Exhibit (m.5)
DISTRIBUTION AGREEMENT
LEBENTHAL FUNDS, INC.
(the "Fund")
CLASS B SHARES OF
LEBENTHAL NEW YORK MUNICIPAL BOND FUND
(the "Portfolio")
New York, New York
June 8, 2002
Advest, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Ladies and Gentlemen:
1. In consideration of the agreements on your part herein contained
and of the payment by us to you of a sales charge as described in the
Portfolio's most recent prospectus filed with the Securities and Exchange
Commission and an annual fee which includes both a service fee ("Service Fee")
and an asset based sales charge ("Asset Based Sales Charge"), determined in
accordance with paragraph 11 herein and on the terms and conditions set forth
herein, we have agreed that you shall be, for the period of this agreement, a
distributor, as our agent, for the unsold portion of such number of Class B
shares of the Portfolio, $.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 in accordance with Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "1940 Act").
2. 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 Class B shares of the Portfolio as shall then be effectively
registered under the 0000 Xxx. All subscriptions for the Portfolio's Class B
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 Class B shares of the
Portfolio 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 Class B shares of our
common stock 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 the Portfolio's Class B shares by our stockholders of
dividends or other distributions or any other offering by us of securities to
our stockholders.
3. You will use your best efforts to obtain subscriptions to Class B
shares of the Portfolio 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 Class B shares of the Portfolio, such other
information with respect to us and such 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 the Portfolio's
Class B shares to or through qualified brokers, dealers and financial
institutions under selling and servicing agreements provided that no dealer,
financial institution or other person shall be appointed or authorized to act as
our agent without our written consent. You will arrange for organizations whose
customers or clients are shareholders of our corporation ("Participating
Organizations") to enter into agreements with you for providing assistance in
distributing the Portfolio's Class B shares.
4. You may make payments from time to time from your own resources,
which may include the Service Fee, the Asset Based Sales Charge and past
profits, for the following purposes:
(a) with respect to the Service Fee, to defray the costs of, and to
compensate others, including Participating Organizations with
whom you have entered into written agreements, for performing
shareholder servicing and related administrative functions on
behalf of the Portfolio;
(b) with respect to the Asset Based Sales Charge and past profits,
to compensate certain Participating Organizations for providing
assistance in distributing the Portfolio's Class B shares;
(c) with respect to the Asset Based Sales Charge and past profits,
to pay the cost of printing and distributing the Portfolio's
prospectus to prospective investors; and
(d) with respect to the Asset Based Sales Charge and past profits,
to defray the cost of the preparation and printing of brochures
and other promotional materials, mailings to prospective
shareholders, advertising, and other
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promotional activities, including the salaries and/or
commissions of sales personnel in connection with the
distribution of the Portfolio's Class B shares.
You in your sole discretion, will determine the amount of such payments,
provided that such payments will not increase the amount which we are required
to pay for any fiscal year under the Management Contract or this agreement. Such
payments will be made only pursuant to written agreements approved in form and
substance by our Board of Directors to be entered into by you and the
Participating Organizations. It is recognized that we shall have no obligation
or liability to you or any Participating Organization for any such payments
under the agreements with Participating Organizations. Our obligation is solely
to make payments under the Management Contract and this agreement. 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 Class B shares of
the Portfolio at any time, in the absolute discretion of our Board of Directors,
and upon notice of such suspension you shall cease to offer such shares
hereunder.
6. Both of us will cooperate with each other in taking such action
as may be necessary to qualify the Portfolio's Class B 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
Management Contract in effect between us and Boston Advisors, Inc. as manager of
the Portfolio, we will pay all fees and expenses of registering the Portfolio's
shares under the Act and of qualification of such 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 shares
of our common stock. 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
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shares of our common stock. If we shall not file such amendment or 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 our Class B 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 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
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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 affect
regardless of any investigation made by or on behalf of you or any controlling
person and shall survive the sale of any Class B shares of our common stock 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 Class B shares of our common stock.
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 to so 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.
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
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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. (a) In consideration of the foregoing we will pay you a Service
Fee at the annual rate of one-quarter of one percent (0.25%) of average daily
net assets of the Portfolio.
(b) In addition, we will compensate you for distribution
assistance with respect to sales of the Portfolio's Class B shares with an Asset
Based Sales Charge equal to 0.75% per annum of the Portfolio's average daily net
assets.
(c) Your fee in (a) and (b) above 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 an 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.
12. This agreement will become effective on the date hereof and will
remain in effect until July 31, 2002 and thereafter for successive twelve-month
periods (computed from each August 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, by vote of a
majority of our entire Board of Directors, or 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 by vote of a majority of our outstanding
voting securities (with each Class of the Portfolio voting separately), as
defined in the 1940 Act, on sixty days' written notice to you, or by you on
sixty days' written notice to us.
13. 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.
14. 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 directors,
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officers or employees, 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 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,
LEBENTHAL FUNDS, INC.
Lebenthal New York Municipal Bond Fund
By:/s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
Accepted:
June 8, 2002
ADVEST, INC.
By:/s/ Xxxxxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxxxxx Xxxxxxxxx
Title: Senior Vice President
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