Exhibit 5c
THE HOMESTATE GROUP
INVESTMENT ADVISORY AGREEMENT
THE HOMESTATE YEAR 2000 FUND
THIS AGREEMENT is made and executed this 12th day of September,
1997, between the HomeState Group (the "Fund"), a Pennsylvania
common law trust, having its principal place of business in
Lancaster, Pennsylvania and Emerald Advisers, Inc. (the
"Adviser"), a Pennsylvania corporation, registered with the
United Stated Securities and Exchange Commission and the
Pennsylvania Securities Commission as an investment adviser.
WHEREAS, the Fund is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as
an open-end management 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 Fund consists of three Series:
The HomeState Pennsylvania Growth Fund, The HomeState Select
Opportunities Fund and The HomeState Year 2000 Fund (the "Y2K
Fund");
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; 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 each
Series.
The fee schedule for The Year 2000 ("Y2K") Fund
is as follows:
NET ASSETS FEE
---------- ---
Up to and including $100,000,000 1.00%
In excess of 100,000,000 0.90 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 become effective as of the date first written above, and
shall continue in force for an initial term expiring two years
from the effective date. 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
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Xxxxx X. Xxxx, President
ATTEST:
By:/s/ Xxxxxx X. Xxxxx XX
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Xxxxxx X. Xxxxx XX, Secretary
EMERALD ADVISERS, INC.
By:/s/ Xxxxxxx X. Xxxxx, XX
-----------------------------
Xxxxxxx X. Xxxxx XX,President
ATTEST:
By:/s/ Xxxxx X. Xxxx
---------------------------
Xxxxx X. Xxxx, Secretary
