Premier Mutual Fund Services, Inc.
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
RE: Distribution and Shareholder Support Agreement for Founders
Funds, Inc.
(For use with Recordkeeping and Other Services Agreement)
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 LLC ("Founders") 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. 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 responses to written or
telephonic inquiries made by investors with respect to their Shares; (ii)
assisting investors in contacting your personnel in instances in which
direct assistance from you would be helpful in expeditiously accomplishing
the investor's request; (iii) providing retirement planning presentations
to potential or current participants in employee retirement programs and
plans; and (iv) providing such other forms of support and assistance as we
are reasonably able to furnish or as you reasonably may request.
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 from you 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 the Funds or
their agent and received by the Funds or their agent pursuant to that
certain Recordkeeping and Other Services Agreement between us and Founders.
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
the Funds or their agent 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 the Funds or their agent 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; and
(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.
(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. Copies of
all notices sent to you also shall be sent to General Counsel, Founders
Asset Management LLC, 0000 Xxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000.
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)
_______________________________ Premier Mutual Fund Services, Inc.
(Address) 00 Xxxxx Xxxxxx, Xxxxx 0000
_______________________________ Xxxxxx, XX 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 Passport Fund
Founders Frontier 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
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.
May 24, 1998
