INVESTMENT ADVISORY AGREEMENT
Agreement made this ____ day of_____________, 1992 between
The Henlopen Fund, a Delaware business trust (the "Trust"), and Xxxxxx
Associates, Inc., a Delaware corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Trust is in the process of registering with the
Securities and Exchange Commission as an open-end management investment
company under the Investment Company Act of 1940 (the "Act");
WHEREAS, upon so registering with the Securities and Exchange
Commission, the Trust will be a registered investment company satisfying
the conditions of Section 10(d) of the Act; and
WHEREAS, the Trust desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940
and which is engaged principally in the business of rendering investment
supervisory services within the meaning of Section 202(a)(13) of the
Investment Advisers Act of 1940, as its investment adviser.
NOW, THEREFORE, the Trust and the Adviser do mutually promise
and agree as follows:
1. Employment. The Trust hereby employs the Adviser to manage
the investment and reinvestment of the assets of the Trust for the period
and on the terms set forth in this Agreement. The Adviser hereby accepts
such employment for the compensation herein provided and agrees during
such period to render the services and to assume the obligations herein
set forth.
2. Authority of the Adviser. The Adviser shall supervise and
manage the investment portfolio of the Trust, and, subject to such
policies as the trustees of the Trust may determine, direct the purchase
and sale of investment securities in the day to day management of the
Trust. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way
or otherwise be deemed an agent of the Trust. However, one or more
shareholders, officers, directors or employees of the Adviser may serve as
directors and/or officers of the Trust, but without compensation or
reimbursement of expenses for such services from the Trust. Nothing
herein contained shall be deemed to require the Trust to take any action
contrary to its Certificate of Trust or Trust Instrument, dated September
16, 1992, or any applicable statute or regulation, or to relieve or
deprive the trustees of the Trust of their responsibility for, and control
of, the affairs of the Trust.
3. Expenses. The Adviser, at its own expense and without
reimbursement from the Trust, shall furnish office space, and all
necessary office facilities, equipment and executive personnel for
managing the investments of the Trust. The Adviser shall pay the salaries
and fees of all officers and trustees of the Trust (except the fees paid
to those trustees who are not interested persons of the Adviser, as
defined in the Act, and who are not officers or employees of the Trust).
The Adviser shall also bear all sales and promotional expenses of the
Trust, except for expenses incurred in complying with laws regulating the
issue or sale of securities. Fees paid for attendance at meetings of the
Trust's trustees to trustees of the Trust who are not interested persons
of the Adviser, as defined in the Act, as amended, shall be borne by the
Trust. The Trust shall bear all other expenses initially incurred by it,
provided that the total expenses borne by the Trust, including the
Adviser's fee but excluding all federal, state and local taxes, interest,
brokerage commissions and extraordinary items, shall not in any year
exceed that percentage of the average net asset value of the Trust for
such year, as determined by valuations made as of the close of each
business day, which is the most restrictive percentage provided by the
state laws of the various states in which the Trust's shares are qualified
for sale. The expenses of the Trust's operations borne by the Trust
include by way of illustration and not limitation, the costs of preparing
and printing its registration statements required under the Securities Act
of 1933 and the Act (and amendments thereto), the expense of registering
its shares with the Securities and Exchange Commission and in the various
states, the printing and distribution cost of prospectuses mailed to
existing shareholders, the cost of share certificates trustee and officer
liability insurance, reports to shareholders, reports to government
authorities and proxy statements, interest charges, taxes, legal expenses,
salaries of administrative and clerical personnel, association membership
dues, auditing and accounting services, insurance premiums, brokerage and
other expenses connected with the execution of portfolio securities
transactions, fees and expenses of the custodian of the Trust's assets,
expenses of calculating the net asset value and repurchasing and redeeming
shares, charges and expenses of dividend disbursing agents, registrars and
stock transfer agents and the cost of keeping all necessary shareholder
records and accounts.
The Trust shall monitor its expense ratio on a monthly basis.
If the accrued amount of the expenses of the Trust exceeds the expense
limitation established herein, the Trust shall create an account
receivable from the Adviser for the amount of such excess. In such a
situation the monthly payment of the Adviser's fee will be reduced by the
amount of such excess, subject to adjustment month by month during the
balance of the Trust's fiscal year if accrued expenses thereafter fall
below the expense limitation.
4. Compensation of the Adviser. For the services and
facilities to be rendered and the charges and expenses to be assumed by
the Adviser hereunder, the Trust shall pay to the Adviser an advisory fee,
paid monthly, based on the average net asset value of the Trust, as
determined by valuations made as of the close of each business day of the
month. The advisory fee shall be 1/12 of 1% (1% per annum) of such net
asset value. For any month in which this Agreement is not in effect for
the entire month, such fee shall be reduced proportionately on the basis
of the number of calendar days during which it is in effect and the fee
computed upon the average net asset value of the business days during
which it is so in effect.
5. Ownership of Shares of the Trust. Except in connection
with the initial capitalization of the Trust, the Adviser shall not take,
and shall not permit any of its shareholders, officers, directors or
employees to take, a long or short position in the shares of the Trust,
except for the purchase of shares of the Trust for investment purposes at
the same price as that available to the public at the time of purchase.
6. Exclusivity. The services of the Adviser to the Trust
hereunder are not to be deemed exclusive and the Adviser shall be free to
furnish similar services to others as long as the services hereunder are
not impaired thereby. Although the Adviser has permitted and is
permitting the Trust to use the name "Henlopen", it is understood and
agreed that the Adviser reserves the right to use and to permit other
persons, firms or corporations, including investment companies, to use
such name, and that the Trust will not use such name if the Adviser ceases
to be the Trust's sole investment adviser. During the period that this
Agreement is in effect, the Adviser shall be the Trust's sole investment
adviser.
7. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Trust or to any shareholder of the Trust for any act or
omission in the course of, or connected with, rendering services
hereunder, or for any losses that may be sustained in the purchase,
holding or sale of any security.
8. Brokerage Commissions. The Adviser may cause the Trust to
pay a broker-dealer which provides brokerage and research services, as
such services are defined in Section 28(e) of the Securities Exchange Act
of 1934 (the "Exchange Act"), to the Adviser a commission for effecting a
securities transaction in excess of the amount another broker-dealer would
have charged for effecting such transaction, if the Adviser determines in
good faith that such amount of commission is reasonable in relation to the
value of brokerage and research services provided by the executing
broker-dealer viewed in terms of either that particular transaction or his
overall responsibilities with respect to the accounts as to which he
exercises investment discretion (as defined in Section 3(a)(35) of the
Exchange Act).
9. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be
amended without the approval of the trustees of the Trust in the manner
required by the Act, and by the vote of the majority of the outstanding
voting securities of the Trust, as defined in the Act.
10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the trustees of the Trust or by a
vote of the majority of the outstanding voting securities of the Trust, as
defined in the Act, upon giving sixty (60) days' written notice to the
Adviser. This Agreement may be terminated by the Adviser at any time upon
the giving of sixty (60) days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its assignment (as
defined in Section 2(a)(4) of the Act). Subject to prior termination as
hereinbefore provided, this Agreement shall continue in effect for two (2)
years from the date hereof and indefinitely thereafter, but only so long
as the continuance after such two (2) year period is specifically approved
annually by (i) the trustees of the Trust or by the vote of the majority
of the outstanding voting securities of the Trust, as defined in the Act,
and (ii) the trustees of the Trust in the manner required by the Act,
provided that any such approval may be made effective not more than sixty
(60) days thereafter.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.
XXXXXX ASSOCIATES, INC.
(the "Adviser")
By: _______________________ By: ________________________
Xxxxxxx Xxxxxxx Xxxxxxx Xxxxxxx X. Xxxxxxx
Secretary President
THE HENLOPEN FUND
(the "Trust")
By: _______________________ By: ________________________________
Xxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxx
Secretary President
