SUBSCRIPTION AGENT AGREEMENT (Company)
This Subscription Agent Agreement (the "Agreement") is made as of March 21, 2002
between Liberty All-Star Equity Fund (the "Company") and EquiServe Trust
Company, N.A. as subscription agent (the "Agent"). All terms not defined herein
shall have the meaning given in the prospectus (the "Prospectus") included in
the (Registration Statement on Form N-2 (File No. 811-4809) filed by the Company
with the Securities and Exchange Commission on February 22, 2002, as amended by
any amendment filed with respect thereto (the "Registration Statement").
WHEREAS, the Company proposes to make a subscription offer by issuing
certificates or other evidences of subscription rights, in the form designated
by the Company (the "Subscription Certificates") to shareholders of record (the
"Shareholders") of its shares of beneficial interest, no par value per share
(the "Shares"), as of a record date specified by the Company (the "Record
Date"), pursuant to which each Shareholder will have certain rights (the
"Rights") to subscribe for Shares, as described in and upon such terms as are
set forth in the Prospectus, a final copy of which has been or, upon
availability will promptly be, delivered to the Agent; and
WHEREAS, the Company wishes the Agent to perform certain acts on behalf of the
Company, and the Agent is willing to so act, in connection with the distribution
of the Subscription Certificates and the issuance and exercise of the Rights to
subscribe therein set forth, 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. Appointment. The Company hereby appoints the Agent to act as subscription
agent in connection with the distribution of Subscription Certificates and the
issuance and exercise of the Rights in accordance with the terms set forth in
this Agreement and the Agent hereby accepts such appointment.
2. Form and Execution of Subscription Certificates.
(a) Each Subscription Certificate shall be irrevocable and non-transferable. The
Agent shall, in its capacity as Transfer Agent of the Company, maintain a
register of Subscription Certificates and the holders of record thereof (each of
whom shall be deemed a "Shareholder" hereunder for purposes of determining the
rights of holders of Subscription Certificates). Each Subscription Certificate
shall, subject to the provisions thereof, entitle the Shareholder in whose name
it is recorded to the following:
(1) With respect to Record Date Shareholders only, the right to acquire
during the Subscription Period, as defined in the Prospectus, at the
Subscription Price, as defined in the Prospectus, a number of Shares equal to
one Share for every ten Rights (the "Primary Subscription Right"); and
(2) With respect to Record Date Shareholders only, the right to subscribe
for additional Shares, subject to the availability of such Shares and to the
allotment of such Shares as may be available among Record Date Shareholders who
exercise Over-Subscription Rights on the basis specified in the Prospectus;
provided, however, that such Record Date Shareholder has exercised all Primary
Subscription Rights issued to him or her (the "Over-Subscription Privilege").
3. Rights and Issuance of Subscription Certificates.
(a) Each Subscription Certificate shall evidence the Rights of the
Shareholder therein named to purchase Common Stock upon the terms and conditions
therein and herein set forth.
(b) Upon the written advice of the Company, signed by any of its duly
authorized officers (listed in Paragraph 12.a), as to the Record Date, the Agent
shall, from a list of the Company Shareholders as of the Record Date to be
prepared by the Agent in its capacity as Transfer Agent of the Company, prepare
and record Subscription Certificates in the names of the Shareholders, setting
forth the number of Rights to subscribe for the Company's Shares calculated on
the basis of one Right for 10 Shares recorded on the books in the name of each
such Shareholder as of the Record Date. The number of Rights that are issued to
Record Date Shareholders will be rounded down, by the Agent, to the nearest
number of Full Rights as Fractional Rights will not be issued. Each Subscription
Certificate shall be dated as of the Record Date and shall be executed manually
or by facsimile signature of a duly authorized officer of the Subscription
Agent. Upon the written advice, signed as aforesaid, as to the effective date of
the Registration Statement, the Agent shall promptly countersign and deliver the
Subscription Certificates, together with a copy of the Prospectus, instruction
letter and any other document as the Company deems necessary or appropriate, to
all Shareholders with record addresses in the United States (including its
territories and possessions and the District of Columbia). Delivery shall be by
first class mail (without registration or insurance), except for those
Shareholders having a registered address outside the United States (who will
only receive copies of the Prospectus, instruction letter and other documents as
the Company deems necessary or appropriate, if any), delivery shall be by air
mail (without registration or insurance) and by first class mail (without
registration or insurance) to those Shareholders having APO or FPO addresses. No
Subscription Certificate shall be valid for any purpose unless so executed.
(c) The Agent will mail a copy of the Prospectus, instruction letter, a
special notice and other documents as the Company deems necessary or
appropriate, if any, but not Subscription Certificates to Record Date
Shareholders whose record addresses are outside the United States (including its
territories and possessions and the District of Columbia ) ("Foreign Record Date
Shareholders"). The Rights to which such Subscription Certificates relate will
be held by the Agent for such Foreign Record Date Shareholders' accounts until
instructions are received to exercise, sell or transfer the Rights.
4. Exercise.
(a) Record Date Shareholders may acquire Shares on Primary Subscription and
pursuant to the Over-Subscription Privilege by delivery to the Agent as
specified in the Prospectus of (i) the Subscription Certificate with respect
thereto, duly executed by such Shareholder in accordance with and as provided by
the terms and conditions of the Subscription Certificate, together with (ii) the
estimated purchase price, as disclosed in the Prospectus, for each Share
subscribed for by exercise of such Rights, including Shares subscribed for an
exercise of the Over-Subscription Privilege, in U.S. dollars by money order or
check drawn on a bank in the United States, in each case payable to the order of
the Company or the Agent.
(b) 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 time on such date as the Company shall designate to the Agent in writing
(the "Expiration Date"). 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 Shareholder Services Division of the
Agent specified in the Prospectus.
(c) Notwithstanding the provisions of Section 4 (a) and 4 (b) regarding
delivery of an executed Subscription Certificate to the Agent prior to 5:00 P.M.
New York time on the Expiration Date, if prior to such time the Agent receives a
Notice of Guaranteed Delivery by facsimile (telecopy) or otherwise from a bank,
a trust company or a New York Stock Exchange member guaranteeing delivery of (i)
payment of the full Subscription Price for the Shares subscribed for on Primary
Subscription and any additional Shares subscribed for pursuant to the
Over-Subscription Privilege, and (ii) a properly completed and executed
Subscription Certificate, then such exercise of Primary Subscription Rights and
Over-Subscription Rights shall be regarded as timely, subject, however, to
receipt of the duly executed Subscription Certificate and full payment for the
Shares by the Agent within three Business Days (as defined below) after the
Expiration Date (the "Protect Period") and full payment for their Shares within
ten Business Days after the Confirmation Date (as defined in Section 4(d)). For
the purposes of the Prospectus and this Agreement, "Business Day" shall mean any
day on which trading is conducted on the New York Stock Exchange.
(d) The Company will determine the Subscription Price by taking 95% of the
lower of (i) last reported sale prices of Shares on the New York Stock Exchange
on the first Business Day following the Expiration Date (the "Pricing Date") or
(ii) the net asset value of a Share on the Pricing Date. As soon as practicable
after the Pricing Date (the "Confirm Date") the Agent shall send to each
exercising Shareholder (or, if Shares on the Record Date are held by Cede & Co.
or any other depository or nominee, to Cede & Co. or such other depository or
nominee) a confirmation showing the number of Shares acquired pursuant to the
Primary Subscription, and, if applicable, the Over-Subscription Privilege, the
per Share and total purchase price for such Shares, and any additional amount
payable to the Company by such Shareholder or any excess to be refunded by the
Company to such Shareholder in the form of a check and stub, along with a letter
explaining the allocation of Shares pursuant to the Over-Subscription Privilege.
(e) Any additional payment required from a Shareholder must be received by
the Agent within ten Business Days after the Confirmation Date and any excess
payment to be refunded by the Company to a Shareholder will be mailed by the
Agent within ten Business Days after the Confirmation Date. If a Shareholder
does not make timely payment of any additional amounts due in accordance with
Section 4(d), the Agent will consult with the Company in accordance with Section
5 as to the appropriate action to be taken. The Agent will not issue or deliver
certificates for Shares subscribed for until payment in full therefore has been
received, including collection of checks and payment pursuant to notices of
guaranteed delivery.
5. Validity of Subscriptions. Irregular subscriptions not otherwise covered
by specific instructions herein shall be submitted to an appropriate officer of
the Company and handled in accordance with his or her instructions. Such
instructions will be documented by the Agent indicating the instructing officer
and the date thereof.
6. Over-Subscription. If, after allocation of Shares to Record Date
Shareholders, there remain unexercised Rights, then the Agent shall allot the
Shares issuable upon exercise of such unexercised Rights (the "Remaining
Shares") to Shareholders who have exercised all the Rights initially issued to
them and who wish to acquire more than the number of Shares for which the Rights
issued to them are exercisable. Shares subscribed for pursuant to the
Over-Subscription Privilege will be allocated in the amounts of such
over-subscriptions. If the number of Shares for which the Over-Subscription
Privilege has been exercised is greater than the Remaining Shares, the Agent
shall allocate the Remaining Shares to Record Date Shareholders exercising the
Over-Subscription Privilege based on the number of Rights issued to them by the
Company. The percentage of Remaining Shares each over-subscribing Record Date
Shareholder may acquire will be rounded down to result in delivery of whole
Shares. The Agent shall advise the Company immediately upon the completion of
the allocation set forth above as to the total number of Shares subscribed and
distributable.
7. Delivery of Certificates. The Agent will deliver (i) certificates
representing those Shares purchased pursuant to exercise of Primary 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 and
(ii) certificates representing those Shares purchased pursuant to the exercise
of the Over-Subscription Privilege as soon as practicable after the Expiration
Date and after all allocations have been effected.
8. Holding Proceeds of Rights Offering
(a) All proceeds received by the Agent from Shareholders in respect of the
exercise of Rights shall be held by the Agent, on behalf of the Company, in a
segregated interest-bearing account (the "Account"). Interest shall accrue at
85% of the the Federal Funds Rate to the Company on funds held in the Account
pending disbursement in the manner described in Section 4(e) above.
(b) The Agent shall deliver all proceeds received in respect of the
exercise of Rights to the Company as promptly as practicable, but in no event
later than ten business days after the Confirmation Date.
9. Reports.
(a) Daily, during the period commencing on April 8, 2002, until termination
of the Subscription Period, the Agent will report by telephone or telecopier,
confirmed by letter, to an Officer (as defined in Section 12(a)) of the Company,
data regarding Rights exercised, the total number of Shares subscribed for, and
payments received therefor, bringing forward the figures from the previous day's
report in each case so as to show the cumulative totals and any such other
information as may be reasonably requested by the Company.
10. Loss or Mutilation. If any Subscription Certificate is lost, stolen,
mutilated or destroyed, the Agent may, on such terms which will indemnify and
protect the Company and the Agent as the Agent may in its reasonable discretion
impose (which shall, in the case of a mutilated Subscription Certificate include
the surrender and cancellation thereof), issue a new Subscription Certificate of
like denomination in substitution for the Subscription Certificate so lost,
stolen, mutilated or destroyed.
11. Compensation for Services. The Company agrees to pay to the Agent
compensation for its services as such in accordance with its Fee Schedule to act
as Agent, dated March 21, 2002 and attached hereto as Exhibit A. The Company
further agrees that it will reimburse the Agent for its reasonable out-of-pocket
expenses incurred in the performance of its duties hereunder.
12. Instructions and Indemnification. The Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions:
(a) The Agent shall be entitled to rely upon any written instructions or
directions furnished to it by an appropriate Officer of the Company (President,
Vice President, Secretary, Assistant Secretary or Treasurer), whether in
conformity with the provisions of this Agreement or constituting a modification
hereof or a supplement hereto. Without limiting the generality of the foregoing
or any other provision of this Agreement, the Agent, in connection with its
duties hereunder, shall not be under any duty or obligation to inquire into the
validity or invalidity or authority or lack thereof of any instruction or
direction from an officer of the Company which conforms to the applicable
requirements of this Agreement and which the Agent reasonably believes to be
genuine and shall not be liable for any delays, errors or loss of data occurring
by reason of circumstances beyond the Agent's control.
(b) The Company will indemnify the Agent and its nominees against, and hold
it harmless from, all liability and expense which may arise out of or in
connection with the services described in this Agreement or the instructions or
directions furnished to the Agent relating to this Agreement by an appropriate
Officer of the Company, except for any liability or expense which shall arise
out of the negligence, bad faith or willful misconduct of the Agent or such
nominees.
13. Changes in Subscription Certificate. The Agent may, without the consent
or concurrence of the Shareholders in whose names Subscription Certificates are
registered, by supplemental agreement or otherwise, concur with the Company in
making any changes or corrections in a Subscription Certificate that it shall
have been advised by counsel (who may be counsel for the Company) 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 provision of the Subscription
Certificate or Prospectus except insofar as any such change may confer
additional rights upon the Shareholders.
14. Assignment, Delegation.
(a) Except as provided in Section 14(c) below, neither this Agreement nor
any rights or obligations hereunder may be assigned or delegated by either party
without the written consent of the other party.
(b) All the covenants and provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their respective permitted
successors and assigns. Nothing in this Agreement is intended or shall be
construed to confer upon any other person any right, remedy or claim or to
impose upon any other person any duty, liability or obligation.
(c) The Agent may, without further consent on the part of the Company, (i)
subcontract for the performance hereof with EquiServe Limited Partnership or
(ii) subcontract with other subcontractors for systems, processing, and
telephone and mailing services as may be required from time to time; provided,
however, that the Agent shall be as fully responsible to the Company for the
acts and omissions of any subcontractor as it is for its own acts and omissions.
15. Governing Law. The validity, interpretation and performance of this
Agreement shall be governed by the law of the Commonwealth of Massachusetts.
16. Third Party Beneficiaries. This Agreement does not constitute an
agreement for a partnership or joint venture between the Agent and the Company.
Neither party shall make any commitments with third parties that are binding on
the other party without the other party's prior written consent.
17. 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 cause reasonably beyond its control, such party shall not be liabile for
damages to the other for any damages resulting from such failure to perform or
otherwise from such causes. Performance under this Agreement shall resume when
the affected party or parties are able to perform substantially that party's
duties.
18. Consequential Damages. Neither party to this Agreement shall be liable
to the other party for any consequential, indirect, special or incidental
damages under any provisions of this Agreement or for any consequential,
indirect, special or incidential damages arising out of any act or failure to
act hereunder even if that party has been advised of or has foreseen the
possibility of such damages.
19. Severability. If any provision of this Agreement shall be held invalid,
unlawful, or unenforceable, the valididty, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
21. Captions. The captions and descriptive headings herein are for the
convenience of the parties only. They do not in any way modify, amplify, alter
or give full notice of the provisions hereof.
22. Confidentiality. The Agent and the Company agree that all books,
records, informtion and data pertaining to the business of the other party which
are exchanged or received pursuant to the negotiation or the carrying out of
this Agreement including the fees for services set forth in the attached
schedule shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law. The Agent shall not disclose
or use any nonpublic personal information (as that term is defined in SEC
Regulation S-P promulgated under Title V of the Xxxxx-Xxxxx-Xxxxxx Act of 1999)
relating to the customers of the Company and/or its affiliates ("Customer
Information") except as may be necessary to carry out the purposes of this
Agreement, including use under ss.248.14 (the processing and servicing
exception) or ss.248.15 (the miscellaneous exception) of Regulation S-P in the
ordinary course of business to carry out those purposes. The Agent shall use
best efforts to safeguard and maintain the confidentiality of such Customer
Information, and to limit access to and usage of such Customer Information to
those employees, officers, agents and representatives of the Agent who have a
need to know the information or as necessary to provide products or services
under this Agreement. The obligations contained in this paragraph shall survive
the termination of this Agreement.
23. Term. This Agreement shall remain in effect until terminated on July
31, 2002 (the "Termination Date") or, prior to the Termination Date, upon 30
days' written notice by either party to the other. Upon termination of the
Agreement, the Agent shall retain all canceled Certificates and related
documentation as required by applicable law.
24. Merger of Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respet to the
subject matter hereof whether oral or written.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, as of the day
and year first above written.
EQUISERVE TRUST COMPANY, N.A. LIBERTY ALL-STAR EQUITY FUND
____________________________ __________________________
Signature Signature
____________________________ __________________________
Title Title
____________________________ __________________________
Date Date
[OBJECT OMITTED] EQUISERVE
EQUISERVE TRUST COMPANY, N.A.
PROPOSAL
to serve as
SUBSCRIPTION AGENT FOR
LIBERTY ALL STAR EQUITY FUND'S RIGHTS OFFERING
A. FEES FOR SERVICES *
========================= ===================================================
$ 12,500.00 Project Management Fee
$ 2.00 Per subscription form issued and mailed
$ 9.50 Per subscription form processed (registered and
beneficial)
$ 15.00 Per defective subscription form received
$ 15.00 Per notice of guaranteed delivery received
$ 2.00 Per broker split certificate issued
$ 3.00 Per sale of right (if applicable)
$ 4.50 Per invoice mailed (if applicable)
$ 1.75 Per refund check issued and mailed (if applicable)
$ 5.00 Per solicitation check processed and mailed
(if applicable)
$ 15.00 Per withdrawal of subscription certificate
(if applicable)
$ 50.00 Per wire (if applicable)
$ 1,500.00 New York window fee for Midnight expiration
(if applicable)
$ 3,000.00 Per offer extension
$ 5,000.00 Minimum charge should the project be canceled for
any reason prior to the mailing of the
subscription form
========================= =====================================================
*Excludes out-of-pocket expenses as described in Section C, "Items Not Covered"
B. SERVICES COVERED
o Designating an operational team to carry out Subscription
Agent duties, including document review and execution of
legal agreement, review of subscription form and
communication materials, project management, and on-going
project updates and reporting
o Calculating Rights to be distributed to each shareholder
and printing shareholder information on the subscription
form
o Issuing and mailing subscription forms to registered
shareholders
o Tracking and reporting the number of exercises made, as
required
o Processing Rights received and exercised
o Deposit participant checks daily and forward all
participant funds to Liberty All-Star Equity Fund at the
end of the offering period
o Providing receipt summation of checks received
o Affixing legends to appropriate stock certificates, where
applicable
o Issuing and mailing stock certificates and/or checks
o Interfacing with the Information Agent
o Calculating, issuing and mailing of proration and/or
over-subscription checks if applicable
o Calculating, issuing and mailing of solicitation checks
if applicable
C. ITEMS NOT COVERED
o Items not specified in the "Services Covered" section set forth
in this Agreement, including any services associated
with new duties, legislation or regulatory fiat which become
effective after the date of this Agreement (these will be
provided on an appraisal basis)
o All out-of-pocket expenses such as telephone line charges,
overprinting, certificates, checks, postage, stationery,
wire transfers, and excess material disposal (these will be
billed as incurred)
o Reasonable legal review fees if referred to outside counsel
o Overtime charges assessed in the event of late delivery of
material for mailings unless the target mail date isrescheduled
D. ASSUMPTIONS
o Proposal based upon document review and information known at
this time about the transaction.
o Significant changes made in the terms or requirements of this
transaction could require modifications to this proposal
o Proposal must be executed prior to the initial mailing
o Company responsible for printing of materials(Rights Card,
Prospectus and ancillary documents)
o Material to be mailed to shareholders must be received no less
than five (5) business days prior to the start of the
mailing project
o Interest shall accrue to the company at 85% of the Federal
Funds Rate
E. PAYMENT FOR SERVICES
The Project Management Fee will be rendered and payable on the
effective date of the transaction. An invoice for any out-of-pockets
and per item fees realized will be rendered and payable on a monthly
basis, except for postage expenses in excess of $5,000. Funds for
such mailing expenses must be received one (1) business day prior to
the scheduled mailing date, provided, however, that the Agent shall
provide five (5) business days' notice of any such amount to be paid.
EquiServe Trust Company, N.A. Liberty All-Star Equity Fund
By: _________________________ By:__________________________
Title:_______________________ Title:_______________________
Date:_________________________ Date:_______________________
