Exhibit 10.5
INVESTMENT ADVISORY AGREEMENT
Agreement made this 1st day of July, 2005 between Xxxxxxxx Funds Trust
(f/k/a The Henlopen Fund), a Delaware statutory trust (the "Trust"), and
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Xxxxxxxx Advisors, Inc., a California corporation (the "Adviser").
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W I T N E S S E T H:
WHEREAS, the Trust is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 (the "Act") as an open-end
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management investment company, having one series, the Xxxxxxxx Cornerstone
Growth Fund, Series II (f/k/a The Henlopen Fund) (the "Fund"); and
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WHEREAS, the Trust desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940, as the
investment adviser to the Fund.
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
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investment and reinvestment of the assets of the Fund 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
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the investment portfolio of the Fund, 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 Fund. 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 or the Fund in any way or otherwise be deemed an agent of
the Trust or the Fund. However, one or more shareholders, officers, directors
or employees of the Adviser may serve as trustees 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, as each may
be amended from time to time, 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
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reimbursement from the Trust or the Fund, shall furnish office space, and all
necessary office facilities, equipment and executive personnel for managing the
investments of the Fund. The Adviser shall also bear all sales and promotional
expenses of the Fund except for expenses incurred in complying with laws
regulating the issue or sale of securities. The Adviser shall not be required
to pay any expenses of the Fund unless the total expenses borne by the Fund,
including the Adviser's fee but excluding all federal, state and local taxes,
interest, brokerage commissions and other costs incurred in connection with the
purchase and sale of securities and extraordinary items, in any year exceed that
percentage of the average net asset value of the Fund for such year, as
determined by valuations made as of the close of each business day, which is the
most restrictive percentage, if any, provided by the state laws of the various
states in which the Fund's shares are qualified for sale. The expenses of the
Fund's operations borne by the Fund include by way of illustration and not
limitation, trustees' fee paid to those trustees who are not interested trustees
under the Act; 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 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 costs incurred in
connection with the purchase and sale of securities; fees and expenses of the
custodian of the Fund's assets; shareholder servicing fees; expenses of
calculating the net asset value and repurchasing and redeeming shares; charges
and expenses of dividend disbursing agents, registrars and stock transfer
agents, fund administrators and fund accountants; and the cost of keeping all
necessary shareholder records and accounts.
The Trust shall monitor the Fund's expense ratio on a monthly basis.
If the accrued amount of the expenses of the Fund exceeds the expense limitation
established herein, if any, the Fund 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 Fund's fiscal year if
accrued expenses thereafter fall below the expense limitation.
4. Compensation of the Adviser. For the services and facilities to
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be rendered and the charges and expenses to be assumed by the Adviser hereunder,
the Trust through the Fund shall pay to the Adviser an advisory fee, paid
monthly, based on the average net assets of the Fund, as determined by
valuations made as of the close of each business day of the month. The advisory
fee shall be 0.74% per annum of such average net assets. 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 assets of the business days
during which it is so in effect.
5. Ownership of Shares of the Fund. The Adviser shall not take, and
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shall not permit any of its shareholders, officers, directors or employees to
take, a long or short position in the shares of the Fund, except for the
purchase of shares of the Fund 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
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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 and the Fund to
use the names "Xxxxxxxx" and "Cornerstone Growth," 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 names, and that the
Trust and the Fund will not use such names if the Adviser ceases to be the
Fund's sole investment adviser. During the period that this Agreement is in
effect, the Adviser shall be the Fund's sole investment adviser.
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7. Liability. In the absence of willful misfeasance, bad faith,
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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 Fund
or to any shareholder of the Fund 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, subject to the control and
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direction of the trustees of the Trust, shall have authority and discretion to
select brokers and dealers to execute portfolio transactions for the Fund and
for the selection of the markets on or in which the transactions will be
executed. The Adviser may cause the Fund 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
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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). The Adviser shall provide such reports as the trustees of the
Trust may reasonably request with respect to the Fund's total brokerage and the
manner in which that brokerage was allocated.
9. Code of Ethics. The Adviser has adopted a written code of ethics
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complying with the requirements of Rule 17j-1 under the Act and has provided the
Trust with a copy of the code of ethics and evidence of its adoption. Upon
written request of the Trust, the Adviser shall permit the Trust to examine any
reports required to be made by the Adviser pursuant to Rule 17j-1 under the
Act.
10. Amendments. This Agreement may be amended by the mutual consent
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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, if required by the Act, by the vote of the majority of the outstanding
voting securities of the Fund, as defined in the Act.
11. Termination. This Agreement may be terminated at any time,
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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 Fund, 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.
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12. Obligations of the Trust. The name "Xxxxxxxx Funds Trust" and
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references to the trustees of Xxxxxxxx Funds Trust refer respectively to the
Trust created and the trustees, as trustees but not individually or personally,
acting from time to time under a Trust Instrument dated September 16, 1992 which
is hereby referred to and a copy of which is on file at the principal office of
the Trust. The obligations of Xxxxxxxx Funds Trust entered into in the name or
on behalf thereof by any of the trustees, representatives or agents of the Trust
are made not individually, but in such capacities, and are not binding upon any
of the trustees, shareholders, or representatives of the Trust personally, but
bind only the Trust property, and all persons dealing with any class of shares
of the Trust must look solely to the Trust property belonging to such class for
the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day first above written.
XXXXXXXX ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
President
XXXXXXXX FUNDS TRUST
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
President
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