Exhibit 6
UNDERWRITING AGREEMENT
AGREEMENT made as of this 1st day of February, 1996, between PENN
CAPITAL FUNDS, INC., a Pennsylvania corporation (the "Fund"), and
DUNWOODY BROKERAGE SERVICES, a __________ corporation (the
"Underwriter").
1. The Underwriter will use its best efforts to find purchasers
for and the Fund will sell, issue and deliver from time to time such
purchasers, such part of the authorized shares of capital stock of the
Fund remaining unissued as from time to time shall be effectively
registered under the Securities Act of 1933, as amended (the "33
Act"), at prices determined as hereinafter provided and on the terms
hereinafter set forth, all subject to applicable Federal and State
laws and regulations and to the charter of the Fund.
2. The Underwriter shall present all orders received by it for
shares of capital stock of the Fund to the Fund by telegraphic or
written purchase orders and each such orders hall be subject to the
acceptance or rejection by the Fund in its sole discretion.
2.1 notwithstanding any other provision hereof, whenever in
the judgment of the President or a Vice President and the Treasurer or
Secretary of the Fund such action is warranted by market, economic or
political conditions or by abnormal circumstances of any kind, the
Fund may suspend the offer of shares in effect and may, without
liability under the provisions of this Agreement, decline to accept or
confirm any orders or make any sales of shares or capital stock under
this Agreement until such time as the Fund shall deem it advisable to
resume the offering of such shares, provided that as soon as
practicable after the taking of any such action a special meeting of
the Board of Directors shall be called to be held as soon as
practicable thereafter to determine whether or not such action shall
then continue to be effective, and the period during, or the
circumstance under, which such action shall continue or cease to be
effective. During any period during which the offer of shares shall
be suspended or the Fund shall decline to accept or confirm any such
orders or make any such sales, the Fund shall be under no obligation
to confirm or accept any such orders or make any such sale at any
price.
2.2 The Fund will use its best efforts to keep effectively
registered under the 33 Act for sale as herein contemplated such
shares of its capital stock as the Underwriter shall reasonably
request and as the Securities and Exchange Commission (the "SEC")
shall permit to be so registered.
3. Sales by the Underwriter shall be made as agent for the Fund
and all such sales be made to or though qualified dealers or others in
such manner, not inconsistent with the provisions hereof and the then
effective registration statement of the Fund under the 33 Act, (and
related prospectus), as the Underwriter may determine from time to time.
3.1 The Underwriter may form a group of underwriters to
participate with it in performing under this Agreement, and the
composition of such ground may be changed from time to time. If such
group shall be formed, the Underwriter shall remain the principal
underwriter, and be the representative of any other underwriters with
the terms and conditions of this Agreement. It is understood and
agreed that the Underwriter as principal underwriters will be
primarily responsible for the preparation and supply of sales
literature to all underwriters, be paid a fee by the other
underwriters for managing the underwriting group and providing sales
literature, payable out of the premium above net asset value at which
underwriters are permitted to sell shares of capital stock of the
Fund. The Fund reserves the right to engage and contract with other
principal underwriters for the sale and distribution of its shares.
3.2 The Underwriter will not make, or authorize any dealers
or others to make, (a) any short sales of shares or (b) any sales of
such shares to any officers, directors or partners of the Fund or of
the Underwriters or of any corporation or firm furnishing investment
advisory, managerial, or supervisory services to the Fund unless such
sales are at the price then available to the public and unless the
Underwriter shall be advised that the purchases are for investment and
that such purchasers will advise the Underwriter of any sales of
shares so purchased made less than two months after the date of
purchase and the Underwriter will promptly advise the Fund of all such
sales of shares, made less than two months after the purchase, or
which it is advised. The Underwriter shall order shares of capital
stock of the Fund from the Fund only to the extent that it shall have
received purchase orders therefor.
4. All shares of capital stock offered for sale or sold by the
Underwriter shall be so offered or sold at a price per share (the
"Offering Price") equal to the net asset value per share (determined
as authorized from time to time by the Board of Directors of the Fund
pursuant to its charter), plus a premium of not more than 4.75% of the
offering price thereof. If the Offering Price per share so determined
is not an exact multiple of one cent it shall be adjusted to the
nearest cent. In all cases the Offering Price per share for the size
of purchase shall be strictly in accordance with the Offering Price
described in the currently effective prospectus of the Fund.
4.1 For the purpose of determining the offering price, the
net asset value of any such shares shall be so determined in
accordance with the then current offering prospectus. The Fund, or
its authorized agent, will promptly furnish to the Underwriter a
statement of the Offering Price as often as such net asset value is
determined and such statement shall at the request of the Underwriter
show the basis of computation of the Offering Price.
4.2 Orders presented by the Underwriter for shares, if
accepted by the Fund, shall be accepted and confirmed by it or its
duly authorized agent at the Offering Price in effect at the time of
its receipt of such order at its principal office.
4.3 The Underwriter will not in any event (a) offer for
sale or sell shares of capital stock in excess of the number then
effectively registered under the 33 Act, and available for sale, or
(b) offer for sale or sell any shares in violation of any applicable
Federal or State law, rule or regulation.
4.4 The public offering price may be reduced within the
limits of the above-mentioned premium in the case of single sales (as
defined in the prospectus forming part of such registration statement
at the time when the same becomes effective) in amounts equal to or
exceeding $100,000 on such basis or bases as may from time to time be
satisfactory to the Fund and set forth in its then current offering
prospectus.
4.5 Out of the above-mentioned premium, the Underwriter
shall allow commissions or concessions to dealers and may allow them
to others in its discretion in such amounts as the Underwriter shall
determine from time to time; except as may be otherwise determined by
the Underwriter and the Fund from time to time, such commissions or
concessions shall be uniform to all dealers.
4.6 The Underwriter will require all dealers to conform to
the provisions hereof and the registration statement (and related
prospectus) at the time in effect under the 33 Act with respect to the
public offering price of the shares, and no dealer shall in any event
withhold the placing of orders for the shares so that dealers shall
profit as a result of such withholding by a change in the net asset
value of the shares from that used in determining the price to the
customer of such dealer or otherwise.
5. At or prior to the delivery by the Fund to or on the order
of the Underwriter of certificates for any share of capital stock, the
Underwriter will pay or cause to be paid to the Fund or to its order
an amount equal to the offering Price of such shares at which such
order has been confirmed, less the premium included therein as
aforesaid which shall constitute the entire sales load (including the
entire compensation to the Underwriter and of any dealer) other than
incidental issuance of sale expenses to be borne by the issuer.
Delivery of certificates shall be made to or on the order of the
Underwriter as promptly as practicable after confirmation of its order
thereof. Certificates shall be registered in such names and amounts
as the Underwriter may specify.
6. The Underwriter, except as hereinafter stated, will pay or
cause to be paid all expenses (other than expenses which one or more
dealers may bear pursuant to any agreement with the Underwriter)
incident to the sale and distribution of shares issued or sold
hereunder, including, without limiting the generality of the
foregoing, (i) all expenses of preparing, printing and distributing or
disseminating any sales literature, advertising and selling aids in
connection with the offering of the shares for sale (except that such
expenses shall not include expenses incurred by the Fund in connection
with the preparation, printing, and distribution of prospectuses and
of any report or other communication to stockholders to the extent
that such expenses are necessarily incurred to effect compliance by
the Fund with any Federal or State law or to comply with the Articles
of Incorporation or By-Laws of the Fund and director's fees and
expenses necessarily incurred by directors in attendance at directors'
meetings); (ii) expenses of advertising performed by the Underwriter
in connection with such offerings. No transfer taxes, if any, which
may be payable in connection with the issue or delivery of shares sold
as herein shall be borne by the Fund, and the Underwriter will
indemnify and hold the Fund harmless against liability for all such
transfer taxes.
7. The Fund will execute any and all documents and furnish any
and all information which may be reasonably necessary in connection
with the qualification of its shares of capital stock in such states
as the Underwriter may reasonably request (it being understood that
the Fund shall be required without its consent to qualify to do
business in any jurisdiction or to comply with any requirement which
in its opinion is unduly burdensome). The Underwriter, at its own
expense, will effect all qualifications as dealer or broker or
otherwise under all applicable state or Federal laws required in order
that the shares may be sold in as broad a territory as practicable.
8. The Fund will furnish to the Underwriter from time to time
such information with respect to its shares as the Underwriter may
reasonably request for use in connection with the sale of shares. The
Underwriter will not use or distribute or authorize the use,
distribution or dissemination by its dealers or others in connection
with such sale of any literature, advertising or selling aids in any
form or through any medium, written or oral, without prior written
specific approval thereof by the Corporation.
9. Nothing herein contained shall limit the right of the Fund,
in its absolute discretion, to issue or sell shares of its capital
stock for such other considerations (whether in connection with the
acquisition of assets or shares or securities of another corporation
or entity or with the merger or consolidation of any other corporation
into or with the Fund, or otherwise) as and to the extent permitted by
its charter and any applicable laws, or to issue or sell any such
shares directly to the shareholders of the Fund, upon such terms and
conditions and for such consideration, if any, as may be determined by
the Board of Directors, whether pursuant to the distribution of
subscription or purchase rights to such holders or by way of dividends
or otherwise.
10. At the request of the Fund, the Underwriter agrees to act as
agent for the Fund for the repurchase or redemption of shares of the
Fund at such prices as the Fund from time to time shall prescribe.
11. In selling or reacquiring shares, the Underwriter agrees to
conform to the requirements of all state and Federal laws relating to
such sale or reacquisition, as the case may be, and will indemnify and
hold the Fund harmless from any damage or expense on account of any
wrongful act by the Underwriter or any employee, representative or
agent of the Underwriter. The Underwriter will observe and be bound
by all the provisions of the charter of the Fund and any fundamental
policies adopted by the Fund pursuant to the Investment Company Act of
1940, as amended (the "40 Act"), notice of which has been given to the
Underwriter.
11.1 Neither the Underwriter, any dealer nor any other
person is authorized by the Fund to give any information or to make
any representation other than those contained (a) in the latest
effective registration statement (and related prospectus) filed with
the SEC under the 33 Act as such registration statement (and
prospectus) may be amended from time to time, or (b) in any statement
expressly authorized by the Fund for use in connection with any sale
or reacquisition of capital stock for the account of the Fund.
12.1 The Underwriter will:
12.1(a) not, directly or indirectly (i) declare or pay any
dividends or distributions (other than dividends payable in its
capital stock), or (ii) use any part of its assets or property for the
purchase, redemption or other retirement of shares of its capital
stock, or (iii) make any other distribution or transfer of assets to
its stockholders, unless in any such case, after giving effect to such
action, the excess of its assets over its liabilities shall be at
least $5,000;
12.2(b) at all times keep its assets (other than those,
such as office furniture and fixtures, equipment, records and the like
required for the operation of the business herein contemplated) in
cash or invested in readily marketable securities;
12.3(c) not incur any indebtedness on account of borrowing
or any other indebtedness except in the ordinary course of business in
the performance of its obligations under this Agreement.
12.4 Determination required hereunder shall be made by the
independent public accountants of the Fund or of the Underwriter in
accordance with the sound accounting practice at such reasonable
intervals as the Fund may from time to time require.
13. This Agreement shall continue in effect until such time as
there remains no unsold balance of shares of capital stock effectively
registered under the 33 Act; provided, however, that (a) this
Agreement shall continue in effect for a period more than two years
from the date hereof only so long as such continuance is specifically
approved at least annually by the Board of Directors or a majority of
the outstanding voting securities of the Fund, and (b) either party
hereto may terminate this Agreement on any date by giving the other
party at least six months prior written notice of such termination
specifying the date fixed therefor, and (c) without prejudice to any
other remedies, the Fund may terminate this Agreement at any time
immediately upon failure of fulfillment of any of the obligations of
the Underwriter hereunder or any of the conditions set forth in
paragraph 12 hereof.
13.1 This Agreement shall automatically terminate in the
event of its assignment by the Underwriter, the term "assignment"
having the meaning defined in Section 2(a)(4) of the 40 Act.
14. Any notice under this Agreement shall be in writing
addressed and delivered by mail, postage prepaid, to the party to whom
addressed at the address given below, or at such other address as such
party shall theretofore have designated (by notice given to the other
party as herein provided) in writing for the receipt of such notice:
To the Fund:
To the Underwriter:
IN WITNESS WHEREOF, the Fund and the Underwriter have each caused
this Agreement to be executed on its behalf by an officer thereunto
duly authorized on the day and year first above written.
Dunwoody Brokerage
Penn Capital Funds, Inc.______ Services,Inc.
By:_/s/ Xxxxx X. Xxxxxx, Xx._ By: /s/ Xxxxxx X. Xxxxxxx
