Exhibit 7(a)
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Draft--February 23, 1996
Rule 12b-1 Distribution Plan and Agreement
Lord Xxxxxx Investment Trust -- Lord Xxxxxx Limited Duration
Government Series --
Class C Shares
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RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996
by and between LORD XXXXXX INVESTMENT TRUST, a Delaware business trust (the
"Fund"), on behalf of its LORD XXXXXX LIMITED DURATION GOVERNMENT SERIES (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 C shares (the "Shares")
pursuant to the Distribution Agreement between the Fund and the Distributor,
dated as of the date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement
(the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1
under the Act, pursuant to which the Series 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 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 distribution and service fees
which the Distributor receives from the Series 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 Series shall pay to the Distributor fees (i) at the time of sale of
Shares (a) for services, not to exceed .25 of 1% of the net asset value of the
Shares sold and (b) for distribution, not to exceed .75 of 1% of the net asset
value of the Shares sold; and (ii) at each quarter-end after the first
anniversary of 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 for
one year or more and (b) for distribution, at an annual rate not to exceed .75
of 1% of the average annual net asset value of Shares outstanding for one year
or more. For purposes of clause (ii) above, (A) Shares issued pursuant to an
exchange for Class C shares of another series of the Fund 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 in clause (ii) have been outstanding and
(B) payments will be based on Shares outstanding during any such quarter. Sales
in clause (i) above exclude Shares issued for reinvested dividends and
distributions, and Shares outstanding in clause (ii) above include Shares issued
for reinvested dividends and distributions which have been outstanding for one
year or more. 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 10 of this Plan.
The service fees men tioned 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 Article III, Section 26, subparagraphs (d)(2) and (5) of the
Rules of Fair Practice 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 Series 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 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. Without limiting the
generality of the
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foregoing, the Distributor may apply up to 10 of the total basis points
authorized by the Fund's Board of Trustees designated as the distribution fee
referred to in clause (ii)(b) of paragraph 2 to expenses incurred by the
Distributor if such expenses are primarily intended to result in the sale of
Shares. The Fund'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 of Trust of the Fund. If the Distributor waives all or a
portion of fees which are to be paid by the Series hereunder, the Distributor
shall not be deemed to have waived its rights under this Agreement to have the
Series pay such fees in the future.
5. 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 Series 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.
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 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, or other representatives of the Distributor are or
may be "interested persons" of the Fund, except as otherwise may be provided in
the Act.
7. 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, the Series or any of the
shareholders, creditors, trustees or officers of the Fund; provided however,
that nothing herein shall be deemed to protect the Distributor against any
liability to the Fund or the Series' 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.
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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 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.
9. This Plan may not be amended to increase materially the amount to
be spent by the Series 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.
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 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.
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 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.
12. 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
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President
ATTEST:
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Assistant Secretary
LORD XXXXXX DISTRIBUTOR LLC
By:
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