund issues and redeems WEBS of a WEBS Index Series only in aggregations of a
specified number of WEBS (each, a "Creation Unit") and only to or through
Authorized Participants, all as set forth in the Fund's Prospectus and Statement
of Additional Information, as they may be amended from time to time. Pursuant to
a Distribution Agreement between the Fund and us (the "Distribution Agreement"),
we act as distributor (the "Distributor") and principal underwriter of Creation
Units of WEBS of the various WEBS Index Series as exclusive agent on behalf of
the Fund. Capitalized terms not defined herein shall have the meanings
attributed to them in the current Prospectus and Statement of Additional
Information of the Fund.
As Distributor and principal underwriter of the Fund, we wish to enter
into this Sales and Investor Services Agreement (this "Agreement") with you
concerning (i) your solicitation of purchase orders for WEBS; (ii) your
provision of assistance in the distribution of Creation Units of WEBS; and (iii)
your provision of broker-dealer and shareholder support services to your clients
("Clients") who may from time to time beneficially own WEBS of any WEBS Index
Series.
You understand and acknowledge that the proposed method by which
Creation Units of WEBS will be created and traded may raise certain issues under
applicable securities laws. For example, because new Creation Units of WEBS may
be issued and sold by the Fund on an ongoing basis, at any point a
"distribution," as such term is used in the Securities Act of 1933, as amended
(the "1933 Act"), may occur. You understand and acknowledge that some activities
on your part, as further described in the Fund's Statement of Additional
Information under "SPECIAL CONSIDERATIONS AND RISKS: Continuous Offering," may,
depending on the circumstances, result in your being deemed a participant in a
distribution in a manner which could render you a statutory underwriter
1
and subject you to the Prospectus delivery and liability provisions of the 1933
Act. You also understand and acknowledge that when you are not an "underwriter"
but are effecting transactions in WEBS, whether or not participating in the
distribution of WEBS, you are generally required to deliver a Prospectus.
This Agreement is a related agreement as contemplated by Rule 12b-1
under the 1940 Act with respect to the Rule 12b-1 plan of the Fund ("12b-1
Plan"). Both we and the Fund expect that your services and educational and
promotional activities in connection with WEBS pursuant to this Agreement will
tend to increase investor interest in and the use and trading of WEBS in the
secondary market and thus further sales of WEBS of the Fund's WEBS Index Series.
In consideration of the mutual covenants contained herein, it is hereby
agreed that our respective rights and obligations shall be as follows:
1. ROLE OF DISTRIBUTOR. Pursuant to and in accordance with the
provisions of the Distribution Agreement, we will make arrangements with
securities dealers that will solicit orders for the purchase of WEBS and will
provide assistance in the distribution of Creation Units of WEBS. You are hereby
invited to become one of the securities dealers referred to herein as a
"Soliciting Dealer." This will confirm our mutual agreement as to the terms and
conditions applicable to your participation as a Soliciting Dealer, such
agreement to be effective upon your confirmation hereof. You understand that we
are seeking to enter into this Agreement in counterparts with you and other
firms which also may act as Soliciting Dealers. You understand that the
Distributor shall have no distribution or underwriting obligation to you
hereunder with regard to the purchase and sale of WEBS (including Creation Unit
aggregations).
2. ROLE OF SOLICITING DEALERS.
(a) As a Soliciting Dealer, you shall offer and solicit purchase orders
for WEBS and shall provide ordinary and reasonable marketing support to assist
us in our distribution of Creation Units of WEBS.
(b) You shall be responsible for opening, approving and monitoring
customer accounts and for the review and supervision of these accounts, all in
accordance with the rules of the Securities and Exchange Commission ("SEC") and
the National Association of Securities Dealers, Inc. (the "NASD").
(c) Although you may solicit purchase orders for WEBS in any
aggregation, you represent the following with regards to any potential orders
you may make in Creation Unit sized aggregations:
(i) When and if you generate a customer request for the purchase of
Creation Units of WEBS and you transmit such request to us, you shall
comply with the procedures for the purchase of Creation Units of WEBS
set forth in the then current Prospectus and Statement of Additional
Information of the Fund;
2
(ii) You understand that all orders for the purchase of Creation Units
of WEBS must be placed with us and may be placed only through an
Authorized Participant that has entered into an Authorized Participant
Agreement with us and the Fund. Each Creation Unit transaction shall be
promptly confirmed to you by the Authorized Participant effecting such
transaction in writing on a fully disclosed basis;
(iii) You understand and agree that to the extent that such Creation
Unit transaction was effected by you on behalf of your customer, you
will promptly confirm such transaction to your customer; and
(iv) You agree that upon receipt of confirmations from an Authorized
Participant you will examine them and promptly notify us of any errors
or discrepancies which you discover and shall promptly bring to our
attention and the Authorized Participant's attention any errors in such
confirmations claimed by your customers.
(d) You acknowledge that all orders for Creation Units of WEBS are
subject to acceptance or rejection by us or the Fund in our or its sole
discretion. A further discussion regarding the acceptance or rejection of an
order by us or the Fund is contained in the Fund's Statement of Additional
Information under "PURCHASE AND ISSUANCE OF WEBS IN CREATION UNITS: Acceptance
of a Purchase Order."
(e) You agree to provide broker/dealer and shareholder support services
to Clients in connection with the outstanding and issued WEBS, including one or
more of the following: (i) distributing Prospectuses and shareholder reports to
current shareholders; (ii) as applicable, complying with federal and state
securities laws pertaining to transactions in WEBS; (iii) processing dividend
payments on behalf of Clients; (iv) providing information periodically to
Clients showing their positions in WEBS; (v) providing and maintaining elective
services such as check writing on the Client's account and wire transfer
services; (vi) acting as nominee for Clients holding WEBS; (vii) maintaining
account records for Clients; (viii) issuing confirmations of transactions; (ix)
providing subaccounting with respect to WEBS beneficially owned by Clients or
the information necessary for subaccounting; (x) if required by law, forwarding
shareholder communications from us or on behalf of the Fund (such as proxies,
shareholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices); (xi) providing services primarily intended to
result in the sale of WEBS; (xii) assisting shareholders who wish to aggregate
sufficient WEBS of a WEBS Index Series to constitute a Creation Unit for
redemption; and (xiii) such other services analogous to the foregoing as you
customarily provide to clients with respect to holdings of shares of open-end
investment companies or exchange-listed stocks or as we or the Fund may
reasonably request to the extent you are permitted to do so under applicable
statutes, rules and regulations.
(f) In order to promote the sale of WEBS you agree to: (i) provide
usual and ordinary educational and marketing services related to the sale of
WEBS to your customers; and (ii) provide WEBS marketing representatives with
reasonable access to your offices or branches so as to allow such
representatives to provide broker education
3
through sales meetings and other broker contact.
(g) Subject to the requirements of applicable law and regulations,
nothing in this Agreement shall be construed to prohibit or restrict you from
purchasing or selling for your own account Creation Unit aggregations of WEBS,
whether as agent or principal.
3. INFORMATION
(a) We will furnish you, without charge, the Fund's current Prospectus
and Statement of Additional Information and copies of sales materials relating
to the offer and sale of Creation Units of WEBS approved and filed with the NASD
by us ("Fund Sales Materials") in such quantities as are reasonably requested by
you and made available to us by the Fund for use in connection with the offer
and sale of Creation Units of WEBS. Such Fund Sales Materials may include
materials suitable for institutional marketing efforts, including conferences,
road shows and institutional advertisements and/or "tombstones" related to the
initial public offering of Creation Units of WEBS.
(b) Under this Agreement you will neither act for us, the Fund or
Barclays Global Fund Advisors (the "Investment Adviser"), nor make any
representation on our behalf or the Fund's behalf, or as authorized by us, the
Fund or the Investment Adviser.
(c) In offering and selling Creation Units of WEBS hereunder you may
rely only upon the Fund's then current Prospectus and Statement of Additional
Information and the Fund Sales Materials.
(d) If you receive the proper authorization from us or the Fund, you
may prepare and use at your own cost and expense other brochures, advertisements
(in print or other format) or similar materials in connection with your
solicitation of purchases of Creation Units of WEBS, which may constitute "sales
literature" within the meaning of Section 24(b) of the 1940 Act ("Other
Soliciting Materials"), but only if such Other Soliciting Materials are (i)
prepared in compliance with all applicable NASD and SEC rules and regulations
and the requirements set forth in Annex I hereof, (ii) provided to us a
reasonable time prior to their intended use and (iii) not used until approved by
us and the Fund and filed by us with the NASD.
(e) Not withstanding the foregoing, you may without our written
approval prepare and circulate in the regular course of your business research
reports that include information, opinions or recommendations relating to WEBS
(i) for public dissemination, provided that such research reports compare the
relative merits and benefits of WEBS with other products and are not used for
purposes of marketing WEBS and (ii) for your internal use.
4
4. REPRESENTATIONS.
(a) You represent to us as follows, and agree to abide by all of the
rules and regulations of the NASD, including, without limitation, the following
provisions of its Rules except as otherwise permitted by the NASD as set forth
in writing, a copy of which shall be provided to you by us:
(i) you will not withhold placing customers' orders for any Creation
Units of WEBS so as to profit yourself as a result of such withholding;
(ii) you are familiar with Rule 15c2-8 under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), Section 4(3) of the 1933 Act,
and Section 24(d) of the 1940 Act relating to the distribution and
delivery of Prospectuses and agree that you will comply therewith;
(iii) you are a member in good standing of the NASD or, if you are not
such a member, you are a foreign bank, dealer or institution not
eligible for membership in the NASD which agrees to make no sale within
the United States, its territories or its possessions or to persons who
are citizens thereof or residents therein, and in making other sales to
comply, as though you were a member of NASD, with the provisions of
Sections 8, 24 and 36 of Article III of the Rules of the NASD and with
Section 25 thereof as that Section applies to a non-NASD member broker
or dealer in a foreign country.
(b) You agree that your expulsion from the NASD will automatically
terminate this Agreement.
(c) You agree to comply with any rules of the American Stock Exchange,
Inc. (the "AMEX") or such other secondary market or markets as has or have been
approved by an order of the SEC for the trading of WEBS. A copy of the
conditions of the SEC order in accordance with which WEBS are offered are
attached hereto as Annex I.
(d) You hereby represent, covenant and warrant that with respect to
purchase and sales of WEBS of any WEBS Index Series, you are a DTC participant.
Any change in the foregoing status shall terminate this Agreement and you shall
give prompt written notice to the Distributor and the Fund of such change.
(e) We represent to you that we are a member in good standing of the
NASD and agree to abide by all of the NASD's rules and regulations.
5. INDEPENDENT CONTRACTOR. For all purposes of this Agreement, you will
be deemed to be an independent contractor, and will have no authority to act as
agent, partner, joint venture participant or in any similar capacity for us in
any matter or in any respect. You and your officers and employees will, upon
request, be available during normal business hours to consult with us or our
designees concerning the performance of your responsibilities under this
Agreement.
5
6. COMPENSATION; EXPENSES. In consideration of the services and
facilities provided by you hereunder, subject to the terms and conditions of the
12b-1 Plan, in our capacity as the Distributor implementing the 12b-1 Plan, we
will pay to you and you agree to accept as full payment therefor, the fees set
forth in Annex II attached hereto. You understand and agree that no amount shall
be paid or payable to you hereunder except from amounts paid to us by the Fund
for disbursements to you under this Agreement and pursuant to and in accordance
with the 12b-1 Plan. You understand and agree that the Distributor is obligated
to make such payments to you only after the Fund has paid such 12b-1 payments to
the Distributor.
7. REPORTS. Pursuant to Rule 12b-1, as requested from time to time, you
will provide to us and the Fund's Board of Directors, and we and the Fund's
Directors will review a written report of the amounts so expended and the
purposes for which such expenditures were made. In addition, you will furnish us
or our designees with such information as we or they may reasonably request
(including, without limitation, periodic certifications confirming the provision
to Clients by you or your agents of the services described herein), and will
otherwise cooperate with us and our designees (including, without limitation,
any auditors designated by us or the Fund), in connection with preparation of
reports to the Fund's Board of Directors concerning this Agreement and the
monies paid or payable by us in connection with the services you have agreed to
provide hereunder, as well as any other reports or filings that may be required
by law. In addition, you shall provide to us on a monthly basis information
which breaks out all sales by state and by branch.
8. RULE 12B-1 RELATED AGREEMENT. By your written acceptance of this
Agreement, you represent, warrant and agree that you understand that this
Agreement is a Rule 12b-1 related agreement under the 1940 Act, subject to the
provisions of such Rule, as well as any other applicable rules or regulations of
the SEC, and agree to conform to the applicable compliance standards adopted by
us for sale of WEBS, as in effect from time to time.
9. COMPLIANCE.
(a) You agree that your activities pursuant to this Agreement will be
at all times in conformity in all material respects with all applicable federal
and state laws, rules and regulations, including without limitation, the 1933
Act, the 1934 Act, the 1940 Act and the Rules of the NASD (as provided in
Section 4 hereof). In connection with offers to sell and sales of WEBS of each
WEBS Index Series, you agree to deliver or cause to be delivered to each person
to whom any such offer of sale is made, at or prior to the time of such offer or
sale, a copy of the then current Prospectus.
(b) We agree to inform you, as the Fund provides or causes to be
provided to us such information, as to the states in which we believe WEBS of
the respective WEBS Index Series have been qualified for sale under, or are
exempt from the requirements of, the respective securities laws thereof, but we
shall have no obligation or responsibility to make WEBS of any WEBS Index Series
available for sale in any jurisdiction.
6
10. BENEFICIAL OWNERSHIP. The Soliciting Dealer represents and warrants
to the Distributor and the Fund that (based upon the number of outstanding WEBS
of such WEBS Index Series made publicly available by the Fund) it does not, and
will not in the future, hold for the account of any single beneficial owner of
WEBS of the relevant WEBS Index Series 80 percent or more of the currently
outstanding WEBS of such relevant WEBS Index Series, so as to cause the Fund to
have a basis in the portfolio securities deposited with the Fund with respect to
such WEBS Index Series different from the market value of such portfolio
securities on the date of such deposit, pursuant to Section 351 of the Internal
Revenue Code of 1986, as amended.
11. INDEMNIFICATION.
(a) The Soliciting Dealer hereby agrees to indemnify and hold harmless
the Distributor and the Fund, their respective subsidiaries, affiliates,
directors, officers, employees and agents, and each person, if any, who controls
such persons within the meaning of Section 15 of the 1933 Act (each, an
"Indemnified Party") from and against any loss, liability, cost and expense
(including attorneys' fees) incurred by such Indemnified Party as a result of
(i) a breach of any representation, warranty or covenant made by the Soliciting
Dealer in this Agreement; (ii) failure of the Soliciting Dealer to perform any
obligations set forth in the Agreement; or (iii) any failure on the part of the
Soliciting Dealer to comply with applicable laws. The Soliciting Dealer and the
Distributor understand and agree that the Fund as a third party beneficiary to
this Agreement is entitled and intends to proceed directly against the
Soliciting Dealer in the event that the Soliciting Dealer fails to honor any
obligations pursuant to this Agreement that benefit the Fund.
(b) The Distributor hereby agrees to indemnify and hold harmless the
Soliciting Dealer, its respective subsidiaries, affiliates, directors, officers,
employees and agents, and each person, if any, who controls such persons within
the meaning of Section 15 of the 1933 Act (each, a "Soliciting Dealer
Indemnified Party") from and against any loss, liability, cost and expense
(including attorneys' fees) incurred by such Soliciting Dealer Indemnified Party
as a result of (i) a breach of any representation, warranty or covenant made by
the Distributor in this Agreement; (ii) failure of the Distributor to perform
any obligations set forth in the Agreement; or (iii) any failure on the part of
the Distributor to comply with applicable laws.
(c) The provisions of this Section 11 shall survive the termination of
this Agreement. THE DISTRIBUTOR SHALL NOT BE LIABLE TO THE SOLICITING DEALER FOR
ANY DAMAGES ARISING OUT OF MISTAKES OR ERRORS IN DATA PROVIDED TO THE
DISTRIBUTOR, OR ARISING OUT OF INTERRUPTIONS OR DELAYS OR COMMUNICATIONS WITH
THE INDEMNIFIED PARTIES WHO ARE SERVICE PROVIDERS TO THE FUND.
12. TERM; TERMINATION; AMENDMENT.
(a) Unless sooner terminated, this Agreement will continue for one year
following the date of its adoption as provided in Section 15, and thereafter
will continue automatically for successive annual periods provided such
continuance is specifically approved at least
7
annually by the Fund in the manner described in Section 15 hereof. This
Agreement is terminable, without penalty, at any time by the Fund with respect
to any WEBS Index Series (which termination may be by a vote of a majority of
the Disinterested Directors as defined in Section 15 hereof or by vote of the
holders of a majority of the voting securities (as such term is defined in the
0000 Xxx) of such WEBS Index Series) or by you upon 60 days' notice in writing
to the other party hereto. This Agreement will also terminate automatically in
the event of its assignment (within the meaning of the 0000 Xxx) or upon the
termination of the Distribution Agreement or Rule 12b-1 Plan between the Fund
and us. The Distributor, with the prior written consent of the Fund, may amend
this agreement by mailing a copy of the amendment to the Soliciting Dealer,
which amendment will become part of this Agreement if the Soliciting Dealer does
not object in writing within 10 business days after its receipt. This Agreement
may also be amended in writing by the parties hereto.
(b) In the event that the Board of Directors of the Fund establishes
any series of WEBS listed and traded on the AMEX or any other national
securities exchange in addition to the WEBS Index Series then subject to this
Agreement, adopts a 12b-1 Plan with respect to such additional series and
approves this Agreement with respect to such additional series in accordance
with Rule 12b-1, such additional series shall be made subject to this Agreement
and shall become an "Additional Series" hereunder effective immediately upon
such adoption and approval.
13. SUSPENSION. All sales will be made subject to receipt of WEBS from
the Fund. We and the Fund reserve the right, in our sole discretion, without
notice, to suspend sales or withdraw the offering of sales of Creation Units of
WEBS of any WEBS Index Series entirely, including the sale of such WEBS to you
for the account of any client or clients.
14. NO OTHER AGREEMENT. This Agreement shall supersede any prior
agreements between us regarding the sale of Creation Units of WEBS.
15. BOARD APPROVAL. This Agreement and the 12b-1 Plan is subject to
approval by vote of (i) the Fund's Board of Directors and (ii) of a majority of
those 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 adopted by the Fund regarding the provision of support services
to the beneficial owners of WEBS of the respective WEBS Index Series or in any
agreement related thereto cast in person at a meeting called for the purpose of
voting on such approval.
16. MISCELLANEOUS.
(a) Notice. Notice shall have been duly given if delivered by hand,
mail or facsimile transmission to you, at your address or facsimile number set
forth below and (b) if to us, to Funds Distributor, Inc., 00 Xxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, XX 00000, facsimile no. (000) 000-0000, Attention: President, with
a copy to General Counsel, or in each case such other addresses as may be
notified to the other party.
8
(b) Successors. Subject to Section 8 hereof, this Agreement will inure
to the benefit of and be binding upon the parties hereto and their respective
legal successors and the Fund, and no other person will have any right or
obligation hereunder.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts of law.
The parties irrevocably submit to the non-exclusive jurisdiction of any
New York State or United States Federal Court sitting in New York City over any
suit, action or proceeding arising out of or relating to this Agreement.
17. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
9
Please confirm your agreement by signing and returning to us the
enclosed duplicate copies of this Agreement. Upon our acceptance hereof, this
Agreement shall constitute a valid and binding contract between us. After our
acceptance, we will deliver to you one fully executed copy of this Agreement.
Very truly yours,
FUNDS DISTRIBUTOR INC.
By_________________________________
Name:
Title:
Confirmed: , 19__
---------------------------------
Name of Soliciting Dealer
By___________________________
Name:
Title:
10
Annex I
CONDITIONS OF SEC ORDER
1. The Fund will not be advertised or marketed as an open-end
investment company, I.E., as a mutual fund, which offers redeemable securities.
The Fund's Prospectus will prominently disclose that WEBS are not redeemable
shares and will disclose that the owners of WEBS may acquire and tender those
shares for redemption to the Fund in Creation Unit aggregations only. Any
advertising material where features of obtaining, buying or selling Creation
Units are described or where there is reference to redeemability will
prominently disclose that WEBS are not redeemable and that owners of WEBS may
acquire and tender those shares for redemption to the Fund in Creation Unit
aggregations only.
2. The Fund will provide copies of its annual and semi-annual
shareholders reports to DTC Participants for distribution to beneficial holders
of individual WEBS.
3. The Fund's registration statement will not be declared effective
until the Commission has approved such proposed rule change pursuant to Rule
19b-4 under the Securities Exchange Act of 1934 as may be necessary to enable a
national securities exchange to list the individual WEBS. In addition, as long
as the Fund operates in reliance on the requested order, the individual WEBS
will be listed on a national securities exchange.
11
Annex II
ANNUAL FEES
At the annual rate of .08 of 1% of the average monthly net assets of WEBS held
in your name at DTC based on information obtained bi-weekly and payable on a
quarterly basis provided, that such fee shall be paid only in respect of WEBS
that are held in your name directly, and not in respect of WEBS held indirectly,
including WEBS held by registered or unregistered investment companies,
including unit investment trusts held by you on behalf of your clients or for
your own account.
ADDITIONAL TERMS AND CONDITIONS
For purposes of determining the fees payable under this Annex II, the
average aggregate daily net assets of the WEBS Index Series will be computed in
the manner specified in the Fund's Registration Statement (as the same is in
effect from time to time) in connection with the computation of the net asset
value of WEBS for purposes of purchases and redemptions. Except as specifically
provided in this Annex II, you shall bear all of your own costs and expenses in
connection with your acting as a Soliciting Dealer, it being understood that we
and the Fund shall bear our and the Fund's respective costs and expenses. You
shall not be required to bear any of the costs or expenses assumed by us or any
other Soliciting Dealer except as provided for herein or as you may have agreed
with another Soliciting Dealer.
12
