EXHIBIT (e)-2
BROKER/DEALER AGREEMENT
Keeley Investment Corp.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Gentlemen:
We desire to enter into an Agreement with you for the sale of shares of
common stock ("Shares") in KEELEY Small Cap Value Fund, Inc. (the "Fund") that
are now or hereafter available for sale to our customers (our "Customers"). You
are the principal underwriter (as such term is defined in the Investment Company
Act of 1940, as amended (the "1940 Act")) of the offering of Shares and the
agent for the continuous distribution of such Shares. As used herein, the term
"Prospectus" means the prospectus of the Fund and, unless the context otherwise
requires, related Statement of Additional Information (the "SAI") incorporated
therein by reference, as the same are amended and supplemented from time to
time.
In consideration for the mutual covenants contained herein, it is hereby
agreed that our respective rights and obligations shall be as follows:
1. Customers who purchase Shares are for all purposes our customers and
not customers of the Fund. We 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 National Association of Securities Dealers, Inc. (the
"NASD"). In no transaction involving Shares shall we have any authority to act
as agent for the Fund or for you, and neither you nor the Fund shall have the
authority to act as agent for us.
2. All orders for the purchase of any Shares shall be executed at the
then current public offering price per Share (i.e., the net asset value per
Share plus the applicable sales load, if any) and all orders for the redemption
of Shares shall be executed at the net asset value per Share, in each case as
described in the Prospectus. The minimum initial purchase order shall be as set
forth in the Prospectus. The Fund reserves the right to reject any purchase
order. Unless otherwise mutually agreed in writing, each transaction shall be
promptly confirmed in writing to the Customer on a fully disclosed basis. We
agree that upon receipt of duplicate confirmations we will examine the same and
promptly notify the Fund of any errors or discrepancies that we discover and
shall promptly bring to the attention of the Fund any errors in such
confirmations claimed by our Customers. The Fund reserves the right, at its
discretion and without notice, to suspend the sale of Shares or withdraw
entirely the sale of Shares; provided, however, that the Fund shall notify us in
writing promptly following any such suspension or withdrawal of the sale(s) of
Shares.
3. In ordering Shares, we shall rely solely and conclusively on the
representations contained herein and in the Prospectus. Each party hereto agrees
that it shall not offer or sell Shares except in compliance with all applicable
federal and state securities laws and the rules and regulations of applicable
regulatory agencies or authorities. In connection with offers to sell and sales
of Shares, we agree to deliver or cause to be delivered to each person to whom
any such offer or sale is made, at or prior to the time of such offer or sale, a
copy of the Prospectus, and upon request, the SAI. We further agree to obtain
for each Customer to whom we sell Shares any taxpayer identification number
certification required under Section 3406 of the Internal Revenue Code of 1986,
as amended (the "Code"), and the regulations promulgated thereunder, and to
provide you or your designee with timely written notice of any failure to obtain
such taxpayer identification number certification in order to enable the
implementation of any required backup withholding in accordance with Section
3406 of the Code and the regulations thereunder. Unless otherwise mutually
agreed in writing, you shall deliver or cause to be delivered to each Customer
who purchases Shares copies of all annual and interim reports, proxy
solicitation materials and any other information and materials relating to the
Fund and prepared by or on behalf of you, the Fund or its investment adviser,
investment sub-adviser, custodian, transfer agent or dividend disbursing agent
for distribution to such Customer. You agree to supply us with copies of the
Prospectus, Statement of Additional Information, annual reports, interim
reports, proxy solicitation materials and any such other information and
materials relating to the Fund in reasonable quantities upon request. We
acknowledge that any material or information that you furnish to us, other than
Prospectuses, annual and interim reports to stockholders and proxy solicitation
materials prepared by the Fund, are your sole responsibility and not the
responsibility of the Fund.
4. We shall not make any representations concerning Shares other than
those contained in this Agreement, the Prospectus or in any promotional
materials or sales literature furnished to us by you or the Fund. We shall not
furnish or cause to be furnished to any person or display or publish any
information or materials relating to the Fund (including, without limitation,
promotional materials and sales literature, advertisements, press releases,
announcements, statements, posters, signs or other similar materials), except
such information and materials as may be furnished to us by you or the Fund, and
such other information and materials as may be approved in writing by you.
5. In determining the amount of any dealer allowance or sales
commission payable to us hereunder, you reserve the right to exclude any sales
which you determine, acting reasonably and in good faith, are not made in
accordance with the terms of the Prospectus and the provisions of this
Agreement; provided, however, that you agree to notify us in writing of any such
exclusions and the reason therefor promptly after you exercise such right.
Unless at the time of transmitting an order we advise you or the transfer agent
for the Fund (the "Transfer Agent") to the contrary, the Shares ordered will be
deemed to be the total holdings of the specified Customer.
6. a. In accordance with the terms of the then current Prospectus, a
reduced sales load may be available to Customers that purchase
Shares sold with a sales load at the then-current public offering
price per Share applicable to the total value (based on the higher
of current net asset value or the public offering price originally
paid) of (i) current purchases plus (ii) Shares that are already
beneficially owned at the time of purchase by the Customer on which
a sales load has been paid. Certain purchases made by a Customer and
certain other persons (for example, a Customer's spouse) as set
forth from time to time in the then current Prospectus may be
combined for purposes of qualifying for a reduced sales charge. In
each case where a reduced sales load is applicable, we agree to
determine whether the Customer is eligible for the reduced sales
load and if so, to furnish to the Transfer Agent sufficient
information to permit confirmation of qualification for that reduced
sales load. We acknowledge that we are responsible identifying which
of our Customers is eligible for a reduced sales load, and providing
all of the information necessary to obtain for our Customers the
lowest sales load to which they are entitled. We understand that
you will rely on us to make that analysis and determination, and
that you have no responsibility to our Customers to assure that they
receive the lowest possible sales load. We also acknowledge that
acceptance of the purchase order at less than the maximum sales load
is subject to such confirmation. Reduced sales charges may be
modified or terminated at any time at the sole discretion of the
Fund; provided, however, that you agree to notify us in writing of
any such modifications or termination promptly after the occurrence
thereof.
b. We acknowledge that certain classes of investors may be
entitled to purchase Shares at net asset value without a sales load
as from time to time as provided in the then current Prospectus.
c. We agree to advise you promptly at your written request as to
the amount of any and all sales by us qualifying for a reduced sales
load or no sales load.
7. The procedures relating to orders and the handling thereof will be
subject to the terms of the then current Prospectus and written instructions
received by us from you or the Transfer Agent from time to time. No conditional
orders will be accepted. We agree that purchase orders placed by us will be made
only for the purpose of covering purchase orders already received from our
Customers and that we will not make purchases of Shares for any other securities
dealer or broker. Further, we shall place purchase orders from Customers with
the Fund immediately and shall not withhold the placement of such orders so as
to profit ourselves; provided, however, that the foregoing shall not prevent the
purchase of Shares by us for our own bona fide investment. We agree that: (a) we
shall not effect any transactions (including, without limitation, any purchases
and redemptions) in Shares registered in the name of, or beneficially owned by,
any Customer unless such Customer has granted us full right, power and authority
to effect such transactions on his or her behalf, and (b) you, the Fund, the
Transfer Agent and your and their respective officers, directors or trustees,
agents, employees and affiliates shall not be liable for, and shall be fully
indemnified and held harmless by us from and against, any and all claims,
demands, liabilities and expenses (including, without limitation, reasonable
attorneys' fees) which may be incurred by you or any of the foregoing persons
entitled
to indemnification from us hereunder arising out of or in connection with the
execution of any transactions in Shares registered in the name of, or
beneficially owed by, any Customer in reliance upon any oral or written
instructions believed to be genuine and to have been given by or on behalf of
us. The indemnification agreement contained in this Paragraph 7 shall survive
the termination of this Agreement.
8. a. We agree that payment for orders from us for the purchase of
Shares will be made in accordance with the terms of the then current
Prospectus as follows:
As a % of As a % of Dealers'
Offering Net Asset Reallowance
Amount of Transaction Price Value as a % of
Per Share Offering Price
Less than $50,000 4.50% 4.71% 4.00%
$ 50,000 but less than $100,000 4.00% 4.17% 3.50%
$100,000 but less than $250,000 3.00% 3.09% 2.50%
$250,000 but less than $500,000 2.50% 2.56% 2.00%
$500,000 and over 1.00% 1.01% 0.50%
On or before the settlement date of each purchase order for Shares,
we shall remit to an account designated by you with the Transfer
Agent an amount equal to the then current public offering price per
share of the Shares being purchased without deduction of our dealer
allowance, if any, with respect to such purchase order as determined
by you in accordance with the terms of the then current Prospectus,
in which case our dealer allowance, if any shall be payable to us on
at least a monthly basis. If we are a member of the National
Securities Clearing Corporation ("NSCC"), we shall place our orders
and settle the transactions through the NSCC in accordance with its
rules and regulations. If payment for any purchase order is not
received in accordance with the terms of the then current
Prospectus, you reserve the right, without advance notice, to cancel
the sale and to hold us responsible for any direct loss sustained as
a result thereof; provided, however, that you agree to notify us in
writing of any such cancellation promptly after the occurrence
thereof.
b. If any Shares sold under the terms of this Agreement are sold
with a sales load and are redeemed by the Fund or repurchased for
the account of the Fund or are tendered for redemption within seven
(7) business days after confirmation of our purchase order for such
Shares: (i) we shall forthwith refund to you the full dealer
allowance received by us on the sale; and (ii) you shall forthwith
pay to the Fund your portion of the sales load on the sale which had
been retained by you, if any, and shall also pay to the Fund the
amount refunded by us.
c. In addition to the fees delineated above in Paragraph 8(a),
you agree, subject to the other terms and conditions of this
Agreement, to pay us a distribution fee and we agree to accept as
full payment therefore, for distribution and marketing services in
the promotion of the Shares, a distribution fee calculated daily and
payable quarterly and based on the average daily net assets of
Shares that are owned of record by us as nominee for our Customers
or which are owned by those Customers of our firm whose records, as
maintained by the Fund or its agent, designate us as the Customer's
dealer of record, equal to 0.25% on an annual basis.
We acknowledge that the distribution fee paid will be paid from
monies received by you under a Distribution Plan adopted pursuant to
Rule 12b-1 (the "Plan") under the 1940 Act. You agree to deliver a
copy of the Plan to us prior to the execution of this Agreement, and
you agree to deliver copies of all amendments to the Plan promptly
after their effectiveness. Under the Plan now in effect, the Fund is
authorized to make expenditures of Fund assets for various
distribution and support services. Further, we understand and agree
that (i) all distribution fees are subject to the
limitations contained in the Plan then in effect, which may be
amended or discontinued at any time, and (ii) our failure to provide
services as agreed to by us will render us ineligible to receive
distribution fees. We shall furnish to you and the Fund such
information as you and the Fund shall reasonably request with
respect to the fees and services hereunder.
9. Each party hereto hereby represents and warrants to the other party
that: (a) such party corporation, partnership or other entity duly organized and
validly existing in good standing under the laws of the jurisdiction in which
such party is organized; (b) the execution and delivery of this Agreement and
the performance of the transactions contemplated hereby have been duly
authorized by all necessary action, and all authorizations and approvals (if
any) required for such party's lawful execution and delivery of this Agreement
and such party's performance hereunder have been obtained; and (c) upon
execution and delivery by such party, and assuming due and valid execution and
delivery by the other party, this Agreement will constitute a valid and binding
agreement, enforceable against such party in accordance with its terms.
10. Each party hereby further represents and warrants to the other party
that such party is a member of the NASD and, with respect to any sales in the
United States, such party agrees to abide by all of the rules and regulations of
the NASD, including, without limitation, its Rules of Fair Practice. Each party
agrees to comply with all applicable federal and state laws, rules and
regulations. You agree to inform us, upon our request, as to the states in which
the Shares are qualified for sale under, or exempt from the requirements of, the
respective securities laws of such states, but you shall have no obligation or
responsibility to make Shares available for sale to our Customers in any
jurisdiction. Each party agrees to notify the other party immediately, in
writing, in the event of such party's expulsion or suspension from the NASD. A
party's expulsion from the NASD will automatically terminate this Agreement
immediately without notice to the other party. A party's suspension from the
NASD will terminate this Agreement effective immediately upon written notice of
termination to such party.
11. The names and addresses and other information concerning our
Customers are and shall remain our sole property, and neither you nor your
affiliates shall use such name, addresses or other information for any purpose
except in connection with the performance of your duties and responsibilities
hereunder and except for servicing and informational mailings relating to the
Fund. Notwithstanding the foregoing, this Paragraph 11 shall not prohibit you or
any of your affiliates from utilizing for any purpose the names, addresses or
other information concerning any of our Customers if such names, addresses or
other information are obtained in any manner other than from us pursuant to this
Agreement. The provisions of this Paragraph 11 shall survive the termination of
this Agreement.
12. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an exclusive
arrangement, or to create a partnership, association or joint venture between
you and us. Neither party hereto shall be, act as, or represent itself as, the
agent or representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of, or on behalf of, the other
party. This Agreement is not intended to, and shall not, create any rights
against either party hereto by any third party solely on account of this
Agreement. Except in connection with a party's performance of its obligations
under this Agreement, neither party hereto shall use the name of the other party
in any manner without the other party's prior written consent, except as
required by an applicable federal or state law, rule or regulation, and except
pursuant to any promotional programs mutually agreed upon in writing by the
parties hereto.
13. Except as otherwise specifically provided herein, all notices
required or permitted to be given pursuant to this Agreement shall be given in
writing and delivered by personal delivery or by postage prepaid, registered or
certified United States first class mail, return receipt requested, or by telex,
telegram or similar means of same day delivery (with confirming copy by mail as
provided herein). Unless otherwise notified in writing, all notices to you shall
be given or sent to you at your office, located at 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, and all notices to us shall be given or
sent to us at our address shown below. All notices shall be effective upon
receipt.
14. Each party hereto represents and warrants to the other party that it
has adopted an anti-money laundering program ("AML Program") that complies with
the Bank Secrecy Act, as amended by the USA PATRIOT Act, and any future
amendments (the "PATRIOT Act," and together with the Bank Secrecy Act, the
"Act"), the rules and regulations under the Act, and the rules, regulations and
regulatory guidance of the SEC, the NASD or any other applicable self-regulatory
organization (collectively, "AML Rules and Regulations"). Each party further
represents that its AML Program, at a minimum, (a) designates a compliance
officer to administer and oversee the AML Program, (b) provides ongoing employee
training, (c) includes an independent audit function to test the effectiveness
of the AML Program, (d) establishes internal policies, procedures, and controls
that are tailored to our particular business, (e) includes a customer
identification program consistent with the rules under section 326 of the Act,
(f) provides for the filing of all necessary anti-money laundering reports
including, but not limited to, currency transaction reports and suspicious
activity reports, (g) with respect to us only, provides for screening all new
and existing customers against the Office of Foreign Asset Control ("OFAC") list
and any other government list that is or becomes required under the Act, and (h)
allows for appropriate regulators to examine such party's AML books and records.
15. Each party hereto agrees that any Nonpublic Personal Information, as
defined under Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated
under the Financial Modernization Act of 1999 (the "Xxxxx-Xxxxx-Xxxxxx Act" or
the "GLB Act"), disclosed by a party hereunder is for the specific purpose of
permitting the other party to perform the services set forth in this Agreement
and shall not be used for any other reason or purpose.
16. This Agreement shall become effective when accepted and signed by
both parties, and may be terminated at any time by either party hereto upon
fifteen (15) days prior written notice to the other party. This Agreement may be
amended only by a written instrument signed by both of the parties hereto, which
amendment shall be effective on the date specified therein, or if no date is
specified then on the date the last party thereto signs such amendment. This
Agreement may not be assigned by either party without the prior written consent
of the other party, except that either party may assign this Agreement to any
successor in interest or to any affiliate of such party. This Agreement
constitutes the entire agreement and understanding between the parties hereto
relating to the subject matter hereof and supersedes any and all prior
agreements, written or verbal, between the parties relating to said subject
matter.
17. We agree to indemnify you and hold you harmless from and against any
claims, liabilities, expenses (including reasonable attorneys fees) and losses
resulting from (a) any failure by us to comply with applicable laws in
connection with our activities under this Agreement, (b) any unauthorized or
untrue representation made by us concerning an investment in Shares or (c) any
breach of this Agreement by us. You agree to indemnify us and hold us harmless
from and against any claims, liabilities, expenses (including reasonable
attorneys fees) and losses resulting from (a) any failure by you to comply with
applicable laws in connection with your activities under this Agreement, (b) any
breach of this Agreement by you or (c) any unauthorized or untrue statement set
forth in the Fund's Prospectus or supplemental sales material provided to us, or
omission to state a material fact required to be stated therein to make the
statements therein not misleading. Notwithstanding anything in this Agreement to
the contrary, in no event shall either party, its affiliates or any of its or
their directors, officers, employees agents or subcontractors be liable to the
other party under any theory of tort, contract, strict liability or other legal
or equitable theory for lost profits, exemplary, punitive, special, incidental,
indirect or consequential damages, each of which is hereby excluded by agreement
of the parties regardless of whether such damages were foreseeable or whether
either party or any entity has been advised of the possibility of such damages.
18. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Illinois, without giving effect to principles
of conflicts of laws.
19. Each of us agrees that from time to time at the request of the other
party, we will provide certifications that we have complied with the provisions
of this Agreement applicable to us and of applicable law, rules and regulations,
which certifications may include, but need not be limited to, anti-money
laundering programs, privacy requirements, late trading and appropriate sales
loads.
20. To the extent that your policies and procedures, and the policies
and procedures of the Fund, impose restrictions and limitations on holders of
Fund securities (such as limitations on frequent trading or market timing), we
will assist you in identifying or otherwise tracking the activities of Customers
who hold their shares of the Fund in street name (to the extent consistent with
our privacy policy and requirements of law) in order to permit
you to apply such policies and procedures to such owners to the same effect as
if those persons held their interest in the Fund directly.
Very truly yours,
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Name of Broker/Dealer (Please Print or Type)
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Firm
--------------------------------------------
Address
Date: _______________, 20__ By:______________________
Authorized Officer
NOTE: PLEASE SIGN AND RETURN BOTH COPIES OF THIS AGREEMENT TO KEELEY
INVESTMENT CORP. UPON ACCEPTANCE, ONE COUNTERSIGNED COPY WILL BE RETURNED TO
YOU FOR YOUR FILES.
Accepted:
Date: ____________, 20__
KEELEY INVESTMENT CORP.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
By:______________________
Authorized Officer
BROKER/DEALER SETUP AND
FUND/SERV-NETWORKING PROFILE SHEET
KEELEY SMALL CAP VALUE FUND
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Please fill in the following information completely and return this form, along
with a copy of your signed Broker/Dealer Selling Agreement to Keeley Investment
Corp. This will allow us to set your firm up as a dealer to trade shares in the
KEELEY Small Cap Value Fund via NSCC/FundServ & Networking.
NAME: MRO#
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ADDRESS: ALPHA CODE
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MATRIX LEVEL(S)
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SETTLEMENT: T+1 or T+3
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DAILY CONTACTS:
Fund/SERV Contact: Phone:
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Title: Fax:
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Networking Contact: Phone:
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Title: Fax:
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Loss Letter Contact: Phone:
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Fax:
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POSITION INFORMATION:
Networking Position Files:
(Please attach calendar, if necessary)
Commission/SERV eligible? Yes No
12b-1 Payments through NSCC? Yes No
**PLEASE ATTACH A CURRENT BRANCH LISTING**
WIRING INSTRUCTIONS:
(For manual settlement) Bank:
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ABA:
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Account:
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For Credit to:
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Special Instructions:
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FIRSTAR=S INTERNAL CHECKLIST
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Fax Contact List
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Personal Contact Made
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Dealer Number
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Position Spreadsheet
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