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M FUND, INC.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of January, 1998, by
and between M Fund, Inc., a corporation organized and existing under the laws of
the State of Maryland (the "Fund"), and M Financial Investment Advisers, Inc., a
corporation organized and existing under the laws of the State of Colorado (the
"Adviser").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several portfolios of shares, each having its own
investment policies; and
WHEREAS, the Adviser is duly registered as an investment adviser
pursuant to the Investment Adviser Act of 1940; and
WHEREAS, the Fund desires to retain the Adviser to render investment
management services with respect to its Edinburgh Overseas Equity Fund, Xxxxxx
Core Growth Fund, Frontier Capital Appreciation Fund, and Enhanced U.S. Equity
Fund, and such other portfolios as the Fund and the Adviser may agree upon (the
"Portfolios"), and the Adviser is willing to render such services.
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. DUTIES OF THE ADVISER. The Fund employs the Adviser:
(a) to manage the investment and reinvestment of the assets;
(b) to hire, and thereafter supervise the investment activities
of, one or more sub-advisers deemed necessary to carry out the
investment program of any Portfolios of the Fund, pursuant to
a written sub-advisory agreement and subject to approval by:
(i) the Fund's Board of Directors;
(ii) the vote of a majority of Directors, who are not
parties to such sub-advisory agreement or
interested persons of any such party, cast in
person at a meeting called for the purpose of
voting on such approval; and
(iii) except as otherwise permitted under the terms of
any exemptive relief obtained from the Securities
and Exchange Commission (the "SEC"), or by rule or
regulation, a majority of the outstanding voting
securities of any affected Portfolio(s);
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(c) to continuously review, supervise and (except where delegated
to a sub-adviser) administer the investment program of the
Portfolios;
(d) to determine in its discretion (except where delegated to a
sub-adviser) the securities to be purchased or sold;
(e) to provide the administrator of the Fund (the "Administrator")
and the Fund with records concerning the Adviser's activities
which the Fund is required to maintain; and
(f) to render regular reports to the Administrator and to the
Fund's officers and Directors concerning the Adviser's
discharge of the foregoing responsibilities. The retention of
a sub-adviser by the Adviser shall not relieve the Adviser of
its responsibilities under this Agreement.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the Board of Directors of the Fund and in compliance
with such policies as the Directors may from time to time establish,
and in compliance with the objectives, policies, and restrictions for
each such Portfolio set forth in the Fund's prospectus and statement of
additional information, as amended from time to time (referred to
collectively as the "Prospectus"), and applicable laws and regulations.
The Fund will furnish the Adviser from time to time with copies of all
amendments or supplements to the Prospectus, if any.
The Adviser accepts such employment and agrees, at its own expense, to
render the investment advisory services and to furnish, for the use of
the Fund, office space and all necessary office facilities, equipment
and personnel (including any sub-advisers) for servicing the
investments of the Fund, maintaining its organization and assisting in
providing shareholder communications and information services and to
permit any of its officers and employees to serve, without
compensation, as Directors or officers of the Fund if elected to such
positions.
2. FEES AND EXPENSES.
(a) PAYABLE BY THE FUND. The Fund shall pay all of its expenses
other than those expressly stated to be payable by the
Adviser. The expenses payable by the Fund shall include,
without limitation:
(i) interest and taxes;
(ii) brokerage commissions and other costs in connection
with the purchase or sale of securities, commodities,
and other investments for the Fund;
(iii) fees and expenses of its Directors (other than those
who are "interested persons" of the Fund or the
Adviser);
(iv) legal and audit expenses;
(v) transfer agent expenses and expenses for servicing
shareholder accounts;
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(vi) expenses of computing the net asset value of the
shares of the Fund and the amount of its dividends;
(vii) custodian fees and expenses;
(viii) fees and expenses related to the registration and
qualification of the Fund and its shares for
distribution under state and federal securities laws;
(ix) expenses of printing and mailing reports, notices and
proxy materials to shareholders of the Fund;
(x) the cost of share certificates, if any;
(xi) reports, membership and dues in the Investment
Company Institute or any similar organization;
(xii) expenses of preparing and typesetting prospectuses;
(xiii) expenses of printing and mailing prospectuses sent to
existing shareholders;
(xiv) such nonrecurring expenses as may arise, including
expenses incurred in actions, suits or proceedings to
which the Fund is a party and the legal obligation
which the Fund may have to indemnify its officers and
Directors in respect thereto; and
(xv) such other expenses as the Directors may, from time
to time, determine to be properly payable by the
Fund.
(b) PAYABLE BY THE ADVISER. The Adviser shall pay the following:
(i) salaries and fees, if any, of all officers of the
Fund and of all Directors of the Fund who are
"interested persons" (as defined in the 0000 Xxx) of
the Fund or of the Adviser and of all personnel of
the Fund or Adviser performing services relating to
research, statistical and investment activities;
(ii) expenses of printing and distributing any
prospectuses or reports prepared for its use or the
use of the Fund in connection with the offering of
the shares of the Fund's common stock for sale to the
public;
(iii) expenses of preparing and typesetting any other
literature used by the Adviser in connection with
such offering;
(iv) the cost of any advertising employed in such
offering; and
(v) fees of any sub-adviser.
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3. DELIVERY OF DOCUMENTS. The Fund has furnished Adviser with copies
properly certified or authenticated of each of the following:
(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");
(c) Current Prospectus(es) of the Portfolios.
4. OTHER COVENANTS. The Adviser agrees that it will:
(a) comply with all applicable rules and regulations of the SEC
and will in addition conduct its activities under this
Agreement in accordance with other applicable law; and
(b) (directly or indirectly through one or more sub-advisers)
place orders pursuant to its investment determinations for the
Portfolios either directly with the issuer of the security or
with any broker or dealer. In executing Portfolio transactions
and selecting brokers or dealers, the Adviser (directly or
indirectly through one or more sub-advisers) 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 Adviser, and any sub-advisers, 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 Adviser and any 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 Adviser or sub-adviser or their affiliates may
exercise investment discretion. The Adviser is authorized (and
may authorize a sub-adviser), subject to the prior approval of
the Fund's Board of Directors, to pay to a broker or dealer
who provides such brokerage and research services a commission
for executing a portfolio transaction for any of the
Portfolios 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 Adviser or 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 Adviser or sub-adviser to the
Portfolio. In addition, the Adviser is authorized (and may so
authorize any sub-adviser) to allocate purchase and sale
orders for Portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the
Adviser or sub-adviser) to take into account the sale of
variable contracts investing through separate accounts in the
Fund if the Adviser or sub-adviser believes that the quality
of the transaction 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
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to the Adviser, any sub-adviser engaged with respect to that
Portfolio, or any affiliated person of the Fund, the Adviser,
or that Portfolio's sub-adviser, acting as principal in the
transaction, except to the extent permitted by the SEC and the
1940 Act.
5. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser pursuant to this Agreement, the Fund shall pay to the Adviser,
and the Adviser agrees to accept as full compensation therefor, an
advisory fee for each Portfolio at the rates specified in Schedule A,
which is attached hereto and made a 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 each Portfolio and shall be paid to the Adviser monthly. The
Adviser may, in its discretion and from time to time, waive all or a
portion of its fee.
No Portfolio of the Fund shall be liable for the obligations of any
other Portfolio of the Fund. Without limiting the generality of the
foregoing, the Adviser shall look only to the assets of a particular
Portfolio for payment of fees for services rendered to that Portfolio.
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this
Agreement.
6. EXCESS EXPENSES. If the expenses for any Portfolio for any fiscal year
(including fees and other amounts payable to the Adviser, but excluding
interest, taxes, brokerage costs, litigation, and other extraordinary
costs) as calculated every business day would exceed the expense
limitations imposed on investment companies by an applicable statute or
regulatory authority of any jurisdiction in which Shares are qualified
for offer and sale, the Adviser shall bear such excess cost.
However, the Adviser will not bear expenses of the Fund or any
Portfolio which would result in the Fund's inability to qualify as a
regulated investment company under provisions of the Internal Revenue
Code. Payment of expenses by the Adviser pursuant to this Section 6
shall be settled on a monthly basis (subject to fiscal year-end
reconciliation, resulting perhaps in the Adviser's recovery of some
fees waived earlier in the fiscal year) by a waiver of the Adviser's
fees provided for hereunder, and such waiver shall be treated as a
reduction in the purchase price of the Adviser's services.
7. REPORTS. The Fund and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request. The Adviser further agrees to furnish to the Fund, if
applicable, the same such documents and information pertaining to any
sub-adviser as the Fund may reasonably request.
8. STATUS OF THE ADVISER. The services of the Adviser to the Fund are not
to be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Fund are not impaired
thereby. The Adviser shall be deemed to be an independent contractor
and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way or otherwise be
deemed an agent of the Fund. To the extent that the purchase or sale of
securities or other investments of any issuer may be deemed by the
Adviser to be suitable for two or more accounts managed by the Adviser,
the available securities or investments may be allocated in a manner
believed by the Adviser to be equitable to each account. It is
recognized that in
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some cases this may adversely affect the price paid or received by the
Fund or the size or position obtainable for or disposed of by the Fund
or any Portfolio.
9. CERTAIN RECORDS. The Adviser shall keep and maintain, or shall arrange
for the sub-adviser of a Portfolio to keep and maintain, all books and
records with respect to each Portfolio's portfolio transactions
required by Rule 31a-1 under the 1940 Act and shall render to the Board
of Directors of the Fund such periodic and special reports as the Board
of Directors may reasonably request. The Adviser shall also furnish to
the Fund any other information that is required to be filed by 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 Adviser agrees that all
records that it (or any sub-adviser) maintains on behalf of the Fund
are the property of the Fund and the Adviser will surrender promptly to
the Fund any of such records upon the Fund's request; provided,
however, that the Adviser may retain a copy of such records. In
addition, for the duration of this Agreement, the 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
Adviser upon the termination of this Agreement (or, if there is no
successor Adviser, to the Fund).
10. LIMITATION OF LIABILITY OF THE ADVISER. The duties of the Adviser shall
be confined to those expressly set forth herein, and no implied duties
are assumed by or may be asserted against the Adviser hereunder. The
Adviser shall not be liable for any error of judgment or mistake of law
or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be provided
under provisions of applicable state law which cannot be waived or
modified hereby. (As used in this Section 10, the term "Adviser" shall
include not only the Adviser itself but also shareholders, directors,
officers, employees and other corporate agents of the Adviser).
11. PERMISSIBLE INTERESTS. Directors, agents, and shareholders of the Fund
are or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise;
directors, partners, officers, agents, and shareholders of the Adviser
are or may be interested in the Fund as Directors, officers,
shareholders or otherwise; and the Adviser (or any successor) is or may
be interested in the Fund as a shareholder or otherwise subject to the
provisions of applicable law. All such interests shall be fully
disclosed between the parties on an ongoing basis and in the Fund's
Prospectus as required by law. In addition, brokerage transactions for
the Fund may be effected through affiliates of the Adviser or any
sub-adviser if approved by the Board of Directors, subject to the rules
and regulations of the SEC.
12. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until one year from the date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a)
by the vote of a majority of those Directors of the Fund who are not
parties to this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Directors of the Fund or by vote of a
majority of the outstanding voting securities of each Portfolio;
provided, however, that if the shareholders of any Portfolio fail to
approve the Agreement
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as provided herein, the Adviser may continue to serve hereunder in the
manner and to the extent permitted by the 1940 Act and rules and
regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Directors of the Fund or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days' nor more
than 60 days' written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days' written notice to
the Fund. This Agreement will automatically and immediately terminate
in the event of its assignment.
As used in this Section 12, the terms "assignment," "interested
persons," and a "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
exemptions as may be granted by the SEC.
13. 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.
14. 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
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 Adviser at: M Financial Investment Advisers, Inc.
River Park Center
000 X.X. Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: President
To the Fund at: M Fund, Inc.
River Park Center
000 X.X. Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: President
Each such notice, advice or report shall be effective upon receipt or
three days after mailing.
15. 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.
16. 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.
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17. 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
M FUND, INC. ADVISERS, INC.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
--------------------------------- -------------------------------------
Title: President Title: President
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Attest: /s/ Xxxx Xxx Attest: /s/ Xxxx Xxx
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Title: Administrator Title: Administrator
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SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
M FUND, INC.
AND
M FINANCIAL INVESTMENT ADVISERS, INC.
Pursuant to Section 5, the Fund shall pay the Adviser compensation at an
effective annual rate as follows:
Name of Portfolio Annual Rate of Compensation
Edinburgh Overseas Equity Fund 1.05% of first $ 10 million
0.90% of next $ 15 million
0.75% of next $ 75 million
0.60% on amounts above
$100 million
Xxxxxx Core Growth Fund 0.45%
Frontier Capital Appreciation Fund 0.90%
Enhanced U.S. Equity Fund 0.55% of first $ 25 million
0.45% of next $ 75 million
0.30% on amounts above
$100 million
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