Exhibit 99.D3
INVESTMENT ADVISORY AGREEMENT
BRAZOS MUTUAL FUNDS
BRAZOS MICRO CAP GROWTH PORTFOLIO
AGREEMENT made this 25th day of June, 1999 by and between Brazos Mutual Funds, a
Delaware business trust (the "Trust'), Xxxx XxXxxx Investment Counsel, L.L.C., a
Delaware Limited Liability Company (the "Adviser").
1. DUTIES OF ADVISER. The Trust hereby appoints the Adviser to act as
investment adviser to the Trust for the period and on such terms as set forth in
this Agreement. The Trust employs the Adviser to manage the investment and
reinvestment of the assets of its portfolios of securities, to continuously
review, supervise and administer the investment program of the portfolios, to
determine in its discretion the securities to be purchased or sold and the
portion of the Trust'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 limitations set forth in the
Trust's prospectus and applicable laws and regulations. The Adviser accepts such
employment 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. The Adviser is responsible for decisions to buy
or sell securities and other investments for the assets of a 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 a 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
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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 a 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. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Section 1 of this Agreement, the Trust shall pay to the
Adviser in monthly installments, an advisory fee calculated by applying the
following annual percentage rates to the Trust's average daily net assets for
the month:
BRAZOS Micro Cap Growth Portfolio 1.20%
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
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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.
4. 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.
5. 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.
6. 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.
7. 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
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
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in connection with the purchase, holding, redemption or sale of any security on
behalf of the Trust.
8. PERMISSIBLE INTERESTS. Subject to and in accordance with the Certificate
of Trust and Agreement and Declaration of Trust of the Trust and the Certificate
of Limited Partnership and Partnership Agreement of the Adviser, Trustees,
officers, agents and shareholders of the Trust are or may be interested in the
Adviser (or any successor thereof) as Trustees, officers, agents, shareholders
or otherwise; Trustees, officers, agents and shareholders of the Adviser are or
may be interested in the Trust as Trustees, officers, agents, shareholders or
otherwise; and the Adviser (or any successor) is or may be interested in the
Trust as a shareholder or otherwise; and the effect of any such
interrelationships shall be governed by said organizational documents and the
provisions of the 1940 Act.
9. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall continue until the earlier of June __, 2000 or the date
of the first annual or special meeting of the shareholders of the Trust, if any,
and, if approved by a majority of the outstanding voting securities of the
Trust, thereafter shall continue for periods of one year so long as such
continuance is specifically approved at least annually (a) by the 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 approval, and (b)
by the Board of Trustees of the Trust or (c) by vote of a majority of the
outstanding voting securities of the Trust; PROVIDED HOWEVER, that if the
shareholders of the Trust fail to approve the Agreement as provided herein, the
Adviser may continue to serve in such capacity in the manner and to the extent
permitted by the 1940 Act and rules thereunder. This Agreement may be terminated
by the Trust at any time, without the payment of any penalty, by
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vote of a majority of the entire Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Trust on 60 days' written
notice to the Adviser. This Agreement may be terminated by the Adviser at any
time, without the payment of any penalty , upon 90 days' written notice to the
Trust. This agreement will automatically and immediately terminate in the event
of its assignment. 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.
As used in this Section 9, the terms "assignment," "interested persons,"
and "a vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act.
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) by vote of a
majority of the outstanding voting securities of the Trust.
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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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of this 25th day of June, 1999.
XXXX XxXXXX INVESTMENT COUNSEL, L.L.C. BRAZOS MUTUAL FUNDS
By: /s/ Xxxx XxXxxx By: /s/ Xxx X. Xxxxxxxxxxxx
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Xxxx X. XxXxxx, President Xxx X. Xxxxxxxxxxxx, President
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