M FUND, INC.
INVESTMENT SUB-ADVISORY AGREEMENT
FOR THE
XXXXXXX ENHANCED U.S. EQUITY FUND
THIS AGREEMENT made and entered into this 1st day of May, 2000, by and
between M Financial Investment Advisers, Inc., a corporation organized and
existing under the laws of the State of Colorado (the "Adviser"), and The
Xxxxxxx Group, a corporation organized and existing under the laws of the
Commonwealth of Minnesota (the "Sub-Adviser").
WHEREAS, M Fund, Inc., a Maryland corporation (the "Fund"), is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and is a series fund with a
number of portfolios; and
WHEREAS, the Adviser has entered or will enter into an Investment
Advisory Agreement (the "Advisory Agreement") with the Fund, pursuant to which
the Adviser will act as investment adviser to the Xxxxxxx Enhanced U.S. Equity
Fund portfolio of the Fund (the "Portfolio"), which is a series of the Fund; and
WHEREAS, the Adviser, with the approval of the Fund, desires to retain
the Sub-Adviser to provide investment advisory services to the Adviser in
connection with the management of the Portfolio, and the Sub-Adviser is willing
to render such investment advisory services.
WHEREAS, the Sub-Adviser is registered as an investment adviser
pursuant to the Investment Adviser Act of 1940.
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and
the Fund's Board of Directors, the Sub-Adviser shall manage the
investment operations of the Portfolio and the composition of the
Portfolio, including the purchase, retention and disposition of
securities and other assets, in accordance with the Portfolio's
investment objectives, policies and restrictions as stated in the
Portfolio's prospectus and statement of additional information, as
currently in effect and as amended or supplemented from time to time
(referred to collectively as the "Prospectus"), and subject to the
following:
(a) The Sub-Adviser shall provide supervision of the Portfolio's
investments and determine from time to time what investments
and securities will be purchased, retained or sold by the
Portfolio, and what portion of the assets will be invested or
held uninvested in cash.
(b) In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the
Fund's Articles of Incorporation and Bylaws (as such terms are
defined herein) and the Prospectus and with the instructions
and directions of the Adviser and of the Board of Directors of
the Fund and will conform to and comply with the requirements
of the 1940 Act, the Internal Revenue Code of 1986, and all
other applicable federal and state laws and regulations, as
each is amended from time to time.
(c) The Sub-Adviser shall determine the securities to be purchased
or sold by the Portfolio and will place orders with or through
such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's Registration
Statement (as defined herein) and Prospectus or as the Board
of Directors or the Adviser may direct from time to time, in
conformity with federal securities laws. In executing
Portfolio transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on behalf of the
Portfolio the best overall terms available. In assessing the
best overall terms available for any transaction, the
Sub-Adviser shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price
of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of
the commission, if any, both for the specific transaction and
on a continuing basis. In evaluating the best overall terms
available, and in selecting the broker-dealer to execute a
particular transaction, the Sub-Adviser may also consider the
brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided
to the Portfolio and/or other accounts over which the
Sub-Adviser or an affiliate of the Sub-Adviser may exercise
investment discretion. The Sub-Adviser is authorized, subject
to compliance with said Section 28(e), to pay to a broker or
dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the
Portfolio which is in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction if, but only if, the Sub-Adviser determines in
good faith that such commission was reasonable in relation to
the value of the brokerage and research services provided by
such broker or dealer -- viewed in terms of that particular
transaction or in terms of the overall responsibilities of the
Sub-Adviser to the Portfolio. In addition, the Sub-Adviser is
authorized to allocate purchase and sale orders for the
Portfolio's portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the
Sub-Adviser) to take into account the sale of variable
contracts investing through separate accounts in the Fund if
the Sub-Adviser believes that the quality of the transactions
and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will any
Portfolio's securities be purchased from or sold to the
Sub-Adviser, the Adviser, or any affiliated person of either
the Fund, the Sub-Adviser or the Adviser, acting as principal
in the transaction, except to the extent permitted by the
Securities and Exchange Commission ("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with
respect to the Portfolio's portfolio transactions required by
subparagraphs (b)(5), (6), (7), (9), (10) and (11) and
paragraph (f) of Rule 31a-1 under the 1940 Act and shall
render to the Adviser or Board of Directors of the Fund such
periodic and special reports as the Adviser or Board of
Directors may reasonably request.
The Sub-Adviser shall keep the Portfolio's books and records
required to be maintained by the Sub-Adviser under this
Agreement and shall timely furnish to the Adviser all
information relating to the Sub-Adviser's services under this
Agreement needed by the Adviser to keep the other books and
records of the Portfolio required by Rule 31a-1 under the 1940
Act. The Sub-Adviser shall also furnish to the Adviser any
other information that is required to be filed by the Adviser
or the Fund with the SEC or sent to shareholders under the
1940 Act (including the rules adopted thereunder) or any
exemptive or other relief that the Adviser or the Fund obtains
from the SEC. The Sub-Adviser agrees that all
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records that it maintains on behalf of the Portfolio are the
property of the Portfolio and the Sub-Adviser will surrender
promptly to the Portfolio any of such records upon the
Portfolio's request; provided, however, that the Sub-Adviser
may retain a copy of such records. In addition, for the
duration of this Agreement, the Sub-Adviser shall preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act any
such records as are required to be maintained by it pursuant
to this Agreement, and shall transfer said records to any
successor Sub-Adviser upon the termination of this Agreement
(or, if there is no successor Sub-Adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on
each business day with information relating to all
transactions concerning the Portfolio's assets and shall
provide the Adviser with such information upon request of the
Adviser.
(f) The Sub-Adviser shall cooperate with the Adviser, its
representatives, and any third party retained thereby upon the
Adviser's exercise of its right, granted hereby, to compel an
audit of the Portfolio's financial records, examine records of
the Portfolio's portfolio transactions, and/or make a copy of
such records.
(g) The investment management services provided by the Sub-Adviser
under this Agreement are not to be deemed exclusive and the
Sub-Adviser shall be free to render similar services to
others, as long as such services do not impair the services
rendered to the Adviser or the Fund.
(h) The Sub-Adviser shall promptly notify the Adviser of any
material financial condition affecting the Sub-Adviser that is
likely to impair the Sub-Adviser's ability to fulfill its
commitments under this Agreement.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners,
officers or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have
responsibility for all services to be provided to the Portfolio
pursuant to the Advisory Agreement and shall oversee and review the
Sub-Adviser's performance of its duties under this Agreement.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Fund's Articles of Incorporation, as filed with the
Secretary of State of the State of Maryland (such Articles of
Incorporation, as in effect on the date of this Agreement and
as amended from time to time, are herein called the "Articles
of Incorporation");
(b) Bylaws of the Fund (such Bylaws, as in effect on the date of
this Agreement and as amended from time to time, are herein
called the "Bylaws"); and
(c) Current Prospectus of the Portfolio.
(d) The Statement of Additional Information shall be provided to
FPA by the Adviser
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4. COMPENSATION OF THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser shall pay to the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rates specified in Schedule A,
which is attached hereto and made part of this Agreement. The fee shall
be calculated by applying a daily rate, based on the annual percentage
rates as specified in Schedule A, to the average daily net assets of
the Portfolio and shall be paid to the Sub-Adviser monthly. The
Sub-Adviser may, in its discretion and from time to time, waive all or
a portion of its fee.
5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not
be liable for any error of judgment or for any loss suffered by the
Portfolio or the Adviser in connection with performance of the
Sub-Adviser's obligations under this Agreement, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages shall be
limited to the period and the amount set forth in Section 36(b)(3) of
the 1940 Act), or a loss resulting from willful misfeasance, bad faith
or gross negligence on the Sub-Adviser's part in the performance of its
duties or from reckless disregard of its obligations and duties under
this Agreement, except as may otherwise be provided under provisions of
applicable state law which cannot be waived or modified hereby. This
provision shall survive termination of this Agreement.
Adviser shall reimburse, indemnify, and hold harmless Sub-Adviser,
individually and as sub-adviser, of and from any and all expenses,
losses, damages, liabilities, demands, charges, and claims of any kind
or nature (including attorneys' fees) whatsoever, arising from the
operations and management of the Portfolio except where such expense,
loss, damage, liability, demand, charge, or claim is the result of an
occurrence described in the foregoing paragraph for which the
Sub-Adviser is determined to be liable.
6. REPORTS. During the term of this Agreement, the Adviser agrees to
furnish the Sub-Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature or other
materials prepared for distribution to shareholders of the Portfolio,
the Fund or the public that refer to the Sub-Adviser or its clients in
any way prior to the use thereof and not to use such material if the
Sub-Adviser reasonably objects to the use thereof in a writing received
by the Adviser within five business days (or such other period as may
be mutually agreed) after the Sub-Adviser's receipt thereof. The
Sub-Adviser's right to object to such materials is limited to the
portions of such materials that expressly relate to the Sub-Adviser,
its services and its clients. The Adviser agrees to use its reasonable
best efforts to ensure that materials prepared by its employees or
agents or its affiliates that refer to the Sub-Adviser or its clients
in any way are consistent with those materials previously approved by
the Sub-Adviser as referenced in the first sentence of this paragraph.
Sales literature may be furnished to the Sub-Adviser by first class or
overnight mail, facsimile transmission equipment or hand delivery.
During the term of this Agreement, the Sub-Adviser agrees to furnish
the Adviser at its principal office all sales literature or other
materials prepared for distribution to shareholders of the Portfolio,
the Fund or the public that refer to the Adviser, its clients or the
Fund in any way prior to the use thereof and not to use such material
if the Adviser reasonably objects to the use thereof in a writing
received by the Sub-Adviser within five business days (or such other
period as may be mutually agreed) after the Adviser's receipt thereof.
The Adviser's right to object to such materials is limited to the
portions of such
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materials that expressly relate to the Adviser, its clients or the
Fund. The Sub-Adviser agrees to use its reasonable best efforts to
ensure that materials prepared by its employees or agents or its
affiliates that refer to the Adviser or its clients in any way are
consistent with those materials previously approved by the Adviser as
referenced in the first sentence of this paragraph. Sales literature
may be furnished to the Adviser by first class or overnight mail,
facsimile transmission equipment or hand delivery.
7. INDEMNIFICATION. Subject to the provisions of Section 5 hereof, the
Sub-Adviser shall indemnify and hold harmless the Adviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorney's fees and other related expenses) arising from or
in connection with the performance by the Sub-Adviser of its duties
under this Agreement. This provision shall survive termination of this
Agreement.
8. DURATION AND TERMINATION. This Agreement shall become effective upon
its approval by the Fund's Board of Directors and by the vote of a
majority of the outstanding voting securities of the Portfolio;
provided, however, that at any time the Adviser shall have obtained
exemptive relief from the SEC permitting it to engage a sub-adviser
without first obtaining approval of the Agreement from a majority of
the outstanding voting securities of the portfolio(s) involved, this
Agreement shall become effective upon its approval by the Fund's Board
of Directors. Any sub-adviser so selected and approved shall be without
the protection accorded by shareholder approval of an investment
adviser's receipt of compensation under Section 36(b) of the 1940 Act,
until such shareholder approval is obtained.
This Agreement shall continue in effect for a period of one year from
the date hereof only so long as continuance is specifically approved at
least annually in conformance with the 1940 Act; provided, however,
that this Agreement may be terminated (a) by the Portfolio at any time,
without the payment of any penalty, by the vote of a majority of
Directors of the Fund or by the vote of a majority of the outstanding
voting securities of the Portfolio, (b) by the Adviser at any time,
without the payment of any penalty, on not more than 60 days' nor less
than 30 days' written notice to the other party, or (c) the Sub-Adviser
at any time, without the payment of any penalty, on 90 days' written
notice to the other party. This Agreement shall terminate automatically
and immediately in the event of its assignment, or in the event of a
termination of the Adviser's agreement with the Fund. As used in this
Section 8, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set
forth in the 1940 Act and the rules and regulations thereunder, subject
to such exceptions as may be granted by the SEC under the 1940 Act.
9. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the State of Maryland, without regard to conflicts of law principles;
provided, however, that nothing herein shall be construed as being
inconsistent with the 1940 Act.
10. SEVERABILITY. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their permitted successors.
11. NOTICE. Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered by hand, transmitted
by electronic facsimile, or mailed by registered, certified or
overnight United States mail, postage prepaid, or sent by overnight
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delivery with a nationally recognized courier, addressed by the party
giving notice to the other party at the last address furnished by the
other party:
To the Adviser at: M FINANCIAL INVESTMENT ADVISERS, INC.
River Park Center
000 X.X. Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: President
To the Sub-Adviser at: THE XXXXXXX GROUP
000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Each such notice, advice or report shall be effective upon receipt or
three days after mailing.
12. 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.
13. 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 SEC, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule,
regulation or order.
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 FINANCIAL INVESTMENT THE XXXXXXX GROUP
ADVISERS, INC.
By:______________________________ By: ____________________________________
Title: President Title:__________________________________
Attest:___________________________ Attest: ________________________________
Title: Administrator, M Funds Title:__________________________________
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SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
M FINANCIAL INVESTMENT ADVISERS, INC.
AND
THE XXXXXXX GROUP
Pursuant to Section 4, the Adviser shall pay the Sub-Adviser compensation at an
effective annual rate as follows:
NAME OF PORTFOLIO ANNUAL RATE OF COMPENSATION
Clifton Enhanced U.S. 0.25% on first $ 25 million
Equity Fund 0.20% on amounts over $25 million
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