Exhibit (d)(8)
STATE STREET BANK AND TRUST COMPANY
SUBSCRIPTION, DISTRIBUTION AND ESCROW AGENCY AGREEMENT
This Subscription, Distribution and Escrow Agency Agreement (the "Agreement") is
made as of December ___, 1997 between Prospect Street High Income Portfolio Inc.
(the "Fund"), a Maryland Corporation, and State Street Bank and Trust Company, a
Massachusetts Trust Company, as subscription, distribution and escrow agent (the
"Agent").
WHEREAS, the Fund proposes to make a subscription offer by issuing certificates
or other evidences of subscription rights, in the form designated by the Fund
("Subscription Certificates") to shareholders of record ("Record Date
Shareholders") of its Common Stock as of a record date specified by the Fund
(the "Record Date"), pursuant to which each Record Date Shareholder will have
certain transferable rights (the "Rights") to subscribe for shares of the Fund's
Common Stock, par value $.01 (the "Common Stock"), as described in and upon such
terms as are set forth in the prospectus (the "Prospectus") included in the Form
N-2 Registration Statement filed by the Fund with the Securities and Exchange
Commission on November 21, 1997, as amended by any amendment filed with respect
thereto (the "Registration Statement"); and
WHEREAS, the Fund wishes the Agent to perform certain acts on behalf of the Fund
and the Agent is willing to so act, in connection with the distribution of the
Subscription Certificates and the issuance and exercise or transfer of the
Rights, all upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual agreements
set forth herein, the parties agree as follows:
1. Pursuant to the resolutions of its Board of Directors, the Fund hereby
appoints and authorizes the Agent to act on its behalf in accordance
with the provisions hereof, and the Agent hereby accepts such
appointment and agrees to so act.
2. (a) Each Subscription Certificate shall evidence the Rights of the
Record Date Shareholder therein named to purchase Common Stock
upon the terms and conditions therein and herein set forth.
(b) Upon the written advice of the Fund signed by its Senior Vice
President, Treasurer, Secretary or Assistant Secretary, as to the
Record Date, the Agent shall, from a list of Record Date
Shareholders prepare Subscription Certificates in the names of the
Record Date Shareholders, setting forth the number of Rights to
subscribe for shares of Common Stock, calculated on the basis of
one right for each share recorded on the Fund's books in the name
of each such Record Date Shareholder as of the Record Date. Each
Subscription Certificate shall be dated as of the Record Date.
Upon the written advice, signed as aforesaid, as to the effective
date of the Registration Statement, the Agent shall as promptly as
practicable deliver the Subscription Certificates, together with a
copy of the Prospectus, to all Record Date Shareholders.
3. (a) Each Subscription Certificate shall be irrevocable and fully
transferable. The Agent shall maintain a register of Subscription
Certificates and the holders of record thereof (each of whom shall
be deemed a "Holder" hereunder for purposes of determining the
rights of holders of Subscription Certificates). Each Subscription
Certificate shall, subject to the provisions thereof, entitle the
Holder in whose name it is recorded to the following:
(1) The right (the "Basic Subscription Right") to purchase a
number of shares of Common Stock equal to one share of Common
Stock for every three Rights held: provided, however, that
Record Date Shareholders issued fewer than three Rights are
entitled to purchase one share of Common Stock; and provided
further, that no fractional shares of Common Stock shall be
issued; and
(2) With respect to Record Date Shareholders, the right (the
"Oversubscription Right") to purchase from the Fund additional
shares of Common Stock, subject to the availability of such
shares and to allotment of such shares as may be available
among Record Date Shareholders who exercise Oversubscription
Rights on the basis specified in the Prospectus; provided,
however, that a Record Date Shareholder who has not exercised
his Basic Subscription Rights with respect to the full number
of shares that such Record Date Shareholder is entitled to
purchase by virtue of his Basic Subscription Rights as of the
Expiration Date, if any, shall not be entitled to any
Oversubscription Rights.
(b) A Holder may exercise his Basic Subscription Rights and, a Record
Date Shareholder may exercise his Oversubscription Rights by
delivery to the Agent at its corporate office specified in the
Prospectus of (i) the Subscription Certificate with respect
thereto, duly executed by such Holder in accordance with and as
provided by the terms and conditions of the Subscription
Certificate, together with (ii) the purchase price of each share
of Common Stock subscribed for by exercise of such Rights as set
forth in the Prospectus (the "Subscription Price"), in United
States dollars in cash, by check, or bank draft drawn on a bank in
the continental United States or by postal, telegraphic, or
express money order, in each case payable to the order of the
Fund.
(c) Rights may be exercised at any time after the date of issuance of
the Subscription Certificates with respect thereto but no later
than 5:00 P.M. New York City Time on the expiration date (the
"Expiration Date") as specified in the Prospectus. For the purpose
of determining the time of the exercise of any Rights, delivery of
any material to the Agent shall be deemed to occur when such
materials are received at the corporate office of the Agent
specified in the Prospectus.
(d) Notwithstanding the provisions of Section 3(b) and 3(c) regarding
delivery of an executed Subscription Certificate to the Agent
prior to 5:00 P.M. New York City Time on the Expiration Date, if
prior to such time the Agent receives notice of guaranteed
delivery by telegram or otherwise from a bank, trust company or a
New York Stock Exchange member guaranteeing delivery of (i) full
payment for shares purchased and subscribed for by virtue of a
Holder's Rights, and (ii) a properly completed and executed
Subscription Certificate, then such exercise of Basic Subscription
Rights and Oversubscription Rights shall be regarded as timely,
subject, however, to receipt of the duly executed Subscription
Certificate and full payment for the Common Stock by the Agent
within three business days after the Expiration Date.
(e) Within eight business days following the Expiration Date (the
"Confirmation Date"), the Agent shall send a confirmation to each
Holder (or, if shares of Common Stock on the Record Date are held
by Cede & Co. or any other depository or nominee, to Cede & Co. or
such other depository or nominee), showing (i) the number of
shares acquired pursuant to the Basic Subscription Rights, (ii)
the number of shares, if any, acquired pursuant to the
Oversubscription Rights, (iii) the per share and total purchase
price for the shares, (iv) any amount payable to the Record Date
Shareholder pursuant to Section 9, and (v) any excess to be
refunded by the Fund to such Record Date Shareholder, in each case
based on the Subscription Price. Any excess payment to be refunded
by the Fund to a Record Date Shareholder, shall be mailed by the
Agent to the Record Date Shareholder as promptly as possible after
the Expiration Date, as provided in Section 7 below.
4. If, after allocation of shares of Common Stock to persons exercising
Basic Subscription Rights, there remain unexercised Rights, then the
Agent shall allot the shares issuable upon exercise of such
unexercised Rights (the "Excess Shares") to Record Date Shareholders
exercising Oversubscription Rights, in the amounts of such
oversubscriptions. If there are insufficient shares of Common Stock to
fill such oversubscriptions, the Excess Shares will be allocated pro
rata among Record Date Shareholders being prorated, based on the
number of shares of Common Stock such Record Date Shareholders
subscribed for in the Primary Subscription relative to the aggregate
number of shares of Common Stock subscribed for in the Primary
Subscription by all such Record Date Shareholders then being prorated.
The Agent shall advise the Fund immediately upon the completion of the
allocation set forth above as to the total number of shares subscribed
and distributable.
5. The Rights are transferable until the Expiration Date, and the Rights
and the shares of Common Stock will be listed for trading on the New
York Stock Exchange. Reference is made to the Prospectus for a
complete description of the sale of the Rights.
6. (a) The Agent, will deliver (i) certificates representing those shares
purchased pursuant to exercise of Basic Subscription Rights as soon as
practicable after the corresponding Rights have been validly exercised
and full payment for such shares has been received and cleared; (ii)
certificates representing those shares purchased pursuant to the
exercise of Oversubscription Rights as soon as practicable after the
Expiration Date and after all allocations have been effected; (iii) in
the case of each Record Date Shareholder who subscribed, pursuant to
the exercise of Oversubscription Rights, for a greater number of
shares than was allotted to such Record Date Shareholder under Section
4, as soon as possible after the Expiration Date, a refund (and
interest on such) in the amount of the difference between the purchase
price delivered for the shares subscribed for pursuant to the exercise
of such Oversubscription Rights and the purchase price of the shares
so allotted under Section 4 (an "Excess Payment"); (iv) in the case of
Record Date Shareholders who are participants in the dividend
reinvestment and cash purchase plan, as soon as possible after the
Expiration Date, account statements reflecting a credit of
uncertificated shares pursuant to their exercise of Basic Subscription
Rights and Oversubscription Rights unless such Record Date
Shareholders have elected to receive certificates.
7. (a) All proceeds received by the Agent from Holders in respect of the
exercise of rights shall be held by the Agent, on behalf of the
Fund in a segregated, interest-bearing escrow account (the "Escrow
Account") (the interest of which shall be paid to the Fund)
pending disbursement in the manner described in Section 7(b)
below.
(b) The Agent shall deliver all proceeds received in respect of the
exercise of the Rights (including interest earned thereon) to the
Fund as promptly as practicable, after the Confirmation Date.
Proceeds held in respect of Excess Payments shall be refunded to
Record Date Shareholders entitled to such a refund as promptly as
possible after the Expiration Date.
8. The Agent shall promptly advise the Fund as to the date of delivery of
Common Stock hereunder and shall supply the Fund with a certified list
of Record Date Shareholders.
9. The Agent shall account promptly to the Fund with respect to Rights
exercised and concurrently account for all monies received and returned
by the Agent with respect to the purchase of shares of Common Stock
upon the exercise of Rights.
10. In the event the Agent does not receive, within three business days
after the Expiration Date, any amount due from a Holder, as specified
in Section 3(e), then it shall take such action with respect to such
Holder's Basic Subscription Rights or Oversubscription Rights as may
be instructed in writing by the Fund, including without limitation (i)
applying any payment actually received by it toward the purchase of
the greatest whole number of shares of Common Stock which could be
acquired with such payment and, (ii) allocating the shares subject to
such Basic Subscription Rights or Oversubscription Rights to one or
more other Record Date Shareholders.
11. No Subscription Certificate shall entitle a Holder to vote or receive
dividends or be deemed the holder of shares of Common Stock for any
purpose, nor shall anything contained in any Subscription Certificate
be construed to confer upon any Holder any of the rights of a
shareholder of the Fund or any right to vote, give or withhold consent
to any action by the Fund (whether upon any recapitalization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings of other action affecting
shareholders, or receive dividends or otherwise, until the Rights
evidenced thereby shall have been exercised and the shares of Common
Stock purchasable upon the exercise thereof shall have become
deliverable as provided in this Agreement and in the Prospectus.
12. If any Subscription Certificate is lost, stolen, mutilated, or
destroyed the Agent may, on such terms which will indemnify the Fund
as the Agent may in its discretion impose (which shall, in the case of
a Subscription Certificate include the surrender thereof), issue a new
Subscription Certificate of like denomination in substitution for the
Subscription Certificate so lost, stolen or mutilated or destroyed.
13. (a) The Fund covenants that all shares of Common Stock issued on
exercise of Rights set forth in the Subscription Certificates will
be validly issued, fully paid, nonassessable and free of
preemptive rights.
(b) The Fund shall furnish to the Agent written notice to the effect
that a registration statement under the Securities Act of 1933, as
amended (the "Act"), is then in effect with respect to its shares
of Common Stock issuable upon exercise of the Rights set forth in
the Subscription Certificates. Upon written advice to the Agent
that the Securities and Exchange Commission shall have issued or
threatened to have issued any order preventing or suspending the
use of the Prospectus, or if for any reason it shall be necessary
to amend or supplement the Prospectus in order to comply with the
Act, the Agent shall cease acting hereunder until receipt of
written instructions from the Fund and such assurances as it may
reasonably request that it may comply with such instruction
without violations of the Act.
14. Any corporation into which the Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from
any merger, conversion or consolidation to which the Agent shall be a
party, or any corporation succeeding to the corporate trust business
of the Agent, shall be the successor to the Agent hereunder without
the execution or filing of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor
Agent. In case at the time such successor to the Agent shall succeed
to the agency created by this Agreement, any of the Subscription
Certificates shall have been countersigned but not delivered, any such
successor to the Agent may adopt the countersignature of the original
Agent and deliver such Subscription Certificates so countersigned, and
in case at that time the Subscription Certificates shall not have been
countersigned, any successor to the Agent may countersign such
Subscription Certificates either in the name of the predecessor Agent
or in the name of the successor Agent, and in all such cases such
Subscription Certificates shall have the full force provided in the
Subscription Certificates and in this Agreement.
15. The Fund agrees to pay to the Agent such reasonable compensation for
all services rendered by it hereunder as set forth in Schedule A
hereto.
16. The Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions:
(a) Whenever in the performance of its duties under this Agreement the
Agent shall deem it necessary or desirable that any fact or matter
be proved or established, prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect
thereof is herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the
Chairman of the Board or President or a Vice President or the
Secretary or Assistant Secretary or the Treasurer of the Fund
delivered to the Agent, and such certificate shall be full
authorization to the Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(b) The Agent shall not be responsible for and the Fund shall
indemnify and hold the Agent harmless from and against, any and
all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to all
actions of the Agent or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such actions
are taken in good faith and without negligence or willful
misconduct. The Fund shall not be liable for indemnification under
this Section 14 unless the Agent shall have notified the Fund in
writing of the commencement of any litigation or proceeding in
respect of which indemnity may be sought under this Section 14.
With respect to claims in such litigation or proceedings for which
indemnity may be sought, the Fund shall be entitled to participate
in any such litigation or proceeding and the Fund shall be
entitled to assume the defense of such litigation or proceeding
with counsel of its own expense in respect of that portion of the
litigation for which the Fund may be subject to an indemnification
obligation. If the Fund is not permitted to participate or control
such litigation or proceeding under applicable law or by a ruling
of a court of competent jurisdiction or otherwise, the Agent shall
reasonably prosecute such litigation or proceeding. In no event
shall the Agent consent to the entry of any judgment or enter into
any settlement in any such litigation or proceeding (including any
threatened litigation or proceeding) without providing the Fund
with adequate notice of any such settlement or judgment, and
without the Fund's prior written consent. The Agent shall submit
written evidence to the Fund with respect to any cost or expense
for which the Agent is seeking indemnification in any such form
and detail as the Fund may reasonably request.
(c) The Agent shall be liable hereunder only for its own negligence or
willful misconduct.
(d) Nothing herein shall preclude the Agent from acting in any other
capacity for the Fund or for any other legal entity.
(e) The Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from any
officer or assistant officer of the Fund and to apply to any such
officer of the Fund for advice or instructions in connection with
its duties, and subject to the other requirements set forth above,
shall be indemnified and not be liable for any action taken or
suffered by it in good faith, without negligence or willful
misconduct, in accordance with instructions of any officer or
assistant officer.
(f) The Agent shall be indemnified and shall incur no liability for or
in respect of any action taken, suffered, or omitted by it in
reasonable reliance upon any Subscription Certificate or
certificate for Common Stock, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper
or document that it reasonably believes to be genuine and to be
signed, executed and, where necessary, verified or acknowledged,
by the proper person or persons.
(g) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or
for any consequential damages arising out of any reasonable act or
failure to act hereunder.
17. The Agent may, without the consent or concurrence of the Holders in
whose names Subscription Certificates are registered, by supplemental
agreement or otherwise, concur with the Fund in making any changes or
corrections in a Subscription Certificate that it shall have been
advised by counsel (who may be counsel for the Fund) is appropriate to
cure any ambiguity or to correct any defective or inconsistent
provision or clerical omission or mistake or manifest error therein or
herein contained, and which shall not be inconsistent with the
provisions of the Subscription Certificate except insofar as any such
change may confer additional rights upon the Holders.
18. a. Except as provided in subsection (c) below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
b. This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
c. The Agent may, without further consent on the part of the Fund
subcontract for the performance hereof with (i) Boston Equiserve
Limited Partnership, a Delaware Limited Partnership, which is duly
registered as a transfer agent pursuant to Section 17(c)(2) of the
Securities Exchange Act of 1934, or (ii) the current third party
vendor utilized by Boston EquiServe; provided, however, that the
Agent shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and
omissions.
19. All the covenants and provisions of this Agreement by or for the
benefit of the Fund or the Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
20. The validity, interpretation and performance of this Agreement shall
be governed by the laws of the State of New York without regard to the
principles of conflicts of law.
STATE STREET BANK AND TRUST PROSPECT STREET HIGH INCOME
COMPANY PORTFOLIO INC.
By: By:
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Vice President (Officer)
