EXHIBIT 99.H2
ADMINISTRATION AGREEMENT
BRAZOS MUTUAL FUNDS
THIS ADMINISTRATION AGREEMENT is made as of this 25th day of June,
1999, by and between Brazos Mutual Funds, a Delaware business trust (the
"Trust"), and SunAmerica Asset Management Corp. (the "Administrator"), a
Delaware corporation.
WHEREAS, the Trust is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"),
WHEREAS, the Trust is authorized to create separate series, each with
its own separate investment portfolio; and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, administrative services to such portfolios
of the Trust as the Trust and the Administrator may agree on ("Portfolios") and
as listed on the schedules attached hereto ("Schedules") and made a part of this
Agreement, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR. The Trust hereby retains the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the administrative services as set forth in Article 2 below. The
Administrator hereby accepts such employment to perform the duties set forth
below.
ARTICLE 2. ADMINISTRATIVE AND ACCOUNTING SERVICES. The Administrator
shall perform or supervise the performance by others of other administrative
services in connection with the operations of the Portfolios, and, on behalf of
the Trust, will investigate, assist in the selection of and conduct relations
with custodians, depositories, accountants, legal counsel, underwriters, brokers
and dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. All
services provided hereunder shall be in conformity with the Agreement and
Declaration of Trust, Bylaws, resolutions and other instructions of the Board of
Trustees and the current prospectuses and statement of additional information of
the Trust. The Administrator agrees to furnish the services set forth herein in
return for the compensation provided in Article 4 of this Agreement. The
Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance and compliance with investment policies and
applicable laws, rules and regulations as they may reasonably request but shall
have no responsibility for supervising the performance
by any investment adviser or sub-adviser of its responsibilities, except with
respect to the Portfolios' compliance with investment objective and policies.
The Administrator or its appointed service provider shall provide the
Trust with administrative services, regulatory reporting, fund accounting and
related portfolio accounting services as set forth on Schedule II of this
Agreement, all necessary office space, equipment, personnel, compensation and
facilities (including facilities for Shareholders' and Trustees' meetings) for
handling the affairs of the Portfolios and such other services as the Trustees
may, from time to time, reasonably request and the Administrator shall, from
time to time, reasonably determine to be necessary to perform its obligations
under this Agreement. In addition, at the request of the Trust's Board of
Trustees (the "Trustees"), the Administrator shall make reports to the Trustees
concerning the performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator or its
appointed service provider shall:
(A) calculate contractual Trust expenses and control all
disbursements for the Trust, and as appropriate compute the
Trust's yields, total return, expense ratios, portfolio
turnover rate and, if required, portfolio average
dollar-weighed maturity;
(B) assist Trust counsel with the preparation of prospectuses,
statements of additional information, registration statements,
and proxy materials;
(C) prepare such reports, applications and documents (including
reports regarding the sale and redemption of Shares as may be
required in order to comply with Federal and state securities
law) as may be necessary or desirable to register the Trust's
shares with state securities authorities, monitor sale of
Trust shares for compliance with state securities laws, and
file with the appropriate state securities authorities the
registration statements and reports for the Trust and the
Trust's shares and all amendments thereto, as may be necessary
or convenient to register and keep effective the Trust and the
Trust's shares with state securities authorities to enable the
Trust to make a continuous offering of its shares;
(D) develop and prepare communications to shareholders, including
the annual report to shareholders, coordinate mailing
prospectuses, notices, proxy statements, proxies and other
reports to Trust shareholders, and supervise and facilitate
the solicitation of proxies solicited by the Trust for all
shareholder meetings, including tabulation process for
shareholder meetings;
(E) coordinate with Trust counsel the preparation of, and
administer contracts on behalf of the Trust with, among
others, the Trust's investment adviser, distributor,
custodian, and transfer agent;
(F) maintain the Trust's general ledger and prepare the Trust's
financial statements, including expense accruals and payments,
determine the net asset value of the
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Trust's assets and of the Trust's shares, and supervise the
Trust's transfer agent with respect to the payment of
dividends and other distributions to shareholders;
(G) calculate performance data of the Trust and its portfolios for
dissemination to information services covering the investment
company industry;
(H) coordinate and supervise the preparation and filing of the
Trust's tax returns;
(I) At the request of the Trustees, examine and review the
operations and performance of the various organizations
providing services to the Trust or any Portfolio of the Trust,
and report to the Trustees;
(J) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and
printing of the Trust's semi-annual and annual reports to
shareholders;
(K) provide internal legal and administrative services as
requested by the Trust from time to time;
(L) assist with the design, development, and operation of the
Trust, including new portfolio and class investment
objectives, policies and structure;
(M) provide individuals acceptable to the Trustees for nomination,
appointment, or election as officers of the Trust, who will be
responsible for the management of certain of the Trust's
affairs as determined by the Trustees;
(N) advise the Trust and its Trustees on matters concerning the
Trust and its affairs;
(O) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust
in accordance with the requirements of Rules 17g-1 and
17d-1(7) under the 1940 Act as bonds and policies are approved
by the Trust's Board of Trustees;
(P) monitor and advise the Trust and its Portfolios on their
registered investment company status under the Internal
Revenue Code of 1986, as amended;
(Q) perform all administrative services and functions of the Trust
and each Portfolio to the extent administrative services and
functions are not provided to the Trust or such Portfolio
pursuant to the Trust's or such Portfolio's investment
advisory agreement, distribution agreement, custodian
agreement and transfer agent agreement;
(R) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Portfolios as the
Trust and the Administrator shall determine desirable; and
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(S) prepare and file with the Securities and Exchange Commission
(the "SEC") the semi-annual report for the Trust on Form N-SAR
and all required notices pursuant to Rule 24f-2.
Also, the Administrator will perform other services for the Trust as agreed from
time to time, including, but not limited to mailing the annual reports of the
Portfolios and mailing notices of shareholders' meetings, proxies and proxy
statements, for all of which the Trust will pay the Administrator's
out-of-pocket expenses.
In compliance with the requirements of Rule 3la-3 under the 1940 Act,
the Administrator agrees that all records which it maintains for the Trust are
the property of the Trust and further agrees to surrender promptly to the Trust
any of such records upon the Trust's request.
ARTICLE 3. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE ADMINISTRATOR. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
(B) THE TRUST. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of pricing
services, the costs of custodial and transfer agency services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees and out-of-pocket expenses of Trustees who are not
affiliated persons of the Administrator or the investment adviser to the Trust
or any affiliated corporation of the Administrator or the investment adviser,
the costs of Trustees' meetings, insurance, interest, brokerage costs,
litigation and other extraordinary or nonrecurring expenses, and all fees and
charges of investment advisers and the distributor of the Trust.
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR.
(A) ADMINISTRATION FEE. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator the fees and out-of-pocket
expenses specified in the attached Schedule I.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Administrator's
compensation for that part of the month in which this Agreement is in effect
shall be prorated in a manner consistent with the calculation of
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the fees as set forth above. Payment of the Administrator's compensation for the
preceding month shall be made promptly.
(B) SURVIVAL OF COMPENSATION RATES. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. The duties of
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or negligence in the performance of its duties,
or by reason of reckless disregard of its obligations and duties hereunder,
except as may otherwise be provided under provisions of applicable law which
cannot be waived or modified hereby. (As used in this Article 5, the term
"Administrator" shall include directors, officers, employees and other agents of
the Administrator as well as that corporation itself.)
So long as the Administrator, or its agents, acts in good faith and
with due diligence the Trust assumes full responsibility and shall indemnify the
Administrator and hold it harmless from and against any and all actions, suits
and claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly from any action which the Administrator takes or
does not take (i) at the request, on the direction of or in reliance on the
advice of the Trust pursuant to this Agreement or (ii) upon oral or written
instructions. The indemnity provision set forth herein shall survive the
termination of this Agreement.
The Administrator may apply to the Trust at any time for instructions
and may consult counsel for the Trust or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with the
written opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. CONFIDENTIALITY. The Administrator agrees on behalf of
itself and its employees to treat confidentially all records and other
information relative to the Trust and its prior, present or potential
Shareholders and relative to the Adviser and its prior, present or potential
customers, except, after prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where the Administrator may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
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ARTICLE 7. YEAR 2000 COMPLIANT. The Administrator warrants that all
software code owned by or under the Administrator's control, used in the
performance of the Administrator's obligations under this contract, will be Year
2000 compliant. For purposes of this paragraph, "Year 2000 Compliant" means that
the software will continue to operate beyond December 31, 1999 without creating
any logical or mathematical inconsistencies concerning any date after December
31, 1999 and without decreasing the functionality of the system applicable to
dates prior to January 1, 2000 including, but not limited to, making changes to
[a] date and data century recognition; [b] calculations which accommodate same-
and multi-century formulas and date values; and [c] input/output of date values
which reflect century dates. All changes described in this paragraph will be
made at no additional cost to the Trust.
ARTICLE 8. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. The
Administrator undertakes to comply with all applicable requirements of the 1933
Act, the 1934 Act, the 1940 Act and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by the Administrator hereunder.
ARTICLE 9. DURATION AND TERMINATION OF THIS AGREEMENT. THIS AGREEMENT
SHALL become effective on the date set forth above and shall remain in effect
for an initial term of two (2) years, unless sooner terminated as provided
herein. Thereafter, unless sooner terminated, this Agreement shall continue in
effect from year to year provided such continuance is specifically approved at
least annually by the Board of Trustees. This Agreement is terminable without
penalty, by the Board or by the Administrator, on not less than ninety (90)
days' written notice. This Agreement shall not be assigned by any of the parties
hereto without the prior consent in writing of the other party; provided,
however, that the Administrator may in its own discretion and without limitation
or prior consent of the Trust, whenever and on such terms and conditions as it
deems necessary or appropriate enter into subcontracts, agreements and
understandings with third parties; provided, that such subcontract, agreement or
understanding shall not discharge the Administrator from obligations hereunder
or delegation of duties to another third party. A change of control of either
party shall not constitute an assignment of this Agreement.
This Agreement shall not be assignable by the Administrator, without
the prior written consent of the Trust, except to an entity that is controlled
by, or under common control with, the Administrator.
Upon termination of this Agreement, the Administrator shall use its
best efforts to assist in the transfer of its responsibilities hereunder to any
successor administrator without additional compensation (it being understood
that they would be reimbursed for their reasonable out-of-pocket expenses).
ARTICLE 10. AMENDMENTS. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
ARTICLE 11. CERTAIN RECORDS. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained
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and preserved pursuant to Rules 3la-1 and 3la-2 under the 1940 Act which are
prepared or maintained by the Administrator on behalf of the Trust shall be
prepared and maintained at the expense of the Administrator, but shall be the
property of the Trust and will be made available to or surrendered promptly to
the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Administrator against such liability.
ARTICLE 12. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 13. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at 0000 Xxxxxx Xxxx, Xxxxx 0000, XX 00000, with a copy
to:
XXXX XXXXXX INVESTMENT COUNSEL, L.L.C.
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0000 XXXXXX XXXX, XXXXX 0000
--------------------------------------
XXXXXX, XX 00000
--------------------------------------
;
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and if to the Administrator at THE SUNAMERICA CENTER, 000 XXXXX XXXXXX,
XXX XXXX, XX 00000.
ARTICLE 14. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of New
York, or any of the provisions herein, conflict with the applicable provisions
of the 1940 Act, the latter shall control.
ARTICLE 15. MULTIPLE ORIGINALS. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 16. LIMITATION OF LIABILITY. The Administrator is hereby
expressly put on notice of the limitation of liability as set forth in Article
III, Section 6 of the Trust's Agreement and Declaration of Trust and agrees that
the obligations pursuant to this Agreement of a particular Portfolio and of the
Trust with respect to that Portfolio shall be limited solely to the assets of
that Portfolio, and the Administrator shall not seek satisfaction of any such
obligation
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from any other Portfolio, the shareholders of any Portfolio, the Trustees,
officers, employees or agents of the Trust, or any of them.
ARTICLE 17. BINDING AGREEMENT. This Agreement, and the rights and
obligations of the parties and the Portfolios hereunder, shall be binding on,
and inure to the benefit of, the parties and the Portfolios and the respective
successors and assigns of each of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
BRAZOS MUTUAL FUNDS
By: /s/ Xxx X. Xxxxxxxxxxxx
-----------------------------------------
Xxx X. Xxxxxxxxxxxx, President
Attest: /s/ Illegible
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SUNAMERICA ASSET MANAGEMENT CORP.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx, Vice President
Attest: /s/ Xxxxxxx Xxxx
-------------------------------------
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SCHEDULE I
FUND ADMINISTRATION AND COMPLIANCE
ANNUAL FEE SCHEDULE - DOMESTIC FUNDS
Separate Series of Brazos Mutual Funds
NAME OF SERIES
Small Cap Growth Portfolio
Micro Cap Growth Portfolio
Real Estate Securities Portfolio
Growth Portfolio
Annual fee based upon average net fund assets per class
7 basis points on the first $200 million
6 basis points on the next $500 million
4 basis points on the balance
Minimum annual fee:
$35,000/first fund
$25,000/fund next three funds
$20,000/fund additional funds
Plus out-of-pocket expense reimbursements, including but not limited to:
Postage
Programming
Stationery
Proxies
Retention of records
Special reports
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of trustees meetings
Auditing and legal expenses
Fees and out-of-pocket expense reimbursements are billed monthly
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SCHEDULE II
ACCOUNTING SERVICES
The Administrator or appointed service provider will perform the following
accounting functions:
(i) Journalize each Portfolio's investment, capital share and
income and expense activities;
(ii) Receive duplicate investment buy/sell trade tickets and
receivable trades with the Trust's custodian;
(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances of each Portfolio with
the custodian, and prepare the beginning cash balance
available for investment purposes;
(vi) Update the cash availability throughout the day as required;
(vii) Post to and prepare each Portfolio's statement of Assets and
Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses (e.g., advisory and
custody fees);
(ix) Monitor the expense accruals and notify Trust management of
any proposed adjustments;
(x) Control all disbursements from each Portfolio and authorize
such disbursements upon Written Instruction;
(xi) Calculate capital gains and losses;
(xii) Determine each Portfolio's net income;
(xiii) Obtain security market quotes from independent pricing
services approved by the Trust, or if such quotes are
unavailable, then obtain such prices from the management of
the Trust, and in either case calculate the market value of
each Portfolio's investments;
(xiv) Transit or mail a copy of the daily portfolio valuation to
each Portfolio's investment advisor;
(xv) Compute the net asset value of each Portfolio;
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(xvi) As appropriate, compute the yields, total return, expense
ratios, portfolio turnover rate, and, if required, portfolio
average dollar-weighted maturity; and
(xvii) Prepare a monthly financial statement, which will include the
following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Change in Net Assets
Cash Statement
Schedule of Capital Gains and Losses.
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