EXHIBIT 99.m(iii)
Rule 12b-1 Distribution Plan and Agreement
Lord Xxxxxx Tax-Free Income Fund, Inc.
Class C Shares
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of October 1, 2001
by and between LORD XXXXXX TAX-FREE INCOME FUND, INC., a Maryland corporation
(the "Corporation"), on behalf of its Lord Xxxxxx California Tax-Free Income
Fund, Lord Xxxxxx National Tax-Free Income Fund and Lord Xxxxxx New York
Tax-Free Income Fund (each, a "Fund"), 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 Class C
shares of capital stock (the "Shares") pursuant to the Distribution Agreements
between the Corporation and the Distributor, and
WHEREAS, the Corporation desires to adopt a revised Distribution Plan
and Agreement for each Fund's Shares (the "Plan") with the Distributor, as
permitted by Rule 12b-1 under the Act, pursuant to which each 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 Corporation's Board of Directors has determined that
there is a reasonable likelihood that the Plan will benefit each 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 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 (or is reimbursed for by) a 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, each Fund shall pay to the Distributor fees at each month-end after 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 and (b) for distribution,
at an annual rate not to exceed .75 of 1% of the average annual net asset value
of
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Shares outstanding. For purposes of the payment of the fees above, (A) Shares
issued pursuant to an exchange for Class C shares of another series of the
Corporation 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 above
have been outstanding and (B) payments will be based on Shares outstanding
during any such month. Shares outstanding above include Shares issued for
reinvested dividends and distributions. The Board of Directors of the
Corporation shall from time to time determine the amounts, within the foregoing
maximum amounts, that each 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. 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 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) each 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 each 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. 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.
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 a 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 Corporation, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by each Fund 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
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
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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 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 Corporation or the Corporation'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 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 each Fund hereunder without the vote of a majority of its
outstanding 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 with
respect to each Fund 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 with respect to each Fund 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. 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 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.
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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 FUND, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxx
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Vice President
ATTEST:
/s/ Xxxxxxxx X. 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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