<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the Securities Exchange Act
of 1934 (Amendment No. __)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
[ ] Definitive Proxy Statement COMMISSION ONLY (AS PERMITTED BY
[ ] Definitive Additional Materials RULE 14A-6 (E) (2))
[ ] Soliciting Material Pursuant to
Rule 14a-11 (c) or Rule 14a-12
CypressTree Senior Floating Rate Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6 (i) (4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- -------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
CYPRESSTREE SENIOR FLOATING RATE FUND, INC.
286 Congress Street
Boston, MA 02210
April 12, 2000
Dear CypressTree Senior Floating Rate Fund, Inc. Shareholder:
An Annual Meeting of Shareholders of the CypressTree Senior Floating Rate
Fund, Inc. (the "Fund") will be held at [Address] on June 1, 2000, at 11:30
a.m., Eastern time, for the purpose of considering the proposals described in
the enclosed Notice of Annual Meeting of Shareholders and Proxy Statement, as
well as any other business that may properly come before the meeting.
On March 10, 2000, CypressTree Investments, Inc. ("CypressTree") sold
substantially all of its assets, including all of the stock of CypressTree
Asset Management Corporation, Inc. ("CAM"), the Fund's investment adviser, and
all of the stock of CypressTree Funds Distributors, Inc. ("CFD"), the Fund's
distributor, to American General Corporation ("American General"). The
acquisition by American General of CypressTree Investments' assets (herein,
the "Acquisition") took place pursuant to a Purchase Agreement dated as of
February 25, 2000.
The closing of the Acquisition on March 10, 2000 (the "Closing") constituted
an assignment of the investment advisory agreement between CAM and the Fund,
and of the distribution agreement between CFD and the Fund, under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
These assignments operated to terminate automatically each of the investment
advisory and distribution agreements.
At meetings of the Board of Directors of the Fund (the "Board") on February
27, 2000, and March 14, 2000, the Board approved an interim investment
advisory agreement between CAM (operating under its new name of American
General Asset Management Corp. ("AGAM")) and the Fund in order to allow AGAM
to continue to serve as investment adviser after the Acquisition. Under the
Investment Company Act, however, AGAM may only continue to serve as the
investment adviser for the Fund beyond an interim period of 150 days if
shareholders of the Fund approve a new investment advisory agreement. At its
February 27, 2000 and March 14, 2000 meetings, the Board also approved, and
recommended shareholder approval of, a new investment advisory agreement
between AGAM and the Fund.
CFD, under its new name American General Funds Distributors, Inc. ("AGFD"),
has likewise continued to serve as the distributor of the Fund's shares since
the Closing. At its February 27, 2000 and March 14, 2000 meetings, the Board
approved a new distribution agreement, substantially similar to the Fund's
previous distribution agreement with CFD, which became effective upon the
Closing.
American General has advised the Board that AGAM and AGFD will continue to
provide the same high-quality services provided to the Fund prior to the
Acquisition.
The number of your shares in the Fund has not changed as a result of the
Acquisition.
By its own terms, the subadvisory agreement between CAM and the subadviser
to the Fund, CypressTree Investment Management Company, Inc. ("CIMCO"), also
terminated upon the Closing. Since the Closing, CIMCO has served as subadviser
to the Fund pursuant to an interim subadvisory agreement approved by the Board
at its February 27, 2000 and March 14, 2000 meetings. Under the Investment
Company Act, however, CIMCO may only continue to serve as the subadviser to
the Fund beyond an interim period of 150 days if shareholders of the Fund
approve a new investment subadvisory agreement between AGAM and CIMCO. At its
February 27, 2000 and March 14, 2000 meetings, the Board also approved, and
recommended shareholder approval of, a new investment subadvisory agreement
between AGAM and CIMCO.
<PAGE>
----------------
Shareholders of the Fund are therefore being asked to consider several
proposals that would take effect upon shareholder approval:
. Shareholders of the Fund are being asked to approve a new investment
advisory agreement between the Fund and AGAM, which is substantially
similar to the Fund's previous investment advisory agreement with CAM.
. Shareholders of the Fund are being asked to approve the new investment
subadvisory agreement between AGAM and CIMCO with respect to the Fund,
which is substantially similar to the previous subadvisory agreement
between CAM and CIMCO.
. Shareholders are being asked to consider the election of seven new
Directors and two current Directors to the Board.
. Shareholders are being asked to ratify the selection of Deloitte &
Touche LLP as independent public accountants of the Fund for its fiscal
year ending December 31, 2000.
Your vote is important
After reviewing these proposals, your Board of Directors unanimously agreed
that they are in the best interests of the Fund's shareholders and voted to
approve them, as more fully described in the accompanying proxy statement. Now
it is your turn to review the proposals and vote. For more information about
the issues requiring your vote, please refer to the accompanying proxy
statement.
No matter how many shares you own, your timely vote is important. If you are
not able to attend the meeting, then please complete, sign, date and mail the
enclosed proxy promptly in order to avoid the expense of additional mailings
or having our proxy solicitor, Georgeson Shareholder Communications
Corporation, telephone you.
Thank you in advance for your participation in this important event.
Sincerely,
/s/ Alice T. Kane
Alice T. Kane
Chairman and President
CypressTree Senior Rate Floating
Fund, Inc.
2
<PAGE>
CYPRESSTREE SENIOR FLOATING RATE FUND, INC.
286 Congress Street
Boston, MA 02210
(800) 872-8037
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of CypressTree Senior Floating Rate Fund, Inc.:
Notice is hereby given that an Annual Meeting of Shareholders of CypressTree
Senior Floating Rate Fund, Inc. (the "Fund") will be held on June 1, 2000 at
[address] at 11:30 a.m., Eastern Time (the "Meeting"). A Proxy Statement
providing additional information about the purpose of the Meeting is included
with this Notice. At the Meeting, shareholders will consider and vote upon the
following proposals:
Proposal 1
Approval of an investment advisory agreement between American
General Asset Management Corp. and the Fund.
Proposal 2
Approval of an investment subadvisory agreement between American
General Asset Management Corp. and CypressTree Investment Management
Company, Inc. with respect to the Fund.
Proposal 3
Election of seven new Directors and two current Directors to serve
as members of the Board of Directors.
Proposal 4
Ratification of the selection of Deloitte & Touche LLP as
independent public accountants for the Fund for its fiscal year
ending December 31, 2000.
Any other business that may properly come before the Meeting.
Each shareholder of record at the close of business on April 7, 2000 is
entitled to receive notice of and to vote at the Meeting and is invited to
attend the Meeting in person. Whether or not you intend to be present at the
Meeting, we urge you to fill in, sign, date, and promptly return the enclosed
proxy card in order that the Meeting may be held and the greatest number of
shares may be voted. If you attend the Meeting you may revoke your proxy and
vote your shares in person if you wish.
Sincerely,
/s/ John I. Fitzgerald
_____________________________________
John I. Fitzgerald
Secretary
April 12, 2000
Boston, Massachusetts
YOUR VOTE IS IMPORTANT
PLEASE RESPOND--YOUR VOTE IS IMPORTANT. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND MAIL
IT IN THE ENCLOSED POSTAGE PREPAID ENVELOPE SO THAT
YOU WILL BE REPRESENTED AT THE MEETING.
<PAGE>
CYPRESSTREE SENIOR FLOATING RATE FUND, INC.
286 Congress Street
Boston, MA 02210
PROXY STATEMENT
Annual Meeting of Shareholders
June 1, 2000
This proxy statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of CypressTree Senior Floating Rate Fund,
Inc. (the "Fund") of proxies to be used at an Annual Meeting of Shareholders
(the "Meeting"), to be held at [Address] on June 1, 2000 at 11:30 a.m. Eastern
Time, or any adjournment or adjournments thereof. This proxy statement and the
enclosed form of proxy are first being mailed to shareholders on or about
April 7, 2000.
The Fund currently offers one class of shares.
In order that your shares may be represented at the Meeting or any
adjournment or adjournments thereof, you are requested to indicate your voting
instructions on the proxy card; date and sign the proxy card; mail the proxy
card promptly in the enclosed postage-paid envelope; and allow sufficient time
for the proxy card to be received before the Meeting.
Shares represented by timely and properly executed proxies will be voted as
specified. If you return a signed proxy and no specification is made with
respect to a particular matter, shares will be voted in accordance with the
recommendations of the Directors. Proxies may be revoked at any time before
they are exercised by sending a written revocation which is received by the
Secretary of the Fund, by properly executing a later-dated proxy or by
attending the Meeting and voting in person. Attendance at the Meeting alone,
however, will not serve to revoke the proxy.
Only shareholders of record at of the close of business on [April 7, 2000]
(the "Record Date") shall be entitled to vote. Each whole share shall be
entitled to one vote as to any matter on which it is entitled to vote and each
fractional share shall be entitled to a proportionate fractional vote.
As of the Record Date, shares of the Fund were issued and outstanding.
The Fund will furnish, without charge, a copy of the Fund's Annual Report
for its fiscal year ended December 31, 1999 to a shareholder upon request. To
obtain an Annual Report, please contact the Fund's Distributor, American
General Funds Distributors, Inc., by calling (800) 872-8037 or by writing to
the Distributor at 286 Congress Street, Boston, Massachusetts 02210, Attn:
John I. Fitzgerald, Secretary.
Solicitation of the proxies by personal interview, mail and telephone may be
made by officers and Directors of the Fund and officers and employees of
American General Asset Management Corp., its affiliates and other
representatives of the Fund. The Fund has retained Georgeson Shareholder
Communications Corporation ("SCC"), 17 State Street, New York, New York 10004,
to aid in the solicitation of proxies. The costs of retaining SCC and other
expenses incurred in connection with the solicitation of proxies, and the
costs of holding the Meeting, will not be borne by the Fund, but will be
divided equally between American General Corporation and CypressTree
Investments, Inc. ("CypressTree").
<PAGE>
Summary of Proposals
<TABLE>
<CAPTION>
Proposal
Number Proposal
-------- --------
<C> <S>
Proposal 1 Approval of an investment advisory agreement between American
General Asset Management Corp. and CypressTree Senior Floating Rate
Fund, Inc.
Proposal 2 Approval of an investment subadvisory agreement between American
General Asset Management Corp. and CypressTree Investment
Management Company, Inc. with respect to the Fund.
Proposal 3 Election of seven new Directors and two current Directors to serve
as members of the Board of Directors.
Proposal 4 Ratification of the selection of Deloitte & Touche LLP as
independent public accountants for the Fund.
</TABLE>
2
<PAGE>
The Acquisition
On March 10, 2000, CypressTree sold substantially all of its assets,
including all of the stock of CypressTree Asset Management Corporation, Inc.
("CAM"), the Fund's investment adviser, and all of the stock of CypressTree
Funds Distributors, Inc. ("CFD"), the Fund's distributor, to American General
Corporation ("American General"). The acquisition by American General of
CypressTree's assets (herein "the Acquisition") took place pursuant to a
Purchase Agreement dated as of February 25, 2000 (the "Purchase Agreement").
American General paid a purchase price of $16.5 million in cash to
CypressTree, $6.75 million of which was placed in escrow pending a
determination of certain adjustments to the purchase price.
The closing of the Acquisition on March 10, 2000 (the "Closing") constituted
an assignment of the investment advisory agreement between CAM and the Fund,
and of the distribution agreement between CFD and the Fund, under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
These assignments operated to terminate automatically each of the investment
advisory and distribution agreements.
At the meetings of the Board on February 27, 2000 and March 14, 2000, the
Board approved an interim investment advisory agreement between CAM (operating
under its new name of American General Asset Management Corp. ("AGAM")) and
the Fund in order to allow AGAM to continue to serve as investment adviser
after the Acquisition. Under the Investment Company Act, however, AGAM may
only continue to serve as the investment adviser for the Fund beyond an
interim period of 150 days if shareholders of the Fund approve a new
investment advisory agreement. You are therefore being asked in Proposal 1 to
approve a new two-year investment advisory agreement between AGAM and the Fund
with respect to the Fund that is substantially similar to the Fund's previous
investment advisory agreement with CAM. This new investment advisory agreement
would be effective upon shareholder approval, and would replace the interim
investment advisory agreement. At its February 27, 2000 and March 14, 2000
meetings, the Board also approved, and recommended shareholder approval of,
the new investment advisory agreement between AGAM and the Fund.
CFD, under its new name American General Funds Distributors, Inc. ("AGFD"),
has likewise continued to serve as the distributor of the Fund's shares since
the Closing. At its meetings on February 27, 2000 and March 14, 2000, the
Board approved a new distribution agreement substantially similar to the
Fund's previous distribution agreement with CFD that became effective upon the
Closing (shareholder approval of the new distribution agreement is not
required under the Investment Company Act).
American General has advised the Board that AGAM and AGFD will continue to
provide the same high-quality services to the Fund that CAM and CFD provided
prior to the Closing. A number of key employees of CypressTree entered into
employment agreements with American General and continue to function in
positions similar to those they held prior to the Acquisition.
By its terms, the subadvisory agreement between AGAM and the subadviser to
the Fund, CypressTree Investment Management Company, Inc. ("CIMCO"), also
terminated upon the Closing. Since the Closing, CIMCO has served as subadviser
to the Fund under an interim subadvisory agreement approved by the Board at
its February 27, 2000 and March 14, 2000 meetings. Under the Investment
Company Act, however, CIMCO may only continue to serve as the subadviser to
the Fund beyond an interim period of 150 days if shareholders of the Fund
approve a new investment subadvisory agreement between AGAM and CIMCO.
Therefore shareholders of the Fund are being asked in Proposal 2 to approve a
new two-year investment subadvisory agreement between AGAM and CIMCO
substantially similar to that in place with respect to the Fund prior to the
Acquisition. At its February 27, 2000 and March 14, 2000 meetings, the Board
also approved, and recommended shareholder approval of, the new investment
subadvisory agreement between AGAM and CIMCO.
3
<PAGE>
CIMCO is a subsidiary of Cypress Holding Company, Inc., which prior to the
Closing was the ultimate parent company of AGAM. Neither CIMCO nor Cypress
Holding Company, Inc. was purchased in the Acquisition, and neither is
currently affiliated with AGAM.
Also in connection with the Acquisition, shareholders of the Fund are being
asked in Proposal 3 to consider the election of seven new Directors to the
Board. One of the nominees, Alice T. Kane, was appointed by the Directors to
the Board effective March 10, 2000 to replace Bradford K. Gallagher as
Chairman of the Board; Ms. Kane is also the President of the Fund and of AGAM.
Further, two current Directors have also been nominated for election to the
Board. This will result in a Board comprised of nine Directors, assuming
shareholder approval.
Finally, in connection with the Acquisition, shareholders of the Fund are
being asked in Proposal 4 to ratify the selection of Deloitte & Touche LLP as
independent public accountants for the Fund.
Description of American General and Its Affiliates
Members of the American General Corporation group of companies (the
"American General Financial Group") operate in each of the 50 states, the
District of Columbia, and Canada and collectively engage in substantially all
forms of financial services. American General Corporation was incorporated as
a Texas business corporation on February 26, 1980 as the successor to American
General Life Insurance Company (organized in 1926) as the result of a
corporate reorganization completed on July 1, 1980. The American General
Financial Group has approximately $115 billion in assets and over $6 billion
in stockholders' equity. American General's address is 2929 Allen Parkway,
Houston, Texas 77019.
Affiliates of American General currently include VALIC Investment Services
Company, American General Distributors, Inc., The VALIC Annuity Marketing
Company, [State Street Brokerage Services, Inc.], American Funds Distributors,
Neuberger Berman, LLC, [Sumitomo Capital Markets], [Kotak Mahindra Capital
Company], [PT Bahana Pembinaan Usha Indonesia], and [Archipelago Holdings,
L.L.C.] These entities are considered to be "Affiliated Brokers." Absent an
exemption or other relief from the Securities and Exchange Commission ("SEC"),
the Fund would generally be precluded from effecting principal transactions
with the Affiliated Brokers, and its ability to purchase securities from
underwriting syndicates including an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
AGAM does not believe that the restrictions on transactions with the
Affiliated Brokers described above will have a material adverse effect on its
ability, post-closing, to provide services to the Fund, the Fund's ability to
take advantage of market opportunities, or the Fund's overall performance.
Interests of Certain Persons in the Acquisition
Bradford K. Gallagher, the former Chairman and President of the Fund and of
CAM, has entered into a consulting agreement with AGAM in connection with the
Acquisition. The agreement has an initial term of six months, and may be
renewed for an additional six months. Mr. Gallagher has also entered into a
two-year non-competition agreement with American General in connection with
the Acquisition.
Joseph T. Grause, Jr., President of AGAM and Vice President and nominee for
Director of the Fund, has entered into an employment agreement having a term
of three years with AGAM in connection with the Acquisition.
Each of Thomas J. Brown, Treasurer and Vice President of the Fund, John I.
Fitzgerald, Secretary and Vice President of the Fund, and John N. Packs, Vice
President and Assistant Treasurer of the Fund, has entered into a three-year
employment agreement with AGAM in connection with the Acquisition.
Messrs. Brown, Fitzgerald and Packs owned, in the aggregate, less than 1% of
the outstanding stock of CypressTree and Cypress Holding Company, Inc., the
parent of CypressTree, prior to the Acquisition.
As a result of the foregoing arrangements and ownership interests, each of
the persons identified in the foregoing paragraphs may be deemed to have a
substantial interest in shareholder approval of the matters set forth in this
Proxy Statement.
4
<PAGE>
Section 15(f) of the Investment Company Act
Section 15(f) provides a non-exclusive safe harbor for an investment adviser
or any affiliated persons to receive any amount or benefit in connection with
a change of control of the investment adviser to an investment company as long
as two conditions are satisfied. First, an "unfair burden" must not be imposed
on investment company clients of the adviser as a result of the transaction,
or any express or implied terms, conditions or understandings applicable to
the transaction. The term "unfair burden" (as defined in the Investment
Company Act) includes any arrangement during the two-year period after the
transaction whereby the investment adviser (or predecessor or successor
adviser), or any "interested person" (as defined in the Investment Company
Act) (an "Interested Person") of any such adviser, receives or is entitled to
receive any compensation, directly or indirectly, from such an investment
company or its security holders (other than fees for bona fide investment
advisory or other services) or from any other person in connection with the
purchase or sale of securities or other property to, from or on behalf of such
investment company. The Board has been advised that AGAM is aware of no
circumstances arising from the Acquisition that might result in an unfair
burden being imposed on the Fund. Moreover, American General has covenanted in
the Purchase Agreement that it will use all reasonable efforts to ensure that
no unfair burden will be imposed on the Fund by or as a result of the
Acquisition during such two-year period.
The second condition of Section 15(f) is that during the three-year period
after the transaction, at least 75% of each such investment company's board of
directors must not be Interested Persons of the investment adviser (or
predecessor or successor adviser). American General has covenanted in the
Purchase Agreement that it will use all reasonable efforts to comply with such
75% requirement during such three-year period.
I. APPROVAL OR DISAPPROVAL OF THE NEW ADVISORY AGREEMENT
The Board is proposing that shareholders approve a new Investment Advisory
Agreement between the Fund and AGAM that will be entered into between AGAM and
the Fund upon shareholder approval (the "New Advisory Agreement"). A
description of the New Advisory Agreement, the services provided thereunder,
the procedure for its termination and renewal and other services provided by
AGAM and its affiliates is set forth below. This description is qualified in
its entirety by reference to the form of New Advisory Agreement included as
Appendix A to this Proxy Statement. Additional information about AGAM is set
forth below in the section entitled "Information About AGAM."
The New Advisory Agreement was unanimously approved by the Directors,
including the Independent Directors (as defined below), at in-person meetings
held on February 27, 2000 and March 14, 2000.
Description of the New Advisory Agreement
As discussed above, AGAM currently serves as investment adviser of the Fund
pursuant to an interim advisory agreement with the Fund approved by the Board
effective March 10, 2000. The New Advisory Agreement is substantially similar
to the previous agreement between the Fund and CAM in effect prior to March
10, 2000 (the "Old Advisory Agreement"). The Old Advisory Agreement, dated
December 16, 1997, was last approved by the initial shareholder of the Fund on
the same date. The Old Advisory Agreement was last approved by the Board of
Directors, including the Independent Directors, for an additional one-year
period on September 14, 1999.
The New Advisory Agreement requires that, subject to the general supervision
of the Directors, AGAM will at its own expense select, contract with, and
compensate an investment subadviser to manage the investments and determine
the composition of the assets of the Fund. Subject always to the direction and
control of the Directors of the Fund, AGAM will monitor compliance of the
subadviser with the investment objectives and investment policies, as set
forth in the Fund's registration statement as filed with SEC, and review and
report to the Directors of the Fund on the performance of the Subadviser.
The New Advisory Agreement provides that it will, unless sooner terminated
in accordance with its terms, continue in effect with respect to the Fund for
a period of two years from its effective date and thereafter on an annual
basis with respect to the Fund, provided such continuance is specifically
approved at least annually (a) by
5
<PAGE>
the vote of a majority of the Board or (b) by the vote of a majority of the
outstanding voting securities of the Fund, and provided continuance is also
specifically approved by the vote of a majority of the Board of Directors of
the Fund who are not parties to the Agreement or "interested persons" (as
defined by the Investment Company Act) of the Fund or AGAM (the "Independent
Directors"), cast in person at a meeting called for the purpose of voting on
such approval. The New Advisory Agreement provides that it terminates
automatically in the event of its assignment (as defined by the Investment
Company Act) by AGAM.
According to its terms, the New Advisory Agreement may be amended by written
agreement of the parties, provided that the terms of any material amendment
shall be approved (i) by the vote of a majority of the outstanding voting
securities of the Fund, and (ii) by the vote of a majority of the Directors of
the Fund who are not interested persons of AGAM or the Fund (such vote to be
cast in person at a meeting called for the purpose of voting on such approval,
if such approval is required by law).
The New Advisory Agreement may be terminated at any time, without the
payment of any penalty, by the Directors of the Fund or by vote of a majority
of the outstanding voting securities of the Fund upon 60 days' written notice
to AGAM, or by AGAM upon 60 days' written notice to the Fund.
The New Advisory Agreement provides that AGAM will oversee the
administration of certain aspects of the Fund's business and affairs, and that
AGAM will supply office space to the Fund, as well as such other office
facilities, utilities, and office equipment as are necessary for the Fund's
operations. The New Advisory Agreement also provides that AGAM will permit
individuals who are AGAM's officers, directors, or employees to serve (if duly
elected) as Directors or officers of the Fund, without remuneration or other
cost to the Fund. The New Advisory Agreement provides that AGAM will furnish
to the Fund, at the Fund's expense, any other personnel necessary for the
operations of the Fund. In addition, the New Advisory Agreement also provides
that AGAM will furnish to the Fund such information, reports, valuations,
analyses and opinions as the Fund may from time to time reasonably request,
provided that the expenses associated with any such materials furnished by the
Adviser at the request of the Fund will be borne by the Fund.
The New Advisory Agreement provides that the Fund, in addition to paying the
advisory fee described below, will also pay all expenses of the Fund's
organization, operations, and business not specifically assumed or agreed to
be paid by AGAM as provided in the New Advisory Agreement, by CIMCO as
provided in the New Subadvisory Agreement, by the Fund's administrator (AGAM)
under an administration agreement, or by the Fund's principal underwriter
(AGFD) under a distribution agreement. Without limiting the generality of the
foregoing, the Fund will pay or arrange for payment of expenses related to
custody and accounting services, shareholder servicing and communications,
shareholder meetings, prospectuses, pricing, communication equipment, legal
and accounting fees and expenses, directors and officers (except with regard
to directors and officers who are also affiliates of AGAM), federal
registration fees, state registration fees, issue and repurchase of Fund
shares, bonding and insurance, brokerage commissions, taxes, trade association
fees, and non-recurring and extraordinary expenses.
The advisory fee rates payable by the Fund to CAM under the Old Advisory
Agreement are the same as those payable to AGAM under the New Advisory
Agreement and no change in the current fee structure is being proposed. The
Old Advisory Agreement contained provisions relating to a voluntary investment
fee waiver by CAM. The New Advisory Agreement contains a similar voluntary
waiver provision (see also below). Under the New Advisory Agreement, the Fund
will pay AGAM a monthly advisory fee at the following annual rates, based on
the average daily gross assets of the Fund (gross assets are total assets
minus all liabilities except debt):
<TABLE>
<CAPTION>
Between
$1,000,000,000
First and Excess over
Funds $1,000,000,000 $2,000,000,000 $2,000,000,000
----- -------------- -------------- --------------
<S> <C> <C> <C>
CypressTree Senior Floating
Rate Fund................... 0.85% 0.80% 0.75%
</TABLE>
AGAM has agreed to waive a portion of its advisory fee or reimburse the Fund
to prevent the total expenses of the Fund, excluding taxes, portfolio
brokerage commissions, interest, certain litigation and indemnification
expenses, and extraordinary expenses, from exceeding 1.25% of average daily
gross assets.
6
<PAGE>
For the fiscal year ended December 31, 1999, the Fund paid CAM $348,679
under the Old Advisory Agreement, after waiver of fees.
Information About AGAM
CypressTree and its affiliates were formed in 1996 to acquire, advise and
distribute mutual funds through broker-dealers and other intermediaries. CAM
was CypressTree's wholly-owned advisory subsidiary and CFD was CypressTree's
wholly-owned distribution subsidiary. Pursuant to its advisory agreement with
the Fund, CAM oversaw the administration of all aspects of the business and
affairs of the Fund, and selected, contracted with and compensated the
subadviser to manage the assets of the Funds. AGAM has continued to perform
these functions under an interim advisory agreement approved by the Board
pursuant to Rule 15a-4 under the Investment Company Act.
AGAM also serves as investment adviser to the North American Senior Floating
Rate Fund, Inc., which has the same investment objective as the Fund, and,
like the Fund, pursues that objective by investing primarily in senior secured
floating rate loans. As of [RECORD DATE], the North American Senior Floating
Rate Fund held [$ ] in assets. The North American Senior Floating Rate Fund
pays AGAM a monthly advisory fee at the following annual rates, based on the
size of the Fund: 0.85% for the first $1 billion of average daily gross
assets; 0.80% for average daily gross assets between $1 billion and $2
billion; and 0.75% for average daily gross assets of more than $2 billion.
AGAM has agreed to waive a portion of its advisory fee or reimburse the North
American Senior Floating Rate Fund to prevent the total expenses, excluding
taxes, portfolio brokerage commissions, interest, certain litigation and
indemnification expenses, and extraordinary expenses, from exceeding 1.40% of
average daily gross assets for Class A and Class B shares and 1.40% of average
daily gross assets for Class C shares of the North American Senior Floating
Rate Fund.
AGAM is located at 286 Congress Street, Boston, Massachusetts 02210. Alice
T. Kane is Chairman and CEO of AGAM, as well as Chairman of the Board of
Directors and a Director of the Fund. Ms. Kane's principal occupation is
President of American General Fund Group. Her business address is 286 Congress
Street, Boston, Massachusetts 02210.
AGAM is a wholly-owned subsidiary of American General. American General is
located at 2929 Allen Parkway, Houston, Texas 77019.
Information regarding the material interests of the Directors and officers
of the Fund in the Acquisition is set forth under "Interests of Certain
Persons in the Acquisition" above.
Approval of the New Advisory Agreement by the Directors of the Fund
In evaluating the New Advisory Agreement, the Directors took into account
that the New Advisory Agreement and the Old Advisory Agreement, including
their terms relating to the services to be provided by AGAM, are substantially
identical. The Directors also considered the terms of the Acquisition and the
possible effects of the Acquisition on AGAM's ability to provide management
services to the Fund. Representatives of AGAM represented to the Directors
that the Acquisition had not resulted in any changes, other than changes in
the ordinary course of business, in the management, operations, personnel or
legal structure of AGAM, with the exception of the replacement of Bradford K.
Gallagher by Ms. Kane.
After consideration of the foregoing factors and such other factors as the
Directors deemed relevant, the Directors concluded that it was appropriate and
desirable for AGAM to continue to act as investment adviser to the Fund on the
same terms as were in effect before the Acquisition. Accordingly, the
Directors unanimously approved the New Advisory Agreement and recommend its
approval by the shareholders.
Required Vote
Approval of the New Advisory Agreement will require the affirmative vote of
a "majority of the outstanding voting securities" of the Fund, which means the
affirmative vote of the lesser of (1) more than 50% of the
7
<PAGE>
outstanding shares of the Fund or (2) 67% or more of the shares of the Fund
present at the Meeting if more than 50% of the outstanding shares of the Fund
are represented at the meeting in person or by proxy. If the shareholders of
the Fund do not approve the New Advisory Agreement, the Directors will take
such further action as they may deem to be in the best interests of the
shareholders of the Fund. Also, if shareholders of the Fund approve the New
Advisory Agreement, but not the New Subadvisory Agreement (discussed below in
Part II), the Directors will take such further action as they may deem to be
in the best interests of the shareholders of the Fund.
The Directors unanimously recommend that shareholders of the Fund vote FOR
approval of the New Advisory Agreement for the Fund.
II. APPROVAL OF THE NEW SUBADVISORY AGREEMENT
The Directors are proposing that shareholders of the Fund approve a New
Subadvisory Agreement between AGAM and CIMCO. Information about the New
Subadvisory Agreement is set forth under "General Information Concerning the
New Subadvisory Agreement" below.
General Information Concerning the New Subadvisory Agreement
The terms and provisions of the New Subadvisory Agreement that will be
entered into between AGAM and CIMCO upon shareholder approval are
substantially identical to those of the subadvisory agreement in effect prior
to March 10, 2000 (the "Old Subadvisory Agreement"), including with respect to
the fees payable by AGAM to CIMCO thereunder. The Old Subadvisory Agreement,
dated December 16, 1997, was last approved by the initial shareholder of the
Fund on the same date.
CIMCO currently serves as subadviser to the Fund pursuant to an interim
subadvisory agreement approved by the Board at its meetings on February 27,
2000 and March 14, 2000. The following discussion of the New Subadvisory
Agreement is qualified in its entirety by reference to the form of the New
Subadvisory Agreement attached to this Proxy Statement as Appendix B. The New
Subadvisory Agreement was approved by the Board of Directors of the Fund,
including the Independent Directors, at in-person meetings held on February
27, 2000 and March 14, 2000.
The New Subadvisory Agreement provides that, subject to the stated
investment policies and restrictions of the Fund as set forth in the Fund's
Prospectus and Statement of Additional Information (as filed with the SEC as a
part of the Fund's Registration Statement, and as amended or supplemented from
time to time, the "Prospectus"), and subject to the general supervision of the
Fund's Directors and of AGAM, CIMCO shall formulate and implement a continuous
program of investment, evaluation, and if appropriate, sale and reinvestment
of the Fund's assets. Under the New Subadvisory Agreement, CIMCO will manage
the Fund's assets in accordance with the Fund's investment objective,
policies, and limitations (as stated in the Prospectus), make investment
decisions for the Fund, place purchase and sale orders for portfolio
transactions for the Fund, and manage otherwise uninvested Fund cash. In
addition, CIMCO's duties under the New Subadvisory Agreement include
compliance with applicable law and governing documents, voting of proxies,
acting as a limited agent of the Fund and of AGAM, maintaining books and
records for the Fund, and providing information concerning the Fund's
investments (and concerning CIMCO) to AGAM, to the Fund, and to the Fund's
custodian, as applicable.
The New Subadvisory Agreement provides that CIMCO will pay all expenses
incurred by it in connection with its activities under the New Subadvisory
Agreement, other than the cost of securities, commodities, and other
investments (including brokerage fees and commission and other transaction
charges, if any) purchased for the Fund. CIMCO will not be responsible for any
expenses of the operations of the Fund including, without limitation,
brokerage fees and commissions and other transaction charges, if any. CIMCO
will not be responsible for the Fund's or AGAM's expenses.
Under the new Subadvisory Agreement between AGAM and CIMCO, AGAM pays CIMCO
a monthly advisory fee at the following annual rates, based on the size of the
Fund: 0.45% for the first $1 billion of average
8
<PAGE>
daily gross assets; 0.40% for average daily gross assets between $1 billion
and $2 billion; and 0.35% for average daily gross assets of more than $2
billion. The fee to CIMCO is paid by AGAM, and is not an additional charge to
the Fund or its shareholders. The fee rates payable by AGAM to CIMCO under the
New Subadvisory Agreement are the same as the rates payable under the Old
Subadvisory Agreement. For the fiscal year ended December 31, 1999, CAM paid
CIMCO $164,084 for its portfolio management services with respect to the Fund.
The New Subadvisory Agreement provides that it will continue in effect for a
period of two years from its effective date and thereafter on an annual basis,
provided such continuance is approved at least annually (a) by the vote of a
majority of the Board of Directors of the Fund or (b) by the vote of a
majority of the outstanding voting securities of the Fund, and provided that
continuance is also approved by the vote of a majority of the Directors who
are not "interested persons" (as defined by the Investment Company Act) of the
Fund, AGAM or CIMCO, cast in person at a meeting called for the purpose of
voting on such approval. The New Subadvisory Agreement may be amended in
writing (signed by the parties), provided that the terms of any material
amendment shall be approved (i) by the vote of a majority of the outstanding
voting securities of the Fund and (ii) by the vote a majority of the Directors
of the Fund who are not interested persons of any party to the New Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on
such approval, if such approval is required by law.
The New Subadvisory Agreement may be terminated at any time, without the
payment of any penalty, by (a) the Fund by vote of a majority of the Board of
Directors, or by vote of a majority of the outstanding voting securities of
the Fund, upon 60 days' written notice to CIMCO, or (b) by AGAM upon 60 days'
written notice to CIMCO, or (c) by CIMCO upon 60 days' written notice to the
Fund and to AGAM. The New Subadvisory Agreement will terminate automatically,
without the payment of any penalty, in the event of its assignment (as defined
in the Investment Company Act).
The New Subadvisory Agreement provides that, in connection with CIMCO's
discharge of its obligations under the New Subadvisory Agreement, neither
CIMCO nor any of its officers, directors, or employees shall be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund,
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 CIMCO or any such person of the duties of
CIMCO under the New Subadvisory Agreement.
Information About CIMCO
CIMCO was founded in 1996 as the nation's first independent investment
advisory firm specializing in the loan asset class. CIMCO is a subsidiary of
Cypress Holding Company, Inc., which prior to the Closing was the ultimate
parent of AGAM. Neither CIMCO nor Cypress Holding Company, Inc. was purchased
in the Acquisition, and following the Closing neither has been affiliated with
AGAM. Accounts managed by CIMCO had combined assets, as of March 17, 2000, of
approximately $2.7 billion. CIMCO is located at 125 High Street, Boston, MA
02110.
CIMCO also serves as investment subadviser to the North American Senior
Floating Rate Fund, Inc., which has the same investment objective as the Fund,
and, like the Fund, pursues that objective by investing primarily in senior
secured floating rate loans. As of [RECORD DATE], the North American Senior
Floating Rate Fund held [$ ] in assets. In connection with providing
subadvisory services to the North American Senior Floating Rate Fund, CIMCO
receives a monthly advisory fee at the following annual rates, based on the
size of the North American Senior Floating Rate Fund: 0.45% for the first $1
billion of average daily gross assets; 0.40% for average daily gross assets
between $1 billion and $2 billion; and 0.35% for average daily gross assets of
more than $2 billion.
CIMCO is a wholly-owned subsidiary of Cypress Holding Company, Inc., a
Delaware corporation with offices located at 125 High Street, Boston, MA,
02110. Cypress Holding Company, Inc. is controlled by its management and by
Berkshire Fund IV, L.P., a Massachusetts investment partnership, which is
sponsored by
9
<PAGE>
Berkshire Partners, LLC (a private equity investor based in Boston), and the
general partner of which is Berkshire Investors, LLC. Each of the Berkshire
Fund IV, L.P., Berkshire Partners, LLC, and Berkshire Investors, LLC, is
located at One Boston Place, Boston, MA, 02108.
Approval of the New Subadvisory Agreement by the Directors of the Fund
In evaluating the New Subadvisory Agreement, the Directors took into account
that the New Subadvisory Agreement and the Old Subadvisory Agreement,
including their terms relating to the services to be provided by CIMCO to AGAM
and the Fund, are substantially identical. The Directors also considered the
terms of the Acquisition and the possible effects of the Acquisition on
CIMCO's ability to provide advisory services to the Fund. Representatives of
CIMCO represented to the Directors that the Acquisition had not resulted in
any changes, other than changes in the ordinary course of business, in the
management, operations, personnel or legal structure of CIMCO.
Under the terms of the Acquisition as provided in the Purchase Agreement,
AGAM is not permitted to terminate the New Subadvisory Agreement with CIMCO
prior to the fifth anniversary of the Closing. However, the Purchase Agreement
also provides that, notwithstanding the foregoing, AGAM may terminate the New
Subadvisory Agreement with CIMCO within 90 days after the occurrence of any of
several defined events. These events include (but are not limited to) any
change in the investment management strategy of CIMCO which materially changes
the Fund's risk profile, the loss of permits or eligibility necessary for
CIMCO to serve as subadviser to the Fund in compliance with all applicable
laws, or declines (beyond a threshold level) in the Fund's gross performance
relative to its peer group. The Purchase Agreement further provides that in
the event that AGAM terminates the New Subadvisory Agreement prior to the
fifth anniversary of the Closing, then neither AGAM nor any affiliate of AGAM
will be allowed directly to manage the Fund's portfolio of investments, nor
will American General (AGAM's parent company) be allowed to engage any of its
affiliates to serve as subadviser in respect of the Fund's portfolio of
investments.
After consideration of the foregoing factors and such other factors as the
Directors deemed relevant, the Directors concluded that it was appropriate and
desirable for CIMCO to continue to act as investment subadviser to the Fund on
the same terms as were in effect before the Acquisition. Accordingly, the
Directors unanimously approved the New Subadvisory Agreement and recommend its
approval by the shareholders.
Required Vote
Approval of the New Subadvisory Agreement will require the affirmative vote
of a "majority of the outstanding voting securities" of the Fund, which means
the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund or (2) 67% or more of the shares of the Fund present at the
Meeting if more than 50% of the outstanding shares of the Fund are represented
at the Meeting in person or by proxy. If the shareholders of the Fund do not
approve the Subadvisory Agreement, the Directors will take such further action
as they may deem to be in the best interests of the shareholders of the Fund.
The Directors unanimously recommend that the shareholders of the Fund vote
FOR approval of the New Subadvisory Agreement for the Fund.
III. ELECTION OF DIRECTORS
The Board of Directors of the Fund proposes that shareholders elect Alice T.
Kane, William F. Devin, Kenneth J. Lavery, Joseph T. Grause, Jr., Dr. Judith
L. Craven, Dr. Timothy J. Ebner, Judge Gustavo E. Gonzales, Jr., Dr. John E.
Maupin, Jr., and Ben H. Love to serve as Directors of the Fund (the
"Nominees").
Information about the Nominees
Information about the Nominees is presented below. Except as shown, the
Nominees' principal occupation and business experience for the last five years
has been with the employer(s) indicated, although in some cases a Nominee may
have held different positions with such employer(s). The business address of
the Nominees is 286 Congress Street, Boston, Massachusetts 02210.
10
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation(s) During the Past Five
Name and Age Years
------------ --------------------------------------------
<C> <S>
Alice T. Kane*................... President of American General Fund Group
Age: 52 (1999-Present); Formerly, Executive Vice
President, American General Investment
Management, LP. (1998-1999); Formerly,
Executive Vice President, (1994-1998)
and General Counsel (1986-1995) New York
Life Insurance Company; Chair, MainStay
Mutual Funds (1994-1998). President of other
investment companies advised by The Variable
Annuity Life Insurance Company.
William F. Devin................. Member of the Board of Governors of the
Age: 61 Boston Stock Exchange (January, 1985-
Present). Retired Executive Vice President
of Fidelity Capital Markets, a division of
National Financial Services Corporation in
Boston. Director, CypressTree Senior
Floating Rate Fund, Inc. (July, 1997-
present). Trustee, North American Funds
(October, 1997-present). Director, North
American Senior Floating Rate Fund, Inc.
(February, 1998-Present).
Kenneth J. Lavery................ Vice President of Massachusetts Capital
Age: 50 Resource Company (1982-Present); Director,
CypressTree Senior Floating Rate Fund, Inc.
(July, 1997-Present); Trustee, North
American Funds, (October, 1997-present).
Director, North American Senior Floating
Rate Fund, Inc. (February, 1998-Present).
Joseph T. Grause, Jr.*........... President, AGAM (March, 2000-Present);
Age: 47 Executive Vice President, Cypress Holding
Company, Inc., (1995-March, 2000); Senior
Vice President of Sales and Marketing, The
Shareholder Services Group, a subsidiary of
First Data Corporation (1993-1995).
Dr. Judith L. Craven............. Retired Administrator. Formerly, President,
Age: 54 United Way of the Texas Gulf Coast (1992-
1998). Director, Houston Branch, Federal
Reserve Bank of Dallas (1992-Present),
Compaq Computer Corporation (1998-Present),
Luby's Inc. (1998-Present), A.H. Belo
Corporation (journalism, TV and radio)
(1993-Present), and Sysco Corporation
(marketing and distribution of food) (1996-
Present). Formerly, Board Member, Sisters of
Charity of the Incarnate Word (1996-1999).
Dr. Timothy J. Ebner............. Professor and Head, Department of
Age: 50 Neuroscience and Visscher Chair of
Physiology, University of Minnesota (1998-
Present). Director, Graduate Program in
Neuroscience, University of Minnesota (1991-
1999). Formerly, Consultant to EMPI, Inc.
(1994-1995) and Medtronic Inc.
(manufacturers of medical products) (1997-
1998).
Judge Gustavo E. Gonzales, Jr. .. Municipal Court Judge, Dallas, Texas (1995-
Age: 59 Present). Director, Downtown Dallas YMCA
Board (1996-Present); Director, Dallas
Easter Seals Society (1997-Present).
Formerly, private attorney (litigation)
(1980-1995).
Dr. John E. Maupin, Jr........... President, Meharry Medical College,
Age: 53 Nashville, Tennessee (1994-Present).
Nashville Advisory Board Member, First
American National Bank (1996-Present).
Director, Monarch Dental Corporation (1997-
Present), LifePoint Hospitals, Inc. (1998-
Present).
Ben H. Love...................... Retired. Formerly, Director, Mid-American
Age: 69 (waste products) (1993-1997) Formerly, Chief
Executive, Boy Scouts of America (1985-
1993).
</TABLE>
- --------
* Is or will be an "interested person" of the Fund (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")).
11
<PAGE>
Information regarding the material interests of the Nominees in the
Acquisition is described under "The Interests of Certain Persons in the
Acquisition" above.
The term of office of each person elected as Director will be until his or
her successor is elected and qualified. Each Nominee has agreed to serve as a
Director if elected. If any Nominee should be unavailable for election at the
time of the Meeting (which is not presently anticipated), the persons named as
proxies may vote for other persons in their discretion, or the Directors may
vote to fix the number of Directors at fewer than nine.
The Fund's Articles of Incorporation and By-Laws do not provide for the
annual election of Directors. However, in accordance with the Investment
Company Act, (i) the Fund will hold a shareholders' meeting for the election
of Directors at such time as less than a majority of the Directors holding
office have been elected by shareholders, and (ii) if, as a result of a
vacancy in the Board of Directors, less than two-thirds of the Directors
holding office have been elected by the shareholders, that vacancy may only be
filled by a vote of the shareholders.
Information about Current Directors
Currently, five persons serve as Directors on the Fund's Board of Directors:
William F. Achtmeyer, William F. Devin, Alice T. Kane, Kenneth J. Lavery, and
Arthur S. Loring. Three of the current Directors (Ms. Kane and Messrs. Devin
and Lavery) have been nominated for election to the Board at the Meeting. Two
of the Directors, Messrs. Achtmeyer and Loring are expected to resign upon the
election of their successors, Messrs. Ebner and Grause. One successor will be
interested, and the other will be disinterested. Information regarding Messrs.
Achtmeyer and Loring is shown below, including their ages, their business
addresses, their terms as Directors of the Fund, their positions with the
Fund, and descriptions of their principal occupations. Except as shown, each
Director's principal occupation and business experience for the last five
years have been with the employer(s) indicated, although in some cases the
Director may have held different positions with such employer(s). Each
Director also serves as a Director of the North American Senior Floating Rate
Fund, Inc., and as a Trustee of North American Funds.
<TABLE>
<CAPTION>
Principal Occupation(s) During the
Name, Age and Address Term as Director Past Five Years
--------------------- ---------------- ----------------------------------
<C> <C> <S>
William F. Achtmeyer.. Director since Co-founder, President and Chief
286 Congress Street July, 1997 Executive Officer of The Parthenon
Boston, MA 02210 Group, a strategic advisory consulting
Age 45 and investment firm (August, 1981-
Present). Director, CypressTree Senior
Floating Rate Fund, Inc. (July, 1997-
Present). Trustee, North American
Funds (October, 1997-Present).
Arthur S. Loring*..... Director since Managing Director, Cypress Holding
125 High Street March, 1998 Company (1998-Present); Senior Vice
Boston, MA 02110 President and General Counsel, FMR
Age 52 Corp. (1983-1997); Secretary, Fidelity
Family of Funds (1983-1997); Director,
CypressTree Senior Floating Rate Fund,
Inc. (March, 1998-Present).
</TABLE>
- --------
* Is an "interested person" of the Fund (as defined by the 1940 Act).
Information regarding the material interests of the current Directors in the
Acquisition is described under "The Interests of Certain Persons in the
Acquisition" above.
In the fiscal year ended December 31, 1999, the Board of Directors held four
regular meetings. Each of the Directors attended at least 75% of the total
number of regular meetings and applicable committee meetings.
Committees of the Board
In the fiscal year ended December 31, 1999, the Administration Committee of
the Board, which functions as an audit committee, a compensation committee,
and a nomination committee, held four meetings. Messrs. Devin (Chairman),
Lavery, and Achtmeyer are members of the Administration Committee. None of
theAdministration Committee members are "interested persons" under the
Investment Company Act. The Administration Committee makes recommendations to
the Directors regarding the selection of the independent
12
<PAGE>
certified public accountants, reviews with the accountants and the Fund
Treasurer accounting and auditing practices and procedures, accounting
records, and internal accounting controls, reviews the Fund's advisory
contracts and advisory fees, serves as the compensation committee, and acts as
nominating committee with regard to disinterested Directors.
Recommendations by shareholders with respect to candidates for the Board of
Directors are not routinely considered by the Administration Committee.
Ms. Kane (Chairman) and Messrs. Loring and Devin are members of the Pricing
Committee of the Board of Directors. The Pricing Committee is responsible for
the valuation and revaluation, between meetings of the Board, of investments
for which market quotations or sale prices are not readily available. The
Pricing Committee also recommends to the Board of Directors monthly repurchase
percentage amounts and monitors liquidity pursuant to Rule 23c-3 under the
Investment Company Act.
Ms. Kane (Chairman) and Messrs. Devin and Lavery are members of the
Investment Committee of the Board of Directors. The Investment Committee
provides an overview to the full Board of the activities of the subadviser.
Information About the Executive Officers
The Executive Officers, their ages, their business addresses, their position
with the Fund and a description of their principal occupations are shown
below.
<TABLE>
<CAPTION>
Position with the Office Held Principal Occupation(s) During the
Names, Age and Address Fund Since Past Five Years
---------------------- ---------------- ------------ -------------------------------------
<S> <C> <C> <C>
Alice T. Kane........... Chairman of the March 2000 See Above.
286 Congress Street Board of
Boston, MA 02210 Directors,
Age 52 Director and
President
Joseph T. Grause, Jr.... Vice President March 2000 See Above.
286 Congress Street
Boston, MA 02210
Age 47
Thomas J. Brown......... Treasurer and October 1997 Chief Financial Officer and Chief
286 Congress Street Vice President Administrative Officer, AGAM (March,
Boston, MA 02210 2000-Present); Principal of Cypress
Age 53 Holding Company, Inc. (July, 1997-
March, 2000); consultant to the
financial services industry (October,
1995-July, 1997); Executive Vice
President, Boston Company Advisors
(August, 1994-October, 1995).
John I. Fitzgerald...... Secretary and October 1997 Counsel, AGAM (March, 2000-Present);
286 Congress Street Vice President Counsel, AGFD (March, 2000-Present);
Boston, MA 02210 Counsel, Cypress Holding Company,
Age 52 Inc. (April, 1997-March, 2000);
Executive Vice President--Legal
Affairs and Government Relations at
the Boston Stock Exchange (June,
1993-March, 1997).
John N. Packs........... Vice President March 2000 Director of Research, AGAM (March,
286 Congress Street and Assistant 2000-Present); Vice President,
Boston, MA 02210 Treasurer Cypress Holding Company (November,
Age 44 1995-March, 2000); Vice President,
Allmerica Financial Services
(September, 1992-December, 1994).
</TABLE>
13
<PAGE>
Information regarding the material interests of the Executive Officers of
the Fund in the Acquisition is set forth under "The Interests of Certain
Persons in the Acquistion" above.
Compensation of the Directors and Certain Executive Officers
The Fund does not pay any remuneration to its Directors who are officers or
employees of AGAM or its affiliates, or who are "interested persons" (as
defined by the Investment Company Act) of the Fund. Directors not so
affiliated receive a retainer of $750 per quarter for each quarter during
which the Director serves, plus $750 for each meeting of the Directors
attended in person and $200 for each telephone meeting. No pension or
retirement benefits are paid to Directors. Directors are reimbursed for travel
and other out-of-pocket expenses. The officers listed above are furnished to
the Fund pursuant to the Advisory Agreement described above and receive no
compensation from the Fund.
The following table sets forth information regarding compensation received
by those Directors who are not "interested persons" of the Fund, or of AGAM or
its affiliates, for the fiscal year ending December 31, 1999:
COMPENSATION TABLE
<TABLE>
<CAPTION>
(3)
(2) Total Compensation
Aggregate from the Fund and Fund
(1) Compensation Complex Paid to the
Name of Person, Position from the Fund Directors(1)
- ------------------------ ------------- ----------------------
<S> <C> <C>
William F. Achtmeyer......................
Director $5,850 $17,150
William F. Devin..........................
Director $6,800 $19,800
Kenneth J. Lavery.........................
Director $6,800 $19,800
</TABLE>
- --------
(1) The amounts listed in column (3) include total compensation paid to the
Directors for their services as Directors of the Fund (for all Directors),
as Trustees of the North American Funds, and as Directors of the North
American Senior Floating Rate Fund, Inc. By virtue of having CAM as
investment adviser, the North American Funds, the CypressTree Senior
Floating Rate Fund, Inc. and the North American Senior Floating Rate Fund,
Inc. were considered to be part of the same "Fund Complex" for these
purposes.
Director Indemnification
The Articles of Incorporation and By-Laws of the Fund provide that the Fund
will indemnify its Directors and officers against liabilities and expenses
incurred in connection with litigation in which they may be involved because
of their offices with the Fund, to the fullest extent permitted under the
General Laws of the State of Maryland, except when that indemnification would
relieve any officer or Director of any liability to the Fund or its
shareholders by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of his or her duties. The Fund, at its expense, provides
liability insurance for the benefit of its Directors and officers.
Required Vote
The election of the Directors of the Fund will be by a plurality of all the
votes cast at the Meeting in person or by proxy. Votes cast by proxy or in
person at the Meeting will be counted by persons appointed as tellers by the
Fund.
The Directors unanimously recommend a vote FOR each of the Nominees.
14
<PAGE>
IV. SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Administration Committee,
has selected Deloitte & Touche LLP as independent public accountants to
examine the financial statements of the Fund for the fiscal year ending
December 31, 2000. Audit services performed by Deloitte & Touche LLP during
the most recent fiscal year included examination of the financial statements
of the Fund, review of filings with the Securities and Exchange Commission and
preparation of tax returns. The Fund knows of no direct or indirect interest
of such firm in the Fund.
A representative of Deloitte & Touche LLP will be present at the Meeting and
will have the opportunity to respond to questions from shareholders.
Required Vote
Ratification of the selection of independent public accountants at the
Meeting will require the affirmative vote of a majority of the votes cast at
the Meeting, in person or represented by proxy.
The Directors unanimously recommend a vote FOR the ratification of the
selection of Deloitte & Touche LLP as independent public accountants.
V. OTHER INFORMATION
The Fund is a closed-end, non-diversified management investment company
organized as a corporation under the laws of Maryland. The address of the Fund
is 286 Congress Street, Boston, Massachusetts, 02210.
Brokerage and Research Services
It is not anticipated that the Fund will pay significant brokerage
commissions. However, on occasion it may be necessary or desirable to purchase
or sell a security through a broker on an agency basis. Agency transactions
involve the payment by the Fund of negotiated brokerage commissions. Such
commissions vary among different brokers. Also, a particular broker may charge
different commissions according to such factors as the difficulty and size of
the transaction.
When AGAM or CIMCO places orders for the purchase and sale of portfolio
securities for the Funds, it is anticipated that such transactions will be
affected through a number of brokers and dealers. In so doing, AGAM and/or
CIMCO intend to use their best efforts to obtain for the Fund the most
favorable price and execution available, except to the extent they may be
permitted to pay higher brokerage commissions as described below. In seeking
the most favorable price and execution, AGAM and/or CIMCO consider all factors
they deem relevant, including, by way of illustration, price, the size of the
transaction, the nature of the market for the security, the amount of
commission, the timing of the transactions taking into account market prices
and trends, the reputation, experience and financial stability of the broker-
dealer involved and the quality of service rendered by the broker-dealer in
other transactions.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional
investors to receive research, statistical and quotation services from broker-
dealers which execute portfolio transactions for the clients of such advisers.
Consistent with this practice, AGAM or CIMCO may receive research, statistical
and quotation services from many of the broker-dealers with which the Fund's
portfolio transactions are placed. These services, which in some instances
could also be purchased for cash, include such matters as general economic and
security market reviews, industry and company reviews, evaluations of
securities and recommendations as to the purchase and sale of securities. Some
of these services are of value to AGAM or CIMCO in advising its other clients,
although not all of these services are necessarily useful and of value in
advising the Fund. The fees paid to AGAM or CIMCO are not reduced because AGAM
or CIMCO receives such services.
15
<PAGE>
As permitted by Section 28(e) of the Securities Exchange Act of 1934 (the
"1934 Act"), under the New Advisory Agreement and the New Subadvisory
Agreement, AGAM and/or CIMCO may cause the Fund to pay a broker-dealer which
provides "brokerage and research services" (as defined by the 1934 Act) to
AGAM or CIMCO an amount of disclosed commission for effecting a securities
transaction for the Fund in excess of the commission which another broker-
dealer would have charged for effecting the same transaction. The authority of
AGAM or CIMCO to cause each Fund to pay any such greater commission is subject
to such policies as the Directors may adopt from time to time.
During the fiscal year ended December 31, 1999, the Fund did not pay any
brokerage commissions to any broker then affiliated with AGAM or CIMCO.
Ownership of Shares and Voting Information
As of March 20, 2000, the Fund believes that the Directors and officers of
the Fund, as a group, owned less than one percent of the shares of the Fund.
As of March 20, 2000, there were no persons who owned of record or
beneficially 5% or more of any class of shares of the Fund.
Compliance with Beneficial Ownership Reporting Requirements
Section 30(h) of the Investment Company Act requires the Fund's Directors
and officers, investment advisers, affiliates of the investment advisers, and
persons who beneficially own more than 10% of a registered class of the Fund's
securities ("Reporting Persons"), to file reports of ownership of the Fund's
securities and changes in ownership with the SEC. Reporting Persons are also
required by such regulations to furnish the Fund with copies of all such forms
that they file.
Based solely on its review of the copies of such forms received by it and
written representations of Reporting Persons, the Fund believes that during
fiscal year 1999, all Reporting Persons complied with all applicable filing
requirements.
Certain Directors and Officers of the Fund
The following table lists the names of each Director and officer of the Fund
who is also an officer or employee of AGAM or CIMCO:
<TABLE>
<CAPTION>
Position with the Adviser
Name Position with the Fund or Sub-Adviser
- ---- ---------------------- -------------------------
<S> <C> <C>
Alice T. Kane........... Chairman of Board of Directors, Chief Executive Officer,
Director and President AGAM
Joseph T. Grause, Jr.... Vice President President, AGAM
Thomas J. Brown......... Vice President and Treasurer Chief Financial Officer,
AGAM
John I. Fitzgerald...... Vice President and Secretary Counsel, AGAM
John N. Packs........... Vice President and Assistant Director of Research, AGAM
Treasurer
</TABLE>
In the period since December 31, 1998, Ms. Kane has been awarded stock and
options to purchase stock in connection with her employment by American
General
16
<PAGE>
Principal Executive Officer and Directors of the Investment Adviser
The following table lists the names, addresses, and principal occupations of
the principal executive officer and each director of AGAM:
<TABLE>
<CAPTION>
Name and Address Position with AGAM Principal Occupation(s)
- ---------------- ------------------ -----------------------
<S> <C> <C>
Alice T. Kane........... Chief Executive Officer and See Above.
286 Congress Street Chairman of the Board
Boston, MA 02210
Joseph T. Grause, Jr.... President and Director See Above.
286 Congress Street
Boston, MA 02210
John A. Graf............ Director President and Director,
2929 Allen Parkway VALIC and American General
Houston, TX 77019 Annuity Insurance Company.
Director, American General
Series Portfolio Company.
Director, USLIFE Income
Fund, Inc. Trustee, American
General Series Portfolio
Company 3. Formerly, Vice
Chairman and Chief Marketing
and Administrative Officer,
Western National Corporation
and Senior Vice President,
Conseco, Inc.
Kent E. Barret.......... Director Executive Vice President,
2929 Allen Parkway American General Series
Houston, TX 77019 Portfolio Company 2.
Executive Vice President and
Chief Financial Officer,
American General Retirement
Services (February, 1999-
Present). Formerly,
Executive Vice President and
Chief Financial Officer,
American General Life &
Accident Company.
</TABLE>
Principal Executive Officer and Directors of the Investment Subadviser
The following table lists the names, addresses, and principal occupations of
the principal executive officer and each director of CIMCO:
<TABLE>
<CAPTION>
Name, Age and Address Position with CIMCO Principal Occupation(s)
- --------------------- ------------------- -----------------------
<S> <C> <C>
Bradford K. Gallagher... Chief Executive Officer Chairman and CEO of Cypress
125 High Street and Director Holding Company, Inc.
Boston, MA 02210
J. Christopher Director Managing Director of
Clifford............... Berkshire Partners, LLC.
One Boston Place
Boston, MA 02108
</TABLE>
17
<PAGE>
Principal Underwriter
American General Funds Distributors, Inc., whose address is 286 Congress
Street, Boston, Massachusetts 02210, is the principal underwriter for the
Fund. AGFD is an affiliate of AGAM. AGFD will continue to provide services to
the Fund after the New Advisory Agreement is approved. For the fiscal year
ending December 31, 1999, no fees were paid for underwriting services. AGFD
will continue to provide services to the Fund after the New Advisory Agreement
is approved.
Administrator
American General Asset Management Corp., whose address is 286 Congress
Street, Boston, Massachusetts 02210, is the administrator for the Fund. In
return for AGAM's services as Administrator, the Fund pays AGAM an annual fee
paid monthly equal to 0.40% of the average daily gross assets of the Fund as
compensation under the Administration Agreement. These services will continue
to be provided after the New Advisory Agreement is approved. For the fiscal
year ending December 31, 1999, after waivers and reimbursements, no fees were
paid for administrative services.
Quorum and Methods of Tabulation
The presence in person or by proxy of shareholders entitled to cast a
majority of the votes entitled to be cast at the meeting shall be a quorum for
the transaction of business by the shareholders of the Fund at the Meeting.
Votes cast by proxy or in person at the Meeting will be counted by persons
appointed by the Fund as tellers for the Meeting. The tellers will count the
total number of votes cast "for" approval of each Proposal for purposes of
determining whether sufficient affirmative votes have been cast. The tellers
will count all shares represented by proxies that reflect abstentions and
"broker non-votes" (i.e., shares held by brokers or nominees as to which (a)
instructions have not been received from the beneficial owners or the persons
entitled to vote and (b) the broker or nominee does not have discretionary
voting power on a particular matter) as shares that are present and entitled
to vote for purposes of determining the presence of a quorum, but that have
not been cast. Assuming the presence of a quorum, abstentions and broker non-
votes have the effect of a negative vote on Proposals 1 and 2 (approval of
advisory and subadvisory agreements). Abstentions and broker non-votes will
not be considered votes cast and therefore will have no effect on Proposal 3
(election of directors) or Proposal 4 (ratification of the selection of
independent auditors).
Adjournments
In the event that a quorum is not present for purposes of acting on a
Proposal, or if sufficient votes in favor of a Proposal are not received by
the time of the Meeting, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those
votes present in person or represented by proxy at the session of the Meeting
to be adjourned. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of any
Proposal that has not then been adopted. They will vote against any such
adjournment those proxies required to be voted against each Proposal that has
not then been adopted and will not vote any proxies that direct them to
abstain from voting on such Proposals.
The costs of any additional solicitation and of any adjourned session will
be divided equally between CypressTree and American General. Any proposal for
which sufficient favorable votes have been received by the time of the Meeting
will be acted upon and such action will be final regardless of whether the
Meeting is adjourned to permit additional solicitation with respect to another
proposal.
Shareholder Voting
In addition to voting by mail, you may also give your voting instructions by
touchtone telephone by following the instructions set forth on the proxy card.
SCC, which has been engaged by the advisor to provide proxy-related services,
will record your instructions and, within [ ] hours, send you a letter or
mailgram to confirm your vote. That letter will also provide you with
instructions on how to proceed if the confirmation does not reflect your
voting instructions correctly.
18
<PAGE>
Telephone Voting. You may give your voting instructions over the telephone
by calling 1-800-[ ]. A representative of SCC will answer your call. When
receiving your instructions by telephone, the SCC representative is required
to ask you for your full name, address, social security or employer
identification number, title (if the person giving the proxy is authorized to
act for an entity, such as a corporation), the number of shares of the Fund
owned, and to confirm that you have received the proxy statement in the mail.
If the information you provide matches the information provided to SCC by
AGAM, then the SCC representative will explain the process. SCC is not
permitted to recommend to you how to vote, other than to read any
recommendation included in the proxy statement. SCC will record your
instructions and transmit them to the official tabulator and, within [ ]
hours, send you a letter or mailgram to confirm your vote. That letter will
also ask you to call SCC immediately if the confirmation does not reflect your
instructions correctly.
As the Meeting date approaches, you may receive a call from a representative
of SCC if AGAM has not yet received your vote. SCC may ask you for authority,
by telephone or by electronically transmitted instructions, to permit SCC to
sign a proxy on your behalf. SCC will record all instructions it receives from
shareholders by telephone or electronically, and the proxies it signs in
accordance with those instructions, in accordance with the procedures set
forth above. The Directors of the Fund believe those procedures are reasonably
designed to determine accurately the shareholder's identity and voting
instructions.
Voting by Mail. If you wish to participate in the Meeting, but do not wish
to give a proxy by telephone, you can still complete, sign and mail the proxy
card received with the proxy statement or attend the Meeting in person.
Shareholder Proposals at Future Meetings
The Fund does not hold regular annual or other meetings of shareholders.
Shareholder proposals to be presented at any future meeting of shareholders of
the Fund must be received by the Fund a reasonable time before that meeting in
order for such proposals to be considered for inclusion in the proxy materials
relating to that meeting.
Other Matters
The Fund is not aware of any other matters that are expected to arise at the
Meeting. If any other matter should arise, however, the persons named in
properly executed proxies have discretionary authority to vote such proxies as
they shall decide.
April 12, 2000
19
<PAGE>
Exhibit A
ADVISORY AGREEMENT
ADVISORY AGREEMENT (the "Agreement") made as of ____ __, 2000, between
CYPRESSTREE SENIOR FLOATING RATE FUND, INC., a Maryland corporation (the
"Fund"), American General Asset Management Corp., a Delaware corporation (the
"Adviser").
WITNESSETH
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 (the "Investment Company Act");
WHEREAS, the Fund desires to retain the Adviser as investment manager
to furnish certain investment advisory services to the Fund, the and Adviser is
willing to furnish those services;
NOW THEREFORE, the parties agree as follows:
1. APPOINTMENT OF ADVISER
The Fund hereby appoints the Adviser, subject to the supervision of the
Directors of the Fund and the terms of this Agreement, as the investment adviser
for the Fund. The Adviser accepts such appointment and agrees to render the
services and to assume the obligations set forth in this Agreement commencing on
its effective date. The Adviser will be an independent contractor and will have
no authority to act for or represent the Fund in any way or otherwise be deemed
an agent unless expressly authorized in this Agreement or another writing by the
Fund and the Adviser.
2. DUTIES OF THE ADVISER
a. Subject to the general supervision of the Directors of the Fund and the
terms of this Agreement, the Adviser will at its own expense select,
contract with, and compensate an investment subadviser (the
"Subadviser") to manage the investments and determine the composition
of the assets of the Fund; provided, that any contract with the
Subadviser (the "Subadvisory Agreement") will be in compliance with and
approved as required by the Investment Company Act. Subject always to
the direction and control of the Directors of the Fund, the Adviser
will monitor compliance of the Subadviser with the investment
objectives and investment policies, as set forth in the Fund's
registration statement as filed with the Securities and Exchange
Commission, and review and report to the Directors of the Fund on the
performance of the Subadviser.
<PAGE>
b. The Adviser will oversee the administration of certain aspects of the
Fund's business and affairs and will furnish to the Fund the following
services:
(1) Office and Other Facilities. The Adviser will furnish to the
Fund office space in the offices of the Adviser or in such
other place as may be agreed upon by the parties to this
Agreement from time to time and such other office facilities,
utilities and office equipment as are necessary for the Fund's
operations.
(2) Directors and Officers. The Adviser agrees to permit
individuals who are directors, officers or employees of the
Adviser to serve (if duly elected or appointed) as Directors
or officers of the Fund, without remuneration from or other
cost to the Fund.
(3) Other Personnel. The Adviser will furnish to the Fund, at the
Fund's expense, any other personnel necessary for the
operations of the Fund.
(4) Reports to Fund. The Adviser will furnish to or place at the
disposal of the Fund such information, reports, valuations,
analyses and opinions as the Fund may, at any time or from
time to time, reasonably request or as the Adviser may deem
helpful to the Fund, provided that the expenses associated
with any such materials furnished by the Adviser at the
request of the Fund will be borne by the Fund.
3. EXPENSES ASSUMED BY THE FUND
In addition to paying the advisory fee provided for in Section 5, the
Fund will pay all expenses of its organization, operations and business not
specifically assumed or agreed to be paid by the Adviser as provided in this
Agreement, by the Subadviser as provided in the Subadvisory Agreement, by the
Administrator under an administration agreement, or by the principal underwriter
(the "Distributor") of the Fund's shares, as that term is defined in Section
2(a)(29) of the Investment Company Act, as provided in a distribution agreement.
Without limiting the generality of the foregoing, the Fund, in addition to
certain expenses specifically described in Section 2 above, will pay or arrange
for the payment of the following:
a. Custody and Accounting Services. All expenses of the transfer,
receipt, safekeeping, servicing and accounting for the Fund's cash,
securities, and other property, including all charges of depositories,
custodians and other agents, if any;
b. Shareholder Servicing. All expenses of maintaining and servicing
shareholder accounts, including all charges of the Fund's transfer,
shareholder recordkeeping, dividend disbursing, repurchase, and other
agents, if any;
-2-
<PAGE>
c. Shareholder Communications. All expenses of preparing, setting in
type, printing, and distributing reports, repurchase notifications, and
other communications to shareholders;
d. Shareholder Meetings. All expenses incidental to holding meetings of
Fund shareholders, including the printing of notices and proxy
material, and proxy solicitation;
e. Prospectuses. All expenses of preparing, setting in type, and
printing of annual or more frequent revisions of the Fund's prospectus
and statement of additional information and any supplements to those
documents and of mailing them to shareholders;
f. Pricing. All expenses of computing the net asset value per share for
the Fund, including the cost of any equipment or services used for
obtaining price quotations and valuing its investment portfolio;
g. Communication Equipment. All charges for equipment or services used
for communication between the Adviser or the Fund and the custodian,
transfer agent or any other agent selected by the Fund;
h. Legal and Accounting Fees and Expenses. All charges for services and
expenses of the Fund's legal counsel and independent auditors;
i. Directors and Officers. Except as expressly provided otherwise in
paragraph 2.b.(2), all compensation of Directors and officers, all
expenses incurred in connection with the service of Directors and
officers, and all expenses of meetings of the Directors and Committees
of Directors;
j. Federal Registration Fees. All fees and expenses of registering and
maintaining the registration of the Fund under the Investment Company
Act and the registration of the Fund's shares under the Securities Act
of 1933, as amended (the "1933 Act"), including all fees and expenses
incurred in connection with the preparation, setting in type, printing
and filing of any registration statement and prospectus under the 1933
Act or the Investment Company Act, and any amendments or supplements to
those documents that may be made from time to time;
k. State Registration Fees. All fees and expenses of qualifying and
maintaining qualification of the Fund and of the Fund's shares for sale
under securities laws of various states or jurisdictions, and of
registration and qualification of the Fund under all other laws
applicable to the Fund or its business activities (including
registering the Fund as a broker-dealer, or any officer of the Fund or
any person as agent or salesman of the Fund in any state);
-3-
<PAGE>
l. Issue and Repurchase of Fund Shares. All expenses incurred in
connection with the issue, repurchase, and transfer of Fund shares,
including the expense of confirming all share transactions, of
preparing and transmitting certificates for shares of the Fund, and of
sending notifications of repurchase offers to shareholders;
m. Bonding and Insurance. All expenses of bond, liability and other
insurance coverage required by law or regulation or deemed advisable by
the Fund's Directors including, without limitation, such bond,
liability and other insurance expense that may from time to time be
allocated to the Fund in a manner approved by its Directors;
n. Brokerage Commissions. All brokers' commissions and other charges
incident to the purchase, sale, or lending of the Fund's portfolio
securities;
o. Taxes. All taxes or governmental fees payable by or with respect to
the Fund to federal, state, or other governmental agencies, domestic or
foreign, including stamp or other transfer taxes, and all expenses
incurred in the preparation of tax returns;
p. Trade Association Fees. All fees, dues, and other expenses incurred
in connection with the Fund's membership in any trade association or
other investment organization; and
q. Nonrecurring and Extraordinary Expenses. Such nonrecurring expenses as
may arise, including the costs of actions, suits, or proceedings to
which the Fund is, or is threatened to be made, a party and the
expenses the Fund may incur as a result of its legal obligation to
provide indemnification to its Directors, officers, agents and
shareholders.
4. COMPENSATION OF ADVISER
a. The Fund will pay the Adviser a fee, computed daily and paid monthly,
on or before the last business day of the month, at the following
annualized rate: 0.85% of the Fund's average daily net assets for
average daily net assets up to and including $1 billion; 0.80% of the
Fund's average daily net assets for average daily net assets between $1
billion and up to and including $2 billion; and 0.75% of the Fund's
average daily net assets for average daily net assets in excess of $2
billion. In calculating the net assets of the Fund for purposes of this
computation, all liabilities of the Fund will 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 Agreement becomes effective or terminates before the end of any
month, the
-4-
<PAGE>
fee for the period from the effective date to the end of
such month or from the beginning of the prorated according to the
proportion which that period bears to the full month in which the
effectiveness or termination occurs.
5. EXPENSE LIMITATION
From time to time, the Adviser may waive all or a portion of its fee
provided for under this Agreement, or agree to reimburse the Fund in order to
limit the Fund's aggregate expenses. The Adviser agrees to be bound by the terms
of any publicly announced waiver of its fee, or any limitation of the Fund's
expenses.
6. NON-EXCLUSIVITY
The services of the Adviser to the Fund are not to be deemed to be
exclusive, and the Adviser will be free to render investment advisory or other
services to others (including other investment companies) and to engage in other
activities. It is understood and agreed that the directors, officers, and
employees of the Adviser are not prohibited from engaging in any other business
activities or from rendering services to any other person, or from serving as
partners, officers, directors, trustees or employees of any other firm or
corporation, including other investment companies.
7. SUPPLEMENTAL ARRANGEMENTS
The Adviser may enter into arrangements with other persons affiliated
with the Adviser to enable it to fulfill its obligations under this Agreement
for the provision of certain personnel and facilities to the Adviser.
8. CONFLICTS OF INTEREST
It is understood that Directors, officers, agents and shareholders of
the Fund are or may be interested in the Adviser as directors, officers,
stockholders, or otherwise; that directors, officers, agents and stockholders of
the Adviser are or may be interested in the Fund as Directors, officers,
shareholders or otherwise; that the Adviser may be interested in the Fund; and
that the existence of any such dual interest will not affect the validity of
this Agreement or of any transactions under this Agreement except as otherwise
provided in the Articles of Incorporation of the Fund and the Articles of
Incorporation of the Adviser, respectively, or by specific provisions of
applicable law.
9. REGULATION
The Adviser will submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
The adviser will comply in all
-5-
<PAGE>
material respects with Rule 17j-1 under the Investment Company Act.
10. DURATION AND TERMINATION OF AGREEMENT
This New Advisory Agreement will become effective on the date of the
meeting of Shareholders of the Fund, at which meeting this New Advisory
Agreement is approved by the vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act) of the Fund. The Agreement
will continue in effect for two years from the date of its execution and from
year to year thereafter, but only so long as such continuance is specifically
approved at least annually either by the Directors of the Fund or by the vote of
a majority of the outstanding voting securities of the Fund, provided that in
either event such continuance will also be approved by the vote of a majority of
the Directors of the Fund who are not interested persons (as defined in the
Investment Company Act) of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval.
If the shareholders of the Fund fail to approve the Agreement or any
continuance of the Agreement, the Adviser will continue to act as investment
adviser with respect to the Fund pending the required approval of the Agreement
or its continuance or of a new contract with the Adviser or a different adviser
or other definitive action; provided, that the compensation received by the
Adviser in respect of the Fund such during such period is in compliance with
Rule 15a-4 under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Directors of the Fund or by the vote of a majority of the
outstanding voting securities of the Fund, on sixty days' written notice to the
Adviser, or by the Adviser on sixty days' written notice to the Fund. This
Agreement will automatically terminate, without the payment of any penalty, in
the event of its assignment (as defined in the Investment Company Act).
11. PROVISION OF CERTAIN INFORMATION BY ADVISER
The Adviser will promptly notify the Fund in writing of the occurrence
of any of the following events:
a. the Adviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Adviser is required to be registered as an investment adviser
in order to perform its obligations under this Agreement;
b. the Adviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Fund; and
-6-
<PAGE>
c. the chief executive officer or controlling stockholder of the
Adviser or the portfolio manager of the Fund changes.
12. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by written amendment signed by the
parties, provided that the terms of any material amendment shall be approved (i)
by the vote of a majority of the outstanding voting securities of the Fund and
(ii) by the vote of a majority of the Directors of the Fund who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, if such approval is required
by law.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
14. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and will not constitute a part of this Agreement.
15. NOTICES
All notices required to be given pursuant to this Agreement will be
delivered or mailed to the last known business address of the Fund or Adviser in
person or by registered mail or a private mail or delivery service providing the
sender with notice of receipt. Notice will be deemed given on the date delivered
or mailed in accordance with this section.
16. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule, or otherwise, the remainder of this Agreement will not
be affected.
17. GOVERNING LAW
The provisions of this Agreement will be construed and interpreted in
accordance with the laws of the Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of the Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter will control.
<PAGE>
18. LIMITATION OF LIABILITY OF ADVISER
Neither the Adviser nor any of its officers, directors, or employees,
nor any person performing executive, administrative, trading, or other functions
for the Fund (at the direction or request of the Adviser) or the Adviser in
connection with the Adviser'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 for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except for loss resulting from
willful misfeasance, bad faith, or gross negligence in the performance of its or
his duties on behalf of the Fund or from reckless disregard by the Adviser or
any such person of the duties of the Adviser under this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed under seal by their duly authorized officers as of the
date first set forth above.
CYPRESSTREE SENIOR FLOATING RATE
FUND, INC.
By:
---------------------------
American General Asset Management Corp.
By:
---------------------------
-8-
<PAGE>
Exhibit B
SUBADVISORY AGREEMENT
THIS AGREEMENT is made and entered into as of _________, 2000, between
AMERICAN GENERAL ASSET MANAGEMENT CORP. (the "Adviser"), a Delaware corporation
registered under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and CYPRESSTREE INVESTMENT MANAGEMENT COMPANY, INC. (the "Subadviser"), a
Delaware corporation also registered under the Advisers Act.
W I T N E S S E T H
WHEREAS, the Adviser, pursuant to an Advisory Agreement with the
CypressTree Senior Floating Rate Fund, Inc., a Maryland Corporation (the
"Fund"), dated as of ________, 2000, (the "Advisory Agreement"), has been
retained to act as investment adviser for the Fund;
WHEREAS, the Fund is registered with the Securities and Exchange
Commission (the "SEC") as a closed-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Subadviser to provide a
continuous investment program for the Fund, and the Subadviser is willing to
render those services subject to the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, the parties agree as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT AS SUBADVISER
The Fund desires to employ its capital by investing and reinvesting in
securities of the kind and in accordance with the limitations specified in the
Fund's Prospectus and Statement of Additional Information relating to the Fund
as may be in effect from time to time (collectively, the "Prospectus") and which
are filed with the SEC as part of the Fund's Registration Statement on Form N-2,
as amended from time to time, and in such manner and to such extent as may be
approved by the Board of Directors of the Fund. A copy of the Prospectus has
been provided to the Subadviser. The Adviser retains the Subadviser to act as
investment adviser for and to manage the Fund's Assets subject to the
supervision of the Adviser and the Board of Directors of the Fund and subject to
the terms of this Agreement, and the Subadviser accepts that employment. In this
capacity, the Subadviser will be responsible for the investment management of
the Fund's assets. It is recognized that the Subadviser now acts, and that from
time to time hereafter may act, as investment adviser to one or more other
investment companies and to fiduciary or other managed accounts and that the
Adviser and the Fund have no objection to those activities.
<PAGE>
-2-
2. DUTIES OF THE SUBADVISER
a. Investments. The Subadviser is authorized and directed and agrees,
subject to the stated investment policies and restrictions of the Fund
as set forth in the Prospectus and subject to the directions of the
Adviser and the Fund's Board of Directors, to purchase, hold and sell
investments for the Fund ("Fund Investments") and to monitor on a
continuous basis the performance of such Fund Investments. Subject to
the supervision of the Board of Directors and the Adviser and the terms
and conditions of this Agreement, including without limitation section
2(b), the Subadviser will: (1) manage the Fund's Assets in accordance
with the Fund's investment objective, policies and limitations as
stated in the Prospectus; (2) make investment decisions for the Fund;
(3) place purchase and sale orders for portfolio transactions for the
Fund; and (4) manage otherwise uninvested Fund cash. In providing these
services, the Subadviser will formulate and implement a continuous
program of investment, evaluation and, if appropriate, sale and
reinvestment of the Fund's Assets. The Adviser agrees to provide to the
Subadviser such assistance as may be reasonably requested by the
Subadviser in connection with its activities under this Agreement,
including, without limitation, information concerning the Fund, its
funds available (or to become available) for investment, and generally
as to the condition of the Fund's affairs.
b. Compliance with Applicable Laws and Governing Documents. In the
performance of its duties and obligations under this Agreement, the
Subadviser will act in conformity with the Prospectus and with the
instructions and directions received in writing from the Adviser or the
Board of Directors of the Fund and will comply with the requirements of
the 1940 Act, the Advisers Act, the Internal Revenue Code of 1986, as
amended (the "Code") (including the requirements for qualification as a
regulated investment company) and all other federal and state laws and
regulations applicable to its services under this Agreement.
The Adviser will provide the Subadviser with reasonable advance notice
of any change in the Fund's investment objectives, policies and
restrictions as stated in the Prospectus, and the Subadviser will, in
the performance of its duties and obligations under this Agreement,
manage the Fund Investments consistent with such changes. The Adviser
acknowledges and agrees that the Prospectus will at all times be in
compliance with all disclosure requirements under all applicable
federal and state laws and regulations relating to the Fund, including,
without limitation, the 1940 Act and the rules and regulations under
this Agreement, and that the Subadviser will have no liability in
connection therewith, except as to the accuracy of material information
furnished in writing by the Subadviser to the Fund or to the Adviser
specifically for inclusion in the Prospectus. The Subadviser hereby
agrees to provide to the Adviser in a timely manner such information
relating to the Subadviser and its relationship to, and actions for,
the Fund as may be required to be contained in the Prospectus.
<PAGE>
-3-
In fulfilling these requirements and its other requirements and
obligations under this Agreement, the Subadviser will be entitled to
rely on and act in accordance with (1) information provided to it by
the Fund's administrator, fund accountant, custodian or other service
provider and (2) instructions, which may be standing instructions, from
the Adviser. The Adviser agrees to provide or cause to be provided to
the Subadviser on an ongoing basis upon request by the Subadviser, such
information as is requested by the Subadviser for the performance of
its obligations under this Agreement, and the Subadviser will not be in
breach of any term of this Agreement or be deemed to have acted
negligently if the Adviser fails to provide or cause to be provided
such information and the Subadviser relies on the information most
recently provided to it.
c. Voting of Proxies. The Subadviser will have the power to vote,
either in person or by proxy, all securities in which the Fund may be
invested from time to time, and will not be required to seek
instructions from the Adviser or the Fund.
d. Agent. Subject to any other written instructions of the Adviser or
the Fund, the Subadviser is hereby appointed the Adviser's and the
Fund's agent and attorney-in-fact for the limited purposes of executing
account documentation, agreements, contracts and other documents as the
Subadviser will be requested by brokers, dealers, counterparties and
other persons in connection with its management of the assets of the
Fund.
e. Portfolio Transactions. Subject to the approval of the Board of
Directors of the Fund, the Subadviser, in carrying out its duties
hereunder, may cause the Fund to pay a broker-dealer which furnishes
brokerage or research services as such services are defined under
Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"34 Act"), a higher commission than that which might be charged by
another broker dealer which does not furnish brokerage or research
services or which furnishes brokerage or research services deemed to be
of lesser value, if such commission is deemed reasonable in relation to
the brokerage and research services provided by the broker-dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of the Subadviser with respect to the accounts as to
which it exercises investment discretion (as such term is defined under
Section 3(a)(35) of the 34 Act).
It is recognized that the services provided by such brokers or other
entities may be useful to the Subadviser in connection with the
Subadviser's services to other clients. On occasions when the
Subadviser deems the purchase or sale of a security to be in the best
interests of the Fund as well as other clients of the Subadviser, the
Subadviser, to the extent permitted by applicable laws and regulations,
may, but is under no obligation to, aggregate the securities to be sold
or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient
<PAGE>
-4-
execution. In that event, allocation of securities so sold or
purchased, as well as the expenses incurred in the transaction, will be
made by the Subadviser in the manner the Subadviser considers to be the
most equitable and consistent with its fiduciary obligations to the
Fund and to its other clients over time. It is recognized that in some
cases, this procedure may adversely affect the price paid or received
by the Fund or the size of the position obtainable for, or disposed of
by, the Fund.
f. Certain Transactions. The Subadviser and any affiliated person of the
Subadviser will not purchase securities or other instruments from or
sell securities or other instruments to the Fund; provided, however,
the Subadviser may purchase securities or other instruments from or
sell securities or other instruments to the Fund if the transaction is
permissible under applicable laws and regulations, including, without
limitation, the 1940 Act and the Advisers Act and the rules and
regulations promulgated under both those acts.
The Subadviser, including its Access Persons (as defined in Rule
17j-1(e) under the 1940 Act), agrees to observe and comply with Rule
17j-1 and its Code of Ethics (which will comply in all material
respects with Rule 17j-1, as amended from time to time). On a quarterly
basis, the Subadviser will either (i) certify to the Adviser that the
Subadviser and its Access Persons have complied with the Subadviser's
Code of Ethics with respect to the Fund's assets or (ii) identify any
material violations that have occurred with respect to the Fund's
assets. In addition, the Subadviser will report at least annually to
the Adviser concerning any other violations of the Subadviser's Code of
Ethics that required significant remedial action and that were not
previously reported.
g. Books and Records. Pursuant both to the 1940 Act and the Advisers Act
and the rules and regulations promulgated under those acts, the
Subadviser will maintain separate books and records of all matters
pertaining to the Fund's assets. The Fund's books and records will be
available to the Adviser at any time upon reasonable request during
normal business hours and will be available for telecopying without
unreasonable delay to the Adviser during any day that the Fund is open
for business.
h. Information Concerning Fund Investments and Subadviser. From time to
time as the Adviser or the Fund may reasonably request (but no less
often than quarterly), the Subadviser will furnish or cause to be
furnished the requesting party reports on portfolio transactions and
reports on Fund Investments held in the portfolio, all in such detail
as the Adviser or the Fund may reasonably request. The Subadviser will
also inform the Adviser promptly of changes in portfolio managers
responsible for Subadviser Assets or of changes in the control of the
Subadviser. The Subadviser will be available to its officers and
employees to meet with the Fund's Board of Directors in person on
reasonable notice to review the Fund Investments and the Subadviser
will report to the Board of Directors in writing on the Fund
Investments
<PAGE>
-5-
monthly.
i. Custody Arrangements. The Subadviser will on each business day provide
the Adviser and the Fund's custodian such information as the Adviser
and the Fund's custodian may reasonably request relating to all
transactions concerning the Fund Investments including, without
limitation, recommendations, in accordance with policies and procedures
established by the Directors, as to the fair value of securities for
which market quotes are not available.
3. INDEPENDENT CONTRACTOR
In the performance of its duties under this Agreement, the
Subadviser is an independent contractor and unless otherwise expressly provided
in this Agreement or otherwise authorized in writing, will have no authority to
act for or represent the Fund or the Adviser in any way or otherwise be deemed
an agent of the Fund or the Adviser.
4. EXPENSES
During the term of this Agreement, Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage fees and commissions and other transaction charges, if any) purchased
for the Fund. The Subadviser will not be responsible for any expenses of the
operations of the Fund including, without limitation, brokerage fees and
commissions and other transaction charges, if any. The Subadviser will not be
responsible for the Fund's or the Adviser's expenses.
5. COMPENSATION
a. The Adviser will pay the Subadviser a fee, computed daily and paid
monthly on or before the last business day of the month, at the
following annualized rate: 0.45% of the Fund's average daily net assets
for average daily net assets up to and including $1 billion; 0.40% of
the Fund's average daily net assets for average daily net assets
between $1 billion and up to and including $2 billion; and 0.35% of the
Fund's average daily net assets for average daily net assets in excess
of $2 billion. In calculating the net assets of the Fund, for purposes
of this computation, all liabilities of the Fund will 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 Agreement becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of
such month or from the beginning of the prorated according to the
proportion which that period bears to the full month in which the
effectiveness or termination occurs.
<PAGE>
-6-
c. Notwithstanding any other provision of this Agreement, the Subadviser
may from time to time agree not to impose all or a portion of its fee
otherwise payable under this Agreement (in advance of the time such fee
or portion of the fee would otherwise accrue). Any such fee reduction
may be discontinued or modified by the Subadviser at any time.
6. REPRESENTATION AND WARRANTIES OF SUBADVISER
The Subadviser represents and warrants to the Adviser and the
Fund as follows:
a. The Subadviser is registered as an investment adviser under the
Advisers Act;
b. The Subadviser is a corporation duly organized and validly existing
under the laws of the State of Delaware with the power to own and
possess its assets and carry on its business as it is now being
conducted;
c. The execution, delivery and performance by the Subadviser of this
Agreement are within the Subadviser's powers and have been duly
authorized by its Board of Directors or shareholders, and no action by
or in respect of, or filing with, any governmental body, agency or
official is required on the part of the Subadviser for the execution,
delivery and performance by the Subadviser of this Agreement, and the
execution, delivery and performance by the Subadviser of this Agreement
do not contravene or constitute a default under (i) any provision of
applicable law, rule or regulation, (ii) the Subadviser's governing
instruments, or (iii) any material agreement, judgment, injunction,
order, decree or other instrument binding upon the Subadviser;
d. The Form ADV of the Subadviser previously provided to the Adviser is a
true and complete copy of the form filed with the SEC and the
information contained therein is accurate and complete in all material
respects.
7. REPRESENTATIONS AND WARRANTIES OF ADVISER
The Adviser represents and warrants to the Subadviser as follows:
a. The Adviser is registered as an investment adviser under the Advisers
Act;
b. The Adviser is a corporation duly organized and validly existing
under the laws of the State of Delaware with the power to own and
possess its assets and carry on its business as it is now being
conducted;
c. The execution, delivery and performance by the Adviser of this
Agreement are
<PAGE>
-7-
within the Adviser's powers and have been duly authorized
by its Board of Directors or shareholders, and no action by or in
respect of, or filing with, any governmental body, agency or official
is required on the part of the Adviser for the execution, delivery and
performance by the Adviser of this Agreement, and the execution,
delivery and performance by the Adviser of this Agreement do not
contravene or constitute a default under (i) any provision of
applicable law, rule or regulation, (ii) the Adviser's governing
instruments, or (iii) any material agreement, judgment, injunction,
order, decree or other instrument binding upon the Adviser;
d. The Form ADV of the Adviser previously provided to the Subadviser is
a true and complete copy of the form filed with the SEC and the
information contained therein is accurate and complete in all material
respects;
e. The Adviser acknowledges that it has received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement;
f. The Fund is in compliance in all material respects, and during the term
of this Agreement will remain in compliance in all material respects,
with all federal and state laws, rules and regulations applicable to
the Fund and the operation of its business (other than those related to
investment objectives, policies and restrictions over which the
Subadviser has discretion pursuant to the terms hereof), including,
without limitation, applicable disclosure and filing obligations for
prospectuses, statements of additional information, registration
statements, periodic reports to shareholders and regulatory bodies,
proxy statements and promotional materials and advertisements; and
g. The Fund is in compliance in all material respects, and during the term
of this Agreement will remain in compliance in all material respects,
with the terms and conditions of the Prospectus (other than those
related to investment objectives, policies and restrictions over which
the Subadviser has discretion pursuant to the terms hereof), including,
without limitation, provisions relating to the computation of the
Fund's net asset value and those relating to processing purchase,
exchange and repurchase requests.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE INFORMATION
All representations and warranties made by the Subadviser and
the Adviser pursuant to Sections 6 and 7, respectively, will survive for the
duration of this Agreement and the parties to this Agreement will promptly
notify each other in writing upon becoming aware that any of the foregoing
representations and warranties are no longer true.
<PAGE>
-8-
9. LIABILITY
Neither the Subadviser nor any of its officers, directors, or
employees, nor any person performing executive, administrative, trading, or
other functions for the Fund (at the direction or request of the Subadviser) or
the Subadviser in connection with the Subadviser'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 for any loss suffered by the Fund
in connection with the matters to which this 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 the Subadviser or any such person of the duties of the Subadviser
under this Agreement.
10. DURATION AND TERMINATION
a. This Agreement will become effective on the date of the meeting of
the shareholders of the Fund, at which meeting this New Subadvisory
Agreement is approved by the vote of a majority of the outstanding
voting securities (as defined in the Investment Company Act) of the
Fund. The Agreement will continue in effect for two years from the date
of its execution, and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually either by
the Directors of the Fund or by the vote of a majority of the
outstanding voting securities of the Fund, provided that in either
event such continuance will also be approved by the vote of a majority
of the Directors of the Fund who are not interested persons (as defined
in the Investment Company Act) of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval.
b. If the shareholders of the Fund fail to approve the Agreement or any
continuance of the Agreement, the Subadviser will continue to act as
subadviser with respect to the Fund pending the required approval of
the Agreement or its continuance or of a new contract with the
Subadviser or a different adviser or other definitive action; provided,
that the compensation received by the Subadviser in respect of the Fund
during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
c. This Agreement may be terminated at any time, without the payment of
any penalty, by the Directors of the Fund, by the Adviser, or by the
vote of a majority of the outstanding voting securities of the Fund, on
sixty days' written notice to the Subadviser; or by the Subadviser on
sixty days' written notice to the Fund and the Adviser. This Agreement
may be terminated immediately in the event of a material breach of any
provision of this Agreement by the other party to this Agreement. This
Agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment
Company Act), or on termination of the Advisory Agreement.
<PAGE>
-9-
11. REFERENCE TO SUBADVISERS
Neither the Adviser, the Fund nor any affiliated person or
agent of the Adviser or the Fund will make reference to or use the name of
"CypressTree Investment Management Company" or any derivative thereof or logo
associated with that name, except references concerning the identity of and
services provided by the Subadviser to the Fund, which references will not
differ in substance from those included in the Prospectus and this Agreement, in
any advertising or promotional materials without the prior approval of the
Subadviser, which approval will not be unreasonably withheld or delayed.
Upon termination of this Agreement in accordance with Section
10(b) hereof, the Adviser, the Fund and the Fund and their affiliates will cease
to make such reference or use such name (or derivative or logo).
12. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Fund in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Adviser is required to be registered as an investment adviser
in order to perform its obligations under this Agreement;
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the
Fund; and
c. the chief executive officer or controlling stockholder of the
Subadviser or the portfolio manager of the Fund changes.
13. AMENDMENT
This Agreement may be amended by written amendment signed by
the parties, provided that the terms of any material amendment shall be approved
(i) by the vote of a majority of the outstanding voting securities of the Fund
and (ii) by the vote of a majority of the Directors of the Fund who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, if such approval is required
by law.
14. CONFIDENTIALITY
<PAGE>
-10-
Subject to the duties of the Subadviser to comply with
applicable law, including any demand of any regulatory or taxing authority
having jurisdiction, the Subadviser will treat as confidential all records and
other information pertaining to the Fund or the Adviser that the Subadviser
maintains or receives as a result of its responsibilities under this Agreement.
In addition, subject to the duties to comply with any applicable law, the
Adviser agrees to treat as confidential any information concerning the
Subadviser, including its investment policies or objectives, that the Adviser
receives as the result of its actions under this Agreement.
15. NOTICE
All notices required to be given pursuant to this Agreement
will be delivered or mailed to the last known business address of the Fund, the
Adviser, or the Subadviser in person or by registered mail or a private mail or
delivery service providing the sender with notice of receipt. Notice will be
deemed given on the date delivered or mailed in accordance with this section.
16. GOVERNING LAW
The provisions of this Agreement will be construed and
interpreted in accordance with the laws of the Commonwealth of Massachusetts, or
any of the applicable provisions of the Investment Company Act. To the extent
that the laws of the Commonwealth of Massachusetts, or any of the provisions in
this Agreement, conflict with applicable provisions of the Investment Company
Act, the latter will control.
17. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, all of which will together constitute
one and the same instrument.
18. CERTAIN DEFINITIONS
For the purposes of this Agreement, "interested person,"
"affiliated person", "majority of outstanding voting securities" and
"assignment" have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC.
19. HEADINGS
The headings in the sections of this Agreement are inserted
for convenience of reference only and will not constitute a part of this
Agreement.
<PAGE>
-11-
20. SEVERABILITY
If any provision of this Agreement is held or made invalid by
a court decision, statute, rule, or otherwise, the remainder of this Agreement
will not be affected.
21. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement
of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
AMERICAN GENERAL ASSET
MANAGEMENT CORP.
By:
-----------------------
-------------------
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.
By:
-----------------------
-------------------
<PAGE>
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
- --------------------------------------------------------------------------------
CYPRESSTREE SENIOR FLOATING RATE FUND, INC.
- --------------------------------------------------------------------------------
Mark box at right if an address change or comment has been noted on the reverse
side of this card.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH PROPOSAL.
CONTROL NUMBER:
------------------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shareholder sign here Co-owner sign here
1. To approve the Investment Advisory Agreement between American General Asset
Management Corp. and the Fund.
For Against Abstain
[ ] [ ] [ ]
2. To approve a New Subadvisory Agreement with respect to the Fund between
American General Asset Management Corp. and CypressTree Investment
Management Company, Inc.
For Against Abstain
[ ] [ ] [ ]
3. To elect Directors. For All With- For All
(01) Alice T. Kane, Nominees hold Except
(02) Joseph T. Grause, Jr., [ ] [ ] [ ]
(03) Dr. Judith L. Craven,
(04) Dr. Timothy J. Ebner,
(05) Judge Gustavo E. Gonzales, Jr.
(06) Dr. John E. Maupin, Jr.,
(07) Ben H. Love,
(08) William F. Devin,
(09) Kenneth J. Lavery
NOTE: If you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s).
4. To ratify the selection of Deloitte & Touche LLP as independent public
accountants for the Fund for the fiscal year ending December 31, 2000.
For Against Abstain
[ ] [ ] [ ]
RECORD DATE SHARES:
1
<PAGE>
CYPRESSTREE SENIOR FLOATING RATE FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS ON JUNE 22, 2000
The undersigned hereby appoints John I. Fitzgerald, John N. Packs and Cathy Z.
Angellis, and each of them separately, proxies with power of substitution to
each, and hereby authorizes them to represent and to vote, as designated hereon,
at the Special Meeting of Shareholders of CypressTree Senior Floating Rate Fund,
Inc. (the "Fund"), on June 1, 2000 at 11:30 a.m. Eastern time, and any
adjournments thereof, all of the shares of the Fund which the undersigned would
be entitled to vote if personally present.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Meeting. The Directors recommend a vote FOR
Proposals 1, 2, 3 and 4.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE: Please sign exactly as your name appears on this proxy card. All joint
owners should sign. When signing as executor, administrator, attorney, trustee
or guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, sign in the partnership name.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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2
