Exhibit 10.1
CAPITAL SUPPORT AGREEMENT
THIS CAPITAL SUPPORT AGREEMENT (this
“Agreement”) is made as of September 29, 2008, by
and between Northern Trust Corporation (the “Support
Provider”) and The Northern Trust Company (“TNT”)
as trustee on behalf of The Northern Trust Company Common Short
Term Investment Fund (the “Fund”).
W I T N E S S E T H:
WHEREAS, the Fund is a bank
maintained common fund for which TNT is trustee that seeks to
maintain a stable net asset value of $1.00 per unit and to value
the Fund’s assets on an amortized cost rather than market
value basis, all pursuant to the applicable regulations of the
Office of the Comptroller of the Currency contained in 12 C.F.R.
Section 9.18 (“OCC Regulations”);
WHEREAS, the Fund holds Impaired
Assets, as defined below;
WHEREAS, a sale of the Impaired
Assets 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 unit;
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 unit;
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 TNT 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 Impaired Asset held by the
Fund, the value of that Impaired Asset as determined using the
amortized cost method (“Amortized Cost Method”) in
accordance with OCC Regulations on the relevant date.
(b) “Capital
Contribution” means a cash contribution by the Support
Provider to the Fund for which the Support Provider does not
receive any units or other consideration from the Fund.
(c) “Contribution Event”
means, with respect to any Impaired Asset held by the Fund, any of
the following occurrences:
(i) Any sale of the Impaired Asset
by the Fund for cash in an amount, after deduction of any
commissions or similar transaction costs, less than the Amortized
Cost Value of the Impaired Asset sold as of the date of
settlement;
(ii) Receipt of final payment on the
Impaired Asset in an amount less than the Amortized Cost Value of
that Impaired Asset as of the date such payment is received;
or
(iii) Issuance of orders by a court
having jurisdiction over the matter discharging the issuer from
liability for the Impaired Asset and providing for payments on that
Impaired Asset in an amount less than the Amortized Cost Value of
that Impaired Asset as of the date such payment is
received.
The excess of the Amortized Cost
Value of the Impaired Assets subject to a Contribution Event over
the amount received by the Fund in connection with such
Contribution Event shall constitute the “Loss” on such
Impaired Assets.
(d) “Impaired Assets”
means any security held in the Fund’s portfolio as of the
date of this Agreement where the market price for such security is
or becomes below the Amortized Cost Value for such security by
0.001%.
(e) “Maximum Contribution
Amount” means ten million dollars ($10,000,000). The Maximum
Contribution Amount may be amended at any time as agreed by TNT 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 unit 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 Impaired Assets. 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 the greater of (i) such minimum net
asset value as determined by TNT will meet the requirements of the
OCC Regulations with respect to valuation of the Fund pursuant to
the Amortized Cost Method or (ii) $0.9990/unit.
2. Covenants of the Fund .
The Fund agrees that:
(a) To the extent consistent with
the Fund’s interest, TNT shall consult with the Support
Provider with respect to all decisions regarding each Impaired
Asset (including, but not limited to, any decision to sell the
Impaired Asset or to forgo the right to any payment) prior to the
occurrence of a Contribution Event with respect to that Impaired
Asset. Nothing in this Agreement shall be construed to cause the
delegation by TNT to any person any authority which is not
permitted to be delegated under OCC Regulations.
(b) The Fund will retain any Capital
Contribution and not include the Capital Contribution in any
dividend or other distribution to the Fund’s participants.
For the avoidanc
