EXHIBIT 23M
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12B-1
CLASS C SHARES
WHEREAS, Fairholme Funds, Inc., a Maryland corporation, (the "Company"),engages
in business as an open-end management investment company and is registered as
such under the Investment Company Act of 1940, as amended (the"1940 Act"); and
WHEREAS, the Company is authorized to issue an indefinite number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets (the "Portfolio");
and
WHEREAS, the Company currently offers the following series of such Shares:
The Fairholme Fund; and
WHEREAS, the Company has further divided each series of the Company into various
Classes of Shares, each representing an undivided proportionate interest in the
portfolio of each series and differing in sales charges and ongoing fees and
expenses; and
WHEREAS, each series of the Company offers Class C Shares, which Class is sold
to the public without front-end sales charges but with a contingent deferred
sales charge; and
WHEREAS, the Directors of the Company as a whole, and the Directors who are not
interested persons of the Company, as defined in the 1940 Act, and who have no
direct or indirect financial interest in the operation of this Plan of
Distribution Pursuant to Rule 12b-1 (the "Plan") or in any agreement relating
hereto (the "Independent Directors"), having determined, in the exercise of
their reasonable business judgment and in light of their fiduciary duties under
state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that the Plan will benefit the Company and its
shareholders, have approved the Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Company hereby adopts this Plan in accordance with Rule
12b-1 under the 1940 Act, on the following terms and conditions:
1. DISTRIBUTION AND SERVICING ACTIVITIES. Subject to the supervision of the
Directors of the Company, the Company may, directly or indirectly, engage
in any activities primarily intended to result in the sale of Class C
Shares of each series of the Company, which activities may include, but are
not limited to, the following:
(a) payments to the Company's Adviser and to securities dealers and others in
respect of the sale of
Class C Shares of each series of the Company;
(b) payment of compensation to and expenses of personnel (including personnel
of organizations with which the Company has entered into agreements related
to this Plan) who engage in or support distribution of Class C Shares of
each series of the Company or who render shareholder
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support services not otherwise provided by the Company's transfer agent,
administrator, or custodian, including but not limited to, answering
inquiries regarding the Company, processing shareholder transactions,
providing personal services and/or the maintenance of shareholder accounts,
providing other shareholder liaison services, responding to shareholder
inquiries, providing information on shareholder investments in each series
of the Company, and providing such other shareholder services as the
Company may reasonably request;
(c) formulation and implementation of marketing and promotional activities,
including, but not limited to, direct mail promotions and television,
radio, newspaper, magazine and other mass media advertising;
(d) preparation, printing and distribution of sales literature;
(e) preparation, printing and distribution of prospectuses and statements of
additional information and reports of the Company for recipients other than
existing shareholders of the Company; and
(f) obtaining such information, analyses and reports with respect to marketing
and promotional activities as the Company may, from time to time, deem
advisable.
The Company is authorized to engage in the activities listed above, and in any
other activities primarily intended to result in the sale of Class C Shares of
each series of the Company, either directly or through other persons with which
the Company has entered into agreements related to this Plan.
2. MAXIMUM EXPENDITURES. During the period in which this Plan is effective,
the Company shall pay to Fairholme Capital Management, LLC (the "Adviser")
a monthly fee for distribution activities in an amount calculated at the
rate of 0.75% per annum of the average daily net asset value of the Class C
Shares of each series of the Company. Further, the Company shall also pay
to the Adviser a monthly fee for shareholder servicing activities in an
amount calculated at the rate of 0.25% per annum of the average daily net
asset value of the Class C Shares of each series of the Company.
Notwithstanding the foregoing, the expenditures to be made by the Company
pursuant to this Plan and the basis upon which payment of such expenditures
will be made shall be determined by the Directors of the Company, and in no
event may such expenditures paid by the Company as distribution fees exceed
an amount calculated at the rate of 0.75% of the average annual net assets
of the Class C Shares of any series of the Company, nor may such
expenditures paid as service fees to any person who sells Class C Shares of
any series of the Company exceed an amount calculated at the rate of 0.25%
of the average annual net asset value of such Shares. At the request of the
Adviser, such payments for distribution and/or shareholder servicing
activities may be made directly by the Company to other persons with which
the Company has entered into agreements related to this Plan.
3. TERM AND TERMINATION. (a) This Plan shall become effective as of the 30th
day of December, 2000. Unless terminated as herein provided, this Plan
shall continue in effect for one year from the date hereof and shall
continue in effect for successive periods of one year thereafter, but only
so long as each such continuance is specifically approved by votes of a
majority of both (i) the Directors of the Company and (ii) the Independent
Directors, cast in person at a meeting called for the purpose of voting on
such approval. (b) This Plan may be terminated at any time with respect to
any series of the Company by a vote of a majority of the Independent
Directors or by a vote of a majority of the outstanding voting securities
of the Class C Shares of such series as defined in the 1940 Act.
4. AMENDMENTS. This Plan may not be amended to increase materially the maximum
expenditures permitted by Section 2 hereof for any series of the Company
unless such amendment is approved by a vote of the majority of the
outstanding voting securities of the Class C Shares of such series, as
defined in the 1940 Act, with respect to which a material increase in the
amount of expenditures is
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proposed, and no material amendment to this Plan shall be made unless
approved in the manner provided for annual renewal of this Plan in Section
3(a) hereof.
5. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in effect, the
selection and nomination of the Independent Directors of the Company shall
be committed to the discretion of such Independent Directors.
6. QUARTERLY REPORTS. The Treasurer of the Company shall provide to the
Directors of the Company, and the Directors shall review quarterly, a
written report of the amounts expended pursuant to this Plan and any
related agreements and the purposes for which such expenditures were made.
7. RECORD KEEPING. The Company shall preserve copies of this Plan and any
related agreements and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such
related agreements or such reports for the first two years will be
maintained in an easily accessible place.
8. LIMITATION OF LIABILITY. Any obligations of the Company hereunder shall not
be binding upon any of the Directors, officers or shareholders of the
Company personally, but shall bind only the assets and property of the
Company. The term "Quaker Investment Trust" means and refers to the
Directors from time to time serving under the Agreement and Declaration of
Company of the Company, a copy of which is on file with the Secretary of
The Commonwealth of Massachusetts. The execution of this Plan has been
authorized by the Directors, and this Plan has been signed on behalf of the
Company by an authorized officer of the Company, acting as such and not
individually, and neither such authorization by such Directors nor such
execution by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Company as provided in the
Agreement and Declaration of Trust.
IN WITNESS THEREOF, the Directors of the Company, including a majority of the
Independent Directors, have adopted this Plan at a meeting held on October 5,
2000, and have further directed that the Plan be made effective as of the date
first written above.
FAIRHOLME FUNDS, INC.
/s/ Michael J. Senior
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MICHAEL J. SENIOR
Secretary
