Founders Asset Management, Inc.
Founders Financial Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
RE: Distribution and Shareholder Support Agreement for Founders Funds, Inc.
Ladies and Gentlemen:
We understand that the separate series mutual funds of Founders Funds, Inc.
listed on Attachment A to this Agreement have adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act"), which includes provision for payments to selected
brokers for their distribution efforts and their shareholder support and
assistance to the funds. Such funds, together with any other mutual funds
managed by Founders Asset Management, Inc. ("Founders" or "you") which hereafter
may enter into a similar Plan, are hereinafter referred to collectively as the
"Funds".
We desire to enter into an agreement with you as the Funds' Distributor for the
sale and distribution of the shares of the Funds (the "Shares"). Upon acceptance
of this Agreement by you, we understand that we may offer and sell Shares
subject, however, to all of the terms and conditions hereof and to your right,
without notice, to suspend or terminate the sale of such Shares.
1. We understand that the Shares will be offered and sold at the current
offering price in effect at the time the order for such securities is
confirmed and accepted by you. All purchase requests and applications
submitted by us are subject to acceptance or rejection in your sole
discretion and, if accepted, each purchase will be deemed to have been
consummated at your office. In the event of a difference between verbal
and written price confirmations, written confirmations shall be considered
final.
2. We certify (a) that we are a member of the National Association of
Securities Dealers, Inc. ("NASD") and agree to maintain membership in the
NASD or (b) in the alternative that we are a foreign dealer not eligible
for membership in the NASD. In either case, we agree to abide by all
federal and state laws, rules and regulations applicable to our activities
under this Agreement including, but not limited to, the rules and
regulations of the Securities and Exchange Commission and the NASD which
are binding upon underwriters and dealers in the distribution of the
securities of open-end investment companies including, without limitation,
Section 2830 of the NASD Conduct Rules, all of which are incorporated
herein as if set forth in full. We agree that we will not sell Shares or
offer Shares for sale in any state or jurisdiction where they are not then
registered or qualified for sale.
3. We will offer and sell Shares only in accordance with the terms and
conditions of the Funds' then current Prospectus and we will make no
representations not included either in said Prospectus or in any
authorized supplemental material supplied by you. We will exercise due
care and diligence, act in good faith and use our best efforts in the
development and promotion of sales of Shares, and agree to be responsible
for the proper instruction and training of all sales personnel employed by
us, in order that the Shares will be offered in accordance with the terms
and conditions of this Agreement and all applicable laws, rules and
regulations. We agree to hold you and the Funds harmless and indemnify
each of you in the event that we, or any of our sales representatives,
should violate any law, rule or regulation, or any provisions of this
Agreement, which violation may result in liability to you and/or the
Funds. In the event you determine to refund any amounts paid by any
investor by reason of any such violation on our part, we shall return to
you any service fees previously paid by you to us with respect to the
assets for which the refund is made. All expenses which we incur in
connection with our activities under this Agreement shall be borne by us.
4. In our offering and sale of Shares, we will disclose to investors our
entitlement to receive service fees from you in accordance with this
Agreement.
5. We will provide continuous support and assistance to investors in the
Funds whose Shares have been sold through us, for such period (a) as the
investors retain their Shares and (b) service fees with respect to such
Shares are paid to us. Such support and assistance may include, but will
not necessarily be limited to: (i) providing assistance to investors in
effecting transactions in their Shares, such as exchanges, transfers,
changes in dividend options and shareholder information alterations; (ii)
providing responses to written or telephonic inquiries made by investors
with respect to their Shares; (iii) assisting investors in the purchase of
additional Shares in existing accounts, in opening new accounts, or in
redeeming Shares; (iv) assisting investors in contacting your personnel in
instances in which direct assistance from you would be helpful in
expeditiously accomplishing the investor's request; (v) providing
retirement planning presentations to potential or current participants in
employee retirement programs and plans; (vi) if Shares are registered in
our name or in the name of our nominee, performing sub-accounting,
establishing and maintaining shareholder accounts and records and
providing periodic statements showing a shareholder's account balance and
activity; and (vii) providing such other forms of support and assistance
as we are reasonably able to furnish or as you reasonably may request. In
the event that we perform the services described in clause (vi) above, and
the aggregate accounts we maintain for shareholders do not balance with
the accounts maintained by you, we shall be liable to the shareholders for
any shortfall.
6. We understand and agree that the service fee relative to any sales and
maintenance of Shares made by us will be in an amount as set forth in the
Service Fee Payment Schedule included on Attachment A, and that we shall
have no right to receive any continuing maintenance fees, other fees or
commissions on Shares sold by us other than as set forth in that Schedule.
Subject to the provisions of Attachment A, our right to receive service
fees will commence on the date of this Agreement, and will apply to all
Shares that were sold by us that are then outstanding.
7. We understand that service fees are subject to change or termination by
you from time to time, upon 30 days' written notice, and that any orders
placed after the effective date of change shall be subject to the rates in
effect at the time of receipt of the payment by you. Such 30-day period
may be waived at your sole option in the event such change increases the
service fee due us.
8. Payment for purchases of Shares made from us shall be made to you and
received by you within three business days after the acceptance of our
order or such shorter time as may be required by law. If such payment is
not so received, we understand that you reserve the right, without notice,
forthwith to cancel the sale or, at your option, to sell the Shares
ordered by us back to the Funds, in which latter case we may be held
responsible for any loss suffered by you or the Funds resulting from our
failure to make the aforesaid payment. We will forward promptly to you any
purchase orders and/or payments received by us from investors. If we
effect a telephone redemption or telephone exchange of any Shares on
behalf of any of our customers, we hereby indemnify you, the Funds and any
agent appointed by you for this purpose against any loss, injury, damage,
expense or liability which results from acting or relying on our telephone
instructions or information. In no event shall we withhold placing with
you orders received from our customers so as to profit ourselves as a
result of such withholding.
9. We agree to purchase Shares only from you or from our customers. If we
purchase Shares from you, we agree that all such purchases shall be made
only to cover orders received by us from our customers, or for our own
bona fide investment. If we purchase Shares from our customers, we agree
to pay such customers not less than the applicable repurchase price as
established by the then current Prospectus of the Funds.
10. We understand and agree that if any Shares sold by us under the terms of
this Agreement are redeemed by the Funds (including redemptions resulting
from an exchange for Shares of another mutual fund distributed by you, in
accordance with the then current Prospectus for the Funds), repurchased by
you for the Funds, or tendered to the Funds for redemption within seven
(7) business days after your confirmation to us of our original purchase
order for such Shares, we shall pay forthwith to you the full amount of
the service fee allowed to us on the original sale, provided you notify us
of such repurchase or redemption within ten (10) days of the date upon
which written redemption requests and, if applicable, Share certificates
are delivered to you or to the Funds.
11. (a) You hereby represent and warrant to us as follows:
(i) You have the corporate power and the authority to enter into and
perform all of your duties and obligations under this Agreement;
(ii) This Agreement constitutes your legal, valid and binding
obligation, enforceable against you 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 you
will not result in your violating any law, rule or regulation or
breaching or otherwise impairing any of your contractual
obligations; and
(v) The Funds are each registered as investment companies under the
1940 Act and the Shares sold by the Funds are, and will be,
registered under the Securities Act of 1933, as amended.
(b) We hereby represent and warrant to you as follows:
(i) We have the corporate power and the authority to enter into and
perform all of our duties and obligations under this Agreement;
(ii) This Agreement constitutes our legal, valid and binding
obligation and is enforceable against us 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 us
will not result in our violating any law, rule or regulation or
breaching or otherwise impairing any of our contractual
obligations; and
(v) We have obtained, and will maintain in effect, all registrations
under federal and state laws, rules and regulations that are
necessary to enable us to perform our obligations under this
Agreement.
12. Your obligations to us under this Agreement are subject to all the
provisions of any distributorship agreements entered into between you and
the Funds. We understand and agree that in performing our services covered
by this Agreement we are acting as principal, and you are in no way
responsible for the manner of our performance or for any of our acts or
omissions in connection therewith. Nothing in this Agreement shall be
construed to constitute us or any of our agents, employees or
representatives as your agent, partner or employee, or the agent or
employee of the Funds.
13. We may terminate this Agreement by notice in writing to you, which
termination shall become effective on the earlier of thirty (30) days
after the date of mailing such notice to you, or receipt of written
notification from you of termination prior to the thirtieth day. We agree
that you have and reserve the right, in your sole discretion and without
notice (and without the payment of any penalty), to suspend sales of
Shares, or to withdraw entirely the offering of Shares or, in your sole
discretion, to modify, amend, cancel or terminate this Agreement, with or
without cause, upon written notice to us of such modification, amendment,
cancellation or termination, which shall be effective on the date stated
in such notice. Without limiting the foregoing, any provision hereof to
the contrary notwithstanding, our expulsion from the NASD will
automatically terminate this Agreement without notice. Your failure to
terminate for any cause shall not constitute a waiver of your right to
terminate at a later date for any such cause or for no cause. All notices
hereunder shall be in writing and sent to the respective parties at the
addresses listed herein, unless changed by notice given in accordance with
this Agreement.
14. In the event that you, in your sole discretion, determine that any
active trading or market timing activities of our customers are
potentially harmful to you or the Funds, you may limit the size of
purchase orders placed by such customers or prohibit such customers from
investing in some or all of the Funds.
15. We will notify you promptly in writing in the event that any of our
customers who has invested in the Funds ceases to be our client.
16. This Agreement shall become effective as of the date when it is executed
and dated by you below, shall embody the entire agreement and
understanding between you and us, and shall supersede any prior agreements
or understandings between you and us regarding the Funds. This Agreement
and all the rights and obligations of the parties hereunder shall be
governed by and construed under the laws of the State of Colorado. This
Agreement is not assignable or transferable by either party without the
prior written consent of the other, except that you may assign or transfer
this Agreement to any successor firm or corporation which becomes the
Distributor of the Funds.
Dealer Firm ________________________ Accepted:
(Name)
____________________________________ Founders Asset Management, Inc.
(Address) 0000 Xxxx Xxxxx Xxxxxx
____________________________________ Xxxxxx, Xxxxxxxx 00000
By: ________________________________ By: ________________________________
(Signature) (Signature)
____________________________________ ____________________________________
(Name) (Title) (Name) (Title)
Date: __ day of _______, 19___
ATTACHMENT A
TO
DISTRIBUTION AND SHAREHOLDER SUPPORT AGREEMENT
FOR FOUNDERS FUNDS, INC.
Participating Funds
-------------------
The following series mutual funds of Founders Funds, Inc. are
included in this Agreement:
Founders Discovery Fund
Founders Frontier Fund
Founders Passport Fund
Founders Special Fund
Founders International Equity Fund
Founders Worldwide Growth Fund
Founders Growth Fund
Founders Blue Chip Fund
Founders Balanced Fund
Founders Government Securities Fund
Service Fee Payment Schedule
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Service Fee: Subject to minimum investment and payment requirements, service
fees will be paid at the annual rate of 0.25% of the average of
the aggregate net asset value of outstanding Shares of Founders
Funds, Inc. sold by the Dealer, measured on each day during each
calendar quarter, payable within 30 days following the end of
each calendar quarter.
All payments to us shall be remitted to the following address:
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Minimum
Investment: Payment of quarterly service fees will commence at such time as
the Dealer shall have been credited with $1 million in sales of
Shares.
Minimum
Payments: Quarterly payments of service fees of less than $1,000 may be
accrued and paid within 30 days following the end of each
calendar quarter in which such payments cumulatively equal or
exceed $1,000.
