UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
☒ ⌧
Filed by a Party other than the Registrant
☐□
Check the appropriate box:
| ☒ | Preliminary Proxy Statement. |
☐ | Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2)). |
☐ | Definitive Proxy Statement. |
☐ | Definitive Additional Materials. |
☐ | Soliciting Material Pursuant to § 240.14a-12. |
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
⌧ No fee required.
☐Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| (4) | Proposed maximum aggregate value of transaction: |
☐
Fee paid previously with preliminary materials:
☐
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
____
PENN CAPITAL FUNDS TRUST
Penn Capital Floating Rate Income
PLEASE CAST YOUR VOTE NOW!
Evermore Global Value Fund
(formerly, Penn Capital Defensive Floating Rate Income Fund)
Penn Capital Short Duration High Income
A Series of The RBB Fund
(formerly, Penn Capital Defensive Short Duration High Income Fund)
Penn Capital Opportunistic High IncomeTrust
c/o U.S. Bank Global Fund
Penn Capital Special Situations Small Cap Equity Services
615 East Michigan Street
February 23, 2023
Dear Shareholder:
I am writing to inform you about an upcoming special shareholder meeting (the “Meeting”) of the Evermore Global Value Fund
Penn Capital Managed Alpha SMID Cap Equity (the “Fund”), a series of The RBB Fund
[May 10], 2021
Dear Shareholder,
PENN Capital Funds Trust (the “Trust,” each series thereof, a “Fund,”“Trust”), which will be held at the offices of U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, WI, 53202 and together,virtually via conference call on March 31, 2023, at 10:00 AM Central Time. We intend to hold the “Funds”) will hold a Special Meeting of Shareholders on June 23, 2021 at Navy Yard Corporate Center, 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112 at [Meeting Time] (the “Special Meeting”). A formal noticein person. However, we are sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of the Specialevolving COVID-19 pandemic. As a result, we may impose additional procedures or limitations on Meeting appearsattendees or may decide to hold the Meeting in a different location or solely by means of remote communication. We plan to announce any such updates on our proxy website www.[ ].com, and we encourage you to check this website prior to the next pagesMeeting if you plan to attend in person. We also encourage you to consider your options to vote by internet, telephone, or mail, as discussed in the enclosed proxy card, in advance of the Meeting in the event that, as of March 31, 2023, in-person attendance at the Meeting is either prohibited under a federal, state, or local order or contrary to the advice of public health care officials.
At the Meeting, shareholders will be asked to approve the new investment advisory agreement between F/m Investments, LLC d/b/a North Slope Capital, LLC (“F/m” or the “Adviser”) and the Trust, on behalf of its series, the Fund (the “New Investment Advisory Agreement”). Additionally, shareholders will be asked to approve a new sub-advisory agreement (the “Sub-Advisory Agreement”) between F/m and MFP Investors LLC (“MFP” or the Sub-Adviser”). MFP is followedan investment management firm founded by the late Michael F. Price, a value investor who was portfolio manager to the Mutual Series funds from the mid-1970s through the mid-1990s. MFP will pay for the costs of this proxy solicitation, including the printing and mailing of the Proxy Statement and related materials.
Pursuant to a Purchase and Assignment and Assumption Agreement between Evermore Global Advisors, LLC (“Evermore”) and MFP, Evermore will sell substantially all of its business and advisory assets to MFP (the “Purchase Agreement”). Contemporaneously, it is proposed that F/m will be appointed as investment adviser to the Fund and MFP will be appointed as sub-adviser to the Fund (the Purchase Agreement and proposals collectively referred to as, the “Transaction”). Evermore, MFP, and F/m believe the Transaction will provide more opportunities for the Special MeetingFund’s growth over the long term.
The first proposal relates to the approval of the New Investment Advisory Agreement between F/m and the Trust, on behalf of the Fund. The New Investment Advisory Agreement will not result in any change in the Fund’s investment strategies, advisory fees or, as further described below in connection with the second proposal, portfolio management. The arrangement will be largely identical to the current investment advisory agreement between Evermore Global Advisors, LLC (“Evermore”) and the Trust (the
“Proxy Statement”“Current Investment Advisory Agreement”).
Evermore has served as the investment adviser to the Fund since its inception and served as investment adviser to the predecessor fund since 2010. As a result of the Transaction, and pending shareholder approval of the New Investment Advisory Agreement, F/m will replace Evermore as the adviser to the Fund. Under the Investment Company Act of 1940, shareholder approval of the New Investment Advisory Agreement is necessary in order for F/m to serve as the Fund’s investment adviser following the closing of the Transaction. The Special Meetingmaterial terms of the proposed New Investment Advisory Agreement are identical to the material terms of the Current Investment Advisory Agreement.
The second proposal relates to the approval of the Sub-Advisory Agreement between F/m and MFP. Pursuant to the proposed Sub-Advisory Agreement, MFP will be responsible for day-to-day investment management of the Fund. In connection with the Transaction, MFP will be acquiring certain advisory and other business assets of Evermore and will be hiring Evermore’s key investment professionals. As a result, the Fund and their shareholders will continue to have the benefit of Evermore’s investment strategies and portfolio management expertise by virtue of the Fund’s engagement of MFP as sub-adviser.
The Board of Trustees recommends that you vote in favor of these Proposals.
The attached Proxy Statement describes the Proposals and the voting process for shareholders. The Board asks that you read it carefully and vote in favor of the Proposals. Please return your proxy card in the postage-paid envelope as soon as possible. You also may vote over the Internet or by telephone. Please follow the instructions on the enclosed proxy card to use these methods of voting.
Thank you for your continued support.
Sincerely,
Steven Plump
President
The RBB Fund Trust
Voting is being calledquick and easy. Everything you need is enclosed. To cast your vote:
PHONE: Call the toll-free number on your proxy card. Enter the control number on your proxy card and follow the instructions.
INTERNET: Visit the website indicated on your proxy card. Enter the control number on your proxy card and follow the instructions.
MAIL: Complete the proxy card(s) enclosed in this package. BE SURE TO SIGN EACH CARD before mailing it in the postage-paid envelope.
Important information to (1)help you understand and vote on the Proposals:
Please read the full text of the proxy statement. Below is a brief overview of the Proposals to be voted upon. Your vote is important.
What is this document and why did you send it to me?
We are sending this document to you for your use in connection with the Trust’s solicitation of your vote to approve a proposal to approve a new investment advisory agreement with F/m Investments, LLC d/b/a North Slope Capital, LLC (“Proposal 1”), a Delaware corporation (“F/m” or the “Adviser”) to enable F/m to become the investment adviser for the Evermore Global Value Fund (the “Fund”), a series of The RBB Fund Trust (the “Trust”). A new investment advisory agreement will be required following the acquisition by MFP Investors LLC of substantially all the business and advisory assets of the Fund’s current adviser, Evermore Global Advisors, LLC (“Evermore”) (such transaction herein referred to as, the “Transaction”). As the closing of the Transaction will result in an assignment, it will automatically terminate the Current Investment Advisory Agreement.
Shareholders are additionally being asked to approve a new sub-advisory agreement engaging MFP Investors LLC (“MFP” or the “Sub-Adviser”) as a sub-adviser to the Fund (“Proposal 2” and together with Proposal 1, the “Proposals”). This document includes a Notice of Meeting of Shareholders, a Proxy Statement, and Proxy Card.
At a meeting of the Trust’s Board of Trustees (the “Board”) held on February 8-9, 2023 and reconvened on February 16, 2023, the Board approved both of the Proposals, which are now subject to shareholder approval. The Board recommends that shareholders also approve the Proposals.
What is Proposal 1 about?
You are being asked to vote to approve a new investment advisory agreement (the “New Investment Advisory Agreement”), between F/m and the Trust on behalf of the Funds,Fund.
Under the Investment Company Act of 1940 (the “1940 Act”), shareholder approval of the New Investment Advisory Agreement is necessary to in order for F/m to serve as the Fund’s investment adviser. The material terms of the New Investment Advisory Agreement are identical to the material terms of the Current Investment Advisory Agreement, and Pennthe approval of the New Investment Advisory Agreement will not result in any change in the Fund’s investment strategies or advisory fee. No increase in shareholder fees or expenses is being proposed.
What is Proposal 2 about?
F/m has proposed that MFP serve as sub-adviser to the Fund. In connection with the Transaction, MFP will be acquiring substantially all the business and advisory assets of Evermore and will be hiring Evermore’s key investment professionals. So that the Fund and their shareholders will continue to have the benefit of Evermore’s investment strategies and portfolio management expertise, shareholders are being asked to approve a new sub-advisory agreement (the “Sub-Advisory Agreement”) between F/m and MFP. If the Sub-Advisory Agreement is approved, MFP will serve as sub-adviser to the Fund, and the Fund’s current portfolio management team will continue to provide portfolio management services.
What if either Proposal 1 or Proposal 2 are not approved by shareholders?
The Transaction will not consummate until after shareholders have approved both the New Investment Advisory Agreement and the Sub-Advisory Agreement. If shareholders do not approve either the New Investment Advisory Agreement or the Sub-Advisory Agreement, Evermore will continue to manage the Fund pursuant to the Current Investment Advisory Agreement and Evermore and the Board will consider alternative options.
How will my approval of the Proposals affect the management and operation of the Fund?
The Fund’s investment strategies, advisory fees and other terms will not change as a result of the New Investment Advisory Agreement or the Sub-Advisory Agreement. The same portfolio management team will continue to manage the Fund but as employees of MFP.
Is anything changing for the Fund related to the Transaction?
Other than the Transaction resulting in F/m replacing Evermore as the Fund’s investment adviser and MFP becoming a sub-adviser to the Fund, no changes are expected to occur with respect to the day-to-day management of the Fund.
How will my approval of the Proposals affect the expenses of the Fund?
The proposed approvals of the New Investment Advisory Agreement and Sub-Advisory Agreement with F/m and MFP, respectively, will not result in an increase of the investment advisory fee paid by the Fund to the investment adviser or in the Fund’s total expenses.
What are the primary reasons for the selection of F/m as the investment adviser of the Fund and MFP as sub-adviser to the Fund?
The benefits of approving the New Investment Advisory Agreement and the Sub-Advisory Agreement include continuity in the portfolio management of the Fund and retention of the current investment personnel. The Board weighed a number of factors in reaching its decision to allow F/m to serve as the investment adviser for the Fund and MFP to serve as sub-adviser to the Fund, including the history, reputation, qualifications and resources of F/m and MFP, respectively and the fact that Evermore’s current portfolio managers would continue to provide the day-to-day management of the Fund through their anticipated employment at MFP. With respect to the latter point, the Board considered the Fund’s performance in the absolute, as well as against its benchmark and peer group. The Board also considered that, as a result of the proposal, the Fund’s advisory fee would not increase and that all costs incurred by the Fund as a result of the Transaction would be borne by MFP, not the Fund’s shareholders. Lastly, the Board considered the extent to which economies of scale are relevant to the Fund and the potential of realizing such through the combined efforts of F/m and MFP. Please see “Board Recommendation of Approval” in the Proxy Statement for a full discussion of the Board’s considerations.
Are there any material differences between the Current Investment Advisory Agreement and the proposed New Investment Advisory Agreement?
No. There are no material differences between the Current Investment Advisory Agreement and the proposed New Investment Advisory Agreement.
Has the Board approved the Proposals?
Yes. The Board approved each proposal set forth herein, subject to shareholder approval.
Who is Broadridge Financial Solutions, Inc. (“Broadridge”)?
Broadridge is a third-party proxy vendor that MFP has engaged to contact shareholders and record proxy votes. In order to hold a shareholder meeting, a quorum must be reached. If a quorum is not attained, the meeting must adjourn to a future date. Voting your shares immediately will help minimize additional solicitation expenses and prevent the need to call you to solicit your vote.
Who is paying for this proxy mailing and for the other expenses and solicitation costs associated with this shareholder meeting?
MFP will pay for the costs of this proxy solicitation, including the printing and mailing of the Proxy Statement and related materials.
What will happen if the Proposals are not approved by shareholders?
If sufficient votes are not obtained to approve the Proposals with respect to the Fund, the Board will consider what further action to take, including adjourning the special meeting for the Fund and making a reasonable effort to solicit support with respect to the proposal in order to receive sufficient votes. If, following such adjournment, it remains unlikely that the Proposals will be approved by shareholders, the Board will consider alternative actions, taking into account the best interests of shareholders, including (without limitation) the retention of Evermore as the investment adviser of the Fund, the recommendation of one or more other investment advisors, subject to approval by Fund shareholders, or the liquidation of the Fund.
Shareholders of record of the Fund as of the close of business on February 28, 2023 (the “Record Date”) are entitled to be present and to vote at the special meeting of shareholders (the “Meeting”) or any adjournment thereof. Shareholders of record of the Fund at the close of business on the Record Date will be entitled to cast one vote for each full share and a fractional vote for each fractional share they hold on the Proposals presented at the Meeting.
How is a quorum for the Meeting established?
The presence of one-third (33-1/3%) of the outstanding shares of the Fund entitled to vote, present in person or represented by proxy, constitutes a quorum for the Proposals for the Fund. Proxies returned for shares that represent broker non-votes, and shares whose proxies reflect an abstention on any item, are all counted as shares present and entitled to vote for purposes of determining whether the required quorum of shares exists. However, such proxies will not be treated as votes cast at the Meeting. If a quorum is not present for the Fund at the Meeting, or if a quorum is present at the Meeting but sufficient votes to approve the Proposals is not received on behalf of the Fund, or if other matters arise requiring shareholder attention, persons named as proxy agents may propose one or more adjournments of the Meeting to permit further solicitation of proxies with respect to the Fund.
What vote is required to approve the Proposals?
Approval of the New Investment Advisory Agreement between F/m and the Trust (on behalf of the Fund) and the Sub-Advisory Agreement between F/m and MFP, requires the vote of the “majority of the outstanding voting securities” of the Fund. Under the 1940 Act, a “majority of the outstanding voting securities” is defined as the lesser of: (1) 67% or more of the voting securities of the Fund entitled to vote present in person or by proxy at the Meeting, if the holders of more than 50% of the outstanding voting securities entitled to vote thereon are present in person or represented by proxy; or (2) more than 50% of the outstanding voting securities of the Fund entitled to vote thereon.
Although you may attend the Meeting and vote in person, you do not have to. You can vote your shares by completing and signing the enclosed proxy card and mailing it in the enclosed postage-paid envelope. You may also vote by touch-tone telephone by calling the toll-free number printed on your proxy card and following the recorded instructions.
In addition, you may vote through the Internet by visiting the Internet address printed on your proxy card and following the on-line instructions. If you need any assistance or have any questions regarding the proposal or how to vote your shares, please call Broadridge Solutions, Inc. at 833-757-0709. Representatives are available to assist you Monday through Friday, 9 a.m. to 10 p.m. Eastern Time.
If you simply sign and date the proxy card but do not indicate a specific vote, your shares will be voted “FOR” the Proposals and to grant discretionary authority to the persons named in the card as to any other matters that properly come before each Meeting. Abstentions will be treated as votes AGAINST a Proposal.
Shareholders who execute proxies may revoke them at any time before they are voted by (1) filing with the Fund a written notice of revocation, (2) timely voting a proxy bearing a later date, or (3) by attending the Meeting and voting in person.
Please complete, sign and return the enclosed proxy card in the enclosed envelope. You may vote your proxies by Internet or telephone in accordance with the instructions set forth on the enclosed proxy card. No postage is required if mailed in the United States.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 31, 2023
EVERMORE GLOBAL VALUE FUND
(a Series of The RBB Fund Trust)
c/o U.S. Bank Global Fund Services
615 East Michigan Street
Milwaukee, WI 53202
Notice is hereby given that a Special Meetings of Shareholders (the “Meeting”) of the Evermore Global Value Fund (the “Fund”), a series of The RBB Fund Trust (the “Trust”), will be at the offices of U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, WI, 53202 and virtually via conference call on March 31, 2023, at 10:00 AM Central Time.
If you are a shareholder of record as of the close of business on February 28, 2023, you are entitled to vote at the Meeting and at any adjournment thereof. Your vote is extremely important. While you are welcome to join us at the Meeting, most shareholders will cast their votes by filling out, signing, and returning the enclosed proxy card, voting by telephone, or voting using the internet.
We intend to hold the Meeting in person. However, we are sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of the evolving COVID-19 pandemic. As a result, we may impose additional procedures or limitations on Meeting attendees or may decide to hold the Meeting in a different location or solely by means of remote communication. We plan to announce any such updates on our proxy website www.[ ].com, and we encourage you to check this website prior to the Meeting if you plan to attend in person. We also encourage you to consider your options to vote by internet, telephone, or mail, as discussed in the enclosed proxy card, in advance of the Meeting in the event that, as of March 31, 2023, in-person attendance at the Meeting is either prohibited under a federal, state, or local order or contrary to the advice of public health care officials.
At the Meeting, shareholders of the Fund will be asked to act upon the following Proposals, all of which are more fully described in the accompanying Proxy Statement dated February 23, 2023:
Proposal 1
To approve the New Investment Advisory Agreement between F/m Investments, LLC d/b/a North Slope Capital, Management Company, LLC (“Penn Capital”F/m” or the “Adviser”) and the Trust, on behalf of the Fund; and
Proposal 2
To approve the new Sub-Advisory Agreement between F/m and MFP Investors LLC (“MFP” or the “Sub-adviser”), on behalf of the Funds’ current investment adviser;Fund.
MFP will pay for the costs of this proxy solicitation, including the printing and (2) elect eight new nomineesmailing of the Proxy Statement and related materials.
In addition, shareholders may be asked to act on such other business as may properly come before the Meeting or any adjournments or postponements thereof,
THE BOARD OF TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSALS.
The Trust’s Board of Trustees has fixed the close of business on February 28, 2023, as the record date for the determination of the shareholders entitled to notice of, and to vote at, the Meetings and any adjournments thereof. Please read the accompanying Proxy Statement for a full discussion of the Proposals.
By Order of the Board of Trustees of the Trust
Steven Plump
President
The RBB Fund Trust
February 23, 2023
Your vote is very important – please vote your shares promptly.
Shareholders are invited to attend the Meeting. Please note, no representatives from F/m, MFP or the Board will be attending the Meeting. Shareholders are urged to vote using the touch-tone telephone or Internet voting instructions found on the enclosed proxy card or indicate voting instructions on the enclosed proxy card, date and sign it, and return it in the envelope provided, which needs no postage if mailed in the United States. In order to avoid unnecessary expense, we ask your cooperation in responding promptly, no matter how large or small your holdings may be.
EVERMORE GLOBAL VALUE FUND
(a Series of The RBB Fund Trust)
c/o U.S. Bank Global Fund Services
615 East Michigan Street
Milwaukee, WI 53202
PROXY STATEMENT
February 23, 2023
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 31, 2023
Introduction
This Proxy Statement is furnished in connection with the solicitation by the Board of Trustees (the “Board”)
of The RBB Fund Trust (the “Trust”) of proxies to be voted at the Special Meeting of Shareholders of the Evermore Global Value Fund (the “Fund”) and any adjournment or postponement thereof (the “Meeting”).
EachWe intend to hold the Meeting in person. However, we are sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of
these proposals isthe evolving COVID-19 pandemic. As a result, we may impose additional procedures or limitations on Meeting attendees or may decide to hold the Meeting in a different location or solely by means of remote communication. We plan to announce any such updates on our proxy website www.[ ].com, and we encourage you to check this website prior to the Meeting if you plan to attend in person. We also encourage you to consider your options to vote by internet, telephone, or mail, as discussed
below and in the enclosed
Proxy Statement.Approvalproxy card, in advance of the Meeting in the event that, as of March 31, 2023, in-person attendance at the Meeting is either prohibited under a federal, state, or local order or contrary to the advice of public health care officials.
Proposal 1
To approve the New Investment Advisory Agreement between F/m Investments, LLC d/b/a North Slope Capital, LLC (“F/m” or the “Adviser”) and the Trust, on behalf of the Fund; and
Proposal 2
To approve the new Sub-Advisory Agreement between F/m and MFP Investors LLC (“MFP” or the “Sub-adviser”), on behalf of the Fund.
Shareholders of record at the close of business on the record date, February 28, 2023 (the “Record Date”), are entitled to notice of, and to vote at, the Meeting. The Notice of Special Meeting of Shareholders (the “Notice”), this Proxy Statement and the enclosed Proxy Card are being mailed to Shareholders on or after March 13, 2023.
Financial statements for the Fund are included in annual reports, which are mailed to shareholders. Shareholders may obtain copies of the annual report or semi-annual report free of charge by calling 866-EVERMORE (866-383-7667) or visit the Fund’s website at https://evermoreglobal.com/our-products/global-value-fund-overview/ or writing the Fund, c/o U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, WI 53202.
PROPOSAL 1: APPROVAL OF INVESTMENT ADVISORY AGREEMENT
Background
Evermore has served as the investment adviser to the Fund since its inception and served as investment adviser to the Fund’s predecessor fund since 2010.
Pursuant to the terms of an agreement (the “Acquisition Agreement”) among the Adviser; 525 Holding Company, Inc. (“525 Holding”), the parent company of the Adviser;a Purchase and Spouting Rock Asset Management,Assignment and Assumption Agreement between Evermore Global Advisors, LLC (“Spouting Rock”Evermore”), Spouting Rock acquired a minority ownership interest in 525 Holding on April 1, 2021 as well as options to purchase additional interests in 525 Holding in several phases exercisable beginning in June 2021 through June 2024 (the “Acquisition”). If and MFP, Evermore will sell substantially all of its business and advisory assets to MFP (the “Purchase Agreement”). Contemporaneously, it is proposed that F/m will be appointed as investment adviser to the options are exercised in their current form,Fund and MFP will be appointed as sub-adviser to the consummation ofFund (the Purchase Agreement and proposals collectively referred to as, the Acquisition is deemed to be a change of control of“Transaction”). Evermore, MFP, and F/m believe the Adviser pursuant toTransaction will provide more opportunities for the Fund’s growth over the long term.
Under the Investment Company Act of 1940, as amended (the “1940 Act”)
. There is no guarantee that the options will ultimately be exercised in their current form (or at all).The change of control caused by the consummation of the Acquisition will result in the termination of the previously existing advisory agreement between the Trust, on behalf of each of the Funds, and Penn Capital. To avoid disruption of the Funds’ investment management program, on March 18, 2021, the Board approved, an interim investment advisory agreement (the “Interim Advisory Agreement”) betweenautomatically terminates in the Trust, with respect to each Fund,event of its “assignment.” MFP’s acquisition of substantially all Evermore’s business and Penn Capital, whichadvisory assets will be effective for up to 150 days following April 1, 2021 (i.e., until and including August 29, 2021). The termsoperate as an “assignment” (as defined in the 1940 Act) of the InterimCurrent Investment Advisory Agreement, areeffectively terminating the same as thoseCurrent Investment Advisory Agreement. Shareholder approval of the previously existing advisory agreement, exceptNew Investment Advisory Agreement is necessary in order for certain provisions that are required by law, the date and term of the agreement and certain other immaterial differences.
For Penn CapitalF/m to continue servingserve as the Funds’Fund’s investment adviser following the expiration of the Interim Advisory Agreement, the Trust is required to seek the approval by the shareholders of the Funds of a new advisory agreement between the Trust, on behalf of each Fund, and Penn Capital (the “New Advisory Agreement”). Please noteadviser.
The Adviser does not anticipate that the
advisory fees payable to Penn Capital underTransaction will have a material impact on the
New Advisory Agreement are the same as the advisory fees payable under the Trust’s previously existing advisory agreement. Furthermore, the investment advisory personnel who providedFund or any third-party vendors that provide services to the Fund,
underincluding with respect to the
previously existing advisory agreementfollowing: operations, personnel, organizational structure; capitalization, or the financial and other resources. Evermore’s key investment personnel are expected to
continue to do so underbe hired by the
New Advisory Agreement. In addition,newly proposed Sub-Adviser as detailed further below in this document, and no change in senior portfolio management’s strategy for the
Funds will not bear any portionFund is anticipated as a result of the
costs related to the Acquisition.The Board believes that approving the New Advisory Agreement is in the best interestsimplementation of the Funds and their shareholders. Accordingly, the Board has unanimously voted to approve the New Advisory Agreement and to recommend that the shareholders of each Fund also approve the New Advisory Agreement.
Election of Nominees to the Board of Trustees
Shareholders are also being asked at the Special Meeting to vote on a proposal to approve the election of eight (8) new nominees to the Board (the “Trustee Nominees”). The current members of the Board are not standing for election and will cease to serve as Trustees of the Trust effective when the Trustee Nominees take office, which is expected to occur shortly after the Special Meeting.
Over the past few years, Penn Capital has considered various options for its business model and the structure of the Funds in an effort to realize operational efficiencies while also maintaining the high quality of investment advisory and other services provided to Fund shareholders. After considering various options, Penn Capital determined that the Funds would benefit from certain expense reductions and operational streamlining associated with joining a shared governance and service provider structure in common with other mutual funds. Such structures are designed to provide an efficient governance and operations solution for mutual funds and their advisers, and permit participating investment advisers to focus more effort and resources on providing advisory services and marketing funds.
In April of 2021, Penn Capital management informed the current Board members that it had determined that the Funds would benefit from joining a shared governance and service provider structure in common with The RBB Fund, Inc. (“RBB”) (such shared governance and service provider structure, the “Shared Governance Structure”). RBB is an open-end management investment company that was organized as a Maryland corporation on February 29, 1988 and currently consists of 36 separate portfolios. The Adviser believes that the Shared Governance Structure has a robust infrastructure that would serve shareholders well, and, as the Shared Governance Structure uses many of the same service providers as the Trust, that shareholders would experience limited changes to their investment experience.
In connection with the Adviser’s recommendation that the Trust participate in a Shared Governance Structure (the “Transition”), the Adviser proposed that the current Board members nominate, and recommended that shareholders elect as Trustees of the Trust, the Trustee Nominees, each of whom is currently on the Board of Directors of RBB. Transaction.
At a meeting of the Board held on
April 19, 2021,February 8-9, 2023 and reconvened on February 16, 2023, the
current Board,
members,including a majority of
whomTrustees who are not “interested
persons” (aspersons,” (the “Independent Trustees”) as the term defined
inunder the 1940
Act) ofAct, voted unanimously to approve the
Trust, considered Penn Capital’s proposal, nominated the Trustee Nomineesproposed New Investment Advisory Agreement between F/m and
recommended that the Trustee Nominees be submitted to the Trust’s shareholders for election at the Special Meeting, and, subject to receipt of such shareholder approval, approved changing the number of Trustees on the Board from three (3) to eight (8). If elected as Board members, it is expected that the Trustee Nominees will oversee the Transition. Further information regarding the current Board members’ considerations, the Trustee Nominees and the Shared Governance Structure is included in the Proxy Statement.The enclosed Proxy Statement explains the following proposals:
| v | A proposal to approve a new investment advisory agreement between the Trust, on behalf of each Fund, and Penn Capital as a result of the Acquisition. |
| v | A proposal to elect eight (8) nominees to the Board of Trustees of the Trust. |
Thank you for your investment in the Funds. I encourage you to exercise your rights in governing the Funds by voting on each proposal. The Board of Trustees recommends that you vote FOR each of the proposals above.
Whether or not you expect to attend the Special Meeting, it is important that your shares be represented. Your immediate response will help reduce the need for the Trust to conduct additional proxy solicitations. Please review the Proxy Statement and then vote by Internet, telephone or mail as soon as possible. If you vote by mail, please sign and return all of the proxy cards included in this package. If you have any questions regarding the proposals or the voting process, please call our proxy solicitation agent, AST Fund Services toll-free at 866-745-0273.
We are concerned about your health and safety during the current coronavirus (COVID-19) pandemic, and intend to monitor the recommendations of public health officials and governmental restrictions as the situation continues to evolve. If we decide to hold the Special Meeting at a different time, in a different location, or partially or entirely by means of remote communication (i.e., a virtual meeting), we will announce any such updates by means of a press release, which will be posted on our website at www.penncapital.com. We encourage you to check the website prior to the Special Meeting if you plan to attend the Special Meeting. An announcement of any change will also be filed with the U.S. Securities and Exchange Commission via its EDGAR system.
| Sincerely,
Richard A. Hocker
Trustee, President and Chairman
|
IMPORTANT INFORMATION
Q. | Why am I receiving this proxy statement? |
A. | You are being asked to vote on the following important matters affecting PENN Capital Funds Trust (the “Trust,” each series thereof, a “Fund,” and together, the “Funds”): |
(1) Approval of a new investment advisory agreement between the Trust on behalf of the Funds, and Penn Capital Management Company, LLC (“Penn Capital” orFund (the “New Investment Advisory Agreement”). The Board also voted unanimously to recommend that shareholders approve the “Adviser”)
PursuantNew Investment Advisory Agreement. The terms of the New Investment Advisory Agreement are substantially identical to the terms of an agreement (the “Acquisition Agreement”) among the Adviser; 525 Holding Company, Inc. (“525 Holding”), the parent companyCurrent Investment Advisory Agreement.
The Fund needs shareholder approval of its New Investment Advisory Agreement to allow F/m to act as its investment adviser following consummation of the Adviser; and Spouting Rock Asset Management, LLC (“Spouting Rock”), Spouting Rock acquired a minority ownership interest in 525 Holding on April 1, 2021Transaction. However, if the Fund’s shareholders do not approve F/m as well as optionsthe investment adviser for the Fund, then the Board will have to purchase additional interests in 525 Holding in several phases exercisable beginning in June 2021 through June 2024 (the “Acquisition”). If all ofconsider other alternatives for the options are exercised in their current form,Fund upon the consummation of the Acquisition is deemed to be a change of controlTransaction and resulting expiration of the Adviser pursuant toCurrent Investment Advisory Agreement.
Legal Requirements in Approving the New Investment Company Act of 1940, as amended (the “1940 Act”). There is no guarantee that the options will ultimately be exercised in their currentAdvisory Agreement
The form (or at all). The change of control caused by the consummation of the Acquisition will result in the termination of the previously existing advisory agreement between the Trust, on behalf of each of the Funds, and Penn Capital. To avoid disruption of the Funds’ investment management program, on March 18, 2021, the Board approved an interim investment advisory agreement (the “InterimNew Investment Advisory Agreement”) between the Trust, with respect to each Fund, and Penn Capital, which will be effective for up to 150 days following April 1, 2021 (i.e., until and including August 29, 2021)Agreement is attached hereto as Exhibit A. The terms of the InterimNew Investment Advisory Agreement are substantially identical to the same as thoseterms of the previously existing advisory agreement, exceptCurrent Investment Advisory Agreement. The Current Investment Advisory Agreement was last submitted to the shareholders of the Fund for certain provisions that are required by law,approval on the date shown below and termwas effective with respect to the Fund upon commencement of the agreementFund’s operations as a portfolio of the Trust:
| Fund | Effective Date
of Current
Advisory Agreement | Date Last Submitted to Fund Shareholders for Approval |
| Evermore Global Value Fund | December 28, 2022 | December 16, 2022 |
The New Investment Advisory Agreement and certainthe Current Investment Advisory Agreement have identical fee structures. There are no material differences between the two agreements, other immaterial differences.than their effective dates and that F/m will serve as the Fund’s investment adviser. The material terms of the New Investment Advisory Agreement and the Current Investment Advisory Agreement are compared below in the section entitled “Summary of the New Investment Advisory Agreement and Current Investment Advisory Agreement.”
The New Investment Advisory Agreement will take effect upon shareholder approval and immediately following MFP’s acquisition of Evermore’s business and advisory assets. If Penn Capital isshareholders do not approve the New Investment Advisory Agreement with respect to continuethe Fund, then F/m will not be permitted to serve as the Fund’s investment adviser toafter the Funds following the expirationconsummation of the InterimTransaction, and the Board will have to consider other alternatives for the Fund.
Compensation Paid to Evermore
Under the Current Investment Advisory Agreement,
itEvermore is
necessary for shareholders of the Fundsentitled to
approvereceive a
newmonthly advisory
agreement (the “New Advisory Agreement”) for the Funds.(2) Approval of the eight (8) nominees to the Board of Trustees
Penn Capital and the members of the Trust’s current Board of Trustees (“Board”) have determined that the Funds would benefit from joining a shared governance and service provider structure in common with The RBB Fund, Inc. (“RBB”) (such shared governance and service provider structure, the “Shared Governance Structure”). RBB isfee computed at an open-end management investment company that was organized as a Maryland corporation on February 29, 1988 and currently consists of 36 separate portfolios. In order to facilitate the transition of the Funds to the Shared Governance Structure, the Board’s Nominating Committee and the current Board members, a majority of whom are not “interested persons” (as defined in the 1940 Act) of the Trust, have nominated eight (8) new individuals (the “Trustee Nominees”) to serve on the Board and recommended that the Trustee Nominees be submitted to the Trust’s shareholders for election at the Special Meeting. Each of the Trustee Nominees is currently on the Board of Directors of RBB. The current Board members are not standing for election and will cease to serve as Trustees of the Trust effective when the Trustee Nominees take office. Further information about the Trustee Nominees and the Shared Governance Structure is included in the Proxy Statement.
Approval of New Advisory Agreement
annual rate of:
Q.Fund | Who is Spouting Rock and why are they acquiring a majorityAdvisory Fee |
| Evermore Global Value Fund | 0.99% of the equity interests of Penn Capital?average daily net assets |
A. | Spouting Rock is a Delaware limited liability company located at 925 W. Lancaster Ave, Suite 250, Bryn Mawr, PA 19010. Spouting Rock is registered with the U.S. Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940, as amended, and had approximately $583 million in assets under advisement as of March 31, 2021. Spouting Rock was organized in February of 2016 and serves as a multi-boutique manager platform providing alternative, traditional, and thematic investment solutions and services. Spouting Rock is principally owned by Spouting Rock Financial Partners, LLC (“SRFP”). Spouting Rock has entered into an Acquisition Agreement with Penn Capital in order to gain access to a quality institutional asset manager and strengthen its investment strategy and product offerings. |
Q. | How will this affect my account with the Funds? |
A. | The Acquisition should not affect your account. You can expect the same level of management expertise and quality shareholder service at the conclusion of the Acquisition. |
Q. | Will the investment advisory fee rate be the same upon approval of the New Advisory Agreement? |
A. | Yes. The investment advisory fee rate applicable to each Fund
The fee structure under the New Investment Advisory Agreement with F/m will be identical to the rate in effect prior to the Acquisition. The table below shows the contractual rates of the advisory fee payable by each Fund to Penn Capital under the previously existing advisory agreement and under the proposed New Advisory Agreement. |
| | Contractual Advisory Fee (as a percentage of average daily net assets) Under the Previously Existing Advisory Agreement | Contractual Advisory Fee (as a percentage of average daily net assets) Under the New Advisory Agreement |
| Penn Capital Floating Rate Income Fund (formerly, Penn Capital Defensive Floating Rate Income Fund) | 0.55% | 0.55% |
| Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund) | 0.45% | 0.45% |
| Penn Capital Opportunistic High Income Fund | 0.69% | 0.69% |
| Penn Capital Managed Alpha SMID Cap Equity Fund | 0.90% | 0.90% |
| Penn Capital Special Situations Small Cap Equity Fund | 0.95% | 0.95% |
With respect to the fee structure under the Current Investment Advisory Agreement. For the fiscal year ended December 31, 2022, the Fund paid Evermore investment advisory fees in the amounts shown below:
Advisory Fees Paid to Evermore for the Fiscal Year Ended December 31, 2022
| Fund | Advisory Fees Accrued | Fee Waiver and Expense Reimbursement | Net Advisory Fees Paid |
Evermore Global Value Fund | $1,546,689 | $190,356 | $1,356,333 |
In the event the Fund’s operating expenses, as accrued each
month, exceeded the Fund’s annual expense limitation, Evermore agreed to pay the Fund,
other thanon a monthly basis, the
Penn Capital Opportunistic High Income Fund and the Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund), the Adviserexcess expenses within 30 calendar days of notification that such payment was due. Evermore has contractually agreed to
waive its fees and/or pay Fund expenses so thatlimit the amount of the Fund’s total annual operating expenses (excluding
anytaxes, interest on borrowings, acquired fund fees and expenses,
taxes, interest,dividends on securities sold short, brokerage
fees, certain insurance costs, and extraordinarycommissions, and other
non-routine expenses)expenditures, which are capitalized in accordance with generally accepted accounting principles, and other extraordinary expenses not incurred in the ordinary course of business) to 1.60% of the Fund’s average daily net assets attributable to Investor Shares and to 1.35% of the Fund’s average daily net assets attributable to Institutional Shares through December 31, 2023. Evermore is permitted to recoup, on a class by class basis, any fees it has waived or deferred or expenses it has borne pursuant to an expense limitation agreement to the extent that the Fund’s expenses (after any repayment is taken into account) do not exceed
both of (i) the
amounts shownexpense limitations that were in
effect at the
table below. With respecttime of the waiver or reimbursement, and (ii) the current expense limitations. The Board of Trustees must approve any recoupment payment made to the
Penn Capital Opportunistic High IncomeEvermore. The Fund
and the Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund), the Adviser has contractually agreedwill not be obligated to
waive its fees and/or pay
Fund expenses so that the Fund’s total annual operating expenses (including any
acquired fundsuch deferred fees and expenses
incurred bymore than three years after date on which the
Fund as a result of its investments in other investment companies managed by the Adviser, but excluding any acquired fund fees and expenses
incurred by the Fund as a result of its investments in unaffiliated investment companies, taxes, interest, brokerage fees, certain insurance costs, and extraordinary and other non-routine expenses) do not exceed the amounts shown in the table below.5were waived or deferred.
| Current Expense Limitation |
| | Institutional Class | Investor Class |
| Penn Capital Floating Rate Income Fund (formerly, Penn Capital Defensive Floating Rate Income Fund) | 0.64% | 0.89% |
| Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund) | 0.54% | N/A |
| Penn Capital Opportunistic High Income Fund | 0.72% | 0.97% |
| Penn Capital Managed Alpha SMID Cap Equity Fund | 1.06% | 1.31% |
| Penn Capital Special Situations Small Cap Equity Fund | 1.09% | 1.34% |
Upon termination of the Interim Advisory Agreement, the contract providing for the above-described current expense limitations for each Fund (the “Current Expense Limitation Agreement”) will also terminate.
If shareholders approve the New
Investment Advisory Agreement,
Penn CapitalF/m has agreed to
enter into, andcontinue the
Board has approved, a newcurrent expense limitation
agreement (the “New Expense Limitation Agreement”) with respect to each Fund that will maintain the above-described current expense limitations for each Fund. The New Expense Limitation Agreement will remain in effect and be contractually binding through April 1, 2023.Q. | How will the approval of the New Advisory Agreement affect the management and operations of the Fund? |
A. | It is expected that the investment advisory personnel who provided services to the Funds under the previously existing advisory agreement will continue to do so under the New Advisory Agreement. Furthermore, the investment objective, risks and investment strategies for each will not change because of the approval of the New Advisory Agreement. However, effective approximately 60 days after notice to shareholders and irrespective of the approval of the New Advisory Agreement, the Penn Capital Managed Alpha SMID Cap Equity Fund will change its name to the Penn Capital Mid Cap Core Fund. In connection with the name change, the Fund will adopt an investment policy to invest at least 80% of its net assets in the equity securities of mid-capitalization companies. The Penn Capital Managed Alpha SMID Cap Equity Fund currently has an investment policy to invest at least 80% of its net assets in the equity securities of small and mid-capitalization companies. |
Q. | What will happen if shareholders of a Fund do not approve the New Advisory Agreement? |
A. | If shareholders of a Fund do not approve the New Advisory Agreement, then the advisory agreement with respect to that Fund will terminate upon the date of the expiration of the Interim Advisory Agreement. The Interim Advisory Agreement will be effective for up to 150 days following April 1, 2021 (i.e., until and including August 29, 2021). The terms of the Interim Advisory Agreement are the same as those of the previously existing advisory agreement, except for certain provisions that are required by law, the date and term of the agreement and certain other immaterial differences. The provisions required by law include a requirement that the fees payable under the Interim Advisory Agreement be put into an escrow account. If a Fund’s shareholders approve the New Advisory Agreement at some time on or before August 29, 2021, the Interim Advisory Agreement with respect to that Fund will terminate and the compensation (plus any interest earned) payable by the Fund under the Interim Advisory Agreement will be paid to Penn Capital. If the New Advisory Agreement is not so approved with respect to a Fund, only the lesser of the costs incurred (plus any interest earned) or the amount in the escrow account (including any interest earned) will be paid to Penn Capital. If shareholders of a Fund do not approve the New Advisory Agreement within the term of the Interim Advisory Agreement, the Board will consider other alternatives and will make such arrangements for the management of the Fund’s investments as it deems appropriate and in the best interests of the Fund, including (without limitation) the liquidation of that Fund. |
6until at least December 31, 2024.
Approval of Trustee Nominees
Q. | Who are the nominees for election as Trustees? |
A. | Julian A. Brodsky, J. Richard Carnall, Gregory P. Chandler, Nicholas A. Giordano, Arnold M. Reichman, Robert Sablowsky, Brian T. Shea and Robert A. Straniere are each standing for election to the Board. None of the Trustee Nominees is currently a Trustee of the Trust. Information about each of these Trustee Nominees is set forth in the Proxy Statement. |
Q. | How many of the Trustee Nominees will be Independent Trustees if elected? |
A. | If elected by shareholders, seven of the Trustee Nominees will not be considered to be “interested persons” (as such term is defined in the 1940 Act) of the Trust (“Independent Trustees”). Independent Trustees have no affiliation with the Funds or the Adviser, apart from any personal investments they choose to make in a Fund as private individuals. Independent Trustees play a critical role in overseeing Fund operations and representing the interests of shareholders. |
Mr. Sablowsky will be considered an “interested person” (as such term is defined in the 1940 Act) of the Trust (“Interested Trustee”). Mr. Sablowsky will be considered an “Interested Trustee” of the Trust by virtue of his position as an officer of Oppenheimer & Co., Inc.,
Information about F/m Investments, LLC d/b/a
registered broker-dealer that may execute portfolio transactions for the Funds or other accounts managed by the Adviser.Q. | How long will each Trustee Nominee serve? |
A. | Each Trustee Nominee may hold office for the lifetime of the Trust or until his earlier death, resignation, removal, retirement or inability otherwise to serve, or, if sooner than any of these events, until the next shareholder meeting called for the purpose of electing Trustees (or consent of shareholders in lieu thereof), and until the election and qualification of his successor. |
Q. | When will the Trustee Nominees take office? |
A. | If the Trustee Nominees are elected by shareholders at the Special Meeting, the Board will work with Fund management on an orderly transition to the new Board. The current members of the Board are not standing for election and will cease to serve as Trustees of the Trust effective when the Trustee Nominees take office, which is expected to occur shortly after the Special Meeting. |
Q. | Will the Fund pay for the proxy solicitation and related legal costs? |
A. | No. These costs ultimately will be borne by the Adviser. |
Q. | How does the Board recommend that I vote? |
A. | The current Board members, including all of the current Independent Trustees, recommend that you vote in favor of the proposal to approve the New Advisory Agreement and the proposal to elect eight (8) nominees to the Board. |
Q. | I have only a few shares — does my vote matter? |
A. | Your vote is important. If many shareholders choose not to vote, the Funds might not receive enough votes to reach a quorum to hold the Special Meeting. If it appears that there will not be a quorum, the Funds would have to send additional mailings or otherwise solicit shareholders to try to obtain more votes. |
7North Slope Capital, LLC
Q. | What’s the deadline for submitting my vote? |
A. | We encourage you to vote as soon as possible to make sure that each Fund receives enough votes to act on the proposals. Unless you attend the Special Meeting to vote in person, your vote (cast by Internet, telephone or paper proxy card as described below) must be received by the Trust by [Meeting Time] on June 23, 2021. |
Q. | Who is eligible to vote? |
A. | Any person who owned shares of a Fund on the “record date,” which was April 19, 2021 (even if that person has since sold those shares), is eligible to vote on the proposals. |
A. | You may vote in any of four ways: |
| ○ | Through the Internet. Please follow the instructions on your proxy card. |
| ○ | By telephone, with a toll-free call to the phone number indicated on the proxy card. |
| ○ | By mailing in your proxy card. |
| ○ | In person at the Special Meeting at Navy Yard Corporate Center, 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112 at [Meeting Time] on June 23, 2021. |
We encourage you to vote via the Internet or telephone using the control number on your proxy card and following the simple instructions because these methods result in the most efficient means of transmitting your vote and reduce the need for the Funds to conduct telephone solicitations and/or follow up mailings. If you would like to change your previous vote, you may vote again using any of the methods described above.
Q. | Whom should I call if I have questions? |
A. | If you have any questions regarding the proposals or the voting process, please call our proxy solicitation agent, AST Fund Services toll-free at (866) 745-0273. |
Q. | How should I sign the proxy card? |
A. | You should sign your name exactly as it appears on the proxy card. Unless you have instructed us otherwise, either owner of a joint account may sign the card, but again, the owner must sign the name exactly as it appears on the card. The proxy card for accounts of which the signer is not the owner should be signed in a way that indicates the signer’s authority—for example, “Mary Smith, Custodian.” |
F/mPENN CAPITAL FUNDS TRUST
Penn Capital Floating Rate Income Fund
(formerly, Penn Capital Defensive Floating Rate Income Fund)
Penn Capital Short Duration High Income Fund
(formerly, Penn Capital Defensive Short Duration High Income Fund)
Penn Capital Opportunistic High Income Fund
Penn Capital Special Situations Small Cap Equity Fund
Penn Capital Managed Alpha SMID Cap Equity Fund
Navy Yard Corporate Center
1200 Intrepid Avenue, Suite 400
Philadelphia, Pennsylvania 19112
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held June 23, 2021
PENN Capital Funds Trust (the “Trust,” each series thereof, a “Fund,” and together, the “Funds”) will hold a Special Meeting of Shareholders on June 23, 2021 at Navy Yard Corporate Center, 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112 at [Meeting Time] (the “Special Meeting”). This Special Meeting is being held so that shareholders can consider the following:
| 1. | A proposal to approve a new advisory agreement between the Trust, on behalf of the Funds, and Penn Capital Management Company, LLC (“Penn Capital”), each Fund’s current investment adviser, as a result of a transaction involving a change of control of Penn Capital; |
| 2. | A proposal to elect eight (8) nominees to the Board of Trustees of the Trust; and |
| 3. | Any other business that may properly come before the Special Meeting. |
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL TO (1) APPROVE THE NEW ADVISORY AGREEMENT; AND (2) ELECT EIGHT (8) NOMINEES TO THE BOARD. APPROVAL OF THE NEW ADVISORY AGREEMENT IS BEING PROPOSED BECAUSE, Pursuant to the terms of an agreement (the “Acquisition Agreement”) among the Adviser; 525 Holding Company, Inc. (“525 Holding”), the parent company of the Adviser; and Spouting Rock Asset Management, LLC (“Spouting Rock”), Spouting Rock acquired a minority ownership interest in 525 Holding on April 1, 2021 as well as options to purchase additional interests in 525 Holding in several phases exercisable beginning in June 2021 through June 2024 (the “Acquisition”). If all of the options are exercised in their current form, the consummation of the Acquisition is deemed to be a change of control of the Adviser pursuant to the Investment Company Act of 1940, as amended. There is no guarantee that the options will ultimately be exercised in their current form (or at all). The change of control caused by the consummation of the Acquisition will result in the termination of the previously existing advisory agreement between the Trust, on behalf of each of the Funds, and Penn Capital. To avoid disruption of the Funds’ investment management program, on March 18, 2021, the Board approved an interim investment advisory agreement (the “Interim Advisory Agreement”) between the Trust, with respect to each Fund, and Penn Capital, which will be effective for up to 150 days following April 1, 2021 (i.e., until and including August 29, 2021). The terms of the Interim Advisory Agreement are the same as those of the previously existing advisory agreement, except for certain provisions that are required by law, the date and term of the agreement and certain other immaterial differences. If Penn Capital is to continue to serve as investment adviser to the Funds following the expiration of the Interim Advisory Agreement, it is necessary for shareholders of the Funds to approve a new advisory agreement for the Funds. APPROVAL OF THE NEW ADVISORY AGREEMENT WILL NOT RESULT IN AN INCREASE IN ANY FUND’S ADVISORY FEE RATE.
Shareholders of record of each Fund at the close of business on the record date, April 19, 2021 are entitled to notice of and to vote at the Special Meeting and any adjournment(s) thereof. The Notice of Special Meeting of Shareholders, proxy statement and proxy card is being mailed on or about [May 10], 2021 to such shareholders of record.
By Order of the Board of Trustees,
Richard A. Hocker
Trustee, President and Chairman
Philadelphia, Pennsylvania
[May 10], 2021
YOUR VOTE IS IMPORTANT
You can vote easily and quickly over the Internet, by toll-free telephone call, or by mail. Just follow the simple instructions that appear on your proxy card. Please help your Fund reduce the need to conduct telephone solicitation and/or follow-up mailings by voting today.
PENN CAPITAL FUNDS TRUST
Penn Capital Floating Rate Income Fund
(formerly, Penn Capital Defensive Floating Rate Income Fund)
Penn Capital Short Duration High Income Fund
(formerly, Penn Capital Defensive Short Duration High Income Fund)
Penn Capital Opportunistic High Income Fund
Penn Capital Special Situations Small Cap Equity Fund
Penn Capital Managed Alpha SMID Cap Equity Fund
proxy statement
Navy Yard Corporate Center
1200 Intrepid Avenue, Suite 400
Philadelphia, Pennsylvania 19112
SPECIAL MEETING OF SHAREHOLDERS
June 23, 2021
Introduction
This proxy statement is being provided to you on behalf of the Board of Trustees of PENN Capital Funds Trust (the “Trust”) in connection with the solicitation of proxies to be used at a Special Meeting of Shareholders (the “Special Meeting”) of each series of the Trust (each a “Fund” and together, the “Funds”). The following table identifies the proposals set forth in this proxy statement and indicates which Funds are affected by the proposal and whether such Funds vote separately or together on such proposal.
Proposal Number | Proposal Description | Funds |
1 | Approval of a new advisory agreement for the Funds | All Funds (voting separately) |
2 | Election of eight (8) nominees to the Board of Trustees of the Trust | All Funds (voting together as a single class) |
You will find this proxy statement divided into five parts:
| Part 1 | Provides details on the proposal to approve a new advisory agreement (see page [_]) |
| Part 2 | Provides details on the proposal to elect eight (8) nominees to the Board of Trustees of the Trust (see page [_]) |
| Part 3 | Provides information about ownership of shares of each Fund (see page [_]) |
| Part 4 | Provides information on proxy voting and the operation of the Special Meeting (see page [_]) |
| Part 5 | Provides information on other matters (see page [_]) |
Please read the proxy statement before voting on the proposals. Please call toll-free at 1-866-745-0273 if you have any questions about the proxy statement, or if you would like additional information.
We anticipate that the Notice of Special Meeting of Shareholders, this proxy statement and the proxy card (collectively, the “proxy materials”) will be mailed to shareholders beginning on or about [May 10], 2021.
Annual and Semi-Annual Reports. The Funds’ most recent annual and semi-annual reports to shareholders are available at no cost. You may obtain a copy of a report through Penn Capital Management Company, LLC’s website at www.penncapital.com/mutual-funds. You may also request a report by calling toll-free at 1-844-302-7366.
Important Notice Regarding the Availability of Materials
for the Shareholder Meeting to be Held on June 23, 2021
The proxy statement for the Special Meeting is available at www.penncapitalfunds.com.
PART 1
DESCRIPTION OF PROPOSAL
APPROVAL OF A NEW ADVISORY AGREEMENT
(each Fund voting separately)
Introduction
The Special Meeting is being called to consider a proposal necessitated by an agreement (the “Acquisition Agreement”) among Penn Capital Management Company, LLC (“Penn Capital” or the “Adviser”); 525 Holding Company, Inc. (“525 Holding”), the parent company of the Adviser; and Spouting Rock Asset Management, LLC (“Spouting Rock”), pursuant to which Spouting Rock acquired a minority ownership interest in 525 Holding on April 1, 2021 as well as options to purchase additional interests in 525 Holding in several phases exercisable beginning in June 2021 through June 2024 (the “Acquisition”). If all of the options are exercised in their current form, the consummation of the Acquisition is deemed to be a change of control of Penn Capital resulting in the automatic termination of the previously existing advisory agreement between the Trust, on behalf of each of the Funds, and Penn Capital. There is no guarantee that the options will ultimately be exercised in their current form (or at all). If the proposal regarding the approval of a new advisory agreement (the “New Advisory Agreement”) is adopted by the Funds, Penn Capital will continue to serve as the investment adviser to each Fund.
To avoid disruption of the Funds’ investment management program, on March 18, 2021, the Board adopted an interim investment advisory agreement between the Trust and Penn Capital with respect to each Fund (the “Interim Advisory Agreement”). The Interim Advisory Agreement was approved pursuant to Rule 15a-4 under the Investment Company Act of 1940, as amended (“1940 Act”), which allows an adviser to provide investment management services pursuant to an interim advisory agreement for up to 150 days while a fund seeks shareholder approval of a new investment advisory agreement, subject to certain conditions.
The Interim Advisory Agreement went into effect with respect to each Fund on April 1, 2021. If shareholder approval is not obtained for a Fund with respect to the New Advisory Agreement, the Interim Advisory Agreement will remain in effect (unless sooner terminated) until the earlier of shareholder approval or disapproval of the New Advisory Agreement or 150 days following April 1, 2021 (i.e., until and including August 29, 2021).
During the term of the Interim Advisory Agreement, the advisory fees earned by Penn Capital during the interim period will be held in an interest-bearing escrow account. Fees that are paid to the escrow account, including interest earned, will be paid to Penn Capital if Fund shareholders approve the New Advisory Agreement with respect to that Fund on or before August 29, 2021. If shareholders of a Fund do not approve the New Advisory Agreement on or before August 29, 2021, then Penn Capital will be paid the lesser of: (i) any costs incurred in performing its services under the Interim Advisory Agreement, plus interest earned on the amount while in escrow; or (ii) the total amount in the escrow account related to its interim services, plus interest if earned.
The form of the New Advisory Agreement is attached hereto as Exhibit A. The advisory fees payable to Penn Capital under the New Advisory Agreement are the same as the advisory fees payable under the Trust’s previously existing advisory agreement. The material terms of the New Advisory Agreement and previously existing advisory agreement are compared below in “Terms of the Previously Existing and New Advisory Agreements.”
Your approval of the New Advisory Agreement will not result in any change in any of the Funds’ advisory fee rates.
Information About Penn Capital Management Company, LLC
Penn Capital, a Delaware limited liability company located at 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112, serves as the Funds’ investment adviser. Founded in 1987 by Richard A. Hocker, the Adviser is owned by 525 Holding, which is ultimately owned by Penn Capital employees. 525 Holding is located at 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112. The Adviser is registered with the U.S. Securities and Exchange Commission (“SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) andamended. F/m’s principal office is located at 3050 K Street NW, Suite W-201, Washington, DC 20007. As of September 30, 2022, the Adviser together with its affiliates had approximately $2.9$1.71 billion in assets under advisementmanagement.
The following table sets forth the name, position and principal occupation of each current member and principal officer of F/m, each of whom is located at F/m’s principal office location.
| Name | Position/Principal Occupation |
Mathew A. Swendiman | Chief Compliance Officer |
Alexander R. Morris | Chief Investment Officer |
The following table sets forth the name of each person who owns of record, or beneficially, 10% of more of the outstanding voting securities of F/m as of
March 31, 2021.Mr. Hocker, as Managing MemberFebruary 23, 2023 each of the Adviser, and through his ownership interest in the Adviser’s parent company, 525 Holding,whom is deemed a controlling person of the Adviser. Due to his ownership interest in 525 Holding, Mr. Hocker may be deemed to have a substantial interest in the transactions contemplated under the Acquisition Agreement and the approvallocated at F/m’s principal office location.
| Name | Current % of Voting Securities Held | Anticipated % of Voting Securities Held |
F/m Acceleration, LLC | 100% | 100% |
Diffractive Managers Group, LLC | 100% | 100% |
Summary of the New
Advisory Agreement. In addition, Marcia Hocker and Eric Green, the Adviser’s Treasurer and Chief Investment
Officer – Equity, respectively, each owned a 10% or greater interest in 525 Holding as of April 1, 2021. Messrs. Hocker’s and Green’s and Ms. Hocker’s mailing address is c/o Penn Capital Management Company, LLC, 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112.Penn Capital does not currently manage any other registered funds with similar investment strategies and objectives to any of the Funds.
The Acquisition
Pursuant to the terms of the Acquisition Agreement between Penn Capital; 525 Holding, the parent company of Penn Capital; and Spouting Rock, Spouting Rock acquired a minority ownership interest in 525 Holding on April 1, 2021 as well as options to purchase additional interests in 525 Holding in several phases exercisable beginning in June 2021 through June 2024. If all of the options are exercised in their current form, the consummation of the Acquisition is deemed to be a change of control of Penn Capital. There is no guarantee that the options will ultimately be exercised in their current form (or at all). No assurance can be given that Spouting Rock will permanently retain its interest in Penn Capital.
Information Concerning Spouting Rock
The following information, which has been provided by Spouting Rock, and is intended to give shareholders of the Funds background information concerning Spouting Rock and its business.
Spouting Rock is a Delaware limited liability company located at 925 W. Lancaster Ave, Suite 250, Bryn Mawr, PA 19010. Spouting Rock is registered with the SEC as an investment adviser under the Advisers Act and had approximately $548 million in assets under advisement as of December 31, 2020. Spouting Rock was organized in February of 2016 and serves as a multi-boutique manager platform providing alternative, traditional, and thematic investment solutions and services. Spouting Rock is principally owned by Spouting Rock Financial Partners, LLC (“SRFP”), which is located at 925 W. Lancaster Ave, Suite 250, Bryn Mawr, PA 19010.
Terms of the Acquisition Agreement
The following is a summary of the terms of the Acquisition considered relevant to the Funds:
Pursuant to the Acquisition Agreement, Spouting Rock will ultimately acquire an aggregate interest of 55% of the Adviser through a series of transactions. The initial transaction closed on April 1, 2021, resulting in Spouting Rock holding a minority interest in the Adviser. Spouting Rock has options to purchase additional interests in 525 Holding in several phases exercisable beginning in June 2021 through June 2024. If all of the options are exercised in their current form, the consummation of the Acquisition is deemed to be a change of control of Penn Capital. There is no guarantee that the options will ultimately be exercised in their current form (or at all).
Assuming shareholder approval of the New Advisory Agreement, Penn Capital will continue to serve as each Fund’s investment adviser. Penn Capital currently serves as investment adviser to the Funds pursuant to an interim investment advisory agreement as described above on page [__] under “Introduction.”
Acquisition Not Expected to Adversely Affect Penn Capital or the Funds
It is anticipated that the Acquisition and Penn Capital’s affiliation with Spouting Rock will not result in any change in the services provided by Penn Capital to the Funds. It is further anticipated that the Acquisition will not diminish in any way the high level of investment advisory service previously provided by Penn Capital and may enhance the services provided to the Funds going forward.
Impact of the Acquisition on the Funds’ Advisory Agreement and Summary of the Proposal
Shareholders of each Fund are being asked to approve a proposed New Advisory Agreement with Penn Capital. The consummation of the Acquisition would constitute an “assignment” (as defined in the 1940 Act) of the Funds’ previously existing advisory agreement with Penn Capital. As required by the 1940 Act, the previously existing advisory agreement provided for its automatic termination in the event of an assignment. Accordingly, the previously existing advisory agreement terminated on April 1, 2021, and the New Advisory Agreement is necessary if Penn Capital is to continue to manage the Funds beyond the 150-day term of the Interim Advisory Agreement.
Factors Considered by the Trustees and their Recommendation
The Board is recommending that shareholders vote to approve the New Advisory Agreement with Penn Capital.
The Trustees considered and unanimously approved the New Advisory Agreement at a meeting of the Board held on April 19, 2021 (the “April Meeting”). The Trustees reviewed and discussed written materials that were provided in connection with the April Meeting and throughout the year. The Trustees also reviewed and discussed written materials that were provided in connection with the March 18, 2021 Board meeting (the “March Meeting” and, together with the April Meeting, the “Meetings”) in connection with the Board’s approval of an interim investment advisory agreement on behalf of each Fund pursuant to Rule 15a-4 under the 1940 Act that went into effect April 1, 2021.
The Trustees relied upon the advice of Fund counsel and their own business judgment in determining the material factors to be considered in evaluating the New Advisory Agreement and the weight to be given to each such factor. The conclusions reached by the Trustees were based on a comprehensive evaluation of all of the information provided and were not the result of any one factor. Moreover, each Trustee may have afforded different weight to the various factors in reaching his conclusions with respect to the NewCurrent Investment Advisory Agreement.Agreement
The Independent Trustees had requested and been provided with detailed materials relating to Penn Capital, Sprouting Rock, RBB and the Acquisition in advance of the Meetings. The Independent Trustees met in executive session with Fund counsel during the Meetings to discuss the Acquisition and its anticipated effects on the Funds, including the proposed RBB trust adoption and the Shared Governance Structure on the RBB series trust platform. At the Meetings, representatives of Penn Capital, Spouting Rock and RBB responded to questions from the Board, and discussed, among other things, the strategic rationale for the Acquisition, the Shared Governance Structure and Penn Capital’s and Spouting Rock’s general plans and intentions regarding the Funds. The Board, including the Independent Trustees, evaluated the terms of the New Advisory Agreement, reviewed the information provided by Penn Capital and Spouting Rock in connection with the consideration of approving the New Advisory Agreement on behalf of the Funds, and reviewed the duties and responsibilities of the Board in evaluating and approving the New Advisory Agreement.
In connection with the Board’s review of the New Advisory Agreement, Penn Capital advised the Board about a variety of matters, including the following:
No material changes are currently contemplated as a result of the Acquisition in the nature, quality, or extent of services currently provided by Penn Capital to the Funds and their shareholders.
All of the portfolio management personnel who currently manage the Funds are expected to continue to do so under the New Advisory Agreement.
Penn Capital has agreed that it will, and will cause each of its affiliates to, conduct their business to enable reliance upon the conditions of Section 15(f) of the 1940 Act, including not imposing any “unfair burden” on the Funds through at least April 1, 2023.
In addition to the information provided by Penn Capital, Spouting Rock and RBB representatives as described above, the Board also considered, among other factors, the following:
The reputation, financial condition, and resources of Penn Capital and Spouting Rock, and the potential benefits to shareholders of retaining Penn Capital as investment adviser to the Funds, including anticipated continuity of portfolio management.
Spouting Rock’s experience with past acquisitions.
The terms and conditions of the New Advisory Agreement, including that each Fund’s contractual advisory fee rates under the New Advisory Agreement will remain the same.
The capabilities, resources, and personnel of Penn Capital necessary to continue to provide the investment management services currently provided to each Fund, and the transition and integration plans for the Funds’ transition to the RBB series trust umbrella under the Shared Governance Structure.
The advisory fees paid by each Fund under the New Advisory Agreement represent reasonable compensation to Penn Capital in light of the services to be provided, the costs to Penn Capital of providing those services, economies of scale, and the fees and other expenses paid by similar funds (based on information compiled by Penn Capital from an unaffiliated third-party proprietary database) and such other matters that the Board considered relevant in the exercise of its reasonable judgment.
Penn Capital has agreed to pay all expenses of the Funds in connection with this proxy solicitation, and that the Funds will bear no costs in obtaining shareholder approval of the New Advisory Agreement.
In considering whether to approve the New Advisory Agreement on behalf of the Funds, the Board reviewed the materials provided for the Meetings, including: (i) a copy of the form of New Advisory Agreement; (ii) information describing the nature, quality and extent of the services that Penn Capital and Spouting Rock expect to provide to the Funds; and (iii) information concerning the financial condition, business, operations and compliance program of Penn Capital. The Board also considered the information presented at Board Meetings throughout the year. In addition, the Board received a report compiled by Penn Capital from an unaffiliated third-party proprietary database comparing the advisory fees, expenses and performance of each Fund with the fees, expenses and performance of other funds with similar investment objectives and policies (each a “Peer Group”). In making its decision to approve the New Advisory Agreement, the Board, including the Independent Trustees, concluded that the information furnished was sufficient to form a reasonable business judgment for approval of the New Advisory Agreement.
During its review of this information, the Board focused on and analyzed the factors that the Board deemed relevant, including: (i) the nature, quality and extent of the services provided and expected to be provided to each Fund by Penn Capital; (ii) the personnel and operations of Penn Capital; (iii) the changes being made to the Trust and Funds in connection with the transition to the Shared Governance Structure; (iv) the investment performance of the Funds; (v) the expected profitability to Penn Capital under the New Advisory Agreement; (vi) any “fall-out” benefits to Penn Capital or Spouting Rock (i.e., the ancillary benefits realized due to a relationship with the Trust); and (vii) possible conflicts of interest. The following are among the primary factors taken into account by the Board in approving the New Advisory Agreement.
The nature, extent, and quality of services expected to be provided to each Fund by the Adviser. The Board reviewed the services that Penn Capital expects to continue to provide to each Fund, as well as potential efficiencies and cost savings under the Shared Governance Structure. In connection with the advisory services to be provided to each Fund, the Board noted Penn Capital’s responsibilities as the Funds’ investment adviser, including: implementation of the investment management program of each Fund; management of the day-to-day investment and reinvestment of the assets in each Fund; executing portfolio security trades; and oversight of general portfolio compliance with relevant law.
The Board reviewed Penn Capital’s experience, resources, strengths and performance as an investment adviser. The Board also noted Penn Capital’s procedures to manage potential conflicts of interest, as well as the RBB compliance and operational infrastructure available to the Funds under the Shared Governance Structure. The Board also considered that the same individuals who currently serve as portfolio managers of the Funds are expected to continue to do so under the New Advisory Agreement. The Board also considered the changes to the operations and certain service providers of the Funds as a result of the RBB trust adoption and Shared Governance Structure.
The Board also noted that Penn Capital will continue to have the capabilities, resources and personnel necessary to provide the investment management services currently provided to each Fund. In evaluating Penn Capital, the Board considered the history, background and experience of Spouting Rock as a multi-boutique manager platform. The Board considered Spouting Rock’s long-term business goals with regard to Penn Capital and the Funds.
Based on their consideration and review of the foregoing information, the Board determined that the Funds would likely benefit from the nature, quality and extent of the services to be provided by Penn Capital, as well as Penn Capitals’s ability to continue to render such services based on its experience, personnel, operations and resources.
Comparison of services provided and fees charged by the Adviser and other investment advisers to similar clients. The Board considered the expense comparison data for the Funds. At the Meetings, the Board compared both the services to be rendered and the fees to be paid pursuant to the New Advisory Agreement to the contractual advisory fees of each Peer Group. The Board also discussed the fee and expense structure of the Funds in light of the services provided.
The Board considered the advisory fees and expense ratios of the Funds under the New Advisory Agreement (which are the same as fees charged under each Fund’s existing advisory agreement) compared to the advisory fees and net expense ratios of the investment companies in each Fund’s Peer Group. The Board received information regarding the profitability of Penn Capital in connection with serving as investment adviser to each Fund. The Board also noted Penn Capital’s agreement to waive its advisory fees and assume certain expenses under the New Expense Limitation Agreement, which contained substantially similar terms and conditions as the expense limitation arrangement in place for the Funds prior to the Acquisition.
After comparing each Fund’s fees with those of other funds in each Fund’s Peer Group and considering the information about fee rates charged to other accounts and clients managed Penn Capital, and in light of the nature, quality and extent of services expected to continue to be provided by Penn Capital, the Board concluded that the level of fees to be paid to Penn Capital with respect to each Fund was fair and reasonable.
The Board also noted that Penn Capital has agreed that it will, and will cause each of its affiliates to, conduct their business to enable reliance upon the conditions of Section 15(f) of the 1940 Act, including not imposing any “unfair burden” on the Funds through at least April 1, 2023. The Board considered the fact that the fee waivers and expense reimbursements under the New Expense Limitation Agreement would be kept in place through April 1, 2023.
Profitability and the extent to which economies of scale would be realized as each Fund grows and whether fee levels would reflect such economies of scale. The Board discussed with the representatives from Penn Capital the expected costs to be incurred by the Adviser in rendering services to the Funds, and the profitability of Penn Capital in connection with its service as investment adviser to each Fund. The Board acknowledged Penn Capital’s contractual obligation to limit each Fund’s expenses under the New Expense Limitation Agreement in order to cap the costs paid by the applicable Funds’ shareholders, and the effect of such obligation on Penn Capital’s expected profitability. The Board considered that the Funds were not yet of a sufficient size to be experiencing economies of scale. The Board received information regarding Penn Capital’s financial condition. The Board concluded that the expected profitability of Penn Capital was reasonable for the Funds in relation to the performance and asset sizes of the Funds.
The Board also considered that Penn Capital and Spouting Rock may experience reputational and other “fall-out” benefits (i.e., benefits to affiliates of Penn Capital and Spouting Rock) based on the success of the Funds, but that such benefits were not likely to result in an “unfair burden” to the Funds.
Investment performance of the Funds. The Board considered the investment performance of the Funds. The Board concluded that Penn Capital’s experience in managing the Funds demonstrated that Penn Capital had the ability to continue to successfully manage the Funds and was adequate to support the approval of the New Advisory Agreement.
Conclusion. No single factor was determinative to the decision of the Board to approve the New Advisory Agreement. Based on the foregoing and such other matters as were deemed relevant, such as the New Expense Limitation Agreement, the Board concluded that the advisory fee rates under the New Advisory Agreement and the net expense ratios under the New Expense Limitation Agreement were reasonable in relation to the services expected to be provided by Penn Capital to each Fund, as well as the expected costs incurred and benefits gained by Penn Capital in providing such services. The Board also found the investment advisory fees under the New Advisory Agreement to be reasonable in comparison to the fees charged by each respective Peer Group. The Board concluded that the Acquisition would not result in an increase in advisory fee rates or net expense ratios, and was not expected to result in a decrease in the quality or quantity of services provided to the Funds, or impose an “unfair burden” on the Funds. The Board further concluded that, after the Acquisition, Penn Capital will continue to have the capabilities, resources, and personnel necessary to provide the investment management services currently provided to each Fund. As a result, the Board concluded that the approval of the New Advisory Agreement between Penn Capital and the Trust, on behalf of each Fund, is in the best interests of each Fund.
Section 15(f) of the 1940 Act
The Board has been advised that Penn Capital intends to rely on Section 15(f) of the 1940 Act, which provides a non-exclusive safe harbor whereby an investment adviser (such as Penn Capital) to an investment company (such as the Trust) may receive payment or benefit in connection with the sale of an interest in the investment adviser if two conditions are satisfied. The first condition is that during the three-year period following the closing of the Acquisition (i.e., through April 1, 2024), at least 75% of the investment company’s board must not be “interested persons” (as defined in the 1940 Act) of the investment adviser or its predecessor, which in this case is Penn Capital. The Board does not currently meet this test, but the new Board currently meets, and through April 1, 2024 anticipates meeting, this test if elected under Proposal 2. Second, no “unfair burden” can be imposed on the investment company as a result of the Acquisition. An “unfair burden” includes any arrangement during the two-year period after the closing of the Acquisition (i.e., through April 1, 2023) where the investment adviser (or predecessor or successor adviser), or any of its “interested persons” (as defined in the 1940 Act), receive or is entitled to receive any compensation, directly or indirectly, (i) from any person in connection with the purchase or sale of securities or other property to, from or on behalf of the investment company (other than bona fide ordinary compensation as principal underwriter for the investment company) or (ii) from the investment company or its shareholders (other than fees for bona fide investment advisory or other services). Penn Capital has agreed that it will, and will cause its affiliates to, conduct its business to enable reliance upon Section 15(f) of the 1940 Act in connection with the investment advisory services provided by Penn Capital to each Fund.
Based on all of the foregoing, the Trustees recommend that shareholders of each Fund vote FOR the approval of the New Advisory Agreement.
If the shareholders of a particular Fund do not approve the New Advisory Agreement with respect to that Fund, the Trustees would consider what further action to take consistent with their fiduciary duties to that Fund.
Terms of the Previously Existing and New Advisory Agreements
A copy of the proposed New Investment Advisory Agreement is attached hereto as Exhibit A.A. The following description is only a summary; however, all material terms of the New Advisory Agreement have been included in this summary. You should refer to Exhibit A for the New Investment Advisory Agreement, andas the description set forth in this Proxy Statement of the New Investment Advisory Agreement is qualified in its entirety by reference to Exhibit A. A. The fee structure with respectinvestment advisory services to each Fundbe provided by F/m under the New Investment Advisory Agreement isand the fee structure are identical to the services currently provided by Evermore and the fee structure under the previously existing advisory agreement. Each Fund’s total annual operating expenses will continue to be limited by the Fund’s expense limitation arrangements upon shareholder approval ofCurrent Investment Advisory Agreement.
Advisory Services. Both the New
Investment Advisory
Agreement. The contractual rates of the advisory fee payable by each Fund to Penn Capital,Agreement and the
actual advisory fee rates paid to Penn Capital by each Fund for the fiscal year ended June 30, 2020, are set forth in Exhibit B. With respect to each Fund, the date on which the previously existing advisory agreement was most recently submitted to shareholders for approval and the purpose for such submission is also set forth in Exhibit B.Current Investment Advisory Services. The previously existing advisory agreement statesAgreement state that, the Trust, on behalf of each Fund, employs the Adviser, subject to the supervision and direction of the Board, and the officers of the Trust, to (i) manage therespective investment and reinvestment of Fund assets; (ii) regularly make decisions as to what securities to purchase and sell on behalf of each Fund and record and implement such decisions; and (iii) furnish the Board with such information and reports regarding the Funds’ investments as the Adviser deems appropriate or as the Board may reasonably request.
The New Advisory Agreement states that the Trust, on behalf of each Fund, employs the Adviser, subject to the supervision of the Board, toadviser will provide for the overall management of the Funds includingFund including: (i) furnish the provision of a continuous investment program for the Funds, including investment researchFund with advice and managementrecommendations with respect to all securities, investments, cash and cash equivalents in the Funds, (ii) the determination from time to timeinvestment of the securitiesFund’s assets and other investments to be purchased, retained, or sold by the Trust for the Funds, and (iii) the placement from time to time of orders for all purchases and sales made for the Funds. In addition, the New Advisory Agreement provides that the Adviser will render to the Funds’ Board such periodic and special reports regarding the performance of its duties as the Board may reasonably request.
Sub-Advisers. The previously existing advisory agreement states that Adviser may, at its own expense, retain any sub-adviser to a Fund that is registered under the Investment Advisers Act of 1940, as amended.
The New Advisory Agreement states that the Adviser may, at its own expense, delegate certain of its responsibilities to any sub-adviser to a Fund pursuant in each case to a written agreement with such sub-adviser that meets the requirements of Section 15 of the 1940 Act and rules thereunder.
Portfolio Transactions. The previously existing advisory agreement provides that the Adviser is responsible for placing and executing Fund orders for the purchase and sale of portfolio securities (“Orders”) with broker-dealersfor the Fund, including the taking of such steps as may be necessary to implement such advice and recommendations (i.e., placing the orders); (ii) manage and oversee the investments of the Fund, subject to obtainingthe ultimate supervision and direction of the Board; (iii) vote proxies for the Fund, file ownership reports under Section 13 of the Securities Exchange Act of 1934 for the Fund, and take other actions on behalf of the Fund; (iv) maintain the books and records required to be maintained by the Fund except to the extent arrangements have been made for such books and records to be maintained by the administrator or another agent of the Fund; (v) furnish reports, statements and other data on securities, economic conditions and other matters related to the investment of the Fund’s assets which the Fund’s administrator or distributor or the officers of the Trust may reasonably request; and (vi) render to the Board such periodic and special reports with respect to the Fund’s investment activities as the Board may reasonably request, including at least one in-person appearance annually before the Board.
Brokerage. Both the New Investment Advisory Agreement and the Current Investment Advisory Agreement provide that the respective investment adviser shall be responsible for decisions to buy and sell securities for the Fund, for broker-dealer selection and for negotiation of brokerage commission rates. In selecting a broker-dealer to execute each particular transaction, the respective investment adviser may take the following into consideration: the best net price available; the reliability, integrity and execution reasonably available, is authorized to place such orders with broker-dealers that it may select from time to time. The previously existing advisory agreement also authorizes the Adviser, subject to applicable law, to (i) place Orders with brokers who provide research or statistical information or analyses to the Fund, the Adviser or to any other client for which the Adviser provides investment advisory services; (ii) cause a Fund to pay a member of an exchange, broker or dealer an amount of commission for effecting a securities transaction in excessfinancial condition of the amountbroker-dealer; the size of commission another member of an exchange, broker or dealer would have charged for effecting that transactionand difficulty in such instances whereexecuting the Adviser has determined in good faith that such amount of commission was reasonable in relation toorder; and the value of the expected contribution of the broker-dealer to the investment performance of the Fund on a continuing basis. The price to the Fund in any transaction may be less favorable than that available from another broker-dealer if the difference is reasonably justified by other aspects of the portfolio execution services offered.
Payment of Expenses. Under both the New Investment Advisory Agreement and the Current Investment Advisory Agreement, the respective investment adviser is responsible for providing the personnel, office space and equipment reasonably necessary for the operation of the Fund, the expenses of printing and distributing copies of the Fund’s prospectus, SAI, and sales and advertising materials to prospective investors, the costs of any special Board meetings or shareholder meetings convened for the primary benefit of the respective investment adviser, and any costs of liquidating or reorganizing the Fund.
The Fund is responsible for all of its own expenses, except for those specifically assigned to the respective investment adviser under the investment advisory agreement, including but not limited to: fees and expenses incurred in connection with the issuance, registration and transfer of its shares; brokerage and researchcommission expenses; all fees and expenses related to Fund custody, shareholder services provided by such member, brokerand Fund accounting; interest charges on any borrowings; costs and expenses of pricing and calculating its daily net asset value and of maintaining its books; insurance premiums on property or dealer, viewed in termspersonnel of eitherthe Fund which inure to its benefit; the cost of preparing and printing regulatory documents and other communications for distribution to existing shareholders; legal, auditing and accounting fees; fees and expenses (including legal fees) of registering and maintaining registration of its shares for sale; all expenses of maintaining and servicing shareholder accounts, and all other charges and costs of its operation plus any extraordinary and non-recurring expenses.
Management Fees. Both the New Investment Advisory Agreement and Current Investment Advisory Agreement contain an identical fee structure based on the Fund’s average daily net assets.
Duration and Termination. Both the New Investment Advisory Agreement and the Current Investment Advisory Agreement provide that particular transaction or Adviser’s overall responsibilitiesif not terminated, the agreement shall continue with respect to the Fund and to other funds or clients for which the Adviser exercises investment discretion; (iii) direct portfolio transactions to a broker thatsuccessive annual periods ending on August 16, 2024, provided such continuance is an affiliated person of the Adviser, any sub-adviser or a Fund in accordance with such standards and procedures as may bespecifically approved at least annually (a) by the Board in accordance with Rule 17e-1 under the 1940 Act, or other rules promulgated by the U.S. Securities and Exchange Commission (“SEC”), provided however that any transaction placed with an affiliated broker must (a) be placed at best execution, and (b) may not bevote of a principal transaction; and (iv) aggregate or “bunch” purchase or sale orders for a Fund with orders for various other clients when it believes that such action is in the best interestsmajority of such Fund and all other such clients and in accordance with the Adviser’s written policy.The New Advisory Agreement provides that, subject to the Adviser’s obligation to obtain best price and execution, the Adviser shall have full discretion to select brokers or dealers to effect the purchase and salethose members of securities. When the Adviser places orders for the purchase or sale of securities for a Fund, in selecting brokers or dealers to execute such orders, the Adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services for the benefit of the Fund directly or indirectly. Without limiting the generality of the foregoing, the Adviser is authorized to cause a Fund to pay brokerage commissions which may be in excess of the lowest rates available to brokers who execute transactions for the Fund or who otherwise provide brokerage and research services utilized by the Adviser, provided that the Adviser determines in good faith that the amount of each such commission paid to a broker is reasonable in relation to the value of the brokerage and research services provided by such broker viewed in terms of either the particular transaction to which the commission relates or the Adviser’s overall responsibilities with respect to accounts as to which the Adviser exercises investment discretion. The Adviser may aggregate securities orders so long as the Adviser adheres to a policy of allocating investment opportunities to each Fund over a period of time on a fair and equitable basis relative to other clients. In no instance will the Funds’ securities be purchased from or sold to the Funds’ principal underwriter, the Adviser, or any affiliated person thereof, except to the extent permitted by SEC exemptive order or by applicable law. The New Advisory Agreement also provides that the Adviser shall report to the Board of Trustees of the Funds at least quarterly with respect to brokerage transactions that were entered into by the Adviser and shall certify to the Board that the commissions paid were reasonable in terms either of that transaction or the overall responsibilities of the Adviser to a Fund and the Adviser’s other clients, that the total commissions paid by the Fund were reasonable in relation to the benefits to the Fund over the long term, and that such commissions were paid in compliance with Section 28(e) of the Securities Exchange Act of 1934.
Compensation of Penn Capital. Both the New Advisory Agreement and the previously existing advisory agreement contain identical fee structures with respect to each Fund based on each Fund’s daily average net assets, payable on a monthly basis.
Duration and Termination. The previously existing advisory agreement had an initial two year term. The New Advisory Agreement will have an initial term ending August 16, 2022. Both the previously existing advisory agreement and the New Advisory Agreement provide that, following the initial term, the agreements will continue in effect for successive one-year terms only upon the approval of a majority of the Board, including a majority of the TrusteesTrust who are not “interested persons” (as defined in the 1940 Act) of the Fund (the “Independent Trustees”) voting separately, as specified in the 1940 Act. Both the previously existing advisory agreement and the New Advisoryparties to this Agreement provide that the agreement shall automatically terminate in the event of its assignment, and may be terminated at any time with respect to the Trust without the paymentor interested persons of any penaltysuch party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Trust or Adviser upon sixty days’ written notice to the other party. The Trust may effect termination of the New Advisory Agreement by action of the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of a Fund, accompanied by appropriate notice.
Payment of Expenses. Pursuant to the previously existing advisory agreement, the Trust is responsible for bearing all expenses and salaries necessary and incidental to its own business and affairs.
Pursuant toFund. In addition, both the New Advisory Agreement, the Adviser will pay all expenses incurred by it in connection with its activities under the NewInvestment Advisory Agreement and each Fund shall bear allthe Current Investment Advisory Agreement may be terminated at any time, without the payment of its own expenses not specifically assumedany penalty, by the Adviser.
LimitationBoard of Liability. The previously existing advisory agreement provides that, in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of its duties to a Fund, the Adviser shall not be liable to the Trust, a Fund or to any Trustee or shareholderTrustees of the Trust or by vote of a majority of the outstanding voting securities of the Fund, foron 60 days’ prior written notice to the respective investment adviser, or by the respective investment adviser at any loss or damage arising fromtime, without payment of any action or omissionpenalty, on 60 days’ prior written notice to the Trust. Both the New Investment Advisory Agreement and the Current Investment Advisory Agreement will immediately terminate in the courseevent of or connected with, services rendered pursuant to the agreement, or for any losses that may be sustainedits assignment. As used in the purchase, holding or sale of any investment or security, or otherwise.
The New Investment Advisory Agreement provides thatand the AdviserCurrent Investment Advisory Agreement, the terms “majority of the outstanding voting securities,” “interested person” and “assignment” shall not be liable for any error of judgment or mistake of law or for any loss suffered by a Fundhave the same meaning as such terms have in connection with the matters to which1940 Act.
Limitation on Liability and Indemnification. Both the New
Investment Advisory Agreement
relates,and the Current Investment Advisory Agreement provide that, 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 misfeasance, bad faith or gross negligence on the part of the
Adviserinvestment adviser in the performance of its duties or from reckless disregard by it of its obligations and duties under the
respective agreement (“disabling conduct”), such investment adviser will not be subject to liability to the Trust or the Fund for any act or omission in the course of, or connected with, rendering services under the agreement or for any losses sustained in the purchase, holding or sale of any security of the Fund. Further, both the New
Investment Advisory Agreement
(“disabling conduct”). The Fundsand the Current Investment Advisory Agreement provide that the Fund will indemnify the
Adviserinvestment adviser against and hold it harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit not resulting from disabling conduct by the
Adviser.Expense Limitation Agreements
With respect to eachinvestment adviser. The New Investment Advisory Agreement additionally provides that the Fund other than the Penn Capital Opportunistic High Income Fund and the Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund),will indemnify the Adviser has contractually agreed pursuant to an Expense Limitation Agreement (the “Current Expense Agreement”) to waive its fees and/or pay Fund expenses so that the Fund’s total annual operating expenses (excluding any acquired fund fees and expenses, taxes, interest, brokerage fees, certain insurance costs, and extraordinary and other non-routine expenses) do not exceed the amounts shown in the table below. With respect to the Penn Capital Opportunistic High Income Fund and the Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund), the Adviser has contractually agreed pursuant to the Current Expense Agreement to waive its fees and/or pay Fund expenses so that the Fund’s total annual operating expenses (including any acquired fund fees and expenses incurred by the Fund as a result of its investments in other investment companies managed by the Adviser, but excluding any acquired fund fees and expenses incurred by the Fund as a result of its investments in unaffiliated investment companies, taxes, interest, brokerage fees, certain insurance costs, and extraordinary and other non-routine expenses) do not exceed the amounts shown in the table below.
| Current Expense Limitation |
| | Institutional Class | Investor Class |
| Penn Capital Floating Rate Income Fund (formerly, Penn Capital Defensive Floating Rate Income Fund) | 0.64% | 0.89% |
| Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund) | 0.54% | N/A |
| Penn Capital Opportunistic High Income Fund | 0.72% | 0.97% |
| Penn Capital Managed Alpha SMID Cap Equity Fund | 1.06% | 1.31% |
| Penn Capital Special Situations Small Cap Equity Fund | 1.09% | 1.34% |
Upon termination of the Interim Advisory Agreement, the Current Expense Agreement will also terminate. If shareholders approve the New Advisory Agreement, Penn Capital has agreed to enter into, and the Board has approved, a new expense limitation agreement (the “New Expense Agreement”) with respect to each Fund that will maintain the above-described current expense limitations for each Fund. The New Expense Agreement will remain in effect and be contractually binding through April 1, 2023.
Pursuant to the Current Expense Agreement and New Expense Agreement, any waived or reimbursed expensesagainst indemnification payments made by the Adviser to the Funds (excludingSub-Adviser resulting from any waivers related to acquired fund fees and expenses incurredclaim, demand, action or suit not resulting from disabling conduct by the FundsAdviser.
Board Recommendation of Approval
The Trustees recommend that shareholders of the Fund vote FOR the approval of the New Investment Advisory Agreement.Information about the Board’s considerations and approval is included below in the section entitled “Board Considerations and Approval”.
Vote Required
Approval of the Proposal to approve the New Investment Advisory Agreement in order to engage F/m as the investment adviser for the Fund requires the vote of the “majority of the outstanding voting securities” of the Fund. Under the 1940 Act, a result“majority of its investmentsthe outstanding voting securities” is defined as the lesser of: (1) 67% or more of the voting securities of the Fund entitled to vote present in otherperson or by proxy at the Meeting, if the holders of more than 50% of the outstanding voting securities entitled to vote thereon are present in person or represented by proxy; or (2) more than 50% of the outstanding voting securities of the Fund entitled to vote thereon.
PROPOSAL 2: APPROVAL OF SUB-ADVISORY AGREEMENT
Background
F/m, the Fund’s proposed new investment companiesadviser, is an investment adviser registered with the SEC. Under the New Investment Advisory Agreement, F/m will serve as the Fund’s investment adviser and maintain overall responsibility for the general management and administration of the Fund. However, the New Investment Advisory Agreement provides F/m with the ability to select and retain sub-advisers on behalf of the Fund and F/m has proposed adding MFP Investors LLC (“MFP” or the “Sub-Adviser”) as investment sub-adviser for the Fund. If both the New Investment Advisory Agreement and a new sub-advisory agreement between F/m and MFP (the “Sub-Advisory Agreement”) are approved, MFP will assume responsibility for the day-to-day portfolio management of the Fund. In that capacity, MFP will assume responsibility for daily monitoring of Fund positions, monitoring portfolio holdings for adherence to investment restrictions, all subject to the supervision of F/m and the Board. If the Sub-Advisory Agreement is approved by shareholders, the Fund will continue to be managed with the same investment objective as it was under Evermore.
Upon the consummation of the Transaction and upon shareholder approval of the Proposals, MFP will hire the portfolio management team and key investment professionals from Evermore, including the Fund’s current portfolio managers – David Marcus and Thomas O. If the Proposals are approved, Messrs. Marcus and O. will continue in their capacity as portfolio managers of the Fund and will be jointly and primarily responsible for the day-to-day management of the Fund. Thus, in approving the Sub-Advisory Agreement, the Fund will continue to be managed by the Adviser) are subjectsame portfolio management team, there will be no material changes to repayment bythe Fund’s investment policies, strategies, and risks.
At a Fund in the three years following the endmeeting of the month in whichBoard, held on February 8-9, 2023 and reconvened on February 16, 2023, F/m requested, and the fees were waived orBoard, including a majority of the expenses were paid, providedTrustees who are not interested persons of the Trust, as defined by the 1940 Act (the “Independent Trustees”), approved the Sub-Advisory Agreement. The Board also voted unanimously to recommend that shareholders approve the respective FundSub-Advisory Agreement.
Under the 1940 Act, the approval of a new investment sub-advisory agreement requires the affirmative vote of a “majority of the outstanding voting securities” of the Fund. Accordingly, you are being asked to approve the Sub-Advisory Agreement for the Fund.
Information about MFP Investors LLC
MFP is able to makeregistered with the repayment without exceedingSEC as an investment adviser under the Fund’s expense limitation in place whenInvestment Advisers Act of 1940, as amended. MFP is an investment management firm founded by the
fees were waived or expenses paid. Any fees or expenses subject to repayment bylate Michael F. Price, a
Fundvalue investor who was portfolio manager to the
Adviser underMutual Series funds from the
Current Expense Agreement will be carried forward tomid-1970s through the
mid-1990s. MFP’s principal office is located at 909 Third Avenue, New Expense Agreement.York, NY 10022. As of December 31, 2020, the Adviser’s waived fees and paid expenses that are subject to potential recoupment are as follows:2022, MFP together with its affiliates had approximately $925 million in assets under management.
| Fiscal Period Incurred | Amount Subject to Potential Recoupment |
Penn Capital Floating Rate Income Fund (formerly, Penn Capital Defensive Floating Rate Income Fund) | Year Ending June 30, 2021 | $172,009 |
Year Ended June 30, 2020 | $308,125 |
Year Ended June 30, 2019 | $291,034 |
Year Ended June 30, 2018 | $281,780 |
Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund) | Year Ending June 30, 2021 | $141,250 |
Year Ended June 30, 2020 | $251,625 |
Year Ended June 30, 2019 | $198,460 |
Year Ended June 30, 2018 | $164,748 |
Penn Capital Opportunistic High Income Fund | Year Ending June 30, 2021 | $126,962 |
Year Ended June 30, 2020 | $221,552 |
Year Ended June 30, 2019 | $204,979 |
Year Ended June 30, 2018 | $226,073 |
Penn Capital Managed Alpha SMID Cap Equity Fund | Year Ending June 30, 2021 | $94,879 |
Year Ended June 30, 2020 | $169,526 |
Year Ended June 30, 2019 | $160,750 |
Year Ended June 30, 2018 | $175,125 |
Penn Capital Special Situations Small Cap Equity Fund | Year Ending June 30, 2021 | $100,306 |
Year Ended June 30, 2020 | $175,626 |
Year Ended June 30, 2019 | $187,190 |
Year Ended June 30, 2018 | $208,947 |
Additional Information Pertaining to Penn Capital
The following table sets forth the name, position and principal occupation of each current
executivemember and principal officer
and/or manager of
Penn Capital asMFP, each of
March 31, 2021. Each individual’s addresswhom is
c/o Penn Capital Management Company, LLC, 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112.located at MFP’s principal office location.
| Name | | Position/Principal Occupation at Penn Capital |
Richard Hocker
Jennifer Cook Price | | Managing MemberDirector |
Marcia HockerTimothy E. Ladin | | TreasurerGeneral Counsel and Vice President; Chief Compliance Officer |
Eric GreenEllen F. Lynch | | Chief Investment Officer - Equity |
Gerald McBride | | Chief Financial Officer |
Kirsten Hocker | | President |
Linda Ridolfi | | Chief Compliance Officer |
Marty Keane | | Chief Technology Officer
|
Peter Duffy | | Chief Investment Officer - Credit |
Andrew Smith | | Chief Executive Officer |
Andrew Daly | | Chief Operating Officer |
Joseph Maguire | | Vice President, Direct of Research
|
Joseph McDonnell | | Vice President of Finance |
| | |
During
The Estate of Michael Price owns 99% of the Funds’ last fiscal year,Member Interests of MFP and the Funds did notPrice Family Office, LLC owns 1% of the Member Interests of MFP. Jennifer Cook Price is co-executor of the Estate of Michael Price and is the Managing Member of MFP.
Summary of the Sub-Advisory Agreement
A copy of the proposed Sub-Advisory Agreement is attached hereto as Exhibit B. The following description is only a summary. You should refer to Exhibit B for the Sub-Advisory Agreement, as the description set forth in this Proxy Statement of the Sub-Advisory Agreement is qualified in its entirety by reference to Exhibit B.
Sub-Advisory Services. The Sub-Advisory Agreement provides that, in conjunction with the Adviser, the Sub-Adviser will make investment decisions for and place all orders for the purchase and sale of securities for the Fund’s investment portfolio, all on behalf of the Fund and subject to the oversight of the Fund’s Board and the Adviser. In performing its duties under the Sub-Advisory Agreement, the Sub-Adviser will monitor the Fund’s investments and will comply with the provisions of the Fund’s organizational documents and the stated investment objectives, policies and restrictions of the Fund. Upon closing of the Transaction, Mr. Marcus and Mr. O will become employees of MFP and continue to be the Lead Portfolio Manager and Co-Portfolio Manager, respectively, of the Fund.
Brokerage. The Sub-Advisory Agreement authorizes MFP to select the brokers or dealers that will execute the purchases and sales of Fund securities and directs MFP to seek for the Fund the most favorable execution and net price available under the circumstances. MFP may cause the Fund to pay any amounta broker a commission more than that which another broker might have charged for effecting the same transaction, in recognition of the value of the brokerage and research and other services provided by the broker to Penn Capital or any affiliated personMFP.
Payment of Penn Capital forExpenses. Under the Sub-Advisory Agreement, MFP agrees to bear all of its expenses in connection with the performance of its services under the Sub-Advisory Agreement, including provision of personnel, office space, and equipment reasonably necessary to provide sub-advisory services to the Fund (other than pursuantFund.
Management Fees. Under the Sub-Advisory Agreement, the Adviser pays the Sub-Adviser a sub-advisory fee out of the management fee it receives from the Fund. The Adviser will pay the Sub-Adviser an annual sub-advisory fee of 0.89% of the average daily net assets of the Fund. The fee shall be based on the average daily net assets for the month involved. Every month, the Adviser will deduct from the advisory fee paid to the previously existing advisory agreement). There were no brokerage commissionsSub-Adviser the following expenses as agreed by the Sub-Adviser in writing from time to time: (i) expenses paid by such Fund attributable to compensating the FundsFund’s statutory distributor and/or placement agent and any additional distribution fees, (ii) amounts paid to affiliated brokersthe Fund by the Adviser related to applicable voluntary fee waivers, expense reimbursements or other payments related to any voluntary expense cap applicable to such Fund, and (iii) expenses paid by such Fund or Adviser with respect to fees charged to such Fund by any financial intermediary related to placement or distribution of Penn Capital forsuch Fund at such intermediary and any applicable sub-transfer agency or shareholder services fees (the “Fee Reimbursements”). In the event any Fee Reimbursement is paid by a Fund other than monthly, such as a financial intermediary placement fee paid annually, Adviser will deduct a pro-rata portion of such fee each month. Except as may otherwise be prohibited by law or regulation (including, without limitation, any then current SEC staff interpretation), the Sub-Adviser may, in its discretion and from time to time, waive all or any portion of its advisory fee.
As MFP did not serve as sub-adviser to the Fund during the fiscal year ended
June 30, 2020.December 31, 2022, MFP did not receive any sub‑advisory fees during that period from the Fund. If MFP had served as sub-adviser during the fiscal period ended December 31, 2022, MFP would have accrued $1,392,020 in sub-advisory fees, payable by the investment adviser, under the proposed Sub-Advisory Agreement.
Duration and Termination. If approved by shareholders of the Fund, the Sub-Advisory Agreement will remain in effect until April 16, 2024, unless sooner terminated. Thereafter, if not terminated, this Agreement shall continue with respect to each Fund for successive annual periods ending on August 16 subject to annual approval by the Board, including at least a majority of the Independent Trustees.
As
Limitation on Liability and Indemnification. The Sub-Advisory Agreement provides that, in the absence of
April 19, 2021 (the “Record Date”),willful misconduct, bad faith, reckless disregard or gross negligence by MFP, MFP will not be subject to liability to the
following individuals are officers and/Trust, the Fund or
the Adviser for any act or omission in the course of, or connected with, rendering services under the agreement or for any losses sustained in the purchase, holding or sale of any security of the Fund. Further, the Sub-Advisory Agreement provides that the Adviser shall indemnify and hold harmless the Sub-Adviser against any and all losses, claims, damages, liabilities or litigation arising out of or based on (i) any willful misconduct, bad faith, reckless disregard or gross negligence of the Adviser, the Trust or any Trustees of the Trust
who are also officers, employees or managersin the performance of
Penn Capital: Name | | Position with the Trust |
Richard Hocker
| | Trustee, President and Chairman of the Board |
Gerald McBride | | Treasurer |
Robert McLaughlin | | Secretary |
| | |
Messrs. McBride and McLaughlin, by virtueany of their respective ownership interestsduties or obligations hereunder or under the Investment Advisory Agreement, (ii) any untrue statement of a material fact contained in materials pertaining to the Fund or the omission to state therein a material fact that was required to be stated therein or necessary to make the statements therein not misleading, unless such statement or omission was made solely in reliance upon information furnished to the Adviser or the Trust in writing by the Sub-Adviser for inclusion in such documents or (iii) any action or inaction by the Sub-Adviser that the Sub-Adviser has made or refrained from making, as applicable, in good faith pursuant to and consistent with the Adviser’s, the Trust’s or the Fund’s written instructions to the Sub-Adviser.
Board Recommendation of Approval
The Trustees recommend that shareholders of the Fund vote FOR the approval of the Sub-Advisory Agreement.Information about the Board’s considerations and approval is included below in the Adviser’s parent company, 525 Holding, have an ownership interest in Penn Capital. In addition, assection entitled “Board Considerations and Approval”.
Vote Required
Approval of the Record Date, Mr. Hocker, as Managing MemberProposal to approve the new Sub-Advisory Agreement requires the vote of the Adviser and through his ownership interest in 525 Holding, is deemed a controlling person“majority of the Adviser. Dueoutstanding voting securities” of the Fund. Under the 1940 Act, a “majority of the outstanding voting securities” is defined as the lesser of: (1) 67% or more of the voting securities of the Fund entitled to his ownership interestvote present in 525 Holding, Mr. Hocker may be deemedperson or by proxy at the Meeting, if the holders of more than 50% of the outstanding voting securities entitled to havevote thereon are present in person or represented by proxy; or (2) more than 50% of the outstanding voting securities of the Fund entitled to vote thereon.
BOARD CONSIDERATIONS AND APPROVAL
At a substantial interest inmeeting held on February 8-9, 2023 and reconvened on February 16, 2023 (the “Board Meeting”), the transactions contemplated underBoard, including a majority of the AcquisitionIndependent Trustees, unanimously voted to approve the New Investment Advisory Agreement and Sub-Advisory Agreement and to recommend that the shareholders of the Fund vote FOR the Proposals to approve the New Investment Advisory Agreement and Sub-Advisory Agreement.
In considering the approval of the New
Investment Advisory
Agreement. In addition, duringAgreement and Sub-Advisory Agreement, the
fourth quarterBoard, with the assistance of
2020, the shareholders of Penn Capital exchanged their ownership interests in Penn Capital for ownership interestsindependent counsel, considered its legal responsibilities with regard to all factors deemed to be
relevant to the Fund. The Board evaluated the New Investment Advisory Agreement and Sub-Advisory Agreement in light of
equal valueall the materials provided prior to and during the Board Meeting and at other meetings that preceded the Board Meeting, the presentations made during the Board Meeting, and the discussions held during the Board Meeting. The Trustees reviewed these materials with management of F/m, Evermore and MFP and discussed the New Investment Advisory Agreement and Sub-Advisory Agreement with counsel in
525 Holding.Forexecutive sessions, at which no representatives of F/m, Evermore or MFP were present. The Trustees considered whether approval of the reasons set forth above,New Investment Advisory Agreement and Sub-Advisory Agreement would be in the best interests of the Fund and its shareholders and the overall fairness of the New Investment Advisory Agreement. Among other things, the Trustees of THE TRUST UNANIMOUSLY recommend that shareholders OF EACH FUND vote in favorconsidered information concerning: (i) the nature, extent and quality of the new advisory agreement with PENN CAPITAL.services to be provided by F/m and MFP
PART 2
DESCRIPTION OF PROPOSAL
Election of eight (8) nominees to the Board of TrusteesFund; (ii) descriptions of the experience and qualifications of F/m’s and MFP’s personnel who would provide those services; (iii) F/m’s and MFP’s investment philosophies and processes; (iv) F/m’s and MFP’s assets under management and client descriptions; (v) F/m’s and MFP’s management fee arrangements with the Trust
(all Funds voting togetherand other similarly managed clients, as applicable; (vi) F/m’s and MFP’s compliance policies and procedures; (vii) F/m’s and MFP’s financial information, insurance coverage and profitability analysis related to its provision of advisory services to the Fund; (viii) the extent to which economies of scale are relevant to the Fund; (ix) a single class)
report prepared by Lipper comparing the Fund’s management fees and total expense ratio to those of its Lipper Group and comparing the performance of the Fund to the performance of its Lipper Group; and (x) information regarding the performance of the Fund relative to its benchmark index.
Nature, Extent and Quality of Services Provided to the Funds. The Trustees evaluated the nature, extent and quality of the services that F/m and MFP would provide under the New Investment Advisory Agreement and Sub-Advisory Agreement, respectively. Based on the information provided and the Trustees’ prior experience with F/m and the portfolio management team of MFP, the Trustees concluded that the nature and extent of the services that F/m and MFP would provide under the New Investment Advisory Agreement and Sub-Advisory Agreement, as well as the quality of those services, was satisfactory.
BackgroundAtSection 15(f) of the Special Meeting, shareholders will be asked1940 Act. The Trustees also considered whether the arrangements comply with the conditions of Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an investment adviser to elect eight (8) new Trustees (eachan investment company or any of its affiliated persons to receive any amount or benefit in connection with a “Trustee Nominee” and together,change in control of the “Trustee Nominees”), who will constituteinvestment adviser so long as two conditions are met. First, for a period of three years after closing of the entire Boardapplicable transaction, at least 75% of Trustees (“Board”) of PENN Capital Funds Trust (the “Trust,” each series thereof, a “Fund,” and together, the “Funds”). The currentboard members of the Board (the “Current Trustees”) are not standing for election and will cease to serve as Trustees effective when the Trustee Nominees take office, which is expected to occur shortly after the Special Meeting.
Over the past few years, Penn Capital has considered various options for its business model and the structure of the Funds in an effort to realize operational efficiencies while maintaining the high quality of investment advisory and other services provided to Fund shareholders. After considering a number of options, Penn Capital determined that the Funds would benefit from certain expense reductions and operational streamlining associated with joining a shared governance and service provider structure in common with other funds. Such structures are designed to provide an efficient governance and operations solution for mutual funds and their advisers, and permit participating investment advisers to focus more effort and resources on providing advisory services and marketing funds.
In April of 2021, Penn Capital management informed the Current Trustees that it had determined that the Funds would benefit from joining a shared governance and service provider structure in common with The RBB Fund, Inc. (“RBB”) (such shared governance and service provider structure, the “Shared Governance Structure”). RBB is an open-end management investment company that was organized as a Maryland corporation on February 29, 1988 and currently consists of 36 separate portfolios. The Adviser believes that the Shared Governance Structure has a robust infrastructure that would serve shareholders well, and, as the Shared Governance Structure uses many of the same service providers as the Trust, that shareholders would experience limited changes to their investment experience.
In connection with the Adviser’s recommendation that the Trust participate in a Shared Governance Structure (the “Transition”), the Adviser proposed that the Current Trustees nominate, and recommended that shareholders elect as Trustees of the Trust, the Trustee Nominees, each of whom is currently on the Board of Directors of RBB. At a meeting of the Board held on April 19, 2021, the Current Trustees, a majority of whom are notcannot be “interested persons” (as defined in the Investment Company Act of 1940, as amended (“1940 Act”)) of the Trust, considered Penn Capital’s proposal, nominated the Trustee Nominees and recommended that the Trustee Nominees be submitted to the Trust’s shareholders for election at the Special Meeting, and, subject to receipt of such shareholder approval, approved changing the number of Trustees on the Board from three (3) to eight (8).
If the Proposal is approved, the Trustee Nominees will be responsible for overseeing the Funds and implementing the Transition. If elected by shareholders, the Trustee Nominees are expected to appoint new Trust officers, including a new Chief Compliance Officer (“CCO”) and Anti-Money Laundering (“AML”) Officer and a new Treasurer of the Trust, and to align most service providers of the Trust to those used by RBB (except for the Funds’ investment adviser and distributor), as follows:
| ● | Penn Capital will remain each Fund’s investment adviser. |
| ● | The current portfolio manager(s) of each Fund are expected to remain the same. |
| ● | The Funds’ administrator, transfer agent and fund accountant will remain U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (“Fund Services”). |
| ● | The Funds’ distributor will remain Foreside Fund Services, LLC (“Foreside”). |
| ● | The Fund’s independent auditors will be Tait, Weller & Baker LLP (“Tait Weller”). |
| ● | The Fund’s custodian will remain U.S. Bank National Association. |
| ● | Vigilant Compliance, LLC will provide compliance consulting services and a CCO and AML Officer for the Trust. |
| ● | Other officers of the Trust will be replaced by individuals who currently serve as officers within the Shared Governance Structure. |
| ● | Trust counsel will be Faegre Drinker Biddle & Reath LLP. |
Board Actions and Considerations
The Board’s Nominating Committee (comprised of the Independent Trustees) met on April 19, 2021 to evaluate candidates for positions on the Board, including evaluating candidates’ qualifications for Board membership and their independence from the Penn Capital, Spouting Rock and their affiliates, as well as such other information as the Nominating Committee deemed relevant to its considerations. The Nominating Committee recommended the Trustee Nominees for nomination by the Independent Trustees, and at their meeting on April 19, 2021, consistent with the recommendation of the Nominating Committee, the Independent Trustees and the full Board selected and nominated the Trustee Nominees for election by the shareholders of the Trust.
In connection with its recommendation for shareholders to elect the Trustee Nominees, the Board’s Nominating Committee and the Current Trustees evaluated the Trustee Nominees’ qualifications to serve as Trustees of the Trust. Based on discussions with management and representatives from RBB, including a review of the background and experience of the Trustee Nominees, consistent with the recommendation of its Nominating Committee, the Board believes that electing a new slate of Trustees may provide benefits to the Funds as part of the Shared Governance Structure. In light of the information received and reviewed, the Board concluded that the Trustee Nominees are well qualified and experienced with the oversight of investment companies, including with respect to the funds on the RBB series trust platform.
The Board noted that if the Trustee Nominees are elected, the Trust would be governed by the new Board and led by an Independent Trustee as Chair. The Board believes that, if the Trustee Nominees are elected by shareholders, there will be an appropriate transition of oversight of the Funds, including risk oversight, from the existing Board to the Trustee Nominees as a result of, among other things, the continuity of each Fund’s investment adviser and the implementation of the Shared Governance Structure as a result of the RBB trust adoption.
If the Trustee Nominees are elected, the Trustee Nominees would take office shortly after the Special Meeting. At such time, it is expected that the current Trustees would tender their resignation. In considering the nomination of the Trustee Nominees, the Current Trustees expressed a willingness to resign in light of the transition to the Shared Governance Structure and trust adoption whereby the Funds will be brought under the RBB series trust platform.
The Board has adopted a written charter for its Nominating Committee. The Trust does not provide the Board’s Nominating Committee charter on a website, but a copy of the Nominating Committee charter is attached to this Proxy Statement as Exhibit D. In addition the Board of Directors of RBB has adopted a written charter for its Nominating and Governance Committee, which is attached to this Proxy Statement as Exhibit E.
Trustee Nominees
Shareholders will be asked to vote on a proposal to elect the following Trustee Nominees to serve as Trustees to the Trust: Julian A. Brodsky, J. Richard Carnall, Gregory P. Chandler, Nicholas A. Giordano, Arnold M. Reichman, Robert Sablowsky, Brian T. Shea and Robert A. Straniere. If elected, seven of Trustee Nominees will not be “interested persons” of the Trust (“Independent Trustees”) as defined in the 1940 Act. Mr. Sablowsky will be considered an “interested person” (as such term is defined in the 1940 Act) of the Trust (“Interested Trustee”)investment adviser or predecessor adviser. Second, an “unfair burden” must not be imposed upon a Fund as a result of the transaction or any express or implied terms, conditions or understandings applicable thereto. The term “unfair burden” is defined in Section 15(f) to include any arrangement during the two-year period after the closing of the transaction whereby the investment adviser (or predecessor or successor adviser) or any interested person of any such investment adviser, receives or is entitled to receive any compensation, directly or indirectly, from a Fund or its shareholders (other than fees for bona fide investment advisory or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of a Fund (other than bona fide ordinary compensation as principal underwriter for the Fund).
Consistent with the first condition of Section 15(f), F/m and MFP represented that they are not aware of any current plans to reconstitute the Board following the Transaction. Thus, at least 75% of the Trustees of the Company would not be “interested persons” (as defined in the 1940 Act) of F/m or MFP for a period of three years after closing of the Transaction and would be in compliance with this provision of Section 15(f). Mr. SablowskyWith respect to the second condition of Section 15(f), F/m and MFP represented that the Transaction will not have an economic impact on their ability to provide services to the Fund and no fee increases are contemplated. Thus, the Trustees found that the Transaction would not result in an "unfair burden" (as defined in Section 15(f)) during the two-year period following the closing of the Transaction. Each of F/m and MFP represented that neither it nor any interested person of it would receive any compensation from the Fund or its shareholders, except as permitted pursuant to Section 15(f).
Costs of Services Provided and Profits Realized by F/m and MFP. The Trustees examined fee information for the Fund, including a comparison of such information to other similarly situated funds, and the total expense ratio of the Fund. In this regard, the Trustees noted that the management fees and total expenses of the Fund were not expected to change as a result of the Transaction or approval of the New Investment Advisory Agreement or Sub-Advisory Agreement. In this regard, the Trustees noted that the fees for MFP under the Sub-Advisory Agreement were paid directly by F/m and not by the Fund. The Trustees also noted that F/m has agreed to continue the current expense limitation until at least December 31, 2024.
The Trustees also reviewed analyses of the estimated profitability of each of F/m and MFP related to its provision of advisory services to the Fund. Based on the information provided, the Trustees concluded that the amount of fees that the Fund currently pays, and would pay under the New Investment Advisory Agreement and Sub-Advisory Agreement, to F/m and MFP are reasonable in light of the nature and quality of the services provided.
Investment Performance of the Fund. The Trustees reviewed information concerning the Fund’s investment performance, both absolutely as well as compared to its benchmark index and Lipper peer group. The Trustees considered the Fund’s investment performance in light of its investment objective and strategies. After considering all of the information, the Trustees concluded that the Fund and its shareholders were likely to benefit from the portfolio managers’ continued provision of investment management services to the Fund.
Economies of Scale and Fee Levels Reflecting Those Economies. In considering the overall fairness of the New Investment Advisory Agreement and Sub-Advisory Agreement, the Trustees assessed the degree to which economies of scale that would be expected to be realized if the Fund’s assets increase, whether the Fund was large enough to generate economies of scale, and the extent to which fee levels would reflect those economies of scale for the benefit of the Fund’s shareholders. The Trustees noted that the Fund’s management fee structure did not contain any breakpoint reductions as the Fund’s assets grew in size, but that the feasibility of incorporating breakpoints would continue to be reviewed on a regular basis. The Trustees determined that the fee schedules in the New Investment Advisory Agreement and Sub-Advisory Agreement are reasonable and appropriate.
Other Benefits to the Adviser. In addition to the above factors, the Trustees also considered an “Interested Trustee”other benefits received or to be received by F/m and MFP from their management of the Fund, including, without limitation, the ability to market their advisory services for similar products in the future.
Based on all of the information presented to and considered by the Trustees and the conclusions that it reached, the Board approved the New Investment Advisory Agreement and Sub-Advisory Agreement on the basis that their terms and conditions are fair to, and in the best interests of, the Fund and its shareholders.]
GENERAL INFORMATION
Solicitation of Proxies
In addition to solicitation of proxies by mail, certain officers of the Trust,
by virtueofficers and employees of
his position as an officer of Oppenheimer & Co., Inc., a registered broker-dealer that may execute portfolio transactions for the FundsF/m, Evermore, MFP, or other
accounts managed by the Adviser.The Trustee Nominees have each consented to stand for election and to serve if elected. Should any Trustee Nominee withdraw from the election or otherwise be unable to serve, the named proxies will vote for the election of such substitute nominee or nominees as the Board may recommend, unless a decision is made to reduce the number of Trustees of the Trust. If elected, a Trustee Nominee will serve for an indefinite term lasting the lifetimerepresentatives of the Trust, who will not be paid for their services, may also solicit proxies by telephone or until his earlier death, resignation, removal, retirement or inability otherwise to serve, or, if sooner than anyin person. MFP has engaged the proxy solicitation firm of these events, until the next meeting of Shareholders calledBroadridge Financial Solutions, Inc. who will be paid approximately $20,000, plus out-of-pocket expenses, for their services. MFP will pay for the purposeexpenses incident to the solicitation of electing Trustees (or consentproxies in connection with the Meeting, which expenses include the fees and expenses of tabulating the results of the proxy solicitation and the fees and expenses of Broadridge Financial Solutions, Inc. MFP also will reimburse upon request persons holding shares as nominees for their reasonable expenses in sending soliciting materials to their principals. The expenses incurred in connection with preparing the proxy statement and its enclosures and all related legal and solicitation expenses will also be paid by MFP.
Householding
If possible, depending on shareholder registration and address information, and unless you have otherwise opted out, only one copy of this Proxy Statement will be sent to shareholders
in lieu thereof)at the same address. However, each shareholder will receive separate proxy cards. If you would like to receive a separate copy of the Proxy Statement, please call 833-757-0709. If you currently receive multiple copies of Proxy Statements or Shareholder Reports and
until the election and qualificationwould like to request to receive a single copy of
his successor.Information regarding the Trustee Nominees is set forthdocuments in the following tables:
INDEPENDENT TRUSTEE NOMINEES
NAME, ADDRESS* AND AGE | POSITION(S) HELD WITH THE TRUST | LENGTH OF TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | OTHER DIRECTORSHIPS DURING THE PAST 5 YEARS | NUMBER OF PORTFOLIOS IN THE FUND COMPLEX THE TRUSTEE NOMINEE WOULD OVERSEE**
|
Julian A. Brodsky
Age: 87
| Trustee Nominee | N/A | From 1969 to 2011, Director and Vice Chairman, Comcast Corporation (cable television and communications). | AMDOCS Limited (service provider to telecommunications companies). | 43 |
J. Richard Carnall
Age: 82
| Trustee Nominee | N/A | Since 1984, Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.); since 2004, Director of Cornerstone Bank. | None. | 43 |
Gregory P. Chandler
Age: 54
| Trustee Nominee | N/A | Since 2020, Chief Financial Officer, Herspiegel Consulting LLC (life sciences consulting services); since 2020, Chief Financial Officer, Avocado Systems Inc. (cyber security software provider); 2009-2020, Chief Financial Officer, Emtec, Inc. (information technology consulting/services). | Emtec, Inc. (until December 2019); FS Investment Corporation (business development company) (until December 2018); FS Energy and Power Fund (business development company); Wilmington Funds (12 portfolios) (registered investment company). | 43 |
Nicholas A. Giordano
Age: 78
| Trustee Nominee | N/A | Since 1997, Consultant, financial services organizations. | IntriCon Corporation (biomedical device manufacturer); Kalmar Pooled InvestmentTrust (registered investment company) (until September 2017); Wilmington Funds (12 portfolios) (registered investment company); Independence Blue Cross (healthcare insurance) (until March 2021). | 43 |
Arnold M. Reichman
Age: 72
| Trustee Nominee | N/A | Retired. | Independent Trustee, EIP Investment Trust (registered investment company). | 43 |
Brian T. Shea
Age: 60
| Trustee Nominee | N/A | From 2014-2017, Chief Executive Officer, BNY Mellon Investment Services (fund services, global custodian and securities clearing firm); from 1983-2014, Chief Executive Officer and various positions, Pershing LLC (broker dealer, clearing and custody firm). | WisdomTree Investments, Inc. (asset management company) (until March 2019); Fidelity National Information Services, Inc. (financial services technology company); Ameriprise Financial, Inc. (financial services company). | 43 |
Robert A. Straniere
Age: 80
| Trustee Nominee | N/A | Since 2009, Administrative Law Judge, New York City; since 1980, Founding Partner, Straniere Law Group (law firm). | None. | 43 |
* The address of each Trustee Nominee, if elected, will befuture, please call 833-757-0709 or write to U.S. Bank Global Fund Services at 615 East Michigan Street, Milwaukee, WIWisconsin 53202.
**The fund complex consists
Voting Procedures
You can vote by mail, on the Internet or by phone by following the instructions on your proxy card, or in person at the Meeting. To vote by mail, sign and send us the enclosed proxy voting card in the envelope provided.
Shares represented by timely and properly executed proxies will be voted as specified. If you do not specify your vote with respect to a particular matter, the proxy holder will vote your shares in accordance with the recommendation of the seven (7) Funds in theTrustees. You may revoke your proxy at any time before it is exercised by sending a written revocation addressed to Steven Plump, President, The RBB Fund Trust,
and thirty-six (36) portfolios of RBB.INTERESTED TRUSTEE NOMINEE*
NAME, ADDRESS** AND AGE | POSITION(S) HELD WITH THE TRUST | LENGTH OF TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | OTHER DIRECTORSHIPS DURING THE PAST FIVE YEARS | NUMBER OF PORTFOLIOS IN THE FUND COMPLEX THE TRUSTEE NOMINEE WOULD OVERSEE***
|
Robert Sablowsky
Age: 83
| Trustee Nominee | N/A | Since 2002, Senior Director – Investments and, prior thereto, Executive Vice President, of Oppenheimer & Co., Inc. (a registered broker-dealer). | None. | 43 |
* Mr. Sablowsky will be considered an “Interested Trustee” of the Trust by virtue of his position as an officer of Oppenheimer & Co., Inc., a registered broker-dealer that may execute portfolio transactions for the Funds or other accounts managed by the Adviser.
** The address of Mr. Sablowsky, if elected, will bec/o U.S. Bank Global Fund Services 615 East Michigan Street, Milwaukee, WI 53202.
***The fund complex consists ofWisconsin 53202, by properly executing and delivering a later-dated proxy, or by attending the seven (7) FundsMeeting and voting in the Trust and thirty-six (36) portfolios of RBB.
The Board believes that each of the Trustee Nominees has the qualifications, experience, attributes and skills (“Trustee Attributes”) appropriate to his service as a Trustee of the Trust in view of the Funds’ business and structure. Each Trustee Nominee has a demonstrated record of business and/or professional accomplishment. The Board annually conducts a “self-assessment” wherein the performance of the Board and the effectiveness of the Board’s committee structures are reviewed.
In addition to the information provided in the chart above, below is certain additional information concerning each Trustee Nominee and certain of his Trustee Attributes. The information provided below, and in the chart above, is not all-inclusive. Many Trustee Attributes involve intangible elements, such as intelligence, work ethic, the ability to work together, to communicate effectively, to exercise judgment, to ask incisive questions, and to manage people and problems or to develop solutions.
Trustee Nominee Experience
The following describes the relevant experience of each individual nominated to serve as a Trustee of the Trust.
Independent Trustee Nominees
Julian A. Brodsky. Mr. Brodsky has over 40 years of senior executive level management experience in the cable television and communications industry.
J. Richard Carnall. Mr. Carnall has decades of senior executive-level management experience in the banking and financial services industry and also serves on the boards of various corporations and a bank.
Gregory P. Chandler. Mr. Chandler has demonstrated leadership and management abilities as evidenced by his senior executive level positions in the investment technology consulting/services and investment banking/brokerage industries, and also serves on various boards.
Nicholas A. Giordano. Mr. Giordano has years of experience as a consultant to financial services organizations and also serves on the boards of other registered investment companies.
Arnold M. Reichman. Mr. Reichman possesses decades of investment management, in addition to senior executive-level management experience.
Brian T. Shea. Mr. Shea has demonstrated leadership and management abilities as evidenced by his senior executive-level positions in the brokerage, clearing and investment services industry, including service on the boards of industry regulatory organizations and a university.
Robert A. Straniere. Mr. Straniere has been a practicing attorney for over 30 years and also serves on the boards of an asset management company and another registered investment company.
Interested Trustee Nominee
Robert Sablowsky. Mr. Sablowsky has demonstrated leadership and management abilities as evidenced by his senior executive-level positions in the financial services industry.
Current Board Leadership Structure and Oversight Responsibilities
The current Board is composed of Dennis S. Hudson, III, John R. Schwab and Richard A. Hocker. Messrs. Hudson and Schwab are Independent Trustees who are not affiliated with the Adviser, the Funds’ distributor, or their affiliates, while Mr. Hocker is considered an “interested person” of the Trust as defined in the 1940 Act due to his position with the Adviser. Mr. Hocker currently serves as the Chairman of the Board. Upon the election of the Trustee Nominees listed above, each of the Current Trustees will cease to serve as Trustees of the Trust effective when the Trustee Nominees take office. If elected by shareholders of the Funds, seven (7) of the Trustee Nominees will be Independent Trustees of the Trust, and one (1) of the Trustee Nominees will be an Interested Trustee of the Trust.
The current Board oversees the Trust’s management and operations. Like all mutual funds, the Trust’s day-to-day management and operation is the responsibility of the various service providers, such as the Adviser and the Funds’ distributor, administrator, custodian, and transfer agent. In conducting this oversight, the Board receives regular reports from the Trust’s officers and service providers. The Board has appointed a CCO who administers the Trust’s compliance program and regularly reports to the Board as to compliance matters. These reports are provided as part of formal Board meetings, which are typically held quarterly, and involve the Board’s review of recent operations in compliance with the reports required by Rule 38a-1 under the 1940 Act. In addition, the Board may hold special in-person or telephonic meetings or informal conference calls to discuss matters between regular quarterly meetings. During the fiscal year ended June 30, 2020, each Current Trustee attended or participated telephonically in at least 75% of the meetings of the Board and committees of the Board on which he served. Trustees are not required to attend shareholder meetings. The Board’s role is one of oversight and not day-to-day management over the Trust’s affairs.
The majority of the current Board is comprised of Independent Trustees, which the Board believes allows the Board to operate in a manner that provides for an appropriate level of independent action and oversight. The Independent Trustees meet in a separate quarterly session in conjunction with each quarterly meeting, during which they review matters relating to their independent oversight. The Independent Trustees have determined that because they comprise a majority of the Board, they can act independently and effectively without having an Independent Trustee serving as Chairman of the Board or as a lead independent trustee.
The Board has structured itself in a manner that it believes allows it to perform its oversight function effectively. As described below, the Board has established a Nominating Committee and an Audit Committee, and may establish ad hoc committees or working groups from time to time to assist the Board in fulfilling its oversight responsibilities. The Board reviews its structure and the structure of its committees annually. The Board has determined that the composition of the Board and the function and composition of its various Committees are appropriate means to address any potential conflicts of interest that may arise.
As part of its oversight function, the Board receives and reviews various risk management reports and discusses these matters with appropriate management and other personnel. Because risk management is a broad concept comprised of many elements (e.g., investment risk, issuer and counterparty risk, compliance risk, operational risk, business continuity risk, liquidity risk, etc.), the oversight of different types of risks is handled in different ways. For example, the Board’s Audit Committee meets with the Trust’s Treasurer and independent registered public accounting firm to discuss, among other things, the internal control structure of the Trust’s financial reporting function. The Board meets regularly with the Trust’s CCO to discuss compliance and operational risks and how they are managed. With respect to investment risks, the Board receives reports from the Adviser describing and analyzing the investment performance of the Funds. The Board discusses these reports and the performance of the Funds and investment risks with management of the Adviserperson. Attendance at the Board’s regular meetings. The Board also approves any material changes to a Fund’s investment policies or restrictions.
With respect to valuation,Meeting alone, however, will not revoke the Board reviews fair valuation reports at quarterly meetings that enable the Board to monitor fair valued securities in the Funds. Such reports also include information concerning illiquid investments held by the Funds. In addition, the Board’s Audit Committee reviews valuation procedures and pricing results with the Trust’s independent registered public accounting firm in connection with such Committee’s review of the results of the audit of each Fund’s year-end financial statements.
The current Board has established the following standing committees:
Current Audit Committee. The Board’s Audit Committee is comprised of all the current Independent Trustees. The Audit Committee oversees the Funds’ financial reporting processes. The Audit Committee’s function is to review the scope and results of the audit and any matters bearing on the audit or a Fund’s financial statements and to ensure the integrity of each Fund’s pricing and financial reporting. The Audit Committee met four times during the fiscal year ended June 30, 2020.
Current Nominating Committee. The Nominating Committee, comprised of all the current Independent Trustees, is responsible for identifying, evaluating and nominating candidates for consideration as Trustees and meets only as necessary. Although the Nominating Committee is solely responsible for the selection and nomination of Trustee candidates, the Nominating Committee will consider nominees recommended by Fund shareholders. Recommendations for nominees from shareholders must be sent to the Secretary of the Trust, c/o PENN Capital Management Company, LLC, 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112. A nomination submission must include all information relating to the recommended nominee that is required to be disclosed in solicitations or proxy statements for the election of Trustees, as well as information sufficient to evaluate the individual nominee’s qualifications. Nomination submissions must be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by the shareholders, and such additional information must be provided regarding the recommended nominee as reasonably requested by the Nominating Committee. The Nominating Committee did not meet during the fiscal year ended June 30, 2020.
Ownership of Fund Shares
Set forth below is the dollar range of equity securities beneficially owned by each of the Current Trustees and Trustee Nominees as of December 31, 2020 in each Fund and in all Funds in the Trust.
Current Trustees’ Ownership
| Penn Capital Floating Rate Income Fund (formerly, Penn Capital Defensive Floating Rate Income Fund) | Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund) | Penn Capital Opportunistic High Income Fund | Penn Capital Managed Alpha SMID Cap Equity Fund | Penn Capital Special Situations Small Cap Equity Fund | Aggregate Dollar Range of Equity Securities in All Funds in the Trust |
Dennis S. Hudson, III | None | None | $10,001-$50,000 | $10,001-$50,000 | None | None |
John R. Schwab | $1-$10,000 | $1-$10,000 | $1-$10,000 | $1-$10,000 | $1-$10,000 | None |
Richard A. Hocker | Over $100,000 | Over $100,000 | Over $100,000 | Over $100,000 | Over $100,000 | Over $100,000 |
Trustee Nominees’ Ownership
| Penn Capital Floating Rate Income Fund (formerly, Penn Capital Defensive Floating Rate Income Fund) | Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund) | Penn Capital Opportunistic High Income Fund | Penn Capital Managed Alpha SMID Cap Equity Fund | Penn Capital Special Situations Small Cap Equity Fund | Aggregate Dollar Range of Equity Securities in All Funds in the Trust |
Julian A. Brodsky
| None | None | None | None | None | None |
J. Richard Carnall
| None | None | None | None | None | None |
Gregory P. Chandler
| None | None | None | None | None | None |
Nicholas A. Giordano
| None | None | None | None | None | None |
Arnold M. Reichman
| None | None | None | None | None | None |
Robert Sablowsky
| None | None | None | None | None | None |
Brian T. Shea
| None | None | None | None | None | None |
Robert A. Straniere
| None | None | None | None | None | None |
Current Trustee and Officer Compensation
Each current Independent Trustee receives a quarterly retainer of $3,000 as well as a per-meeting fee of $1,000 for each meeting he attends in-person or $500 if he attends telephonically. The Audit Committee Chair receives an additional quarterly fee of $1,000 for such Chairmanship. The Independent Trustees are reimbursed for the travel and other expenses they incur in attending Board meetings. No officer or Trustee of the Trust who is also an officer or employee of the Adviser receives any compensation from the Trust for services to the Trust. During the fiscal year ended June 30, 2020, the Independent Trustees received the compensation indicated in the table below:
| Name | Aggregate Compensation
from the Trust | Pension Retirement Benefits Accrued as Part of Trust Expenses | Estimated Annual Benefits Upon Retirement | Total Compensation from the PENN Capital Fund Complex |
| Dennis S. Hudson, III | $13,000 | $0 | $0 | $13,000 |
| John R. Schwab | $18,500 | $0 | $0 | $18,500 |
Jack P. Huntington, the Funds’ CCO and AML Officer is an employee of Foreside Fund Officer Services, LLC. During the fiscal year ended June 30, 2020, Foreside Fund Officer Services, LLC received compensation from the Trust pursuant to a Fund CCO Agreement. As part of the Transition, it is expected that Mr. Huntington will cease serving as an officer of the Trust and Vigilant Compliance, LLC will provide a new CCO and AML Officer for the Trust.
Independent Accountant’s Fees
Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees. The Trust’s independent registered public accounting firm, KPMG LLP, billed aggregate fees for services rendered to the Funds for the fiscal years ended June 30, 2020 and June 30, 2019 as follows:
| | | 2020 | |
| | | All fees and
services to the
Trust that were
pre-approved | | All fees and
services to
service
affiliates that
were pre-
approved | | All other fees
and services to
service
affiliates that
did not require
pre-approval | |
| (a) Audit Fees (1) | | $ | 125,000 | | N/A | | N/A | |
| (b) Audit-Related Fees (2) | | | None | | N/A | | N/A | |
| (c) Tax Fees (3) | | $ | 25,000 | | N/A | | N/A | |
| (d) All Other Fees | | None | | N/A | | N/A | |
| | | 2019 | |
| | | All fees and
services to the
Trust that were
pre-approved | | All fees and
services to
service
affiliates that
were pre-
approved | | All other fees
and services to
service
affiliates that
did not require
pre-approval | |
| (a) Audit Fees (1) | | $ | 120,000 | | N/A | | N/A | |
| (b) Audit-Related Fees (2) | | | None | | N/A | | N/A | |
| (c) Tax Fees (3) | | $ | 25,000 | | N/A | | N/A | |
| (d) All Other Fees | | None | | N/A | | N/A | |
| (1) | Audit Fees include fees related to the audit of the Funds’ annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. |
| (2) | Audit-Related Fees relate to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. |
| (3) | Tax Fees relate to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. |
Pre-Approval Policies and Procedures. The Board’s Audit Committee has adopted pre-approval policies and procedures that require the Audit Committee to pre-approve all audit services of the Trust, including services provided to any entity affiliated with the Trust. The percentage of fees billed by KPMG LLP applicable to non-audit services pursuant to waiver of preapproval requirement were as follows:
| | | 2020 | | 2019 | |
| Audit-Related Fees | | 0.00 | % | 0.00 | % |
| Tax Fees | | 0.00 | % | 0.00 | % |
| All Other Fees | | 0.00 | % | 0.00 | % |
Non-Audit Fees. The following table indicates the non-audit fees billed or expected to be billed by the Funds’ accountant for services to the Funds and to the Funds’ investment adviser (and any other controlling entity, etc.—not sub-adviser) for the last two years. The Audit Committee of the Board has considered whether the provision of non-audit services that were rendered to the Funds’ investment adviser is compatible with maintaining the principal accountant’s independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant’s independence.
| | | 2020 | | 2019 | |
| Registrant | | 0.00 | % | 0.00 | % |
| Adviser | | 0.00 | % | 0.00 | % |
Additional Information
Officers of the Trust. The current officers of the Trust, their respective age, and their principal occupations for the last five years are set forth below. The business address of each officer of the Trust, other than Mr. Huntington, is c/o PENN Capital Management Company, LLC, 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112. Mr. Huntington’s business address is 10 High Street, Suite 302, Boston, MA 02110. None of the officers receives compensation from the Trust for his services, other than Mr. Huntington, who receives compensation noted above for his service as Trust CCO and AML Officer. Each of the Trust officers named below serves at the pleasure of the Board.
Current Officers of the Trust
NAME AND YEAR OF BIRTH | POSITION(S) HELD WITH THE TRUST | LENGTH OF TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS |
Richard A. Hocker
1946
| Trustee, President and Chairman | Since 2014 | Founder, Director, Chief Executive Officer (1987-2021) and Chief Investment Officer (1987-2020) of Penn Capital Management Company, LLC f/k/a Penn Capital Management Company, Inc.; Director, Ethel Mae Hocker Foundation (charitable) (since 2005). |
Gerald McBride
1963
| Treasurer | Since 2014 | Chief Operating Officer (2007-2021) and Chief Financial Officer, Penn Capital Management Company, LLC f/k/a Penn Capital Management Company, Inc. (since 2007). |
Robert J. McLaughlin, CFA
1966
| Secretary | Since October 2020 | Director of Investment Services (since 2016); Manager of Business Operations (2011-2015), Penn Capital Management Company, LLC f/k/a Penn Capital Management Company, Inc. |
Jack P. Huntington
1970
| Chief Compliance Officer | Since 2015 | Fund Chief Compliance Officer, Foreside Fund Officer Services, LLC (since 2015); Senior Vice President of Regulatory Administration, Citi Fund Services Ohio, Inc. (2008 to 2015). |
If shareholders elect each of the Trustee Nominees, it is expected that the current officers of the Trust will resign as part of the Transition, and that the individuals named in the table below will be appointed by the newly-constituted Board to serve as officers of the Trust. These individuals’ names, addresses, respective age, and principal occupations for the last five years are set forth below.
NAME, ADDRESS AND AGE | POSITION(S) HELD WITH THE RBB FUND, INC. | LENGTH OF TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS |
Salvatore Faia, JD,
CPA, CFE
Vigilant Compliance, LLC
Gateway Corporate
Center Suite 216
223 Wilmington West
Chester Pike
Chadds Ford, PA 19317
Age: 58
| President
Chief Compliance Officer
| 2009 to present
2004 to present
| Since 2004, President, Vigilant Compliance, LLC (investment management services company); since 2005, Independent Trustee of EIP Investment Trust (registered investment company). |
James G. Shaw
615 East Michigan Street
Milwaukee, WI 53202
Age: 60
| Treasurer
and
Secretary
| 2016 to present | Since 2016, Treasurer and Secretary of The RBB Fund, Inc.; from 2005 to 2016, Assistant Treasurer of The RBB Fund, Inc.; from 1995 to 2016, Senior Director and Vice President of BNY Mellon Investment Servicing (US) Inc. (financial services company). |
Craig A. Urciuoli
615 East Michigan Street Milwaukee, WI 53202
Age: 46
| Director of Marketing & Business Development | 2019 to present | Since 2019, Director of Marketing & Business Development, The RBB Fund, Inc.; from 2000-2019, Managing Director, Third Avenue Management LLC. |
Jennifer Witt
615 East Michigan Street
Milwaukee, WI 53202
Age: 38
| Assistant Treasurer | 2018 to present | Since 2016, Assistant Vice President, U.S. Bank Global Fund Services (fund administrative services firm); from 2007 to 2016, Supervisor, Nuveen Investments (registered investment company). |
Edward Paz
615 East Michigan Street
Milwaukee, WI 53202
Age: 50
| Assistant Secretary | 2016 to present | Since 2007, Vice President and Counsel, U.S. Bank Global Fund Services (fund administrative services firm). |
Michael P. Malloy
One Logan Square
Ste. 2000
Philadelphia, PA 19103
Age: 61
| Assistant
Secretary
| 1999 to present | Since 1993, Partner, Faegre Drinker Biddle & Reath LLP (law firm). |
Jillian L. Bosmann
One Logan Square
Ste. 2000
Philadelphia, PA 19103
Age: 42
| Assistant
Secretary
| 2017 to present | Partner, Faegre Drinker Biddle & Reath LLP (law firm) (2017-Present); Faegre Drinker Biddle & Reath LLP (2006-Present). |
THE TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE “FOR” EACH TRUSTEE NOMINEE.
PART 3
INFORMATION ABOUT OWNERSHIP OF SHARES OF EACH FUND
Outstanding Shares
Only shareholders of record at the close of business on April 19, 2021,whole share will be entitled to notice of, and to vote at, the Special Meeting. On April 19, 2021, the following shares of each class of the Funds were outstanding and entitled to vote:
| | Shares outstanding and |
Fund | | entitled to vote |
| | |
Penn Capital Floating Rate Income Fund (formerly, Penn Capital Defensive |
Floating Rate Income Fund) | | |
Investor Class | | 0 |
Institutional Class | | 3,277,601.450 |
| | |
Penn Capital Short Duration High Income Fund (formerly, PENN Capital | | |
Defensive Short Duration High Income Fund) | | |
Institutional Class | | 4,172,594.359 |
| | |
Penn Capital Opportunistic High Income Fund | | |
Investor Class | | 0 |
Institutional Class | | 1,952,320.517 |
| | |
Penn Capital Managed Alpha SMID Cap Equity Fund | | |
Investor Class | | 0 |
Institutional Class | | 1,172,018.045 |
| | |
Penn Capital Special Situations Small Cap Equity Fund | | |
Investor Class | | 0 |
Institutional Class | | 835,697.127 |
PART 4
INFORMATION ON PROXY VOTING and the operation of THE SPECIAL MEETING
Who is Eligible To Vote
Shareholders of record of a Fund as of the close of business on April 19, 2021 (the “Record Date”) are entitled to vote on all of that Fund’s business at the Special Meeting and any adjournments thereof. Each whole share is entitled to one vote on eachas to any matter on which it is entitled to vote, and each fractional share iswill be entitled to a proportionate fractional vote. Shares represented by properly executed proxies, unless revoked before or at the Special Meeting, will be voted according to the shareholder’s instructions. If you sign a proxy, but do not fill in a vote, your shares will be voted to approve the proposals. If any other business comes before the Meeting, your shares will be voted at the discretion of the persons named as proxies.
Proposals by Shareholders
The Trust does not intend to hold meetings of shareholders except to the extent that such meetings may are required under the 1940 Act or state law. Under the Trust’s By-Laws, and to the extent permitted by the 1940 Act, a meeting of the shareholders for the purpose of electing Trustees may be called at the request of shareholders holding not less than ten (10) percent of the shares of the Trust, provided that the shareholders requesting such a meeting must pay the Trust the reasonably estimated cost of preparing and mailing the notice of such meeting, which an authorized officer of the Trust shall determine and specify to such shareholders. No meeting of shareholders will be called upon the request of shareholders to consider any matter which is substantially the same as a matter voted upon at any meeting of the shareholders held during the preceding twelve (12) months, unless requested by the holders of a majority of all shares entitled to be voted at such meeting. Shareholders who wish to submit proposals for inclusion in the proxy statement for a subsequent shareholder meeting should submit their written proposals to the Trust at its principal office within a reasonable time before such meeting. The timely submission of a proposal does not guarantee its consideration at the meeting.
Proxies,
Quorum and
Voting at the Special MeetingShareholders may use the proxy card provided if they are unable to attend the Special Meeting in person or wish to have their shares voted by a proxy even if they do attend the Special Meeting. Any shareholder that has given a proxy to someone has the power to revoke that proxy at any time prior to its exercise by executing a superseding proxy or by submitting a noticeMethods of revocation to the Secretary of the Trust. Tabulation
The
Secretary of the Trust is Robert J. McLaughlin, and he may be reached at the following address: c/o PENN Capital Management Company, LLC, 1200 Intrepid Avenue, Suite 400 Philadelphia, Pennsylvania 19112. In addition, although mere attendance at the Special Meeting will not revoke a proxy, a shareholder present at the Special Meeting may withdraw a previously submitted proxy and vote in person.All properly executed and unrevoked proxies received in time for the Special Meeting will be voted in accordance with the instructions contained in the proxies. A proxy shall be deemed executed if the shareholder’s name is placed on the proxy (whether by manual signature, typewriting, telegraphic or electronic transmission (as defined in Section 3806 of the Delaware Statutory Trust Act, as amended) or otherwise) by the shareholder or the shareholder’s attorney-in-fact. If no instruction is given, the persons named as proxies will vote the shares represented thereby in favor of the proposals described herein and will use their best judgment to vote on such other business as may properly come before the Special Meeting or any adjournment thereof. The Funds may also arrange to have votes recorded by telephone, the Internet or other electronic means.
Telephonic Voting. Shareholders may call the toll-free phone number indicated on their proxy card to vote their shares. Shareholders will need to enter the control number set forth on their proxy card and then will be prompted to answer a series of simple questions. The telephonic procedures are designed to authenticate a shareholder’s identity, to allow shareholders to vote their shares and to confirm that their instructions have been properly recorded.
Internet Voting. Shareholders may submit an “electronic” proxy over the Internet in lieu of returning an executed proxy card. In order to use this voting feature, shareholders should go to the website indicated on the shareholder’s proxy card and enter the control number set forth on the proxy card. Shareholders will be prompted to follow a simple set of instructions which will appear on the website.
Quorum. With respect to a proposal requiring approval of all Fund shareholders voting together as a single class, the presence in person or by proxy of the holders of one-third (33-1/3%) of all shares of the Funds entitled to vote shall constitute a quorum for the transaction of business at the Special Meeting. With respect to a proposal requiring approval by each Fund voting separately, the presence in person or by proxy of the holders of one-third (33-1/3%) of the outstanding shares of athe Fund entitled to vote, shall constitutepresent in person or represented by proxy, constitutes a quorum for the transaction of businessProposals for the Fund. Votes cast by proxy or in person at the SpecialMeeting will be counted by persons appointed by the Board as inspectors for the Meeting.
For purposes of determining the presence of a quorum for the Meetings, the inspectors will count as present the total number of shares voted “for” or “against” approval of any proposal, as well as shares represented by proxies that reflect abstentions and broker non-votes (that is, proxies from“broker non-votes” (i.e., shares held by brokers or nominees indicating that such personsas to which instructions have not been received instructions from the beneficial owners or otherthe persons entitled to vote sharesand the broker or nominee does not have the discretionary voting power on a particular matter with respectmatter). With regard to which the brokers or nominees do not have discretionary power) will be treated as votes present atProposals, assuming the Special Meeting, butpresence of a quorum, abstentions and broker non-votes“broker non-votes” will not be treated as votes cast at such meeting. Abstentions and broker non-votes, therefore (i) will be included for purposes of determining whetherthe Meeting.
Adjournment
If a quorum is
present; and (ii)not present or sufficient votes in favor of the Proposals is not received by the time scheduled for the Meeting, the persons named as proxies may propose one or more adjournments of the Meeting to a date within a reasonable time after the Record Date to permit further solicitation of proxies with respect to the Proposals. In addition, if the persons named as proxies determine it is advisable to defer action on the Proposals the persons named as proxies may propose one or more adjournments of either Meeting to a date within a reasonable time after the Record Date in order to defer action on the Proposals as they deem advisable. Any such adjournments will
have no effect on proposals that require
a plurality for approval, or on proposals requiring anthe affirmative vote of a majority of
the votes cast
for approval.If a quorum is not presenton the question in person or by proxy at the Special Meeting, or if a quorum is present at the Special Meeting but sufficient votes to approve a proposal are not received, the Trust expects the chairmansession of the Special MeetingMeetings to adjourn the Special Meeting (from time to timebe adjourned. The persons named as proxies will vote in his or her discretion) in order to solicit additional proxies. Any adjournment may be held without the necessityfavor of further notice if the time and place thereof are announced at the Special Meeting at which the adjournment is taken. A shareholder vote may be taken on one or more proposals prior to such adjournment ifthose proxies that they are entitled to vote in favor of the Proposals. They will vote against any such adjournment those proxies required to be voted against any of the Proposals. They will vote in their discretion shares represented by proxies that reflect abstentions and “broker non-votes”. A Proposal for which sufficient affirmative votes for its approval have been received and it is otherwise appropriate. Such voteby the time of the Meeting will be consideredacted upon and such action will be final regardless of whether the Speciala Meeting is adjourned to permit additional solicitation with respect to any other proposal.
Proposal.
Investment Advisor
The Fund’s investment adviser is Evermore Global Advisors, LLC, located at 89 Summit AvenueRequired Vote. As provided under the 1940 Act, approval, Summit, NJ 07901.
Other Service Providers
The principal executive office of the New Advisory Agreement with respectTrust is located at 615 East Michigan Street, Milwaukee, Wisconsin 53202. The Trust’s administrator, transfer and dividend disbursing agent is U.S. Bank Global Fund Services, 615 East Michigan Street, Milwaukee, Wisconsin 53202. The Trust’s principal underwriter/distributor is Quasar Distributors, LLC, 111 East Kilbourn Avenue, Suite 1250, Milwaukee, WI 53202.
Independent Registered Public Accounting Firm
Ernst & Young (“E&Y”) has acted as the independent registered public accounting firm to athe Fund will require the vote of a majoritysince December 18, 2009. Upon recommendation of the outstanding voting securitiesTrust’s Audit Committee, the Board has selected E&Y as the independent registered public accounting firm to audit and certify the Trust’s financial statements for the Fund’s most recent and current fiscal year ended as of that Fund. In accordance withDecember 31, 2022. Representatives of E&Y will not be present at the 1940 Act, a “majorityMeeting.
Outstanding Shares
The number of
the outstanding voting securities” of a Fund means the lesser of (a) 67% or more of the shares of the Fund
present at a shareholder meeting if the owners of more than 50% of the shares of the Fund thenand class issued and outstanding
are present in person or by proxy, or (b) more than 50% of the outstanding shares of the Fund entitled to vote at the meeting. With respect to the proposal to elect eight (8) Trustees of the Trust, a plurality of shares of all Funds of the Trust, voting together and not separately by Fund, is required to elect a Trustee. That means that the eight (8) nominees who receive the highest number of votes cast at the Special Meeting will be elected as Trustees.Method of Solicitation and Expenses
Your vote is being solicited by the Board of Trustees of the Trust. The cost of soliciting proxies, including the costs related to the printing, mailing and tabulation of proxies and the fees of the proxy soliciting agent, ultimately will be borne by the Adviser. The Trust has engaged AST Fund Services, a professional proxy solicitation firm, to serve as the proxy soliciting and tabulation agent for the Special Meeting and estimates AST Fund Services’ fees to be approximately $12,000. Those fees do not reflect the costs associated with printing and mailing of the proxy materials and the costs associated with reimbursing brokerage firms and other financial intermediaries for their expenses in forwarding proxy materials to the beneficial owners and soliciting them to execute proxies. The Trust expects that the solicitation will be primarily by mail, but may also include telephone, electronic or other means of communication. If the Trust does not receive your proxy by a certain time, you may receive a telephone call from the proxy soliciting agent asking you to vote. The Funds do not reimburse Trustees and officers of the Trust, or regular employees and agents of Penn Capital, for any involvement in the solicitation of proxies.
The Trust will not bear any expenses in connection with the Transaction, including any costs of soliciting shareholder approval. All such expenses ultimately will be borne by Penn Capital.
Voting by Penn Capital
[Penn Capital intends to vote shares it owns and/or has the power to vote in the same proportion (for and against) the proposals described herein as those cast by other shareholders for and against these proposals, except in the case of Funds where Penn Capital owns 25% or more of a Fund’s outstanding shares. In the case of Funds where Penn Capital owns 25% or more of a Fund’s outstanding shares as ofon the Record Date Penn Capital intends to vote those shares in favor of the proposalswas as Penn Capital may already be deemed to control those Funds because of the size of its ownership interest.]
Ownership of the Funds
follows:
| Fund | Number of Issued and Outstanding Shares |
| Evermore Global Value Fund | […] |
As of the Record Date, the
Current Trustees and officers of the Trust as a group owned
the percentagebeneficially less than one percent (1%) of the outstanding shares of the
Institutional Class of each Fund
as set forth in the table below. The table indicates ownership amountsand of the Adviser’s parent company, 525 Holding Co., Inc. (“525 Holding”), which is under the control of Richard A. Hocker. No information is provided for Investor Class shares because shares of that class had not yet been issuedTrust as
a whole. As of the
Record Date. | | | | | | | | | | | |
Fund | Ownership by 525 Holding | Beneficial Ownership by Individuals | Total |
Penn Capital Floating Rate Income Fund (formerly, Penn Capital Defensive Floating Rate Income Fund) | [ ]% | [ ]% | [ ]% |
Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund) | [ ]% | [ ]% | [ ]% |
Penn Capital Opportunistic High Income Fund | [ ]% | [ ]% | [ ]% |
Penn Capital Managed Alpha SMID Cap Equity Fund | [ ]% | [ ]% | [ ]% |
Penn Capital Special Situations Small Cap Equity Fund | [ ]% | [ ]% | [ ]% |
The Trustee Nominees do not own any sharesclose of the Funds as ofbusiness on the Record Date. Each person that,Date, the following persons were the only persons who were record owners or, to the knowledge of the Funds, owned beneficially orFund, were beneficial owners of record 5% or more of the Fund’s outstanding shares of anyshares.
Evermore Global Value Fund
Name and
Address | %
Ownership | Type of Ownership |
| | |
| […]% | Record |
| […]% | Record |
| […]% | Record |
Reports to Shareholders.
Copies of the
Funds as of the Record Date is listed in Exhibit C to this proxy statement.Procedures for Shareholder Communications with the Board
ShareholdersFund’s most recent annual and semi-annual reports may send communications to the Board. Shareholders should send communications intended for the Board by addressing the communication directly to the Board of Trustees (or individual Trustee(s)) and/or otherwise clearly indicating in the salutation that the communication is for the Board of Trustees (or individual Trustee(s)) and by sending the communication to the Trust’s address for the Trustee(s) at c/o Penn Capital Management Company, LLC, 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112. Other shareholder communications received by the Trust not directly addressed and sent to the Board of Trustees will be reviewed and generally responded to by management, and will be forwarded to the Board only at management’s discretion based on the matters contained therein.
Other Business
While the Special Meeting has been called to transact any business that may properly come before it, the only matters that the Trustees intend to present are those matters stated in the attached Notice of Special Meeting of Shareholders. However, if any additional matters properly come before the Special Meeting, and on all matters incidental to the conduct of the Special Meeting, it is the intention of the persons named in the proxy to vote the proxy in accordance with their judgment on such matters unless instructed to the contrary.
[May 10], 2021
PART 5
OTHER MATTERS
Proxy Statement Delivery
“Householding” is the term used to describe the practice of delivering one copy of a document to a household of shareholders instead of delivering one copy of a document to each shareholder in the household. Shareholders of a Fund who share a common address and who have not opted out of the householding process should receive a single copy of the proxy statement together with one Proxy Card or Voting Instruction Card, as applicable. If you received more than one copy of the proxy statement, you may elect to household in the future; if you received a single copy of the proxy statement, you may opt out of householding in the future; and you may, in any event, obtain an additional copy of this proxy statementrequested without charge by calling 1-844-302-7366866-EVERMORE (866-383-7667) or visit the Fund’s website at https://evermoreglobal.com/our-products/global-value-fund-overview/ or writing to the Trust at the following address: PENN Capital Funds Trust,Fund, c/o U.S. Bank Global Fund Services, P.O. Box 701,615 East Michigan Street, Milwaukee, Wisconsin 53201-0701. CopiesWI 53202.
Other Matters
The Board knows of this Proxy Statementno other matters that may come before the Meeting, other than the proposal as set forth above. If any other matter properly comes before the Meeting, the persons named as proxies will vote on the same in their discretion.
Notice to Banks, Broker-Dealers and Voting Directors
Banks, broker-dealers, and voting directors should advise the
accompanying NoticeTrust, in care of
Special Meeting are also available at www.penncapital.com.Principal Offices and Current Service Providers
The principal office of PENN Capital Funds Trust is at Navy Yard Corporate Center, 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112. Penn Capital Management Company, LLC, which is also located at Navy Yard Corporate Center, 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112, serves as the investment adviser to each Fund. U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services, (“Fund Services”) serves as the Funds’ administrator, transfer agent and fund accountant and is located at 615 East Michigan Street, Milwaukee, Wisconsin 53202. U.S. Bank National Association, an affiliate53202, whether other persons are beneficial owners of Fund Services, isshares held in their names for which proxies are being solicited and, if so, the custodiannumber of copies of the Funds’ assetsProxy Statement and is located at 555 North RiverCenter Drive, Suite 302, Milwaukee, Wisconsin 53212. The Trust’s principal underwriter is Foreside Fund Services, LLC (“Foreside”), which located at Three Canal Plaza, Suite 100, Portland, Maine 04101. Foreside Fund Officer Services, LLC, an affiliateAnnual Reports they wish to receive in order to supply copies to the beneficial owners of Foreside that is also located at Three Canal Plaza, Suite 100, Portland, Maine 04101, provides a CCO and an AML Officer as well as certain additional compliance support functions for the Trust. Stradley Ronon Stevens & Young, LLP, located at 2600 One Commerce Square, Philadelphia, Pennsylvania 19103, serves as the Funds’ current legal counsel.
Fiscal Year
The fiscal year-end of each Fund is June 30.
respective shares.
Exhibit A
EXHIBIT A
FORM OF NEW ADVISORY AGREEMENT
FORM OF
INVESTMENT ADVISORY AGREEMENT
PENN Capital Funds Trust
Evermore Global Value Fund
AGREEMENT made as of
[ ] by and___________, 2023 between
PENN Capital Funds Trust,THE RBB FUND TRUST, a Delaware statutory trust
(the “Fund”(herein called the "Fund")
, and
Penn Capital Management Company,F/M INVESTMENTS, LLC, d/b/a NORTH SLOPE CAPITAL LLC, a Delaware limited liability company
(the “Investment Adviser”(herein called the "Investment Adviser").
WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940 (the “1940 Act”), and currently offers or proposes to offer shares representing interests in separate investment portfolios; and
WHEREAS, the Fund desires to retain the Investment Adviser to render certain investment advisory services to the Fund with respect to
eachthe Evermore Global Value Fund, a series of the Fund
set forth on Schedule A of this Agreement (each a(the “Portfolio”
and collectively, the “Portfolios”), and the Investment Adviser is willing to so render such services; and
WHEREAS, the Board of Trustees of the Fund
andhas approved this Agreement, subject to approval by the shareholders of the
Portfolios have approved this Agreement,Portfolio, and the Investment Adviser is willing to furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, it is agreed between the parties hereto as follows:
SECTION 1. APPOINTMENT. The Fund hereby appoints the Investment Adviser to act as investment adviser for the
PortfoliosPortfolio for the period and on the terms set forth in this Agreement. The Investment Adviser accepts such appointment and agrees to render the services herein set forth for the compensation herein provided.
SECTION 2. DELIVERY OF DOCUMENTS. The Fund has furnished the Investment Adviser with copies properly certified or authenticated of each of the following:
(a) Resolutions of the Board of Trustees of the Fund authorizing the appointment of the Investment Adviser and the execution and delivery of this Agreement; and
(b) A prospectus and statement of additional information relating to each class of shares representing interests in the
PortfoliosPortfolio of the Fund in effect under the Securities Act of 1933 (such prospectus and statement of additional information, as presently in effect and as they shall from time to time be amended and supplemented, are herein collectively called the
“Prospectus”"Prospectus" and “Statement of Additional Information,” respectively).
The Fund will promptly furnish the Investment Adviser from time to time with copies, properly certified or authenticated, of all amendments of or supplements to the foregoing, if any.
In addition to the foregoing, the Fund will also provide the Investment Adviser with copies of the Fund’s CharterAmended and Restated Agreement and Declaration of Trust and By-laws, and any registration statement or service contracts related to the Portfolios,Portfolio, and will promptly furnish the Investment Adviser with any amendments of or supplements to such documents.
(a) Subject to the supervision of the Board of Trustees of the Fund and subject to Section 3 (b) below, the Investment Adviser will provide for the overall management of the
PortfoliosPortfolio including (i) the provision of a continuous investment program for the
Portfolios,Portfolio, including investment research and management with respect to all securities, investments, cash and cash equivalents in the
Portfolios,Portfolio, (ii) the determination from time to time of the securities and other investments to be purchased, retained, or sold by the Fund for the
Portfolios,Portfolio, and (iii) the placement from time to time of orders for all purchases and sales made for the
Portfolios.Portfolio. The Investment Adviser shall have a limited power-of-attorney to execute any trading and/or subscription documents necessary in order to carry out its duties under this Section 3. The Investment Adviser will provide the services rendered by it hereunder in accordance with the
Portfolios’ respectivePortfolio's investment
objectives,objective, restrictions and policies as stated in the applicable Prospectus and Statement of Additional Information, provided that the Investment Adviser has actual notice or knowledge of any changes by the Board of Trustees to such investment objectives, restrictions or policies. The Investment Adviser further agrees that it will render to the
Fund’sFund's Board of Trustees such periodic and special reports regarding the performance of its duties under this Agreement as the Board may reasonably request. The Investment Adviser agrees to provide to the Fund (or its agents and service providers) prompt and accurate data with respect to the
Portfolios’Portfolio's transactions and, where not otherwise available, the daily valuation of securities in the
Portfolios.Portfolio.
(b)
Sub-Advisers. The Investment Adviser may delegate certain of its responsibilities hereunder with respect to provision of the investment advisory services set forth in Section 3(a) above to one or more other parties (each such party, a “Sub-Adviser”), pursuant in each case to a written agreement with such Sub-Adviser that meets the requirements of Section 15 of the 1940 Act and rules thereunder applicable to contracts for service as investment adviser of a registered investment company (including without limitation the requirements for approval by the Board of Trustees of the Fund and the shareholders of the
Portfolios)Portfolio), subject, however, to such exemptions as may be granted by the U.S. Securities and Exchange Commission upon application or by rule. Such Sub-Adviser may (but need not) be affiliated with the Investment Adviser.
Any delegation of services pursuant to this Section 3(b) shall be subject to the following conditions:
1. Any fees or compensation payable to any Sub-Adviser shall be paid by the Investment Adviser and no additional obligation may be incurred on the Fund’s behalf to any Sub-Adviser; except that any Fund expenses that may be incurred by the Investment Adviser and paid by the Fund to the Investment Adviser directly may be incurred by the Sub-Adviser and paid by the Fund to the Sub-Adviser directly, so long as such payment arrangements are approved by the Fund and the Investment Adviser prior to the Sub-Adviser’s incurring such expenses.
2. If the Investment Adviser delegates its responsibilities to more than one Sub-Adviser, the Investment Adviser shall be responsible for assigning to each Sub-Adviser that portion of the assets of
athe Portfolio for which the Sub-Adviser is to act as Sub-Adviser, subject to the approval of the Fund’s Board of Trustees.
3. To the extent that any obligations of the Investment Adviser or any Sub-Adviser require any service provider of the Fund or
a Portfolio to furnish information or services, such information or services shall be furnished by the Fund’s or
suchthe Portfolio’s service providers directly to both the Investment Adviser and any Sub-Adviser.
SECTION 4. BROKERAGE. Subject to the Investment
Adviser’sAdviser's obligation to obtain best price and execution, the Investment Adviser shall have full discretion to select brokers or dealers to effect the purchase and sale of securities. When the Investment Adviser places orders for the purchase or sale of securities for
athe Portfolio, in selecting brokers or dealers to execute such orders, the Investment Adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services for the benefit of the Portfolio directly or indirectly. Without limiting the generality of the foregoing, the Investment Adviser is authorized to cause
athe Portfolio to pay brokerage commissions which may be in excess of the lowest rates available to brokers who execute transactions for the Portfolio or who otherwise provide brokerage and research services utilized by the Investment Adviser, provided that the Investment Adviser determines in good faith that the amount of each such commission paid to a broker is reasonable in relation to the value of the brokerage and research services provided by such broker viewed in terms of either the particular transaction to which the commission relates or the Investment
Adviser’sAdviser's overall responsibilities with respect to accounts as to which the Investment Adviser exercises investment discretion. The Investment Adviser may aggregate securities orders so long as the Investment Adviser adheres to a policy of allocating investment opportunities to
eachthe Portfolio over a period of time on a fair and equitable basis relative to other clients. In no instance will the
Portfolios’Portfolio’s securities be purchased from or sold to the
Fund’sFund's principal underwriter, the Investment Adviser, or any affiliated person thereof, except to the extent permitted by SEC exemptive order or by applicable law.
The Investment Adviser shall report to the Board of Trustees of the Fund at least quarterly with respect to brokerage transactions that were entered into by the Investment Adviser, pursuant to the foregoing paragraph, and shall certify to the Board that the commissions paid were reasonable in terms either of that transaction or the overall responsibilities of the Investment Adviser to the Fund and the Investment
Adviser’sAdviser's other clients, that the total commissions paid by the Fund were reasonable in relation to the benefits to the Fund over the long term, and that such commissions were paid in compliance with Section 28(e) of the Securities Exchange Act of 1934.
SECTION 5. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment Adviser further agrees that it will comply with all applicable rules and regulations of all federal regulatory agencies
and self-regulatory organizations having jurisdiction over
the Portfolio and/or the Investment Adviser in the performance of its duties hereunder. The Investment Adviser will treat confidentially and as proprietary information of the Fund all records and other information relating to the Fund and prior, present, or potential shareholders (except with respect to clients of the Investment Adviser) and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where the Investment Adviser may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Fund. Where the Investment Adviser may be exposed to civil or criminal contempt proceedings for failure to comply with a request for records or other information relating to the Fund, the Investment Adviser may comply with such request prior to obtaining the Fund’s written approval, provided that the Investment Adviser has taken reasonable steps to promptly notify the Fund, in writing, upon receipt of the request.
SECTION 6. SERVICES NOT EXCLUSIVE. The Investment Adviser and its officers may act and continue to act as investment managers for others, and nothing in this Agreement shall in any way be deemed to restrict the right of the Investment Adviser to perform investment management or other services for any other person or entity, and the performance of such services for others shall not be deemed to violate or give rise to any duty or obligation to the
PortfoliosPortfolio or the Fund.
Nothing in this Agreement shall limit or restrict the Investment Adviser or any of its directors, officers, affiliates or employees from buying, selling or trading in any securities for its or their own account. The Fund acknowledges that the Investment Adviser and its directors, officers, affiliates, employees and other clients may, at any time, have, acquire, increase, decrease, or dispose of positions in investments which are at the same time being acquired or disposed of for
one or more of the
Portfolios.Portfolio. The Investment Adviser shall have no obligation to acquire for the
PortfoliosPortfolio a position in any investment which the Investment Adviser, its directors, officers, affiliates or employees may acquire for its or their own accounts or for the account of another client, so long as it continues to be the policy and practice of the Investment Adviser not to favor or disfavor consistently or consciously any client or class of clients in the allocation of investment opportunities so that, to the extent practical, such opportunities will be allocated among clients over a period of time on a fair and equitable basis.
The Investment Adviser agrees that this Section 6 does not constitute a waiver by the Fund of the obligations imposed upon the Investment Adviser to comply with Sections 17(d) and 17(j) of the 1940 Act, and the rules thereunder, nor constitute a waiver by the Fund of the obligations imposed upon the Investment Adviser under Section 206 of the Investment Advisers Act of 1940 and the rules thereunder. Further, the Investment Adviser agrees that this Section 6 does not constitute a waiver by the Fund of the fiduciary obligation of the Investment Adviser arising under federal or state law, including Section 36 of the 1940 Act. The Investment Adviser agrees that this Section 6 shall be interpreted consistent with the provisions of Section 17(i) of the 1940 Act.
SECTION 7. BOOKS AND RECORDS. In compliance with the requirements of Rule
3la-331a‑3 under the 1940 Act, the Investment Adviser hereby agrees that all records which it maintains for the
PortfoliosPortfolio are the property of the Fund and further agrees to surrender promptly to the Fund any of such records upon the
Fund’sFund's request. The Investment Adviser further agrees to preserve for the periods prescribed by Rule
3la-231a‑2 under the 1940 Act the records required to be maintained by Rule
3la-131a‑1 under the 1940 Act.
SECTION 8. EXPENSES. During the term of this Agreement, the Investment Adviser will pay all expenses incurred by it in connection with its activities under this Agreement.
EachThe Portfolio shall bear all of its own expenses not specifically assumed by the Investment Adviser. General expenses of the Fund not readily identifiable as belonging to an investment portfolio of the Fund shall be allocated among all investment portfolios by or under the direction of the
Fund’sFund's Board of Trustees in such manner as the Board determines to be fair and equitable. Expenses borne by the
PortfoliosPortfolio shall include, but are not limited to, the following (or the
Portfolios’Portfolio's share of the following): (a) the cost (including brokerage commissions) of securities purchased or sold by the
PortfoliosPortfolio and any losses incurred in connection therewith; (b) fees payable to and expenses incurred on behalf of the
PortfoliosPortfolio by the Investment Adviser; (c) filing fees and expenses relating to the registration and qualification of the Fund and the
Portfolios’Portfolio’s shares under federal and/or state securities laws and maintaining such registrations and qualifications; (d) fees and salaries payable to the
Fund’sFund's trustees and officers; (e) taxes (including any income or franchise taxes) and governmental fees; (f) costs of any liability and other insurance or fidelity bonds; (g) any costs, expenses or losses arising out of a liability of or claim for damages or other relief asserted against the Fund or the
PortfoliosPortfolio for violation of any law; (h) legal, accounting and auditing expenses, including legal fees of special counsel for the independent trustees; (i) charges of custodians and other agents; (j) expenses of setting in type and printing prospectuses, statements of additional information and supplements thereto for existing shareholders, reports, statements, and confirmations to shareholders and proxy materials that are not attributable to a class; (k) costs of mailing prospectuses, statements of additional information and supplements thereto to existing shareholders, as well as reports to shareholders and proxy materials that are not attributable to a class; (1) any extraordinary expenses; (m) fees, voluntary assessments and other expenses incurred in connection with membership in investment company organizations; (n) costs of mailing and tabulating proxies and costs of
shareholders’shareholders' and
trustees’trustees' meetings; (o) costs of independent pricing services to value
a Portfolio’sthe Portfolio's securities; and (p) the costs of investment company literature and other publications provided by the Fund to its trustees and officers. Distribution expenses, transfer agency expenses, expenses of preparing, printing and mailing prospectuses, statements of additional information, proxy statements and reports to shareholders, and organizational expenses and registration fees, identified as belonging to a particular class of
athe Portfolio are allocated to such class.
SECTION 9. VOTING. The Investment Adviser shall have the authority to vote as agent for the
Portfolios,Portfolio, either in person or by proxy, tender and take all actions incident to the ownership of all securities in which the
Portfolios’Portfolio’s assets may be invested from time to time, subject to such policies and procedures as the Board of Trustees of the Fund may adopt from time to time.
SECTION 10. RESERVATION OF NAME. The Investment Adviser shall at all times have all rights in and to
eachthe Portfolio’s name and all investment models used by or on behalf of the
Portfolios.Portfolio. The Investment Adviser may use the
Portfolios’ namesPortfolio’s name or any portion thereof in connection with any other
mutual fundinvestment company or business activity without the consent of any shareholder and the Fund shall execute and deliver any and all documents required to indicate the consent of the Fund to such use.
The Fund hereby agrees that in the event that neither the Investment Adviser nor any of its affiliates acts as investment adviser to a Portfolio, the name of that Portfolio will be changed to one that does not suggest an affiliation with the Investment Adviser.SECTION 11. COMPENSATION.
(a) For the services provided and the expenses assumed pursuant to this Agreement with respect to
eachthe Portfolio, the Fund will pay the Investment Adviser from the assets of
eachthe Portfolio and the Investment Adviser will accept as full compensation therefor a fee, computed daily and payable monthly, at the annual rate of
each0.99% of the Portfolio’s average daily net
assets as set forth on Schedule A hereto.assets. For any period less than a full month during which this Agreement is in effect, the fee shall be prorated according to the proportion which such period bears to a full month.
(b) The fee attributable to
athe Portfolio shall be satisfied only against the assets of
thatthe Portfolio and not against the assets of
any other Portfolio or any other investment portfolio of the Fund. The Investment Adviser may from time to time agree not to impose all or a portion of its fee otherwise payable hereunder (in advance of the time such fee or portion thereof would otherwise accrue) and/or undertake to pay or reimburse
athe Portfolio for all or a portion of its expenses not otherwise required to be borne or reimbursed by the Investment Adviser.
SECTION 12. LIMITATION OF LIABILITY. The Investment Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates, 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 misfeasance, bad faith or gross negligence on the part of the Investment Adviser in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement (“disabling conduct”). The
PortfoliosPortfolio will indemnify the Investment Adviser against and hold it harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and
expenses)expenses and indemnification payments made to any Sub-Adviser) resulting from any claim, demand, action or suit not resulting from disabling conduct by the Investment
Adviser.Adviser (or a Sub-Adviser). Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Investment Adviser was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Investment Adviser was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of trustees of
athe Portfolio who are neither
“interested persons”"interested persons" of the Fund nor parties to the proceeding
(“("disinterested non-party
trustees”trustees") or (b) an independent legal counsel in a written opinion. The Investment Adviser shall be entitled to advances from
athe Portfolio for payment of the reasonable expenses incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under the Delaware Statutory Trust Act. The Investment Adviser shall provide to
eachthe Portfolio a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Portfolio has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Investment Adviser shall provide a security in form and amount acceptable to
eachthe Portfolio for its undertaking; (b)
eachthe Portfolio is insured against losses arising by reason of the advance; or (c) a majority of a quorum of disinterested non-party trustees, or independent legal counsel, in a written opinion, shall have determined, based upon a review of facts readily available to
eachthe Portfolio at the time the advance is proposed to be made, that there is reason to believe that the Investment Adviser will ultimately be found to be entitled to indemnification. Any amounts payable by
athe Portfolio under this Section shall be satisfied only against the assets of
thatthe Portfolio and not against the assets of any other
Portfolio or any other investment portfolio of the Fund.
The limitations on liability and indemnification provisions of this Section 12 shall not be applicable to any losses, claims, damages, liabilities or expenses arising from the Investment
Adviser’sAdviser's rights to
athe Portfolio’s name. The Investment Adviser shall indemnify and hold harmless the Fund and
eachthe Portfolio for any claims arising from the use of the term
“Penn Capital Investment Company” or “Penn Capital”“Evermore” in the name of the Portfolio.
Each Sub-Adviser shall be a third-party beneficiary to the indemnification obligations of the Portfolio to the Adviser set forth in this Section 12.
SECTION 13. DURATION AND TERMINATION. This Agreement shall become effective with respect to the
Portfolios asPortfolio upon approval of this Agreement by vote of a majority of the
date first above writtenoutstanding voting securities of the Portfolio and, unless sooner terminated as provided herein, shall continue with respect to
eachthe Portfolio until
[AugustAugust 16,
2022].2024. Thereafter, if not terminated, this Agreement shall continue with respect to
eachthe Portfolio for successive annual periods ending on August 16, provided such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Trustees of the Fund who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Board of Trustees of the Fund or by vote of a majority of the outstanding voting securities of
athe Portfolio; provided, however, that this Agreement may be terminated with respect to
athe Portfolio by the Fund at any time, without the payment of any penalty, by the Board of Trustees of the Fund or by vote of a majority of the outstanding voting securities of
athe Portfolio, on 60
days’days' prior written notice to the Investment Adviser, or by the Investment Adviser at any time, without payment of any penalty, on 60
days’days' prior written notice to
a Portfolio.the Fund. This Agreement will immediately terminate in the event of its assignment. (As used in this Agreement, the terms
“majority"majority of the outstanding voting securities,
” “interested person”" "interested person" and
“assignment”"assignment" shall have the same meaning as such terms have in the 1940 Act).
SECTION 14. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed, discharged or terminated orally, except by an instrument in writing signed by the party against which enforcement of the change, discharge or termination is sought, and, unless otherwise permitted by the 1940 Act, no amendment of this Agreement affecting
athe Portfolio shall be effective until approved by vote of the holders of a majority of the outstanding voting securities of
thatthe Portfolio.
SECTION 15. MISCELLANEOUS. The captions in this Agreement are included for convenience of reference only and in no way define or delimit 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 this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors.
SECTION 16. NOTICE. All notices hereunder shall be given in writing and delivered by hand, national overnight courier, facsimile (provided written confirmation of receipt is obtained and said notice is sent via first class mail on the next business day) or mailed by certified mail, return receipt requested, as follows:
If to the Fund:
[Name of Fund]
The RBB Fund Trust
c/o
PENN Capital Funds Trust c/o USU.S. Bancorp Fund Services, LLC
Attention:
Salvatore FaiaSteven Plump
If to the Investment Adviser:
Penn
F/M Investments, LLC d/b/a North Slope Capital,
Management Company, LLC
1200 Intrepid Avenue,
3050 K Street NW Suite
400 Philadelphia, PA 19112
W-201
Washington, DC 20007
The effective date of any notice shall be (i) the date such notice is sent if such delivery is effected by hand or facsimile, (ii) one business day after the date such notice is sent if such delivery is effected by national overnight courier; or (iii) the fifth (5
th) Business Day after the date of mailing thereof.
SECTION 17. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof.
SECTION 18. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written.
THE RBB FUND TRUST
By: ____________________________
Name: James G. Shaw
Title: Chief Operating Officer, Chief Financial
Officer and Secretary
F/M INVESTMENTS, LLC d/b/a NORTH SLOPE CAPITAL, LLC
By: ____________________________
Name: _________________________
Title: _________________________
SCHEDULE A
Series or Fund of The RBB Fund Trust Evermore Global Value Fund | Annual Fee Rate 0.99% |
Exhibit B
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of February 17, 2023 (the “Agreement”) by and between F/m Investments, LLC d/b/a North Slope Capital LLC, a Delaware limited liability company (the “Adviser”), and MFP Investors LLC, a Delaware limited liability company (the “Sub-Adviser”).
WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (“Advisers Act”);
WHEREAS, the Adviser has entered into an investment advisory agreement (the “Investment Advisory Agreement”) with The RBB Fund Trust, a Delaware statutory trust (the “Trust”) that is an investment company registered under the Investment Company Act of 1940, as amended (“Investment Company Act”);
WHEREAS, the Sub-Adviser is registered as an investment adviser under the Advisers Act;
WHEREAS, the Adviser desires to retain the Sub-Adviser to render investment advisory and other services to the fund(s) specified in Appendix A hereto (as such Appendix may be amended by the parties from time to time with consent of the Sub-Adviser), each a series of the Trust (each a “Fund” and collectively, the “Funds”), in the manner and on the terms hereinafter set forth;
WHEREAS, the Adviser has the authority under the Investment Advisory Agreement with the Trust to select advisers for each Fund of the Trust; and
WHEREAS, the Sub-Adviser is willing to furnish such services to the Adviser and each Fund;
NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, and intending to be legally bound hereby, the Adviser and the Sub-Adviser agree as follows:
1. APPOINTMENT OF THE SUB-ADVISER
The Adviser hereby appoints the Sub-Adviser to act as an investment adviser for each Fund, subject to the supervision and oversight of the Adviser and the Trustees of the Trust, and in accordance with the terms and conditions of this Agreement. The Sub-Adviser will be an independent contractor and will have no authority to act for or represent the Trust or the Adviser in any way or otherwise be deemed an agent of the Trust or the Adviser except as expressly authorized in this Agreement or another writing by the Trust, the Adviser and the Sub-Adviser. Except as expressly set forth in this Agreement, the Sub-Adviser shall not be responsible for any aspects of the management or administration of each Fund or the Trust.
2. ACCEPTANCE OF APPOINTMENT
The Sub-Adviser accepts the appointment to act as an investment adviser for each Fund and agrees to render the services herein set forth, for the compensation herein provided.
The assets of each Fund will be maintained in the custody of U.S. Bank NA, or such other custodian as may be appointed by such Fund from time to time. The Sub-Adviser will not have custody of any securities, cash or other assets of each Fund and will not be liable for any loss resulting from any act or omission of the custodian other than acts or omissions arising in accordance with the instructions of the Sub-Adviser.
3. SERVICES TO BE RENDERED BY THE SUB-ADVISER TO THE FUNDS
A. As investment adviser to the Funds, the Sub-Adviser will coordinate the investment and reinvestment of the assets of each Fund and determine the composition of the assets of each Fund, subject always to the supervision and control of the Adviser and the Trustees of the Trust.
B. As part of the services it will provide hereunder, the Sub-Adviser will:
(i) obtain and evaluate, to the extent deemed necessary and advisable by the Sub-Adviser in its discretion, pertinent economic, statistical, financial, and other information affecting the economy generally and individual companies or industries, the securities of which are included in the Funds or are under consideration for inclusion in the Funds;
(ii) formulate and implement a continuous investment program for each Fund;
(iii) implement the investment program for each Fund by arranging for the purchase and sale of securities and other investments, including issuing directives to the administrator of the Trust as necessary for the appropriate implementation of the investment program of such Fund;
(iv) keep the Trustees of the Trust and the Adviser informed in writing on an ongoing basis as agreed by the Adviser and the Sub-Adviser of all material facts concerning the investment and reinvestment of the assets in each Fund, the Sub-Adviser and its key investment personnel involved in the management of the respective Fund and operations related to the services to be performed hereunder, make regular and periodic special written reports of such additional information concerning the same as may reasonably be requested from time to time by the Adviser or the Trustees of the Trust and the Sub-Adviser will attend meetings with the Adviser and/or the Trustees, as reasonably requested, to discuss the foregoing;
(v) in accordance with procedures and methods established by the Trustees of the Trust, which may be amended from time to time, provide assistance in determining the fair value of all securities and other investments/assets in each Fund, as necessary, and use reasonable efforts to arrange for the provision of valuation information or a price(s) from a party(ies) independent of the Sub-Adviser for each security or other investment/asset in the Funds for which market prices are not readily available, in each case at the reasonable request of the Adviser or the Trustees; provided that Sub-Advisor will not be considered a valuation designee under Rule 2a-5 of the Investment Company Act without Sub-Advisor’s prior written consent;
(vi) provide at the reasonable request of the Adviser or the Trustees material composite performance information, records and supporting documentation about accounts the Sub-Adviser manages, if appropriate, which are relevant to the Funds and that have investment objectives, policies, and strategies substantially similar to those employed by the Sub-Adviser in managing the Funds that may be reasonably necessary, under applicable laws, to allow such Fund or its respective agent to present information concerning Sub-Adviser’s prior performance in the Trust’s Prospectus and SAI (as hereinafter defined) and any permissible reports and materials prepared by such Fund or its respective agent; and
(vii) cooperate with and provide reasonable assistance to the Adviser, the Trust’s administrator, the Trust’s custodian and foreign custodians, the Trust’s transfer agent and pricing agents and all other agents and representatives of the Trust and the Adviser, keep all such persons informed as to such matters as are reasonably necessary to the performance of their obligations to the Trust and the Adviser, provide prompt responses to reasonable requests made by such persons and maintain any appropriate interfaces with each so as to promote the efficient exchange of information.
C. In furnishing services hereunder, the Sub-Adviser shall be subject to, and shall perform in accordance with the following: (i) the Trust’s Articles of Incorporation, as the same may be hereafter modified and/or amended from time to time (“Trust’s Articles”); (ii) the By-Laws of the Trust, as the same may be hereafter modified and/or amended from time to time (“By-Laws”); (iii) the currently effective Prospectus(es) and Statement(s) of Additional Information of the Trust relating to the Funds filed with the Securities and Exchange Commission (“SEC”) and delivered to the Sub-Adviser, as the same may be hereafter modified, amended and/or supplemented (“Prospectus and SAI”); (iv) the Investment Company Act and the Advisers Act and the rules under each, and all other federal and state laws or regulations applicable to the Trust and the Funds; (v) the applicable sections of the Trust’s Compliance Manual and other policies and procedures adopted from time to time by the Board of Trustees of the Trust; and (vi) the written instructions of the Adviser which are agreed to in writing by the Sub-Adviser. Prior to the commencement of the Sub-Adviser’s services hereunder, the Adviser shall provide the Sub-Adviser with current copies of the Trust’s Articles, By-Laws, Prospectus and SAI, Compliance Manual and other relevant policies and procedures that are adopted by the Board of Trustees. The Adviser undertakes to provide the Sub-Adviser with reasonable written notice and copies of any amendments, modifications or supplements to any such above-mentioned document, and the Sub-Adviser shall only be subject to those amendments, modifications or supplements after they have been provided to it by the Adviser (provided that Sub-Advisor shall have the right to object to any such amendments, modifications or supplements that materially increase Sub-Advisor’s expenses in providing the services hereunder or is otherwise materially burdensome on the operations of Sub-Advisor).
D. In furnishing services hereunder, the Sub-Adviser will not consult with any other adviser to (i) the Fund, (ii) any other Fund of the Trust or (iii) any other investment company under common control with the Trust concerning transactions of the Funds in securities or other assets. (This shall not be deemed to prohibit the Sub-Adviser from consulting with any of its affiliated persons concerning transactions in securities or other assets. This shall also not be deemed to prohibit the Sub-Adviser from consulting with any of the other covered advisers concerning compliance with paragraphs a and b of Rule 12d3-1 under the Investment Company Act.)
E. The Sub-Adviser, at its expense, will furnish: (i) all necessary facilities (including office space, furnishings, and equipment) and personnel, including salaries, expenses and fees of any personnel required for them to faithfully perform their duties under this Agreement; and (ii) administrative facilities, including bookkeeping, and all equipment necessary for the efficient conduct of the Sub-Adviser’s duties under this Agreement. The parties acknowledge and agree that, pursuant to the Advisory Agreement and any side letter between the Adviser and Sub-Adviser implementing an expense cap (a “Side Letter”), each respective Fund will pay all of its expenses other than those expenses expressly stated to be payable by the Sub-Adviser hereunder or pursuant to a Side Letter, or by the Adviser under the Advisory Agreement.
F. The Sub-Adviser will select brokers and dealers to effect all portfolio transactions subject to the conditions set forth herein. The Sub-Adviser will, directly or indirectly through Adviser or one or more service providers to Sub-Adviser with respect to the services to be performed hereunder, place all necessary orders with brokers, dealers, or issuers, and will negotiate brokerage commissions, if applicable. The Sub-Adviser is directed at all times to seek to execute transactions for each Fund in accordance with any written policies, practices or procedures that may reasonably be established by the Board of Trustees or the Adviser or as described in the Trust’s Prospectus and SAI from time to time and, in each case, which have been provided to the Sub-Adviser. In placing any orders for the purchase or sale of investments for a Fund, in the name of such Fund or its nominees, the Sub-Adviser shall seek to obtain for each Fund “best execution,” considering all of the circumstances, and shall maintain records adequate to demonstrate compliance with this requirement. In no instance will portfolio securities be purchased from or sold to the Sub-Adviser, or any affiliated person thereof, except in accordance with the Investment Company Act, the Advisers Act and the rules under each, and all other federal and state laws or regulations applicable to the Trust and applicable Fund.
G. Subject to the appropriate policies and procedures approved by the Board of Trustees, the Sub-Adviser may, to the extent authorized by Section 28(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) cause each Fund to pay a broker or dealer that provides brokerage or research services to the Adviser, the Sub-Adviser and the respective Fund an amount of commission for effecting a portfolio transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Sub-Adviser determines, in good faith, that such amount of commission is reasonable in relationship to the value of such brokerage or research services provided viewed in terms of that particular transaction or the Sub-Adviser’s overall responsibilities to each Fund or its respective other advisory clients. To the extent authorized by Section 28(e) and not prohibited by the policies and procedures approved by the Trust’s Board of Trustees, the Sub-Adviser shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of such action.
H. On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as other clients of the Sub-Adviser, the Sub-Adviser to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities to be purchased or sold to attempt to obtain a more favorable price or lower brokerage commissions and efficient execution. Allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Sub-Adviser in the manner which the Sub-Adviser considers to be the most equitable and consistent with its fiduciary obligations to each Fund and to its other clients over time. The Adviser agrees that the Sub-Adviser and its Affiliates may give advice and take action in the performance of their duties with respect to any of their other clients that may differ from advice given, or the timing or nature of actions taken, with respect to a Fund. The Adviser also acknowledges that the Sub-Adviser and its Affiliates are fiduciaries to other entities, some of which have the same or similar investment objectives (and will hold the same or similar investments) as a Fund, and that the Sub-Adviser will carry out its duties hereunder together with its duties under such relationships. Nothing in this Agreement shall be deemed to confer upon the Sub-Adviser any obligation to purchase or to sell or to recommend for purchase or sale for any Fund any investment that the Sub-Adviser, its Affiliates, officers or employees may purchase or sell for its or their own account or for the account of any client, if in the sole and absolute discretion of the Sub-Adviser it is for any reason impractical or undesirable to take such action or make such recommendation for such Fund.
I. The Sub-Adviser will maintain all accounts, books and records with respect to each Fund as are required of an investment adviser of a registered investment company pursuant to the Investment Company Act and Advisers Act and the rules thereunder with respect to the service provided by the Sub-Adviser to the respective Fund and shall file with the SEC all forms pursuant to Section 13 of the Exchange Act, with respect to its duties as are set forth herein.
J. The Sub-Adviser will, unless and until otherwise directed by the Adviser or the Board of Trustees, exercise the following rights of security holders with respect to securities held by each Fund: voting proxies, converting, tendering, exchanging or redeeming securities. The Sub-Adviser will cooperate in providing the Adviser with all information in the Sub-Adviser’s possession reasonably requested by the Adviser regarding the Adviser’s decision with respect to the following: participation in class action litigation regarding portfolio securities (including litigation with respect to securities previously held). The parties acknowledge and agree that the Sub-Adviser will not be responsible for the filing of claims (or otherwise causing the Trust or any Fund to participate) in any legal proceedings or settlements with shareholders, portfolio companies or any others persons.
4. COMPENSATION OF SUB-ADVISER
The Adviser will pay the Sub-Adviser an advisory fee with respect to each Fund as specified in Appendix B to this Agreement. Payments shall be made to the Sub-Adviser in arrears on or about the fifth day of each month, and calculated by applying a daily rate, based on the annual percentage rates as specified in the appropriate Schedule, to the assets. The fee shall be based on the average daily net assets for the month involved. Every month, Adviser will deduct from the advisory fee paid to Sub-Adviser with respect to each Fund as specified in Appendix B to this Agreement the following expenses as agreed by the Sub-Adviser in writing from time to time: (i) expenses paid by such Fund attributable to compensating the Fund’s statutory distributor and/or placement agent and any additional distribution fees, (ii) amounts paid to the Fund by the Adviser related to applicable voluntary fee waivers, expense reimbursements or other payments related to any voluntary expense cap applicable to such Fund, and (iii) expenses paid by such Fund or Adviser with respect to fees charged to such Fund by any financial intermediary related to placement or distribution of such Fund at such intermediary and any applicable sub-transfer agency or shareholder services fees (the “Fee Reimbursements”). In the event any Fee Reimbursement is paid by a Fund other than monthly, such as a financial intermediary placement fee paid annually, Adviser will deduct a pro-rata portion of such fee each month. Except as may otherwise be prohibited by law or regulation (including, without limitation, any then current SEC staff interpretation), the Sub-Adviser may, in its discretion and from time to time, waive all or any portion of its advisory fee.
5. LIABILITY AND INDEMNIFICATION
A. Except as may otherwise be provided by the Investment Company Act or any other federal securities law, neither the Sub-Adviser, any affiliated persons thereof (within the meaning of Section 2(a)(3) of the Investment Company Act) and any controlling persons (as described in Section 15 of the 1933 Act), nor any of their respective officers, members or employees (each an “Affiliate” and collectively, its “Affiliates”) shall be liable for any losses, claims, damages, liabilities or litigation or any formal or informal inquiry, investigation or request by a regulatory agency or authority with jurisdiction over the Sub-Adviser (including legal and other expenses) incurred or suffered by the Adviser, the Trust, each Fund or any of their Affiliates, control persons or securityholders as a result of any error of judgment, mistake of law or any other action or inaction by the Sub-Adviser or its Affiliates with respect to a Fund, except that nothing in this Agreement shall operate or purport to operate in any way to exculpate, waive or limit the liability of the Sub-Adviser for acts or omissions to act arising out of or based on any willful misconduct, bad faith, reckless disregard or gross negligence of the Sub-Adviser in the performance of any of its duties or obligations hereunder.
B. Except as may otherwise be provided by the Investment Company Act or any other federal securities law, the Adviser, the Trust, each Fund and their Affiliates, control persons and securityholders shall not be liable for any losses, claims, damages, liabilities or litigation or any formal or informal inquiry, investigation or request by a regulatory agency or authority with jurisdiction over the Adviser (including legal and other expenses) incurred or suffered by the Sub-Adviser as a result of any error of judgment, mistake of law or any other action or inaction by the Adviser with respect to such Fund, except that nothing in this Agreement shall operate or purport to operate in any way to exculpate, waive or limit the liability of the Adviser for, and the Advisor shall indemnify and hold harmless the Sub-Adviser, all affiliated persons thereof (within the meaning of Section 2(a)(3) of the Investment Company Act) and all controlling persons (as described in Section 15 of the 1933 Act) (collectively, “Sub-Adviser Indemnitees”) against any and all losses, claims, damages, liabilities or litigation or any formal or informal inquiry, investigation or request by a regulatory agency or authority with jurisdiction over the Adviser (including reasonable legal and other expenses) to which any of the Sub-Adviser Indemnitees may become subject under the 1933 Act, the Investment Company Act, the Advisers Act, or under any other statute, at common law or otherwise arising out of or based on (i) any willful misconduct, bad faith, reckless disregard or gross negligence of the Adviser, the Trust or any Trustees of the Trust in the performance of any of their duties or obligations hereunder or under the Investment Advisory Agreement, (ii) any untrue statement of a material fact contained in the Prospectus and SAI, proxy materials, reports, advertisements, sales literature, or other materials pertaining to any Fund or the omission to state therein a material fact that was required to be stated therein or necessary to make the statements therein not misleading, unless such statement or omission was made solely in reliance upon information furnished to the Adviser or the Trust in writing by the Sub-Adviser for inclusion in such documents or (iii) any action or inaction by the Sub-Adviser that the Sub-Adviser has made or refrained from making, as applicable, in good faith pursuant to and consistent with the Adviser’s, the Trust’s or such Fund’s written instructions to the Sub-Adviser.
C. Expenses (including attorneys’ fees) incurred by the Sub-Advisor in defense or settlement of any claim that may be subject to a right of indemnification hereunder shall be advanced prior to the final disposition thereof upon receipt of an undertaking by or on behalf of the Sub-Advisor to repay the amount advanced to the extent that it shall be determined ultimately that the Sub-Advisor is not entitled to be indemnified hereunder; provided that the Sub-Advisor shall provide a letter from its counsel that in view of such counsel, the Sub-Advisor is not likely to be found to be not entitled to indemnification hereunder.
6. REPRESENTATIONS OF THE ADVISER
The Adviser represents, warrants and agrees that:
A. The Adviser has been duly authorized by the Board of Trustees of the Trust to delegate to the Sub-Adviser the provision of investment services to each Fund as contemplated hereby.
B. The Adviser has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the Investment Company Act and will provide the Sub-Adviser with a copy of such code of ethics.
C. The Adviser is currently in material compliance and shall at all times continue to materially comply with the requirements imposed upon the Adviser by applicable law and regulations.
D. The Adviser (i) is registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement remains in effect; (ii) is not prohibited by the Investment Company Act, the Advisers Act or other law, regulation or order from performing the services contemplated by this Agreement; (iii) to the best of its knowledge, has met and will seek to continue to meet for so long as this Agreement is in effect, any other applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency necessary to be met in order to perform the services contemplated by this Agreement; (iv) has the authority to enter into and perform the services contemplated by this Agreement; and (v) will promptly notify the Sub-Adviser of the occurrence of any event that would disqualify the Adviser from serving as investment adviser of an investment company pursuant to Section 9(a) of the Investment Company Act or otherwise. The Adviser will also promptly notify the Sub-Adviser, to the extent permitted by law, if it is served or otherwise receives notice of any action, suit, proceeding, order, inquiry or investigation, at law or in equity, before or by any court, public board or body or law enforcement or regulatory authority, involving the affairs of the Adviser, the Trust or any Fund.
E. The execution, delivery and performance of this Agreement do not, and will not, conflict with, or result in any violation or default under, any agreement to which Adviser or any of its Affiliates are a party.
F. The Adviser will notify the Sub-Adviser of any assignment of this Agreement or change of control of the Adviser, as applicable, prior to such change. The Adviser agrees to bear all reasonable expenses of the Sub-Adviser, if any, arising out of such an assignment or change in control.
G. The Adviser will promptly notify the Sub-Adviser of any financial condition that is likely to impair the Adviser’s ability to fulfill its commitment under this Agreement or the Investment Advisory Agreement.
H. The Adviser shall provide the Sub-Adviser with a list of each broker-dealer, if any, that is an “affiliated person” of any Fund, the Trust or the Adviser and shall promptly notify the Sub-Adviser of any changes to such list.
7. REPRESENTATIONS OF THE SUB-ADVISER
The Sub-Adviser represents, warrants and agrees as follows:
A. The Sub-Adviser is currently in material compliance and shall at all times continue to materially comply with the requirements imposed upon the Sub-Adviser by applicable law and regulations.
B. The Sub-Adviser (i) is registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement remains in effect; (ii) is not prohibited by the Investment Company Act, the Advisers Act or other law, regulation or order from performing the services contemplated by this Agreement; (iii) to the best of its knowledge has met and will seek to continue to meet for so long as this Agreement remains in effect, any other applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency necessary to be met in order to perform the services contemplated by this Agreement; (iv) has the authority to enter into and perform the services contemplated by this Agreement; and (v) will promptly notify the Adviser of the occurrence of any event that would disqualify the Sub-Adviser from serving as an investment adviser of an investment company pursuant to Section 9(a) of the Investment Company Act or otherwise. The Sub-Adviser will also promptly notify the Funds and the Adviser, to the extent permitted by law, if it is served or otherwise receives notice of any action, suit, proceeding, order, inquiry or investigation, at law or in equity, before or by any court, public board or body or law enforcement or regulatory authority, involving the affairs of any Fund.
C. The Sub-Adviser has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the Investment Company Act and Rule 204A-1 under the Advisers Act and will provide the Adviser and the Board with a copy of such code of ethics, together with evidence of its adoption. Within forty-five days of the end of the last calendar quarter of each year that this Agreement is in effect, and as otherwise reasonably requested in writing, the lead portfolio manager, Chief Compliance Officer or a vice-president of the Sub-Adviser shall certify to the Adviser that the Sub-Adviser has materially complied with the requirements of Rule 17j-1 and Rule 204A-1 during the previous year and that there has been no material violation of the Sub-Adviser’s code of ethics or, if such a material violation has occurred, that appropriate action was taken in response to such violation. Upon the written request of the Adviser, the Sub-Adviser shall permit the Adviser, its employees or its agents to examine the reports required to be made to the Sub-Adviser by Rule 17j-1(c)(1) and Rule 204A-1(b) and other records relevant to the Sub-Adviser’s code of ethics.
D. The Sub-Adviser has provided the Trust and the Adviser with a copy of its Form ADV Part 1, which as of the date of this Agreement is its Form ADV as most recently filed with the SEC, and ADV Part 2 and promptly will furnish a copy of all amendments to the Trust and the Adviser at least annually. Such amendments shall reflect changes in the Sub-Adviser’s organizational structure, professional staff or other significant developments affecting the Sub-Adviser, as required by the Advisers Act.
E. The Sub-Adviser will notify the Trust and the Adviser of any assignment of this Agreement or change of control of the Sub-Adviser, as applicable, and any changes in the key personnel who are either the portfolio manager(s) of the Fund(s) or senior management of the Sub-Adviser, in each case prior to such change. The Sub-Adviser agrees to bear all reasonable expenses of the Trust, if any, arising out of an assignment or change in control.
F. The Sub-Adviser will promptly notify the Adviser of any financial condition that is likely to impair the Sub-Adviser’s ability to fulfill its commitment under this Agreement.
G. The Sub-Adviser agrees to maintain an appropriate level of errors and omissions or professional liability insurance coverage as determined by industry standards.
H. The execution, delivery and performance of this Agreement do not, and will not, conflict with, or result in any violation or default under, any agreement to which Sub-Adviser or any of its Affiliates are a party.
8. NON-EXCLUSIVITY
The services of the Sub-Adviser to the Adviser, the Funds and the Trust are not to be deemed to be exclusive, and the Sub-Adviser shall be free to render investment advisory or other services to others and to engage in other activities. It is understood and agreed that the directors, officers, and employees of the Sub-Adviser are not prohibited from engaging in any other business activity or from rendering services to any other person, or from serving as partners, officers, directors, trustees, or employees of any other firm or corporation.
9. SUPPLEMENTAL ARRANGEMENTS
The Sub-Adviser may from time to time employ or associate itself with any person it believes to be particularly suited to assist it in providing the services to be performed by the Sub-Adviser hereunder, provided that no such person shall perform any services with respect to any Fund that would constitute an assignment or require a written advisory agreement pursuant to the Investment Company Act. Any compensation payable to such persons shall be the sole responsibility of the Sub-Adviser, and neither the Adviser nor the Trust shall have any obligations with respect thereto or otherwise arising under the Agreement.
10. REGULATION
The Sub-Adviser shall, to the extent required by applicable law, submit to all regulatory and administrative bodies having jurisdiction over the services provided pursuant to this Agreement any information, reports, or other material which any such body by reason of this Agreement may request or as may be required by such applicable laws and regulations.
11. RECORDS
The records relating to the services provided under this Agreement shall be the property of the Trust and shall be under its control; however, the Trust shall furnish to the Sub-Adviser such records and permit it to retain such records (either in original or in duplicate form) as it shall reasonably require in order to carry out its business. In the event of the termination of this Agreement, such other records shall promptly be returned to the Trust by the Sub-Adviser free from any claim or retention of rights therein, provided that the Sub-Adviser may retain copies of any such records at its own expense.
12. DURATION OF AGREEMENT
This Agreement shall become effective with respect to the Funds upon the approval of the Investment Advisory Agreement by the shareholders of the applicable Fund and, unless sooner terminated as provided herein, shall continue with respect to each Fund until August 16, 2024. Thereafter, if not terminated, this Agreement shall continue with respect to each Fund for successive annual periods ending on August 16, provided such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Trustees of the respective Fund who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Board of Trustees of such Fund or by vote of a majority of the outstanding voting securities of such Fund. Notwithstanding the foregoing, the obligations of the Adviser to indemnify the Sub-Adviser and to advance expenses set forth in Section 5 of this Agreement shall survive the termination of this Agreement.
13. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time, without the payment of any penalty, by the Board of Trustees, including a majority of the Independent Trustees, by the vote of a majority of the outstanding voting securities of the respective Fund, on sixty (60) days’ prior written notice to the Adviser and the Sub-Adviser, or by the Adviser (with respect to itself as a party) or by the Sub-Adviser (with respect to itself as a party) on sixty (60) days’ prior written notice to the Trust and the other party. This Agreement will automatically terminate, without the payment of any penalty, (i) in the event of its assignment, or (ii) in the event the Investment Advisory Agreement between the Adviser and the Trust is assigned or terminates for any other reason. This Agreement will also terminate upon written notice to the other party that the other party is in material breach of this Agreement, unless the party in material breach of this Agreement cures such breach to the reasonable satisfaction of the party alleging the breach within thirty (30) days after written notice, provided that any such written notice provided to the Sub-Adviser must be provided by the Board of Trustees of the Trust.
14. USE OF THE SUB-ADVISER’S NAME AND TRACK RECORD
The parties agree that the name of the Sub-Adviser, the names of any Affiliates of the Sub-Adviser and any derivative or logo or trademark or service mark or trade name are the valuable property of the Sub-Adviser and its Affiliates. The Adviser and the Trust shall have the right to use such name(s), derivatives, logos, trademarks or service marks or trade names only with the prior written approval of the Sub-Adviser, which approval shall not be unreasonably withheld or delayed so long as this Agreement is in effect.
Upon termination of this Agreement, the Adviser and the Trust shall forthwith cease to use such name(s), derivatives, logos, trademarks or service marks or trade names. The Adviser and the Trust agree that they will review with the Sub-Adviser any advertisement, sales literature, or notice prior to its use that makes reference to the Sub-Adviser or its Affiliates or any such name(s), derivatives, logos, trademarks, service marks or trade names so that the Sub-Adviser may review the context in which it is referred to, it being agreed that the Sub-Adviser shall have no responsibility to ensure the adequacy of the form or content of such materials for purposes of the Investment Company Act or other applicable laws and regulations. If the Adviser or the Trust makes any unauthorized use of the Sub-Adviser’s names, derivatives, logos, trademarks or service marks or trade names, the parties acknowledge that the Sub-Adviser shall suffer irreparable harm for which monetary damages may be inadequate and thus, the Sub-Adviser shall be entitled to injunctive relief, as well as any other remedy available under law.
Notwithstanding the foregoing, the Sub-Adviser may use performance data it generates in connection with its management of each Fund’s portfolio for its track record and use the name of the Trust and the respective Fund to identify such performance. Adviser shall provide Sub-Adviser reasonable access to, and the right to make copies of, records of Adviser, the Trust or any Fund to enable Sub-Adviser to calculate such track record in accordance with applicable law and regulatory guidance.
15. AMENDMENTS TO THE AGREEMENT
Except to the extent permitted by the Investment Company Act or the rules or regulations thereunder or pursuant to exemptive relief granted by the SEC, this Agreement may be amended by the parties only if such amendment, if material, is specifically approved by the vote of a majority of the outstanding voting securities of the respective Fund (unless such approval is not required by Section 15 of the Investment Company Act as interpreted by the SEC or its staff or unless the SEC has granted an exemption from such approval requirement) and by the vote of a majority of the Independent Trustees cast in person at a meeting called for the purpose of voting on such approval. The required shareholder approval shall be effective with respect to any Fund if a majority of the outstanding voting securities of such Fund vote to approve the amendment, notwithstanding that the amendment may not have been approved by a majority of the outstanding voting securities of any other Fund affected by the amendment or all the Funds of the Trust.
16. ASSIGNMENT
Any assignment of the Agreement made by the Sub-Adviser shall result in the automatic termination of this Agreement, as provided in Section 13 hereof. Notwithstanding the foregoing, no assignment shall be deemed to result from any changes in the directors, officers or employees of such Sub-Adviser except as may be provided to the contrary in the Investment Company Act or the rules or regulations thereunder. The Sub-Adviser agrees that it will notify the Trust and the Adviser of any changes in its control persons or key employees who provide services under this Agreement within a reasonable time thereafter.
17. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the parties with respect to the Funds.
18. HEADINGS
The headings in the sections of this Agreement are inserted for convenience of reference only and shall not constitute a part hereof.
19. NOTICES
All notices required to be given pursuant to this Agreement shall be delivered or mailed to the address listed below of each applicable party in person or by registered or certified mail or a private mail or delivery service providing the sender with notice of receipt or such other address as specified in a notice duly given to the other parties. Alternatively, notice may be provided by electronic communication with confirmation of receipt. Notice shall be deemed given on the date delivered or mailed in accordance with this paragraph.
For: F/m Investments, LLC
3050 K Street Northwest, Suite 201
Washington, DC 20007
Attention: Alexander Morris (amorris@fmacceleration.com)
For: MFP Investors, LLC
909 Third Avenue
33rd Floor
New York, NY 10022
Attn: David Marcus (dmarcus@mfpllc.com)
Attn: Timothy E Ladin (tladin@mfpllc.com)
20. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void in law or in equity, the Agreement shall be construed, insofar as is possible, as if such portion had never been contained herein.
21. TRUST AND SHAREHOLDER LIABILITY
The Adviser and the Sub-Adviser are hereby expressly put on notice of the limitation of shareholder liability as set forth in the Trust’s Articles and agree that obligations assumed by the Trust pursuant to this Agreement shall be limited in all cases to the Trust and its assets, and if the liability relates to one or more series, the obligations hereunder shall be limited to the respective assets of each Fund. The Adviser and the Sub-Adviser further agree that they shall not seek satisfaction of any such obligation from the shareholders or any individual shareholder of any Fund, nor from the Trustees or officers, or from any individual Trustees or officer of the Trust.
22. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware, without reference to conflict of law or choice of law doctrines, or any of the applicable provisions of the Investment Company Act. To the extent that the laws of the State of Delaware, or any of the provisions in this Agreement, conflict with applicable provisions of the Investment Company Act, the latter shall control.
23. INTERPRETATION
Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the Investment Company Act shall be resolved by reference to such term or provision of the Investment Company Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC validly issued pursuant to the Investment Company Act. Specifically, the terms “vote of a majority of the outstanding voting securities,” “interested persons,” “assignment,” and “affiliated persons,” as used herein shall have the meanings assigned to them by Section 2(a) of the Investment Company Act. In addition, where the effect of a requirement of the Investment Company Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the SEC, whether of special or of general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
24. THIRD PARTY BENEFICIARY
The Adviser and Sub-Adviser expressly agree that the Trust shall be deemed an intended third party beneficiary of this Agreement.
25. CONFIDENTIALITY
Except as otherwise agreed in writing, as required by law, or as necessary for the parties hereto to carry out the intended purposes of this Agreement (including disclosures to employees, officers, directors, third-party service providers, consultants and other agents and in marketing materials for each Fund), each party will keep confidential all nonpublic information concerning the Adviser’s, Sub-Adviser’s, any Fund’s, the Trust’s, and their respective Affiliate’s identities, financial affairs, or investments. Nonpublic information shall not include information which was (a) known to such party or generally available to the public prior to this Agreement, (b) acquired from a third party whom such party reasonably believes is not under an obligation of confidentiality to the other party, their Affiliates or the Trust, (c) placed in the public domain without fault of such party, or (d) independently developed by or on behalf of such party without reference or reliance upon the nonpublic information. Adviser hereby agrees that Sub-Adviser may use Adviser’s, Trust’s and any Fund’s name in Sub-Adviser’s marketing materials, regulatory filings and other communications regarding Sub-Adviser’s clients.
26. RISK ACKNOWLEDGMENT
The Sub-Adviser does not guarantee the future performance of any Fund or any specific level of performance, the success of any investment decision or strategy that the Sub-Adviser may use, or the success of the Sub-Adviser’s overall management of any Fund. The Adviser understands that investment decisions made for the Adviser by the Sub-Adviser are subject to various market, currency, economic, political, business and structural risks, and that those investment decisions will not always be profitable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first mentioned above.
| F/M INVESTMENTS,
| | |
| LLC D/B/A NORTH SLOPE CAPITAL
| | |
| | | |
| By: ________________________________
| By: ___________________________
| |
| | | |
| | PENN CAPITAL FUNDS TRUSTName:
| Name: Timothy E. Ladin | |
| | | | |
| | By: | | |
| Name: | |
Title:
| Title: | General Counsel, Vice President |
| | | |
| PENN CAPITAL MANAGEMENT COMPANY, LLC | |
| | | |
| By: | | |
| Name: | |
| Title: | |
APPENDIX A
TO
INVESTMENT SUB-ADVISORY AGREEMENT
Evermore Global Value Fund
| Advisory Fee (as a percentageName of average daily net assets)Fund |
Penn Capital Floating Rate IncomeEvermore Global Value Fund | 0.55% |
Penn Capital Short Duration High Income Fund | 0.45% |
Penn Capital Opportunistic High Income Fund | 0.69% |
Penn Capital Managed Alpha SMID Cap Equity Fund | 0.90% |
Penn Capital Special Situations Small Cap Equity Fund | 0.95% |
[Draft Subject to Change]
EXHIBIT B
INVESTMENT ADVISORY FEES
| | Contractual Advisory Fee (as a percentage of daily average net assets) | Advisory Fee Rate Paid to PENN Capital (after waivers and reimbursements and/or recoupment, if any) for the Fiscal Year Ended June 30, 2020 | Most Recent Date of Shareholder Approval of Previously Existing Advisory Agreement and Purpose of Submission to Shareholders |
| Penn Capital Floating Rate Income Fund (formerly, Penn Capital Defensive Floating Rate Income Fund) | 0.55% | 0% | November 20, 2015 (initial approval by sole shareholder) |
| Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund) | 0.45% | 0% | July 14, 2017 (initial approval by sole shareholder) |
| Penn Capital Opportunistic High Income Fund | 0.69% | 0% | November 20, 2015 (initial approval by sole shareholder) |
| Penn Capital Managed Alpha SMID Cap Equity Fund | 0.90% | 0% | November 20, 2015 (initial approval by sole shareholder) |
| Penn Capital Special Situations Small Cap Equity Fund | 0.95% | 0% | December 14, 2015 (initial approval by sole shareholder) |
[Draft Subject to Change]
EXHIBIT C
5% or Greater Ownership of A Share Class
The following table identifies those investors known to the Trust to own beneficially or of record 5% or more of the voting securities of a class of a Fund’s shares as of April 19, 2021. Any shareholder that owns 25% or more of the outstanding shares of a Fund or class may be presumed to “control” (as that term is defined in the 1940 Act) the Fund or class. Shareholders controlling a Fund or class could have the ability to vote a majority of the shares of the Fund or class on any matter requiring approval of the shareholders of the Fund or class.
| Fund and Class | Shareholder Name and Address | Number of Shares of Class Owned | Percentage of Shares of Class Owned |
Penn Capital Floating Rate Income Fund (formerly, Penn Capital Defensive Floating Rate Income Fund) - Institutional Class shares | 525 Holding Co. Inc. 1200 Intrepid Ave Fl. 4 Philadelphia, PA 19112-1230 | 1319812.983 | 40.267% |
National Financial Services, LLC For the Exclusive Benefit of its Customers Attn Mutual Funds Dept. 4th Fl. 499 Washington Blvd. Jersey City, NJ 07310-1995 | 462553.822 | 14.112% |
Charles Schwab & Co Inc. Special Custody Account for the Benefit of Customers Attn: Mutual Funds 211 Main St. San Francisco, CA 94105-1905 | 457725.956 | 13.965% |
Richard A. Hocker Revocable Trust Richard A. Hocker & Marcia A. Hocker TR U/A 09/16/2005 c/o Penn Capital Management Company, LLC 1200 Intrepid Avenue, Suite 400 Philadelphia, PA 19112 | 452980.182 | 13.82% |
Capinco c/o U.S. Bank, NA PO Box 1787 Milwaukee, WI 53201-1787 | 245304.942 | 7.484% |
| Penn Capital Short Duration High Income Fund (formerly, Penn Capital Defensive Short Duration High Income Fund) - Institutional Class shares | TD Ameritrade Inc. For the Benefit of its Clients PO Box 2226 Omaha, NE 68103-2226 | 1958587.255 | 46.939% |
Charles Schwab & Co Inc. Special Custody Account for the Benefit of Customers Attn Mutual Funds 211 Main St. San Francisco, CA 94105-1905 | 564228.101 | 13.522% |
National Financial Services, LLC For the Exclusive Benefit of its Customers Attn Mutual Funds Dept. 4th Fl. 499 Washington BLVD Jersey City, NJ 07310-1995 | 539221.788 | 12.922% |
525 Holding Co. Inc. 1200 Intrepid Ave Fl. 4 Philadelphia, PA 19112-1230 | 420135.347 | 10.068% |
[Draft Subject to Change]
| Fund and Class | Shareholder Name and Address | Number of Shares of Class Owned | Percentage of Shares of Class Owned |
| | Richard A. Hocker Revocable Trust Tenant in CO 1 Richard A. Hocker & Marcia A. Hocker TR U/A 09/16/2005 c/o Penn Capital Management Company, LLC 1200 Intrepid Avenue, Suite 400 Philadelphia, PA 19112 | 242608.431 | 5.814% |
| Penn Capital Opportunistic High Income Fund - Institutional Class shares | Richard A. Hocker Revocable Trust Tenant in CO 1 Richard A. Hocker & Marcia A. Hocker TR U/A 09/16/2005 c/o Penn Capital Management Company, LLC 1200 Intrepid Avenue, Suite 400 Philadelphia, PA 19112 | 500427.906 | 25.632% |
525 Holding Co. Inc. 1200 Intrepid Ave FL 4 Philadelphia, PA 19112-1230 | 426167.168 | 21.828% |
E*TRADE Savings Bank For the Benefit of its Customer PO Box 6503 Englewood, CO 80155-6503 | 395883.894 | 20.277% |
National Financial Services, LLC For the Exclusive Benefit of its Customers Attn Mutual Funds Dept. 4th Fl. 499 Washington Blvd. Jersey City, NJ 07310-1995 | 287232.894 | 14.712% |
| Penn Capital Special Situations Small Cap Equity Fund - Institutional Class shares | 525 Holding Co. Inc. 1200 Intrepid Ave Fl. 4 Philadelphia, PA 19112-1230 | 136088.017 | 16.284% |
National Financial Services, LLC For the Exclusive Benefit of its Customers Attn Mutual Funds Dept. 4th Fl. 499 Washington BLVD Jersey City, NJ 07310-1995 | 118380.523 | 14.165% |
Thomas Harris Jr. c/o Penn Capital Management Company, LLC 1200 Intrepid Avenue, Suite 400 Philadelphia, PA 19112 | 101317.803 | 12.123% |
Pershing LLC 1 Pershing Plaza, Fl. 14 Jersey City, NJ 07399-0002 | 100876.712 | 12.07% |
Eric J. Green c/o Penn Capital Management Company, LLC 1200 Intrepid Avenue, Suite 400 Philadelphia, PA 19112 | 49764.312 | 5.954% |
[Draft Subject to Change]
| Fund and Class | Shareholder Name and Address | Number of Shares of Class Owned | Percentage of Shares of Class Owned |
| | The SSL Family Living Trust Matthew C. Huttemeyer & Brigitte B. Huttemeyer TR U/A 11/20/2014 c/o Penn Capital Management Company, LLC 1200 Intrepid Avenue, Suite 400 Philadelphia, PA 19112 | 48979.368 | 5.86% |
DSL Living Trust Daniel R. Lee & Suzanne Lee TR U/A 08/27/2013 c/o Penn Capital Management Company, LLC 1200 Intrepid Avenue, Suite 400 Philadelphia, PA 19112 | 45282.667 | 5.418% |
| Penn Capital Managed Alpha SMID Cap Equity Fund - Institutional Class shares | Thomas Harris Jr. c/o Penn Capital Management Company, LLC 1200 Intrepid Avenue, Suite 400 Philadelphia, PA 19112 | 263630.529 | 22.493% |
525 Holding Co. Inc. 1200 Intrepid Ave Fl. 4 Philadelphia, PA 19112-1230 | 228486.194 | 19.495% |
National Financial Services, LLC For the Exclusive Benefit of its Customers Attn Mutual Funds Dept. 4th Fl. 499 Washington Blvd. Jersey City, NJ 07310-1995 | 112975.669 | 9.639% |
Elizabeth Harris c/o Penn Capital Management Company, LLC 1200 Intrepid Avenue, Suite 400 Philadelphia, PA 19112 | 92492.725 | 7.891% |
c/o GWP US Advisors SEI Private Trust Company 1 Freedom Valley Drive Oaks, PA 19456-9989 | 84754.894 | 7.231% |
US Bank, NA Customer William P. Brady IRA Rollover c/o Penn Capital Management Company, LLC 1200 Intrepid Avenue, Suite 400 Philadelphia, PA 19112 | 70558.591 | 6.02% |
APPENDIX B
TO
INVESTMENT SUB-ADVISORY AGREEMENT
Name of Fund | Annual Sub-Advisory Fee |
Evermore Global Value Fund | 0.89% |
EXHIBIT D
BOARD OF TRUSTEES OF PENN CAPITAL FUNDS TRUST
NOMINATING COMMITTEE CHARTER
NOMINATING COMMITTEE CHARTER
PENN CAPITAL FUNDS TRUST (THE “TRUST”)
ORGANIZATION
The Nominating Committee (the “Committee”) of the Trust shall be composed solely of Trustees who are not “interested persons” of the Trust as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “1940 Act”) (“Independent Trustees”). The Board of Trustees of the Trust (the “Board”) shall select the members of the Committee and shall designate the Chairperson of the Committee.
RESPONSIBILITIES
The Committee shall select and nominate persons for election or appointment by the Board as Trustees of the Trust, including as Independent Trustees.
EVALUATION OF POTENTIAL NOMINEES
In evaluating a person as a potential nominee to serve as a Trustee of the Trust (including any nominees recommended by shareholders as provided below), the Committee shall consider, among other factors it may deem relevant:
the character and integrity of the person;
whether or not the person is qualified under applicable laws and regulations to serve as a Trustee of the Trust;
whether or not the person has any relationships that might impair his or her service on the Board;
whether nomination of the person would be consistent with Trust policy and applicable laws and regulations regarding the number and percentage of Independent Trustees on the Board;
whether or not the person serves on boards of, or is otherwise affiliated with, competing financial service organizations or their related Trust complexes;
whether or not the person is willing to serve and is willing and able to commit the time necessary for the performance of the duties and responsibilities of a Trustee of the Trust;
the contribution which the person can make to the Board and the Trustee, in conjunction with the other Trustees, with consideration being given to the person’s business and professional experience, education and such other factors as the Committee may consider relevant; and
whether the Committee believes the person has the ability to apply sound and independent business judgment and would act in the interests of the Trust and its shareholders.
While the Committee is solely responsible for the selection and nomination of Trustees, the Committee may consider nominees recommended by Trust shareholders. The Committee will consider recommendations for nominees from shareholders sent to the Secretary of the Trust, c/o PENN Capital Management Company, Inc., Three Crescent Drive, Suite 400, Philadelphia, Pennsylvania 19112. A nomination submission must include all information relating to the recommended nominee that is required to be disclosed in solicitations or proxy statements for the election of Trustees, as well as information sufficient to evaluate the factors listed above. Nomination submissions must be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by the shareholders, and such additional information must be provided regarding the recommended nominee as reasonably requested by the Committee.
NOMINATION OF TRUSTEES
After a determination by the Committee that a person should be selected and nominated as a Trustee of the Trust, the Committee shall present its recommendation to the full Board for its consideration.
REVIEW OF CHARTER
The Committee shall review this Charter from time to time, as it considers appropriate.
Adopted: October 21, 2015
EXHIBIT E
BOARD OF DIRECTORS OF THE RBB FUND, INC.
NOMINATING AND GOVERNANCE COMMITTEE CHARTER
NOMINATING AND GOVERNANCE COMMITTEE CHARTER
I. PURPOSE
The Nominating and Governance Committee (the “Committee”) shall be a standing committee of the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”). The purpose of the Committee is to:
| 1. | Recommend, for the Board’s approval, a statement of fund governance principles;
|
| 2. | Make recommendations to the Board regarding (a) its size, structure and composition; (b) qualifications for Board membership, and (c) compensation and indemnification of, and insurance for, Board members;
|
| 3. | Identify and recommend qualified individuals for Board membership and for the chairmanship of the Board;
|
| 4. | Oversee the self-evaluation of the Board and its committees; and
|
| 5. | Identify and recommend to the Board, from time to time, qualified individuals to serve as the Company’s Chief Compliance Officer (“CCO”), President, and other officers and, in cooperation with the Regulatory Oversight Committee, monitor such officers’ performance. In cooperation with the Regulatory Oversight Committee, the Committee shall also make recommendations to the Board with respect to such officers’ responsibilities, retention and compensation.
|
II. ORGANIZATION A. Membership
| 1. | The Committee shall consist of at least three Directors, none of whom is an “interested person” of the Company, as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940.
|
| 2. | The Board shall elect each member of the Committee and the chairman of the Committee (the “Chairman”). If the Board does not elect a Chairman, the Committee shall designate a Chairman by majority vote of the Committee. The Board may replace any member of the Committee for any reason.
|
| 3. | The Chairman shall designate a secretary for each meeting of the Committee to record the minutes thereof.
|
B. Meetings
| 1. | The Committee shall meet at least two times a year. Committee meetings may be held in person, by telephone conference, or other interactive electronic communication. The Chairman may call additional meetings as are necessary or appropriate.
|
| 2. | The Committee shall have the authority to meet privately and to allow non-members to attend by invitation.
|
| 3. | A majority of the Committee members shall constitute a quorum for the transaction of business. Approval of actions by a majority of the members present at a meeting at which a quorum is present shall constitute approval by the Committee. The Committee may also act by unanimous written consent to action without a meeting.
|
| 4. | A meeting agenda shall be distributed to the Committee members at a reasonable time prior to each meeting.
|
| 5. | The secretary appointed by the Chairman shall prepare written minutes of each meeting.
|
C. Reporting
Any action taken by the Committee shall be reported to the Board at the next Board meeting following such action.
III. AUTHORITY
| 1. | The Committee shall have authority to retain and terminate any search firm used to identify candidates for Board membership, including the authority to approve such firm’s fees or retention terms.
|
| 2. | The Committee is authorized to obtain advice and assistance from the Company’s counsel, independent accountant and other service providers in connection with the performance of its responsibilities. If the Committee determines that it is necessary to do so in order for the Committee to discharge its responsibilities, the Committee may retain independent counsel and accounting services at the Company’s expense.
|
| 3. | In discharging its responsibilities, the Committee shall have full access to any relevant and material records of the Company.
|
IV. RESPONSIBILITIES
A. Size, Structure and Composition of the Board and Qualifications for Membership
1. The Committee shall review periodically the size, structure and composition of the Board to determine the appropriate number of Directors comprising the Board, the ratio of interested to non-interested Directors, the number and types of committees, the functions of the Company’s officers, and the types of expertise and experience needed among the Directors. Accordingly, the Committee shall recommend to the Board:
(a) a Statement of Policy on Qualifications for Board Membership; and
(b) a Statement of Policy on Qualifications for Chairman of the Board.
2. The Committee shall be responsible for overseeing the orientation and training of new Directors and the continuing education of all Directors.
3. The Committee shall make recommendations to the Board with respect to the level and types of compensation for Board members and the Chairman of the Board. The Committee shall review such compensation arrangements annually.
4. The Committee shall make recommendations to the Board with respect to level and extent of insurance for and indemnification of Board members and the Chairman of the Board. The Committee shall review such insurance and indemnification arrangements annually.
B. Identification and Nomination of Candidates for Membership and Chairmanship
| 1. | The Committee shall develop a list of possible new members for the Board, even when there is no current or anticipated vacancy on the Board, for consideration by the Board when appropriate.
|
| 2. | The Committee shall identify and recommend candidates for nomination by the Board in accordance with the Statement of Policy on Qualifications for Board Membership, and candidates for the chairmanship of the Board in accordance with the Statement of Policy on Qualifications for Chairman of the Board.
|
C. Committee Structure
| 1. | The Committee shall review periodically the Board’s committee structure and make recommendations to the Board regarding the formation and/or dissolution of committees.
|
| 2. | The Committee shall make recommendations to the Board with respect to membership on committees.
|
D. Self-evaluation of the Board and its Committees
| 1. | The Committee shall recommend a plan and schedule to the Board for annual self-evaluation by the Board and its committees.
|
| 2. | The Committee shall oversee the process of self-evaluation approved by the Board.
|
E. Chief Compliance Officer, President and Other Company Officers
| 1. | The Committee shall identify and recommend to the Board qualified individuals, from time to time, to serve as CCO, President and other Company officers. In cooperation with the Regulatory Oversight Committee, the Committee shall also make recommendations to the Board with respect to such officers’ responsibilities, retention and compensation.
|
| 2. | The Committee shall work with the Regulatory Oversight Committee of the Board to monitor (a) the performance of the CCO and (b) the cooperation of the advisers and service providers with the CCO, including the requirement of regular reports by the CCO to both committees and, as appropriate, the Board.
|
| 3. | The Committee shall work with the Regulatory Oversight Committee to annually review the Chief Compliance Officer’s responsibilities and the extent of his or her authority.
|
F. Committee Charter
The Board shall adopt and approve this Charter and may amend it on the Board’s own motion. The Committee shall review this Charter at least annually and recommend to the full Board any changes the Committee deems appropriate.
IV. NOMINEE CANDIDATES RECOMMENDED BY SHAREHOLDERS
A. Policy
The Committee will consider nominee candidates recommended by shareholders of the Company. The Committee will evaluate such nominees according to the Statement of Policy on Qualifications for Board Membership in the same manner as nominee candidates not recommended by shareholders.
B. Process
Shareholders who wish to recommend individuals for consideration by the Committee as nominee candidates may do so by submitting a written recommendation to the Secretary of the Company at: c/o US Bancorp Fund Services, 615 E. Michigan St., Milwaukee, WI 53202. Submissions must include sufficient biographical information concerning the recommended individual, including age, twenty years of employment history with employer names and a description of the employer’s business, and a list of board memberships (if any). The submission must be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected. Recommendations must be received in a sufficient time, as determined by the Committee in its sole discretion, prior to the date proposed for the consideration of nominees by the Board.
Revised: September 10, 2019
Revised: September 17, 2020
Revised: November 12, 2020
STATEMENT OF POLICY ON QUALIFICATIONS FOR MEMBERSHIP
ON THE BOARD OF DIRECTORS
All members of the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) shall possess:
1. The ability to apply reasonable business judgment and exercise properly their duties of care and loyalty in the best interests of the shareholders of the Company.
2. Proven leadership ability, high integrity, collegiality and moral character, substantial business or other relevant experience, and a demonstrated capacity to manage a high level of responsibility;
3. The ability to understand complex principles of business and investment, to solve multi-faceted problems, and to operate positively in the regulatory environment of the Company; and
4. The ability to read and understand basic financial statements.
In addition, as may be required by the Company in order to take advantage of certain exemptive rules under the Investment Company Act of 1940 (the “1940 Act”), certain members of the Board of Directors may also need to be “disinterested directors” as such term is defined in Rule 0-1(a)(7) under the 1940 Act.
In selecting among potential candidates for Board membership, the Board shall give effect to a preference for candidates who hold or have held senior-level positions in business, finance, law, education, research or government.
The Board does not believe that a director should be required to resign in the event a director retires or changes from the position they held when they were elected to the Board. The Company recognizes and embraces the benefits of having a diverse Board, and sees increasing diversity at Board level as an essential element in maintaining a competitive advantage. The Company believes a truly diverse Board will include a broad complement of different skills, regional and industry experience, background, race, gender and other distinctions between Directors. These differences will be considered in determining the optimum composition of the Board and when possible should be balanced appropriately. All Board appointments are made on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective.
STATEMENT OF POLICY ON QUALIFICATIONS FOR SELECTION AS
CHAIRMAN OF THE BOARD
I. INDEPENDENCE
The Chairman of the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) shall be a “disinterested director” (as such term is defined in Rule 0-1(a)(7) under the Investment Company Act of 1940).
II. REQUIRED SKILLS
In addition to the basic qualifications for all members of the Company, the Chairman shall possess the ability to:
| 1. | Foster a boardroom culture consistent with the Company’s statement of fund governance principles.
|
| 2. | Exercise leadership among the Directors
|
| 3. | Chair Board meetings in an evenhanded and open manner
|
| 4. | Communicate effectively with the Company’s shareholders, service providers, regulatory agencies, the press and other relevant parties.
|
| 5. | Represent the Company’s interests effectively in all dealings with the Company’s advisers and other service providers.
|
| 6. | Evaluate and prioritize issues for consideration by the Board.
|
III. REQUIRED EXPERIENCE
The Chairman shall have senior-level experience in business, finance, law, education, research or government, including experience in managing a high level of responsibility.
IV. COMMITMENT
The Chairman must have the commitment, availability and time needed to discharge the responsibilities of the position to the extent necessary to serve the best interests of the shareholders.
[PENN CAPITAL LOGO] | PROXY CARD |
| |
| SIGN, DATE AND VOTE ON THE REVERSE SIDE
|
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. PLEASE CAST YOUR PROXY VOTE TODAY!
[Shareholder registration printed here]
| PROXY VOTING OPTIONS
1. MAIL your signed and voted proxy back in the postage paid envelope provided
2. ONLINE at proxyonline.com using your proxy control number found below
3. By PHONE when you dial toll-free [ ] to reach an automated touchtone voting line
4. By PHONE with a live operator when you call toll-free [ ] Monday through Friday 9 a.m. to 10 p.m. Eastern time
CONTROL NUMBER > [12345678910]
|
PENN Capital Funds Trust
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON [June 23], 2021
This Proxy is solicited on behalf of the Board of Trustees of PENN Capital Funds Trust (the “Trust”) for a Special Meeting of Shareholders and related to the proposals with respect to each series of the Trust (each, a “Fund,” and together, the “Funds”). The undersigned hereby appoints [ ] (or, if only one shall act, that one), as Proxy of the undersigned, with full power of substitution, and hereby authorizes each of them to vote on behalf of the undersigned all shares of the Funds that the undersigned is entitled to vote at the Special Meeting of Shareholders of the Trust to be held at Navy Yard Corporate Center, 1200 Intrepid Avenue, Suite 400, Philadelphia, Pennsylvania 19112 at [Meeting Time] and at any postponements or adjournments thereof, as fully as the undersigned would be entitled to vote if personally present. This proxy will be governed by and construed in accordance with the laws of the State of Delaware and applicable federal securities laws. The execution of this proxy is not intended to, and does not, revoke any prior proxies or powers of attorney other than the revocation, in accordance with the laws of the State of Delaware and applicable federal securities laws, of any proxy previously granted specifically in connection with the voting of the shares subject hereto. This proxy may be revoked at any time prior to the exercise of the powers conferred thereby.
Important Notice Regarding the Availability of Proxy Materials for thisthe Shareholders Meeting:
The Notice of Special Meeting of Shareholders
to Be Held on [June 23], 2021. The proxy statementand Proxy Statement/Prospectus for this meeting
isare available
at: www.penncapitalfunds.com.[PROXY ID NUMBER HERE] | [BAR CODE HERE] | [CUSIP HERE] |
PENN CAPITAL FUNDS TRUST | PROXY CARD |
| |
YOUR SIGNATURE IS REQUIRED FOR YOUR VOTE TO BE COUNTED. Please sign your name exactly as it appears on this card. If you are a joint owner, any one of you may sign. When signing as executor, administrator, attorney, trustee, or guardian, or as custodian for a minor, please give your full title as such. If you are signing for a corporation, please sign the full corporate name and indicate the signer’s office. If you are a partner, sign in the partnership name.
| SIGNATURE (AND TITLE IF APPLICABLE) DATE
SIGNATURE (IF HELD JOINTLY) DATE
|
This proxy is solicited on behalf of the Trust’s Board of Trustees, and the Proposals have been unanimously approved by the Board of Trustees and recommended for approval by shareholders. This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR each Proposal. In their discretion, the Proxies are authorized to vote upon such other matters as may properly come before the meeting.
TO VOTE, MARK CIRCLES BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: ●
1. | To approve a new advisory agreement between the Trust, on behalf of the Funds, and Penn Capital Management Company, LLC (“Penn Capital”), each Fund’s current investment adviser, as a result of a transaction involving a change of control of Penn Capital.
○ FOR ○ AGAINST ○ ABSTAIN
|
2. To elect eight (8) nominees to the Board of Trustees of the Trust.
| INSTRUCTIONS: | To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and mark the box next to each nominee you wish to withhold. |
○ FOR ALL NOMINEES○WITHHOLD AUTHORITY FOR ALL NOMINEES○FOR ALL EXCEPT
○Julian A. Brodsky
○J. Richard Carnall
○Gregory P. Chandler
○Nicholas A. Giordano
○Arnold M. Reichman
○Robert Sablowsky
○Brian T. Shea
○Robert A. Straniere
THANK YOU FOR VOTING
[PROXY ID NUMBER HERE] | [BAR CODE HERE] | [CUSIP HERE] |
