ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, made as of the 10th day of March, 2000, between
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC., a Maryland corporation (the
"Fund"), and AMERICAN GENERAL ASSET MANAGEMENT CORP., a Delaware corporation
("AGAM").
WHEREAS, the Fund is registered with the Securities and Exchange Commission
as a closed-end management investment company under the Investment Company Act
of 1940, as amended ("1940 Act").
WHEREAS, the Fund desires to retain AGAM as administrator to furnish
certain administrative services to the Fund, and AGAM is willing to furnish
these services;
NOW THEREFORE, the parties agree as follows:
1. APPOINTMENT
The Fund appoints AGAM as administrator of the Fund for the period and on
the terms set forth in this Administration Agreement. AGAM accepts this
appointment and agrees to render the services set forth in this Administration
Agreement, for the compensation provided in this Administration Agreement.
2. DUTIES AS ADMINISTRATOR
AGAM will perform the following administrative duties, subject to the
supervision of the Fund's Board of Directors ("Board").
a. AGAM will authorize expenditures and approve bills for payment on behalf
of the Fund.
b. AGAM will provide assistance in connection with meetings of the Directors
and shareholders of the Fund.
c. AGAM will provide administrative services in connection with the Fund's
repurchase offers, including arrangement for preparation and dissemination
of notification to shareholders of upcoming repurchase offers, and the
Fund's complying with the procedural and other requirements of Securities
and Exchange Commission Rule 23c-3.
d. AGAM will prepare all annual, semi-annual and other reports required to be
sent to Fund shareholders, and arrange for the printing and dissemination
of such reports to shareholders.
e. AGAM will prepare and arrange for the filing of all reports, forms,
registration statements, and documents required to be filed by the Fund
with the Securities and Exchange Commission ("SEC").
f. AGAM will review the provision of services by the Fund's independent
accountants, including but not limited to the preparation by such
accountants of audited financial statements of the Fund and the Fund's
federal, state and local tax returns, and make such reports and
recommendations to the Directors of the Fund concerning the performance of
the independent accountants as the Directors deem appropriate.
g. AGAM will arrange for the filing with the appropriate authorities of all
required federal, state and local tax returns.
h. AGAM will arrange for the dissemination to shareholders of the Fund's
proxy materials.
i. AGAM will review and supervise the valuation of such portfolio investments
and other assets of the Fund as may be designated by the Board (subject to
any guidelines, directions and instructions of the Board) and review and
supervise the calculation of net asset value of the Fund's shares by the
fund accounting agent.
j. AGAM will arrange for the preparation of all advertisements and promotional
material relating to the continuous offering of the Fund's shares, and all
communications by the Fund to its shareholders.
k. AGAM will arrange for the preparation and filing of all reports, forms and
documents required to be filed by the Fund with state securities
administrators or Blue Sky authorities, or other appropriate state or
federal regulatory authorities.
l. AGAM will monitor the Fund's compliance with (1) the 1940 Act and other
federal securities laws and the regulations under any federal securities
laws; (2) state and foreign laws and regulations applicable to the
operation of investment companies; (3) the Fund's investment objectives,
policies and restrictions, and (4) the Code of Ethics and other policies
adopted by the Fund's Board of Directors or by the Fund's investment
adviser or subadviser and applicable to the Fund.
m. AGAM will perform calculations in connection with distribution of income
and capital gains by the Fund, prepare and arrange for printing of notices
to shareholders regarding such distributions, and provide the Fund's
transfer and dividend disbursing agent and custodian with such information
as is required for such parties to effect the payment of distributions and
to implement the Fund s dividend reinvestment plan.
n. AGAM will negotiate terms and conditions for provision of services from,
maintain liaison with and oversee the various agents and other persons
employed by the Fund (including the Fund's transfer agent, custodian, fund
accounting agent, independent accountants and legal counsel) and assist in
the coordination of their activities on behalf of the Fund. Fees and
expenses of such agents and other persons will be paid by the Fund.
2
o. AGAM will provide customer support services to wholesalers, broker-dealers,
representatives, and shareholders.
p. AGAM will establish the accounting policies of the Fund, assist in the
reconciliation of accounting issues that may arise with respect to the
Fund's operations, and consult with the Fund's independent accountants,
legal counsel, and other agents in connection therewith.
q. AGAM will not be responsible for providing investment advisory services to
the Fund under this Agreement.
3. FURTHER DUTIES
In all matters relating to the performance of this Administration
Agreement, AGAM will act in conformity with the Articles of Incorporation, By-
Laws and Registration Statement of the Fund and with the instructions and
directions of the Board and will comply with the requirements of the 1940 Act,
the rules under the 1940 Act, and all other applicable federal and state laws
and regulations.
4. DELEGATION OF AGAM'S DUTIES AS ADMINISTRATOR
With respect to the Fund, AGAM may enter into one or more agreements ("Sub-
Administration Agreement") with a sub-administrator in which AGAM delegates to a
sub-administrator the performance of any or all of the services specified in
Paragraphs 2 and 3 of this Administration Agreement, provided that (i) each Sub-
Administration Agreement imposes on the Sub-administrator all the duties and
conditions to which AGAM is subject with respect to the delegated services under
Paragraphs 2 and 3 of this Administration Agreement; (ii) each sub-
Administration Agreement meets all requirements of the 1940 Act and rules under
the 1940 Act; and (iii) AGAM will not enter into a Sub-Administration Agreement
unless it is approved by the Directors of the Fund before implementation.
5. SERVICES NOT EXCLUSIVE
The services furnished by AGAM under this Administration Agreement are not
to be deemed exclusive and AGAM is free to furnish similar services to others so
long as its services under this Administration Agreement are not impaired.
Nothing in this Administration Agreement shall limit or restrict the right of
any director, officer or employee of AGAM, who may also be a Director, officer
or employee of the Fund, to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
6. EXPENSES
a. During the term of this Administration Agreement, the Fund will bear all
expenses incurred in its operations which are not specifically assumed by
AGAM.
3
b. Expenses borne by the Fund will include but not be limited to the
following: (i) the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in
connection with securities transactions; (ii) fees payable to and expenses
incurred on behalf of the Fund by AGAM under this Administration Agreement;
(iii) expenses of organizing the Fund and continuing its existence; (iv)
filing fees and expenses relating to the registration and qualification of
the Fund's shares under federal and/or state securities laws and
registration of the Fund under the Investment Company Act and maintaining
such registrations and qualifications; (v) fees and salaries payable to the
Fund's Directors who are not interested persons of the Fund and who are not
parties to this Administration Agreement or interested persons of any party
("Independent Directors"); (vi) all expenses incurred in connection with
the Independent Directors' services, including travel expenses; (vii) taxes
(including any income or franchise taxes) and governmental fees; (viii)
costs of any liability, uncollectible items of deposit and other insurance
and fidelity bonds; (ix) any costs, expenses or losses arising out of a
liability of or claim for damages or other relief asserted against the Fund
for violation of any law; (x) legal, accounting and auditing expenses,
including legal fees of special counsel for the Independent Directors; (xi)
charges of custodians, transfer agents, pricing agents and other agents;
(xii) costs of preparing share certificates; (xiii) expenses of setting in
type, printing, distributing, and mailing prospectuses and supplements to
prospectuses, statements of additional information, reports, proxy
materials and notifications of repurchase offers to existing shareholders;
(xiv) any extraordinary expenses (including fees and disbursements of
counsel, costs of actions, suits or proceedings to which the Fund is a
party and the expenses the Fund may incur as a result of its legal
obligation to provide indemnification to its officers, Directors, employees
and agents) incurred by the Fund; (xv) fees, voluntary assessments and
other expenses incurred in connection with membership in investment company
organizations; (xvi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees of the Board; (xvii)
the cost of investment company literature and other publications provided
by the Fund to its Directors and officers; and (xviii) costs of mailing,
stationery and communications equipment; (xix) expenses of issue, sale,
repurchase and redemption (if any) of shares of the Fund, including all
expenses of repurchase offers; (xx) expenses of reports to governmental
offices and commissions; and (xxi) expenses of pricing and valuation
services employed by the Fund.
c. The payment or assumption by AGAM of any expense of the Fund that AGAM is
not required by this Administration Agreement to pay or assume will not
obligate AGAM to pay or assume the same or any similar expense of the Fund
on any subsequent occasion.
7. COMPENSATION
a. For the services provided under this Administration Agreement, the Fund
will pay to AGAM a fee, computed daily and paid monthly, on or before the
last business day of the month, at the annualized rate of 0.40% of the
Fund's average daily net assets. In calculating the net assets of the Fund
for purposes of this computation, all liabilities of
4
the Fund shall be deducted from gross assets except the principal amount of
any indebtedness for money borrowed including debt securities issued by the
Fund.
b. If this Administration Agreement becomes effective or terminates before the
end of any month, the fee for the period from the effective date to the end
of the month or from the beginning of the month to the date of termination,
as the case may be, will be prorated according to the proportion which that
period bears to the full month in which effectiveness or termination
occurs.
c. From time to time, AGAM may waive all or a portion of its fees provided for
under this Administration Agreement.
d. On the investment of substantially all of the Fund's assets in another
investment company with substantially the same investment objective,
policies, and restrictions as the Fund, the Fund will pay to AGAM a fee,
computed daily and paid monthly, on or before the last business day of the
month, at the annualized rate of 0.40% the average daily net assets of such
other investment company that throughout the month is attributable to the
Fund's interest in the other investment company. In calculating the net
assets of the other investment company for purposes of this computation,
all liabilities of the other investment company will be deducted from gross
assets except the principal amount of any indebtedness for money borrowed
including debt securities issued by the other investment company.
8. LIMITATION OF LIABILITY OF AGAM AND INDEMNIFICATION
Neither AGAM nor any of its officers, directors, or employees, nor any
person performing executive, administrative, or other functions for the Fund (at
the direction or request of the AGAM) or AGAM in connection with AGAM's
discharge of its obligations undertaken or reasonably assumed with respect to
this Agreement, shall be liable for any error of judgment or mistake of law or
any loss suffered by the Fund in connection with the matters to which this
Administration Agreement relates except, for loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its or his or
her duties on behalf of the Fund or from reckless disregard by AGAM or any such
person of the duties of AGAM under this Administration Agreement.
9. DURATION AND TERMINATION
a. This Administration Agreement will become effective on the date first
written above, provided that this Administration Agreement will not take
effect with respect to the Fund unless it has first been approved (i) by a
vote of a majority of the Independent Directors, and (ii) by vote of a
majority of the Fund's outstanding voting securities.
b. Unless sooner terminated as provided in this Administration Agreement, this
Administration Agreement will continue in effect for two years from the
date of execution, and from year to year thereafter, but only so long as
such continuance is
5
specifically approved at least annually (i) by a vote of a majority of the
Independent Directors, and (ii) by the Board or by vote of a majority of
the outstanding voting securities of the Fund.
c. Notwithstanding the foregoing, with respect to the Fund this Administration
Agreement may be terminated at any time, without the payment of any penalty
by the Directors of the Fund or by a vote of a majority of the outstanding
voting securities of the Fund on sixty days' written notice to AGAM, or by
AGAM at any time, without the payment of any penalty, on sixty days'
written notice to the Fund. This Administration Agreement may only be
assigned upon written consent of the Fund, provided that such consent be
approved by a majority of those directors of the Fund who are not
interested persons of CAM or the Fund.
10. AMENDMENT
This Agreement may be amended by an instrument in writing signed by both
parties provided that no amendment to this Agreement shall be effective until
approved by the vote of a majority of those Directors of the Fund who are not
interested persons of AGAM or the Fund.
11. GOVERNING LAW
This Administration Agreement will be construed in accordance with the laws
of the Commonwealth of Massachusetts and the 1940 Act. To the extent that the
applicable laws of the Commonwealth of Massachusetts conflict with the
applicable provisions of the 1940 Act, the latter will control.
12. MISCELLANEOUS
a. The captions in this Administration Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions of
this Administration Agreement or otherwise affect their construction or
effect.
b. If any provision of this Administration Agreement is held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this
Administration Agreement will not be affected.
c. This Administration Agreement will be binding upon and will inure to the
benefit of the parties to this Administration Agreement and their
respective successors.
d. As used in this Administration Agreement, the terms "majority of the
outstanding voting securities," "interested person," "broker," "dealer,"
"investment adviser" "prospectus," "sale," "sell" and security" have the
same meaning as given those terms in the 1940 Act, subject to any exemption
granted by the Commission by any rule, regulation or order.
6
e. Where the effect of a requirement of the 1940 Act reflected in any
provision of this Administration Agreement is made less restrictive by a
rule, regulation or order of the Commission, whether of special or general
application, that provision will be deemed to incorporate the effect of the
rule, regulation or order.
IN WITNESS WHEREOF, the parties to this Administration Agreement have
caused this instrument to be executed by their officers designated as of the day
and year first above written.
NORTH AMERICAN SENIOR FLOATING
RATE FUND, INC.
_______________________________________
By:
AMERICAN GENERAL ASSET MANAGEMENT CORP.
_______________________________________
By:
7
