EXHIBIT 99(h)(1)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of July 1, 2006, by and between First American
Strategy Funds, Inc., a Minnesota Corporation, (the "Fund"), and FAF Advisors,
Inc., a Delaware corporation (the "Administrator").
WHEREAS, the Fund is an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of Common Stock; and
WHEREAS, the Fund desires the Administrator to provide, and the
Administrator is willing to provide, administrative and other services as set
forth herein to all portfolios of the Fund now and hereafter created
("Portfolios"), on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator. The Fund hereby retains the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the administrative services set forth in Article 2 below. The
Administrator hereby accepts such employment to perform the duties set forth
below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund in any way and shall
not be deemed an agent of the Fund.
ARTICLE 2. Administrative Services. For the compensation set forth in
Schedule A hereto, the Administrator shall perform, or supervise the performance
by others of, administrative and other services as set forth herein in
connection with the operations of the Portfolios. The Administrator is
authorized to appoint and compensate from its resources one or more other
entities to perform such services on a subcontracted basis in connection with
the operations of the Portfolios. If the Administrator appoints one or more
other entities to perform services called for by this Agreement on a
subcontracted basis as aforesaid, the Administrator nevertheless shall remain
liable to the Fund and the Portfolios for the acts and omissions of such other
entities as if the Administrator itself performed such services. The
Administrator shall promptly notify the Fund of any persons appointed on a
subcontracted basis pursuant to this provision.
In addition, on behalf of the Fund, the Administrator will monitor and
review the Fund's relationships with vendors including relationships with
custodians, depositories, transfer agents, accountants, the Fund's 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 and, at the request of the Fund's Board of Directors,
will investigate and assist in the selection of such service providers.
(A) Administrative and Accounting Services. The Administrator shall
provide the Fund with regulatory reporting, fund accounting and related
portfolio accounting services, all necessary
office space, equipment, personnel, compensation and facilities (including
facilities for Shareholders' and Directors' meetings) for handling the affairs
of the Portfolios and such other services as the Administrator shall, from time
to time, determine to be necessary to perform its obligations under this
Agreement. In addition, at the request of the Fund's Board of Directors, the
Administrator shall make such reports to the Fund's Directors concerning the
performance of its obligations hereunder as reasonably agreed to from time to
time. Without limiting the generality of the foregoing, the Administrator, under
the supervision of the Fund's Board of Directors, shall:
- calculate Fund expenses and control all disbursements for the
Fund, and as appropriate, compute the Fund's yields, total
return, expense ratios, portfolio turnover rate and, if
required, portfolio average dollar-weighted maturity;
- assist with preparation of prospectuses, statements of
additional information, registration statements and proxy
materials;
- 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 Fund's
shares with state securities authorities, monitor sale of the
Fund's shares for compliance with state securities laws, and
file with the appropriate securities authorities the
registration statements and reports for the Fund and the
Fund's shares and all amendments thereto, as may be necessary
or convenient to register and keep effective the Fund and its
shares with state securities authorities to enable the Fund to
make a continuous offering of its shares;
- prepare communications to shareholders, including the annual
and semi-annual reports to shareholders, coordinate mailing
prospectuses, notices, proxy statements, proxies and other
reports to the Fund's shareholders, and supervise and
facilitate the solicitation of proxies solicited by the Fund
for all shareholder meetings, including the tabulation process
for shareholder meetings;
- prepare, negotiate, and administer contracts on behalf of the
Fund with, among others, the Fund's distributor, subject to
any approvals or reapprovals by the Fund's Board of Directors
required by applicable law or Board procedures;
- maintain the Fund's general ledger and prepare the Fund's
financial statements, including expense accruals and payments,
determine the net asset value of the Fund's assets and of the
Fund's shares, and provide for the payment of dividends and
other distributions to shareholders;
- calculate performance data of the Fund and the Portfolios for
dissemination to information services covering the investment
company industry;
- coordinate and supervise the preparation and filing of the
Fund's tax returns;
- examine and review the operations and performance of the
various organizations providing services to the Fund or any
Portfolio directly or on a subcontracted basis as provided for
herein and, at the request of the Fund's Board of Directors,
report to the Board on the performance of such organizations;
- provide for and coordinate the layout and printing of publicly
disseminated prospectuses and the Fund's semi-annual and
annual reports to shareholders;
- provide internal legal and administrative services as
requested by the Fund from time to time;
- provide for and coordinate the design, development, and
operation of the Fund, including new portfolio and class
investment objectives, policies and structure;
- provide individuals reasonably acceptable to the Fund's Board
of Directors for nomination, appointment, or election as
officers of the Fund, who will be responsible for the
management of certain of the Fund's affairs as determined by
the Fund's Board of Directors;
- advise the Fund and the Fund's Board of Directors on matters
concerning the Fund and its affairs;
- obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Fund
in accordance with the requirements of Rules 17g-1 and
17d-1(7) under the 1940 Act as such bonds and policies are
approved by the Fund's Board of Directors;
- monitor and advise the Fund and the Portfolios on their
registered investment company status under the Internal
Revenue Code of 1986, as amended;
- perform all administrative services and functions required for
the operation of the Fund and each Portfolio to the extent
such administrative services and functions are not provided to
the Fund or such Portfolio pursuant to the Fund's or such
Portfolio's investment advisory agreement, distribution
agreement, custodian agreement and transfer agency agreement;
- furnish advice and recommendations with respect to other
aspects of the business and affairs of the Portfolios as the
Fund and the Administrator shall determine desirable;
- prepare and file with the Securities and Exchange Commission
the semi-annual reports for the Fund on Form N-SAR and Form
N-CSR, quarterly reports on Form N-Q, annual proxy voting
reports on Form N-PX and all required notices pursuant to Rule
24f-2; and
- organize and coordinate meetings of the Fund's Board of
Directors and the committees thereof.
(B) Other Services. The Administrator shall establish a call center to
answer shareholder inquiries and provide information and data to prospective
shareholders or marketing materials to selling brokers and potential selling
brokers. In addition, to the extent it deems appropriate, the Administrator
shall contract with broker-dealers, financial institutions and other entities
for the provision of recordkeeping and other customary services related to
omnibus accounts established by such entities, or for the provision of
shareholder services or other appropriate services, and shall pay such entities
out of its own assets for the provision of such services. The Administrator will
also perform such other services for the Fund as agreed from time to time at the
request of the Fund's Board of Directors, including, but not limited to,
performing internal audit examinations; mailing annual reports of the
Portfolios; preparing a list of shareholders; and mailing notices of
shareholders' meetings, proxies and proxy statements, for all of which the Fund
will pay the Administrator's out-of-pocket expenses.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Fund as well as all Directors of the
Fund who are officers or employees 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 Fund retained by the Directors of the Fund
to perform services on behalf of the Fund.
(B) The Fund. The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for outside Fund counsel
(including, if applicable, counsel to the Fund's independent directors) and
independent 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 custodial services, the cost of initial and ongoing
registration of the shares under Federal and state securities laws, fees and
out-of-pocket expenses of Directors who are not affiliated officers or employees
of the Administrator or any affiliated corporation of the Administrator,
insurance, interest, brokerage costs, dues and other expenses incident to the
Fund's membership in the Investment Company Institute and other like
associations, shareholder meetings, corporate reports and reports and notices to
shareholders, litigation and other extraordinary or nonrecurring expenses, all
fees and charges of investment advisers to the Fund, Rule 12b-1 fees and
reasonable reimbursement for out-of-pocket expenses including, without
limitation, postage and telephone communications expense. The Administrator
shall provide such information to the Board at such times as the Board may
reasonably request to enable the Board to monitor such Fund expenses.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Fund (for and on behalf of each Portfolio or class of shares
thereof, as applicable) shall pay to the Administrator compensation at an annual
rate, which is calculated and accrued daily and paid to the Administrator
monthly, as specified in Schedule A.
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 the fees as set forth
above. Payment of the Administrator's compensation for the preceding month shall
be made promptly.
In addition to the fee paid pursuant to this Article 4, the Fund will
reimburse the Administrator for out-of-pocket expenses or advances incurred by
the Administrator in connection with the Administrator's performance of services
hereunder, as set forth in Schedule A to this Agreement.
(B) Survival of Compensation Rates. All rights to compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 5. Limitation of Liability of the Administrator. The duties of the
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or negligence in the performance of its duties,
or by reason of reckless disregard of its obligations and duties hereunder,
except as may otherwise be provided under provisions of applicable law which
cannot be waived or modified hereby. (As used in this Article 5, the term
"Administrator" shall include directors, officers, employees and other corporate
agents of the Administrator as well as that corporation itself.)
So long as the Administrator acts in good faith and with due diligence and
without negligence, the Fund 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 out of said administration, transfer agency, and
dividend disbursing relationships to the Fund or any other service rendered to
the Fund hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The Administrator shall indemnify and hold harmless the Fund and each
Portfolio from and against any and all losses, damages, costs, charges,
reasonable counsel fees and disbursements, payments, expenses and liabilities
arising out of or attributable to any action or failure or omission to act by
the Administrator as a result of the Administrator's willful misfeasance, bad
faith or negligence.
In order that the indemnification provision contained herein shall apply,
however, it is understood that if in any case the Fund may be asked to indemnify
or hold the Administrator harmless, the Fund shall be fully and promptly advised
of all pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Fund promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Fund, but failure to do so in good faith shall not affect the
Administrator's rights hereunder.
The Fund shall be entitled to participate at its own expense 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
reasonably satisfactory to the Administrator, 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 Administrator shall bear the fees and
expenses of any additional counsel retained by it. If the Fund does not elect to
assume the defense of a suit, it will reimburse, subject and pursuant to the
provisions of this Article 5, the Administrator for the reasonable fees and
expenses of any counsel retained by the Administrator.
The Administrator may apply to the Fund at any time for instructions and
may consult outside counsel for the Fund 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 such
instruction or with the 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, other than documents signed or presented by
officers, directors, employees and other corporate agents of the Administrator.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Fund are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests.
ARTICLE 7. Duration of this Agreement. The term of this Agreement, unless
sooner terminated as specified below, shall commence on July 1, 2005 and shall
remain in effect through June 30, 2006. This Agreement shall continue in effect
from year to year thereafter, but only so long as such continuance is
specifically approved at least annually by the Fund's Board of Directors,
including the specific approval of a majority of the directors who are not
interested persons of the Fund.
The Administration Agreement will be terminable by the Fund with respect
to any Portfolio by delivery to the Administrator of written notice: (i) for any
reason on six months' prior written notice to the Administrator; (ii) in the
event of the Administrator's bankruptcy or insolvency; (iii) in the event of a
conviction of the Administrator for corporate criminal activity; (iv) if the
Administrator has materially breached the Agreement, and such material breach
has not been cured within 45 days after written notice is received by the
Administrator specifying the nature of the material breach. The Agreement will
be terminable by the Administrator by delivery to the Portfolios of written
notice of termination delivered no less than 180 days prior to the end of the
Initial Term (as extended if applicable).
This Agreement shall not be assignable by the Fund or by the Administrator
without the written consent of the other party.
ARTICLE 8. Amendments. This Agreement may be amended by the parties hereto
only if such amendment is specifically approved (i) by the vote of a majority of
the Directors of the Fund, and (ii) by the vote of a majority of the Directors
of the Fund who are not parties to this Agreement or interested persons of any
such party.
ARTICLE 9. Certain Records. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Fund shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Fund and will be made available
to or surrendered promptly to the Fund on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Fund and follow the Fund'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 Fund has
agreed to indemnify the Administrator against such liability.
ARTICLE 10. Definitions of Certain Terms. The terms "interested person"
and "affiliated person", when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 11. Notice. Any notice required or permitted to be given by one
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
(a) in the case of notice to the Fund, to the Chair of the Board of Directors of
the Fund at the last address furnished by such person or, if the Chair is an
affiliated person or interested person of the Administrator, to the Directors of
the Fund who are not such affiliated persons or interested persons at the last
addresses furnished by such persons, and (b) in the case of notice to the
Administrator, to the last address furnished by the Administrator for such
purpose.
ARTICLE 12. 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 13. 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 WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
FIRST AMERICAN STRATEGY FUNDS, INC.
By /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
Its Vice President - Administration
FAF ADVISORS, INC.
By /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, III
Its Chief Financial Officer
