DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
XXXXXXXXXXX FUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
XXXXXXXXXXX CALIFORNIA TAX-EXEMPT FUND
REVISED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the 10th
day of February, 1994 by and between XXXXXXXXXXX CALIFORNIA TAX-EXEMPT FUND (the
"Fund") and XXXXXXXXXXX FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
Class B shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant to
which the Fund will compensate the Distributor for a portion of its costs
incurred in connection with the distribution of Shares, and the personal service
and maintenance of shareholder accounts that hold Shares ("Accounts"). The Fund
may act as distributor of securities of which it is the issuer, pursuant to the
Rule, according to the terms of this Plan. The Distributor is authorized under
the Plan to pay "Recipients," as hereinafter defined, for rendering (1)
distribution assistance in connection with the sale of Shares and/or (2)
administrative support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under this Plan.
The terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in (i) the 1940
Act, (ii) the Rule, (iii) Article III, Section 26, of the Rules of Fair Practice
of the National Association of Securities Dealers, Inc., or its successor (the
"NASD Rules of Fair Practice") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other institution
which: (i) has rendered assistance (whether direct, administrative or both)
in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with
such information as the Distributor shall reasonably request to answer such
questions as may arise concerning the sale of Shares; and (iii) has been
selected by the Distributor to receive payments under the Plan.
Notwithstanding the foregoing, a majority of the Fund's Board of Trustees
(the "Board") who are not "interested persons" (as defined in the 0000 Xxx)
and who have no direct or indirect financial interest in the operation of
this Plan or in any agreements relating to this Plan (the "Independent
Trustees") may remove any broker, dealer, bank or other institution as a
Recipient, whereupon such entity's rights as a third-party beneficiary
hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such customers,
clients and/or accounts as to which such Recipient is a fiduciary or
custodian or co-fiduciary or co-custodian (collectively, the "Customers"),
but in no event shall any such Shares be deemed owned by more than one
Recipient for purposes of this Plan. In the event that two entities would
otherwise qualify as
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Recipients as to the same Shares, the Recipient which is the dealer of
record on the Fund's books shall be deemed the Recipient as to such Shares
for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support Services.
(a) The Fund will make payments to the Distributor, (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares computed as of the
close of each business day (the "Service Fee"), plus (ii) within ten (10)
days of the end of each month, in the aggregate amount of 0.0625% (0.75% on
an annual basis) of the average during the month of the aggregate net asset
value of Shares computed as of the close of each business day (the
"Asset-Based Sales Charge") outstanding for six years or less (the "Maximum
Holding Period"). Such Service Fee payments received from the Fund will
compensate the Distributor and Recipients for providing administrative
support services of the type approved by the Board with respect to
Accounts. Such Asset-Based Sales Charge payments received from the Fund
will compensate the Distributor and Recipients for providing distribution
assistance in connection with the sales of Shares.
The administrative support services in connection with the Accounts to
be rendered by Recipients may include, but shall not be limited to, the
following: answering routine inquiries concerning the Fund, assisting in
the establishment and maintenance of accounts or sub-accounts in the Fund
and processing Share redemption transactions, making the Fund's investment
plans and dividend payment options available, and providing such other
information and services in connection with the rendering of personal
services and/or the maintenance of Accounts, as the Distributor or the Fund
may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses
other than those furnished to current holders of the Fund's Shares
("Shareholders"), and providing such other information and services in
connection with the distribution of Shares as the Distributor or the Fund
may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment under
the Plan if it has Qualified Holdings of Shares to entitle it to payments
under the Plan. In the event that either the Distributor or the Board
should have reason to believe that, notwithstanding the level of Qualified
Holdings, a Recipient may not be rendering appropriate distribution
assistance in connection with the sale of Shares or administrative support
services for Accounts, then the Distributor, at the request of the Board,
shall require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the Distributor
still is not satisfied, it may take appropriate steps to terminate the
Recipient's status as such under the Plan, whereupon such entity's rights
as a third-party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter,
at a rate not to exceed 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting Qualified
Holdings owned beneficially or of record by the Recipient or by its
Customers for a period of more than the minimum period (the "Minimum
Holding Period"), if any, to be set from time to time by a
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majority of the Independent Trustees. Alternatively, the Distributor may,
at its sole option, make service fee payments ("Advance Service Fee
Payments") to any Recipient quarterly, within forty-five (45) days of the
end of each calendar quarter, at a rate not to exceed (i) 0.25% of the
average during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares are
sold, constituting Qualified Holdings sold by the Recipient during that
quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting Qualified
Holdings owned beneficially or of record by the Recipient or by its
Customers for a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed the
limits on payments to Recipients that are, or may be, imposed by Article
III, Section 26, of the NASD Rules of Fair Practice. In the event Shares
are redeemed less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a pro
rata portion of such Advance Service Fee Payments, based on the ratio of
the time such shares were held to one (1) year. The Advance Service Fee
Payments described in part (i) of the preceding sentence may, at the
Distributor's sole option, be made more often than quarterly, and sooner
than the end of the calendar quarter. However, no such payments shall be
made to any Recipient for any such quarter in which its Qualified Holdings
do not equal or exceed, at the end of such quarter, the minimum amount
("Minimum Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Trustees. A majority of the Independent
Trustees may at any time or from time to time decrease and thereafter
adjust the rate of fees to be paid to the Distributor or to any Recipient,
but not to exceed the rate set forth above, and/or direct the Distributor
to increase or decrease the Maximum Holding Period, the Minimum Holding
Period or the Minimum Qualified Holdings. The Distributor shall notify all
Recipients of the Minimum Qualified Holdings, Maximum Holding Period or
Minimum Holding Period, if any, and the rate of payments hereunder
applicable to Recipients, and shall provide each Recipient with written
notice within thirty (30) days after any change in these provisions.
Inclusion of such provisions or a change in such provisions in a revised
current prospectus shall constitute sufficient notice. The Distributor may
make Plan payments to any "affiliated person" (as defined in the 0000 Xxx)
of the Distributor if such affiliated person qualifies as a Recipient.
(c) The Distributor is entitled to retain from the payments described in
Section 3(a) the aggregate amount of (i) the Service Fee on Shares
outstanding for less than the Minimum Holding Period plus (ii) the
Asset-Based Sales Charge on Shares outstanding for not more than the
Maximum Holding Period, in each case computed as of the close of each
business day during that period and subject to reduction or elimination of
such amounts under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair Practice.
Such amount is collectively referred to as the "Quarterly Limitation." The
distribution assistance and administrative support services in connection
with the sale of Shares to be rendered by the Distributor may include, but
shall not be limited to, the following: (i) paying sales commissions to any
broker, dealer, bank or other institution that sells Shares, and\or paying
such persons Advance Service Fee Payments in advance of, and\or greater
than, the amount provided for in Section 3(a) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Recipients; (iii) paying of or
reimbursing the Distributor for interest and other borrowing costs on
unreimbursed Carry Forward Expenses (as hereafter defined) at the rate paid
by the Distributor or, if such amounts are financed by the Distributor from
its own resources or by an affiliate, at the rate of 1% per annum above the
prime rate (which shall mean the most preferential interest rate on
corporate loans at large U.S. money center commercial banks) then being
reported in the Eastern edition
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of the Wall Street Journal (or if such prime rate is no longer so reported,
such other rate as may be designated from time to time by the Distributor
with the approval of the Independent Trustees); (iv) other direct
distribution costs of the type approved by the Board, including without
limitation the costs of sales literature, advertising and prospectuses
(other than those furnished to current Shareholders) and state "blue sky"
registration expenses; and (v) any service rendered by the Distributor that
a Recipient may render pursuant to part (a) of this Section 3. The
Distributor's costs of providing the above-mentioned services are
hereinafter collectively referred to as "Distribution and Service Costs."
"Carry Forward Expenses" are Distribution and Service Costs that are not
paid in the fiscal quarter in which they arise because they exceed the
Quarterly Limitation. In the event that the Board should have reason to
believe that the Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with the sale
of Shares, then the Distributor, at the request of the Board, shall provide
the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) The excess in any fiscal quarter of (i) the Quarterly Limitation plus
any contingent deferred sales charge ("CDSC") payments recovered by the
Distributor on the proceeds of redemption of Shares over (ii) Distribution
and Service Costs during that quarter, shall be applied in the following
order of priority: first, to interest on unreimbursed Carry Forward
Expenses, second, to reduce any unreimbursed Carry Forward Expenses, third,
to reduce Distribution and Service Costs during that quarter, and fourth,
to reduce the Asset-Based Sales Charge payments by the Fund to the
Distributor in that quarter. Carry Forward Expenses shall be carried
forward by the Fund until payment can be made under the Quarterly
Limitation.
(e) Under the Plan, payments may be made to Recipients: (i) by Xxxxxxxxxxx
Management Corporation ("OMC") from its own resources (which may include
profits derived from the advisory fee it receives from the Fund), or (ii)
by the Distributor (a subsidiary of OMC), from its own resources, from
Asset-Based Sales Charge payments or from its borrowings.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Fund who are not
"interested persons" of the Fund ("Disinterested Trustees") shall be committed
to the discretion of such Disinterested Trustees. Nothing herein shall prevent
the Disinterested Trustees from soliciting the views or the involvement of
others in such selection or nomination if the final decision on any such
selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund shall
provide at least quarterly a written report to the Fund's Board for its review,
detailing distribution expenditures properly attributable to the Shares,
including the amount of all payments made pursuant to this Plan, the identity of
the Recipient of each such payment, the amount paid to the Distributor and the
Distribution and Service Costs and Carry Forward Expenses for that period. The
report shall state whether all provisions of Section 3 of this Plan have been
complied with. The Distributor shall annually certify to the Board the amount of
its total expenses incurred that year and its total expenses incurred in prior
years and not previously recovered with respect to the distribution of Shares in
conjunction with the Board's annual review of the continuation of the Plan.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 0000
Xxx) of the Fund's outstanding voting securities of the Class, on not more than
sixty days written
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notice to any other party to the agreement; (ii) such agreement shall
automatically terminate in the event of its assignment (as defined in the 1940
Act); (iii) it shall go into effect when approved by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as herein
provided, continue in effect from year to year only so long as such continuance
is specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called on February 10, 1994 for the purpose of voting on this Plan, and
replaces the Fund's Distribution and Service Plan and Agreement dated June 10,
1993. Unless terminated as hereinafter provided, it shall continue in effect
until December 31, 1994 and from year to year thereafter or as the Board may
otherwise determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance. This
Plan may not be amended to increase materially the amount of payments to be made
without approval of the Class B Shareholders, in the manner described above, and
all material amendments must be approved by a vote of the Board and of the
Independent Trustees. This Plan may be terminated at any time by vote of a
majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the 0000 Xxx) of the Fund's outstanding voting
securities of the Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor is entitled to
payment from the Fund of any Carry Forward Expenses and related costs properly
incurred in respect of Shares sold prior to the effective date of such
termination, and whether the Fund shall continue to make payment to the
Distributor in the amount the Distributor is entitled to retain under part (c)
of Section 3 hereof, until such time as the Distributor has been reimbursed for
all or part of such amounts by the Fund and by retaining CDSC payments.
8. Disclaimer of Shareholder Liability. The Distributor understands that the
obligations of the Fund under this Plan are not binding upon any Trustee or
shareholder of the Fund personally, but bind only the Fund and the Fund's
property. The Distributor represents that it has notice of the provisions of the
Declaration of Trust of the Fund disclaiming shareholder and Trustee liability
for acts or obligations of the Fund.
XXXXXXXXXXX CALIFORNIA TAX-EXEMPT FUND
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, Secretary
XXXXXXXXXXX FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxxxxx X. Xxxx
---------------------------------
Xxxxxxxxx X. Xxxx
Vice President & Secretary
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