EXHIBIT (d)(30)
NORTHERN FUNDS
FORM OF SUB-ADVISORY AGREEMENT
MULTI-MANAGER _______________ FUND
Sub-Advisory Agreement (this "Agreement") entered into as of ____
day of __________, 200_, by and among Northern Trust Investments, N.A. and
Northern Trust Global Advisors, Inc. (together, the "Advisers"), and [name of
Sub-Adviser], a [entity description] (the "Sub-Adviser").
WHEREAS, the Advisers have entered into an Investment Advisory and
Ancillary Services Agreement dated ___________, 2006 (the "Advisory Agreement")
with Northern Funds (the "Trust"), relating to the provision of portfolio
management and administrative services to the Multi-Manager _______________ Fund
(the "Fund");
WHEREAS, the Advisory Agreement provides that the Advisers may
delegate any or all of their portfolio management responsibilities under the
Advisory Agreement to one or more sub-advisers;
WHEREAS, the Advisers and the Trustees of the Trust desire to retain
the Sub-Adviser to render portfolio management services to the Fund in the
manner and on the terms set forth in this Agreement, and the Sub-Adviser is
willing to provide such services.
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. Sub-Advisory Services.
(a) The Advisers hereby appoint the Sub-Adviser to act as an
investment adviser to the Fund for the periods and on the
times herein set forth. The Sub-Adviser accepts such
appointment and agrees to render the services herein set
forth, for the compensation herein provided.
(b) The Sub-Adviser shall, subject to the supervision and
oversight of the Advisers, manage the investment and
reinvestment of such portion of the assets of the Fund, as the
Advisers may from time to time allocate to the Sub-Adviser for
management (the "Sub-Advised Assets"). The Sub-Adviser shall
manage the Sub-Advised Assets in conformity with (i) the
investment objective, policies and restrictions of the Fund
set forth in the Trust's prospectus and statement of
additional information relating to the Fund, as they may be
amended from time to time, any additional policies or
guidelines, including without limitation compliance policies
and procedures, established by the Advisers, the Trust's Chief
Compliance Officer, or by the Trust's Board of Trustees
("Board") that have been furnished in writing to the
Sub-Adviser, (ii) the provisions of the Internal Revenue Code
as amended (the "Code") applicable to "regulated
investment companies" (as defined in Section 851 of the Code),
(iii) the written instructions and directions received from
the Advisers and the Trust; and (iv) the requirements of the
Investment Company Act of 1940 (the "1940 Act"), the
Investment Advisers Act of 1940 ("Advisers Act"), and all
other federal and state laws applicable to registered
investment companies and The sub-adviser's duties under this
Agreement, all as may be in effect from time to time. The
foregoing are referred to below together as the "Policies."
For purposes of compliance with the Policies, the Sub-Adviser
shall be entitled to treat the Sub-Advised Assets as though
the Sub-Advised Assets constituted the entire Fund, and the
Sub-Adviser shall not be responsible in any way for the
compliance of any other assets of the Fund, other than the
Sub-Advised Assets, with the Policies, or for the compliance
of the Fund, taken as a whole, with the Policies. Subject to
the foregoing, the Sub-Adviser is authorized, in its
discretion and without prior consultation with the Advisers,
to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of
the Fund, without regard to the length of time the securities
have been held and the resulting rate of portfolio turnover or
any tax considerations; and the majority or the whole of the
Sub-Advised Assets may be invested in such proportions of
stocks, bonds, other securities or investment instruments, or
cash, as the Sub-Adviser shall determine. Notwithstanding the
foregoing provisions of this Section 1(b), however, (i) the
Sub-Adviser shall, upon written instructions from any Adviser,
effect such portfolio transactions for the Sub-Advised Assets
as the Adviser shall determine are necessary in order for the
Fund to comply with the Policies, and (ii) upon notice to the
Sub-Adviser, the Advisers may effect in-kind redemptions with
shareholders of the Fund with securities included within the
Sub-Advised Assets.
(c) Absent instructions from the Advisers or the officers of the
Trust to the contrary, the Sub-Adviser shall place orders
pursuant to its determinations either directly with the issuer
or with any broker and/or dealer or other person who deals in
the securities in which the Fund is trading. With respect to
common and preferred stocks, in executing portfolio
transactions and selecting brokers or dealers, the Sub-Adviser
shall use its best judgment to obtain the best overall terms
available. In assessing the best overall terms available for
any transaction, the Sub-Adviser shall consider all factors it
deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition
and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In evaluating
the best overall terms available and in selecting the broker
or dealer to execute a particular transaction, the Sub-Adviser
may also consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) provided
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to the Fund and/or other account over which the Sub-Adviser
and/or an affiliate of the Sub-Adviser exercises investment
discretion. With respect to securities other than common and
preferred stocks, in placing orders with brokers, dealers or
other persons, the Sub-Adviser shall attempt to obtain the
best net price and execution of its orders, provided that to
the extent the execution and price available from more than
one broker, dealer or other such person are believed to be
comparable, the Sub-Adviser may, at its discretion but subject
to applicable law, select the executing broker, dealer or such
other person on the basis of the Sub-Adviser's opinion of the
reliability and quality of such broker, dealer or such other
person; broker dealers selected by the Sub-Adviser for the
purchase and sale of securities for the Sub-Advised Assets may
include brokers or dealers affiliated with the Sub-Adviser,
provided such orders comply with Rules 17e-1 and 10f-3 under
the 1940 Act and the Trust's Rule 17e-1 and Rule 10f-3
Procedures, respectively, in all respects. Notwithstanding the
foregoing, the Sub-Adviser will not effect any transaction
with a broker or dealer that is an "affiliated person" (as
defined under the 1940 Act) of the Sub-Adviser or the Advisers
without the prior approval of the Advisers. The Advisers shall
provide the Sub-Adviser with a list of broker dealers that are
affiliated persons of the Advisers.
(d) The Sub-Adviser acknowledges that the Advisers and the Trust
may rely on Rules 17a-7, 17a-10, 10f-3 and 17e-1 under the
1940 Act, and the Sub-Adviser hereby agrees that it shall not
consult with any other sub-adviser to the Trust with respect
to transactions in securities for the Sub-Advised Assets or
any other transactions in the Trust's assets, other than for
the purposes of complying with the conditions of paragraphs
(a) and (b) of Rule 12d3-1 under the 1940 Act.
(e) The Sub-Adviser has provided the Advisers with a true and
complete copy of its compliance policies and procedures for
compliance with "federal securities laws" (as such term is
defined under Rule 38a-1 of the 1940 Act) and Rule 206(4)-7 of
the Advisers Act (the "Sub-Adviser Compliance Policies"). The
Sub-Adviser's chief compliance officer ("Sub-Adviser CCO")
shall provide to the Trust's Chief Compliance Officer ("Trust
CCO") or his or her delegee promptly (and in no event more
than 10 business days) the following:
(i) a report of any material changes to the Sub-Adviser
Compliance Policies;
(ii) a report of any "material compliance matters," as
defined by Rule 38a-1 under the 1940 Act, that have
occurred in connection with the Sub-Adviser Compliance
Policies;
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(iii) a copy of the Sub-Adviser CCO's report with respect to
the annual review of the Sub-Adviser Compliance Policies
pursuant to Rule 206(4)-7 of the Advisers Act; and
(iv) an annual (or more frequently as the Trust CCO may
request) certification regarding the Sub-Adviser's
compliance with Rule 206(4)-7 under the Advisers Act and
Section 38a-1 of the 1940 Act as well as the foregoing
sub-paragraphs (i) - (iii).
(f) The Sub-Adviser may, on occasions when it deems the purchase
or sale of a security to be in the best interests of a Fund as
well as other fiduciary or agency accounts managed by the
Sub-Adviser, aggregate, to the extent permitted by applicable
laws and regulations, the securities to be sold or purchased
in order to obtain the best overall terms available execution
with respect to common and preferred stocks and the best net
price and execution with respect to other securities. In such
event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made
by the Sub-Adviser in the manner it considers to be most
equitable and consistent with its fiduciary obligations to the
Fund and to its other accounts.
(g) The Sub-Adviser, in connection with its rights and duties with
respect to the Fund and the Trust shall use the care, skill,
prudence and diligence under the circumstances then prevailing
that a prudent person acting in a like capacity and familiar
with such matters would use in the conduct of an enterprise of
a like character and with like aims.
(h) The services of the Sub-Adviser hereunder are not deemed
exclusive and the Sub-Adviser shall be free to render similar
services to others (including other investment companies) so
long as its services under this Agreement are not impaired
thereby. The Sub-Adviser will waive enforcement of any
non-compete agreement or other agreement or arrangement to
which it is currently a party that restricts, limits, or
otherwise interferes with the ability of the Advisers to
employ or engage any person or entity to provide investment
advisory or other services and will transmit to any person or
entity notice of such waiver as may be required to give effect
to this provision; and the Sub-Adviser will not become a party
to any non-compete agreement or any other agreement,
arrangement, or understanding that would restrict, limit, or
otherwise interfere with the ability of the Advisers and the
Trust or any of their affiliates to employ or engage any
person or organization, now or in the future, to manage the
Fund or any other assets managed by the Advisers.
(i) The Sub-Adviser shall furnish the Advisers and the
administrators of the Trust (together, the "Administrator")
weekly, monthly, quarterly and annual reports concerning
portfolio transactions and performance of the Sub-Advised
Assets as the Advisers may reasonably determine in such
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form as may be mutually agreed upon, and agrees to review the
Sub-Advised Assets with the Advisers and discuss the
management of them. The Sub-Adviser shall permit all books and
records with respect to the Sub-Advised Assets to be inspected
and audited by the Advisers, the Administrators to the Trust,
and the Trust CCO or their delegees at all reasonable times
during normal business hours, upon reasonable notice. The
Sub-Adviser shall also provide the Advisers with such other
information and reports, including information and reports
related to compliance matters, as may reasonably be requested
by them from time to time, including without limitation all
material requested by or required to be delivered to the
Board.
(j) Unless otherwise instructed by the Advisers, the Sub-Adviser
shall not have the power, discretion or responsibility to vote
any proxies in connection with securities in which the
Sub-Advised Assets may be invested, and the Advisers shall
retain such responsibility.
(k) The Sub-Adviser shall cooperate promptly and fully with the
Advisers and/or the Trust in responding to any regulatory or
compliance examinations or inspections (including any
information requests) relating to the Trust, the Fund or
either of the Advisers brought by any governmental or
regulatory authorities. The Sub-Adviser shall provide the
Trust CCO or his or her delegee with reasonable access to
copies of all SEC examination letters or other correspondence
or communications in which the SEC has identified any issues
relating to any aspects of the Sub-Adviser's operations.
(l) The Sub-Adviser shall be responsible for the preparation and
filing of Schedule 13G and Form 13F on behalf of the
Sub-Advised Assets. The Sub-Adviser shall not be responsible
for the preparation or filing of any other reports required on
behalf of the Sub-Advised Assets, except as may be expressly
agreed to in writing.
(m) The Sub-Adviser shall maintain separate detailed records of
all matters pertaining to the Sub-Advised Assets, including,
without limitation, brokerage and other records of all
securities transactions. Any records required to be maintained
and preserved pursuant to the provisions of Rule 31a-1 and
Rule 31a-2 promulgated under the 1940 Act that are prepared or
maintained by the Sub-Adviser on behalf of the Trust are the
property of the Trust and will be surrendered promptly to the
Trust upon request. The Sub-Adviser further agrees to preserve
for the periods prescribed in Rule 31a-2 under the 1940 Act
the records required to be maintained under Rule 31a-1 under
the 1940 Act.
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2. Representations and Warranties of the Parties
(a) The Sub-Adviser represents and warrants to the Advisers as
follows:
(i) The Sub-Adviser is a registered investment adviser under
the Advisers Act;
(ii) The Form ADV that the Sub-Adviser has previously
provided to the Advisers is a true and complete copy of
the form as currently filed with the United States
Securities and Exchange Commission, and the information
contained therein is accurate and complete in all
material respects and does not omit to state any
material fact necessary in order to make the statements
made, in light of the circumstances under which they are
made, not misleading. The Sub-Adviser will promptly
provide the Advisers and the Trust with a complete copy
of all subsequent amendments to its Form ADV;
(iii) The Sub-Adviser will carry at all times, and with
companies rated by A.M. Best Company with at least an
A-VII rating, or its equivalent, professional errors and
omissions liability insurance covering services provided
hereunder by the Sub-Adviser in an appropriate amount,
which insurance shall be primary to any insurance policy
carried by the Advisers;
(iv) The Sub-Adviser will furnish the Advisers with
certificates of insurance in forms and substance
reasonably acceptable to the Advisers evidencing the
coverages specified in paragraph 2(a)(iii) hereof and
will provide notice of termination of such coverages, if
any, to the Advisers and the Trust, all as promptly as
reasonably possible. The Sub-Adviser will notify the
Advisers promptly, and in any event within 10 business
days, when the Sub-Adviser receives notice of any
termination of the specified coverage; and
(v) This Agreement has been duly authorized and executed by
the Sub-Adviser.
(b) Each Adviser represents and warrants to the Sub-Adviser as
follows:
(i) Each Adviser is registered under the Advisers Act; and
(ii) Each Adviser and the Trust has duly authorized the
execution of this Agreement by the Advisers.
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3. Obligations of the Advisers.
(a) The Advisers shall provide (or cause the Fund's Custodian (as
defined in Section 3 hereof) to provide) timely information to
the Sub-Adviser regarding such matters as the composition of
the Sub-Advised Assets, cash requirements and cash available
for investment in the Sub-Advised Assets, and all other
information as may be reasonably necessary for the Sub-Adviser
to perform its responsibilities hereunder.
(b) The Advisers have furnished the Sub-Adviser with a copy of the
prospectus and statement of additional information of the Fund
and they agree during the continuance of this Agreement to
furnish the Sub-Adviser copies of any revisions or supplements
thereto at, or, if practicable, before the time the revisions
or supplements become effective. The Advisers agree to furnish
the Sub-Adviser with copies of any financial statements or
reports made by the Fund to its shareholders, and any further
materials or information that the Sub-Adviser may reasonably
request to enable it to perform its functions under this
Agreement.
4. Custodian. The Advisers shall provide the Sub-Adviser with a copy of the
Fund's agreement with the custodian designated to hold the assets of the Fund
(the "Custodian") and any material modifications thereto (the "Custody
Agreement") that may affect the Sub-Adviser's duties, copies of such
modifications to be provided to the Sub-Adviser reasonably in advance of the
effectiveness of such modifications. The Sub-Advised Assets shall be maintained
in the custody of the Custodian identified in, and in accordance with the terms
and conditions of, the Custody Agreement (or any sub-custodian properly
appointed as provided in the Custody Agreement). The Sub-Adviser shall have no
liability for the acts or omissions of the Custodian, unless such act or
omission is taken solely in reliance upon instruction given to the Custodian by
a representative of the Sub-Adviser properly authorized to give such instruction
under the Custody Agreement. Any assets added to the Fund shall be delivered
directly to the Custodian.
5. Use of Sub-Adviser's Name. During the term of this Agreement, the Advisers
shall have permission to use the Sub-Adviser's name in the marketing of the
Fund, and agree to furnish the Sub-Adviser, for its prior approval (which
approval shall not be unreasonably withheld) at its principal office all
prospectuses, proxy statements and reports to shareholders prepared for
distribution to shareholders of the Fund or the public, which refer to the
Sub-Adviser in any way. If Advisers do not receive a response from the
Sub-Adviser with respect to such materials within five days of its submission
for approval, such materials shall be deemed accepted by the Sub-Adviser. The
Sub-Adviser agrees that Advisers may request that Sub-Adviser approve use of a
certain type, and that Advisers need not provide for approval each additional
piece of marketing material that is of substantially the same type.
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6. Expenses. During the Term of this Agreement, the Sub-Adviser will pay all
expenses incurred by it in connection with the performance of its duties under
paragraph 1 hereof other than the cost (including taxes, brokerage commissions
and other transaction costs, if any) of the securities purchased or sold for the
Fund.
7. Compensation of the Sub-Adviser. As full compensation for all services
rendered, facilities furnished and expenses borne by the Sub-Adviser hereunder,
the Sub-Adviser shall be paid the fees in the amounts and in the manner set
forth in Appendix A hereto.
8. Independent Contractor Status. The Sub-Adviser shall for all purposes hereof
be deemed to be an independent contractor and shall, unless otherwise provided
or authorized, have no authority to act for or represent the Trust or the
Advisers in any way or otherwise be deemed an agent of the Fund or the Advisers.
9. Liability and Indemnification.
(a) Liability. The duties of the Sub-Adviser shall be confined to those
expressly set forth herein with respect to the Sub-Advised Assets.
The Sub-Adviser shall not be liable for any loss arising out of any
portfolio investment or disposition hereunder, except a loss
resulting from willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of reckless disregard of
its obligations and duties hereunder. Under no circumstances shall
the Sub-Adviser be liable for any loss arising out of any act or
omission taken by another sub-adviser, or any other third party, in
respect of any portion of the Trust's assets not managed by the
Sub-Adviser pursuant to this Agreement.
(b) Indemnification.
(i) The Sub-Adviser shall indemnify the Advisers, the Trust and
the Fund, and their respective affiliates and controlling
persons (the "Sub-Adviser Indemnified Persons") for any
liability and expenses, including reasonable attorneys' fees,
which the Advisers, the Trust or the Fund and their respective
affiliates and controlling persons may sustain as a result of
the Sub-Adviser's willful misfeasance, bad faith, gross
negligence, or reckless disregard of its duties hereunder;
provided, however, that the Sub-Adviser Indemnified Persons
shall not be indemnified for any liability or expenses that
may be sustained as a result of the either of the Advisers'
willful misfeasance, bad faith, gross negligence, or reckless
disregard of their duties hereunder.
(ii) Each Adviser shall indemnify the Sub-Adviser, its affiliates
and its controlling persons (the "Adviser Indemnified
Persons") for any liability and expenses, including reasonable
attorneys' fees, arising from, or in connection with, such
Adviser's breach of this
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Agreement or their representations and warranties herein or as
a result of such Adviser's willful misfeasance, bad faith,
gross negligence, reckless disregard of their duties hereunder
or violation of applicable law; provided, however, that the
Adviser Indemnified Persons shall not be indemnified for any
liability or expenses that may be sustained as a result of the
Sub-Adviser's willful misfeasance, bad faith, gross
negligence, or reckless disregard of its duties hereunder.
10. Effective Date and Termination. This Agreement shall become effective as of
the date of its execution, and:
(a) unless otherwise terminated, this Agreement shall continue in effect
until [March] __, 200_, and from year to year thereafter so long as
such continuance is specifically approved at least annually (i) by
the Board or by vote of a majority of the outstanding voting
securities of the Fund, and (ii) by vote of a majority of the
Trustees of the Trust who are not interested persons of the Trust,
either of the Advisers or the Sub-Adviser, cast in person at a
meeting called for the purpose of voting on such approval;
(b) this Agreement may at any time be terminated on 60 days' written
notice to the Sub-Adviser either by vote of the Board or by vote of
a majority of the outstanding voting securities of the Fund;
(c) this Agreement shall automatically terminate in the event of its
assignment or upon the termination of the Advisory Agreement; and
(d) this Agreement may be terminated by the Sub-Adviser on 30 days'
written notice to the Advisers and the Trust, or by the Advisers
immediately upon notice to the Sub-Adviser.
Termination of this Agreement pursuant to this Section 10 shall be without
the payment of any penalty.
11. Amendment. This Agreement may be amended at any time by mutual consent of
the Advisers and the Sub-Adviser, provided that, if required by law, such
amendment shall also have been approved by vote of a majority of the outstanding
voting securities of the Fund and by vote of a majority of the Trustees of the
Trust who are not interested persons of the Trust, either of the Advisers, or
the Sub-Adviser, cast in person at a meeting called for the purpose of voting on
such approval.
12. Assignment. The Sub-Adviser may not assign this Agreement and this Agreement
shall automatically terminate in the event of an "assignment," as such term is
defined in Section 2(a)(4) of the 1940 Act. The Sub-Adviser shall notify the
Advisers in writing sufficiently in advance of any proposed change of "control,"
as defined in Section
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2(a)(9) of the 1940 Act, so as to enable the Trust and/or the Advisers to: (a)
consider whether an assignment will occur, (b) consider whether to enter into a
new Sub-Advisory Agreement with the Sub-Adviser, and (c) prepare, file, and
deliver any disclosure document to the Fund's shareholders as may be required by
applicable law.
13. Miscellaneous. 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. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be construed in accordance with applicable federal law and the
laws of the State of Illinois and shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors (subject to
paragraph 10 (c) hereof) and, to the extent provided in paragraph 9 hereof, each
Sub-Adviser and Adviser Indemnified Party. Anything herein to the contrary
notwithstanding, this Agreement shall not be construed to require, or to impose
any duty upon, either of the parties to do anything in violation of any
applicable laws or regulations. Any provision in this Agreement requiring
compliance with any statute or regulation shall mean such statute or regulation
as amended and in effect from time to time.
14. Regulation S-P. In accordance with Regulation S-P, if non-public personal
information regarding any party's customers or consumers is disclosed to the
other party in connection with this Agreement, the other party receiving such
information will not disclose or use that information other than as necessary to
carry out the purposes of this Agreement.
15. Confidentiality. Any information or recommendations supplied by either the
Advisers or the Sub-Adviser, that are not otherwise in the public domain or
previously known to the other party in connection with the performance of its
obligations and duties hereunder, including without limitation portfolio
holdings of the Trust, financial information or other information relating to a
party to this Agreement, are to be regarded as confidential ("Confidential
Information") and held in the strictest confidence. Except as may be required by
applicable law or rule as requested by regulatory authorities having
jurisdiction over a party rule or as requested by regulatory authorities having
jurisdiction over a party to this Agreement, Confidential Information may be
used only by the party to which said information has been communicated and such
other persons as that party believes are necessary to carry out the purposes of
this Agreement, the custodian, and such persons as the Advisers may designate in
connection with the Sub-Advised Assets.
16. Counterparts. This Agreement may be executed 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.
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This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Illinois.
NORTHERN TRUST GLOBAL ADVISORS, INC.
By:
---------------------------------------
Name:
Title:
NORTHERN TRUST INVESTMENTS, N.A.
By:
---------------------------------------
Name:
Title:
[Name of Sub-Adviser]
By:
---------------------------------------
Name:
Title:
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Appendix A
Sub-Advisory Fees
As full compensation for the services and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, the Advisers shall pay the Sub-Adviser a
fee at the annual rate of _____% of the first $_____ million of Sub-Advised
Assets' average daily net assets and _____% of the Sub-Advised Assets' average
daily net assets in excess of $_____ million.
Such compensation will be computed based on net assets on each day and
will be payable monthly in arrears.
