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EXHIBIT 8.(h)
EXPENSE LIMITATION AGREEMENT
Expense Limitation Agreement, made as of the _______ day of October, 1999
by and between Homestead Funds, Inc., a Maryland corporation ("Homestead
Funds"), on behalf of the Stock Index Fund (the "Fund"), and RE Advisers
Corporation, a Virginia corporation ("RE Advisers").
WHEREAS, Homestead Funds and RE Advisers have entered into an
Administrative Service Agreement pursuant to which RE Advisers will provide
administrative services to the Fund;
WHEREAS, Homestead Funds and RE Advisers 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
fees the Fund incurs indirectly through its investment in the BT Fund (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 RE Advisers.
1.2 Method of Computation. To determine RE Adviser'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, RE Advisers shall first waive or reduce
its administrative 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 administrative fee for such month, RE Advisers, in addition to waiving its
entire administrative fee for such month, shall also remit to the Fund the
difference between the Excess Amount and the amount due as the administrative
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.
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2. Operating Expense Limit.
2.1 Limitation. To the extent that Fund Operating Expenses in any
year exceed .75% of the Fund's average daily net assets (the "Operating Expense
Limit"), such excess amount (the "Excess Operating amount") shall be the
liability of RE Advisers.
2.2 Method of Computation. To determine RE Adviser'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, RE Advisers shall
first waive or reduce its administrative 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 administrative fee for the
month, RE Advisers, in addition to waiving its entire administrative 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 administrative 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.
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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.
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.
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4.3 Definitions. Any questions of interpretation of any term or
provision of this Agreement, including but not limited to the administrative
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
Administrative Service 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 Stock Index Fund
By:
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Xxxxx X. Xxxxxx, Secretary Xxxxxxx X. XxXxxxxxx, Vice
President
ATTEST: RE ADVISERS CORPORATION
By:
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Xxxxx X. Xxxxxx, Secretary Xxxxxxx X. Xxxxxxxx, President
