FIDUCIARY INVESTMENT SERVICES AGREEMENT

Exhibit 10.1

FIDUCIARY INVESTMENT SERVICES AGREEMENT

between

The Northern Trust Company, Northern Trust Investments, N.A.

and the

ABA Retirement Funds

August 15, 2008

 

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THIS FIDUCIARY INVESTMENT SERVICES AGREEMENT (the “Agreement”) is entered into as of the          day of                  , 2008, between THE NORTHERN TRUST COMPANY, an Illinois banking corporation, (“Northern Trust”), Northern Trust Investments, N.A., a national banking association (“NTI”) and the ABA RETIREMENT FUNDS, an Illinois not for profit corporation (“ABA RF”).

W I T N E S S E T H:

WHEREAS, ABA RF sponsors the American Bar Association Members Retirement Program (the “Program”) under which it has established the American Bar Association Members Retirement Plan (the “ABA Members Retirement Plan”), American Bar Association Members Defined Benefit Pension Plan (the “ABA Members Pension Plan”), the American Bar Association Members Retirement Trust (the “Master Trust”) and the American Bar Association Members Pooled Trust for Retirement Plans (the “Pooled Trust”);

WHEREAS, pursuant to an Administrative and Investment Management Agreement between ABA RF and State Street Bank and Trust Company (“State Street”), as amended and restated effective November 18, 2002 (the “State Street Agreement”), as amended, State Street has been the Trustee of the Master Trust and the Pooled Trust;

WHEREAS, pursuant to the State Street Agreement, State Street has established, and its affiliate, State Street Bank and Trust Company of New Hampshire, maintains, the American Bar Association Members/State Street Collective Trust (the “Existing ABA Members Collective Trust”), a group trust consisting of certain Investment Options;

WHEREAS, pursuant to Sections 15.01 and 15.03 of the State Street Agreement, ABA RF and State Street each have the right to terminate the State Street Agreement by notice to the other party as specified therein and, pursuant thereto, have agreed to do so effective at the Effective Date (as defined herein);

WHEREAS, no later than the effectiveness of this Agreement, ABA RF has entered into an agreement with another vendor whereby it will provide the administrative, communication and marketing services for the Program previously provided by State Street pursuant to the State Street Agreement; and

WHEREAS, ABA RF and Northern Trust desire to establish their relationship pursuant to this Agreement, including the substitution of Northern Trust for State Street as trustee of the Master Trust and the Pooled Trust and the substitution of Northern Trust for State Street Bank and Trust Company of New Hampshire as trustee of the Existing ABA Members Collective Trust, immediately followed by the amendment and restatement of the Existing ABA Members Collective Trust as the American Bar Association Members/Northern Trust Collective Trust.

 

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NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and undertakings, and subject to the terms and conditions, hereinafter set forth, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

1.01 “ ABA ” means the American Bar Association and any successor thereto.

1.02 “ ABA Members Collective Trust ” means the American Bar Association Members/Northern Trust Collective Trust, a group trust established pursuant to a Declaration of Trust, dated as of the Effective Date, in a form approved by ABA RF, as an amendment and restatement of the American Bar Association Members/State Street Collective Trust as in effect at the close of business on the day before the Effective Date, and maintained by Northern Trust for the purpose of providing certain Investment Options to Investors under the Program.

1.03 “ ABA Members Pension Plan ” means the American Bar Association Members Defined Benefit Pension Plan, as amended and in effect from time to time.

1.04 “ ABA Members Plans ” means the ABA Members Pension Plan and the ABA Members Retirement Plan, collectively.

1.05 “ ABA Members Retirement Plan ” means the American Bar Association Members Retirement Plan, as amended and in effect from time to time.

1.06 “ ABA RF ” means the ABA Retirement Funds, an Illinois not-for-profit corporation, and any successor through which qualified retirement plans are offered to Qualified Employers.

1.07 “ Affiliate ” means NTI and any person or entity, including any general partnership, limited partnership, corporation, joint venture, business trust, limited liability partnership, limited liability company or similar organization, that, directly or indirectly, controls, is controlled by, or is under common control with Northern Trust.

1.08 “ Board ” means the Board of Directors of ABA RF, or the comparable governing body of any successor thereto.

1.09 “ Business Day ” means any day on which the New York Stock Exchange is open for trading. Any other reference in this Agreement to a “day,” “week,” “quarter,” or “year” shall mean, respectively, a calendar day, a calendar week, a calendar quarter or a calendar year.

1.10 “ Cause ” means behavior by ABA RF that is described in Section 9.02 which gives the other party certain rights with respect to this Agreement.

1.11 “ Code ” means the Internal Revenue Code of 1986, as amended and in effect from time to time.

1.12 “ Date of Termination ” means the date specified in the Notice of Termination delivered pursuant to Section 9.01 or 9.03 as the date as on which this Agreement shall terminate.

 

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1.13 “ Effective Date ” means July 1, 2009 or such other date as may be mutually agreed upon by the parties, but not prior to the effectiveness of the Program Interface Agreement.

1.14 “ Employer ” means (a) any Qualified Employer that maintains a Plan and (b) any successor to any such Qualified Employer that agrees, or is required by operation of law, to continue the Plan.

1.15 “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended and in effect from time to time.

1.16 “ Extension Period ” means the period immediately following the Date of Termination during which Northern Trust, at the written request of ABA RF, is obligated to perform its obligations and is entitled to exercise its rights under this Agreement pursuant to Sections 9.05 and 9.06.

1.17 “ Fund ” means any Investment Option that is a collective investment fund established from time to time under the ABA Members Collective Trust.

1.18 “ Fund Declaration ” means any separate declaration executed by NTI, pursuant to the ABA Members Collective Trust, for the purpose of establishing a Fund thereunder.

1.19 “ Indemnified Person ” means any person or entity entitled to indemnification pursuant to Sections 6.06 and 8.03.

1.20 “ Investment Advisor ” means any person or entity (other than Northern Trust) engaged by Northern Trust pursuant to Section 2.02 to make recommendations to Northern Trust regarding the acquisition or disposition of assets held in a Fund.

1.21 “ Investment Advisor Agreement ” means any agreement entered into pursuant to Section 2.02 between Northern Trust, as trustee of the ABA Members Collective Trust, and an Investment Advisor.

1.22 “ Investment Option ” means any investment offered to, or obtained for, Investors under the Program, including, without limitation, the Self-Managed Option.

1.23 “ Investor ” means (a) the Participant, in the case of a Plan for which the Participant is authorized to direct the investment in, and allocation among, Investment Options of the amounts attributable to such Participant’s accounts in the Plan (or applicable portion thereof) and (b) in the case of a Plan (or portion thereof) not described in subsection (a) of this Section, the person or entity having investment discretion with respect to the investment in, and allocation among, Investment Options of the assets of such Plan (or applicable portion thereof).

1.24 “ Major Vendor ” means any person or entity (other than an Investor Advisor or independent accountant) providing material services specific to the Program that Northern Trust engages to assist it in performing its services for the benefit of the Program.

 

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1.25 “ Master Plan ” means any employee benefit plan established and maintained by a Qualified Employer pursuant to either of the ABA Members Plans.

1.26 “ Master Trust ” means the trust maintained under the ABA Members Plans, known as of the Effective Date as the American Bar Association Members Retirement Trust, as amended and in effect from time to time.

1.27 “ Non-Master Plan ” means any employee benefit plan (other than a Master Plan) that is established and maintained by a Qualified Employer, and with respect to which the Pooled Trust has been adopted.

1.28 “ Northern Trust ” means The Northern Trust Company, a banking corporation organized and existing under the laws of the State of Illinois, and any entity that succeeds to Northern Trust’s obligations under this Agreement by operation of law or to which such obligations are otherwise assigned with the consent of ABA RF.

1.29 “ Notice of Termination ” means a written notice delivered by Northern Trust or by ABA RF pursuant to Section 9.05 declaring an intent to terminate this Agreement.

1.30 “ NTI ” means Northern Trust Investments, N.A., a national banking association with trust powers, and any entity that succeeds to NTI’s obligations under this Agreement by operation of law or to which such obligations are otherwise assigned with the consent of ABA RF.

1.31 “ Participant ” means any person for whom benefits under a Plan are provided under either Trust, including, where the context so requires, (a) a beneficiary designated under the terms of a Plan to receive a benefit after the death of a Participant and (b) a person designated by an Employer in writing to the Program Recordkeeper as having been determined by the Employer to be an alternate payee entitled to benefits under the Trust in accordance with a qualified domestic relations order as defined in Section 414(p) of the Code.

1.32 “ Plan ” means a Master Plan, a Non-Master Plan, or both, as the case may be.

1.33 “ Pooled Trust ” means the trust maintained under the Program to hold assets of Non-Master Plans, known as of the Effective Date as the American Bar Association Members Pooled Trust for Retirement Plans, as amended and in effect from time to time.

1.34 “ Program ” means the program sponsored by ABA RF for Qualified Employers that provides for administrative, recordkeeping, custodial and investment services and includes the ABA Members Plans, the Trusts and the Investment Options, known as of the Effective Date as the ABA Members Retirement Funds Program, as amended from time to time.

1.35 “ Program Data and Records ” means (a) all Investor and Trust records acquired by, provided to, created by or maintained by Northern Trust pursuant to this Agreement, (b) all information made available to Northern Trust (or any person engaged by Northern Trust), (c) all reports compiled by Northern Trust (or any person engaged by Northern Trust) pursuant to, or otherwise in the course of performing its obligations under, this

 

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Agreement, (f) all reports or other information made available to Northern Trust by the Program Recordkeeper and any other party engaged to provide services to the Program and (g) all data, records and other information derived from any of the foregoing.

1.36 “ Program Interface Agreement ” means the agreement between Northern Trust and the Program Recordkeeper described in Section 6.01 hereof.

1.37 “ Program Investment Policy ” means the investment policy for the ABA Members Collective Trust, developed and approved pursuant to Section 3.01 hereof, as in effect from time to time.

1.38 “ Program Recordkeeper ” means the organization or entity engaged by ABA RF to provide recordkeeping, administrative, marketing and communications services for the Program.

1.39 “ Prospectus ” means the prospectus included within the most recent registration statement, as amended from time to time, filed by the ABA Members Collective Trust with the Securities and Exchange Commission.

1.40 “ Qualified Bar Association ” means an organization that is represented in the House of Delegates of the ABA.

1.41 “ Qualified Employer ” means (a) any sole practitioner, partnership, corporation, limited liability partnership, limited liability company or association engaged in the practice of law, provided that the sole practitioner or at least one partner of the partnership, one shareholder of the corporation or one member of the limited liability partnership or company is a member or associate of the ABA or of a Qualified Bar Association, (b) the ABA, (c) any Qualified Bar Association, and (d) any organization that does not engage in the practice of law but is closely associated with the legal profession, which receives the approval of ABA RF, and which has as an owner or a member of its governing board a member or associate of the ABA.

1.42 “ RFP Response ” means Northern Trust’s “Response to Request for Proposal, American Bar Association Retirement Funds,” dated November 7, 2007, and as supplemented.

1.43 “ Self-Managed Option ” means the Investment Option available under the Trusts and maintained in accordance with Section 2.07(a), pursuant to which an Investor may designate the investment of assets of a Plan or of a Participant’s account, as the case may be, in securities selected by such Investor.

1.44 “ Service Standards ” means those identified minimum performance standards established by agreement between Northern Trust and ABA RF and set forth in Appendix A , as amended from time to time pursuant to Section 6.02.

1.45 “ Transfer Completion Date ” means the date as of which ABA RF or a third party designated by it assumes responsibility for Northern Trust’s obligations to perform services under this Agreement, which shall be the later of the Date of Termination or the end of the Extension Period.

 

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1.46 “ Trustee ” means the trustee of the Master Trust and the Pooled Trust from time to time.

1.47 “ Trust ” means the Master Trust, the Pooled Trust, and “Trusts” means both the Master Trust and the Pooled Trust.

 

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ARTICLE 2

TRUST SERVICES

2.01 Establishment and Maintenance of the ABA Members Collective Trust and the Trusts . Northern Trust shall, as of the Effective Date, become the successor trustee and custodian under, and shall maintain in accordance with this Agreement and in accordance with its Declaration of Trust, the ABA Members Collective Trust with exclusive management and control over the assets thereof until the Transfer Completion Date. The ABA Members Collective Trust shall include, as of the Effective Date, the Investment Options described in the most recent Prospectus, and shall include such other Funds as may be established by Northern Trust as Investment Options from time to time pursuant to this Article 2, consistent with its obligation to implement the Program Investment Policy.

2.02 Investment Advisors . Northern Trust shall engage one or more Investment Advisors only in accordance with the following procedures:

(a) Each Investment Advisor shall be identified in the appropriate Fund Declaration or attachment thereto.

(b) Northern Trust shall enter into an Investment Advisor Agreement with each such Investment Advisor, which Investment Advisor Agreement shall include, among other things (A) representations that the Investment Advisor is registered, or exempt under, or excluded from, the Investment Advisers Act of 1940, as amended, and is in the business of acting as a fiduciary with respect to assets of various retirement plans and trusts, (B) an acknowledgement in writing that the Investment Advisor is a fiduciary as defined in ERISA with respect to the applicable assets of the Plans and the Trusts, and each such agreement may include supplemental guidelines governing the Investment Advisor’s activities and (C) indemnification of the Indemnified Persons, as third-party beneficiaries.

(c) If more than one Investment Advisor is engaged by Northern Trust to advise it with respect to a single Fund, each applicable Investment Advisor Agreement shall designate the portion of the assets of, contributions and transfers to, and withdrawals and transfers from, such Fund to be allocated to each such Investment Advisor or provide that Northern Trust has the authority to make such allocation; and

(d) An Investment Advisor shall not be permitted to take any action with respect to any Fund that, in the reasonable opinion of Northern Trust, would cause the Fund to cease to qualify as a fund maintained by a bank within the meaning of (i) Section 3(c)(11) of the Investment Company Act of 1940, as amended, and any successor provision thereto, and (ii) Section 3(a)(2) of the Securities Act of 1933, as amended, and any successor provision thereto.

(e) Northern Trust shall provide ABA RF with copies of all (a) Investment Advisor Agreements, (b) notices required under the Investment Advisor Agreements, and (c) reports required under the Investment Advisor Agreements.

2.03 Investment Advisor Removal by Northern Trust . Subject to applicable laws and regulations, to its reasonable administrative capabilities and other responsibilities under the Program, and to the provisions of the applicable Investment Advisor Agreements, Northern Trust may remove any Investment Advisor upon prior or concurrent written notice to ABA RF explaining the reasons for the removal; provided, however, that:

(a) Northern Trust may remove an Investment Advisor with concurrent notice to ABA RF if Northern Trust reasonably determines that such urgent action is necessary; and

 

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(b) Northern Trust may not remove an Investment Advisor without engaging a new Investment Advisor or allocating such assets to an existing Investment Advisor.

2.04 Selecting and Monitoring of Investment Advisors . Northern Trust shall exercise its discretion to select, retain and terminate Investment Advisors by utilizing the information, resources and methodology described in Part IV, Items 25, 26 and 27 of the RFP Response.

2.05 Amendments to or Mergers Under ABA Members Collective Trust . (a) Northern Trust shall make all amendments to the ABA Members Collective Trust and agreements thereunder that it determines are necessary to (i) comply with Northern Trust’s reasonable administrative requirements, (ii) permit Funds to be offered, made available, maintained, merged, divided or terminated, (iii) comply with changes in the ABA Members Plans, the Trusts and applicable laws and regulations and (iv) enable Northern Trust to manage and control the ABA Members Collective Trust and the Funds established thereunder in accordance with the terms of this Agreement and the ABA Members Collective Trust. In addition, in the event that ABA RF determines that changes in the ABA Members Plans or the Trusts may require amendments to the ABA Members Collective Trust, it shall so notify Northern Trust and Northern Trust shall make such amendments to the ABA Members Collective Trust as it determines are appropriate in connection with such changes. In making any amendment to the ABA Members Collective Trust, Northern Trust shall exercise its reasonable judgment as to the content and timing of any such amendment. Notwithstanding the foregoing, no such amendment (including the amendment and restatement referred to in Section 1.02) shall reduce the duties, obligations or liabilities of the Trustee thereunder without the prior consent of the ABA RF

(b) Northern Trust shall furnish to ABA RF at least thirty (30) days prior to adoption of any amendment made pursuant to Section 7.01 of the ABA Members Collective Trust or any amendment to a Fund Declaration made pursuant to Section 3.03(a) of the ABA Members Collective Trust, (i) written notice of the reasons for any such amendment and (ii) copies of any such amendment; provided, however, that Northern Trust may make any such amendment, with concurrent notice to ABA RF if Northern Trust reasonably determines that such urgent amendment is necessary or appropriate. ABA RF may make comments and suggestions in connection with any such amendment, and Northern Trust shall give full consideration thereto, provided, however, that ABA RF’s right to make comments and suggestions hereunder shall not be interpreted as delegating to ABA RF any discretion over the investment or fiduciary authority over the assets of the ABA Members Collective Trust in a manner that would cause ABA RF to be a fiduciary subject to ERISA with respect thereto or to in any manner diminish Northern Trust’s discretion to determine the final content of any such amendment. Northern Trust shall, to the extent it determines necessary or appropriate, submit

 

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such amendments to the Internal Revenue Service and other governmental agencies for approval and shall provide ABA RF with copies of the submissions at least thirty (30) days prior to submission and copies of such approvals and other responses promptly after receipt thereof. ABA RF shall offer timely assistance to Northern Trust in making such submissions and obtaining such approvals and may make comments or suggestions regarding such submissions, and Northern Trust shall give full consideration thereto.

(c) In the event that Northern Trust exercises its authority to terminate a Fund, to divide a Fund into multiple Funds or to merge two Funds pursuant to Sections 7.02 and 7.03, respectively, of the ABA Members Collective Trust, Northern Trust shall notify ABA RF thereof pursuant to the notice procedures in Section 2.05(b) for amendments

2.06 Trustee of the Trusts . ABA RF shall retain Northern Trust, and Northern Trust shall serve, as sole Trustee, until the Transfer Completion Date.

2.07 Self-Managed Option . Northern Trust shall maintain the Self-Managed Option under the applicable provisions of the Trusts. The Self-Managed Option shall constitute an Investment Option under the Program and shall be made available to any Investor, except that, with respect to any Plan maintained under the ABA Members Retirement Plan, each adopting Employer may elect not to have the Self-Managed Option available with respect to its Plan. The terms and conditions of the Self-Managed Option, including without limitation, an appropriate fee schedule, shall be set forth in the Program Interface Agreement.

2.08 Investment Records . Northern Trust shall, pursuant to the terms of the ABA Members Collective Trust and the Program Interface Agreement, maintain records for each Investment Option with respect to multiple classes of units as shall be necessary or appropriate to allow the Program Recordkeeper to maintain records of each Plan’s interest in each Investment Option and in each such class of units.

2.09 Contributions . Northern Trust shall allocate all contributions among the Investment Options in accordance with the instructions from the Program Recordkeeper. In the event that Northern Trust has received a contribution that Northern Trust believes to be incorrect or invalid or instructions from the Program Recordkeeper that Northern Trust believes are incorrect or invalid, it shall use commercially reasonable efforts to contact the Program Recordkeeper to clarify or correct such contribution amount or instructions. Northern Trust shall establish standard procedures (with reasonable notice to ABA RF) regarding the action to be taken by Northern Trust in the interim, in accordance with the applicable Service Standards.

2.10 Transfers . Northern Trust shall transfer amounts among Investment Options in accordance with instructions from the Program Recordkeeper. To the extent that Northern Trust has received no instructions or it believes that such instructions are incorrect or invalid, Northern Trust shall use commercially reasonable efforts to contact the Program Recordkeeper in order to obtain, clarify or correct such investment instructions. If Northern Trust receives instructions that it believes are invalid, the affected assets shall not be transferred until valid instructions are received; provided, that if Northern Trust receives invalid instructions or no instructions where instructions are required because assets must be transferred, the transfer shall be promptly made to the Stable Asset Return Fund.

 

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2.11 Distributions and Withdrawals . Subject to applicable laws and regulations and upon the direction of the Program Recordkeeper, Northern Trust shall make payments out of the Trusts in such amounts to such persons, including any disbursing agent appointed by the Program Recordkeeper, as shall be specified by the Program Recordkeeper in such directions. Immediately prior to the time when a distribution is to be made pursuant to this Section 2.11, Northern Trust shall transfer the amount thereof to a demand deposit account maintained by Northern Trust for this purpose. Upon such transfer, the appropriate Trust shall be relieved of, and the disbursing agent appointed by the Program Recordkeeper, or Northern Trust (acting in its institutional capacity and not as a trustee), as the case may be, shall assume, the liability to pay such distribution. ABA RF acknowledge that the earnings attributable to Trust assets transferred to such account shall accrue to the benefit of the third party disbursing agent or Northern Trust, as the case may be, and have been taken into account in their negotiations with respect to the fees payable to Northern Trust under Section I of Appendix B attached hereto, and in furtherance thereof, Northern Trust shall, from time to time as reasonably requested by ABA RF, provide to it an accounting of the amount of such earnings.

2.12 Fiduciary Duties . Northern Trust hereby acknowledges, represents, warrants and agrees that as trustee of the ABA Members Collective Trust, Northern Trust shall have exclusive discretion and control over the assets thereof as required by Section 403 of ERISA, including, without limitation, exclusive responsibility for the engagement, monitoring, retention and removal of the Investment Advisors. It is the express intention of ABA RF and Northern Trust that neither ABA RF nor its officers, directors or agents shall have any discretion or fiduciary duty with respect to such assets except as provided in Sections 2.06 and 3.01(b) hereof.

ARTICLE 3

INVESTMENT SERVICES

3.01 Investment Policy . (a)  Policy Contents . Northern Trust shall, not less than 180 days prior to the Effective Date, and effective thereon, develop and propose to ABA RF for its approval a continuing and suitable investment policy for the Program. Such proposed investment policy shall represent Northern Trust’s recommendations, as trustee of the ABA Members Collective Trust, and best expert advice regarding, (i) the classes of securities by type (such as equity, fixed income, derivative, etc.), (ii) the market capitalization of the issuers of such securities (such as domestic, international, developing, global, etc.), (iii) investing style (such as growth, value, core, etc.), (iv) asset allocation models and such other characteristics that Northern Trust, in its reasonable best judgment advises, shall result in Investment Options that provide Investors opportunities for investment diversification that satisfy the requirements of Section 404(c) of ERISA and are competitive with the investment opportunities typically available to defined contribution plans. Such investment policy shall also set forth, for each Investment Option and for each Investment Advisor, the performance criteria, measured by external benchmark and peer group comparisons over specified time periods, which Northern Trust shall use to measure the investment performance of Investment Advisors in determining whether to engage, retain or terminate them. The Program Investment Policy shall contain such detail as shall be reasonably necessary so as to provide ABA RF with the ability to monitor the performance of Northern Trust, as trustee of the ABA Members Collective Trust, in fulfillment of ABA RF’s duty as the “named fiduciary,” within the meaning of Section 402(c) of ERISA with the authority to engage, retain or terminate Northern Trust as trustee of the ABA Members Collective Trust.

 

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(b) Approval of Initial Program Investment Policy . Notwithstanding any provision of this Agreement to the contrary, this Agreement shall not become effective until Northern Trust shall have proposed and ABA RF shall have accepted the initial Program Investment Policy.

(c) Amendments to Program Investment Policy . Northern Trust may, from time to time, in its sole discretion as trustee of the ABA Members Collective Trust, propose an amendment or amendments to the Program Investment Policy by written notice provided to ABA RF at least 90 days prior to the proposed effective date of such amendment. Such notice shall state Northern Trust’s reasons for such amendment in sufficient detail for ABA RF to be able to determine the reasonableness and efficacy of such proposed amendment, including whether such amendment shall change the number or composition of the Investment Options and the estimated cost of implementation of such amendment. ABA RF shall use its reasonable due diligence to review such proposed amendment to the Program Investment Policy and shall within 45 days after receipt thereof, either accept and approve such proposed amendment or disapprove such proposed amendment. In the event ABA RF disapproves any proposed amendment to the Program Investment Policy, ABA RF shall provide to Northern Trust, in writing, the reasons for such disapproval.

(d) Transition Services . Northern Trust shall have exclusive fiduciary responsibility for implementing the Program Investment Policy and any amendments thereto as it shall in its sole fiduciary discretion determine, including the creation or termination of Investment Options, the engagement or termination of Investment Advisor pursuant to Article 2 and the management directly of any necessary disposition or acquisition of securities. Such activities shall be carried out substantially in the manner described in Part III, Items 22 and 23 of the RFP Response.

3.02 Securities Lending . Northern Trust, acting in its institutional capacity and not as trustee, shall provide securities lending services for the ABA Members Collective Trust pursuant to an agreement with Northern Trust, as trustee of the ABA Members Collective Trust. Such agreement shall contain such terms and conditions as the parties shall agree, provided that such agreement shall provide that no more than twenty percent (20%) of the securities lending revenue, net of borrower rebates and other expenses, shall be paid by the ABA Members Collective Trust as a fee for Northern Trust’s services as lending agent for the Funds.

3.03 Consultant . ABA RF may from time to time hire a consultant to assist ABA RF in (a) monitoring the performance of Northern Trust, (b) monitoring the performance of Investment Advisors, and (c) monitoring the relationship between Northern Trust and the Investment Advisors. Upon request by ABA RF, such fee shall be payable directly, or by reimbursement, by the Trusts and the ABA Members Collective Trust pursuant to Section 7.04

 

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ARTICLE 4

MAINTENANCE OF TRUSTS AND PLANS

4.01 Necessary Amendments to Trusts and ABA Members Plans and Trusts . ABA RF, as sponsor of the ABA Members Plans, shall make all amendments to the ABA Members Plans and any form of participation agreement or other agreements thereunder and shall agree to all amendments to the Trusts that are necessary to comply with Northern Trust’s reasonable administrative requirements, to permit Investment Options to be offered, made available, maintained or terminated under the Program, or to comply with applicable laws, regulations, revenue rulings, revenue procedures, advisory opinions or other governmental pronouncements. All such amendments shall be made in accordance with the following procedures:

(a) If ABA RF has prepared a necessary amendment to the ABA Members Plans or any form of participation agreement or other agreement thereunder or to the Trusts, it shall provide such amendment to Northern Trust for review, and Northern Trust shall be entitled to make comments and suggestions with respect thereto (to which ABA RF shall give full consideration), and shall conduct its reviews under this Section in accordance with a reasonable schedule specified by ABA RF or, if none is specified, within a reasonable period of time.

(b) ABA RF shall, to the extent necessary, submit such necessary amendments to the Internal Revenue Service for approval. ABA RF shall provide copies of such submissions to Northern Trust for review prior to submission and Northern Trust shall (i) be entitled to make comments and suggestions (to which ABA RF shall give full consideration), (ii) conduct such reviews in accordance with a reasonable schedule specified by ABA RF or, if none is specified, within a reasonable period of time, and (iii) offer timely assistance to ABA RF in making such submissions and obtaining approvals thereof.

(c) Outside legal expenses incurred by either ABA RF or Northern Trust pursuant to this Section shall be paid by such party incurring such expense, but may be reimbursed by the Trusts or the ABA Members Collective Trust to the extent permitted by Section 7.04.

4.02 Other Amendments to the ABA Members Plans and the Trusts . From time to time, ABA RF and Northern Trust may each notify the other of proposed amendments or changes to the Trusts, the ABA Members Plans and any form of participation agreement or other agreement thereunder that such party believes are appropriate or desirable in connection with the Program, but not required under Section 4.01, in accordance with the following procedures:

(a) ABA RF, as sponsor of the ABA Members Plans, shall be responsible for making any amendment to the ABA Members Plans and any form of participation agreement or other agreement thereunder and to the Trusts; provided that Northern Trust, together with ABA RF, may make amendments to the Trusts.

 

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(b) Each party shall cooperate with the other to make such amendments as both parties agree are reasonable and practicable, subject to the terms of this Agreement.

(c) Each party shall be entitled to make comments and suggestions on such amendments, to which the other party shall give full consideration.

(d) ABA RF shall, to the extent necessary, submit such amendments to the Internal Revenue Service and other governmental agencies for approval and shall provide Northern Trust with copies of the submissions prior to submission for review.

(e) Northern Trust shall offer timely assistance to ABA RF in making such submissions and obtaining such approvals as may be necessary or advisable, including by conducting its reviews under this Section in accordance with a reasonable schedule specified by ABA RF or, if none is specified, within a reasonable period of time.

(f) Outside legal expenses incurred by either ABA RF or Northern Trust pursuant to this Section shall be paid by such party incurring such expense, but may be reimbursed by the Trusts or the ABA Members Collective Trust to the extent permitted by Section 7.04.

4.03 Plan Interpretation . ABA RF, as sponsor of the Program, may provide any legal or other technical assistance as it may, from time to time, determine is necessary or appropriate to assist with the proper interpretation and operation of the Master Plans with respect to issues brought to ABA RF’s attention by Northern Trust or otherwise. Outside legal and other expenses incurred by ABA RF pursuant to this Section shall be paid by ABA RF, but may be reimbursed by the Trusts or the ABA Members Collective Trust to the extent permitted by Section 7.04.

ARTICLE 5

REPORTS BY NORTHERN TRUST TO ABA RF

5.01 Investment Services . (a)  Quarterly Reports . Northern Trust shall prepare quarterly reports summarizing the investment performance for each Investment Option and the performance of each of the Investment Advisors engaged in connection therewith for each calendar quarter. Such quarterly reports shall include Northern Trust’s analysis of the current market environment, including a summary of the most recent events in the financial markets and a review of the performance of the major market indices, Northern Trust’s analysis of the allocation of the assets invested in the ABA Members Collective Trust among its Investment Options, a complete investment return analysis, and a review of the investment results of all the Investment Options in the context of their respective objectives and benchmarks and peer rankings, along with specific commentary on factors Northern Trust believes have an effect on investment performance, and such other investment information as ABA RF may from time to time reasonably request. The quarterly report for a specific calendar quarter shall be delivered by Northern Trust to ABA RF at least two weeks prior to the next regularly scheduled meeting of ABA RF’s Board of Directors occurring during the next calendar quarter.

 

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(b) Reviews . Northern Trust shall conduct ongoing, due diligence reviews of and discussions with the Investment Advisors. Such diligence shall focus on investment performance, organizational and investment process issues, such as changes in ownership, investment methodology, adherence to stated policies, retention of professional staff, fee changes, new products, etc. Northern Trust shall promptly communicate to ABA RF any important developments arising as a result of such diligence.

(c) Annual Report . Northern Trust shall prepare an annual review of the Investment Options. This report shall contain, in addition to the items in Section 5.01(b) above, a review of each Investment Advisor, and shall identify any Investment Advisor whose performance may no longer be considered by Northern Trust to be adequate, and address other investment-related issues that may arise or on which ABA RF may request Northern Trust’s advice. This annual review will be delivered to ABA RF at least two weeks before the