CLASS C DISTRIBUTION PLAN
OF
THE XXXXX GROWTH FUND, INC.
PURSUANT TO RULE 12b-1
THIS DISTRIBUTION PLAN made as of the ____ day of ______________,
1995, by and between The Xxxxx Growth Fund, Inc., a Minnesota corporation, (the
"Fund") and U.S. Growth Investments, Inc., a Minnesota corporation (the
"Distributor").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, Distributor is a securities firm engaged in the business of
selling shares of investment companies either directly to purchasers or through
other securities dealers; and
WHEREAS, the Fund proposes to enter into a Distribution Agreement with
Distributor, pursuant to which Distributor will act as the exclusive distributor
and representative of the Fund in the offer and sale of Class C shares of common
stock, par value $.01 per share (the "Class C shares"), of the Fund to the
public; and
WHEREAS, the Fund desires to adopt this Class C Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act, pursuant to
which the Fund will pay an account maintenance fee and a distribution fee to
Distributor with respect to the Fund's Class C shares; and
WHEREAS, the Directors of the Fund have determined that there is a
reasonable likelihood that adoption of the Plan will benefit the Fund and its
Class C shareholders.
NOW, THEREFORE, the Fund hereby adopts, and Distributor xxxxxx agrees
to the terms of, the Plan in accordance with Rule 12b-1 under the Investment
Company Act on the following terms and conditions:
1. The Fund shall pay Distributor an account maintenance fee under
the Plan at the end of each month at the annual rate of 0.25% of average
daily net assets of the Fund relating to Class C shares to compensate
Distributor and securities firms with which Distributor enters into related
agreements pursuant to paragraph 4 hereof ("Sub-Agreements") for account
maintenance activities with respect to Class C shareholders of the Fund.
2. The Fund shall pay Distributor a distribution fee under the Plan
at the end of each month at the annual rate of 0.75% of average daily net assets
of the Fund relating to the Class C shares to compensate Distributor and
securities firms with which Distributor enters into related Sub-Agreements for
providing sales and promotional activities and services relating to the Class C
shares. Such activities and services will relate to the sale, promotion and
marketing of the Class C shares. Such expenditures may consist of sales
commissions to financial consultant for selling Class C shares, compensation,
sales incentives and payments to sales and marketing personnel, payment of
expenses incurred in sales and promotional activities, including advertising
expenditures relating to the Fund and the costs of preparing and distributing
promotional materials. The distribution fee may also be used to pay the
financing costs of carrying the expenditures described in this paragraph 2.
Payment of the distribution fee described in this paragraph 2 shall be subject
to any limitations set forth in any applicable regulation of the National
Association of Securities Dealers, Inc.
3. Payments made pursuant to the Plan will be imposed directly
against the assets of the Fund relating to the Class C shares.
4. The Fund hereby authorizes Distributor to enter into
Sub-Agreements with certain securities firms ("Securities Firms") to provide
compensation to such Securities Firms for activities and services of the type
referred to in paragraphs 1 and 2 hereof. Distributor may reallocate all or a
portion of its account maintenance fee or distribution fee to such Securities
Firms as compensation for the above-mentioned activities and services. Such
Sub-Agreements shall provide that the Securities Firms shall provide Distributor
with such information as is reasonably necessary to permit Distributor to comply
with the reporting requirements set forth in paragraph 5 hereof.
5. Distributor shall provide the Fund for review by the Board of
Directors, and the Directors shall review, at least quarterly, a written report
complying with the requirements of Rule 12b-1 regarding the disbursement of the
account maintenance fee and the distribution fee during such period.
2
6. The Plan shall not take effect until it has been approved by a
vote of at least a majority, as defined in the Investment Company Act, of the
outstanding Class C voting securities of the Fund.
7. The Plan shall not take effect until it has been approved,
together with any related agreements, by votes of a majority of both (a) the
Directors of the Fund and (b) those Directors of the Fund who are not
"interested persons" of the Fund, as defined in the Investment Company Act, and
have no direct or indirect financial interest in the operation of the 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 the Plan and such
related agreements.
8. The Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of the Plan in paragraph 7.
9. The Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by vote of a majority of the outstanding Class C
voting securities of the Fund.
10. The Plan may not be amended to increase materially the rate of
payments by the Fund provided for herein unless such amendment is approved by at
least a majority, as defined in the Investment Company Act, of the outstanding
Class C voting securities of the Fund, and by the Directors of the Fund in the
manner provided for in paragraph 7 hereof, and no material amendment to the Plan
shall be made unless approved in the manner provided for approval and annual
renewal in paragraph 7 hereof.
11. While the Plan is in effect, the selection and nomination of
Directors who are not interested persons, as defined in the Investment Company
Act, of the Fund shall be committed to the discretion of the Directors who are
not interested persons.
12. The Fund shall preserve copies of the 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 the Plan, or the agreements or such
report, as the case may be, the first two years in an easily accessible place.
3
IN WITNESS WHEREOF, the parties hereto have executed this Plan as of
the date first above written.
THE XXXXX GROWTH FUND, INC.
By: _____________________________________
Title:
U.S. GROWTH INVESTMENTS, INC.
By: _____________________________________
Title:
4
