Exhibit (d)(19)
NORTHERN FUNDS
INVESTMENT ADVISORY AND ANCILLARY SERVICES AGREEMENT
AGREEMENT made this 5th day of May, 2006 between NORTHERN FUNDS, a
Delaware business trust (the "Trust"), and NORTHERN TRUST INVESTMENTS, N.A., an
Illinois state-chartered trust company and NORTHERN TRUST GLOBAL ADVISORS, INC.,
a Delaware corporation (each, an "Adviser" and together, the "Advisers").
WITNESSETH:
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 of beneficial
interest in three new portfolios, known as the Multi-Manager Mid Cap Fund,
Multi-Manager Small Cap Fund and Multi-Manager International Equity Fund (each a
"New Fund" and together, the "New Funds") (such Fund together with all other
portfolios subsequently established by the Trust and made subject to this
Agreement being herein collectively referred to as the "Funds"); and
WHEREAS, the Trust desires to retain the Advisers to render investment
advisory and ancillary services to the Trust and the New Funds as indicated
below and the Advisers are 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 Advisers.
(a) The Trust hereby appoints each Adviser to act as
investment adviser to the Trust and the New Funds for
the periods and on the terms herein set forth. Each
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 New Funds with respect to
which it desires to retain the
Advisers to act as investment adviser hereunder, it
shall notify the Advisers in writing. If the Advisers
are willing to render such services under this
Agreement they shall notify the Trust in writing
whereupon such portfolio shall become a Fund
hereunder and shall be subject to the provisions of
this Agreement to the same extent as the New Funds,
except to the extent that said provisions (including
those relating to the compensation payable by the
Trust to the Advisers) are modified with respect to
such Fund in writing by the Trust and the Advisers at
the time.
2. Delivery of Documents. The Trust has delivered (or will
deliver as soon as is possible) to the Advisers copies of each of the following
documents:
(a) Agreement and Declaration of Trust dated as of
February 7, 2000 (such Agreement and Declaration of
Trust, as presently in effect, is herein called the
"Trust Agreement"), copies of which are also on file
with the Trust;
(b) By-Laws of the Trust (such By-Laws, as presently in
effect, are herein called the "By-Laws");
(c) Co-Administration Agreement between the Trust and its
Co-Administrators;
(d) Distribution Agreement between the Trust and its
Distributor;
(e) Custodian Agreement between the Trust and its
Custodian;
(f) Foreign Custody Agreement between the Trust and the
Foreign Custodian;
(g) Transfer Agency Agreement between the Trust and its
Transfer Agent;
(h) Prospectus and Statement of Additional Information
for the New Funds (the Prospectus and Statement of
Additional Information, as presently in effect and as
amended, supplemented and/or superseded from time to
time, are herein called "Prospectus" and "Statement
of Additional Information," respectively);
(i) Post Effective Amendment No. 46 to the Trust's
Registration Statement on Form N-1A (No. 33-73404)
under the Securities Act of 1933 (the "1933 Act") and
Amendment No. 48 to the Trust's Registration
Statement on such form (No. 811-8236) under the 1940
Act filed as a single document with the Securities
and Exchange Commission (the "Commission") (such
Registration
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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 Advisers 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 Advisers.
(a) Subject to the general supervision of the Trustees of
the Trust, the Advisers shall manage the investment
operations of each of the Funds and the composition
of each Fund's assets, including the purchase,
retention and disposition thereof. In this regard,
each Adviser:
(i) shall provide supervision of the
Funds' assets, furnish a continuous
investment program for such Funds,
determine from time to time what
investments or securities will be
purchased, retained or sold by the
Funds, 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 person who
deals in the securities in which
the Fund in question is trading.
With respect to common and
preferred stocks, in executing
portfolio transactions and
selecting brokers or dealers, each
Adviser shall use its best judgment
to obtain the best overall terms
available. In assessing the best
overall terms available for any
transaction, each 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,
each 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
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orders with brokers, dealers or
other persons, each 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, each 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;
(iii) 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
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 Fund and to
such other accounts.
(b) Notwithstanding Section 3(a) hereof, each Adviser may
delegate any or all of its responsibilities under
Section 3(a) (and the assumption of related expenses)
to one or more other parties (each such party, a
"Sub-Adviser"), pursuant in each case, to a written
agreement with such Sub-Adviser that meets the
requirements of Section 15 of the Investment Company
Act and the rules thereunder (the "1940 Act")
applicable to contracts for services as an investment
adviser of a registered investment company (including
without limitation the requirements for approval by
the Board of Trustees of the Trust and the
shareholders of a Fund), subject, however, to such
exemptions as may be granted by the Securities and
Exchange Commission. Any Sub-Adviser may (but need
not) be affiliated with the Advisers. If Sub-Advisers
are engaged to provide the services under Section
3(a) with respect to different segments of a Fund,
the Advisers shall (i) determine, in the manner
described in the prospectus of the Fund from time to
time in effect, what portion of the assets belonging
to the Fund shall be managed by each Sub-Adviser,
(ii) retain the responsibility to set each Fund's
investment objective, policies and restrictions
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(the "Policies") and shall adopt and implement
procedures to ensure that the Sub-Advisers comply
with the Policies, (iii) oversee the services
provided by each Sub-Adviser and its compliance with
applicable laws; and (iv) monitor and evaluate each
Sub-Adviser's performance and report on same
periodically to the Board of Trustees.
(c) In addition, the Advisers shall provide the following
ancillary services under this Agreement:
(i) review the preparation of reports
and proxy statements to the Trust's
shareholders, the periodic updating
of the Trust's Prospectus,
Statement of Additional Information
and Registration Statement, and the
preparation of other reports and
documents required to be filed by
the Trust with the Securities and
Exchange Commission;
(ii) in connection with its management
of the Funds, monitor anticipated
purchases and redemptions by
shareholders and new investors;
(iii) provide information and assistance
as requested by the Administrator
of the Trust in connection with the
registration of the Trust's shares
in accordance with state and
foreign securities requirements;
(iv) provide assistance as requested by
the Trust or its Administrator
concerning the regulatory
requirements applicable to
investors that invest in the Trust;
(v) develop and monitor investor
programs for shareholders of the
Trust, and assist in the
coordination of such programs with
programs offered separately by the
Advisers to their clients;
(vi) provide assistance in connection
with the operations of the Trust
generally; and
(vii) provide other similar services as
reasonably requested from time to
time by the Board of Trustees of
the Trust.
(d) Each Adviser, in connection with its rights and
duties with respect to the Trust:
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(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 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.
(e) Each Adviser shall:
(i) comply with all applicable Rules
and Regulations of the Securities
and Exchange 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 Advisers. When the Adviser
makes investment recommendations
for a Fund, its investment advisory
personnel will not inquire or take
into consideration whether the
issuer of securities proposed for
purchase or sale for the Fund's
account are customers of its
commercial banking department or
the commercial banking department
of any affiliated bank of the
Adviser.
(f) The Advisers shall not, unless permitted by the
Securities and Exchange Commission:
(i) permit the Funds to execute
transactions with the Advisers'
Bond Department; or
(ii) permit the Funds to purchase
certificates of deposit of the
Advisers or their affiliate banks,
commercial paper issued by the
Advisers' parent holding company or
other securities issued or
guaranteed by
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the Advisers, their parent holding
company or their subsidiaries or
affiliates.
(g) The Advisers, if any, shall render to the Trustees of
the Trust such periodic and special reports as the
Trustees may reasonably request.
(h) The services of the Advisers hereunder are not deemed
exclusive and the Advisers shall be free to render
similar services to others (including other
investment companies) so long as their services under
this Agreement are not impaired thereby.
4. Expenses. During the term of this Agreement, the Advisers
shall pay all costs incurred by them in connection with the performance of their
duties under paragraph 3 hereof, other than the cost (including taxes, brokerage
commissions and other transactions costs, if any) of securities purchased or
sold for each of the Funds.
5. Compensation.
(a) For the services provided and the expenses assumed by
the Advisers pursuant to this Agreement, the Trust
shall pay to the Advisers as full compensation
therefor a joint fee at an annual rate of 0.90% of
the average daily net assets of the Multi-Manager Mid
Cap Fund, 1.10% of the average daily net assets of
the Multi-Manager Small Cap Fund, and 1.10% of the
average daily net assets of the Multi-Manager
International Equity Fund.
(b) The fees will be computed based on net assets on each
day and will be paid to the Advisers monthly.
6. Books and Records. The Advisers shall maintain, and preserve
for 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 Advisers further agree that all records which they maintain for
the Trust are the property of the Trust and they shall surrender promptly to the
Trust any of such records upon the Trust's request.
7. Indemnification.
(a) The Trust hereby agrees to indemnify and hold
harmless each of the Advisers, their directors,
officers, and employees and each person, if any, who
controls the Advisers (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 the 1933 Act,
the Securities Exchange Act of 1934, the 1940 Act or
other federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses,
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claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon:
(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 such 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 Advisers 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
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allocation that does not take account 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.
(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
representing the interests in the New Funds are affected by this Agreement, it
shall continue, unless sooner terminated as provided herein, until August 31,
2007, and, insofar as the holders of Shares representing the interests in each
of the other Funds 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
Fund) until August 31 of the year following the year in which the Fund becomes a
Fund hereunder, and with respect to each Fund thereafter shall continue
automatically for periods of one year so long as each such latter continuance is
approved at least annually 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 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 Fund; provided,
however, that this Agreement may be terminated by the Trust as to any Fund 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 Fund 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 Advisers agree that the name
"Northern" may be used in the name of the Trust and that such name, any related
logos and any service marks containing the word "Northern" may be used in
connection with the Trust's business only for so
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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 Advisers as Independent Contractors. Each Adviser
shall for all purposes herein be deemed to be independent contractors 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 at any
time by mutual consent of the parties, provided that if required by law, such
amendment shall also have been approved by vote of a majority of 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 by vote of a majority of the
outstanding Shares (as defined with respect to a voting securities by the 1940
Act) representing the interests in each Fund affected by such amendment.
12. Shareholder Liability. This Agreement is executed by or on
behalf of the Trust with respect to each of the Funds 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 Fund-by-Fund basis, and the assets of one Fund shall not be liable for the
obligations of another Fund.
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 (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
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.
NORTHERN FUNDS
By: /s/ Xxxxx X. Xxxxxxxx
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Title: President
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NORTHERN TRUST GLOBAL ADVISORS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
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Title: President & CEO
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NORTHERN TRUST INVESTMENTS, N.A.
By: /s/ Xxxx Xxxxxxxxxx
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Title: Senior Vice President
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