DISTRIBUTION AGREEMENT
AGREEMENT made as of _________________________ , 1998, by and between North
American Senior Floating Rate Fund (the "Fund"), a Maryland corporation which
intends to engage in business as an closed-end investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
CypressTree 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 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.
2. 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 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
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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 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.
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(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
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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 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
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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:
(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
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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 Fund or any of its portfolio series.
6. Selected Dealer Agreements. The Distributor shall:
(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
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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 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.
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9. Indemnification.
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(a) The Fund 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
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
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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
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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 10, 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 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 10.
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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.
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(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 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: _____________________________________
CYPRESSTREE FUNDS DISTRIBUTORS, INC.
By: _____________________________________
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