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 Recipients as to the same Shares, the Recipient which
is the dealer of record on the Fund's books shall be
-1-
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 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
-2-
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 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
-3-
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 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.
-4-
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
-------------------------------------
Xxxxxx X. Xxxxxxx, Secretary
XXXXXXXXXXX FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxxxxx X. Xxxx
--------------------------------------
Xxxxxxxxx X. Xxxx
Vice President & Secretary
OFMI/790B.2
-5-
