THE PENN STREET FUND, INC.
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 15th day of December, 2005,
between The Penn Street Fund, Inc. (the "Company") and Penn Street Investment
Advisors, Inc., a Delaware corporation (the "Adviser").
RECITALS
WHEREAS, the Company is organized under the laws of the state of
Maryland as a corporation and operates and is registered as an open-end
management investment company of the series type under the Investment Company
Act of 1940, as amended (the "1940 Act");
WHEREAS, the Company is authorized by its Articles of Incorporation
and bylaws to issue separate Portfolios of shares representing interests in
separate investment portfolios (the "Portfolios");
WHEREAS, The Company has authorized the issuance of shares of
beneficial interest ("Shares") in the Portfolios which are identified on
Schedule A attached hereto and incorporated herein, which Schedule A may be
amended from time to time by mutual agreement of the Company and Adviser (the
"Portfolios");
WHEREAS, Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") and engages in
the business of asset management; and
WHEREAS, the Company desires to retain Adviser to act as Master
Investment Advisor and to furnish investment advisory services to the
Portfolios, and such other Portfolios as may be added from time to time by
mutual agreement of the parties, pursuant to the terms and conditions of this
Agreement, and Adviser is willing to so furnish such services.
NOW THEREFORE, in consideration of the foregoing and the agreements
and covenants herein contained, the parties hereto, intending to be legally
bound, agree as follows:
1. Appointment.
The Company hereby appoints Adviser to serve as Master Investment Adviser
to the Portfolios for the periods and pursuant to the terms and conditions as
set forth in this Agreement. Adviser accepts the appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Delivery of Documents.
The Company has furnished Adviser with properly certified or authenticated
copies of each of the following:
(a) The Company's Articles of Incorporation as filed with the State
of Maryland;
(b) The Company's Bylaws;
(c) Resolutions of the Company's Board of Directors, and approval of
the shareholders of the Company at a special meeting of shareholders held
December 15, 2005, authorizing the appointment of Adviser and approving this
Agreement;
(d) The Company's current Registration Statement on form N-1A
promulgated under the 1940 Act and under the Securities Act of 1933, as amended
(the "1933 Act"); and
(e) The Company's current Prospectus and Statement of Additional
Information (together called the "Prospectus").
The Company will furnish Adviser from time to time with properly certified
or authenticated copies of all amendments of or supplements to the foregoing at
the same time as such documents are required to be filed with the SEC and/or
state authorities.
3. Management.
Subject to the general supervision of the Company's Board of Directors
(the "Board"), Adviser will be responsible for providing a continuous investment
program for the Portfolios, including investment research and management with
respect to all securities, investments, cash and cash equivalents held by the
Portfolios.
Adviser may, with the prior written consent of the Board and the approval
of the appropriate Company shareholders, as required, employ persons or entities
to serve as sub-advisers to one or more Portfolios. The Adviser and/or such
sub-advisers, if any, may, in their sole discretion, determine from time to time
what securities and other investments will be purchased, retained or sold by the
Portfolios. The investment activities of such sub-advisers, if any, as such
services relate to the Portfolios, will at all times be subject to the general
supervision and control of Adviser. Adviser will provide, through its own
efforts itself and/or through the medium of its previously approved
sub-adviser(s), the services under this Agreement in accordance with each
Portfolio's investment objectives, policies and restrictions as such are set
forth in the Prospectus from time to time. Adviser further agrees that it:
(a) Will conform its activities to all applicable Rules and
Regulations of the SEC and will, in addition, conduct its activities under this
agreement in accordance with the regulations of any other Federal and State
agencies which may now or in the future have jurisdiction over its activities
under this Agreement;
(b) Will monitor the investment activities of any sub-adviser which
it employs to insure that such sub-adviser conducts its activities with respect
to the applicable Portfolio(s) in accordance with the Prospectus and any and all
federal and/or state laws and regulations relating to the applicable
Portfolio(s);
(c) Will place orders, or monitor the placement of orders by
sub-advisers, pursuant to good faith investment determinations for the
Portfolios either directly with the respective issuers or with appropriate
brokers and dealers. In placing orders with brokers or dealers, the Advisor, or
sub-adviser(s) under the supervision of Adviser, will attempt to obtain the best
net price and the most favorable execution of its orders. Consistent with this
obligation, when Adviser, or Adviser's duly authorized sub-adviser(s), believes
two or more brokers or dealers are comparable in price and execution, Adviser,
or Adviser's duly authorized sub-adviser(s), may prefer: (i) brokers and dealers
who provide the Portfolio(s) with research advice and other services, or who
recommend or sell Company shares, and (ii) brokers who are affiliated with the
Company, Adviser or sub-adviser; provided, however, that in no instance will
portfolio securities be purchased from or sold to Adviser or any sub-adviser in
principal transactions; and
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(d) Will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities on behalf of the
Company.
4. Services Not Exclusive.
The services to be furnished by Adviser hereunder are not to be considered
exclusive, and Adviser shall be free to furnish similar services to others so
long as its services under this Agreement are not impaired thereby; provided,
however, that without the prior written consent of the Board, Adviser will not
serve as an investment adviser to any other investment company having a similar
investment objective to that of the Company.
5. Books and Records.
In compliance with Rule 31a-3 promulgated under the 1940 Act, Adviser
hereby agrees that all records which it maintains for the benefit of the Company
are the property of the Company and further agrees to surrender promptly to the
Company any of such records upon the Company's request. Adviser further agrees
to preserve for the periods prescribed by Rule 31a-2 the records required to be
maintained by it pursuant to such Rule that are not maintained by others on
behalf of the Company.
6. Expenses.
During the term of this Agreement, Adviser will pay all expenses incurred
by it in connection with its investment advisory services furnished to the
Company other than the costs of securities and other investments (including
brokerage commissions and other transaction charges) purchased or sold for the
Portfolios.
7. Compensation.
The Company will pay Adviser, and Adviser will accept as full compensation
for its services rendered hereunder, the investment advisory fees for each
Portfolio as set forth on Schedule B attached hereto and incorporated herein,
which Schedule B may be amended from time to time by mutual agreement of the
Company, Adviser and shareholders as applicable. All fees payable to Adviser
pursuant to this Agreement shall be computed at the end of each month and
payable within five (5) business days thereafter, and shall be computed at an
annual rate at a percentage of the average daily net assets of the applicable
Portfolio. All parties to this Agreement do hereby expressly authorize and
instruct the Company's Administrator to provide, in accordance with the fees set
forth on Schedule B, a calculation each month of the gross amounts due Adviser
for each Portfolio and to remit such fee payments hereunder promptly to Adviser.
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8. Limitation of Liability.
Adviser shall not be liable for any error of judgment, mistake of law or
for any other loss suffered by the Company or any Portfolio in connection with
the performance of this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful malfeasance, bad faith or gross negligence on
Adviser's part in the performance of its duties or from reckless disregard by it
of its obligations or duties under this Agreement.
9. Duration and Termination.
This Agreement shall become effective as of the date first written above
and continue in effect until June 30, 2006. Thereafter, this Agreement shall be
renewable for successive periods of one year each provided such continuance is
specifically approved annually:
(a) By the affirmative vote of a majority of those members of the
Board who are not parties to the Agreement or interested persons of any such
party (as that term is defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval; and
(b) By affirmative vote of either a majority of the entire Board or
a majority (as that term is defined in the 0000 Xxx) of the outstanding voting
securities of the Company.
Notwithstanding the foregoing, this Agreement may be terminated by the
Company or by Adviser at any time upon sixty (60) days written notice, without
payment of any penalty; provided, however that termination by the Company must
be authorized by majority vote of the Board or by vote of a majority of the
outstanding voting securities of the Company. This Agreement will automatically
terminate in the event of its assignment (as that term is defined in the 1940
Act).
10. Amendment of this Agreement.
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by a written instrument signed by the party against
which enforcement of the change, waiver, discharge or termination is sought. No
material amendment of this Agreement shall be effective until approved by vote
of the holders of a majority of the Fund's outstanding voting securities (as
defined in the 1940 Act).
11. Miscellaneous.
The captions in this Agreement are included for convenience of reference
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of the Agreement shall not be affected thereby. This Agreement shall
be binding on, and shall inure to the benefit of, the parties hereto and their
respective successors.
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12. Counterparts.
This Agreement may be executed in counterparts by the parties hereto, each
of which shall constitute an original, and all of which, together, shall
constitute one Agreement.
13. Governing Law.
This Agreement shall be construed in accordance with, and governed by, the
laws of the Commonwealth of Pennsylvania.
14. Notices.
Except as otherwise provided in this Agreement, any notice or other
communication required by or permitted to be given in connection with this
Agreement will be in writing and will be delivered in person or sent by first
class mail, postage prepaid or by prepaid overnight delivery service to the
respective parties as follows:
If to the Company: If to the Adviser:
----------------- -----------------
The Penn Street Fund, Inc. Penn Street Investment Advisors, Inc.
00 Xxxxxxx Xxxxxx Xxxxxxxxx 83 General Xxxxxx Xxxxxxxxx
Xxxxx 000 Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Xxxx X. Xxxxx Xxxx X. Xxxxx
President President
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the day and year first
written above.
THE PENN STREET FUND, INC.
s/Xxxx Xxxxx
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By: Xxxx Xxxxx
Title: Chairman
PENN STREET INVESTMENT ADVISORS, INC.
s/Xxxx Xxxxx
-------------------------------------------
By: Xxxx Xxxxx
Title: President
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Schedule A
The Penn Street Fund, Inc.
Portfolios of the Company
December 15, 2005
The following Portfolios and Classes of Shares are offered by the Company and
subject to this Agreement:
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Class A Class C
Name of Portfolio Shares Shares
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The Berkshire Advisors Select Equity Portfolio X X
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The Penn Street Sector Rotational Portfolio X X
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Schedule B
The Penn Street Investment Advisors, Inc.
Compensation Schedule
December 15, 2005
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Name of Portfolio Total Annual Fee (as percentage
of average daily net assets)
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The Berkshire Advisors Select Equity Portfolio 1.00%
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The Penn Street Sector Rotational Portfolio 0.25%
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