Exhibit 23D(6)
THE PENN STREET FUND, INC.
SUB-INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of the ___ day of ________, 200_, between The
Penn Street Fund, Inc. (the "Company"), Citco-Quaker Fund Advisors, Inc. a
registered investment adviser and investment adviser to each series of the
Company (the "Fund Manager") and 1777 Capital, LLC (the "Sub-Adviser").
RECITALS
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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
by-laws 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 in, among others, a Portfolio known as The New Epoch Portfolio (the
"Portfolio");
WHEREAS, Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Adviser's Act") and engages in
the business of asset management;
WHEREAS, the Company has retained Fund Manager to furnish investment
advisory services to each series of the Company, including the Portfolio,
pursuant to a written agreement for such services;
WHEREAS, the Fund Manager desires to retain Sub-Adviser to furnish
day-to-day investment advisory services to the Portfolio pursuant to the terms
and conditions of this Agreement, Sub-Adviser is willing to so furnish such
services, and the Company has approved such engagement;
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 and Fund Manager hereby appoint the Sub-Adviser to provide
day-to-day investment advisory services to the Portfolio for the periods and on
the terms set forth in this Agreement. Sub-Adviser accepts the appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
2. Delivery of Documents
The Company and/or Fund Manager have furnished or will furnish Sub-Adviser
with properly certified or authenticated copies of each of the following:
a. Resolutions of the Company's Board of Directors authorizing the
appointment of Sub-Adviser and approving this Agreement;
b. The Company's most current Registration Statement on form N-1A
promulgated under the 1940 Act and under the Securities Act of 1933,
as amended (the "1933 Act");
c. The Company's current Prospectus and Statement of Additional
Information (together called the "Prospectus")
d. All compliance policies and/or procedures adopted by the Board of
Directors of the Company that are applicable to the operations of the
Portfolio.
The Company and/or Fund manager will furnish Sub-Adviser 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, or at such time as officially adopted by the Board
of Directors of the Company.
3. Management
Subject to the supervision of the Company's Board of Directors and Fund
Manager, Sub-Adviser will provide a continuous investment program for the
Portfolio, including investment research and management with respect to all
securities, investments, cash and cash equivalents in the Portfolio. Sub-Adviser
will determine from time to time what securities and other investments will be
purchased, retained or sold by the Portfolio. Sub-Adviser will provide the
services under this Agreement in accordance with the Portfolio's investment
objectives, policies and restrictions as such are set forth in the Portfolio's
prospectus from time to time. Sub-Adviser further agrees that it:
(a) will conform its activities in all material respects to all applicable
rules and regulations adopted by the U.S. Securities and Exchange
Commission (the "SEC") and will, in addition, conduct its activities
under this agreement in accordance with the regulations of any other
federal and state agency which may now or in the future have
jurisdiction over its activities under this Agreement;
(b) will place orders pursuant to its investment determinations for the
Portfolio either directly with the respective issuers or with any
broker or dealer. In placing orders with brokers or dealers,
Sub-Adviser will attempt to obtain the best net price and the most
favorable execution of its orders under the circumstances. Consistent
with this obligation, when Sub-Adviser believes two or more brokers or
dealers are comparable in price and execution, Sub-Adviser may prefer:
(I) brokers and dealers who provide Sub-Adviser with research advice
and other services, or who recommend or sell Company shares, and (II)
brokers who are affiliated with the Portfolio, Fund Manager, and/or
Sub-Adviser; provided, however, that in no instance will portfolio
securities be purchased from or sold to Sub-Adviser in principal
transactions. The Board of Directors of the Company has adopted
procedures pursuant to Rule 17a-7 and Rule 17e-1 with respect to
transactions between the Portfolio and affiliated persons and the
Portfolio and Affiliated broker/dealers, respectively; which
procedures Sub-Adviser expressly agrees to comply with; and
(c) will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities on
behalf of the Portfolio.
4. Services not Exclusive
(a) Services to Other Funds. The advisory services to be furnished by
Sub-Adviser hereunder are not to be considered exclusive, and
Sub-Adviser shall be free to furnish similar services to others so
long as its services under this Agreement are not materially impaired
thereby; provided, however, that without the written consent of the
Company's Board of Directors, which consent will not be unreasonably
withheld, Sub-Adviser will not serve as an investment advisor to any
other registered management investment company having a fund with
investment objectives and principal investment strategies
substantially similar to those of the Portfolio.
(b) Status of Sub-Adviser. Sub-Adviser shall for all purposes herein be
deemed to be an independent contractor and not an agent for the
Company, the Fund Manager or the Portfolio and shall, unless otherwise
expressly provided or authorized herein, have no authority to act for
or represent the Company, Portfolio or Fund Manager in any way.
5. Books and Records
In compliance with Rule 31a-3 promulgated under the 1940 Act, Sub-Adviser
hereby agrees that all records which it maintains for the benefit of the
Portfolio are the property of the Portfolio and further agrees to surrender
promptly to the Portfolio any of such records upon the Portfolio's request.
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
promulgated under the 1940 Act, the records required to be maintained by it
pursuant to Rule 31a-1 promulgated under the 1940 Act resulting from the
services to the Portfolio provided by Sub-Adviser pursuant to Section 3 of this
Agreement.
6. Expenses
During the term of this Agreement, Sub-Adviser will pay all expenses
incurred by it in connection with its investment advisory services furnished to
the Portfolio other than the costs of securities and other investments
(including brokerage commissions and other transaction charges) purchased or
sold for the Portfolio.
7. Compensation
The Fund Manager will pay to Sub-Adviser, and Sub-Adviser will accept as
full compensation for its services rendered hereunder, an investment advisory
fee, computed at the end of each month and payable within five (5) business days
thereafter, equal to the annual rate of the average daily net assets of the
Portfolio as set forth on Schedule B attached hereto and incorporated herein, as
such Schedule B may be amended from time to time by agreement of the Company,
Fund Manager and shareholders, as applicable.
All parties to this Agreement do hereby authorize and instruct the
Portfolio's Administrator, Citco-Quaker Fund Services, Inc., or its successor,
to provide a calculation each month of the gross amount due the Sub-Advisor and
to remit such fee payments directly to Sub-Adviser. In the event that
Sub-Adviser's services to the Portfolio begin or end at a time other than the
beginning or end of a month, fees payable to the Sub-Adviser will be prorated
for that portion of the month during which services were actually provided.
During the term of this Agreement, Sub-Adviser may, from time to time,
waive receipt of some or all of its fee and/or reimburse the Portfolio for other
expenses incurred by the Portfolio in order to assist the Portfolio to maintain
a certain overall expense ratio, such expense ratio to be determined by the
Sub-Adviser at its discretion. Sub-Adviser is under no obligation to waive
receipt of its fees, reimburse the Portfolio for expenses, or attempt in any
manner to maintain any predetermined expense cap. Such actions and/or waivers on
the part of Sub-Adviser are entirely voluntary. However, in the event
Sub-Adviser does undertake such waivers and/or reimbursements, Sub-Adviser may
recover such waived fees and/or reimbursed expenses, at Sub-Adviser's
discretion, at any time for a period of thirty-six months subsequent to the time
such waiver or reimbursement is made.
8. Limitation of Liability
Sub-Adviser shall not be liable for any error of judgment, mistake of law
or for any other loss suffered by the Portfolio in connection with the
performance of this Agreement, except a loss resulting from a breach of
Sub-Adviser's fiduciary duty with respect to the receipt of compensation for
services or a loss to the Portfolio resulting from willful malfeasance, bad
faith or gross negligence on its 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, unless sooner terminated as provided herein, shall continue in effect until
February 14, 2005. Thereafter, this Agreement shall be renewable for successive
periods of one year each, provided such continuance is specifically approved
annually:
(a) By the vote of a majority of those members of the Board of Directors
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 vote of either the Board of Directors or a majority (as that term
is defined in the ▇▇▇▇ ▇▇▇) of the outstanding voting securities of
the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the
Company or by Fund Manager or by Sub-Adviser at any time upon sixty (60) days
written notice, without payment of any penalty. Any such termination by the
Company must be authorized by vote of the Board of Directors or by vote of a
majority of the outstanding voting securities of the Portfolio. 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 Portfolio'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.
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 Sub-Adviser:
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The Penn Street Fund, Inc. 1777 Capital, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: G. ▇▇▇▇▇▇▇ ▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
President President
If to the Fund Manager:
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Citco-Quaker Fund Advisors, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
President
15. Disclosures
Neither the Company, the Portfolio nor the Fund Manager shall, without the
written consent of Sub-Adviser, which consent shall not be unreasonably
withheld, make representations regarding the Sub-Adviser or any of its
affiliates in any disclosure document, advertisement, sales literature or other
promotional materials. The Sub-Adviser shall respond in writing within five (5)
business days of any such request for prior written consent and in the event
Sub-Adviser does not so respond, Sub-Adviser shall be deemed to have consented
to the disclosure document, advertisement, sales literature or other promotional
materials submitted to the Sub-Adviser.
16. Non-Liability of Directors and Shareholders
All obligations of the Portfolio hereunder shall be binding only upon the
assets of the Portfolio and shall not be binding upon any Director, officer,
employee, agent or shareholder of the Portfolio. Neither the authorization of
any action by the Directors or shareholders of the Portfolio nor the execution
of this
Agreement on behalf of the Portfolio shall impose any liability upon any
Director, officer or shareholder of the Portfolio.
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.
Attest: THE PENN STREET FUND, INC.
_____________________________ __________________________________
By: _________________________ By: G. ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Secretary Title: President
Attest: CITCO-QUAKER FUND ADVISORS, INC.
_____________________________ __________________________________
By: ________________________ By: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: ______________________ Title: President
Attest: 1777 CAPITAL, LLC
_____________________________ __________________________________
By: ________________________ By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: _____________________ Title: President
Schedule B
Compensation Schedule
For the first twelve months of Portfolio operations, the Sub-Advisor will be
paid a base fee equal to an annual rate of 2.98% of the average daily net assets
of the Portfolio.
After the first twelve months of portfolio operations, the Sub-Advisor will be
paid a base fee equal to an annual rate of 2.98% of the average daily net assets
of the Portfolio, adjusted each month to reflect the Portfolio's rolling twelve
month performance vs. the rolling twelve month performance of the 90 day U.S
Treasury ▇▇▇▇ Index. Adjustments to the base fee will be made in accordance with
the following schedule:
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Gross Base+ Fulcrum Net
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Return Fees Return
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-10.00% 0.20% -10.20%
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-9.50% 0.20% -9.70%
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-9.00% 0.20% -9.20%
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-8.50% 0.20% -8.70%
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-8.00% 0.23% -8.23%
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-7.50% 0.35% -7.85%
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-7.00% 0.48% -7.48%
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-6.50% 0.60% -7.10%
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-6.00% 0.73% -6.73%
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-5.50% 0.85% -6.35%
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-5.00% 0.98% -5.98%
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-4.50% 1.10% -5.60%
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-4.00% 1.23% -5.22%
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-3.50% 1.35% -4.85%
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-3.00% 1.48% -4.47%
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-2.50% 1.60% -4.10%
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-2.00% 1.73% -3.72%
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-1.50% 1.85% -3.35%
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-1.00% 1.98% -2.97%
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-0.50% 2.10% -2.60%
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0.00% 2.23% -2.23%
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0.50% 2.35% -1.85%
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1.00% 2.48% -1.48%
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1.50% 2.60% -1.10%
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2.00% 2.73% -0.73%
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2.50% 2.85% -0.35%
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3.00% 2.98% 0.02%
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3.50% 3.10% 0.40%
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4.00% 3.23% 0.78%
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4.50% 3.35% 1.15%
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5.00% 3.48% 1.53%
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5.50% 3.60% 1.90%
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6.00% 3.73% 2.28%
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6.50% 3.85% 2.65%
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7.00% 3.98% 3.03%
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7.50% 4.10% 3.40%
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8.00% 4.23% 3.78%
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8.50% 4.35% 4.15%
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9.00% 4.48% 4.53%
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9.50% 4.60% 4.90%
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10.00% 4.73% 5.28%
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10.50% 4.85% 5.65%
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11.00% 4.98% 6.03%
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11.50% 5.10% 6.40%
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12.00% 5.23% 6.78%
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12.50% 5.35% 7.15%
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13.00% 5.48% 7.53%
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13.50% 5.60% 7.90%
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14.00% 5.73% 8.28%
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14.50% 5.75% 8.75%
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15.00% 5.75% 9.25%
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15.50% 5.75% 9.75%
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16.00% 5.75% 10.25%
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16.50% 5.75% 10.75%
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17.00% 5.75% 11.25%
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17.50% 5.75% 11.75%
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18.00% 5.75% 12.25%
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18.50% 5.75% 12.75%
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19.00% 5.75% 13.25%
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19.50% 5.75% 13.75%
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20.00% 5.75% 14.25%
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