M FUND, INC.
PRINCIPAL UNDERWRITING AGREEMENT
FEBRUARY 9, 1998
THIS AGREEMENT is made and entered into this 9th day of February, 1998, by
and between M Fund, Inc., a corporation organized and existing under the laws of
the state of Maryland (the "Company"), and M Holdings Securities, Inc., a
corporation organized and existing under the laws of the State of Oregon (the
"Distributor").
WHEREAS, the Company consists of several portfolios of shares and is
registered as an open-end management series investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Company has registered the shares of its several classes of
stock ("Shares") for offer and sale in four portfolios, each as set forth on
Schedule A hereto under the Securities Act of 1933, as amended (the "1933 Act"),
and the Company may offer Shares of one or more additional portfolios in the
future (such existing and future portfolios are collectively referred to herein
as the "Funds"); and
WHEREAS, the Company was organized to serve as the funding vehicle for
certain individual and group variable life insurance policies and variable
annuity contracts offered by certain life insurance companies ("Participating
Insurance Companies") through their segregated asset accounts (the "Accounts"),
and may also offer its Shares directly to qualified pension and retirement plans
(the "Qualified Plans"); and
WHEREAS, the Distributor is a broker-dealer registered with the Securities
and Exchange Commission (the "Commission") under the Securities Exchange Act of
1934, as amended (the "1934 Act") and is a member of the National Association of
Securities Dealers, Inc. (the "NASD");
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties hereto agree as follows:
I. APPOINTMENT OF THE DISTRIBUTOR
A. The Company hereby appoints the Distributor as its exclusive agent for
the distribution of the Shares of each Fund to the Accounts of Participating
Insurance Companies and to the Qualified Plans as may be permitted by applicable
law and subject to the Company's obtaining any necessary regulatory approvals,
subject to the terms of this Agreement and the policies and control of the
Company's Board of Directors (the "Board"). The Distributor hereby accepts such
appointment.
B. In the event that the Company from time to time creates one or more
additional Funds, it shall notify the Distributor. If the Distributor is
willing to perform services hereunder to the additional Fund(s), it shall so
notify the Company. Thereafter, the Company and the
Distributor shall mutually agree to amend Schedule A to this Agreement in
writing to add the additional Fund(s) and the additional Fund(s) shall be
subject to this Agreement, subject to the approval of the Board as set forth in
Paragraph XII below.
C. The Distributor is an independent contractor. The Distributor is
responsible for its own conduct, for the employment, control and conduct of its
agents and employees and for injury to such agents or employees or to others
through its agents or employees. The Distributor assumes full responsibility
for its agents and employees under applicable laws and agrees to pay all
employer taxes relating thereto.
II. DUTIES OF THE DISTRIBUTOR AND THE COMPANY
A. THE COMPANY EMPLOYS THE DISTRIBUTOR:
1. to sell the Shares of each Fund at net asset value upon the terms
described in (a) the then effective registration statement of the
Company, under the 1933 Act and the 1940 Act (the "Registration
Statement") and (b) the then current prospectus and statement of
additional information and any supplements thereto (collectively,
the "Prospectus"). The Distributor agrees that the Company
shall receive 100% of such net asset value;
2. to sell the Shares of each Fund in accordance with any
participation agreements between the Company and the
Participating Insurance Companies and, where applicable, the
Company and Qualified Plans;
3. to submit to the NASD for review and approval, as required, all
sales literature and advertisements to be used in connection with
the sale of the Shares and to take any and all action necessary
and appropriate to ensure the approval of such material within a
reasonable time period. All sales literature and advertisements
used by the Distributor in connection with the sale of Shares
shall be subject to approval by the Company or its delegatee.
The Company authorizes the Distributor, in connection with the
sales or arranging for the sale of Shares, to provide only such
information and to make only such statements or representations
as are contained in the Company's Registration Statement or
Prospectus or in sales literature or advertisements approved by
the Company or in such financial or other statements or reports
which are furnished to the Distributor pursuant to the next
paragraph. The Company shall not be responsible in any way for
any information provided or statements and representations made
by the Distributor or its representatives or agents other than
the information, statements, and representations described in the
preceding sentence. The Distributor shall review all materials
submitted to it by Participating Insurance Companies and
Qualified Plans that describe the Company, the Shares, or the
Company's investment adviser. The Distributor shall not be
responsible for any information provided or
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statements or representations made by Participating Insurance
Companies or Qualified Plans, representatives or agents of
Participating Insurance Companies or Qualified Plans, or any
other persons or entities other than the Distributor's
representatives or agents.
B. THE COMPANY AGREES:
1. to make available to the Distributor copies of all information,
financial statements and auditor's reports thereon and other
papers which the Distributor may reasonably request for use in
connection with the distribution of Shares, including such
reasonable number of copies of the most current prospectus,
statement of additional information, and annual and interim
reports of a Fund as the Distributor may request;
2. to cooperate fully in the efforts of the Distributor to sell and
arrange for the sale of the Shares and in the performance of the
Distributor of its duties under this Agreement; and
3. to register or cause to be registered all Shares sold by the
Distributor pursuant to the provisions of this Agreement.
C. The Company reserves the right at any time to withdraw all offerings
of the Shares of any or all Funds by written notice to the Distributor
at its principal office.
D. The Company and the Distributor hereby agree that all advertisements
and sales literature issued by either of them referring directly or
indirectly to the Company or to the Distributor will be submitted to
and receive the approval of the Company and the Distributor before it
may be used by either party.
III. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE DISTRIBUTOR. The Distributor
hereby represents and warrants to the Company as follows:
1. DUE INCORPORATION AND ORGANIZATION. The Distributor is duly
organized and is in good standing under the laws of the State of
Oregon and is fully authorized to enter into this Agreement and
carry out its terms.
2. REGISTRATION. The Distributor is a broker-dealer registered
with the Commission under the 1934 Act, is a member of the NASD,
and is registered or licensed under the laws of all jurisdictions
in which its activities require it to be so registered or
licensed. The Distributor shall maintain such registration or
license in effect at all times during the term of this Agreement
and will immediately notify the Company of the
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occurrence of any event that would disqualify the Distributor
from serving as a Distributor by operation of Section 9(a) of the
1940 Act or otherwise.
3. CODE OF ETHICS. The Distributor has adopted and implemented a
written code of ethics that complies with the requirements of
Rule 17j-I under the 1940 Act and will provide the Company with a
copy of such code of ethics and all subsequent modifications
together with evidence of its adoption and implementation. At
least annually the Distributor will provide the Company with a
report describing the implementation of the code of ethics during
the immediately preceding twelve (12) month period.
B. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company, on behalf
of the Funds, hereby represents and warrants to the Distributor as
follows:
1. DUE INCORPORATION AND ORGANIZATION. The Company is duly
organized under the laws of the State of Maryland and is fully
authorized to enter into this Agreement and carry out its terms.
2. REGISTRATION. The Company is registered as an investment company
with the Commission under the 1940 Act and Shares of the Company
are and will be registered under the 1933 Act for offer and sale
to the Accounts of Participating Insurance Companies and to
Qualified Plans. Such registration shall be kept in effect
during the term of this Agreement.
IV. NOTICE
The Company agrees to advise the Distributor immediately in writing:
A. of any request by the SEC for amendments to the registration
statement, prospectus or statement of additional information then in
effect of for additional information;
B. in the event of the issuance by the SEC of any stop order suspending
the effectiveness of the registration statement, prospectus or
statement of additional information then in effect or the initiation
of any proceeding for that purpose;
C. of the happening of any event that makes untrue any statement of a
material fact made in the registration statement, prospectus or
statement of additional information then in effect or that requires
the making of a change in the registration statement, prospectus or
statement of additional information in order to make the statements in
those documents not misleading; and
D. of all actions of the SEC with respect to any amendment to any
registration statement, prospectus or statement of additional
information that may from time to time be filed with the SEC.
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V. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Distributor shall
at all times conform to:
A. all applicable provisions of the 1934 Act and the 1940 Act and the
rules and regulations thereunder.
B. the provisions of the Registration Statement of the Company as the
same may be amended from time to time, under the 1933 Act and the 1940
Act.
C. the provisions of the Company's Articles of Incorporation, as amended;
D. the provisions of the By-Laws of the Company, as amended; and
E. any other applicable provisions of state and federal law.
VI. EXPENSES
The expenses in connection with the distribution of the Shares shall be
allocated as follows:
A. EXPENSES OF THE COMPANY
The Company will pay or cause to be paid:
1. registration fees for registering its Shares under the 1933 Act;
2. expenses incident to preparing and filing amendments to the
Registration Statement of the Company under the 1933 Act and the
1940 Act;
3. expenses for preparing and setting in type all prospectuses and
the expenses of printing and supplying them to the existing
shareholders or beneficial owners of Shares (including, but not
limited to, owners of individual and group variable life
insurance policies and variable annuity contracts that use one or
more Funds as their funding vehicle);
4. expenses incident to the issuance of its Shares such as the cost
of stock certificates, if any, taxes, and fees for establishing
shareholder record accounts; and
5. expenses for administrative and transfer agency services.
B. EXPENSES OF THE DISTRIBUTOR
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1. The Distributor shall pay all of its own costs and expenses
connected with the offer and sale of Shares.
VII. REPORTS
The Distributor shall prepare reports for the Board on a quarterly basis
showing such information concerning services provided and expenses incurred
related to this Agreement, and such other information, as from time to time may
be reasonably requested by the Board.
VIII. INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify, defend and hold the Distributor, each
person who has been, is, or may hereafter be an officer, director, employee or
agent of the Distributor, and any person who controls the Distributor within the
meaning of Section 15 of the 1933 Act, free and harmless against any loss,
damage or expense reasonably incurred by any of them in connection with any
claim or in connection with any action, suit, or proceeding to which any of them
may be a party, which arises out of or is alleged to arise out of or is based
upon a violation of any of the Company's covenants herein contained, or any
alleged untrue statement of a material fact, or the alleged omission to state a
material fact necessary to make the statements made not misleading, in the
Registration Statement or prospectus of the Company, or any amendment or
supplement thereto, unless such statement or omission was made in reliance upon
information furnished by the Distributor. The foregoing rights of
indemnification shall be in addition to any other rights to which any of the
foregoing indemnified parties may be entitled as a matter of law. Nothing
contained herein shall relieve the Distributor of any liability to the Company
or its shareholders, or the Company of any liability to the Distributor, to
which the Distributor or the Company would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its
duties or reckless disregard of its obligations and duties under this Agreement.
IX. INDEMNIFICATION BY THE DISTRIBUTOR
The Distributor agrees to indemnify, defend and hold the Company, each
person who has been, is, or may hereafter be an officer, director, employee or
agent of the Company, and any person who controls the Company within the meaning
of Section 15 of the 1933 Act, free and harmless against any loss, damage or
expense reasonably incurred by any of them in connection with any claim or in
connection with any action, suit or proceeding to which any of them may be a
party, which arises out of or is alleged to arise out of or is based upon a
violation of any of the Distributor's covenants herein contained, or any alleged
untrue statement of a material fact, or the alleged omission to state a material
fact necessary to make the statements made not misleading, on the part of the
Distributor or nay agent or employee of the Distributor, whether made orally or
in writing, unless such statement or omission was made in reliance upon written
information furnished by the Company. The foregoing rights of indemnification
shall be in addition to any other rights to which any of the foregoing
indemnified parties may be entitled as a matter of law.
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X. NON-EXCLUSIVITY
The services of the Distributor to the Company under this Agreement are not
to be deemed exclusive, and the Distributor shall be free to render similar
services to others (including other investment companies) so long as its
services to the Company are not impaired thereby. It is understood and agreed
that officers and directors of the distributor may serve as officers or
directors of the Company, and that officers or directors of the Company may
serve as officers or directors of the Distributor to the extent permitted by
law. The officers and directors of the Distributor are not prohibited by this
Agreement from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm, corporation or trust, including other investment
companies.
XI. TERM
This Agreement shall become effective as of the date on which this
Agreement is executed, provided this Agreement is approved by both (a) the vote
of a majority of the Board and (b) the vote of a majority of those members of
the Board who are not parties to this Agreement or interested persons of any
such party, and who have no direct or indirect financial interest in this
Agreement, case in person at a meeting called for such purposes.
Unless terminated as herein provided, this Agreement shall remain in full
force and effect for two years from the date of execution of this Agreement and
shall continue in effect from year to year thereafter, only so long as such
continuance is approved at least annually:
A. by the vote of a majority of those members of the Board who are not
parties to this Agreement or interested persons of any such party, and
who have no direct or indirect financial interest in this Agreement,
cast in person at a meeting called for the purpose of voting on such
renewal; and
B. by either the vote of a majority of the Board or the vote of a
majority of the outstanding voting securities of the Company.
XII. TERMINATION AND ASSIGNMENT
A. This Agreement may be terminated at any time, without the payment of
any penalty,
1. by (a) Company, (b) the vote of a majority of the Board, (c) the
vote of a majority of those members of the Board whoa re not
parties to this Agreement or interested persons of any such
party, and who have no direct or indirect financial interest in
this Agreement, (d) the vote of a majority of the outstanding
voting securities of the Company, or (e) without limiting the
foregoing, the Company, in the event the Distributor fails to
perform in a satisfactory manner, or
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2. by the Distributor.
3. In the event of termination of this Agreement, the Company and
the Distributor agree to provide the non-terminating party at
least sixty (60) days' prior written notice of such termination.
In the case of termination under paragraph 1. of this subsection,
only the Distributor will be deemed the non-terminating party.
B. This Distribution Agreement may not be assigned by the Distributor and
will automatically and immediately terminate in the event of its assignment.
XIII. AMENDMENTS
This Agreement may be amended in writing, by an instrument signed by a duly
authorized officer of the Company and by the Distributor, but no amendment to
this Agreement shall be effective until such amendment is approved:
A. by the vote of a majority of those members of the Board who are not
parties to this Agreement or interested persons of any such party, and
who have no direct or indirect financial interest in this Agreement,
cast in person at a meeting called for the purpose of voting on such
approval; and
B. by the vote of a majority of the Board.
XIV. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Oregon,
without regard to conflicts of law principles; provided, however, that nothing
herein shall be construed as being inconsistent with 1933 Act, the 1934 Act or
the 1940 Act.
XV. DEFINITIONS
As used in this Agreement, the terms "majority of outstanding voting
securities," "interested persons," and "assignment" shall have the same meaning
as those terms have in the 1940 Act.
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XVI. NOTICE
Any notice, advice or report to be given pursuant to this Agreement shall
be deemed sufficient if delivered by hand or first class mail, or transmitted by
electronic facsimile, or mailed by registered, certified or overnight United
States mail, postage prepaid, or sent by overnight delivery with a recognized
courier, addressed by the party giving notice to the other party at the last
address furnished by the other party:
To the Distributor at: M Holdings Securities, Inc.
River Park Center
000 X.X. Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: Corporate Secretary
To the Company at: M Fund, Inc.
River Park Center
000 X.X. Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: Corporate Secretary
Each such notice, advice or report shall be effective upon receipt or three
days after mailing, whichever is first.
XVII. SEVERABILITY
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
XVIII. ENTIRE AGREEMENT
This Agreement embodies the entire agreement and understanding between the
parties hereto, and supersedes all prior agreements and understandings relating
to this Agreement's subject matter. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
such counterparts shall, together, constitute only one instrument.
XIX. 1940 ACT
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
Commission, whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
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XX. COOPERATION WITH AUTHORITIES
Each party hereto shall cooperate with the other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD, and
state insurance regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
XXI. CUMULATIVE RIGHTS
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
XXII. BOOKS AND RECORDS
The Company shall own and control all the pertinent records pertaining to
its operations.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
M FUND, INC
Attest: /s/ Xxxx Xxx By: /s/ [illegible]
---------------------- --------------------------
Title: President
----------------------
M HOLDINGS SECURITIES, INC.
Attest: /s/ Xxxx Xxx By:/s/ [illegible]
---------------------- --------------------------
Title: President
-----------------------
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SCHEDULE A
FUNDS OF M FUND, INC.
Edinburgh Overseas Equity Fund
Xxxxxx Core Growth Fund
Frontier Capital Appreciation Fund
Enhanced U.S. Equity Fund
