EXHIBIT (K)(5)(B)
AMENDMENT NO. 1
to
INSURANCE AGREEMENT
between
FINANCIAL SECURITY ASSURANCE INC.
and
PROSPECT STREET HIGH INCOME PORTFOLIO INC.
AMENDMENT NO. 1 dated as of March 14, 1990, to the Insurance
Agreement dated as of December 1, 1988 (the "Insurance Agreement"),
between FINANCIAL SECURITY ASSURANCE INC., a New York stock insurance
company ("Financial Security"), and PROSPECT STREET HIGH INCOME
PORTFOLIO INC., a Maryland corporation (the "Fund").
WITNESSETH:
WHEREAS, the fund has issued 300 shares of its Preferred Stock, with an
aggregate Liquidation Preference of $30,000,000;
WHEREAS, Financial Security, at the request of the Fund, has issued its
Surety Bond No. 50074-N guarantying, upon the terms provided therein, payment of
dividends on, and redemption or liquidation preference amounts in respect of,
the Preferred Stock; and
WHEREAS, the Fund and Financial Security desire to amend the Insurance
Agreement to provide for a redemption or repurchase of the Preferred Stock by
the Fund in the event of a failed auction upon the terms specified herein;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, Financial Security and the Fund hereby agree as follows:
1. Amendment to Appendix I to the Insurance Agreement. Appendix
I to the Insurance Agreement is amended by the addition of the following
immediately following the first sentence thereof:
"Applicable Rate:, "Auction Date", "Dividend Payment date", "Dividend
Period", "Maximum Applicable Rate' and "Sufficient Clearing Bids" shall
have the meanings provided in the Certificate.
2. Amendment to Section 2.04 of the Insurance Agreement.
Section 2.04 of the Insurance Agreement is hereby amended by the addition
of the following paragraph immediately following Section 2.04 (1):
(j) The Fund agrees for the benefit of the Holders to call for
redemption or to repurchase all outstanding shares of the Preferred
Stock in the event that the Applicable Rate for the Dividend Period
next succeeding the Auction Date in September 1993 is determined to be
the Maximum Applicable Rate due to a lack of Sufficient Clearing Bids,
with such redemption or repurchase to be completed no later than the
second Dividend Payment Date succeeding such Auction Date. Upon the
completion of such redemption or repurchase, the Fund agrees to
surrender, or cause to be surrendered, the Surety Bond to Financial
Security for cancellation.
3. Amendment to Section 5.01 of the Insurance Agreement.
Section 5.01 of the Insurance Agreement is hereby amended by deleting
paragraph (a) thereof and inserting, in lieu thereof, the following:
(a) the Fund shall fail to pay to Financial Security when due
any amount payable by the Fund hereunder or under any other Fund
Document or shall fail to effect a redemption or repurchase of all
outstanding shares of the Preferred Stock in the time period required
by Section 2.04(j) hereof.
4. Redemption Request. If an Event of default has occurred as a result
of failure by the Fund to perform its obligations under Section f2.04(j) of the
Insurance Agreement, Financial Security intends to submit a Redemption Request
pursuant to section 5.02(b) of the Insurance Agreement requesting the Fund to
redeem all outstanding shares of Preferred stock, designating a date for such
redemption no later than the second Dividend Payment Date following the date of
delivery of such Redemption Request to the Fund.
5. Miscellaneous. Unless the context otherwise requires,
capitalized terms used herein shall have the meanings provided in the
Insurance Agreement. Except as expressly amended hereby, the Insurance
Agreement shall remain in full force and effect, and all references in the
Insurance Agreement to "this Agreement" or to "the Insurance Agreement"
shall mean the Insurance Agreement as amended by this Amendment No. 1.
This amendment No. 1 may be executed in counterparts by the parties
hereto, and each such counterpart shall be deemed an original and all such
counterparts shall constitute one and the same instrument. This Amendment
No. 1 shall be governed by and construed in accordance with the laws of
the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
AMENDMENT NO. 1, all as of the day and year first above written.
FINANCIAL SECURITY ASSURANCE INC.
By /S/ Illegible
-----------------------------
Managing Director
PROSPECT STREET HIGH INCOME
PORTFOLIO, INC.
By /S/ Xxxx X. Xxxxxxxx
-----------------------------
Title: Vice President
