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EXHIBIT 4.(f)
THIRD PARTY FEEDER FUND AGREEMENT
AMONG
PROMOTER,
DISTRIBUTOR,
RIC,
SERIESFUND,
BTFUND
AND
INVESTMENT ADVISER
DATED AS OF AGREEMENT DATE
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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"), BTFund, a New York business trust (the "Portfolio"), RE
Investment, a corporation organized under the laws of the State of Virginia, and
Bankers Trust Company, a New York banking corporation ("BT"), with respect to
the proposed investment by the Fund in the Portfolio. THIS AGREEMENT is made and
entered into as of October ___, 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, BT currently serves as the investment adviser of the Portfolio;
WHEREAS, RE Investment currently serves as the principal underwriter of
the Company and 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 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
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(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 BT 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
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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.
(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 $_____ 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.
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(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 Fund shares contemplated by this
Agreement shall be effected in accordance with the Fund's
then-current prospectus.
3.2 THE PORTFOLIO AND BT
The Portfolio and BT 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 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 _________.
(f) Auditors. The Portfolio has appointed ______________ as the
Portfolio's independent public accountants to certify the
Portfolio's financial statements in accordance with Section 32 of
the 1940 Act.
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(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 $________ 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").
(l) Year 2000 Preparedness. The Portfolio has taken steps reasonably
designed to assure that the software and operating systems it uses
(and those of its vendors) to perform its obligations hereunder are
able properly to distinguish dates before January 1, 2000 from dates
on or after January 1, 2000.
3.3 BT
BT represents and warrants to the Company and RE Advisers that:
(a) Organization. BT is a New York banking corporation duly organized,
validly existing and in good standing under the laws of the State of
New York 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 BT has been duly authorized by all necessary action on
the part of BT and no other action or proceeding is necessary for
the execution and delivery of this Agreement by BT.
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This Agreement has been duly executed and delivered by BT and
constitutes a legal, valid and binding obligation of BT.
(c) Advisers Act. BT is exempt from the definition of an investment
adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and is not required to register under that Act.
(d) Year 2000. BT has taken steps reasonably designed to assure that the
software and operating systems it uses (and those of its vendors) to
perform its obligations hereunder are able properly to distinguish
dates before January 1, 2000 from dates on or after January 1, 2000.
3.4 RE ADVISERS AND RE INVESTMENT
(a) RE Advisers represents and warrants to the Portfolio and BT 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 BT 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 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 BT, 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 BT 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 BT. The Company agrees that it will
include in all such Fund documents any disclosures that may be
required by law, particularly those relating to BT's status as a
bank, and it will include in all such Fund documents any material
comments reasonably made by BT or the Portfolio. The Portfolio and
BT 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 BT or the Portfolio. The Company will not
make any other written or oral representation about the Portfolio or
BT 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 BT, BT shall
bear the costs and expenses in calling and holding such meetings,
including, but not
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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
_____________. At least once each calendar year, the 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
(vi) below, RE Advisers will indemnify and hold harmless the
Portfolio, BT and their respective trustees, directors, officers and
employees and each other person who controls the Portfolio or BT, 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 is based upon:
(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 BT;
(ii) the Fund having caused the Portfolio to be an association
taxable as a corporation rather than a partnership; or
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(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 BT or included in Fund advertising
or sales literature at the request of the Portfolio or BT 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 was committed against the Company,
the Portfolio, BT Trust or any third party;
(vi) 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 BT, 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
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paragraph (a) will be in addition to any liability that the Company
in respect of the Fund might otherwise have to a Covered Person.
4.3 INDEMNIFICATION BY RE INVESTMENT
(a) With respect to those matters listed in subparagraph (i) through
(iv) below, RE Investment will indemnify and hold harmless the
Portfolio, BT and their respective trustees, directors, officers
and employees and each other person who controls the Portfolio or
BT, 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 is based upon:
(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 BT or included in Fund advertising or
sales literature at the request of the Portfolio or BT 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, BT Trust or any third party; or
(iv) 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 BT, 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.
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(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 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 __________. At least once
each calendar year, the Portfolio shall review its insurance
coverage, and shall increase its coverage, as it deems appropriate.
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(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.
4.5 INDEMNIFICATION BY BT
(a) With respect to those matters listed in subparagraphs (i) through
(viii) below, BT 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 BT elects to assume the defense pursuant to paragraph (b),
BT 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 is
based upon:
(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, BT or any party retained for that
purpose);
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(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 BT to be materially accurate when made, any
material breach of any representation or warranty made by the
Portfolio or BT, or the failure of the Portfolio or BT 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, BT or any
director, trustee, officer, employee or agent of the
Portfolio or adviser, whether such 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 liability of the Portfolio for which the Fund is also
liable and for which the Portfolio or BT 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
BT 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 BT 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 BT of such claim relieves 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 BT from any liability that it may have to
any Covered Person otherwise than on account of the
indemnification contained in this paragraph.
(b) BT 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 BT elects
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to assume the defense, such defense shall be conducted by counsel
chosen by BT. In the event BT 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) BT shall have specifically authorized the
retaining of such counsel or (ii) the parties to such suit include
any Covered Person and BT, 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 BT, in which case
BT shall not be entitled to assume the defense of such suit
notwithstanding the obligation to bear the fees and expenses of
such counsel. BT shall not be liable to indemnify any Covered
Person for any settlement of any such claim effected without BT'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.
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. In connection with a partial or
complete "in kind," the Portfolio will distribute to the Company securities as
described in the prospectus for the BTFund. 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.
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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 APPROVAL OF AUDITORS
Unless precluded by applicable fiduciary duties or the failure of the
Fund's shareholders to provide necessary ratification, the directors of the
Company that are not "interested persons" of the Company, as defined in the 1940
Act, shall have selected as the independent certified public accountants for the
Fund the independent certified public accountants selected and ratified for the
Portfolio.
5.3 INVESTMENT OBJECTIVE/RESTRICTIONS
The Fund shall have the same investment objective and substantively the
same investment restrictions as the Portfolio.
ARTICLE SIX
ADDITIONAL AGREEMENTS
6.1 NOTIFICATION OF CERTAIN MATTERS
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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 BT.
(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 BT 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 BT 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.
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(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.
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.
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If to the Portfolio or BT:
Mutual Fund Services
BT Alex. Xxxxx Incorporated
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.
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.
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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.
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:
Name:
Title:
RE INVESTMENT CORPORATION
By:
Name:
Title:
HOMESTEAD FUNDS, INC., on behalf of itself and the Stock Index Fund, a series
thereof
By:
Name:
Title:
BTFUND
By:
Name: Xxxxxx X. Xxxxxx
Title: Secretary
INVESTMENT ADVISER
By:
Name:
Title:
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