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EXHIBIT 2(h)(ii)
FORM OF SOLICITING DEALER AGREEMENT
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Exhibit A
October 18, 1996
SOLICITING DEALER AGREEMENT
Ladies and Gentlemen:
The Pilgrim America Prime Rate Trust, a Massachusetts business
trust (the "Trust"), proposes to issue to holders of record (the "Holders") of
its outstanding shares of beneficial interests (the "Common Shares"),
non-transferable rights entitling such Holders to subscribe for shares of Common
Shares and, subject to certain conditions, additional shares of Common Shares
pursuant to an over-subscription privilege (the "Offer"). The shares of Common
Shares for which Holders may subscribe pursuant to the Offer are herein referred
to as the "Shares". Pursuant to the terms of the Offer, the Trust is issuing
each Holder one non-transferable right (each a "Right" and collectively, the
"Rights") for each share of Common Shares held on the record date set forth in
the accompanying Prospectus (the "Prospectus"). Such Rights entitle Holders to
acquire during the subscription period set forth in the Prospectus (the
"Subscription Period"), and at the subscription price set forth in the
Prospectus (the "Subscription Price"), one Share for each five Rights held on
the terms and subject to the conditions set forth in the Prospectus. Pursuant to
the terms of the Offer, such Rights also entitle Holders to acquire during the
Subscription Period at the Subscription Price certain additional Shares on the
terms and conditions of the over-subscription privilege as set forth in such
Prospectus.
The undersigned, as the dealer managers (the "Dealer
Managers") named in the Prospectus, have entered into a Dealer Manager Agreement
dated October 18, 1996 with the Trust and Pilgrim America Investments, Inc., a
Maryland corporation (the "Investment Manager"), pursuant to which the
undersigned have agreed to form and manage, for purposes of soliciting exercises
of Rights pursuant to the Offer, a group of soliciting dealers, including the
undersigned, consisting of brokers and dealers who shall be members in good
standing of the National Association of Securities Dealers, Inc. (the "NASD") or
brokers or dealers not registered under the Securities Exchange Act of 1934 with
their principal place of
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business located outside the United States, its territories or possessions who
agree to solicit exercises of Rights only in accordance with the laws applicable
to such activities and agree to solicit no exercises of Rights within the United
States, its territories or its possessions or from persons who are nationals
thereof or residents therein and who agree, although not members of the NASD, to
conform to the Conduct Rules of the NASD, in soliciting exercises of Rights
outside the United States, its territories and possessions, to the same extent
as though they were members thereof (the members of such group being hereinafter
called the "Soliciting Dealers"). You are invited to become one of the
Soliciting Dealers and by your confirmation hereof you agree to act in such
capacity, in accordance with the terms and conditions herein and in your
confirmation hereof, to obtain exercises of Rights pursuant to the Offer.
1. Solicitation and Solicitation Material. Solicitation and
other activities by you hereunder shall be undertaken only in accordance with
this Agreement, the Securities Act of 1933 (the "Securities Act"), the
Securities Exchange Act of 1934 (the "Exchange Act"), and the applicable rules
and regulations of the Securities and Exchange Commission. Accompanying this
Agreement are copies of the following documents: the Prospectus describing the
terms of the Offer, an exercise form for the exercise of the Rights (an
"Exercise Form") and letters to stockholders. Additional copies of these
documents will be supplied in reasonable quantities upon your request. You agree
that during the period of the Offer you will not use any solicitation material
other than that referred to above and such as may hereafter be furnished to you
by the Trust through us.
2. Compensation of Soliciting Dealers. As compensation for the
services of the Soliciting Dealers hereunder, the Dealer Managers will reallow
to each Soliciting Dealer a concession of 2.25% of the subscription price per
Share purchased pursuant to the Offer through such Soliciting Dealer's efforts,
(excluding the exercise of Rights by a Soliciting Dealer for its own account or
for the account of any affiliate, other than a natural person, pursuant to the
Offer) (a "Reallowance"). A Soliciting Dealer, other than Prudential Securities
Incorporated acting in such capacity, shall be entitled to a Reallowance only
where the insertion of such Soliciting Dealer's name has been made on the
Exercise Form in the place so provided and where the Dealer Managers shall have
received from such Soliciting Dealer an executed copy of this Agreement in the
form hereof. Payment of such Reallowance will be made by the Dealer Managers or
their agent
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directly to such Soliciting Dealer by U.S. Dollar check drawn upon an account at
a bank in New York City. Such payments to Soliciting Dealers shall be made as
soon as practicable after payment of the Dealer Manager Fee is made to the
Dealer Managers.
No Reallowance shall be payable in respect of any particular
exercise of Rights if, in the opinion of counsel for the Dealer Managers, such
Reallowance cannot legally be paid in respect of such exercise of Rights because
of the provisions of applicable state law or for any other reason. In case of
any dispute or disagreement as to the amount of Reallowance payable to any
Soliciting Dealer hereunder or as to the proper recipient of any such
Reallowance, the decision of the Dealer Managers shall be conclusive. The
payment of any Reallowance to Soliciting Dealers shall be solely the
responsibility of the Dealer Managers, but the Dealer Managers shall have no
obligation or liability to any Soliciting Dealer for any obligation of the Trust
hereunder.
For the purpose of this Section 2, the Offer will expire on
the expiration date set forth in the Prospectus. No Reallowance will be payable
to Soliciting Dealers with respect to Rights exercised after expiration of the
Offer.
3. Trading. You represent to the Trust and the Dealer Managers
that you have not engaged, and agree that you will not engage, in any activity
in respect of the Rights or the Shares in violation of the Exchange Act,
including Rule 10b-6 and Rule 10b-8 thereunder. Your acceptance of a Reallowance
will constitute a representation that you are eligible to receive such
Reallowance and that you have complied with the preceding sentence and your
other agreements hereunder.
4. Unauthorized Information and Representations. Neither you
nor any other person is authorized by the Trust or the Dealer Managers to give
any information or make any representations in connection with this Agreement or
the Offer other than those contained in the Prospectus and other authorized
solicitation material furnished by the Trust through the Dealer Managers, and
you hereby agree not to use any solicitation material other than material
referred to in this Section 4 and not to give any unauthorized information or
make any unauthorized representations. Without limiting the generality of the
foregoing, you agree for the benefit of the Trust and the Dealer Managers not to
publish, circulate or otherwise use any other advertisement or solicitation
material without the prior approval of the Trust and the Dealer Managers. You
are not authorized to act as agent of the Trust or
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the Dealer Managers in any respect, and you agree not to act as such agent and
not to purport to act as such agent. On becoming a Soliciting Dealer and in
soliciting exercises of Rights, you agree for the benefit of the Trust and the
Dealer Managers to comply with any applicable requirements of the Securities
Act, the Exchange Act, the rules and regulations thereunder, any applicable
securities laws of any state or jurisdiction where such solicitations may
lawfully be made, and the applicable rules and regulations of any
self-regulatory organization or registered national securities exchange, and to
perform and comply with the agreements set forth in your confirmation of your
acceptance of this Agreement, a copy of the form of which is appended hereto.
5. Blue Sky and Securities Laws. The Dealer Managers assume no
obligation or responsibility in respect of the qualification of the Shares
issuable pursuant to the Offer or the right to solicit Rights under the laws of
any jurisdiction. The enclosed Blue Sky Memorandum indicates the states in which
it is believed that acceptances of the Offer may be solicited under the
applicable Blue Sky or securities laws. Under no circumstances will you as a
Soliciting Dealer engage in any activities hereunder in any state (a) that is
not listed in said enclosed Blue Sky Memorandum as a state in which acceptances
of the Offer may be solicited under the Blue Sky or securities law of such state
or (b) in which you may not lawfully so engage. The Blue Sky Memorandum shall
not be considered solicitation material as that term is herein used. You
authorize the undersigned to cause to be filed in the Department of State of the
State of New York a Further State Notice with respect to the Shares complying
with the provisions of Article 23-A of the General Business Law of the State of
New York, if required by such provisions. You agree that you will not engage in
any activities hereunder outside the United States except in jurisdictions where
such solicitations and other activities may lawfully be undertaken and in
accordance with the laws thereof.
6. Termination. This Agreement may be terminated by written or
telegraphic notice to you from the Dealer Managers, or to the Dealer Managers
from you, and in any case it will terminate upon the expiration or termination
of the Offer; provided, however, that such termination shall not relieve the
Dealer Managers of the obligation to pay when due any Reallowance payable to you
hereunder with respect to Shares acquired pursuant to the exercise of Rights
through the close of business on the date of such termination that are
thereafter exercised pursuant to the Offer or relieve the Trust or the
Investment Manager of each of their obligations referred to
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under Section 8 hereof, and shall not relieve you of any obligation or liability
under Sections 3, 4, 9 and 10 hereof.
7. Liability of the Dealer Managers. Nothing herein contained
shall constitute the Soliciting Dealers as partners with the Dealer Managers or
with one another, or agents of the Dealer Managers or the Trust, or shall render
the Trust liable for the obligations of the Dealer Managers or the obligations
of any Soliciting Dealers, or shall render the Dealer Managers liable for the
obligations of any Soliciting Dealers other than each of themselves nor
constitute the Trust or the Dealer Managers as the agent of any Soliciting
Dealer. The Trust, the Investment Manager and the Dealer Managers shall be under
no liability to any Soliciting Dealer or any other person for any act or
omission or any matter connected with this Agreement or the Offer, except that
the Trust and the Investment Manager shall be liable on the basis set forth in
Section 8 hereof to indemnify certain persons. You represent that you have not
purported, and agree that you will not purport, to act as agent of the Trust or
the Dealer Managers in any connection or transaction relating to the Offer.
8. Indemnification. Under the Dealer Manager Agreement, each
of the Trust and the Investment Manager has agreed to indemnify and hold
harmless the Dealer Managers, each Soliciting Dealer and each person, if any,
controlling the Dealer Managers or any Soliciting Dealer within the meaning of
Section 15 of the Securities Act against certain liabilities, including
liabilities under the Securities Act and the Exchange Act. By returning an
executed copy of this Agreement, you agree to indemnify the Trust, the
Investment Manager and the Dealer Managers (the "Indemnified Persons") against
losses, claims, damages and liabilities to which the Indemnified Persons may
become subject (a) as a result of your breach of your representations or
agreements made herein or (b) if you (as custodian, trustee or fiduciary or in
any other capacity) are acting on behalf of another entity that is soliciting
exercises of Rights pursuant to the Offer (a "Soliciting Entity"), as a result
of any breach by any such Soliciting Entity of the representations or agreements
made herein by the Soliciting Dealers to the same extent as if such Soliciting
Entity had executed the confirmation referred to in Section 13 hereof and was
therefore a Soliciting Dealer that had directly made such representations and
agreements. This indemnity agreement will be in addition to any liability that
you may otherwise have.
9. Delivery of Prospectus. You agree for the benefit of the
Trust and the Dealer Managers to deliver to each person who
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owns beneficially Common Shares registered in your name, and who exercises
Rights on an Exercise Form on which your name, to your knowledge, has been
inserted, a Prospectus prior to the exercise of such person's Rights.
10. Status of Soliciting Dealer. Your acceptance of a
Reallowance will constitute a representation to the Trust and the Dealer
Managers that you (i) have not purported to act as agent of the Trust or the
Dealer Managers in any connection or in any transaction relating to the Offer,
(ii) except to the extent that you have given the Dealer Managers prior written
notification, are not affiliated with the Trust, (iii) will not accept a
Reallowance from the Dealer Managers pursuant to the terms hereof with respect
to Shares purchased by you pursuant to an exercise of Rights for your own
account or the account of any affiliate, other than a natural person, (iv) will
not remit, directly or indirectly, any part of any Reallowance to any beneficial
owner of Shares purchased pursuant to the Offer, (v) agree to the amount of the
Reallowance and the terms and conditions set forth herein with respect to
receiving such Reallowance, (vi) have read and reviewed the Prospectus, and
(vii) are (a) a member in good standing of the NASD and will comply with Rules
2730, 2740 and 2750 of the Conduct Rules of the NASD or (b) a broker or dealer
with your principal place of business located outside the United States, its
territories or its possessions and not registered under the Exchange Act, and
you agree for the benefit of the Trust and the Dealer Managers (1) to solicit
exercises of Rights only in accordance with the laws applicable to such
activities and to solicit no exercises of Rights within the United States, its
territories or possessions or from persons who are nationals thereof or
residents therein, and (2) that, although not a member of the NASD, in acting
under this Agreement you will conform to the Conduct Rules of the NASD,
including Rules 2420, 2730, 2740, and 2750 thereof, in soliciting exercises of
Rights outside the United States, its territories and possessions to the same
extent as though you were a member thereof.
11. Notices. Any notice hereunder shall be in writing or by
telegram and if to you as a Soliciting Dealer shall be deemed to have been duly
given if mailed or telegraphed to you at the address to which this letter is
addressed, and if to the Dealer Managers, if delivered or sent to Prudential
Securities Incorporated at ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Equity Transactions Group.
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12. Parties in Interest. The Agreement herein set forth is
intended for the benefit of the Dealer Managers, the Soliciting Dealers, the
Trust, and the Investment Manager.
13. Confirmation. Please confirm your agreement to become one
of the Soliciting Dealers under the terms and conditions set forth herein and in
the attached confirmation by completing and executing the confirmation and
sending it via facsimile ((▇▇▇) ▇▇▇-▇▇▇▇/1564) to Prudential Securities
Incorporated, Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Equity Transactions Group.
14. Governing Law and Time. This Agreement shall be governed
by the laws of the State of New York applicable to agreements made and to be
performed in said State.
NOTICE: IF A COPY OF THE CONFIRMATION REFERRED TO IN SECTION
13 HEREOF IS NOT SIGNED, DATED AND RETURNED TO THE DEALER MANAGERS PRIOR TO THE
EXPIRATION OF THE OFFER, NO REALLOWANCE WILL BE PAYABLE HEREUNDER.
Very truly yours,
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
As Dealer Managers
By: PRUDENTIAL SECURITIES INCORPORATED
By_____________________________________
▇▇▇▇-▇▇▇▇▇▇ Canfin, Director
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CONFIRMATION
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
c/o PRUDENTIAL SECURITIES INCORPORATED
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Equity Transactions Group
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇/1564
Ladies and Gentlemen:
We hereby confirm our acceptance of the terms and conditions
of the letter captioned "Soliciting Dealer Agreement" which was attached hereto
upon our receipt hereof (this "Agreement") with reference to the Offer of
Pilgrim America Prime Rate Trust (the "Trust") described therein. We hereby
acknowledge that we (i) have received, read and reviewed the Prospectus and
other solicitation material referred to in this Agreement, and confirm that in
executing this confirmation we have relied upon such Prospectus and other
solicitation materials authorized by the Trust or Pilgrim America Investments,
Inc. (the "Investment Manager") and upon no other representations whatsoever,
written or oral,(ii) have not purported to act as agent of the Trust or the
Dealer Managers in any connection or in any transaction relating to the Offer,
(iii) are not affiliated with the Trust, (iv) are not purchasing Shares for our
own account or the account of any of our affiliates, other than a natural
person, (v) will not remit, directly or indirectly, any part of any Reallowance
to any beneficial owner of Shares purchased pursuant to the Offer, and (vi)
agree to the amount of the Reallowance and the terms and conditions set forth in
this Agreement with respect to receiving such Reallowance. We also confirm that
we are a broker or dealer who is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD") and will comply with Rules
2730, 2740 and 2750 of the Conduct Rules of the NASD or a broker or dealer not
registered under the Securities Exchange Act of 1934 with its
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principal place of business located outside the United States, its territories
or possessions who by signing below also (a) agrees to solicit exercises of
Rights only in accordance with the laws applicable to such activities and to
solicit no exercises of Rights within the United States, its territories or its
possessions, or from persons who are nationals thereof or residents therein and
(b) agrees, although not a member of the NASD, to conform to the Conduct Rules
of the NASD, including Rules 2420, 2730, 2740, and 2750 thereof, in acting under
this Agreement in soliciting exercises of Rights outside the United States, its
territories and possessions, to the same extent as though we were a member
thereof. In connection with the Offer, we represent that we have complied, and
agree that we will comply, with any applicable requirements of the Securities
Act of 1933, the Securities Exchange Act of 1934, any applicable securities or
Blue Sky laws, and the rules and regulations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and any applicable securities or Blue Sky
laws.
_____________________________
Firm Name
By_____________________________
Authorized Signature
Address:
_______________________________
_______________________________
DTC Number:
_______________________________
Nominee Name:
_______________________________
_______________________________
_______________________________
Dated:__________________________, 1996
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NOTICE: IF A COPY OF THIS CONFIRMATION IS NOT SIGNED, DATED AND
RETURNED TO THE DEALER MANAGERS PRIOR TO THE EXPIRATION OF THE OFFER, NO
REALLOWANCE WILL BE PAYABLE HEREUNDER.
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