EXHIBIT (m)(3)
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DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
OF
MORGAN KEEGAN SELECT FUND, INC.
WHEREAS, Morgan Keegan Select Fund, Inc. ("Fund") is registered as an
open-end, diversified management investment company under the Investment Company
Act of 1940, as amended ("1940 Act") and has two distinct series of shares of
common stock which have been designated Morgan Keegan Intermediate Bond Fund and
Morgan Keegan High Income Fund (the "Series"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution ("Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to the Class C shares of
the above-referenced Series and of such other series as may hereafter be
designated by the Fund's Board of Directors ("Board") and have Class C shares
established; and
WHEREAS, the Fund has entered into an Underwriting Agreement with Morgan
Keegan & Company, Inc. ("Morgan Keegan") pursuant to which Morgan Keegan has
agreed to serve as Distributor of the Class C shares of each Series;
NOW THEREFORE, the Fund hereby adopts this Plan with respect to the Class
C shares of each Series in accordance with Rule 12b-1 under the 1940 Act.
1. A. The following Series of the Fund are authorized to pay
to Morgan Keegan, as compensation for Morgan Keegan's services as Distributor of
Series' Class C shares, distribution fees at the rate (on an annualized basis)
set forth below of the average daily net assets of the Series' Class C shares.
Such fee shall be calculated and accrued daily and paid monthly or at such other
intervals as the Board shall determine:
Morgan Keegan Intermediate Bond Fund: .35 %
Morgan Keegan High Income Fund: .50 %
B. The following Series of the Fund are authorized to pay to
Morgan Keegan, as compensation for Morgan Keegan's services to shareholders of
the Series' Class C shares, a service fee (on an annualized basis) of the
average daily net assets of the Series' Class C shares. Such fee shall be
calculated and accrued daily and paid monthly or at such other intervals as the
Board shall determine as set forth below:
Morgan Keegan Intermediate Bond Fund: .25 %
Morgan Keegan High Income Fund: .25 %
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C. Any series hereafter established is authorized to pay to
Morgan Keegan, as compensation for Morgan Keegan's services as Distributor of
the series' Class C shares, distribution and service fees in the amounts to be
agreed upon in a written distribution fee addendum to this Plan ("Distribution
Fee Addendum") executed by the Fund on behalf of such series. All such
Distribution Fee Addenda shall provide that they are subject to all terms and
conditions of this Plan.
D. The distribution and service fees payable hereunder are
payable without regard to the aggregate amount that may be paid over the years,
provided that, so long as the limitations set forth in Article III, Section
26(d) of this Rules of Fair Practice of the National Association of Securities
Dealers, Inc. ("NASD") remain in effect and apply to distributors or dealers in
the Fund's shares, the amounts paid hereunder shall not exceed those
limitations, including permissible interest.
E. Any Series may pay a distribution or service fee to Morgan
Keegan at a lesser rate than the fees specified above, as agreed upon by the
Board and Morgan Keegan and as approved in the manner specified in Paragraph 8
of this Plan.
2. Morgan Keegan may spend the fees it receives pursuant to
paragraph 1 of this Plan and/or its other resources on any activities or
expenses primarily intended to result in the sale of the Fund's shares or the
servicing and maintenance of shareholder accounts, including but not limited to,
compensation to investment executives or other employees of Morgan Keegan, and
independent dealers; compensation to and expenses, including overhead and
telephone expenses, of employees who engage in or support distribution of shares
or who service shareholder accounts; printing of prospectuses, statements of
additional information and reports for other than existing shareholders; and
preparation, printing and distribution of sales literature and advertising
materials. The amount of the fees payable by the Fund to Morgan Keegan under
paragraph 1 hereof is not related directly to expenses incurred by Morgan Keegan
in serving as Distributor, and this paragraph 2 neither obligates the Fund to
reimburse Morgan Keegan for such expenses nor obligates Morgan Keegan to incur
distribution or shareholder servicing expenses equal to or in excess of the fees
it receives.
3. This Plan shall not take effect with respect to the Class C
shares of any Series until it has been approved, together with any related
agreements, by votes of a majority of both (a) the Board and (b) those directors
of the Fund who are not "interested persons" of the Fund, as defined in the 1940
Act, and have no direct or indirect financial interest in the operation of this
Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast in
person at a meeting or meetings called for the purpose of voting on this Plan
and such related agreements; and until the directors who approve the Plan with
respect to such Series' Class C shares have, in the exercise of reasonable
business judgment and in light of their fiduciary duties under state law and
under Sections 36(a) and (b) of the 1940 Act, concluded that there is a
reasonable likelihood that the plan will benefit the company and its
shareholders.
4. This Plan shall continue in effect for a period of one year from
the date of execution of this Plan and shall continue in full force and effect
thereafter for successive periods of up to one year, for so long as such
continuance is specifically approved at least annually in the manner provided
for approval of this Plan in paragraph 3.
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5. Any person authorized to direct the disposition of monies paid
or payable by any Series pursuant to this Plan or any related agreement shall
provide to the Fund's Board of Directors and the Board shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made. Morgan Keegan shall submit only information
regarding amounts expended for "distribution activities," as defined in
paragraph 6, to the Board in support of the distribution fee payable hereunder
and shall submit only information regarding amounts expended for "service
activities," as defined in paragraph 6, to the Board in support of the service
fee payable hereunder.
6. For purposes of this Plan, "distribution activities" shall
mean any activities in connection with Morgan Keegan's performance of its
obligations under the Underwriting Agreement that are not deemed "service
activities." As used herein, "distribution activities" also includes
sub-accounting or recordkeeping services provided by an entity if the entity is
compensated, directly or indirectly, by the Series or Morgan Keegan for such
services. Such entity may also be paid a service fee if it provides appropriate
services. Nothing in the foregoing is intended to or shall cause there to be any
implication that compensation for such services must be made only pursuant to a
plan of distribution under Rule 12b-1. "Service activities" shall mean
activities covered by the definition of "service fee" contained in amendments to
Article III, Section 26(d) of the NASD's Rules of Fair Practice that became
effective July 7, 1993, including the provision by Morgan Keegan of personal,
continuing services to investors in the Fund's shares. Overhead and other
expenses of Morgan Keegan related to its "distribution activities" or "service
activities," including telephone and other communications expenses, may be
included in the information regarding amounts expended for such distribution or
service activities, respectively.
7. This Plan may be terminated with respect to the Class C shares
of any Series at any time by vote of a majority of the Rule 12b-1 Directors or
by vote of a majority of the "outstanding voting securities" (as defined in
the 1940 Act). The fees set forth in paragraph 1 hereof will be paid by the Fund
to Morgan Keegan unless and until either the Plan or Underwriting Agreement is
terminated or not renewed. If either the Plan or Underwriting Agreement is
terminated or not renewed, expenses incurred by Morgan Keegan in connection with
providing services thereunder in excess of the fees specified in paragraph 1
hereof which Morgan Keegan has received or accrued through the termination date
are the sole responsibility and liability of Morgan Keegan, and are not
obligations of the Fund.
8. This Plan may not be amended with respect to the Class C
shares of any Series to increase materially the amount of distribution and
service fees provided for in paragraph 1 hereof unless such amendment is
approved by a vote of a majority of the outstanding voting securities of the
Class C shares of any Series, and no material amendment to the Plan shall be
made with respect to the Class C shares of any Series unless such amendment is
approved in the manner provided for approval and annual renewal in paragraph 3
hereof.
9. While this Plan is in effect, the selection and nomination
of directors of the Fund who are not interested persons of the Fund, as defined
in the 1940 Act, shall be committed to the discretion of the directors who
are themselves not interested persons of the Fund, as defined in the 1940 Act.
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10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 5 hereof for a period of
not less than six years from the date of this Plan, the first two years in an
easily accessible place.
IN WITNESS WHEREOF, the Fund has executed this Plan as of the date and
year set forth below:
Date: March 15, 1999 MORGAN KEEGAN SELECT FUND, INC.
By: /s/ Charles D. Maxwell
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Name: Charles D. Maxwell
Title: Secretary
Attest:
By: /s/ Linda J. Harwood
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Linda J. Harwood
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