Exhibit 99.(n)(ii)
The following
FORM OF RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
for
CLASS B
was adopted by
LORD XXXXXX VALUE OPPORTUNITIES FUND
A substantially identical plan was adopted by the following Funds or Series of
LORD XXXXXX SECURITIES TRUST:
on the date indicated
Alpha Strategy Fund (December 12, 1997)
Lord Xxxxxx All Value Fund (May 19, 1997)
International Opportunities Fund (May 19, 1997)
Lord Xxxxxx Large-Cap Value Fund (June 30, 2003)
Lord Xxxxxx International Core Equity Fund (December 1, 2003)
RULE 00x-0 XXXXXXXXXXXX XXXX XXX XXXXXXXXX
XXXX XXXXXX SECURITIES TRUST - LORD XXXXXX VALUE OPPORTUNITIES FUND
CLASS B SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of December 20, 2005 by
and between LORD XXXXXX SECURITIES TRUST, a Delaware business trust (the
"Fund"), on behalf of the LORD XXXXXX VALUE OPPORTUNITIES FUND, (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 beneficial
interest, including the Series' Class B shares (the "Shares") pursuant to the
Distribution Agreement between the Fund and the Distributor.
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 Fund, 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 Trustees 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 Trustees (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 Shares issued for reinvested dividends and distributions. The Board of
Trustees 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 Trustees 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 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) 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 Series 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 Series, in whole or in part, by the Fund's Board of
Trustees. The Fund's Board of Trustees (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 Series 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 Trustees, after due
consideration of such factors as they considered relevant, including the
transactions contemplated in any purchase and sale agreement entered into
between the Fund's Distributor and any commission financing entity, the Board of
Trustees 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 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 Series 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 Fund 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 Declaration and Agreement of Trust 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.
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 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. 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.
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
Trustees, 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 trustees, 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, Trustees 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.
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 Trustees of the Fund, including the vote of a majority of the
Trustees 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 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 Trustees of the Fund, including the vote of a majority of the Trustees
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 Trustees of the Fund, including the vote of a majority of the
Trustees 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 Trustees 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 Trustees 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 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 Fund sold by the Distributor before there is a new principal
underwriter, plus (ii) Shares of the Fund issued in connection with the exchange
of Shares of another Fund in the Lord, Xxxxxx Family of Funds, plus (iii) Shares
of the Fund 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 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 Fund 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 Fund, 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 Fund's 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 Fund 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 Trustees of the Fund who are not "interested persons" of the
Fund 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.
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 SECURITIES TRUST
Lord Xxxxxx Value Opportunities Fund
By:
-----------------------------
Vice President
ATTEST:
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Assistant Secretary
LORD XXXXXX DISTRIBUTOR LLC
By: LORD, XXXXXX & CO. LLC
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Managing Member
By:
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A Member
