EX-99.(H)(3) 7 a2101864zex-99_h3.txt EXHIBIT 99.(H)(3) EXHIBIT (h)(3) +ADMINISTRATION AGREEMENT AGREEMENT made as of April 1, 2002 by and between HARRIS ASSOCIATES INVESTMENT TRUST, a business trust organized under the laws of the Commonwealth of Massachusetts (the "Fund"), and INVESTORS BANK & TRUST COMPANY, a Massachusetts trust company (the "Bank"). WHEREAS, the Fund, a registered investment company under the Investment Company Act of 1940, as amended (the "1940 Act"), consisting of the separate portfolios listed on APPENDIX A hereto; and WHEREAS, the Fund desires to retain the Bank to render certain administrative services to the Fund and the Bank is willing to render such services. NOW, THEREFORE, in consideration of the mutual covenants herein set forth, it is agreed between the parties hereto as follows: 1. APPOINTMENT. The Fund hereby appoints the Bank to act as Administrator of the Fund on the terms set forth in this Agreement. The Bank accepts such appointment and agrees to render the services herein set forth for fees that may be agreed to from time to time in writing between the parties. 2. DELIVERY OF DOCUMENTS. The Fund has furnished the Bank with copies properly certified or authenticated of each of the following: (a) Resolutions of the Fund's Board of Trustees authorizing the appointment of the Bank to provide certain administrative services to the Fund and approving the form of this Agreement; (b) The Fund's Agreement and Declaration of Trust dated February 1, 1991, filed with the Commonwealth of Massachusetts on February 1, 1991 and all amendments thereto (the "Declaration"); (c) The Fund's by-laws and all amendments thereto (the "By-Laws"); (d) The Fund's agreements with all service providers which include any investment advisory agreements, sub-investment advisory agreements, custody agreements, distribution agreements and transfer agency agreements (collectively, the "Agreements"); (e) The Fund's most recent post-effective amendment to its Registration Statement on Form N-1A (the "Registration Statement") under the Securities Act of 1933 and under the 1940 Act; and (f) The Fund's most recent prospectus and statement of additional information and all supplements thereto (the "Prospectus"); and (g) Such other certificates, documents or opinions as may mutually be deemed necessary or appropriate for the Bank in the proper performance of its duties hereunder. The Fund will promptly furnish the Bank with copies of all amendments of or supplements to the foregoing. Furthermore, the Fund will notify the Bank as soon as practicable of any matter which may materially affect the performance by the Bank of its services under this Agreement. 3. DUTIES OF ADMINISTRATOR. Subject to the supervision and direction of the Board of Trustees of the Fund, the Bank, as Administrator, will assist in conducting various aspects of the Fund's administrative operations and undertakes to perform the services described in APPENDIX B hereto. The Bank may, from time to time, perform additional duties and functions which shall be set forth in an amendment to such APPENDIX B executed by both parties. In performing all services under this Agreement, the Bank shall act in conformity with the Fund's Declaration and By-Laws and the 1940 Act, as the same may be amended from time to time, and the investment objectives, investment policies and other practices and policies set forth in the Fund's Registration Statement, as the same may be amended from time to time. Notwithstanding any item discussed herein, the Bank has no discretion over the Fund's assets or choice of investments and cannot be held liable for any problem relating to such investments. 4. DUTIES OF THE FUND. (a) The Fund is solely responsible (through its transfer agent or otherwise) for (i) providing timely and accurate reports ("Daily Sales Reports") which will enable the Bank as Administrator to monitor the total number of shares sold in each state on a daily basis and (ii) identifying any exempt transactions ("Exempt Transactions") which are to be excluded from the Daily Sales Reports. (b) The Fund agrees to make its legal counsel available to the Bank for instruction with respect to any matter of law arising in connection with the Bank's duties hereunder, and the Fund further agrees that the Bank shall be entitled to rely on such instruction without further investigation on the part of the Bank. 5. FEES AND EXPENSES. (a) For the services rendered by the Bank hereunder, the Fund will pay to the Bank such fees at such rate as shall be agreed upon in writing by the parties from time to time. The Fund will also pay or reimburse the Bank from time to time for any transfer taxes payable upon any transfers made hereunder, and for all necessary proper disbursements, expenses and charges reasonably made or reasonably incurred by the Bank in the performance of this Agreement (including any duties listed on any Schedule hereto, if any) including any indemnities for any loss, liabilities or expense to the Bank as provided herein. The Bank will also be entitled to reimbursement by the Fund for all reasonable expenses incurred in conjunction with termination of this Agreement and any conversion or transfer work done in connection therewith unless the Fund terminates this Agreement pursuant to Sections 7(c) or 7(d). (b) Fees and expenses will be calculated monthly. Fees and expenses owed to the Bank for any month may be charged against any cash balance held by the Fund beginning on the first (1st) business day after the end of such month based on information then available. Fees charged to an account may result in an overdraft that will be subject to normal interest charges. The Fund will have thirty (30) days after the receipt of an invoice to dispute any charge that appears on such invoice. After such thirty (30) day period, the invoice will be deemed to be complete and accurate and may no longer be disputed. (c) The Bank shall not be required to pay any expenses incurred by the Fund. (d) In the case of the following transactions, not in the ordinary course of business, namely, the merger of a series of the Fund into or the consolidation of a series of the Fund with another investment company or series thereof, the sale by a series of the Fund of all, or substantially all, of its assets to another investment company or series thereof, or the liquidation or dissolution of a series of the Fund and distribution of its assets, upon the payment of the fees, disbursements and expenses of the Bank through the then remaining term of this Agreement, the Bank will complete all actions reasonably necessary to implement such merger, consolidation, or sale upon the order of the Fund set forth in an Officers' Certificate, accompanied by a certified copy of a resolution of the Board authorizing any of the foregoing transactions. Upon completion of such actions and the payment of all such fees, disbursements and expenses of the Bank, this Agreement will terminate and the Bank shall be released from any and all obligations hereunder. 6. LIMITATION OF LIABILITY. 2 (a) The Bank, its directors, officers, employees and agents 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 performance of its obligations and duties under this Agreement, except if such error of judgment, mistake of law or loss results from the willful misfeasance, bad faith or negligence of the Bank or its directors, officers, employees or agents in the performance of its or their obligations and duties, or by reason of its or their reckless disregard thereof. The Fund will indemnify the Bank, its directors, officers, employees and agents against and hold it and them harmless from any and all losses, claims, damages, liabilities or expenses (including legal fees and expenses) resulting from any claim, demand, action or suit (a "Claim") (i) arising out of the willful misfeasance, bad faith or negligence of the Fund, including, but not limited to, inaccurate Daily Sales Reports and misidentification of Exempt Transactions; (ii) arising out of the offer or sale of any securities of the Fund in violation of (x) any requirement under the federal securities laws or regulations, (y) any requirement under the securities laws or regulations of any state, or (z) any stop order or other determination or ruling by any federal or state agency with respect to the offer or sale of such securities or (iii) not resulting from the willful misfeasance, bad faith or negligence of the Bank or its directors, officers, employees or agents in the performance of its or their obligations and duties, or by reason of its or their reckless disregard thereof. (b) The Bank may apply to the Fund at any time for instructions and may consult counsel for the Fund, or its own counsel, and with accountants and other experts with respect to any matter arising in connection with its duties hereunder. The Bank shall not be liable or accountable for any action taken or omitted by it in good faith in accordance with any written instruction from counsel for the Fund, or with the written opinion of such counsel. The Bank shall not be liable for any act or omission taken or not taken in reliance upon any document, certificate or instrument provided in writing by the Fund or its authorized agent which it reasonably believes to be genuine and to be signed or presented by the proper person or persons. The Bank shall not be held to have notice of any change of authority of any officers, employees, or agents of the Fund until receipt of written notice thereof has been received by the Bank from the Fund. (c) Notwithstanding anything in this Agreement to the contrary, in no event shall the Fund or any of its officers, trustees, employees or agents be liable to the Bank or any third party for, and the Bank shall indemnify and hold the Fund and any of its officers, trustees, employees or agents harmless from and against any Claim to the extent arising from the willful misfeasance, bad faith or negligence of the Bank or its directors, officers, employees or agents in the performance of its or their obligations and duties, or by reason of its or their reckless disregard thereof provided that the Bank's indemnification obligation with respect to the acts or omissions of its subcustodians shall not exceed the indemnification provided by the applicable subcustodian to the Bank. The Bank shall provide the Fund copies of the applicable subcustody agreements, and any amendments to such agreements, that will in reasonable detail describe such subcustodians' obligation(s) to indemnify the Bank, if any. (d) In the event either party is unable to perform, or is delayed in performing, its obligations under the terms of this Agreement because of acts of God, strikes, legal constraint, government actions, war, emergency conditions, interruption of electrical power or other utilities, equipment or transmission failure or damage reasonably beyond its control or other causes reasonably beyond its control, such party shall not be liable to the other party for any damages resulting from such failure to perform, delay in performance, or otherwise from such causes; provided, however, that each party shall use its best efforts to ameliorate the effects of such failure or delay and each party shall use its commercially reasonable efforts to not discriminate against the other in favor of any other customer or client in performing the services contemplated by this Agreement. (e) Notwithstanding anything to the contrary in this Agreement, in no event shall either party be liable for special, incidental or consequential damages, even if advised of the possibility of such damages. 3 7. TERMINATION OF AGREEMENT. (a) The term of this Agreement shall be three years commencing upon the date hereof (the "Initial Term"), unless earlier terminated as provided herein. After the expiration of the Initial Term, the term of this Agreement shall automatically renew for successive one-year terms (each a "Renewal Term") unless notice of non-renewal is delivered by the non-renewing party to the other party no later than ninety days prior to the expiration of the Initial Term or any Renewal Term, as the case may be. If a majority of the Board of Trustees reasonably determines that the performance of the Bank under this Agreement by and between the Bank and the Fund does not meet industry standards, written notice of such determination setting forth the reasons for such determination shall be provided to the Bank. In the event the Bank shall not, within sixty (60) days thereafter, cure identified deficiencies to the reasonable satisfaction of the Board of Trustees, the Fund, with the authorization of the Board, may terminate this Agreement. (b) Either party hereto may terminate this Agreement prior to the expiration of the Initial Term or any Renewal Term in the event the other party violates any material provision of this Agreement, provided that the violating party does not cure such violation within ninety days of receipt of written notice from the non-violating party of such violation. (c) The Fund may terminate this Agreement at any time without notice in the event of an appointment of a conservator or receiver for the Administrator by regulatory authorities or the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. (d) At any time after the termination of this Agreement, the Fund may, upon written request, have reasonable access to the records of the Bank relating to its performance of its duties as Administrator. 8. MISCELLANEOUS. (a) Any notice or other instrument authorized or required by this Agreement to be given in writing to the Fund or the Bank shall be sufficiently given if addressed to that party and received by it at its office set forth below or at such other place as it may from time to time designate in writing. To the Fund: Harris Associates Investment Trust Two North LaSalle Street Chicago, IL 60602 Attention: Kristi Rowsell With a copy to: Bell, Boyd & Lloyd LLC 70 West Madison Street, Suite 3300 Chicago, IL 60602 Attention: Cameron S. Avery To the Bank: Investors Bank & Trust Company 200 Clarendon Street, P.O. Box 9130 Boston, MA 02117-9130 Attention: Geoffrey M. O'Connell, Senior Director, Client Management With a copy to: John E. Henry, General Counsel 4 (b) This Agreement shall extend to and shall be binding upon the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable without the written consent of the other party. (c) This Agreement shall be construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to its conflict of laws provisions. (d) This Agreement may be executed in any number of counterparts each of which shall be deemed to be an original and which collectively shall be deemed to constitute only one instrument. (e) The captions of 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. 9. CONFIDENTIALITY. All books, records, information and data, including all nonpublic personal information (as defined by Rule 3(t) of Regulation S-P under the federal securities laws), pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required in the performance of duties hereunder or as otherwise required by law. 10. USE OF NAME. Neither party shall use the name of the other party or any of its affiliates in any prospectus, sales literature or other material in a manner not approved by the other party prior thereto in writing; provided however, that the approval of the Bank shall not be required for any use of its name which merely refers in accurate and factual terms to its appointment hereunder or which is required by the Securities and Exchange Commission or any state securities authority or any other appropriate regulatory, governmental or judicial authority; PROVIDED FURTHER, that in no event shall such approval be unreasonably withheld or delayed. 11. BINDING OF TRUST PROPERTY ONLY. A copy of the Agreement and Declaration of Trust of the Fund is on file with the Secretary of State of the Commonwealth of Massachusetts. Notice is hereby given that the execution and delivery of this Agreement have been authorized by the trustees of the Fund, and this Agreement has been signed and delivered by an officer of the Fund, acting as such, and neither such authorization by the trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the trust property of the Fund. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 5 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed and delivered by their duly authorized officers as of the date first written above. HARRIS ASSOCIATES INVESTMENT TRUST By:/s/ Kristi L. Rowsell Name: Kristi L. Rowsell Title: Treasurer INVESTORS BANK & TRUST COMPANY By:/s/ Michael F. Rodgers Name: Michael F. Rodgers Title: President 6 APPENDICES Appendix A Portfolios Appendix B Services APPENDIX A THE OAKMARK FAMILY OF FUNDS The Oakmark Fund The Oakmark Select Fund The Oakmark Small Cap Fund The Oakmark Equity and Income Fund The Oakmark Global Fund The Oakmark International Fund The Oakmark International Small Cap Fund APPENDIX B INVESTORS BANK & TRUST SUMMARY OF ADMINISTRATION FUNCTIONS OAKMARK FAMILY OF FUNDS
SUGGESTED FUND AUDITOR FUNCTION INVESTORS BANK & TRUST HARRIS ASSOCIATES AND/OR COUNSEL ------------------------------------- --------------------------------- ----------------------------- ------------------------- MANAGEMENT REPORTING & TREASURY ADMINISTRATION ------------------------------------- Monitor portfolio compliance in Perform tests of certain specific Continuously monitor A/C - Provide accordance with the current portfolio activity designed from portfolio activity and Fund consultation as needed on Prospectus and SAI. provisions of the Fund's operations in conjunction compliance issues. Prospectus and SAI. Follow-up on with 1940 Act, Prospectus, potential violations. SAI and any other applicable laws and regulations. Monitor testing results and approve resolution of compliance FREQUENCY: MONTHLY issues. Provide compliance summary package. Provide a report of compliance Review report. A/C - Provide testing results. consultation as needed. FREQUENCY: MONTHLY Perform asset diversification testing Perform asset diversification Continuously monitor A - Provide consultation to establish qualification as a RIC. tests at each tax quarter end. portfolio activity in as needed in establishing Follow-up on issues. conjunction with IRS positions to be taken in requirements. Review test tax treatment of results and take any particular issues. Review necessary action. Approve quarter end tests on a tax positions taken. current basis. FREQUENCY: QUARTERLY Perform qualifying income testing to Perform qualifying income testing Continuously monitor A- Consult as needed on establish qualification as a RIC. (on book basis income, unless portfolio activity in tax accounting positions material differences are conjunction with IRS to be taken. Review in anticipated) on quarterly basis requirements. Review test conjunction with year-end and as may otherwise be results and take any audit. necessary. Follow-up on necessary action. Approve FREQUENCY: QUARTERLY issues. tax positions taken. MANAGEMENT REPORTING & TREASURY ADMINISTRATION (CONT.) ------------------------------------- Prepare the Fund's annual expense Prepare preliminary expense Provide asset level budget. Establish daily accruals. budget. Notify fund accounting projections. Approve of new accrual rates. expense budget. FREQUENCY: ANNUALLY
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SUGGESTED FUND AUDITOR FUNCTION INVESTORS BANK & TRUST HARRIS ASSOCIATES AND/OR COUNSEL ------------------------------------- --------------------------------- ----------------------------- ------------------------- Monitor the Fund's expense budget. Monitor actual expenses, updating Provide asset level Review the Fund's net expense ratios, budgets/ expense accruals. projections. Provide vendor including multi-class expense Review expense differentials information as necessary. differentials. among classes. Review expense analysis and approve budget revisions. FREQUENCY: MONTHLY Receive and coordinate payment of Propose allocations of invoices Approve invoices and fund expenses. among Funds and obtain authorized allocations of payments. approval to process payment. Send invoices to IBT in a FREQUENCY: AS OFTEN AS NECESSARY timely manner. Calculate periodic dividend rates to Calculate amounts available for Review and approve dividend C/A - Review and approve be declared in accordance with distribution. Calculate rates calculation methodologies dividend calculation management guidelines. Review the for each class in accordance with for each class. Approve methodology for each Fund's multi-class dividend approved methodology. Coordinate dividend rate per share and class of shares. Provide calculation procedures. review by management and aggregate amounts. Obtain consultation as auditors. Notify custody and Board approval when required. requested. transfer agent of authorized dividend rates. Report dividends to Board as required. FREQUENCY: ACCORDING TO DIVIDEND POLICY MANAGEMENT REPORTING & TREASURY ADMINISTRATION (CONT.) ------------------------------------- Prepare responses to major industry Prepare, coordinate as necessary, Identify the services to questionnaires. and submit responses to the which the Funds report. appropriate agency. Provide information as FREQUENCY: AS OFTEN AS NECESSARY requested. Prepare disinterested Summarize amounts paid to Provide social security director/trustee Form 1099-Misc. directors/trustees during the numbers and current mailing calendar year. Prepare and mail address for trustees. Form 1099-Misc. Review and approve FREQUENCY: ANNUALLY information provided for Form 1099-Misc.
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SUGGESTED FUND AUDITOR FUNCTION INVESTORS BANK & TRUST HARRIS ASSOCIATES AND/OR COUNSEL ------------------------------------- --------------------------------- ----------------------------- ------------------------- Preparation and filing of 24f-2 Accumulate capital stock Review and approve filing. C - Approve 24f-2 Notice. Notice. information and draft Form 24f-2 Notice. File approved Form with FREQUENCY: ANNUALLY SEC via Edgar. ------------------------------------- FINANCIAL REPORTING ------------------------------------- Prepare financial information for Prepare selected financial Review financial presentation to Fund Management, information for client internal information. Board of Directors and shareholders. use, inclusion in board material and distribution to shareholders. Financial information limited to Schedule of Investments and other related tables. FREQUENCY: MONTHLY/QUARTERLY ------------------------------------- FINANCIAL REPORTING (CONT.) ------------------------------------- Coordinate the annual audit and Coordinate the creation of Provide past financial A - Perform audit and semi-annual preparation and printing templates reflecting statements and other issue opinion on annual of financial statements and notes client-selected standardized information required to financial statements. with management, fund accounting and appearance and text of financial create templates, including the fund auditors. statements and footnotes. Draft report style and graphics. A/C - Review reports. and manage production cycle. Approve format and text as Coordinate with IBT fund standard. Approve accounting the electronic production cycle and assist receipt of portfolio and general in managing to the cycle. ledgar information. Assist in Coordinate review and resolution of accounting issues. approval by portfolio Using templates, draft financial managers of portfolio statements, coordinate auditor listings to be included in and management review, and clear financial statements. comments. Coordinate transmission Prepare appropriate of draft files to Merrill to management letter and typeset. Coordinate printing of coordinate production of reports and EDGAR conversion with Management Discussion and outside printer and filing with Analysis. Review and the SEC via EDGAR. approve entire report. Make appropriate representations in conjunction with audit. FREQUENCY: ANNUALLY/SEMI-ANNUALLY
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SUGGESTED FUND AUDITOR FUNCTION INVESTORS BANK & TRUST HARRIS ASSOCIATES AND/OR COUNSEL ------------------------------------- --------------------------------- ----------------------------- ------------------------- Prepare and file Form N-SAR. Prepare form for filing. Obtain Provide appropriate C - Provide consultation any necessary supporting responses. Review and as needed. documents. File with SEC via authorize filing. A - Provide annual audit EDGAR. internal control letter TO BE PERFORMED BY R&C. to accompany the annual FREQUENCY: SEMI-ANNUALLY filing. ------------------------------------- TAX ------------------------------------- Prepare income tax provisions. Calculate investment company Provide transaction A - Provide consultation taxable income, net tax exempt information as requested. as needed in establishing interest, net capital gain and Identify Passive Foreign positions to be taken in spillback dividend requirements. Investment Companies tax treatment of Identify book-tax accounting (PFICs). Approve tax particular issues. differences. Track required accounting positions to be Perform review in information relating to taken. Approve provisions. conjunction with the FREQUENCY: ANNUALLY accounting differences. year-end audit. TAX (CONT.) ------------------------------------- Calculate excise tax distributions Calculate required distributions Provide transaction A - Provide consultation to avoid imposition of excise tax. information as requested. as needed in establishing - Calculate capital gain net Identify Passive Foreign positions to be taken in income and foreign currency Investment Companies tax treatment of gain/loss through October 31. (PFICs). Approve tax particular issues. - Calculate ordinary income accounting positions to be Review and concur with and distributions through a taken. Review and approve proposed distributions specified cut off date . all income and distribution per share. - Project ordinary income calculations, including from cut off date to projected income and December 31. TO BE PERFORMED dividend shares. Approve BY R&C. distribution rates per share - Ascertain dividend shares. and aggregate amounts. TO BE PERFORMED BY R&C. Obtain Board approval when Identify book-tax accounting required. differences. Track required information relating to accounting differences. Coordinate review by management FREQUENCY: ANNUALLY and fund auditors. Prepare Form 1099 Obtain yearly distribution Review and approve information. Calculate 1099 information provided for reclasses and coordinate with Form 1099. FREQUENCY: ANNUALLY transfer agent.
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SUGGESTED FUND AUDITOR FUNCTION INVESTORS BANK & TRUST HARRIS ASSOCIATES AND/OR COUNSEL ------------------------------------- --------------------------------- ----------------------------- ------------------------- Prepare other year-end tax-related Obtain yearly income Review and approve disclosures distribution information. information provided. Calculate disclosures (i.e., dividend received deductions, foreign tax credits, tax-exempt income, income by jurisdiction) and coordinate with transfer agent. FREQUENCY: ANNUALLY
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