Plan and Agreement of Distribution
This plan and agreement, effective as of July 1, 1999, is between AXP Discovery
Fund, Inc. (the "Fund") and American Express Financial Advisors Inc. (AEFA), the
principal underwriter of the Fund, for distribution services to the Fund.
The plan and agreement has been approved by members of the Board of Directors
(the "Board") of the Fund who are not interested persons of the Fund and have no
direct or Indirect financial interest in the operation of the plan or any
related agreement, and all of the members of the Board, in person, at a meeting
called for the purpose of voting on the plan and agreement.
The plan and agreement provides that:
1. The Fund will reimburse AEFA for expenses incurred in connection with
the distribution of the Fund's shares and providing personal service to
shareholders. These expenses include sales commissions; business, employee and
financial advisor expenses charged to distribution of Class A and Class B
shares; and overhead appropriately allocated to the sale of Class A and Class B
shares.
2. A portion of the fee under the agreement will be used to compensate
AEFA, financial advisors and other servicing agents for personal service to
shareholders. Fees paid will be used to help shareholders thoughtfully consider
their investment goals and objectively monitor how well the goals are being
achieved. AEFA represents that it will continue to provide the same level of
service as was provided under the previous shareholder service agreement.
3. AEFA agrees to monitor the services it provides, to measure the level
and quality of services and to provide training and support to financial
advisors and servicing agents. AEFA will use its best efforts to assure that
other distributors provide comparable services to shareholders.
4. For Class A shares, the fee under this agreement will be equal on an
annual basis to 0.25% of the average daily net assets of the Fund attributable
to Class A shares. The amount so determined shall be paid to AEFA in cash within
five (5) business days after the last day of each month.
5. For Class B shares, the fee under this agreement will be equal on an
annual basis to 1.00% of the average daily net assets of the Fund attributable
to Class B shares. Of that amount, 0.75% shall be reimbursed for distribution
expenses. The additional 0.25% shall be paid to AEFA to compensate AEFA,
financial advisors and servicing agents for personal service to shareholders and
maintenance of shareholder accounts. The amount so determined shall be paid to
AEFA in cash within five (5) business days after the last day of each month.
6. For each purchase of Class B shares, the Class B shares will be
converted to Class A shares in the ninth year of ownership.
7. The Fund understands that if a shareholder redeems Class B shares
before they are converted to Class A shares, AEFA will impose a sales charge
directly on the redemption proceeds to cover those expenses it has previously
incurred on the sale of those shares.
8. AEFA agrees to provide at least quarterly an analysis of expenses under
this agreement and to meet with representatives of the Fund as reasonably
requested to provide additional information.
9. The plan and agreement shall continue in effect for a period of more
than one year provided it is reapproved at least annually in the same manner in
which it was initially approved.
10. The plan and agreement may not be amended to increase materially the
amount that may be paid by the Fund without the approval of a least a majority
of the outstanding shares of the relevant class. Any other amendment must be
approved in the manner in which the plan and agreement was initially approved.
11. This agreement may be terminated as to Class A or Class B at any time
without payment of any penalty by a vote of a majority of the members of the
Board who are not interested persons of the Fund and have no financial interest
in the operation of the plan and agreement, or by vote of a majority of the
outstanding shares of the relevant class, or by AEFA. The plan and agreement
will terminate automatically in the event of its assignment as that term is
defined in the Investment Company Act of 1940.
AXP DISCOVERY FUND, INC.
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
Xxxxxx X. Xxxxx
Vice President
