EXHIBIT 99.m(iv)
Rule 12b-1 Distribution Plan and Agreement
Lord Xxxxxx Tax-Free Income Fund, Inc.
Class P Shares
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of February 2,
1999, by and between LORD XXXXXX TAX-FREE INCOME FUND, INC., a Maryland
corporation (the "Corporation"), on behalf of its Class P shares of the Lord
Xxxxxx California Tax-Free Income Fund, Lord Xxxxxx Connecticut Tax-Free Income
Fund, Lord Xxxxxx Hawaii Tax-Free Income Fund, Lord Xxxxxx Minnesota Tax-Free
Income Fund, Lord Xxxxxx Missouri Tax-Free Income Fund, Lord Xxxxxx National
Tax-Free Income Fund, Lord Xxxxxx New Jersey Tax-Free Income Fund, Lord Xxxxxx
New York Tax-Free Income Fund, Lord Xxxxxx Texas Tax-Free Income Fund and Lord
Xxxxxx Washington Tax-Free Income Fund, (each, a "Fund," or collectively, the
"Funds"), and LORD XXXXXX DISTRIBUTOR LLC, a New York limited liability company
(the "Distributor").
WHEREAS, the Corporation is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
the Distributor is the exclusive selling agent of the Corporation's shares of
capital stock, including each Fund's Class P shares (the "Shares"), pursuant to
the Distribution Agreement between the Corporation and the Distributor, and
WHEREAS, the Corporation desires to adopt a Distribution Plan and
Agreement (the "Plan") for the Funds' Shares with the Distributor, as permitted
by Rule 12b-1 under the Act, pursuant to which the Funds may make certain
payments to the Distributor for payment to institutions and persons permitted by
applicable law and/or rules to receive such payments ("Authorized Institutions")
in connection with sales of Shares and for use by the Distributor as provided in
paragraph 3 of this Plan, and
WHEREAS, the Corporation's Board of Directors has determined that
there is a reasonable likelihood that the Plan will benefit the Funds and the
holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other
good and valuable consideration, receipt of which is hereby acknowledged, it is
agreed as follows:
1. The Corporation hereby authorizes the Distributor to enter into
agreements with Authorized Institutions (the "Agreements") which may provide for
the payment to such Authorized Institutions of distribution and service fees
which the Distributor receives from the Funds in order to provide incentives to
such Authorized Institutions (i) to sell Shares and (ii) to provide continuing
information and investment services to their accounts holding Shares and
otherwise to encourage their accounts to remain invested in the Shares. The
Distributor may, from time to time, waive or defer payment of some fees payable
at the time of the sale of Shares provided for under paragraph 2 hereof.
2. Subject to possible reduction as provided below in this paragraph
2, each Fund shall pay to the Distributor fees at each quarter-end (a) for
services, at an annual rate not to exceed .20% of 1% of the average annual net
asset value of Shares outstanding for the quarter or more and (b) for
distribution, at an annual rate not to exceed .25 of 1% of the average annual
net asset value of Shares outstanding for the quarter or more. For purposes of
the quarter-end fee payments above (A) Shares
issued pursuant to an exchange for shares of another series of the Corporation
or another Lord Xxxxxx-sponsored fund (or for shares of a fund acquired by the
Corporation) will be credited with the time held from the initial purchase of
such other shares when determining how long Shares mentioned in clauses (a) and
(b) have been outstanding and (B) payments will be based on Shares outstanding
during any such quarter. Shares outstanding in clauses (a) and (b) above include
Shares issued for reinvested dividends and distributions that have been
outstanding for the quarter or more.
The Board of Directors of the Corporation shall from time to time
determine the amounts and the time of payments (such as, at the time of sale,
quarterly or otherwise), within the foregoing maximum amounts, that the Funds
may pay the Distributor hereunder. Such determinations by the Board of Directors
shall be made by votes of the kind referred to in paragraph 10 of this Plan. The
service fees mentioned in this paragraph are for the purposes mentioned in
clause (ii) of paragraph 1 of this Plan and the distribution fees mentioned in
this paragraph are for the purposes mentioned in clause (i) of paragraph 1 and
the second sentence of paragraph 3 of this Plan. The Distributor will monitor
the payments hereunder and shall reduce such payments or take such other steps
as may be necessary to assure that (x) the payments pursuant to this Plan shall
be consistent with Rule 2830, subparagraphs (d)(2) and (5) of the Conduct Rules
of the NASD Regulation, Inc. with respect to investment companies with
asset-based sales charges and service fees as the same may be in effect from
time to time and (y) the Funds shall not pay with respect to any Authorized
Institution service fees equal to more than .20% of 1% of the average annual net
asset value of Shares sold by (or attributable to shares sold by) such
Authorized Institution and held in an account covered by an Agreement.
3. Within the foregoing maximum amounts, the Distributor may use
amounts received as distribution fees hereunder from the Funds to finance any
activity that is primarily intended to result in the sale of Shares including,
but not limited to, commissions or other payments relating to selling or
servicing efforts. Without limiting the generality of the foregoing, the
Distributor may apply amounts authorized by the Corporation's Board of Directors
designated as the distribution fee referred to in clause (b) of paragraph 2 to
expenses incurred by the Distributor if such expenses are primarily intended to
result in the sale of Shares. The Corporation's Board of Directors (in the
manner contemplated in paragraph 10 of this Plan) shall approve the timing,
categories and calculation of any payments under this paragraph 3 other than
those referred to in the foregoing sentence.
4. The net asset value of the Shares shall be determined as provided
in the Articles of Incorporation of the Corporation. If the Distributor waives
all or a portion of fees which are to be paid by the Funds hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Corporation pay such fees in the future.
5. The Secretary of the Corporation, or in his absence the
Treasurer, is hereby authorized to direct the disposition of monies paid or
payable by the Funds hereunder and shall provide to the Corporation's Board of
Directors, and the Board of Directors shall review, at least quarterly, a
written report of the amounts so expended pursuant to this Plan and the purposes
for which such expenditures were made.
6. Neither this Plan nor any other transaction between the parties
hereto pursuant to this Plan shall be invalidated or in any way affected by the
fact that any or all of the directors, officers, shareholders, or other
representatives of the Corporation are or may be "interested persons" of the
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Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Corporation, except as
otherwise may be provided in the Act.
7. The Distributor shall give the Corporation the benefit of the
Distributor's best judgment and good faith efforts in rendering services under
this Plan. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, the Distributor assumes no responsibility
under this Plan and, having so acted, the Distributor shall not be held liable
or held accountable for any mistake of law or fact, or for any loss or damage
arising or resulting therefrom suffered by the Corporation, the Funds or any of
the shareholders, creditors, directors or officers of the Corporation; provided
however, that nothing herein shall be deemed to protect the Distributor against
any liability to the Corporation or the Funds' shareholders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of the reckless disregard of its obligations and duties
hereunder.
8. This Plan shall become effective on the date hereof, and shall
continue in effect for a period of more than one year from such date only so
long as such continuance is specifically approved at least annually by a vote of
the Board of Directors of the Corporation, including the vote of a majority of
the Directors who are not "interested persons" of the Corporation and who have
no direct or indirect financial interest in the operation of this Plan or in any
agreement related to this Plan, cast in person at a meeting called for the
purpose of voting on such renewal.
9. This Plan may not be amended to increase materially the amount to
be spent by the Funds hereunder without the vote of a majority of the Shares and
each material amendment must be approved by a vote of the Board of Directors of
the Corporation, including the vote of a majority of the Directors who are not
"interested persons" of the Corporation and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan, cast in person at a meeting called for the purpose of voting on such
amendment.
10. Amendments to this Plan other than material amendments of the
kind referred to in the foregoing paragraph 9 of this Plan may be adopted by a
vote of the Board of Directors of the Corporation, including the vote of a
majority of the directors who are not "interested persons" of the Corporation
and who have no direct or indirect financial interest in the operation of this
Plan or in any agreement related to this Plan. The Board of Directors of the
Corporation may, by such a vote, interpret this Plan and make all determinations
necessary or advisable for its administration.
11. This Plan may be terminated at any time without the payment of
any penalty by (a) the vote of a majority of the directors of the Corporation
who are not "interested persons" of the Corporation and have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, or (b) by a shareholder vote in compliance with Rule 12b-1
and Rule 18f-3 under the Act as in effect at such time.
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12. So long as this Plan shall remain in effect, the selection and
nomination of those Directors of the Corporation who are not "interested
persons" of the Corporation are committed to the discretion of such
disinterested directors. The terms "interested persons," "assignment" and "vote
of a majority of the outstanding voting securities" shall have the same meaning
as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by its duly authorized representative as
of the date first above written.
LORD XXXXXX TAX-FREE INCOME FUND, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxx,
Vice President
LORD XXXXXX DISTRIBUTOR LLC
By: LORD, XXXXXX & CO.
Managing Member
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, A Partner
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