EXHIBIT 8.(i).
EXPENSE LIMITATION AGREEMENT
Expense Limitation Agreement, made as of the first day of January, 2001,
by and between Homestead Funds, Inc., a Maryland corporation (the "Homestead
Funds"), on behalf of the NASDAQ 100 Index Tracking Stock Fund (the "Fund"), and
RE Advisers Corporation, a Virginia corporation (the "Investment Manager").
WHEREAS, the Homestead Funds, on behalf of the Fund, and the Investment
Manager have entered into an Investment Management Agreement, dated as of the
first day of January, 2001, (the "Investment Management Agreement") pursuant to
which the Investment Manager will render investment management services to the
Fund for compensation based on the value of the net assets of the Fund; and
WHEREAS, the Homestead Funds and the Investment Manager have determined
that it is appropriate and in the best interests of the Fund and its
shareholders to set a limit of the level of expenses to which the Fund will be
subject;
NOW THEREFORE, the parties hereto agree as follows:
1. State Expense Limit
1.1 Limitation. To the extent that the aggregate expenses of
every character incurred by the Fund in any fiscal year, including but not
limited to investment management fees of the Investment Manager (but excluding
interest, taxes, brokerage commissions and other expenditures which are
capitalized in accordance with generally accepted accounting principles, and
other extraordinary expenses not incurred In the ordinary course of the Fund's
business) (the "Fund Operating Expenses"), exceed the lowest applicable limit
actually enforced by any state in which the Fund's shares are qualified for sale
(the "State Expense Limits") such excess amount (the "Excess Amounts") shall be
the liability of the Investment Manager.
1.2 Method of Computation. To determine the Investment
Manager's liability for the Excess Amount, the Fund Operating Expenses shall be
annualized monthly as of the last day of the month. If the annualized Fund
operating Expenses for any month exceed the State Expense Limit, the Investment
Manager shall first waive or reduce its investment management fee for such
month, as appropriate, to the extent necessary to pay such Excess Amount. In the
event the Excess Amount exceeds the amount of the investment management fee for
such month, the Investment Manager, in addition to waiving its entire investment
management fee for such month, shall also remit
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to the Fund the difference between the Excess Amount and the amount due as the
investment management fee; provided, however, that an adjustment shall be made
on or before the last day of the first month of the next succeeding fiscal year
if the aggregate Fund Operating Expenses for the fiscal year do not exceed the
State Expense Limit.
2. Operating Expense Limit.
2.1 Limitation. To the extent that Fund Operating Expenses
in any year exceed 1.50% of the Fund's average daily net assets (the "Operating
Expense Limit"), such excess amount (the "Excess Operating amount") shall be the
liability of the Investment Manager.
2.2 Method of Computation. To determine the Investment
Manager's liability for the Excess Operating Amount, the Fund Operating Expenses
shall be annualized monthly as of the last day of the month. If the annualized
Fund Operating Expenses for any month exceed the Operating Expense Limit, the
Investment Manager shall first waive or reduce its investment management fee for
such month, as appropriate, to the extent necessary to pay such Excess Operating
Amount. In the event the Excess Operating Amount exceeds the amount of the
investment management fee for the month, the Investment Manager, in addition to
waiving its entire investment management fee for such month, shall also assume
as its own expense and reimburse the Fund for the difference between the Excess
Operating Amount and the investment management fee up to the amount of the State
Expense Limit; provided, however, that an adjustment shall be made on or before
the last day of the first month of the next succeeding fiscal year if the
aggregate Fund Operating Expenses for the fiscal year do not exceed the
Operating Expense Limit.
3. Termination of Agreement. This Agreement shall continue in
effect for a period of one year from the date of execution. This Agreement shall
continue thereafter from month to month and may then be terminated by either
party without payment of any penalty, upon 90 days prior notice in writing to
the other party at its principal place of business; provided that, in the case
of termination by the Homestead Funds, be authorized by resolution of the Board
of Homestead Funds.
4. Miscellaneous.
4.1 Captions. The captions in this Agreement are included
for convenience or reference only and in no other way define or delineate any of
the provisions hereof or otherwise affect their construction or effect.
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4.2 Interpretation. Nothing herein contained shall be deemed
to require the Homestead Funds to take any action contrary to its Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory requirement
to which it is subject or by which it is bound, or to relieve or deprive the
Board of Directors of its responsibility for and control of the conduct of the
affairs of the Homestead Funds.
4.3 Definitions. Any questions of interpretation of any term
or provision of this Agreement, including but not limited to the investment
management fee, the computations of net asset values and the allocation of
expenses, having a counterpart in or otherwise derived from the terms and
provisions of the Investment Management Agreement, shall have the same meaning
as and be resolved by reference to such agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: HOMESTEAD FUNDS, INC.
on behalf of the NASDAQ 100 Index
Tracking Stock Fund
/s/ XXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXXXXXX
---------------------------- --------------------------------
Xxxxx X. Xxxxxx, Secretary Xxxxxxx X. XxXxxxxxx, Vice
President
ATTEST: RE ADVISERS CORPORATION
/s/ XXXXX X. XXXXXX By: /s/ XXXXX XXXX
---------------------------- --------------------------------
Xxxxx X. Xxxxxx, Secretary Xxxxx Xxxx, President
