Exhibit (d)(8)
STATE STREET BANK AND TRUST COMPANY
SUBSCRIPTION, DISTRIBUTION AND ESCROW AGENCY AGREEMENT
This Subscription, Distribution and Escrow Agency Agreement (the "Agreement") is
made as of February _____ , 1997 between Prospect Street High Income Portfolio
Inc. (the "Fund"), a Maryland Corporation, and State Street Bank and Trust
Company, a Massachusetts Trust Company, as subscription, distribution and escrow
agent (the "Agent").
WHEREAS, the Fund proposes to make a subscription offer by issuing certificates
or other evidences of subscription rights, in the form designated by the Fund
("Subscription Certificates") to shareholders of record ("Record Date
Shareholders") of its Common Stock as of a record date specified by the Fund
(the "Record Date"), pursuant to which each Record Date Shareholder will have
certain non-transferable rights (the "Rights") to subscribe to shares of the
Fund Common Stock, par value $.01 (the "Common Stock"), as described in and upon
such terms as are set forth in the prospectus (the "Prospectus") included in the
Form N-2 Registration Statement filed by the Fund with the Securities and
Exchange Commission on January 30, 1997, as amended by any amendment filed with
respect thereto (the "Registration Statement");
WHEREAS, the Fund wishes the Agent to perform certain acts on behalf of the Fund
and the Agent is willing to so act, in connection with the distribution of the
Subscription Certificates and the issuance and exercise of the Rights to
subscribe therein set forth, all upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual agreements
set forth herein, the parties agree as follows:
1. Pursuant to the resolutions of its Board of Directors, the Fund
hereby appoints and authorizes the Agent to act on its behalf in
accordance with the provisions hereof, and the Agent hereby accepts
such appointment and agrees to so act.
2. (a) Each Subscription Certificate shall evidence the Rights of the
Record Date Shareholder therein named to purchase Common Stock
upon the terms and conditions therein and herein set forth.
(b) Upon the written advice of the Fund signed by its Senior Vice
President, Treasurer, Secretary or Assistant Secretary, as to the
Record Date, the Agent shall, from a list of the Fund
Shareholders as of the Record Date prepare and record
Subscription Certificates in the names of the Record Date
Shareholders, setting forth the number of Rights to subscribe for
shares of the Fund's Common Stock, par value $.01 per share,
calculated on the basis of one right for each share recorded on
the Fund's books in the name of each such Record Date Shareholder
as of the Record Date. Each Subscription Certificate shall be
dated as of the Record Date. Upon the written advice, signed as
aforesaid, as to the effective date of the Registration
Statement, the Agent shall as promptly as practicable deliver the
Subscription Certificates, together with a copy of the
Prospectus, to all Record Date Shareholders.
3. (a) Each Subscription Certificate shall be irrevocable and
non-transferable. The Agent shall maintain a register of
Subscription Certificates and the holders of record thereof (each
of whom shall be deemed a "Record Date Shareholder" hereunder for
purposes of determining the rights of holders of Subscription
Certificates). Each Subscription Certificate shall, subject to
the provisions thereof, entitle the Record Date Shareholders in
whose name it is recorded to the following:
(1) The right (the "Basic Subscription Right") to purchase a
number of shares of Common Stock equal to one share of Common
Stock for every three Subscription Rights: provided, however,
that no fractional shares of Common Stock shall be issued;
and
(2) The right (the "Oversubscription Right") to purchase from the
Fund additional shares of Common Stock, subject to the
availability of such shares and to allotment of such shares
as may be available among Record Date Shareholders who
exercise Oversubscription Rights on the basis specified in
the Prospectus; provided, however, that a Record Date
Shareholder who has not exercised his Basic Subscription
Rights with respect to the full number of shares that such
Record Date Shareholder is entitled to purchase by virtue of
his Basic Subscription Rights as of the Expiration Date, if
any, shall not be entitled to any Oversubscription Rights.
(b) A Record Date Shareholder may exercise his Basic Subscription
Rights and Oversubscription Rights by delivery to the Agent at
its corporate office specified in the Prospectus of (i) the
Subscription Certificate with respect thereto, duly executed by
such Record Date Shareholder in accordance with and as provided
by the terms and conditions of the Subscription Certificate,
together with (ii) the purchase price of each share of Common
Stock subscribed for by exercise of such Rights as set forth in
the Prospectus (the "Subscription Price"), in United States
dollars in cash, by check, or bank draft drawn on a bank in the
continental United States or by postal, telegraphic, or express
money order, in each case payable to the order of the Fund.
(c) Rights may be exercised at any time after the date of issuance of
the Subscription Certificates with respect thereto but no later
than 5:00 P.M. New York City Time on such date as the Fund shall
designate to the Agent in writing (the "Expiration Date"). For
the purpose of determining the time of the exercise of any
Rights, delivery of any material to the Agent shall be deemed to
occur when such materials are received at the corporate office of
the Agent specified in the Prospectus.
(d) Notwithstanding the provisions of Section 3(b) and 3(c)
regarding delivery of an executed Subscription Certificate to the
Agent prior to 5:00 P.M. New York City Time on the Expiration
Date, if prior to such time the Agent receives notice of
guaranteed delivery by telegram or otherwise from a bank, trust
company or a New York Stock Exchange member guaranteeing delivery
of (i) full payment for shares purchased and subscribed for by
virtue of a Rights Holder's Rights, and (ii) a properly completed
and executed Subscription Certificate, then such exercise of
Basic Subscription Rights and Oversubscription Rights shall be
regarded as timely, subject, however, to receipt of the duly
executed Subscription Certificate and full payment for the Common
Stock by the Agent within three business days after the
Expiration Date (as defined in the Prospectus).
(e) Within eight business days following the Expiration Date (the
"Confirmation Date"), the Agent shall send a confirmation to each
Shareholder (or, if shares of Common Stock on the Record Date are
held by Cede & Co. or any other depository or nominee, to Cede &
Co. or such other depository or nominee), showing (i) the number
of shares acquired pursuant to the Basic Subscription Rights,
(ii) the number of shares, if any, acquired pursuant to the
Oversubscription Rights, (iii) the per share and total purchase
price for the shares, (iv) any amount payable to the Shareholder
pursuant to Section 9, and (v) any excess to be refunded by the
Fund to such Shareholder, in each case based on the Subscription
Price. Any excess payment to be refunded by the Fund to a
Shareholder, shall be mailed by the Agent to the Shareholder as
promptly as possible after the Expiration Date, as provided in
Section 6 below.
4. If, after allocation of shares of Common Stock to persons exercising
Basic Subscription Rights, there remain unexercised Rights, then the
Agent shall allot the shares issuable upon exercise of such unexercised
Rights (the "Remaining Shares") to persons exercising Oversubscription
Rights, in the amounts of such oversubscriptions. If the number of
shares for which Oversubscription Rights have been exercised is greater
than the Remaining Shares, then the Agent shall allot the Remaining
Shares to the persons exercising Oversubscription Rights pro rata based
solely on the number of Basic Subscription Rights exercised by each of
them. The Agent shall advise the Fund immediately upon the completion
of the allocation set forth above as to the total number of shares
subscribed and distributable.
5. (a) The Agent, will deliver (i) certificates representing those shares
purchased pursuant to exercise of Basic Subscription Rights as soon as
practicable after the corresponding Rights have been validly exercised
and full payment for such shares has been received and cleared; (ii)
certificates representing those shares purchased pursuant to the
exercise of Oversubscription Rights as soon as practicable after the
Expiration Date and after all allocations have been effected; (iii) in
the case of each Record Date Shareholder who subscribed, pursuant to
the exercise of Oversubscription Rights, for a greater number of shares
than was allotted to such Record Date Shareholder under Section 4, as
soon as possible after the Expiration Date, a refund (and interest on
such) in the amount of the difference between the purchase price
delivered for the shares subscribed for pursuant to the exercise of
such Oversubscription Rights and the purchase price of the shares so
allotted under Section 4 (an "Excess Payment"); (iv) in the case of
record shareholders who are participants in the dividend reinvestment
and cash purchase plan, as soon as possible after Expiration Date,
account statements reflecting a credit of uncertificated shares for
their primary and oversubscription shares unless such shareholders have
elected to receive certificates.
6. (a) All proceeds received by the Agent from Rights holders in respect
of the exercise of rights shall be held by the Agent, on behalf
of the fund in a segregated, interest-bearing escrow account (the
"Escrow Account") (the interest of which shall be paid to the
Fund) pending disbursement in the manner described in Section
6(b) below.
(b) The Agent shall deliver all proceeds received in respect of the
exercise of the Rights (including interest earned thereon) to the
Fund as promptly as practicable, after the Confirmation Date.
Proceeds held in respect of Excess Payments shall be refunded to
Record Date Shareholders entitled to such a refund as promptly as
possible after the Expiration Date.
7. The Agent shall promptly advise the Fund as to the date of delivery
of Common Stock hereunder and shall supply the Fund with a certified
list of Shareholders as of the Record Date.
8. The Agent shall account promptly to the Fund with respect to Rights
exercised and concurrently account for all monies received and
returned by the Agent with respect to the purchase of shares of Common
Stock upon the exercise of Rights.
9. In the event the Agent does not receive, within three business days
after the Expiration Date, any amount due from a Rights Holder, as
specified in Section 3(e), then it shall take such action with respect
to such Rights Holder's Subscription Rights as may be instructed in
writing by the Fund, including without limitation (i) applying any
payment actually received by it toward the purchase of the greatest
whole number of shares of Common Stock which could be acquired with
such payment and, (ii) allocating the shares subject to such
Subscription Rights to one or more other Record Date Shareholders.
10. No Subscription Certificate shall entitle a Rights Holder to vote or
receive dividends or be deemed the holder of shares of Common Stock for
any purpose, nor shall anything contained in any Subscription
Certificate be construed to confer upon any Rights Holder any of the
rights of a shareholder of the Fund or any right to vote, give or
withhold consent to any action by the Fund (whether upon any
recapitalization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of
meetings of other action affecting shareholders, or receive dividends
or otherwise, until the Rights evidenced thereby shall have been
exercised and the shares of Common Stock purchasable upon the exercise
thereof shall have become deliverable as provided in this Agreement and
in the Prospectus.
11. If any Subscription Certificate is lost, stolen, mutilated, or
destroyed the Agent may, on such terms which will indemnify the Fund as
the Agent may in its discretion impose (which shall, in the case of a
Subscription Certificate include the surrender thereof), issue a new
Subscription Certificate of like denomination in substitution for the
Subscription Certificate so lost, stolen or mutilated or destroyed.
12. (a) The Fund covenants that all shares of Common Stock issued on
exercise of Rights set forth in the Subscription Certificates
will be validly issued, fully paid, nonassessable and free of
preemptive rights.
(b) The Fund shall furnish to the Agent written notice to the effect
that a registration statement under the Securities Act of 1933,
as amended (the "Act"), is then in effect with respect to its
shares of Common Stock issuable upon exercise of the Rights set
forth in the Subscription Certificates. Upon written advice to
the Agent that the Securities and Exchange Commission shall have
issued or threatened to have issued any order preventing or
suspending the use of the Prospectus, or if for any reason it
shall be necessary to amend or supplement the Prospectus in order
to comply with the Act, the Agent shall cease acting hereunder
until receipt of written instructions from the Fund and such
assurances as it may reasonably request that it may comply with
such instruction without violations of the Act.
13. Any corporation into which the Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Agent shall be a
party, or any corporation succeeding to the corporate trust business of
the Agent, shall be the successor to the Agent hereunder without the
execution or filing of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Agent. In
case at the time such successor to the Agent shall succeed to the
agency created by this Agreement, any of the Subscription Certificates
shall have been countersigned but not delivered, any such successor to
the Agent may adopt the countersignature of the original Agent and
deliver such Subscription Certificates so countersigned, and in case at
that time and of the Subscription Certificates shall not have been
countersigned, any successor to the Agent may countersign such
Subscription Certificates either in the name of the predecessor Agent
or in the name of the successor Agent, and in all such cases such
Subscription Certificates shall have the full force provided in the
Subscription Certificates and in this Agreement.
14. The Fund agrees to pay to the Agent such reasonable compensation for
all services rendered by it hereunder as set forth in Schedule A hereto
and in addition to its reasonable expenses and other disbursements
incurred in the exercise and performance of its duties hereunder.
15. The Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions:
(a) Whenever in the performance of its duties under this Agreement
the Agent shall deem it necessary or desirable that any fact or
matter be proved or established, prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in
respect thereof is herein specifically prescribed) may be deemed
to be conclusively proved and established by a certificate signed
by the Chairman of the Board or President or a Vice President or
the Secretary or Assistant Secretary or the Treasurer of the Fund
delivered to the Agent, and such certificate shall be full
authorization to the Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(b) The Agent shall not be responsible for and the fund shall
indemnify and hold the Agent harmless from and against, any and
all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to all
actions of the Agent or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such actions
are taken in good faith and without negligence or willful
misconduct. The Fund shall not be liable for indemnification
under this Section 14 unless the Agent shall have notified the
Fund in writing of the commencement of any litigation or
proceeding in respect of which indemnity may be sought under this
Section 14. With respect to claims in such litigation or
proceedings for which indemnity may be sought, the Fund shall be
entitled to participate in any such litigation or proceeding and
the Fund shall be entitled to assume the defense of such
litigation or proceeding with counsel of its own expense in
respect of that portion of the litigation for which the Fund may
be subject to an indemnification obligation. If the fund is not
permitted to participate or control such litigation or proceeding
under applicable law or by a ruling of a court of competent
jurisdiction or otherwise, the Agent shall reasonably prosecute
such litigation or proceeding. In no event shall the Agent
consent to the entry of any judgment or enter into any settlement
in any such litigation or proceeding (including any threatened
litigation or proceeding) without providing the Fund with
adequate notice of any such settlement or judgment, and without
the Fund's prior written consent. The Agent shall submit written
evidence to the Fund with respect to any cost or expense for
which the Agent is seeking indemnification in any such form and
detail as the Fund may reasonably request.
(c) The Agent shall be liable hereunder only for its own negligence
or willful misconduct.
(d) Nothing herein shall preclude the Agent from acting in any other
capacity for the Fund or for any other legal entity.
(e) The Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from any officer or assistant officer of the Fund and
to apply to any such officer of the Fund for advice or
instructions in connection with its duties, and subject to the
other requirements set forth above, shall be indemnified and not
be liable for any action taken or suffered by it in good faith,
without negligence or willful misconduct, in accordance with
instructions of any officer or assistant officer.
(f) The Agent shall be indemnified and shall incur no liability for
or in respect of any action taken, suffered, or omitted by it in
reasonable reliance upon any Subscription Certificate or
certificate for Common Stock, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper
or document that it reasonably believes to be genuine and to be
signed, executed and, where necessary, verified or acknowledged,
by the proper person or persons.
(g) Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this
Agreement or for any consequential damages arising out of any
reasonable act or failure to act hereunder.
16. The Agent may, without the consent or concurrence of the Shareholders
in whose names Subscription Certificates are registered, by
supplemental agreement or otherwise, concur with the Fund in making any
changes or corrections in a Subscription Certificate that it shall have
been advised by counsel (who may be counsel for the fund) is
appropriate to cure any ambiguity or to correct any defective or
inconsistent provision or clerical omission or mistake or manifest
error therein or herein contained, and which shall not be inconsistent
with the provisions of the Subscription Certificate except insofar as
any such change may confer additional rights upon the Rights Holders.
17. Assignment
a. Except as provided in Section c below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
b. This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and
assigns.
c. The Agent may, without further consent on the part of the Fund
subcontract for the performance hereof with (i) Boston Equiserve
Limited Partnership, a Delaware Limited Partnership, which is
duly registered as a transfer agent pursuant to Section 17(c)(2)
of the Securities Exchange Act of 1934 ("Section A(c)(1)"), or
(ii) the current third party vendor utilized by Boston EquiServe;
provided, however, that the Agent shall be as fully responsible
to the Fund for the acts and omissions of any subcontractor as it
is for its own acts and omissions.
18. All the covenants and provisions of this Agreement by or for the
benefit of the Fund or the Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
19. The validity, interpretation and performance of this Agreement shall be
governed by the laws of the State of New York without regard to the
principles of conflicts of law.
STATE STREET BANK AND TRUST PROSPECT STREET HIGH INCOME
COMPANY PORTFOLIO INC.
By: By:
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Vice President (Officer)
