PRINCIPAL UNDERWRITING AGREEMENT
FOR CLASS B-1 SHARES
OF
KEYSTONE OMEGA FUND
AGREEMENT made this 11th date of December, 1996 by and between Keystone
Omega Fund, a Massachusetts business trust, ("Fund"), and Evergreen Keystone
Investment Services, Inc., a Delaware corporation (the "Principal Underwriter").
The Fund, individually and/or on behalf of its series, if any, referred
to above in the title of this Agreement, to which series, if any, this Agreement
shall relate, as applicable (the "Fund"), may act as the distributor of certain
securities of which it is the issuer pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act"). Accordingly, it is hereby mutually agreed
as follows:
1. The Fund hereby appoints the Principal Underwriter a principal
underwriter of the Class B-1 shares of beneficial interest of the Fund ("B-1
Shares") as an independent contractor upon the terms and conditions hereinafter
set forth. The general term "Shares" as used herein has the same meaning as is
provided therefor in Schedule I hereto. Except as the Fund may from time to time
agree, the Principal Underwriter will act as agent for the Fund and not as
principal.
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2. The Principal Underwriter will use its best efforts to find
purchasers for the B-1 Shares and to promote distribution of the B-1 Shares and
may obtain orders from brokers, dealers or other persons for sales of B-1 Shares
to them. No such dealer, broker or other person shall have any authority to act
as agent for the Fund; such dealer, broker or other person shall act only as
principal in the sale of B-1 Shares.
3. Sales of B-1 Shares by Principal Underwriter shall be at the public
offering price determined in the manner set forth in the prospectus and/or
statement of additional information of the Fund current at the time of the
Fund's acceptance of the order for B-2 Shares. All orders shall be subject to
acceptance by the Fund and the Fund reserves the right in its sole discretion to
reject any order received. The Fund shall not be liable to anyone for failure to
accept any order.
4. On all sales of B-1 Shares the Fund shall receive the current net
asset value. The Fund shall pay the Principal Underwriter Distribution Fees (as
defined in Section 14 hereof), as commissions for the sale of B-1 Shares and
other Shares, which shall be paid in conjunction with distribution fees paid to
the Principal Underwriter by other classes of Shares of the Fund to the extent
required in order to comply with Section 14 hereof, and shall pay over to the
Principal Underwriter CDSCs (as defined in Section 14 hereof) as set forth in
the Fund's current prospectus and statement of additional information, and as
required by Section 14 hereof. The Principal Underwriter shall also receive
payments consisting of shareholder service fees ("Service Fees") at the rate of
.25% per annum of the average daily net asset value of the Class B-1 Shares. The
Principal Underwriter may allow all or a part of said Distribution Fees and
CDSCs received
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by it (not paid to others as hereinafter provided) to such brokers, dealers or
other persons as Principal Underwriter may determine.
5. Payment to the Fund for B-1 Shares shall be in New York or Boston
Clearing House funds received by the Principal Underwriter within three business
days after notice of acceptance of the purchase order and the amount of the
applicable public offering price has been given to the purchaser. If such
payment is not received within such period, the Fund reserves the right, without
further notice, forthwith to cancel its acceptance of any such order. The Fund
shall pay such issue taxes as may be required by law in connection with the
issue of the B-1 Shares.
6. The Principal Underwriter shall not make in connection with any sale
or solicitation of a sale of the B-1 Shares any representations concerning the
B-1 Shares except those contained in the then current prospectus and/or
statement of additional information covering the Shares and in printed
information approved by the Fund as information supplemental to such prospectus
and statement of additional information. Copies of the then current prospectus
and statement of additional information and any such printed supplemental
information will be supplied by the Fund to the Principal Underwriter in
reasonable quantities upon request.
7. The Principal Underwriter agrees to comply with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (as defined in
the Purchase and Sale Agreement, dated as of May 31, 1995 (the "Purchase
Agreement"), between the Principal Underwriter, Citibank, N.A. and Citicorp
North America, Inc., as agent (the "Rules of Fair Practice")).
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8. The Fund appoints the Principal Underwriter as its agent to accept
orders for redemptions and repurchases of B-1 Shares at values and in the manner
determined in accordance with the then current prospectus and/or statement of
additional information of the Fund.
9. The Fund agrees to indemnify and hold harmless the Principal
Underwriter, its officers and Directors and each person, if any, who controls
the Principal Underwriter within the meaning of Section 15 of the Securities Act
of 1933 ("1933 Act"), against any losses, claims, damages, liabilities and
expenses (including the cost of any legal fees incurred in connection therewith)
which the Principal Underwriter, its officers, Directors or any such controlling
person may incur under the 1933 Act, under any other statute, at common law or
otherwise, arising out of or based upon
a. any untrue statement or alleged untrue statement of a material
fact contained in the Fund's registration statement,
prospectus or statement of additional information (including
amendments and supplements thereto) or
b. any omission or alleged omission to state a material fact
required to be stated in the Fund's registration statement,
prospectus or statement of additional information necessary to
make the statements therein not misleading, provided, however,
that insofar as losses, claims, damages, liabilities or
expenses arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or omission
made in reliance and in conformity with information furnished
to the Fund by the Principal Underwriter for use in the Fund's
registration statement, prospectus or statement of additional
information, such indemnification is not applicable. In no
case shall the Fund indemnify the Principal Underwriter or its
controlling person as to any amounts incurred for any
liability arising out of or based upon any action for which
the Principal Underwriter, its officers and Directors or any
controlling person would otherwise be subject to liability by
reason of willful misfeasance, bad faith, or gross negligence
in the performance of its duties or by reason of the reckless
disregard of its obligations and duties under this Agreement.
10. The Principal Underwriter agrees to indemnify and hold harmless the
Fund, its officers and Trustees and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act against any loss, claims,
damages, liabilities and expenses (including the cost of any legal fees incurred
in connection therewith) which the Fund, its officers, Directors or any such
controlling person may incur under the 1933 Act, under any other statute, at
common law or otherwise arising out of the acquisition of any Shares by any
person which
(a) may be based upon any wrongful act by the Principal
Underwriter or any of its employees or representatives, or
(b) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Fund's
registration statement, prospectus or statement of additional
information (including amendments and supplements thereto), or
any omission or alleged omission to state a
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material fact required to be stated therein or necessary to
make the statements therein not misleading, if such statement
or omission was made in reliance upon information furnished or
confirmed in writing to the Fund by the Principal Underwriter.
11. The Fund agrees to execute such papers and to do such acts and
things as shall from time to time be reasonably requested by the Principal
Underwriter for the purpose of qualifying the B-1 Shares for sale under the
so-called "blue sky" laws of any state or for registering B-1 Shares under the
1933 Act or the Fund under the Investment Company Act of 1940 ("1940 Act"). The
Principal Underwriter shall bear the expenses of preparing, printing and
distributing advertising, sales literature, prospectuses, and statements of
additional information. The Fund shall bear the expense of registering B-1
Shares under the 1933 Act and the Fund under the 1940 Act, qualifying B-1 Shares
for sale under the so-called "blue sky" laws of any state, the preparation and
printing of prospectuses, statements of additional information and reports
required to be filed with the Securities and Exchange Commission and other
authorities, the preparation, printing and mailing of prospectuses and
statements of additional information to holders of B-1 Shares, and the direct
expenses of the issue of B-1 Shares.
12. The Principal Underwriter shall, at the request of the Fund,
provide to the Board of Trustees or Directors (together herein called the
"Directors") of the Fund in connection with sales of B-1 Shares not less than
quarterly a written report of the amounts received from the Fund therefor and
the purpose for which such expenditures by the Fund were made.
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13. The term of this Agreement shall begin on the date hereof and,
unless sooner terminated or continued as provided below, shall expire after one
year. This Agreement shall continue in effect after such term if its continuance
is specifically approved by a majority of the outstanding voting securities of
Class B-1 of the Fund or by a majority of the Directors of the Fund and a
majority of the Directors who are not parties to this Agreement or "interested
persons", as defined in the Investment Company Act of 1940 (the "1940 Act"), of
any such party and who have no direct or indirect financial interest in the
operation of the Fund's Rule 12b-1 plan for Class B-1 Shares or in any
agreements related to the plan at least annually in accordance with the 1940 Act
and the rules and regulations thereunder.
This Agreement may be terminated at any time, without payment of any
penalty, by vote of a majority of the Directors of the Fund, or a majority of
such Directors who are not parties to this Agreement or "interested persons", as
defined in the 1940 Act, of any such party and who have no direct or indirect
financial interest in the operation of the Fund's Rule 12b-1 plan for Class B-1
Shares or in any agreement related to the plan or by a vote of a majority of the
outstanding voting securities of Class B-1 on not more than sixty days written
notice to any other party to the agreement; and shall terminate automatically in
the event of its assignment (as defined in the 1940 Act), which shall not
include assignment of the Principal Underwriter's (as hereinafter defined)
provided for hereunder and/or rights related to such Allocable Portions.
14. The provisions of this Section 14 shall be applicable to the extent
necessary to enable the Fund to comply with the obligation of the Fund to pay
the Principal Underwriter its Allocable Portion of Distribution Fees paid in
respect of Shares while the Fund is required to do
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so pursuant the Principal Underwriting Agreement, of even date herewith, in
respect of Class B-2 Shares, and shall remain in effect so long as any payments
are required to be made by the Fund pursuant to the irrevocable payment
instruction (as defined in the Purchase Agreement (the "Irrevocable Payment
Instruction")).
14.1 The Fund shall pay to the Principal Underwriter the Principal
Underwriter's Allocable Portion (as hereinafter defined) of a fee (the
"Distribution Fee") at the rate of .75% per annum of the average daily net asset
value of the Shares, subject to the limitation on the maximum aggregate amount
of such fees under the Rules of Fair Practice as applicable to such Distribution
Fee on the date hereof.
14.2 The Principal Underwriter's Allocable Portion of Distribution Fees
paid by the Fund in respect of Shares shall be equal to the portion of the Asset
Based Sales Charge allocable to Distributor Shares (as defined in Schedule I
hereto to this Agreement) in accordance with Schedule I hereto. The Fund agrees
to cause its transfer agent to maintain the records and arrange for the payments
on behalf of the Fund at the times and in the amounts and to the accounts
required by Schedule I hereto, as the same may be amended from time to time. It
is acknowledged and agreed that by virtue of the operation of Schedule I hereto
the Principal Underwriter's Allocable Portion of Distribution Fees paid by the
Fund in respect of Shares, may, to the extent provided in Schedule I hereto,
take into account Distribution Fees payable by the Fund in respect of other
existing and future classes and/or sub-classes of shares of the Fund which would
be treated as "Shares" under Schedule I hereto. The Fund will limit amounts paid
to any subsequent principal underwriters of Shares to the portion of the Asset
Based Sales Charge paid
18149
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in respect of Shares which is allocable to Post-distributor Shares (as defined
in Schedule I hereto) in accordance with Schedule I hereto. The Fund's payments
to the Principal Underwriter in consideration of its services in connection with
the sale of B-1 Shares shall be the Distribution Fees attributable to B-1 Shares
which are Distributor Shares (as defined in Schedule I hereto) and all other
amounts constituting the Principal Underwriter's Allocable Portion of
Distribution Fees shall be the Distribution Fees related to the sale of other
Shares which are Distributor Shares (as defined in Schedule I hereto).
The Fund shall cause its transfer agent and sub-transfer agents to
withhold from redemption proceeds payable to holders of Shares on redemption
thereof the contingent deferred sales charges payable upon redemption thereof as
set forth in the then current prospectus and/or statement of additional
information of the Fund ("CDSCs") and to pay over to the Principal Underwriter
The Principal Underwriter's Allocable Portion of said CDSCs paid in respect of
Shares which shall be equal to the portion thereof allocable to Distributor
Shares (as defined in Schedule I hereto) in accordance with Schedule I hereto.
14.3 The Principal Underwriter shall be considered to have completely
earned the right to the payment of its Allocable Portion of the Distribution Fee
and the right to payment over to it of its' Allocable Portion of the CDSC in
respect of Shares as provided for hereby upon the completion of the sale of each
Commission Share (as defined in Schedule I hereto) taken into account as a
Distributor Share in computing the Principal Underwriter's Allocable Portion in
accordance with Schedule I hereto.
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14.4 Except as provided in Section 14.5 hereof in respect of
Distribution Fees only, the Fund's obligation to pay the Principal Underwriter
the Distribution Fees and to pay over to the Principal Underwriter CDSCs
provided for hereby shall be absolute and unconditional and shall not be subject
to dispute, offset, counterclaim or any 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 Principal Underwriter
and enforce such claims against any assets (other than the Principal
Underwriter's right to its Allocable Portion of the Distribution Fees and CDSCs
(the "Collection Rights") of the Principal Underwriter).
14.5 Notwithstanding anything in this Agreement to the contrary, the
Fund shall pay to the Principal Underwriter its Allocable Portion of
Distribution Fees provided for hereby notwithstanding its termination as
Principal Underwriter for the Shares or any termination of this Agreement and
such payment of such Distribution Fees, and that obligation and the method of
computing such payment, shall not be changed or terminated except to the extent
required by any change in applicable law, including, without limitation, the
1940 Act, the Rules promulgated thereunder by the Securities and Exchange
Commission and the Rules of Fair Practice, in each case enacted or promulgated
after June 1, 1995, or in connection with a Complete Termination (as hereinafter
defined). For the purposes of this Section 14.5, "Complete Termination" means a
termination of the Fund's Rule 12b-1 plan for B-2 Shares involving the cessation
of payments of the Distribution Fees, and the cessation of payments of
distribution fees pursuant to every other Rule 12b-1 plan of the Fund for every
existing or future B-Class-of-Shares (as hereinafter defined) and the Fund's
discontinuance of the offering of every existing or future B-Class-of-Shares,
which conditions shall be deemed satisfied when they are first complied with
hereafter and so long thereafter as they are complied with prior to the earlier
of (i) the date upon which all of the B-2 Shares which are Distributor Shares
pursuant to Schedule I hereto shall have been redeemed or converted or (ii) June
1, 2005. For purposes of this Section 14.5, the term B-Class-of-Shares means
each of the B-1 Class of Shares of the Fund, the B-2 Class of Shares of the Fund
and each other class of shares of the Fund hereafter issued which would be
treated as Shares under Schedule I hereto or which has substantially similar
economic characteristics to the B-1 or B-2 Classes of Shares taking into account
the total sales charge, CDSC or other similar charges borne directly or
indirectly by the holder of the shares of such class. The parties agree that the
existing C Class of Shares of the Fund does not have substantially similar
economic characteristics to the B-1 or B-2 Classes of Shares taking into account
the total sales charge, CDSC or other similar charges borne directly or
indirectly by the holder of such shares. For purposes of clarity the parties to
this agreement hereby state that they intend that a new installment load class
of shares which may be authorized by amendments to Rule 6(c)-10 under the 1940
Act will be considered to be a B-Class-of-Shares if it has economic
characteristics substantially similar to the economic characteristics of the
existing B-1 or B-2 Classes of Shares taking into account the total sale charge,
CDSC or other similar charges borne directly or indirectly by the holder of such
shares and will not be considered to be a B-Class-of-Shares if it has economic
characteristics substantially similar to the economic characteristics of the
existing C Class of shares of the Fund taking into account the total sales
charge, CDSC or other similar charges borne directly or indirectly by the holder
of such shares.
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14.6 The Principal Underwriter may assign any part of its Allocable
Portions and obligations of the Fund related thereto (but not the Principal
Underwriter's obligations to the Fund provided for in this Agreement) to any
person (an "Assignee") and any such assignment shall be effective as to the Fund
upon written notice to the Fund by the Principal Underwriter. In connection
therewith the Fund shall pay all or any amounts in respect of its Allocable
Portions directly to the Assignee thereof as directed in a writing by the
Principal Underwriter in the Irrevocable Payment Instruction, as the same may be
amended from time to time with the consent of the Fund, and the Fund shall be
without liability to any person if it pays such amounts when and as so directed,
except for underpayments of amounts actually due, without any amount payable as
consequential or other damages due to such underpayment and without interest
except to the extent that delay in payment of Distribution Fees and CDSCs
results in an increase in the maximum Sales Charge allowable under the Rules of
Fair Practice, which increases daily at a rate of prime plus one percent per
annum.
14.7 The Fund will not, to the extent it may otherwise be empowered to
do so, change or waive any CDSC with respect to B-1 Shares, except as provided
in the Fund's prospectus or statement of additional information without the
Principal Underwriter's or Assignee's consent, as applicable. Notwithstanding
anything to the contrary in this Agreement or any termination of this Agreement
or the Principal Underwriter as principal underwriter for the Shares of the
Fund, the Principal Underwriter shall be entitled to be paid its Allocable
Portion of the CDSCs whether or not the Fund's Rule 12b-1 plan for B-1 Shares is
terminated and whether or not any such termination is a Complete Termination, as
defined above.
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15. Pursuant to that certain Xxxx of Sale and Assumption of
Liabilities, dated July 21, 1995 (the "Xxxx of Sale") between the Fund and
Keystone America Omega Fund, Inc. (the "Corporation") and the Agreement and Plan
of Reorganization dated July 21, 1995 (the "Plan of Reorganization" between the
Fund and the Corporation: (1) the Fund purchased all of the Corporation's assets
of every kind and nature whatsoever held on the date thereof in exchange for
Shares of the Fund (the "Exchange Shares") and the assumption by the Fund of all
of the liabilities (fixed and contingent) and obligations (contractual or
otherwise) accrued or arising through the date thereof (including without
limitation all obligations of the Corporation under the Principal Underwriting
Agreement for Class B-2 Shares of Keystone America Omega Fund, Inc. dated as of
June 1, 1995 (the "Corporation's Underwriting Agreement") between the
Corporation and the Principal Underwriter to pay to the Principal Underwriter
the Distribution Fees (as defined therein) in respect of all Distributor Shares
(as defined therein) and (2) each of the outstanding shares (or fraction
thereof) of the Corporation were exchanged for an identical Exchange Share (or
fraction thereof) so that (a) each holder of Shares of the Corporation received
the same number of Exchange Shares (or fraction thereof) of the same class as
the number of shares (or fraction thereof) of each class of the Corporation
surrendered, and (b) the net asset value of each of the Exchange Shares received
was identical to the net asset value of shares of the same class of shares of
the Corporation surrendered. For all purposes of this Agreement (including,
without limitation, Sections 4, 14.1, 14.2 and 14.3 hereof) all references to
Shares shall be deemed to also refer to the Exchange Shares which constitute
Class B-1 shares and Class B-2 shares of the Fund, and the Fund shall pay to the
Distributor all fees in respect of such Exchange Shares (including, without
limitation, all Distribution Fees) as if such Exchange Shares were sold by the
Principal Underwriter under this Agreement. The obligations of the Fund in
respect of the Exchange
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Shares which constitute Class B-2 shares are for all purposes of this Agreement
identical to those of the Corporation in respect of the Class B-2 shares of the
Corporation outstanding immediately prior to the Closing Date (as defined in the
Plan of Reorganization) in all respects, including without limitation, in
respect of (i) the dates and terms of the contingent deferred sales charges,
(ii) the date of conversion of such shares, and (iii) the rate and schedule of
payment of Asset Based Sales Charges. Each of the Exchange Shares (or fraction
thereof) which constitutes a Class B-1 share and a Class B-2 share shall be
deemed to have the "Date of Original Purchase," the "Distributor Inception
Date," the "Distributor Last Sale Cut-Off Date," "Month of Original Purchase,"
and "Original Purchase Amount" (as such terms are defined in Schedule I hereof)
as shares (or faction thereof) of the same class of the Corporation outstanding
immediately prior to the Closing Date (as defined in the Plan of Reorganization)
which were surrendered by the holders thereof for such Exchange Share (or
fraction thereof). In addition, the net asset value in respect of each of the
Class B-1 and Class B-2 shares (or faction thereof) which constitutes as
Exchange Share immediately after the issuance of such Exchange Share which was
issued to a holder in exchange for a share (or a fraction thereof) of the same
class of the Corporation which was a "Commission Share," "Free Share,"
"Post-distribution Share," or a "Special Free Share" (as such terms are defined
in Schedule I to the Corporation's Underwriting Agreement) shall be deemed to be
an Exchange Share (or fraction thereof) which is a "Commission Share," "Free
Share," "Post-distribution Share" or a "Special Free Share," (as such terms are
defined in Schedule I hereof) as the case may be.
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16. The Fund is a Massachusetts business trust established under a
Declaration of Trust, as it may be amended from time to time. The obligations of
the Fund are not personally binding upon, nor shall recourse be had against the
private property of any of the Trustees, shareholders, officers, employees or
agents of the Fund, but only the property of the Fund shall be bound.
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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective officers thereunto duly authorized at Boston,
Massachusetts, on the day and year first written above.
KEYSTONE OMEGA FUND
By:_____________________________
Title:
EVERGREEN KEYSTONE INVESTMENT
SERVICES, INC.
By:_____________________________
Title:
SCHEDULE I
TO
PRINCIPAL UNDERWRITING AGREEMENT
FOR CLASS B-1 SHARES
OF
KEYSTONE OMEGA FUND
TRANSFER AGENT PROCEDURES FOR DIFFERENTIATING
AMONG DISTRIBUTOR SHARES AND POST-DISTRIBUTOR SHARES
Amounts (in respect of Asset Based Sales Charges (as
hereinafter defined) and CDSCs (as hereinafter defined) in respect of Shares (as
hereinafter defined) of each Fund (as hereinafter defined) shall be allocated
between Distributor Shares (as hereinafter defined) and Post-distributor Shares
(as hereinafter defined) of such Fund in accordance with the rules set forth in
clauses (B) and (C). Clause (B) sets forth the rules to be followed by the
Transfer Agent for each Fund and the record owner of each Omnibus Account (as
hereinafter defined) in maintaining records relating to Distributor Shares and
Post-distributor Shares. Clause (C) sets forth the rules to be followed by the
Transfer Agent for each Fund and the record owner of each Omnibus Account in
determining what portion of the Asset Based Sales Charge (as hereinafter
defined) payable in respect of each class of Shares of such Fund and what
portion of the CDSC (as hereinafter defined) payable by the holders of Shares of
such Fund is attributable to Distributor Shares and Post-distributor Shares,
respectively.
(A) DEFINITIONS:
Generally, for purposes of this Schedule I, defined terms
shall be used with the meaning assigned to them in the Agreement, except that
for purposes of the following rules the following definitions are also
applicable:
"AGREEMENT" shall mean the Principal Underwriting Agreement
for Class B-1 Shares of the Instant Fund dated as of December 11, 1996 and the
sucessor Agreement dated December 11, 1996 between the Instant Fund and the
Distributor.
17959
"ASSET BASED SALES CHARGE" shall have the meaning set forth in
Section 26(b)(8)(C) of the Rules of Fair Practice it being understood that for
purposes of this Exhibit I such term does not include the Service Fee.
"BUSINESS DAY" shall mean any day on which the banks and the
New York Stock Exchange are not authorized or required to close in New York
City.
"CAPITAL GAIN DIVIDEND" shall mean, in respect of any Share of
any Fund, a Dividend in respect of such Share which is designated by such Fund
as being a "capital gain dividend" as such term is defined in Section 852 of the
Internal Revenue Code of 1986, as amended.
"CDSC" shall mean with respect to any Fund, the contingent
deferred sales charge payable, either directly or by withholding from the
proceeds of the redemption of the Shares of such Fund, by the shareholders of
such Fund on any redemption of Shares of such Fund in accordance with the
Prospectus relating to such Fund.
"COMMISSION SHARE" shall mean, in respect of any Fund, a Share
of such Fund issued prior to December 11, 1996 under circumstances where a CDSC
would be payable upon the redemption of such Share if such CDSC is not waived or
shall have not otherwise expired.
"DATE OF ORIGINAL PURCHASE" shall mean, in respect of any
Commission Share of any Fund, the date on which such Commission Share was first
issued by such Fund; PROVIDED, that if such Share is a Commission Share and such
Fund issued the Commission Share (or portion thereof) in question in connection
with a Free Exchange for a Commission Share (or portion thereof) of another
Fund, the Date of Original Purchase for the Commission Share (or portion
thereof) in question shall be the date on which the Commission Share (or portion
thereof) of the other Fund was first issued by such other Fund (unless such
Commission Share (or portion thereof) was also issued by such other Fund in a
Free Exchange, in which case this proviso shall apply to that Free Exchange and
this application shall be repeated until one reaches a Commission Share (or
portion thereof) which was issued by a Fund other than in a Free Exchange).
"DISTRIBUTOR" shall mean Keystone Investment Distributors
Company, its successors and assigns.
"DISTRIBUTOR'S ACCOUNT" shall mean the account of the
Distributor, account no. 0000-000-0, ABA No. 011 0000 28, entitled "General
Account" maintained with State Street Bank & Trust Company or such other account
as the Distributor may designate in a notice to the Transfer Agent.
17959
2
"DISTRIBUTOR INCEPTION DATE" shall mean, in respect of any
Fund, the date identified as the date Shares of such Fund are first sold by the
Distributor.
"DISTRIBUTOR LAST SALE CUT-OFF DATE" shall mean, in respect of
any Fund, the date identified as the last sale of a Commission Share during the
period the Distributor served as principal underwriter under the Agreement.
"DISTRIBUTOR SHARES" shall mean, in respect of any Fund, all
Shares of such Fund the Month of Original Purchase of which occurs on or after
the Inception Date for such Fund and on or prior to the Distributor Last Sale
Cut-off Date in respect of such Fund.
"DIVIDEND" shall mean, in respect of any Share of any Fund,
any dividend or other distribution by such Fund in respect of such Share.
"FREE EXCHANGE" shall mean any exchange of a Commission Share
(or portion thereof) of one Fund (the "Redeeming Fund") for a Share (or portion
thereof) of another Fund (the "Issuing Fund"), under any arrangement which
defers the exchanging Shareholder's obligation to pay the CDSC in respect of the
Commission Share (or portion thereof) of the Redeeming Fund so exchanged until
the later redemption of the Share (or portion thereof) of the Issuing Fund
received in such exchange.
"FREE SHARE" shall mean, in respect of any Fund, each Share of
such Fund issued prior to December 11, 1996 other than a Commission Share,
including, without limitation: (i) Shares issued in connection with the
automatic reinvestment of Capital Gain Dividends or Other Dividends by such
Fund, (ii) Special Free Shares issued by such Fund and (iii) Shares (or portion
thereof) issued by such Fund in connection with an exchange whereby a Free Share
(or portion thereof) of another Fund is redeemed and the Net Asset Value of such
redeemed Free Share (or portion thereof) is invested in such Shares (or portion
thereof) of such Fund.
"FUND" shall mean each of the regulated investment companies
or series or portfolios of regulated investment companies identified in Schedule
II to the Irrevocable Payment Instruction, as the same may be amended from time
to time in accordance with the terms thereof.
"INSTANT FUND" shall mean Keystone Omega Fund.
"ML OMNIBUS ACCOUNT" shall mean, in respect of any Fund, the
Omnibus Account maintained by Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx as
subtransfer agent.
"MONTH OF ORIGINAL PURCHASE" shall mean, in respect of any
Share of any Fund, the calendar month in which such Share was first issued by
such Fund; PROVIDED,
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3
that if such Share is a Commission Share and such Fund issued the Commission
Share (or portion thereof) in question in connection with a Free Exchange for a
Commission Share (or portion thereof) of another Fund, the Month of Original
Purchase for the Commission Share (or portion thereof) in question shall be the
calendar month in which the Commission Share (or portion thereof) of the other
Fund was first issued by such other Fund (unless such Commission Share (or
portion thereof) was also issued by such other Fund in a Free Exchange, in which
case this proviso shall apply to that Free Exchange and this application shall
be repeated until one reaches a Commission Share (or portion thereof) which was
issued by a Fund other than in a Free Exchange); PROVIDED, FURTHER, that if such
Share is a Free Share and such Fund issued such Free Share in connection with
the automatic reinvestment of dividends in respect of other Shares of such Fund,
the Month of Original Purchase of such Free Share shall be deemed to be the
Month of Original Purchase of the Share in respect of which such dividend was
paid; PROVIDED, FURTHER, that if such Share is a Free Share and such Fund issued
such Free Share in connection with an exchange whereby a Free Share (or portion
thereof) of another Fund is redeemed and the Net Asset Value of such redeemed
Free Share (or portion thereof) is invested in a Free Share (or portion thereof)
of such Fund, the Month of Original Issue of such Free Share shall be the Month
of Original Issue of the Free Share of such other Fund so redeemed (unless such
Free Share of such other Fund was also issued by such other Fund in such an
exchange, in which case this proviso shall apply to that exchange and this
application shall be repeated until one reaches a Free Share which was issued by
a Fund other than in such an exchange); and PROVIDED, FINALLY, that for purposes
of this Schedule I each of the following periods shall be treated as one
calendar month for purposes of applying the rules of this Schedule I to any
Fund: (i) the period of time from and including the Distributor Inception Date
for such Fund to and including the last day of the calendar month in which such
Distributor Inception Date occurs; (ii) the period of time commencing with the
first day of the calendar month in which the Distributor Last Sale Cutoff Date
in respect of such Fund occurs to and including such Distributor Last Sale
Cutoff Date; and (iii) the period of time commencing on the day immediately
following the Distributor Last Sale Cutoff Date in respect of such Fund to and
including the last day of the calendar month in which such Distributor Last Sale
Cut-off Date occurs.
"OMNIBUS ACCOUNT" shall mean any Shareholder Account the
record owner of which is a registered broker-dealer which has agreed with the
Transfer Agent to provide sub-transfer agent functions relating to each
Sub-shareholder Account within such Shareholder Account as contemplated by this
Schedule I in respect of each of the Funds.
"OMNIBUS ASSET BASED SALES CHARGE SETTLEMENT DATE" shall mean,
in respect of each Omnibus Account, the Business Day next following the
twentieth day of each calendar month for the calendar month immediately
preceding such date so long as the record owner is able to allocate the Asset
Based Sales Charge accruing in respect of Shares of any Fund as contemplated by
this Schedule I no more frequently than monthly; PROVIDED, that at such time as
the record owner of such Omnibus Account is able to
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4
provide information sufficient to allocate the Asset Based Sales Charge accruing
in respect of such Shares of such Fund owned of record by such Omnibus Account
as contemplated by this Schedule I on a weekly or daily basis, the Omnibus Asset
Based Sales Charge Settlement Date shall be a weekly date as in the case of the
Omnibus CDSC Settlement Date or a daily date as in the case of Asset Based Sales
Charges accruing in respect of Shareholder Accounts other than Omnibus Accounts,
as the case may be.
"OMNIBUS CDSC SETTLEMENT DATE" shall mean, in respect of each
Omnibus Account, the third Business Day of each calendar week for the calendar
week immediately preceding such date so long as the record owner of such Omnibus
Account is able to allocate the CDSCs accruing in respect of any Shares of any
Fund as contemplated by this Schedule I for no more frequently than weekly;
PROVIDED, that at such time as the record owner of such Shares of such Fund
owned of record by such Omnibus Account is able to provide information
sufficient to allocate the CDSCs accruing in respect of such Omnibus Account as
contemplated by this Schedule I on a daily basis, the Omnibus CDSC Settlement
Date for such Omnibus Account shall be a daily date as in the case of CDSCs
accruing in respect of Shareholder Accounts other than Omnibus Accounts.
"ORIGINAL PURCHASE AMOUNT" shall mean, in respect of any
Commission Share of any Fund, the amount paid (i.e., the Net Asset Value thereof
on such date), on the Date of Original Purchase in respect of such Commission
Share, by such Shareholder Account or Sub-shareholder Account for such
Commission Share; PROVIDED, that if such Fund issued the Commission Share (or
portion thereof) in question in connection with a Free Exchange for a Commission
Share (or portion thereof) of another Fund, the Original Purchase Amount for the
Commission Share (or portion thereof) in question shall be the Original Purchase
Amount in respect of such Commission Share (or portion thereof) of such other
Fund (unless such Commission Share (or portion thereof) was also issued by such
other Fund in a Free Exchange, in which case this proviso shall apply to that
Free Exchange and this application shall be repeated until one reaches a
Commission Share (or portion thereof) which was issued by a Fund other than in a
Free Exchange).
"OTHER DIVIDEND" shall mean in respect of any Share, any
Dividend paid in respect of such Share other than a Capital Gain Dividend.
"POST-DISTRIBUTOR SHARES" shall mean, in respect of any Fund,
all Shares of such Fund the Month of Original Purchase of which occurs after the
Distributor Last Sale Cut-off Date for such Fund.
"PROGRAM AGENT" shall mean Citicorp North America, Inc., as
Program Agent under the Purchase Agreement, and its successors and assigns in
such capacity.
"PURCHASE AGREEMENT" shall mean that certain Purchase and Sale
Agreement dated as of May 31, 1995, among Keystone Investment Distributors
Company,
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5
as Seller, Citibank, N.A., as Purchaser, and Citicorp North America, Inc., as
Program Agent.
"SHARE" shall mean in respect of any Fund any share of the
classes of shares specified in Schedule II to the Irrevocable Payment
Instruction opposite the name of such Fund, as the same may be amended from time
to time by notice from the Distributor and the Program Agent to the Fund and the
Transfer Agent; PROVIDED, that such term shall include, after the Distributor
Last Sale Cut-off Date, a share of a new class of shares of such Fund: (i) with
respect to each record owner of Shares which is not treated in the records of
each Transfer Agent and Sub-transfer Agent for such Fund as an entirely separate
and distinct class of shares from the classes of shares specified Schedule II to
the Irrevocable Payment Instruction or (ii) the shares of which class may be
exchanged for shares of another Fund of the classes of shares specified on
Schedule II to the Irrevocable Payment Instruction of any class existing on or
prior to the Distributor Last Sale Cut-off Date; or (iii) dividends on which can
be reinvested in shares of the classes specified on Schedule II to the
Irrevocable Payment Instruction under the automatic dividend reinvestment
options; or (iv) which is otherwise treated as though it were of the same class
as the class of shares specified on Schedule II to the Irrevocable Payment
Instruction.
"SHAREHOLDER ACCOUNT" shall have the meaning set forth in
clause (B)(1) hereof.
"SPECIAL FREE SHARE" shall mean, in respect of any Fund, a
Share (other than a Commission Share) issued by such Fund other than in
connection with the automatic reinvestment of Dividends and other than in
connection with an exchange whereby a Free Share (or portion thereof) of another
Fund is redeemed and the Net Asset Value of such redeemed Share (or portion
thereof) is invested in a Share (or portion thereof) of such Fund.
"SUB-SHAREHOLDER ACCOUNT" shall have the meaning set forth in
clause (B)(1) hereof.
"SUB-TRANSFER AGENT" shall mean, in respect of each Omnibus
Account, the record owner thereof.
(B) RECORDS TO BE MAINTAINED BY THE TRANSFER
AGENT FOR EACH FUND AND THE RECORD OWNER OF EACH OMNIBUS
ACCOUNT:
The Transfer Agent shall maintain Shareholder Accounts, and
shall cause each record owner of each Omnibus Account to maintain
Sub-shareholder Accounts, each in accordance with the following rules:
17959
6
(1) SHAREHOLDER ACCOUNTS AND SUB-SHAREHOLDER ACCOUNTS. The
Transfer Agent shall maintain a separate account (a "Shareholder Account") for
each record owner of Shares of each Fund. Each Shareholder Account (other than
Omnibus Accounts) will represent a record owner of Shares of such Fund, the
records of which will be kept in accordance with this Schedule I. In the case of
an Omnibus Account, the Transfer Agent shall require that the record owner of
the Omnibus Account maintain a separate account (a "Sub-shareholder Account")
for each record owner of Shares which are reflected in the Omnibus Account, the
records of which will be kept in accordance with this Schedule I. Each such
Shareholder Account and Sub-shareholder Account shall relate solely to Shares of
such Fund and shall not relate to any other class of shares of such Fund.
(2) COMMISSION SHARES. For each Shareholder Account (other
than an Omnibus Account), the Transfer Agent shall maintain daily records of
each Commission Share of such Fund which records shall identify each Commission
Share of such Fund reflected in such Shareholder Account by the Month of
Original Purchase of such Commission Share.
For each Omnibus Account, the Transfer Agent shall require
that the Sub-transfer Agent in respect thereof maintain daily records of such
Sub-shareholder Account which records shall identify each Commission Share of
such Fund reflected in such Sub-shareholder Account by the Month of Original
Purchase; PROVIDED, that until the Sub-transfer Agent in respect of the ML
Omnibus Account develops the data processing capability to conform to the
foregoing requirements, such Sub-transfer Agent shall maintain daily records of
Sub-shareholder Accounts which identify each Commission Share of such Fund
reflected in such Sub-shareholder Account by the Date of Original Purchase. Each
such Commission Share shall be identified as either a Distributor Share or a
Post-distributor Share based upon the Month of Original Purchase of such
Commission Share (or in the case of a Sub-shareholder Account within the ML
Omnibus Account, based upon the Date of Original Purchase).
(3) FREE SHARES. The Transfer Agent shall maintain daily
records of each Shareholder Account (other than an Omnibus Account) in respect
of any Fund so as to identify each Free Share (including each Special Free
Share) reflected in such Shareholder Account by the Month of Original Purchase
of such Free Share. In addition, the Transfer Agent shall require that each
Shareholder Account (other than an Omnibus Account) have in effect separate
elections relating to reinvestment of Capital Gain Dividends and relating to
reinvestment of Other Dividends in respect of any Fund. Either such Shareholder
Account shall have elected to reinvest all Capital Gain Dividends or such
Shareholder Account shall have elected to have all Capital Gain Dividends
distributed. Similarly, either such Shareholder Account shall have elected to
reinvest all Other Dividends or such Shareholder Account shall have elected to
have all Other Dividends distributed.
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7
The Transfer Agent shall require that the Sub-transfer Agent
in respect of each Omnibus Account maintain daily records for each
Sub-shareholder Account in the manner described in the immediately preceding
paragraph for Shareholder Accounts (other than Omnibus Accounts); PROVIDED, that
until the Sub-transfer Agent in respect of the ML Omnibus Account develops the
data processing capability to conform to the foregoing requirements, such
Sub-transfer Agent shall not be obligated to conform to the foregoing
requirements. Each Sub-shareholder Account shall also have in effect Dividend
reinvestment elections as described in the immediately preceding paragraph.
The Transfer Agent and each Sub-transfer Agent in respect of
an Omnibus Account shall identify each Free Share as either a Distributor Share
or a Post-distributor Share based upon the Month of Original Purchase of such
Free Share; PROVIDED, that until the Sub-transfer Agent in respect of the ML
Omnibus Account develops the data processing capability to conform to the
foregoing requirements, the Transfer Agent shall require such Sub-transfer Agent
to identify each Free Share of a given Fund in the ML Omnibus Account as a
Distributor Share, or Post-distributor Share, as follows:
(a) Free Shares of such Fund which are outstanding on the
Distributor Last Sale Cut-off Date for such Fund shall be
identified as Distributor Shares.
(b) Free Shares of such Fund which are issued (whether or not in
connection with an exchange for a Free Share of another Fund)
to the ML Omnibus Account during any calendar month (or
portion thereof) after the Distributor Last Sale Cut-off Date
for such Fund shall be identified as Distributor Shares in a
number computed as follows:
A X (B/C)
where:
A = Free Shares of such Fund issued to the ML Omnibus
Account during such calendar month (or portion
thereof)
B = Number of Commission Shares and Free Shares of such
Fund in the ML Omnibus Account identified as
Distributor Shares and outstanding as of the close of
business in the last day of the immediately preceding
calendar month (or portion thereof)
C = Total number of Commission Shares and Free Shares
of such Fund in the ML Omnibus Account and
outstanding as of the close of business on the last
day of the immediately preceding calendar month (or
portion thereof).
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8
(c) Free Shares of such Fund which are issued (whether or not in
connection with an exchange for a free share of another Fund)
to the ML Omnibus Account during any calendar month (or
portion thereof) after the Distributor Last Sale Cut-off Date
for such Fund shall be identified as Post-distributor Shares
in a number computed as follows:
(A X (B/C)
where:
A = Free Shares of such Fund issued to the ML Omnibus
Account during such calendar month (or portion
thereof)
B = Number of Commission Shares and Free Shares of such
Fund in the ML Omnibus Account identified as
Post-distributor Shares and outstanding as of the
close of business in the last day of the immediately
preceding calendar month (or portion thereof)
C = Total number of Commission Shares and Free Shares
of such Fund in the ML Omnibus Account and
outstanding as of the close of business on the last
day of the immediately preceding calendar month (or
portion thereof).
(d) Free Shares of such Fund which are redeemed (whether or not in
connection with an exchange for Free Shares of another Fund or
in connection with the conversion of such Shares into a Class
A Share of such Fund) from the ML Omnibus Account in any
calendar month (or portion thereof) after the Distributor Last
Sale Cut-off Date for such Fund shall be identified as
Distributor Shares in a number computed as follows:
A X (B/C)
Where:
A = Free Shares of such Fund which are redeemed
(whether or not in connection with an exchange for
Free Shares of another Fund or in connection with the
conversion of such Shares into a class A share of
such Fund) from the ML Omnibus Account during such
calendar month (or portion thereof)
B = Free Shares of such Fund in the ML Omnibus Account
identified as Distributor Shares and outstanding as
of the close of business on the last day of the
immediately preceding calendar month.
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9
C = Total number of Free Shares of such Fund in the ML
Omnibus Account and outstanding as of the close of
business on the last day of the immediately preceding
calendar month.
(e) Free Shares of such Fund which are redeemed (whether or not in
connection with an exchange for Free Shares of another Fund or
in connection with the conversion of such Shares into a class
A share of such Fund) from the ML Omnibus Account in any
calendar month (or portion thereof) after the Distributor Last
Sale Cut-off Date for such Fund shall be identified as
Post-distributor Shares in a number computed as follows:
A X (B/C)
where:
A = Free Shares of such Fund which are redeemed
(whether or not in connection with an exchange for
Free Shares of another Fund or in connection with the
conversion of such Shares into a class A share of
such Fund) from the ML Omnibus Account during such
calendar month (or portion thereof)
B = Free Shares of such Fund in the ML Omnibus Account
identified as Post-distributor Shares and outstanding
as of the close of business on the last day of the
immediately preceding calendar month.
C = Total number of Free Shares of such Fund in the ML
Omnibus Account and outstanding as of the close of
business on the last day of the immediately preceding
calendar month.
(4) APPRECIATION AMOUNT AND COST ACCUMULATION AMOUNT. The
Transfer Agent shall maintain on a daily basis in respect of each Shareholder
Account (other than Omnibus Accounts) a Cost Accumulation Amount representing
the total of the Original Purchase Amounts paid by such Shareholder Account for
all Commission Shares reflected in such Shareholder Account as of the close of
business on each day. In addition, the Transfer Agent shall maintain on a daily
basis in respect of each Shareholder Account (other than Omnibus Accounts)
sufficient records to enable it to compute, as of the date of any actual or
deemed redemption or Free Exchange of a Commission Share reflected in such
Shareholder Account an amount (such amount an "Appreciation Amount") equal to
the excess, if any, of the Net Asset Value as of the close of business on such
day of the Commission Shares reflected in such Shareholder Account minus the
Cost Accumulation Amount as of the close of business on such day. In the event
that a Commission Share (or portion thereof) reflected in a Shareholder Account
is redeemed or under these rules is deemed to have been redeemed (whether in a
Free Exchange or
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10
otherwise), the Appreciation Amount for such Shareholder Account shall be
reduced, to the extent thereof, by the Net Asset Value of the Commission Share
(or portion thereof) redeemed, and if the Net Asset Value of the Commission
Share (or portion thereof) being redeemed equals or exceeds the Appreciation
Amount, the Cost Accumulation Amount will be reduced to the extent thereof, by
such excess. If the Appreciation Amount for such Shareholder Account immediately
prior to any redemption of a Commission Share (or portion thereof) is equal to
or greater than the Net Asset Value of such Commission Share (or portion
thereof) deemed to have been tendered for redemption, no CDSCs will be payable
in respect of such Commission Share (or portion thereof).
The Transfer Agent shall require that the Sub-transfer Agent
in respect of each Omnibus Account maintain on a daily basis in respect of each
Sub-shareholder Account reflected in such Omnibus Account a Cost Accumulation
Amount and sufficient records to enable it to compute, as of the date of any
actual or deemed redemption or Free Exchange of a Commission Share reflected in
such Sub-shareholder Account an Appreciation Amount in accordance with the
preceding paragraph and to apply the same to determine whether a CDSC is payable
(as though such Sub-shareholder Account were a Shareholder Account other than an
Omnibus Account; PROVIDED, that until the Sub-transfer Agent in respect of the
ML Omnibus Account develops the data processing capability to conform to the
foregoing requirements, such Sub-transfer Agent shall maintain for each
Sub-shareholder Account a separate Cost Accumulation Amount and a separate
Appreciation Amount for each Date of Original Purchase of any Commission Share
which shall be applied as set forth in the preceding paragraph as if each Date
of Original Purchase were a separate Month of Original Purchase.
(5) NASD CAP. On the date the distribution fees paid in
respect of any class of Shares equals the maximum amount thereon under the Rules
of Fair Practice, in respect of such class, all outstanding Shares of such class
of such Fund shall be converted into Class A shares of such Fund and will be
deemed to have been redeemed for their Net Asset Value for purposes of this
Schedule I.
(6) IDENTIFICATION OF REDEEMED SHARES. If a Shareholder
Account (other than an Omnibus Account) tenders a Share of a Fund for redemption
(other than in connection with an exchange of such Share for a Share of another
Fund or in connection with the conversion of such Share pursuant to a Conversion
Feature), such tendered Share will be deemed to be a Free Share if there are any
Free Shares reflected in such Shareholder Account immediately prior to such
tender. If there is more than one Free Share reflected in such Shareholder
Account immediately prior to such tender, such tendered Share will be deemed to
be the Free Share with the earliest Month of Original Purchase. If there are no
Free Shares reflected in such Shareholder Account immediately prior to such
tender, such tendered Share will be deemed to be the Commission Share with the
earliest Month of Original Purchase reflected in such Shareholder Account.
17959
11
If a Sub-shareholder Account reflected in an Omnibus Account
tenders a Share for redemption (other than in connection with an Exchange of
such Share for a Share of another Fund or in connection with the conversion of
such Share pursuant to a Conversion Feature), the Transfer Agent shall require
that the record owner of each Omnibus Account supply the Transfer Agent
sufficient records to enable the Transfer Agent to apply the rules of the
preceding paragraph to such Sub-shareholder Account (as though such
Sub-shareholder Account were a Shareholder Account other than an Omnibus
Account); PROVIDED, that until the Sub-transfer Agent in respect of the ML
Omnibus Account develops the data processing capability to conform to the
foregoing requirements, such Sub-transfer Agent shall not be required to conform
to the foregoing rules regarding Free Shares (and the Transfer Agent shall
account for such Free Shares as provided in (3) above) but shall apply the
foregoing rules to each Commission Share with respect to the Date of Original
Purchase of any Commission Share as though each such Date were a separate Month
of Original Purchase.
(7) IDENTIFICATION OF EXCHANGED SHARES. When a Shareholder
Account (other than an Omnibus Account) tenders Shares of one Fund (the
"Redeeming Fund") for redemption where the proceeds of such redemption are to be
automatically reinvested in shares of another Fund (the "Issuing Fund") to
effect an exchange (whether or not pursuant to a Free Exchange) into Shares of
the Issuing Fund: (1) such Shareholder Account will be deemed to have tendered
Shares (or portions thereof) of the Redeeming Fund with each Month of Original
Purchase represented by Shares of the Redeeming Fund reflected in such
Shareholder Account immediately prior to such tender in the same proportion that
the number of Shares of the redeeming Fund with such Month of Original Purchase
reflected in such Shareholder immediately prior to such tender bore to the total
number of Shares of the Redeeming Fund reflected in such Shareholder Account
immediately prior to such tender, and on that basis the tendered Shares of the
Redeeming Fund will be identified as Distributor Shares or Post-distributor
Shares; (2) such Shareholder Account will be deemed to have tendered Commission
Shares (or portions thereof) and Free Shares (or portions thereof) of the
Redeeming Fund of each category (i.e., Distributor Shares or Post-distributor
Shares) in the same proportion that the number of Commission Shares or Free
Shares (as the case may be) of the Redeeming Fund in such category reflected in
such Shareholder Account bore to the total number of Shares of the Redeeming
Fund in such category reflected in such Shareholder Account immediately prior to
such tender, (3) the Shares (or portions thereof) of the Issuing Fund issued in
connection with such exchange will be deemed to have the same Months of Original
Purchase as the Shares (or portions thereof) of the Redeeming Fund so tendered
and will be categorized as Distributor Shares and Post-distributor Shares
accordingly, and (4) the Shares (or portions thereof) of each Category of the
Issuing Fund issued in connection with such exchange will be deemed to be
Commission Shares and Free Shares in the same proportion that the Shares of such
Category of the Redeeming Fund were Commission Shares and Free Shares.
17959
12
The Transfer Agent shall require that each record owner of an
Omnibus Account maintain records relating to each Sub-shareholder Account in
such Omnibus Account sufficient to apply the foregoing rules to each such
Sub-shareholder Account (as though such Sub-shareholder Account were a
Shareholder Account other than an Omnibus Account); PROVIDED, that until the
Sub-transfer Agent in respect of the ML Omnibus Account develops the data
processing capability to conform to the foregoing requirements, such
Sub-transfer Agent shall not be required to conform to the foregoing rules
relating to Free Shares (and the Sub-transfer Agent shall account for such Free
Shares as provided in (3) above) and shall apply a first-in-first-out procedure
(based upon the Date of Original Purchase) to determine which Commission Shares
(or portions thereof) of a Redeeming Fund were redeemed in connection with an
exchange.
(8) IDENTIFICATION OF CONVERTED SHARES. The Transfer Agent
records maintained for each Shareholder Account (other than an Omnibus Account)
will treat each Commission Share of a Fund as though it were redeemed at its Net
Asset Value on the date such Commission Share converts into a class A share of
such Fund in accordance with an applicable Conversion Feature applied with
reference to its Month of Original Purchase and will treat each Free Share of
such Fund with a given Month of Original Purchase as though it were redeemed at
its Net Asset Value when it is simultaneously converted to a class A share at
the time the Commission Shares of such Fund with such Month of Original Purchase
are so converted.
The Transfer Agent shall require that each record owner of an
Omnibus Account maintain records relating to each Sub-shareholder Account in
such Omnibus Account sufficient to apply the foregoing rules to each such
Sub-shareholder Account (as though such Sub-shareholder Account were a
Shareholder Account other than an Omnibus Account) ; provided, that until the
Sub-transfer Agent in respect of the ML Omnibus Account develops the data
processing capability to conform to the foregoing requirements, such
Sub-transfer Agent shall apply the foregoing rules to Commission Shares with
reference to the Date of Original Issue of each Commission Share (as though each
such date were a separate Month of Original Issue) and shall not be required to
apply the foregoing rules to Free Shares (and the Sub-transfer Agent shall
account for such Free Shares as provided in (3) above).
(C) ALLOCATIONS OF ASSET BASED SALE CHARGES AND
CDSCS AMONG DISTRIBUTOR SHARES AND POST-DISTRIBUTOR
SHARES:
The Transfer Agent shall use the following rules to allocate
the amounts of Asset Based Sales Charges and CDSCs payable by each Fund in
respect of Shares between Distributor Shares and Post-distributor Shares:
(1) RECEIVABLES CONSTITUTING CDSCS: CDSCs will be treated as
relating
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13
to Distributor Shares or Post-distributor Shares depending upon the Month of
Original Purchase of the Commission Share the redemption of which gives rise to
the payment of a CDSC by a Shareholder Account.
The Transfer Agent shall cause each Sub-transfer Agent to
apply the foregoing rule to each Sub-shareholder Account based on the records
maintained by such Sub-transfer Agent; PROVIDED, that until the Sub-transfer
Agent in respect of the ML Omnibus Account develops the data processing
capability to conform to the foregoing requirements, such Sub-transfer Agent
shall apply the foregoing rules to each Sub-shareholder Account with respect to
the Date of Original Purchase of any Commission Share as though each such date
were a separate Month of Original Purchase.
(2) RECEIVABLES CONSTITUTING ASSET BASED SALES CHARGES:
The Asset Based Sales Charges accruing in respect of each
Shareholder Account (other than an Omnibus Account) shall be allocated to each
Share reflected in such Shareholder Account as of the close of business on such
day on an equal per share basis. For example, the Asset Based Sales Charges
attributable to Distributor Shares on any day shall be computed and allocated as
follows:
A X (B/C)
where:
A. = Total amount of Asset Based Sales Charge accrued in
respect of such Shareholder Account (other than an
Omnibus Account) on such day.
B. = Number of Distributor Shares reflected in such
Shareholder Account (other than an Omnibus Account)
on the close of business on such day
C. = Total number of Distributor Shares and
Post-Distributor Shares reflected in such Shareholder
Account (other than an Omnibus Account) and
outstanding as of the close of business on such day.
The Portion of the Asset Based Sales Charges of such Fund accruing in respect of
such Shareholder Account for such day allocated to Post-distributor Shares will
be obtained using the same formula but substituting for "B" the number of
Post-distributor Shares, as the case may be, reflected in such Shareholder
Account and outstanding on the close of business on such day. The foregoing
allocation formula may be adjusted from time to time by notice to the Fund and
the transfer agent for the Fund from the Seller and the Program Agent pursuant
to Section 8.18 of the Purchase Agreement.
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The Transfer Agent shall, based on the records maintained by
the record owner of such Omnibus Account, allocate the Asset Based Sales Charge
accruing in respect of each Omnibus Account on each day among all
Sub-shareholder Accounts reflected in such Omnibus Account on an equal per share
basis based upon the total number of Distributor Shares and Post-distributor
Shares reflected in each such Sub-shareholder Account as of the close of
business on such day. In addition, the Transfer Agent shall apply the foregoing
rules to each Sub-shareholder Account (as though it were a Shareholder Account
other than an Omnibus Account), based on the records maintained by the record
owner, to allocate the Asset Based Sales Charge so allocated to any
Sub-shareholder Account among the Distributor Shares and Post-distributor Shares
reflected in each such Sub-shareholder Account in accordance with the rules set
forth in the preceding paragraph; PROVIDED, that until the Sub-transfer Agent in
respect of the ML Omnibus Account develops the data processing capacity to apply
the rules of this Schedule I as applicable to Sub-shareholder Accounts other
than ML Omnibus Accounts, the Transfer Agent shall allocate the Asset Based
Sales Charge accruing in respect of Shares of any Fund in the ML Omnibus Account
during any calendar month (or portion thereof) among Distributor Shares and
Post-distributor Shares as follows:
(a) The portion of such Asset Based Sales Charge allocable to
Distributor Shares shall be computed as follows:
A X ((B + C)/2)
((D + E)/2)
where:
A = Total amount of Asset Based Sales Charge accrued
during such calendar month (or portion thereof) in
respect of Shares of such Fund in the ML Omnibus
Account
B = Shares of such Fund in the ML Omnibus Account and
identified as Distributor Shares and outstanding as of
the close of business on the last day of the
immediately preceding calendar month (or portion
thereof), times Net Asset Value per Share as of such
time
C = Shares of such Fund in the ML Omnibus Account and
identified as Distributor Shares and outstanding as of
the close of business on the last day of such calendar
month (or portion thereof), times Net Asset Value per
Share as of such time
D = Total number of Shares of such Fund in the ML Omnibus
Account and outstanding as of the close of business on
the last day of the immediately preceding calendar
month (or portion thereof), times Net
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Asset Value per Share as of such time.
E = Total number of Shares of such Fund in the ML Omnibus
Account and outstanding as of the close of business on
the last day of such calendar month (or portion
thereof), times Net Asset Value per Share as of such
time.
(b) The portion of such Asset Based Sales Charge allocable to
Post-distributor Shares shall be computed s follows:
A X ((B + C)/2)
((D + E)/2)
where:
A = Total amount of Asset Based Sales Charge accrued
during such calendar month (or portion thereof) in
respect of Shares of such Fund in the ML Omnibus
Account
B = Shares of such Fund in the ML Omnibus Account and
identified as Post-distributor Shares and outstanding
as of the close of business on the last day of the
immediately preceding calendar month (or portion
thereof), times Net Asset Value per Share as of such
time
C = Shares of such Fund in the ML Omnibus Account and
identified as Post-distributor Shares and outstanding
as of the close of business on the last day of such
calendar month (or portion thereof), times Net Asset
Value per Share as of such time
D = Total number of Shares of such Fund in the ML Omnibus
Account and outstanding as of the close of business on
the last day of the immediately preceding calendar
month (or portion thereof), times Net Asset Value per
Share as of such time.
E = Total number of Shares of such Fund in the ML Omnibus
Account outstanding as of the close of business on the
last day of such calendar month, times Net Asset Value
per Share as of such time.
(3) PAYMENTS ON BEHALF OF EACH FUND.
On the close of business on each day the Transfer Agent shall cause payment to
be made of the amount of the Asset Based Sales Charge and CDSCs accruing on such
day in
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respect of the Shares of such Fund owned of record by Shareholder Accounts
(other than Omnibus Accounts) by two separate wire transfers, directly from
accounts of such Fund as follows:
1. The Asset Based Sales Charge and CDSCs accruing in respect
of Shareholder Accounts other than Omnibus Accounts and
allocable to Distributor Shares in accordance with the
preceding rules shall be paid to the Distributor's Account,
unless the Distributor otherwise instructs the Fund in any
irrevocable payment instruction; and
2. The Asset Based Sales Charges and CDSCs accruing in respect
of Shareholder Accounts other than Omnibus Accounts and
allocable to Post-distributor Shares in accordance with the
preceding rules shall be paid in accordance with direction
received from any future distributor of Shares of the Instant
Fund.
On each Omnibus CDSC Settlement Date, the Transfer Agent for
each Fund shall cause the applicable Sub-transfer Agent to cause payment to be
made of the amount of the CDSCs accruing during the period to which such Omnibus
CDSC Settlement Date relates in respect of the Shares of such Fund owned of
record by each Omnibus Account by two separate wire transfers directly from the
account of such Fund maintained by such Transfer Agent, as follows:
1. The CDSCs accruing in respect of such Omnibus
Account and allocable to Distributor Shares in accordance with the preceding
rules shall be paid to the Distributor's Account, unless the Distributor
otherwise instructs the Fund in any irrevocable payment instruction; and
2. The CDSCs accruing in respect of such Omnibus
Account and allocable to Post-distributor Shares in accordance with the
preceding rules shall be paid in accordance with direction received from any
future distributor of Shares of the Instant Fund.
On each Omnibus Asset Based Sales Charge Settlement Date the
Transfer Agent for each Fund shall cause payment to be made of the amount of the
Asset Based Sales Charge accruing for the period to which such Omnibus Asset
Based Sales Charge Settlement Date relates in respect of the Shares of such Fund
owned of record by each Omnibus Account by two separate wire transfers directly
from accounts of such Fund as follows:
1. The Asset Based Sales Charge accruing in respect
of such Omnibus Account and allocable to Distributor Shares shall be paid to the
Distributor's
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Collection Account, unless the Distributor otherwise instructs the Fund in any
irrevocable payment instruction; and
2. The Asset Based Sales Charge accruing in respect
of such Omnibus Account and allocable to Post-Distributor Shares shall be paid
in accordance with direction received from any future distributor of Shares of
the Instant Fund.
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