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EXHIBIT 5(r)
June 25, 1993
Xxxxxxx Xxxxxxx Trees
& Xxxxx, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
(HARBOR SHORT DURATION 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 investment adviser
to Harbor Fund (the "Trust"), on behalf of Harbor Short Duration 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. Pursuant to authority granted the adviser by the Trust's Trustees and
pursuant to the provisions of the Investment Advisory agreement dated June 25,
1993, between the Adviser and the Trust, 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, and you are willing to act as such sub-investment
adviser and to perform such services under the terms and conditions hereinafter
set forth. 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 Secretary of the
State of Delaware, dated June 8, 1993, as amended from time to time
(the "Declaration of Trust").
(b) By-Laws of the Trust as in effect on the date hereof.
(c) Resolutions of the Trustees selecting the Adviser as investment
adviser and you as sub-investment adviser and approving the form of
this Agreement.
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XXXXXXX XXXXXXX TREES & XXXXX, INC.
HARBOR SHORT DURATION 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 objectives and policies of the
Fund. 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 of the Investment Company
Act of 1940, as amended, and to the investment objectives, policies and
restrictions of the Fund, as each of the same shall be from time to time in
effect, and subject, further to such policies and instructions as the Board
of Trustees may from time to time establish. 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 such Declaration; By-laws; investment objectives and
policies; 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 shall have no obligations or duties whatsoever to ensure compliance
with any limitation relating to the amount of (1) the Fund's aggregate
assets which may be invested in any category of investment or in a
particular manner or (ii) short-term or other category of gain that may be
realized by the Fund, in the aggregate, in any given period.
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 in any way or otherwise be deemed to be an agent of the
Trust 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.
3. ALLOCATION OF CHARGES AND EXPENSES: You will bear your own costs of
providing services hereunder. Except as aforesaid, 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 Appendix
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. The
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 of 1940. Your fee will be
based on the average of the net asset values of the Fund computed 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
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XXXXXXX XXXXXXX TREES & XXXXX, INC.
HARBOR SHORT DURATION FUND
JUNE 25, 1993
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.
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 partners, directors, officers or employees will
act as a principal or agent or receive any commission. 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
Trust's 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. From time
to time as the Trustees of the Trust 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.
6. LIMITATION OF LIABILITY: You shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund 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 in the
performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
employed by
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XXXXXXX XXXXXXX TREES & XXXXX, INC.
HARBOR SHORT DURATION FUND
JUNE 25, 1993
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.
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 of the Fund, 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 of 1940 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. In interpreting the provisions of this Agreement, the
definitions contained in Section 2(a) of the Investment Company Act of 1940
(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, regulation
or order.
8. AMENDMENT OF THIS AGREEMENT: No provisions of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought, and no 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 Trustees of the Trust
such information as may reasonably be necessary in order for such 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.
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XXXXXXX XXXXXXX TREES & XXXXX, INC.
HARBOR SHORT DURATION FUND
JUNE 25, 1993
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 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.
The name "Harbor Fund" is the designation of the Trustees for the time
being under the Declaration of Trust dated June 8, 1993, as amended from
time to time, 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 as neither the Trustees, officers, agents or
shareholders assume any personal liability for obligations entered into on
behalf of the Trust. No series of the Trust shall be liable for any claims
against any other series of the Trust.
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.
Yours very truly,
HARBOR FUND
(ON BEHALF OF HARBOR SHORT DURATION FUND)
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
The foregoing Agreement is hereby accepted as of the date thereof.
XXXXXXX XXXXXXX TREES & XXXXX, INC.
By /s/ S. Xxxxx Xxxxxxxx
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Title: Managing Director
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XXXXXXX XXXXXXX TREES & XXXXX, INC.
HARBOR SHORT DURATION FUND
JUNE 25, 1993
SCHEDULE A
You will receive an advisory fee equal on an annual basis to .20% of the Fund's
average actual net assets, as defined in paragraph 4 of the Agreement, up to
$100 million; and .15% on assets in excess of $100 million. The Adviser will
pay you a fee each year which is not less than $200,000. 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.
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