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EXIBIT 5(m)
June 1, 1996
Summit International Investments, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
(HARBOR INTERNATIONAL FUND II)
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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 Fund II (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) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Trustees selecting the Adviser as
investment adviser and you as a sub-investment adviser and approving
the form of this Agreement.
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 (c) above.
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SUMMIT INTERNATIONAL INVESTMENTS, INC.
HARBOR INTERNATIONAL FUND II
JUNE 1, 1993
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 subinvestment 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 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.
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SUMMIT INTERNATIONAL INVESTIMENTS, INC.
HARBOR INTERNATIONAL FUND II
JUNE 1, 1996
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 portion of the Fund that you managed 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 portion of the Fund that you manage,
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 investment clients. Such offer shall
be made as soon as it is practicable after a more favorable asset based fee
agreement is provided for any other investment clients.
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, 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 deemed to be exclusive
for a period of seven (7) years from the date of this contract and it is
understood that you may not render investment advice, management and other
services to any other registered investment company in the United States
provided, however, that the provisions set forth in this
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SUMMIT INTERNATIONAL INVESTMENTS, INC.
HARBOR INTERNATIONAL FUND II
JUNE 1. 1996
sentence survives termination of this agreement except in the event
this Agreement is assigned by or otherwise terminated by the Adviser or the
Trust on behalf of the Fund.
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 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.
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SUMMIT INTERNATIONAL INVESTMENTS, INC.
HARBOR INTERNATIONAL FUND II
JUNE 1, 1996
7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
remain in force until March 17, 1998 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 penalties charged to the Fund, 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 will terminate immediately upon 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.
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.
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SUMMIT INTERNATIONAL INVESTMENTS, INC.
HARBOR INTERNATIONAL FUND II
JUNE 1, 1993
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 FUND II)
By /s/ Xxxxxx X. Xxxxxx
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Title: President
HARBOR CAPITAL ADVISORS, INC.
By /s/ Xxxxxxxxx X. Xxxxxxx
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Title: Senior Vice President
SUMMIT INTERNATIONAL INVESTMENT, INC.
By /s/ Xxxxx XxXxxxx
------------------------------------
Title: President
SUMMIT INTERNATIONAL INVESTMENTS, INC.
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SUMMIT INTERNATIONAL INVESTMENTS, INC.
HARBOR INTERNATIONAL FUND II
JUNE 1, 1996
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 assets managed by Summit International
Investments, Inc., 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 $10,000. In the event that
this Agreement terminates during any portion of a year, the fee due you shall be
prorated based upon the number of days the Agreement was in effect. For the
purposes of determining the applicable fee rate and satisfying the minimum
payment, the assets of the Fund and the payments of the accounts of the Xxxxx-
Illinois Master Retirement Trust that you manage.
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