Exhibit (h)(7)
AMENDED AND RESTATED
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JOINT INSURANCE AGREEMENT
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THIS AMENDED AND RESTATED JOINT INSURANCE AGREEMENT, dated as of August 9, 1999,
by and among XXXXX XXXXXXX INVESTMENT COMPANY ("FRIC"), XXXXXXX INSURANCE FUNDS
("RIF"), such other funds as may be included as parties to this Agreement as
provided herein (each referred to herein as a "Fund," and collectively referred
to as the "Funds"), and Xxxxx Xxxxxxx Company ("FRC"), and each of its
subsidiaries, (hereinafter collectively referred to, along with FRC, as the
"Xxxxxxx Companies") amends and restates the Joint Insurance Agreement, dated as
of August 5, 1996, by and among the same parties.
Recitals
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WHEREAS, Section 17(g) of the Investment Company Act of 1940 (the "Act")
authorizes the U.S. Securities and Exchange Commission (the "SEC") to require
that the officers and employees of registered management investment companies be
bonded against larceny and embezzlement, and the SEC has promulgated Rule 17g-1
under the Act requiring such coverage in specified minimum amounts, and
WHEREAS, the Funds and the Xxxxxxx Companies have obtained and maintain with
respect to the Funds the bonds and policies of insurance providing coverage
against larceny and embezzlement by their officers and employees described on
Attachment I hereto (all of such bonds and policies of insurance being referred
to hereafter collectively as the "Joint Bonds," such Attachment I being subject
to modification from time to time hereafter, to reflect the then current
coverage amounts and to reflect any other changes in the coverage), and
WHEREAS, the Board of Directors/Trustees of each Fund, by vote of a majority of
its members and a majority of those members of the Board of each Fund who are
not "interested persons" as defined by Section 2(a)(19) of the Act, has given
due consideration to all factors relevant to the amount, type, form, coverage
and apportionment of recoveries and premiums on the Joint Bonds and has approved
the form, term and amount of the Joint Bonds, the portion of the premiums
payable by each Fund, and the manner in which recovery on the Joint Bonds
("Joint Bond Proceeds"), if any, shall be shared by and among the parties hereto
as hereinafter set forth, and
WHEREAS, Rule 17d-1(d)(7) under the Act provides that an exemptive application
need not be filed with respect to an arrangement regarding joint liability
policies subject to the provisions set forth in such paragraph, and
WHEREAS, it is the intention of the Funds and the Xxxxxxx Companies that this
Agreement restate and replace all prior agreements entered into by the parties
from time to time under Rule 17g-1(f) to establish the manner in which Joint
Bond Proceeds shall be shared, and desire to further amend such agreement and
restate it in its entirety by this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED by and among the parties hereto, intending
to be so bound, as follows:
1. ALLOCATION OF PROCEEDS
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a. In the event a single party suffers a loss or losses covered under the
Joint Bonds, the party suffering such loss or losses shall be entitled
to be indemnified up to the full amount of the Joint Bond Proceeds.
b. If more than one party is damaged in a single loss for which Joint
Bond Proceeds are received, each such party shall receive that portion
of the Joint Bond Proceeds which represents the loss sustained by that
party, unless the recovery is inadequate to indemnify fully each such
party. If the recovery is inadequate to indemnify fully each such
party sustaining a loss, the Joint Bond Proceeds shall be allocated
among such parties as follows:
(1) Each party sustaining a loss shall be allocated an amount equal
to the lesser of its actual loss or the minimum amount of bond
coverage allocated to such party on Attachment II hereto. Any
party not fully indemnified for its insurable losses as a result
of this allocation is hereafter referred to as an "Underinsured
Party."
(2) The remaining portion of the Joint Bond Proceeds, if any, shall
be allocated to each Underinsured Party in the same proportion as
such party's allocation of minimum bond coverage on Attachment II
hereto bears to the aggregate of the minimum bond coverage
amounts set forth on Attachment II for all Underinsured Parties,
provided that no party shall receive Joint Bond Proceeds in
excess of its actual insurable losses.
2. ALLOCATION OF PREMIUMS
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a. The premiums payable with respect to the Joint Bonds shall be
allocated to each of the parties hereto on an annual basis (and,
in the event any increased or additional premium is required to
be paid during the year, as of the date such increased or
additional premium is due) in the same proportion as each party's
minimum amount of bond coverage as then reflected on Attachment
II shall bear to the total of such minimum coverage.
3. BOND COVERAGE REQUIREMENTS AND CHANGES
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a. Each party hereto has determined that the minimum amount of
fidelity bond coverage deemed appropriate to be maintained by it
is as set forth opposite its name in Attachment II hereto. Each
of the Funds represents and warrants to each of the other parties
hereto that the minimum amount of coverage required of it under
Rule 17g-1(d)(1) as of the date hereof is not more than the
amount reflected opposite its name in Attachment II hereto. Each
of the Funds further agrees that it will promptly take such steps
as may be necessary, from time to time, to increase its minimum
coverage as set forth in Attachment II hereto (and, if necessary,
the face amount of the Joint Bonds) so that its minimum coverage
as therein set forth shall at no time be less than the minimum
coverage required of it under Rule 17g-1(d)(1).
b. The parties hereto may, from time to time hereafter, agree to
modify Attachment II hereto to reflect changes in allocation of
premium and coverage. All references in this Agreement to
"Attachment II" shall be to such Attachment as amended as of the
relevant date on which premiums are to be allocated or losses are
sustained.
4. ADDITION OF NEW FUNDS AND SERIES
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This Agreement shall pertain to each Fund of FRIC and RIF whether now
existing or hereinafter created. All future Funds of FRIC and RIF
shall automatically, and without any further action required, be
included as additional parties to this Agreement upon approval of the
creation of such Funds by FRIC's or RIF's Board of Trustees, and all
references herein to "Funds" shall include such additional Funds.
5. TERM OF AGREEMENT
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This Agreement shall apply to the present fidelity bond coverage and
any renewals or replacements thereof and shall continue until
terminated by any party hereto upon the giving of not less than sixty
days written notice to the other parties.
6. DISPUTES
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Any dispute arising under this Agreement shall be submitted to
arbitration in the City of Tacoma, Washington under the Rules of the
American Arbitration Association, and the decision rendered therein
shall be final and binding upon the parties hereto.
7. GOVERNING LAW
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This Agreement shall be governed by, and construed in accordance with
the laws of the State of Washington, to the extent not inconsistent
with applicable provisions of the Act and the rules and regulations
promulgated thereunder by the SEC.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have caused this Agreement to be executed by a duly authorized officer or
representative on the date first written above.
Attest: XXXXX XXXXXXX INVESTMENT COMPANY
/s/ Xxxx X. Xxx /s/ Xxxx Xxxxxxx
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Secretary Treasurer/Chief Accounting Officer
Attest: XXXXXXX INSURANCE FUNDS
/s/ Xxxx X. Xxx /s/ Xxxx Xxxxxxx
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Secretary Treasurer/Chief Accounting Officer
Attest: XXXXX XXXXXXX COMPANY, on its own behalf and on
behalf of each of its subsidiaries
/s/ Xxxx X. Xxx /s/ Xxxxxxx X. X. Xxxxxxxx
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Secretary President
ATTACHMENT I
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Policy Coverage
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Investment Company Blanket Bond $3.5 million
(Gulf Insurance Company--
Bond Number GA6065678)
ATTACHMENT II
Aggregate of Minimum
Fund Minimum Coverage Bond Coverage
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Xxxxx Xxxxxxx Investment
Company $2,975,000 $3,500,000
Xxxxxxx Insurance Funds $ 525,000 $3,500,000
This Attachment II reflects allocations of minimum fidelity bond coverage for
Xxxxx Xxxxxxx Investment Company for the period from May 31, 1998 through May
31, 2001, and for Xxxxxxx Insurance Funds for the period from May 31, 1998
through May 31, 2001.
