EXHIBIT (e)(3)
DISTRIBUTION AGREEMENT
FOR CLASS A SHARES, CLASS D SHARES AND TREASURY RESERVE SHARES
[as amended and restated June 4, 2003, effective August 1, 2003]
THIS AGREEMENT is made as of this 1st day of October, 2001, and is
amended and restated June 4, 2003, effective August 1, 2003, between FIRST
AMERICAN 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 for the Treasury Reserve Fund, and the Class A and Class D Shares of
the Fund's portfolios, as now in existence or hereafter created from time to
time (collectively, 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 the 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, in the case of Retail Class
A Shares, Corporate Trust Class D Shares and Treasury Reserve Shares, any
applicable sales charge, in accordance with the 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 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 Fund; 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 not 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.
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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 which the Distributor may reasonably request for use in connection
with the distribution of Shares of the Fund.
ARTICLE 5. Compensation and Allocation of Expenses.
(a) Pursuant to the Fund's Class A Plan of Distribution (the "Retail
Plan") adopted by the Portfolios in accordance with Rule 12b-1 under the 1940
Act, Class A Shares of each Portfolio will pay the Distributor a fee 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. Pursuant to the Fund's Class D
Distribution Plan (the "Class D Plan"), adopted by the Portfolios in accordance
with Rule 12b-1 under the 1940 Act, Class D Shares of each Portfolio will pay
the Distributor a total fee in connection with distribution-related services
provided in respect of such class, calculated and payable monthly, at the annual
rate of .15% of the value of the average daily net assets of such class.
Pursuant to the Fund's Treasury Reserve Fund Plan of Distribution (the "Treasury
Reserve Plan" and, together with the Retail Plan and the Class D Plan, the
"Plans") adopted by Treasury Reserve Fund in accordance with Rule 12b-1 under
the 1940 Act, Shares of the Treasury Reserve Fund will pay the Distributor a fee
in connection with distribution-related services provided in respect of such
Fund, calculated and payable monthly, at the annual rate of .50% of the value of
the average daily net assets of such Fund. Amounts payable to the Distributor
under the Plans may exceed or be less than the Distributor's actual Distribution
Expenses as described in (b) below. In the event such Distribution Expenses
exceed amounts payable to the Distributor under the Plans, the Distributor shall
not be entitled to reimbursement by the Funds.
(b) 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 incurred
by the Distributor. The Distributor shall pay all of its own costs incurred in
connection with the distribution of the shares of each such class ("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 Fund shares; and other distribution-related expenses.
(c) 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 Plans on a class by class basis and the purposes for which these
expenditures were made.
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ARTICLE 6. 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
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 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 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 of 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 7. Indemnification of Fund. The Distributor covenants and
agrees to 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 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), 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
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state a material fact required to be stated or necessary in order to make the
statements made 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 otherwise
would 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 the 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 such 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 of 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 or sale
of any of the Fund's Shares.
ARTICLE 8. 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 affected Portfolio and class, 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
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 affected Portfolio and class upon not less than sixty days
prior written notice to the other party.
ARTICLE 9. 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:
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(a) Filing of Forms and Reports. 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 Distributor, including funds
received by 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. Distributor has
implemented a program to educate 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
Distributor's registered representatives are required to
complete an anti-money laundering course as part of
Distributor's Firm Element Continuing Education. The course
concludes with a test on the subject as per the NASD Rule.
(c) Quarterly Reports. Distributor (i) will report to the Fund
Board of Directors, at least quarterly, any forms filed and
any compliance exceptions to 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. 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 Distributor for the Fund, and
Distributor consents to any inspection authorized by law or
regulation in connection therewith.
(e) Annual Audit. 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. 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: Xxxx Xxxxxx, 000 Xxxxxxxx Xxxx, Xxxxxxxxxxx, XX
00000; and to its Secretary at the following address: 000 Xxxxxxxx Xxxx,
Xxxxxxxxxxx, XX 00000; and if to the Distributor, attn: Xxxxx Xxxxxxxxx, 000
Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000.
ARTICLE 11. 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 provisions herein, conflict with the applicable provisions of
the 1940 Act, the latter shall control.
ARTICLE 12. 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.
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IN WITNESS, the Fund and Distributor have each duly executed this
Agreement, as of the day and year above written.
FIRST AMERICAN FUNDS, INC.
By:
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Attest:
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QUASAR DISTRIBUTORS, LLC
By:
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Attest:
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