Exhibit (e)(4)
DISTRIBUTION AGREEMENT
between
SUNAMERICA CAPITAL SERVICES, INC.
and
BRAZOS MUTUAL FUNDS
THIS AGREEMENT is made as of October __, 1999, between Brazos Mutual
Funds (the "Trust"), a Delaware business trust, and SunAmerica Capital Services,
Inc. ("SACS"), a Delaware corporation.
WHEREAS the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and has registered one or more distinct series of shares of beneficial interest
for sale to the public under the Securities Act of 1933, as amended (the "1933
Act"), and has qualified its shares for sale to the public under various state
securities laws; and
WHEREAS the Trust desires to retain SACS as principal underwriter in
connection with the offering and sale of the Class Y Shares (the "Shares") of
each series listed on Schedule A (as amended from time to time) to this
Agreement; and
WHEREAS this Agreement has been approved by a vote of the Trust's Board
of Trustees (the "Board") and its disinterested trustees in conformity with
Section 15(c) under the 1940 Act; and
WHEREAS SACS is willing to act as principal underwriter for the
Trust on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints SACS as its agent to be the
principal underwriter so as to hold itself out as available to receive and
accept orders for the purchase and redemption of the Shares on behalf of the
Trust, subject to the terms and for the period set forth in this Agreement. SACS
hereby accepts such appointment and agrees to act hereunder. The Trust
understands that any solicitation activities conducted on behalf of the Trust
will be conducted primarily, if not exclusively, by employees of the Trust's
sponsor.
2. SERVICES AND DUTIES OF SACS.
(a) SACS agrees to sell the Shares on a best efforts basis from time
to time during the term of this Agreement as agent for the Trust and upon the
terms described in the Registration Statement. As used in this Agreement, the
term "Registration Statement" shall mean the currently effective registration
statement of the Trust, and any supplements thereto, under the 1933 Act and the
1940 Act.
(b) SACS will hold itself available to receive purchase and
redemption orders satisfactory to SACS for the Shares and will accept such
orders on behalf of the Trust. Such purchase orders shall be deemed effective at
the time and in the manner set forth in the Registration Statement.
(c) SACS, with the operational assistance of the Trust's transfer
agent, shall make the Shares available through the National Securities Clearing
Corporation's Fund/Serv System.
(d) SACS shall provide to investors and potential investors only
such information regarding the Trust as the Trust shall provide or approve. SACS
shall assist in the production of advertising and sales literature; review and
file all proposed advertisements and sales literature with appropriate
regulators; and consult with the Trust regarding any comments provided by
regulators with respect to such materials.
(e) The offering price of the Shares shall be the price determined
in accordance with, and in the manner set forth in, the most current Prospectus.
The Trust shall make available to SACS a statement of each computation of net
asset value and the details of entering into such computation.
(f) SACS at its sole discretion may repurchase Shares offered for
sale by the shareholders. Repurchase of Shares by SACS shall be at the price
determined in accordance with, and in the manner set forth in, the most current
Prospectus. At the end of each business day, SACS shall notify, by any
appropriate means, the Trust and its transfer agent of the orders for repurchase
of Shares received by SACS since the last such report, the amount to be paid for
such Shares, and the identity of the shareholders offering Shares for
repurchase. The Trust reserves the right to suspend such repurchase right upon
written notice to SACS. SACS further agrees to act as agent for the Trust to
receive and transmit promptly to the Trust's transfer agent shareholder requests
for redemption of Shares.
(g) SACS shall not be obligated to sell any certain number of
Shares.
(h) SACS, with the assistance of the Trust sponsor, shall prepare
reports for the Board regarding its activities under this Agreement as from time
to time shall be reasonably requested by the Board.
(i) SACS may enter into selling agreements with selected dealers and
others for the sale of Shares, and will act only on its own behalf as principal
in entering into such selling agreements.
(j) The rights granted to SACS shall be non-exclusive in that the
Trust reserves the right to sell its Shares to investors on applications
received and accepted by the Trust. Further, the Trust reserves the right to
issue Shares in connection with (i) the merger or consolidation, or acquisition
by the Trust through purchase or otherwise, with any other investment company,
trust or personal holding company, and (ii) a pro rata distribution directly
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to the holders of Shares in the nature of a stock dividend or split-up.
(k) If and whenever the determination of net asset value is
suspended and until such suspension is terminated, no further orders for Shares
shall be processed by SACS except such unconditional orders placed with SACS
before it had knowledge of the suspension. In addition, the Trust reserves the
right to suspend sales and SACS's authority to process orders for Shares on
behalf of the Trust if, in the judgement of the Trust, it is in the best
interests of the Trust to do so. Suspension will continue for such period as may
be determined by the Trust. In addition, SACS reserves the right to reject any
purchase order.
3. DUTIES OF THE TRUST.
(a) The Trust shall keep SACS fully informed of its affairs and
shall provide to SACS from time to time copies of all information, financial
statements, and other papers that SACS may reasonably request for use in
connection with the distribution of Shares, including, without limitation,
certified copies of any financial statements prepared for the Trust by its
independent public accountant and such reasonable number of copies of the most
current Prospectus, Statement of Additional Information ("SAI"), and annual and
interim reports as SACS may request, and the Trust shall fully cooperate in the
efforts of SACS to sell and arrange for the sale of Shares.
(b) The Trust shall maintain a currently effective Registration
Statement on Form N-1A with the Securities and Exchange Commission (the "SEC"),
maintain qualification with applicable states and file such reports and other
documents as may be required under applicable federal and state laws. The Trust
shall notify SACS in writing of the states in which the Shares may be sold and
shall notify SACS in writing of any changes to such information.
(c) The Trust shall not use any advertisements or other sales
materials that have not been (i) submitted to SACS for its review and approval,
and (ii) filed with the appropriate regulators.
(d) The Trust represents and warrants that its Registration
Statement and any advertisements and sales literature (excluding statements
relating to SACS and the services it provides that are based upon written
information furnished by SACS expressly for inclusion therein) of the Trust,
that have been approved by the Trust, shall not contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that all
statements or information furnished to SACS, pursuant to Section 3(a) hereof,
shall be true and correct in all material respects.
4. OTHER BROKER DEALERS. SACS in its discretion may enter into
agreements to sell Shares to such registered and qualified retail dealers, as
reasonably requested by the Trust. In making agreements with such dealers, SACS
shall act only as principal and not as agent for the Trust. The form of any such
dealer agreement shall be mutually agreed upon and approved by the Trust and
SACS.
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5. WITHDRAWAL OF OFFERING. The Trust reserves the right at any time
to withdraw all offerings of any or all Shares by written notice to SACS at its
principal office. No Shares shall be offered by either SACS or the Trust under
any provisions of this Agreement and no orders for the purchase or sale of
Shares hereunder shall be accepted by the Trust if and so long as effectiveness
of the Registration Statement then in effect or any necessary amendments thereto
shall be suspended under any of the provisions of the 1933 Act, or if and so
long as a current prospectus as required by Section 5(b)(2) of the 1933 Act is
not on file with the SEC.
6. SERVICES NOT EXCLUSIVE. The services furnished by SACS hereunder are
not to be deemed exclusive and SACS shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby.
7. EXPENSES OF THE TRUST.
(a) The Trust shall pay all fees and expenses:
(i) in connection with the preparation, setting in type and
filing of any Registration Statement, Prospectus and SAI
under the 1933 Act, and any amendments thereto, for the
issue of its Shares;
(ii) in connection with the registration and qualification of
Shares for sale in the various states or other jurisdictions
in which the Board shall determine it advisable to qualify
such Shares for sale (including registering the Trust or
series as a broker or dealer or any officer of the Trust as
agent or salesperson in any state);
(iii) of preparing, setting in type, printing and mailing any
report or other communication to shareholders of the Trust
in their capacity as such; and
(iv) of preparing, setting in type, printing and mailing
Prospectuses, SAIs, and any supplements thereto, sent to
existing shareholders.
(b) SACS shall pay expenses of:
(i) printing and distributing Prospectuses, SAIs, and reports
prepared for its use in connection with the offering of the
Shares for sale to the public;
(ii) any other literature used in connection with such
offering; and
(iii) advertising in connection with such offering.
(c) In addition to the services described above, SACS will provide
services including, without limitation, assistance in the production of
marketing and advertising materials
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for the sale of the Shares and their review for compliance with applicable
regulatory requirements and making any required filings with regulatory
authorities; and entering into dealer agreements with broker-dealers to sell the
Shares.
8. COMPENSATION. In connection with the services to be provided by SACS
under this Agreement, SACS shall receive fees from the Trust's investment
adviser and reimbursement of expenses, including all expenses incurred pursuant
to Section 7(b) hereof. Notwithstanding anything to the contrary, amounts owed
by the Trust to SACS shall only be paid out of the assets and property of the
particular series involved.
9. SHARE CERTIFICATES. The Trust shall not issue certificates
representing Shares unless requested to do so by a shareholder. If such request
is transmitted through SACS, the Trust will cause certificates evidencing the
Shares owned to be issued in such names and denominations as SACS shall from
time to time direct.
10. STATUS OF SACS. SACS is an independent contractor and shall be
agent of the Trust only with respect to the sale and redemption of Shares.
11. INDEMNIFICATION.
(a) The Trust agrees to indemnify, defend, and hold SACS, its
officers and directors, and any person who controls SACS within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities, and expenses (including the cost of investigating
or defending such claims, demands, or liabilities and any reasonable counsel
fees incurred in connection therewith) that SACS, its officers, directors, or
any such controlling person may incur under the 1933 Act, or under common law or
otherwise, arising out of or based upon any (i) alleged untrue statement of a
material fact contained in the Registration Statement, Prospectus, SAI or sales
literature, (ii) alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading (except for
information furnished by SACS as stated in Section 11(d) of this Agreement), or
(iii) failure by the Trust to comply with the terms of the Agreement; provided,
that in no event shall anything contained herein be so construed as to protect
SACS against any liability to the Trust or its shareholders to which SACS would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations under this Agreement.
(b) The Trust shall not be liable to SACS under this Agreement
with respect to any claim made against SACS or any person indemnified unless
SACS or other such person shall have notified the Trust in writing of the claim
within a reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served upon SACS
or such other person (or after SACS or the person shall have received notice of
service on any designated agent). However, failure to notify the Trust of any
claim shall not relieve the Trust from any liability that it may have to SACS or
any person against whom such action is brought otherwise than on account of this
Agreement.
(c) The Trust shall be entitled to participate at its own
expense in the defense
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or, if it so elects, to assume the defense of any suit brought to enforce any
claims subject to this Agreement. If the Trust elects to assume the defense of
any such claims, the defense shall be conducted by counsel chosen by the Trust
and satisfactory to indemnified defendants in the suit whose approval shall not
be unreasonably withheld. In the event that the Trust elects to assume the
defense of any suit and retain counsel, the indemnified defendants shall bear
the fees and expenses of any additional counsel retained by them. If the Trust
does not elect to assume the defense of a suit, it will reimburse the
indemnified defendants for the reasonable fees and expenses of any counsel
retained by the indemnified defendants. The Trust agrees to promptly notify SACS
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of any of its
Shares.
(d) SACS agrees to indemnify, defend, and hold the Trust, its
officers and trustees, and any person who controls the Trust within the meaning
of Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities, and expenses (including the cost of investigating
or defending against such claims, demands, or liabilities and any reasonable
counsel fees incurred in connection therewith) that the Trust, its trustees or
officers, or any such controlling person may incur under the 1933 Act, or under
common law or otherwise, resulting from SACS's willful misfeasance, bad faith or
gross negligence in the performance of its obligations and duties under this
Agreement, or arising out of or based upon any alleged untrue statement of a
material fact contained in information furnished in writing by SACS to the Trust
for use in the Registration Statement, Prospectus, SAI, or sales literature
arising out of or based upon any alleged omission to state a material fact in
connection with such information required to be stated therein or necessary to
make such information not misleading.
(e) SACS shall be entitled to participate, at its own expense,
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if SACS elects to assume the defense, the defense shall
be conducted by counsel chosen by SACS and satisfactory to the indemnified
defendants whose approval shall not be unreasonably withheld. In the event that
SACS elects to assume the defense of any suit and retain counsel, the defendants
in the suit shall bear the fees and expenses of any additional counsel retained
by them. If SACS does not elect to assume the defense of any suit, it will
reimburse the indemnified defendants in the suit for the reasonable fees and
expenses of any counsel retained by them. SACS agrees to notify the Trust
promptly of the commencement of any litigation or proceedings against it in
connection with the issue and sale of any of the Shares.
12. DURATION AND TERMINATION.
(a) This Agreement shall become effective on the date first
written above or such later date as indicated in Schedule A and, unless sooner
terminated as provided herein, will continue in effect for two years from the
above written date. Thereafter, if not terminated, this Agreement shall continue
in effect for successive annual periods, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority of the Board
who are neither interested persons (as defined in the 0000 Xxx) of the Trust
(the "Independent trustees") or SACS, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of the Trust.
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(b) Notwithstanding the foregoing, this Agreement may be
terminated in its entirety at any time, without the payment of any penalty, by
vote of the Board, by vote of a majority of the Independent trustees, or by vote
of a majority of the outstanding voting securities of the Trust on sixty days'
written notice to SACS or by SACS at any time, without the payment of any
penalty, on sixty days' written notice to the Trust. This Agreement will
automatically terminate in the event of its assignment (as defined in the 1940
Act).
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge, or termination is sought. This Agreement may be amended with the
approval of the Board or of a majority of the outstanding voting securities of
the Trust; provided, that in either case, such amendment also shall be approved
by a majority of the Independent trustees.
14. LIMITATION OF LIABILITY. SACS is hereby expressly put on notice of
the limitation of shareholder liability as set forth in the Trust Instrument of
the Trust and agrees that obligations assumed by the Trust pursuant to this
Agreement shall be limited in all cases to the Trust and its assets, and if the
liability relates to one or more series, the obligations hereunder shall be
limited to the respective assets of such series. SACS further agrees that it
shall not seek satisfaction of any obligation from the shareholders or any
individual shareholder of a series of the Trust, nor from the Trustees or any
individual Trustee of the Trust.
15. NOTICE. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient upon receipt in writing at the
other party's principal offices.
16. MISCELLANEOUS. 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. If any
provision 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. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person," and "assignment" shall have the same meaning as such terms
have in the 1940 Act.
17. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the 1940 Act. To the extent that the
applicable laws of the State of New York conflict with the applicable provisions
of the 1940 Act, the latter shall control.
18. YEAR 2000 COMPLIANT. At the present time, SACS does not offer,
provide or propose to offer or provide any computer system product or service to
the Trust under the Agreement. Any such product or services are to be provided
to the Trust by the Trust's transfer agent/custodian or other third party
vendors to be selected by the Trust.
19. PROPRIETARY AND CONFIDENTIAL INFORMATION. SACS agrees on behalf of
itself and
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its directors, officers, and employees to treat confidentially and as
proprietary information of the Trust all records and other information relative
to the Trust and prior, present, or potential shareholders of the Trust (and
clients of said shareholders), and not to use such records and information for
any purpose other than the performance of its responsibilities and duties
hereunder, 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 SACS 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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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
ATTEST: BRAZOS MUTUAL FUNDS
________________________ By: __________________________
ATTEST: SUNAMERICA CAPITAL SERVICES, INC.
________________________ By: __________________________
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SCHEDULE A
to the
DISTRIBUTION AGREEMENT
BRAZOS MUTUAL FUNDS
and
SUNAMERICA CAPITAL SERVICES, INC.
Pursuant to Section 1 of the Distribution Agreement between Brazos
Mutual Funds (the "Trust") and SunAmerica Capital Services, Inc. ("SACS"), the
Trust hereby appoints SACS as its agent to be the principal underwriter of the
Trust with respect to its following series:
Brazos Small Cap Growth Portfolio
Brazos Micro Cap Growth Portfolio
Brazos Real Estate Securities Portfolio
Brazos Growth Portfolio
Brazos Mid Cap Growth Portfolio
Dated: October ___, 1999
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