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.
-----------
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.
-------------------------
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.
---------
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.
----------------------------
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.
15. Ownership of Shares of the Fund.
--------------------------------
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.
------------
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.
----------
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-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.
-----------
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.
------------
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
