Rule 12b-1 Distribution Plan and Agreement
Lord Xxxxxx Research Fund, Inc. - Large-Cap Series -- Class C Shares
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RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of March
11, 1997 by and between LORD XXXXXX RESEARCH FUND, INC., a Maryland corporation
(the "Fund"), and LORD XXXXXX DISTRIBUTOR LLC, a New York limited liability
company (the "Distributor").
WHEREAS, the Fund 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 Fund's Class C shares of
capital stock (the "Shares") pursuant to the Distribution Agreement between the
Fund and the Distributor, dated as of the date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and
Agreement (the "Plan") with the Distributor, as permitted by Rule 12b-1 under
the Act, pursuant to which the Fund 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 Fund's Board of Directors has determined that
there is a reasonable likelihood that the Plan will benefit the Fund 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 Fund 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 Fund 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, the Fund shall pay to the Distributor fees (I) at the time of sale
of Shares (A) for services, not to exceed .25 of 1% of the net asset value of
the Shares sold and (B) for distribution, not to exceed .75 of 1% of the net
asset value of the Shares sold; and (II) at each quarter-end after the first
anniversary of the sale of Shares (A) for services, at an annual rate not to
exceed .25 of 1% of the average annual net asset value of Shares outstanding for
one year or more and (B) for distribution, at an annual rate not to exceed .75
of 1% of the average annual net asset value of Shares outstanding for one year
or more. For purposes of clause (ii) above, (A) Shares issued pursuant to an
exchange for Class C shares of another series of the Fund or another Lord
Xxxxxx-sponsored fund (or for shares of a fund acquired by the Fund) will be
credited with the time held from the initial purchase of such other shares when
determining how long Shares mentioned in clause (ii) have been outstanding and
(B) payments will
be based on Shares outstanding during any such quarter. Sales in clause (i)
above exclude Shares issued for reinvested dividends and distributions, and
Shares outstanding in clause (ii) above include Shares issued for reinvested
dividends and distributions which have been outstanding for one year or more.
The Board of Directors of the Fund shall from time to time determine the
amounts, within the foregoing maximum amounts, that the Fund 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 Article III, Section 26, subparagraphs (d)(2) and (5) of the
Rules of Fair Practice of the National Association of Securities Dealers, 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 Fund shall not
pay with respect to any Authorized Institution service fees equal to more than
.25 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. The Distributor may use amounts received as distribution
fees hereunder from the Fund to finance any activity which 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 up to 10 of the total
basis points authorized by the Fund's Board of Directors designated as the
distribution fee referred to in clause (ii)(b) of paragraph 2 to expenses
incurred by the Distributor if such expenses are primarily intended to result in
the sale of Shares. The Fund'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 Fund. If the Distributor waives
all or a portion of fees which are to be paid by the Fund hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Fund pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by the Fund hereunder and shall provide to the Fund'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 Fund are or may be "interested persons" of the
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 Fund, except as otherwise
may be provided in the Act.
7. The Distributor shall give the Fund 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 Fund or any of its shareholders,
creditors, directors or officers; provided however, that nothing herein shall be
deemed to protect the Distributor against any liability to the Fund or the
Fund's 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 Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund 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 Fund hereunder without the vote of a majority of its
outstanding voting securities and each material amendment must be approved by a
vote of the Board of Directors of the Fund, including the vote of a majority of
the directors who are not "interested persons" of the Fund 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 Fund, including the vote of a majority
of the directors who are not "interested persons" of the Fund 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 Fund 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
Fund who are not "interested persons" of the Fund 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. This Plan shall automatically
terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection
and nomination of those directors of the Fund who are not "interested persons"
of the Fund 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 RESEARCH FUND, INC.
By: /S/ XXXXXXX X. XXXXXX
Vice President
ATTEST:
/S/ Xxxx X. Xxxxxxx
Assistant Secretary
LORD XXXXXX DISTRIBUTOR LLC
By: LORD, XXXXXX & CO.
Managing Member
By: /S/ XXXXXXX X. XXXXXX
A Partner
Rule 12b-1 Distribution Plan and Agreement
LORD XXXXXX RESEARCH FUND, INC. -- SMALL-CAP SERIES -- CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July
12, 1996 by and between LORD XXXXXX RESEARCH FUND, INC., a Maryland corporation
(the "Fund"), on behalf of its SMALL-CAP SERIES (the "Series"), and LORD XXXXXX
DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund 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 Fund's shares of capital
stock, including the Series' Class A shares (the "Shares") pursuant to the
Distribution Agreement between the Fund and the Distributor, dated as of the
date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and
Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule
12b-1 under the Act, pursuant to which the Series may make certain payments to
the Distributor to be used by the Distributor or paid to institutions and
persons permitted by applicable law and/or rules to receive such payments
("Authorized Institutions") in connection with sales of Shares and/or servicing
of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that
there is a reasonable likelihood that the Plan will benefit the Series 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 Fund 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 Series in order to provide additional
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.
2. The Fund also hereby authorizes the Distributor to use
payments received hereunder from the Series in order to (A) finance any activity
which is primarily intended to result in the sale of Shares and (B) provide
continuing information and investment services to shareholder accounts not
serviced by Authorized Institutions
receiving a service fee from the Distributor hereunder and otherwise to
encourage such accounts to remain invested in the Shares; PROVIDED that (I) any
payments referred to in the foregoing clause (a) shall not exceed the
distribution fee permitted to be paid at the time under paragraph 3 of this Plan
and shall be authorized by the Board of Directors of the Fund by a vote of the
kind referred to in paragraph 10 of this Plan and (II) any payments referred to
in clause (b) shall not exceed the service fee permitted to be paid at the time
under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder
for remittance to Authorized Institutions and/or use by the Distributor pursuant
to this Plan (A) service fees and (B) distribution fees, each at an annual rate
not to exceed .25 of 1% of the average annual net asset value of Shares
outstanding. The Board of Directors of the Fund shall from time to time
determine the amounts, within the foregoing maximum amounts, that the Series may
pay the Distributor hereunder. Any such fees (which may be waived by the
Authorized Institutions in whole or in part) may be calculated and paid
quarterly or more frequently if approved by the Board of Directors of the Fund.
Such determinations and approvals by the Board of Directors shall be made and
given by votes of the kind referred to in paragraph 10 of this Plan. Payments by
holders of Shares to the Series of contingent deferred reimbursement charges
relating to distribution fees paid by the Series hereunder shall reduce the
amount of distribution fees for purposes of the annual 0.25% distribution fee
limit. The Distributor will monitor the payments hereunder and shall reduce such
payments or take such other steps as may be necessary to assure that (I) the
payments pursuant to this Plan shall be consistent with Article III, Section 26,
subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, 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 (II) the Series shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to Shares or shares
sold by) such Authorized Institution and held in an account covered by an
Agreement.
4. The net asset value of the Shares shall be determined as
provided in the Articles of Incorporation of the Fund. If the Distributor waives
all or a portion of the fees which are to be paid by the Series hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by the Series hereunder and shall provide to the Fund's Board of
Directors, and the 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 Fund are or may be "interested persons" of the
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 Fund, except as may
otherwise be provided in the Act.
7. The Distributor shall give the Fund 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 Fund, the Series or any of the
shareholders, creditors, directors, or officers of the Fund; provided however,
that nothing herein shall be deemed to protect the Distributor against any
liability to the Fund or the Series' 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 upon the date hereof, and
shall continue in effect for a period of more than one year from that date only
so long as such continuance is specifically approved at least annually by a vote
of the Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund 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 Series hereunder above the maximum amounts referred to
in paragraph 3 of this Plan without a shareholder vote in compliance with Rule
12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material
amendment must be approved by a vote of the Board of Directors of the Fund,
including the vote of a majority of the directors who are not "interested
persons" of the Fund 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.
Amendments to this Plan which do not increase materially the amount to be spent
by the Series hereunder above the maximum amounts referred to in paragraph 3 of
this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of
the kind referred to in the foregoing paragraph 9 may be adopted by a vote of
the Board of
Directors of the Fund, including the vote of a majority of the directors who are
not "interested persons" of the Fund 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 Fund 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 (A) by the vote of a majority of the directors of the
Fund who are not "interested persons" of the Fund and have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
the 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.
12. So long as this Plan shall remain in effect, the selection
and nomination of those directors of the Fund who are not "interested persons"
of the Fund 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 meanings 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 RESEARCH FUND, INC.
By: /S/ XXXXXXX X. XXXXXX
Vice President
ATTEST:
/S/ XXXXXX X. XXXXX
Assistant Secretary
LORD XXXXXX DISTRIBUTOR LLC
By: LORD, XXXXXX $ CO.
By: / S/ XXXXXXX X. XXXXXX
A Partner
Rule 12b-1 Distribution Plan and Agreement
LORD XXXXXX RESEARCH FUND, INC.-- SMALL-CAP SERIES-- CLASS B SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by
and between LORD XXXXXX RESEARCH FUND, INC., a Maryland Corporation (the
"Fund"), on behalf of its SMALL-CAP SERIES (the "Series"), and LORD XXXXXX
DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund 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 Fund's shares of capital
stock including the Series Class B shares (the "Shares") pursuant to the
Distribution Agreement between the Fund and the Distributor, dated as of the
date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement
(the "Plan") with the Distributor, as permitted by Rule 12b-1 under the Act,
pursuant to which the Series may make certain payments to the Distributor (a) to
help reimburse the Distributor for the payment of sales commissions to
institutions and persons permitted by applicable law and/or rules to receive
such payments ("Authorized Institutions") in connection with sales of Shares and
(b) for use by the Distributor in rendering service to the Series, including
paying and financing the payment of sales commissions, service fees, and other
costs of distributing and selling Shares as provided in paragraph 3 of this
Plan, and
WHEREAS, the Fund's Board of Directors has determined that there is a
reasonable likelihood that the Plan will benefit the Series 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 Fund hereby authorizes the Distributor to enter into agreements
with Authorized Institutions (the "Agreements") which may provide for the
payment to such Authorized Institutions of (a) sales commissions (particularly
those paid or financed with payments received hereunder) and (b) service fees
received hereunder 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, respectively. 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 reductions as provided below in this paragraph
2, the Series periodically, as determined by the Fund's Board of Directors (in
the manner contemplated in paragraph 11), shall pay to the Distributor fees (a)
for services, at an annual rate not to exceed .25 of 1% of the average annual
net asset value of Shares outstanding and (b) for distribution, at an annual
rate not to exceed .75 of 1% of the average annual net asset value of Shares
outstanding. Payments will be based on Shares outstanding during any such
period. Shares outstanding include
1
Shares issued for reinvested dividends and distributions. The Board of Directors
of the Fund shall from time to time determine the amounts, within the foregoing
maximum amounts, that the Series may pay the Distributor hereunder. Such
determinations by the Board of Directors shall be made by votes of the kind
referred to in paragraph 11 of this Plan. The service fees mentioned in this
paragraph are for the purposes mentioned in clause (b) (ii) of paragraph 1 of
this Plan and the distribution fees mentioned in this paragraph are for the
purposes mentioned in clause (b) (i) of paragraph 1 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 Article III, Section 26,
subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, 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 Fund shall not pay with respect to any Authorized
Institution service fees equal to more than .25 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. The Distributor may use amounts received as distribution fees
hereunder from the Fund to engage directly or indirectly in financing any
activity which is primarily intended to result in the sale of Shares including,
but not limited to: (a) paying and financing the payment of commissions or other
payments relating to selling or servicing efforts and (b) paying interest,
carrying, or any other financing charges on any unreimbursed distribution or
other expense incurred in a prior fiscal year of the Series whether or not such
charges and unreimbursed distribution or other expense are determined to be a
legal obligation of the Fund, in whole or in part, by the Fund's Board of
Directors. The Fund's Board of Directors (in the manner contemplated in
paragraph 11 of this Plan) shall approve the timing, categories and calculation
of any payments under this paragraph 3.
4.1. The Fund will pay each person which has acted as Distributor of
Shares its Allocable Portion (as such term is defined in paragraphs 13.1 through
13.3) of the distribution fees with respect to Shares of the Series in
consideration of its services as principal underwriter for the Shares of the
Fund. The Distribution Agreement pursuant to which a person acts or acted as
principal underwriter of the Shares is referred to as the "Applicable
Distribution Agreement". Such person shall be paid its Allocable Portion of such
distribution fees notwithstanding such person's termination as Distributor of
the Shares, such payments to be changed or terminated only (i) as required by a
change in applicable law or a change in accounting policy adopted by the
Investment Companies Committee of the AICPA and approved by FASB that results in
a determination by the Fund's independent accountants that any sales charges in
respect of such Fund, which are not contingent deferred sales charges and which
are not yet due and payable, must be accounted for by such Fund as a liability
in accordance with GAAP, each after the effective date of this Plan and
restatement; (ii) if in the sole discretion of the Board of Directors, after due
consideration of such factors as they considered relevant, including the
transactions contemplated in any purchase and sale agreement entered into
between the Series Distributor and any commission financing entity, the Board of
Directors determines (in the manner contemplated in paragraph 12), in the
exercise of its fiduciary duty, that this Plan and the payments thereunder must
be changed or terminated, notwithstanding the effect this action might have on
the Fund's ability to offer and sell Shares; or (iii) in connection with a
Complete Termination of this Plan, it being understood that for this purpose a
Complete
2
Termination of this Plan occurs only if this Plan is terminated and the Fund has
discontinued the distribution of Shares or other back-end load or substantially
similar classes of shares; it being understood that such does not include Class
C shares, I.E., those sold with a level load. The services rendered by a
Distributor for which that Distributor is entitled to receive its Allocable
Portion of the distribution fee shall be deemed to have been completed at the
time of the initial purchase of the Shares (as defined in the Applicable
Distribution Agreement) (whether of that Fund or another fund) taken into
account in computing that Distributor's Allocable Portion of the distribution
fee.
4.2. The obligation of the Fund to pay the distribution fee shall
terminate upon the termination of this Plan in accordance with the terms hereof.
4.3. The right of a Distributor to receive payments hereunder may be
transferred by that Distributor (but not the distribution agreement itself or
that Distributor's obligations thereunder) in order to raise funds which may be
useful or necessary to perform its duties as principal underwriter, and any such
transfer shall be effective upon written notice from that Distributor to the
Fund. In connection with the foregoing, the Series is authorized to pay all or
part of the distribution fee and/or contingent deferred sales charges with
respect to Shares (upon the terms and conditions set forth in the then current
Fund prospectus) directly to such transferee as directed by that Distributor.
4.4. As long as this Plan is in effect, the Series shall not change the
manner in which the distribution fee is computed (except as may be required by a
change in applicable law or a change in accounting policy adopted by the
Investment Companies Committee of the AICPA and approved by FASB that results in
a determination by the Fund's independent accountants that any distribution fees
which are not yet due and payable, must be accounted for by such Fund as a
liability in accordance with GAAP).
5. The net asset value of the Shares shall be determined as provided in
the Articles of Incorporation of the Fund. If the Distributor waives all or a
portion of fees which are to be paid by the Series hereunder, the Distributor
shall not be deemed to have waived its rights under this Agreement to have the
Series pay such fees in the future.
6. The Secretary of the Fund, or in his absence the Chief Financial
Officer, is hereby authorized to direct the disposition of monies paid or
payable by the Fund hereunder and shall provide to the Fund'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. Over the long-term the expenses incurred
by the Distributor for engaging directly or indirectly in financing any activity
which is primarily intended to result in the sale of Shares are likely to be
greater then the distribution fees receivable by the Distributor hereunder.
Nevertheless, there exists the possibility that for a short-term period the
Distributor may not have a sufficient amount of such expenses to warrant
reimbursement by receipt of such distribution fees. Although the Distributor
undertakes not to make a profit under this Plan, the Plan will be considered a
compensation plan (i.e. distribution fees will be paid regardless of expenses
incurred) in order to avoid the possibility of the Distributor not being able to
receive such distribution fees because of a temporary timing difference between
its incurring such expenses and the receipt of such distribution fees.
3
7. Neither this Plan nor any other transaction between the Fund and the
Distributor, or any successor or assignee thereof, 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 Fund are or
may be "interested persons" of the 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 Fund, except as otherwise may be provided in the Act.
8. The Distributor shall give the Fund 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 Fund or any of its shareholders, creditors,
directors or officers; provided however, that nothing herein shall be deemed to
protect the Distributor against any liability to the Fund or the Series
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.
9. 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 Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund 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.
10. This Plan may not be amended to increase materially the amount to
be spent by the Series hereunder without the vote of a majority of its
outstanding voting securities and each material amendment must be approved by a
vote of the Board of Directors of the Fund, including the vote of a majority of
the directors who are not "interested persons" of the Fund 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.
11. Amendments to this Plan other than material amendments of the kind
referred to in the foregoing paragraph 10 of this Plan may be adopted by a vote
of the Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund 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 Fund may, by such a vote,
interpret this Plan and make all determinations necessary or advisable for its
administration.
12. 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 Fund who are not
"interested persons" of the Fund 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. This Plan shall automatically terminate in
the event of its assignment.
13.1. For purposes of this Plan, the Distributor's "Allocable
Portion" of the distribution fee
4
shall be 100% of such distribution fees unless or until the Fund uses a
principal underwriter other than the Distributor. Thereafter the Allocable
Portion shall be the portion of the distribution fee attributable to (i) Shares
of the Series sold by the Distributor before there is a new principal
underwriter, plus (ii) Shares of the Series issued in connection with the
exchange of Shares of another Fund in the Lord, Xxxxxx Family of Funds, plus
(iii) Shares of the Series issued in connection with the reinvestment of
dividends and capital gains.
13.2. The Distributor's Allocable Portion of the distribution fees and
the contingent deferred sales charges arising with respect to Shares taken into
account in computing the Distributor's Allocable Portion shall be limited under
Article III, Sections 26(b) and (d) or other applicable regulations of the
National Association of Securities Dealers, Inc. (the "NASD") as if the Shares
taken into account in computing the Distributor's Allocable Portion themselves
constituted a separate class of shares of the Fund.
13.3. The services rendered by the Distributor for which the
Distributor is entitled to receive the Distributor's Allocable Portion of the
distribution fees shall be deemed to have been completed at the time of the
initial purchase of the Shares (or shares of another Fund in the Lord Xxxxxx
Family of Funds) taken into account in computing the Distributor's Allocable
Portion. In addition, the Series will pay to the Distributor any contingent
deferred sales charges imposed on redemption of Shares (upon the terms and
conditions set forth in the then current Fund prospectus) taken into account in
computing the Distributor's Allocable Portion of the distribution fees.
Notwithstanding anything to the contrary in this Plan, the Distributor shall be
paid its Allocable Portion of the distribution fees regardless of the
Distributor's termination as principal underwriter of the Shares of the Series,
or any termination of this Agreement other than in connection with a Complete
Termination (as defined in paragraph 4.1) of the Plan as in effect on the date
of execution of Distribution Agreement with the new Distributor. Except as
provided in paragraph 4.1 and in the preceding sentence, the Series obligation
to pay the distribution fees to the Distributor shall be absolute and
unconditional and shall not be subject to any dispute, offset, counterclaim or
defense whatsoever (it being understood that nothing in this sentence shall be
deemed a waiver by the Series of its right separately to pursue any claims it
may have against the Distributor and to enforce such claims against any assets
of the Distributor (other than the assets represented by the Distributor's
rights to be paid its Allocable Portion of the distribution fees and to be paid
the contingent deferred sales charges).
14. So long as this Plan shall remain in effect, the selection and
nomination of those directors of the Fund who are not "interested persons" of
the Fund 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.
5
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 RESEARCH FUND, INC.
By: /S/ XXXXXX X. XXX
President
ATTEST:
/S/ XXXX X. XXXXXXX
Assistant General Counsel
LORD XXXXXX DISTRIBUTOR LLC
By: /S/ XXXXXXX X. XXXXXX
General Counsel
6
Rule 12b-1 Distribution Plan and Agreement
Lord Xxxxxx Research Fund, Inc. - Small-Cap Series -- Class C Shares
-------------------------------------------------------------------
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of March
11, 1997 by and between LORD XXXXXX RESEARCH FUND, INC., a Maryland corporation
(the "Fund"), and LORD XXXXXX DISTRIBUTOR LLC, a New York limited liability
company (the "Distributor").
WHEREAS, the Fund 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 Fund's Class C shares of
capital stock (the "Shares") pursuant to the Distribution Agreement between the
Fund and the Distributor, dated as of the date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and
Agreement (the "Plan") with the Distributor, as permitted by Rule 12b-1 under
the Act, pursuant to which the Fund 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 Fund's Board of Directors has determined that
there is a reasonable likelihood that the Plan will benefit the Fund 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 Fund 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 Fund 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, the Fund shall pay to the Distributor fees (I) at the time of sale
of Shares (A) for services, not to exceed .25 of 1% of the net asset value of
the Shares sold and (B) for distribution, not to exceed .75 of 1% of the net
asset value of the Shares sold; and (II) at each quarter-end after the first
anniversary of the sale of Shares (A) for services, at an annual rate not to
exceed .25 of 1% of the average annual net asset value of Shares outstanding for
one year or more and (B) for distribution, at an annual rate not to exceed .75
of 1% of the average annual net asset value of Shares outstanding for one year
or more. For purposes of clause (ii) above, (A) Shares issued pursuant to an
exchange for Class C shares of another series of the Fund or another Lord
Xxxxxx-sponsored fund (or for shares of a fund acquired by the Fund) will be
credited with the time held from the initial purchase of such other shares when
determining how long Shares mentioned in clause (ii) have been outstanding and
(B) payments will
be based on Shares outstanding during any such quarter. Sales in clause (i)
above exclude Shares issued for reinvested dividends and distributions, and
Shares outstanding in clause (ii) above include Shares issued for reinvested
dividends and distributions which have been outstanding for one year or more.
The Board of Directors of the Fund shall from time to time determine the
amounts, within the foregoing maximum amounts, that the Fund 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 Article III, Section 26, subparagraphs (d)(2) and (5) of the
Rules of Fair Practice of the National Association of Securities Dealers, 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 Fund shall not
pay with respect to any Authorized Institution service fees equal to more than
.25 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. The Distributor may use amounts received as distribution
fees hereunder from the Fund to finance any activity which 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 up to 10 of the total
basis points authorized by the Fund's Board of Directors designated as the
distribution fee referred to in clause (ii)(b) of paragraph 2 to expenses
incurred by the Distributor if such expenses are primarily intended to result in
the sale of Shares. The Fund'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 Fund. If the Distributor waives
all or a portion of fees which are to be paid by the Fund hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Fund pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by the Fund hereunder and shall provide to the Fund'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 Fund are or may be "interested persons" of the
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 Fund, except as otherwise
may be provided in the Act.
7. The Distributor shall give the Fund 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 Fund or any of its shareholders,
creditors, directors or officers; provided however, that nothing herein shall be
deemed to protect the Distributor against any liability to the Fund or the
Fund's 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 Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund 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 Fund hereunder without the vote of a majority of its
outstanding voting securities and each material amendment must be approved by a
vote of the Board of Directors of the Fund, including the vote of a majority of
the directors who are not "interested persons" of the Fund 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 Fund, including the vote of a majority
of the directors who are not "interested persons" of the Fund 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 Fund 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
Fund who are not "interested persons" of the Fund 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. This Plan shall automatically
terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection
and nomination of those directors of the Fund who are not "interested persons"
of the Fund 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 RESEARCH FUND, INC.
By: /S/ XXXXXXX X. XXXXXX
Vice President
ATTEST:
/S/ Xxxx X. Xxxxxxx
Assistant Secretary
LORD XXXXXX DISTRIBUTOR LLC
By: LORD, XXXXXX & CO.
Managing Member
By: /S/ XXXXXXX X. XXXXXX
A Partner
