Exhibit 6(a)
THE HOMESTATE GROUP
XXXXXX SQUARE DISTRIBUTORS, INC.
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is made as of the 20th day of November,
1995, between The HomeState Group , a Pennsylvania common law trust (the
"Trust"), having its principal place of business in Lancaster,
Pennsylvania, and Xxxxxx Square Distributors, Inc., a corporation organized
under the laws of the State of Delaware (the "Distributor"), having its
principal place of business in Wilmington, Delaware.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company and offers for public sale one or more distinct, series of shares
of beneficial interest ("Series") each corresponding to a distinct
portfolio;
WHEREAS, each share of a Series represents an undivided interest in the
assets, subject to the liabilities, allocated to that Series and each
Series has a separate investment objective and policies;
WHEREAS, at the present time, the Trust exists of one Series, (each a
"Portfolio," and two or more together "Portfolios");
WHEREAS, the Trust wishes to employ the services of Distributor, with
such assistance from its affiliates as the latter may provide, such
employment to take effect as of November 20, 1995; and
WHEREAS, Distributor wishes to provide distribution services to the
Trust as set forth below;
NOW, THEREFORE, in consideration of the mutual promises and undertakings
herein contained, the parties agree as follows:
1. SALE OF SHARES. The Trust grants to the Distributor the right to
sell shares of beneficial interest of all Series of the Trust, now or
hereafter created, (the "Shares") on its behalf during the term of this
Agreement and subject to the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and of the laws governing the
sale of securities in various states (the "Blue Sky Laws") under the
following terms and conditions: the Distributor (i) shall have the right
to sell, as agent on behalf of the Trust, Shares authorized for issue and
registered under the 1933 Act and applicable Blue Sky Laws; and (ii) shall
sell such Shares only in compliance with the terms set forth in the Trust's
currently effective registration statement any Plan of Distribution of the
Trust or its series ("Plan") as may be in effect from time to time and any
further limitations the trustees of the Trust may impose. Distributor may
enter into selling agreements with selected dealers and others for the sale
of Trust Shares and will act only on its own behalf as principal in
entering into such selling agreements.
2. SALE OF SHARES BY THE TRUST. The rights granted to the
Distributor shall be non-exclusive in that the Trust reserves the right to
sell its Shares to investors on applications received and accepted by the
Trust. Further, the Trust reserves the right to issue Shares in connection
with (a) the merger or consolidation of the assets of, or acquisition by
the Trust through purchase or otherwise, with any other investment company,
trust or personal holding company; and (b) a pro rata distribution directly
to the holders of Shares in the nature of a stock dividend or split-up.
3. SHARES COVERED BY THIS AGREEMENT. This Agreement shall apply to
issued Shares of all Series of the Trust, Shares of all Series of the Trust
held in its treasury in the event that in the discretion of the Trust
treasury shares shall be sold, and Shares of all Series of the Trust
repurchased for resale.
4. PUBLIC OFFERING PRICE. Except as otherwise noted in the Trust's
current Prospectus (the "Prospectus") or Statement of Additional
Information (the "SAI") with respect to each Series, all Shares sold to
investors by the Distributor or the Trust will be sold at the public
offering price. The public offering price for all accepted subscriptions
will be the net asset value per Share, plus applicable sales load,if any,
determined in the manner described in the Trust's current Prospectus or SAI
with respect to the applicable series. The Trust shall in all cases
receive the net asset value per Share on all sales.
5. SUSPENSION OF SALES. If and whenever the determination of net
asset value is suspended and until such suspension is terminated, no
further orders for Shares shall be processed by the Distributor except such
unconditional orders placed with the Distributor before it had knowledge of
the suspension. In addition, the Trust reserves the right to suspend sales
and the Distributor's authority to process orders for Shares on behalf of
the Trust if, in the judgment of the Trust, it is in the best interests of
the Trust to do so. Suspension will continue for such period as may be
determined by the Trust. In addition, the Trust and Distributor reserve
the right to reject any purchase order.
6. SOLICITATION OF SALES. In consideration of these rights granted
to the Distributor, the Distributor agrees to use all reasonable efforts,
consistent with its other business, to secure purchasers for Shares of the
Trust. This shall not prevent the Distributor from entering into like
arrangements (including arrangements involving the payment of underwriting
commissions) with other issuers. Distributor agrees to use all reasonable
efforts to ensure that taxpayer identification numbers provided for
shareholders of the Trust are correct.
7. AUTHORIZED REPRESENTATIONS. The Distributor is not authorized by
the Trust to give any information or to make any representations other than
those contained in the appropriate registration statements, Prospectuses or
SAI's filed with the Securities and Exchange Commission under the 1933 Act
and applicable Blue Sky Laws (as those registration statements,
Prospectuses and SAI's may be amended from time to time), or contained in
shareholder reports or other material that may be prepared by or on behalf
of the Trust for the Distributor's use. This shall not be construed to
prevent the Distributor from preparing and distributing, in compliance with
applicable laws and regulations, sales literature or other material as it
may deem appropriate. Distributor will furnish or cause to be furnished
copies of such sales literature or other material to the President of the
Trust or his designee and will provide him with a reasonable opportunity to
comment on it. Distributor agrees to take appropriate action to cease
using such sales literature or other material to which the Trust reasonably
objects as promptly as practicable after receipt of the objection.
8. REGISTRATION OF SHARES. The Trust agrees that it will take all
action necessary to register Shares under the 1933 Act (subject to the
necessary approval, if any, of its shareholders) so that there will be
available for sale the number of Shares the Distributor may reasonably be
expected to sell. The Trust shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor
may reasonably request for use in connection with the distribution of
Shares of each series of the Trust.
9. EXPENSES, COMPENSATION AND REIMBURSEMENT
(a)The Trust shall pay all fees and expenses:
(i)in connection with the preparation, setting in type and filing
of any registration statement, Prospectus and SAI under the
1933 Act, and any amendments thereto, for the issue of its
Shares;
(ii) in connection with the registration and qualification of
Shares for sale in the various states in which the Board of
Trustees (the "Trustees") of the Trust shall determine it
advisable to qualify such Shares for sale (including
registering the Trust or Series as a broker or dealer or any
officer of the Trust as agent or salesperson in any state);
(iii)of preparing, setting in type, printing and mailing any report
or other communication to shareholders of the Trust in their
capacity as such; and
(iv) of preparing, setting in type, printing and mailing
Prospectuses, SAI's, and any supplements thereto, sent to
existing shareholders.
(b)The Distributor shall pay costs of:
(i)printing and distributing Prospectuses, SAI's and reports
prepared for its use in connection with the offering of the
Shares for sale to the public;
(ii) any other literature used in connection with such offering;
(iii)advertising in connection with such offering including, but
not limited to the following: public relations services, sales
presentations, media charges, preparation, printing and mailing
of advertising and sales literature, data processing necessary
to support a distribution effort, printing and mailing
prospectuses and distribution and shareholder servicing
activities of brokers/dealers and other financial institutions;
and
(iv) any additional out-of-pocket expenses incurred in connection
with these costs.
(c)In addition to the services described above, Distributor will
provide services including assistance in the production of
marketing and advertising materials for the sale of Shares of the
Trust and their review for compliance with applicable regulatory
requirements, entering into dealer agreements with broker-dealers
to sell Shares of the Trust and monitoring their financial strength
and contractual compliance, providing, directly or through its
affiliates certain investor support services, personal service, and
the maintenance of shareholder accounts.
(d)In connection with the services to be provided by the Distributor
under this Agreement, the Distributor shall receive a fee payable
monthly of $3,000 per annum from the Trust and reimbursement from
the Trust's Investment Advisor which may include without limitation
reimbursement for the expenses incurred pursuant to Section 9(b)
hereof. The Trust authorizes Distributor to debit each Portfolio's
custody account for fees and out-of-pocket expenses which are
rendered for the services performed under this Agreement.
10.INDEMNIFICATION.
(a)The Trust agrees to indemnify and hold harmless the Distributor
and each of its trustees and officers and each person, if any, who
controls the Distributor within the meaning of Section 15 of the
1933 Act against any loss, liability, claim, damages or expense
(including the reasonable cost of investigating or defending any
alleged loss, liability, claim, damages, or expense and reasonable
counsel fees incurred in connection therewith) arising by reason of
any person acquiring any Shares, based upon the 1933 Act or any
other statute or common law, alleging any wrongful act of the Trust
or any of its employees or representatives, or based upon the
grounds that the registration statements, Prospectuses, SAI's,
shareholder reports or other information filed or made public by
the Trust (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact
required to be stated or necessary in order to make the statements
not misleading. However, the Trust does not agree to indemnify the
Distributor or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with,
information furnished to the Trust in writing by or on behalf of
the Distributor. In no case (i) is the indemnity of the Trust in
favor of the Distributor or any person indemnified to be deemed to
protect the Distributor or any person against any liability to the
Trust or its security holders to which the Distributor or such
person would otherwise be subject by reason of willful misfeasance,
bad faith or ordinary negligence in the performance of its duties
or by reason of its reckless disregard of its obligations and
duties under this Agreement, or (ii) is the Trust to be liable
under its indemnity agreement contained in this Section 10(a) with
respect to any claim made against the Distributor or any person
indemnified unless the Distributor or person, as the case may be,
shall have notified the Trust in writing of the claim within a
reasonable time after the summons or other first written
notification giving information of the nature of the claim shall
have been served upon the Distributor or any such person or after
the Distributor or such person shall have received notice of
service on any designated agent. However, except to the extent the
Trust is harmed, thereby failure to notify the Trust of any claim
shall not relieve the Trust from any liability which it may have to
the Distributor or any person against whom such action is brought
other than on account of its indemnity agreement contained in this
Section 10(a). The Trust shall 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 claims, but if the Trust
elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Distributor, or person
or persons, defendant or defendants in the suit. In the event the
Trust elects to assume the defense of any suit and retain counsel,
the Distributor, officers or trustees or controlling person(s) or
defendant(s) in the suit, shall bear the fees and expenses of any
additional counsel retained by them. If the Trust does not elect
to assume the defense of any suit, it will reimburse the
Distributor, officers or trustee or controlling person(s) or
defendant(s) in the suit, for the reasonable fees and expenses of
any counsel retained by them. The Trust agrees to notify the
Distributor promptly of the commencement of any litigation or
proceedings against it or any of its officers or Trustees in
connection with the issuance or sale of any of the Shares.
(b)The Distributor also covenants and agrees that it will indemnify
and hold harmless the Trust and each of its trustees and officers
and each person, if any, who controls the Trust within the meaning
of Section 15 of the 1933 Act, against any loss, liability,
damages, claim or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages,
claim or expense and reasonable counsel fees incurred in connection
therewith) arising by reason of any person acquiring any Shares,
based upon the 1933 Act or any other statute or common law,
alleging any wrongful act of the Distributor or any of its
employees or representatives, or alleging that the registration
statements, Prospectuses, SAI's, shareholder reports or other
information filed or made public by the Trust (as from time to time
amended) included an untrue statement of a material fact or omitted
to state a material fact required to be stated or necessary in
order to make the statements not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity
with, information furnished in writing to the Trust by or on behalf
of the Distributor. In no case (i) is the indemnity of the
Distributor in favor of the Trust or any person indemnified to be
deemed to protect the Trust or any person against any liability to
which the Trust or such person would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of
its obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in
this Section 10(b) with respect to any claim made against the Trust
or any person indemnified unless the Trust or person, as the case
may be, shall have notified the Distributor in writing of the claim
within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall
have been served upon the Trust or any such person or after the
Trust or such person shall have received notice of service on any
designated agent. However, failure to notify the Distributor of
any claim shall not relieve the Distributor from any liability
which it may have to the Trust or any person against whom the
action is brought other than on account of its indemnity agreement
contained in this Section 10(b). In the case of any notice to the
Distributor, it shall 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 claims, but if the Distributor
elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Trust, to its officers
and trustees and to any controlling person(s) or any defendants(s)
in the suit. In the event the Distributor elects to assume the
defense of any suit and retain counsel, the Trust or controlling
person(s) or defendant(s) in the suit, shall bear the fees and
expenses of any additional counsel retained by them. If the
Distributor does not elect to assume the defense of any suit, it
will reimburse the Trust, its officers or Trustees, controlling
person(s) or defendant(s) in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Distributor agrees
to notify the Trust promptly of the commencement of any litigation
or proceedings against it in connection with the issue and sale of
any of the Shares.
11. EFFECTIVENESS, TERMINATION, ETC. This Agreement shall become
effective as of the date first written above, and unless terminated as
provided, shall continue in force for two (2) years from the date of its
execution and thereafter from year to year, provided continuance is
approved at least annually by either (i) the vote of a majority of the
trustees of the Trust, or by the vote of a majority of the outstanding
voting securities of the Trust, and (ii) the vote of a majority of those
trustees of the Trust who are not interested persons of the Trust and who
are not parties to this Agreement or interested persons of any party, cast
in person at a meeting called for the purpose of voting on the approval.
This Agreement shall automatically terminate in the event of its
assignment. As used in this Section 11, the terms "vote of a majority of
the outstanding voting securities," "assignment" and "interested person"
shall have the respective meanings specified in the 1940 Act and the rules
enacted thereunder as now in effect or as hereafter amended. In addition
to termination by failure to approve continuance or by assignment, this
Agreement may at any time be terminated without the payment of any penalty
by vote of a majority of the trustees of the Trust who are not interested
persons of the Trust, or by vote of a majority of the outstanding voting
securities of the Trust, on not more than sixty (60) days' written notice
to the Trust. This Agreement may be terminated by the Distributor upon not
less than sixty (60) days' prior written notice to the Trust.
12. NOTICE. Any notice under this Agreement shall be given in writing
addressed and hand delivered or sent by registered or certified mail,
postage prepaid, to the other party to this Agreement at its principal
place of business.
13. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
14. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall
be administered, construed and enforced according to the laws of the State
of Delaware.
15. SHAREHOLDER LIABILITY. Distributor acknowledges that it has
received notice of and accepts the limitations of liability set forth in
the Trust's Declaration of Trust. Distributor agrees that the Trust's
obligations hereunder shall be limited to the Trust, and that Distributor
shall have recourse solely against the assets of the Portfolio with respect
to which the Trust's obligations hereunder relate and shall have no
recourse against the assets of any other Portfolio or against any
shareholder, Trustee, officer, employee, or agent of the Trust.
16. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. This Agreement may be
executed in two counterparts, each of which taken together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE HOMESTATE GROUP
By: _____________________________
Xxxxx X. Xxxx, President
XXXXXX SQUARE DISTRIBUTORS, INC.
By: _____________________________
Xxxxxxx X. Xxxxxxx, President
Acknowledgment as to the reimbursement with
respect to marketing expenses of Xxxxxx Square
Distributors, Inc. as Distributor:
Emerald Advisors, Inc.
as Investment Advisor
By: _____________________________
Xxxxxxx X. Xxxxx XX, President
Date:________________________
