Exhibit (h)
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
________ Shares of Common Stock
Issuable Upon Exercise of Transferable Rights
to Subscribe for Such Shares of Common Stock
DEALER MANAGER AGREEMENT
New York, New York
________ __, 199_
PaineWebber Incorporated
Xxxxxx Xxxxxxx Incorporated
c/o PaineWebber Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Each of Prospect Street High Income Portfolio Inc., a Maryland
corporation (the "Company") and Prospect Street Investment Management Co., Inc.,
a Massachusetts corporation (the "Investment Adviser"), hereby confirms the
agreement with and appointment of PaineWebber Incorporated ("PaineWebber") on
their own behalf and on behalf of Xxxxxx Xxxxxxx Incorporated ("Xxxxxx") to act
as dealer managers (PaineWebber and Xxxxxx collectively being referred to herein
as the "Dealer Managers") in connection with the issuance by the Company to the
holders of record (the "Holders") at the close of business on the record date
set forth in the Prospectus (as defined herein) (the "Record Date") ________
transferable rights entitling such Holders to subscribe for ________ shares
(each a "Share" and, collectively, the "Shares") of common stock, par value
$.01 per share (the "Common Stock"), of the Company (the "Offer"). Pursuant to
the terms of the Offer, the Company is issuing each Holder one transferable
right (each a "Right" and, collectively, the "Rights") for each share of Common
Stock held by such Holder on the Record Date. Such Rights entitle holders to
acquire during the subscription period set forth in the Prospectus (the
"Subscription Period"), at the price set forth in such Prospectus (the
"Subscription Price"), one Share for each three Rights exercised, except that
any Holder who is issued fewer than three Rights will be able to subscribe for
one full Share, on the terms and conditions set forth in such Prospectus. No
fractional shares will be issued. Any Holder who fully exercises all Rights
initially issued to such Holder (other than those Rights that cannot be
exercised because they represent the right to acquire less than one Share) will
be entitled to subscribe for, subject to allocation, additional Shares (the
"Over-Subscription Privilege") on the terms and conditions set forth in such
Prospectus. The Rights are transferable and are expected to be listed on the New
York Stock Exchange.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form N-2 (Nos. 333-_____ and
811-5557) and a related preliminary prospectus under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), the Securities Act of 1933,
as amended (the "Securities Act"), and the rules and regulations of the
Commission under the Investment Company Act and the Securities Act (the "Rules
and Regulations"), and has filed such amendments to such registration statement
on Form N-2, if any, and such amended preliminary prospectuses as may have been
required to the date hereof. If the registration statement has not become
effective, a further amendment to such registration statement, including forms
of a final prospectus necessary to permit such registration statement to become
effective will promptly be filed by the Company with the Commission. If the
registration statement has become effective and any prospectus contained therein
omits certain information at the time of effectiveness pursuant to Rule 430A of
the Rules and Regulations, a final prospectus containing such omitted
information will promptly be filed by the Company with the Commission in
accordance with Rule 497(h) of the Rules and Regulations. The registration
statement, as amended at the time it becomes or became effective, including
financial statements and all exhibits and all documents, if any, incorporated
therein by reference, and any information deemed to be included by Rule 430A, is
called the "Registration Statement." The term "Prospectus" means the final
prospectus in the form filed with the Commission pursuant to Rule 497(c), (e),
(h) or (j) of the Rules and Regulations, as the case may be, as from time to
time amended or supplemented pursuant to the Securities Act. The Prospectus and
letters to beneficial owners of the shares of Common Stock of the Company, forms
used to exercise rights, any letters from the Company to securities dealers,
commercial banks and other nominees and any newspaper announcements, press
releases and other offering materials and information that the Company may use,
approve, prepare or authorize for use in connection with the Offer, are
collectively referred to hereinafter as the "Offering Materials."
1. Representations and Warranties.
(a) The Company represents and warrants to, and agrees with, the
Dealer Managers as of the date hereof, as of the date of the
commencement of the Offer (such later date being hereinafter
referred to as the "Representation Date") and as of the
Expiration Date (as defined below)
that:
(i) the Company meets the requirements for use of Form N-2
under the Securities Act and the Investment Company Act
and the Rules and Regulations. At the time the
Registration Statement became or becomes effective, the
Registration Statement did or will contain all statements
required to be stated therein in accordance with and did
or will comply in all material respects with the
requirements of the Securities Act, the Investment
Company Act and the Rules and Regulations and did or will
not contain any untrue statement of a material fact or
omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading. From the time the Registration Statement
became or becomes effective through the expiration date of
the Offer set forth in the Prospectus (the "Expiration
Date"), the Prospectus and the other Offering Materials
will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary in order to make the statements
therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that
the representations and warranties in this subsection
shall not apply to statements in or omissions from the
Registration Statement, Prospectus or Offering Materials
made in reliance upon and in conformity with information
furnished to the Company in writing by the Dealer Managers
expressly for use in the Registration Statement,
Prospectus or Offering Materials.
(ii) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws
of the State of Maryland, has full corporate power and
authority to conduct its business as described in the
Registration Statement and the Prospectus, currently
maintains all governmental licenses, permits, consents,
orders, approvals, and other authorizations (collectively,
the "Licenses and Permits") necessary to carry on its
business as contemplated in the Prospectus, and is duly
qualified to do business as a foreign corporation in each
jurisdiction wherein it owns or leases real property or in
which the conduct of its business requires such
qualification, except where the failure to obtain or
maintain such Licenses and Permits or to be so qualified
would not result in a material adverse effect upon the
business, properties, financial position or results of
operations of the Company. The Company has no
subsidiaries.
(iii) the Company is registered with the Commission under the
Investment Company Act as a closed-end, diversified
management investment company, no order of suspension or
revocation of such registration has been issued or
proceedings there for initiated or, to the knowledge of
the Company, threatened by the Commission, all required
action has been taken under the Securities Act and the
Investment Company Act to consummate the issuance of the
Rights and the issuance and sale of the Shares by the
Company upon exercise of the Rights, and the provisions of
the Company's charter and by-laws comply as to form in all
material respects with the requirements of the Investment
Company Act.
(iv) Xxxxxx Xxxxxxxx LLP, the accountants who certified the
financial statements of the Company set forth or
incorporated by reference in the Registration Statement
and the Prospectus, are independent public accountants as
required by the Investment Company Act and the Rules and
Regulations.
(v) the financial statements of the Company set forth or
incorporated by reference in the Registration Statement
and the Prospectus present fairly in all material respects
the financial condition of the Company as of the dates or
for the periods indicated in conformity with generally
accepted accounting principles applied on a consistent
basis; and the information set forth in the Prospectus
under the headings "Fee Table" and "Financial Highlights"
presents fairly in all material respects the information
stated therein.
(vi) the Company has an authorized capitalization as set forth
in the Prospectus; the outstanding shares of Common Stock
and outstanding shares of preferred stock, designated as
Taxable Auction Rate Preferred Stock, no par value,
liquidation preference $100,000 per share (the "Preferred
Shares"), have been duly authorized and are validly
issued, fully paid and non-assessable and conform in all
material respects to the description thereof in the
Prospectus under the heading "Description of Capital
Stock"; the Rights have been duly authorized by all
requisite action on the part of the Company for issuance
pursuant to the Offer; the Shares have been duly
authorized by all requisite action on the part of the
Company for issuance and sale pursuant to the terms of the
Offer and, when issued and delivered by the Company
pursuant to the terms of the Offer against payment of the
consideration set forth in the Prospectus, will be
validly issued, fully paid and non-assessable; the Shares
and the Rights conform in all material respects to all
statements relating thereto contained in the Registration
Statement, the Prospectus and the other Offering
Materials; and the issuance of each of the Rights and the
Shares is not subject to any preemptive rights.
(vii) the Company has authorized debt leverage as set forth in
the Prospectus; the outstanding Senior Notes payable
December 1, 1998 (the "Notes") have been duly authorized
and conform in all material respects to the description
thereof in the Prospectus under the heading "Description
of Notes".
(viii) except as set forth in the Prospectus, subsequent to the
respective dates as of which information is given in the
Registration Statement and the Prospectus, (A) the Company
has not incurred any liabilities or obligations, direct
or contingent, or entered into any transactions, other
than in the ordinary course of business, that are material
to the Company, (B) there has not been any material change
in the capital stock or long-term debt of the Company, or
any material adverse change, or any development involving
a prospective material adverse change, in the condition
(financial or other), business, prospects, net worth or
results of operations of the Company (excluding
fluctuations in the Company's net asset value due to
investment activities in the ordinary course of business)
and (C) except for the regular monthly dividend on the
outstanding shares of Common Stock and the regular 30-day
dividend on the outstanding shares of Preferred Stock,
there have been no dividends or distributions paid or
declared in respect of the Company's capital stock.
(ix) except as set forth in the Registration Statement and
Prospectus, there is no pending or, to the knowledge of
the Company, threatened action, suit or proceeding to
which the Company is a party before or by any court or
governmental agency, authority or body or any arbitrator,
whether foreign or domestic, which might result in any
material adverse change in the condition (financial or
other), business prospects, net worth or results of
operations of the Company, or which might materially and
adversely affect the properties or assets thereof of a
character required to be disclosed in the Registration
Statement or the Prospectus.
(x) there are no franchises, contracts or other documents of
the Company required to be described in the Registration
Statement or the Prospectus, or to be filed or
incorporated by reference as exhibits which are not
described or filed or incorporated by reference therein as
permitted by the Securities Act, the Investment Company
Act or the Rules and Regulations.
(xi) each of this agreement (the "Agreement"), the Subscription
Agency Agreement (the "Subscription Agency Agreement")
dated as of ________ __, 199_ between the Company and
[State Street Bank and Trust Company] (the "Subscription
Agent"), the Information Agent Agreement (the "Information
Agent Agreement") dated as of ________ __, 199_ between
the Company and [Corporate Investor Communications, Inc.]
(the "Information Agent"), the Investment Advisory
Agreement dated as of March 1, 1994 between the Company
and the Investment Adviser (the "Investment Advisory
Agreement"), the Custodian Agreement dated as of June 6,
1994 between the Company and State Street Bank and Trust
Company (the "Custodian Agreement"), the Registrar,
Transfer Agency and Service Agreement dated as of June 6,
1994 between the Company and State Street Bank and Trust
Company (the "Transfer Agency Agreement"), the Amended and
Restated Note Purchase Agreement dated as of December 16,
1993 between the Company and Pacific Mutual Life Insurance
Company (the "Note Purchase Agreement"), the Notes dated
as of July 21, 1993 between the Company and Pacific Mutual
Life Insurance Company, the Insurance Agreement dated as
of December 1, 1988, including any amendments thereto,
between the Company and Financial Security Assurance Inc.
(the "Insurance Agreement"), the Custody Agreement dated
as of December 1, 1988 between the Bankers Trust Company
and Financial Security Assurance Inc. (the "Surety
Custodian Agreement"), the Auction Agent Agreement dated
as of May 7, 1990 between the Company and Bankers Trust
Company (the "Auction Agent Agreement"), the Broker-Dealer
Agreement dated as of May 7, 1990, including any
amendments thereto, among the Company Bankers Trust
Company and Bear, Xxxxxxx & Co. Inc. (the "Broker-Dealer
Agreement"), and the Letter Agreement (the Letter
Agreement) dated as of May 7, 1990 among the Company,
Bankers Trust Company and The Depository Trust Company
(collectively, all the foregoing are the "Company
Agreements") has been duly authorized, executed and
delivered by the Company; each of the Company Agreements
complies with all applicable provisions of the Investment
Company Act; and, assuming due authorization, execution
and delivery by the other parties thereto, each of the
Company Agreements constitutes a legal, valid, binding and
enforceable obligation of the Company, subject to the
qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors'
rights, and to general principles of equity (regardless of
whether enforceability is considered in a proceeding in
equity or at law).
(xii) neither the issuance of the Rights, nor the issuance and
sale of the Shares, nor the performance and consummation
by the Company of any other of the transactions
contemplated in the Company Agreements, or any
sub-custodial arrangements entered into pursuant to the
Custodian Agreement, nor the consummation of the
transactions contemplated in the Registration Statement
will conflict with, result in a breach or violation of, or
constitute a default or an event of default under, or
result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the
Company under the charter or by-laws of the Company, or
the terms and provisions of any agreement, indenture,
mortgage, loan agreement, note, insurance or surety
agreement, lease or other instrument to which the Company
is a party or by which it may be bound or to which any of
the property or assets of the Company is subject, nor will
such action result in any violation of any order, law,
rule or regulation of any court or governmental agency or
body, whether foreign or domestic, having jurisdiction
over the Company or any of its properties.
(xiii) no consent, approval, authorization, notification or order
of, or filing with, any court or governmental agency or
body, whether foreign or domestic, is legally required for
the consummation by the Company of the transactions
contemplated by the Company Agreements or the Registration
Statement, except such as have been obtained, or if the
registration statement filed with respect to the Shares is
not effective under the Securities Act as of the time of
execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the
Investment Company Act, the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
state securities laws.
(xiv) the Company either owns or possesses all governmental
licenses, permits, consents, orders, approvals or other
authorizations to enable the Company to invest in
securities as contemplated in the Prospectus. Neither the
execution or delivery by the Company nor the performance
by the Company of any of its obligations under the Company
Agreements contravenes or constitutes a default under any
provision contained in any law, rule or regulation of any
governmental or regulatory authority or any order or
regulation of any court by which the Company or any of its
assets is bound or affected.
(xv) the Common Stock has been duly listed on the New York
Stock Exchange and prior to their issuance the Rights and
the Shares will have been duly approved for listing,
subject to official notice of issuance, on the New York
Stock Exchange.
(xvi) the Company (A) has not taken, directly or indirectly, any
action designed to cause or to result in, or that has
constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price
of any security of the Company to facilitate the issuance
of the Rights or the sale or resale of the Rights or the
Shares, (B) has not since the filing of the Registration
Statement sold, bid for or purchased, or paid anyone any
compensation for soliciting purchases of, shares of Common
Stock of the Company (except for the solicitation of
exercises of the Rights pursuant to this Agreement) and
(C) will not, until the later of the expiration of the
Rights or the completion of the distribution (within the
meaning of the anti-manipulation rules under the Exchange
Act) of the Shares, sell, bid for or purchase, pay or
agree to pay to any person any compensation for soliciting
another to purchase any other securities of the Company
(except for the solicitation of the exercises of Rights
pursuant to this Agreement); provided that any action in
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connection with the Company's dividend reinvestment plan
will not be deemed to be within the terms of this Section
1(a)(xvi).
(xvii) the Company has complied in all previous tax years, and
intends to direct the investment of the proceeds of the
offering described in the Registration Statement and the
Prospectus in such a manner as to continue to comply, with
the requirements of Subchapter M of the Internal Revenue
Code of 1986, as amended ("Subchapter M of the Code"), and
has qualified and intends to continue to qualify as a
regulated investment company under Subchapter M of the
Code.
(xviii) the Company has complied in all previous years, and
intends to direct the investment of the proceeds of the
offering described in the Registration Statement and the
Prospectus in such a manner as to continue to comply, with
the diversification, liquidity, investment guidelines and
asset coverage requirements of the Insurance Agreement and
the Note Purchase Agreement for so long as such agreements
remain in effect and with the asset coverage requirements
of the Investment Company Act.
(xix) the Preferred Stock and the Notes have a rating of
"AAA"/"Aaa" from Standard and Poor's Ratings Group and
Xxxxx'x Investors Service, Inc. and "Aaa" from Fitch
Investors Service, Inc., respectively, and the Company is
not aware of any proposed, pending or threatened
downgrading of either rating or placing the Company under
watch for downgrading by such rating agencies.
(b) The Investment Adviser represents and warrants to, and agrees
with, the Dealer Managers as of the date hereof, as of the
Representation Date and as of the Expiration Date that:
(i) the Investment Adviser has been duly incorporated and is
validly existing as a corporation in good standing under
the laws of the Commonwealth of Massachusetts, has full
corporate power and authority to own its properties and
conduct its business as described in the Registration
Statement and the Prospectus, and is duly qualified to do
business as a foreign corporation in each jurisdiction
wherein it owns or leases real property or in which the
conduct of its business requires such qualification,
except where the failure to be so qualified does not
involve a material adverse risk to the Investment
Adviser's business, properties, financial position or
operations.
(ii) the Investment Adviser is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), and is not prohibited by the
Advisers Act or the Investment Company Act, or the rules
and regulations under such Acts, from acting as an
investment adviser for the Company as contemplated in the
Prospectus and the Investment Advisory Agreement.
(iii) each of this Agreement and the Investment Advisory
Agreement has been duly authorized, executed and delivered
by the Investment Adviser and complies with all applicable
provisions of the Advisers Act and the Investment Company
Act, and is, assuming due authorization, execution and
delivery by the other parties thereto, a legal, valid,
binding and enforceable obligation of the Investment
Adviser, subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors'
rights, and to general principles of equity (regardless of
whether enforceability is considered in a proceeding in
equity or at law).
(iv) neither the performance by the Investment Adviser of its
obligations under this Agreement or the Investment
Advisory Agreement nor the consummation of the
transactions contemplated therein or in the Registration
Statement nor the fulfillment of the terms thereof will
conflict with, result in a breach or violation of, or
constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
properties or assets of the Investment Adviser under the
charter or by-laws of the Investment Adviser, or the terms
and provisions of any agreement, indenture, mortgage,
lease or other instrument to which the Investment Adviser
is a party or by which it may be bound or to which any of
the property or assets of the Investment Adviser is
subject, nor will such action result in any violation of
any order, law, rule or regulation of any court or
governmental agency or body, whether foreign or domestic,
having jurisdiction over the Investment Adviser or any of
its properties.
(v) except as set forth in the Registration Statement and
Prospectus, there is no pending or, to the best knowledge
of the Investment Adviser, threatened action, suit or
proceeding to which the Investment Adviser is a party
before or by any court or governmental agency, authority
or body or any arbitrator, whether foreign or domestic,
which might result in any material adverse change in the
condition (financial or other), business prospects, net
worth or results of operations of the Investment Adviser,
or which might materially and adversely affect the
properties or assets thereof of a character required to be
disclosed in the Registration Statement or Prospectus.
(vi) the Investment Adviser does not require any governmental
licenses, permits, consents, orders, approvals or other
authorizations to enable the Investment Adviser to
continue to supervise investments in securities as
contemplated in the Prospectus. Neither the execution or
delivery by the Investment Adviser nor the performance by
the Investment Adviser of any of its obligations under
this Agreement or the Investment Advisory Agreement will
contravene or constitute a default under any provision
contained in any law, rule or regulation of any
governmental or regulatory authority or any order or
regulation of any court by which the Company or any of its
assets is bound or affected.
(vii) no consent, approval, authorization, notification or order
of, or any filing with, any court or governmental agency
or body is required under federal law or the laws of any
other jurisdiction, whether foreign or domestic, for the
consummation by the Investment Adviser of the transactions
contemplated by this Agreement or the Investment Advisory
Agreement.
(viii) the Investment Adviser (A) has not taken, directly or
indirectly, any action designed to cause or to result in,
or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate
the issuance of the Rights or the sale or resale of the
Rights or the Shares, (B) has not since the filing of the
Registration Statement sold, bid for or purchased, or paid
anyone any compensation for soliciting purchases of,
shares of Common Stock of the Company (except for the
solicitation of exercises of Rights pursuant to this
Agreement) and (C) will not, until the later of the
expiration of the Rights or the completion of the
distribution (within the meaning of the anti-manipulation
rules under the Exchange Act) of the Shares, sell, bid for
or purchase, pay or agree to pay any person any
compensation for soliciting another to purchase any other
securities of the Company (except for the solicitation of
exercises of Rights pursuant to this Agreement); provided
that any action in connection with the Company's dividend
reinvestment plan will not be deemed to be within the
terms of this Section 1(b)(viii).
(c) Any certificate required by this Agreement that is signed by any
officer of the Company, or the Investment Adviser and delivered
to the Dealer Managers or counsel for the Dealer Managers shall
be deemed a representation and warranty by the Company or the
Investment Adviser, as the case may be, to the Dealer Managers,
as to the matters covered thereby.
2. Agreement to Act as Dealer Managers.
(a) On the basis of the representations and warranties contained
herein, and subject to the terms and conditions of the Offer:
(i) The Company hereby appoints the Dealer Managers and
authorizes the Dealer Managers to form and manage a group
of broker-dealers (each a "Selling Group Member" and
collectively the "Selling Group") to solicit the exercise
of Rights and to sell Shares purchased by PaineWebber from
the Fund though the exercise of Rights as described
herein; and the Dealer Managers hereby agree to solicit
through themselves, through each Selling Group Member that
enters into a Selling Group Agreement in the form attached
hereto as Exhibit A and through each soliciting
broker-dealer (each a "Soliciting Dealers" and
collectively the (Soliciting Dealers") that enter into a
Soliciting Dealer Agreement in the form attached hereto as
Exhibit B, in accordance with the Securities Act, the
Investment Company Act and the Exchange Act, and its
customary practice, the exercise of the Rights, subject to
the terms and conditions of this Agreement, the procedures
described in the Registration Statement, the Prospectus
and, where applicable, the terms and conditions of such
Selling Group Agreement or Soliciting Dealer Agreement and
to sell Shares purchased by PaineWebber from the Fund
though the exercise of Rights as described herein.
(ii) The Company hereby authorizes PaineWebber to buy and
exercise Rights, including unexercised Rights delivered to
the Subscription Agent for resale and Rights of "Foreign
Record Date Shareholders" (as defined in the Prospectus)
held by the Subscription Agent for which no instructions
are received on the terms and conditions set forth in such
Prospectus, and to sell Shares to the public or to Selling
Group Members at the offering price set by PaineWebber
from time to time. Sales of Shares by PaineWebber or
Selling Group Members shall be not more than the offering
price set by PaineWebber from time to time.
(iii) The Company hereby authorizes PaineWebber to buy and
exercise Rights and to sell Shares to the public or to
Selling Group Members at the offering price set by
PaineWebber from time to time. Sales of Shares by
PaineWebber or Selling Group Members shall be not more
than the offering price set by PaineWebber from time to
time.
(b) The Company agrees to furnish, or cause to be furnished, to the
Dealer Managers, lists, or copies of those lists, showing the
names and addresses of, and number of shares of Common Stock held
by, Holders as of the Record Date, and the Dealer Managers agrees
to use such information only in connection with the Offer, and
not to furnish the information to any other person except for
securities brokers and dealers that have been requested by the
Dealer Managers to solicit exercises of Rights.
(c) The Dealer Managers agree to provide to the Company, in addition
to the services described in paragraph (a) of this Section 2,
financial advisory and marketing services in connection with the
Offer. No advisory fee, other than the fees provided for in
Section 3 of this Agreement and the reimbursement of the Dealer
Managers' out-of- pocket expenses as described in Section 5 of
this Agreement, will be payable by the Company, or any other
party hereto, to the Dealer Managers in connection with the
financial advisory and marketing services provided by the Dealer
Managers pursuant to this Section 2(b).
(d) The Company and the Dealer Managers agree that the Dealer
Managers are independent contractors with respect to the
solicitation of the exercise of Rights and the performance of
financial advisory and marketing services for the Company
contemplated by this Agreement.
(e) In rendering the services contemplated by this Agreement, the
Dealer Managers will not be subject to any liability to the
Company or the Investment Adviser or any of their affiliates, for
any act or omission on the part of any soliciting broker or
dealer (except with respect to the Dealer Managers acting in such
capacity) or any other person, and the Dealer Managers will not
be liable for acts or omissions in performing its obligations
under this Agreement, except for any losses, claims, damages,
liabilities and expenses that have resulted primarily from the
bad faith, willful misconduct or gross negligence of a respective
Dealer Manager or by reason of the reckless disregard of the
obligations and duties of a respective Dealer Manager under this
Agreement.
3. Dealer Manager Fees. In full payment for the financial advisory,
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marketing and soliciting services rendered and to be rendered hereunder
by the Dealer Managers, the Company agrees to pay the Dealer Managers a
fee (the "Dealer Manager Fee") equal to 3.75% of the aggregate
Subscription Price for the Shares issued pursuant to the exercise of
Rights and the Over-Subscription Privilege. In full payment for the
soliciting efforts to be rendered, the Dealer Managers agree to reallow
selling fees (the "Selling Fees") to Selling Group Members equal to
2.50% of the Subscription Price per Share for each Share issued pursuant
to the exercise of Rights and the Over-Subscription Privilege. In full
payment for the soliciting efforts to be rendered, the Dealer Managers
agree to reallow soliciting fees (the "Soliciting Fees") to Soliciting
Dealers equal to 0.50% of the Subscription Price per Share for each
Share issued pursuant to the exercise of Rights and the
Over-Subscription Privilege, subject to a maximum fee based on the
number of shares of Common Stock held by such broker-dealer through The
Depository Trust Company ("DTC") on the Record Date. The Dealer Managers
agree to pay the Selling Fees or Solicitation Fees, as the case may be,
to the broker-dealer designated on the applicable portion of the form
used by the holder to exercise Rights and the Over-Subscription
Privilege, and if no broker-dealer is so designated or a broker-dealer
is otherwise not entitled to receive compensation pursuant to the terms
of the Selling Group Agreement or Soliciting Dealer Agreement, then
PaineWebber shall retain such Selling Fee or Solicitation Fee for Shares
issued pursuant to the exercise of Rights and the Over-Subscription
Privilege. Payment to the Dealer Managers by the Company will be in the
form of a wire transfer of same day funds to an account or accounts
identified by the respective Dealer Manager. Such payment will be made
on each date on which the Company issues Shares after the Expiration
Date. Payment to a Selling Group Member or Soliciting Dealer will be
made by the Dealer Managers directly to such Selling Group Member by
check to an address identified by such broker-dealer. Such payments
shall be made on or before the tenth business day following the day the
Company issues Shares after the Expiration Date.
4. Other Agreements.
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(a) The Company covenants with the Dealer Managers as follows:
(i) The Company will use its best efforts to cause the
Registration Statement to become effective under the
Securities Act, and will advise the Dealer Managers
promptly as to the time at which the Registration
Statement and any amendments thereto (including any
post-effective amendment) becomes so effective.
(ii) The Company will notify, and confirm the notice in writing
to, the Dealer Managers immediately (A) of the
effectiveness of the Registration Statement and any
amendment thereto (including any post-effective
amendment), (B) of the receipt of any comments from the
Commission, (C) of any request by the Commission for any
amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional
information, (D) of the issuance by the Commission of any
stop order suspending the effectiveness of the
Registration Statement or the initiation of any
proceedings for that purpose, and (E) of the suspension of
the qualification of the Shares or the Rights for offering
or sale in any jurisdiction. The Company will make every
reasonable effort to prevent the issuance of any stop
order described in subsection (D) hereunder and, if any
such stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(iii) The Company will give the Dealer Managers notice of its
intention to file any amendment to the Registration
Statement (including any post-effective amendment) or any
amendment or supplement to the Prospectus (including any
revised prospectus which the Company proposes for use by
the Dealer Managers in connection with the Offer, which
differs from the prospectus on file at the Commission at
the time the Registration Statement becomes effective,
whether or not such revised prospectus is required to be
filed pursuant to Rule 497(c), (e) or Rule 497(h) of the
Rules and Regulations), whether pursuant to the Investment
Company Act, the Securities Act, or otherwise, and will
furnish the Dealer Managers with copies of any such
amendment or supplement a reasonable amount of time prior
to such proposed filing or use, as the case may be, and
will not file any such amendment or supplement to which
the Dealer Managers or counsel for the Dealer Managers
shall reasonably object.
(iv) The Company will, without charge, deliver to the Dealer
Managers, as soon as practicable, the number of copies
(one of which is manually executed) of the Registration
Statement as originally filed and of each amendment
thereto as it may reasonably request, in each case with
the exhibits filed therewith.
(v) The Company will, without charge, furnish to the Dealer
Managers, from time to time during the period when the
Prospectus is required to be delivered under the
Securities Act, such number of copies of the Prospectus
(as amended or supplemented) as the Dealer Managers may
reasonably request for the purposes contemplated by the
Securities Act or the Rules and Regulations.
(vi) If any event shall occur as a result of which it is
necessary, in the reasonable opinion of counsel for the
Dealer Managers, to amend or supplement the Registration
Statement or the Prospectus in order to make the
Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a
holder, the Company will forthwith amend or supplement the
Prospectus by preparing and filing with the Commission
(and furnishing to the Dealer Managers a reasonable number
of copies of) an amendment or amendments of the
Registration Statement or an amendment or amendments of or
a supplement or supplements to the Prospectus (in form
and substance satisfactory to counsel for the Dealer
Managers), at the Company's expense, which will amend or
supplement the Registration Statement or the Prospectus
so that the Prospectus will not contain an untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order
to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is
delivered to a holder, not misleading.
(vii) The Company will endeavor, in cooperation with the Dealer
Managers and their counsel, to assist such counsel to
qualify the Rights and the Shares for offering and sale
under the applicable securities laws of such states and
other jurisdictions of the United States as the Dealer
Managers may designate and maintain such qualifications in
effect for the duration of the Offer; provided, however,
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that the Company will not be obligated to file any general
consent to service of process, or to qualify as a foreign
corporation or as a dealer in securities in any
jurisdiction in which it is not now so qualified. The
Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the
Rights and the Shares have been qualified as above
provided.
(viii) The Company will make generally available to its security
holders as soon as practicable, but no later than 60 days
after the end of the Fund's fiscal semi-annual or fiscal
year-end period covered thereby, an earnings statement
(which need not be audited) (in form complying with the
provisions of Rule 158 of the Rules and Regulations of the
Securities Act) covering a twelve-month period beginning
not later than the first day of the Company's fiscal
semi-annual period next following the "effective" date (as
defined in said Rule 158) of the Registration Statement.
(ix) For a period of 180 days from the date of this Agreement,
the Company will not, without the prior consent of
PaineWebber, which consent shall not be unreasonably
withheld offer or sell, or enter into any agreement to
sell, any equity or equity related securities of the
Company or securities convertible into such securities,
other than the Rights and the Shares and the Common Stock
issued in reinvestment of dividends or distributions.
(x) The Company will apply the net proceeds from the Offer as
set forth under "Use of Proceeds" in the Prospectus.
(xi) The Company will use its best efforts to cause the Rights
and the Shares to be duly authorized for listing by the
New York Stock Exchange prior to the time the Rights are
issued.
(xii) The Company will use its best efforts to maintain its
qualification as a regulated investment company under
Subchapter M of the Code.
(xiii) The Company will use its best efforts to direct the
proceeds of the Offer in such a manner as to continue to
comply with the diversification, liquidity, investment
guidelines and asset coverage requirements of the
Insurance Agreement and the Note Purchase Agreement for so
long as such agreements remain in effect and with the
asset coverage requirements of the Investment Company
Act.
(xiv) The Company will advise or cause the Subscription Agent
(A) to advise each Dealer Manager and each Selling Group
Member from day to day during the period of, and promptly
after the termination of, the Offer, as to the names and
addresses of all holders exercising Rights, the total
number of Rights exercised by each holder during the
immediately preceding day, indicating the total number of
Rights verified to be in proper form for exercise,
rejected for exercise and being processed and, for each
Dealer Manager and each Selling Group Member, the number
of Rights exercised on subscription certificates
indicating such Dealer Manager or such Selling Group
Member, as the case may be, as the broker-dealer with
respect to such exercise, and as to such other information
as the Dealer Managers may reasonably request; and will
notify each Dealer Manager and each Selling Group Member,
not later than 5:00 P.M., New York City time, on the first
business day following the Expiration Date, of the total
number of Rights exercised and Shares related thereto, the
total number of Rights verified to be in proper form for
exercise, rejected for exercise and being processed and,
for each Dealer Manager and each Selling Group Member, the
number of Rights exercised on subscription certificates
indicating such Dealer Manager or such Selling Group
Member, as the case may be, as the broker-dealer with
respect to such exercise, and as to such other information
as the Dealer Managers may reason ably request; (B) to
sell any Rights received for resale from Holders
exclusively to or through PaineWebber, which may, at its
election, purchase such Rights as principal or act as
agent for such resales; and (C) to issue Shares upon
PaineWebber's exercise of Rights no later than the close
of business on the business day following the day that
full payment for such Shares has been received by the
Subscription Agent.
(b) Neither the Company nor the Investment Adviser will take,
directly or indirectly, any action designed to cause or to result
in, or that has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the issuance of the
Rights or the sale or resale of the Rights or the Shares;
provided that any action in connection with the Company's
--------
dividend reinvestment plan will not be deemed to be within the
meaning of this Section 4(b).
5. Payment of Expenses.
--------------------
(a) The Company will pay all expenses incident to the performance of
its obligations under this Agreement, including, but not limited
to, expenses relating to (i) the printing and filing of the
Registration Statement as originally filed and of each amendment
thereto, (ii) the preparation, issuance and delivery of the
certificates for the Shares and subscription certificates
relating to the Rights, (iii) the fees and disbursements of the
Company's counsel (including the fees and disbursements of local
counsel) and accountants, (iv) the qualification of the Rights
and the Shares under securities laws in accordance with the
provisions of Section 4(a)(vii) of this Agreement, including
filing fees, (v) the printing or other production and delivery to
the Dealer Managers of copies of the Registration Statement as
originally filed and of each amendment thereto and of the
Prospectus and any amendments or supplements thereto, (vi) the
fees and expenses incurred with respect to filing with the
National Association of Securities Dealers, Inc., (vii) the fees
and expenses incurred in connection with the listing of the
Shares on the New York Stock Exchange, (viii) the printing or
other production, mailing and delivery expenses incurred in
connection with Offering Materials and (ix) the fees and expenses
incurred with respect to the Information Agent.
(b) In addition to any fees that may be payable to the Dealer
Managers under this Agreement, the Company agrees to reimburse
PaineWebber upon request made from time to time for its
reasonable expenses incurred in connection with its activities
under this Agreement, including the reasonable fees and
disbursements of its legal counsel (excluding Blue Sky filing
fees which are paid directly by the Company), in an amount up to
$100,000.
(c) If this Agreement is terminated by the Dealer Managers in
accordance with the provisions of Section 6 or Section 9(a)(i),
9(a)(ii) or 9(a)(iii), the Company agrees to reimburse the Dealer
Managers for all of its reasonable out-of-pocket expenses
incurred in connection with its performance hereunder, including
the reasonable fees and disbursements of counsel for the Dealer
Managers. In the event the transactions contemplated hereunder
are not consummated, the Company agrees to pay all of the costs
and expenses set forth in paragraphs (a) and (b) of this Section
5 which the Company would have paid if such transactions had been
consummated.
6. Conditions of the Dealer Managers' Obligations. The obligations of the
Dealer Managers hereunder are subject to the accuracy of the respective
representations and warranties of the Company and the Investment Adviser
contained herein, to the performance by the Company and the Investment
Adviser of their respective obligations hereunder, and to the following
further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., New York City time, on the Record Date, or at
such later time and date as may be approved by the Dealer
Managers; the Prospectus and any amendment or supplement thereto
shall have been filed with the Commission in the manner and
within the time period required by Rule 497(c), (e), (h) or (j),
as the case may be, under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement or any
amendment thereto shall have been issued, and no proceedings for
that purpose shall have been instituted or threatened or, to the
knowledge of the Company, the Investment Adviser or the Dealer
Managers, shall be contemplated by the Commission; and the
Company shall have complied with any request of the Commission
for additional information (to be included in the Registration
Statement, the Prospectus or otherwise).
(b) On the Representation Date and the Expiration Date, the Dealer
Managers shall have received:
(1) The favorable opinions, dated the Representation Date and the
Expiration Date, of Xxxxxx & Xxxxx, counsel for the Company, in
form and substance satisfactory to counsel for the Dealer
Managers to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws
of the State of Maryland, has full corporate power and
authority to conduct its business as described in the
Registration Statement and the Prospectus, currently
maintains all governmental licenses, permits, consents,
orders, approvals, and other authorizations necessary
under U.S. federal or New York or Maryland state law to
carry on its business as contemplated in the Prospectus
(except that counsel need express no opinion as to
securities or "blue sky" laws of any state) and the
Company is duly qualified to do business as a foreign
corporation in each jurisdiction wherein it owns or leases
real property or in which the conduct of its business
requires such qualification, except where the failure to
be so qualified would not result in a material adverse
effect upon the business, properties, financial position
or results of operations of the Company.
(ii) the Company is registered with the Commission under the
Investment Company Act as a closed-end, diversified
management investment company and, to the best knowledge
of such counsel, no order of suspension or revocation of
such registration has been issued or proceedings therefor
initiated or threatened by the Commission; all required
action has been taken under the Securities Act and the
Investment Company Act to make the public offering and
consummate the issuance of the Rights and the issuance and
sale of the Shares by the Company upon exercise of the
Rights, and the provisions of the Company's charter and
by-laws comply as to form in all material respects with
the requirements of the Investment Company Act.
(iii) the Company's authorized capitalization is as set forth in
the Prospectus; the outstanding shares of Common Stock and
outstanding shares of Preferred Stock have been duly
authorized and are validly issued, fully paid and
non-assessable and conform in all material respects to the
description thereof in the Prospectus under the heading
"Description of Capital Stock"; the Rights have been duly
authorized by all requisite action on the part of the
Company for issuance pursuant to the Offer; the Shares
have been duly authorized by all requisite action on the
part of the Company for issuance and sale pursuant to the
terms of the Offer and, when issued and delivered by the
Company pursuant to the terms of the Offer against payment
of the consideration therefore determined as provided set
forth in the Prospectus, will be validly issued, fully
paid and non-assessable; the Shares and the Rights conform
in all material respects to all statements relating
thereto contained in the Registration Statement, the
Prospectus and the other Offering Materials; and the
issuance of the Rights and the Shares is not subject to
any preemptive rights.
(iv) the outstanding Notes have been duly authorized and
conform in all material respects to the description
thereof in the Prospectus under the heading "Description
of Notes."
(v) except as set forth in the Registration Statement and
Prospectus, to the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding to
which the Company is a party before or by any U.S.
federal, New York or Maryland state court or governmental
agency, authority or body or any foreign or domestic
arbitrator which might result in any material adverse
change in the condition (financial or other), business
prospects, net worth or results of operations of the
Company, or which might materially and adversely affect
the properties or assets thereof of a character required
to be disclosed in the Registration Statement or the
Prospectus.
(vi) to the best knowledge of such counsel after due inquiry of
corporate officers, there are no franchises, contracts or
other documents of the Company required to be described in
the Registration Statement or the Prospectus, or to be
filed or incorporated by reference as exhibits which are
not described or filed or incorporated by reference
therein as permitted by the Securities Act, the Investment
Company Act or the Rules and Regulations.
(vii) neither the issuance of the Rights, nor the issuance and
sale of the Shares, nor the consummation by the Company of
any other of the transactions contemplated in this
Agreement nor the consummation of the transactions
contemplated in the Registration Statement will violate
the charter or by-laws of the Company or result in a
breach or violation of, or constitute a default or event
of default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any properties or
assets of the Company under the terms and provisions of
any agreement, indenture, mortgage, loan agreement, note,
insurance or surety agreement, lease or other instrument
known to such counsel to which the Company is a party or
by which it may be bound or to which any of the property
or assets of the Company is subject, nor, to the best
knowledge of such counsel, will such action result in any
violation of any order, law, rule or regulation of any
U.S., New York or Maryland state court or governmental
agency or body having jurisdiction over the Company or any
of its properties.
(viii) no consent, approval, authorization, notification or order
of, or any filing with, any U.S. federal, New York or
Maryland state court or governmental agency or body is
required for the consummation by the Company of the
transactions contemplated by the Company Agreements or the
Registration Statement, except (A) such as have been
obtained and (B) such as may be required under the blue
sky laws of any jurisdiction in connection with the
transactions contemplated hereby.
(ix) the Company's outstanding Common Stock has been duly
listed on the New York Stock Exchange and the Rights and
the Shares have been duly approved for listing, subject to
official notice of issuance, on the New York Stock
Exchange.
(x) the Registration Statement is effective under the
Securities Act; any required filing of the Prospectus or
any supplement thereto pursuant to Rule 497(c), (e), (h)
or (j) required to be made prior to the date hereof has
been made in the manner and within the time period
required by Rule 497(c), (e), (h) or (j), as the case may
be; to the best knowledge of such counsel no stop order
suspending the effectiveness of the Registration Statement
has been issued, and no proceedings for that purpose have
been instituted or threatened; and the Registration
Statement, the Prospectus and each amendment thereof or
supplement thereto (other than the financial statements,
schedules, the notes thereto and the schedules and other
financial, economic and statistical data contained or
incorporated by reference therein or omitted therefrom, as
to which such counsel need express no opinion) as of their
respective effective or issue dates complied as to form in
all material respects with the applicable requirements of
the Securities Act and the Investment Company Act and the
Rules and Regulations.
(xi) the statements in the Prospectus under the heading
"Federal Taxation" fairly present the information
disclosed therein in all material respects.
In rendering such opinion, such counsel may rely as to matters of Maryland law
on the opinion of Xxxxx & Marbury L.L.P. and as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the Company
and public officials.
Such counsel shall also have stated that, while they have not
them selves checked the accuracy and completeness of or otherwise verified, and
are not passing upon and assume no responsibility for the accuracy or
completeness of, the statements contained in the Registration Statement or the
Prospectus, in the course of their review and discussion of the contents of the
Registration Statement and Prospectus with certain officers and employees of the
Company and its independent accountants, no facts have come to their attention
which cause them to believe that the Registration Statement, on the date it
became effective, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements contained therein not misleading or that the Prospectus, as of
its date and on the Representation Date or the Expiration Date, as the case may
be, contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(2) The favorable opinions, dated the Representation Date and the
Expiration Date, of Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP,
counsel for the Investment Adviser, in form and substance
satisfactory to counsel for the Dealer Managers to the effect
that:
(i) each of the Company Agreements has been duly authorized,
executed and delivered by the Company, and complies in all
material respects with all applicable provisions of the
Investment Company Act; and each such agreement, assuming
due and valid authorization, execution and delivery by the
other parties thereto, constitutes a legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent
such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors'
rights and general principles of equity and except to the
extent that the enforceability of the indemnification and
contribution provisions contained in this Agreement may be
limited under U.S. federal and state securities laws.
(ii) the Investment Adviser is duly registered as an investment
adviser under the Advisers Act and is not prohibited by
the Advisers Act or the Investment Company Act, or the
rules and regulations under such Acts, from acting as an
investment adviser for the Company as contemplated in the
Prospectus.
(iii) each of this Agreement and the Investment Advisory
Agreement complies with all applicable provisions of the
Advisers Act and the Investment Company Act.
(iv) except as set forth in the Registration Statement and
Prospectus, to the best knowledge of counsel, there is no
pending or threatened action, suit or proceeding to which
the Investment Adviser is a party before or by any U.S. or
state court or governmental agency, authority or body or
any arbitrator which might result in any material adverse
change in the Investment Adviser's condition (financial or
other), business prospects, net worth or operations or
which might materially and adversely affect the properties
or assets thereof of a character required to be disclosed
in the Registration Statement or Prospectus.
(v) no consent, approval, authorization, notification or order
of, or any filing with, any U.S. or state court or
governmental agency or body is required for the
consummation by the Investment Adviser of the transactions
contemplated by this Agreement or the Investment Advisory
Agreement.
(vi) each of the Company Agreements to which the Investment
Adviser is a party has been duly authorized, executed and
delivered by the Investment Adviser, and, assuming due
authorization, execution and delivery by the other parties
thereto, each of the Company Agreements to which the
Investment Adviser is a party constitutes a legal, valid,
binding and enforceable obligation of the Investment
Adviser except to the extent such enforceability may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating
to or affecting creditors' rights and general principles
of equity and except to the extent that the enforce
ability of the indemnification and contribution provisions
contained in this Agreement may be limited under U.S.
federal and state securities laws.
(vii) the Investment Adviser has been duly incorporated and is
validly existing and in good standing under the laws of
Massachusetts, has full power and authority (corporate and
other) to own its properties and conduct its business as
described in the Registration Statement and the
Prospectus, and is duly qualified to do business as a
foreign corporation in each jurisdiction wherein it owns
or leases real property or in which the conduct of its
business requires such qualification, except where the
failure to be so qualified does not involve a material
adverse risk to the Investment Adviser's business,
properties, financial position or operations.
(viii) neither the performance by the Investment Adviser of its
obligations under this Agreement or the other Company
Agreements to which the Investment Adviser is a party nor
the consummation of the transactions contemplated therein
or in the Registration Statement nor the fulfillment of
the terms thereof will conflict with or violate the
charter, by-laws or similar organizational documents of
the Investment Adviser, or to the best knowledge of such
counsel, after due inquiry, conflict with, result in a
breach or violation of, or constitute a default under, or
result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the
Investment Adviser under the terms and provisions of any
agreement, indenture, mortgage, lease or other instrument
to which the Investment Adviser is a party or by which it
may be bound or to which any of the property or assets of
the Investment Adviser is subject, nor will such action
result in any violation of any order, law, rule or
regulation of any U.S. or state court or governmental
agency or body, having jurisdiction over the Investment
Adviser or any of its properties.
In rendering such opinion, such counsel may rely as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible officers of the
Investment Adviser and public officials.
Such counsel shall also have stated that, while they have not
them selves checked the accuracy and completeness of or otherwise verified, and
are not passing upon and assume no responsibility for the accuracy or
completeness of, the statements contained in the Registration Statement or the
Prospectus, in the course of their review and discussion of the contents of the
Registration Statement and Prospectus with certain officers and employees of the
Investment Adviser and its affiliates, no facts have come to their attention
which cause them to believe that the Registration Statement, on the date it
became effective, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements contained therein not misleading or that the Prospectus, as of
its date and on the Representation Date or the Expiration Date, as the case may
be, contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(c) The Dealer Managers shall have received from Xxxxxxx,
Arps, Slate, Xxxxxxx & Xxxx (Illinois), counsel for the Dealer
Managers, such opinion or opinions, dated the Representation Date
and the Expiration Date, with respect to the Offer, the
Registration Statement, the Prospectus and other related matters
as the Dealer Managers may reason ably require, and the Company
shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon
such matters.
(d) The Company shall have furnished to the Dealer Managers
certificates of the Company, signed by the President, the
Treasurer, the Assistant Treasurer, the Secretary, the Assistant
Secretary or a Vice President of the Company, dated the
Representation Date and the Expiration Date, to the effect that
the signer(s) of such certificate carefully examined the
Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that, to the best of their
knowledge:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on
and as of the Representation Date or the Expiration Date,
as the case may be, with the same effect as if made on the
Representation Date or the Expiration Date, as the case
may be, and the Company has complied with all the
agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the
Representation Date or the Expiration Date, as the case
may be;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened;
(iii) since the date of the most recent balance sheet included
or incorporated by reference in the Prospectus, there has
been no material adverse change in the condition
(financial or other), earnings, business, prospects, net
worth or results of operations of the Company (excluding
fluctuations in the Company's net asset value due to
investment activities in the ordinary course of business),
except as set forth in or contemplated in the Prospectus;
and
(iv) as of the most recent calculation dates as required by
each of the Note Purchase Agreement and Insurance
Agreement, the Company complied with the diversification,
liquidity, investment guidelines and asset coverage
requirements of the Insurance Agreement, the Note Purchase
Agreement and the In vestment Company Act.
(e) The Investment Adviser shall have furnished to the Dealer
Managers certificates of the Investment Adviser, signed by the
President, Treasurer, Secretary or Vice President, dated the
Representation Date and the Expiration Date, to the effect that
the signer of such certificate has read the Registration
Statement, the Prospectus, any supplement to the Prospectus and
this Agreement and, to the best knowledge of such signer, the
representations and warranties of the Investment Adviser in this
Agreement are true and correct in all material respects on and as
of the Representation Date or the Expiration Date, as the case
may be, with the same effect as if made on the Representation
Date or the Expiration Date, as the case may be.
(f) Xxxxxx Xxxxxxxx LLP shall have furnished to the Dealer Managers
letters, dated the Representation Date and the Expiration Date,
in form and substance satisfactory to the Dealer Managers stating
in effect that:
(i) they are independent accountants with respect to the
Company within the meaning of the Securities Act and the
applicable published Rules and Regulations;
(ii) in their opinion, the audited financial statements
examined by them and included or incorporated by reference
in the Registration Statement comply as to form in all
material respects with the applicable accounting
requirements of the Securities Act and the Investment
Company Act and the respective published Rules and
Regulations with respect to registration statements on
Form N-2;
(iii) they have performed specified procedures, not constituting
an audit in accordance with generally accepted auditing
standards, including a reading of the latest available
unaudited financial information of the Company, a reading
of the minute books of the Company, and inquiries of
officials of the Company responsible for financial and
accounting matters and on the basis of such inquiries and
procedures nothing came to their attention that caused
them to believe that at a specified date not more than
five business days prior to the Representation Date, there
was any change in the capital stock, any decrease in net
assets or any increase in long-term debt of the Company as
compared with amounts shown in the most recent statement
of assets and liabilities included or incorporated by
reference in the Registration Statement, except as the
Registration Statement discloses has occurred or may
occur, or they shall state any specific changes, increases
or decreases;
(iv) in addition to the procedures referred to in clause (iii)
above, they have compared certain dollar amounts (or
percentages as derived from such dollar amounts) and other
financial information regarding the operations of the
Company appearing in the Registration Statement, which
have previously been specified by the Dealer Managers and
which shall be specified in such letter, and have found
such items to be in agreement with, the accounting and
financial records of the Company.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there
shall not have been (i) any change, increase or decrease
specified in the letter or letters referred to in paragraph (f)
of this Section 6, or (ii) any change, or any development
involving a prospective change, in or affecting the business or
properties of the Company, the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the reasonable
judgment of the Dealer Managers, so material and adverse as to
make it impractical or inadvisable to proceed with the Offer as
contemplated by the Registration Statement and the Prospectus.
(h) Prior to the Representation Date, the Company shall have
furnished to the Dealer Managers such further information,
certificates and documents as the Dealer Managers may reasonably
request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects satisfactory
in form and substance to the Dealer Managers and their counsel, this Agreement
and all obligations of the Dealer Managers hereunder may be canceled at, or at
any time prior to, the Representation Date by the Dealer Managers. Notice of
such cancellation shall be given to the Company in writing or by telephone
confirmed in writing.
7. Indemnification and Contribution.
---------------------------------
(a) The Company will indemnify and hold harmless the Dealer Managers,
the directors, officers, employees and agents of the Dealer
Managers and each person, if any, who controls the Dealer
Managers within the meaning of Section 15 of the Securities Act
and Section 20 of the Ex change Act against any and all losses,
claims, damages and liabilities, joint or several (including any
investigation, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claim asserted), to which they,
or any of them, may become subject under the Securities Act, the
Exchange Act, the Investment Company Act, the Advisers Act or
other statutory law or regulation, at common law or otherwise,
whether foreign or domestic, insofar as such losses, claims,
damages or liabilities arise out of or are based on any untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, and
any amendment or supplement thereto, or the omission or alleged
omission to state in any or all such documents a material fact
required to be stated therein or necessary to make the statements
in it not misleading (in the case of the Prospectus, in light of
the circumstances under which such statements were made),
provided, however, that the Company will not be liable to the
extent that such loss, claim, damage or liability arises from an
untrue statement or omission or alleged untrue statement or
omission (1) made in reliance on and in conformity with
information furnished in writing to the Company by the Dealer
Managers expressly for use in the document, or (2) if a copy of
the Prospectus was not sent or given to the purchaser of Shares
at or before the written confirmation of the sale to such person
in any case where such delivery is required by the Securities
Act. This indemnity agreement will be in addition to any
liability that the Company might otherwise have.
(b) The Investment Adviser will indemnify and hold harmless the
Dealer Managers, the directors, officers, employees and agents of
the Dealer Managers and each person, if any, who controls the
Dealer Managers within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to the Dealer
Managers, but only insofar as losses, claims, damages or
liabilities arise out of or are based on any untrue statement or
omission or alleged untrue statement or omission made in reliance
on and in conformity with information furnished in writing to the
Company by the Investment Adviser for use in preparation of the
documents in which the statement or omission is made or alleged
to be made which includes all statements attributed to the
Investment Adviser in such documents and the sections entitled
"Prospectus Summary-Information Regarding the Investment Adviser"
and "The Investment Adviser". This indemnity agreement will be in
addition to any liability that the Investment Adviser might
otherwise have.
(c) The Dealer Managers will indemnify and hold harmless the Company
and the Investment Adviser, the directors, officers and each
person, if any, who controls the Company or the Investment
Adviser within the meaning of Section 15 of the Securities Act or
Section 20 of the Ex change Act, to the same extent as the
foregoing indemnity from the Company or the Investment Adviser to
the Dealer Managers, but only insofar as losses, claims, damages
or liabilities arise out of or are based on any untrue statement
or omission or alleged untrue statement or omission made in
reliance on and in conformity with information furnished in
writing to the Company by the Dealer Managers expressly for use
in preparation of the documents in which the statement or
omission is made or alleged to be made. This indemnity agreement
will be in addition to any liability that the Dealer Managers
might otherwise have.
(d) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of
commencement of any action against such party in respect of which
a claim is to be made, promptly notify each such indemnifying
party in writing of the commencement of such action, enclosing a
copy of all papers served, but the omission to so notify such
indemnifying party will not, except to the extent set forth
below, relieve it from liability that it may have to any
indemnified party. No indemnification provided for in Section
7(a), (b) or (c) hereof shall be available to any party who shall
fail to give notice as provided in this Section 7(d) if the party
to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the
failure to give such notice, but the omission so to notify such
indemnifying party of such action shall not relieve it from any
liability that it may have to any indemnified party for
contribution or otherwise on account of the provisions in Section
7(a), (b) or (c). If any such action is brought against any
indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to
participate in, and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified
party, jointly with any other indemnifying party similarly
notified, to assume the defense of the action, with counsel
reasonably satisfactory to the indemnified party, and, after
notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party will
not be liable to the indemnified party for any legal or other
expenses except as provided below and except for the reasonable
costs of investigation subsequently incurred by the indemnified
party in connection with the defense. The indemnified party will
have the right to employ its counsel in any such action, but the
fees and expenses of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the
indemnifying party, (2) the indemnified party has reasonably
concluded that there may be legal defenses available to it or
other indemnified parties that are different from or in addition
to those available to the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (3) the
indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving
notice of the commencement of the action, in each of which cases
the reasonable fees and expenses of counsel will be at the
expense of the indemnifying party or parties. All such fees and
expenses will be reimbursed promptly as they are incurred upon
submission in writing to the indemnifying party with regard to
any cost or expense for which the indemnified party is seeking
indemnification in such form and detail as the indemnifying party
may reasonably request. An indemnifying party will not be liable
for any settlement of any action or claim effected without its
written consent or, in connection with any proceeding or related
proceeding in the same jurisdiction, for the fees and expenses of
more than one separate counsel for all indemnified parties except
to the extent provided herein.
(e) In no case shall the indemnification provided in this Section 7
be available to protect any person against any liability to which
any such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
its or his obligations or duties hereunder, or by reason of its
or his reckless disregard of its or his obligations and duties
hereunder.
(f) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this
Section 7 is applicable in accordance with its terms but for any
reason is held to be unavailable from the Company, the Investment
Adviser or the Dealer Managers, the Company or the Investment
Adviser and the Dealer Managers will contribute to the total
losses, claims, damages and liabilities (including any
investigation, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action
or any claims asserted, but after deducting any contribution
received by the Company, the Investment Adviser or from persons
other than the Dealer Managers, such as persons who control the
Company or the Investment Adviser within the meaning of the
Securities Act or the Exchange Act, officers of the Company who
signed the Registration Statement and directors of the Company,
who may also be liable for contribution) to which the Company,
the Investment Adviser or the Dealer Managers may be subject in
such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other hand from the
offering of the Shares or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by applicable law, not only
such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified
party on the other hand in connection with the statements or
omissions or alleged statements or omissions that resulted in the
losses, claims, damages or liabilities, joint or several
(including any investigation, legal or other expenses reasonably
incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), for
which contribution is sought. The relative benefits received by
(x) the Dealer Managers shall be deemed to be the total fees
received by the Dealer Managers and (y) the Company and the
Investment Adviser in such proportion as shall be appropriate to
reflect the relative benefits received by the Fund on the one
hand and the Investment Adviser on the other. The relative fault
of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, the
Investment Adviser or the Dealer Managers, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission and
any other equitable considerations appropriate in the
circumstances. Notwithstanding any other provisions of this
Section 7, (1) the Dealer Managers will not be responsible for
any amount in excess of the fees paid by the Company pursuant to
Section 3 hereof and (2) no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 7, any person who controls a party to
this Agreement within the meaning of the Securities Act will have
the same rights to contribution as that party, and each officer
of the Company who signed the Registration Statement and each
director of the Company will have the same rights to contribution
as the Company, subject in each case to clause (i) of the first
sentence of this Subsection 7(f). Any party entitled to
contribution will, promptly after receipt of notice of
commencement of any action against such party in respect of which
a claim for contribution may be made under this Section 7, notify
such party or parties from whom contribution may be sought, but
the omission so to notify will not relieve the party or parties
from whom contribution may be sought from any other obligation it
or they may have other wise than under this Section 7. No party
will be liable for contribution with respect to any action or
claim settled without its written consent.
(g) The Company agrees to indemnify each Selling Group Member and
Soliciting Dealer and controlling persons to the same extent and
subject to the same conditions and to the same agreements,
including with respect to contribution, provided for in
subsections (a), (d), (e) and (f) of this Section 7.
(h) The Investment Adviser agrees to indemnify each Selling Group
Member and Soliciting Dealer and controlling persons to the same
extent and subject to the same conditions and to the same
agreements, including with respect to contribution, provided for
in subsections (b), (d), (e) and (f) of this Section 7.
(i) The Company and the Investment Adviser acknowledge that the
statements under the caption "The Offer-Distribution
Arrangements" in the Prospectus constitute the only information
furnished in writing to the Company by the Dealer Managers
expressly for use in such document, and each Dealer Manager
confirms that such statements as they relate to such Dealer
Manager are correct.
8. Representations, Warranties and Agreements to Survive Delivery. The
--------------------------------------------------------------
respective agreements, representations, warranties, indemnities and
other statements of the Company or its officers, of the Investment
Adviser and of the Dealer Managers set forth in or made pursuant to this
Agreement shall survive the Expiration Date and will remain in full
force and effect, regard less of any investigation made by or on behalf
of Dealer Managers or the Company or any of the officers, directors or
controlling persons referred to in Section 7 hereof, and will survive
delivery of and payment for the Shares pursuant to the Offer. The
provisions of Sections 5 and 7 hereof shall survive the termination or
cancellation of this Agreement.
9. Termination of Agreement.
-------------------------
(a) This Agreement shall be subject to termination in the absolute
discretion of the Dealer Managers, by notice given to the Company
prior to the expiration of the Offer, if prior to such time (i)
financial, political, economic, currency, banking or social
conditions in the United States shall have undergone any material
change the effect of which on the financial markets makes it, in
the Dealer Managers' judgment, impracticable or inadvisable to
proceed with the Offer, (ii) there has occurred any outbreak or
material escalation of hostilities or other calamity or crisis
the effect of which on the financial markets of the United States
is such as to make it, in the Dealer Managers' judgment,
impracticable or inadvisable to proceed with the Offer, (iii)
trading in the shares of Common Stock shall have been suspended
by the Commission or the New York Stock Exchange, (iv) trading in
securities generally on the New York Stock Exchange shall have
been suspended or limited or (v) a banking moratorium shall have
been declared either by Federal or New York State authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other
party except as provided in Section 5.
10. Notices. All communications hereunder will be in writing and effective
-------
only on receipt, and, if sent to the Dealer Managers, will be mailed,
delivered or telegraphed and confirmed to PaineWebber Incorporated,
Attn: Xxxx Xxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000;
or if sent to the Company or the Investment Adviser will be mailed, or
delivered or telegraphed and confirmed to them at: Prospect Street High
Income Portfolio Inc., Attn: Xxxx X. Xxxxxxxx, 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, with a copy to Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (Facsimile No.: 212-878-8375), attention of
Xxxxxxxx X. Xxxxxx, Esq.
11. Successors. This Agreement will inure to the benefit of and be binding
----------
upon the parties hereto and their respective successors and will inure
to the benefit of the officers and directors and controlling persons
referred to in Section 7 hereof, and no other person will have any right
or obligation hereunder.
12. Applicable Law. This Agreement will be governed by and construed in
--------------
accordance with the laws of the State of New York.
13. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our
agreement, please so indicate in the space provided below for that purpose,
where upon this letter shall constitute a binding agreement among the Company,
the Investment Adviser and the Dealer Manager.
Very truly yours,
Prospect Street High Income Portfolio Inc.
By: __________________________
Name: ____________________
Title: ____________________
Prospect Street Investment Management Co., Inc.
By: __________________________
Name: ____________________
Title: ____________________
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
PaineWebber Incorporated
By: ________________________
Name: __________________
Title: __________________
Xxxxxx Xxxxxxx Incorporated
By: ________________________
Name: __________________
Title: __________________
EXHIBIT A
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
________ Shares of Common Stock
Issuable Upon Exercise of Transferable Rights
to Subscribe for Such Shares of Common Stock
SELLING GROUP AGREEMENT
New York, New York
________ __, 199_
PaineWebber Incorporated
Xxxxxx Xxxxxxx Incorporated
c/o PaineWebber Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
We understand that Prospect Street High Income Portfolio Inc., a
Maryland corporation (the "Company"), proposes to issue to holders of record
(the "Holders") at the close of business on the record date set forth in the
Prospectus (as defined herein) (the "Record Date") ________ transferable rights
entitling such Holders to subscribe for ________ shares (each a "Share" and,
collectively, the "Shares") of common stock, par value $.01 per share (the
"Common Stock"), of the Company (the "Offer"). Pursuant to the terms of the
Offer, the Company is issuing each Holder one transferable right (each a "Right"
and, collectively, the "Rights") for each share of Common Stock held by such
Holder on the Record Date. Such Rights entitle holders to acquire during the
subscription period set forth in the Prospectus (the "Subscription Period"), at
the price set forth in such Prospectus (the "Subscription Price"), one Share for
each three Rights exercised, except that any Holder who is issued fewer than
three Rights will be able to subscribe for one full Share, on the terms and
conditions set forth in such Prospectus. No fractional shares will be issued.
Any Holder who fully exercises all Rights initially issued to such Holder (other
than those Rights that cannot be exercised because they represent the right to
acquire less than one Share) will be entitled to subscribe for, subject to
allocation, additional Shares (the "Over-Subscription Privilege") on the terms
and conditions set forth in such Prospectus. The Rights are transferable and are
expected to be listed on the New York Stock Exchange.
We further understand that the Company has appointed PaineWebber
Incorporated ("PaineWebber") on their own behalf and on behalf of Xxxxxx Xxxxxxx
Incorporated ("Xxxxxx") to act as dealer managers (PaineWebber and Xxxxxx
collectively being referred to herein as the "Dealer Managers") in connection
with the offer of Shares contemplated by the proposed issuance of Rights (the
"Offer") and has authorized the Dealer Managers to form and manage a group of
broker-dealers (each a "Selling Group Member" and collectively the "Selling
Group") to solicit the exercise of Rights and to sell Shares purchased by
PaineWebber from the Company through the exercise of Rights.
We hereby express our interest in participating in the Offer as a
Selling Group Member.
We hereby agree with you as follows:
1. We have received and reviewed the Company's prospectus dated
________ __, 199_ (the "Prospectus") relating to the Offer and we
understand that additional copies of the Prospectus (or of the
Prospectus as it may be subsequently supplemented or amended, if
applicable) and any other solicitation materials authorized by
the Company relating to the Offer ("Offering Materials") will be
supplied to us in reasonable quantities upon our request therefor
to you. We agree that we will not use any solicitation material
other than the Prospectus (as supplemented or amended, if
applicable) and such Offering Materials and we agree not to make
any representation, oral or written, to any shareholders or
prospective shareholders of the Company that are not contained in
the Prospectus, unless previously authorized to do so in writing
by the Company.
2. From time to time during the period (the "Subscription Period")
commencing on ________ __, 199_ and ending at 5:00 p.m., New York
City time, on the Expiration Date (the term "Expiration Date"
means ________ __, 199_, unless and until the Company shall, in
its sole discretion, have extended the period for which the Offer
is open, in which event the term "Expiration Date" with respect
to the Offer will mean the latest time and date on which the
Offer, as so extended by the Company, will expire.), we may
solicit the exercise of Rights in connection with the Offer. We
will be entitled to receive fees in the amounts and at the times
described in Section 4 of this Agreement with respect to Shares
purchased pursuant to the exercise of Rights and with respect to
which [State Street Bank and Trust Company] (the "Subscription
Agent") has received, no later than 5:00 p.m., New York time, on
the Expiration Date, either (i) a properly completed and executed
Subscription Certificate (in the form attached to the
Prospectus), identifying us as the broker-dealer having been
instrumental in the exercise of such Rights, and full payment for
such Shares or (ii) a Notice of Guaranteed Delivery (in the form
attached to the Prospectus) guaranteeing to the Subscription
Agent by the close of business of the third business day after
the Expiration Date of a properly completed and duly executed
Subscription Certificate, similarly identifying us, and full
payment for such Shares. We understand that we will not be paid
these fees with respect to Shares purchased pursuant to an
exercise of Rights for our own account or for the account of any
of our affiliates. We also understand and agree that we are not
entitled to receive any fees in connection with the solicitation
of the exercise of Rights other than pursuant to the terms of
this Agreement and, in particular, that we will not be entitled
to receive any fees under the Company's Soliciting Dealer
Agreement. We agree to solicit the exercise of Rights in
accordance with the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Investment Company Act of
1940, as amended, and the rules and regulations under each such
Act, any applicable securities laws of any state or jurisdiction
where such solicitations may be law fully made, the applicable
rules and regulations of any self-regulatory organization or
registered national securities exchange and customary practice
and subject to the terms of the Subscription Agent Agreement
between the Company and the Subscription Agent and the procedures
described in the Company's registration statement on Form N-2
(File Nos. 333-_____ and 811-5557), as amended (the "Registration
Statement").
3. From time to time during the Subscription Period, we may indicate
interest in purchasing Shares from PaineWebber as a Dealer
Manager. We understand that from time to time PaineWebber intends
to offer Shares obtained or to be obtained by PaineWebber through
the exercise of Rights to Selling Group Members who have so
indicated interest at prices which shall be determined by
PaineWebber (the "Offering Price"). We agree that with respect to
any such Shares purchased by us from PaineWebber the sale of such
Shares to us shall be irrevocable and we will offer them to the
public at the Offering Price at which we purchase them from
PaineWebber. Shares not sold by us at such Offering Price may be
offered by us after the next succeeding Offering Price is set at
the latest Offering Price set by PaineWebber. PaineWebber agrees
that, if requested by any Selling Group Member, and subject to
applicable law, PaineWebber will set a new Offering Price prior
to 4:00 p.m., New York time, on any business day. We agree to
advise PaineWebber from time to time upon request, prior to the
termination of this Agreement, of the number of Shares remaining
unsold which were purchased by us from PaineWebber and, on
PaineWebber's request, we will resell to PaineWebber any of such
Shares remaining unsold at the purchase price thereof if in
PaineWebber's opinion such Shares are needed to make delivery
against sales made to other Selling Group Members. Any shares
purchased hereunder from PaineWebber shall be subject to regular
way settlement through the facilities of the Depository Trust
Company.
4. We understand that you will remit to us on or before the tenth
business day following the day the Company issues Shares after
the Expiration Date, following receipt by you from the Company of
the Dealer Manager Fee, a selling fee equal to 2.50% of the
Subscription Price per Share for (A) each Share issued pursuant
to the exercise of Rights or the Over-Subscription Privilege
pursuant to each Subscription Certificate upon which we are
designated, as certified to you by the Subscription Agent, as a
result of our solicitation efforts in accordance with Section 2
and (B) each Share sold by PaineWebber to us in accordance with
Section 3 less any Shares resold to PaineWebber in accordance
with Section 3. Your only obligation with respect to payment of
the foregoing selling fee to us is to remit to us amounts owing
to us and actually received by you from the Company. Except as
aforesaid, you shall be under no liability to make any payments
to us pursuant to this Agreement.
5. We agree that you, as Dealer Managers, have full authority to
take such action as may seem advisable to you in respect of all
matters pertaining to the Offer. You are authorized to approve on
our behalf any amendments or supplements to the Registration
Statement or the Prospectus.
6. We represent that we are a member in good standing of the NASD
and, in making sales of Shares, agree to comply with all
applicable rules of the National Association of Securities
Dealers, Inc. (the "NASD") including, without limitation, the
NASD's Interpretation with Respect to Free-Riding and
Withholding, as set forth in IM 2110-1 of the NASD's Conduct
Rules, and Rule 2740 of the NASD's Conduct Rules. We understand
that no action has been taken by you or the Company to permit the
solicitation of the exercise of Rights or the sale of Shares in
any jurisdiction (other than the United States) where action
would be required for such purpose. We agree that we will not,
without your approval in advance, buy, sell, deal or trade in, on
a when-issued basis or otherwise, the Rights or the Shares or any
other option to acquire or sell Shares for our own account or for
the accounts of customers, except as provided in Sections 2 and 3
hereof and except that we may buy or sell Rights or Shares in
brokerage transactions on unsolicited orders which have not
resulted from activities on our part in connection with the
solicitation of the exercise of Rights and which are executed by
us in the ordinary course of our brokerage business. We will keep
an accurate record of the names and addresses of all persons to
whom we give copies of the Registration Statement, the
Prospectus, any preliminary prospectus (or any amendment or
supplement thereto) or any Offering Materials and, when furnished
with any subsequent amendment to the Registration Statement and
any subsequent prospectus, we will, upon your request, promptly
forward copies thereof to such persons.
7. Nothing contained in this Agreement will constitute the Selling
Group Members partners with the Dealer Managers or with one
another or create any association between those parties, or will
render the Dealer Managers or the Company liable for the
obligations of any Selling Group Member. The Dealer Managers will
be under no liability to make any payment to any Selling Group
Member other than as provided in Section 4 of this Agreement, and
will be subject to no other liabilities to any Selling Group
Member, and no obligations of any sort will be implied. We agree
to indemnify and hold harmless you and each other Selling Group
Member and each person, if any, who controls you and any such
Selling Group Member within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, against
loss or liability caused by any breach by us of the terms of this
Agreement.
8. We agree to pay any transfer taxes which may be assessed and paid
on account of any sales or transfers for our account.
9. All communications to you relating to the Offer will be
addressed to:
PaineWebber Incorporated, Attn: Xxxx Xxxx, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Telephone No.: (212) 713-
4908 and Facsimile No.: (000) 000-0000.
10. This Agreement will be governed by the internal laws of the State
of New York.
A signed copy of this Soliciting Dealer Agreement will be promptly
returned to the Soliciting Dealer at the address set forth below.
Very truly yours,
PaineWebber Incorporated
By: ________________________
Name: __________________
Title: __________________
Xxxxxx Xxxxxxx Incorporated
By: ________________________
Name: __________________
Title: __________________
PLEASE COMPLETE THE INFORMATION BELOW
___________________________________ ____________________________________
Printed Firm Name Address
___________________________________ ____________________________________
Contact at Selling Group Member
___________________________________ ____________________________________
Authorized Signature Area Code and Telephone
Number
___________________________________ ____________________________________
Name and Title Facsimile Number
Dated: ____________________________
Payment of the Selling Fee shall be mailed
by check to the following address:
___________________________________
___________________________________
___________________________________
EXHIBIT B
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
Rights Offering for Shares of Common Stock
SOLICITING DEALER AGREEMENT
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
________ __, 199_, UNLESS EXTENDED
To Securities Dealers and Brokers:
Prospect Street High Income Portfolio Inc. (the "Company") is
issuing to its shareholders of record ("Record Date Shareholders") as of the
close of business on ________ __, 199_ (the "Record Date") transferable rights
("Rights") to subscribe for an aggregate of up to ________ shares (the "Shares")
of common stock, par value $0.01 per share (the "Common Stock"), of the Company
upon the terms and subject to the conditions set forth in the Company's
Prospectus (the "Prospectus") dated ________ __, 199_ (the "Offer"). Each such
Record Date Shareholder is being issued one Right for each full share of Common
Stock owned on the Record Date. Such Rights entitle holders to acquire during
the Subscription Period (as hereinafter defined) at the Subscription Price (as
hereinafter defined), one Share for each three Rights, except that any Record
Date Shareholder who is issued fewer than three Rights will be able to sub
scribe for one full Share, on the terms and conditions set forth in such
Prospectus. No fractional shares will be issued. Any record Date Shareholder who
fully exercises all Rights initially issued to such holder (other than those
Rights that cannot be exercised because they represent the right to acquire less
than one Share) will be entitled to sub scribe for, subject to allocation,
additional Shares (the "Over-Subscription Privilege") on the terms and
conditions set forth in such Prospectus. The Rights are transferable and are
expected to be listed on the New York Stock Exchange. The Subscription Price
will be ___. The Subscription Period will commence on ________ __, 199_ and end
at 5:00 p.m., New York City time on the Expiration Date (the term "Expiration
Date" means ________ __, 199_, unless and until the Company shall, in its sole
discretion, have extended the period for which the Offer is open, in which event
the term "Expiration Date" with respect to the Offer will mean the latest time
and date on which the Offer, as so extended by the Company, will expire.)
For the duration of the Offer, the Company has authorized and the
Dealer Managers have agreed to reallow a Solicitation Fee to any qualified
broker or dealer executing a Soliciting Dealer Agreement who solicits the
exercise of Rights and the Over-Subscription Privilege in connection with the
Offer and who complies with the procedures described below (a "Soliciting
Dealer"). Upon timely delivery to State Street Bank and Trust Company, the
Company's Subscription Agent for the Offer, of payment for Shares purchased
pursuant to the exercise of Rights and the Over-Subscription Privilege and of
properly completed and executed documentation as set forth in this Soliciting
Dealer Agreement, a Soliciting Dealer will be entitled to receive the
Solicitation Fee equal to 0.50% of the Subscription Price per Share so
purchased; provided, however, that no payment shall be due with respect to the
issuance of any Shares until payment therefor is actually received. A qualified
broker or dealer is a broker or dealer which is a member of a registered
national securities exchange in the United States or the National Association of
Securities Dealers, Inc. ("NASD") or any foreign broker or dealer not eligible
for membership who agrees to conform to the Rules of Fair Practice of the NASD,
including Sections 2730, 2740, 2420 and 2750 thereof, in making solicitations in
the United States to the same extent as if it were a member thereof.
The Company has authorized and the Dealer Managers have agreed to
pay the Solicitation Fees payable to the undersigned Soliciting Dealer and to
indemnify such Soliciting Dealer on the terms set forth in the Dealer Manager
Agreement, dated ________ __, 199_, among PaineWebber Incorporated
("PaineWebber") on their own behalf and on behalf of Xxxxxx Xxxxxxx Incorporated
(Xxxxxx") as the dealer managers (PaineWebber and Xxxxxx collectively referred
to herein as the "Dealer Managers"), the Company and others (the "Dealer Manager
Agreement"). Solicitation and other activities by Soliciting Dealers may be
undertaken only in accordance with the applicable rules and regulations of the
Securities and Exchange Commission and only in those states and other
jurisdictions where such solicitations and other activities may lawfully be
undertaken and in accordance with the laws thereof. Compensation will not be
paid for solicitations in any state or other jurisdiction in which the opinion
of counsel to the Company or counsel to the Dealer Manager, such compensation
may not lawfully be paid. No Soliciting Dealer shall be paid Solicitation Fees
with respect to Shares purchased pursuant to an exercise of Rights and the
Over-Subscription Privilege for its own account or for the account of any
affiliate of the Soliciting Dealer. No Soliciting Dealer or any other person is
authorized by the Company or the Dealer Managers to give any information or make
any representations in connection with the Offer other than those contained in
the Prospectus and other authorized solicitation material furnished by the
Company through the Dealer Manager. No Soliciting Dealer is authorized to act as
agent of the Company or the Dealer Managers in any connection or trans action.
In addition, nothing herein contained shall constitute the Soliciting Dealers
partners with the Dealer Managers or with one another, or agents of the Dealer
Managers or of the Company, or create any association between such parties, or
shall render the Dealer Managers or the Company liable for the obligations of
any Soliciting Dealer. The Dealer Managers shall be under no liability to make
any payment to any Soliciting Dealer, and shall be subject to no other
liabilities to any Soliciting Dealer, and no obligations of any sort shall be
implied.
In order for a Soliciting Dealer to receive Solicitation Fees,
the Subscription Agent must have received from such Soliciting Dealer no later
than 5:00 p.m., New York City time, on the Expiration Date, either (i) a
properly completed and duly executed Subscription Certificate with respect to
Shares purchased pursuant to the exercise of Rights and the Over-Subscription
Privilege and full payment for such Shares; or (ii) a Notice of Guaranteed
Delivery guaranteeing delivery to the Subscription Agent by close of business on
the third business day after the Expiration Date, of (a) full payment for such
Shares and (b) a properly completed and duly executed Subscription Certificate
with respect to Shares purchased pursuant to the exercise of Rights.
Solicitation Fees will only be paid after receipt by the Subscription Agent of a
properly completed and duly executed Soliciting Dealer Agreement and a
Subscription Certificate designating the Soliciting Dealer in the applicable
portion hereof. In the case of a Notice of Guaranteed Delivery, Solicitation
Fees will only be paid after delivery in accordance with such Notice of
Guaranteed Delivery has been effected. Solicitation Fees will be paid by the
Company (through the Subscription Agent) to the Soliciting Dealer by check to an
address designated by the Soliciting Dealer below by the tenth business day
following the day the Company issues Shares after the Expiration Date.
All questions as to the form, validity and eligibility (including
time of receipt) of this Soliciting Dealer Agreement will be determined by the
Company, in its sole discretion, which determination shall be final and binding.
Unless waived, any irregularities in connection with a Soliciting Dealer
Agreement or delivery thereof must be cured within such time as the Company
shall determine. None of the Company, the Dealer Manager, the Subscription
Agent, the Information Agent for the Offer, Corporate Investor Communications,
Inc., or any other person will be under any duty to give notification of any
defects or irregularities in any Soliciting Dealer Agreement or incur any
liability for failure to give such notification.
The acceptance of Solicitation Fees from the Company by the under
signed Soliciting Dealer shall constitute a representation by such Soliciting
Dealer to the Company that: (i) it has received and reviewed the Prospectus;
(ii) in soliciting purchases of Shares pursuant to the exercise of the Rights
and the Over-Subscription Privilege, it has complied with the applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the applicable rules and regulations thereunder, any applicable
securities laws of any state or jurisdiction where such solicitations were made,
and the applicable rules and regulations of any self-regulatory organization or
registered national securities exchange; (iii) in soliciting purchases of Shares
pursuant to the exercise of the Rights and the Over-Subscription Privilege, it
has not published, circulated or used any soliciting materials other than the
Prospectus and any other authorized solicitation material furnished by the
Company through the Dealer Manager; (iv) it has not purported to act as agent of
the Company or the Dealer Managers in any connection or transaction relating to
the Offer; (v) the information contained in this Soliciting Dealer Agreement is,
to its best knowledge, true and complete; (vi) it is not affiliated with the
Company; (vii) it will not accept Solicitation Fees paid by the Company pursuant
to the terms hereof with respect to Shares purchased by the Soliciting Dealer
pursuant to an exercise of Rights and the Over-Subscription Privilege for its
own account; (viii) it will not remit, directly or indirectly, any part of
Solicitation Fees paid by the Company pursuant to the terms hereof to any
beneficial owner of Shares purchased pursuant to the Offer; and (ix) it has
agreed to the amount of the Solicitation Fees and the terms and conditions set
forth herein with respect to receiving such Solicitation Fees. By returning a
Soliciting Dealer Agreement and accepting Solicitation Fees, a Soliciting Dealer
will be deemed to have agreed to indemnify the Company and the Dealer Managers
against losses, claims, damages and liabilities to which the Company may become
subject as a result of the breach of such Soliciting Dealer's representations
made herein and described above. In making the foregoing representations,
Soliciting Dealers are reminded of the possible applicability of the
anti-manipulation rules under the Exchange Act if they have bought, sold, dealt
in or traded in any Shares for their own account since the commencement of the
Offer.
Upon expiration of the Offer, no Solicitation Fees will be
payable to Soliciting Dealers with respect to Xxxxxx purchased thereafter.
Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Dealer Manager Agreement or, if not defined
therein, in the Prospectus.
This Soliciting Dealer Agreement will be governed by the laws of
the State of New York.
Please execute this Soliciting Dealer Agreement below accepting
the terms and conditions hereof and confirming that you are a member firm of the
NASD or a foreign broker or dealer not eligible for membership who has conformed
to the Rules of Fair Practice of the NASD, including Sections 2730, 2740, 2420
and 2750 thereof, in making solicitations of the type being undertaken pursuant
to the Offer in the United States to the same extent as if you were a member
thereof, and certifying that you have solicited the purchase of the Shares
pursuant to exercise of the Rights, all as described above, in accordance with
the terms and conditions set forth in this Soliciting Dealer Agreement. Please
forward two executed copies of this Soliciting Dealer Agreement to PaineWebber
Incorporated, Attn: Xxxx Xxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000; Telephone No.: (000) 000-0000 and Facsimile No.: (000) 000-0000.
A signed copy of this Soliciting Dealer Agreement will be promptly
returned to the Soliciting Dealer at the address set forth below.
Very truly yours,
PaineWebber Incorporated
By: ________________________
Name: __________________
Title: __________________
Xxxxxx Xxxxxxx Incorporated
By: ________________________
Name: __________________
Title: __________________
PLEASE COMPLETE THE INFORMATION BELOW
______________________________________ ____________________________________
Printed Firm Name Address
________________________________________________________________________________
Contact at Soliciting Dealer
______________________________________ ____________________________________
Authorized Signature Area Code and Telephone
Number
______________________________________ ____________________________________
Name and Title Facsimile Number
Dated: _______________________________
Payment of the Solicitation Fee shall be
mailed by check to the following address:
______________________________________
______________________________________
______________________________________
