EXHIBIT (D)(3)
INVESTMENT ADVISORY AGREEMENT
Agreement made as of the day of , 1998, between The Jefferson
Fund Group Trust, a Delaware business trust (the "Trust"), and Xxxxxxxx Capital
Management, Inc., a (the "Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940 (the "Act");
WHEREAS, the Trust desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940 as its
investment adviser, as the adviser for one series of the Trust;
NOW, THEREFORE, the Trust and the Adviser do mutually promise and
agree as follows:
11. Employment.
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The Trust hereby employs the Adviser to manage the investment and
reinvestment of the assets of the Jefferson Regional Bank Fund (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.
12. Authority of the Adviser.
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The Adviser shall supervise and manage the investment portfolio of the
Fund, and, subject to such policies as the trustees of the Trust may determine
for the Fund, 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
Fund in any way or otherwise be deemed an agent of the Trust or 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, dated January 20, 1995, 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 or
the Fund.
13. Expenses.
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The Adviser, at its own expense and without reimbursement from 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 pay the salaries and fees of all officers and trustees of the Trust
affiliated with the Adviser. 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
Fund shall bear all other expenses initially incurred by it. 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, 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 Fund'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.
14. Compensation of the Adviser.
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For the services and facilities to be rendered and the charges and
expenses to be assumed by the Adviser hereunder, the Fund shall pay to the
Adviser an advisory fee, paid monthly, based on the average net asset value of
the Fund, as determined by valuations made as of the close of each business day
of the month. The advisory fee shall be .60% per annum of the first
$500,000,000 of the Fund's average net asset value, .50% per annum of the next
$500,000,000 of the Fund's average net asset value and .40% per annum of the
Fund's average net asset value exceeding $1,000,000,000. 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. The Adviser may from time to time and for
such periods as it deems appropriate reduce its compensation and/or assume
expenses for the Fund (including initial organization costs); provided, however,
that in the event that the Adviser reduces its compensation and/or assumes
expenses, the Advisor shall be entitled to recoup such amounts for a period of
up to three (3) years from the date such amount was reduced or assumed.
15. Ownership of Shares of the Fund.
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Except in connection with the initial capitalization of the Fund, 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
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.
16. Exclusivity.
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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.
17. Liability.
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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 Fund or the Trust
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.
18. Brokerage Commissions. The Adviser may cause the Fund to pay a broker-
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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 its overall
responsibilities with respect to the accounts as to which it exercises
investment discretion (as defined in Section 3(a)(35) of the Exchange Act).
19. Amendments.
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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, if required by
the Act, by the vote of the majority of the outstanding voting securities of the
Fund, as defined in the Act.
20. Termination.
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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 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 Fund, 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.
XXXXXXXX CAPITAL MANAGEMENT, INC.
By: /s/ Xxxx X. Xxxxx
Its: President
THE JEFFERSON FUND GROUP TRUST
By: Xxxxxxx Xxxxxxxxx
/s/ Xxxxxxx Xxxxxxxxx
Its: Chairman
