DISTRIBUTION AGREEMENT
AGREEMENT made as of March 10, 2000, by and between North American
Senior Floating Rate Fund (the "Fund"), a Maryland corporation engaged in
business as a closed-end investment company under the Investment Company Act of
1940, as amended (the "Investment Company Act"), and American General Funds
Distributors, Inc. (the "Distributor"), a Delaware corporation registered under
the Securities Exchange Act of 1934, as amended, as a broker-dealer.
1. Appointment of Distributor. The Fund hereby appoints the
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Distributor as the principal underwriter and exclusive distributor of shares of
Class A, Class B, and Class C of the Fund (the "Shares") and the Distributor
hereby accepts that appointment.
Sale of Shares Through Distributor.
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(a) The Fund hereby grants to the Distributor the exclusive
right to sell, as agent for the Fund and not as principal, and to arrange for
the sale of Shares upon the terms herein set forth. The exclusive right hereby
granted shall not apply to Shares issued or transferred or sold: (i) in
connection with the merger or consolidation of any other investment company or
personal holding company with the Fund or the acquisition by purchase or
otherwise of all (or substantially all) the assets or the outstanding shares of
any such company by the Fund; or (ii) pursuant to reinvestment of dividends or
capital gains distributions; or (iii) pursuant to any reinstatement privilege
afforded redeeming shareholders. It is understood that shares may be purchased
directly through the Fund's transfer and dividend disbursing agent in the manner
set forth in the Fund's prospectus.
(b) The Distributor, either directly or through a promotional
agent selected and compensated by the Distributor, will devote research, time
and effort to effect sales of Shares through dealers, and will assist those
dealers and their associated persons to the extent and in whatever manner the
Distributor deems appropriate in order to enhance the sale of Shares, but the
Distributor does not undertake to arrange for the sale of any specific number of
Shares. Neither the Distributor nor any selected dealer nor any other person is
authorized by the Fund to give any information or to make any representations,
other than those contained in the registration statement or related prospectus
and statement of additional information and any sales literature specifically
approved by the Fund. The services of the Distributor to the Fund hereunder are
not to be deemed exclusive and nothing herein contained shall prevent the
Distributor from entering into like arrangements with other investment companies
so long as the performance of its obligations hereunder is not impaired thereby.
(c) The Distributor shall have the right, as agent of the Fund,
to order from the Fund the Shares needed, but not more than the Shares needed
(except for reasonable allowances for clerical errors, delays and errors of
transmission and cancellation of orders), to fill unconditional orders for
Shares received by the Distributor from dealers and investors. The price
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which shall be paid to the Fund for the Shares so purchased shall be the net
asset value, determined as set forth in Section 2(e) hereof.
(d) The price at which the Distributor or dealer purchasing
shares through the Distributor may sell Shares to the public shall be the public
offering price determined in accordance with the method set forth in the Fund's
prospectus and statement of additional information.
(e) The net asset value of Shares of the Fund shall be
determined by the Fund or any agent of the Fund in accordance with the method
set forth in the prospectus and statement of additional information of the Fund
and guidelines established by the directors of the Fund (the "Directors").
(f) The Fund shall have the right to suspend the sale of its
Shares at times when redemption is suspended pursuant to the conditions referred
to in Section 8 hereof. The Fund shall also have the right to suspend the sale
of its Shares if a banking moratorium shall have been declared by federal or
applicable state authorities, or if there shall have been some other event,
which, in the judgment of the Directors, makes it impracticable or inadvisable
to sell the Shares.
(g) The Fund, or any agent of the Fund designated in writing by
the Fund, shall be advised promptly of all purchase orders for Shares received
by the Distributor. Any order may be rejected by the Fund; provided, however,
that the Fund will not arbitrarily or without reasonable cause refuse to accept
or confirm orders for the purchase of Shares. The Fund (or its agent) will
confirm orders upon their receipt, will make appropriate book entries and, upon
receipt by the Fund (or its agent) of payment therefor, will deliver deposit
receipts or certificates for such Shares pursuant to the instructions of the
Distributor.
3. Sales Charges.
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(a) For the purposes of this Section 3, "Distribution Fees"
shall mean, collectively, (i) the sales charges payable to the Distributor as
set forth in Section 3(b), below, and (ii) the amounts payable to the
Distributor under the Distribution Plans as set forth in Section 3(c) and
"Effective Date" shall mean the date hereof.
(b) The Distributor shall have the right to receive the sales
charges (including, without limitation, contingent deferred sales charges) in
respect of Shares (i) sold during the term of this Agreement or any continuation
hereof (including Shares into which such Shares convert), (ii) later issued in
connection with the reinvestment of dividends (whether ordinary, capital gain or
tax exempt dividends, or return of capital) paid in respect of Shares described
in clause (i) or this clause (ii), (iii) later acquired by a holder of Shares
described in clause (i) or clause (ii) upon a free exchange of such Shares for
shares of a portfolio of the North American Funds or (iv) later issued in
connection with a reinvestment of dividends paid in respect of Shares described
in clause (iii) (collectively, "Distributor Shares"),in each case under the
circumstances, upon the
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terms and conditions and in the amounts set forth in the Fund's prospectus at
the time of the sale.
(c) So long as the Fund's Distribution Plans remain in effect
with respect to assets attributable to Distributor Shares, the Distributor shall
have the right to receive one hundred percent (100%) of the amounts payable
under such Distribution Plans.
(d) The Distributor may transfer its right to receive
Distribution Fees (but not its obligations under this Agreement), and such
transfer shall be effective upon written notice from the Distributor to the
Fund. In connection with the foregoing, the Fund is authorized to pay all or a
part of the Distribution Fees directly to such transferee of the Distributor.
(e) The right of the Distributor to receive Distribution Fees
with respect to Distributor Shares shall survive the termination of this
Agreement.
4. Duties of the Fund. The Fund shall:
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(a) Furnish to the Distributor copies of its prospectus and
statement of additional information, its annual and interim reports, and other
information, financial statements and papers, including one certified copy of
all financial statements prepared for the Fund by independent public
accountants, to the extent reasonably requested by the Distributor for use in
connection with the distribution of Shares of the Fund.
(b) Take, from time to time, any steps necessary to register the
Shares under the Securities Act of 1933 (the "Securities Act"), so that there
will be available for sale as many Shares as the Distributor reasonably may be
expected to sell.
(c) Use its best efforts to qualify and maintain the
qualification of an appropriate number of its Shares for sale under the
securities laws of those states approved by the Distributor and the Fund, and,
if necessary or appropriate in connection therewith, to qualify and maintain the
qualification of the Fund as a broker-dealer in those states; provided that any
such qualification may be terminated or withdrawn by the Fund at any time in its
discretion. The Distributor shall furnish information and other material
relating to its affairs and activities reasonably required by the Fund in
connection with any such qualification(s).
5. Duties of the Distributor. The Distributor shall:
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(a) Use its best efforts in all respects duly to conform with
the requirements of all federal and state laws relating to the sale of the
Shares of the Fund and with all applicable rules and regulations of all
regulatory bodies, including the National Association of Securities Dealers,
Inc. (the "NASD").
(b) Use its best efforts to obtain any approval or clearance
required from
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the NASD or other regulatory authorities with respect to sales material for the
Fund or any of its portfolio series.
6. Selected Dealer Agreements. The Distributor shall:
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(a) Have the right to enter into selected dealer agreements with
securities dealers of its choice ("selected dealers") for the sale of Shares.
Shares sold to selected dealers shall be for resale by the selected dealers only
at the public offering price determined as set forth in Section 2(d) hereof. The
standard form of agreement with selected dealers pertaining to sales of the
Shares shall be approved by the Directors.
(b) Offer and sell Shares, within the United States, only to
selected dealers that are members in good standing of the NASD.
(c) Act only as principal and not as agent for the Fund in
making agreements with selected dealers.
7. Payment of Expenses.
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(a) The Fund shall bear all costs and expenses of the Fund,
except for those expenses assumed by any investment adviser or subadviser of the
Fund or any other party contracting with the Fund or by the Distributor pursuant
to Section 7(b) of this Agreement.
(b) The Distributor shall bear the costs and expenses of: (i)
any payments made to selected dealers; (ii) the printing and distributing of any
copies of prospectuses, statements of additional information and annual and
interim reports to be used in connection with the offering of Shares to selected
dealers or prospective investors pursuant to this Agreement after the same have
been prepared and set in type and copies have been printed and distributed to
regulatory bodies and existing shareholders as deemed necessary; (iii)
preparing, printing and distributing any other literature used by the
Distributor or furnished by it for use by selected dealers in connection with
the offering of the Shares for sale to the public; (iv) any advertising expenses
incurred by the Distributor in connection with the offering; and (v) the
registration or qualification of the Distributor as a broker-dealer under
federal and states laws and of continuing those registrations or qualifications.
8. Repurchase of Shares. Any of the outstanding Shares may be
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tendered for repurchase at such times, and the Fund agrees to repurchase the
Shares so tendered in accordance with the applicable provisions set forth in the
prospectus and statement of additional information of the Fund.
9. Indemnification.
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(a) The Fund shall indemnity and hold harmless the Distributor
and
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each person, if any, who controls the Distributor, against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damage or expense and reasonable
counsel fees incurred in connection therewith), arising by reason of any person
acquiring any Shares, which may be based upon the Securities Act, or on any
other statute or at common law, on the ground that the registration statement or
related prospectus and statement of additional information, as from time to time
amended and supplemented, or an annual or interim report to shareholders of the
Fund, includes an untrue statement of material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, unless that statement or omission was made in reliance
upon, and in conformity with, information furnished to the Fund in connection
therewith by or on behalf of the Distributor; provided, however, that in no case
(i) is the indemnity of the Fund in favor of the Distributor and/or its
controlling persons to be deemed to protect the Distributor or any controlling
persons thereof against any liability to the Fund or its security holders to
which the Distributor or any of its controlling persons would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of their duties or by reason of the reckless disregard of their
obligations and duties under this Agreement; or (ii) is the Fund to be liable
under its indemnity agreement contained in this paragraph with respect to any
claim made against the Distributor or its controlling persons, unless the
Distributor or its controlling persons, as the case may be, shall have notified
the Fund in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Distributor or its controlling persons (or after the Distributor
or its controlling persons shall have received notice of service on any
designated agent), but failure to notify the Fund of any claim shall not relieve
the Fund from any liability which it may have to the person against whom the
action is brought otherwise than on account of the indemnity agreement contained
in this paragraph. The Fund will 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 such liability, but if the Fund elects to assume the defense,
that defense shall be conducted by counsel chosen by it and satisfactory to the
Distributor or the Distributor's controlling person or persons, defendant or
defendants in the suit. In the event the Fund elects to assume the defense of a
suit and retain satisfactory counsel, the Distributor or its controlling person
or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Fund does
not elect to assume the defense of such a suit, it will reimburse the
Distributor or the Distributor's controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Fund shall promptly notify the Distributor 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 the Shares.
(b) The Distributor shall indemnity and hold harmless the Fund
and each of its Directors and officers and each person, if any, who controls the
Fund against any loss, liability, claim, damage or expense described in the
foregoing indemnity contained in subsection (a) of this Section 9, but only with
respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Fund by or on behalf of the Distributor for
use in connection with the registration statement or related prospectus and
statement of additional
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information, as from time to time amended, or the annual or interim reports to
shareholders. In case any action shall be brought against the Fund or any person
so indemnified, in respect of which indemnity may be sought against the
Distributor, the Distributor shall have the rights and duties given to the Fund,
and the Fund and each person so indemnified shall have the rights and duties
given to the Distributor by the provisions of subsection (a) of this Section 9.
10. Continuation, Amendment or Termination of the Agreement.
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(a) This Agreement shall become effective as of the date first
written above and shall continue in full force and effect from year to year so
long as continuance is approved at least annually (i) by the Directors or by
vote of a majority of the outstanding voting securities of the Fund and (ii) by
vote of a majority of the Directors who are not interested persons of the
Distributor or of the Fund cast in person at a meeting called for the purpose of
voting on such approval, provided, however, that (a) this Agreement may at any
time be terminated without the payment of any penalty either by vote of the
Directors or by vote of a majority of the outstanding voting securities of the
Fund, on sixty (60) days' notice to the Distributor; (b) this Agreement shall
immediately terminate in the event of its assignment; and (c) this Agreement may
be terminated by the Distributor on ninety (90) days' written notice to the
Fund.
(b) This Agreement may be amended at any time by mutual consent
of the parties, provided that the consent on the part of the Fund shall have
been approved (i) by the Directors or by vote of a majority of the outstanding
voting securities of the Fund and (ii) by vote of a majority of the Directors
who are not interested persons of the Distributor or of the Fund cast in person
at a meeting called for the purpose of voting on the amendment.
(c) Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed post-paid, to the other party at the
principal office of the other party.
11. Definitions. For the purposes of this Agreement, the terms "vote
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of a majority of the outstanding voting securities," "interested person" and
"assignment" shall have the respective meanings specified in the Investment
Company Act.
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IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the
day and year first above written.
NORTH AMERICAN SENIOR
FLOATING RATE FUND, INC.
By:_______________________
AMERICAN GENERAL FUNDS
DISTRIBUTORS, INC.
By:_______________________
