Exhibit 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of this 15th day of June, 1995, among by and
between Penn Capital Funds, Inc., a Pennsylvania corporation (the
"Company"), and Xxxxxx X. Xxxx, an individual ("Advisor").
WHEREAS, the Company is an open-end, diversified management
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), which offers shares of several
diversified investment series, each having its own objective and
policies; and
WHEREAS, the Company desires to retain Advisor to render to that
series of the Company known as the "Aggressive Growth Fund" investment
advisory services relating to the assets of the Aggressive Growth
Fund, and Advisor is willing to render such services.
NOW THEREFORE, this agreement
WITNESSETH:
that in consideration of the premises and mutual promises hereinafter
set forth and intending to be legally bound, the parties hereto agree
as follows:
1. Appointment of Advisor. The Company hereby employs Advisor as
investment adviser, on the terms and conditions set forth herein, for
the assets of the Aggressive Growth Fund. Advisor accepts such
employment and agrees to render the services herein set forth, for the
compensation herein provided.
2. Duties of Advisor. The Company employs Advisor to manage the
investment and reinvestment of the Aggressive Growth Fund (the
"Advisor Portfolio"), to continuously review, supervise and administer
the investment program for the Aggressive Growth Fund, to determine in
its discretion the securities to be purchased or sold and the portion
of such assets to be held uninvested, to provide the Company with
records concerning the activities of Advisor which the Company is
required to maintain, and to render regular reports to the Company's
officers and Board of Directors concerning the discharge of the
foregoing responsibilities. Advisor shall discharge the foregoing
responsibilities subject to the control of the officers and the Board
of Directors of the Company, and in compliance with the objectives,
policies and limitations set forth in the Aggressive Growth Fund's
prospectus and applicable laws and regulations. Advisor agrees to
provide, at its own expense, the office space, furnishings and
equipment and the personnel required by it to perform the services on
the terms and for the compensation provided herein.
3. Securities Transactions. Advisor agrees that he will execute the
purchases and sales of securities for the Aggressive Growth Fund
through Penn Capital Financial Services, Inc., except as prescribed
herein. Subject to policies established by the Board of Directors of
the Company, Advisor may, upon agreement with management of the
Company, also be authorized to effect individual securities
transactions at commission rates in excess of the minimum commission
rates available through the Broker, if Advisor determines in good
faith that such amount of commission was reasonable in relation to the
value of the brokerage or research services provided by such broker or
dealer, viewed in terms of either that particular transaction or
overall responsibilities of Advisor with respect to the Aggressive
Growth Fund. The execution of such transactions shall not be deemed
to represent an unlawful act or breach of any duty created by this
Agreement or otherwise. Advisor will promptly communicate to the
officers and Directors of the Company such information relating to
portfolio transactions as they may reasonably request.
4. Compensation of Advisor. For the services to be rendered by
Advisor as provided in the Agreement, the Aggressive Growth Fund shall
pay to Advisor at the end of the Company's fiscal quarters, an
Advisory Fee equal to one quarter of an annual fee of 1% of the
Aggressive Growth Fund's net assets as of the end of such fiscal
quarter.
5. Reports. The Company and Advisor agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders,
certified copies of their financial statements, and such other
information with regard to their affairs as each may reasonable
request.
6. Status of Advisor. The services of Advisor to the Aggressive
Growth Fund are not to be deemed exclusive, and Advisor shall be free
to render similar services to others so long as its services to the
Aggressive Growth Fund are not impaired thereby. Advisor shall be
deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent the Company or the Aggressive Growth Fund in any or
otherwise be deemed an agent of the Company or the Aggressive Growth Fund.
7. Liability of Advisor. No provision of this Agreement shall be
deemed to protect Advisor against any liability to the Company or its
shareholders to which it might otherwise be subject by reasons of any
willful misfeasance, bad faith or gross negligence in the performance
of its duties or the reckless disregard of its obligations under this
Agreement.
8. Duration and Termination. This Agreement shall become effective
on August 1, 1995, and shall continue in effect until July 31, 1997.
The Agreement shall continue after July 31, 1997, only so long as such
continuance is approved at least annually by votes of the Company's
Board of Directors, including the votes of a majority of the Directors
who are not parties to such Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting such approval. In addition, the question of continuance of the
Agreement may be presented to the shareholders of the Aggressive
Growth Fund; in such event, such continuance shall be effected only if
approved by the affirmation vote of a majority of the outstanding
voting securities of the Aggressive Growth Fund.
Provided, however, that (i) this Agreement may at any time be
terminated without payment of any penalty either by vote of the Board
of Directors of the Company or by vote of a majority of the
outstanding voting securities of the Aggressive Growth Fund, on ninety
(90) days' written notice to Advisor in the event that a majority of
the Board of Directors of the company determines that the Advisor has
willfully violated Federal or any state securities laws, or the rules
and regulations adopted thereunder or committed a violation of any
other law which renders him unfit to act as the adviser for the
Aggressive Growth Fund; (ii) this Agreement shall automatically
terminate in the event of its assignment, and (iii) this Agreement may
be terminated by Advisor on ninety days' written notice to the
Company. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any
office of such party.
As used in this Section 8, the terms "assignment," "interested
persons," a "vote of a majority of the outstanding voting securities"
shall have the respective meaning set forth in Section 2(a)(4),
Section 2(a)(19) and Section 2(a)(42) of the Investment Company Act of
1940.
9. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
10. Notwithstanding the foregoing, should the Adviser become unfit to
continue to act as the adviser to the Aggressive Growth Fund because
of health reasons, the Advisor may appoint a replacement adviser to
the Aggressive Growth Fund, subject to the approval of the Board of
Directors of the Company and the shareholders of the Aggressive Growth
Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of this 15th day of June, 1995.
PENN CAPITAL FUNDS, INC.
By /s/ Xxxxxxxxxxx X. Xxxxxx
XXXXXX X. XXXX
/s/ Xxxxxx X. Xxxx
