Exhibit 99.2k(iii)
SUBSCRIPTION RIGHTS AGENCY AGREEMENT
This Subscription Rights Agency Agreement (the "Agreement") is made as of this
day of , by and between H & Q Healthcare Investors, a Massachusetts business
trust (the "Fund"); and State Street Bank and Trust Company, a national banking
association, as subscription and distribution agent ("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
(the "Subscription Certificates") to shareholders of record (the "Shareholders")
of its Common Stock, par value $.01 per share (the "Common Stock"), as of a
record date specified by the Fund (the "Record Date"), pursuant to which each
Shareholder will have certain rights (the "Rights") to subscribe for shares of
Common Stock, as described in and upon such terms as are set forth in the final
prospectus (the "Prospectus") included in the Form N-2 Registration Statement
originally filed by the Fund with the Securities and Exchange Commission on
January 3, 1997, as amended (as amended, the "Registration Statement"), in
accordance with the applicable requirements of the Securities Act of 1933, as
amended (the "Act");
WHEREAS, the Fund wishes the Agent to perform certain acts on its behalf 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 resolution of its Board of Trustees, 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
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 Chairman, President,
Secretary or Assistant Secretary, as to the Record Date, the agent
shall, from a list of Shareholders as of the Record Date to be
prepared by the Agent in its capacity as Transfer Agent of the Fund,
prepare and record Subscription Certificates in the names of the
Shareholders, setting forth the number of Rights to subscribe to
Common Stock calculated on the basis of one Right for each share of
Common Stock recorded on the books of the Fund in the name of each
such Shareholder as of the Record Date.
(c) Each Subscription Certificate shall be dated as of the Record Date and
shall be executed manually or by facsimiles signature of a duly
authorized Officer of H & Q Healthcare Investors. Upon the written
advice, signed as aforesaid, as to the effective date of the
Registration Statement, the Agent shall as promptly as practicable
countersign and deliver the Subscription Certificates, together with a
copy of the Prospectus, to all Record Date Shareholders. No
Subscription Certificate shall be valid for any purpose unless so
executed. Should any Officer whose signature has been placed upon a
Subscription Certificate cease to hold such office at any time
thereafter, such event shall have no effect on the validity of such
Subscription Certificate.
3. Rights and Issuance of Subscription Certificates.
(a) Each Subscription Certificate shall not be transferable and shall,
unless exercised by the holder thereof in the manner set forth in the
Prospectus, expire upon the expiration of the offer. The Agent shall,
in its capacity as transfer agent for the Fund, maintain a register of
Subscription Certificates and the holders of record thereof (each of
whom shall be deemed a "Shareholder" hereunder for purposes of
determining the rights of holders of Subscription Certificates). Each
Subscription Certificate shall, subject to the provisions thereof,
entitle the Shareholder 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 Rights; provided, however, that no fractional shares
of Common Stock shall be issued; and
(2) The right (the "Oversubscription Right") to purchase additional
shares of Common Stock, subject to the availability of such
shares and to allotment of such shares as may be available among
Shareholders who exercise Oversubscription Rights on the basis
specified in the Prospectus; provided, however, that a
Shareholder who has not exercised his Basic Subscription Right
with respect to me full number of shares that such Shareholder is
entitled to purchase by virtue of his Basic Subscription Right as
of the Expiration Date, if any, shall not be entitled to any
Oversubscription Right.
(b) A Shareholder may exercise his Basic Subscription Right and
Oversubscription Right 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 Shareholder in accordance
with and as provided by the terms and conditions of the Subscription
Certificate, together with (ii) the estimated subscription price for
each share of Common Stock subscribed for by exercise of such Rights,
in United States dollars by money order or check drawn on a bank
located in the U.S. and in each case payable to the order of H & Q
Healthcare Investors.
(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) Not withstanding the provisions of Section 3(b) and 3(c) above
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 a properly completed and
executed notice of guaranteed delivery in the form accompanying the
Prospectus by facsimile (telecopier) or otherwise from a financial
institution that is a member of the Securities Transfer Agents
Medallion Program, the Stock Exchange Medallion Program or the New
York Stock Exchange Medallion Signature Program, guaranteeing delivery
of (i) payment of the full subscription price for shares purchased and
subscribed for by virtue of a Subscription Certificate, 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 by the Agent within five business
days after the Expiration Date and receipt of full payment within ten
business days after the Confirmation Date (as defined below).
(e) On a date (the "Confirmation Date") that is no later than ten business
days after the Pricing Date (as defined in the Prospectus), the Agent
shall send a confirmation to each Shareholder (or, for shares of
Common Stock on the Record Date 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 8 below, and (v) any additional amount
payable by the Shareholder to the Fund or any excess to be refunded by
the Fund to the Shareholder, on the Pricing Date. Any additional
payment required from a Shareholder must be received by the Agent
within ten business days after the Confirmation Date. Any excess
payment to be refunded by the Fund to a Shareholder shall be mailed by
the Agent to the Shareholder as provided in Section 6 below.
4. Pursuant to the terms of the Prospectus, the Fund reserves the right to
increase the number of shares of common Stock subject to subscription by up
to 25% (any such, an Increased Allocation"). The Agent shall confer with
the Fund concerning the Fund's decision as to whether or not to undertake
an Increased Allocation. If, after allocation of shares of Common Capital
Stock to persons exercising Basic
Subscription Rights, there remain unexercised Rights (taking into account
any Increased Allocation elected by the Fund), 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, the Agent shall allot the Remaining Shares to the persons
exercising Oversubscription Rights pro rata based solely on the number of
shares of Common Stock held on the Record Date.
5. All proceeds from the exercise of Rights shall be held by the Agent in a
segregated, interest-bearing account in the name of the Fund. 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.
6. (a) The Agent shall mail to the Shareholders as soon as practicable after
the Confirmation Date and after full payment for the shares subscribed
for has cleared: (i) certificates representing those shares purchased
pursuant to exercise of Basic Subscription Rights and those shares
purchased pursuant to the exercise of Oversubscription Rights; and
(ii) in the case of each Shareholder who subscribed and paid for
shares at an estimated Subscription Price greater than the actual
Subscription Price, a refund in the amount of the difference between
the estimated Subscription Price and the actual Subscription Price.
(b) The Agent shall deliver the proceeds of the exercise of Rights to the
Fund as promptly as practicable, but in no event later than 20
business days after the Confirmation Date.
7. (a) 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.
(b) The Agent will advise the Fund and Prudential Securities Incorporated
(the "Dealer Manager") from day to day during the period of, and
promptly after the termination of, the Offer as to all the names and
addresses of Rightsholders exercising Rights, the total number of
Rights exercised by each Rightsholders during the immediately
preceding day (indicating the total number of Rights verified to be
proper form for exercise, rejected for exercise and being processed)
and the number of Rights exercised on Subscription Certificates
indicating the Dealer Manager or such soliciting broker as the
broker-dealer with respect to such exercise and such other information
as the Fund or the Dealer Manager may reasonably request.
(c) The Agent shall notify the Fund and the Dealer Manager no later than
5:00 p.m., New York time, on the first business day following the
Expiration Date, of the number of Rights exercised, the total number
of Rights verified to be in proper form for exercise, rejected for
exercised and being and being processed, and the number of Rights
exercised on Subscription Certificates indicating the Dealer Manager
or such soliciting broker as the broker-dealer with respect to such
exercise and such other information as the Fund or the Dealer Manager
may reasonably request.
(d) Upon request of the Fund after the Confirmation Date, the Agent shall
notify the Fund, and at the Fund's request the Dealer Manager of any
Right with respect of which the full amount due upon the exercise
thereof has not been received and the soliciting broker, if any,
specified as the broker-dealer with respect to such right.
8. In the event the Agent does not receive, within ten business days after the
Confirmation Date, any amount due from a Shareholder as specified in
Section 3 (e), then it shall take such action with respect to such
Shareholder's 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, (ii) allocating the shares subject to
such Subscription Rights to one or more other Shareholders, and (iii)
selling all or a portion of the shares of Common Stock deliverable upon
exercise of such Rights on the open market, and applying the proceeds
thereof to the amount owed.
9. No Subscription Certificate shall entitle a Shareholder 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 Shareholder 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 or other action affecting shareholders or
receive dividends or otherwise, until the Rights evidenced thereby shall
have been exercised and the shares of Common Capital Stock purchasable upon
the exercise thereof shall have become deliverable as provided in this
Agreement and in the Prospectus.
10. If there shall be delivered to the Agent (i) evidence to the Agent's and
the Fund's satisfaction of the destruction, loss or theft of any
Subscription Rights and (ii) such security or indemnity as may be required
by the Agent or the Fund to save each of them harmless, then, in the
absence of notice to the Agent that the Rights evidenced by such
Subscription Rights have been acquired by a bona fide purchaser, the Agent
may issue a new Subscription Certificate for a like number of Rights in
substitution for the Subscription Certificate so lost, stolen or mutilated
or destroyed.
11. (a) The Fund covenants that all shares of Common Stock issued on exercise
of Rights will be validly issued, fully paid, non-assessable and free
of preemptive rights.
(b) Upon request, the Fund shall furnish to the Agent an opinion of
counsel or other evidence satisfactory to the Agent to the effect that
a registration statement is then in effect with respect to its shares
of Common Stock issuable upon exercise of the Rights set forth in the
Subscription Rights. 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.
12. (a) 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 document by any of the parties hereto,
provided that such corporation would be eligible for appointment as a
successor to the 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 Agent and deliver such Subscription
Certificates as countersigned, and in case at that time any of the
Subscription Certificates shall not have been countersigned, the
successor to the Agent may countersign such Subscription Certificates
either in the name of the Agent or in the name of the successor Agent,
and in all such cases such Subscription Certificates shall have the
full force and legal effect provided in the Subscription Certificates
and in this Agreement.
(b) If, at any time, the name of the Agent shall be changed and at such
time any of the Subscription Certificates shall have been
countersigned but not delivered, the Agent may adopt the
countersignature under its prior name and deliver Subscription
Certificates so countersigned, and in case at that time any of the
Subscription Certificates shall not have been countersigned, the Agent
may countersign such Subscription Certificates either in its prior
name or in its changed name, and in all such cases such Subscription
Certificates shall have the full force provided in the Subscription
Certificates and in this Agreement.
13. The Fund agrees to pay to the Agent at the completion of the offering, on
demand of the Agent, reasonable compensation for all services rendered by
it hereunder and also its reasonable out-of-pocket expenses and other
disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder as set
forth in Schedule A (attached).
14. 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 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 feels, 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.
(c) The Agent shall be liable hereunder only for its own negligence or
misconduct, and for the negligence or misconduct of its agents or
subcontractors.
(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 office of the Fund and to apply to any such
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 shall be indemnified and not be liable for any action
taken or suffered by it in good faith in accordance with instructions
of any officer or assistant officer of the Fund; and
(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 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.
15. 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 or the Prospectus except insofar as any such change may confer
additional rights upon the Shareholders.
16. 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.
17. The validity, interpretation and performance of this Agreement shall be
governed by the law of the Commonwealth of Massachusetts.
18. All capitalized terms used herein and not defined herein shall have the
meaning specified in the Prospectus.
19. The name H & Q Healthcare Investors is the designation of the Trustees for
the time being under a Declaration of Trust dated October 31, 1986, as
amended, and all persons dealing with H & Q Healthcare
Investors must look solely to the trust property for the enforcement of any
claim against H & Q Healthcare Investors, as neither the Trustees, officers
nor shareholders assume any personal liability for obligations entered into
on behalf of H & Q Healthcare Investors
STATE STREET BANK AND TRUST COMPANY H & Q HEALTHCARE INVESTORS
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Signature Signature
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Title Title
BOSTON
EQUISERVE
AGREEMENT
FOR SUBSCRIPTION/ESCROW AGENT SERVICES
between
H&Q HEALTHCARE INVESTORS
and
STATE STREET BANK & TRUST COMPANY
This Agreement sets forth the terms and conditions under which State Street Bank
& Trust Company ("State Street Bank") will serve as Subscription/Escrow Agent,
pursuant to the terms and conditions set forth in the Prospectus of H&Q
Healthcare Investors with respect to the Rights Offering, as the same may be
amended or supplemented.
A. TERM
The term of this Agreement shall be for a period of six (6) months, commencing
from the effective date of this Agreement December 1, 1996.
B. FEES FOR SERVICES
For the services stated in Section C provided by State Street Bank under this
Agreement, H&Q Healthcare Investors:
$5,000.00 Administrative Fee
$.60 Per Subscription Certificate Issued and Mailed (if Machine
Enclosed)
$9.00 Per Subscription Certificate Received and Processed for each
Beneficial Holder and Registered Holder
$12.00 Per Defective Subscription Certificate Received and
Processed (Telephone Calls if Necessary)
$15.00 Per Notice of Guaranteed Delivery Received
$1.00 Per Account, for Proration
$1.25 Per Refund Check Issued
$1.00 Per Broker Split Certificate Issued
$3.00 Per Withdrawal of Subscription Certificate, If Applicable
$1,000.00 New York Window Fee Upon Expiration
$3,000.00 Per Offer Extension
$4,000.00 Escrow Agent Fee to Handle Daily Investment of Funds
Received (Optional)
H&Q HEALTHCARE INVESTORS
Page 0
X. XXXXXXXX XXXXXXXX
Xxxxx Xxxxxx Xxxx & Trust agrees to provide the following services to H&Q
Healthcare Investors in accordance with the standard fees set forth in Section B
hereinabove.
1. Designation of an operational Task Force
2. Design of Subscription Certificate
3. Calculating Rights to be distributed to each shareholder according to the
formula approved by H&Q Healthcare Investors
4. Issuance and mailing of Subscription Certificates to registered
shareholders
5. Preparation of a daily exercise journal
6. Tally of Rights received and exercised or sold
7. Receipt summation and investment of checks received
8. Affixing legends to appropriate stock certificates, where applicable
9. Issuance and mailing of stock certificates or checks
10. Handling of shareholder inquiries related to the rights offerings as
referred by the Information Agent
11. Reminder calls to shareholders who have not exercised their Subscription
Certificates as determined by State Street Bank and H&Q Healthcare
Investors
12. Calculation, issuance and mailing of proration and/or over-subscription
checks if applicable
D. LIMITATIONS*
Fees effective for a period of one (1) year following the effective date of the
Agreement.
E. ITEMS NOT COVERED
Items not included in the fees set forth in this Agreement for "Standard
Services" or in Section B hereinabove are to be billed separately, on an
appraisal basis.
Services required by legislation or regulatory fiat which become effective
after the date of this Agreement shall not be a part of the Standard
Services and shall be billed by appraisal.
All out-of-pocket expenses such as postage, insurance, stationery,
facsimile charges, cost of disposal of excess material, etc. will be billed
as incurred.
Funds to cover postage expenses in excess of $5,000 for shareholder
mailings must be received by State Street Bank one business day prior to
the scheduled mailing date. Postage expenses less than $5,000 will be
billed as incurred.
Overtime charges will be assessed in the event of late delivery of material
for mailings to shareholders unless the mail date is rescheduled. Such
material includes, but is not limited to: Subscription Certificate, Notice
of Guaranteed Delivery, Return Envelope, Shareholder Letter, W-9 Guideline
Form, and Prospectus. Receipt of material for mailing to shareholders by
State Street Bank Mail Unit must be in accordance with Shareholder
Services' Schedule of Required Material Delivery Time Frames.
F. MINIMUM FEE
$10,000.00 (should the Offer be canceled for any reason after a period of
active involvement)
H&Q HEALTHCARE INVESTORS
Page 3
G. PAYMENT FOR SERVICES
It is agreed that the Administrative Fee of $3,000.00 will be paid in
advance and the remaining fees for services rendered will be paid on a
monthly basis.
H. ASSIGNABILITY
State Street Bank and Trust may, with the consent of the Company,
subcontract for the performance hereof with (i) Boston EquiServe, L.P., a
Delaware limited partnership which is duly registered as a transfer agent
pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934
("Section 17A(c)(2)"), (ii) a subsidiary duly registered as a transfer
agent pursuant to Section 17A(c)(2), (iii) an affiliate, or (iv) other
subcontractors, which consent will not be unreasonably withheld; provided,
however, that State Street Bank and Trust shall be as fully responsible to
the Company for the acts or omissions of any subcontractor as it is for its
own acts or omissions.
I. CONFIDENTIALITY
The pricing information contained in this Agreement is confidential and
proprietary in nature. By receiving this Agreement, H&Q Healthcare
Investors agrees that none of its directors, officers, employees, or agents
without the prior written consent of State Street Bank, will divulge,
furnish or make accessible to any third party, except as permitted by the
next sentence, any part of this Agreement or information in connection
therewith which has been or may be made available to it. In this
connection, H&Q Healthcare Investors agrees that it will limit access to
the Agreement and such information to only those officers or employees with
responsibilities for analyzing the Agreement and to such independent
consultants hired expressly for the purpose of assisting in such analysis.
In addition, H&Q Healthcare Investors agrees that any persons to whom such
information is properly disclosed shall be informed of the confidential
nature of the Agreement and the information relating thereto, and shall be
directed to treat the same appropriately.
J. CONTRACT ACCEPTANCE
In witness whereof, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly agreed and authorized,
as of the effective date of this Agreement.
STATE STREET BANK & TRUST COMPANY H&Q HEALTHCARE INVESTORS
By: By:
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Title: Administration Manager Title:
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Date: December 5, 1996 Date:
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