EXHIBIT (H)(6)
[FORM OF]
ADMINISTRATION AGREEMENT
BRAZOS MUTUAL FUNDS
THIS ADMINISTRATION AGREEMENT is made as of this __ 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
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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
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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.
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(A) The Administrator. The Administrator shall furnish at its own expense
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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
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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.
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(A) Administration Fee. For the services to be rendered, the facilities
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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
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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
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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
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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
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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
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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
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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
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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
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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"
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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
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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 ______________________________________, with a copy to:
__________________________
__________________________
__________________________
__________________________;
and if to the Administrator at_________________________________.
ARTICLE 14. Governing Law. This Agreement shall be construed in accordance
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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
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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
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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 from any other Portfolio, the shareholders of any Portfolio, the
Trustees, officers, employees or agents of the Trust, or any of them.
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ARTICLE 17. Binding Agreement. This Agreement, and the rights and
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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:_____________________________
Attest:_________________________
SUNAMERICA ASSET MANAGEMENT CORP.
By:_____________________________
Attest:_________________________
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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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