Exhibit k(7)
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AUCTION AGENT AGREEMENT
between
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
and
BANKERS TRUST COMPANY
Dated as of _______________, 1998
Relating to
Taxable Auction Rate Preferred Stock
of
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
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TABLE OF CONTENTS
Page
1. Definitions and Rules of Construction ............................. 1
1.1 Terms Defined by Reference to TARPS Provisions ........... 1
1.2 Terms Defined Herein ..................................... 1
1.3 Rules of Construction .................................... 3
2. The Auction ....................................................... 3
2.1 Purpose; Incorporation by Reference of Auction
Procedures and Settlement Procedures ..................... 3
2.2 Preparation of Each Auction; Maintenance of Registry
of Beneficial Owners ..................................... 4
2.3 Information Concerning Rates ............................. 6
2.4 Auction Schedule ......................................... 6
2.5 Designation of Dividend Period ........................... 7
2.6 Notice of Auction Results ................................ 8
2.7 Broker-Dealers ........................................... 8
2.8 Ownership of TARPS ....................................... 9
2.9 Access to and Maintenance of Auction Records ............. 9
2.10 Dividend and Redemption Price Deposit .................... 9
3. The Auction Agent as Dividend and Redemption Price Disbursing
Agent ............................................................. 9
4. The Auction Agent as Transfer Agent and Registrar ................. 10
4.1 Issue of Share Certificates .............................. 10
4.2 Registration of Transfer of Shares ....................... 10
4.3 Removal of Legend on Restricted Shares ................... 10
4.4 Lost Share Certificates .................................. 10
4.5 Disposition of Canceled Certificates; Record Retention ... 10
4.6 Share Transfer Books ..................................... 11
4.7 Return of Funds .......................................... 11
5. Representations and Warranties of the Fund ........................ 11
6. The Auction Agent ................................................. 12
6.1 Duties and Responsibilities .............................. 12
6.2 Rights of the Auction Agent .............................. 13
6.3 Auction Agent's Disclaimer ............................... 13
6.4 Compensation, Expenses and Indemnification ............... 13
7. Miscellaneous ..................................................... 14
7.1 Term of Agreement ........................................ 14
7.2 Communications ........................................... 14
7.3 Entire Agreement ......................................... 15
7.4 Benefits ................................................. 15
7.5 Amendment; Waiver ........................................ 16
7.6 Successors and Assigns ................................... 16
7.7 Severability ............................................. 16
7.8 Execution in Counterparts ................................ 16
7.9 Governing Law ............................................ 16
EXHIBITS
EXHIBIT A - Form of Broker-Dealer Agreement
EXHIBIT B - Form of Master Purchaser's Letter
EXHIBIT C - Settlement Procedures
EXHIBIT D - Form of TARPS Provisions
EXHIBIT E - Form of Notice of Auction Dates
EXHIBIT F - Form of Notice of Proposed Designation of Alternate Term Period
EXHIBIT G - Form of Notice of Designation of Alternate Term Period
EXHIBIT H - Form of Notice of Determination Not to Designate Alternate Term
Period
AUCTION AGENT AGREEMENT dated as of _____________, 1998 between
PROSPECT STREET HIGH INCOME PORTFOLIO INC., a Maryland corporation (the "Fund"),
and BANKERS TRUST COMPANY, a New York banking corporation (the "Auction Agent").
WHEREAS, the Fund proposes to issue a series of preferred stock, par
value $1.00 per share, liquidation preference $25,000 per share, designated
Taxable Auction Rate Preferred Stock, Series A ("TARPS Series A") and may in the
future designate additional series of Auction Term Preferred Stock (together
with the TARPS Series A, referred to as the "TARPS") pursuant to the TARPS
Provisions (as hereinafter defined), and desires that the Auction Agent perform
certain duties in connection with the TARPS upon the terms and subject to the
conditions of this Agreement, and hereby appoints the Auction Agent to act in
the capacities set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Fund and the Auction Agent agree as follows:
1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to TARPS Provisions. Capitalized terms
not defined herein shall have the respective meanings specified in the TARPS
Provisions.
1.2 Terms Defined Herein. As used herein and in the Settlement
Procedures, the following terms shall have the following meanings, unless the
context otherwise requires:
(a) "Adviser" shall mean Prospect Street Investment Management Co.,
Inc.
(b) "Agent Member" of any Person shall mean the member of, or
participant in, the Securities Depository.
(c) "Auction" shall have the meaning specified in Section 2.1
hereof.
(d) "Auction Procedures" shall mean the auction procedures
constituting Part II of the TARPS Provisions.
(e) "Authorized Officer" shall mean each Senior Vice President,
Vice President, Assistant Vice President, Assistant Treasurer and Assistant
Secretary of the Auction Agent and every other officer or employee of the
Auction Agent designated as an "Authorized Officer" for purposes hereof in a
communication to the Fund.
(f) "Broker-Dealer" shall mean any broker-dealer, commercial bank
or other entity permitted by law to perform the functions of a Broker-Dealer
that is a member of or a participant in, the Securities Depository or is an
affiliate of such member or participant, has been selected by the Fund and has
entered into a Broker-Dealer Agreement that remains effective.
(g) "Broker-Dealer Agreement" shall mean each agreement between the
Auction Agent as agent for the Fund and a Broker-Dealer substantially in the
form attached hereto as Exhibit A.
(h) "Existing Holder" means (a) a person who has signed a Master
Purchaser's Letter and beneficially owns shares of a series of TARPS listed in
that person's name in the records of the Auction Agent or (b) the beneficial
owner of shares of a series of TARPS which are listed under such person's
Broker-Dealer's name in the records of the Auction Agent, which Broker-Dealer
shall have signed a Master Purchaser's Letter.
(i) "Fund Officer" shall mean the Chairman of the Board of
Directors of the Fund, the President, each Vice President (whether or not
designated by a number or word or words added before or after the title "Vice
President"), the Secretary, the Treasurer, each Assistant Secretary and each
Assistant Treasurer of the Fund and every other officer or employee of the Fund
designated as a "Fund Officer" for purposes hereof in a notice to the Auction
Agent.
(j) "Master Purchaser's Letter" means a letter substantially in the
form of or containing provisions similar to those in the form attached hereto as
Exhibit B which is required to be executed by (1) each prospective purchaser of
shares of a series of the TARPS or (2) the Broker-Dealer through whom such
shares will be held.
(k) "Person" means and includes an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.
(l) "Potential Holder," when used with respect to shares of a
series of the TARPS, means any person, including any Existing Holder of shares
of such series, (i) who shall have executed a Master Purchaser's Letter or whose
shares will be listed under such person's Broker-Dealer in the records of the
Auction Agent, which Broker-Dealer shall have executed a Master Purchaser's
Letter, and (ii) who may be interested in acquiring shares of such series (or,
in the case of an Existing Holder or such person, additional shares of such
series).
(m) "Settlement Procedures" shall mean the Settlement Procedures
attached hereto as Exhibit C.
(n) "TARPS Provisions" shall mean the Articles Supplementary
designating the TARPS Series A and any additional series of Taxable Auction Rate
Preferred Stock as may be designated at some future time, and establishing the
rights and preferences thereof pursuant to the Articles of Incorporation, as
amended, attached hereto as Exhibit D.
(o) "Underwriter" shall mean Bear, Xxxxxxx & Co. Inc. and any other
person named as an underwriter of the TARPS in the Underwriting Agreement or any
schedule thereto.
(p) "Underwriting Agreement" shall mean the Underwriting Agreement
dated ______________, 1998 among the Fund, the Underwriter and the Adviser.
1.3 Rules of Construction. Unless the context or use indicates another
or different meaning or intent, the following rules shall apply to the
construction of this Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto" and other words of
similar import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be to
New York City time.
2. The Auction.
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The TARPS Provisions provide that the Applicable Rate per annum
for each series of TARPS for each Dividend Period after the initial Dividend
Period with respect to each series of TARPS shall, except under certain
conditions, be equal to the rate per annum that a bank or trust company
appointed by the Fund advises has resulted on the Business Day preceding the
first day of such Dividend Period from implementation of the Auction Procedures
for such series. Each periodic implementation of the Auction Procedures is
hereinafter referred to as an "Auction." The Board of Directors has adopted a
resolution appointing Bankers Trust Company as Auction Agent for purposes of the
Auction Procedures for each series of the TARPS. The Auction Agent accepts such
appointment and agrees to follow the procedures set forth in this Section 2 and
the Auction Procedures for the purpose of determining the Applicable Rate for
each series of TARPS for each Dividend Period thereof for which the Applicable
Rate is to be determined by an Auction.
(b) All of the provisions contained in the Auction Procedures and
the Settlement Procedures are incorporated herein by reference in their entirety
and shall be deemed to be a part hereof to the same extent as if such provisions
were fully set forth herein.
2.2 Preparation of Each Auction; Maintenance of Registry of Beneficial
Owners.
(a) Not later than seven days prior to the first Auction Date for
any series of TARPS, the Fund shall provide the Auction Agent with a list of the
Broker-Dealers and a manually signed copy of each Broker-Dealer Agreement for
execution by the Auction Agent. Not later than seven days prior to any Auction
Date for any series of TARPS for which any change in such list of Broker-Dealers
is to be effective, the Fund will notify the Auction Agent in writing of such
change and, if any such change involves the addition of a Broker-Dealer to such
list, shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a Broker-Dealer Agreement signed by such Broker-Dealer; provided,
however, that if the Fund proposes to designate any Alternate Term Period of any
series of TARPS pursuant to Section 4 of Part I of the TARPS Provisions, not
later than 11:00 A.M., New York City time, on the Business Day next preceding
the Auction next preceding the first day of such Alternate Term Period, upon the
written request of the Auction Agent, the Fund shall provide the Auction Agent
with a list of the Broker-Dealers for such series and a manually signed copy of
each Broker-Dealer Agreement or a new Schedule A to the Broker-Dealer Agreement
(which Schedule A shall replace and supersede any previous Schedule A to such
Broker-Dealer Agreement) with each Broker-Dealer for such series. The Auction
Agent and the Fund shall have entered into a Broker-Dealer Agreement with each
Broker-Dealer prior to the participation of any such Broker-Dealer in any
Auction.
(b) In the event that any Auction Date for any series of TARPS
shall be changed after the Auction Agent shall have given the notice referred to
in clause (vii) of paragraph (a) of the Settlement Procedures, or after the
notice referred to in Section 2.5(a) hereof, if applicable, the Auction Agent,
by such means as the Auction Agent deems practicable, shall give notice of such
change to the Broker-Dealers for such series not later than the earlier of 9:15
A.M. on the new Auction Date or 9:15 A.M. on the old Auction Date.
(c)(i) The Auction Agent shall maintain a registry of the
beneficial owners of the shares of each series of TARPS who shall constitute
Existing Holders of shares of such series of TARPS for purposes of Auctions and
shall indicate thereon the identity of the respective Broker-Dealer of each
Existing Holder, if any, on whose behalf such Broker-Dealer submitted the most
recent order in any Auction which resulted in such Existing Holder continuing to
hold or purchasing shares of such series of TARPS. The Auction Agent shall keep
such registry current and accurate. The Fund shall provide or cause to be
provided to the Auction Agent at or prior to the Date of Original Issue of each
series of TARPS a list of the initial Existing Holders of the shares of each
such series, the number of shares purchased by each such Existing Holder and the
respective Broker-Dealer of each such Existing Holder or the affiliate thereof
through which each such Existing Holder purchased such shares. At the request of
the Fund, the Auction Agent shall advise the Fund in writing as to whether the
number of Existing Holders is 500 or more or any Existing Holder owns 5% or more
of the outstanding shares of any series of TARPS. The Auction Agent may rely
upon, as conclusive evidence of the identities of the Existing Holders of shares
of any series of TARPS, (A) such list, (B) the results of Auctions and (C)
notices from any Existing Holder, the Agent Member of any Existing Holder or the
Broker-Dealer of any Existing Holder as described in the first sentence of
Section 2.2(c)(iii) hereof.
(ii) In the event of any partial redemption of any
series of TARPS, the Auction Agent shall, at least two Business Days prior to
the next Auction for such series, request the Agent Member of each Existing
Holder of shares of TARPS of such series to disclose to the Auction Agent (upon
selection by such Agent Member of the Existing Holders whose shares of TARPS of
such series are to be redeemed) the number of shares of TARPS of such series, if
any, of such Existing Holder which are subject to such redemption, provided the
Auction Agent has been furnished with the name and telephone number of a person
or department at such Agent Member from which it shall request such information.
Upon any refusal of an Agent Member to release such information, the Auction
Agent shall deliver to such Agent Member a facsimile copy of the Existing
Holder's Master Purchaser's Letter, which authorizes and instructs such Agent
Member to release such information to the Auction Agent. In the absence of
receiving any such information with respect to an Existing Holder, from such
Existing Holder's Agent Member or otherwise, the Auction Agent may continue to
treat such Existing Holder as the beneficial owner of the number of shares of
TARPS of such series shown in the Auction Agent's registry.
(iii) The Auction Agent shall be required to register a
transfer of shares of TARPS of any series from an Existing Holder of such shares
of TARPS to another Person only if such transfer is made to a Person that has
delivered, or on whose behalf has been delivered, a signed Master Purchaser's
Letter to the Auction Agent and if (A) such transfer is pursuant to an Auction
or (B) the Auction Agent has been notified in writing (I) in a notice
substantially in the form of Exhibit D to the Broker-Dealer Agreement by such
Existing Holder, the Agent Member of such Existing Holder or the Broker-Dealer
of such Existing Holder of such transfer or (II) in a notice substantially in
the form of Exhibit E to the Broker-Dealer Agreement by the Broker-Dealer of any
Person that purchased or sold such TARPS in an Auction of the failure of such
shares of TARPS to be transferred as a result of such Auction. The Auction Agent
is not required to accept any such notice for an Auction unless it is received
by the Auction Agent by 3:00 P.M. on the Business Day preceding such Auction.
(iv) The Auction Agent is not required to accept the Master
Purchaser's Letter of any Potential Holder who wishes to submit a Buy Order for
the first time in an Auction or of any Potential Holder or Existing Holder who
wishes to amend its Master Purchaser's Letter unless such letter or amendment is
received by the Auction Agent by 3:00 P.M. on the Business Day preceding such
Auction.
(d) The Auction Agent may request the Broker-Dealers, as set forth
in the Broker-Dealer Agreement, to provide the Auction Agent with a list of
their respective customers that such Broker-Dealers believe are Existing Holders
of shares of any series of TARPS. The Auction Agent shall keep confidential such
registry of Existing Holders and shall not disclose the identities of the
Existing Holders of such shares of TARPS to any Person other than the Fund and
the Broker-Dealer that provided such information.
2.3 Information Concerning Rates.
(a) On each Auction Date, the Auction Agent shall determine the AA
Composite Commercial Paper Rate or the Treasury Index Rate, as the case may be,
and the Maximum Applicable Rate. If the AA Composite Commercial Paper Rate or
the Treasury Index Rate, as the case may be, is not quoted on an interest basis,
if the rate obtained by the Auction Agent is quoted on a discount basis, or if
the rate obtained by the Auction Agent is quoted on another basis the Auction
Agent shall convert the quoted rate to an interest rate after consultation with
the Fund as to the method of such conversion. Not later than 9:30 A.M. on each
Auction Date the Auction Agent shall notify the Fund and the Broker-Dealers of
the Maximum Applicable Rate so determined and the AA Composite Commercial Paper
Rate or the Treasury Index Rate, as the case may be, used to make such
determination.
(b) If any AA Composite Commercial Paper Rate is to be based on
rates supplied by Commercial Paper Dealers and one or more of the Commercial
Paper Dealers shall not provide a quotation for the determination of such AA
Composite Commercial Paper Rate, the Auction Agent shall immediately notify the
Fund so that the Fund can determine whether to subject a substitute Commercial
Paper Dealer or substitute Commercial Paper Dealers to provide the quotation or
quotations not being supplied by any Commercial Paper Dealer or Commercial Paper
Dealers. The Fund shall promptly advise the Auction Agent of any such selection.
(c) If any Treasury Index Rate is to be based on rates supplied by
U.S. Government Securities Dealers and one or more of the U.S. Government
Securities Dealers shall not provide a quotation for the determination of such
Treasury Rate, the Auction Agent shall immediately notify the Fund so that the
Fund can determine whether to select a Substitute U.S. Government Securities
Dealer or Substitute U.S. Government Securities Dealers to provide the quotation
or quotations not being supplied by any U.S. Government Securities Dealers. The
Fund shall promptly advise the Auction Agent of any such selection.
2.4 Auction Schedule. The Auction Agent shall conduct Auctions for each
series of TARPS in accordance with the schedule set forth below. Such schedule
may be changed by the Auction Agent with the consent of the Fund, which consent
shall not be unreasonably withheld or delayed. The Auction Agent shall give
written notice of any such change to each Broker-Dealer. Such notice shall be
given prior to the close of business on the Business Day next preceding the
first Auction Date on which any such change shall be effective.
Time Event
By 9:30 A.M. Auction Agent advises the Fund and Broker-Dealers
of the Maximum Applicable Rate and the Reference
Rate(s), used in determining such Maximum
Applicable Rate as set forth in Section 2.3(a)
hereof, with respect to each series of TARPS.
9:30 A.M. - 1:00 P.M. Auction Agent assembles information communicated to
it by Broker-Dealers as provided in Section 4(a) of
the Auction Procedures. Submission Deadline 1:00
P.M.
Not earlier than 1:00 P.M. Auction Agent makes determination pursuant to
Section 5(a) of the Auction Procedures.
By approximately 3:00 P.M. Auction Agent advises Fund of results of Auction as
provided in Section 5(b) of the Auction Procedures.
Submitted Orders are accepted and rejected and
shares of TARPS of the respective Series allocated
as provided in Section 6 of the Auction Procedures.
Auction Agent gives notice of Auction results as
set forth in Paragraph (a) of the Settlement
Procedures.
2.5 Designation of Dividend Period.
(a) The TARPS Provisions provide that, subject to the Fund's option
to designate an Alternate Term Period as referred to in paragraph (b) of this
Section 2.5, (i) the Dividend Period (other than the initial Dividend Period)
for each series of TARPS will be a Standard Term Period. Any such designation of
an Alternate Term Period shall be effective only if (i) notice thereof shall
have been given as provided herein, (ii) any failure to pay in a timely manner
to the Auction Agent the full amount of any dividend on, or the redemption price
of, the TARPS shall have been cured, (iii) Sufficient Clearing orders shall have
existed in an Auction held on the Auction Date immediately preceding the first
day of such proposed Dividend Period other than a Standard Term Period, (iv) if
the Fund shall have mailed a Notice of Redemption with respect to any shares,
the Redemption Price with respect to such shares shall have been deposited with
the Auction Agent, and (v) in the case of an Alternate Term Period, the Fund has
provided notice and an TARPS Basic Maintenance Report to Fitch (if Fitch is then
rating the TARPS) and Moody's (if Xxxxx'x is then rating the TARPS).
(b) Pursuant to the TARPS Provisions, the Fund may, at its option,
designate an Alternate Term Period for any series of TARPS in the manner
described below and in Section 4 of Part I of the TARPS Provisions. If the Fund
proposes to designate any succeeding Alternate Term Period the Fund shall
deliver to the Auction Agent:
(i) A notice of such proposed Alternate Term Period in the
form of Exhibit F hereto not less than 15 nor more than 30 days prior to the
first day of such proposed Alternate Term Period. The Auction Agent on behalf of
the Fund shall deliver such notice by first-class mail, postage prepaid, to each
Existing Holder of shares of such series of TARPS at the address specified in
such Existing Holder's Master Purchaser's Letter and to the Broker-Dealers for
such series as promptly as practicable after its receipt of such notice from the
Fund.
(ii) A notice in the form of Exhibit G hereto not later than
3:00 P.M. on the second Business Day next preceding the first day of such
proposed Alternate Term Period, of either (x) its determination, subject to
certain conditions, to proceed with such Alternate Term Period, in which case
the Fund shall specify the terms of the Specific Redemption Provisions, if any,
or (y) its determination not to proceed with such Alternate Period in which
latter event the succeeding Dividend Period shall be a Standard Term Period. The
Auction Agent shall promptly deliver such notice to the Broker-Dealers, but in
no event later than 3:00 P.M. on the date of such notice.
(iii) If the Fund fails to deliver either such notice
with respect to any designation of any proposed Alternate Term Period to the
Auction Agent by 3:00 P.M., New York City time, on the second Business Day next
preceding the first day of such proposed Alternate Term Period, the Fund shall
be deemed to have delivered a notice to the Auction Agent with respect to such
Dividend Period to the effect that it has determined not to proceed with the
designation of an Alternate Term Period, thereby resulting in a Standard Term
Period.
2.6 Notice of Auction Results. On each Auction Date for any series of
TARPS, the Auction Agent shall notify Broker-Dealers of the results of the
Auction held on such date by telephone as set forth in paragraph (a) of the
Settlement Procedures.
2.7 Broker-Dealers.
(a) Not later than 12:00 Noon on each Auction Date for any series
of TARPS, the Fund shall pay to the Auction Agent an amount in cash equal to the
aggregate fees payable to the Broker-Dealers for such series pursuant to Section
2.8 of the Broker-Dealer Agreement for such series. The Auction Agent shall
apply such moneys as set forth in Section 2.8 of each such Broker-Dealer
Agreement.
(b) The Fund shall obtain the consent of the Auction Agent prior to
selecting any Person to act as a Broker-Dealer, which consent shall not be
unreasonably withheld.
(c) The Auction Agent shall terminate any Broker-Dealer Agreement
as set forth therein if so directed by the Fund.
(d) Subject to the Auction Agent's having consented to the
selection of the relevant Broker-Dealer pursuant to Section 2.8(b) hereof, the
Auction Agent shall from time to time enter into such Broker-Dealer Agreements
with one or more Broker-Dealers as the Fund shall request, and shall enter into
such schedules to any such Broker-Dealer Agreements as the Fund shall request,
which schedules, among other things, shall set forth the series of TARPS to
which such Broker-Dealer Agreement relates.
2.8 Ownership of TARPS. The Fund shall notify the Auction Agent if the
Fund or any affiliate of the Fund acquires any shares of TARPS of any series.
Neither the Fund nor any affiliate of the Fund shall submit any Order in any
Auction for TARPS, except as set forth in the next sentence. Any Broker-Dealer
that is an affiliate of the Fund may submit Orders in Auctions, but only if such
orders are not for its own account. For purposes of this Section 2.8, a
Broker-Dealer shall not be deemed to be an affiliate of the Fund solely because
one or more of the directors or executive officers of such Broker-Dealer or of
any Person controlled by, in control of or under common control with such
Broker-Dealer is also a Director of the Fund. The Auction Agent shall have no
duty or liability with respect to enforcement of this Section 2.8.
2.9 Access to and Maintenance of Auction Records. The Auction Agent
shall, upon the receipt of prior written notice from the Fund, afford to the
Fund access at reasonable times during normal business hours to all books,
records, documents and other information concerning the conduct and results of
Auctions. The Auction Agent shall maintain records relating to an Auction for a
period of six years after such Auction and such records shall, in reasonable
detail, accurately and fairly reflect the actions taken by the Auction Agent
hereunder.
2.10 Dividend and Redemption Price Deposit. The Fund shall pay to the
Auction Agent, not later than 12:00 noon, New York City time, (A) on the
Business Day next preceding any Dividend Payment Date for any series of TARPS,
in funds available on such Dividend Payment Date in The City of New York, New
York, the full amount of any dividends to be paid on such Dividend Payment Date
on any share of such series, and (B) on the Business Day next preceding any
redemption date for any series of TARPS in funds available on such redemption
date for such series in The City of New York, New York, the Redemption Price to
be paid on such redemption date for the shares of any such series after notice
of redemption is given as set forth in the TARPS Provisions.
3. The Auction Agent as Dividend and Redemption Price Disbursing Agent. The
Auction Agent, as dividend and redemption price disbursing agent, shall pay to
the Holders of shares of TARPS of any series (i) on each Dividend Payment Date
for such series, dividends on the shares of TARPS of such series, (ii) an any
date fixed for redemption of shares of TARPS of any series, the Redemption Price
of any shares of such series called for redemption and (iii) any late charge
related to any payment of dividends or Redemption Price, in each case after
receipt of the necessary funds from the Fund with which to pay such dividends,
Redemption Price or late charge. The amount of dividends for any Dividend Period
for any series of TARPS to be paid by the Auction Agent to the Holders of such
shares of such series will be determined by the Fund as set forth in Section 2
of Part I of the TARPS Provisions with respect to such series. The Redemption
Price of any shares to be paid by the Auction Agent to the Holders will be
determined by the Fund as set forth in Section 3 of Part I of the TARPS
Provisions with respect to such series. The Fund shall notify the Auction Agent
in writing of a decision to redeem shares of any series of TARPS at least five
days prior to the date a notice of redemption is required to be mailed to the
Holders of the shares to be redeemed by paragraph (b) of Section 3 of Part I of
the TARPS Provisions. Such notice by the Fund to the Auction Agent shall contain
the information required by paragraph (b) of Section 3 of Part I of the TARPS
Provisions to be stated in the notice of redemption required to be mailed by the
Auction Agent to such Holders.
4. The Auction Agent as Transfer Agent and Registrar.
4.1 Issue of Share Certificates. Upon the Date of original Issue of
each series or TARPS, one certificate representing all of the shares of each
series issued on such date shall be issued by the Fund and, at the request of
the Fund, registered in the name of Cede & Co. and countersigned by the Auction
Agent.
4.2 Registration of Transfer of Shares. Shares of each series of TARPS
shall be registered solely in the name of the Securities Depository or its
nominee.
4.3 Removal of Legend on Restricted Shares. All requests for removal of
legends on shares of any series of TARPS indicating restrictions on transfer
shall be accompanied by an opinion of counsel stating that such legends may be
removed and such shares freely transferred, such opinion to be delivered under
cover of a letter from a Fund Officer authorizing the Auction Agent to remove
the legend on the basis of said opinion.
4.4 Lost Share Certificates. The Auction Agent shall issue and register
replacement certificates for certificates represented to have been lost, stolen
or destroyed upon the fulfillment of such requirements as shall be deemed
appropriate by the Fund and the Auction Agent, subject at all times to
provisions of law, the By-Laws of the Fund governing such matters and
resolutions adopted by the Fund with respect to lost securities. The Auction
Agent may issue new certificates in exchange for and upon the cancellation of
mutilated certificates. Any request by the Fund to the Auction Agent to issue a
replacement or new certificate pursuant to this Section 4.4 shall be deemed to
be a representation and warranty by the Fund to the Auction Agent that such
issuance will comply with such provisions of law and the By-Laws and resolutions
of the Fund.
4.5 Disposition of Canceled Certificates; Record Retention. The Auction
Agent shall retain all share certificates which have been cancelled in transfer
or exchange and all accompanying documentation in accordance with applicable
rules and regulations of the Securities and Exchange Commission for two calendar
years. Upon the expiration of this two-year period, the Auction Agent shall
deliver to the Fund the cancelled certificates and accompanying documentation.
The Fund also shall undertake to furnish to the Securities and Exchange
Commission and to the Board of Governors of the Federal Reserve System, upon
demand, at either the principal office or at any regional office, complete,
correct and current hard copies of any and all such records. Thereafter such
records shall not be destroyed by the Fund without the concurrence of the
Auction Agent.
4.6 Share Transfer Books. For so long as the Auction Agent, Bankers
Trust Company, is acting as the transfer agent for any series of TARPS pursuant
to this Agreement, it shall maintain a share transfer book containing a list of
the Holders of the shares of each series of TARPS, the number of shares of each
series held by such Holders and the address of each Holder. The Auction Agent
shall record in such share transfer books any change of address of a Holder upon
notice by such Holder. In case of any request or demand for the inspection of
the share transfer books of the Fund or any other books in the possession of the
Auction Agent, the Auction Agent will notify the Fund and secure instructions as
to permitting or refusing such inspection. The Auction Agent reserves the right,
however, to exhibit the share transfer books or other books to any Person in
case it is advised by its counsel that its failure to do so would be unlawful.
4.7 Return of Funds. Any funds deposited with the Auction Agent
hereunder by the Fund for any reason, including but not limited to redemption of
shares of TARPS of any series, the remain unpaid after 90 days shall be repaid
to the Fund upon the written request of the Fund, together with interest, if
any, earned thereon.
5. Representations and Warranties of the Fund. The Fund represents and warrants
to the Auction Agent that:
(a) The Fund has been duly organized and is validly existing as a
corporation under the laws of the State of Maryland and has all necessary
corporate power and authority to execute and deliver this Agreement and to
authorize, create and issue the shares of each series of TARPS;
(b) This Agreement has been duly and validly authorized, executed
and delivered by the Fund and, assuming due authorization, execution and
delivery by the Auction Agent, constitutes the legal, valid and binding
obligation of the Fund subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium, receivership or similar laws, whether statutory or
decisional, relating to or affecting creditors' rights and to general equitable
principles (regardless of whether enforcement is sought in equity or at law);
(c) The form of the certificate evidencing the shares of TARPS
complies with all applicable laws of the State of Maryland;
(d) The shares of TARPS, when issued, delivered and paid for on the
Date of Original Issue as contemplated by the Underwriting Agreement, will have
been duly authorized, validly issued, fully paid and nonassessable, except as
provided under Maryland law;
(e) Assuming the Underwriter complies with its obligations under
the Underwriting Agreement and that the purchasers of the TARPS comply with
their obligations in the Master Purchaser's Letters, no consent, authorization
or order of, or filing or registration with, any court, governmental agency or
official (except such as have been obtained and such as may be required under
the Securities Act of 1933, as amended, or the Investment Company Act of 1940,
as amended, or under the blue sky or state securities laws) is required in
connection with the execution and delivery of this Agreement or the issuance of
the shares of the TARPS; and
(f) The issuance and sale of the TARPS, the execution, delivery and
performance of this Agreement, the compliance by the Fund with all provisions
hereof, and the consummation of the transactions contemplated hereby or by the
Underwriting Agreement or the Broker-Dealer Agreements, will not conflict with,
constitute a breach of any of the terms or provisions of, or a default under, or
result in the creation or imposition of any material lien, charge or encumbrance
upon any of the assets of the Fund pursuant to the terms of any agreement,
indenture or instrument to which the Fund is a party or by which the Fund is
bound, or result in a violation of the Articles of Incorporation, TARPS
Provisions or By-Laws of the Fund or of any order, rule or regulation of any
court or governmental agency having jurisdiction over the Fund or its property
which conflict, breach, default, lien or violation, individually or in the
aggregate, would have a material adverse effect on the business, financial
position or results of operations of the Fund.
6. The Auction Agent.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Fund
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.
(b) The Auction Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement and the
Broker-Dealer Agreements, and no implied covenants or obligations shall be read
into this Agreement against the Auction Agent.
(c) In the absence of bad faith or gross negligence on its part,
the Auction Agent shall not be liable for any action taken, suffered, or omitted
or for any effort of judgment made by it in the performance of its duties under
this Agreement except that the Auction Agent shall be liable for any effort of
judgment made in good faith if the Auction Agent shall have been grossly
negligent in ascertaining the pertinent facts.
(d) Any funds deposited with the Auction Agent hereunder by the
Fund for any reason, including the payment of dividends or the redemption of
shares of TARPS of any series, that remain with the Auction Agent after 90 days
shall be repaid to the Fund as provided in Section 4.7 hereof.
6.2 Rights of the Auction Agent.
(a) The Auction Agent may rely and shall be protected in acting or
refraining from acting upon any communication authorized hereby and upon any
written instruction, notice, request, direction, consent, report, certificate,
share certificate or other instrument, paper or document believed by it to be
genuine. The Auction Agent shall not be liable for acting upon any telephone
communication authorized hereby which the Auction Agent believes in good faith
to have been given by the Fund or by any Broker-Dealer. The Auction Agent may
record telephone communications with the Fund or with any Broker-Dealer.
(b) The Auction Agent may consult with counsel reasonably
acceptable to the Fund and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys and shall
not be responsible for any misconduct on the part of any agent or attorney
appointed by it with due care hereunder except as set forth above in Section
6.1(c).
6.3 Auction Agent's Disclaimer. The Auction Agent makes no
representation as to the validity or adequacy of this Agreement (except as to
the Auction Agent's duties hereunder and as to the due authorization, execution
and delivery of this Agreement), the Broker-Dealer Agreements (except as to the
Auction Agent's duties thereunder) or the shares of any series of TARPS.
6.4 Compensation, Expenses and Indemnification.
(a) The Fund shall pay the Auction Agent from time to time
reasonable compensation for all services rendered by it under this Agreement and
the Broker-Dealer Agreements in such amounts as may be agreed to by the Fund and
the Auction Agent from time to time.
(b) The Fund shall reimburse the Auction Agent upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Auction Agent in accordance with any provision of this Agreement and the
Broker-Dealer Agreements (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any expense or disbursement
attributable to its gross negligence or bad faith.
(c) The Fund shall indemnify the Auction Agent for and hold it
harmless against, any loss, liability or expense incurred without gross
negligence or bad faith on its part, arising out of or in connection with its
agency under this Agreement and the Broker-Dealer Agreements, including the
costs and expenses of defending itself against any claim or liability in
connection with its exercise or performance of its duties hereunder and
thereunder for which indemnification is provided by this subsection.
7. Miscellaneous.
7.1 Term of Agreement.
(a) The term of this Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Fund may terminate this
Agreement any time by so notifying the Auction Agent in writing, provided that
the Fund has entered into an agreement in substantially the form of this
Agreement with a successor auction agent. The Auction Agent may terminate this
Agreement upon written notice to the Fund, such termination to be effective on
the earlier of (i) the date specified in such notice which shall not be earlier
than 90 days after the giving of such notice or (ii) the date on which a
successor trust company is appointed by the Fund pursuant to an agreement
containing substantially the same terms and conditions as this Agreement.
(b) Except as otherwise provided in this paragraph (b), the
respective rights and duties of the Fund and the Auction Agent under this
Agreement shall cease upon termination of this Agreement. The Fund's obligations
under Section 6.4 hereof and its representations and warranties contained in
Section 5 hereof and the Auction Agent's obligations and liabilities under
Sections 2.9 and 4.5 hereof shall survive the termination hereof. Upon
termination of this Agreement, the Auction Agent shall, at the Fund's request,
promptly deliver to the Fund copies of all books and records maintained by it in
connection with its duties hereunder.
7.2 Communications. Except for (a) communications authorized to be by
telephone pursuant to this Agreement or the Auction Procedures and (b)
communications in connection with Auctions (other than those expressly required
to be in writing) and unless otherwise specified by the terms of this Agreement
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) given to such person at its
address or telecopy number set forth below:
If to the Company, addressed: Prospect Street High Income Portfolio Inc.
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Investment Officer
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
With a copy sent to:
Xxxxxx Xxxxxxxxxx, Esq.
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
If to the Auction Agent, addressed: Bankers Trust Company
[Address]
Attention: ______________
Telecopier No.:
Telephone No.:
or to such other address as the party to whom the communication is addressed
shall have previously communicated to the other party. Communications shall be
given on behalf of the Fund by a Fund Officer and on behalf of the Auction Agent
by an Authorized Officer. Communications shall be effective when received at the
proper address.
7.3 Entire Agreement. This Agreement contains the entire agreement
among the parties relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral,
written or inferred, between the parties. This Agreement supersedes terminates
all prior agreements between the parties relating to the subject matter of this
Agreement, including without limitation the Auction Agent Agreement dated
_________________________.
7.4 Benefits. Nothing herein, express or implied, shall give to any
Person, other than the Fund, the Auction Agent and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim
hereunder.
7.5 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be modified,
amended, rescinded, cancelled or waived, in whole or in part, except by a
written instrument signed by a duly authorized representative of the party to be
charged. The Fund shall notify the auction Agent and each Broker-Dealer of any
change in the Fund's Articles, prior to the effective date of any such change.
(b) Failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such rights or remedies with respect to any
subsequent breach.
7.6 Successors and Assigns. This Agreement shall be binding upon, inure
to the benefit of, and be enforceable by, the respective successors of each of
the Fund and the Auction Agent.
7.7 Severability. If any clause, provision or section hereof shall be
ruled invalid or unenforceable by any court of competent jurisdiction, the
invalidity or unenforceability of such clause, provision or section shall not
affect any of the remaining clauses, provisions or sections hereof.
7.8 Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
7.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Auction Agent
Agreement to be duly executed and delivered by their proper authorized officers
as of the date first above written.
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
By: -----------------------
Name:
Title:
BANKERS TRUST COMPANY
By: -----------------------
Name:
Title:
EXHIBIT A
BROKER-DEALER AGREEMENT
EXHIBIT B
MASTER PURCHASER'S LETTER
Relating to
Securities Involving Rate Settings
Through Auctions or Remarketings
THE COMPANY
A REMARKETING AGENT
THE AUCTION AGENT
A BROKER-DEALER
AN AGENT MEMBER
OTHER PERSONS
Dear Sirs:
1. This letter is designed to apply to publicly or privately offered
debt or equity securities ("Securities") of any issuer ("Company") which are
described in any final prospectus or other offering materials relating to such
Securities as the same may be amended or supplemented (collectively, with
respect to the particular Securities concerned, the "Prospectus") and which
involve periodic rate settings through auctions ("Auctions") or procedures
("Remarketings"). This letter shall be for the benefit of any Company and of any
auction agent, paying agent (collectively, "auction agent"), remarketing agent,
broker-dealer, agent member, securities depository or other interested person in
connection with any Securities and related Auctions or Remarketings (it being
understood that such persons may be required to execute specified agreements and
nothing herein shall alter such requirements). The terminology used herein is
intended to be general in its application and not to exclude any Securities in
respect of which (in the Prospectus or otherwise) alternative terminology is
used.
2. We may from time to time offer to purchase, purchase, offer to sell
and/or sell Securities of any Company as described in the Prospectus relating
thereto. We agree that this letter shall apply to all such purchases, sales and
offers and to Securities owned by us. We understand that the dividend/interest
rate on Securities may be based from time to time on the results of Auctions or
Remarketings as set forth in the Prospectus.
3. We agree that any bid or sell order placed by us in an Auction or a
Remarketing shall constitute an irrevocable offer (except as otherwise described
in the Prospectus) by us to purchase or sell Securities subject to such bid or
sell order, or such lesser amount of Securities as we shall be required to sell
or purchase as a result of such Auction or Remarketing, at the applicable price,
all as set forth in the Prospectus, and that if we fail to place a bid or sell
order with respect to Securities owned by us with a broker-dealer on any Auction
or Date, or a broker-dealer to which we communicate a bid or sell order fails to
submit such bid or sell order to the auction agent or remarketing agent
concerned, we shall be deemed to have placed a hold or a sell order with respect
to such Securities as described in the Prospectus. We authorize any
broker-dealer that submits a bid or sell order as our agent in Auctions or
Remarketings to execute contracts for the sale of Securities by such bid or sell
order. We recognize that the payment of such broker-dealer for Securities
purchased on our behalf shall not relieve us of any liability to such
broker-dealer for payment for such Securities.
4. We understand that in a Remarketing, the dividend or interest rate
or rates on the Securities and the allocation of Securities tendered for sale
between dividend or interest periods of different lengths will be based from
time to time on the determinations of one or more remarketing agent(s), and we
agree to be conclusively bound by such determinations. We further agree to the
payment of different dividend or interest rates to different holders of
Securities depending on the length of the dividend or interest period elected by
such holders. We agree that any notice given by us to a remarketing agent (or a
broker-dealer for transmission to a remarketing agent) of our desire to tender
Securities in a Remarketing shall constitute an irrevocable (except to the
limited extent set forth in the Prospectus) offer by us to sell the securities
specified in such Notice, or such lesser number of Securities as we shall be
required to sell as a result of such Remarketing, in accordance with the terms
set forth in the Prospectus, and we authorize the remarketing agent to sell,
transfer or otherwise dispose of such Securities as set forth in the Prospectus.
5. We agree that, during the applicable period as described in the
Prospectus, dispositions of Securities can be made only in the denominations set
forth in the Prospectus and we will sell, transfer or otherwise dispose of any
Securities held by us from time to time only pursuant to a bid or sell order
placed in an Auction, in a Remarketing, to or through a broker-dealer or, when
permitted in the Prospectus, to a person that has signed and delivered to the
applicable auction agent or a remarketing agent a letter substantially in the
form of this letter (or other applicable purchaser's letter), provided that in
the case of all transfers other than pursuant to Auctions or Remarketings we or
our broker-dealer or our agent member shall advise such auction agent or a
remarketing agent of such transfer. We understand that a restrictive legend will
be placed on certificates representing the Securities and stop-transfer
instructions will be issued to the transfer agent and/or registrar, all as set
forth in the Prospectus.
6. We agree that, during the applicable period as described in the
Prospectus, ownership of Securities shall be represented by one or more global
certificates registered in the name of the applicable securities depository or
its nominee, that we will not be entitled to receive any certificate
representing the Securities and that our ownership of any Securities will be
maintained in book-entry form by the securities depository for the account of
our agent member, which in turn will maintain records of our beneficial
ownership. We authorize and instruct our agent member to disclose to the
applicable auction agent or remarketing agent such information concerning our
beneficial ownership of Securities as such auction agent or remarketing agent
shall request.
7. We acknowledge that partial deliveries of Securities purchased in
Auctions or Remarketings may be made to us and such deliveries shall constitute
good delivery as set forth in the Prospectus.
8. This letter is not a commitment by us to purchase any Securities.
9. This letter supersedes any prior-dated version of this master
purchaser's letter, and supplements any prior to post-dated purchaser's letter
specific to any particular Securities, and this letter may only be revoked by a
signed writing delivered to the original recipients hereof.
10. The descriptions of Auction or Remarketing procedures set forth in
each applicable Prospectus are incorporated by reference herein and in case of
any conflict between this letter, any purchaser's letter specific to particular
Securities and any such description, such description shall control.
11. Any xerographic or other copy of this letter shall be deemed of
equal effect as a signed original.
12. Our agent member of The Depository Trust company currently is
__________.
13. Our personnel authorized to place orders with broker-dealers for
the purposes set forth in the Prospectus in Auctions or Remarketings currently
is/are __________, telephone number (___) ________.
14. Our taxpayer identification number is __________.
15. In the case of each offer to purchase, purchase, offer to sell or
sale by us of Securities not registered under the Securities Act of 1933, as
amended (the "Act"), we represent and agree as follows:
(a) We understand and expressly acknowledge that the Securities
have not been and will not be registered under the Act and, accordingly, that
the Securities may not be reoffered, resold or otherwise pledged, hypothecated
or transferred unless an applicable exemption from the registration requirements
of the Act is available.
(b) We hereby confirm that any purchase of Securities made by us
will be for our own account, or for the account of one or more parties for which
we are acting as trustee or agent with complete investment discretion and with
authority to bind such parties, and not with a view to any public resale or
distribution thereof. We and each other party for which we are acting which will
acquire Securities will be "accredited investors" within the meaning of
Regulation D under the Act with respect to the Securities to be purchased by us
or such party, as the case may be, will have previously invested in similar
types of instructions and will be able and prepared to bear the economic risk of
investing in and holding such Securities.
(c) We acknowledge that prior to purchasing any Securities we shall
have received a Prospectus (or private placement memorandum) with respect
thereto and acknowledge that we will have had access to such financial and other
information, and have been afforded the opportunity to ask such questions or
representatives of the Company and receive answers thereto, as we deem necessary
in connection with our decision to purchase Securities.
(d) We recognize that the Company and broker-dealers will rely upon
the truth and accuracy of the foregoing investment representations and
agreements, and we agree that each of our purchases of Securities now or in the
future shall be deemed to constitute our concurrence in all of the foregoing
which shall be binding on us and each party for which we are acting as set forth
in Subparagraph (b) above.
Dated: ___________________________ ______________________________
(Name of Purchaser)
Mailing Address of Purchaser
___________________________________ By: __________________________
Printed Name:
Title:
----------------------------------
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EXHIBIT C
SETTLEMENT PROCEDURES
Capitalized terms used herein shall have the respective meanings
specified in the Articles Supplementary or herein, as the case may be.
(a) On each Auction Date for any series of TARPS, the Auction Agent
shall notify by telephone or telecopy the Broker-Dealers that participated in
the Auction held for such series on such Auction Date and submitted an Order on
behalf of any Existing Holder or Potential Holder of:
(i) the Applicable Rate fixed for the subsequent Dividend Period
and the Dividend Payment Date therefor;
(ii) whether Sufficient Clearing Orders existed for the
determination of the Applicable Rate;
(iii) if such Broker-Dealer submitted a Hold/Sell Order or a Sell
Order for such series on behalf of an Existing Holder, whether such Hold/Sell
Order or Sell Order was accepted or rejected, in whole or in part, and the
number of shares, if any, of such series of TARPS then outstanding to be sold by
such Existing Holder;
(iv) if such Broker-Dealer submitted a Buy Order on behalf of a
Potential Holder, whether such Buy Order was accepted or rejected, in whole or
in part, and the number of shares, if any, of such series of TARPS to be
purchased by such Potential Holder;
(v) if the aggregate number of shares of such series of TARPS to be
sold by all Existing Holders on whose behalf such Broker-Dealer submitted
Hold/Sell Orders or Sell Orders for such series is different than the aggregate
number of shares of such series of TARPS to be purchased by all Potential
Holders on whose behalf such Broker-Dealer submitted Buy Orders, the name or
names of one or more other Broker-Dealers (and the name of the Agent Member, if
any, of each such other Broker-Dealer) and the number of shares of such series
of TARPS to be (x) purchased from one or more Existing Holders on whose behalf
such other Broker-Dealer submitted Hold/Sell Orders or Sell Orders for such
series, or (y) sold to one or more Potential Holders on whose behalf such other
Broker-Dealers submitted Buy Orders for such series; and
(vi) the scheduled Auction Date of the next succeeding Auction with
respect to such series of TARPS.
(b) On each Auction Date for any series of TARPS, each Broker-Dealer
that submitted an Order for such series on behalf of any Existing Holder or
Potential Holder shall:
(i) as soon as practicable, advise each Existing Holder and
Potential Holder on whose behalf such Broker-Dealer submitted a Buy Order,
Hold/Sell Order or Sell Order for such series whether such Buy Order, Hold/Sell
Order or Sell Order was accepted or rejected, in whole or in part;
(ii) instruct each Potential Holder on whose behalf such
Broker-Dealer submitted a Buy Order for such series that was accepted, in whole
or in part, to instruct such Potential Holder's Agent Member to pay to such
Broker-Dealer (or its Agent Member) through the Securities Depository the amount
necessary to purchase the number of shares of such series of TARPS to be
purchased pursuant to such Buy Order against receipt of such shares;
(iii) instruct each Existing Holder on whose behalf such
Broker-Dealer submitted a Hold/Sell Order for such series that was accepted, in
whole or in part, as a Sell Order or a Sell Order for such series that was
accepted, in whole or in part, to instruct such Existing Holder's Agent Member
to deliver to such Broker-Dealer (or its Agent Member) through the Securities
Depository the number of shares of such series of TARPS to be sold pursuant to
such Order against payment therefor;
(iv) advise each Existing Holder on whose behalf such Broker-Dealer
submitted an Order for such series that will continue to hold shares of TARPS of
such series and each Potential Holder on whose behalf such Broker-Dealer
submitted a Buy Order for such series that was accepted, in whole or in part, of
the Applicable Rate for such series for the next succeeding Dividend Period for
such series;
(v) advise each Existing Holder on whose behalf such Broker-Dealer
submitted an Order for such series of the Auction Date of the next succeeding
Auction for such series; and
(vi) advise each Potential Holder on whose behalf such
Broker-Dealer submitted a Buy Order for such series that was accepted, in whole
or in part, of the Auction Date of the next succeeding Auction for such series.
(c) On the basis of the information provided to it pursuant to (a)
above, each Broker-Dealer that submitted a Buy Order, a Hold/Sell Order or a
Sell Order for any series of TARPS shall allocate any funds received by it in
respect of such series pursuant to (b)(ii) above, and any shares of such series
of TARPS received by it pursuant to (b)(iii) above, among the Potential Holders,
if any, on whose behalf such Broker-Dealer submitted Buy Orders for such series,
the Existing Holders, if any, on whose behalf such Broker-Dealer submitted Buy
Orders, Hold/Sell Orders or Sell Orders for such series, and any Broker-Dealers
identified to it by the Auction Agent pursuant to (a)(v) above.
(d) On the Business Day after the Auction Date, the Securities
Depository shall execute the transactions described above, debiting and
crediting the accounts of the respective Agent Members as necessary to effect
the purchases and sales of shares of any series of TARPS as determined in the
Auction for such series.
EXHIBIT D
FORM OF TARPS PROVISIONS
EXHIBIT E
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
NOTICE OF AUCTION DATE FOR
TAXABLE AUCTION RATE PREFERRED STOCK ("TARPS")
NOTICE IS HEREBY GIVEN that the Auction Date of the next Auction for the TARPS
Series ___ of PROSPECT STREET HIGH INCOME PORTFOLIO INC. (the "Fund") is
scheduled to be ________ and the next Dividend Payment Date for the Fund's TARPS
Series ___ will be ___________.
PROSPECT STREET HIGH INCOME PORTFOLIO, INC.
EXHIBIT F
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
NOTICE OF PROPOSED DESIGNATION OF
ALTERNATE TERM PERIOD FOR
TAXABLE AUCTION RATE PREFERRED STOCK
NOTICE IS HEREBY GIVEN that PROSPECT STREET HIGH INCOME PORTFOLIO INC. (the
"Fund") proposes to exercise its option to designate the Dividend Period of its
Series ___ Taxable Auction Rate Preferred Stock ("TARPS") commencing [the first
day of the proposed Alternate Term Period] and ending (the last day of the
proposed Alternate Term Period] as an Alternate Term Period.
By 9:00 A.M., New York City time, on the Business Day next preceding the first
day of such proposed Alternate Term Period, the Fund will notify the Auction
Agent for the TARPS of either (a) its determination to exercise such option,
designating the length of such Alternate Term Period and the terms of the
Specific Redemption Provisions, if any, or (b) its determination not to exercise
such option.
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
Dated: ___________
EXHIBIT G
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
NOTICE OF DESIGNATION OF ALTERNATE TERM PERIOD OF
AUCTION RATE PREFERRED STOCK
NOTICE IS HEREBY GIVEN that PROSPECT STREET HIGH INCOME PORTFOLIO INC. (the
"Fund") has determined to designate the Dividend Period of its Series ___
Taxable Auction Rate Preferred Stock ("TARPS") commencing on (the first day of
the Alternate Term Period] and ending on (the last day of the Alternate Term
Period] as an Alternate Term Period.
The Alternate Term Period will be ___ (days] [year(s]].
The Auction Date for the Alternate Term Period is (the Business Day next
preceding the first day of such Alternate Term Period].
The scheduled Dividend Payment Dates for such series of TARPS during such
Alternate Term Period will be
------------------.
[Specific Redemption Provisions, if applicable.]
[The Alternate Term Period shall not commence if on such Auction Date Sufficient
Clearing Orders shall not exist.]
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
Dated: ______________
EXHIBIT H
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
NOTICE OF DETERMINATION NOT TO DESIGNATION
ALTERNATE TERM PERIOD OF
TAXABLE AUCTION RATE PREFERRED STOCK
NOTICE IS HEREBY GIVEN that PROSPECT STREET HIGH INCOME PORTFOLIO INC. (the
"Fund") has determined not to exercise its option to designate an Alternate Term
Period of its Series ___ Taxable Auction Rate Preferred Stock. Accordingly, the
next succeeding Dividend Period of such series will be a Standard Term Period.
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
Dated: ______________
