EXHIBIT 15(a)
CLASS B DISTRIBUTION PLAN
OF
XXXXXXX XXXXX CONVERTIBLE FUND, INC.
PURSUANT TO RULE 12B-1
DISTRIBUTION PLAN made as of the day of , 1997, by and between
Xxxxxxx Xxxxx Convertible Fund, Inc., a Maryland corporation (the "Company"),
and Xxxxxxx Xxxxx Funds Distributor, Inc., a Delaware corporation ("MLFD").
W I T N E S S E T H:
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WHEREAS, the Company intends to engage in business as an open-end
investment company registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"); and
WHEREAS, MLFD is a securities firm engaged in the business of selling
shares of investment companies either directly to purchasers or through other
securities dealers; and
WHEREAS, the Company proposes to enter into a Class B Shares
Distribution Agreement with MLFD, pursuant to which MLFD will act as the
exclusive distributor and representative of the Company in the offer and sale
of Class B shares of common stock, par value $0.10 per share (the "Class B
shares"), of the Company to the public; and
WHEREAS, the Company desires to adopt this Class B Shares Distribution
Plan pursuant to Rule 12b-1 under the Investment Company Act, pursuant to
which the Company will pay an account maintenance fee and a distribution fee
to MLFD with respect to the Company's Class B Shares; and
WHEREAS, the Directors of the Company have determined that there is a
reasonable likelihood that adoption of this Class B Shares Distribution Plan
will benefit the Company and its shareholders.
NOW, THEREFORE, the Company hereby adopts, and MLFD hereby agrees to the
terms of, this Class B Shares Distribution Plan (the "Plan") in accordance
with Rule 12b-1 under the Investment Company Act on the following terms and
conditions:
1. The Company shall pay MLFD an account maintenance fee under the Plan
at the end of each month at the annual rate of 0.25% of average daily net
assets of the Company relating to Class B shares to compensate MLFD and
securities firms with which MLFD enters into related agreements pursuant to
Paragraph 3 hereof ("Sub-Agreements") for providing account maintenance
activities with respect to Class B shareholders of the Company. Expenditures
under the Plan may consist of payments to financial consultants for
maintaining accounts in connection with Class B shares of the Company and
payment of expenses incurred in connection with such account maintenance
activities including the costs of making services available to shareholders
including assistance in connection with inquiries related to shareholder
accounts.
2. The Company shall pay MLFD a distribution fee under the Plan at the
end of each month at the annual rate of 0.75% of average daily net assets of
the Company relating to Class B shares to compensate MLFD and securities
firms with which MLFD enters into related Sub-Agreements for providing sales
and promotional activities and services. Such activities and services will
relate to the sale, promotion and marketing of the Class B shares of the
Company. Such expenditures may consist of sales commissions to financial
consultants for selling Class B shares of the Company, compensation, sales
incentives and payments to sales and marketing personnel, and the payment of
expenses incurred in its sales and promotional activities, including ad-
vertising expenditures related to the Company and the costs of preparing and
distributing promotional materials. The distribution fee may also be used to
pay the financing costs of carrying the unreimbursed expenditures described
in this Paragraph 2. Payment of the distribution fee described in this
Paragraph 2 shall be subject to any limitations set forth in any applicable
regulation of the National Association of Securities Dealers, Inc.
3. The Company hereby authorizes MLFD to enter into Sub-Agreements with
certain securities firms ("Securities Firms"), including Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated, to provide compensation to such
Securities Firms for activities and services of the type referred to in
Paragraphs 1 and 2 hereof. MLFD may reallocate all or a portion of its
account maintenance fee or distribution fee to such Securities Firms as
compensation for the above-mentioned activities and services. Such
Sub-Agreement shall provide that the Securities Firms shall provide MLFD with
such information as is reasonably necessary to permit MLFD to comply with the
reporting requirements set forth in Paragraph 4 hereof.
4. MLFD shall provide the Company for review by the Board of Directors,
and the Directors shall review, at least quarterly, a written report
complying with the requirements of Rule 12b-1 regarding the disbursement of
the account maintenance fee and the distribution fee during such period.
5. This Plan shall not take effect until it has been approved by a vote
of at least a majority, as defined in the Investment Company Act, of the
outstanding Class B voting securities of the Company.
6. This Plan shall not take effect until it has been approved, together
with any related agreements, by votes of a majority of both (a) the Directors
of the Company and (b) those Directors of the Company who are not "interested
persons" of the Company, as defined in the Investment Company Act, and have
no direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Rule 12b-1 Directors"), cast in person at a
meeting or meetings called for the purpose of voting on this Plan and such
related agreements.
7. This Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for
approval of this Plan in Paragraph 6.
8. This Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors, or by vote of a majority of the outstanding Class B
voting securities of the Company.
9. This Plan may not be amended to increase materially the rate of
payments provided for herein unless such amendment is approved by at least a
majority, as defined in the Investment Company Act, of the outstanding Class
B voting securities of the Company, and by the Directors of the Company in
the manner provided for in Paragraph 6 hereof, and no material amendment to
the Plan shall be made unless approved in the manner provided for approval
and annual renewal in Paragraph 6 hereof.
10. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons, as defined in the Investment
Company Act, of the Company shall be committed to the discretion of the
Directors who are not interested persons.
11. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Paragraph 4 hereof, for a period
of not less than six years from the date of this Plan, or the agreements or
such report, as the case may be, the first two years in an easily accessible
place.
IN WITNESS WHEREOF, the parties hereto have executed this Plan as of the
date first above written.
XXXXXXX XXXXX CONVERTIBLE FUND, INC.
By
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Title:
XXXXXXX XXXXX FUNDS DISTRIBUTOR, INC.
By
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Title:
CLASS B SHARES DISTRIBUTION PLAN SUB-AGREEMENT
AGREEMENT made as of the day of , 1997 by and between Xxxxxxx
Xxxxx Funds Distributor, Inc. ("MLFD"), and Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated, a Delaware corporation ("Securities Firm").
W I T N E S S E T H:
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WHEREAS, MLFD has entered into an agreement with Xxxxxxx Xxxxx
Convertible Fund, Inc., a Maryland corporation (the "Company"), pursuant to
which it acts as the exclusive distributor for the sale of Class B shares of
common stock, par value $0.10 per share (the "Class B shares"), of the
Company; and
WHEREAS, MLFD and the Company have entered into a Class B Shares
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "Act") pursuant to which MLFD receives an account
maintenance fee from the Company at the annual rate of 0.25% of average daily
net assets of the Company relating to Class B shares for account maintenance
services related to the Class B shares of the Company and a distribution fee
from the Company at the annual rate of 0.75% of average daily net assets of
the Company relating to Class B shares for providing sales and promotional
activities and services related to the distribution of Class B shares; and
WHEREAS, MLFD desires the Securities Firm to perform certain account
maintenance activities and sales and promotional activities and services for
the Company's Class B shareholders and the Securities Firm is willing to
perform such services;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1. The Securities Firm shall provide account maintenance activities
with respect to the Class B shares of the Company of the types referred to in
Paragraph 1 of the Plan.
2. The Securities Firm shall provide sales and promotional activities
and services with respect to the sale of the Class B shares of the Company,
and incur distribution expenditures of the types referred to in Paragraph 2
of the Plan.
3. As compensation for its activities and services performed under this
Agreement, MLFD shall pay the Securities Firm an account maintenance fee and
a distribution fee at the end of each calendar month in an amount agreed upon
by the parties hereto.
4. The Securities Firm shall provide MLFD, at least quarterly, such
information as reasonably requested by MLFD to enable MLFD to comply with the
reporting requirements of Rule 12b-1 regarding the disbursement of the
account maintenance fee and the distribution fee during such period referred
to in Paragraph 4 of the Plan.
5. This Agreement shall not take effect until it has been approved by
votes of a majority of both (a) the Directors of the Company and (b) those
Directors of the Company who are not "interested persons" of the Company, as
defined in the Act, and have no direct or indirect financial interest in the
operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting or meetings called for the purpose
of voting on this Agreement.
6. This Agreement shall continue in effect for as long as such
continuance is specifically approved at least annually in the manner provided
for approval of the Plan in Paragraph 6.
7. This Agreement shall automatically terminate in the event of its
assignment or in the event of the termination of the Plan or any amendment to
the Plan that requires such termination.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
XXXXXXX XXXXX FUNDS DISTRIBUTOR, INC.
By
Title: -----------------------------------
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
By
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Title:
