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PLEDGE AND SECURITY AGREEMENT
between
LIBERTY FUNDS DISTRIBUTOR, INC.,
as Distributor
and
CITICORP NORTH AMERICA, INC.,
as Agent
Dated as of April 12, 1999
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[Type VII-C]
13620.110 #71862
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions; Terminology; Rules of Construction.. . . . . . . .1
ARTICLE II
PLEDGE OF ASSIGNED COLLATERAL; RIGHTS OF THE AGENT
SECTION 2.01. Security Interests. . . . . . . . . . . . . . . . . . . . . . .2
SECTION 2.02. Rights and Remedies.. . . . . . . . . . . . . . . . . . . . . .2
SECTION 2.03. Remedies Cumulative.. . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.04. Enforcement of Remedies under the Distribution
Agreements and Distribution Plans. . . . . . . . . . . . . . .3
SECTION 2.05. Application of Proceeds.. . . . . . . . . . . . . . . . . . . .3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Distributor . . . . . . .4
ARTICLE IV
COVENANTS
SECTION 4.01. Affirmative Covenants of the Distributor. . . . . . . . . . . .7
SECTION 4.02. Negative Covenants of the Distributor.. . . . . . . . . . . . 11
ARTICLE V
MISCELLANEOUS
SECTION 5.01. No Waiver; Modifications in Writing.. . . . . . . . . . . . . 13
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SECTION 5.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.03. Indemnification.. . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.04. Execution in Counterparts.. . . . . . . . . . . . . . . . . . 15
SECTION 5.05. Assignability.. . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.06. Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.07. Severability of Provisions. . . . . . . . . . . . . . . . . . 15
SECTION 5.08. Confidentiality.. . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.09. Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.10. No Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.11. Survival of Representations and Warranties, Etc.. . . . . . . 17
SECTION 5.12. Submission to Jurisdiction; Waivers.. . . . . . . . . . . . . 17
SECTION 5.13. Waiver Of Jury Trial. . . . . . . . . . . . . . . . . . . . . 17
SCHEDULES
SCHEDULE I Form of Investor Report
SCHEDULE II CDSCs
SCHEDULE III Permitted Conversion Features
EXHIBITS
EXHIBIT D Form of Irrevocable Payment Instruction
13620.110 #71862
ii
SCHEDULE I
FORM OF INVESTOR REPORT
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of April 12, 1999 (this
"Agreement") between CITICORP NORTH AMERICA, INC., as agent for the Secured
Parties (as defined below) (in such capacity, together with its successors and
assigns, the "Agent") and LIBERTY FUNDS DISTRIBUTOR, INC. (together with its
permitted successors and assigns, the "Distributor").
W I T N E S S E T H:
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, 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 Distributor enter into this Agreement and
assign and pledge 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 below); and
WHEREAS, the Borrower shall make the proceeds of the advances made
under the Credit Agreement available to the Distributor;
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained, the receipt by the Distributor of substantial
economic benefit whether or not set forth herein, the receipt and sufficiency of
which are hereby acknowledged, and for other good and valuable consideration,
receipt and sufficiency of which are hereby acknowledged by each of the parties
hereto, the Distributor undertakes and agrees as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
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
PLEDGE OF ASSIGNED COLLATERAL; RIGHTS OF THE AGENT
SECTION 2.01. SECURITY INTERESTS.
As collateral security for the prompt, complete and unconditional
payment and performance of all of the Borrower Obligations, the Distributor
hereby pledges, hypothecates, assigns, transfers, sets over and delivers to the
Agent for the benefit of the Secured Parties and grants to the Agent for the
benefit of the Secured Parties a continuing first Lien upon and security
interest in, all of the Distributor's right, title and interest in, to and under
the following assets and properties now existing and hereafter arising or
acquired (collectively, the "Assigned Collateral"):
(i) all of the Receivables relating to all Funds;
(ii) all Collections;
(iii) all accounts into which any Collections are remitted; and
(iv) all Proceeds of any and all of the foregoing.
SECTION 2.02. RIGHTS AND REMEDIES.
The Agent (for itself and on behalf of the other Secured Parties)
shall have all of the rights and remedies of a secured party under the UCC and
other Applicable Law. Upon the occurrence and during the continuance of an Event
of Default, the Agent or its designees may (i) sell or otherwise dispose of the
Assigned Collateral, all without judicial process or proceedings; (ii) take
control of the Collections and Proceeds of any such Assigned Collateral; and/or
(iii) institute and prosecute legal and equitable proceedings to enforce
collection of, or realize upon, any of the Assigned Collateral. In addition,
upon the occurrence and during the continuance of a Default or Event of Default,
the Agent may deliver a Remittance Notice to each Fund and the Transfer Agent
for each Fund. The Distributor authorizes the Agent to file financing or
continuation statements, and amendments thereto and assignments thereof,
relating to the Assigned Collateral without the signature of the Distributor
where permitted by law. A photocopy or other reproduction of this Agreement
shall be sufficient as a financing statement
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where permitted by law. For purposes of taking the actions described in this
Section 2.02 the Distributor hereby irrevocably appoints the Agent as its
attorney-in-fact (which appointment being coupled with an interest is
irrevocable while any of the Borrower Obligations remain unpaid), with power of
substitution, in the name of the Agent or in the name of the Distributor or
otherwise, for the use and benefit of the Agent, but at the cost and expense of
the Distributor and without notice to the Distributor.
SECTION 2.03. REMEDIES CUMULATIVE.
Each right, power, and remedy of the Agent and the other Secured
Parties, or any of them, as provided for in this Agreement or in the other
Program Documents or now or hereafter existing at law or in equity or by statute
or otherwise shall be cumulative and concurrent and shall be in addition to
every other right, power, or remedy provided for in this Agreement or in the
other Facility Documents or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by the Agent
or any other Secured Party of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by such Persons
of any or all such other rights, powers, or remedies.
SECTION 2.04. ENFORCEMENT OF REMEDIES UNDER THE DISTRIBUTION
AGREEMENTS AND DISTRIBUTION PLANS.
The Distributor agrees that it shall upon the request of the Agent
(and at the Distributor's own expense) (i) diligently exercise and enforce its
rights and remedies under the Distribution Agreements and the Irrevocable
Payment Instructions and in respect of the Assigned Collateral and at law or
equity against the Funds, (ii) respond to inquiries of the Agent relating to the
Assigned Collateral, and (iii) cause the Funds to comply with the Irrevocable
Payment Instructions for the breach of any term or agreement thereunder relating
to or affecting any Assigned Collateral. In enforcing and exercising such
rights and remedies the Distributor shall exercise the same degree and care that
it would exercise if this Agreement had not been entered into; provided, that
the Distributor shall not, in enforcing such rights and remedies, settle any
claim against any Fund without the prior written consent of the Agent (which
consent shall not be unreasonably withheld).
SECTION 2.05. APPLICATION OF PROCEEDS.
(a) After the occurrence of an Event of Default, all Collections and
other cash amounts received in respect of the Assigned Collateral, including all
Proceeds resulting from the sale or other disposition of the Assigned Collateral
shall be applied by the Agent in the following order and priority:
FIRST, to the payment of all amounts advanced or expended by the Agent
and all costs and expenses incurred by the Agent in connection with the
enforcement of the Secured Parties rights and remedies under the Program
Documents;
SECOND, to the extent funds are remaining after the above application,
to the
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Lenders and the Secondary Lenders for the payment of all accrued and unpaid
Yield on all outstanding Advances on a pro-rata basis according to the amount of
accrued Yield owing to each Lender and Secondary Lender;
THIRD, to the extent funds are remaining after the above applications,
to the Secured Parties for the payment of all fees payable under the Fee Letter
on a pro rata basis according to the amount of such fees owing to each Secured
Party;
FOURTH, to the extent funds are remaining after the above
applications, to the Lenders and the Secondary Lenders for the payment of the
principal amount of each outstanding Advance on a pro-rata basis according to
the amount of principal owing to each Lender and Secondary Lender;
FIFTH, to the extent funds are remaining after the above applications,
to the Secured Parties for the payment of all other amounts payable to the
Secured Parties pursuant to this Agreement and the other Program Documents on a
pro rata basis according to the amounts owed to each Secured Party.
The Agent shall, after the final payment in full of all Advances
and all other Borrower Obligations, remit the remaining excess Proceeds which it
had received from the sale or disposition of the Assigned Collateral to the
Distributor.
(b) For purposes of determining the application to be made of such
monies and other cash proceeds by the Agent to the Lender and the Secondary
Lenders pursuant to this Section 2.05, the Agent may rely exclusively upon a
certificate or other statement the Lender or such Secondary Lender, as the case
may be, setting forth in reasonable detail the Lender's and such Secondary
Lender's amount then owing to the Lender and such Secondary Lender, as the case
may be. The Agent shall not be liable for any application of funds in accordance
with any certificate or direction delivered pursuant to this Section 2.05;
provided, however, that no application of funds in accordance with any
certificate delivered pursuant to this Section 2.05 shall be deemed to restrict
or limit the right of any party to contest with the purported obligee its
respective liability in respect of the amount set forth in such certificate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE DISTRIBUTOR.
The Distributor represents and warrants to each of the Secured Parties
on and as of the Closing Date, each Borrowing Date and the last day of each
Settlement Period, as follows:
(a) the Distributor is duly organized and validly existing in good
standing under the laws of the Commonwealth of Massachusetts, with full
corporate power and authority to own and operate its assets and properties,
conduct the business in which it is now engaged and to execute and deliver and
perform its obligations under this Agreement and the other Program Documents to
which it is a party;
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(b) the Distributor is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business, assets and
properties, including, without limitation, 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 by the Distributor of the
Program Documents to which it is a party and the other instruments and
agreements contemplated thereby are within its corporate powers and have been
duly authorized by all requisite corporate action by the Distributor and have
been duly executed and delivered by the Distributor and constitute the legal,
valid and binding obligations of the Distributor enforceable against the
Distributor in accordance with their respective terms;
(d) neither the execution and delivery by the Distributor of this
Agreement, the other Program Documents to which it is a party, or any instrument
or agreement referred to herein or therein, or 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 certificate of incorporation, or by-laws or other
organizational documents, (ii) conflict with or contravene any (A) Applicable
Law, (B) any contractual restriction binding on or affecting the Distributor or
any of its assets or properties, (C) any order, writ, judgment, award,
injunction or decree binding on or affecting the Distributor or any of its
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 or any of its 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 Distribution Agreement or Distribution
Plan;
(e) the Distributor has obtained all necessary Governmental Authorizations
and Private Authorizations, and made all Governmental Filings necessary for the
execution, delivery and performance by the Distributor of this Agreement, the
other Program Documents to which it is a party and the agreements and
instruments contemplated hereby or thereby, and no Governmental Authorization,
Private Authorization or Governmental Filing which has not been obtained or
made, is required to be obtained or made by it in connection with the execution,
delivery or performance of this Agreement and the other Program Documents,
including without limitation the pledge of the Assigned Collateral contemplated
by this Agreement;
(f) this Agreement and the actions required to be taken pursuant to the
terms hereof are, and at all times shall be, effective to create and perfect in
the Agent for the benefit of the Secured Parties a first priority security
interest in the Assigned Collateral free and clear of all Adverse Claims;
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(g) the Distributor owns the Assigned Collateral free and clear of Adverse
Claims; and as of the initial Borrowing Date and at all times thereafter, the
Agent has a first priority perfected security interest in the Assigned
Collateral free and clear of all Adverse Claims and no actions, except as have
been taken, are necessary or advisable to perfect or protect such security
interest free and clear of Adverse Claims;
(h) no effective financing statements or other instruments similar in
effect covering any Assigned Collateral of the Distributor is on file in any
recording office, except those filed in favor of the Agent pursuant to this
Agreement;
(i) the Distributor is a wholly-owned subsidiary of Colonial Management
Associates, Inc., which is a wholly-owned subsidiary of the Borrower which is
wholly-owned by LFSI, which in turn is a wholly-owned subsidiary of the Parent
and the Distributor's principal place of business and chief executive office and
the place where its records concerning the Assigned Collateral are kept is at
the addresses referred to in Section 4.01(d);
(j) there are no pending or, to the best of the Distributor's knowledge,
threatened investigations, actions, suits or proceedings involving the
Distributor which give rise to a reasonable possibility of a Material Adverse
Effect;
(k) the Prospectus, each Investor Report, each Notice of Borrowing and all
other written information, reports and statements provided by or on behalf of
the Distributor or any of its Affiliates to any Secured Party for purposes of or
in connection with this Agreement, any other Facility Document or the
transactions contemplated hereby or thereby is, and all such information,
notices, reports and statements hereafter provided to any Secured Party will be
true, correct and complete in all material respects on the date such
information, notice, report or statement is stated or certified and on such date
no such information, notice, report or statement contains, or will 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 when considered in its entirety;
(l) the Distributor is in compliance in all material respects with
Applicable Law, including, without limitation, the Securities Act, the Exchange
Act and the Investment Company Act;
(m) the Distributor is not a member of an ERISA Group and has no Benefit
Arrangement, Plan or Multiemployer Plan subject to ERISA;
(n) 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;
(o) the Distributor is taking all reasonable actions necessary to mitigate
the effect of the Year 2000 Problem on its computer systems;
(p) the Distributor has filed all United States Federal income tax returns
and
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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 the Distributor, 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 of
the Distributor in respect of taxes or other governmental charges, if any, are,
in the opinion of the Distributor, adequate;
(q) the statement of assets and liabilities of the Distributor as at
December 31, 1998, certified by Ernst & Young, LLP, certified public
accountants, fairly present in conformity with GAAP the financial position of
the Distributor 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 Distributor;
(r) the Asset Based Sales Charge relating to Shares of each Fund and CDSC
arrangement relating to the Shares and the payments provided for in, and
actually being made pursuant to, the related Distribution Plan, the Distribution
Agreement and/or the Prospectus for each such Fund are fairly and accurately
described in the related Distribution Plan, the Distribution Agreement and/or
the Prospectus relating to such Fund;
(s) each Fund (and in respect of each Fund which constitutes a Portfolio,
each Company related to such Fund in respect thereof) has complied in all
material respects with the Fundamental Investment Objectives and Policies
relating to such Funds;
(t) each Fund (and in respect of each Fund which constitutes a Portfolio,
each Company related to such Fund) and the Distribution Agreement, the
Distribution Plan, and the Irrevocable Payment Instruction relating to each Fund
are in compliance, in all material respects, with Applicable Law, including,
without limitation, Rule 12b-1 of the Investment Company Act and the Conduct
Rules;
(u) the Sales Charges paid and payable in respect of each Fund (or, in
respect of each Fund which constitutes a Portfolio, by each Company in respect
of each related Fund) relating to the sales of Shares of each such Fund pursuant
to the related Distribution Agreement, Distribution Plan and Prospectus and
pursuant to the Conduct Rules (as are interpreted by each such Fund (or in
respect of each Fund which constitutes a Portfolio, by each Company in respect
of each related Fund) and the Distributor as of the date hereof), is the Maximum
Aggregate Sales Charge Allowable in respect of such sales;
(v) the CDSCs payable upon the redemption or conversion of the Shares
relating to the Receivables of each Fund shall continue to be payable in
accordance with Schedule II attached hereto after any termination or
modification of the Distribution Plan or the Distribution Agreement in respect
of such Fund; and
(w) the Shares of each Fund can only be exchanged for the Shares of
another Fund in respect of which the Agent has a first priority perfected
security interest in the Receivables relating to such Fund.
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ARTICLE IV
COVENANTS
SECTION 4.01. AFFIRMATIVE COVENANTS OF THE DISTRIBUTOR.
The Distributor covenants and agrees that it shall:
(a) (i)duly observe, comply with and conform in all material respects to
all requirements of Applicable Law relative to the conduct of its business or to
its assets or properties, including without limitation the Investment Company
Act, (ii) preserve and keep in full force and effect its legal existence and its
rights, privileges, qualifications and franchises, and (iii) obtain, maintain
and keep in full force and effect all Governmental Authorizations, Private
Authorizations and Governmental Filings which are necessary or appropriate to
properly carry out its business and the transactions contemplated to be
performed by the Distributor under this Agreement and the other Program
Documents;
(b) cause to be computed, paid and discharged when due all taxes,
assessments and other governmental charges or levies imposed upon it, or upon
any of its income, assets or properties, 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 the books of the Distributor in accordance
with GAAP and which could not otherwise subject it or its assets to any risk of
foreclosure, distraint, sale or other similar proceedings or give rise to a
reasonable possibility of a Material Adverse Effect;
(c) promptly, at its expense, execute and deliver such further instruments
and take such further action in order to establish and protect the rights,
interests and remedies created, or intended to be created, in favor of the
Secured Parties including, without limitation, all such actions which are
necessary or advisable to maintain and protect the Secured Parties' first
priority perfected security interest in the Assigned Collateral;
(d) keep its principal place of business and chief executive office and
the office where it keeps its records concerning the Assigned Collateral at the
address of the Distributor set forth in Section 5.02 or, upon thirty (30) days'
prior written notice to the Agent, at any other locations in jurisdictions where
all actions reasonably requested by the Agent to protect and perfect the Secured
Parties' security interest in the Assigned Collateral have been taken and
completed;
(e) duly fulfill all obligations on its part to be performed under or in
connection with the Program Documents and will use its best efforts to cause
each Fund (and in respect of each Fund which constitutes a Portfolio, each
Company related to each Fund) to duly fulfill and perform its respective
obligations under the Program Documents;
(f) keep proper books of record and account 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,
including dealings and transactions resulting
8
from activities of each Selling Agent;
(g) 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 the Distributor;
(h) promptly give written notice to the Agent of the occurrence of any
Default or Event of Default or the failure of any conditions precedent set forth
in Article III to the Credit Agreement to be fully satisfied;
(i) to the extent obtained or received by it, furnish or cause to be
furnished to the Agent a copy of all Governmental Authorizations obtained or
required to be obtained by the Distributor in connection with the transactions
contemplated by the Program Documents and a copy of all Private Authorizations
required to be obtained by the Distributor in connection with the transactions
contemplated by the Facility Documents;
(j) (1) cause Ernst & Young, LLP or another nationally recognized
accounting firm reasonably acceptable to the Agent to enter the premises of the
Distributor and examine and audit the books, records and accounts relating to
the Assigned Collateral, the Collections in respect thereto and the
Distributor's performance under the Program Documents (which may be coordinated
as part of the Distributor's regular annual audit), (2) permit such accounting
firm to discuss the Distributor's affairs, finances, accounts and performance
under the Program Documents with the Distributor's 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;
(k) permit the Agent, the Lender and the Secondary Lenders to, upon
reasonable advance notice, during normal business hours, and with reasonable
frequency, visit and inspect the Distributor's books, records and accounts
relating to the Assigned Collateral, the Collections in respect thereto, the
Distributor's finances and the Distributor's performance under the Program
Documents and to discuss the foregoing with the officers, employees and
accountants of the Distributor, all as often as the Agent may reasonably
request, and during the continuance of a Default or Event of Default, permit the
Secured Parties to have full access to such books, records and accounts to the
extent necessary to enforce their rights and remedies under this Agreement and
the other Facility Documents;
(l) promptly deliver to the Agent copies of all material notices,
requests, agreements, amendments, supplements, waivers and other documents
received or delivered by the Distributor (except if received from the Agent)
under or with respect to any of the Program Documents;
(m) 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, each Company in
respect of each related Fund), including a
9
majority of the board of directors or trustees of each Fund (or in respect of
each Fund which constitutes a Portfolio, 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 and
the Distribution Agreement relating to Shares of each 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 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 and
distribution agreement between the Distributor and such Fund (and in respect of
each Fund which constitutes a Portfolio, the Company related to each Fund) so as
to permit the continued payments in respect of the Receivables relating to
Shares of each such Fund as though no such termination had occurred; PROVIDED,
HOWEVER, that in using its best efforts, the Distributor shall not be required
to resign or violate Applicable Law;
(n) immediately upon becoming aware, provide written notice to the Agent
of any action by the board of directors or trustees or officers of the
Distributor or, the shareholders or board of directors or trustees of any Fund
(and in respect of any Fund which constitutes a Portfolio, the Board of
Directors 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, any CDSC
arrangement, or Conversion Feature, any Distribution Agreement, or the
interpretation of any thereof, in effect on the Closing Date, or any
modification, amendment, supplement or waiver in the amounts payable or actually
being paid thereunder, 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 began acting as distributor for such
Fund), or if a new distribution plan, investment advisory agreement, contingent
deferred sales charge arrangement or distribution agreement is proposed to be
approved and entered into in respect of Shares of any Fund, provide the Agent
with copies of any such proposed modification, amendment, supplement or waiver,
as adopted, and a newly adopted distribution plan, contingent deferred sales
charge arrangement, investment advisory agreement, prospectus or distribution
agreement promptly after such proposal, modification, amendment, supplement,
waiver or adoption has been made (such notice to include specific written
reference concerning any aspect of any of the foregoing which gives rise to a
reasonable possibility of a Material Adverse Effect and a copy of any of the
foregoing in the form finally adopted); PROVIDED, HOWEVER, that the Distributor
shall not be required to provide the Agent with written notices of any
amendment, modification, supplement or waiver (i) to any Advisory Agreements
under this Section 4.01(n), unless such amendments or supplements provide for
the replacement of an Advisor or otherwise give rise to a reasonable possibility
of a Material Adverse Effect, or (ii) to the interpretation of any Distribution
Agreement, Distribution Plan, Advisory Agreement, CDSC arrangement or Conversion
Feature unless such modification or waiver could give rise to a reasonable
possibility of a Material Adverse Effect;
(o) 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;
10
(p) promptly notify the Agent of any material adverse change with respect
to the business, properties, financial conditions, or results of operations of
the Distributor, any Company and any Fund since December 31, 1998;
(q) furnish to the Agent such information as the Agent may reasonably
request;
(r) on or before the tenth (10th) Business Day of each calendar month or
more frequently as the Agent shall request (which may be daily), furnish to the
Agent an Investor Report substantially in the form of Schedule I hereto,
together with a certificate of the Distributor in substantially the form of
Annex A to Schedule I hereto;
(s) use its best efforts to preserve its present relationship with each
Company and each Fund; PROVIDED, HOWEVER, that in using its best efforts, the
Distributor shall not be required to resign or violate Applicable Law;
(t) warrant and defend each of the Secured Parties' right and interest in
and to the Assigned Collateral thereof against all Adverse Claims of all Persons
whomsoever;
(u) cause to, at all times, be in full force and effect an Irrevocable
Payment Instruction with each Fund that issues Shares;
(v) do all things reasonably necessary to ensure that the Year 2000
Problem will not have a Material Adverse Effect on its computer systems;
(w) from time to time, at its expense, promptly to 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 perfect,
protect or more fully evidence the Secured Parties' first priority perfected
security interest in the Assigned Collateral and to enable the Secured Parties
to exercise and enforce their respective rights and remedies under this
Agreement, including without limitation executing and filing such financing or
continuation statements, or amendments thereto, and such other instruments and
documents, that may be necessary or desirable, or that the Agent may reasonably
request, to perfect, protect or evidence the Assigned Collateral; and
(x) after the Agent's delivery of a Remittance Notice, 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 amounts to the Agent's Account and ensure that such amounts
are not commingled with any other funds.
SECTION 4.02. NEGATIVE COVENANTS OF THE DISTRIBUTOR.
The Distributor covenants and agrees that it shall not:
(a) permit to exist any Adverse Claim attributable to the
Distributor or any Affiliate of the Distributor or any party claiming through
the Distributor or any Affiliate of the
11
Distributor (including any Selling Agent) on, or otherwise attempt to
transfer, pledge or assign any interest in, any Assigned Collateral or any
interest in any of the foregoing or take any other action which could
adversely affect the Secured Parties' first priority perfected security
interest in the Assigned Collateral;
(c)(b) move its principal executive office or the place where it keeps
its records concerning the Assigned Collateral from the offices specified in
Section 4.01(d), unless (a) it shall have given to the Agent not less than
twenty (20) days' prior written notice of its intention to do so, clearly
describing the new location, and (b) it shall have taken such action,
satisfactory to the Agent to maintain the Secured Parties' first priority
security interest in the Assigned Collateral at all times fully perfected and in
full force and effect;
(c) 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 the Distributor shall have 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 of any CDSC obligations to
the extent such change or modification could give rise to a reasonable
possibility of a Material Adverse Effect;
(d) change its operations in a manner which could reasonably be
expected to give rise to a Material Adverse Effect;
(e) if any Default or Event of Default shall have occurred and be
continuing, 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;
(f) without the prior written consent of the Agent (which consent
shall not be unreasonably withheld), assign its rights under any Distribution
Agreement, 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, other than as contemplated by the
Facility Documents;
(g) 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;
(h) enter into any agreement containing any provision which would be
12
violated or breached by the performance of its obligations under any Program
Document;
(i) create, assume or suffer to exist any Debt or any Guarantee,
except for Debt arising under this Agreement or the other Facility Documents and
Debt arising in the ordinary course of its business in connection with Persons
providing services to the Distributor and Permitted Debt;
(j) extend credit to others for the purpose of buying or carrying any
"margin stock" in such a manner as to violate Regulation T, Regulation U or
Regulation X; or
(k) change its name (i) without giving the Agent at least ten (10)
days' prior written notice, and (ii) unless all actions necessary and
appropriate to protect and perfect the Secured Parties' first priority security
interest in the Assigned Collateral have been taken and completed.
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 any Secured Party, at law or in equity.
Without limiting the generality of the foregoing, the Distributor acknowledges
and agrees 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 the
Distributor shall not argue and 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 the Agent 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 the
Distributor in any case shall entitle the Distributor 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 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
13
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 Distributor: Liberty Funds Distributor, 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: Liberty Financial Companies, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SECTION 5.03. INDEMNIFICATION.
The Distributor 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 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
14
or proceeding arising out of, related to or in connection with this Agreement or
any of the transactions contemplated hereby; (ii) any breach or alleged breach
of any covenant by the Distributor, any Fund or any Transfer Agent in any
Program Document; (iii) any representation or warranty made or deemed made by
the Distributor, any Fund or any Transfer Agent 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 the
Distributor, any Advisor, any Fund, any Transfer Agent or any Selling Agent to
comply with any Applicable Law or contractual obligation binding upon it; (v)
any failure to vest, or delay in vesting, in the Secured Parties a first
priority perfected security interest in all of the Assigned Collateral; and(vi)
any action or omission, not expressly authorized by the Program Documents, by
the Distributor, any Fund, any Transfer Agent or any Selling Agent, which has
the effect of reducing or impairing the Assigned Collateral or the rights of the
Agent or the Secured Parties with respect thereto; 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(b);
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 Secured Parties' rights and obligations
hereunder shall be assignable by the Secured Parties 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) The Distributor may not 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 SAID STATE.
15
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.
(a) The Distributor 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 Distributor, 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 "Distributor 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 Distributor Representatives to comply with the
provisions of this Section 5.08 and to be responsible for any failure of any
Distributor Representative to so comply.
The provisions of this Section 5.08(a) 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
Distributor, any Fund, any of their respective Affiliates or any Distributor
Representative or that is required to be disclosed by Applicable Law or is
requested by any Authority with jurisdiction over the Distributor, any Advisor
or any of their respective Affiliates.
(b) Each of the Secured Parties agrees (i) to keep all non-public
information with respect to the Distributor and its Affiliates which such
Secured Party receives pursuant to the Facility Documents (collectively, the
"Distributor Information") confidential and to disclose Distributor Information
only to those of its officers, employees, agents, accountants, legal counsel and
other representatives of the Secured Parties (collectively, the "Secured Party
Representatives") and to S&P, Xxxxx'x and each other rating agency rating CRC's
commercial paper notes which, in each case, may have a need to know or review
such Distributor Information for the purpose of assisting in the negotiation,
completion, administration and evaluation of the Facility; (ii) to use the
Distributor Information only in connection with the Facility and not for any
other purpose; and (iii) to cause its related Secured Party Representatives to
comply with the provisions of this Section 5.08(b).
The provisions of this Section 5.08(b) shall not apply to any
Distributor Information that is a matter of general public knowledge or that has
heretofore been made available to the public by any Person other than such
Secured Party Representative or that is
16
required to be disclosed by Applicable Law or is requested by any Authority with
jurisdiction over any Secured Party or Secured Party Representative or any of
its Affiliates.
Notwithstanding the foregoing, the Distributor Information may be
disclosed by any Secured Party Representative to permitted assignees and
participants and potential assignees and participants in the Facility to the
extent such disclosure is made pursuant to a written agreement of
confidentiality substantially similar to this Section 5.08(b).
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.
SECTION 5.10. NO PROCEEDINGS.
The Distributor 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, ETC.
The Secured Parties' rights and remedies with respect to any breach of
any representation and warranty made by the Distributor pursuant to Article III,
the indemnification and payment provisions of Section 5.03 and the Distributor's
obligations under Sections 5.08(a) and 5.10 and the Agent's, the Lender's and
the Secondary Lenders' obligations under Section 5.08(b) shall be continuing and
shall survive any termination of this Agreement and the other Facility
Documents.
SECTION 5.12. SUBMISSION TO JURISDICTION; WAIVERS.
The Distributor 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 court 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
17
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Distributor 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
(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.
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
LIBERTY FUNDS DISTRIBUTOR, INC.,
as Distributor
By:_____________________________
Name:
Title:
CITICORP NORTH AMERICA, INC.,
as Agent
By:____________________________
Name:
Title:
13620.110 #71862
19
Annex A
to
Schedule I
-------------------------------------------------------------------------------
Investor Report Officer's Certificate
The undersigned, ______________, [President] [Treasurer] [Chief
Accounting Officer] of Liberty Funds Distributor, Inc. (the "Distributor")
pursuant to that certain Pledge and Security Agreement, dated as of April 12,
1999 (the "Security Agreement") between the Distributor and Citicorp North
America, Inc., as agent (the "Agent"), as the same may be amended, modified or
supplemented from time to time, hereby certifies that:19
1. CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED SHALL HAVE THE
MEANING ASCRIBED TO SUCH TERMS IN APPENDIX A TO THE CREDIT AGREEMENT.
2. THE INVESTOR REPORT FURNISHED HEREWITH TO THE AGENT PURSUANT TO
SECTION 4.01(r) OF THE SECURITY AGREEMENT IS TRUE, ACCURATE AND
COMPLETE AS OF THE DAY HEREOF.
3. No event has occurred and is continuing which would constitute a
Default or an Event of Default.
4. As of the date hereof, the Borrowing Base Test is fully complied with.
IN WITNESS WHEREOF, the undersigned has duly signed on behalf of the
Distributor as of the date set forth below.
DATED: ___________________________
Name:
Title:
--------------------------------------------------------------------------------
13620.110 #71862
20
SCHEDULE II
------------------------------------------------------------------------------
TYPE OF FEE
STRUCTURE: B1 B2 B3 B4 B5 B6 B7 B8
------------------------------------------------------------------------------
------------------------------------------------------------------------------
REDEMPTION
FEE:
------------------------------------------------------------------------------
Year 1 5% 5% 5% 5% 4% 3% 2% 4%
------------------------------------------------------------------------------
Year 2 4% 4% 4% 4% 3% 2% 2% 3%
------------------------------------------------------------------------------
Year 3 3% 4% 3% 3% 2% 1% 1% 2%
------------------------------------------------------------------------------
Year 4 3% 3% 3% 3% 2% 0% 1%
------------------------------------------------------------------------------
Year 5 2% 2% 2% 2% 1% 0%
------------------------------------------------------------------------------
Year 6 1% 1% 1% 1% 0% 0%
------------------------------------------------------------------------------
Year 7 0% 0% 0% 0% 0%
------------------------------------------------------------------------------
Year 8 0% 0% 0% 0% 0%
------------------------------------------------------------------------------
Companies currently using B1 Structure: Colonial Trust I; Colonial Trust II;
Colonial Trust III, Colonial Trust IV; Colonial Trust V.
Companies currently using B2 Structure: Colonial Trust I; Colonial Trust II;
Colonial Trust III; Colonial Trust IV; Colonial Trust VI; Colonial Trust VII.
Companies currently using B3 Structure: Colonial Trust I.
Companies currently using B8 Structure: Colonial Trust II; Colonial Trust IV.
21
EXHIBIT D
FORM OF IRREVOCABLE PAYMENT INSTRUCTION
[INSERT NAME AND ADDRESS OF FUND]
[NAME AND ADDRESS OF TRANSFER AGENT]
You are hereby notified that pursuant to that certain Revolving Credit
Agreement dated as of April 12, 1999 (as from time to time amended, the "Credit
Agreement") among Liberty Funds Group LLC (together with its successors and
assigns, "Liberty"), Corporate Receivables Corporation (together with its
successors and assigns, the "Lender"), Citibank, N.A., the banks and financial
institutions from time to time parties thereto (together with Citibank, N.A.,
the "Secondary Lenders") and Citicorp North America, Inc., as agent for the
Lender and the Secondary Lenders (together with its successors and assigns, the
"Agent"), the Lender and the Secondary Lenders have agreed to from time to time
make advances to Liberty which in turn shall make the proceeds of such advances
available to Liberty Funds Distributor, Inc., its wholly-owned subsidiary. You
are hereby further notified that in order to secure the obligations of Liberty
under the Credit Agreement to the Lenders, the Secondary Lenders and the Agent
(collectively, the "Secured Parties"), the Distributor, pursuant to that certain
Pledge and Security Agreement dated as of April 12, 1999 (as from time to time
amended, the "Security Agreement") between the Distributor and the Agent, has
pledged and assigned to the Agent for the benefit of the Secured Parties all of
its right, title and interest in, to and under the Receivables (defined below)
now owned or hereafter arising relating to all Funds (defined below).
Capitalized terms used herein shall have the following meanings:
"ASSET BASED SALES CHARGE" shall have the meaning set forth in Rule
2830 of the Conduct Rules it being understood that such term does not include
the Service Fee.
"BUSINESS DAY" means any day on which banks and the New York Stock
Exchange are not authorized or required to close in New York City.
"CDSC" means with respect to any Fund, the contingent deferred sales
charges payable, either directly or by withholding from the proceeds of the
redemption of the Shares of such Fund, by the shareholders of such Fund on any
redemption of Shares relating to such Fund in accordance with the Prospectus.
22
"CONDUCT RULES" means the Conduct Rules of the NASD, as amended, and
the rules, regulations and interpretations (including examples and explanations)
of the NASD in respect thereto.
"COMPANY" means [INSERT NAME OF INVESTMENT COMPANY], together with its
successors and assigns.
"DISTRIBUTION AGREEMENT" means with respect to any Shares of any Fund,
the agreement between the Distributor and the Company in respect of such Fund,
in respect of the Shares of such Fund and any replacement agreement as may be
adopted in the future, pursuant to which the Distributor has been appointed the
principal underwriter in respect of such Fund.
"DISTRIBUTION PLAN" means with respect to any Shares of the Fund the
distribution plan of the Company, pursuant to which such Shares of any Fund are
distributed by the Distributor, together with any successor or replacement
distribution plan, as the same may be amended, supplemented, waived or modified
from time to time.
"FUND" means each separate investment portfolio or series of the
Company.
"MAXIMUM AGGREGATE SALES CHARGE ALLOWABLE" means, at any time with
respect to the Receivables relating to Shares of any Fund, the maximum aggregate
Sales Charges which may be paid by such Fund to the Distributor pursuant to the
Distribution Agreement, the Distribution Plan and the Prospectus, together with
interest thereon at the Maximum Interest Allowable, relating to such Shares and
pursuant to the "maximum sales charge rule" set forth in Rule 2830 of the
Conduct Rules, assuming the Fund pays a separate Service Fee in connection with
such Shares, unreduced by payments previously made in respect thereof by the
Fund.
"MAXIMUM INTEREST ALLOWABLE" means the maximum interest which may be
taken into account under Rule 2830 of the Conduct Rules in computing the Maximum
Aggregate Sales Charge Allowable.
"NASD" means both the National Association of Securities Dealers, Inc.
and NASD Regulation, Inc. or any successor entity.
"PROSPECTUS" means with respect to any Fund the prospectus filed with
the SEC as a part of such Fund's registration statement on Form N-1A, as amended
(or any successor SEC form), and shall include, without limitation, the related
statement of additional information included in such registration statement.
"RECEIVABLES" means with respect to any Fund, all of the Distributor's
rights under the Distribution Agreement, the Distribution Plan, the Prospectus
and the applicable Conduct Rules to receive amounts paid or payable in respect
of Asset Based Sales Charges (including interest at the Maximum Interest
Allowable) and CDSCs, in each case in respect of any Shares issued by such Fund,
including, without limitation, any similar amount paid or payable under any
replacement distribution agreement, distribution plan, prospectus or the Conduct
Rules, and any continuation payments in respect thereof paid or payable by such
Fund in the event of a
23
termination of the related Distribution Plan or the related Distribution
Agreement; it being understood that such term does not include the Service Fee.
"SALES CHARGE" shall have the meaning set forth in Section 2830 of the
Conduct Rules.
"SERVICE FEE" shall have the meaning set forth in Section 2830 of the
Conduct Rules.
"SHARES" means, in respect of any Fund, the Class B Shares of such
Fund, together with all other shares or capital stock of such Fund which are
issued on a deferred sales charge basis and which have a sales load structure
substantially similar to that of the Class B shares, PROVIDED, THAT, for the
avoidance of doubt the Class C shares of any Fund shall not be deemed to
constitute "Shares".
You are hereby directed upon your receipt from the Agent of a notice
in the form of Annex A hereto (the "Remittance Notice") to make all payments in
respect of all amounts paid or payable by each of the Funds pursuant to the
Distribution Agreements, the Distribution Plan, the Prospectuses and the Conduct
Rules in respect of the Receivables relating to each Fund and all proceeds
therefrom (hereinafter, "Payments"), which otherwise would be payable by you to
the Distributor on or prior to the second (2nd) Business Day of each calendar
month directly by wire in immediately available funds to an account of the
Agent, Acct. No. 40517805, ABA No. 000000000 (the "Agent's Account") maintained
at the office of Citibank, N.A. at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or
to such other account as the Agent shall designate in writing.
You are further notified that:
(1) this Irrevocable Payment Instruction is delivered on behalf of
the Secured Parties and is irrevocable and cannot be changed without the
consent of the Secured Parties and the Distributor;
(2) by your acknowledgment, you authorize the Distributor to deliver
a copy of this Irrevocable Payment Instruction and your acknowledgment to the
Secured Parties and their respective successors and assigns; and
(3) after your receipt of a Remittance Notice any payment by you
other than in compliance with the directions herein shall not be deemed to
discharge your obligations in respect of the Payments.
24
THIS IRREVOCABLE PAYMENT INSTRUCTION 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 SAID STATE WITHOUT
REGARD TO ITS CONFLICTS OF LAWS PROVISIONS.
By your execution of this Irrevocable Payment Instruction you hereby
acknowledge and agree to abide by the foregoing instructions, it being
understood that such acknowledgment and waiver does not constitute a waiver of
any defenses.
LIBERTY FUNDS DISTRIBUTOR, INC.
By:____________________________
Name:
Title:
Acknowledged and
Agreed to as of the date
first written above:
[INSERT NAME OF COMPANY]
By:_____________________
Name:
Title:
[INSERT NAME OF TRANSFER AGENT]
By:_____________________
Name:
Title:
25
ANNEX A
to
Irrevocable Payment Instruction
CITICORP NORTH AMERICA, INC.
U.S. Securitization
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
[INSERT NAME OF COMPANY]
[ADDRESS]
[INSERT NAME OF TRANSFER AGENT]
[ADDRESS]
REMITTANCE NOTICE
Reference is made to that certain Irrevocable Payment Instruction
dated as of April 12, 1999 (the "Payment Instruction") from Liberty Funds
Distributor, Inc. to each of you. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings assigned to such terms in the Payment
Instruction.
Pursuant to the Payment Instruction we hereby instruct you to make all
Payments in respect of the Receivables directly by wire transfer to the Agent's
Account in accordance with the terms of the Payment Instruction.
26
Very truly yours,
CITICORP NORTH AMERICA, INC.
as Agent
By:_________________________
Authorized Signatory
13620.110 #71862
27
