Exhibit 23(m)(ii)
The following
Form of Rule 12b-1 Distribution Plan and Agreement
For
Class B
was adopted by
LORD XXXXXX CONVERTIBLE FUND
A substantially identical plan was adopted by the following Funds or Series of
LORD XXXXXX INVESTMENT TRUST
on the date indicated
Balanced Series (March 12, 1998)
Lord Xxxxxx Core Fixed Income Fund (March 15, 2000)
Lord Xxxxxx High Yield Fund (October 21, 1998)
Lord Xxxxxx Limited Duration U.S.
Government & Government Sponsored Enterprises Fund (April 1, 2002)
Lord Xxxxxx Total Return Fund (March 15, 2000)
Lord Xxxxxx U.S. Government & Government Sponsored Enterprises Fund
(July 12, 1996)
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Rule 00x-0 Xxxxxxxxxxxx Xxxx xxx Xxxxxxxxx - Xxxx Xxxxxx Investment Trust
Lord Xxxxxx Convertible Fund - Class B Shares
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RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of June
30, 2003 by and between LORD XXXXXX INVESTMENT TRUST, a Delaware business trust
(the "Fund"), on behalf of the LORD XXXXXX CONVERTIBLE 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.
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
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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. ("NASD") 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
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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
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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
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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.
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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 INVESTMENT TRUST
By:/s/ Xxxxxxxxx X. Xxxxxxx
Vice President
ATTEST:
/s/ Xxxxxx X. Xxxxxxxx
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Assistant Secretary
LORD XXXXXX DISTRIBUTOR LLC
By: LORD, XXXXXX & CO. LLC
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Managing Member
By:/s/ Xxxx X. Xxxxxxx
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A Member
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