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DISTRIBUTION PLAN
FLAG INVESTORS EMERGING GROWTH FUND, INC.
CLASS C SHARES
1. The Plan. This Plan (the "Plan") is a written plan as described in Rule 12b-1
(the "Rule") under the Investment Company Act of 1940, as amended (the "1940
Act") of Class C Shares (the "Shares") of Flag Investors Emerging Growth Fund,
Inc. (the "Fund"). Other capitalized terms herein have the meaning given to them
in the Fund's prospectus.
2. Payments Authorized. (a) The Fund's distributor (the "Distributor") is
authorized, pursuant to the Plan, to make payments to any Participating Dealer
under a Sub-Distribution Agreement, to accept payments made to it under the
Distribution Agreement and to make payments on behalf of the Fund to Shareholder
Servicing Agents under Shareholder Servicing Agreements.
(b) The Distributor may make payments in any amount, provided that the
total amount of all payments made during a fiscal year of the Fund do not
exceed, in any fiscal year of the Fund, the amount paid to the Distributor under
the Distribution Agreement with respect to distribution of the Shares which is
an annual fee, calculated on an average daily net basis and paid monthly, equal
to 0.75% of the average daily net assets of the Shares of the Fund.
3. Expenses Authorized. The Distributor is authorized, pursuant to the Plan,
from sums paid to it under the Distribution Agreement, to purchase advertising
for the Shares, to pay for promotional or sales literature and to make payments
to sales personnel affiliated with it for their efforts in connection with sales
of Shares. Any such advertising and sales material may include references to
other open-end investment companies or other investments, provided that expenses
relating to such advertising and sales material will be allocated among such
other investment companies or investments in an equitable manner, and any sales
personnel so paid are not required to devote their time solely to the sale of
Shares.
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4. Certain Other Payments Authorized. As set forth in the Distribution
Agreement, the Fund assumes certain expenses, which the Distributor is
authorized to pay or cause to be paid on its behalf and such payments shall not
be included in the limitations contained in this Plan. These expenses include:
the fees of the Fund's investment advisor and the Distributor; the charges and
expenses of any registrar, any custodian or depository appointed by the Fund for
the safekeeping of its cash, portfolio securities and other property, and any
transfer, dividend or accounting agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio securities
transactions to which the Fund is a party; all taxes, including securities
issuance and transfer taxes, and fees payable by the Fund to federal, state or
other governmental agencies; the costs and expenses of engraving or printing of
certificates representing shares of the Fund; all costs and expenses in
connection with maintenance of registration of the Fund and its shares with the
Securities and Exchange Commission and various states and other jurisdictions
(including filing fees and legal fees and disbursements of counsel); the costs
and expenses of printing, including typesetting, and distributing prospectuses
and statements of additional information of the Fund and supplements thereto to
the Fund's shareholders; all expenses of shareholders' and Directors' meetings
and of preparing, printing and mailing of proxy statements and reports to
shareholders; fees and travel expenses of Directors or Director members of any
advisory board or committee; all expenses incident to the payment of any
dividend, distribution, withdrawal or redemption, whether in shares or in cash;
charges and expenses of any outside service used for pricing of the Fund's
shares; charges and expenses of legal counsel, including counsel to the
Directors of the Fund who are not interested persons (as defined in the 1940
Act) of the Fund and of independent certified public accountants, in connection
with any matter relating to the Fund; membership dues of industry associations;
interest payable on Fund borrowings; postage; insurance premiums on property or
personnel (including officers and Directors) of the Fund which inure to its
benefit; extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification related thereto); and
all other charges and costs of the Fund's operation unless otherwise explicitly
provided herein.
5. Other Distribution Resources. The Distributor and Participating Dealers may
expend their own resources separate and apart from amounts payable under the
Plan to support the Fund's distribution effort. The Distributor will report to
the Board of Directors on any such expenditures as part of its regular reports
pursuant to Section 6 of this Plan.
6. Reports. While this Plan is in effect, the Distributor shall report in
writing at least quarterly to the Fund's Board of Directors, and the Board shall
review, the following:
(i) the amounts of all payments under the Plan, the identity of the
recipients of each such payment;
(ii) the basis on which the amount of the payment to such recipient
was made;
(iii) the amounts of expenses authorized under this Plan and the
purpose of each such expense; and
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(iv) all costs of each item specified in Section 4 of this Plan
(making estimates of such costs where necessary or desirable),
in each case during the preceding calendar or fiscal quarter.
7. Effectiveness, Continuation, Termination and Amendment. (a) This Plan has
been approved by a vote of the Board of Directors of the Fund and of a majority
of the Directors who are not interested persons (as defined in the 1940 Act),
cast in person at a meeting called for the purpose of voting on this Plan. This
Plan shall, unless terminated as hereinafter provided, continue in effect from
year to year only so long as such continuance is specifically approved at least
annually by the vote of the Fund's Board of Directors and by the vote of a
majority of the Directors of the Fund who are not interested persons (as defined
in the 1940 Act), cast in person at a meeting called for the purpose of voting
on such continuance.
(b) This Plan may be terminated at any time by a vote of a majority of
the Directors who are not interested persons (as defined in the 1940 Act) or by
the vote of the holders of a majority of the Fund's outstanding voting
securities (as defined in the 1940 Act).
(c) This Plan may not be amended to increase materially the amount of
payments to be made without approval by a vote of the holders of at least a
majority of the Fund's outstanding voting securities (as defined in the 1940
Act) and all amendments must be approved by the Board of Directors in the manner
set forth under (a) above.
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