DISTRIBUTION AGREEMENT
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AGREEMENT made as of January 1, 1996, by and between North American Funds
(the "Trust"), a Massachusetts business trust which intends to engage in
business as an open-end investment company under the Investment Company Act of
1940, as amended (the "Investment Company Act"), and NASL Financial Services,
Inc. (the "Distributor"), a Massachusetts corporation registered under the
Securities Exchange Act of 1934, as amended, as a broker-dealer.
1. Appointment of Distributor. The Trust hereby appoints the Distributor
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as the principal underwriter and exclusive distributor of shares of each series
of shares of beneficial interest of the Trust (the "Shares") and the Distributor
hereby accepts that appointment.
2. Sale of Shares Through Distributor.
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(a) The Trust hereby grants to the Distributor the exclusive right to
sell, as agent for the Trust 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 Trust or one of its portfolio series or the acquisition
by purchase or otherwise of all (or substantially all) the assets or the
outstanding shares of any such company by the Trust or one of its portfolio
series; 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 Trust's transfer and dividend disbursing agent in the manner set
forth in the Trust'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 Trust 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 Trust. The services of the
Distributor to the Trust 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 Trust, to order
from the Trust 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 which shall be paid to
the Trust 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 Trust's prospectus and
statement of additional information.
(e) The net asset value of Shares of the Trust shall be determined by the
Trust or any agent of the Trust in accordance with the method set forth in the
prospectus and statement of additional information of the Trust and guidelines
established by the trustees of the Trust (the "Trustees").
(f) The Trust shall have the right to suspend the sale of its Shares at
times when redemption is suspended pursuant to the conditions set forth in
Section 8 (c) hereof. The Trust 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 Trustees, makes it impracticable or inadvisable to
sell the Shares.
(g) The Trust, or any agent of the Trust designated in writing by the
Trust, shall be advised promptly of all purchase orders for Shares received by
the Distributor. Any order may be rejected by the Trust; provided, however,
that the Trust will not arbitrarily or without reasonable cause refuse to accept
or confirm orders for the purchase of Shares. The Trust (or its agent) will
confirm orders upon their receipt, will make appropriate book entries and, upon
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receipt by the Trust (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. The Distributor shall have the right to receive the
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sales charges in respect of Shares sold during the term of this Agreement or any
continuation hereof under the circumstances, upon the terms and conditions and
in the amounts set forth in the Trust's prospectus at the time of the sale.
4. Duties of the Trust. The Trust 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 Trust by independent public accountants, to the
extent reasonably requested by the Distributor for use in connection with the
distribution of Shares of the Trust.
(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 Trust, and, if necessary or
appropriate in connection therewith, to qualify and maintain the qualification
of the Trust as a broker-dealer in those states; provided that any such
qualification may be terminated or withdrawn by the Trust at any time in its
discretion. The Distributor shall furnish information and other material
relating to its affairs and activities reasonably required by the Trust 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 Trust 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
the NASD or other regulatory authorities with respect to sales material for the
Trust or any of its portfolio series.
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6. Selected Dealer Agreements. The Distributor shall:
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(a) Have the right to enter into an agreement with ▇▇▇▇ ▇▇▇▇▇ Associates,
Inc. ("WLA") and, jointly with WLA, 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.
Any agreement with WLA and the standard form of agreement with selected dealers
pertaining to sales of the Shares shall be approved by the Trustees.
(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 Trust in making
agreements with selected dealers.
7. Payment of Expenses.
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(a) The Trust shall bear all costs and expenses of the Trust, except for
those expenses assumed by any investment adviser or subadviser of the Trust or
any other party contracting with the Trust 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 WLA and 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 state laws and of continuing those registrations or qualifications.
It is understood and agreed that, so long as the Trust's Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act remains in effect, any
expenses incurred by the Distributor in performing or in providing for the
performance of its duties hereunder may be paid from amounts recovered by it
from the Trust under that Plan.
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8. Redemption of Shares. Any of the outstanding Shares may be tendered
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for redemption at any time, and the Trust agrees to redeem the Shares so
tendered in accordance with its obligations as set forth in Article IV of its
Agreement and Declaration of Trust, as amended from time to time, in accordance
with the applicable provisions set forth in the prospectus and statement of
additional information of the Trust, and subject to the following conditions:
(a) The price to be paid to redeem the Shares shall be equal to the net
asset value calculated in accordance with the provisions of Section 2 (e)
hereof.
(b) The Trust shall pay the total amount of the redemption price as
defined in the above paragraph pursuant to the instructions of the Distributor
on or before the seventh day subsequent to receiving the notice of redemption in
proper form.
(c) Redemption of Shares or payment may be suspended at times when the New
York Stock Exchange is closed, when trading on that Exchange is suspended or
restricted, when an emergency exists as a result of which disposal by a
portfolio series of the Trust of its investment securities is not reasonably
practicable or it is not reasonably practicable for a portfolio series of the
Trust fairly to determine the value of its net assets, or during any other
period when the Securities and Exchange Commission, by order, so permits.
9. Repurchase of Shares. The Trust hereby authorizes the Distributor to
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repurchase upon the terms and conditions set forth in the Trust's prospectus and
statement of additional information (as supplemented by written instructions
given by the Trust to the Distributor from time to time), as the Trust's agent
and for the Trust's account, such Shares as may be offered for sale to the Trust
from time to time by holders of those Shares or their agents. No offers for
sale of Shares to the Trust shall be accepted by the Distributor during any time
when the redemption of Shares by the Trust shall have been suspended.
10. Indemnification.
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(a) The Trust shall indemnify and hold harmless the Distributor and 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
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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
Trust, 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 Trust in
connection therewith by or on behalf of the Distributor; provided, however, that
in no case ( i) is the indemnity of the Trust 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 Trust 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
Trust 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 Trust 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 Trust of any claim
shall not relieve the Trust 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 Trust 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 Trust 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 Trust 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 Trust 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 Trust shall promptly notify the Distributor of the
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commencement of any litigation or proceedings against it or any of its officers
or Trustees in connection with the issuance or sale of any of the Shares.
(b) The Distributor shall indemnify and hold harmless the Trust and each
of its Trustees and officers and each person, if any, who controls the Trust
against any loss, liability, claim, damage or expense described in the foregoing
indemnity contained in subsection (a) of this Section 10, but only with respect
to statements or omissions made in reliance upon, and in conformity with,
information furnished to the Trust by or on behalf of the Distributor for use in
connection with the registration statement or related prospectus and statement
of additional information, as from time to time amended, or the annual or
interim reports to shareholders. In case any action shall be brought against
the Trust 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 Trust, and the Trust and each person so indemnified shall have the
rights and duties given to the Distributor by the provisions of subsection (a)
of this Section 10.
11. 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 Trustees or by vote of a
majority of the outstanding voting securities of the Trust and (ii) by vote of a
majority of the Trustees who are not interested persons of the Distributor or of
the Trust 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 Trustees or
by vote of a majority of the outstanding voting securities of the Trust, 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 Trust.
(b) This Agreement may be amended at any time by mutual consent of the
parties, provided that the consent on the part of the Trust shall have been
approved ( i) by the Trustees or by vote of a majority of the outstanding voting
securities of the Trust and (ii) by vote of a majority of the Trustees who are
not interested persons of the Distributor or of the Trust cast in person at a
meeting called for the purpose of voting on the amendment.
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(c) Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at the principal office of
the other party.
12. Definitions. For the purposes of this Agreement, the terms "vote of a
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majority of the outstanding voting securities," "interested person" and
"assignment" shall have the respective meanings specified in the Investment
Company Act.
13. Agreement and Declaration of Trust. The Agreement and Declaration of
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Trust establishing the Trust, dated September 28, 1988, a copy of which,
together with all amendments thereto (the "Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts, provides that the
name "North American Security Trust" refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of the Trust shall be held
to any personal liability, nor shall resort be had to their private property for
the satisfaction of any obligation or claim, in connection with the affairs of
the Trust or any portfolio series thereof, but only the assets belonging to the
Trust, or to the particular portfolio series with which the obligee or claimant
dealt, shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the day and year first above written.
NORTH AMERICAN FUNDS
By:
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NASL FINANCIAL SERVICES, INC.
By:
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