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Exhibit
10.1
CONFIDENTIAL TREATMENT
REQUESTED BY NORTHERN FUNDS
AND NORTHERN INSTITUTIONAL
FUNDS
UNDER RULE 81(b), 17
C.F.R. 81(b)
CAPITAL SUPPORT
AGREEMENT
THIS CAPITAL SUPPORT
AGREEMENT (this “Agreement”) is made as of
February 21, 2008, by and between Northern Trust Corporation
(the “Support Provider”) and Northern Institutional
Funds (the “Trust”) on behalf of its series the Prime
Obligations Portfolio (the “Fund”).
W I T N E S S E T
H:
WHEREAS, the Trust is an
investment company registered with the Securities and Exchange
Commission in accordance with the Investment Company Act of 1940
(as amended, the “1940 Act”);
WHEREAS, the Fund is a money
market fund that seeks to maintain a stable net asset value of
$1.00 per share using the Amortized Cost Method as defined in and
in accordance with Rule 2a-7 promulgated under the 1940 Act (as
amended, “Rule 2a-7”);
WHEREAS, the Fund holds notes
(“Notes”) issued by Whistlejacket Capital LLC and/or
White Pine Finance LLC (together the “Issuer”), which
no longer are “Eligible Securities” as defined in
paragraph (a)(10) of Rule 2a-7;
WHEREAS, a sale of the Notes
under current market conditions is unlikely to result in the full
recovery of the Fund’s investments, and may cause the Fund to
realize losses to the extent that it could no longer maintain a
stable net asset value of $1.00 per share;
WHEREAS, it is in the
interest of the Support Provider and certain of its affiliates for
the Fund to maintain a stable net asset value of $1.00 per
share;
NOW, THEREFORE, in
consideration of the above premises, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the Support
Provider and Trust hereby agree as follows:
1. Definitions . In
addition to the terms defined elsewhere in this Agreement, the
following terms have the meanings indicated:
(a) “Amortized
Cost Value” means, with respect to any Eligible Note held by
the Fund, the value of that Eligible Note as determined using the
Amortized Cost Method in accordance with Rule 2a-7 on the relevant
date.
(b) “Capital
Contribution” means a cash contribution by the Support
Provider to the Fund pursuant to this Agreement for which the
Support Provider does not receive any shares or other consideration
from the Fund.
(c) “Contribution
Event” means, with respect to any Eligible Note held by the
Fund, any of the following occurrences:
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(i) |
Any sale of
the Eligible Note by the Fund for cash in an amount, after
deduction of any commissions or similar transaction costs, less
than the
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Amortized Cost Value of the
Eligible Note sold as of the date of settlement;
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(ii) |
Receipt of final payment on the Eligible Note in an amount less
than the Amortized Cost Value of that Eligible Note as of the date
such payment is received; or |
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(iii) |
Issuance of orders by a court having jurisdiction over the
matter discharging the Issuer from liability for the Eligible Note
and providing for payments on that Eligible Note in an amount less
than the Amortized Cost Value of that Eligible Note as of the date
such payment is received. |
The excess of the Amortized Cost Value
of the Eligible Notes subject to a Contribution Event over the
amount received by the Fund in connection with such Contribution
Event shall constitute the “Loss” on such Eligible
Notes.
(d) “Eligible
Notes” means the Notes held by the Fund as portfolio
securities on the date hereof or any securities or other
instruments received in exchange for, or as a replacement of, the
Notes as a result of an exchange offer, debt restructuring,
reorganization or similar transaction pursuant to which the Notes
are exchanged for, or replaced with, new securities of the Issuer
or a third party, other than Notes or securities which are or
become “Eligible Securities,” as defined in paragraph
(a)(10) of Rule 2a-7.
(e) “Maximum
Contribution Amount” means twenty-one million dollars
($21,000,000). The Maximum Contribution Amount may be increased at
any time as agreed by the Trust and the Support
Provider.
(f) “Required Capital
Contribution” means for the Fund on the date of any
Contribution Event, a Capital Contribution in an amount sufficient
for the Fund to maintain its net asset value per share at no less
than the Minimum Permissible NAV, after giving effect to the
Contribution Event and all payments received by the Fund in respect
of the Eligible Notes. The net asset value for purposes of
calculating the amount of Required Capital Contribution shall
exclude any account receivable or other asset representing the
Support Provider’s obligations under this Agreement. Minimum
Permissible NAV means $0.9975 for so long as the Fund is rated by
Standard & Poor’s, and $0.995 if the Fund is not
rated by Standard & Poor’s.
2. Covenants of the
Fund . The Fund agrees that:
(a) To the extent consistent
with the Fund’s interest, the Board of Trustees of the Trust
(the “Board”) shall consult with the Support Provider
with respect to all decisions regarding each Eligible
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