LINCOLN ADVISOR FUNDS, INC.
DISTRIBUTION AGREEMENT
(Class A shares)
AGREEMENT, made as of the 25th day of September, 1995, between Lincoln
Advisor Funds, Inc., a Maryland corporation (the "Fund"), and Delaware
Distributors, L.P., a Delaware limited partnership (the "Distributor").
RECITALS
1. The Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a diversified, open-end, management investment
company, its shares are divided into separate series and within each series
(with limited exception) divided into separate classes, and it is in the
interest of the Fund to offer its Class A shares for sale continuously.
2. The Distributor is a securities firm engaged in the business of
promoting the distribution of the securities of investment companies and, in
connection therewith, acting solely as agent for such investment companies and
not as principal, and the Distributor is an affiliate of Lincoln National
Corporation.
3. The Fund and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the Fund's Class A shares
from and after the date hereof in order to promote the growth of the Fund and
facilitate the distribution of its Class A shares.
4. It is contemplated that the Fund will adopt a Distribution and
Service Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan") authorizing
payments by the Fund to the Distributor with respect to the distribution of
Class A shares of the Fund and the maintenance of Class A stockholder accounts.
The Fund and the Distributor hereby agree as follows:
Section 1. Appointment of the Distributor. The Fund hereby appoints the
Distributor as the principal underwriter and distributor of the Class A shares
of the Fund to sell Class A shares, as agent, on the Fund's behalf to the public
either directly or through other securities dealers, and the Distributor hereby
accepts such appointment and agrees to act hereunder. The Fund hereby agrees
during the term of this Agreement to sell Class A shares of the Fund through the
Distributor on the terms and conditions set forth below.
Section 2. Exclusive Nature of Duties. The Distributor shall be the
exclusive representative of the Fund to act as principal underwriter and
distributor of the Fund's Class A shares, except that:
2.1 The exclusive rights granted to the Distributor to sell
Class A shares on behalf of the Fund shall not apply to Class A shares of the
Fund issued in connection with the
merger or consolidation of any other investment company or personal holding
company with the Fund or the acquisition by purchase or otherwise of all (or
substantially all) the assets or the outstanding shares of any such company by
the Fund.
2.2 Such exclusive rights shall not apply to Class A shares
issued by the Fund pursuant to reinvestment of dividends or capital gains
distributions.
2.3 Such exclusive rights shall not apply to Class A shares
issued by the Fund pursuant to the reinstatement privilege afforded redeeming
stockholders.
2.4 Such exclusive rights shall not apply to purchases made
through the Fund's transfer and dividend disbursing agent in the manner set
forth in the currently effective Prospectus of the Fund. The term "Prospectus"
shall mean the Prospectus and Statement of Additional Information included as
part of the Fund's Registration Statement, as such Prospectus and Statement of
Additional Information may be amended or supplemented from time to time, and the
term "Registration Statement" shall mean the Registration Statement filed by the
Fund with the Securities and Exchange Commission and effective under the
Securities Act of 1933, as amended (the "Securities Act"), and the 1940 Act, as
such Registration Statement is amended from time to time.
Section 3. Sale of Class A Shares.
3.1 All shares sold by the Fund either directly or through the
Distributor, whether to registered broker-dealers or other financial
institutions ("selected dealers") or directly to investors, shall be sold at the
public offering price. The public offering price for all orders accepted by the
Fund shall be the net asset value per share, plus any applicable sales charge on
such shares, determined in the manner described in the Fund's current
Prospectus.
3.2 The Distributor shall receive compensation for sales of
the shares of the Fund in the form of front-end, contingent deferred, or
asset-based sales charges as provided in Sections 7 and 8 of this Agreement, and
shall have the right to enter into agreements with selected dealers under which
such selected dealers will perform distributor and/or shareholder servicing
activities relating to the sale of Class A shares. The Distributor may
compensate selected dealers in accordance with such agreements, by forwarding to
such selected dealers, all or a portion of the compensation received by the
Distributor in connection with the sale of the Fund's shares, or in any other
manner provided in the dealer agreement.
3.3 The Fund shall have the right to suspend the sale of its
Class A shares at times when redemption is suspended pursuant to the conditions
in Section 4.3 hereof or at such other times as may be determined by the Board
of Directors. The Fund shall also have the right to suspend the sale of its
Class A shares if a banking moratorium shall have been declared by federal or
New York authorities.
3.4 The Fund, the Distributor, or any other agent of the Fund
designated in writing by the Fund, shall have the right to reject any order;
provided, however, that the Fund
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will not arbitrarily or without reasonable cause refuse to accept or confirm
orders for the purchase of Class A shares. The Fund (or its agent) will confirm
orders upon their receipt, will make appropriate book entries and upon receipt
by the Fund (or its agent) of payment therefor, will deliver deposit receipts
for such Class A shares pursuant to the instructions of the Distributor. Payment
shall be made to the Fund in New York Clearing House funds or federal funds. The
Distributor agrees to cause such payment and such instructions to be delivered
promptly to the Fund (or its agent).
Section 4. Repurchase or Redemption of Class A Shares by the Fund.
4.1 Any of the outstanding Class A shares may be tendered for
redemption at any time, and the Fund agrees to repurchase or redeem the Class A
shares so tendered in accordance with its Articles of Incorporation, as amended
from time to time, and in accordance with the applicable provisions of the
Prospectus. The price to be paid to redeem or repurchase the Class A shares
shall be equal to the net asset value determined as set forth in the Prospectus.
All payments by the Fund hereunder shall be made in the manner set forth in
Section 4.2 below.
4.2 The Fund shall pay the total amount of the redemption
price as defined in the above paragraph pursuant to the instructions of the
Distributor on or before the seventh business day subsequent to its having
received the notice of redemption in proper form. The proceeds of any redemption
of Class A shares shall be paid by the Fund as follows: (a) any applicable
contingent deferred sales charge shall be paid to the Distributor and (b) the
balance shall be paid to or for the account of the redeeming stockholder, in
each case in accordance with applicable provisions of the Prospectus.
4.3 Redemption of Class A shares or payment may be suspended
at times when the New York Stock Exchange is closed for other than customary
weekends and holidays, when trading on said Exchange is suspended, when trading
on said Exchange is restricted, when an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably practicable or
it is not reasonably practicable for the Fund fairly to determine the value of
its net assets, or during any other period when the Securities and Exchange
Commission, by order, so permits.
Section 5. Duties of the Fund.
5.1 Subject to the possible suspension of the sale of Class A
shares as provided herein, the Fund agrees to sell its Class A shares so long as
it has Class A shares available.
5.2 The Fund shall furnish the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Class A
shares, and this shall include one certified copy, upon request by the
Distributor, of all financial statements prepared for the Fund by independent
public accountants. The Fund shall make available to the Distributor such number
of copies of its Prospectus and annual and interim reports as the Distributor
shall reasonably request.
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5.3 The Fund shall take, from time to time, but subject to the
necessary approval of the Board of Directors and the stockholders, all necessary
action to fix the number of authorized Class A shares and such steps as may be
necessary to register the same under the Securities Act, to the end that there
will be available for sale such number of Class A shares as the Distributor
reasonably may expect to sell. The Fund agrees to file from time to time such
amendments, reports and other documents as may be necessary in order that there
will be no untrue statement of a material fact in the Registration Statement, or
necessary in order that there will be no omission to state a material fact in
the Registration Statement which omission would make the statement therein
misleading.
5.4 The Fund shall use its best efforts to qualify and
maintain the qualification of any appropriate number of its Class A shares for
sales under the securities laws of such states as the Distributor and the Fund
may approve; provided that the Fund shall not be required to amend its Articles
of Incorporation or By-Laws to comply with the laws of any state, to maintain an
office in any state, to change the terms of the offering of its Class A shares
in any state from the terms set forth in its Registration Statement, to qualify
as a foreign corporation in any state or to consent to service of process in any
state other than with respect to claims arising out of the offering of its Class
A shares. Any such qualification may be withheld, terminated or withdrawn by the
Fund at any time in its discretion. As provided in Section 9.1 hereof, the
expense of qualification and maintenance of qualification shall be borne by the
Fund. The Distributor shall furnish such information and other material relating
to its affairs and activities as may be required by the Fund in connection with
such qualifications.
Section 6. Duties of the Distributor.
6.1 The Distributor shall devote reasonable time and effort to
effect sales of Class A shares of the Fund, but shall not be obligated to sell
any specific number of Class A shares on behalf of the Fund. Sales of the Class
A shares shall be on the terms described in the Prospectus. The Distributor may
enter into like arrangements with other investment companies.
6.2 In selling the Class A shares, the Distributor shall use
its best efforts in all respects duly to conform with the requirements of all
federal and state laws relating to the sale of such securities. Neither the
Distributor nor any selected dealer nor any other person is authorized by the
Fund to give any information or to make any representations, other than those
contained in the Registration Statement or Prospectus and any sales literature,
the use of which is permitted by appropriate officers of the Fund.
6.3 The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and selected dealers, the collection of
amounts payable by investors and selected dealers on such sales, and the
cancellation of unsettled transactions, as may be necessary to comply with the
requirements of the National Association of Securities Dealers, Inc. (the
"NASD").
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Section 7. Payments to the Distributor.
The Distributor shall receive and may retain any front-end sales charge
which is imposed on sales of Class A shares as set forth in the Prospectus,
subject to the limitations of Article III, Section 26 of the NASD Rules of Fair
Practice. Payment of these amounts to the Distributor is not contingent upon the
adoption or continuation of the Plan.
Section 8. Payments to the Distributor under the Plan.
8.1 The Fund shall pay to the Distributor as compensation for
services under the Distribution and Service Plan and this agreement a fee of
.35% (including a service fee of .25%) per annum of the average daily net assets
of the Class A shares of the Fund. Amounts payable under the Plan shall be
accrued daily and paid monthly or at such other intervals as the Directors may
determine. Amounts payable under the Plan shall be subject to the limitations of
Article III, Section 26 of the NASD Rules of Fair Practice.
8.2 So long as the Plan or any amendment thereto is in effect,
the Distributor shall inform the Board of Directors of the commissions and
account servicing fees to be paid by the Distributor to account executives of
the Distributor and to broker-dealers and financial institutions which have
dealer agreements with the Distributor. So long as the Plan (or any amendment
thereto) is in effect, at the request of the Board of Directors or any agent or
representative of the Fund, the Distributor shall provide such additional
information as may reasonably be requested concerning the activities of the
Distributor hereunder and the costs incurred in performing such activities.
8.3 Expenses of distribution with respect to the Class A
shares of the fund include, among others: (a) sales commissions and trailer
commissions paid to, or on account of, broker-dealers and financial institutions
which have entered into selected dealer agreements with the Distributor with
respect to Class A shares of the Fund; (b) indirect and overhead costs of the
Distributor associated with the performance of distribution activities,
including central office and branch expenses; (c) sales commissions (including
trailer commissions) paid to, or on account of, account executives of the
Distributor; (d) advertising for the Fund in various forms through any available
medium, including the cost of printing and mailing Fund Prospectuses and
periodic financial reports and sales literature to persons other than current
stockholders of the Fund and (e) amounts paid to, or on account of,
broker-dealers or financial institutions for personal service and/or the
maintenance of stockholder accounts. Indirect and overhead costs referred to in
clause (b) of the foregoing sentence include (i) lease expenses, (ii) salaries
and benefits of personnel including operations and sales support personnel,
(iii) utility expenses, (iv) communications expense, (v) sales promotion
expenses, (vi) expenses of postage, stationery and supplies and (vii) general
overhead.
Section 9. Allocation of Expenses.
9.1 The Fund shall bear all costs and expenses of the
continuous offering of its Class A shares, including fees and disbursements of
its counsel and auditors, in connection with
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the preparation and filing of any required Registration Statements and/or
Prospectuses under the 1940 Act or the Securities Act, and preparing and mailing
annual and periodic reports and proxy materials to stockholders (including but
not limited to the expense of setting in type any such Registration Statements,
Prospectuses, annual or periodic reports or proxy materials). The Fund shall
also bear the cost of expenses of qualification of the Class A shares for sale,
and, if necessary or advisable in connection therewith, of qualifying the Fund
as a broker or dealer, in such states of the United States or other
jurisdictions as shall be selected by the Fund and the Distributor pursuant to
Section 5.4 hereof and the cost and expense payable to each such state for
continuing qualification therein until the Fund decides to discontinue such
qualification pursuant to Section 5.4 hereof. As set forth in Section 8 above,
the Fund shall also bear the expenses it assumes pursuant to the Plan with
respect to Class A shares, so long as the Plan is in effect.
Section 10. Indemnification.
10.1 The Fund agrees to indemnify, defend and hold the
Distributor, its officers and directors and any person who controls the
Distributor within the meaning of Section 15 of the Securities 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 counsel fees incurred in connection therewith) which the
Distributor, its officers, directors or any such controlling person may incur
under the Securities Act, or under common law or otherwise, arising out of or
based upon any untrue statement of a material fact contained in the Registration
Statement or Prospectus or arising out of or based upon any alleged omission to
state a material fact required to be stated in either thereof or necessary to
make the statements in either thereof not misleading, except insofar as such
claims, demands, liabilities or expenses arise out of or are based upon any such
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information furnished in writing by the
Distributor to the Fund for use in the Registration Statement or Prospectus;
provided, however, that this indemnity agreement shall not inure to the benefit
of any such officer, director or controlling person unless a court of competent
jurisdiction shall determine in a final decision on the merits, that the person
to be indemnified was not liable, by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations under this Agreement ("disabling conduct"), or, in
the absence of such a decision, a reasonable determination, based upon a review
of the facts, that the indemnified person was not liable by reason of disabling
conduct, by (a) a vote of a majority of a quorum of Directors who are neither
"interested persons" of the Fund as defined in Section 2(a)(19) of the 1940 Act
nor parties to the proceeding, or (b) an independent legal counsel in a written
opinion. The Fund's agreement to indemnify the Distributor, its officers and
directors and any such controlling person as aforesaid is expressly conditioned
upon the Fund's being promptly notified of any action brought against the
Distributor, its officers or directors, or any such controlling person, such
notification to be given by letter or telegram addressed to the Fund at its
principal business office. The Fund agrees promptly to notify the Distributor of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issue and sale of any Class A
shares.
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10.2 The Distributor agrees to indemnify, defend and hold the
Fund, its officers and directors and any person who controls the Fund, if any,
within the meaning of Section 15 of the Securities Act, free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending against such claims, demands or liabilities
and any counsel fees incurred in connection therewith) which the Fund, its
directors or officers or any such controlling person may incur under the
Securities Act or under common law or otherwise, but only to the extent that
such liability or expense incurred by the Fund, its directors or officers or
such controlling person resulting from such claims or demands shall arise out of
or be based upon any alleged untrue statement of a material fact contained in
information furnished in writing by the Distributor to the Fund for use in the
Registration Statement or Prospectus 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. The Distributor's agreement to
indemnify the Fund, its directors and officers, and any such controlling person
as aforesaid, is expressly conditioned upon the Distributor's being promptly
notified of any action brought against the Fund, its officers or directors or
any such controlling person, such notification being given to the Distributor at
its principal business office.
Section 11. Duration and Termination of this Agreement.
11.1 This Agreement shall become effective as of the date
first above written and shall remain in force for two years from the date hereof
and thereafter, but only so long as such continuance is specifically approved at
least annually by (a) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Class A shares of the Fund,
and (b) by the vote of a majority of those Directors who are not parties to this
Agreement or interested persons of any such parties and who have no direct or
indirect financial interest in this Agreement or in the operation of the Fund's
Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act or in any
agreement related thereto ("Rule 12b-1 Directors"), cast in person at a meeting
called for the purpose of voting upon such approval.
11.2 This Agreement may be terminated at any time, without the
payment of any penalty, by a majority of the Rule 12b-1 Directors or by vote of
a majority of the outstanding voting securities of the Fund, or by the
Distributor, on sixty (60) days' written notice to the other party. The
Distributor may also terminate this Agreement on written notice to the Fund at
anytime in case the Registration Statement shall be suspended, or in case Stop
Order proceedings are initiated by the SEC in respect of the Registration
Statement and such proceedings are not withdrawn or terminated within thirty
days. This Agreement shall automatically terminate in the event of its
assignment.
11.3 The terms "affiliated person," "assignment," "interested
person" and "voting securities", when used in this Agreement, shall have the
respective meaning specified in the 1940 Act.
Section 12. Amendment to this Agreement. This Agreement may be amended
by the parties only if such amendment is specifically approved by (a) the Board
of Directors of the
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Fund, or by the vote of a majority of outstanding voting securities of the Class
A Shares of the Fund, and (b) by the vote of a majority of the Rule 12b-1
Directors cast in person at a meeting called for the purpose of voting on such
amendment.
Section 13. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of Delaware
as at the time in effect and the applicable provisions of the 1940 Act. To the
extent that the applicable law of the State of Delaware, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
LINCOLN ADVISOR FUNDS, INC.
By: /s/ Xxxxxx X. Xxxxx
Title: Xxxxxx X. Xxxxx, Vice President
DELAWARE DISTRIBUTORS, L.P., by
Delaware Distributors, Inc.,
General Partner
By: /s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
President and Chief Executive Officer
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