Exhibit (d)
NORTHERN INSTITUTIONAL FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 31st day of July, 2001 between NORTHERN
INSTITUTIONAL FUNDS, a Delaware business trust (the "Trust"), and NORTHERN TRUST
INVESTMENTS, INC., an Illinois state bank (the "Adviser").
WITNESSETH:
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WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial
interest ("Shares") in separate series with each such series representing the
interests in a separate portfolio of securities and other assets; and
WHEREAS, the Trust presently intends to offer Shares in a new
portfolio, known as the Liquid Assets Portfolio (such Portfolio, the "Current
Portfolio," together with all other portfolios previously or subsequently
established by the Trust and made subject to this Agreement being herein
collectively referred to as the "Portfolios"); and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory services to the Trust and its Current Portfolio as indicated below and
the Adviser is willing to so render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Adviser.
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(a) The Trust hereby appoints the Adviser to act as investment
adviser to the Trust and its Current Portfolio for the periods
and on the terms herein set forth. The Adviser accepts such
appointment and agrees to render the services herein set forth,
for the compensation herein provided.
(b) In the event that the Trust establishes one or more portfolios
other than the Current Portfolio with respect to which it desires
to retain the Adviser to act as investment adviser hereunder, it
shall notify the Adviser in writing. If the Adviser is willing to
render such services under this Agreement it shall notify the
Trust in writing whereupon such portfolio shall become a
Portfolio hereunder and shall be subject to the provisions of
this Agreement to the same extent as the Current Portfolio except
to the extent that said provisions (including those relating to
the compensation payable by the Trust to the Adviser) are
modified with respect to such Portfolio in writing by the Trust
and the Adviser at the time.
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(c) At its discretion, the Adviser may provide advisory services
under this Agreement through its own employees or the employees
of one or more affiliated companies that are qualified to act as
investment adviser to the Trust under applicable law and either
control, are controlled by or are under control with the Adviser,
provided that: (i) all persons, when providing services
hereunder, are functioning as part of an organized group of
persons; and (ii) such organized group of persons is managed at
all times by the Adviser's authorized officers. In addition, the
Adviser may engage one or more investment advisers that are
either registered as such or specifically exempt from
registration under the Investment Advisers Act of 1940, as
amended, to act as sub-advisers or co-advisers to provide with
respect to any Portfolio any or all of the services set forth in
this Agreement, all as shall be set forth in a written contract
approved to the extent and in the manner required by the 1940 Act
and interpretations thereof by the Securities and Exchange
Commission (the "Commission") and its staff.
2. Delivery of Documents. The Trust has delivered (or will deliver as
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soon as is possible) to the Adviser copies of each of the following documents:
(a) Agreement and Declaration of Trust dated as of July 1, 1997,
together with all Amendments thereto (such Agreement and
Declaration of Trust, as presently in effect and as amended from
time to time, is herein called the "Trust Agreement"), copies of
which are on file with the Trust;
(b) By-Laws of the Trust (such By-Laws, as presently in effect and as
amended from time to time, are herein called the "By-Laws");
(c) Co-Administration Agreement between the Trust and its Co-
Administrators;
(d) Placement Agency Agreement and Foreign Custody Agreement between
the Trust and its Placement Agent;
(e) Custodian Agreement and Foreign Custody Agreement between the
Trust and its Custodian;
(f) Transfer Agency Agreement between the Trust and its Transfer
Agent;
(g) Prospectus and Statement of Additional Information for the
Current Portfolio (such Prospectus and Statement of Additional
Information, as presently in effect and as amended, supplemented
and/or superseded from time to time, is herein called the
"Prospectus" and "Statement of Additional Information,"
respectively); and
(h) Post-Effective Amendment No. 50 to the Trust's Registration
Statement on such Form N-1A (No. 811-3605) under the 1940 Act
filed with
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the Commission (such Registration Statement, as presently in
effect and as amended from time to time, is herein called the
"Registration Statement").
The Trust agrees to promptly furnish the Adviser from time to time
with copies of all amendments of or supplements to or otherwise current versions
of any of the foregoing documents not heretofore furnished.
3. Duties of Adviser.
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(a) Subject to the general supervision of the Trustees of the Trust,
the Adviser shall manage the investment operations of each of the
Portfolios and the composition of each Portfolio's assets,
including the purchase, retention and disposition thereof. In
this regard, the Adviser:
(i) shall provide supervision of the Portfolios' assets, furnish
a continuous investment program for such Portfolios,
determine from time to time what investments or securities
will be purchased, retained or sold by the Portfolios, and
what portion of the assets will be invested or held
uninvested as cash;
(ii) shall place orders pursuant to its determinations either
directly with the issuer or with any broker and/or dealer or
other persons who deal in the securities in which the
Portfolio in question is trading. With respect to common and
preferred stocks, in executing portfolio transactions and
selecting brokers or dealers, the Adviser shall use its best
judgment to obtain the best overall terms available. In
assessing the best overall terms available for any
transaction, the 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 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 to any fund and/or
other account over which the Adviser and/or an affiliate of
the Adviser exercises investment discretion. With respect to
securities other than common and preferred stocks, in
placing orders with brokers, dealers or other persons the
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 Adviser may, at its discretion but subject to applicable
law, select the executing broker, dealer or such other
person on the basis of the Adviser's opinion of the
reliability and quality of such broker, dealer or such other
person; and
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(iii) may, on occasions when it deems the purchase or sale of a
security to be in the best interests of a Portfolio as
well as other fiduciary or agency accounts managed by the
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 Adviser
in the manner it considers to be most equitable and
consistent with its fiduciary obligations to such
Portfolio and to such other accounts.
(b) The Adviser, in connection with its rights and duties with
respect to the Trust:
(i) 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; and
(ii) shall act in conformity with the Trust Agreement, By-Laws,
Registration Statement, Prospectus and Statement of
Additional Information, and the instructions and
directions of the Trustees of the Trust, and will use its
best efforts to comply with and conform to the
requirements of the 1940 Act and all other applicable
federal and state laws, regulations and rulings.
(c) The Adviser shall:
(i) comply with all applicable Rules and Regulations of the
Commission and will in addition conduct its activities
under this Agreement in accordance with other applicable
law; and
(ii) maintain a policy and practice of conducting its
investment advisory services hereunder independently of
its commercial banking operations and those of any
affiliated bank of the Adviser. When the Adviser makes
investment recommendations for a Portfolio, its investment
advisory personnel will not inquire or take into
consideration whether the issuer of securities proposed
for purchase or sale for the Portfolio's account are
customers of its commercial banking department (if any) or
the commercial banking department of any affiliated bank
of the Adviser.
(d) The Adviser shall not, unless permitted by the Commission:
(i) permit the Portfolios to execute transactions with the
Adviser's Bond Department; or
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(ii) permit the Portfolios to purchase certificates of deposit
of the Adviser or its affiliate banks, commercial paper
issued by the Adviser's parent holding company or other
securities issued or guaranteed by the Adviser, its parent
holding company or their subsidiaries or affiliates.
(e) The Adviser shall render to the Trustees of the Trust such
periodic and special reports as the Trustees may reasonably
request.
(f) The services of the Adviser hereunder are not deemed exclusive
and the 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.
4. Expenses. During the term of this Agreement, the Adviser shall pay all
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costs incurred by it in connection with the performance of its duties under
paragraph 3 hereof, other than the cost (including taxes, brokerage commissions
and other transaction costs, if any) of securities purchased or sold for the
Portfolio.
5. Compensation.
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(a) For the services provided and the expenses assumed by the Adviser
pursuant to this Agreement, the Trust will pay to the Adviser as
full compensation therefor a fee at an annual rate of .25 of 1%
of the Portfolio's average net assets.
(b) The fee will be computed based on net assets on each day and will
be paid to the Adviser monthly.
6. Books and Records. The Adviser agrees to maintain, and preserve for
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the periods prescribed by Rule 31a-2 of the Commission under the 1940 Act, such
records as are required to be maintained by Rule 31a-1 of the Commission under
the 1940 Act (other than clause (b)(4) and paragraphs (c), (d) and (e) thereof).
The Adviser further agrees that all records which it maintains for the Trust are
the property of the Trust and it shall surrender promptly to the Trust any of
such records upon the Trust's request.
7. Indemnification.
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(a) The Trust hereby agrees to indemnify and hold harmless the
Adviser, its directors, officers, and employees and each person,
if any, who controls the Adviser (collectively, the "Indemnified
Parties") against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may
become subject under federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
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(i) any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a
material fact required to be stated or necessary to make the
statements made not misleading in the Registration
Statement, the Prospectus, the Statement of Additional
Information, or any application or other document filed in
connection with the qualification of the Trust or Shares of
the Trust under the Blue Sky or securities laws of any
jurisdiction ("Application"), except insofar as such losses,
claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or
omission either pertaining to a breach of the Adviser's
duties in connection with this Agreement or made in reliance
upon and in conformity with information furnished by,
through or on behalf of the Adviser for use in connection
with the Registration Statement, any Application, the
Prospectus or the Statement of Additional Information; or
(ii) subject to clause (i) above, the Adviser acting in
accordance with the terms hereof;
and the Trust will reimburse each Indemnified Party for any
legal or other expense incurred by such Indemnified Party in
connection with investigating or defending any such loss,
claim, damages, liability or action.
(b) If the indemnification provided for in paragraph 7(a) is due in
accordance with the terms of such paragraph but is for any reason
held by a court to be unavailable from the Trust, then the Trust
shall contribute to the aggregate amount paid or payable by the
Trust and the Indemnified Parties as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect (i) the relative
benefits received by the Trust and such Indemnified Parties in
connection with the operation of the Trust, (ii) the relative
fault of the Trust and such Indemnified Parties, and (iii) any
other relevant equitable considerations. The Trust and the
Adviser agree that it would not be just and equitable if
contribution pursuant to this subparagraph (b) were determined by
pro rata allocation or other method of allocation which does not
take account of the equitable considerations referred to above in
this subparagraph (b). The amount paid or payable as a result of
the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subparagraph (b) shall be
deemed to include any legal or other expense incurred by the
Trust and the Indemnified Parties in connection with
investigating or defending any such loss, claim, damage,
liability or action. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
0000 Xxx) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
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(c) It is understood, however, that nothing in this paragraph 7 shall
protect any Indemnified Party against, or entitle any Indemnified
Party to indemnification against, or contribution with respect
to, any liability to the Trust or its Shareholders to which such
Indemnified Party is subject, by reason of its willful
misfeasance, bad faith or gross negligence in the performance of
its duties, or by reason of a reckless disregard to its
obligations and duties, under this Agreement or otherwise, to an
extent or in a manner inconsistent with Section 17 of the 1940
Act.
8. Duration and Termination. Insofar as the holders of Shares
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representing the interests in the Current Portfolio are affected by this
Agreement, it shall continue, unless sooner terminated as provided herein, until
April 30, 2002, and, insofar as the holders of Shares representing the interests
in each of the other Portfolios are affected by this Agreement, it (as
supplemented by the terms specified in any notice and agreement pursuant to
paragraph 1(b) hereof) shall continue (assuming approval by the initial
holder(s) of Shares of such Portfolio) until April 30 of the year following the
year in which the Portfolio becomes a Portfolio hereunder, and with respect to
each Portfolio thereafter shall continue automatically for periods of one year
so long as each such latter continuance is approved at least annually (a) by the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons (as defined by the 0000 Xxx) of any such party,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Trustees of the Trust or by vote of a majority of the outstanding
Shares (as defined with respect to voting securities in the 1940 Act)
representing the interests in such Portfolio; provided, however, that this
Agreement may be terminated by the Trust as to any Portfolio at any time,
without the payment of any penalty, by vote of a majority of the Trustees of the
Trust or by vote of a majority of the outstanding Shares (as so defined)
representing the interests in the Portfolio affected thereby on 60 days' written
notice to the Adviser, or by the Adviser at any time, without the payment of any
penalty, on 60 days' written notice to the Trust. This Agreement shall
automatically and immediately terminate in the event of its assignment (as
defined by the 1940 Act).
9. Name of the Trust. The Adviser agrees that the name "Northern" may be
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used in the name of the Trust and that such name, any related logos and any
service marks containing the words "Northern" may be used in connection with the
Trust's business only for so long as this Agreement (including any continuance
or amendment hereof) remains in effect and that such use shall be royalty free.
At such time as this Agreement shall no longer be in effect, the Trust will
cease such use. The Trust acknowledges that it has no rights to the name
"Northern," such logos or service marks other than those granted in this
paragraph and that the Adviser reserves to itself the right to grant the
nonexclusive right to use the name "Northern," such logos or service marks to
any other person, including, but not limited to, another investment company.
10. Status of Adviser as Independent Contractor. The Adviser shall for all
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purposes herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided herein or authorized by the Trustees of the Trust
from time to time, have no authority to act for or represent the Trust in any
way or otherwise be deemed an agent of the Trust.
11. Amendment of Agreement. This Agreement may be amended by mutual
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consent but, except as otherwise permitted by the 1940 Act and interpretations
thereof by the Commission and its staff, the consent of the Trust must be
approved (a) by vote of a majority of
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those Trustees of the Trust who are not parties to this Agreement or interested
persons (as defined in the 0000 Xxx) of any such party, cast in person at a
meeting called for the purpose of voting on such amendment, and (b) by vote of a
majority of the outstanding Shares (as defined with respect to voting securities
by the 1940 Act) representing the interests in each Portfolio affected by such
amendment.
12. Shareholder Liability. This Agreement is executed by or on behalf of
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the Trust with respect to each of the Portfolios and the obligations hereunder
are not binding upon any of the Trustees, officers or Shareholders of the Trust
individually but are binding only upon the Trust and its assets and property.
All obligations of the Trust 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.
13. Miscellaneous. The captions in this Agreement are included for
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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 (except as to paragraph 12 hereof which shall be
construed in accordance with the laws of the State of Delaware) 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 the last sentence
of paragraph 8) and, to the extent provided in paragraph 7 hereof, each
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. Counterparts. This Agreement may be executed in two or more
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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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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ATTEST: NORTHERN INSTITUTIONAL FUNDS
By: /s/ Xxxx Xxxxxxxxxx
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Name: Xxxx Xxxxxxxxxx
Title: Vice President
ATTEST: NORTHERN TRUST INVESTMENTS, INC.
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
Title: President
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