1
EXIBIT 5(n)
June 25, 1993
Northern Cross Investments Limited
00 Xxx-Xx-Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX00 Xxxxxxx
INVESTMENT ADVISORY AGREEMENT FOR
SUBADVISER (HARBOR INTERNATIONAL 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
International 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 subinvestment 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) Declaration of Trust of the Trust, filed with the Delaware
Secretary of State, dated June 8, 1993, as amended and restated from
time to time (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 sub-investment adviser and approving the form of
this Agreement.
2
NORTHERN CROSS INVESTMENTS LIMITED
HARBOR INTERNATIONAL FUND
JUNE 25, 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 (c) above.
2. ADVISORY SERVICES. You will regularly provide the Fund with advice
concerning the investment management of the Fund's portfolio, 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. You will determine what securities shall be
purchased for the Fund, what securities shall be held or sold by the Fund,
and what portion of the Fund's 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 for the Fund's
account with brokers or dealers selected by you.
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 portfolio of the Fund 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 Fund 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.
2
3
NORTHERN CROSS INVESTMENTS LIMITED
HARBOR INTERNATIONAL FUND
JUNE 25, 1993
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 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 Fund,
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 Fund's account 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 not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and other services to others.
3
4
NORTHERN CROSS INVESTMENTS LIMITED
HARBOR INTERNATIONAL FUND
JUNE 25, 1993
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 wilful 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.
4
5
NORTHERN CROSS INVESTMENTS LIMITED
HARBOR INTERNATIONAL FUND
JUNE 25, 1993
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.
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
5
6
NORTHERN CROSS INVESTMENTS LIMITED
HARBOR INTERNATIONAL FUND
JUNE 25, 1993
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
By /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Title: President
HARBOR CAPITAL ADVISORS, INC.
By /s/ Xxxxxxxxx X. Xxxxxxx
-----------------------------------
Title: Senior Vice President
NORTHERN CROSS INVESTMENTS LIMITED
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------
Title: President
6
7
NORTHERN CROSS INVESTMENTS LIMITED
HARBOR INTERNATIONAL FUND
JJNE 25, 1993
SCHEDULE A
You will receive an advisory fee equal on an annual basis to 0.60% of the
Fund's average actual net asset values of the Fund 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 $6,000. 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 by the Adviser to you will be
combined with the assets and payments of the accounts of the Xxxxx-Illinois
Master Retirement Trust that you manage.
7
