FOUNDERS FUNDS, INC.
UNDERWRITING AGREEMENT
This Agreement made as of the 1st day of April, 1998, by and between
Premier Mutual Fund Services, Inc., a Delaware corporation (the "Underwriter"),
and Founders Funds, Inc., a Maryland corporation (the "Company"), on behalf of
any series of its shares which may now exist or hereafter be created (the
"Funds").
WITNESSETH:
That in consideration of the mutual covenants herein contained and for
other good and valuable consideration the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Appointment of Underwriter. Except as otherwise provided herein, the
Company hereby appoints the Underwriter its exclusive agent to sell and
distribute shares of the Funds without compensation at the public offering price
thereof, which shall be equivalent to their net asset value, calculated as
described in the current prospectus of the Company. The Company agrees that it
will deliver such shares as the Underwriter may sell. The Underwriter agrees to
use its best efforts to promote the sale of shares of the Funds, but is not
obligated to sell any specific number of shares.
2. Independent Contractor. The Underwriter will undertake and discharge
its obligations hereunder as an independent contractor and shall have no
authority of power to obligate or bind the Company by its actions, conduct or
contracts except that it may be authorized to accept orders for the sale or
repurchase of shares of the Funds as the Company's agent. The Underwriter may
appoint subagents or distribute shares of the Funds through dealers or otherwise
as it may determine from time to time including, without limitation, appointing
subagents for the purpose of accepting orders for the sale or repurchase of Fund
shares, provided that no such appointment shall relieve the Underwriter of its
responsibility for the proper performance of this Agreement by the Underwriter
or, where applicable, its subagents.
3. Payment for Shares and Share Registration. The Underwriter shall notify
the Company or cause the Company to be notified by the Company's Transfer Agent,
at the end of each business day, or as soon thereafter as orders placed during
such day have been compiled, of the number of shares and the prices thereof
which the Underwriter shall have sold on behalf of each Fund. The Underwriter
shall use its best efforts to cause the sums due for shares ordered from a Fund
to be collected or to be advanced to that Fund by the Company's Transfer Agent
on behalf of purchasers on or before the third business day after the shares
have been so ordered. The Underwriter shall issue and deliver on behalf of the
Company or cause to be issued and delivered by the Company's Transfer Agent all
confirmations of transactions effected hereunder for the account of a Fund. The
Company will provide for the recording of share purchases in "book accounts;"
provided, however, that upon receipt of a written request from a purchaser, the
Company's Transfer Agent may, but is not required to, deliver a certificate of
shares in such names and amount as the purchaser shall specify in writing, such
delivery to be made as soon as practicable after payment therefor and their
registration on the books of the Company.
4. Suspension of Sales. The sale of shares of the Funds may be suspended
with or without prior notice whenever in the judgment of the Company it is in
its best interests to do so.
5. Repurchase of Shares. As the Company's agent, the Underwriter may buy
shares of a Fund offered for repurchase at the next effective net asset value
per share calculated and effective as set forth in Paragraphs 1 and 3 above.
Whenever the officers of the Company deem it advisable, for the protection of
the shareholders of a Fund, they may suspend or cancel such authority. The
Underwriter will pay all expenses in connection with the repurchase of shares.
6. Conduct of Business. Neither the Underwriter nor any other person is
authorized by the Company or any Fund to give any information or make any
representation relative to the Company or any Fund's shares other than those
contained in the registration statement or prospectus filed with the Securities
and Exchange Commission as the same may be amended from time to time or in any
supplemental information to said prospectus approved by the Company. The
Underwriter agrees that any information or representation other than that
specified above which it or any dealer or other person who purchases shares
through the Underwriter may make in connection with the offer or sale of shares
shall be made entirely without liability on the part of the Company or any Fund.
The Underwriter agrees that in offering or selling shares as agent of the
Company, it will in all respects duly conform to all applicable state and
federal laws. The Underwriter will submit to the Company copies of all sales
literature before using the same and will not use such literature if disapproved
by the Company.
7. Allocation of Expenses. In connection with the sale and distribution of
shares pursuant to this Agreement, the Underwriter shall pay all of its own
expenses and such other expenses as are not specifically assumed by the Company
as hereinafter provided.
The Company specifically assumes and shall pay all fees and
expenses, including legal fees, incurred in (a) the preparation of audited
financial statements to the Company; (b) the preparation and initial printing of
all post-effective amendments, supplements and revisions of its registration
statements; (c) printing and distributing copies of any prospectus to its
shareholders; (d) the preparation and initial printing of shareholder reports
and communications and distributing copies thereof to its shareholders; (e) the
registration of the Company and its shares with the Securities and Exchange
Commission; and (f) the qualification of the Company and its shares in each
state in which its shares will be qualified for sale. Nothing contained herein
shall be deemed to require the Company to pay any of the costs of advertising
the sale of Company shares.
8. Provision of Information. The Company shall furnish the Underwriter
from time to time, for use in connection with the sale of shares of the Funds,
such information with respect to the Company or any relevant Fund and the shares
as the Underwriter may reasonably request, all of which shall be signed by one
or more of the Company's duly authorized officers; and the Company warrants that
the statements contained in any such information, when so signed by the
Company's officers, shall be true and correct. The Company also shall furnish
the Underwriter upon request with: (a) semi-annual reports and annual audited
reports of the Company's books and accounts made by independent public
accountants regularly retained by the Company, (b) a monthly itemized list of
the securities in the Company's or, if applicable, each Fund's portfolio, and
(c) from time to time such additional information regarding the Company's
financial condition as the Underwriter may reasonably request.
9. Registrations and Qualifications; Representations and Warranties.
(a) The Company agrees to execute any and all documents and to furnish any
and all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Company's officers in connection with the
qualification of shares of the Funds for sale in such states as the Underwriter
may designate to the Company and the Company may approve. The Underwriter shall
pay all expenses connected with its own qualification as a dealer under state or
Federal laws and, except as otherwise specifically provided in this Agreement,
all other expenses incurred by it in connection with the sale of Shares as
contemplated in this Agreement.
(b) The Company represents to the Underwriter that all registration
statements and prospectuses filed by the Company with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and under the
Investment Company Act of 1940, as amended, with respect to the shares have been
carefully prepared in conformity with the requirements of said Acts and rules
and regulations of the Securities and Exchange Commission thereunder. As used in
this agreement the terms "registration statement" and "prospectus" shall mean
any registration statement and prospectus, including the statement of additional
information incorporated by reference therein, filed with the Securities and
Exchange Commission and any amendments and supplements thereto which at any time
shall have been filed with said Commission. The Company represents and warrants
to the Underwriter that any registration statement and prospectus, when such
registration statement becomes effective, will contain all statements required
to be stated therein in conformity with said Acts and the rules and regulations
of said Commission; that all statements of fact contained in any such
registration statement and prospectus will be true and correct when such
registration statement becomes effective; and that neither any registration
statement nor any prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Company may, but shall not be obligated to, propose from
time to time such amendment or amendments to any registration statement and such
supplement or supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Company's counsel, be necessary or
advisable. If the Company shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Company of a
written request from the Underwriter to do so, the Underwriter may, at its
option, terminate this agreement or decline to make offers of the Company's
securities until such amendments are made if, in the Underwriter's reasonable
opinion, the failure to make such amendments could have a material adverse
effect upon the Underwriter. The Company shall not file any amendment to any
registration statement or supplement to any prospectus without giving the
Underwriter reasonable notice thereof in advance, if possible; provided,
however, that nothing contained in this agreement shall in any way limit the
Company's right to file at any time such amendments to any registration
statement and/or supplements to any prospectus, of whatever character, as the
Company may deem advisable, such right being in all respects absolute and
unconditional.
(c) The Underwriter shall comply with all applicable federal and state
laws, rules and regulations, the rules and regulations of any self-regulatory
organization with jurisdiction over the Underwriter and/or the Company, and the
provisions of the Company's prospectus and statement of additional information
(the foregoing laws, rules, regulations and provisions are collectively referred
to herein as "Applicable Law") relating to the services the Underwriter provides
pursuant to this Agreement. The Underwriter hereby represents and warrants to
the Company that:
(i) It has the corporate power and the authority to enter into
and perform all of its duties and obligations under this Agreement;
(ii) This Agreement constitutes its legal, valid and binding
obligation and is enforceable against it in accordance with its terms;
(iii) No consent or authorization of, filing with, or other
act by or in respect of any governmental authority is required in
connection with the execution, delivery, performance, validity or
enforceability of this Agreement;
(iv) The execution, performance and delivery of this Agreement
by the Underwriter will not result in its violating any Applicable Law or
breaching or otherwise impairing any of its contractual obligations; and
(v) The Underwriter has obtained, and will maintain in effect,
all registrations under Applicable Law that are necessary to enable it to
perform its obligations under this Agreement.
10. Indemnification. (a) The Company authorizes the Underwriter to
use any current prospectus in the form furnished by the Company to the
Underwriter from time to time, in connection with the sale of shares of the
Funds. The Company agrees to indemnify, defend and hold the Underwriter, its
several officers and directors, and any person who controls the Underwriter
within the meaning of Section 15 of the Securities Act of 1933, as amended, free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith) which the
Underwriter, its officers and directors, or any such controlling persons, may
incur under the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon any omission, or alleged omission, to
state a material fact required to be stated in either any registration statement
or any prospectus or necessary to make the statements in either thereof not
misleading; provided, however, that the Company's agreement to indemnify the
Underwriter, its officers or directors, and any such controlling person shall
not be deemed to cover any claims, demands, liabilities or expenses arising out
of any untrue statement or alleged untrue statement or omission or alleged
omission made in any registration statement or prospectus in reliance upon and
in conformity with written information furnished to the Company by the
Underwriter specifically for use in the preparation thereof. The Company's
agreement to indemnify the Underwriter, its officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon the Company's
being notified of any action brought against the Underwriter, its officers or
directors, or any such controlling person, such notification to be given by
letter or by telegram addressed to the Company at its address set forth above
within ten days after the summons or other first legal process shall have been
served. The failure so to notify the Company of any such action shall not
relieve the Company from any liability which the Company may have to the person
against whom such action is brought by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
the Company's indemnity agreement contained in this paragraph 10(a). The Company
will be entitled to assume the defense of any suit brought to enforce any such
claim, demand or liability, but, in such case, such defense shall be conducted
by counsel of good standing chosen by the Company and approved by the
Underwriter, acting in good faith. In the event the Company elects to assume the
defense of any such suit and retain counsel of good standing approved by the
Underwriter, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the
Company does not elect to assume the defense of any such suit, or in case the
Underwriter does not approve of counsel chosen by the Company, the Company will
reimburse the Underwriter, its officers and directors, or the controlling person
or persons named as defendant or defendants in such suit, for the reasonable
fees and expenses of any counsel retained by the Underwriter or them. The
Company's indemnification agreement contained in this paragraph 10(a) and the
Company's representations and warranties in this agreement shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Underwriter, its officers and directors, or any controlling
person, and shall survive the delivery of any shares of the Funds. This
agreement of indemnity will inure exclusively to the Underwriter's benefit, to
the benefit of its several officers and directors, and their respective estates,
and to the benefit of any controlling persons and their successors. The Company
agrees promptly to notify the Underwriter of the commencement of any litigation
or proceedings against the Company or any of its officers or Board members in
connection with the issue and sale of shares of the Funds.
(b) The Underwriter agrees to indemnify, defend and hold the Company, its
several officers and Board members, and any person who controls the Company
within the meaning of Section 15 of the Securities Act of 1933, as amended, free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith) which the
Company, its officers or Board members, or any such controlling person, may
incur under the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon: (i) the Underwriter's negligence or
willful misconduct in the performance of its duties and obligations under this
Agreement; (ii) the Underwriter's violation of Applicable Law in connection with
the performance of its duties and obligations under this Agreement; (iii) any
breach by the Underwriter of any provision of this Agreement, including any
representation, warranty or covenant made in the Agreement; and (iv) any untrue,
or alleged untrue, statement of a material fact contained in information
furnished in writing by the Underwriter to the Company specifically for use in
the Company's registration statement and used in the answers to any of the items
of the registration statement or in the corresponding statements made in the
prospectus, or any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by the Underwriter to the
Company and required to be stated in such answers or necessary to make such
information not misleading. The Underwriter's agreement to indemnify the
Company, its officers and Board members, and any such controlling person, as
aforesaid, is expressly conditioned upon its being notified of any action
brought against the Company, its officers or Board members, or any such
controlling person, such notification to be given by letter or telegram
addressed to the Underwriter at its address set forth above within ten days
after the summons or other first legal process shall have been served. The
failure so to notify the Underwriter of any such action shall not relieve the
Underwriter from any liability which the Underwriter may have to the Company,
its officers or Board members, or to such controlling person by reason of any
such untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of its indemnity agreement contained in this paragraph
10(b). The Underwriter will be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case, such
defense shall be conducted by counsel of good standing chosen by the Underwriter
and approved by the Company, acting in good faith. In the event the Underwriter
elects to assume the defense of any such suit and retain counsel of good
standing approved by the Company, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of them;
but in case the Underwriter does not elect to assume the defense of any such
suit, or in case the Company does not approve of counsel chosen by the
Underwriter, the Underwriter will reimburse the Company, its officers and Board
members, or the controlling person or persons named as defendant or defendants
in such suit, for the reasonable fees and expenses of any counsel retained by
the Company or them. The Underwriter's indemnification agreement contained in
this paragraph 10(b) and the Underwriter's representations and warranties in
this Agreement shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Company, its officers and Board
members, or any controlling person, and shall survive the delivery of any shares
of the Funds. This agreement of indemnity will inure exclusively to the
Company's benefit, to the benefit of the Company's officers and Board members,
and their respective estates, and to the benefit of any controlling persons and
their successors. The Underwriter agrees promptly to notify the Company of the
commencement of any litigation or proceedings against the Underwriter or any of
its officers or directors in connection with the issue and sale of shares of the
Funds.
11. Suspension of Registration. No shares of the Funds shall be offered by
either the Underwriter or the Company under any of the provisions of this
Agreement, and no orders for the purchase or sale of such shares hereunder shall
be accepted by the Company, if and so long as the effectiveness of the
registration statement then in effect or any necessary amendments thereto shall
be suspended under any of the provisions of the Securities Act of 1933, as
amended, or if and so long as a current prospectus as required by Section 10 of
said Act, as amended, is not on file with the Securities and Exchange
Commission; provided, however, that nothing contained in this paragraph 11 shall
in any way restrict or have any application to or bearing upon the Company's
obligation to repurchase any shares of the Funds from any shareholder in
accordance with the provisions of the Company's prospectus or charter documents.
12. Required Notifications. The Company agrees to advise the Underwriter
promptly in writing:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the registration
statement or prospectus then in effect or the initiation of any proceeding for
that purpose;
(c) of the happening of any event which makes untrue any statement
of a material fact made in the registration statement or prospectus then in
effect or which requires the making of a change in such registration statement
or prospectus in order to make the statements therein not misleading; and
(d) of all actions of the Securities and Exchange Commission with
respect to any amendments to any registration statement or prospectus which may
from time to time be filed with the Securities and Exchange Commission.
13. Other Activities. So long as the Underwriter acts as the distributor
of Company shares, the Underwriter shall not perform any services for any entity
other than a "Mellon Entity," such term being defined as any entity that is
advised or administered by a direct or indirect subsidiary of the Mellon Bank
Corporation. The Company acknowledges that the persons employed by the
Underwriter to assist in the performance of its duties under this Agreement may
not devote their full time to such service and, subject to the preceding
sentence, nothing contained in this Agreement shall be deemed to limit or
restrict the Underwriter's right or any of its affiliates' right to engage in
and devote time and attention to other businesses or to render services of
whatever kind or nature.
14. Term of Agreement. This Agreement shall become effective upon the date
first above written. This Agreement shall continue in effect through May 31,
1999, and thereafter for successive annual periods, provided that its
continuance is specifically approved at least annually by the Company's
directors or, with respect to any Fund, by vote of a majority of that Fund's
outstanding voting securities and, in any event, by a majority of those
directors who are not parties to this Agreement or interested persons of any
party to this Agreement (other than as directors of the Company) at a meeting
called for the purpose of voting on such approval.
This Agreement shall automatically terminate in the event of its
assignment (within the meaning of the Investment Company Act of 1940, as
amended): provided, however, that the Underwriter may employ such other person,
persons, corporation or corporations, as it shall determine, in order to assist
it in carrying out the provisions of this Agreement.
This Agreement may be terminated at any time by either party hereto
by giving six months' written notice to the other party, or at any time by
mutual consent of the parties hereto. Such notice shall be sent by certified
mail. Until further notice, the mailing address of Company shall be:
Founders Financial Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Until further notice, the mailing address of Underwriter shall be:
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
15. Miscellaneous. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Colorado and shall be
interpreted and construed to further and promote the operation of the Company as
an open-end investment company. As used herein, the terms "Net Asset Value,"
"Offering Price," "Investment Company," and "Interested Persons" shall have the
meanings set forth in the Investment Company Act of 1940, as amended, and the
Rules, Regulations, Orders, and Forms thereunder.
IN WITNESS WHEREOF, this Agreement has been executed by the Underwriter
and the Company as of the day and year first above written.
FOUNDERS FUNDS, INC.
ATTEST: By: /s/ Xxxxx X. Xxxxxxxx
----------------------------
Xxxxx X. Xxxxxxxx, President
/s/ Xxxxxxxxxxx X. Xxxxxx
-------------------------
Xxxxxxxxxxx X. Xxxxxx,
Assistant Secretary
PREMIER MUTUAL FUND SERVICES, INC.
ATTEST: By: /s/ Xxxxxxx X. Xxxxxx
------------------------
Xxxxxxx X. Xxxxxx,
Executive Vice President
/s/ Xxxx X. X'Xxxxx
-------------------
Xxxx X. X'Xxxxx,
Secretary
