DISTRIBUTION AGREEMENT
LEBENTHAL FUNDS, INC.
(the "Fund")
LEBENTHAL NEW YORK MUNICIPAL BOND FUND
(the "Portfolio")
New York, New York
__________, 1991
Lebenthal & Co., Inc.
00 Xxxxxxxx - Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
1. In consideration of the agreements on your part herein
contained and of the payment by us to you of an annual fee (the "Distribution
Fee"), 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 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 shares of the Portfolio as shall then be effectively
registered under the Act. All subscriptions for the Portfolio's 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 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 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 shares by our stockholders of dividends or
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other distributions or any other offering by us of securities to
our stockholders.
3. You will use your best efforts to obtain subscriptions to
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 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
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 shares.
4. You may make payments from time to time from your own
resources, which may include the Distribution Fee, the management fee received
from us, management or advisory fees received from other investment companies
and past profits, for the following purposes:
(a) 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) to compensate certain participating
organizations for providing assistance in
distributing the Portfolio's shares;
(c) to pay the cost of printing and distributing
the Portfolio's prospectus to prospective
investors; and
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(d) 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 the
salaries and/or commissions of sales
personnel in connection with the distribution
of the Portfolio's 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 to you for any fiscal year under the Management Agreement 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 to you under the Management Agreement 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 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 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 Agreement in effect between us and you as Manager, 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 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
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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 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
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 or 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
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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 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 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 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
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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 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. In consideration of the foregoing we will pay you a fee at
the annual rate of one-quarter of one percent (0.25%) of average daily net
assets of the Portfolio. 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.
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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 _______________ and thereafter for successive
twelve-month periods (computed from each __________), 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, as defined in the 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, 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.
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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:____________________________________
Accepted:
_________________, 199__
Lebenthal & Co., Inc.
By:_________________________
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