DISTRIBUTION SERVICES AGREEMENT (RULE 12B-1 PLAN)
EMERALD SELECT BANKING & FINANCE FUND CLASS A SHARES
This Distribution Services Agreement (the "Plan") is adopted by The HomeState
Group (the "Fund"), a Pennsylvania Common Law Trust organized under the
Investment Company Act of 1940 (the "Act") as an open-end mutual fund, with
respect to the distribution of its shares of the Emerald Select Banking and
Finance Fund Class A (the "Shares") by Citco-Quaker Fund Distributors, Inc., the
principal underwriter and distributor for the Fund (the "Distributor").
WITNESSETH:
WHEREAS, the Fund is an open-end management company,
and WHEREAS, it has been proposed that the Fund make payments to the Distributor
out of the Fund's net assets for distribution services rendered to the Fund;
and WHEREAS, the Fund intends to distribute its Shares in accordance with Rule
12b-1 under the Act and desires to adopt a distribution plan pursuant to such
rule;
and WHEREAS, the Fund's Board of Trustees at a meeting held on November 21,
1996, in considering whether the Fund should adopt and implement a written plan,
and annually thereafter, evaluated such information as it deemed necessary to
make an informed determination as to whether a written plan should be adopted
and implemented and has considered such pertinent factors as it deemed necessary
to form the basis for a decision to use assets of the Fund for such purposes and
has determined that there is a reasonable likelihood that adoption and
implementation of a plan will benefit the Fund and is shareholders.
NOW, THEREFORE, the Fund hereby adopts a distribution plan in accordance with
Rule 12b-1 under the Act, having the following terms and conditions:
1. The Distributor shall pay all costs and expenses incurred in connection
with (i) advertising and marketing the Shares; (ii) payments of servicing
fees to one or more securities dealers (which may include the Distributor
itself but only to the extent necessary to reimburse the Distributor for
its costs and expenses incurred in connection with such servicing),
financial institutions or other industry professionals, such as investment
advisers, accountants, and estate planning firms (individually, a "Service
Organization"), in respect of the average daily net asset value of the
Shares owned by shareholders for whom the Service Organization is the
dealer of record or holder of record and with whom the Service Organization
has a servicing relationship pursuant to the Fund's related Rule 12b-1
Service Agreement; (iii) printing any Prospectuses, Statements of
Additional Information, or reports prepared for the Distributor's use in
connection with the offering of the Fund's Shares (except those used for
regulatory purposes or for distribution to existing shareholders); and (iv)
with implementing and operating this Plan.
2. Each of the Fund's respective series will reimburse the Distributor as
appropriate for its out-of-pocket costs and expenses described in Section
(1) on a monthly basis at an annual rate of not more than .35% of such
Series net assets as of the close of the last business day of the month. To
determine the maximum amount of the costs and expenses reimbursable
hereunder, the value of the Fund's net assets shall be computed in the
manner specified in the Fund's Prospectus and/or Statement of Additional
Information for the determination of the net asset value of the Shares. The
Distributor may incur additional unreimbursed costs and expense in
connection with the distribution of Shares and may utilize its capital or
any other resources to pay for such costs and expenses.
3. The Fund shall, from time to time, furnish or otherwise make available to
the Distributor such financial reports, proxy statements, and other
information relating to the business and affairs of the Fund as the
Distributor may reasonably require in order to discharge its duties and
obligations hereunder.
4. Nothing herein contained shall be deemed to require the Fund to take any
action contrary to its Declaration of Trust, or any applicable statutory or
regulatory requirement to which it is subject or by which it is bound, or
relieve or deprive the Board of Trustees of the Fund of the responsibility
for and control of the conduct of the affairs of the Fund.
5. This Plan shall become effective when executed following approval by a vote
of at least a majority of the outstanding voting securities of the Fund and
by a vote of the Trustees of the Fund and of those Trustees who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the Plan or in any agreements relating to the
Plan (the "Independent Trustees), cast in person at a meeting called for
the purpose of voting on the Plan.
6. This Plan shall remain in effect until December 31, 2002 and for successive
annual periods of twelve months each thereafter; provided, however, that
such continuance is subject to approval annually by a vote of the Trustees
of the Fund and of the Independent Trustees cast in person at a meeting
called for the purpose of voting on this Plan. If such annual approval is
not obtained, the Plan shall expire twelve months after the date of the
last approval. This Plan may be amended at any time by the Board of
Trustees; provided that (a) any amendment to increase materially the amount
to be spent for the services described herein shall be effective only upon
approval by a vote of a majority of the outstanding Shares, and (b) any
material amendment of this Plan shall be effective only upon approval in
the manner provided in the first sentence of this paragraph.
7. This Plan may be terminated as to any Series at any time, without the
payment of any penalty, by a vote of a majority of the Independent Trustees
or by a vote of a majority of the outstanding voting securities of such
Series, and shall automatically terminate in the event of its assignment.
8. Nothing herein contained shall prohibit the Distributor or any "affiliated
person" of the Distributor to act as distributor for other persons, firms,
or corporations or to engage in other business activities.
9. Neither the Distributor nor any of its employees or agents is authorized to
make any representations concerning the Shares except those contained in
the Prospectus, Statement of Additional Information, or such supplemental
sales literature as the Fund may approve.
10. The Distributor shall be required to use its best efforts in rendering
distribution services but shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with
matters to which the Fund's distribution agreement with the Distributor
relates except a loss resulting from willful misfeasance, bad faith, or
gross negligence on the part of the Distributor in the performance of its
duties as Distributor of from reckless disregard by the Distributor of its
obligations and duties under such distribution agreement.
11. The Distributor shall provide the Fund, for review by the Fund's Board of
Trustees, and the Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for
which such
expenditures were made. Such written report shall be in a form satisfactory
to the Fund and shall supply all information necessary for the Board to
discharge its responsibilities, including its responsibilities pursuant to
Rule 12b-1.
12. While this Plan is in effect, the selection and nomination of Independent
Trustees shall be committed to the discretion of such Independent Trustees.
13. The Fund shall preserve copies of this Plan, any related agreements, and
all reports made pursuant to Section 11 hereof for a period of not less
than six years from the date of this Plan, or any such agreement or report,
as the case may be, the first two years, in an easily accessible place.
14. In the event that the Fund establishes additional classes of shares
evidencing interests in other series with respect to which it desires the
Plan to apply, it shall notify the Distributor in writing. If the
Distributor is willing to act hereunder it shall notify the Fund in writing
whereupon such series shall become a series hereunder and the compensation
payable by such new series to the Distributor will be as agreed in writing
at the time. Payments made by a series to the Distributor pursuant to this
Plan must be to reimburse the Distributor for reimbursable costs and
expenses incurred in connection with the distribution of such series shares
only.
15. If any provision of this Plan shall be held or made invalid by a court
decision statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
16. For the purposes of this Plan, the terms "interested persons,"
"assignment," "affiliated person" and "majority of the outstanding voting
securities" are used as defined in the Act.
IN WITNESS WHEREOF, this Plan has been executed by the Fund effective as of
November 15, 2002.
THE HOMESTATE GROUP
By: /s/ Xxxxxx X. Xxxxx XX
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President
