UNDERTAKING
among
LIBERTY FINANCIAL COMPANIES, INC.,
COLONIAL MANAGEMENT ASSOCIATES, INC.,
NEWPORT FUND MANAGEMENT, INC.,
CRABBE HUSON GROUP, INC.,
XXXXX XXX & XXXXXXX INCORPORATED
and
CITICORP NORTH AMERICA, INC.,
as Agent
Dated as of April 12, 1999
[Type VII-C]
13620.110 #70013
TABLE OF CONTENTS
Page
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UNDERTAKING
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions; Terminology; Rules of Construction. 2
ARTICLE II
GENERAL UNDERTAKINGS
SECTION 2.01. Covenants; Payment of Borrower Obligations. 2
SECTION 2.02. Agreement Not Affected. 3
SECTION 2.03. Waiver of Notice; No Offset. 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties. 4
ARTICLE IV
COVENANTS
SECTION 4.01. Covenants. 7
SECTION 4.02. Additional Covenants of the Advisors. 9
ARTICLE V
MISCELLANEOUS
SECTION 5.01. No Waiver; Modifications in Writing. 11
SECTION 5.02. Notices, Etc. 12
SECTION 5.03. Indemnification. 13
SECTION 5.04. Execution in Counterparts. 14
SECTION 5.05. Assignability. 14
SECTION 5.06. Governing Law. 14
SECTION 5.07. Severability of Provisions. 14
SECTION 5.08. Confidentiality. 15
SECTION 5.09. Merger. 15
SECTION 5.10. No Proceedings. 15
SECTION 5.11. Survival of Representations and Warranties. 15
SECTION 5.12. Submission to Jurisdiction; Waivers. 16
SECTION 5.13. Waiver Of Jury Trial. 16
13620.110 #70013
i
UNDERTAKING
UNDERTAKING dated as of April 12, 1999 (this "Agreement") among
LIBERTY FINANCIAL COMPANIES, INC. (together with its permitted successors and
assigns, the "Parent"), COLONIAL MANAGEMENT ASSOCIATES, INC. ("CMA"), NEWPORT
FUND MANAGEMENT, INC. ("NFM"), CRABBE HUSON GROUP, INC. ("CHG"), XXXXX XXX &
XXXXXXX INCORPORATED ("SRF") (CMA, NFM, CHG and SRF, together with their
respective permitted successors and assigns, each an "Advisor" and collectively,
the "Advisors") and CITICORP NORTH AMERICA, INC., as agent for the Lender (as
defined below) and the Secondary Lenders (as defined below) (together with its
successors and assigns, the "Agent").
WHEREAS, contemporaneously with the execution of this Agreement,
Liberty Funds Group LLC (together with its successors and assigns, the
"Borrower"), Corporate Receivables Corporation (together with its successors and
assigns, the "Lender"), Citibank, N.A. and the other banks and financial
institutions from time to time parties thereto (together with Citibank, N.A. and
their respective successors and assigns, the "Secondary Lenders") are entering
into that certain Revolving Credit Agreement dated as of the date hereof (as
from time to time amended, the "Credit Agreement") pursuant to which the Lender
and the Secondary Lenders have agreed, subject to the terms and conditions
thereof, to make advances from time to time to the Borrower;
WHEREAS, contemporaneously with the execution of this Agreement,
Liberty Funds Distributor, Inc. (together with its successors and assigns, the
"Distributor") and the Agent are entering into that certain Pledge and Security
Agreement dated as of the date hereof (as from time to time amended, the
"Security Agreement") pursuant to which the Distributor has assigned and pledged
to the Agent for the benefit of the Agent, the Lender and the Secondary Lenders
(each a "Secured Party" and collectively, the "Secured Parties") all of its
right, title and interest in, to and under the Assigned Collateral (as defined
in the Security Agreement); and
WHEREAS, an essential condition precedent to the Lender's and the
Secondary Lenders' making advances to the Borrower in accordance with the terms
of the Credit Agreement is that the Parent and each Advisor (each a "Liberty
Entity" and collectively the "Liberty Entities") enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained, the receipt by each of the Liberty Entities of
substantial economic benefit whether or not set forth herein, the receipt and
sufficiency of which are hereby acknowledged by each of the Liberty Entities,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto,
each of the Liberty Entities undertakes and agrees as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS; TERMINOLOGY; RULES OF CONSTRUCTION.
Unless otherwise defined herein capitalized terms shall have the
meanings assigned to such terms in Appendix A to the Credit Agreement. For all
purposes of this Agreement, except as otherwise expressly provided or unless the
context otherwise requires (a) each use in this Agreement of a singular version
of a pronoun shall be deemed to include references to the plural, and vice
versa, as appropriate, (b) Article and Section headings are for convenience of
reference only and shall not affect the construction of this Agreement, and
(c) references to "this section" or words of similar import shall be deemed to
refer to the entire section and not to a particular subsection, and references
to "hereunder," "herein" or words of similar import shall be deemed to refer to
this entire Agreement and not to the particular section or subsection.
References in this Agreement to "including" means including without limiting the
generality of any description preceding such term. Each of the parties to this
Agreement and its counsel have reviewed and revised, or requested revisions to,
this Agreement, and the usual rule of construction that any ambiguities are to
be resolved against the drafting party shall be inapplicable in the construction
and interpretation of this Agreement.
ARTICLE II
GENERAL UNDERTAKINGS
SECTION 2.01. COVENANTS; PAYMENT OF BORROWER OBLIGATIONS.
(a) The Parent hereby irrevocably and unconditionally agrees to (i)
perform and punctually and completely carry out or cause the Borrower, the
Distributor or the Advisors, as the case may be, to perform and punctually and
completely carry out each and every covenant and agreement of the Borrower, the
Distributor and each Advisor under this Agreement, the Credit Agreement, the
Security Agreement and each of the other Facility Documents in accordance with
the terms thereof, and (ii) promptly (at its own expense) take or cause to be
taken all measures as may be necessary or appropriate and can lawfully be
effected to prevent the occurrence of any Default or Event of Default and to
promptly cure or make good any such Default or Event of Default which may at any
time occur. Each of the covenants and agreements of the Borrower, the
Distributor and each Advisor set forth in the Facility Documents shall be deemed
to be made by the Parent in the same manner, to the same extent and with the
same effect as if the Parent made the same and such covenants referred to the
Parent. The Parent hereby absolutely, unconditionally and irrevocably guarantees
to the Agent
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on behalf of the Secured Parties the full and punctual payment when due, whether
at stated maturity, by scheduled repayment, required prepayment, declaration,
acceleration, demand or otherwise (including, without limitation, all amounts
which would have become due but for the operation of the automatic stay under
Section 362(a) of the United States Bankruptcy Code), of each of the Borrower
Obligations, whether such payment obligations are outstanding on the Closing
Date or arise or are incurred at any time thereafter.
(b) The Parent covenants and agrees that all payment obligations
arising under the Facility Documents incurred or to be assumed by the Parent
hereunder shall be paid strictly in accordance with the terms and provisions of
the Facility Documents.
(c) The Parent agrees that the guarantee and the undertakings under
this Agreement shall continue to be effective or shall be reinstated, as the
case may be, if at any time any payment (in whole or in part) of any of the
Borrower Obligations is rescinded or must otherwise be restored by any Secured
Party upon the insolvency, bankruptcy or reorganization of the Borrower, the
Distributor, any Advisor or any of their Affiliates or otherwise, all as though
such payment had not been made.
SECTION 2.02. AGREEMENT NOT AFFECTED.
The Secured Parties may proceed to exercise any right or remedy which
it might have pursuant to this Agreement without regard to any actions or
omissions of any Secured Party or any other Person. The validity of this
Agreement shall not be affected by any action or inaction which may be taken
under or in respect of any Program Document. The Secured Parties at their
option may proceed in the first instance against the Parent to obtain a remedy
to which it is entitled under any Facility Document in the amount and in the
manner set forth in such Facility Document, without being obliged to resort
first to any claim or action against the Borrower, the Distributor, any Advisor
or any other Person, it being understood that the liability of the Parent is a
primary obligation hereunder with respect to each provision of the Facility
Documents that binds the Parent. The liabilities and obligations of the Parent
under this Agreement shall be absolute, unconditional and irrevocable,
irrespective of (a) any lack of validity or enforceability of this Agreement or
any other Program Document or any other instrument relating to any thereof or to
any of the Borrower Obligations; (b) any change in the corporate existence,
structure or ownership of the Borrower, the Parent, any Advisor or any of their
Affiliates, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting any such Person or any property of any such Person or any
resulting release or discharge of any Borrower Obligation contained in any
Facility Document; (c) any defense, set-off or counterclaim which may at any
time be available or be asserted by the Borrower, the Distributor, any Advisor,
any of their respective Affiliates or any other Person against any Secured
Party; or (d) any other circumstance which might otherwise constitute a
suretyship or other defense available to, or a legal or equitable discharge of,
the Borrower, the Distributor, any Advisor, any of their respective Affiliates
or any other guarantor of any of the Borrower Obligations.
SECTION 2.03. WAIVER OF NOTICE; NO OFFSET.
The Parent hereby waives any and all notices or demands to which it
may otherwise be entitled in connection with the pursuit of any remedy
hereunder, under any other Facility Document or, to the extent permitted under
Applicable Law; PROVIDED, that this sentence shall not constitute a waiver on
behalf of the Parent of any notice or demand to which the Parent
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is entitled under the Facility Documents. The obligations of the Parent under
this Agreement shall not be subject to any counterclaim or right of offset which
the Parent, any Advisor, the Borrower, the Distributor or any other Person has
or may have against any Secured Party, or any defense which the Borrower, the
Distributor, the Parent, any Advisor or any other Person may have against any
Secured Party, in each case whether in respect of this Agreement, any other
Facility Document, any Assigned Collateral or otherwise. Any and all payments
by the Parent under this Agreement shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES.
Each of the Liberty Entities represents and warrants to the Agent on
behalf of each of the Secured Parties on and as of Closing Date, each Borrowing
Date and the last day of each Settlement Period as follows:
(a) it is duly organized and validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the corporate
power and authority to own and operate its properties, conduct its business and
to execute, deliver and perform its obligations under this Agreement and the
other Program Documents to which it is a party;
(b) it is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the performance of its
obligations under this Agreement and the other Program Documents to which it is
a party requires such qualification, except where the failure to be so qualified
could not give rise to a reasonable possibility of a Material Adverse Effect;
(c) the execution, delivery and performance of this Agreement and the
other Program Documents to which it is a party have been duly authorized by all
necessary corporate action and this Agreement and the other Program Documents to
which it is a party have been duly executed and delivered and constitute its
legal, valid and binding obligations, enforceable against it in accordance with
their terms;
(d) neither the execution and delivery by it of this Agreement, the
other Program Documents to which it is a party, or any instrument or agreement
referred to herein or therein, or
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contemplated hereby or thereby, nor the consummation of the transactions herein
or therein contemplated, nor compliance with the terms, conditions and
provisions hereof or thereof by it, will (i) conflict with, or result in a
breach or violation of, or constitute a default under its, the Distributor's,
any Advisor's, any of their respective Subsidiaries or LMIC's certificate of
incorporation, or by-laws or other organizational documents, (ii) conflict with
or contravene any (A) Applicable Law, (B) contractual restriction binding on or
affecting it, the Distributor, any Advisor, any of their respective Subsidiaries
or LMIC or any of their respective assets or properties, (C) any order, writ,
judgment, award, injunction or decree binding on or affecting it, the
Distributor, any Advisor, any of their respective Subsidiaries or LMIC or any of
their respective assets or properties, (iii) result in a breach or violation of,
or constitute a default under, or permit the acceleration of any obligation or
liability in, or but for any requirement of the giving of notice or the passage
of time (or both) would constitute such a conflict with, breach or violation of,
or default under, or permit any such acceleration in, any contractual obligation
or any agreement or document to which it is a party or by which it, the
Distributor, any Advisor, any of their respective Subsidiaries, LMIC or any of
their respective properties is bound (or to which any such obligation, agreement
or document relates), (iv) result in any Adverse Claim upon any of the Assigned
Collateral, or (v) result in the termination of any Advisory Agreement,
Distribution Agreement or Distribution Plan;
(e) it has obtained all necessary Governmental Authorizations and
Private Authorizations and made all necessary Governmental Filings required to
be made or obtained by it for the execution, delivery and performance by it of
this Agreement and the other Program Documents to which it is a party and no
consents or waivers, which have not been obtained under any instrument to which
it is a party or by which it or any of its properties are bound, are required to
be obtained in connection with the execution, delivery or performance of this
Agreement or any other Program Document;
(f) there are no pending or, to the best of its knowledge, threatened
investigations, actions, suits or proceedings involving it which give rise to a
reasonable possibility of a Material Adverse Effect;
(g) it is not in default in any of its obligations under this
Agreement or any other Program Document to which it is a party;
(h) all information, notices, reports and statements provided by or
behalf of it or any of its Affiliates, to any Secured Party or any other Person
pursuant to or in connection with the terms of this Agreement or the any other
Facility
5
Document is, and all such information, notices, reports and statements hereafter
provided to any Secured Party or any other Person will be, true, correct and
complete in all material respects on and as of the date such information is
stated or certified, and on and as of the date such information, notice, report
or statement is stated or certified such information, notice, report or
statement does not contain, and will not contain, any misrepresentation of a
material fact or any omission to state therein matters necessary to make the
statements made therein not misleading in any material respect;
(i) the Parent directly or indirectly owns all of the issued and
outstanding capital stock of NFM and SRH, the Parent directly owns all of the
issued and outstanding capital stock of CHG and LFSI, LFSI is the sole member of
the Borrower, the Borrower directly owns all of the issued and outstanding
capital stock of CMA and CMA owns all of the outstanding capital stock of the
Distributor;
(j) it acknowledges and confirms that it has reviewed and understands
the terms and conditions of each of the Facility Documents;
(k) it is in compliance in all material respects with Applicable Law,
including, without limitation, the Securities Act, the Exchange Act and the
Investment Company Act;
(l) on each Borrowing Date and immediately after the making of each
Advance, the Borrower is in full compliance with the Borrowing Base Test and the
other conditions specified in Article III of the Credit Agreement;
(m) it is taking all reasonable actions necessary to mitigate the
effect of the Year 2000 Problem on its computer systems;
(n) it has filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by it, if any, and has
paid all taxes due pursuant to such returns, if any, or pursuant to any
assessment received by it, except for any taxes or assessments which are being
contested in good faith by appropriate proceedings and with respect thereto
adequate reserves have been established in accordance with GAAP and which could
otherwise not give rise to a reasonable possibility of a Material Adverse
Effect; and the charges, accruals and reserves on the books in respect of taxes
or other governmental charges, if any, are, in its opinion, adequate;
(o) it and its respective Subsidiaries have fulfilled their
obligations, if any, under the minimum funding standards of ERISA and the Code
with respect to any Plan or Multi Employer Plan and is in compliance in all
material respects with the
6
presently applicable provisions of ERISA and the Code, and has not incurred any
liability to the Pension Benefit Guaranty Corporation, a Multi Employer Plan or
a Plan under Title IV of ERISA other than a liability to the Pension Benefit
Guaranty Corporation for premiums under Section 407 of ERISA;
(p) its obligations under this Agreement to make payments to the
Secured Parties rank at least equally with indebtedness of such Liberty Entity
which is not contractually subordinated;
(q) the statement of assets and liabilities of the Parent and its
consolidated subsidiaries as at December 31, 1998, certified by Ernst & Young,
LLP, certified public accountants, fairly present in conformity with GAAP the
financial position of the Parent and its consolidated subsidiaries at such date
and since such date there has been no material adverse change in the business,
financial position or results of operations of the Parent and its consolidated
subsidiaries;
(r) each Advisor has complied in all material respects with both the
Fundamental Investment Objectives and Policies relating to each Fund for which
it serves as investment advisor and the terms of each Advisory Agreement to
which it is a party, and each Advisory Agreement is in full force and effect;
(s) each Fund (and in respect of each Fund which constitutes a
Portfolio, each Company related to such Fund in respect of such Fund) and the
Advisory Agreements, the Prospectuses, the Distribution Agreements and the
Distribution Plans relating to each Fund, are in compliance in all material
respects with Applicable Law, including without limitation, Rule 12b-1 under the
Investment Company Act and the Conduct Rules; and
(t) the representations and warranties of the Borrower and the
Distributor set forth in the Facility Documents are true and correct.
ARTICLE IV
COVENANTS
SECTION 4.01. COVENANTS.
Each of the Liberty Entities hereby agrees as follows:
(a) Each Liberty Entity shall (i) duly observe and conform, in all
material respects, to all requirements of Applicable Law relative to the conduct
of its business or to its properties or assets, (ii) preserve and keep in full
force and effect its corporate existence, rights, privileges and
7
franchises, and (iii) observe, conform, preserve, obtain, maintain and keep in
full force and effect all Governmental Authorizations and Private Authorizations
which are necessary or appropriate to properly carry out the transactions
contemplated to be performed by it under this Agreement and the other Program
Documents.
(b) Each Liberty Entity shall duly fulfill all obligations on its
part to be performed under or in connection with this Agreement and the other
Program Documents and will use its best efforts to cause the Borrower and the
Distributor to duly fulfill and perform their respective obligations under the
Program Documents.
(c) Each Liberty Entity shall promptly deliver to the Agent copies of
any amendments or modifications to its certificate of incorporation or by-laws,
certified by an authorized officer of such Liberty Entity.
(d) Each Liberty Entity shall promptly notify the Agent of any
material adverse change with respect to its, the Distributor's or the Borrower's
business, properties, conditions (financial or otherwise) or results of
operations, since December 31, 1998.
(e) No Liberty Entity shall fail to maintain its operations if such
failure gives rise to a reasonable possibility of a Material Adverse Effect.
(f) Each Liberty Entity shall promptly give written notice to the
Agent of (i) the occurrence of any Default or Event of Default, (ii) the failure
of any conditions precedent set forth in Article III of the Credit Agreement to
be fully satisfied, or (iii) the failure of any Fund to constitute an Eligible
Fund.
(g) Each Liberty Entity shall keep proper books of record and
accounts in accordance with its normal business practice and GAAP in which full
and appropriate entries shall be made of all dealings or transactions in
relation to its business and activities.
(h) Each Liberty Entity shall cause to be computed, paid and
discharged when due all taxes, assessments and other governmental charges or
levies imposed upon it, or upon any income or assets of such Liberty Entity,
prior to the day on which penalties are attached thereto, unless and to the
extent that the same shall be contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been established on its books
in accordance with GAAP and which could not otherwise subject such Liberty
Entity or its assets to any risk of foreclosure, distraint, sale or other
similar proceedings
8
or to a reasonable possibility of a Material Adverse Effect.
(i) Each Liberty Entity shall, to the extent obtained or received by
it, furnish or cause to be furnished to the Agent a copy of each Governmental
Authorization obtained or required to be obtained by it in connection with the
transactions contemplated by this Agreement or any other Program Document and a
copy of all Private Authorizations to be obtained by the Distributor in
connection with the transactions contemplated by the Facility Documents.
(j) After the Agent's delivery of a Remittance Notice, each Liberty
Entity shall immediately upon its receipt of any Collections relating to any
Fund (or in respect of any Fund which constitutes a Portfolio, from the related
Company in respect of such Fund), remit such amount to the Agent's Account and
ensure that such amounts are not commingled with any other funds.
(k) The Parent shall (1) cause Ernst & Young, LLP or another
nationally recognized accounting firm reasonably acceptable to the Agent to
enter its premises and examine and audit its books, records and accounts and its
performance under the Program Documents (which may be coordinated as part of its
regular annual audit), (2) permit such accounting firm to discuss its affairs,
finances, accounts and performance under the Program Documents with its
officers, partners, employees and accountants, (3) cause such accounting firm to
provide the Agent with a certified report in respect of the foregoing, which
shall be in form and scope reasonably satisfactory to the Agent, and
(4) authorize such accounting firm to discuss such affairs, finances, records
and accounts with representatives of the Secured Parties; PROVIDED, HOWEVER,
that so long as no Default or Event of Default has occurred, such audits shall
be limited to one (1) per twelve (12) month period.
(l) Each Liberty Entity shall permit the Secured Parties to, upon
reasonable advance notice, during normal business hours and with reasonable
frequency, visit and inspect its books, records and accounts, its finances and
its performance under the Program Documents and to discuss the foregoing with
its officers, employees and accountants, all as often as the Agent may
reasonably request.
(m) Without the prior written consent of the Agent (which shall not
be unreasonably withheld), no Liberty Entity shall merge with or into or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to, or acquire all
or substantially all of the assets or capital stock or other ownership interest
of, or enter into any joint venture or partnership agreement with, any Person.
9
(n) Each Liberty Entity shall do all things reasonably necessary to
ensure that the effect of the Year 2000 Problem on its computer systems will not
have a Material Adverse Effect.
(o) Each Liberty Entity shall from time to time, at its expense,
promptly execute and deliver all further instruments and documents, and to take
all further actions, that may be necessary or desirable, or that the Agent may
reasonably request to enable the Secured Parties to exercise and enforce their
respective rights and remedies under this Agreement and the other Facility
Documents.
(p) The Parent shall (i) continue to own directly or indirectly all
of the outstanding capital stock of each Advisor and LFSI, (ii) cause LFSI to
continue to be the sole member of the Borrower, (iii) cause the Borrower to
continue to own all of the outstanding capital stock of CMA, and (iv) cause CMA
to continue to own all of the outstanding capital stock of the Distributor,
except as otherwise consented to in writing by the Agent (which consent shall
not be unreasonably withheld or delayed).
(q) Each Liberty Entity shall comply and cause its Subsidiaries to
comply, in all material respects, with the provisions of ERISA and the Code and
with all minimum funding requirements applicable to them with respect to any
Plan or Multiemployer Plan pursuant to Section 302 of ERISA or Section 412 of
the Code. At no time shall the Accumulated Benefit Obligations under any
Benefits Arrangement exceed the fair market value of the assets of such Plan
allocable to such benefits by more than $1,000,000. The Liberty Entities and
their Subsidiaries will not withdraw, and will cause all other person which is a
member of any ERISA Group not to withdraw, in whole or in part, from any
Multiemployer Plan so as to give rise to withdrawal liability exceeding
$1,000,000 in the aggregate. At no time shall the actuarial present value of
unfunded liabilities for post-employment health care benefits, whether or not
provided under a Plan or Multiemployer Plan, calculated in a manner consistent
with Statement No. 106 of the Financial Accounting Standards Board, exceed
$1,000,000.
SECTION 4.02. ADDITIONAL COVENANTS OF THE ADVISORS.
In addition to the covenants of the Advisors contained in Section
4.01, each Advisor hereby agrees as follows:
(a) Such Advisor shall manage the Funds in accordance with and comply
in all material respects with the Fundamental Investment Objectives and Policies
of the Funds (or in respect of any Fund which constitutes a Portfolio, the
related Company in respect of such Fund).
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(b) Such Advisor shall, immediately upon its becoming aware, provide
prompt written notice to the Agent of any action by its Board of Directors or,
to the best of its knowledge, information and belief, the board of directors or
trustees of any Fund (and in respect of any Fund which constitutes a Portfolio,
the board of directors or trustees of the Company related to such Fund) to make
any modification, amendment or supplement to, or any waiver of any provisions
of, or any termination of any Distribution Plan, any Advisory Agreement,
Conversion Feature, any CDSC arrangement or any Distribution Agreement or any
interpretation of any thereof, each as in effect on the Closing Date (or in
respect of any Fund for which the Distributor did not act as principal
distributor on the Closing Date, the date the Distributor first began acting as
distributor for such Fund), or any modification in the amounts payable or
actually being paid thereunder, or if a new investment advisory agreement or
contingent deferred sales charge arrangement is proposed to be approved and
entered into with respect to any Fund, it shall provide the Agent with copies of
any such proposed modification, as adopted, and a newly adopted contingent
deferred sales charges arrangement, conversion feature or investment advisory
agreement, promptly after such proposal, modification or adoption has been made;
in addition, it shall specifically provide notice to the Agent in writing of any
aspect of any of the foregoing which could have a Material Adverse Effect and
shall provide the Agent with a copy of any of the foregoing in the form finally
adopted; PROVIDED, HOWEVER, that such Advisor shall not be required to provide
the Agent with written notices of any amendment, modification, supplement or
waiver (i) to any Advisory Agreement under this Section, unless such amendments
or supplements provide for the replacement of such Advisor or otherwise give
rise to a reasonable possibility of a Material Adverse Effect, or (ii) to the
interpretation of any Distribution Plan, Distribution Agreement, Advisory
Agreement, CDSC arrangement or Conversion Feature unless such modification or
waiver could give rise to a reasonable possibility of a Material Adverse Effect.
(c) Such Advisor shall, subject to its fiduciary obligations, if any,
use its best efforts to obtain the approval of a majority of the board of
directors or trustees of each Fund (or in respect of each Fund which constitutes
a Portfolio, the board of directors or trustees of each Company in respect of
each related Fund), including a majority of the board of directors or trustees
of each Fund (or in respect of each Fund which constitutes a Portfolio, the
board of directors or trustees of each Company in respect of each related Fund),
who are not "Interested Persons" (as defined in Section 2(a)(19) of the
Investment Company Act), to: (a) annually reapprove the Distribution Plan, the
Distribution Agreement and the Advisory Agreement relating to each class of
Shares of such Fund (if necessary in order to continue payments in respect of
the Receivables relating to Shares of each such Fund) and its interpretation
thereof by each Fund (or in respect of each Fund
11
which constitutes a Portfolio, by each Company in respect of each related Fund)
as of the date of this Agreement, and (b) in the event any of the foregoing
shall be terminated, to approve a new distribution plan, distribution agreement
and advisory agreement with respect to such Fund (and in respect of each Fund
which constitutes a Portfolio, the Company related to each such Fund) so as to
permit the continued payments of the Receivables relating to Shares of such Fund
as though no such termination had occurred. In the event such Advisor is unable
to use its best efforts as a consequence of such obligations, it shall, prior to
taking any action inconsistent with such best efforts, or failing to take any
action it could otherwise take: (i) notify the Agent in writing of the nature
of such failure to use its best efforts, and (ii) provide certification by a
responsible officer of such Advisor that such failure to use its best efforts is
required in order to comply with such obligations.
(d) Such Advisor shall use its best efforts to preserve its present
relationship with each Company and each Fund; PROVIDED, HOWEVER, that in using
its best efforts, such Advisor shall not be required to resign or violate
Applicable Law.
(e) Such Advisor shall not cancel, terminate, amend, modify, supplement or
waive any term or condition of any Distribution Agreement, any Distribution
Plan, any Irrevocable Payment Instruction or the CDSC obligations of any holder
of Shares of any Fund (subject to Permitted Free Redemptions and Permitted Free
Exchanges), each as in effect on the Closing Date or take any action to permit
any Company or any Fund to do so, unless a responsible officer of such Advisor
has certified to the Agent that immediately after giving effect to all such
cancellations, terminations, amendments, modifications and waivers, (i) the
Borrower will be in full compliance with the Borrowing Base Test, and (ii) no
Default or Event of Default will be continuing or will result therefrom, or
change or modify any interpretation of any term or condition of any Distribution
Agreement, Distribution Plan, Irrevocable Payment Instruction or any such CDSC
obligation to the extent that such change or modification could give rise to a
reasonable possibility of a Material Adverse Effect.
(f) If any Default or Event of Default shall have occurred and be
continuing, such Advisor shall not permit any Free Redemption by any Fund or
otherwise waive its right to any CDSC relating to a Receivable relating to such
Fund, other than in connection with a Permitted Free Redemption or a Permitted
Free Exchange.
(g) Such Advisor shall not permit any Fund to change the Transfer Agent
for such Fund, unless such successor Transfer Agent, the Fund and the
Distributor have each executed a new Irrevocable Payment Instruction.
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(h) Such Advisor shall not assign its rights under any Advisory Agreement
or transfer, convey or permit to exist any Lien upon any of its assets or
properties, including without limitation, the management or advisory fees
payable to such Advisor under any Advisory Agreement, other than Permitted
Liens.
(i) Such Advisor shall not create, assume or suffer to exist any Debt or
any Guarantee, except for Debt arising in the ordinary course of its business in
connection with Persons providing services to such Advisor and Permitted Debt.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. NO WAIVER; MODIFICATIONS IN WRITING.
No failure or delay on the part of any Secured Party exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to the Secured Parties, at law or in
equity. Without limiting the generality of the foregoing, the Parent and each
Advisor acknowledge and agree that it will be impossible to measure in money the
damage to the Secured Parties in the event of a breach of any of the terms and
provisions of this Agreement or any other Program Document, and that, in the
event of any such breach, the Secured Parties may not have an adequate remedy at
Law, and no Liberty Entity shall argue, and each Liberty Entity hereby waives
any defense, that there is an adequate remedy available at Law. No amendment,
modification, supplement, termination or waiver of this Agreement shall be
effective unless the same shall be in writing and signed by the Agent. Any
waiver of any provision of this Agreement, and any consent to any departure by
any Secured Party from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand on any Liberty Entity in any case shall entitle
any Liberty Entity to any other or further notice or demand in similar or other
circumstances.
SECTION 5.02. NOTICES, ETC.
Except where telephonic instructions are authorized herein to be
given, all notices, demands, instructions and other communications required or
permitted to be given to or made upon any party hereto shall be in writing and
shall be personally delivered or sent by registered, certified or express mail,
postage prepaid, or by prepaid telegram (with messenger delivery specified in
the case of a telegram), or by facsimile
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transmission, or by prepaid courier service, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is received by the
intended recipient thereof in accordance with the provisions of this
Section 5.02. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section 5.02, notices, demands,
instructions and other communications in writing shall be given to or made upon
the respective parties hereto at their respective addresses (or to their
respective facsimile numbers) indicated below, and, in the case of telephonic
instructions or notices, by calling the telephone number or numbers indicated
for such party below:
If to the Agent: Citicorp North America, Inc.
U.S. Securitization
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: U.S. Securitization
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
If to the Parent: Liberty Financial Companies, Inc.
Federal Reserve Plaza
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to CMA: Colonial Management Associates, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to the Parent
If to NFM: Newport Fund Management, Inc.
c/o Colonial Management Associates
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to the Parent
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If to CHG: Crabbe Huson Group, Inc.
c/o Colonial Management Associates
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to the Parent
If to SRF: Xxxxx Xxx & Farnham Incorporated
c/o Colonial Management Associates
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to the Parent
SECTION 5.03. INDEMNIFICATION.
The Parent agrees to indemnify and hold harmless each Secured Party,
their successors, assigns, transferees and participants and each of their
Affiliates and the respective officers, directors, employees, agents, managers
of, and any Person controlling any of, the foregoing (each, an "Indemnified
Party") from and against any and all claims, damages, losses, liabilities,
obligations, expenses, penalties, actions, suits, judgments and disbursements of
any kind or nature whatsoever, (including, without limitation, the reasonable
fees and disbursements of counsel) (collectively the "Liabilities") that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of the execution, delivery,
enforcement, performance, administration of or otherwise arising out of or
incurred in connection with this Agreement or any other Program Document or any
transaction contemplated hereby or thereby (and regardless of whether or not any
such transactions are consummated), including, without limitation any such
Liability that is incurred or arises out of or in connection with, or by reason
of any one or more of the following: (i) preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with this Agreement or any other Program Document or any of the
transactions contemplated hereby or thereby; (ii) any breach or alleged breach
of any covenant or agreement by any Liberty Entity in any Program Document;
(iii) any representation or warranty made or deemed made by any
15
Liberty Entity contained in any Program Document or in any certificate,
statement or report delivered in connection therewith is, or is alleged to be,
false or misleading; (iv) any failure by any Liberty Entity to comply with any
Applicable Law or contractual obligation binding upon it; (v) any action or
omission, not expressly authorized by the Program Documents, by any Liberty
Entity, which has the effect of reducing or impairing the Assigned Collateral or
the rights of the Agent or the Secured Parties with respect thereto; or (vi) any
Default or Event of Default; except to the extent any such Liability is found in
a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
The Secured Parties agree to use reasonable efforts to utilize the same legal
counsel in connection with any matter for which the Secured Parties are entitled
to indemnification under this Section 5.03; PROVIDED, that nothing herein shall
be deemed to limit any Secured Party's right to employ separate counsel if such
Secured Party determines that there may be legal defenses or claims available to
it which are not available to the other Secured Parties or which are different
from or additional to those of the other Secured Parties.
SECTION 5.04. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
Agreement.
SECTION 5.05. ASSIGNABILITY.
(a) This Agreement and the Lender's and the Secondary Lender's rights
hereunder shall be assignable by the Lender, the Secondary Lenders and their
respective permitted successors and assigns.
(b) This Agreement and the rights and obligations of the Agent herein
shall be assignable by the Agent and its successors and assigns.
(c) No Liberty Entity may assign its rights or obligations hereunder
or any interest herein without the prior written consent of the Agent (which
consent shall not be unreasonably withheld or delayed).
SECTION 5.06. GOVERNING LAW.
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF
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SAID STATE.
SECTION 5.07. SEVERABILITY OF PROVISIONS.
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
SECTION 5.08. CONFIDENTIALITY.
Each of the Liberty Entities agrees that it shall and shall cause each
of its Affiliates (i) to keep this Agreement and the other Facility Documents,
the proposal relating to the structure of the facility contemplated by this
Agreement and the other Facility Documents (the "Facility"), any analyses,
computer models, information or document prepared by the Agent, Citibank or any
of their respective Affiliates in connection with the Facility, the Agent's or
its Affiliate's written reports to the Borrower, the Distributor, the Advisors,
the Parent, any Fund or any of their respective Affiliates and any related
written information (collectively, the "Product Information") confidential, and
to disclose Product Information only to those of its officers, employees,
agents, accountants, legal counsel and other representatives (collectively, the
"Liberty Entity Representatives") who have a need to know such Product
Information for the purpose of assisting in the negotiation, completion and
administration of the Facility; (ii) to use the Product Information only in
connection with the Facility and not for any other purpose; and (iii) to cause
the Liberty Entity Representatives to comply with the provisions of this Section
5.08 and to be responsible for any failure of any Liberty Entity Representative
to so comply.
The provisions of this Section 5.08 shall not apply to any Product
Information that is a matter of general public knowledge or that has heretofore
been made available to the public by any Person other than the Borrower, the
Distributor, the Liberty Entities, any Fund, any of their respective Affiliates
or any Liberty Entity Representative or that is required to be disclosed by
Applicable Law or is requested by any Authority with jurisdiction over any
Liberty Entity or any of their respective Affiliates.
SECTION 5.09. MERGER.
The Facility Documents taken as a whole incorporate the entire
agreement between the parties thereto concerning the subject matter thereof.
The Facility Documents supersede any prior agreements among the parties relating
to the subject matter thereof.
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SECTION 5.10. NO PROCEEDINGS.
Each of the Liberty Entities hereby agrees that it will not institute
against CRC any proceeding of the type referred to in Section 6.01(e) of the
Credit Agreement so long as any commercial paper or other senior indebtedness
issued by CRC shall be outstanding or there shall not have elapsed one year plus
one day since the last day on which any such commercial paper or other senior
indebtedness shall have been outstanding.
SECTION 5.11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The rights and remedies with respect to any breach of any
representation and warranty made by the Liberty Entities pursuant to any
Facility Document and the certificates and statements in connection therewith,
the indemnification provisions of Section 5.03 and the Liberty Entities'
obligations under Sections 5.08 and 5.10 shall be continuing and shall survive
any termination of this Agreement and the other Program Documents.
SECTION 5.12. SUBMISSION TO JURISDICTION; WAIVERS.
Each Liberty Entity hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement or the other Program Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and the appellate courts of any of them;
(b) consents that any such action or proceeding may be brought in any
of such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such Liberty Entity
at its address set forth in Section 5.02 or at such other address as may be
permitted thereunder;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction or court; and
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(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
SECTION 5.13. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER FACILITY DOCUMENT OR FOR ANY COUNTERCLAIM THEREIN OR
RELATING THERETO.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
LIBERTY FINANCIAL COMPANIES, INC.
By:____________________________
Name:
Title:
COLONIAL MANAGEMENT ASSOCIATES, INC.
By:____________________________
Name:
Title:
NEWPORT FUND MANAGEMENT, INC.
By:____________________________
Name:
Title:
CRABBE HUSON GROUP, INC.
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By:____________________________
Name:
Title:
XXXXX XXX & XXXXXXX INCORPORATED
By:____________________________
Name:
Title:
00
XXXXXXXX XXXXX XXXXXXX, INC.,
as Agent
By:____________________________
Name:
Title:
13620.110 #70013
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