ADMINISTRATION AGREEMENT
THIS AGREEMENT, made as of the ___ day of ______, 2003, by and among First
American Strategic Income Portfolio Inc., a Minnesota corporation (the "Fund")
and U.S. Bancorp Asset Management, Inc., a Delaware corporation (the
"Administrator").
WHEREAS, the Fund is a closed-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund desires the Administrator to provide, and the
Administrator is willing to provide, administrative and other services as set
forth herein, 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 Fund and to furnish the Fund
with the administrative and other 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 attached 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 Fund. 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 Fund. 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 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 conduct
relations with custodians, depositories, 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 Fund's
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 Fund 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 reports to
the Fund's Directors concerning the performance of its obligations
hereunder, as amended by agreement of the parties 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 outside Fund counsel with preparation of proxy materials;
- prepare communications to shareholders, including the annual and
semi-annual reports to shareholders, coordinate mailing notices,
proxy statements, proxies and other reports to Fund 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, 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 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 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 the Fund's
publicly disseminated semi-annual and annual reports to
shareholders;
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- provide internal legal and administrative services as requested
by the Fund from time to time;
- 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 its 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 on its 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 to the extent such administrative
services and functions are not provided to the Fund pursuant to
the Fund's investment advisory agreement, transfer agency
agreement and custodian agreement;
- furnish advice and recommendations with respect to other aspects
of the business and affairs of the Fund 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
- organize and coordinate meetings of the Fund's Board of Directors
and the committees thereof.
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 Fund; 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.
(B) SHAREHOLDER SERVICES. The Administrator may provide the Fund with
other services to shareholders not otherwise the subject of this Article 2.
These shareholder
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services may include personal services provided to shareholders, such as
answering shareholder inquiries and providing reports and other information
and services related to the maintenance of shareholder accounts.
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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 and transfer agency and dividend disbursing
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 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 shall pay to the Administrator compensation 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.
(
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(B) SURVIVAL OF COMPENSATION RATES. All rights of 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 in the second
paragraph of this Article 5 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 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
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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 shall be
as specified in Schedule A.
This Agreement shall not be assignable by either party 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, cast in person at a Board of Directors meeting called for the
purpose of voting on such approval.
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.
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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 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
(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.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
FIRST AMERICAN STRATEGIC INCOME
PORTFOLIO INC.
By
---------------------------------
Name:
Title:
U.S. BANCORP ASSET MANAGEMENT, INC.
By
---------------------------------
Name:
Title:
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SCHEDULE A TO THE
ADMINISTRATION AGREEMENT
DATED AS OF _______, 2003 FOR
FIRST AMERICAN STRATEGIC INCOME PORTFOLIO INC.
FEES: Pursuant to Article 4, the Fund shall pay the Administrator
compensation for services rendered to the Fund at an annual
rate, which is calculated weekly and paid monthly, equal to .25%
of the average weekly net assets of the Fund.
TERM: Pursuant to Article 7, the Initial Term of this Agreement, unless
sooner terminated as specified under the heading "Termination"
below, shall commence on ______, 2003 and shall remain in effect
through June 30, 2003. On July 1, 2003 and on July 1 of each
year thereafter (each, an "Extension Date"), this Agreement shall
be automatically extended for successive one-year periods if the
Administrator has met or exceeded at least 90% of the Service
Standards on a cumulative basis during the prior year ending on
Extension Date and only so long as such continuance is
specifically approved at least annually in conformity with the
requirements of the 1940 Act. Calculation of compliance with the
Service Standards will be measured monthly, and reported to the
Board of Directors of the Fund quarterly, as a fraction, the
numerator of which is the number of Service Standard events that
were met in such month and the denominator of which is the number
of Service Standard events to be completed for such month
("Service Level Percentage"). The Administrator will calculate
the compliance percentage, and Ernst & Young will review such
calculation, on a quarterly basis. Any disagreements will be
reported to the Fund's Board of Directors for resolution, in the
Board's good faith judgment.
TERMINATION: The Administration Agreement will be terminable by the Fund 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 in any
consecutive six-month period the average cumulative Service Level
Percentage is less than 50%; or (v) if the Administrator has
materially failed to perform its responsibilities as
administrator under this Agreement, and such material failure has
not been cured within 45 days after written notice is received by
the Administrator specifying the nature of the failure. The
Administration Agreement will be terminable by the Administrator
by delivery to the Fund of written notice of termination
delivered no less than 180 days prior to the end of the Initial
Term (or the then current one-year term if this Agreement has
been extended).
Agreed to and accepted by the undersigned effective as of ____________, 2003.
FIRST AMERICAN STRATEGIC U.S. BANCORP ASSET
INCOME PORTFOLIO INC. MANAGEMENT, INC.
By By
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Name: Name:
Title: Title:
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