INTERIM MANAGEMENT CONTRACT
LEBENTHAL FUNDS, INC.
(the "Fund")
LEBENTHAL TAXABLE MUNICIPAL BOND FUND
(the "Portfolio")
New York, New York
November 30, 2001
Lebenthal Asset Management, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and
reinvesting our assets in securities of the type, and in accordance with the
limitations, specified in our Articles of Incorporation, By-Laws and
Registration Statement filed with the Securities and Exchange Commission under
the Investment Company Act of 1940 (the "1940 Act") and the Securities Act of
1933, including the Prospectus forming a part thereof (the "Registration
Statement"), all as from time to time in effect, and in such manner and to such
extent as may from time to time be authorized by our Board of Directors. We
enclose copies of the document listed above and will furnish you such amendments
thereto as may be made from time to time.
2. (a) We hereby employ you to manage the investment and
reinvestment of our assets as above specified, and, without limiting the
generality of the foregoing, to provide the management and other services
specified below, including supervising and monitoring the performance of the
Administrator in connection with its duties under our Administrative Services
Agreement.
(b) Subject to the general control of our Board of Directors, you
will make decisions with respect to all purchases and sales of our portfolio
securities. To carry out such decisions, you are hereby authorized, as our agent
and attorney-in-fact for our account and at our risk and in our name, to place
orders for the investment and reinvestment of our assets. In all purchases,
sales and other transactions in our portfolio securities you are authorized to
exercise full discretion and act for us in the same manner and with the same
force and effect as our corporation itself might or could do with
respect to such purchases, sales or other transactions, as well as with respect
to all other things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions.
(c) You will report to our Board of Directors at each meeting
thereof all changes in our Portfolio since your prior report, and will also keep
us in touch with important developments affecting our Portfolio and, on your
initiative, will furnish us from time to time with such information as you may
believe appropriate for this purpose, whether concerning the individual entities
whose securities are included in our Portfolio, the activities in which such
entities engage, federal income tax policies applicable to our investments, or
the conditions prevailing in the money market or the economy generally. You will
also furnish us with such statistical and analytical information with respect to
the portfolio securities as you may believe appropriate or as we may reasonably
request. In making such purchases and sales of our portfolio securities, you
will comply with the policies set from time to time by our Board of Directors as
well as the limitations imposed by our Articles of Incorporation and by the
provisions of the Internal Revenue Code and the 1940 Act relating to regulated
investment companies and the limitations contained in the Registration
Statement.
(d) It is understood that you will from time to time employ,
subcontract with or otherwise associate yourself with, entirely at your expense,
such persons as you believe to be particularly fitted to assist you in the
execution of your duties hereunder.
(e) You or your affiliates will also furnish us, at your own
expense, such investment advisory supervision and assistance as you may believe
appropriate or as we may reasonably request subject to the requirements of any
regulatory authority to which you may be subject. You and your affiliates will
also pay the expenses of promoting the sale of our shares (other than the costs
of preparing, printing and filing our registration statement, printing copies of
the prospectus contained therein and complying with other applicable regulatory
requirements), except to the extent that we are permitted to bear such expenses
under a plan adopted pursuant to Rule 12b-1 under the 1940 Act or a similar
rule.
3. We agree, subject to the limitations described below, to be
responsible for, and hereby assume the obligation for payment of, all our
expenses, including: (a) brokerage and commission expenses; (b) federal, state
or local taxes, including issue and transfer taxes incurred by or levied on us;
(c) commitment fees and certain insurance premiums; (d) interest charges on
borrowings; (e) charges and expenses of our custodian; (f) charges, expenses and
payments relating to the issuance, redemption, transfer and dividend disbursing
functions for us; (g) telecommunications expenses; (h) recurring and
nonrecurring legal and accounting expenses, including the determination of net
asset value per share and the maintenance of Portfolio and general accounting
records; (i) costs of organizing and maintaining our existence as a
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corporation; (j) compensation, including directors' fees, of any of our
directors, officers or employees who are not your officers or officers of your
affiliates and costs of other personnel providing clerical, accounting
supervision and other office services to us, as we may request; (k) costs of
stockholders' services; (l) costs of stockholders' reports, proxy solicitations,
and corporate meetings; (m) fees and expenses of registering our shares under
the appropriate Federal securities laws and of qualifying our shares under
applicable state securities laws, including expenses attendant upon the initial
registration and qualification of our shares and attendant upon renewals of, or
amendment to, those registrations and qualifications; (n) expenses of preparing,
printing and delivering our prospectus to our existing shareholders and of
printing shareholder application forms for shareholder accounts; and (o) payment
of the fees provided for herein and in the Shareholder Servicing Agreement,
Administrative Services Agreement and Distribution Agreement. Our obligation for
the foregoing expenses is limited by your agreement to be responsible, while
this Agreement is in effect, for any amount by which our annual operating
expenses (excluding taxes, brokerage, interest and extraordinary expenses)
exceed the limits on investment company expenses prescribed by any state in
which the Portfolio's shares are qualified for sale.
4. We will expect of you, and you will give us the benefit of,
your best judgment and efforts in rendering these services to us, and we agree
as an inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
5. In consideration of the foregoing we will pay you a fee at the
annual rate of .25% of the Portfolio's average daily net assets not in excess of
$50 million, .225% of such assets between $50 million and $100 million and .20%
of such assets in excess of $100 million. Your fee will be accrued by us daily,
and will be payable on the last day of each calendar month for services
performed hereunder during that month or on such other schedule as you shall
request of us in writing. You may waive your right to any fee to which you are
entitled hereunder, provided such waiver is delivered to us in writing.
6. The compensation to be paid to you, as set forth above in
paragraph 5, shall be held in escrow in an interest-bearing account ("Escrow
Account") with State Street Bank and Trust Company for a term (the "Interim
Period") beginning on the date the proposed purchase of your parent, Lebenthal &
Co., Inc., by The Advest Group, Inc., is completed (the "Closing Date"), and
ending on the earlier of (1) 150 days after the Closing Date, or (2) the date
the shareholders of the Portfolio approve or disapprove the new management
contract between us, acting on behalf of the Portfolio, and you (the "New
Management Contract").
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If the New Management Contract is approved by vote of a majority
of the outstanding voting securities, as defined in the 1940 Act, of the
Portfolio by the end of the Interim Period, the amount held in the Escrow
Account (including interest earned thereon) shall be paid to you.
If the New Management Contract is not approved by vote of a
majority of the outstanding voting securities, as defined in the 1940 Act, of
the Portfolio by the end of the Interim Period, you shall receive as
compensation for your services provided during the Interim Period the lesser of
(1) any costs you incurred in performing services to the Portfolio under this
Contract (plus interest earned on such amount while held in the Escrow Account),
or (2) the total amount held in the Escrow Account (plus interest earned
thereon).
7. This Agreement shall become effective on the Closing Date,
provided it has been approved by the Fund's Board (including a majority of the
disinterested directors who are not parties to this Agreement).
8. This Agreement shall continue in effect for the duration of
the Interim Period. In addition, this Agreement:
(1) may be terminated without the payment of any penalty upon 10
calendar days' written notice to you either by the Board or by a
majority vote, as defined in the 1940 Act, of the Portfolio's
outstanding voting securities; and
(2) may be terminated by you without payment of any penalty upon
60 days' written notice to us.
9. This Agreement may not be transferred, assigned, sold or in
any manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the Securities and Exchange Commission.
10. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers and directors employees or the who may also be
a director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
If the foregoing is in accordance with your understanding, will
you kindly so indicate by signing and returning to us the enclosed copy hereof.
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Very truly yours,
LEBENTHAL FUNDS, INC.
Lebenthal Taxable Municipal Bond Fund
By: /s/ Xxxxxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxxxxx Xxxxxxxxx
Title: President
ACCEPTED: November 30, 2001
LEBENTHAL ASSET MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
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