M FUND, INC.
INVESTMENT SUB-ADVISORY AGREEMENT
For The
XXXXXXX INTERNATIONAL EQUITY FUND
THIS AGREEMENT made and entered into this 30th day of June, 1998, by and
between M Financial Investment Advisers, Inc., a corporation organized and
existing under the laws of the State of Colorado (the "Adviser"), and Xxxxxxx
Investment Partners, L.P., a California limited partnership (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 into an Investment Advisory Agreement (the
"Advisory Agreement") with the Fund, pursuant to which the Adviser will act as
investment adviser to the Xxxxxxx International 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's directors, 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, on a discretionary basis
without prior consultation with the Adviser of the Fund's board of
directors, 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 in its discretion, select 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 as 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
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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 upon request 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 upon request 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 records that it maintains on
behalf of the Portfolio are records of the Fund and the Sub-Adviser
will provide access to or copies of any of such records upon the
Fund's request; provided, however, that the Sub-Adviser may retain
control 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 the Adviser upon the termination of this Agreement.
The Adviser agrees to provide access to or copies of Fund records
maintained by it (e.g., minutes of board of director meetings) to the
Sub-Adviser at the Sub-Adviser's request when Sub-Adviser has a
reasonable business need for such records.
(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
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to render investment management services to others in any manner that
it, in its sole discretion, considers appropriate, 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 financial
condition 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.
The Adviser acknowledges that the Sub-Adviser has no authority or
responsibility for management of the Fund or the Portfolio other than as
specifically identified in (a) through (g) above. In particular, the
Sub-Adviser is not responsible for the general management of the Fund, the
promotion, marketing or sale of Fund shares, the Fund's relations or
dealings with its shareholders or investors, the disclosure provided to
investors or prospective investors, the performance by the Adviser of the
Adviser's duties to the Fund, and the supervision of the activities of
other service providers to the Fund such as custodian, administrator or
other sub-advisers.
2. REPRESENTATIONS AND WARRANTS. The Adviser represents and warrants to the
Sub-Adviser that:
(a) The Adviser and the Fund prepared the Fund's registration statement,
including the Prospectus, and that the registration statement,
including the Prospectus, complies in all material respects with the
applicable laws, rules and regulations in every jurisdiction in which
such documents will be used;
(b) The Fund's registration statement, including the Prospectus, does not
contain any untrue statement of material fact or omit to state any
material fact required by applicable law to be stated therein or
necessary to be stated therein to make the statements therein not
misleading under applicable law; and
(c) The Adviser and its officers, directors, partners, employees and
agents will act in material compliance with all applicable laws, rules
and regulations related to its management of the Fund, the operations
of the Fund, the offering and distribution of the Fund's shares and
its dealings with the Sub-Adviser.
The Sub-Adviser represents and warrants to the Adviser that:
(a) The Sub-Adviser prepared all information supplied by it to the Adviser
for inclusion in the Fund's registration statement, including the
Prospectus, and such information: (i) is accurate and complete in all
material respects, (ii) does
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not contain any untrue statement of material fact or omit to state any
material fact required by applicable law to be stated therein or
necessary to be stated therein to make the statements therein not
misleading under applicable law, and (iii) complies in all material
respects with the applicable laws, rules and regulations in every
jurisdiction in which the Sub-Adviser anticipates that the
registration statement, including the Prospectus, will be used; and
(b) The Sub-Adviser and its officers, directors, partners, employees and
agents will act in material compliance with all applicable laws, rules
and regulations in managing the assets of the Portfolio and otherwise
carrying out its obligations 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.
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
therefore, 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 AND INDEMNIFICATION.
(a) The Sub-Adviser shall not be liable for any error of judgement or for
any loss suffered by the Fund, 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, 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.
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The Sub-Adviser shall indemnify and hold harmless the Adviser, and any
person or entity that controls the Adviser, from and against any and
all claims, losses, liabilities or damages (including attorney's fees
and related expenses) incurred by the Adviser or the Fund, and amounts
paid in satisfaction of judgments or in a compromise or settlement,
arising from or in connection with the performance or non-performance
by the Sub-Adviser of its duties under this Agreement which gives rise
to liability as provided in the preceding sentence. Notwithstanding
the foregoing, the Sub-Adviser shall indemnify and hold harmless the
Adviser, and any person or entity that controls the Adviser, from and
against any and all claims, losses, liabilities or damages (including
attorney's fees and related expenses) incurred by the Adviser or the
Fund, and amounts paid in satisfaction of judgments or in a compromise
or settlement, arising from or in connection with the Sub-Adviser's
breach of its warranties in section 2 of this Agreement. The Adviser
shall be entitled to advances from the Sub-Adviser for payment for the
reasonable expenses incurred by it in connection with investigating
and defending any matter as to which it seeks indemnification. This
provision shall survive the termination of the Agreement.
(b) The Adviser shall indemnify and hold harmless the Sub-Adviser, and any
person or entity that controls the Sub-Adviser, from and against any
and all claims, losses, liabilities or damages (including attorney's
fees and related expenses) incurred by the Sub-Adviser, and amounts
paid in satisfaction of judgments or in a compromise or settlement,
arising from or in connection with the (i) the Adviser's breach, or
alleged breach, of its warranties in section 2 of this Agreement, (ii)
the issue, sale or distribution of the Fund's shares, (iii) any action
taken or omitted to be taken by the Sub-Adviser with the consent of,
pursuant to the instructions given by, or in reliance on information
provided by the Adviser, (iv) any action taken or omitted to be taken
by the Adviser or the Fund or any other service provider to the Fund
or Portfolio, (v) any action taken or omitted to be taken by the
Fund's custodian or administration (A) without or contrary to
instructions given by the Sub-Adviser, (B) with the consent of or
pursuant to instructions given by the Adviser or the Fund, or (C)
pursuant to instructions given by the Sub-Adviser that would not give
rise to liability for the Sub-Adviser under paragraph (a) of this
section 5. The Sub-Adviser shall be entitled to advances from the
Adviser for payment of the reasonable expenses incurred by it in
connection with investigating and defending any matter as to which it
seeks indemnification. This provision shall survive the termination
of this Agreement.
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 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
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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 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.
The Sub-Adviser agrees not to publish or otherwise distribute written
information, sales literature or other documents describing or discussing
the Adviser or the Fund without the Adviser's prior written approval.
7. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Fund's Board of Directors and its execution by the Adviser
and the Sub-Adviser. The Adviser represents and warrants that it and the
Fund have obtained exemptive relief from the SEC permitting them 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 continue in effect for a period of more than two years
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 60 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 7, 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.
8. 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.
9. 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.
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10. 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
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: XXXXXXX INVESTMENT PARTNERS, L.P.
00000 Xxxx Xxxxx Xx.
Xxx Xxxxx, XX 00000
Attn: General Counsel
Facsimile: (000) 000-0000
Each such notice, advice or report shall be effective upon receipt or three
days after mailing.
11. 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.
12. 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.
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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 XXXXXXX INVESTMENT
ADVISERS, INC. PARTNERS, L.P.
By: /s/ illegible By: /s/ illegible
--------------- --------------------------
Title: President Title: Managing Partner
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SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
M FINANCIAL INVESTMENT ADVISERS, INC.
AND
XXXXXXX INVESTMENT PARTNERS, L.P.
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
----------------- ---------------------------
Xxxxxxx International Equity Fund 0.90% on first $10 million
0.75% on next $15 million
0.60% on next $75 million
0.45% on amounts over $100 million
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