DISTRIBUTION AGREEMENT
NEW YORK DAILY TAX FREE INCOME FUND, INC.
(the "Fund")
CIBC World Markets New York Tax Exempt Fund Class Shares ("CIBC Shares")
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
September 3, 2002
Xxxxx & Xxxx Distributors, Inc. (the "Distributor")
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
We hereby confirm our agreement with you as follows:
1. In consideration of the agreements on your part herein contained and of
the payment by us to you of a compensatory asset-based sales charge in an amount
not to exceed 0.45% per annum of the CIBC Shares' average daily net assets and
on the terms and conditions set forth herein, we have agreed that you shall be,
for the period of this Agreement, the distributor, as our agent, for the unsold
portion of the CIBC Shares, $.001 par value per share, as may be effectively
registered from time to time under the Securities Act of 1933, as amended (the
"1933 Act"). This Agreement is being entered into pursuant to the Distribution
and Service Plan (the "Plan") adopted by us on behalf of the CIBC Shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "1940 Act").
2. You will make payments from time to time from your fees payable
hereunder and your own resources and past profits for the following purposes:
(a) to compensate CIBC World Markets Corp. ("CIBC"), with whom you have a
written contract, for providing assistance in distributing the CIBC Shares;
(b) to pay the costs of printing and distributing the Fund's CIBC Shares'
prospectus to prospective investors; and
(c) to defray the cost of the preparation and printing of brochures and
other promotional materials, mailings to prospective shareholders, advertising,
and other promotional activities, including salaries and/or commissions of sales
personnel in connection with the distribution of the CIBC Shares.
The Distributor will in its sole discretion determine the amount of any
payments made by the Distributor pursuant to this Agreement, provided, however,
that no such payment will increase the amount which the Fund, on behalf of the
CIBC Shares, is required to pay either to the Distributor under this Agreement
or the Shareholder Servicing Agreement or to Xxxxx & Tang Asset Management, LLC
(the "Manager"), the Fund's manager, under the Investment Management Contract,
the Administrative Services Agreement, or otherwise.
3. We hereby agree that you will act as our agent, and hereby appoint you
our agent, to offer, and to solicit offers to subscribe to, the unsold balance
of the CIBC Shares as shall then be effectively registered under the 0000 Xxx.
All subscriptions for the CIBC Shares obtained by you shall be directed to us
for acceptance and shall not be binding on us until accepted by us. You shall
have no authority to make binding subscriptions on our behalf. We reserve the
right to sell CIBC Shares through other distributors or directly to investors
through subscriptions received by us at our principal office in New York, New
York. The right given to you under this Agreement shall not apply to CIBC Shares
issued in connection with (a) the merger or consolidation of any other
investment company with us, (b) our acquisition by purchase or otherwise of all
or substantially all of the assets or stock of any other investment company, or
(c) the reinvestment in our common stock by our stockholders of dividends or
other distributions or any other offering by us of securities to our
stockholders.
4. You will use your best efforts to obtain subscriptions to CIBC Shares
upon the terms and conditions contained herein and in our Prospectus, as in
effect from time to time. You will send to us promptly all subscriptions placed
with you. We shall furnish you from time to time, for use in connection with the
offering of CIBC Shares, such other information with respect to us and CIBC
Shares as you may reasonably request. We shall supply you with such copies of
our Registration Statement and Prospectus, as in effect from time to time, as
you may request. Except as we may authorize in writing, you are not authorized
to give any information or to make any representation that is not contained in
the Registration Statement or Prospectus, as then in effect. You may use
employees, agents and other persons, at your cost and expense, to assist you in
carrying out your obligations hereunder, but no such employee, agent or other
person shall be deemed to be our agent or have any rights under this agreement.
You may sell CIBC Shares to or through CIBC under the Domestic Proprietary Class
Sub-Distribution and Service Agreement (the "CIBC Agreement") provided that CIBC
shall not be appointed or authorized to act as our agent without our written
consent.
With respect to the CIBC Shares, you have entered into the CIBC Agreement,
which has been approved by our Board of Directors, pursuant to which CIBC is
authorized to provide distribution assistance to you and to provide certain
shareholder servicing activities for customers of CIBC in connection with the
CIBC Shares and pursuant to which CIBC will be compensated directly by you for
providing such
-2-
assistance and services. Pursuant to our Shareholder Servicing Agreement with
you with respect to our CIBC Shares, you may make payments to CIBC for
performing shareholder servicing and related administrative functions with
respect to CIBC Shares. These payments will be made pursuant to the CIBC
Agreement. It is recognized that we shall have no obligation or liability to you
or to CIBC for any such payments under the CIBC Agreement. Our obligation is
solely to make payments to you under this Distribution Agreement and under the
Shareholder Servicing Agreement (with respect to the CIBC Shares) and to the
Manager under the Investment Management Contract and the Administrative Services
Contract. All sales of our shares effected through you will be made in
compliance with all applicable federal securities laws and regulations and the
Constitution, rules and regulations of the National Association of Securities
Dealers, Inc. ("NASD").
5. We reserve the right to suspend the offering of the CIBC Shares at any
time, in the absolute discretion of our Board of Directors, and upon notice of
such suspension you shall cease to offer shares of the CIBC Shares hereunder.
6. Both of us will cooperate with each other in taking such action as may
be necessary to qualify the CIBC Shares for sale under the securities laws of
such states as we may designate, provided, that you shall not be required to
register as a broker-dealer or file a consent to service of process in any such
state where you are not now so registered. Pursuant to the Investment Management
Contract in effect between us and the Manager, we will pay all fees and expenses
of registering the CIBC Shares under the 1933 Act and of qualification of the
CIBC Shares, and to the extent necessary, our qualification under applicable
state securities laws. You will pay all expenses relating to your broker-dealer
qualification.
7. We represent to you that our Registration Statement and Prospectus have
been carefully prepared to date in conformity with the requirements of the 1933
Act and the 1940 Act and the rules and regulations of the Securities and
Exchange Commission (the "SEC") thereunder. We represent and warrant to you, as
of the date hereof, that our Registration Statement and Prospectus contain all
statements required to be stated therein in accordance with the 1933 Act and the
1940 Act and the SEC's rules and regulations thereunder; that all statements of
fact contained therein are or will be true and correct at the time indicated or
the effective date as the case may be; and that neither our Registration
Statement nor our Prospectus, when they shall become effective or be authorized
for use, will include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of the CIBC Shares. We will from time to
time file such amendment or amendments to our Registration Statement and
Prospectus as, in the light of future development, shall, in the opinion of our
counsel, be necessary in order to have our Registration Statement and Prospectus
at all times contain all material facts required to be stated therein or
necessary to make any statements therein not misleading to a purchaser of the
CIBC Shares. If we shall not file such amendment or
-3-
amendments within fifteen days after our receipt of a written request from you
to do so, you may, at your option, terminate this agreement immediately. We will
not file any amendment to our Registration Statement or Prospectus without
giving you reasonable notice thereof in advance; provided, however, that nothing
in this agreement shall in any way limit our right to file such amendments to
our Registration Statement or Prospectus, of whatever character, as we may deem
advisable, such right being in all respects absolute and unconditional. We
represent and warrant to you that any amendment to our Registration Statement or
Prospectus hereafter filed by us will be carefully prepared in conformity within
the requirements of the 1933 Act and the 1940 Act and the SEC's rules and
regulations thereunder and will, when it becomes effective, contain all
statements required to be stated therein in accordance with the 1933 Act and the
1940 Act and the SEC's rules and regulations thereunder; that all statements of
fact contained therein will, when the same shall become effective, be true and
correct; and that no such amendment, when it becomes effective, will include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading to
a purchaser of the CIBC Shares.
8. We agree to indemnify, defend and hold you, and any person who controls
you within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which you or any such controlling person
may incur, under the 1933 Act or the 1940 Act, or under common law or otherwise,
arising out of or based upon any alleged untrue statement of a material fact
contained in our Registration Statement or Prospectus in effect from time to
time or arising out of or based upon any alleged omission to state a material
fact required to be stated in either of them or necessary to make the statements
in either of them not misleading; provided, however, that in no event shall
anything herein contained be so construed as to protect you against any
liability to us or our security holders to which you would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of your duties, or by reason of your reckless disregard of your
obligations and duties under this agreement. Our agreement to indemnify you and
any such controlling person is expressly conditioned upon our being notified of
any action brought against you or any such controlling person, such notification
to be given by letter or by telegram addressed to us at our principal office in
New York, New York, and sent to us by the person against whom such action is
brought within ten days after the summons or other first legal process shall
have been served. The failure so to notify us of any such action shall not
relieve us from any liability which we may have to the person against whom such
action is brought other than on account of our indemnity agreement contained in
this paragraph 8. We will be entitled to assume the defense of any suit brought
to enforce any such claim, and to retain counsel of good standing chosen by us
and approved by you. In the event we do elect to assume the defense of any such
suit and retain counsel of good standing approved by you, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case we do not elect to
-4-
assume the defense of any such suit, or in case you, in good faith, do not
approve of counsel chosen by us, we will reimburse you or the controlling person
or persons named as defendant or defendants in such suit, for the fees and
expenses of any counsel retained by you or them. Our indemnification agreement
contained in this paragraph 8 and our representations and warranties in this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of you or any controlling person and shall survive the sale
of any CIBC Shares made pursuant to subscriptions obtained by you. This
agreement of indemnity will inure exclusively to your benefit, to the benefit of
your successors and assigns, and to the benefit of any of your controlling
persons and their successors and assigns. We agree promptly to notify you of the
commencement of any litigation or proceeding against us in connection with the
issue and sale of any CIBC Shares.
9. You agree to indemnify, defend and hold us, our several officers and
directors, and any person who controls us within the meaning of Section 15 of
the 1933 Act, free and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which we, our officers or directors, or any such
controlling person may incur under the 1933 Act or under common law or
otherwise, but only to the extent that such liability or expense incurred by us,
our officers or directors or such controlling person shall arise out of or be
based upon any alleged untrue statement of a material fact contained in
information furnished in writing by you to us for use in our Registration
Statement or Prospectus as in effect from time to time, or shall arise out of or
be based upon any alleged omission to state a material fact in connection with
such information required to be stated in the Registration Statement or
Prospectus or necessary to make such information not misleading. Your agreement
to indemnify us, our officers and directors, and any such controlling person is
expressly conditioned upon your being notified of any action brought against us,
our officers or directors or any such controlling person, such notification to
be given by letter or telegram addressed to you at your principal office in New
York, New York, and sent to you by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. You shall have a right to control the defense of such action,
with counsel of your own choosing, satisfactory to us, if such action is based
solely upon such alleged misstatement or omission on your part, and in any other
event you and we, our officers or directors or such controlling person shall
each have the right to participate in the defense or preparation of the defense
of any such action. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to us, to our officers or
directors, or to such controlling person other than on account of your indemnity
agreement contained in this paragraph 9.
-5-
10. We agree to advise you immediately:
(a) of any request by the SEC for amendments to our Registration Statement
or Prospectus or for additional information,
(b) of the issuance by the SEC of any stop order suspending the
effectiveness of our Registration Statement or Prospectus or the initiation of
any proceedings for that purpose,
(c) of the happening of any material event which makes untrue any statement
made in our Registration Statement or Prospectus or which requires the making of
a change in either of them in order to make the statements therein not
misleading, and
(d) of all action of the SEC with respect to any amendments to our
Registration Statement or Prospectus.
11. This Agreement will become effective on the date hereof and shall
continue in effect until April 30, 2003, and thereafter for successive
twelve-month periods (computed from each May 1), provided that such continuation
is specifically approved at least annually by vote of our Board of Directors and
of a majority of those of our directors who are not interested persons (as
defined in the 0000 Xxx) and have no direct or indirect financial interest in
the operation of the Plan or in any agreements related to the Plan, cast in
person at a meeting called for the purpose of voting on this agreement. This
agreement may be terminated at any time, without the payment of any penalty, (a)
on sixty days' written notice to you (i) by vote of a majority of our entire
Board of Directors, and by a vote of a majority of our Directors who are not
interested persons (as defined in the 0000 Xxx) and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan, or (ii) by vote of a majority of the outstanding voting
securities of the CIBC Shares, as defined in the Act, or (b) by you on sixty
days' written notice to us.
12. 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 SEC thereunder.
13. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, the right of any
of your employees, officers or directors, who may also be a director, officer or
employee of ours, or of a person affiliated with us, as defined in the 1940 Act,
to engage in any other business or to devote time and attention to the
management or other aspects of any
-6-
other business, whether of a similar or dissimilar nature, or to render services
of any kind to another 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.
Very truly yours,
NEW YORK DAILY TAX FREE INCOME FUND, INC.
CIBC World Markets New York Tax Exempt Fund Class Shares
By /s/ Xxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Secretary
Accepted: September 3, 2002
XXXXX & XXXX DISTRIBUTORS, INC.
By: /s/ Xxxxxxx Xx Xxxxxxx
--------------------------
Name: Xxxxxxx Xx Xxxxxxx
Title: CFO, Treasurer and Executive Vice President
