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EXHIBIT 5(j)
November 1, 1993
Xxxxxxxx Associates Capital Corp.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
(HARBOR INTERNATIONAL GROWTH FUND)
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Dear Sirs:
Harbor Capital Advisors, Inc. (the "Adviser"), a Delaware corporation, with
its principal offices at One XxxXxxx, Xxxxxx, Xxxx 00000, is the investment
adviser to Harbor Fund (the "Trust") on behalf of Harbor International Growth
Fund (the "Fund"). The Trust has been organized under the laws of Delaware to
engage in the business of an investment company. The shares of beneficial
interest of the Trust ("Shares") are divided into multiple series including the
Fund, as established pursuant to a written instrument executed by the Trustees
of the Trust. The Trust is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act"). Pursuant to authority granted the adviser by the Trust's
Trustees, the Adviser has selected you to act as a sub-investment adviser of the
Fund and to provide certain other services, as more fully set forth below. You
are willing to act as such a sub-investment adviser and to perform such services
under the terms and conditions hereinafter set forth, and you represent and
warrant that you are an investment adviser registered under the Investment
Advisers Act of 1940, as amended. Accordingly, the Adviser and the Trust on
behalf of the Fund agree with you as follows:
1. DELIVERY OF FUND DOCUMENTS. The Adviser has furnished you with copies,
properly certified or authenticated, of each of the following:
(a) Agreement and Declaration of Trust of the Trust, as amended and
restated from time to time, and the Certificate of Trust which was
filed with the Delaware Secretary of State dated June 8, 1993 (the
"Declaration of Trust").
(b) Establishment and Designation of Series of Shares of Beneficial
Interest, $.01 Par Value Per Share, establishing the Fund.
(c) By-Laws of the Trust as in effect on the date hereof (the "By-Laws").
(d) Resolutions of the Trustees selecting the Adviser as investment
adviser and you as a sub-investment adviser and approving the form of
this Agreement.
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XXXXXXXX ASSOCIATES CAPITAL CORP.
HARBOR INTERNATIONAL GROWTH FUND
NOVEMBER 1, 1993
The Adviser will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, including future resolutions of the Trustees approving the
continuance of the items listed in (d) above.
2. ADVISORY SERVICES. You will regularly provide the Fund with advice
concerning the investment management of that portion of the Fund's
portfolio which the Board of Trustees determines to allocate to you from
time to time, which advice shall be consistent with the investment
objective and policies of the Fund as set forth in the Fund's Prospectus
and Statement of Additional Information and any investment guidelines or
other instructions received in writing from the Adviser. The Board of
Trustees may, from time to time, make additions to and withdrawals from the
assets of the Fund allocated to you. You will determine what securities
shall be purchased for such portion of the Fund's assets, what securities
shall be held or sold, and what portion of such assets shall be held
uninvested, subject always to the provisions of the Trust's Declaration of
Trust and By-Laws and the Investment Company Act and to the investment
objective, policies and restrictions (including, without limitation, the
requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") for qualification as a regulated investment company)
of the Fund, as each of the same shall be from time to time in effect as
set forth in the Fund's Prospectus and Statement of Additional Information,
or any investment guidelines or other instructions received in writing from
the Adviser, and subject, further, to such policies and instructions as the
Board of Trustees may from time to time establish and deliver to you. In
accordance with paragraph 5, you or your agent shall arrange for the
placing of all orders for the purchase and sale of portfolio securities
with brokers or dealers selected by you for that portion of the Fund's
assets for which you serve as sub-investment adviser.
The Adviser shall provide you with written statements of the Declaration of
Trust; By-laws; investment objective and policies; prospectus and statement
of additional information and instructions, as in effect from time to time;
and you shall have no responsibility for actions taken in reliance on any
such documents. You will conform your conduct in accordance with and will
ensure that the portion of the portfolio of the Fund allocated to you
conforms with the Investment Company Act and all rules and regulations
thereunder, the requirements for qualification as a regulated investment
company of Subchapter M of the Code, all other applicable federal and state
laws and regulations and with the provisions of the Fund's Registration
Statement as amended or supplemented under the Securities Act of 1933, as
amended, and the Investment Company Act.
In the performance of your duties hereunder, you are and shall be an
independent contractor and unless otherwise expressly provided herein or
otherwise authorized in writing, shall have no authority to act for or
represent the Trust or the Fund in any way or otherwise be deemed to be an
agent of the Trust or the Fund or of the Adviser. You will make your
officers and employees available to meet with the Trust's officers and
Trustees at least quarterly on due notice to review the investments and
investment program of the portion of the Fund's assets allocated to you in
the light of current and prospective economic and market conditions.
Nothing in this Agreement shall limit or restrict the right of any of your
directors, officers and employees who may also be a trustee, officer or
employee of the Trust to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of
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XXXXXXXX ASSOCIATES CAPITAL CORP.
HARBOR INTERNATIONAL GROWTH FUND
NOVEMBER 1, 1993
any business, whether of a similar or a dissimilar nature, nor limit or
restrict your right to engage in any other business or to render service of
any kind to any other corporation, firm, individual or association.
3. ALLOCATION OF CHARGES AND EXPENSES. You will bear your own costs of
providing services hereunder. Other than as herein specifically indicated,
you will not be required to pay any expenses of the Fund.
4. COMPENSATION OF THE SUBADVISER. For all investment management services to
be rendered hereunder, the Adviser will pay a fee, as set forth in Schedule
A attached hereto, quarterly in April, July, October and January, based on
a percentage of the average of the actual net asset values of the Fund at
the close of the last business day of each month within the quarter.
Determination of net asset value of the Fund is computed daily by the
Fund's custodian, State Street Bank and Trust Company, and is consistent
with the provisions of Rule 22c-1 under the Investment Company Act. Your
fee will be based on the average of the net asset values of the fund,
computed in the manner specified in the Fund's Prospectus and Statement of
Additional Information for the computation of the net assets of the Fund by
State Street Bank and Trust Company, on the last business day of each month
within the quarter. If the determination of net asset value is suspended
for the last business day of the month, then for the purposes of this
paragraph 4, the value of the net assets of the Fund as last determined
shall be deemed to be the value of the net assets. If State Street Bank
and Trust Company determines the value of the net assets of the Fund's
portfolio more than once on any day, the last such determination thereof on
that day shall be deemed to be the sole determination thereof on that day
for the purposes of this paragraph 4.
You will offer to the Adviser any more favorable asset based fee agreements
that are provided to other international investment clients, except for the
international investment clients who received grandfathered fee provisions
in the transition of your international investment unit. Such offer shall
be made as soon as practicable after a more favorable asset based fee is
provided for any other international investment client. You agree not to
provide international advice, portfolio or fund management services to a
publicly offered international mutual fund (Registered Investment Company)
for a period of seven years from the date of this contract.
5. AVOIDANCE OF INCONSISTENT POSITION AND BROKERAGE. In connection with
purchases or sales of portfolio securities for the account of the portion
of the Fund allocated to you, neither you nor any of your directors,
officers or employees will act as a principal or agent or receive any
compensation in connection with the purchase or sale of investment
securities by the Fund, other than the compensation provided for in this
Agreement. You or your agent shall arrange for the placing of all orders
for the purchase and sale of portfolio securities for the portion of the
Fund's account allocated to you with brokers or dealers selected by you. In
the selection of such brokers or dealers and the placing of such orders,
you are directed at all times to seek for the Fund the most favorable
execution and net price available. It is also understood that it is
desirable for the Fund that you have access to supplemental investment and
market research and security and economic analyses provided by certain
brokers who may execute brokerage transactions at a higher cost to the Fund
than may result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and efficient execution. Therefore, you
are authorized to place orders for the purchase and sale of securities for
the Fund with such certain brokers,
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XXXXXXXX ASSOCIATES CAPITAL CORP.
HARBOR INTERNATIONAL GROWTH FUND
NOVEMBER 1, 1993
subject to review by the Board of Trustees from time to time with respect
to the extent and continuation of this practice. It is understood that the
services provided by such brokers may be useful to you in connection with
your services to other clients. If any occasion should arise in which you
give any advice to clients of yours concerning the Shares of the Fund, you
will act solely as investment counsel for such clients and not in any way
on behalf of the Fund. Your services to the Fund pursuant to this
Agreement are not to be deemed to be exclusive and it is understood that
you may render investment advice, management and other services to others.
You will advise the Trust's custodian and the Adviser on a prompt basis of
each purchase and sale of a portfolio security specifying the name of the
issuer, the description and amount or number of shares of the security
purchased, the market price, commission and gross or net price, trade date,
settlement date and identity of the effecting broker or dealer and such
other information as may be reasonably required. From time to time as the
Board of Trustees or the Adviser may reasonably request, you will furnish
to the Trust's officers and to each of its Trustees reports on portfolio
transactions and reports on issues of securities held in the portfolio, all
in such detail as the Trust or the Adviser may reasonably request.
On occasions when you deem the purchase or sale of a security to be in the
best interest of the Fund as well as other of your clients, you, to the
extent permitted by applicable laws and regulations, may, but shall be
under no obligation to, aggregate the securities to be sold or purchased in
order to obtain the most favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
shall be made by you in the manner you consider to be the most equitable
and consistent with your fiduciary obligations to the Fund and to such
other clients.
6. LIMITATION OF LIABILITY OF SUBADVISER. You will not be liable for any loss
sustained by reason of the adoption of any investment policy or the
purchase, sale or retention of any security on your recommendation, whether
or not such recommendation shall have been based upon your own
investigation and research or upon investigation and research made by any
other individual, firm or corporation, if such recommendation shall have
been made, and such other individual, firm or corporation shall have been
selected without gross negligence and in good faith; but nothing herein
contained will be construed to protect you against any liability to the
Adviser, the Trust, the Fund or its shareholders by reason of your gross
negligence or bad faith or willful misfeasance in the performance of your
duties or by reason of your reckless disregard of your obligations and
duties under this Agreement. Any person, even though also employed by you,
who may be or become an employee of and paid by the Fund shall be deemed,
when acting within the scope of his employment by the Fund, to be acting in
such employment solely for the Fund and not as your employee or agent.
The Adviser shall indemnify you for any damages and related expenses
incurred by you as a result of the performance of your duties hereunder,
unless the same shall result from behavior found by a final judicial
determination to constitute willful misfeasance, bad faith, gross
negligence or a reckless disregard of your obligations, as specified above.
You shall keep the Fund's books and records to be maintained by you and
shall timely furnish to the Adviser all information relating to your
services hereunder needed by the Adviser to keep the
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XXXXXXXX ASSOCIATES CAPITAL CORP.
HARBOR INTERNATIONAL GROWTH FUND
NOVEMBER 1, 1993
other books and records of the Fund required by Rule 31a-1 under the
Investment Company Act. You agree that all records which you maintain for
the Fund are the property of the Fund and you shall surrender promptly and
without any charge to the Fund any of such records required to be
maintained by you.
7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force until March 17, 1995 and from year to year thereafter, but only so
long as such continuance, and the continuance of the Adviser as investment
adviser of the Fund, is specifically approved at least annually by the vote
of a majority of the Trustees who are not interested persons of you or the
Adviser or the Trust, cast in person at a meeting called for the purpose of
voting on such approval and by a vote of the Board of Trustees or of a
majority of the outstanding voting securities of the Fund. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the
Investment Company Act and the rules and regulations thereunder. This
Agreement may, on 60 days' written notice, be terminated at any time
without the payment of any penalty, by the Board of Trustees, by vote of a
majority of the outstanding voting securities of the Fund, by the Adviser,
or by you. This Agreement shall automatically terminate in the event of
its assignment or the assignment of the investment advisory agreement
between the Adviser and the Trust, on behalf of the Fund. In interpreting
the provisions of this Agreement, the definitions contained in Sections
2(a) of the Investment Company Act (particularly the definitions of
"interested person", "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject,
however, to such exemptions as may be granted by the Securities and
Exchange Commission by any rule, regulations or order.
8. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against whom enforcement of the change,
waiver, discharge or termination is sought, and no material amendment of
this Agreement shall be effective until approved by vote of the holders of
a majority of the outstanding voting securities of the Fund and by the
Board of Trustees, including a majority of the Trustees who are not
interested persons of the Adviser or you or of the Trust, cast in person at
a meeting called for the purpose of voting on such approval.
It shall be your responsibility to furnish to the Board of Trustees such
information as may reasonably be necessary in order for the Trustees to
evaluate this Agreement or any proposed amendments thereto for the
purposes of casting a vote pursuant to paragraphs 7 or 8 hereof.
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
10. MISCELLANEOUS. It is understood and expressly stipulated that neither the
holders of Shares of the Trust or the Fund nor the Trustees shall be
personally liable hereunder. The name "Harbor Fund" is the designation of
the Trustees for the time being under the Declaration of Trust and all
persons dealing with the Trust or the Fund must look solely to the property
of the Trust or the Fund for the enforcement of any claims against the
Trust or the Fund as neither the Trustees, officers, agents or shareholders
assume any personal liability for obligations entered into on behalf of the
Trust or the Fund. No series of the Trust shall be liable for any claims
against any other series or assets of the Trust.
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XXXXXXXX ASSOCIATES CAPITAL CORP.
HARBOR INTERNATIONAL GROWTH FUND
NOVEMBER 1, 1993
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return one such
counterpart to the Fund and the other such counterpart to the Adviser, whereupon
this letter shall become a binding contract.
HARBOR FUND
(ON BEHALF OF HARBOR
INTERNATIONAL GROWTH FUND)
By /s/ Xxxxxx X. Xxxxxx
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Title: President
HARBOR CAPITAL ADVISORS, INC.
By /s/ Xxxxxxxxx X. Xxxxxx
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Title: Senior Vice President
XXXXXXXX ASSOCIATES CAPITAL CORP.
By /s/ Xxxx X. Xxxxx
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Title: President
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XXXXXXXX ASSOCIATES CAPITAL CORP.
HARBOR INTERNATIONAL GROWTH FUND
NOVEMBER 1, 1993
SCHEDULE A
You will receive an advisory fee equal on an annual basis to .50% of the portion
of the Fund's average actual net asset value of the Fund managed by Xxxxxxxx up
to $1.5 billion; .45% on the next $1 billion of such assets; and .40% on such
assets in excess of $2.5 billion, at the close of the last business day of each
month within the quarter. The annual advisory fee paid by the Adviser to you
shall not be less than $125,000. In the event that this Agreement terminates
during any portion of a year, the fee due to you shall be prorated based upon
the number of days the Agreement was in effect. For purposes of determining the
applicable fee rate and satisfying the minimum payment, the assets of the Fund
and the payments of the Adviser to you will be combined with the assets and
payment of the accounts of the Xxxxx-Illinois Master Retirement Trust
international account that you manage.
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