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M FUND, INC
PRINCIPAL UNDERWRITING AGREEMENT
_________ __, 1998
THIS AGREEMENT is made and entered into this ____ day of ___________,
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
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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-1 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. 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.
V. EXPENSES
The expenses in connection with the distribution of the Shares shall be
allocable as follows:
A. EXPENSES OF THE COMPANY
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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 expense of printing and
supplying them to the then 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
1. The Distributor shall pay all of its own costs and
expenses connected with the offer and sale of Shares.
VI. 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.
VII. 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
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to which the Distributor 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.
VIII. 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 any 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.
IX. 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.
X. 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, cast 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:
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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.
XI. TERMINATION AND ASSIGNMENT
A. This Agreement may be terminated at any time, without the
payment of any penalty,
1. by (a) the Company, (b) the vote of a majority of the
Board, (c) 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, or (d) the vote of a majority of the
outstanding voting securities of the Company, or
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.
XII. 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.
XIII. GOVERNING LAW
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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.
XIV. 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.
XV. 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. Xxxxxxx 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.
XVI. 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.
XVII. 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
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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.
XVIII. 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.
XIX. 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.
XX. 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.
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: By:
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Title:
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M HOLDINGS SECURITIES, INC.
Attest: By:
----------------------------- -------------------------------------
Title:
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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
