Exhibit 5
ADVISORY CONTRACT
THIS AGREEMENT made this 1st day of December, 1995, by and
between INTERNATIONAL INVESTMENTS, INC., a/k/a ADS/INTERNATIONAL
INVESTMENTS, a Florida corporation, (hereinafter referred to as the
"Adviser"), and PENN CAPITAL FUNDS, INC. a Pennsylvania corporation
(hereinafter referred to as the "Fund").
WHEREAS, the Fund is an open-end management investment company as
that term is defined in the Investment Company Act of 1940, as
amended, and is registered as such with the U.S. Securities and
Exchange Commission; and
WHEREAS, the Adviser is in the business of rendering investment
advisory, statistical and research services, and is registered as an
investment adviser with the U.S. Securities and Exchange Commission
under the Investment Adviser's Act of 1940, as amended; and
WHEREAS, the parties desire to provide for continuing services by
the Adviser to the Fund pursuant to the terms and conditions
hereinafter set forth,
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
1. The Fund hereby retains and appoints the Adviser as its
investment adviser and portfolio manager to render research,
statistical and advisory services to the Fund, and to supervise the
investments of the Fund for the period and upon the terms herein set
forth, subject to the direction and control of the Board of Directors
of the Fund. The Advisor accepts such employment and agrees during
such period to render the services and to assume the obligation herein
set forth for the compensation herein provided.
2. The Adviser in its supervision of the investments of the
Fund will be guided by the Fund's fundamental investment policies and
the provisions and restrictions contained in the Charter and By-Laws
of the Fund as set forth in the Fund's registration statement, and
exhibits thereto, as may be filed with the U.S. Securities and
Exchange Commission (the "Commission"), all subject to the applicable
provisions of the Investment Company Act of 1940, as amended (the
"Act").
3. The Fund will pay and is solely responsible for its own
expenses including, without limitation, interest charges, taxes, costs
of purchasing and selling securities for its portfolio, rent expenses
of redemption of shares, auditing and legal expenses; expenses
attributable to printing prospectuses directors' fees and expenses
necessarily incurred by a director in attendance at directors'
meeting; expenses of administrative personnel and administrative
series, custodian fees; fees of transfer agents, registrar and
dividend disbursing agents; the cost of stock certificates and
corporate reports; all other printing expenses; costs in connection
with Board of Director's meetings and the annual or special meetings
of shareholders, including proxy material preparation and
distribution, filing fees, dues, insurance premiums, miscellaneous
management and operating expenses and expenses of an extraordinary and
nonrecurring nature.
In no event shall the Adviser be responsible for the payment or
reimbursement of any Fund expense of any king what-so-ever.
4. Fund Management is solely responsible for the day-to-day
operations of the Fund, maintaining compliance with the Securities Act
of 1933, the Investment Company Act of 1940, Section 851 of the
Internal Revenue Code of 1986, as amended, and any law or regulation
of any governmental agency having jurisdictional over the Fund. The
Adviser shall be held harmless and the Fund will indemnify the Adviser
for any fines or damages that may be levied or charged to the Adviser
and for any expenses incurred by the Adviser, including but not
limited to legal fees, that may arise as a result of any violation or
error committed by Fund Management to any party.
5. Subject to the provision of Paragraph 7 hereof, the Fund
agrees to pay to the Adviser for its services rendered during the
preceding month thereunder on the first business day each month during
the term of the Agreement a cash fee in an amount determined by
applying the following monthly rates to the average daily net asset
value of the Fund during the preceding month, determined in the manner
used for the determination of the offering price of the Fund's shares:
Equivalent Average Daily
Monthly Rate Annual Rate Net Asset Values
1/12 of 1% 1% On the first
$25 million
1/16 of 1% 3/4 of 1% On the next
$75 million
5/96 of 1% 5/8 of 1% On amounts over
$100 million
6. The term of this Agreement shall begin on the date first
above written and shall continue in effect for two years from that
date and from year-to-year thereafter, subject to the provisions for
termination and all of the other terms and conditions hereof, if; (a)
such continuation shall be specifically approved at least annually by
the vote of a majority of the directors who are not parties to such
contract or interested persons of any such party to such contract
(other than as directors of the Fund) cast in person at a meeting
called for that purpose, or by a vote of the majority of the
outstanding voting securities of the Fund, and (b) the Adviser shall
not have notified the Fund in writing at least sixty (60) days prior
to the anniversary date of this Agreement in any year hereafter that
it does not desire such continuation.
7. Notwithstanding anything to the contrary herein, the
Agreement may be terminated at any time, without the payment of any
penalty, by the directors of the Fund or by a vote of a majority of
the outstanding voting securities of the Fund on sixty (60) days
written notice to the Adviser.
8. This Agreement shall automatically terminate in the event of
its assignment, the term "assignment" for this purpose having the
meaning defined in Section 2(a)(4) of the 0000 Xxx.
9. The Adviser may employ or contract with such other person or
persons, corporation or corporations at its own cost and expense as it
shall determine in order to assist it in carrying out this Agreement;
provided, however, that to the extent that any such employment or
contract constitutes such other person or persons, corporation or
corporations to be an investment adviser to the Fund within the
meaning of the 1940 Act, such employment or contracts shall be subject
to the approval of the Fund's shareholders in the manner provided by
such Act, prior to its effectiveness.
10. The adviser shall not be liable to the Fund for anything
done or omitted by it, except acts or omissions involving willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties imposed on it by this Agreement.
11. The services of the Adviser herein provided are not to be
deemed exclusive and, so long as its services hereunder shall not be
impaired thereby, should the Adviser so desire, it may sponsor,
promote, and provide investment advisory and management series to one
or more investment companies other than the Fund.
12. This Agreement may be amended at any time by agreement of
the parties, provided that the amendment shall be approved by the vote
of a majority of directors of the Fund, including a majority of
directors who are not parties to this Agreement or interested persons
of any such party to this Agreement (other than as directors of the
Fund) cast in person at a meeting called for that purpose.
IN WITNESS WHEREOF, the parties have caused this Investment
Advisory Contract to be executed on their behalf by their duly
authorized officers and their corporate seals to be affixed hereto as
of the date first above written.
The Adviser: The Fund:
INTERNATIONAL INVESTMENTS, INC. PENN CAPITAL ASSET
ALLOCATION FUND
By:_/s/ Xxxx X. Bartoletta___ By:_/s/ Xxxx X. Beimel____________
Xxxx X. Xxxxxxxxxx, President Xxxx X. Xxxxxx
