NORTH AMERICAN GOVERNMENT BOND FUND, INC.
ISI NORTH AMERICAN GOVERNMENT BOND FUND SHARES
DISTRIBUTION AGREEMENT
AGREEMENT, made as of the 1st day of April, 1997, as amended March 13,
2003, by and between NORTH AMERICAN GOVERNMENT BOND FUND, INC., a Maryland
corporation (the "Fund"), and INTERNATIONAL STRATEGY & INVESTMENT GROUP INC., a
Delaware corporation ("ISI").
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund offers shares of various classes as listed in APPENDIX A
hereto (each such class together with all other classes subsequently established
by the Fund being herein referred to as a "Class," and collectively as the
"Classes"); and
WHEREAS, the Fund wishes to appoint ISI as the exclusive distributor of the
shares of the Classes (the "Shares") and ISI wishes to become the distributor of
the Shares; and
WHEREAS, the compensation to ISI hereunder and the payments contemplated by
paragraph 9 constitute the financing of activities intended to result in the
sale of Shares, and this Agreement is entered into pursuant to a "written plan"
pursuant to Rule 12b-1 under the Act (the "Plan") allowing the Fund to make such
payments.
NOW, THEREFORE, in consideration of the premises herein and of other good
and valuable consideration the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:
1. APPOINTMENT. The Fund appoints ISI as the exclusive distributor for the
Shares for the period and on the terms set forth in this Agreement. ISI accepts
such appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Fund has furnished ISI with copies properly
certified or authenticated, of each of the following:
(a) The Fund's Articles of Incorporation, filed with the Secretary of State
of Maryland on October 20, 1992 and all amendments thereto (the "Articles of
Incorporation");
(b) The Fund's By-Laws and all amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Fund's Board of Directors authorizing the
appointment of ISI as the distributor of the Shares and approving this
Agreement, as amended;
(d) The Fund's Notification of Registration filed pursuant to Section 8(a)
of the 1940 Act on Form N-8A under the 1940 Act, as filed with the Securities
and Exchange Commission (the "SEC") on October 22, 1992;
(e) The Fund's Registration Statement on Form N-1A under the Securities Act
of 1933, as amended (the "1933 Act") (File No. 33-53598) and under the 1940 Act
as filed with the SEC on October 22, 1992 relating to the Shares of the Fund,
and all amendments thereto; and
(f) The Fund's most recent prospectuses (such prospectuses and all
amendments and supplements thereto are herein called "Prospectus").
The Fund will furnish ISI from time to time with copies, properly certified
or authenticated, of all amendments or supplements to the foregoing, if any, and
all documents, notices and reports filed with the SEC.
3. DUTIES AS DISTRIBUTOR. ISI agrees that all solicitations for
subscriptions for Shares shall be made in accordance with the Fund's Articles of
Incorporation and By-Laws, and its then current Registration Statement,
Prospectus and Statement of Additional Information, and shall not at any time or
in any manner violate any provisions of the laws of the United States or of any
state or other jurisdiction in which solicitations are then being made. In
carrying out its obligations hereunder, ISI shall undertake the following
actions and responsibilities:
(a) receive orders for purchase of Shares, accept or reject such orders on
behalf of the Fund in accordance with the currently effective Prospectus for the
Shares and the Fund's Statement of Additional Information and transmit such
orders as are so accepted to the Fund's transfer agent as promptly as possible;
(b) receive requests for redemption from holders of Shares and transmit
such redemption requests to the Fund's transfer agent as promptly as possible;
(c) respond to inquiries from the Fund's shareholders concerning the status
of their accounts with the Fund;
(d) provide to the Fund's Treasurer, at least quarterly, a written report
of the amounts expended in connection with all distribution services rendered
pursuant to this Agreement, including an explanation of the purposes for which
such expenditures were made; and
(e) take, on behalf of the Fund, all actions deemed necessary to carry into
effect the distribution of the Shares and perform such other administrative
duties with respect to the Shares as the Fund's Board of Directors may require.
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4. DISTRIBUTION OF SHARES. ISI shall be the exclusive distributor of the
Shares. It is mutually understood and agreed that ISI does not undertake to sell
all or any specific portion of the Shares. The Fund shall not sell any of the
Shares except through ISI and securities dealers who have valid Agency
Distribution Agreements with ISI. Notwithstanding the provisions of the
foregoing sentence, the Fund may issue its Shares at their net asset value to
any shareholder of the Fund purchasing such Shares with dividends or other cash
distributions received from the Fund pursuant to an offer made to all
shareholders.
5. CONTROL BY BOARD OF DIRECTORS. Any distribution activities undertaken by
ISI pursuant to this Agreement, as well as any other activities undertaken by
ISI on behalf of the Fund pursuant hereto, shall at all times be subject to any
directives of the Board of Directors of the Fund. The Board of Directors may
agree, on behalf of the Fund, to amendments to this Agreement, provided that the
Fund must obtain prior approval of the shareholders of the Fund to any amendment
which would result in a material increase in the amount expended by the Fund.
6. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its obligations
under this Agreement, ISI shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and regulations
adopted thereunder as amended;
(b) the provisions of the Registration Statement of the Fund under the 1933
Act and the 1940 Act and any amendments and supplements thereto;
(c) the provisions of the Articles of Incorporation of the Fund;
(d) the provisions of the By-Laws of the Fund;
(e) the rules and regulations of the National Association of Securities
Dealers, Inc. ("NASD") and all other self-regulatory organizations applicable to
the sale of investment company shares; and
(f) any other applicable provisions of federal and state law.
7. EXPENSES. The expenses connected with the Fund shall be allocable
between the Fund and ISI as follows:
(a) ISI shall furnish, at its expense and without cost to the Fund, the
services of personnel to the extent that such services are required to carry out
their obligations under this Agreement;
(b) ISI shall bear the expenses of any promotional or sales literature used
by ISI or furnished by ISI to purchasers or dealers in connection with the
public offering of the Shares, the expenses of advertising in connection with
such public offering and all legal expenses in connection with the foregoing;
and
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(c) the Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including, without limitation: the fees of the Fund's investment
advisor and administrator; the charges and expenses of any registrar, custodian
or depositary appointed by the Fund for the safekeeping of its cash, portfolio
securities and other property, and any stock transfer, dividend or accounting
agent or agents appointed by the Fund; brokers' commissions chargeable to the
Fund in connection with portfolio securities transactions to which the Fund is a
party; all taxes, including securities issuance and transfer taxes, and
corporate fees payable by the Fund to federal, state or other governmental
agencies; the cost and expense of engraving or printing of stock certificates
representing Shares; all costs and expenses in connection with maintenance of
registration of the Fund and the Shares with the SEC and various states and
other jurisdictions (including filing fees and legal fees and disbursements of
counsel) except as provided in subparagraph (a) above, the expenses of printing,
including typesetting, and distributing prospectuses of the Fund and supplements
thereto to the Fund's shareholders; all expenses of shareholders' and Directors'
meetings and of preparing, printing and mailing of proxy statements and reports
to shareholders; fees and travel expenses of Directors who are not "interested
persons" of the Fund (as defined in the 0000 Xxx) or members of any advisory
board or committee; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in Shares or in cash; charges
and expenses of any outside service used for pricing of the Shares; charges and
expenses of legal counsel, including counsel to the Directors who are not
"interested persons" of the Fund (as defined in the 1940 Act), and of
independent accountants, in connection with any matter relating to the Fund; a
portion of membership dues of industry associations; interest payable on Fund
borrowings; postage; insurance premiums on property or personnel (including
officers and Directors) of the Fund which inure to its benefit; extraordinary
expenses (including, but not limited to, legal claims and liabilities and
litigation costs and any indemnification related thereto); and all other charges
and costs of the Fund's operation unless otherwise explicitly provided herein.
8. DELEGATION OF RESPONSIBILITIES. ISI may, but shall be under no duty to,
perform services on behalf of the Fund which are not required by this Agreement
upon the request of the Fund's Board of Directors. Such services will be
performed on behalf of the Fund and ISI's charge in rendering such services may
be billed monthly to the Fund, subject to examination by the Fund's independent
accountants. Payment or assumption by ISI of any Fund expense that ISI is not
required to pay or assume under this Agreement shall not relieve ISI of any of
its obligations to the Fund or obligate ISI to pay or assume any similar Fund
expense on any subsequent occasions.
9. COMPENSATION. For the services to be rendered and the expenses assumed
by ISI, the Fund shall pay to ISI, compensation for each Class at the annual
rate set forth opposite the name of such Class on Appendix A. Except as
hereinafter set forth, continuing compensation under this Agreement shall be
calculated and accrued daily and the amounts of the daily accruals shall be paid
monthly. If this Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last day of a month compensation for that
part of the month this Agreement is in effect shall be prorated in a manner
consistent with the calculations of the fees as set forth above.
10. COMPENSATION FOR SERVICING SHAREHOLDER ACCOUNTS. The Fund acknowledges
that ISI may compensate its investment representatives for opening accounts,
processing investor letters of transmittal and applications and withdrawal and
redemption orders,
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responding to inquiries from Fund shareholders concerning the status of their
accounts and the operations of the Fund, and communicating with the Fund and its
transfer agent on behalf of the Fund shareholders.
11. AGENCY DISTRIBUTION AGREEMENTS. ISI may enter into agency distribution
agreements (the "Agency Distribution Agreements") with any securities dealer who
is registered under the Securities Exchange Act of 1934 and a member in good
standing of the NASD, who may wish to act as a transmitting broker in connection
with the proposed offering. All Agency Distribution Agreements shall be in
substantially the form of the agreement attached hereto as Exhibit "A". For
processing Fund shareholders' redemption orders, responding to inquiries from
Fund shareholders concerning the status of their accounts and the operations of
the Fund and communicating with the Fund, its transfer agent and ISI, ISI may
pay each such transmitting broker an amount not to exceed that portion of the
compensation paid to ISI hereunder that is attributable to accounts of Fund
shareholders who are customers of such transmitting broker.
12. NON-EXCLUSIVITY. The services of ISI to the Fund are not to be deemed
exclusive and ISI shall be free to render distribution or other services to
others (including other investment companies) and to engage in other activities.
It is understood and agreed that directors, officers or employees of ISI may
serve as directors or officers of the Fund, and that directors or officers of
the Fund may serve as directors, officers and employees of ISI to the extent
permitted by law; and that directors, officers and employees of ISI are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, directors or officers
of any other firm or corporation, including other investment companies.
13. TERM AND APPROVAL. This Agreement shall become effective at the close
of business on the date hereof and shall remain in force and effect for an
initial term of two years and from year to year thereafter, provided that such
continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Directors or (ii) by the vote of a majority
of the outstanding voting securities (as defined in the 1940 Act), and
(b) by the affirmative vote of a majority of the Directors who are not
"interested persons" of the Fund (as defined in the 0000 Xxx) and do not have a
financial interest in the operation of this Agreement, by votes cast in person
at a meeting specifically called for such purpose.
14. TERMINATION. This Agreement may be terminated at any time, on sixty
(60) days' written notice to the other party without the payment of any penalty,
(i) by vote of the Fund's Board of Directors, (ii) by vote of a majority of the
directors who are not "interested persons" of the Fund (as defined in the 0000
Xxx) and do not have a financial interest in the operation of this Agreement,
(iii) by vote of a majority of the Fund's outstanding voting securities (as
defined in the 1940 Act) or (iv) by ISI. The notice provided for herein may be
waived by each party. This Agreement shall automatically terminate in the event
of its assignment (as defined in the 1940 Act).
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15. LIABILITY. In the performance of its duties hereunder, ISI shall be
obligated to exercise care and diligence and to act in good faith and to use its
best efforts within reasonable limits in performing all services provided for
under this Agreement, but shall not be liable for any act or omission which does
not constitute willful misfeasance, bad faith or gross negligence on the part of
ISI or reckless disregard by ISI of its duties under this Agreement.
16. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other parties, it is agreed that for this purpose the
address of ISI and the Fund shall be 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000.
17. QUESTIONS OF INTERPRETATION. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the 1940 Act shall be resolved by reference to such term
or provision of the 1940 Act and to interpretations thereof, if any, by the
United States courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is revised by rule, regulation or order of the
SEC, such provision shall be deemed to incorporate the effect of such rule,
regulation or order. Otherwise the provisions of this Agreement shall be
interpreted in accordance with the laws of Maryland.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the day and year first
above written.
NORTH AMERICAN GOVERNMENT BOND FUND, INC.
By: /s/ R. Xxxx Xxxxxxx
Title: President
INTERNATIONAL STRATEGY & INVESTMENT GROUP INC.
By: /s/ Xxxxxx X. Xxxxx
Title: Chairman
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APPENDIX A
CLASS COMPENSATION
ISI North American Government Bond Fund -- A Shares 0.40% of the average
daily net assets
invested in the Shares
of the Class
ISI North American Government Bond Fund -- C Shares 1.00% of the average
daily net assets
invested in the Shares
of the Class
EXHIBIT A
ISI FAMILY OF FUNDS
000 Xxxxxxx Xxxxxx,
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
AGENCY DISTRIBUTION AGREEMENT
____________________, 20__
Gentlemen:
International Strategy & Investment Group Inc. ("ISI"), a Delaware
corporation, serves as distributor (the "Distributor") of the ISI Family of
Mutual Funds (collectively, the "Funds", individually a "Fund"). The Funds are
open-end investment companies registered under the "Investment Company Act of
1940, as amended (the "Investment Company Act"). The Funds offer their shares
("Shares") to the public in accordance with the terms and conditions contained
in the Prospectus of each Fund. The term "Prospectus" used herein refers to the
prospectus on file with the Securities and Exchange Commission which is part of
the registration statement of each Fund under the Securities Act of 1933 (the
"Securities Act"). In connection with the foregoing you may serve as a
participating dealer (and, therefore, accept orders for the purchase or
redemption of Shares, respond to shareholder inquiries and perform other related
functions) on the following terms and conditions:
1. TRANSMITTING BROKER. You are hereby designated as a Broker and as such
are authorized (i) to accept orders for the purchase of Shares and to transmit
to the Funds such orders and payment made therefore, (ii) to accept orders for
the redemption of Shares and to transmit to the Funds such orders and all
additional material, including any certificates for Shares, as may be required
to complete the redemption and (iii) to assist shareholders with the foregoing
and other matters relating to their investments in each Fund, in each case
subject to the terms and conditions set forth in the Prospectus of each Fund.
You are to review each Share purchase or redemption order submitted through you
or with your assistance for completeness and accuracy. You further agree to
undertake from time to time certain shareholder servicing activities for
customers of yours who have purchased Shares and who use your facilities to
communicate with the Funds or to effect redemptions or additional purchases of
Shares.
2. LIMITATION OF AUTHORITY. No person is authorized to make any
representations concerning the Funds or the Shares except those contained in the
Prospectus of each Fund and in such printed information as the Distributor may
subsequently prepare. No person is authorized to distribute any sales material
relating to any Fund without the prior written approval of the Distributor.
3. COMPENSATION. As compensation for such services, you will look solely to
the Distributor, and you acknowledge that the Funds shall have no direct
responsibility for any compensation. In addition to any sales charge payable to
you by your customer pursuant to a
Prospectus, the Distributor will pay you no less often than annually a
shareholder processing and service fee (as we may determine from time to time in
writing) computed as a percentage of the average daily net assets maintained
with each Fund during the preceding period by shareholders who purchase their
shares through you or with your assistance, provided that said assets are at
least $250,000 for each Fund for which you are to be compensated, and provided
that in all cases your name is transmitted with each shareholder's purchase
order.
4. PROSPECTUS AND REPORTS. You agree to comply with the provisions
contained in the Securities Act governing the distribution of prospectuses to
persons to whom you offer Shares. You further agree to deliver, upon our
request, copies of any amended Prospectus of the relevant Fund to purchasers
whose Shares you are holding as record owner and to deliver to such persons
copies of the annual and interim reports and proxy solicitation materials of the
Funds. We agree to furnish to you as many copies of each Prospectus, annual and
interim reports and proxy solicitation materials as you may reasonably request.
5. QUALIFICATION TO ACT. You represent that you are a member in good
standing of the National Association of Securities Dealers, Inc. (the "NASD").
Your expulsion or suspension from the NASD will automatically terminate this
Agreement on the effective date of such expulsion or suspension. You agree that
you will not offer Shares to persons in any jurisdiction in which you may not
lawfully make such offer due to the fact that you have not registered under, or
are not exempt from, the applicable registration or licensing requirements of
such jurisdiction. You agree that in performing the services under this
Agreement, you at all times will comply with the Rules of Fair Practice of the
NASD including, without limitation, the provisions of Section 26 of such Rules.
You agree that you will not combine customer orders to reach breakpoints in
commissions for any purposes whatsoever unless authorized by the then current
Prospectus in respect of Shares of a particular class or by us in writing. You
also agree that you will place orders immediately upon their receipt and will
not withhold any order so as to profit therefrom. In determining the amount
payable to you hereunder, we reserve the right to exclude any sales which we
reasonably determine are not made in accordance with the terms of the Prospectus
and provisions of the Agreement.
6. BLUE SKY. The Funds have registered an indefinite number of Shares under
the Securities Act. The Funds intend to comply with applicable state laws. We
will notify you of the states or other jurisdictions in which the Shares may be
sold. You agree that you will offer Shares to your customers only in those
states where there has been compliance with state laws applicable to the sale of
such Shares. We assume no responsibility or obligation as to your right to sell
Shares in any jurisdiction. We will file with the Department of State in New
York a State Notice and a Further State Notice with respect to the Shares, if
necessary.
7. AUTHORITY OF FUND. Each of the Funds shall have full authority to take
such action as it deems advisable in respect of all matters pertaining to the
offering of its Shares, including the right not to accept any order for the
purchase of Shares.
8. RECORD KEEPING. You will (i) maintain all records required by law to be
kept by you relating to transactions in Shares and, upon request by any Fund,
promptly make such of these records available to the Fund as the Fund may
reasonably request in connection with its operations and (ii) promptly notify
the Fund if you experience any difficulty in maintaining the records described
in the foregoing clauses in an accurate and complete manner.
9. LIABILITY. The Distributor shall be under no liability to you except for
lack of good faith and for obligations expressly assumed by them hereunder. In
carrying out your obligations, you agree to act in good faith and without
negligence. Nothing contained in this Agreement is intended to operate as a
waiver by the Distributor or you of compliance with any provision of the
Investment Company Act, the Securities Act, the Securities Exchange Act of 1934,
as amended, or the rules and regulations promulgated by the Securities and
Exchange Commission thereunder.
10. TERMINATION. This Agreement may be terminated by either party, without
penalty, upon ten days' notice to the other party and shall automatically
terminate in the event of its assignment (as defined in the Investment Company
Act). This Agreement may also be terminated at any time for any particular Fund
without penalty by the vote of a majority of the members of the Board of
Directors or Trustees of such Fund who are not "interested persons" (as defined
in the Investment Company Act) and who have no direct or indirect financial
interest in the operation of the Distribution Agreement between such Fund and
the Distributor or by the vote of a majority of the outstanding voting
securities of the Fund.
11. COMMUNICATIONS. All communications to us should be sent to the above
address. Any notice to you shall be duly given if mailed or telegraphed to you
at the address specified by you below.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us one copy of this agreement.
INTERNATIONAL STRATEGY & INVESTMENT
GROUP INC.
--------------------------------
(Authorized Signature)
Confirmed and accepted:
Firm Name:_____________________________
By:____________________________________
Address:_______________________________
Date:__________________________________
