Rule 00x-0 Xxxxxxxxxxxx Xxxx xxx Xxxxxxxxx
Xxxx Xxxxxx Tax-Free Income Trust
Class P Shares
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 22, 2002,
by and between LORD XXXXXX TAX-FREE INCOME TRUST, a Delaware business trust (the
"Trust"), on behalf of its Class P shares of Florida Series, Georgia Series,
Michigan Series and Pennsylvania Series (each a "Fund"), and LORD XXXXXX
DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Trust 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 Trust's shares of
beneficial interest, including the Funds' Class P shares (the "Shares") pursuant
to the Distribution Agreement between the Trust and the Distributor, dated as of
the date hereof, and
WHEREAS, the Fund has entered into an Agreement and Plan of
Reorganization with the Lord Xxxxxx Tax-Free Income Trust, a Massachusetts
Business Trust (the "Predecessor Fund") dated May 17, 2002 providing for the
reorganization of the Predecessor Fund into the Fund.
WHEREAS, the Trust desires to adopt a Distribution Plan and Agreement
(the "Plan") for the Funds' Shares with the Distributor, substantially similar
to the Predecessor Fund's Distribution Plan and Agreement of Trust for its
Florida Series, Georgia Series, Michigan Series and Pennyslvania Series, 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 Trust's Board of Trustees 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 Trust 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, the Funds 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 Trust or another Lord
Xxxxxx-sponsored fund (or for shares of a fund acquired by the Trust) 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 Trustees of the Trust 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 Trustees 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 Trust's Board of Trustees
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 Trust's Board of Trustees (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 Declaration and Agreement of Trust of the Trust. 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 Trust pay such fees in the future.
5. The Secretary of the Trust, 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 Trust's Board of Trustees, and the
Board of Trustees 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 trustees, officers, shareholders, or other
representatives of the Trust are or may be "interested persons" of the
Distributor, or
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any successor or assignee thereof, or that any or all of the trustees, officers,
partners, members or other representatives of the Distributor are or may be
"interested persons" of the Trust, except as otherwise may be provided in the
Act.
7. The Distributor shall give the Trust 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 Trust, the Funds or any of the
shareholders, creditors, trustees or officers of the Trust; provided however,
that nothing herein shall be deemed to protect the Distributor against any
liability to the Trust 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 Trustees of the Trust, including the vote of a majority of the
trustees who are not "interested persons" of the Trust 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 their
respective Shares and each material amendment must be approved by a vote of the
Board of Trustees of the Trust, including the vote of a majority of the trustees
who are not "interested persons" of the Trust 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 Trustees of the Trust, including the vote of a majority of the
trustees who are not "interested persons" of the Trust 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 Trustees of the Trust 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 trustees of the Trust who are not
"interested persons" of the Trust and have no trustees 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.
12. So long as this Plan shall remain in effect, the selection and
nomination of those trustees of the Trust who are not "interested persons" of
the Trust are committed to the discretion of such disinterested trustees. 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.
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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 TRUST
By: /s/ Xxxxxxxxx X. Xxxxxxx
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Vice President
ATTEST:
/s/ Xxxxx Xxxxxx
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Assistant Secretary
LORD XXXXXX DISTRIBUTOR LLC
By: LORD, XXXXXX & CO.
Managing Member
By: /s/ Xxxx X. Xxxxxxx
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A Partner
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