THE BENCHMARK FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 31st day of March, 1998 between THE BENCHMARK
FUNDS, a Delaware business trust (the "Trust"), and THE NORTHERN TRUST COMPANY,
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 of beneficial
interest in four portfolios, known as the Diversified Assets Portfolio,
Government Portfolio, Government Select Portfolio and Tax-Exempt Portfolio (such
Portfolios [the "Current Portfolios"] 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 each of its Current Portfolios 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 each of its Current Portfolios 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 Portfolios 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 Portfolios 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.
2. Delivery of Documents. The Trust has delivered (or will deliver
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as 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) Administration Agreement between the Trust and its
Administrator;
(d) Distribution Agreement between the Trust and its
Distributor;
(e) Custodian 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 Portfolios (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. 38 to the Trust's Registration
Statement on Form N-1A (No. 2-80543) under the Securities
Act of 1933 (the "1933 Act") and Amendment No. 39 to the
Trust's Registration Statement on such form (No. 811-3605)
under the 1940 Act filed as a single document with the
Securities and Exchange Commission (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
dealing. 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 persons are believed to
be comparable, the Adviser may, at its discretion but
subject to applicable law, select the executing
broker, dealer or such other persons on the basis of
the Adviser's opinion of the reliability and quality
of such broker, dealer or such other persons; and
(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 net price and execution. 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, 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 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 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 or the commercial banking department of any
affiliated bank of the Adviser.
(d) The Adviser shall not, unless permitted by the Securities
and Exchange Commission:
(i) permit the Portfolios to execute transactions with the
Adviser's Bond Department; or
(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 will
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pay all 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 transactions costs, if any) of securities purchased or
sold for each of the Portfolios.
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 each 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
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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 Adviser further agrees that all records which it maintains for
the Trust are the property of the Trust and it will 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 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 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, 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
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.
(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 Portfolios are affected by this
Agreement, it shall continue, unless sooner terminated as provided herein, until
April 30, 1999, 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 will
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 "The
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Benchmark" may be used in the name of the Trust and that such name, any related
logos and any service marks containing the words "The Benchmark" 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 "The Benchmark," 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 "The Benchmark," 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
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for all 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 the consent of the Trust must be approved (a) 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 (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
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behalf of 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ATTEST: THE BENCHMARK FUNDS
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Vice President
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ATTEST: THE NORTHERN TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Sr. Vice President
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