EXHIBIT 99(e)(1)
FIRST AMERICAN INVESTMENT FUNDS, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 1st day of July, 2005, between FIRST
AMERICAN INVESTMENT FUNDS, INC., a Maryland corporation (the "Fund"), and QUASAR
DISTRIBUTORS, LLC, a Delaware limited liability company (the "Distributor").
WHEREAS, the Fund is registered as an investment company with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended ("1940 Act"), and its shares are registered with the SEC under
the Securities Act of 1933, as amended ("1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended;
WHEREAS, the Fund desires to appoint the Distributor to act as distributor
and shareholder servicing agent for the shares of the Fund's portfolios, as now
in existence or hereinafter created from time to time (the "Shares"), in
accordance with the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Fund and Distributor hereby agree as follows:
ARTICLE 1. Sale of Shares. The Fund grants to the Distributor the
exclusive right to sell Shares of each portfolio of the Fund (each a
"Portfolio"), at the net asset value per Share plus any applicable sales charge,
in accordance with the respective Portfolio's current prospectus, as agent and
on behalf of the Fund, during the term of this Agreement and subject to the
registration requirements of the 1933 Act, the rules and regulations of the
Securities and Exchange Commission ("SEC") and the laws governing the sale of
securities in the various states ("Blue Sky Laws").
ARTICLE 2. Solicitation of Sales. In consideration of these rights granted
to the Distributor, the Distributor agrees to use all reasonable efforts,
consistent with its other business, in connection with the distribution of
Shares of the Portfolios; provided, however, that the Distributor shall not be
prevented from entering into like arrangements with other issuers. The
provisions of this paragraph do not obligate the Distributor to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction when it determines
it would be uneconomical for it to do so or to maintain its registration in any
jurisdiction in which it is now registered nor obligate the Distributor to sell
any particular number of Shares.
ARTICLE 3. Authorized Representations. The Distributor is not authorized
by the Fund to give any information or to make any representations other than
those contained in the current registration statements and prospectuses of the
Fund filed with the SEC or contained in Shareholder reports or other material
that may be prepared by or on behalf of the Fund for the Distributor's use. The
Distributor may prepare and distribute sales literature and other material as it
may deem appropriate, provided that such literature and materials have been
approved by the Fund prior to their use.
ARTICLE 4. Registration of Shares. The Fund agrees that it will take all
action necessary to register Shares under the federal and state securities laws
so that there will be available for sale the number of Shares the Distributor
may reasonably be expected to sell and to pay all fees associated with said
registration. The Fund shall make available to the Distributor such number of
copies of its currently effective prospectus and statement of additional
information as the Distributor may reasonably request. The Fund shall furnish to
the Distributor copies of all information, financial statements and other papers
that the Distributor may reasonably request for use in connection with the
distribution of Shares of the Portfolios.
ARTICLE 5. Allocation Of Expenses
During the period of this Agreement, the Fund shall pay or cause to be
paid all expenses, costs and fees incurred by the Fund which are not assumed by
the Distributor or U.S. Bancorp Asset Management, Inc. (the "Adviser"). The
Distributor agrees to provide, and shall pay costs which it incurs in connection
with, ongoing servicing and/or maintenance of shareholder accounts with respect
to each Portfolio (such costs are referred to as "Shareholder Servicing Costs").
Shareholder Servicing Costs include, but are not limited to, an allocation of
the Distributor's overhead and payments made to persons, including employees of
the Distributor, who respond to inquiries of shareholders regarding their
ownership of Portfolio shares or their accounts with a Portfolio, or who provide
other administrative services not otherwise required to be provided by the
applicable Portfolio's investment adviser, administrator or transfer agent. The
Distributor also shall pay all of its own costs incurred in connection with the
distribution of shares of the Portfolios ("Distribution Expenses"). Distribution
Expenses include, but are not limited to, the following expenses incurred by the
Distributor: initial and ongoing sales compensation (in addition to sales loads)
paid to investment executives of the Distributor and to other broker-dealers and
participating financial institutions which the Distributor has agreed to pay;
expenses incurred in the printing of prospectuses, statements of additional
information and reports used for sales purposes; expenses of preparation and
distribution of sales literature; expenses of advertising of any type; an
allocation of the Distributor's overhead; payments to and expenses of persons
who provide support services in connection with the distribution of Portfolio
shares; and other distribution-related expenses.
ARTICLE 6. Compensation of Distributor
(a) The Distributor shall be entitled to receive or retain any front-end
sales charge imposed in connection with sales of shares of each Portfolio, as
set forth in the applicable current Prospectus.
(b) The Distributor shall be entitled to receive or retain any contingent
deferred sales charge imposed in connection with any redemption of shares of
each Portfolio, as set forth in the applicable current Prospectus.
(c) Pursuant to the Fund's Amended and Restated Distribution and Service
Plan (the "Plan") adopted by the Board of Directors of the Fund in accordance
with Rule 12b-1 under the 1940 Act:
(i) The Class A shares of each Portfolio will pay the Distributor a
total fee in connection with the servicing of shareholder accounts of such
class and in connection with distribution-related services provided in
respect of such class, calculated and payable monthly, at the annual rate
of .25% of the value of the average daily net assets of such class. All or
any portion of such total fee may be payable as a Shareholder Servicing
Fee designed to cover Shareholder Servicing Costs, and all or any portion
of such total fee may be payable as a Distribution Fee designed to cover
Distributions Expenses, as determined from time to time by the Fund's
Board of Directors. Until further action by the Board of Directors, all of
such fee shall be designated and payable as a Shareholder Servicing Fee.
(ii) The Class B shares and the Class C shares of each Portfolio
offering shares of such class will pay the Distributor a total fee in
connection with the servicing of shareholder accounts of the respective
class and in connection with distribution-related services provided in
respect of such class, calculated and payable monthly, at the annual rate
of 1.00% of the value of the average daily net assets of the respective
class. A portion of such total fee will be payable as a Shareholder
Servicing Fee and a portion of such total fee will be payable as a
Distribution Fee, as
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determined from time to time by the Fund's Board of Directors. With
respect to each class, until further action by the Board of Directors, a
portion of such total fee equal to .25% of the value of the average daily
net assets of such class shall be designated and payable as a Shareholder
Servicing Fee and the remainder of such fee shall be designated as a
Distribution Fee.
(iii) The Class R shares of each Portfolio offering shares of such
class will pay the Distributor a total fee in connection with the
servicing of shareholder accounts of such class and in connection with
distribution-related services provided in respect of such class,
calculated and payable monthly, at the annual rate of .50% of the value of
the average daily net assets of such class. A portion of such total fee
may be payable as a Shareholder Servicing Fee and all or any portion of
such total fee may be payable as a Distribution Fee, as determined from
time to time by the Fund's Board of Directors. Until further action by the
Board of Directors, all of such fee shall be designated as a Distribution
Fee.
(iv) Amounts payable to the Distributor under the Plan may exceed or
be less than the Distributor's actual Distribution Expenses and
Shareholder Servicing Costs. In the event such Distribution Expenses and
Shareholder Servicing Costs exceed amounts payable to the Distributor
under the Plan, the Distributor shall not be entitled to reimbursement by
the Fund.
(v) In each year during which this Agreement remains in effect, the
Distributor will prepare and furnish to the Board of Directors of the
Fund, on a quarterly basis, written reports complying with the
requirements of Rule 12b-1 under the 1940 Act that set forth the amounts
expended under this Agreement and the Plan and the purposes for which
those expenditures were made.
(d) The Distributor may reallow any or all of the sales charges that it is
paid under this Agreement to such dealers as the Distributor may from time to
time determine.
(e) The Distributor may transfer its right to all or a portion of the
payments described above in Article 6, Section (c)(ii) to third persons who
provide funding to the Distributor, provided that any such transfer shall not be
deemed a transfer of the Distributor's obligations under this Agreement. Upon
receipt of direction from the Distributor to pay such fees to a transferee, the
Fund shall make payment in accordance with such direction.
ARTICLE 7. Indemnification of Distributor. The Fund agrees to indemnify
and hold harmless the Distributor and each of its directors and officers and
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act against any loss, liability, claim, damages or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees and
disbursements incurred in connection therewith), arising by reason of any person
acquiring any Shares, based upon the ground that the registration statement,
prospectus, shareholder reports or other information filed or made public by the
Fund (as from time to time amended) included an untrue statement of a material
fact or omitted to state a material fact required to be stated or necessary in
order to make the statements made not misleading. However, the Fund does not
agree to indemnify the Distributor or hold it harmless to the extent that the
statements or omission was made in reliance upon, and in conformity with,
information furnished to the Fund by or on behalf of the Distributor.
In no case (i) is the indemnity of the Fund to be deemed to protect the
Distributor against any liability to the Fund or its shareholders to which the
Distributor or such person otherwise would be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties under this
Agreement, or (ii) is the Fund to be
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liable to the Distributor under the indemnity agreement contained in this
paragraph with respect to any claim made against the Distributor or any person
indemnified unless the Distributor or other person shall have notified the Fund
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 the Distributor or such other person (or after the
Distributor or the person shall have received notice of service on any
designated agent). However, failure to notify the Fund of any claim shall not
relieve the Fund from any liability which it may have to the Distributor or any
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph.
The Fund 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 any claims subject to this indemnity provision. If the Fund elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Fund and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Fund
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 Fund 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 Fund agrees to notify the Distributor promptly 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.
ARTICLE 8. Anti-Money Laundering Compliance Program. The USA PATRIOT Act
imposes certain obligations on Broker-Dealers through new anti-money laundering
provisions and amendments to the Bank Secrecy Act. Distributor agrees to adopt
appropriate policies and procedures sufficient to ensure compliance with federal
anti-money laundering laws and regulations, including the following:
(a) Filing of Forms and Reports. The Distributor's exclusive business
purpose is to provide mutual fund underwriting and distribution services, and it
does not receive customer funds. However, any funds received by the Distributor,
including funds received by the Distributor's registered representatives, will
be processed in accordance with applicable law, including filing of Forms 8300,
filing of Suspicious Activity Reports, and filing of any other forms required by
applicable regulations.
(b) Employee Awareness and NASD Training. The Distributor has implemented
a program to educated employees with respect to its anti-money laundering
program and applicable anti-money laundering regulations. To comply with the
National Association of Securities Dealers training requirements, all of the
Distributor's registered representatives are required to complete an anti-money
laundering course as part of the Distributor's Firm Element Continuing
Education. The course concludes with a test on the subject as per the NASD Rule.
(c) Quarterly Reports. The Distributor (i) will report to the Fund's Board
of Directors, at least quarterly, any forms filed and any compliance exceptions
of its anti-money laundering policy, including resolution of such exceptions, or
certify that there were no such forms filed and no such compliance exceptions to
its anti-money laundering program; and (ii) will, on an annual basis, provide to
the Board of Directors a copy of any policies created as part of its anti-money
laundering program.
(d) Inspection. The Distributor agrees that federal, state and other
self-regulatory organizations' examiners shall have access to information and
records relating to any anti-money laundering activities performed by the
Distributor for the Fund, and the Distributor consents to any inspection
authorized by law or regulation in connection thereof.
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(e) Annual Audit. The Distributor agrees to an annual independent audit of
its anti-money laundering program and also agrees to respond to the Fund's Board
of Directors with respect to each recommendation made pursuant to such audit.
ARTICLE 10. Indemnification of Fund. The Distributor covenants and agrees
that it will indemnify and hold harmless the Fund and each of its Directors and
officers and each person, if any, who controls the Fund within the meaning of
Section 15 of the Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred in
connection therewith) based upon the 1933 Act or any other statute or common law
and arising by reason of any person acquiring any Shares, and alleging a
wrongful act of the Distributor or any of its employees or alleging that the
registration statement, prospectus, Shareholder reports or other information
filed or made public by the Fund (as from time to time amended) included an
untrue statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon and in conformity
with information furnished to the Fund by or on behalf of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of the Fund or
any other person indemnified to be deemed to protect the Fund or any other
person against any liability to which the Fund or such other person 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 and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Fund or any person
indemnified unless the Fund or person, as the case may be, shall have notified
the Distributor 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 the Fund or upon any person (or after the
Fund or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Fund or any
person against whom the action is brought otherwise than on account of its
indemnity agreement contained in this paragraph.
The Distributor 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 the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event that the Distributor 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 the Distributor 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.
The Distributor agrees to notify the Fund promptly of the commencement of
any litigation or proceedings against it in connection with the issue and sale
of any of the Fund's Shares.
ARTICLE 11. Effective Date . This Agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force for one
year from the effective date and thereafter from year to year, provided that
such annual continuance is approved by (i) either the vote of a majority of the
Directors of the Fund, or the vote of a majority of the outstanding voting
securities of the Fund, and (ii) the vote of a majority of those Directors of
the Fund who are not parties to this Agreement or the Plans or interested
persons of any such party ("Qualified Directors"), cast in person at a meeting
called for the purpose of voting on the approval. This Agreement shall
automatically terminate in the event of its assignment. As used in this
paragraph the terms "vote of a majority of the outstanding voting
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securities", "assignment" and "interested person" shall have the respective
meanings specified in the 1940 Act. In addition, this Agreement may at any time
be terminated without penalty by The Distributor, by a vote of a majority of
Qualified Directors or by vote of a majority of the outstanding voting
securities of the Fund upon not less than sixty days prior written notice to the
other party.
ARTICLE 12. Notices. 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 Fund, attn: Xxxxxxx Xxxxxx, 000 Xxxxxxxx Xxxx, Xxxxxxxxxxx, XX
00000; and to its Secretary at the following address: Xxxxxxxx Xxxxxxxxx, 000
Xxxxxxxx Xxxx, Xxxxxxxxxxx, XX 00000; and if to the Distributor, attn: Xxxxx
Xxxxxxxxx, 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000.
ARTICLE 13. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Minnesota and the applicable provisions of the
1940 Act. To the extent that the applicable laws of the State of Minnesota, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.
ARTICLE 14. 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.
IN WITNESS, the Fund and Distributor have each duly executed this
Agreement, as of the day and year above written.
FIRST AMERICAN INVESTMENT FUNDS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Xxxxxxx X. Xxxxxx
Its: Vice President - Administration
QUASAR DISTRIBUTORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------
Xxxxx X. Xxxxxxxxx
Its: President
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