Exhibit d(36)
February 1, 2006
NorthPointe Capital, LLC
000 Xxxx Xxx Xxxxxx Xxxx
Xxxxx 000
Xxxx, XX 00000
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
(HARBOR SMALL COMPANY GROWTH 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 Company 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 (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.
NORTHPOINTE CAPITAL, LLC
HARBOR SMALL COMPANY GROWTH FUND
FEBRUARY 1, 2006
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.
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, if consistent
therewith, any investment guidelines or other instructions received in
writing from the Adviser, such services to exclude the voting of proxies
and the filing of proofs of claims with respect to class action
settlements. 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 writing, it being understood that you
shall have no responsibility for any changes in the above until such time
as you shall receive actual notice in writing from the Adviser. In
accordance with paragraph 5 hereof, 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. Consistent with the
standard of care described in paragraph 6 hereof, you will seek to conform
your conduct to and will seek to 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.
Consistent with the standard of care described in paragraph 6 hereof, 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 material 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
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NORTHPOINTE CAPITAL, LLC
HARBOR SMALL COMPANY GROWTH FUND
FEBRUARY 1, 2006
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 reasonably 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.
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 hereof.
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 asset value of the portion of the Fund that you
managed. The net asset value of the Fund is computed in the manner
specified in the Fund's Prospectus and Statement of Additional Information
for the computation of the net assets 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 investment fund and institutional (i.e.,
non-individual, non-wrap) advisory clients 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. Such offer shall be
made as soon as practicable after a more favorable asset based fee
agreement is provided for such other advisory
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NORTHPOINTE CAPITAL, LLC
HARBOR SMALL COMPANY GROWTH FUND
FEBRUARY 1, 2006
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.
You may not serve as investment adviser or subadviser to another publicly
offered, open-end mutual fund that would be in direct competition with the
Fund for a period of five years from February 1, 2006 (the "Exclusivity
Period"), except that you may continue to serve as investment adviser or
subadviser to any open-end mutual fund for which you served as adviser or
subadviser on January 1, 2006. Notwithstanding the foregoing, the Adviser
agrees that this Exclusivity Period shall expire on July 31, 2009 in the
event that (a) the Fund's performance for the three year period ending
January 31, 2009 (measured only at the end of such period) is in the top
third of a reasonably constituted peer group of similar open-end mutual
funds and exceeds the performance of its benchmark index for the three year
period ending January 31, 2009 (measured only at the end of such period),
(b) you have been reasonably supportive of the Fund's marketing efforts,
and (c) the Fund does not have at least $150 million in assets on January
31, 2009. The provisions set forth in the preceding sentence will survive
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. Both parties agree that they will discuss any possible
modifications to the forgoing provisions and interpret said provisions in
good faith.
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, 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
best execution, which for purposes of this Agreement shall mean the "best
qualitative execution" where you take into consideration the full range and
quality of a broker's or dealer's services in placing transactions,
including among other things, the value of any research provided as well as
execution capability, commission rate, financial responsibility, and
responsiveness to your request. 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. Therefore, in accordance with the safe harbor
provided by Section 28(e) of the Securities Exchange Act of 1934, 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,
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NORTHPOINTE CAPITAL, LLC
HARBOR SMALL COMPANY GROWTH FUND
FEBRUARY 1, 2006
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 best 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 February 1, 2008 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 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.
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NORTHPOINTE CAPITAL, LLC
HARBOR SMALL COMPANY GROWTH FUND
FEBRUARY 1, 2006
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.
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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NORTHPOINTE CAPITAL, LLC
HARBOR SMALL COMPANY GROWTH FUND
FEBRUARY 1, 2006
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 COMPANY GROWTH FUND
By:
------------------------------------
Xxxxx X. Xxx Xxxxxx, President
HARBOR CAPITAL ADVISORS, INC.
By:
------------------------------------
Xxxxxxx X. XxXxxx, Executive Vice
President
The foregoing Agreement is hereby accepted as of the date thereof.
NORTHPOINTE CAPITAL, LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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NORTHPOINTE CAPITAL, LLC
HARBOR SMALL COMPANY GROWTH FUND
FEBRUARY 1, 2006
SCHEDULE A
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