Exhibit 5(B)(iii)
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Investment Sub-Advisory Agreement
between M Financial Investment Advisers, Inc.
and Frontier Capital Management Company, Inc.
M FUND, INC.
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INVESTMENT SUB-ADVISORY AGREEMENT
For The
FRONTIER CAPITAL APPRECIATION FUND
THIS AGREEMENT made and entered into this ___ day of __________, 1995, by
and between M Financial Investment Advisers, Inc., a corporation organized and
existing under the laws of the State of Colorado (the "Adviser"), and Frontier
Capital Management Company, Inc., a corporation organized and existing under the
laws of the Commonwealth of Massachusetts (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 Frontier Capital Appreciation 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 man-agement of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
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.
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(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 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 financial
condition that is likely to impair the Sub-Adviser's ability to
fulfill its commitments under this Agreement.
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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.
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.
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.
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
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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 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. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reason-able 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 out-standing 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.
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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 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 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: Frontier Capital Management Company, Inc.
00 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: J. Xxxx Xxxxx, CFA
Each such notice, advice or report shall be effective upon receipt or three
days after mailing.
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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 FRONTIER CAPITAL
ADVISERS, INC. MANAGEMENT COMPANY
INC.
By: By:
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Title: Title:
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Attest: Attest:
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Title: Title:
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Schedule A
to the
Investment Sub-Advisory Agreement
between
M Financial Investment Advisers, Inc.
and
Frontier Capital Management Company, Inc.
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
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Frontier Capital Appreciation Fund 0.75%
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