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EXHIBIT (6)(b)
DEALER AGREEMENT
WITH XXX XXXXXX AMERICAN CAPITAL DISTRIBUTORS, INC.
REGARDING XXX XXXXXX AMERICAN CAPITAL
OPEN-END AND CLOSED-END INVESTMENT COMPANIES
Ladies and Gentlemen:
As dealer for our own account, we offer to sell to you shares of any of
the Xxx Xxxxxx American Capital open-end investment companies (the "Open-End
Funds" or, individually, an "Open-End Fund") and Xxx Xxxxxx American Capital
closed-end investment companies (the "Closed-End Funds" or, individually, a
"Closed-End Fund") distributed by Xxx Xxxxxx American Capital Distributors,
Inc. ("VKAC") pursuant to the terms and conditions contained herein.
Collectively, the Open-End Funds and Closed-End Funds sometimes are referred to
herein as the "Funds" or, individually, as a "Fund".
VKAC acts as the principal underwriter (as such term is defined in the
Investment Company Act of 1940, as amended) for each Fund with respect to its
offering of one or more classes of shares as described in each Fund's
Prospectus. Pursuant to this Agreement, VKAC offers to sell to you shares of
each Open-End Fund and each Closed-End Fund prior to the Effective Date (as
defined herein) of each Fund's Registration Statement (as defined herein) (the
"Initial Offering Period") and after the Effective Date of each Fund's
Registration Statement (the "Continuous Offering Period") (if any) as described
in each respective Fund's Prospectus.
As used herein unless otherwise indicated, the term "Prospectus" means the
final prospectus and Statement of Additional Information included in the
registration statement for the fund on the effective date and as from time to
time thereafter amended or supplemented. As used herein unless otherwise
indicated, the term "Preliminary Prospectus" means any preliminary prospectus
and any preliminary Statement of Additional Information included at any time as
a part of the registration statement for any Fund prior to the effective date
and which is authorized by VKAC for use in connection with the offering of
shares.
In consideration of the mutual obligations contained herein, the
sufficiency of which is hereby acknowledged by you, the terms of the Agreement
are as follows:
GENERAL TERMS AND CONDITIONS
1. Your acceptance of this Agreement constitutes a representation that
you are a broker-dealer registered with the Securities and Exchange Commission
(the "SEC") and a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD") or, in the alternative, that you are a
foreign dealer or bank, not required to be registered as a broker-dealer with
the SEC and not required or eligible for membership in the NASD. If you are
such an NASD member, you agree that in making sales of shares of the one or
more classes of shares of each Fund you will comply with all applicable rules
of the NASD, including without limitation rules pertaining to the opening,
approval, supervision and monitoring of customer accounts, the NASD's
Interpretation with Respect to Free-Riding and Withholding and Sections 8, 24
and 36 of Article III of the NASD's Rules of Fair Practice. If you are such an
unregistered foreign dealer or bank, you agree not to offer or sell, or to
agree to offer or sell, directly or indirectly, except through VKAC, any shares
to any party to whom such shares may not be sold unless you are so registered
and a member of the NASD, and in making sales of such shares you agree to
comply with the NASD's Interpretation with Respect to Free-Riding and
Withholding and Sections 8, 24 and 36 of Article III of the NASD's Rules of
Fair Practice as though you were a member in
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good standing of the NASD and to comply with Section 25 of such Article III as
it applies to a nonmember broker or dealer in a foreign country. You and we
agree to abide by all other Rules and Regulations of the NASD, including
Section 26 of its Rules of Fair Practice, and all applicable state and Federal
laws, rules and regulations. Your acceptance also constitutes a representation
that you have been duly authorized by proper corporate or partnership action to
enter into this Agreement and to perform your obligations hereunder. You will
not accept any orders from any broker, dealer or financial institution who is
purchasing from you with a view toward distribution unless you have obtained
such person's or entity's written consent to be bound by the terms of this
Agreement.
2. In all sales of shares of the Funds to the public you shall act as
dealer for your own account, and you shall have no authority in any transaction
to act as agent for the Fund or for VKAC.
3. Each Fund has filed with the SEC and the securities commissions of one
or more states a Registration Statement (the "Registration Statement") on the
SEC Form applicable to the respective Fund. The date on which the Registration
Statement is declared effective by the SEC is referred to herein as the
"Effective Date". Prior to the Effective Date of the Registration Statement
with respect to a particular Fund, you expressly acknowledge and understand
that with respect to such Fund:
(a) Shares of such Fund may not be sold, nor may offers to buy be
accepted, (i) in any state prior to the Effective Date of the Registration
Statement with respect thereto or (ii) in any state in which such offer or sale
would be unlawful prior to registration or qualification under the securities
laws of such state.
(b) The Fund's Preliminary Prospectus, together with any sales
material distributed for use in connection with the offering of shares of such
Fund, does not constitute an offer to sell or the solicitation of an offer to
buy shares of such Fund and is subject to completion and modification by the
Prospectus. You agree that you will distribute to the public only (a) the
Preliminary Prospectus, the Prospectus and any amendment or supplement thereto
and (b) sales literature or other documents expressly authorized for such
distribution by VKAC.
(c) In the event that you transmit indications of interest to VKAC for
accumulation prior to the Effective Date, you will be responsible for
confirming such indications of interest with your customers following the
Effective Date. Indications of interest with respect to shares of a class of a
Fund's shares transmitted to VKAC prior to the Effective Date will be
conditioned upon the occurrence of the Effective Date and the registration or
qualification of the respective class of shares in the respective state.
(d) Indications of interest with respect to shares of a class of a
Fund's shares which are not canceled by you prior to the latter of the Effective
Date and the registration or qualification of the respective class of the Fund's
shares in the respective state, and accepted by VKAC will be deemed by VKAC to
be orders for shares of such class of shares of the Fund.
(e) All indications of interest and orders transmitted to VKAC are
subject to the terms and conditions of the Prospectus and this Agreement.
4. After the Effective Date, you will not offer shares of a class of the
Fund's shares for sale in any state where they are not qualified for sale under
the "blue sky" laws and regulations of such state or where you are not
qualified to act as a dealer, except for states in which they are exempt from
qualification.
5. In the event that you offer shares of the Fund for sale outside the
United States, you agree to comply with the applicable laws, rules and
regulations of the foreign government having jurisdiction over such sales,
including any regulations of the United States military authorities applicable
to solicitations to military personnel.
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6. Upon application to VKAC, VKAC will inform you as to the jurisdictions
in which VKAC believes shares of a Fund have been qualified for sale under the
respective securities or "blue sky" laws of such jurisdictions. VKAC
understands and agrees that qualification of any shares of a Fund for sale in
such jurisdictions shall be solely VKAC's responsibility and that you assume no
responsibility or obligation with respect to such eligibility. You understand
and agree that your compliance with the requirements of the securities or "blue
sky" laws in each jurisdiction with respect to your right to sell the shares in
such jurisdiction shall be solely your responsibility.
7. No person is authorized to make any representations concerning any
class of shares of a Fund except those contained in the Fund's current
Preliminary Prospectus or Prospectus, as the case may be. In purchasing shares
from us you shall rely solely on the representations contained in such
Prospectus. VKAC will furnish additional copies of a Fund's current Prospectus
and sales literature issued by VKAC in reasonable quantities upon request.
8. Orders received from you will be accepted by VKAC only at the public
offering price applicable to each order as specified in the then-current Fund
Prospectus. The minimum dollar purchase of any shares of each Fund by any
person shall be the applicable minimum dollar amount described in the
then-current Fund Prospectus for that class of shares, and no order for less
than such amount will be accepted hereunder. The procedures relating to the
handling of orders shall be subject to instructions that VKAC shall communicate
from time to time to you. All orders are subject to acceptance or rejection by
VKAC in its sole discretion.
9. Payment for Fund shares shall be made on or before the settlement date
specified in the VKAC confirmation at the office of VKAC's clearing agent, or
wire to the order of the Fund which reserves VKAC's right to delay issuance or
transfer of shares until such check has cleared. If such payment is not
received by VKAC, VKAC reserves the right, without notice, forthwith either to
cancel the sale or, at its option, to sell the shares ordered back to the Fund,
and in either case, VKAC may hold you responsible for any loss suffered by the
Fund. You agree that in transmitting investors' funds, you will comply with
Rule 15c2-4 under the Securities Exchange Act of 1934, as amended.
10. You shall not withhold placing orders with VKAC from your customers
so as to profit yourself as a result of such withholding; e.g., by a change in
the net asset value from that used in determining the public offering price to
your customers.
11. VKAC will not accept from you any conditioned orders for shares,
except at a definite, specified price.
12. You represent that you are familiar with Release No. 4968 under the
Securities Act of 1933, as amended, and Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended, as it relates to the distribution of
Preliminary Prospectuses (and not Statements of Additional Information) and
Prospectuses (and not Statements of Additional Information) for each Fund and
agree that you will comply therewith. You agree that if an investor or
potential investor places a request with you to receive a Statement of
Additional Information, you will (i) provide such person with a Statement of
Additional Information without charge and notify the Fund that you have done
so, (ii) notify the Fund of the request so that the Fund can fulfill the
request or (iii) tell such person to request a Statement of Additional
Information by telephoning the Fund at the number set forth on the cover of the
current Prospectus or Preliminary Prospectus. You also agree to keep an
accurate record of your distribution (including dates, number of copies and
persons to whom sent) of copies of any Preliminary Prospectus (and any
Statement of Additional Information) and/or Prospectus (and any Statement of
Additional Information) for each Fund (or any amendment or supplement to
either) and, promptly upon request by VKAC, to bring all subsequent changes to
such Preliminary Prospectus or Prospectus to the attention of anyone to whom
such material shall have been distributed. You further agree to furnish to
persons who receive a confirmation of sale of shares of any Fund a copy of the
Prospectus (and not the Statement of Additional Information) for such Fund
filed pursuant to Rule 497 under the Securities Act of 1933, as amended.
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13. Unless otherwise indicated in a Fund's Prospectus, stock certificates
for shares of Funds sold to you shall be issued only if specifically requested.
14. VKAC will have no liability to you, except for lack of good faith and
for obligations expressly assumed by VKAC in this Agreement.
15. All communications to VKAC shall be sent to Xxx Xxxxxxxx Xxxxx,
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attention: Mutual Fund Department. Any
notice to you shall be duly given if sent to you at the address specified by
you below or such other address as you may designate to VKAC in writing.
16. Neither this Agreement nor the performance of the services hereunder
shall be considered to create a joint venture or partnership between VKAC and
you.
17. This Agreement shall be construed in accordance with the laws of the
State of Illinois without reference to the choice-of-law principles thereof.
18. The Fund reserves the right in its discretion and VKAC reserves the
right in its discretion, without notice, to suspend or withdraw the offering of
any shares of a Fund entirely. VKAC reserves the right, without notice, to
amend, modify or cancel the Agreement. The Agreement may not be assigned by
either party without prior written consent of the other party.
19. This Agreement may be terminated at any time by either party.
TERMS AND CONDITIONS APPLICABLE ONLY TO OPEN-END FUNDS
20. Each of the Open-End Fund's is subject to an alternative distribution
plan (the "Alternative Distribution Plan") as described in such Fund's
then-current Prospectus pursuant to which the Open-End Fund may sell multiple
classes of its shares with varying combinations of front-end service charges
(each a "FESC"), distributions fees, service fees, contingent deferred sales
charges (each a "CDSC"), exchange features, conversion rights, voting rights,
expenses allocations and investment requirements. As used herein, classes of
shares of a Fund subject to a FESC will be referred to as FESC Shares, and
classes of shares of a Fund subject to a CDSC will be referred to as CDSC
Shares.
21.(a) With respect to any shares of a class of FESC Shares of an
Open-End Fund, the public offering price for such shares shall be the net asset
value per share plus a FESC, expressed as a percentage of the applicable public
offering price, as determined and effective as of the time specified in the
then-current Prospectus of such Open-End Fund. The dealer discount applicable
to any sale of shares of a class of FESC Shares of an Open-End Fund shall be a
percentage of the applicable public offering price for such shares as provided
for in the then-current Prospectus of such Open-End Fund or, if not so
provided, as provided to you from time to time in writing by VKAC.
(b) With respect to any shares of a class of CDSC Shares of an Open-End
Fund, the public offering price for such shares shall be the net asset value
per share as determined and effective as of the time specified in the
then-current Prospectus of such Open-End Fund. The dealer sales compensation
payable by VKAC applicable to any sale of shares of a class of CDSC Shares of
an Open-End Fund shall be the percentage of the applicable public offering
price for such shares as provided for in the then-current Prospectus of such
Open-End Fund or, if not so provided, as provided to you from time to time in
writing by VKAC.
22. Should you wish to participate in the Distribution Plan with respect
to a class of shares adopted by an Open-End Fund pursuant to Rule 12b-1 ("Rule
12b-1 Plan") under the Investment Company Act of 1940, as amended, or the
Service Plan with respect to a class of shares, it is understood that you must
be approved by the Board of Directors of such Open-End Fund and execute a
Distribution Assistance Agreement.
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23. With respect to the Open-End Funds, your acceptance of this Agreement
constitutes a representation that you will adopt policies and procedures to
comply with Rule 18f-3 under the Investment Company Act of 1940, with respect
to when you may appropriately sell the various classes of shares of the
Open-End Funds to investors and that you will sell such shares only in
accordance therewith.
24.(a) You agree to purchase shares of an Open-End Fund only from VKAC or
from your customers. If you purchase shares of an Open-End Fund from VKAC, you
agree that all such purchases shall be made only: (i) to cover orders already
received by you from your customers or (ii) for your own bona fide investment.
If you purchase shares of an Open-End Fund from your customers, you agree to
pay such customers not less than the applicable repurchase price for such
shares as established by the then-current Prospectus for such Open-End Fund.
VKAC in turn agrees that it will not purchase any shares from an Open-End Fund
except for the purpose of covering purchase orders that it has already
received.
(b) With respect to shares of a class of CDSC Shares of an Open-End Fund
purchased from your customers, you additionally agree to resell such shares
only to VKAC as agent for the Fund at the repurchase price for such shares as
established by the then-current Prospectus of such Open-End Fund. You
acknowledge and understand that shares of a class of CDSC Shares of an Open-End
Fund may be subject to a CDSC payable to VKAC as set forth in the Prospectus
for such Open-End Fund in effect at the time of the original purchase of such
shares from the Open-End Fund and that the repurchase price for such shares
that will be paid by VKAC will reflect the imposition of any applicable CDSC.
25.(a) You shall sell shares of a class of shares of an Open-End Fund
only: (i) to customers at the applicable public offering price or (ii) to VKAC
as agent for the Open-End Fund at the repurchase price in the then-current
Prospectus of such Open-End Fund. In such a sale to VKAC, you may act either
as principal for your own account or as agent for your customer. If you act as
principal for your own account in purchasing shares of a class of shares of an
Open-End Fund for resale to VKAC, you agree to pay your customer not less than
the price that you receive from VKAC. If you act as agent for your customer in
selling shares of a class of shares of an Open-End Fund to VKAC, you agree not
to charge your customer more than a fair commission for handling the
transaction. You acknowledge and understand that CDSC Shares of an Open-End
Fund may be subject to a CDSC payable to VKAC as set forth in the Prospectus of
such Open-End Fund in effect at the time of the original purchase of such CDSC
Shares and that the repurchase price that will be paid by VKAC for such CDSC
Shares will reflect the imposition of any such CDSC.
26. If any shares of a class of FESC Shares of an Open-End Fund sold to
or by you under the terms of this Agreement are repurchased by the Fund or by
VKAC as agent for the Fund or are tendered for redemption within seven business
days after the date of VKAC's confirmation of the original purchase, it is
agreed that you shall forfeit your right to any dealer discount received by you
on such FESC Shares. VKAC will notify you of any such repurchase or redemption
within ten business days from the date on which the repurchase or redemption
order in proper form is delivered to VKAC or to the Fund, and you shall
forthwith refund to VKAC the full dealer discount allowed to you on such sale.
VKAC agrees, in the event of any such repurchase or redemption, to refund to
the Fund its share of any discount allowed to VKAC and, upon receipt from you
of the refund of the discount allowed to you, to pay such refund forthwith to
the Fund.
TERMS AND CONDITIONS APPLICABLE TO CLOSED END-FUNDS
27. No Closed-End Fund will issue fractional shares.
28. VKAC may, in its sole discretion, allocate shares of a Closed-End
Fund among brokers and dealers participating in the Initial Offering Period or
among brokers, dealers and banks in the Continuous Offering Period, as the case
may be, on other than a pro rata basis, which may result in
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certain brokers, dealers and banks not being allocated the full amount of
shares of such fund sold by them while certain other brokers, dealers and banks
may receive their full allocation.
29. You agree that with respect to orders for shares of a Closed-End
Fund, you will transmit such orders received during the Initial Offering Period
to VKAC within the time period as specified in such Closed-End Fund's
Prospectus (or in the time period as extended by VKAC in writing). You also
agree to transmit any customer order received during the Continuous Offering
Period to VKAC prior to the time that the public offering price for such
Closed-End Fund is next determined after your receipt of such order as set
forth in the Closed-End Fund's Prospectus. There is no assurance that each
Closed-End Fund will engage in a continuous offering of shares.
30. On each order accepted by VKAC for shares of a Closed-End Fund, you
will be entitled to receive a concession paid out of VKAC's own assets as set
forth in the then-current Prospectus of such Closed-End Fund (exclusive of
additional compensation that may be payable pursuant to sales programs, if any,
that may be established from time to time as described in the Prospectus for
such Closed-End Fund, which will be payable only as and to the extent the
requirements of such programs are satisfied). In no event will any Closed-End
Fund reimburse VKAC for any such sales concessions or other additional
compensation or pay any such concession or other additional compensation or
allowance directly to you. VKAC will specify for each Closed-End Fund a period
after the date that the shares of such Closed-End Fund are listed on the New
York Stock Exchange, the American Stock Exchange or another national securities
market system (which period will end no later that the first dividend payment
date with respect to such Closed-End Fund) during which sales concessions and
other additional compensation are subject to forfeiture as provided in the
following sentence (the "Forfeiture Period"). During the Forfeiture Period for
any Closed-End Fund, physical delivery of certificates representing shares will
be required to transfer ownership of such shares. In the event that any shares
of a Closed-End Fund sold through an order received from you in the Initial
Offering Period or the Continuous Offering Period are resold in the open market
or otherwise during the Forfeiture Period, VKAC reserves the right to require
you to forfeit any sales concessions and other additional compensation with
respect to such shares. In the event of a forfeiture, VKAC may withhold any
forfeited sales concessions and other additional compensation that has not yet
been paid or from other amounts yet to be paid to you (whether or not payable
with respect to such shares) and you agree to repay to VKAC, promptly upon
demand, any forfeited sales concessions and other compensation that has been
paid. Determinations of the amounts to be paid to you or by you to VKAC shall
be made by VKAC and shall be conclusive.
31. During the Initial Offering Period and any Continuous Offering Period
for any Closed-End Fund, you agree to supply VKAC, not less frequently than
once a week by Friday, 5:00 p.m. Eastern Time, during such Closed-End Fund's
Initial Offering Period, a list setting forth by state and in the aggregate all
indications of interest and, during any Continuous Offering Period, all shares
sold by you of such Closed-End Fund during such week (or lesser period of
time), and a list setting forth by name and location each registered
representative making said sales and indicating the amount of all sales per
Closed-End Fund to date.
32. You expressly acknowledge and understand that there is no Rule 12b-1
Plan for the Closed-End Funds.
33. You expressly acknowledge and understand that shares of the
Closed-End Funds will not be repurchased by either the Closed-End Funds (other
than through tender offers from time to time, if any) or by VKAC and that no
secondary market for such shares is expected to develop until the shares have
begun trading on a national exchange or national market system. You hereby
covenant that, until notified by VKAC that the distribution of such shares has
been completed or that the Forfeiture Period has ended, you (a) will not make a
secondary market in any shares of such a Closed-End Fund, (b) will not purchase
or hold shares of such Closed-End Fund in inventory for the purpose of resale
in the open market or to your customers and (c) without VKAC's consent, will
not repurchase shares of such Closed-End Fund in the open market or from your
customers for any account in which you have a beneficial interest.
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34. Unlike the other Closed-End Funds, the Continuous Offering period
with respect to the Xxx Xxxxxx American Capital Prime Rate Income Trust (the
"Prime Rate Fund") may continue indefinitely. The offer to sell shares of the
Prime Rate Fund is subject to further terms and conditions in addition to those
set forth above as follows:
(a) You expressly acknowledge and understand that shares of the Prime
Rate Fund will not be repurchased by either the Prime Rate Fund (other than
through tender offers from time to time, if any) or VKAC, and that no secondary
market for the shares of the Prime Rate Fund exists currently, or is expected
to develop. You also expressly acknowledge and agree that, in the event your
customer cancels their order for shares after confirmation, such shares may not
be repurchased, remarketed or otherwise disposed of by or through VKAC.
(b) You acknowledge and understand that, while the Board of Trustees of
the Prime Rate Fund intends to consider tendering for all or a portion of the
Prime Rate Fund's shares on a quarterly basis, there is no assurance the Prime
Rate Fund will tender for shares at any time or, following such a tender offer,
that shares so tendered will be repurchased by the Prime Rate Fund. You
acknowledge and understand that an early withdrawal charge payable to VKAC will
be imposed on most shares accepted for tender by the Prime Rate Fund which have
been held for less than five years, as set forth in the Prime Rate Fund's
Prospectus. ANY REPRESENTATION AS TO A TENDER OFFER BY THE PRIME RATE FUND,
OTHER THAN THAT WHICH IS SET FORTH IN THE PRIME RATE FUND'S CURRENT PROSPECTUS
IS EXPRESSLY PROHIBITED.
Please accept the foregoing by signing this Dealer Agreement, keeping a
copy for your files and returning the original to us.
Accepted and Agreed to:
(PRINT OR TYPE)
Dated: By:
-------------------------------- Its:
-------------------------------- XXX XXXXXX AMERICAN CAPITAL
Broker-Dealer Name DISTRIBUTORS, INC.
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Broker-Dealer Taxpayer ID Number
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Address
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City, State, Zip
By:
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Signature
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Name
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Title
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Phone
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