FOUNDERS FUNDS, INC.
FORM OF UNDERWRITING AGREEMENT
This Agreement made as of the __ day of _________,
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:___________________________
________________, President
___________________________
________________, Secretary
PREMIER MUTUAL FUND SERVICES, INC.
ATTEST: By:___________________________
___________________________
________________, Secretary
