CLASS A DISTRIBUTION PLAN
WHEREAS, Xxxxxxxxx Smaller Companies Growth Fund (the "Fund") is registered
as an open-end diversified management investment company under the Investment
Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Fund and Franklin Xxxxxxxxx Distributors, Inc. (the "Selling
Company"), a wholly owned subsidiary of Franklin Resources, Inc. and a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Selling Company will act as
principal underwriter of Shares of the Fund for sale to the public; and
WHEREAS, shares of beneficial interest of the Fund are divided into classes
of shares, one of which is designated Class A; and
WHEREAS, the Board of Directors or Trustees of the Fund (the "Board") has
determined to adopt this Distribution Plan (the "Plan"), in accordance with the
requirements of the 1940 Act and has determined that there is a reasonable
likelihood that the Plan will benefit the Fund and the holders of Class A
Shares.
NOW THEREFORE, the Fund hereby adopts, with respect to its Class A Shares,
the Plan on the following terms and conditions:
1. The Fund will reimburse the Selling Company for costs and expenses
incurred in connection with the distribution and marketing of the Class A Shares
of the Fund. Such distribution costs and expenses may include: (a) payments to
broker-dealers who provide certain services of value to the Fund's Class A
Shareholders (sometimes referred to as a "trail fee"); (b) reimbursement of
expenses relating to selling and servicing efforts or of organizing and
conducting sales seminars; (c) payments to employees or agents of the Selling
Company who engage in or support distribution of the Class A Shares; (d) payment
of the costs of preparing, printing and distributing prospectuses and reports to
prospective investors and of printing and advertising expenses; (e) payment of
dealer commissions and wholesaler compensation in connection with sales of the
Fund's Class A Shares exceeding $1 million (for which the Fund imposes no sales
charge) and interest or carrying charges in connection therewith; and (f) such
other similar services as the Fund's Board determines to be reasonably
calculated to result in the sale of Class A Shares.
The Selling Company will be reimbursed for such costs, expenses or payments
on a quarterly basis, subject to a limit of 0.25% per annum of the average daily
net assets of the Fund's Class A Shares. Payments made out of or charged against
the assets of the Class A Shares of the Fund must be in reimbursement for costs
and expenses in connection with any activity which is primarily intended to
result in the sale of the Fund's Class A Shares. The costs and expenses not
reimbursed in any one given quarter (including costs and expenses not reimbursed
because they exceeded the limit of 0.25% per annum of the average daily net
assets of the Fund's Class A Shares) may be reimbursed in subsequent quarters or
years.
2. The Plan shall not take effect with respect to the Fund's Class A Shares
until it has been approved by a vote of at least a majority (as defined in the
1940 Act) of the outstanding voting securities of the Class A Shares of the
Fund. With respect to the submission of the Plan for such a vote, it shall have
been effectively approved with respect to the Fund's Class A Shares if a
majority of the outstanding voting securities of the Class A Shares of the Fund
votes for approval of the Plan.
3. The Plan shall not take effect until it has been approved, together with
any related agreements and supplements, by votes of a majority of both (a) the
Board of Directors or Trustees of the Fund, and (b) those Fund Board members who
are not "interested persons" (as defined in the 1940 Act) and have no direct or
indirect financial interest in the operation of the Plan or any agreements
related to it (the "non-interested Board members""), cast in person at a meeting
(or meetings) called for the purpose of voting on the Plan and such related
agreements.
4. The Plan shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in paragraph 3.
5. Any person authorized to direct the disposition of monies paid or
payable by the Class A Shares of the Fund pursuant to the Plan or any related
agreement shall provide to the Fund's Board, 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.
6. Any agreement related to the Plan shall be in writing and shall provide:
(a) that such agreement may be terminated at any time as to the Fund's Class A
Shares, without payment of any penalty, by vote of a majority of the
non-interested Board members or by vote of a majority of the outstanding voting
securities of the Class A Shares of the Fund, on not more than sixty days'
written notice to any other party to the agreement; and (b) that such agreement
shall terminate automatically in the event of its assignment.
7. The Plan may be terminated at any time, without payment of any penalty,
by vote of a majority of the non-interested Board members, or by vote of a
majority of the outstanding Class A Shares of the Fund.
8. The Plan may be amended at any time by the Fund's Board , provided that
(a) any amendment to increase materially the costs which the Class A Shares of
the Fund may bear for distribution pursuant to the Plan shall be effective only
upon approval by a vote of a majority of the Class A Shares of the Fund, and (b)
any material amendments of the terms of the Plan shall become effective only
upon approval as provided in paragraph 3 hereof.
9. While the Plan is in effect, the selection and nomination of Board
members who are not "interested persons" (as defined in the 1940 Act) of the
Fund shall be committed to the discretion of the Board members who are not
interested persons.
10. The Fund shall preserve copies of the Plan, any related agreement and
any report made pursuant to paragraph 5 hereof, for a period of not less than
six years from the date of the Plan, such agreement or report, as the case may
be, the first two years of which shall be in an easily accessible place.
IN WITNESS WHEREOF, the Fund has executed this Distribution Plan on this
1st day of June, 2004.
XXXXXXXXX GLOBAL SMALLER COMPANIES FUND
By:/s/XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Vice President and Assistant Secretary
FRANKLIN/XXXXXXXXX DISTRIBUTORS, INC.
By:/s/XXXXX X. XXXXX
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Xxxxx X. Xxxxx
President
