CORNERCAP BALANCED FUND
FORM OF
DISTRIBUTION PLAN
DISTRIBUTION PLAN dated this ___ day of ____________ 1996, by and among
CORNERCAP BALANCED FUND, a Massachusetts Business Trust (the "Fund"),
CORNERSTONE CAPITAL CORP., a corporation (the "Advisor"), and XXXXXXXXX, XXXXXX
& XXXXX, INC. (the "Distributor").
1. THE PLAN. This Distribution Plan (the "Plan") is the written plan of the
Fund contemplated by Rule 12b-1 (the "Rule") under the Investment Company Act of
1940 (the "1940 Act").
2. DEFINITIONS. As used in the Plan, the following terms shall have the
following meanings:
a) "Qualified Recipient" shall mean any broker-dealer or other "person
(as that term is defined in the 1940 Act) which (i) has rendered
distribution assistance (whether direct, administrative or both) in
the distribution of the Fund's Shares; (ii) shall furnish the Advisor
or Distributor (on behalf of the Fund) with such information as they
shall reasonably request to answer such questions as may arise
concerning the sale of Fund shares; and (iii) has been selected to
receive payments under the Plan.
b) "Qualified Holdings" shall mean all shares of the Fund beneficially
owned by (i) a Qualified Recipient, (ii) customers (brokerage or
other) of a Qualified Recipient, (iii) the clients (investment
advisory or other) of a Qualified Recipient; (iv) the accountants as
to which a Qualified Recipient has a fiduciary or custodial
relationship, and (v) the members of a Qualified Recipient, if such
qualified Recipient is an association or union; provided that the
Qualified Recipient shall have been instrumental in the purchase of
such Fund shares by, or shall have provided administrative assistance
to, such customers, clients, accounts or members in relation thereto.
The Advisor and Distributor may make final and binding decisions as to
all matters relating to Qualified Holdings and Qualified Recipients,
including but not limited to (i) the identity of Qualified Recipients;
(ii) whether or not any Fund shares are to be considered as Qualified
Holdings of any particular Qualified Recipient; and (iii) what Fund
shares, if any, are to be attributed to a particular Qualified
Recipient, to a different Qualified Recipient or to no Qualified
Recipient.
c) "Qualified Trustees" shall mean the Trustees of the Fund who are not
interested persons, as defined in the 1940 Act, of the Fund and who
have no direct or indirect financial interest in the operation of this
Plan or any agreement related to this Plan. While this Plan is in
effect, the selection and nomination of Qualified Trustees shall be
committed to the discretion of the Trustees who are not interested
persons of
the Fund. Nothing herein shall prevent the involvement of others in
such selection and nomination if the final decision on any such
selection and nomination is approved by a majority of such
disinterested Trustees.
d) "Permitted Payments" shall mean payments by the Fund to Qualified
Recipients as permitted by this Plan.
3. PAYMENTS AUTHORIZED. The Fund is authorized, pursuant to this Plan, to
make Permitted Payments to any Qualified Recipient on either or both of the
following bases:
a) as reimbursement for direct expenses in the course of distributing
Fund shares or providing administrative assistance to the Fund or its
shareholders, including, but not limited to, advertising, printing and
mailing promotional material, telephone calls and lines, computer
terminals, and personnel; and/or
b) at a rate determined by the Advisor or Distributor on behalf of the
Fund with respect to the Qualified Recipient in question based on the
average value of the Qualified Holdings of such Qualified Recipient.
It may be presumed that a Qualified Recipient has provided distribution
assistance with respect to its Qualified Holdings, but if either the Advisor on
behalf of the Fund or the Fund's Qualified Trustees should have reason to
believe a Qualified Recipient may not be rendering appropriate distribution or
administrative assistance in connection with the sale of Fund shares, then the
Advisor or Distributor shall require the Qualified Recipient to provide a
written report or other information to verify that said Qualified Recipient is
providing appropriate service in this regard.
Permitted Payments may be made in any amount to any Qualified Recipient,
provided that (i) the total amount of all Permitted Payments made during a
fiscal year of the Fund to all Qualified Recipients (whether made under (a)
and/or (b) above) do not exceed, in that fiscal year of the Fund 0.25% of 1% of
the average annual net assets of the Fund in that fiscal year; and (ii) a
majority of the Fund's Qualified Trustees may at any time decrease or limit the
aggregate amount of all Permitted Payments or decrease or limit the amount
payable to any Qualified Recipient.
4. EXPENSES AUTHORIZED. The Advisor or Distributor is authorized on behalf of
the Fund, pursuant to this Plan, to purchase advertising of shares of the Fund,
to pay for sales literature and other promotional material, and to make payments
to sales personnel affiliated with either of them. Any such advertising and
sales material may include references to other series of the Trust, other open-
end investment companies or other investments, and any salesmen so paid are not
required to devote their time solely to the sale of Fund shares. The Fund will
reimburse the Advisor or Distributor for any such expenses ("Permitted
Expenses:) incurred during a fiscal year of the Fund, and the Fund may pay for
Permitted Expenses directly from the assets of the Fund, except that the
aggregate amount of reimbursement or payment of Permitted Expenses together with
the Permitted Payments made pursuant to Section 3 of this Plan shall not, in the
aggregate, in that fiscal year of the Fund exceed 0.25% of 1% of the average net
assets of the Fund in such year. No such reimbursement may be made for
Permitted Expenses or Permitted Payments for
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fiscal years prior to the fiscal year in question or in contemplation of future
Permitted Expenses or Permitted Payments.
5. REPORTS. While this Plan is in effect, a written report shall be provided
at least quarterly to the Fund's Board of Trustees, and the Board shall review,
the following: (i) the amounts of all Permitted Payments, the identity of the
recipients of each such Payment; the basis on which each such recipient was
chosen as a Qualified Recipient and the basis on which the amount of the
Permitted Payment to such Qualified Recipient was made; and (ii) the amounts of
Permitted Expenses and the purpose of each such Expense.
6. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This Plan has been
approved by a vote of the Board of Trustees of the Trust and of the Qualified
Trustees, cast in person at a meeting called for the purpose of voting on this
Plan. This Plan shall, unless terminated as hereinafter provided, continue in
effect until ____________ ___, 1998 and from year to year thereafter only so
long as such continuance is specifically approved at least annually by the
Trust's Board of Trustees and its Qualified Trustees cast in person at a meeting
called for the purpose of voting such continuance. This Plan may be terminated
at any time by a vote of a majority of the Qualified Trustees or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the outstanding
voting securities of the Fund. This Plan may not be amended to increase
materially the amount of payments to be made without approval of at least a
"majority" of the outstanding voting securities of the Fund, and all amendments
must be approved by a vote of the Board of Trustees and of the Qualified
Trustees cast in person at a meeting called for the purpose of voting on such
amendment.
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IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to
be executed by their duly authorized officers and their seals to be hereunto
affixed, all as of the day and year first above written.
CORNERCAP BALANCED FUND
BY:
ATTEST:
CORNERSTONE CAPITAL CORP.
BY:
ATTEST:
XXXXXXXXX, XXXXXX AND XXXXX, INC.
BY:
ATTEST:
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