<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:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
[x] 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
North American Senior Floating Rate Fund, Inc.
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(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>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
286 Congress Street
Boston, MA 02210
April 12, 2000
Dear North American Senior Floating Rate Fund, Inc. Shareholder:
An Annual Meeting of Shareholders of the North American Senior Floating Rate
Fund, Inc. (the "Fund") will be held at the Wyndham Boston Hotel, 89 Broad
Street, Boston, Massachusetts 02110 on June 1, 2000, at 11:00 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's 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 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.
<PAGE>
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.
----------------
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, 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
North American Senior Rate Floating
Fund, Inc.
2
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
286 Congress Street
Boston, MA 02210
(800) 872-8037
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of North American Senior Floating Rate Fund, Inc.:
Notice is hereby given that an Annual Meeting of Shareholders of North
American Senior Floating Rate Fund, Inc. (the "Fund") will be held on June 1,
2000 at the Wyndham Boston Hotel, 89 Broad Street, Boston, Massachusetts 02110
at 11:00 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>
NORTH AMERICAN 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 North American Senior Floating Rate Fund,
Inc. (the "Fund") of proxies to be used at an Annual Meeting of Shareholders
(the "Meeting"), to be held at the Wyndham Boston Hotel, 89 Broad Street,
Boston, Massachusetts 02110 on June 1, 2000 at 11:00 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 12, 2000.
The Fund currently offers two separate classes of shares, designated as
Class B Shares and Class C Shares. The Fund also issues Class A shares, which
are available to investors upon automatic conversion of Class B and of Class C
shares purchased before August 18, 1999, and are not offered to the public. For
purposes of voting on each proposal at the Meeting, Class B Shares and Class C
Shares of the Fund will be treated as 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, 25,782,084 shares of the Fund were issued and
outstanding, including 4,245,730 Class B shares and 21,536,354 Class C shares.
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 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. ("Cypress
Tree").
<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 North American 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.
CIMCO is a subsidiary of Cypress Holding Company, Inc. ("Cypress Holding"),
which prior to the Closing was the ultimate parent of AGAM. Neither CIMCO nor
Cypress Holding was purchased in the Acquisition, and neither is currently
affiliated with AGAM.
3
<PAGE>
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 Chairman and Chief
Executive Officer 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 American General
Distributors, Inc., The VALIC Annuity Marketing Company, American General Funds
Distributors, Inc., and American General Financial Advisors, Inc. 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. As of the Closing, Mr. Gallagher owned approximately 15.6% of the
outstanding equity interests of Cypress Holding, the parent of CypressTree.
Joseph T. Grause, Jr., President of AGAM and Vice President and a 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. As of the Closing, Mr.
Grause owned approximately 7.8% of the outstanding equity interests of Cypress
Holding.
As of the Closing, Arthur S. Loring, Director of the Fund, owned
approximately 1.9% of the outstanding equity interests of Cypress Holding.
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.
As of the Closing, Mr. Packs owned approximately 1.3% of the outstanding
equity interests of Cypress Holding. As of the Closing, Messrs. Brown and
Fitzgerald owned, in the aggregate, less than 1% of the outstanding equity
interests of CypressTree and Cypress Holding.
4
<PAGE>
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.
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
Exhibit 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 July 13,
1998, 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 the SEC, and review and
report to the Directors of the Fund on the performance of the Subadviser.
5
<PAGE>
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 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):
6
<PAGE>
<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>
North American 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 1.40% of average daily gross assets for
Class A and Class B shares and 1.40% of average daily gross assets for Class C
shares.
For the fiscal year ended December 31, 1999, the Fund paid CAM $899,365
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 CypressTree 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 March 31, 2000, the CypressTree Senior Floating Rate
Fund held $90,206,583 in assets. The CypressTree 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 CypressTree 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 1.25% of average daily gross assets.
AGAM is located at 286 Congress Street, Boston, Massachusetts 02210. Alice
T. Kane is Chairman and Chief Executive Officer 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.
7
<PAGE>
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 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 July
13, 1998, 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 Exhibit 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.
8
<PAGE>
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 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 $423,230 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, which prior to the Closing was the ultimate parent of AGAM.
Neither CIMCO nor Cypress Holding 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 CypressTree 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 March 31, 2000, the CypressTree Senior
Floating Rate Fund held $90,206,583 in assets. In connection with providing
subadvisory services to the CypressTree Senior Floating
9
<PAGE>
Rate Fund, CIMCO receives a monthly advisory fee at the following annual rates,
based on the size of the CypressTree 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, a Delaware
corporation with offices located at 125 High Street, Boston, MA, 02110. Cypress
Holding is controlled by its management and by Berkshire Fund IV, L.P., a
Massachusetts investment partnership, which is sponsored by 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 New 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").
10
<PAGE>
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.
<TABLE>
<CAPTION>
Name and Age Principal Occupation(s) During the Past Five Years
------------ --------------------------------------------------
<S> <C>
Alice T. Kane*.......... President of American General Fund Group (1999-Present);
Age: 52 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 Boston Stock
Age: 61 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 Resource Company
Age: 50 (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); Executive Vice
Age: 47 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, United Way of
Age: 54 the Texas Gulf Coast (1992-1998). Director, 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,
Director, Houston Branch, Federal Reserve Bank of Dallas
(1992-1999), Board Member, Sisters of Charity of the
Incarnate Word (1996-1999).
Dr. Timothy J. Ebner.... Professor and Head, Department of Neuroscience and
Age: 50 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-Present).
Age: 59 Director, Downtown Dallas YMCA Board (1996-Present).
Director, Dallas Easter Seals Society (1997-Present).
Formerly, private attorney (litigation) (1980-1995).
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Name and Age Principal Occupation(s) During the Past Five Years
------------ --------------------------------------------------
<S> <C>
Dr. John E. Maupin,
Jr..................... President, Meharry Medical College, Nashville, Tennessee
Age: 53 (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 (waste
Age: 69 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 by the
Investment Company Act).
Information regarding the material interests of the Nominees in the
Acquisition is described under "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 CypressTree Senior Floating Rate Fund, Inc., and as
a Trustee of North American Funds.
12
<PAGE>
<TABLE>
<CAPTION>
Name, Age and Address Term as Director Principal Occupation(s) During the Past Five Years
--------------------- ---------------- --------------------------------------------------
<S> <C> <C>
William F. Achtmeyer.... Director since Co-founder, President and Chief Executive
286 Congress Street February, 1998 Officer of The Parthenon Group, a strategic
Boston, MA 02210 advisory consulting and investment firm
Age 45 (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 Company
125 High Street March, 1998 (1998-Present); Senior Vice President and
Boston, MA 02110 General Counsel, FMR Corp. (1983-1997);
Age 52 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 Investment Company
Act).
Information regarding the material interests of the current Directors in the
Acquisition is described under "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 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
as a nomination committee, held four meetings. Messrs. Devin (Chairman),
Lavery, and Achtmeyer are members of the Administration Committee. None of the
Administration Committee members are "interested persons" under the Investment
Company Act. The Administration Committee makes recommendations to the
Directors regarding the selection of the independent 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.
13
<PAGE>
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 Office Held Principal Occupation(s) During the
Name, Age and Address the Fund Since Past Five Years
--------------------- ------------- ----------- ----------------------------------
<S> <C> <C> <C>
Alice T. Kane*.......... Chairman of the March, 2000 See Above.
286 Congress Street Board of Directors,
Boston, MA 02210 Director and
Age 52 President
Joseph T. Grause, Jr.... Vice President March, 2000 See Above.
286 Congress Street
Boston, MA 02210
Age 47
Thomas J. Brown......... Treasurer and Vice October 1997 Chief Financial Officer and
286 Congress Street President Chief Administrative Officer,
Boston, MA 02210 AGAM (March, 2000-Present);
Age 53 Principal of Cypress 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 Vice October 1997 Counsel, AGAM (March, 2000-
286 Congress Street President Present); Counsel, AGFD (March,
Boston, MA 02210 2000-Present); Counsel, Cypress
Age 52 Holding Company, 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 and March, 2000 Director of Research, AGAM
286 Congress Street Assistant Treasurer (March, 2000-Present); Vice
Boston, MA 02210 President, Cypress Holding
Age 44 Company, Inc. (November, 1995-
March, 2000); prior to November
1995, Investment Professional,
Allmerica Financial Services.
</TABLE>
- --------
* Is an "interested person" of the Fund (as defined by the Investment Company
Act).
Information regarding the material interests of the Executive Officers of
the Fund in the Acquisition is set forth under "Interests of Certain Persons in
the Acquisition" 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.
14
<PAGE>
The following table sets forth information regarding compensation received
by those Directors who are not "interested persons" of the Fund or AGAM or its
affiliates for the fiscal year ending December 31, 1999:
COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3)
Total Compensation from the Fund
Aggregate Compensation and Fund Complex Paid to the
Name of Person, Position from the Fund Directors(1)
- ------------------------ ---------------------- --------------------------------
<S> <C> <C>
William F. Achtmeyer.... $5,850 $17,150
Director
William F. Devin........ $6,800 $19,800
Director
Kenneth J. Lavery....... $6,800 $19,800
Director
</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 North American Funds, and as Directors of CypressTree Senior
Floating Rate Fund, Inc. By virtue of having AGAM as investment adviser,
North American Funds, CypressTree Senior Floating Rate Fund, Inc. and North
American Senior Floating Rate Fund, Inc. are 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.
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.
15
<PAGE>
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.
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 each class of 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.
16
<PAGE>
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 or
Name Position with the Fund Sub-Adviser
---- ---------------------- ----------------------------
<S> <C> <C>
Alice T. Kane........... Chairman of Board of Chief Executive Officer,
Directors, Director and AGAM
President
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 of American General in connection with her employment
by American General.
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)
---------------- ------------------ -----------------------
<C> <C> <S>
Alice T. Kane.......... Chief Executive Officer See Above.
286 Congress Street and Chairman of the
Boston, MA 02210 Board
Joseph T. Grause, Jr... President and Director See Above.
286 Congress Street
Boston, MA 02210
John A. Graf........... Director President and Director, VALIC and American
2929 Allen Parkway General Annuity Insurance Company. Director,
Houston, TX 77019 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 Cor-
poration and Senior Vice President, Conseco, Inc.
Kent E. Barret......... Director Executive Vice President, American General
2929 Allen Parkway Series Portfolio Company 2.
Houston, TX 77019 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>
17
<PAGE>
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 and Chairman and CEO of Cypress
125 High Street Director Holding Company, Inc.
Boston, MA 02210
J. Christopher
Clifford............... Director Managing Director of
One Boston Place Berkshire Partners, LLC.
Boston, MA 02108
</TABLE>
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, the Fund paid AGFD, under its former name, CFD, $793,556 for
its services as principal underwriter. 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
administrative fee was paid to AGAM (under its former name, CAM) by the Fund.
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
18
<PAGE>
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
Telephone Voting. You may give your voting instructions over the telephone
by calling 1-800-611-9049. 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 a 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 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.
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, to permit SCC
to sign a proxy on your behalf. SCC will record all instructions it receives
from shareholders by telephone, 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 or In Person. 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>
NA397
<PAGE>
EXHIBIT A
ADVISORY AGREEMENT
Advisory Agreement (the "Agreement") made as of , 2000, between North
American 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, and the 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.
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.
A-1
<PAGE>
(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;
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);
A-2
<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 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.
A-3
<PAGE>
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 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
c. the chief executive officer or controlling stockholder of the Adviser or
the portfolio manager of the Fund changes.
A-4
<PAGE>
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.
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.
A-5
<PAGE>
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.
North American Senior Floating Rate
Fund, Inc.
By: _________________________________
American General Asset Management
Corp.
By: _________________________________
A-6
<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.
WITNESSETH
Whereas, the Adviser, pursuant to an Advisory Agreement with the North
American 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.
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
B-1
<PAGE>
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.
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).
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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 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 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.
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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.
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;
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<PAGE>
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
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.
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
B-5
<PAGE>
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.
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
B-6
<PAGE>
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
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.
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<PAGE>
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 AssetManagement
Corp.
By: _________________________________
Cypresstree Investment Management
Company, Inc.
By: _________________________________
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<PAGE>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- --------------------------------------------------------------------------------
NORTH AMERICAN 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-------------------
For Against Abstain
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.
3. To elect Directors. For All With- For All
Nominees hold Except
(01) Alice T. Kane [_] [_] [_]
(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).
For Against Abstain
4. To ratify the selection of Deloitte & Touche [_] [_] [_]
LLP as independent public accountants for the
Fund for the fiscal year ending
December 31, 2000.
RECORD DATE SHARES:
- --------------------------------------------------------------------------------
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON JUNE 1, 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 Annual Meeting of Shareholders of North American Senior Floating Rate
Fund, Inc. (the "Fund"), on June 1, 2000 at 11:00 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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