Exhibit 5(a)
THE HOMESTATE GROUP
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made and executed this 1st day of September, 1992, between
the HomeState Group (the "Fund") and Emerald Advisers, Inc. (the "Adviser").
The Fund is a Pennsylvania common law trust and is an investment company
registered under the Investment Company Act of 1940 (the "Act"). The Fund is
an open-end, diversified management company of the series type which invests
and reinvests its assets in one series: The HomeState Pennsylvania Growth
Fund, but which may in the future introduce additional series, each with
distinct investment objectives and policies (The "Series"). The Adviser is a
Pennsylvania corporation, registered with the United States Securities and
Exchange Commission and the Pennsylvania Securities Commission as an
investment adviser.
WHEREAS, the Fund and the Adviser wish to enter into an agreement setting
forth the terms on which the Adviser will perform certain services for the
Fund;
NOW, THEREFORE, INTENDING TO BE LEGALLY BOUND HEREBY, it is agreed by and
between the parties hereto as follows:
1. Appointment of Investment Adviser. The Fund hereby appoints the
Adviser to manage the investment and reinvestment of the assets of the fund
and to administer its affairs, subject to supervision by the Fund's Board of
Trustees, for the period and on the terms set forth in this Agreement. In
furnishing such management and administration services, the Adviser will be
guided by the Fund's distinct investment objectives and policies for each
Series as set forth in the statements contained in the a Fund's Registration
Statement on Form N-1A filed with the Securities and Exchange Commission, as
such Registration Statement may be amended or supplemented from time to time.
The Adviser hereby accepts such appointment and agrees to render the services
required by this Agreement for the compensation and upon other terms and
conditions set forth in this Agreement. In performing the investment advisory
services under this Agreement, the Adviser is authorized to engage such sub-
advisers and other persons as deemed necessary or desirable.
The fees of any such persons shall be borne entirely by the Adviser, and
the engagement of such persons shall not relieve the Adviser of any
responsibility under this Agreement. The Adviser shall for all purposes
contained herein be deemed an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund.
2. Office Space and Facilities. The Adviser shall furnish to the Fund
space in the offices of the Adviser or in such other place as may be agreed
upon from time to time and all necessary office facilities, equipment and
personnel for managing the affairs and investments and keeping the books of
the Fund.
3. Allocation of Expenses.
(a) (1) Adviser shall pay the organizational expenses of the Fund,
which the Fund shall reimburse to Adviser over a sixty-month period
commencing after the date of the Fund's initial public offering of its
shares. The Fund shall not be obligated to reimburse the Adviser for
aggregate organizational expenses in excess of $25,000. (2.) The Adviser
shall be responsible for the compensation (if any) paid to officers of
the Fund for serving in that capacity; federal and state registration
fees, other than initial fees to be reimbursed pursuant to Section 3(a)
(1); and the cost of fidelity bond and other insurance for the Fund.
(b) The Fund shall bear all expenses of its organization,
operations, and business not specifically assumed or agreed to be paid by
the Adviser as provided in this Agreement. In particular, but without
limiting the generality of the foregoing, the Fund shall pay:
(1) Custody and Accounting Service. All expenses of the
transfer, receipt, safekeeping, servicing and accounting for the
Fund's cash, securities, and other property, including all charges
of depositories, custodians, and other agents, if any;
(2) Shareholder Servicing. All expenses of maintaining and
servicing shareholder accounts, including all charges of the Fund's
transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents, if any;
(3) Shareholder Communications. All expenses of preparing,
setting in type, printing, and distributing reports and other
communications to shareholders;
(4) Shareholder Meetings. All expenses incidental to holding
duly called meetings of Fund shareholders, including the printing of
notices and proxy material;
(5) Prospectuses. All expenses of preparing, setting in type,
and printing of annual or more frequent revisions of the Fund's
prospectus and of mailing them to shareholders;
(6) Communication Equipment. All charges for equipment or
services used for communication between the Adviser or the Fund and
the custodian, transfer agent or any other agents selected by the
Fund;
(7) Legal and Accounting Fees and Expenses. All charges for
services and expenses of the Fund's legal counsel and independent
auditors;
(8) Trustee's Fees and Expenses. All compensation of Trustees,
other than those affiliated with the Adviser, and all expenses
incurred in connection with their service;
(9) Issue and Redemption of the Fund Shares. All expenses
incurred in connection with the issue, redemption and transfer of
Fund shares, including the expense of confirming all share
transactions, and of preparing and transmitting the Fund's stock
certificates (if any);
(10) Brokerage Commissions. All broker's commission and other
charges incident to the purchase, sale, or lending of the Fund's
portfolio securities;
(11) Taxes and Fees. All taxes or governmental fees payable by
or with respect of the Fund to federal, state, or other governmental
agencies, domestic or foreign, including stamp or other transfer
taxes;
(12) Non-recurring and Extraordinary Expenses. Such non-
recurring expenses as may arise, including the costs of actions,
suits, or proceeding to which the Fund is a party and the expense
the Fund may incur as a result of its legal obligation to provide
indemnification to its officers, trustees and agents.
4. Service to Other Accounts. The service of the Adviser to the Fund
hereunder shall not be deemed exclusive, and the Adviser shall be free to
render similar services to others so long as its services hereunder are not
impaired hereby.
5. Compensation for Services.
(a) For the facilities and services to be furnished by the Adviser,
the Fund shall pay the Adviser an annual fee computed on the basis of the
average net asset value of the Fund as ascertained each business day and
paid monthly in accordance with the fee schedule as determined by the
Board of Trustees for the Series.
The fee schedule for the HomeState Select Opportunities Fund is as
follows:
Net Assets Fee
---------- ---
Up to and including $250,000,000 .75 of 1%
In excess of 250,000,000 and up
to and including $500,000,000 .65 of 1%
In excess of $500,000,000 and up
to and including $750,000,000 .55 of 1%
In excess of $750,000,000 .45 of 1%
For purposes of computing the annual fee, the net asset value of the
Fund shall be equal to the difference between its total assets and its
total liabilities (excluding from such liabilities its capital stock and
surplus) with its assets and liabilities to be valued in accordance with
the procedures set forth in the Fund's Declaration of Trust.
(b) The Fund and the Adviser may mutually agree to reduce the fees
payable by the Fund if the reduction is in the best long-range interest
of the Fund and the Adviser. The fees may not be increased under any
circumstances. If the Adviser shall serve for less than the whole of any
month, the monthly payment shall be prorated.
6. Reimbursement by Adviser. The Adviser agrees to reimburse the Fund
for the amount by which the adviser's fee in any fiscal year exceeds the
limits prescribed by any state in which the Fund's shares are qualified for
sale. For the purposes of determining whether the Fund is entitled to
reimbursements, the adviser's fee is calculated on a monthly basis. If the
Fund is entitled to a reimbursement, that month's advisory fee will be reduced
or postponed, with any adjustments made at the end of the fiscal year.
7. Books and Records. The Fund shall cause its books and accounts to be
audited at least once each year by a reputable, independent public accountant
or organization of public accountants who shall render a report to the Fund.
8. Affiliation. It is understood that trustees, officers, agents and
stockholders of the Fund are or may not be interested in the Adviser (or any
successor thereof) as directors, officers, stockholders, or otherwise, and
that the Adviser (or any such successor) is or may be interested in the Fund
as a stockholder or otherwise.
9. Approval of Agreement; Termination. This Agreement shall be in effect
upon its execution and will remain in effect for an initial term expiring
December 31, 1997. Thereafter, the Agreement will continue in effect with
respect to a particular Series for successive yearly terms each ended on
December 31 of each year, unless terminated by either party, provided that the
renewal of the Agreement and its terms are specifically approved annually by
(i) the vote of a majority of those members of the Fund's Board of Trustees
who are not interested persons of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval; and (ii) by
the Fund's Board of Trustees or such vote of a majority of the outstanding
voting securities of such Series. The Agreement may be terminated with respect
to a particular Series at any time, without payment of any penalty, by the
Fund (by vote of the Fund's Board of Trustees or by vote of a majority of
outstanding voting securities of such Series, or by the Adviser, on sixty days
written notice). This Agreement will terminate automatically in the event of
an assignment, unless as order is issued by the Securities and Exchange
Commission conditionally or unconditionally exempting such assignments from
the provisions of Section 15(a) of the Act, in which event this contract shall
continue in full force and effect.
This Agreement may not be amended, transferred, sold or in any manner
hypothecated or pledged, nor may a new advisory agreement become effective
with respect to a particular Series, without the affirmative vote or written
consent of the holders of a majority of the shares of such Series; provided,
that this limitation shall not prevent any minor amendments to the Agreement
which may be required pursuant to federal or state law.
10. Defined Terms. For the purpose of this Agreement, the terms "Vote of
a majority of the outstanding securities," "assignment," and "interested
persons" shall have the respective meaning specified in the Investment Company
Act of 1940 when such terms are used in reference to the Fund.
11. Miscellaneous. This Agreement embodies the entire agreement between
the Adviser and the Fund with respect to the services to be provided by the
Adviser and supercedes any prior written or oral agreement between those
parties. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania and, to the extent it involves
any United States statutes, in accordance with the laws of the United States.
In the event that either party should be required to take legal action in
order to enforce its rights under this Agreement, the prevailing party in any
such action or proceeding shall be entitled to recover from the other party
costs and reasonable attorney's fees.
IN WITNESS THEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the day and year first above written.
HOMESTATE GROUP
By: /S/ XXXXX X. XXXX
Xxxxx X. Xxxx
President
ATTEST:
/S/XXXXXX X. XXX
Xxxxxx X. Xxx
Secretary
EMERALD ADVISERS, INC.
By: /S/ XXXXX X. XXXX
Xxxxx X. Xxxx
President
ATTEST:
/S/XXXXXX X. XXX
Xxxxxx X. Xxx
Secretary
