EXHIBIT 99(e)(1)
FIRST AMERICAN STRATEGY FUNDS, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 19th day of September, 2006, between
FIRST AMERICAN STRATEGY FUNDS, INC., a Minnesota 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 such
shares are authorized to 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, 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.
(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
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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 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
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performed by the Distributor for the Fund, and the Distributor consents to any
inspection authorized by law or regulation in connection thereof.
(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
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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
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 STRATEGY FUNDS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Its: Vice President - Administration
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QUASAR DISTRIBUTORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
Its: President
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