1
EXHIBIT (l)(12)
PURCHASE AGREEMENT
(Fixed Income Funds)
Agreement dated as of October 1, 1999 between Northern Funds,
a Massachusetts business trust (the "Trust"), and The Northern Trust Company
("Northern"), acting on behalf of certain common trust funds named below that
are maintained by Northern (the "Common Funds") in a fiduciary capacity.
BACKGROUND
1. The Trust is an open-end management investment company
registered under the Investment Company Act of 1940, consisting of twenty-nine
separate investment portfolios advised by Northern (the "Portfolios").
2. Northern also maintains, in a fiduciary capacity, the
Common Funds in accordance with Section 584 of the Internal Revenue Code of
1996, as amended (the "Code").
3. Northern believes that it is in the interests of the
accounts that are invested in the Common Funds (the "Accounts") to transfer
their investments from the Common Funds to the Portfolios. As fiduciary of the
Common Funds and the Accounts, Northern has, therefore, determined that each
Common Fund should transfer its assets to a Portfolio of the Trust with
corresponding investment objectives and policies in exchange solely for shares
of the Portfolio, and then distribute the shares to its participants solely in
exchange for and in cancellation of their interests in the Common Fund pursuant
to Section 584(h) of the Code. Northern believes that the foregoing procedure
for transferring the investments of the Accounts in the Common Funds to the
Portfolios will be beneficial to both the Accounts and the Portfolios, and will
minimize brokerage and other costs associated with the transfer of the Assets.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto, intending to be legally bound,
agree as follows:
AGREEMENT
1. Purchase of Portfolio Shares.
Effective as of 3:00 p.m. (Central Time) on October 1, 1999
(the "Transfer Time"), the Common Funds named below shall purchase, and the
Trust shall issue to the Common Funds, for subsequent distribution to the
participants in the Common Funds, shares of the corresponding Portfolios, as
listed below, with an aggregate net asset value equal to the aggregate market
value of the Assets transferred to the Portfolios determined in accordance with
Sections 3 and 4 hereof.
- 1 -
2
Corresponding Portfolios
Common Funds of the Trust
------------ ------------
1986 Government Bond U.S. Government
Government Bond U.S. Government
Intermediate Tax-Exempt Bond Intermediate Tax-Exempt
Taxable Bond Fixed Income
Tax-Exempt Bond Tax-Exempt
California Tax-Exempt Bond California Tax-Exempt
International Government Bond International Fixed Income
Arizona Tax-Exempt Bond Arizona Tax-Exempt
Intermediate California Tax-Exempt Bond California Intermediate Tax-Exempt
Intermediate Government Bond Short-Intermediate U.S. Government
2. Purchase Price. In consideration of the issuance of shares
of the Portfolios pursuant to this Agreement, Northern shall transfer those
Assets held by the Common Funds that are set forth in Exhibit A, attached hereto
and made a part hereof; provided that the Assets so transferred shall constitute
permissible investments under the Portfolios' respective investment policies and
limitations as set forth in the Trust's registration statement. No brokerage
commissions, fees (except for customary transfer fees) or other remuneration
will be paid by the Portfolios, the Common Funds or the Accounts in connection
with the transactions contemplated hereby. The number of shares of each
Portfolio to be issued to the Common Funds shall be determined by dividing the
aggregate market value (computed as set forth below) of the Assets being
transferred to the Portfolio, determined as of the Transfer Time, by the
Portfolio's per share value, determined as of the Transfer Time.
3. Determination of Market Value. The aggregate market value
of the Assets of a Common Fund shall be any cash plus the sum of the independent
current market price of each security being purchased hereunder. For purposes of
this Agreement, the "current market price" shall be determined pursuant to
paragraph (b) of Rule 17a-7 under the Investment Company Act of 1940 as
interpreted and applied by the staff of the Securities and Exchange Commission.
Securities may be valued on the basis of prices provided by independent
pricing services when such prices are believed by Northern to reflect the fair
market value of such securities.
4. Representation of Northern. Northern hereby represents and
warrants as follows:
(a) Northern is entering into this Agreement as
fiduciary of the Common Funds. The execution and delivery of this Agreement by
Northern has been duly authorized by all requisite corporate action and
(assuming the due authorization, execution and delivery hereof by the Trust)
constitutes the valid and binding obligation of Northern, as fiduciary,
enforceable in accordance with its terms.
- 2 -
3
(b) At the time of the transfer of the Assets to the
Trust, the Common Funds will have good title to the Assets, free and clear of
all mortgages, security interests, liens, charges, pledges and encumbrances
whatsoever. Upon transfer of the Assets to the Trust, the Trust will acquire
good title thereto, free and clear of all such mortgages, security interests,
liens, charges, pledges and encumbrances whatsoever.
5. Representations of the Trust. The Trust hereby represents
and warrants as follows:
(a) The Trust is entering into this Agreement on
behalf of the Portfolios. The execution and delivery of this Agreement by the
Trust has been duly authorized by all requisite action and (assuming the due
authorization, execution and delivery hereof by Northern) constitutes the valid
and binding obligation of the Trust, enforceable in accordance with its terms.
(b) The issuance, sale and delivery of shares of the
Portfolios in accordance with the terms of this Agreement have been duly
authorized by all requisite action and such shares, when so issued, sold and
delivered against payment therefor in accordance with the provisions hereof,
will be duly and validly issued, fully paid and nonassessable by the Trust.
6. Names. The Trust's Agreement and Declaration of Trust is on
file with the Secretary of the Commonwealth of Massachusetts. This Agreement is
executed by or on behalf of the Trust 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.
7. 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.
- 3 -
4
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers designated below as
of the day, month and year first above written.
Attest: NORTHERN FUNDS
By: /s/ Jylanne Xxxxx
-------------------------- -----------------------------------
Attest: THE NORTHERN TRUST COMPANY, acting
as Fiduciary for the Common Trust Funds
Named Above
/s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxxxxx X. Xxxx
-------------------------- -----------------------------------
- 4 -
5
Exhibit A
to Agreement between
Northern Funds and
The Northern Trust Company
Dated as of October 1, 1999
The following is a List of Assets for transfer to the investment
portfolios of Northern Funds from Common Trust Funds maintained by The Northern
Trust Company:
- 5 -
