Exhibit (k)
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
PROSPECT STREET(R) FUNDS
AND
AMERICAN STOCK TRANSFER AND TRUST COMPANY
TABLE OF CONTENTS
PAGE
1. Terms of Appointment and Duties............................................1
2. Fees and Expenses..........................................................2
3. Representations and Warranties of the Transfer Agent.......................2
4. Representations and Warranties of the Fund.................................3
5. Indemnification............................................................3
6. Confidentiality............................................................4
7. Covenants of the Transfer Agent............................................5
8. Termination of Agreement...................................................6
9. Assignment and Third Party Beneficiaries...................................6
10. Miscellaneous.............................................................7
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of November 2002 by and between each investment
company listed on Schedule A, each being a Maryland Corporation (each, the
"Fund"), and AMERICAN STOCK TRANSFER AND TRUST COMPANY (the "Transfer Agent").
WHEREAS, the Fund desires to appoint the Transfer Agent as its transfer agent
and registrar, agree as follows:
1. TERMS OF APPOINTMENT AND DUTIES.
1.1 TRANSFER AGENCY SERVICES. Subject to the terms and conditions set forth in
this Agreement, the Fund hereby employs and appoints the Transfer Agent to
act as, and the Transfer Agent agrees to act as, its transfer agent and
registrar for the Fund's authorized and issued shares of its common stock
("Shares"), administrator for the Fund's dividend reinvestment plan and
dividend disbursing agent to the shareholders of record of the Fund
("Shareholders"). In accordance with procedures established from time to
time by agreement between the Fund and the Transfer Agent, the Transfer
Agent agrees that it will perform the following services:
(a) issue and record the appropriate number of Shares as authorized
and hold such Shares in the appropriate Shareholder account and advise the
Fund and Shareholders of the foregoing;
(b) effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions and documentation;
(c) act as agent for Shareholders pursuant to dividend reinvestment
plans and any other investment programs as in effect from time to time;
(d) issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed, or mutilated stock certificates, upon
receipt of any appropriate indemnity as agreed between the Transfer Agent
and the Fund;
(e) prepare and transmit payments for dividends and distributions
declared by the Fund;
(f) issue replacement checks and place stop orders on original checks
based on a Shareholder's representation that a check was not received or
was lost, destroyed or stolen or is otherwise beyond the Shareholder's
control, through no fault of the Shareholder, and cannot be produced by the
Shareholder for presentation and collection, with the Fund responsible for
all losses or claims resulting from such replacement; and
(g) record the issuance of Shares and maintain, pursuant to Rule
17Ad-10(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), a record of the total number of Shares of the Fund which
are authorized (based upon data provided to it by the Fund), issued and
outstanding and provide the Fund on a regular basis with the total number
of Shares which are authorized, issued and outstanding.
1.2 ADDITIONAL SERVICES. In addition to, and neither in lieu nor in
contravention of, the services set forth in the above paragraph, the
Transfer Agent shall perform the following services:
(a) OTHER CUSTOMARY SERVICES. Perform the customary services of a
transfer agent and registrar, administrator for the Fund's dividend
reinvestment plan and dividend disbursing agent, including but not limited
to: preparing Shareholder meeting lists, mailing Shareholder proxy
materials and beneficial owner "search cards" to record owners, withholding
taxes as required by applicable law and making the necessary return and
payment of such taxes in connection therewith, preparing (in consultation
with the Fund) and filing U.S. Treasury Department Forms 1099 and other
appropriate forms for all Shareholders as required by federal or state
authorities with respect to dividends and distributions and distributing
any appropriate tax forms to Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders for all
confirmable transactions in Shareholder accounts and providing Shareholder
account information, in each case in compliance with applicable law.
(b) UNCLAIMED PROPERTY AND LOST SHAREHOLDERS. The Transfer Agent shall
report unclaimed property to each state in compliance with state law and
shall comply with Section 17Ad-17 of the Exchange Act for lost
Shareholders.
(c) CERTIFICATES. The Transfer Agent shall ensure that certificates
for Shares are issued in accordance with the terms thereof.
(d) COMPLIANCE WITH OFFICE OF FOREIGN ASSET CONTROL ("OFAC")
REGULATION. Ensure compliance with any OFAC laws, regulations, guidance
documents, and blocking and notification requirements applicable to the
Fund or the Transfer Agent by adopting appropriate compliance policies,
procedures and internal controls and, in respect of the Fund, with any
procedures as may be provided by the Fund or agreed between the parties.
(e) MONEY LAUNDERING. Comply with any applicable money laundering and
currency transaction reporting laws, regulations and government guidance
applicable to the Fund or the Transfer Agent, including suspicious activity
reporting and recordkeeping requirements, and, in respect of the Fund, with
any "money laundering" guidelines as may be provided by the Fund or agreed
between the parties.
(f) PROPOSED SECURITIES AND TAX LAWS. Monitor proposed securities and
tax laws and regulations which may affect the Transfer Agent's products
and/or services provided hereunder and take reasonable steps to update its
products and/or services to accommodate new securities and tax laws and
regulations applicable to the Transfer Agent in the time and manner
required by such laws and regulations.
2. FEES AND EXPENSES. For the performance by the Transfer Agent pursuant to
this Agreement, the Fund agrees to pay the Transfer Agent and to reimburse the
Transfer Agent for out-of-pocket expenses as set forth in the attached Schedule
B.
3. REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT. The Transfer Agent
represents and warrants to the Fund that:
3.1 It is registered as a transfer agent under the Exchange Act.
3.2 It is a trust company duly organized and existing and in good standing
under the laws of New York and is duly qualified to carry on its business
in New York.
3.3 It is empowered under applicable laws and by its organizational documents
to enter into and perform this Agreement.
3.4 All requisite proceedings required by such organizational documents have
been taken to authorize it to enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND. The Fund represents and
warrants to the Transfer Agent that:
4.1 It is a corporation duly organized and existing and in good standing under
the laws of the State of Maryland.
4.2 It is empowered under applicable laws and by its articles of incorporation
and by-laws to enter into and perform this Agreement.
4.3 All requisite corporate proceedings required by such articles of
incorporation and by-laws have been taken to authorize it to enter into and
perform this Agreement.
4.4 It is a closed-end management investment company registered under the
Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as amended, is
currently effective and will remain effective with respect to all Shares of
the Fund being offered for sale.
5. INDEMNIFICATION.
5.1 The Transfer Agent shall not be responsible for, and the Fund shall
indemnify and hold the Transfer Agent harmless from and against, any and
all losses, damages, costs, charges, counsel fees, payments, expenses and
liability ("Losses") arising out of or attributable to:
(a) all actions of the Transfer 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;
(b) the Fund's lack of good faith, negligence or willful misconduct in
the performance of this Agreement or the breach of any representation,
warranty or covenant of the Fund hereunder;
(c) the reasonable reliance by the Transfer Agent or its agents or
subcontractors on: (i) any information, records, documents, data or stock
certificates which are received by the Transfer Agent or its agents or
subcontractors by machine readable input, facsimile, CRT data entry,
electronic instructions or other similar means authorized by the Fund and
which have been prepared, maintained or performed by the Fund or any other
person or firm on behalf of the Fund including but not limited to any
broker-dealer or previous transfer agent; (ii) any instructions or requests
of the Fund or any of its officers; or (iii) any paper or document,
including certificates for Shares, reasonably believed to be genuine,
authentic, or signed by the proper person or persons unless, in each case,
such Losses are due to the negligence of the Transfer Agent arising out of
its failure to perform in accordance with procedures established with the
Fund;
(d) the offer or sale of Shares in violation of federal or state
securities laws requiring that such Shares be registered or in violation of
any stop order or other determination or ruling by any federal or any state
agency with respect to the offer or sale of such Shares; and
(e) the negotiation and processing of any checks including without
limitation for deposit into the Fund's demand deposit account maintained by
the Transfer Agent, unless such Losses are due to the negligence of the
Transfer Agent arising out of its failure to perform in accordance with
procedures established with the Fund.
5.2 The Fund shall not be responsible for, and the Transfer Agent shall
indemnify and hold the Fund harmless from and against, any and all Losses
arising out of or attributable to the Transfer Agent's lack of good faith,
negligence or willful misconduct in the performance of this Agreement or
the breach of any representation, warranty or covenant of the Transfer
Agent hereunder.
5.3 In order that the indemnification provisions contained in this SECTION 5
shall apply, upon the assertion of a claim for which a party (the
"Indemnifying Party") may be required to indemnify the other party (the
"Indemnified Party"), the Indemnified Party shall promptly notify the
Indemnifying Party of such assertion and shall keep the Indemnifying Party
advised with respect to all developments concerning such claim. The
Indemnifying Party shall have the option to participate with the
Indemnified Party in the defense of such claim or to defend against said
claim in its own name or in the name of the Indemnified Party. The
Indemnified Party shall in no case confess any claim or make any compromise
in any case in which the Indemnifying Party may be required to indemnify
the Indemnified Party except with the Indemnifying Party's prior written
consent.
5.4 No party shall be liable for any incidental, indirect, special or
consequential damages of any nature whatsoever, including, but not limited
to, lost or anticipated profits, occasioned by a breach of any provision of
this Agreement even if apprised of the possibility of such damages.
6. CONFIDENTIALITY.
6.1 The Fund and the Transfer Agent agree that they will not, at any time
during the term of this Agreement or after its termination, reveal,
divulge, or make known to any person, firm, corporation or other business
organization any customers' lists, trade secrets, cost figures and
projections, profit figures and projections, or any other secret or
confidential information whatsoever, including Nonpublic Personal
Information as defined below ("Confidential Information"), whether of the
Transfer Agent or of the Fund, used or gained by the Transfer Agent or the
Fund during performance under this Agreement. The Fund and the Transfer
Agent further covenant and agree to retain all such Confidential
Information acquired during and after the term of this Agreement in trust
for the sole benefit of the other party and their successors and assigns.
In the event of breach of the foregoing by either party, the breaching
party acknowledges that its obligation to protect the other party's
Confidential Information is essential to the business interests of such
other party and that the disclosure of such Confidential Information in
breach of this Agreement would cause such other party immediate,
substantial and irreparable harm, the value of which would be extremely
difficult to determine. Accordingly, the parties agree that, in addition to
any other remedies that may be available in law, equity, or otherwise for
the disclosure or use of the Confidential Information in breach of this
Agreement, such other party shall be entitled to seek and obtain a
temporary restraining order, injunctive relief, or other equitable relief
against the continuance of such breach. The above prohibition of disclosure
shall not apply to the extent that the Transfer Agent must disclose such
data to its subcontractor or a Fund agent for purposes of providing
services under this Agreement or, in the case of Nonpublic Personal
Information, in compliance with the redisclosure and reuse restrictions in
Regulation S-P, as defined below, and the Fund's Privacy Policy. The
Transfer Agent shall use its best efforts to require such subcontractors to
agree that the Fund's Confidential Information be kept in strictest
confidence and used solely for the purposes of performing this Agreement.
6.2 In the event that any requests or demands are made for the inspection of
the Shareholder records of the Fund, other than request for records of
Shareholders pursuant to standard subpoenas from state or federal
government authorities (i.e., divorce and criminal actions), the Transfer
Agent will notify the Fund and secure instructions from an authorized
officer of the Fund as to such inspection. The Transfer Agent expressly
reserves the right, however, to exhibit the Shareholder records to any
person whenever it is advised by counsel that it may be held liable for the
failure to exhibit the Shareholder records to such person or if required by
law or court order.
6.3 (a) Nonpublic Personal Information (as defined in Regulation S-P
promulgated by the Securities and Exchange Commission, "Regulation S-P")
relating to Shareholders or prospective Shareholders shall be considered
confidential information ("Nonpublic Personal Information"). The Transfer
Agent shall use its best efforts to (i) cause its directors, officers and
employees to be informed of and to agree to be bound by the provisions of
this Agreement regarding Nonpublic Personal Information and (ii) maintain
physical, electronic and procedural safeguards reasonably designed to
protect the security, confidentiality and integrity of, and to prevent
unauthorized access to or use of, Nonpublic Personal Information.
(b) Upon the earlier of (i) the Fund's request or (ii) the termination
of this Agreement, the Transfer Agent will return all Nonpublic Personal
Information, in whatever form or media, retaining no copies, other than as
required to be retained by the Transfer Agent under applicable laws or
regulation. The Fund will have the right to perform on-site audits of
records, accounts and procedures relating to the Transfer Agent's use and
protection of Nonpublic Personal Information at the Transfer Agent's
facilities in accordance with reasonable procedures and at reasonable
frequencies.
7. COVENANTS OF THE TRANSFER AGENT.
7.1 The Transfer Agent hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if
any, and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
7.2 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. The
Transfer Agent agrees that all such records prepared or maintained by the
Transfer Agent relating to the services to be performed by the Transfer
Agent hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with applicable law, and will
be surrendered promptly to the Fund on and in accordance with its request.
7.3 The Transfer Agent will provide for back-up of its computer files and data
with respect to the Fund. The Transfer Agent will maintain a comprehensive
Disaster Recovery Plan and will provide the Fund with a summary of its
Disaster Recovery Plan upon the reasonable request of the Fund.
7.4 The Transfer Agent shall maintain fidelity insurance in the form of a
standard Financial Institutions Bond covering performance of its duties
under this Agreement.
8. TERMINATION OF AGREEMENT.
8.1 TERM. The initial term of this Agreement is two (2) years, and upon
expiration of each term this Agreement renews automatically for an
additional one (1) year period unless either party provides written notice
to the other party of non-renewal of this Agreement at least sixty (60)
days prior to the end of the then-current term, in which case this
Agreement will terminate on the last day of the current term; provided,
however, that if either party materially breaches this Agreement, and such
breach continues for a period of thirty (30) days after notice of such
breach is given by the non-breaching party, the non-breaching party shall
have the right to terminate this Agreement for cause by giving notice of
intent to terminate to the other party, and such notice shall be effective
on the date specified therein for such termination unless the breaching
party shall correct such breach prior to the termination date.
8.2 CONFIDENTIAL INFORMATION. Subject to any other provision of this Agreement,
upon termination of this Agreement each party shall return to the other
party all copies of Confidential Information received from such other party
hereunder, other than materials or information required to be retained by
such party under applicable law.
8.3 BANKRUPTCY. Either party hereto may terminate this Agreement by notice to
the other party, effective at any time specified therein, in the event that
(a) the other party ceases to carry on its business or (b) an action is
commenced by or against the other party under Title 11 of the United States
Code or a receiver, conservator or similar officer is appointed for the
other party and such suit, conservatorship or receivership is not
discharged within thirty (30) days.
9. ASSIGNMENT AND THIRD PARTY BENEFICIARIES.
9.1 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
Any attempt to do so in violation of this Section shall be void. Unless
specifically stated to the contrary in any written consent to an
assignment, no assignment will release or discharge the assignor from any
duty or responsibility under this Agreement.
9.2 Except as explicitly stated elsewhere in this Agreement, nothing under this
Agreement shall be construed to give any rights or benefits in this
Agreement to anyone other than the Transfer Agent and the Fund, and the
duties and responsibilities undertaken pursuant to this Agreement shall be
for the sole and exclusive benefit of the Transfer Agent and the Fund. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns.
9.3 This Agreement does not constitute an agreement for a partnership or joint
venture between the Transfer Agent and the Fund. Neither party shall make
any commitments with third parties that are binding on the other party
without the other party's prior written consent.
10. MISCELLANEOUS.
10.1 AMENDMENT. This Agreement may be amended or modified by a written agreement
executed by both parties.
10.2 MARYLAND LAW TO APPLY. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the state of
Maryland.
10.3 FORCE MAJEURE. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably beyond its
control, or other causes reasonably beyond its control, such party shall
not be liable for damages to the other for any Losses resulting from such
failure to perform or otherwise from such causes, provided that the parties
shall take reasonable steps under the facts and circumstances then
prevailing to mitigate damages arising out of such causes.
10.4 SURVIVAL. All provisions regarding indemnification, warranty (other than in
SECTIONS 4 AND 5), liability, and limits thereon, and Confidential
Information shall survive the termination of this Agreement.
10.5 SEVERABILITY. If any provision or provisions of this Agreement shall be
held invalid, void, unlawful, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be
affected, impaired or invalidated.
10.6 WAIVER. No waiver by either party or any breach or default of any of the
covenants or conditions herein contained and performed by the other party
shall be construed as a waiver of any succeeding breach of the same or of
any other covenant or condition.
10.7 MERGER OF AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect
to the subject matter hereof whether oral or written.
10.8 COUNTERPARTS. This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall
be deemed to constitute one and the same instrument.
10.9 REPRODUCTION OF DOCUMENTS. This Agreement and all schedules, exhibits,
attachments and amendments hereto may be reproduced by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process. The parties hereto each agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding, whether or not the original is in existence and
whether or not such reproduction was made by a party in the regular course
of business, and that any enlargement, facsimile or further reproduction
shall likewise be admissible in evidence.
10.10 NOTICES. All notices and other communications as required or permitted
hereunder shall be in writing and sent by overnight commercial courier,
addressed as follows or to such other address or addresses of which the
respective party shall have notified the other.
(a) If to the Transfer Agent, to:
00 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: President
(b) If to the Fund, to:
Two Galleria Tower
00000 Xxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Secretary
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
PROSPECT STREET(R)HIGH INCOME AMERICAN STOCK TRANSFER AND
PORTFOLIO INC. TRUST COMPANY
PROSPECT STREET(R) INCOME SHARES INC.
By: By:
-------------------------------- --------------------------------
Name: Name:
------------------------------ ------------------------------
Title: Title:
----------------------------- -----------------------------
Date: Date:
------------------------------ ------------------------------
Attest: Attest:
---------------------------- ----------------------------
Name: Name:
------------------------------ ------------------------------
SCHEDULE A
FUNDS
Prospect Street(R) High Income Portfolio Inc.
Prospect Street(R) Income Shares Inc.
SCHEDULE B
FEE SCHEDULE
Prospect Street(R) High Income Portfolio Inc.
(monthly Dividend and Dividend Reinvestment) $2,000.00 per month
Prospect Street(R) Income Shares Inc.
(quarterly Dividend and Dividend Reinvestment) $1,000.00 per month
The only additional charges will be reimbursement of out-of-pocket
expenses such as postage and stationary.
