EXHIBIT 4.(g).
THIRD PARTY FEEDER FUND AGREEMENT
The parties to this Agreement are RE Advisers, Homestead Funds, Inc.
(the "Company"), a Maryland corporation, in respect of the Stock Index Fund, a
series thereof (the "Fund"), Equity 500 Index Portfolio, a New York business
trust (the "Portfolio"), RE Investment, a corporation organized under the laws
of the State of Virginia, and Deutsche Asset Management, Inc., a Delaware
corporation ("XxXX, Inc."), with respect to the proposed investment by the
Fund in the Portfolio. THIS AGREEMENT is made and entered into as of April 27,
2001, amending and restating a prior agreement dated October 28, 1999, with
respect to the proposed investment by the Fund in the Portfolio.
PREAMBLE
WHEREAS, the Company and the Portfolio are each open-end management
investment companies and the Fund and the Portfolio have the same investment
objectives;
WHEREAS, XxXX, Inc. currently serves as the investment adviser of the
Portfolio;
WHEREAS, RE Investment currently serves as the principal underwriter
of the Company and the Fund;
WHEREAS, RE Advisers serves as promoter of the Fund;
WHEREAS, the Company desires to invest all of the Fund's investable
assets in the Portfolio in exchange for a beneficial interest in the Portfolio
(the "Investment") on the terms and conditions set forth in this Agreement;
and
WHEREAS, the Portfolio believes that accepting the Investment is in
the best interests of the Portfolio and that the interests of existing
investors in the Portfolio will not be diluted as a result of its accepting
the Investment;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
herein made and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE ONE
THE INVESTMENT
1.1 Agreement to Effect the Investment. The Company agrees to assign,
transfer and deliver all of the the Fund's investable assets (the
"Assets") to the Portfolio at each Closing (as hereinafter defined).
The Portfolio agrees in exchange therefor to issue to the Fund a
beneficial interest (the "Interest") in the Portfolio equal in value
to the net asset value of the Assets of the Fund conveyed to the
Portfolio on that date of Closing.
ARTICLE TWO
CLOSING AND CLOSING DATE
2.1 Time of Closing. The conveyance of the Assets in exchange for the
Interest, as described in Article One , together with related acts
necessary to consummate such transactions, shall occur initially on
the date the Company commences its offering of shares of the Fund to
the public and at each subsequent date as the Company desires to make
a further Investment in the Portfolio (each, a "Closing"). All acts
occurring at any Closing shall be deemed to occur simultaneously as
of the last daily determination of the Portfolio's net asset value on
the date of Closing.
2.2 Related Closing Matters. On each date of Closing, the Company, on
behalf of the Fund, shall authorize the Fund's custodian to deliver
all of the Assets held by such custodian to the Portfolio's
custodian. The Fund's and the Portfolio's custodians shall each
acknowledge, in a form acceptable to the other party, their
respective delivery and acceptance of the Assets. The Portfolio shall
deliver to the Company acceptable evidence of the Fund's ownership of
the Interest. In addition, each party shall deliver to each other
party such bills of sale, checks, assignments, securities
instruments, receipts or other documents as such other party or its
counsel may reasonably request. Each of the representations and
warranties set forth in Article Three shall be deemed to have been
made anew on each date of Closing.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
3.1 THE COMPANY AND RE ADVISERS
The Company and RE Advisers each represents and warrants to the
Portfolio and XxXX, Inc. that:
(a) Organization. The Company is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Maryland. The Fund is a duly and
validly designated series of the Company. The Company and
the Fund have the requisite power and authority to own their
property and conduct their business as now being conducted
and as proposed to be conducted pursuant to this Agreement.
(b) Authorization of Agreement. The execution and
delivery of this Agreement by the Company and the
consummation of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of
the Company. No other action or proceeding is necessary for
the execution and delivery of this Agreement by the Company,
the performance by the Company of its obligations hereunder
and the consummation by the Company of the transactions
contemplated hereby. This Agreement has been duly executed
and delivered by the Company and constitutes a legal, valid
and binding obligation of the Company in respect of the
Fund, enforceable against them in accordance with its terms.
(c) Authorization of Investment. The Investment has been duly
authorized by all necessary action on the part of the Board
of Directors of the Company.
(d) No Bankruptcy Proceedings. Neither the Company nor
the Fund is under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code (the
"Bankruptcy Code") or similar case within the meaning of
Section 368(a) (3) (A) of the Bankruptcy Code.
(e) Fund Assets. The Fund's Assets will, at the initial Closing,
consist solely of cash.
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(f) Fiscal Year. The fiscal year end for the Fund is December
31.
(g) Auditors. The Company has appointed Deloitte & Touche as the
Fund's independent public accountants to certify the Fund's
financial statements in accordance with Section 32 of the
Investment Company Act of 1940, as amended ("1940 Act").
(h) Registration Statement. The Company has reviewed the
Portfolio's registration statement on Form N-1A, as filed
with the Securities and Exchange Commission ("SEC"), and
understands and agrees to the Portfolio's policies and
methods of operation as described therein.
(i) Errors and Omissions Insurance Policy. The Company has in
force an errors and omissions liability insurance policy
insuring the Fund against loss up to $2 million for
negligence or wrongful acts.
(j) SEC Filings. To the best of its knowledge, the Company has
duly filed all forms, reports, proxy statements and other
documents (collectively, the "SEC Filings") required to be
filed under the Securities Act of 1933, as amended (the
"1933 Act"), the Securities Exchange Act of 1934 (the "1934
Act") and the 1940 Act (collectively, the "Securities Laws")
in connection with the registration of its shares, any
meetings of its shareholders and its registration as an
investment company. The SEC Filings were prepared in
accordance with the requirements of the Securities Laws, as
applicable, and the rules and regulations of the SEC
thereunder and do not contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
(k) 1940 Act Registration. The Company is duly registered as an
open-end management investment company under the 1940 Act
and the Fund and its shares are registered or qualified in
any states where such registration or qualification is
necessary and such registrations or qualifications are in
full force and effect.
(l) All purchases and redemptions of the Fund shares
contemplated by this Agreement shall be effected in
accordance with the Fund's then-current prospectus.
3.2 THE PORTFOLIO AND XXXX, INC.
The Portfolio and XxXX, Inc. each represents and warrants to the
Company and RE Advisers that:
(a) Organization. The Portfolio is a business trust
duly organized and validly existing under the common law of
the State of New York and has the requisite power and
authority to own its property and conduct its business as
now being conducted and as proposed to be conducted pursuant
to this Agreement.
(b) Authorization of Agreement. The execution and
delivery of this Agreement by the Portfolio and the
consummation of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of
the Portfolio by its Board of Trustees and no other action
or proceeding is necessary for the execution and delivery of
this Agreement by the Portfolio, the performance by
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the Portfolio of its obligations hereunder and the
consummation by the Portfolio of the transactions
contemplated hereby. This Agreement has been duly executed
and delivered by the Portfolio and constitutes a legal,
valid and binding obligation of the Portfolio, enforceable
against it in accordance with its terms.
(c) Authorization of Issuance of Interest. The issuance by the
Portfolio of the Interest in exchange for the Investment by
the Fund of its Assets has been duly authorized by all
necessary action on the part of the Board of Trustees of the
Portfolio. When issued in accordance with the terms of this
Agreement, the Interest will be validly issued, fully paid
and non-assessable by the Portfolio.
(d) No Bankruptcy Proceedings. The Portfolio is not
under the jurisdiction of a court in a proceeding under
Title 11 of the Bankruptcy Code or similar case within the
meaning of Section 368(a)(3)(A) of the Bankruptcy Code.
(e) Fiscal Year. The fiscal year end of the Portfolio is
December 31.
(f) Auditors. The Portfolio has appointed PricewaterhouseCoopers
LLP as the Portfolio's independent public accountants to
certify the Portfolio's financial statements in accordance
with Section 32 of the 1940 Act.
(g) Registration Statement. The Portfolio has reviewed the
Company's registration statement on Form N-1A, as filed with
the SEC, and understands and agrees to the Fund's policies
and methods of operation as described therein.
(h) Errors and Omissions Insurance Policy. The Portfolio has in
force an errors and omissions liability insurance policy
insuring the Portfolio against loss up to $10 million for
negligence or wrongful acts.
(i) SEC Filings; State Filings. To the best of its knowledge,
the Portfolio has duly filed all SEC Filings required to be
filed with the SEC pursuant to the 1934 Act and the 1940 Act
in connection with any meetings of its investors and its
registration as an investment company. Beneficial interests
in the Portfolio are not required to be registered under the
1933 Act because such interests are offered solely in
private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of the
1933 Act, and such beneficial interests are not required to
be registered or qualified in any state. The SEC Filings
were prepared in accordance with the requirements of the
Securities Laws, as applicable, and the rules and
regulations of the SEC thereunder, and do not contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(j) 1940 Act Registration. The Portfolio is duly registered as
an open-end management investment company under the 1940 Act
and such registration is in full force and effect.
(k) Tax Status. The Portfolio is taxable as a partnership under
the Internal Revenue Code of 1986, as amended (the "Code").
3.3 XXXX, INC.
XxXX, Inc. represents and warrants to the Company and RE
Advisers that:
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(a) Organization. XxXX, Inc. is a Delaware corporation
duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the requisite
power and authority to conduct its business as now being
conducted.
(b) Authorization of Agreement. The execution and
delivery of this Agreement by XxXX, Inc. has been duly
authorized by all necessary action on the part of XxXX, Inc.
and no other action or proceeding is necessary for the
execution and delivery of this Agreement by XxXX, Inc.. This
Agreement has been duly executed and delivered by XxXX, Inc.
and constitutes a legal, valid and binding obligation of
XxXX, Inc. and would not involve a breach of the license
agreement dated as of July 14, 1992 between Standard &
Poor's Corporation and Bankers Trust Company, an affiliate
of XxXX, Inc.
(c) Advisers Act. XxXX, Inc. is a registered investment adviser
under the Investment Advisers Act of 1940, as amended (the
"Advisers Act").
3.4 RE ADVISERS AND RE INVESTMENT
(a) RE Advisers represents and warrants to the
Portfolio and XxXX, Inc. that:
(i) Organization. RE Advisers is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Virginia and has the
requisite power and authority to conduct its business
as now being conducted.
(ii) Authorization of Agreement. The execution and delivery
of this Agreement by RE Advisers have been duly
authorized by all necessary action on the part of RE
Advisers and no other action or proceeding is
necessary for the execution and delivery of this
Agreement by RE Advisers. This Agreement has been duly
executed and delivered by RE Advisers and constitutes
a legal, valid and binding obligation of RE Advisers.
(iii) Promoter and Administrator. RE Advisers is the Fund's
promoter and administrator and is registered as an
investment adviser under the Advisers Act.
(b) RE Investment represents and warrants to the
Portfolio and XxXX, Inc. that:
(i) Authorization of Agreement. The execution and delivery
of this Agreement by RE Investment has been duly
authorized by all necessary action on the part of RE
Investment and no other action or proceeding is
necessary for the execution and delivery of this
Agreement by RE Investment. This Agreement has been
duly executed and delivered by RE Investment and
constitutes a legal, valid and binding obligation of
RE Investment.
(ii) RE Investment serves as the Company's and the Fund's
principal underwriter and is duly registered as a
broker-dealer under the 1934 Act. RE Investment is
duly organized, validly existing and in good standing
under the laws of the state of Virginia, and has
requisite authority to conduct its business as now
being conducted.
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ARTICLE FOUR
COVENANTS
4.1 THE COMPANY
The Company covenants that:
(a) Advance Review of Certain Documents. The Company
will furnish the Portfolio and XxXX, Inc., at least 10
business days prior to filing or first use, as the case may
be, with drafts of its registration statement on Form N-lA
(including amendments) and prospectus supplements or
amendments relating to the Fund. The Company will furnish
the Portfolio and XxXX, Inc. with any proposed advertising
or sales literature relating to the Fund at least 10
business days prior to filing or first use. These advance
review periods may be waived with the consent of the
Portfolio and XxXX, Inc.. The Company agrees that it will
include in all such Fund documents any disclosures that may
be required by law, and it will include in all such Fund
documents any material comments reasonably made by XxXX,
Inc. or the Portfolio. The Portfolio and XxXX, Inc. will,
however, in no way be liable for any errors or omissions in
such documents, whether or not they make any objection
thereto, except to the extent such errors or omissions
result from information provided by XxXX, Inc. or the
Portfolio. The Company will not make any other written or
oral representation about the Portfolio or XxXX, Inc.
without their prior written consent.
(b) Tax Status. The Fund will qualify for treatment as
a regulated investment company under Subchapter M of the
Code for all periods during which this Agreement is in
effect, except to the extent a failure to so qualify may
result from any action or omission of the Portfolio.
(c) Investment Securities. The Fund will own no
investment security other than its Interest in the Portfolio.
(d) Proxy Voting. If requested to vote as a shareholder
on matters pertaining to the Portfolio (other than a vote by
the Company to continue the operation of the Portfolio upon
the withdrawal of another investor in the Portfolio), the
Company will, to the extent required by applicable law, (i)
call a meeting of shareholders of the Fund for the purpose
of seeking instructions from shareholders regarding such
matters, (ii) vote the Fund's Interest proportionally as
instructed by Fund shareholders, and (iii) vote the Fund's
Interest with respect to the shares held by Fund
shareholders who do not give voting instructions in the same
proportion as the shares of Fund shareholders who do give
voting instructions. The Company will hold each such meeting
of Fund shareholders in accordance with a timetable
reasonably established by the Portfolio. With respect to
proposals solely attributable to and for the benefit of
XxXX, Inc., XxXX, Inc. shall bear the costs and expenses in
calling and holding such meetings, including, but not
limited to the cost of printing and mailing proxy statements
and expenses associated with the solicitation of Fund
shareholders.
(e) Insurance. The Company shall at all times maintain errors
and omissions liability insurance with respect to the Fund
covering losses for negligence and wrongful acts in an
amount not less than $2 million. At least once each calendar
year, the
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Company shall review its insurance coverage, and shall
increase its coverage as it deems appropriate.
(f) Auditors. In the event the Fund's independent public
accountants differ from those of the Portfolio, the Fund
shall be responsible for any costs and expenses associated
with the need for the Portfolio's independent public
accountants to provide information to the Fund's independent
public accountants.
4.2 INDEMNIFICATION BY RE ADVISERS
(a) With respect to those matters listed in subparagraphs
(i) through (vii) below, RE Advisers will indemnify and hold
harmless the Portfolio, XxXX, Inc. and their respective
trustees, directors, officers and employees and each other
person who controls the Portfolio or XxXX, Inc., as the case
may be, within the meaning of Section 15 of the 1933 Act
(each, a "Covered Person" and collectively, "Covered
Persons"), against any and all losses, claims, demands,
damages, liabilities and expenses, joint or several, (each, a
"Liability" and collectively, the "Liabilities"). Unless RE
Advisers elects to assume the defense pursuant to paragraph
(b) RE Advisers will bear the reasonable cost of investigating
and defending against any claims therefor and any reasonable
counsel fees incurred in connection therewith. This Section
4.2 applies to any Liability which arises out of, is based
upon or results from:
(i) any violation or alleged violation of the Securities
Laws, any other statute or common law or are incurred
in connection with or as a result of any formal or
informal administrative proceeding or investigation by
a regulatory agency, insofar as such Liabilities arise
out of or are based upon the ground or alleged ground
that any direct or indirect omission or commission by
the Company or the Fund (either during the course of
its daily activities or in connection with the
accuracy of its representations or its warranties in
this Agreement) caused or continues to cause the
Portfolio to violate any federal or state securities
laws or regulations or any other applicable domestic
or foreign law or regulations or common law duties or
obligations, but only to the extent that such
Liabilities do not arise out of and are not based upon
an omission or commission of the Portfolio or XxXX,
Inc.;
(ii) the Fund having caused the Portfolio to be an
association taxable as a corporation rather than a
partnership; or
(iii) any misstatement of a material fact or an omission of
a material fact in the Company's registration
statement (including amendments thereto) or included
in Fund advertising or sales literature, other than
information provided by or on behalf of the Portfolio
or XxXX, Inc. or included in Fund advertising or sales
literature at the request of the Portfolio or XxXX,
Inc. or the agent of either;
(iv) the failure of any representation or warranty made by
the Company or RE Advisers to be materially accurate
when made or the failure of the Company or RE Advisers
to perform any covenant contained herein or to
otherwise comply with the terms of this Agreement;
(v) any unlawful or negligent act of the Company, RE
Advisers or any director, officer, employee or agent
of the Company or RE Advisers, whether such act
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was committed against the Company, the Portfolio,
XxXX, Inc. or any third party;
(vi) any claim that the use of the names "Standard of
Poor's," "S&P," "Standard of Poor's 500," "S&P 500" or
"500" by the Company violates any license or infringes
upon any trademark; or
(vii) any Liability of the Fund for which the Portfolio is
also liable and for which the Company or RE Advisers
is responsible; provided, however, that in no case
shall RE Advisers be liable with respect to any claim
made against any Covered Person under this Section 4.2
unless the Covered Person shall have notified RE
Advisers in writing of the nature of the claim within
a reasonable time after the summons, other first legal
process or formal or informal initiation of a
regulatory investigation or proceeding shall have been
served upon or provided to a Covered Person, or any
federal, state or local tax deficiency has come to the
attention of XxXX, Inc., the Portfolio or a Covered
Person. Failure to notify RE Advisers of such claim
shall relieve it from Liability only to the extent
that it is actually harmed or disadvantaged by the
failure to provide timely notice and shall not relieve
RE Advisers from any Liability that it may have to any
Covered Person otherwise than on account of the
indemnification contained in this Section.
(b) RE Advisers will be entitled to participate at its own
expense in the defense or, if it so elects, to assume the
defense of any suit brought to enforce any such Liability.
If RE Advisers elects to assume the defense, such defense
shall be conducted by counsel chosen by RE Advisers. In the
event RE Advisers elects to assume the defense of any such
suit and retain such counsel, each Covered Person and any
other defendant or defendants may retain additional counsel,
but shall bear the fees and expenses of such counsel unless
(A) RE Advisers shall have specifically authorized the
retaining of such counsel or (B) the parties to such suit
include any Covered Person and RE Advisers, and any such
Covered Person has been advised by counsel in writing that
one or more legal defenses may be available to it that may
not be available to RE Advisers, in which case RE Advisers
shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the reasonable fees
and expenses of such counsel. RE Advisers shall not be
liable to indemnify any Covered Person for any settlement of
any claim effected without RE Advisers's written consent,
which consent shall not be unreasonably withheld or delayed.
The indemnities set forth in paragraph (a) will be in
addition to any liability that the Company in respect of the
Fund might otherwise have to a Covered Person.
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4.3 INDEMNIFICATION BY RE INVESTMENT
(a) With respect to those matters listed in subparagraph (i)
through (v) below, RE Investment will indemnify and hold
harmless the Portfolio, XxXX, Inc. and their respective
trustees, directors, officers and employees and each other
person who controls the Portfolio or XxXX, Inc., as the case
may be, within the meaning of Section 15 of the 1933 Act
(each a "Covered Person" and collectively, "Covered
Persons"), against any and all losses, claims, demands,
damages, liabilities and expenses, joint or several, (each,
a "Liability" and collectively, the "Liabilities"). Unless
RE Investment elects to assume the defense pursuant to
paragraph (c), RE Investment will bear the reasonable cost
of investigating and defending against any claims therefor
and any reasonable counsel fees incurred in connection
therewith. This Section 4.3 applies to any Liability which
arises out of, is based upon or results from:
(i) any misstatement of a material fact or an omission of
a material fact included in Fund advertising or sales
literature, other than information provided by or on
behalf of the Portfolio or XxXX, Inc. or included in
Fund advertising or sales literature at the request of
the Portfolio or XxXX, Inc. or the agent of either;
(ii) the failure of any representation or warranty made by
RE Investment to be materially accurate when made or
the failure of RE Investment to perform any covenant
contained herein or to otherwise comply with the terms
of this Agreement;
(iii) any unlawful or negligent act of RE Investment or any
director, officer, employee or agent of RE Investment,
whether such act was committed against the Company,
the Portfolio, XxXX, Inc. Trust or any third party; or
(iv) any claim that the use of the names "Standard of
Poor's," "S&P," "Standard of Poor's 500," "S&P 500" or
"500" by the Company violates any license or infringes
upon any trademark; or
(v) any material breach of RE Investment's
representations, warranties and covenants included
herein.
(b) In no case shall RE Investment be liable with respect to
any claim made against any Covered Person under this Section
4.3 unless the Covered Person shall have notified RE
Investment in writing of the nature of the claim within a
reasonable time after the summons, other first legal process
or formal or informal initiation of a regulatory investigation
or proceeding shall have been served upon or provided to a
Covered Person, or any federal, state or local tax deficiency
has come to the attention of XxXX, Inc., the Portfolio or a
Covered Person. Failure to notify RE Investment of such claim
shall relieve it from Liability only to the extent that it is
actually harmed or disadvantaged by the failure to provide
timely notice and shall not relieve RE Investment from any
Liability that it may have to any Covered Person otherwise
than on account of the indemnification contained in this
Section.
(c) RE Investment will be entitled to participate at its own
expense in the defense or, if it so elects, to assume the
defense of any suit brought to enforce any such Liability.
If RE Investment elects to assume the defense, such defense
shall be conducted by counsel chosen by RE Investment. In
the event RE Investment
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elects to assume the defense of any such suit and retain
such counsel, each Covered Person and any other defendant or
defendants may retain additional counsel, but shall bear the
fees and expenses of such counsel unless (i) RE Investment
shall have specifically authorized the retaining of such
counsel or (ii) the parties to such suit include any Covered
Person and RE Investment, and any such Covered Person has
been advised by counsel in writing that one or more legal
defenses may be available to it that may not be available to
RE Investment, in which case RE Investment shall not be
entitled to assume the defense of such suit notwithstanding
its obligation to bear the reasonable fees and expenses of
such counsel. RE Investment shall not be liable to indemnify
any Covered Person for any settlement of any claim effected
without RE Investment's written consent. Such consent shall
not be unreasonably withheld or delayed. The indemnities set
forth in paragraph (a) will be in addition to any liability
that RE Investment might otherwise have to a Covered Person.
4.4 THE PORTFOLIO
The Portfolio covenants that:
(a) Advance Review of Certain Documents. The Portfolio
will furnish the Company and RE Advisers, at least 10
business days prior to filing or first use, as the case may
be, with drafts of its registration statement on Form N-1A
(including amendments) and prospectus supplements or
amendments. This advance review period may be waived with
the consent of the Company and RE Advisers. The Portfolio
will not make any written or oral representation about the
Company, RE Investment or RE Advisers without their prior
written consent.
(b) Tax Status. The Portfolio will qualify to be
taxable as a partnership under the Code for all periods
during which this Agreement is in effect, except to the
extent that the failure to so qualify results from any
action or omission of the Fund.
(c) Insurance. The Portfolio shall at all times maintain errors
and omissions liability insurance covering losses for
negligence and wrongful acts in an amount not less than $10
million. At least once each calendar year, the Portfolio
shall review its insurance coverage, and shall increase its
coverage, as it deems appropriate.
(d) Availability of Interests. Conditional upon the
Company complying with the terms of this Agreement, the
Portfolio shall permit the Fund to make additional
Investments in the Portfolio on each business day on which
shares of the Fund are sold to the public; provided,
however, that the Portfolio may refuse to permit the Fund to
make additional Investments in the Portfolio on any day on
which:
(i) the Portfolio has refused to permit all other investors
in the Portfolio to make additional investments in the
Portfolio, or
(ii) the Trustees of the Portfolio have reasonably
determined that permitting additional investments by
the Fund in the Portfolio would constitute a breach of
their fiduciary duties to the Portfolio.
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4.5 INDEMNIFICATION BY XXXX, INC.
(a) With respect to those matters listed in subparagraphs
(i) through (ix) below, XxXX, Inc. will indemnify and hold
harmless the Company, RE Advisers, RE Investment, their
respective directors, officers and employees and each other
person who controls the Company, the Fund, RE Advisers or RE
Investment, as the case may be, within the meaning of Section
15 of the 1933 Act (each, a "Covered Person" and collectively,
"Covered Persons"), against any and all losses, claims,
demands, damages, liabilities and expenses, joint or several,
(each, a "Liability" and collectively, the "Liabilities").
Unless XxXX, Inc. elects to assume the defense pursuant to
paragraph (b), XxXX, Inc. will bear the reasonable costs of
investigating and defending against any claims therefore and
any reasonable counsel fees incurred in connection therewith),
whether incurred directly by the Company, RE Advisers or RE
Investment or indirectly by the Company, RE Advisers, or RE
Investment through the Company's Investment in the Portfolio.
This Section 4.5 applies to any Liability which arises out of,
is based upon or results from:
(i) any violation or alleged violation of the Securities
Laws, any other statute or common law or are incurred
in connection with or as a result of any formal or
informal administrative proceeding or investigation by
a regulatory agency, insofar as such Liabilities arise
out of or are based upon the ground or alleged ground
that any direct or indirect omission or commission by
the Portfolio (either during the course of its daily
activities or in connection with the accuracy of its
representations or its warranties in this Agreement)
caused or continues to cause the Company to violate
any federal or state securities laws or regulations or
any other applicable domestic or foreign law or
regulations or common law duties or obligations, but
only to the extent that such Liabilities do not arise
out of and are not based upon an omission or
commission of the Company, RE Advisers or RE
Investment;
(ii) an inaccurate calculation of the Portfolio's net asset
value (whether by the Portfolio, XxXX, Inc. or any
party retained for that purpose);
(iii) (A) any misstatement of a material fact or an omission
of a material fact in the Portfolio's registration
statement (including amendments thereto) or included
in advertising or sales literature used by the Fund,
other than information provided by or on behalf of the
Company, RE Advisers or RE Investment or included at
their, or their agent's request, or (B) any
misstatement of a material fact or an omission of a
material fact in the registration statement or
advertising or sales literature of any investor in the
Portfolio, other than the Company;
(iv) the Portfolio's having caused the Fund to fail to
qualify as a regulated investment company under the
Code;
(v) failure of any representation or warranty made by the
Portfolio or XxXX, Inc. to be materially accurate when
made, any material breach of any representation or
warranty made by the Portfolio or XxXX, Inc., or the
failure of the Portfolio or XxXX, Inc. to perform any
covenant contained herein or to otherwise comply with
the terms of this Agreement;
(vi) any unlawful or negligent act by the Portfolio, XxXX,
Inc. or any director, trustee, officer, employee or
agent of the Portfolio or adviser, whether such
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act was committed against the Portfolio, the Company,
RE Advisers, RE Investment or any third party;
(vii) any claim that the systems, methodologies, or
technology used in connection with operating the
Portfolio, including the technologies associated with
maintaining the master-feeder structure of the
Portfolio, violate any license or infringe upon any
patent or trademark;
(viii) any claim that the use of the names "Standard of
Poor's," "S&P," "Standard of Poor's 500" or " S&P
500" or "500" by the Portfolio violates any license
or infringes upon any trademark; or
(ix) any liability of the Portfolio for which the Fund is
also liable and for which the Portfolio or XxXX, Inc.
is responsible, and any Liability of the Portfolio to
any investor in the Portfolio (or shareholder
thereof), other than the Fund (and its shareholders);
provided, however, that in no case shall XxXX, Inc.
be liable with respect to any claim made against any
such Covered Person under this Section 4.5 unless
such Covered Person shall have notified XxXX, Inc. in
writing of the nature of the claim within a
reasonable time after the summons, other first legal
process or formal or informal initiation of a
regulatory investigation or proceeding shall have
been served upon or provided to a Covered Person or
any federal, state or local tax deficiency has come
to the attention of the Company, RE Advisers, RE
Investment or a Covered Person. Failure to notify
XxXX, Inc. of such claim shall relieve it from
Liability only to the extent that it is actually
harmed or disadvantaged by the failure to provide
timely notice and shall not relieve XxXX, Inc. from
any liability that it may have to any Covered Person
otherwise than on account of the indemnification
contained in this paragraph.
(b) XxXX, Inc. will be entitled to participate at its
own expense in the defense or, if it so elects, to assume
the defense of any suit brought to enforce any such
liability. If XxXX, Inc. elects to assume the defense, such
defense shall be conducted by counsel chosen by XxXX, Inc..
In the event XxXX, Inc. elects to assume the defense of any
such suit and retain such counsel, each Covered Person and
any other defendant or defendants in the suit may retain
additional counsel but shall bear the reasonable fees and
expenses of such counsel unless (i) XxXX, Inc. shall have
specifically authorized the retaining of such counsel or
(ii) the parties to such suit include any Covered Person and
XxXX, Inc., and any such Covered Person has been advised by
counsel, in writing, that one or more legal defenses may be
available to it that may not be available to XxXX, Inc., in
which case XxXX, Inc. shall not be entitled to assume the
defense of such suit notwithstanding the obligation to bear
the fees and expenses of such counsel. XxXX, Inc. shall not
be liable to indemnify any Covered Person for any settlement
of any such claim effected without XxXX, Inc.'s written
consent. Such consent shall not be unreasonably withheld or
delayed. The indemnities set forth in paragraph (a) will be
in addition to any liability that the Portfolio might
otherwise have to a Covered Person.
4.6 SCOPE OF AGREEMENT
Nothing contained herein shall be construed to protect any person
against any liability to which such person would otherwise be subject by
reason of willful misfeasance, bad faith, or negligence, in the performance of
such person's duties, or by reason of such person's reckless disregard of such
person's obligations under such contract or agreement.
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4.7 IN-KIND REDEMPTION
In the event the Company desires to withdraw or redeem all or a
portion of the Fund's Investment in the Portfolio, unless otherwise agreed to
by the parties, the Portfolio will effect such redemption "in-kind" and in
such a manner that the securities delivered to the Fund's custodian for the
account of the Fund will mirror, as closely as practicable, the composition of
the Portfolio immediately prior to such redemption. No other withdrawal or
redemption of any Interest in the Portfolio will be satisfied by means of an
"in-kind" redemption except in compliance with Rule 18f-1 under the 1940 Act,
provided, however, that for purposes of determining compliance with Rule
18f-1, each shareholder of the Fund redeeming shares of the Fund on a
particular day will be treated as a direct holder of an Interest in the
Portfolio being redeemed that day.
4.8 REASONABLE ACTIONS
Each party covenants that it will, subject to the provisions of this
Agreement, from time to time, as and when requested by another party or in its
own discretion, as the case may be, execute and deliver or cause to be
executed and delivered all such assignments and other instruments, take or
cause to be taken such actions, and do or cause to be done all things
reasonably necessary, proper or advisable in order to consummate the
transactions contemplated by this Agreement and to carry out its intent and
purpose.
ARTICLE FIVE
CONDITIONS PRECEDENT
5.0 GENERAL
The obligations of each party to consummate the transactions provided
for herein shall be subject to:
(a) performance by the other parties of all the obligations
to be performed by the other parties hereunder on or before
each Closing,
(b) all representations and warranties of the other parties
contained in this Agreement being true and correct in all
material respects as of the date hereof and, except as they
may be affected by the transactions contemplated by this
Agreement, as of each date of Closing, with the same force
and effect as if made on and as of the time of such Closing,
and
(c) the following further conditions that shall be fulfilled on
or before each Closing.
5.1 REGULATORY STATUS
All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received
that any other or further action is required to permit the parties to carry
out the transactions contemplated hereby.
5.2 INVESTMENT OBJECTIVE/RESTRICTIONS
The Fund shall have the same investment objective and substantively
the same investment restrictions as the Portfolio.
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ARTICLE SIX
ADDITIONAL AGREEMENTS
6.1 NOTIFICATION OF CERTAIN MATTERS
Each party will give prompt notice to the other parties of:
(a) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would be likely to
cause either:
(i) any representation or warranty contained in this
Agreement to be materially untrue or inaccurate, or
(ii) any condition precedent set forth in Article Five
hereof to be unsatisfied in any material respect at
the time of any Closing, and
(b) any material failure of a party to comply with or
satisfy any covenant, condition or agreement to be complied
with or satisfied by such person hereunder; provided,
however, that the delivery of any notice pursuant to this
Section 6.1 shall not limit or otherwise affect the remedies
available, hereunder or otherwise, to the party receiving
such notice.
6.2 ACCESS TO INFORMATION
The Portfolio and the Company shall afford each other reasonable
access at all reasonable times to such party's officers, employees, agents and
offices and to all its relevant books and records and shall furnish each other
party with all relevant financial and other data and information as requested;
provided, however, that nothing contained herein shall obligate the Company to
provide the Portfolio with access to the books and records of the Company
relating to any series of the Company other than the Fund, nor shall anything
contained herein obligate the Company to furnish the Portfolio with the Fund's
shareholder list, except as may be required to comply with applicable law or
any provision of this Agreement.
6.3 CONFIDENTIALITY
Each party agrees that it shall hold in strict confidence all data
and information obtained from another party (unless such information is or
becomes readily ascertainable from public or published information or trade
sources) and shall ensure that its officers, employees and authorized
representatives do not disclose such information to others without the prior
written consent of the party from whom it was obtained, except if disclosure
is required by the SEC, any other regulatory body or the Fund's or Portfolio's
respective auditors, or in the opinion of counsel such disclosure is required
by law, and then only with as much prior written notice to the other party as
is practical under the circumstances.
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6.4 PUBLIC ANNOUNCEMENTS
No party shall issue any press release or otherwise make any public
statements with respect to the matters covered by this Agreement without the
prior consent of the other parties hereto, which consent shall not be
unreasonably withheld; provided, however, that consent shall not be required
if, in the opinion of counsel, such disclosure is required by law, provided
further, however, that the party making such disclosure shall provide the
other parties hereto with as much prior written notice of such disclosure as
is practical under the circumstances. Advance review of sales literature and
advertising material shall be subject to the provisions of Section 4.1 of this
Agreement.
ARTICLE SEVEN
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION
(a) This Agreement may be terminated by the mutual agreement
of all parties.
(b) This Agreement may be terminated at any time by the
Company by withdrawing all of the Fund's Interest in the
Portfolio.
(c) This Agreement may be terminated on not less than 120 days'
prior written notice by the Portfolio to the Company, RE
Advisers and RE Investment, or by RE Advisers or RE
Investment on not less than 120 days' prior written notice
to the Portfolio and XxXX, Inc..
(d) This Agreement shall terminate automatically with respect
to RE Advisers and RE Investment upon the effective date of
termination by the Company and this Agreement shall terminate
automatically with respect to XxXX, Inc. upon the effective
date of termination by the Portfolio.
(e) This Agreement may be terminated at any time immediately
upon written notice to the other parties in the event that
formal proceedings are instituted against another party to
this Agreement by the SEC or any other regulatory body,
provided that the terminating party has a reasonable belief
that the institution of the proceeding is not without
foundation and will have a material adverse impact on the
terminating party.
(f) This Agreement shall terminate automatically with respect to
RE Investment upon the effective date of the termination of
its duties as principal underwriter by the Company. At such
time XxXX, Inc. shall have the right to immediately
terminate this Agreement. RE Advisers and the Company
acknowledge that at such time in the event this Agreement is
not terminated, the Agreement will require amendment to
reflect the Company's appointment of a new principal
underwriter.
(g) The indemnification obligations of the parties set forth in
Article Four shall survive the termination of this Agreement
with respect to any Liability relating to actions or
omissions prior to the termination.
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7.2 AMENDMENT
This Agreement may be amended, modified or supplemented at any time
in such manner as may be mutually agreed upon in writing by the parties.
7.3 WAIVER
At any time prior to any Closing, any party may:
(a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered
pursuant hereto, and
(c) waive compliance with any of the agreements or conditions
contained herein.
ARTICLE EIGHT
DAMAGES
8.1 APPROPRIATE RELIEF
The parties agree that, in the event of a breach of this Agreement,
the remedy of money damages would not be adequate and agree that injunctive
relief would be the appropriate relief.
ARTICLE NINE
GENERAL PROVISIONS
9.1 NOTICES
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made on the
earlier of (a) when actually received in person or by fax, or (b) three days
after being sent by certified or registered United States mail, return receipt
requested, postage prepaid, addressed as follows:
If to RE Advisers, RE Investment or the Company:
Homestead Funds, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. XxXxxxxxx, Esq.
If to the Portfolio or XxXX, Inc.:
Mutual Fund Services
Deutsche Asset Management.
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Any party to this Agreement may change the identity or address of the
person to receive notice by providing written notice thereof to all other
parties to the Agreement.
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9.2 EXPENSES
All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses, unless otherwise provided herein.
9.3 HEADINGS
The headings and captions contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.4 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
9.5 ENTIRE AGREEMENT
This Agreement and the agreements and other documents delivered
pursuant hereto set forth the entire understanding between the parties
concerning the subject matter of this Agreement and incorporate or supersede
all prior negotiations and understandings. There are no covenants, promises,
agreements, conditions or understandings, either oral or written, between them
relating to the subject matter of this Agreement other than those set forth
herein. No representation or warranty has been made by or on behalf of any
party to this Agreement (or any officer, director, trustee, employee or agent
thereof) to induce any other party to enter into this Agreement or to abide by
or consummate any transactions contemplated by any terms of this Agreement,
except representations and warranties expressly set forth herein.
9.6 SUCCESSORS AND ASSIGNMENTS
Each and all of the provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and, except as otherwise
specifically provided in this Agreement, their respective successors and
assigns. Notwithstanding the foregoing, no party shall make any assignment of
this Agreement or any rights or obligations hereunder without the written
consent of all other parties. As used herein, the term "assignment" shall have
the meaning ascribed thereto in the 1940 Act.
9.7 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to the choice of law
or conflicts of law provisions thereof.
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9.8 COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which shall constitute one and the same instrument, and any party hereto may
execute this Agreement by signing one or more counterparts.
9.9 THIRD PARTIES
Nothing herein expressed or implied is intended or shall be construed
to confer upon or give any person, other than the parties hereto and their
successors or assigns, any rights or remedies under or by reason of this
Agreement.
9.10 INTERPRETATION
Any uncertainty or ambiguity existing herein shall not presumptively
be interpreted against any party, but shall be interpreted according to the
application of the rules of interpretation for arm's- length agreements.
9.11 LIMITATION OF LIABILITY
The parties hereby acknowledge that the Company has entered into this
Agreement solely on behalf of the Fund and that no other series of the Company
shall have any obligation hereunder with respect to any liability of the
Company arising hereunder.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the
date first written above.
RE ADVISERS
By: Xxxxx X. Xxxxxx
------------------------
Name: Xxxxx X. Xxxxxx
Title: Director, Vice President and Director of Investments
RE INVESTMENT CORPORATION
By: Xxxxx X. Xxxxxx
------------------------
Name: Xxxxx X. Xxxxxx
Title: Director, Secretary and Treasurer
HOMESTEAD FUNDS, INC., on behalf of itself and the Stock Index Fund, a series
thereof
By: /s/ Xxxxx X. Xxxxxx
------------------------
Name: Xxxxx X. Xxxxxx
Title: Director, Secretary and Treasurer
EQUITY 500 INDEX PORTFOLIO
By: Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: Secretary
DEUTSCHE ASSET MANAGEMENT, INC.
By: Xxxxxxx X. Xxxx
------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
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