Contract
Exhibit
(d)(5)
M FUND,
INC.
For
The
BUSINESS
OPPORTUNITY VALUE FUND
THIS
AGREEMENT made and entered into this 1st day
of July 2009, by and between M Financial Investment Advisers, Inc., a
corporation organized and existing under the laws of the State of Colorado (the
“Adviser”), and Iridian Asset Management LLC, a limited liability company
organized and existing under the laws of the State of Connecticut (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 is registered as an investment adviser pursuant to the Investment
Advisers Act of 1940.
WHEREAS,
the Sub-Adviser is registered as an investment adviser pursuant to the
Investment Advisers Act of 1940.
WHEREAS,
the Adviser entered into an Investment Agreement (the “Advisory Agreement”) with
the Fund, pursuant to which the Adviser will act as investment adviser to the
Business Opportunity Value Fund portfolio of the Fund (the “Portfolio”), which
is a series of the Fund.
WHEREAS,
the Adviser, with the approval of the Fund, has retained the Sub-Adviser to
provide investment advisory services to the Adviser in connection with the
management of the Portfolio, and the Sub-Adviser is currently rendering such
investment advisory services pursuant to an interim Investment Sub-Advisory
Agreement dated March 27, 2009 (the “Interim Agreement”).
WHEREAS, the Interim Agreement must be
approved by a majority of the Directors who are not “interested persons”
(“Independent Directors”) within the meaning of the 1940 Act, of the Fund
at an-person Board Meeting on or before August 24, 2009.
NOW,
THEREFORE, in consideration of mutual covenants herein contained, the parties
hereto agree as follows:
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1.
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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:
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(a)
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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.
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(b)
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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.
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(c)
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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 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.
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(d)
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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.
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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 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).
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(e)
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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.
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(f)
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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.
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(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. The Sub-Adviser shall not be under any
obligation to purchase or sell for the Portfolio any security that the
Sub-Adviser, its officers or employees may purchase or sell for its or their own
accounts. The Sub-Adviser, its officers and employees may have an
interest in an issuer or security whose purchase or sale is recommended or which
is purchased, sold or otherwise traded for the Portfolio, provided, however,
that such ownership, purchases and sales shall be in compliance with the
Sub-Adviser’s Code of Ethics, and, provided further, that such ownership,
purchases and sales shall be consistent with the Sub-Adviser’s fiduciary duties
to the Portfolio.
The
Sub-Adviser certifies that it has adopted a written code of ethics (a “Code”)
that complies with Rule 17j-1 of the Investment Company Act of 1940, as amended,
and that it has instituted procedures reasonably designed to prevent its Access
Persons from violating the Sub-Adviser’s Code, and will provide evidence of the
Sub-Adviser’s adoption of such Code. Within a reasonable period
following the end of each calendar quarter during which this Agreement remains
in effect, the Sub-Adviser shall certify to the Adviser that the Sub-Adviser has
complied with Rule 17j-1 and that no violations of the Sub-Adviser’s Code
occurred (or, if such violations did occur, appropriate action was
taken). The Sub-Adviser shall furnish the Adviser with a written
report, no less frequently than annually, that complies with Rule 17j-1 with
respect to such reports regarding issues, material violations and any related
sanctions in connection with the administration of the Code. Upon
written request of the Adviser, the Sub-Adviser shall permit the Adviser to
examine the reports required to be made to the Sub-Adviser under Rule
17j-1(d)(1) and other records evidencing enforcement of the Code.”
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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.
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2.
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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.
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3.
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Delivery of
Documents. The Adviser has furnished the Sub-Adviser
with copies properly certified or authenticated of each of the following
documents:
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(a)
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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”);
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(b)
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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
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(c)
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Current
Prospectus of the Portfolio.
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(d)
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The
Statement of Additional Information shall be provided to the Sub-Adviser
by the Adviser.
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(e)
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Part
II of the Adviser’s SEC Form ADV (as currently on file with the Securities
and Exchange Commission).
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4.
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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 quarterly in
arrears. The Sub-Adviser may, in its discretion and from time
to time, waive all or a portion of its
fee.
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5.
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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.
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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. This provision shall survive termination of
this Agreement.
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6.
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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.
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During
the term of this Agreement, the Sub-Adviser agrees to obtain written
approval from the Adviser prior to the use of any 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.
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7.
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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.
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8.
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Duration and
Termination. This Agreement shall become effective upon
its execution after 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.
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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 Advisory Agreement. As used in this Section
10, 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.
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9.
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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.
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10.
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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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11.
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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:
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To
the Adviser at:
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M
Financial Investment Advisers, Inc.
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0000
XX Xxxxx Xxxxxx, Xxxxx 000
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Xxxxxxxx,
XX 00000
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Attn:
President
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To
the Sub-Adviser at:
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Iridian
Asset Management LLC
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000
Xxxx Xxxx Xxxx
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Xxxxxxxx,
XX 00000
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Attn:
Xxxxx X. Xxxxx, Executive Vice
President
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Each
such notice, advice or report shall be effective upon receipt or three
days after mailing.
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12.
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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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13.
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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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14.
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ADV. Adviser, itself and
on behalf of the Fund, acknowledges receipt of and the opportunity to read
Part II of Sub-Adviser’s SEC Form ADV (as currently on file with the
Securities and Exchange Commission) as required by Rule 204-3 promulgated
under the Advisers Act.
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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.
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M
FINANCIAL INVESTMENT
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IRIDIAN
ASSET MANAGEMENT LLC
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ADVISERS,
INC.
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By:
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/s/
Xxxxxx Xxxxx
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By:
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/s/
Xxxx Xxxxxxx
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Title:
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President
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Title:
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General
Counsel
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Attest:
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/s/
Xxxxx Xxxx
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Attest:
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/s/
Xxxxx X. Xxxxx
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Title:
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Fund
Administrator
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Title:
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Co-Chief
Executive Officer
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Schedule
A
to
the
between
M
Financial Investment Advisers, Inc.
and
Iridian
Asset Management LLC
Pursuant
to Section 4, the Adviser shall pay the Sub-Adviser compensation at an effective
annual rate as follows:
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Name of
Portfolio
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Annual Rate of
Compensation
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Business
Opportunity Value
Fund
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Annual Advisory
Fee:
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0.50%
x first $50,000,000
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0.45%
x next $50,000,000
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0.40%
x next $100,000,000
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0.35%
x
balance
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