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EXHIBIT (h)(12)
CO-ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT (the "Agreement"), dated as of this 1st
day of October, 1999 (the "Effective Date"), by and among FIRST DATA INVESTOR
SERVICES GROUP, INC. ("Investor Services Group"), a Massachusetts corporation,
THE NORTHERN TRUST COMPANY ("Northern"), an Illinois state bank (each a
"Co-Administrator" and collectively, the "Co-Administrators"), and NORTHERN
FUNDS (the "Fund"), a Massachusetts business trust.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund desires to retain the Co-Administrators to render
certain administrative services with respect to each investment portfolio listed
in Schedule A hereto, as the same may be amended from time to time by the
parties hereto (collectively, the "Portfolios"), and the Co-Administrators are
willing to render such services.
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein and intending to be legally bound hereby, the parties hereto
agree as follows:
Article 1 Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Advisory Agreement" shall mean the Investment Advisory
and Ancillary Services Agreement between the Fund and Northern made as
of April 1, 1994, as currently in effect and as amended and/or
superseded from time to time.
(b) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of a party as the same may be amended from
time to time.
(c) "Assign" and "Assignment" shall have the same meaning
herein as the term "assignment" has in the 1940 Act.
(d) "Authorized Person" shall be deemed to include (i) any
Board Member or officer of the Fund; or (ii) any person, whether or not
such person is an officer or employee of the Fund, duly authorized to
give Oral Instructions or Written Instructions on behalf of the Fund as
indicated in writing to a Co-Administrator from time to time.
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(e) "Board Members" shall mean the Directors or Trustees of
the governing body of the Fund, as the case may be.
(f) "Board of Directors" shall mean the Board of Directors or
Board of Trustees of the Fund, as the case may be.
(g) "By-Laws" shall mean the By-Laws of a party as the same
may be amended from time to time.
(h) "Commission" shall mean the Securities and Exchange
Commission.
(i) "Custodian" refers to any custodian or subcustodian of
securities and other property, which the Fund may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a custody agreement.
(j) "1933 Act" shall mean the Securities Act of 1933 and the
rules and regulations promulgated thereunder, all as amended from time
to time.
(k) "1940 Act" shall mean the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(l) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by a Co-Administrator from a
person reasonably believed by a Co-Administrator to be an Authorized
Person.
(m) "Prospectus" shall mean the most recently dated Fund
Prospectuses and Statements of Additional Information, including any
supplements thereto if any, which has become effective under the 1933
Act and the 1940 Act.
(n) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class thereof, of
each respective Portfolio of the Fund as may be issued from time to
time.
(o) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by a Co-Administrator to be an
Authorized Person and actually received by a Co-Administrator. Written
Instructions shall include manually executed originals and authorized
electronic transmissions, including telefacsimile of a manually
executed original or other process.
Article 2 Appointment of the Co-Administrators.
The Fund hereby appoints Northern and Investor Services Group to act as
Co-Administrators of the Fund for the period and on the terms set forth in this
Agreement. Northern and Investor Services Group accept such appointment and
agree to render the services herein set
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forth for the compensation herein provided. This Agreement shall be effective
and binding on the parties hereto as of the Effective Date.
Article 3 Duties of the Co-Administrators.
3.1 Subject to the general supervision of the Board of Directors, the
Co-Administrators shall provide supervision of all aspects of the Fund's
operations (other than those referred to in paragraph 3(a) of the Advisory
Agreement) and perform the customary services of an administrator, including but
not limited to the corporate secretarial, treasury and blue sky services set
forth in Schedule B to this Agreement.
3.2 In performing their duties under this Agreement, the
Co-Administrators: (a) will act in accordance with the Articles of
Incorporation, By-Laws, Prospectus and with the Oral Instructions and Written
Instructions of the Fund and will conform to and comply with the requirements of
the 1940 Act and all other applicable federal or state laws and regulations; and
(b) will consult with legal counsel to the Fund, as necessary and appropriate.
Furthermore, the Co-Administrators shall not have or be required to have any
authority to supervise the investment or reinvestment of the securities or other
properties which comprise the assets of the Fund or any of its Portfolios and
shall not provide any investment advisory services to the Fund or any of its
Portfolios under this Agreement.
3.3 In addition to the duties set forth herein, the Co-Administrators
shall perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Fund
and the Co-Administrators.
3.4 The Co-Administrators agree to provide the services described
herein in accordance with the performance standards annexed hereto as Exhibit 1
of Schedule B and incorporated herein (the "Performance Standards"). Such
Performance Standards may be amended from time to time upon written agreement by
the parties.
3.5 The services of the Co-Administrators hereunder are not deemed
exclusive and the Co-Administrators shall be free to render similar services to
others so long as their services under this Agreement are not impaired thereby.
Article 4 Recordkeeping and Other Information.
4.1 The Co-Administrators shall create and maintain all records
required of them pursuant to their duties hereunder and as set forth in Schedule
B in accordance with all applicable laws, rules and regulations, including
records required by Section 31(a) of the 1940 Act. Where applicable, such
records shall be maintained by the Co-Administrators for the periods and in the
places required by Rule 31a-2 under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, the
Co-Administrators agree that all such records prepared or maintained by the
Co-Administrators relating to the services to be performed by the
Co-Administrators hereunder are the property of the Fund and will be
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preserved, maintained and made available in accordance with such section, and
will be surrendered promptly to the Fund on and in accordance with the Fund's
request.
Article 5 Fund Instructions.
5.1 A Co-Administrator will have no liability when acting upon Written
or Oral Instructions reasonably believed to have been executed or orally
communicated by an Authorized Person and will not be held to have any notice of
any change of authority of any person until receipt of a Written Instruction
thereof from the Fund.
5.2 At any time, a Co-Administrator may request Written Instructions
from the Fund and may seek advice from legal counsel for the Fund, or its own
legal counsel, with respect to any matter arising in connection with this
Agreement, and it shall not be liable for any action taken or not taken in good
faith in accordance with such Written Instructions or in accordance with the
opinion of counsel for the Fund or for the Co-Administrator. Written
Instructions requested by a Co-Administrator will be provided by the Fund within
a reasonable period of time.
5.3 Each Co-Administrator, its officers, agents or employees, shall
accept Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Fund only if said representative is an
Authorized Person. The Fund agrees that all Oral Instructions shall be followed
within one business day by confirming Written Instructions, and that the Fund's
failure to so confirm shall not impair in any respect a Co-Administrator's right
to rely on Oral Instructions.
Article 6 Compensation.
6.1 Each Co-Administrator will from time to time employ or associate
with itself such person or persons as the Co-Administrator may believe to be
particularly suited to assist it in performing services under this Agreement.
Such person or persons include officers and employees who are employed by both
the Co-Administrator and the Fund. The Co-Administrator shall pay the
compensation of such person or persons and no obligation shall be incurred on
behalf of the Fund in such respect.
6.2 The Co-Administrators shall not be required to pay any of the
following expenses incurred by the Fund: membership dues in the Investment
Company Institute or any similar organization; investment advisory fees; custody
and transfer agency fees; fees paid under any service or distribution plan
adopted by the Fund; costs of printing and mailing stock certificates; costs of
typesetting and printing of the Prospectus for regulatory purposes and for
distribution to existing shareholders of the Portfolios; costs of shareholders'
reports and notices; interest on borrowed money; brokerage commissions; stock
exchange listing fees; taxes and fees payable to federal, state and other
governmental agencies; fees of Board Members of the Fund who are not affiliated
with the Co-Administrators; outside auditing expenses; outside legal expenses;
blue sky registration or filing fees; or other expenses not specified in this
Section 6.2 which may be properly payable by the Fund. The Co-Administrators
shall not be required to pay any blue sky
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registration or filing fees unless and until they have received the amount of
such fees from the Fund.
6.3 The Fund on behalf of each of the Portfolios will compensate the
Co-Administrators for the performance of their obligations hereunder in
accordance with the fees and charges set forth in the written Fee Schedule
annexed hereto as Schedule C and incorporated herein.
6.4 During the term of this Agreement, the Co-Administrators will pay
all expenses incurred by them in connection with the performance of their duties
under Article 3 and Article 4 hereof, other than those items listed in Section
6.2 and those out-of-pocket costs of the preparations, submissions, updatings
and filings of the Fund's Prospectus.
6.5 Any compensation agreed to hereunder may be adjusted from time to
time by the unanimous consent of the parties.
Article 7 Documents.
In connection with the appointment of the Co-Administrators, the Fund
shall, on or before the Effective Date, but in any case within a reasonable
period of time for the Co-Administrators to prepare to perform their duties
hereunder, deliver or caused to be delivered to the Co-Administrators the
documents set forth in the written schedule of fund documents annexed hereto as
Schedule D.
Article 8 Fund Accounting System.
8.1 Each Co-Administrator shall retain title to and ownership of any
and all data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions, discoveries,
patentable or copyrightable matters, concepts, expertise, patents, copyrights,
trade secrets, and other related legal rights owned and/or developed by it in
connection with the services provided by such Co-Administrator to the Fund
pursuant to this Agreement (the "Co-Administrator System").
8.2 Each Co-Administrator hereby grants to the Fund a limited license
to the Co-Administrator System for the sole and limited purpose of having such
Co-Administrator provide the services contemplated hereunder and nothing
contained in this Agreement shall be construed or interpreted otherwise and such
license shall immediately terminate with the termination of this Agreement.
8.3 In the event that the Fund, including any affiliate or agent of the
Fund or any third party acting on behalf of the Fund, is provided with direct
access to the Co-Administrator System, such direct access capability shall be
limited to direct entry to the Co-Administrator System by means of on-line
mainframe terminal entry or PC emulation of such mainframe terminal entry, and
any other non-conforming method of transmission of information to the
Co-Administrator System is strictly prohibited without the prior written consent
of the particular Co-Administrator.
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Article 9 Representations and Warranties.
9.1 Investor Services Group represents and warrants to the Fund that:
(a) it is a corporation duly organized, existing and in good
standing under the laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform the services
contemplated by this Agreement;
(c) all requisite corporate proceedings have been taken to
authorize it to enter into this Agreement; and
(d) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
9.2 Northern represents and warrants to the Fund that:
(a) it is duly organized, existing and in good standing under
the laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform the services
contemplated by this Agreement;
(c) all requisite corporate proceedings have been taken to
authorize it to enter into this Agreement; and
(d) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
9.3 The Fund represents and warrants to each Co-Administrator that:
(a) it is duly organized, existing and in good standing under
the laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to authorize
it to enter into this Agreement;
(d) a registration statement under the 1933 Act and the 1940
Act on behalf of each of the Portfolios is currently effective; and
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(e) as of the date hereof, each Portfolio is duly registered
and lawfully eligible for sale in each jurisdiction indicated for such
Portfolio on the list furnished to the Co-Administrators pursuant to
Article 7 of this Agreement and that it will notify the
Co-Administrators immediately of any changes to the aforementioned
list.
Article 10 Indemnification.
10.1 The Fund shall indemnify and hold each Co-Administrator harmless
from and against any and all claims, costs, expenses (including reasonable
attorneys' fees), losses, damages, charges, payments and liabilities of any sort
or kind which may be asserted against a Co-Administrator or for which a
Co-Administrator may be held to be liable in connection with this Agreement or a
Co-Administrator's performance hereunder (a "Claim"), unless such Claim resulted
from: (a) the willful misfeasance, bad faith or negligence of such
Co-Administrator in the performance of its duties hereunder, or by reason of its
reckless disregard thereof; or (b) such Co-Administrator's breach of Article 14
of this Agreement.
10.2 The Fund agrees and acknowledges that the Co-Administrators have
not prior to the Effective Date assumed, and will not assume, any obligations or
liabilities arising out of the conduct by the Fund or its administrator prior to
the Effective Date of those duties which the Co-Administrators have agreed to
perform pursuant to this Agreement. The Fund further agrees to indemnify each
Co-Administrator against any losses, claims, damages or liabilities to which a
Co-Administrator may become subject in connection with the conduct by the Fund
or its administrator of such duties prior to the Effective Date.
10.3 Each Co-Administrator jointly and severally shall indemnify and
hold the Fund harmless from and against any and all claims, costs, expenses
(including reasonable attorneys' fees), losses, damages, charges, payments and
liabilities of any sort or kind which may be asserted against the Fund or for
which the Fund may be held to be liable in connection with this Agreement or the
Fund's performance hereunder (a "Claim"), provided that such Claim resulted
from: (a) the willful misfeasance, bad faith or negligence of such
Co-Administrator in the performance of its duties hereunder, or by reason of its
reckless disregard thereof; or (b) such Co-Administrator's breach of Article 14
of this Agreement.
10.4 In any case in which one party (the "Indemnifying Party") may be
asked to indemnify or hold another party (the "Indemnified Party") harmless, the
Indemnified Party will notify the Indemnifying Party in writing promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification (an "Indemnification Claim") against the
Indemnifying Party, although the failure to do so shall not relieve the
Indemnifying Party from any liability which it may otherwise have to the
Indemnified Party, and the Indemnified Party shall keep the Indemnifying Party
advised with respect to all developments concerning such situation. The
Indemnifying Party shall be entitled to participate at its own expense in the
defense, or if it so elects, to assume the defense of, any Indemnification Claim
which may be the subject of this indemnification, and, in the event that the
Indemnifying Party so elects, such defense shall be conducted by counsel of good
standing chosen by the Indemnifying Party and approved by the Indemnified Party,
which approval shall not be unreasonably withheld. In the event the Indemnifying
Party elects to assume the defense of any
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such Indemnification Claim and retain such counsel, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by the Indemnified
Party. In the event that the Indemnifying Party does not elect to assume the
defense of any such Indemnification Claim, or in case the Indemnified Party
reasonably does not approve of counsel chosen by the Indemnifying Party, or in
case there is a conflict of interest between the Indemnifying Party or the
Indemnified Party, the Indemnifying Party will reimburse the Indemnified Party
for the fees and expenses of any counsel retained by the Indemnified Party. The
Indemnified Party will not confess any Indemnification Claim or make any
compromise in any case in which the Indemnifying Party will be asked to provide
indemnification, except with the Indemnifying Party's prior written consent. The
obligations of the parties hereto under this Article 10 shall survive the
termination of this Agreement.
Article 11 Standard of Care.
11.1 The Co-Administrators shall at all times act in good faith and
agree to use their best efforts within commercially reasonable limits to ensure
the accuracy of all services performed under this Agreement, but assume no
responsibility for loss or damage to the Fund unless said errors are caused by
the Co-Administrators' willful misfeasance, bad faith or negligence in the
performance of their duties hereunder, or by reason of their reckless disregard
thereof.
11.2 Each party shall have the duty to mitigate damages for which
another party may become responsible.
11.3 Without in any way limiting the foregoing, in the event the
Co-Administrators shall provide blue sky services to the Fund, the
Co-Administrators shall have no liability for failing to file on a timely basis
any material to be provided by the Fund or its designee that the
Co-Administrators have not received on a timely basis from the Fund or its
designee, nor shall the Co-Administrators have any responsibility to review the
accuracy or adequacy of materials they receive from the Fund or its designee for
filing; nor shall the Co-Administrators have any liability for monetary damages
for the sale of securities in jurisdictions where Shares are not properly
registered, or in jurisdictions where Shares are sold in excess of the lawfully
registered amount, unless such failure of proper registration or excess sales is
due to the willful misfeasance, bad faith or negligence of the
Co-Administrators, or the reckless disregard of their duties hereunder. The
Co-Administrators shall not be liable for any errors which result from
inaccurate or inadequate information reported to the Co-Administrators directly
or indirectly from the Fund's transfer agent. The Co-Administrators shall be
under no obligation to investigate or confirm the accuracy or adequacy of any
information provided to the Co-Administrators by the Fund's transfer agent.
11.4 NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO
EVENT SHALL ANY PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
TRUSTEES, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE TO ANY OTHER
PARTY FOR CONSEQUENTIAL DAMAGES.
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Article 12 Term and Termination.
12.1 This Agreement shall be effective on the Effective Date and,
unless sooner terminated as provided herein, shall continue until September 30,
2001 (the "Initial Term").
12.2 Upon the expiration of the Initial Term, this Agreement shall
continue automatically for successive one-year terms ("Renewal Terms") with
respect to each Portfolio, provided such continuance is specifically approved at
least annually by (i) the Board of Directors or (ii) by a vote of a majority (as
defined in the 1940 Act and Rule 18f-2 thereunder) of the outstanding voting
securities of the particular Portfolio, provided that in either event the
continuance is also approved by a majority of the Board Members who are not
parties to this Agreement and who are not interested persons (as defined in the
0000 Xxx) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval.
12.3 The Fund may terminate this Agreement at any time after the
Initial Term, with or without cause, and without penalty, on at least sixty (60)
days written notice to the Co-Administrators.
12.4 Each Co-Administrator may terminate this Agreement with respect to
itself at any time after the Initial Term, with or without cause, and without
penalty, on at least sixty (60) days written notice to the Fund and the other
Co-Administrator.
12.5 The Fund may terminate this Agreement at any time during the
Initial Term in the event that the Fund or its shareholders incur damages in
excess of one hundred thousand dollars ($100,000) as a result of the willful
misfeasance, bad faith or negligence of the Co-Administrators, or the reckless
disregard of their duties hereunder. For this purpose, "damages" is defined as
damages caused by a single event, or cumulative series of events related to the
same matter, which generates a monetary loss to the Fund or its shareholders.
The Fund's right to terminate this Agreement pursuant to this Section 12.5 shall
remain effective even if the Co-Administrators have made the Fund or its
shareholders whole with respect to the damages caused.
12.6 The Fund may also terminate this Agreement at any time during the
Initial Term, regardless of the amount of damages to the Fund or its
shareholders, in the event that the Co-Administrators have failed to meet one of
the performance standards set forth in Exhibit 1 to Schedule B (a "Triggering
Event"). The Fund will provide the Co-Administrators with sixty (60) days
written notice if the Fund intends to exercise its option to terminate this
Agreement under this Section 12.6; provided, however, that such notice must be
given within sixty (60) days following the end of the month in which the
Triggering Event occurs. Notwithstanding the foregoing, the Fund's rights under
this Section 12.6 shall not become effective until ninety (90) days following
the Effective Date.
12.7 In the event this Agreement: (a) is terminated by the Fund
pursuant to Section 12.5, Section 12.6 or Section 12.9 hereof; or (b) is not
continued after the expiration of the Initial Term or any Renewal Term, all
reasonable expenses associated with the movement of records and materials and
conversion thereof to a successor administrator shall be borne by the
Co-
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Administrators, and the Fund shall not be responsible for the Co-Administrators'
costs associated with such termination; provided, however, that such expenses
shall not exceed $25,000 in the event this Agreement is not continued after the
expiration of the Initial Term or any Renewal Term. In the event this Agreement
is terminated by the Fund pursuant to any other provision of this Agreement, all
reasonable expenses associated with conversion to a successor administrator
shall be borne by the Fund.
12.8 Notwithstanding anything contained in this Agreement to the
contrary, unless this Agreement is terminated pursuant to Section 12.5, Section
12.6 or Section 12.9 hereof, should the Fund move any of the services provided
by the Co-Administrators hereunder to a successor service provider during the
Initial Term, or should, during the Initial Term, all or substantially all of
the Fund's assets be merged with or purchased by another entity which does not
utilize the services of the Co-Administrators, the Co-Administrators shall be
entitled to receive fees from the Fund for the period from the date of such
movement, merger or purchase until the end of the Initial Term (the "Unexpired
Term"). The fees payable for the Unexpired Term shall be accelerated to the date
of such movement, merger or purchase and shall be calculated in accordance with
Section 6.3 herein at the asset levels on such date.
12.9 The Fund may terminate this Agreement upon its Assignment by a
Co-Administrator unless the conditions to an Assignment as set forth in Article
16 hereof have been satisfied.
Article 13 Additional Portfolios.
In the event that the Fund establishes one or more Portfolios in
addition to those identified in Schedule A with respect to which the Fund
desires to have the Co-Administrators render services as administrator under the
terms hereof, the Fund shall so notify the Co-Administrators in writing, and if
the Co-Administrators agree in writing to provide such services, Schedule A
shall be deemed amended to include such additional Portfolios.
Article 14 Confidentiality.
14.1 The parties agree that the Proprietary Information (defined below)
is confidential information of the parties and their respective licensers. The
Fund and the Co-Administrators shall exercise at least the same degree of care,
but not less than reasonable care, to safeguard the confidentiality of the
Proprietary Information of each other as they would exercise to protect their
own Proprietary Information. The Fund and the Co-Administrators may use the
Proprietary Information only to exercise their respective rights or perform
their respective duties under this Agreement. Except as otherwise required by
law, the Fund and the Co-Administrators shall not duplicate, sell or disclose to
others the Proprietary Information of the other, in whole or in part, without
the prior written permission of the affected party. The Fund and the
Co-Administrators may, however, disclose Proprietary Information to their
respective employees who have a need to know the Proprietary Information to
perform work for the other, provided that the Fund and the Co-Administrators
shall use reasonable efforts to ensure that the Proprietary Information is not
duplicated or disclosed by their respective employees in breach of this
Agreement. The Fund and the Co-Administrators may also disclose the Proprietary
Information to independent
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contractors, auditors and professional advisors, provided they first agree in
writing to be bound by confidentiality obligations substantially similar to this
Section 14.1. Notwithstanding the previous sentence, in no event shall either
the Fund or the Co-Administrators disclose the Proprietary Information to any
competitor of the other without specific, prior written consent.
14.2 Proprietary Information means:
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating to
the past, present or future business activities of the Fund or the
Co-Administrators, their respective subsidiaries and affiliated
companies and the customers, clients and suppliers of any of them;
(b) any scientific or technical information, design, process,
procedure, formula or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Fund or the
Co-Administrators a competitive advantage over their competitors;
(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable;
(d) all documents, inventions, substances, engineering and
laboratory notebooks, drawings, diagrams, specifications, bills of
material, equipment, prototypes and models, and any other tangible
manifestation of the foregoing of any party hereto which now exist or
come into the control or possession of the other; and
(e) with respect to the Fund, all records and other
information relative to the Fund and its prior, present or potential
shareholders (and clients of such shareholders).
14.3 The obligations of confidentiality and restriction on use herein
shall not apply to any Proprietary Information that a party proves:
(a) Was in the public domain prior to the date of this
Agreement or subsequently came into the public domain through no fault
of such party; or
(b) Was lawfully received by the party from a third party free
of any obligation of confidence to such third party; or
(c) Was already in the possession of the party prior to
receipt thereof, directly or indirectly, from the other party; or
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(d) Is required to be disclosed in a judicial or
administrative proceeding after all reasonable legal remedies for
maintaining such information in confidence have been exhausted
including, but not limited to, giving the other party as much advance
notice of the possibility of such disclosure as practical so the other
party may attempt to stop such disclosure or obtain a protective order
concerning such disclosure; or
(e) Is subsequently and independently developed by employees,
consultants or agents of the party without reference to the Proprietary
Information disclosed under this Agreement.
14.4 Notwithstanding the foregoing, it is hereby understood and agreed
by the parties hereto that any marketing strategies, customer profiles or
administrative, business or shareholder servicing plans or similar items
prepared or developed by the Co-Administrators for the benefit of the Fund shall
be considered the Proprietary Information of the Fund and nothing in this
Agreement shall be construed to prevent or prohibit the Fund from disclosing
such Proprietary Information to a successor administrator.
14.5 The obligations of the parties hereto under this Article 14 shall
survive the termination of this Agreement.
Article 15 Force Majeure.
No party shall be liable for any default or delay in the performance of
its obligations under this Agreement if and to the extent such default or delay
is caused, directly or indirectly, by circumstances beyond such party's
reasonable control. In any such event, the non-performing party shall be excused
from any further performance and observance of the obligations so affected only
for as long as such circumstances prevail and such party continues to use
commercially reasonable efforts to recommence performance or observance as soon
as practicable.
Article 16 Assignment and Subcontracting.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Except for the pending acquisition of Investor Services Group
by PNC Bank Corp., this Agreement may not be Assigned or otherwise transferred
by any party hereto without the prior written consent of the other parties;
provided, however, that each party may, in its sole discretion, Assign all its
right, title and interest in this Agreement to an entity controlling, controlled
by, or under common control with, such party, provided that the Board of
Directors in its sole discretion reasonably determines within ninety (90) days
of receiving written notice of such Assignment that: (i) the financial capacity
of a Co-Administrator's assignee is not materially less than that of the
Co-Administrator; (ii) the nature and quality of the services to be provided
hereunder are not materially adversely affected by such Assignment; and (iii)
the quality and capability of the personnel and facilities of a
Co-Administrator's assignee are not materially less than those of the
Co-Administrator. The Co-Administrators may, in their sole discretion, engage
subcontractors to perform any non-material or non-substantive obligations
contained in this Agreement that they
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are otherwise required to perform hereunder, provided that the Co-Administrators
shall be responsible for all compensation payable to such subcontractors and
shall remain responsible for the acts and omissions of such subcontractors to
the same extent that the Co-Administrators are hereunder.
Article 17 Notice.
Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Fund or a Co-Administrator shall be sufficiently
given if addressed to a 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:
Xxxxx X. Xxxxxx, Esq.
The Northern Trust Company
00 Xxxxx XxXxxxx Xxxxxx - X-0
Xxxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
One Xxxxx Square
00xx xxx Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
To Northern:
Xxxxx X. Xxxxxx, Esq.
The Northern Trust Company
00 Xxxxx XxXxxxx Xxxxxx - X-0
Xxxxxxx, XX 00000
To Investor Services Group:
First Data Investor Services Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
with a copy to Investor Services Group's General Counsel
Article 18 Governing Law/Venue.
The laws of the Commonwealth of Massachusetts shall govern the
interpretation, validity, and enforcement of this Agreement. All actions arising
from or related to this Agreement shall
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14
be brought in the state and federal courts sitting in the City of Boston, and
the parties hereby submit themselves to the exclusive jurisdiction of those
courts.
Article 19 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
Article 20 Captions.
The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 21 Publicity.
No party shall release or publish news releases, public announcements,
advertising or other publicity relating to this Agreement or to the transactions
contemplated by it without the prior review and written approval of the other
parties; provided, however, that a party may make such disclosures as are
required by legal, accounting or regulatory requirements after making reasonable
efforts in the circumstances to consult in advance with the other parties.
Article 22 Relationship of Parties.
The Co-Administrators agree that they are independent contractors and
not partners or co-venturers and nothing contained herein shall be interpreted
or construed otherwise.
Article 23 Entire Agreement; Severability.
23.1 This Agreement, including all Schedules and Exhibits hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification or waiver of any term or condition of the Agreement
shall be valid unless in writing signed by each party. No such writing shall be
effective as against Investor Services Group unless said writing is executed by
a Senior Vice President, Executive Vice President or President of Investor
Services Group. No such writing shall be effective as against the Fund unless
said writing is executed by the Chairman of the Board of Directors or another
person specifically designated by the Board of Directors. No such writing shall
be effective as against Northern unless said writing is executed by the Vice
President, Senior Vice President, Executive Vice President or President of
Northern. A party's waiver of a breach of any term or condition in the Agreement
shall not be deemed a waiver of any subsequent breach of the same or another
term or condition.
23.2 The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In
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15
such case, the parties shall in good faith modify or substitute such provision
consistent with the original intent of the parties. Without limiting the
generality of this paragraph, if a court determines that any remedy stated in
this Agreement has failed of its essential purpose, then all other provisions of
this Agreement shall remain fully effective.
Article 24 Board Member and Shareholder Liability.
This Agreement is executed by or on behalf of the Fund with respect to
each of the Portfolios and the obligations hereunder are not binding upon any of
the Board Members, officers or shareholders of the Fund individually but are
binding only upon the Portfolio to which such obligations pertain and the assets
and property of such Portfolio. All obligations of the Fund under this Agreement
shall apply only on a Portfolio-by-Portfolio basis, and the assets of one
Portfolio shall not be liable for the obligations of another Portfolio. The
Fund's Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts.
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16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the Effective Date.
NORTHERN FUNDS
By:/s/ Xxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxx
-------------------------------------
Title: Chairman of the Board of Trustees
-------------------------------------
THE NORTHERN TRUST COMPANY
By:/s/ Xxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxx
-------------------------------------
Title: Senior Vice President
-------------------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC.
By:/s/ Jylanne Xxxxx
-----------------------------------------
Name: Jylanne Xxxxx
-------------------------------------
Title: Senior Vice President
-------------------------------------
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17
SCHEDULE A
LIST OF PORTFOLIOS
Money Market Fund
U.S. Government Money Market Fund
U.S. Government Select Money Market Fund
Tax-Exempt Money Market Fund
Municipal Money Market Fund
California Municipal Money Market Fund
U.S. Government Fund
Short-Intermediate U.S. Government Fund
Intermediate Tax-Exempt Fund
California Intermediate Tax-Exempt Fund
Florida Intermediate Tax-Exempt Fund
Fixed Income Fund
Tax-Exempt Fund
Arizona Tax-Exempt Fund
California Tax-Exempt Fund
International Fixed Income Fund
High Yield Municipal Fund
High Yield Fixed Income Fund
Income Equity Fund
Stock Index Fund
Growth Equity Fund
Select Equity Fund
Mid Cap Growth Fund
Small Cap Index Fund
Small Cap Fund
Small Cap Growth Fund
International Growth Equity Fund
International Select Equity Fund
Technology Fund
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18
SCHEDULE B
DUTIES OF THE CO-ADMINISTRATORS
(a) Maintaining office facilities (which may be in the offices of a
Co-Administrator or a corporate affiliate) and furnishing corporate officers for
the Fund;
(b) Furnishing data processing services, clerical services, and
executive and administrative services and standard stationery and office
supplies;
(c) Performing all functions ordinarily performed by the office of a
corporate treasurer, and furnishing the services and facilities ordinarily
incident thereto, as follows:
- Expense accrual monitoring and payment of the Fund's bills,
preparing monthly reconciliation of the Fund's expense records
and updating projections of annual expenses
- Determining dividends
- Calculating yields and total returns
- Preparing materials for review by the Board of Directors,
e.g., written reports pursuant to Rules 2a-7, 10f-3, 17a-7,
17e-1 and 144A and the Fund's applicable procedures
- Tax and financial counsel
- Creating expense pro formas for new Portfolios/classes
- Reporting Fund statistical information to investment company
reporting agencies and associations (e.g., Lipper Analytical
Services, Inc. and the Investment Company Institute)
- Compliance testing (e.g., to test compliance with applicable
provisions of the Prospectus, 1940 Act and Internal Revenue
Code)
(d) Preparing and submitting reports to the Fund's shareholders and the
Commission including, but not necessarily limited to, Annual Reports and
Semi-Annual Reports on Form N-SAR;
(e) Preparing and printing financial statements;
(f) Preparing monthly Portfolio profile reports;
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19
(g) Preparing and filing the Fund's federal and state tax returns
(other than those required to be filed by the Fund's custodian and transfer
agent) and providing shareholder tax information to the Fund's transfer agent;
(h) Assisting the Fund's investment adviser, at the adviser's request,
in monitoring and developing compliance procedures for the Fund which will
include, among other matters, procedures to assist the adviser in monitoring
compliance with each Portfolio's investment objective, policies, restrictions,
tax matters and applicable laws and regulations;
(i) Assisting in marketing strategy and product development;
(j) Performing oversight/management responsibilities, including the
following:
- Supervision and coordination of transfer agent
- Supervision and coordination of XXX custodian
- Supervision and coordination of Fund custodian
- Vendor management and invoicing
- Daily report coordination
- Media relations
- Sales literature forms and development
- Fund operations coordination
- Management of auditor relationship
- Oversight of Portfolio compliance and tax function
(k) Performing "blue sky" compliance functions, as follows:
- Effecting and maintaining, as the case may be, the
registration of Shares of the Fund for sale under the
securities laws of the jurisdictions listed in the Written
Instructions of the Fund, which instructions will include the
amount of Shares to be registered as well as the warning
threshold to be maintained.
- Filing with each appropriate jurisdiction the appropriate
materials relating to the Fund.
- Providing to the Fund quarterly reports of sales activity in
each jurisdiction in accordance with the Written Instructions
of the Fund. Sales will be reported by shareholder residence.
NSCC trades and order clearance will be reported by the
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20
state provided by the dealer at the point of sale. Trades by
omnibus accounts will be reported by trustee state of
residence in accordance with the Written Instructions of the
Fund outlining the entities which are permitted to maintain
omnibus positions with the Fund.
- In the event sales of Shares in a particular jurisdiction
reach or exceed the warning levels provided in the Written
Instructions of the Fund, the Co-Administrators will promptly
notify the Fund with a recommendation of the amount of Shares
to be registered in such jurisdiction and the fee for such
registration. The Co-Administrators will not register
additional Shares in such jurisdiction unless and until the
Co-Administrators shall have received Written Instructions to
do so.
- If the Co-Administrators are instructed by the Fund not to
register Shares in a particular jurisdiction, the
Co-Administrators will use their best efforts to cause any
sales in such jurisdictions to be blocked, and such sales will
not be reported to the Co-Administrators as sales of Shares of
the Fund.
(l) Performing corporate secretarial services including the following:
- Assist in maintaining corporate records and good standing
status of Fund in its state of organization
- Develop and maintain calendar of annual and quarterly board
approvals and regulatory filings
- Prepare notice, agenda, memoranda, resolutions and background
materials for legal approvals at quarterly and special board
meetings and committee meetings; assemble and distribute board
materials for board meetings and committee meetings; attend
meetings; make presentations where appropriate; prepare
minutes; follow up on issues; prepare such periodic and
special reports as the Board Members may reasonably request
- Provide support for written consent votes where needed
(m) Monitoring the Fund's arrangements with respect to services
provided by institutions ("Servicing Agents") to their customers who are the
beneficial owners of Shares, pursuant to agreements ("Servicing Agreements")
between the Fund and such Servicing Agents including:
- Review the qualifications of Servicing Agents wishing to enter
into Servicing Agreements
- Assist in the execution and delivery of Servicing Agreements
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21
- Report to the Board of Directors with respect to the
amounts paid or payable by the Fund from time to time under
the Servicing Agreements and the nature of the services
provided by Servicing Agents
- Maintain appropriate records in connection with their
monitoring duties
(n) Performing the following legal services:
- Prepare and file annual Post-Effective Amendments to the
Fund's Registration Statement
- Prepare and file Rule 24f-2 Notices
- Prepare and file Forms N-SAR
- Prepare and file Annual and Semi-Annual Financial Reports
- Communicate significant regulatory or legislative developments
to Fund management and Board Members and provide related
planning assistance where needed
- Consult with Fund management regarding portfolio compliance
and Fund corporate and regulatory issues as needed
- Maintain effective communication with outside counsel
- Arrange D&O/E&O insurance and fidelity bond coverage for Fund
- Assist in monitoring Fund Code of Ethics reporting and provide
such reports to the person designated under the Fund's Code
- Monitor handling of litigation by outside counsel and
non-routine regulatory matters
- Assist in managing Commission audits of the Fund at the
investment adviser's principal place of business
- Review sales material and advertising for Fund Prospectus
compliance
- Assist in developing compliance guidelines and procedures to
improve overall compliance by Fund and service providers
- Prepare compliance manuals
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22
(o) Performing, in accordance with the Written Instructions of the
Fund, Special Legal Services in accordance with the pricing structure listed on
the Fee Schedule attached to this Agreement as Schedule C. Examples of such
Special Legal Services are:
- Assist in new Portfolio start-up (to the extent requested):
- Coordinate time and responsibility schedules
- Prepare Fund corporate documents
- Draft/file registration statement (including
investment objectives/policies and prospectuses)
- Respond to and negotiate Commission comments
- Draft notice, agenda and resolutions for
organizational meeting; attend board meeting; make
presentations where appropriate; prepare minutes and
follow up on issues
- Prepare proxy materials for special meetings of shareholders
(including fund merger documents)
- Prepare Post-Effective Amendments for special purposes (e.g.,
new funds or classes, changes in advisory relationships,
mergers, restructurings)
- Assist in extraordinary non-recurring projects, including
providing consultative legal services, such as:
- Arrange CDSC financial programs
- Prospectus simplification
- Profile prospectuses
- Exemptive order applications
- Requests for no-action letters
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EXHIBIT 1 TO SCHEDULE B
PERFORMANCE STANDARDS
The Co-Administrators' obligation to meet the following Performance Standards
shall be measured in the aggregate with respect to all Portfolios of the Fund.
The Co-Administrators will report to the Fund on a monthly basis the percent of
items completed within standard as well as a quality rating. Reporting will be
detailed to the transaction type level. A pass/fail determination for
contractual penalties will be based on the categories listed below. Note that
completion standards are measured in business days.
Fund Administration (Treasury and Reporting)/Tax/Compliance
The following standards will be met 100% of the time:
- All Commission and Internal Revenue Service ("IRS") regulatory
requirements will be met according to the deadlines set forth
by the Commission and the IRS
- Notification to the Fund's investment adviser within two (2)
business days with compliance violations based on procedures
established by and among the Co-Administrators and the Fund
- Directors & Officers Errors & Omissions Insurance Coverage
will be reviewed annually
- Rule 17g-1 Fidelity Bond filings will be made as required by
the regulations of the Commission
The following standard will be met 98% of the time:
- Code of Ethics reporting forms will be circulated at least
seven (7) business days before each quarter end
BLUE SKY
The following standards will be met 98% of the time:
- Annual renewal filings will be submitted at least thirty (30)
business days prior to expiration
- Filings of Prospectus and Annual Reports will be submitted
within fifteen (15) business days of printing/release
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Legal Administration
The following standards will be met 98% of the time as measured on a quarterly
basis:
- Board materials will be sent to the Fund for review at least
fourteen (14) business days prior to the Board meeting,
provided that all requested information has been received by
the Co-Administrators within agreed-upon time frames
- Board materials will be sent to the Board Members at least
seven (7) business days prior to the Board meeting, provided
that all requested information has been received by the
Co-Administrators within agreed-upon time frames
- Timely submission of sales literature to NASD, provided that
copies of such materials are provided to the Co-Administrators
or their affiliates on a timely basis
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SCHEDULE C
FEE SCHEDULE
For the services rendered, expenses assumed, facilities furnished and
payments made by the Co-Administrators, as provided for in this Agreement, the
Fund, on behalf of each Portfolio, on the first business day of each month, will
pay to Northern, as agent for itself and Investor Services Group, a fee for the
previous month at the annualized rates listed below.
1. Standard Annual Fees: .15% of each Portfolio's average daily net
assets
The foregoing fee will be computed based on net assets on each day.
2. Fees for Special Legal Services: The Co-Administrators shall be
entitled to the following fee for the performance of any Special Legal
Services as described in Schedule B in accordance with the Written
Instructions of the Fund: $185 per hour subject to certain project caps
as may be agreed to by the Co-Administrators and the Fund. Services and
charges may vary based on volume.
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SCHEDULE D
FUND DOCUMENTS
- Certified copy of the Articles of Incorporation of the Fund
- Certified copy of the By-Laws of the Fund
- Copy of the resolution of the Board of Directors authorizing the
execution and delivery of this Agreement
- Copies of all agreements between the Fund and its service providers
- A listing of all jurisdictions in which each Portfolio is registered
and lawfully available for sale as of the date of this Agreement and
all information relative to the monitoring of sales and registrations
of the Shares in such jurisdictions
- The Fund's most recent post-effective amendment to its registration
statement
- The Fund's Prospectus
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