Support Agreement with Affiliate
Support
Agreement with Affiliate
On
September 25, 2008, an affiliate of the portfolio’s investment advisor (the
“support provider”) entered into a support agreement (the “agreement”) with the
portfolio that would prevent any losses realized on $40,000 principal amount of
notes issued by Xxxxxx Brothers Holdings, Inc. (“Lehman notes”) and held in the
portfolio, or any losses realized on the portfolio's receivable for its Primary
Fund redemption proceeds (up to a maximum loss on the receivable of $27,850),
from causing the price at which the portfolio purchases and redeems its shares
to drop below $1.00 per share. Generally, upon a sale or other
ultimate disposition of Xxxxxx notes or the receivable, or receipt of payment on
the receivable that is less than the face amount of the receivable, the
agreement obligates the support provider to make a cash contribution to the
portfolio, up to the loss incurred upon the disposition, and subject to the
maximum loss noted above with respect to the receivable, sufficient to restore
the portfolio’s market based net asset value per share to a level that would
allow the portfolio to purchase and redeem its shares at $1.00 per
share. The agreement terminates on March 15, 2009. The
portfolio is obligated to sell any remaining Xxxxxx notes and the receivable
prior to the termination date if such a sale would require the support provider
to make a payment to the portfolio. The agreement was entered into at
no cost to the portfolio, and the support provider is not entitled to obtain any
shares or other property from the portfolio in exchange for its payments under
the agreement.
The
portfolio treats the agreement as an asset of the portfolio in calculating its
market based net asset value. The value of the agreement may increase
or decrease on any day the portfolio calculates its market based net asset value
per share as a result of changes in the market value of the Xxxxxx notes, the
fair value of the receivable, or other factors. At December 31, 2008,
the fair value of the agreement was estimated to be $36,702.