INTERIM INVESTMENT ADVISORY AGREEMENT
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BRAZOS MUTUAL FUNDS
BRAZOS REAL ESTATE SECURITIES PORTFOLIO
AGREEMENT made as of the 22nd day of January, 2004 by and between Brazos
Mutual Funds, a Delaware statutory trust (the "Trust") and Xxxx XxXxxx
Investment Counsel, L.P., a Delaware limited partnership (the "Adviser").
1. INVESTMENT MANAGEMENT DUTIES. The Trust hereby appoints the Adviser
to act as investment adviser to the Trust, on behalf of the Real Estate
Securities Portfolio (the "Portfolio"), for the period and on such terms as set
forth in this Agreement. Subject to the delegation of any duties to one or more
investment subadvisers ("Subadvisers") as provided in Section 3 herein, the
Trust appoints the Adviser to manage the investment and reinvestment of the
assets of the Portfolio, to continuously review, supervise and administer the
investment program of the Portfolio, to determine in its discretion the
securities to be purchased, held, sold or exchanged for the Portfolio, and the
portion of the Portfolio's assets to be held uninvested, to provide the Trust
with records concerning the Adviser's activities which the Trust is required to
maintain, and to render regular reports to the Trust's officers and Board of
Trustees concerning the Adviser's discharge of the foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to the
control of the officers and the Board of Trustees of the Trust, and in
compliance with the objectives, policies and restrictions of the Portfolio, as
stated in the then-current Form N-1A Registration Statement of the Portfolio
("Registration Statement"), applicable laws and regulations, and such other
standards as the Board may reasonably establish. The Adviser accepts such
appointment and agrees to render the services and to provide, at its own
expense, the office space, furnishings and equipment and the personnel required
by it to perform the services on the terms and for the compensation provided
herein.
2. PORTFOLIO TRANSACTIONS. Subject to the delegation of any duties
to one or more Subadvisers as provided in Section 3 herein, the Adviser is
responsible for decisions to buy or sell securities and other investments for
the assets of the Portfolio, broker-dealers and futures commission merchants'
selection, and negotiation of brokerage commission and futures commission
merchants' rates. As a general matter, in executing Portfolio transactions, the
Adviser may employ or deal with such broker-dealers or futures commission
merchants as may, in the Adviser's best judgment, provide prompt and reliable
execution of the transactions at favorable prices and reasonable commission
rates. In selecting such broker-dealers or futures commission merchants, the
Adviser shall consider all relevant factors including price (including the
applicable brokerage commission, dealer spread or futures commission merchant
rate), the size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficult of execution, the execution
capabilities and operational facilities of the firm involved, and, in the case
of securities, the firm's risk in positioning a block of securities. Subject to
such policies as the Trustees may determine and consistent with Section 28(e) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), the 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 the Adviser's having
caused the Portfolio to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member of an exchange, broker
or dealer viewed in terms of either that particular transaction or the Adviser's
overall responsibility with respect to such Portfolio and to other clients as to
which the Adviser exercises investment discretion. In accordance with Section
11(a) of the 1934 Act and Rule 11a2-2(T) thereunder, and subject to any other
applicable laws and regulations, including Section 17(e) of the Act and Rule
17e-1 thereunder, the Adviser may engage its affiliates or any other subadviser
to the Trust and its respective affiliates, as broker-dealers or futures
commission merchants to effect Portfolio transactions in securities and other
investments for the Portfolio. The Adviser will promptly communicate to the
officers and the Trustees of the Trust such information relating to Portfolio
transactions as they may reasonably request. To the extent consistent with
applicable law, the Adviser may aggregate purchase or sell orders for the
Portfolio with contemporaneous purchase or sell orders of other clients of the
Adviser or its affiliated persons. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Adviser in the manner the Adviser determines to be equitable and
consistent with its and its affiliates' fiduciary obligations to the Portfolio
and to such other clients. The Adviser hereby acknowledges that such aggregation
of orders may not result in more favorable pricing or lower brokerage
commissions in all instances.
3. RETENTION OF SUBADVISERS.
(a) Subject to Board and Portfolio shareholder approval to the extent
required by the 1940 Act and related rules, and subject to the general
supervision and control of the Board and under the terms and conditions set
forth in this Agreement, Adviser, at its own expense, may delegate to one or
more Subadvisers any responsibilities of the Adviser as set forth in Sections 1
or 2 of this Agreement.
(b) Subject to Board and Portfolio shareholder approval to the extent
required by the 1940 Act and related rules, and subject to the general
supervision and control of the Board, Adviser will have full discretion to (i)
select new or additional Subadvisers for the Portfolio, (ii) enter into and
materially modify existing Subadvisory Agreements, and (iii) terminate and
replace any Subadviser. To the extent that Adviser has delegated responsibility
to more than one Subadviser pursuant to Section 3, Adviser will assess the
Portfolio's investment focus and will seek to implement decisions with respect
to the allocation and reallocation of the Portfolio's assets among one or more
current or additional Subadvisers from time to time, as Adviser deems
appropriate, to enable the Portfolio to achieve its investment goals. In
addition, Adviser will monitor compliance of each Subadviser with the investment
objectives, policies and restrictions of the Portfolio (or portions of the
Portfolio) under the management of such Subadviser, monitor compliance with
brokerage execution standards, and review and report to the Board on the
performance of each Subadviser. Adviser will furnish, or cause the appropriate
Subadvisers to furnish, to the Trust such statistical information, with respect
to the investments that the Portfolio (or portions of the Portfolio) may hold or
contemplate purchasing, as the Trust may reasonably request. On Adviser's own
initiative, Adviser will apprise, or cause the appropriate Subadvisers to
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apprise, the Trust of important developments materially affecting the Portfolio
(or any portion of the Portfolio that they advise) and will furnish the Trust,
from time to time, with such information as may be appropriate for this purpose.
Further, Adviser agrees to furnish, or cause the appropriate Subadvisers to
furnish, to the Board such periodic and special reports as the Board may
reasonably request. In addition, Adviser agrees to cause the appropriate
Subadvisers to furnish to third-party data reporting services all currently
available standardized performance information and other customary data.
4. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1, 2 and 3 of this Agreement, the Trust, on
behalf of the Portfolio, shall pay to the Adviser in monthly installments, an
advisory fee equal to one-twelfth of 0.40% of the Portfolio's average daily net
assets for the month.
In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect subject to a pro rata adjustment based
on the number of days elapsed in the current fiscal month as a percentage of the
total number of days in such month.
Adviser may from time to time and for such periods as it deems appropriate
voluntarily waive fees or otherwise reduce its compensation hereunder. In
addition to any amounts otherwise payable to Adviser as an advisory fee for
current services under this Agreement, the Trust shall be obligated to pay
Adviser amounts previously waived or expenses paid by Adviser with respect to
the Portfolio, provided that such additional payments are made not inconsistent
with the then-current Registration Statement.
5. OTHER SERVICES. At the request of the Trust, the Adviser in its
discretion may make available to the Trust office facilities, equipment,
personnel and other services. Such office facilities, equipment, personnel and
services shall be provided for or rendered by the Adviser and billed to the
Trust at the Adviser's cost.
6. REPORTS. The Trust and the Adviser agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
7. STATUS OF ADVISER. The services of the Adviser to the Trust are not to
be deemed exclusive, and the Adviser shall be free to render similar services to
others so long as its services to the Trust are not impaired thereby.
8. LIABILITY OF ADVISER. In the absence of (i) willful misfeasance, bad
faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act of 1940 ("1940
Act"), the Adviser shall not be subject to any liability whatsoever to the
Trust, or to any shareholder of the Trust, for any error or judgment, mistake of
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law or any other act or omission in the course of, or connected with, rendering
services hereunder including, without limitation, for any losses that may be
sustained in connection with the purchase, holding, redemption or sale of any
security on behalf of the Trust.
9. DURATION AND TERMINATION. Unless sooner terminated as provided
herein, this Agreement shall continue in effect until the sooner of (a) 150 days
from the date this Agreement is entered into or (b) the date upon which
Portfolio shareholders and the Board, including a majority of the Board members
who are not "interested persons" (as defined in the 0000 Xxx) of the Trust or
the Adviser ("Independent Board Members"), approve the retention of the Adviser
in accordance with Section 15(a) of the 1940 Act; provided, however, that this
Agreement may continue for a period in excess of 150 days upon the written
agreement of the parties and consistent with SEC or SEC staff action or
interpretation of applicable law. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Board or by vote of a majority of
the outstanding shares (as defined in the 1940 Act), or by Adviser on 60 days'
written notice to the other party. This Agreement shall terminate automatically
in the event of its assignment (as defined in the 1940 Act).
Any notice under this Agreement shall be given in writing, addressed and
delivered or mailed postpaid, to the other party at the principal office of such
party.
10. AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, but the consent of the Trust must be approved (a) by vote of a majority
of those members of the Board of Trustees of the Trust 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 amendment, and (b) to the
extent required by the 1940 Act and related regulations, by vote of a majority
of the outstanding voting securities of the Portfolio.
11. SEVERABILITY. If any provisions 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.
12. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Texas, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of Texas conflict with the applicable provisions of
the 1940 Act, the latter shall control.
13. COUNTERPARTS. This Agreement may be executed simultaneously 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.
14. HEADINGS. 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.
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15. LIABILITY OF TRUSTEES AND SHAREHOLDERS. Any obligations of the
Portfolio under this Agreement is not binding upon the Board members or the
shareholders individually but are binding only upon the assets and property of
the Portfolio.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date set forth above.
Xxxx XxXxxx Investment Counsel, L.P.
By:
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Name:
Title:
Brazos Mutual Funds
By:
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Name:
Title:
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