UNDERWRITING AGREEMENT BETWEEN
LIBERTY-XXXXX XXX ADVISOR FLOATING RATE ADVANTAGE FUND
AND LIBERTY FUNDS DISTRIBUTOR, INC.
THIS UNDERWRITING AGREEMENT ("Agreement"), made as of the 14th day of
January, 2000 by and between Liberty-Xxxxx Xxx Advisor Floating Rate Advantage
Fund, a business trust organized and existing under the laws of the Commonwealth
of Massachusetts (hereinafter called the "Fund"), and Liberty Funds Distributor,
Inc., a corporation organized and existing under the laws of the Commonwealth of
Massachusetts (hereinafter called the "Distributor").
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end management
investment company registered under the Investment Company Act of 1940, as
amended ("ICA-40"); and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended ("SEA-34") and the laws of each
state (including the District of Columbia and Puerto Rico) in which it engages
in business to the extent such law requires, and is a member of the National
Association of Securities Dealers ("NASD") (such registrations and membership
are referred to collectively as the "Registrations"); and
WHEREAS, the Fund desires the Distributor to act as the distributor in
the public offering of its Shares of beneficial interest (hereinafter called
"Shares");
WHEREAS, the Fund shall pay all charges of its transfer, shareholder
recordkeeping, dividend disbursing and redemption agents, if any; all expenses
of notices, proxy solicitation material and reports to shareholders; all
expenses of preparation of annual or more frequent revisions of the Fund's
Prospectus and Statement of Additional Information ("SAI") and of supplying
copies thereof to shareholders; all expenses of registering and maintaining the
registration of the Fund under ICA-40 and of the Fund's Shares under the
Securities Act of 1933, as amended ("SA-33"); all expenses of qualifying and
maintaining qualification of such Fund and of the Fund's Shares for sale under
securities laws of various states or other jurisdictions and of registration and
qualification of the Fund under all laws applicable to the Fund or its business
activities; and
WHEREAS, Xxxxx Xxx and Xxxxxxx Incorporated, investment advisor to the
Fund, or its affiliates, may pay expenses incurred in the sale and promotion of
the Fund except as provided in the Fund's 12b-1 plan;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. Appointment. The Fund appoints Distributor to act as principal
underwriter (as such term is defined in Sections 2(a)(29) of ICA-40) of its
Shares for each series or class of the Fund set forth on Schedule A hereto.
2. Delivery of Fund Documents. The Fund has furnished Distributor with
properly certified or authenticated copies of each of the following in effect on
the date hereof and shall furnish Distributor from time to time properly
certified or authenticated copies of all amendments or supplements thereto:
(a) Agreement and Declaration of Trust;
(b) By-Laws;
(c) Resolutions of the Board of Trustees of the Fund (hereinafter
referred to as the "Board") selecting Distributor as
distributor and approving this form of agreement and
authorizing its execution.
The Fund shall furnish Distributor promptly with copies of any
registration statements filed by it with the Securities and Exchange Commission
("SEC") under SA-33 or ICA-40, together with any financial statements and
exhibits included therein, and all amendments or supplements thereto hereafter
filed.
The Fund also shall furnish Distributor such other certificates or
documents which Distributor may from time to time, in its discretion, reasonably
deem necessary or appropriate in the proper performance of its duties.
3. Distribution of Shares.
(a) Subject to the provisions of Paragraphs 6, 7, 10, 11, 12, 13
and 14 hereof, and to such minimum purchase and other
requirements as may from time to time be indicated in the
Fund's Prospectus, Distributor, acting as principal for its
own account and not as agent for the Fund, shall have the
right to purchase Shares from the Fund. Distributor shall sell
Shares only in accordance with the Fund's Prospectus, on a
"best efforts" basis. Distributor shall purchase Shares from
the Fund at a price equal to the net asset value, shall sell
Shares at the public offering price as defined in Paragraph 8,
and shall retain all sales charges.
(b) The Fund shall pay all expenses associated with notices, proxy
solicitation material, the preparation of annual or more
frequent revisions to the Fund's Prospectus and SAI and of
printing and supplying the currently effective Prospectus and
SAI to shareholders, other than those necessitated by
Distributor's activities or rules and regulations related to
Distributor's activities where such amendments or supplements
result in expenses which the Fund would not otherwise have
incurred.
(c) The Distributor (or its affiliates) shall pay the costs of
printing and supplying all copies of the Prospectus and SAI
that it may reasonably request for use in connection with the
distribution of Shares. The Distributor will also pay the
expenses of the preparation, excluding legal fees, and
printing of all amendments and supplements to the Fund's
Prospectus and SAI if the amendment or supplement arises from
Distributor's activities or rules and regulations related to
Distributor's activities and those expenses would not
otherwise have been incurred by the Fund. Distributor will pay
all expenses incurred by Distributor in advertising, promoting
and selling Fund Shares.
(d) Prior to the continuous offering of any Fund Shares,
commencing on a date agreed upon by the Fund and the
Distributor, it is contemplated that the Distributor may
solicit subscriptions for such Shares during a subscription
period which shall last for such period as may be agreed upon
by the parties hereto. The subscriptions will be payable
within three business days after the termination of the
subscription period, at which time the Fund will commence
operations.
4. Selling Agreements. Distributor is authorized to enter into
agreements with other broker-dealers providing for the solicitation of
unconditional orders for purchases of the Fund's Shares authorized for issuance
and registered under SA-33 and fix therein the portion of the sales charge which
may be reallowed to the selected dealers, as permitted under that Fund's
prospectus. All such agreements shall be either in the form of agreement
attached hereto or in such other form as may be approved by the officers of the
Fund ("Selling Agreement"). Within the United States, the Distributor shall
offer and sell Shares to such selected dealers as are members in good standing
of the NASD; "banks" as such term is defined in Section 3(a)(6) of the Exchange
Act or a "bank holding company" as such term is defined in the Bank Holding
Company Act of 1956, as amended, duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was organized; and such
other entities or purchasers as otherwise mutually agreed in writing.
5. Conduct of Business. Other than as set forth in the Fund's currently
effective prospectus, Distributor will not distribute any sales material or
statements except literature or advertising which conforms to the requirements
of federal and state securities laws and regulations which have been filed,
where necessary, with the appropriate regulatory authorities. Upon the Fund's
request, Distributor will furnish the Fund with copies of all such materials
prior to their use. Any sales material or statements the substance of which is
not included in the Prospectus or SAI shall be submitted for advance approval by
the Fund.
6. Solicitation of Orders to Purchase Shares by Fund. The rights
granted to the Distributor shall be non-exclusive in that the Fund reserves the
right to solicit purchases from, and sell its Shares to, investors. Further, the
Fund reserves the right to issue Shares in connection with the merger or
consolidation of any other investment company, trust or personal holding company
with the Fund, or the Fund's acquisition, by the purchase or otherwise, of all
or substantially all of the assets of an investment company, trust or personal
holding company, or substantially all of the outstanding Shares or interests of
any such entity. Any right granted to Distributor to solicit purchases of Shares
will not apply to Shares that may be offered by the Fund to shareholders by
virtue of their being shareholders of the Fund.
7. Shares Covered by this Agreement. This Agreement relates to the
solicitation of orders to purchase Shares that are duly authorized and
registered and available for sale by the Fund, including redeemed or repurchased
Shares if and to the extent that they may be legally sold and if, but only if,
the Fund authorizes the Distributor to sell them.
8. Public Offering Price. The public offering price for the Fund's
Shares will be the net asset value per Share next determined by the Fund after
the Distributor or its appointed agent receives the order plus any sales charge
as set forth in the Fund's Prospectus. The net asset value per Share shall be
determined in the manner provided in the Fund's Agreement and Declaration of
Trust as now in effect or as they may be amended, and as reflected in the Fund's
then current Prospectus and SAI.
9. Compensation.
(a) Sales Charge. Distributor shall be entitled to charge a sales
charge on the sale or redemption, as appropriate, of
each series and class of each Fund's Shares as set forth
in the Fund's then current Prospectus. Distributor may
allow any dealers with which it has signed selling agreements
such commissions or discounts from and not exceeding
the total sales charge as Distributor shall deem advisable,
so long as any such commissions or discounts are set
forth in the Fund's current Prospectus to the extent required
by the applicable federal and state securities laws.
Distributor may also make payments to dealers from
Distributor's own resources, subject to the following
conditions: (a) any such payments shall not create any
obligation for or recourse against the Fund or any series
or class, and (b) the terms and conditions of any such
payments are consistent with the Fund's Prospectus and
applicable federal and state securities laws and are
disclosed in the Prospectus or SAI to the extent such laws may
require.
(b) Distribution Plans. Distributor shall also be entitled to
compensation for its services as provided in any Distribution
Plan adopted as to any series and class of any Fund's Shares
pursuant to Rule 12b-1 under the ICA-40.
10. Suspension of Sales. If and whenever the determination of the
Fund's net asset value is suspended and until such suspension is terminated, the
Distributor shall not accept orders for Shares except for unconditional orders
placed before the suspension. In addition, the Fund reserves the right to
suspend sales of Shares if, in the judgment of the Board of the Fund, it is in
the best interest of the Fund to do so, such suspension to continue for such
period as may be determined by the Board of the Fund; and in that event, (i) at
the direction of the Fund, Distributor shall suspend receipt and acceptance of
orders to purchase Shares of the Fund until otherwise instructed by the Fund and
(ii) the Distributor shall not accept orders to purchase Shares while such
suspension remains in effect unless otherwise directed by the Board.
11. Orders and Payment for Shares.
(a) Distributor shall direct orders for the purchase of Shares of
any series to the Fund's transfer agent. At or prior to the
time of delivery of any Shares the Distributor will pay or
cause to be paid to the custodian of the Fund's assets, for
the account of such series, an amount in cash equal to the
purchase price of such Shares. The Fund's custodian and
transfer agent shall be identified in its Prospectus.
(b) The Fund, or any agent of the Fund designated in writing by
the Fund, shall be promptly advised of all purchase orders for
Fund Shares received by the Distributor. Any order may be
rejected by the Fund; provided, however, that the Fund will
not arbitrarily or without reasonable cause refuse to accept
or confirm orders for the purchase of Fund Shares from
eligible investors.
12. Repurchase or Redemption of Shares by the Fund.
(a) Any of the outstanding Fund Shares may be tendered to the
transfer agent for redemption at any time, other than when
the Fund suspends redemptions as permitted by the Prospectus
or applicable law, and the Fund agrees to repurchase or
redeem the Shares so tendered in accordance with its
obligations as set forth in its Agreement and Declaration of
Trust, as amended from time to time, and in accordance with
the applicable provisions set forth in the Prospectus
and SAI. The price to be paid to redeem or repurchase the
Shares shall be equal to the net asset value calculated
in accordance with the provisions of the Fund's Prospectus
and SAI, less any contingent deferred sales charge
("CDSC"), redemption fee or other charge(s), if any, set
forth in the Prospectus or SAI of the Fund. All payments
by the Fund hereunder shall be made in the manner set forth
below.
(b) If Shares are tendered to the transfer agent for redemption or
repurchase by the Fund within seven business days after
Distributor's acceptance of the original purchase order for
such Shares, Distributor will immediately refund to the Fund
the full sales commission (net of allowances to dealers or
brokers) allowed to Distributor on the original sale, and will
promptly, upon receipt thereof, pay to the Fund any refunds
from dealers or brokers of the balance of sales commissions
reallowed by Distributor. The transfer agent shall notify
Distributor of such tender for redemption within ten days of
the day on which notice of such tender for redemption is
received by the transfer agent.
(c) The transfer agent shall pay the total amount of the
redemption price as defined in the above paragraph 12(a),
pursuant to the instructions of the Distributor in Federal
Funds on or before the seventh business day subsequent to its
having received the notice of redemption in proper form except
as otherwise provided in the Prospectus or SAI of the Fund.
The proceeds of any redemption of Shares shall be paid by the
transfer agent as follows: (i) any applicable CDSC shall be
paid to the Distributor, and (ii) the balance shall be paid to
or for the account of the shareholder, in each case in
accordance with the applicable provision of the Prospectus and
SAI.
13. Purchases for your own Account. Distributor may purchase Shares for
its own investment account upon Distributor's written assurance that the
purchase is for investment purposes and that the Shares will not be resold
except through redemption by the Fund.
14. Xxxxx Xxx & Xxxxxxx Incorporated Investment Programs. In connection
with any program under which Xxxxx Xxx & Farnham Incorporated or one of its
affiliates offers investment advice to shareholders, the Distributor is
authorized to offer and sell Shares of the Fund, as principal, to participants
in such program. The terms of this Agreement shall apply to such sales,
including terms as to the offering price of Shares, the proceeds to be paid to
the Fund, the duties of the Distributor, the payment of expenses and
indemnification obligations of the Fund and the Distributor.
15. Authorized Representations. No Fund is authorized by the
Distributor to give on behalf of the Distributor any information or to make any
representations other than the information and representations contained in the
Fund's registration statement filed with the SEC under SA-33 and/or ICA-40 as it
may be amended from time to time.
16. Registration of Additional Shares. The Fund hereby agrees to
register an indefinite number of Shares pursuant to Rule 24f-2 under ICA-40, as
amended. The Fund will, in cooperation with the Distributor, take such action as
may be necessary from time to time to qualify the Shares (so registered or
otherwise qualified for sale under SA-33), in any state mutually agreeable to
the Distributor and the Fund, and to maintain such qualification; provided,
however, that nothing herein shall be deemed to prevent the Fund from
registering its Shares without approval of the Distributor in any state it deems
appropriate.
17. Conformity With Law. Distributor agrees that in soliciting orders
to purchase Shares it shall duly conform in all respects with applicable federal
and state laws and the rules and regulations of the NASD. Distributor will use
its best efforts to maintain its registrations in good standing during the term
of this Agreement and will promptly notify the Fund and Xxxxx Xxx & Xxxxxxx
Incorporated in the event of the suspension or termination of any of the
registrations.
18. Independent Contractor. Distributor shall be an independent
contractor and neither the Distributor, nor any of its officers, directors,
employees, or representatives is or shall be an employee of the Fund in the
performance of Distributor's duties hereunder. Distributor shall be responsible
for its own conduct and the employment, control, and conduct of its agents and
employees and for injury to such agents or employees or to others through its
agents and employees and agrees to pay all employee taxes thereunder.
Distributor may appoint sub-agents or distribute through dealers or otherwise as
Distributor may determine from time to time, but this Agreement shall not be
construed as authorizing any dealer or other person to accept orders for sale or
repurchase on the Fund's behalf or otherwise act as the Fund's agent for any
purpose.
19. Indemnification. Distributor agrees to indemnify and hold harmless
the Fund and each of the members of its Board and its officers, employees and
representatives and each person, if any, who controls the Fund within the
meaning of Section 15 of SA-33 against any and all losses, liabilities, damages,
claims and expenses (including the reasonable costs of investigating or
defending any alleged loss, liability, damage, claim or expense and reasonable
legal counsel fees incurred in connection therewith) to which the Fund or such
of the members of its Board and of its officers, employees, representatives, or
controlling person or persons may become subject under SA-33, under any other
statute, at common law, or otherwise, arising out of or based upon (i) any
violation of an applicable law, rule or regulation or wrongful act by
Distributor or any of Distributor's directors, officers, employees or
representatives, or (ii) any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, Prospectus, SAI,
shareholder report or other information covering Shares of the Fund filed or
made public by the Fund or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such statement or omission was made in reliance upon information furnished to
the Fund by Distributor in writing. In no case (i) is Distributor's indemnity in
favor of the Fund, or any person indemnified, to be deemed to protect the Fund
or such indemnified person against any liability to which the Fund or such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or negligence in the performance of its or his duties or by reason of its or his
reckless disregard of its or his obligations and duties under this Agreement or
(ii) is Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Fund or any person
indemnified unless the Fund or such person, as the case may be, shall have
notified Distributor in writing of the claim within a reasonable time after the
summons, or other first written notification, giving information of the nature
of the claim served upon the Fund or upon such person (or after the Fund or such
person shall have received notice of such service on any designated agent).
However, failure to notify Distributor of any such claim shall not relieve
Distributor from any liability which Distributor may have to the Fund or any
person against whom such action is brought otherwise than on account of
Distributor's indemnity agreement contained in this Paragraph.
Distributor shall be entitled to participate, at its own expense, in
the defense, or, if Distributor so elects, to assume the defense of any suit
brought to enforce any such claim but, if Distributor elects to assume the
defense, such defense shall be conducted by legal counsel chosen by Distributor
and satisfactory to the persons indemnified who are defendants in the suit. In
the event that Distributor elects to assume the defense of any such suit and
retain such legal counsel, persons indemnified who are defendants in the suit
shall bear the fees and expenses of any additional legal counsel retained by
them. If Distributor does not elect to assume the defense of any such suit,
Distributor will reimburse persons indemnified who are defendants in such suit
for the reasonable fees of any legal counsel retained by them in such
litigation.
The Fund agrees to indemnify and hold harmless Distributor and each of
its directors, officers, employees, and representatives and each person, if any,
who controls Distributor within the meaning of Section 15 of SA-33 against any
and all losses, liabilities, damages, claims or expenses (including the damage,
claim or expense and reasonable legal counsel fees incurred in connection
therewith) to which Distributor or such of its directors, officers, employees,
representatives or controlling person or persons may become subject under SA-33,
under any other statute, at common law, or otherwise arising out of or based
upon (i) any violation of applicable law, rule or regulation or wrongful act by
the Fund or any of the members of the Fund's Board, or the Fund's officers,
employees or representatives other than Distributor, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement, Prospectus, SAI, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading unless such statement or omission was made in reliance
upon information furnished by Distributor to the Fund. In no case (i) is the
Fund's indemnity in favor of the Distributor or any person indemnified to be
deemed to protect the Distributor or such indemnified person against any
liability to which Distributor or such indemnified person would otherwise be
subject by reason of willful misfeasance, bad faith, or negligence in the
performance of its or his duties or by reason of its or his reckless disregard
of its or his obligations and duties under this Agreement, or (ii) is the Fund
to be liable under its indemnity agreement contained in this Paragraph with
respect to any claim made against Distributor or any person indemnified unless
Distributor, or such person, as the case may be, shall have notified the Fund in
writing of the claim within a reasonable time after the summons, or other first
written notification, giving information of the nature of the claim served upon
Distributor or upon such person (or after Distributor or such person shall have
received notice of such service on any designated agent). However, failure to
notify a Fund of any such claim shall not relieve the Fund from any liability
which the Fund may have to Distributor or any person against whom such action is
brought otherwise than on account of the Fund's indemnity agreement contained in
this Paragraph.
The Fund shall be entitled to participate, at its own expense, in the
defense or, if the Fund so elects, to assume the defense of any suit brought to
enforce such claim but, if the Fund elects to assume the defense, such defense
shall be conducted by legal counsel chosen by the Fund and satisfactory to the
persons indemnified who are defendants in the suit. In the event that the Fund
elects to assume the defense of any such suit and retain such legal counsel, the
persons indemnified who are defendants in the suit shall bear the fees and
expenses of any additional legal counsel retained by them. If the Fund does not
elect to assume the defense of any such suit, the Fund will reimburse the
persons indemnified who are defendants in such suit for the reasonable fees and
expenses of any legal counsel retained by them in such litigation.
20. Duration and Termination of this Agreement. With respect to the
Fund and the Distributor, this Agreement shall become effective upon its
execution ("Effective Date") and unless terminated as provided herein, shall
remain in effect through June 30, 2001, and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually (a)
by a vote of majority of the members of the Board of the Fund who are not
interested persons of the Distributor or of the Fund, voting in person at a
meeting called for the purpose of voting on such approval, and (b) by the vote
of either the Board of the Fund or a majority of the outstanding Shares of the
Fund. This Agreement may be terminated by and between an individual Fund and
Distributor at any time, without the payment of any penalty (a) on 60 days'
written notice, by the Board of the Fund or by a vote of a majority of the
outstanding Shares of the Fund, or by Distributor, or (b) immediately, on
written notice by the Board of the Fund, in the event of termination or
suspension of any of the Registrations. This Agreement will automatically
terminate in the event of its assignment. In interpreting the provisions of this
Paragraph 20 the definitions contained in Section 2(a) of ICA-40 (particularly
the definitions of "interested person", "assignment", and "majority of the
outstanding Shares") shall be applied.
21. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by each party against which enforcement of the change, waiver,
discharge, or termination is sought. If the Fund should at any time deem it
necessary or advisable in the best interests of the Fund that any amendment of
this Agreement be made in order to comply with the recommendations or
requirements of the SEC or any other governmental authority or to obtain any
advantage under state or Federal tax laws and notifies Distributor of the form
of such amendment, and the reasons therefor, and if Distributor should decline
to assent to such amendment, the Fund may terminate this Agreement forthwith. If
Distributor should at any time request that a change be made in the Fund's
Agreement and Declaration of Trust or By-Laws or in its methods of doing
business, in order to comply with any requirements of Federal law or regulations
of the SEC, or of a national securities association of which Distributor is or
may be a member, relating to the sale of Shares, and the Fund should not make
such necessary changes within a reasonable time, Distributor may terminate this
Agreement forthwith.
22. Liability. It is understood and expressly stipulated that neither
the shareholders of the Fund nor the members of the Board of the Fund shall be
personally liable hereunder. The obligations of the Fund are not personally
binding upon, nor shall resort to the private property of, any of the members of
the Board of the Fund, nor of the shareholders, officers, employees or agents of
the Fund, but only the Fund's property shall be bound. A copy of the Declaration
of Trust and of each amendment thereto has been filed by the Trust with the
Secretary of State of The Commonwealth of Massachusetts and with the Clerk of
the City of Boston, as well as any other governmental office where such filing
may from time to time be required.
23. Miscellaneous. The captions in this Agreement are included for
convenience or reference only, and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
24. Notice. Any notice required or permitted to be given by a party to
this Agreement or to any other party hereunder shall be deemed sufficient if
delivered in person or sent by registered or certified mail, postage prepaid,
addressed by the party giving notice to each such other party at the address
provided below or to the last address furnished by each such other party to the
party giving notice.
If to the Fund: Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Secretary
If to Distributor: Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Secretary
LIBERTY FUNDS DISTRIBUTOR, INC.
By:_____________________________
ATTEST:
--------------------------
LIBERTY-XXXXX XXX ADVISOR FLOATING RATE ADVANTAGE FUND
By:______________________________
Xxxxxxx X. Xxxxxx
President
ATTEST:
--------------------------
Assistant Secretary
Schedule A to Underwriting Agreement
Between Liberty-Xxxxx Xxx Advisor Floating Rate Advantage Fund
and Liberty Funds Distributor, Inc.
The classes of the Fund covered by this agreement are:
Name of Class Effective Date
Liberty-Xxxxx Xxx Advisor Floating Rate Advantage Fund
Class A January ___, 2000
Class B January ___, 2000
Class C January ___, 2000
Class Z January ___, 2000
Dated: January ___, 2000
