INVESTMENT ADVISORY AGREEMENT
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BRAZOS MUTUAL FUNDS
BRAZOS REAL ESTATE SECURITIES PORTFOLIO
AGREEMENT made this 7th day of April, 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 .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. This Agreement shall become effective upon its
execution; provided, however, that this Agreement shall not become effective
with respect to the Portfolio unless it has first been approved in the manner
required by the 1940 Act and rules thereunder or in accordance with exemptive or
other relief granted by the SEC or its staff. This Agreement shall remain in
full force and effect continuously thereafter, except as follows:
(a) By vote of a majority of the (i) Board members who are not "interested
persons" (as defined in the 0000 Xxx) of the Trust or Adviser ("Independent
Board Members") or (ii) outstanding voting shares of the Portfolio (as defined
in the 1940 Act), the Portfolio may at any time terminate this Agreement,
without the payment of any penalty, by providing not more than 60 days' written
notice delivered or mailed by registered mail, postage prepaid, to Adviser.
(b) This Agreement will terminate automatically, without the payment of any
penalty, unless within two years after its initial effectiveness and at least
annually thereafter, the continuance of the Agreement is specifically approved
by (i) the Board or the shareholders of the Portfolio by the affirmative vote of
a majority of the outstanding shares (as defined in the 0000 Xxx) of the
Portfolio, and (ii) a majority of the Independent Board Members, by vote cast in
person at a meeting called for the purpose of voting on such approval. If the
continuance of this Agreement is submitted to the shareholders of the Portfolio
for their approval and such shareholders fail to approve such continuance as
provided herein, the Adviser may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules thereunder.
(c) Adviser may at any time terminate this Agreement, without the payment
of any penalty, by not less than 90 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Trust.
(d) This Agreement automatically and immediately shall terminate, without
the payment of any penalty, 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.
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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.
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: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Managing Director
Brazos Mutual Funds
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: President
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