EXHIBIT 99.d(42)
May 1, 2007
Evercore Asset Management, LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
(HARBOR SMALL TO MID CAP VALUE FUND)
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 Small to Mid Cap Value 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 (the "Investment Advisers Act"). 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 in effect on
the date hereof (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.
EVERCORE ASSET MANAGEMENT, LLC
HARBOR SMALL TO MID CAP VALUE FUND
MAY 1, 2007
2. ADVISORY SERVICES. You will regularly provide the Fund with advice
concerning the investment management of that portion of the Fund's
assets that are allocated to you, which advice shall be consistent with
the investment objectives 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 or the Adviser 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 by such portions of the Fund's assets, 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 to the investment
objectives, policies and restrictions 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; the By-Laws; the Fund's written investment
objectives and policies; the 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 to, and will ensure that your
management of the portion of the Fund's assets allocated to you
complies with, the Investment Company Act and Investment Advisers Act
and all rules and regulations thereunder, the requirements for
qualification of the Fund as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (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.
You shall maintain written compliance policies and procedures that you
reasonably believe are adequate to ensure the Fund's compliance with
the foregoing and that are reasonably designed to prevent yourself and
the Fund from violating applicable federal securities laws. You agree
to provide the Trust and the Adviser with such reports and
certifications and with such access to your officers and employees that
the Trust or Adviser may reasonably request for the purpose of
assessing the adequacy of your compliance policies and procedures. You
agree to notify the Adviser immediately upon detection of any breach of
any of the Fund's policies, guidelines or procedures and of any
violation of any applicable law or regulation, including the Investment
Company Act and Subchapter M of the Code, relating to that portion of
the Fund's assets allocated to you. You also agree to notify us
promptly upon detection of any material violations of your compliance
policies and procedures that relate to the Fund or your activities as
an investment adviser generally, such as when the violation could be
considered material to your advisory clients.
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.
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EVERCORE ASSET MANAGEMENT, LLC
HARBOR SMALL TO MID CAP VALUE FUND
MAY 1, 2007
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.
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 Trustees and the
Trust's or Adviser's officers 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 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 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, except as specifically prescribed in
Section 4.
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 to you a fee, as set
forth in Schedule A attached hereto, quarterly in arrears, based on a
percentage of the average daily net assets (as defined below) of the
portion of the Fund that you managed during the quarter. "Average daily
net assets" means the average of the values placed on the net assets of
the portion of the Fund that you managed on each day on which the net
asset value of the Fund's portfolio is determined. The net assets of
the Fund are valued in the manner specified in the Fund's Prospectus
and Statement of Additional Information by the Fund's custodian. If
determination of the value of net assets is suspended for any
particular business day, 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 the Fund's custodian 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 your other collective investment fund
clients (i.e., registered investment companies and other unregistered
pooled investment vehicles) for investment strategies substantially
similar to that utilized by the Fund, except for any such agreements in
effect as of the date of this Agreement. Notwithstanding the foregoing,
this provision shall not apply to investment fund clients which are
marketed or held out to the public as employing a multi-manager
investment approach and which in fact do employ multiple managers to
achieve their investment objectives. Such offer shall be made as soon
as practicable after a more favorable asset based fee agreement is
provided for such other advisory clients. Should more favorable asset
based fee agreements be offered to others, the Adviser will be notified
within (30) business days after such new asset based fee agreements are
established.
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EVERCORE ASSET MANAGEMENT, LLC
HARBOR SMALL TO MID CAP VALUE FUND
MAY 1, 2007
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, employees or affiliates 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, except as permitted by the Investment
Company Act and approved by the Board of Trustees. 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.
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 shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the
Fund or the Adviser in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on your part or from reckless disregard
by you of your obligations and duties under this Agreement.
7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain
in force until May 1, 2009 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 in the manner prescribed in the Investment Company Act and the
rules and regulations thereunder, subject however, to such exemptions
as may be granted by the Securities and
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EVERCORE ASSET MANAGEMENT, LLC
HARBOR SMALL TO MID CAP VALUE FUND
MAY 1, 2007
Exchange Commission by any rule, regulation or order. This Agreement
may, on 30 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 Section 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 the
Board of Trustees, including a majority of the Trustees who are not
interested persons of the Adviser or you or of the Trust.
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.
11. PROHIBITION ON CONSULTING WITH OTHER SUBADVISERS. You are not permitted
to consult with any other subadviser to Harbor Fund with respect to
transactions by the Fund in securities or other assets.
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EVERCORE ASSET MANAGEMENT, LLC
HARBOR SMALL TO MID CAP VALUE FUND
MAY 1, 2007
12. CONFIDENTIALITY. You shall maintain all non-public information
regarding the Fund's portfolio, including the list of portfolio
securities held by the Fund, which you receive or have access to in the
course of performing your duties hereunder as strictly confidential.
You shall not disclose or disseminate such non-public information to
any third party unless such disclosure is approved in writing by the
Fund or the Adviser or is otherwise required by law. You shall not use
your knowledge of non-public information regarding the Fund's portfolio
as a basis to place or recommend any securities transactions for your
own benefit to the detriment of the Fund.
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EVERCORE ASSET MANAGEMENT, LLC
HARBOR SMALL TO MID CAP VALUE FUND
MAY 1, 2007
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 SMALL TO MID CAP VALUE FUND
By:
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Xxxxx X. Xxx Xxxxxx, President
HARBOR CAPITAL ADVISORS, INC.
By:
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Xxxxx X. Xxxxxxx, Executive Vice President
The foregoing Agreement is hereby accepted as of the date thereof.
EVERCORE ASSET MANAGEMENT, LLC
By:
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Name:
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Title:
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