NORTH AMERICAN SENIOR FLOATING RATE FUND INC
PRE 14A, 2000-03-29
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<PAGE>

                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                           SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
                              (Amendment No.____)

Filed by the Registrant                                 [x]
Filed by a Party other than the Registrant              [_]

Check the appropriate box:

[x]  Preliminary Proxy Statement         [_]  CONFIDENTIAL, FOR USE OF THE
[_]  Definitive Proxy Statement               COMMISSION ONLY (AS PERMITTED BY
[_]  Definitive Additional Materials          RULE 14A-6(E)(2))
                                         [_]  Soliciting Material Pursuant to
                                              Rule 14a-11 (c) or Rule 14a-12


                North American Senior Floating Rate Fund, Inc.
- --------------------------------------------------------------------------------
               (Name of Registrant as Specified In Its Charter)


- --------------------------------------------------------------------------------
   (Name of Person(s) Filing Proxy Statement, if other than the Registrant)


Payment of Filing Fee (Check the appropriate box):

[x]  No fee required
[_]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.


(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed pursuant to
    Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
    calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[_]  Fee paid previously with preliminary materials.

[_]  Check box if any part of the fee is offset as provided by Exchange
     Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
     was paid previously. Identify the previous filing by registration statement
     number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

- --------------------------------------------------------------------------------

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 [Address] 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, Georgeson Shareholder Communications Corporation,
telephone you.

   Thank you in advance for your participation in this important event.

                                          Sincerely,

                                          /s/ Alice T. Kane

                                          Alice T. Kane
                                          Chairman and President
                                          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 [address] 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 10, 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 [Address] 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
10, 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,     shares of the Fund were issued and outstanding,
including     Class B shares and     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 Georgeson Shareholder
Communications Corporation ("SCC") 17 State Street, New York, New York 10004,
to aid in the solicitation of proxies. The costs of retaining SCC and other
expenses incurred in connection with the solicitation of proxies, and the costs
of holding the Meeting, will not be borne by the Fund, but will be divided
equally between American General Corporation and CypressTree Investments, Inc.
("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., which prior to the
Closing was the ultimate parent of AGAM. Neither CIMCO nor Cypress Holding
Company, Inc. 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 CEO
of AGAM. Further, two current Directors have also been nominated for election
to the Board. This will result in a Board comprised of nine Directors, assuming
shareholder approval.

   Finally, in connection with the Acquisition, shareholders of the Fund are
being asked in Proposal 4 to ratify the selection of Deloitte & Touche LLP as
independent public accountants for the Fund.

Description of American General and Its Affiliates

   Members of the American General Corporation group of companies (the
"American General Financial Group") operate in each of the 50 states, the
District of Columbia, and Canada and collectively engage in substantially all
forms of financial services. American General Corporation was incorporated as a
Texas business corporation on February 26, 1980 as the successor to American
General Life Insurance Company (organized in 1926) as the result of a corporate
reorganization completed on July 1, 1980. The American General Financial Group
has approximately $115 billion in assets and over $6 billion in stockholders'
equity. American General's address is 2929 Allen Parkway, Houston, Texas 77019.

   Affiliates of American General currently include VALIC Investment Services
Company, American General Distributors, Inc., The VALIC Annuity Marketing
Company, [State Street Brokerage Services, Inc.], American Funds Distributors,
Neuberger Berman, LLC, [Sumitomo Capital Markets], [Kotak Mahindra Capital
Company], [PT Bahana Pembinaan Usha Indonesia], and [Archipelago Holdings,
L.L.C.] These entities are considered to be "Affiliated Brokers." Absent an
exemption or other relief from the Securities and Exchange Commission ("SEC"),
the Fund would generally be precluded from effecting principal transactions
with the Affiliated Brokers, and its ability to purchase securities from
underwriting syndicates including an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions would be subject to restrictions.
AGAM does not believe that the restrictions on transactions with the Affiliated
Brokers described above will have a material adverse effect on its ability,
post-closing, to provide services to the Fund, the Fund's ability to take
advantage of market opportunities, or the Fund's overall performance.

Interests of Certain Persons in the Acquisition

   Bradford K. Gallagher, the former Chairman and President of the Fund and of
CAM, has entered into a consulting agreement with AGAM in connection with the
Acquisition. The agreement has an initial term of six months, and may be
renewed for an additional six months. Mr. Gallagher has also entered into a
two-year non-competition agreement with American General in connection with the
Acquisition.

   Joseph T. Grause, Jr., President of AGAM and Vice President and 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.

   Each of Thomas J. Brown, Treasurer and Vice President of the Fund, John I.
Fitzgerald, Secretary and Vice President of the Fund, and John N. Packs, Vice
President and Assistant Treasurer of the Fund, has entered into a three-year
employment agreement with AGAM in connection with the Acquisition.

   Messrs. Gallagher, Grause, Brown, Fitzgerald and Packs owned, in the
aggregate, less than 1% of the outstanding stock of CypressTree and Cypress
Holding Company, Inc., the parent of CypressTree, prior to the Acquisition.

   As a result of the foregoing arrangements and ownership interests, each of
the persons identified in the foregoing paragraphs may be deemed to have a
substantial interest in shareholder approval of the matters set forth in this
Proxy Statement.

                                       4
<PAGE>

Section 15(f) of the Investment Company Act

   Section 15(f) provides a non-exclusive safe harbor for an investment adviser
or any affiliated persons to receive any amount or benefit in connection with a
change of control of the investment adviser to an investment company as long as
two conditions are satisfied. First, an "unfair burden" must not be imposed on
investment company clients of the adviser as a result of the transaction, or
any express or implied terms, conditions or understandings applicable to the
transaction. The term "unfair burden" (as defined in the Investment Company
Act) includes any arrangement during the two-year period after the transaction
whereby the investment adviser (or predecessor or successor adviser), or any
"interested person" (as defined in the Investment Company Act) (an "Interested
Person") of any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from such an investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any other person in connection with the purchase or sale of
securities or other property to, from or on behalf of such investment company.
The Board has been advised that AGAM is aware of no circumstances arising from
the Acquisition that might result in an unfair burden being imposed on the
Fund. Moreover, American General has covenanted in the Purchase Agreement that
it will use all reasonable efforts to ensure that no unfair burden will be
imposed on the Fund by or as a result of the Acquisition during such two-year
period.

   The second condition of Section 15(f) is that during the three-year period
after the transaction, at least 75% of each such investment company's board of
directors must not be Interested Persons of the investment adviser (or
predecessor or successor adviser). American General has covenanted in the
Purchase Agreement that it will use all reasonable efforts to comply with such
75% requirement during such three-year period.

            I. APPROVAL OR DISAPPROVAL OF THE NEW ADVISORY AGREEMENT

   The Board is proposing that shareholders approve a new Investment Advisory
Agreement between the Fund and AGAM that will be entered into between AGAM and
the Fund upon shareholder approval (the "New Advisory Agreement"). A
description of the New Advisory Agreement, the services provided thereunder,
the procedure for its termination and renewal and other services provided by
AGAM and its affiliates is set forth below. This description is qualified in
its entirety by reference to the form of New Advisory Agreement included as
Appendix A to this Proxy Statement. Additional information about AGAM is set
forth below in the section entitled "Information About AGAM."

   The New Advisory Agreement was unanimously approved by the Directors,
including the Independent Directors (as defined below), at in-person meetings
held on February 27, 2000 and March 14, 2000.

Description of the New Advisory Agreement

   As discussed above, AGAM currently serves as investment adviser of the Fund
pursuant to an interim advisory agreement with the Fund approved by the Board
effective March 10, 2000. The New Advisory Agreement is substantially similar
to the previous agreement between the Fund and CAM in effect prior to March 10,
2000 (the "Old Advisory Agreement"). The Old Advisory Agreement, dated 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 [RECORD DATE], the CypressTree Senior Floating Rate
Fund held [$   ] 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 CEO of AGAM, as well as Chairman of the Board of
Directors and a Director of the Fund. Ms. Kane's principal occupation is
President of American General Fund Group. Her business address is 286 Congress
Street, Boston, Massachusetts 02210.

   AGAM is a wholly-owned subsidiary of American General. American General is
located at 2929 Allen Parkway, Houston, Texas 77019.

   Information regarding the material interests of the Directors and officers
of the Fund in the Acquisition is set forth under "Interests of Certain Persons
in the Acquisition" above.

Approval of the New Advisory Agreement by the Directors of the Fund

   In evaluating the New Advisory Agreement, the Directors took into account
that the New Advisory Agreement and the Old Advisory Agreement, including their
terms relating to the services to be provided by AGAM, are substantially
identical. The Directors also considered the terms of the Acquisition and the
possible effects of the Acquisition on AGAM's ability to provide management
services to the Fund. Representatives of AGAM represented to the Directors that
the Acquisition had not resulted in any changes, other than changes in the
ordinary course of business, in the management, operations, personnel or legal
structure of AGAM, with the exception of the replacement of Bradford K.
Gallagher by Ms. Kane.

                                       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 Appendix B. The New
Subadvisory Agreement was approved by the Board of Directors of the Fund,
including the Independent Directors, at in-person meetings held on February 27,
2000 and March 14, 2000.

   The New Subadvisory Agreement provides that, subject to the stated
investment policies and restrictions of the Fund as set forth in the Fund's
Prospectus and Statement of Additional Information (as filed with the SEC as a
part of the Fund's Registration Statement, and as amended or supplemented from
time to time, the "Prospectus"), and subject to the general supervision of the
Fund's Directors and of AGAM, CIMCO shall formulate and implement a continuous
program of investment, evaluation, and if appropriate, sale and reinvestment of
the Fund's assets. Under the New Subadvisory Agreement, CIMCO will manage the
Fund's assets in accordance with the Fund's investment objective, policies, and
limitations (as stated in the "Prospectus"), make investment decisions for the
Fund, place purchase and sale orders for portfolio transactions for the Fund,
and manage otherwise uninvested Fund cash. In addition, CIMCO's duties under
the New Subadvisory Agreement include compliance with applicable law and
governing documents, voting of proxies, acting as a limited agent of the Fund
and of AGAM, maintaining books and records for the Fund, and providing
information concerning the Fund's investments (and concerning CIMCO) to AGAM,
to the Fund, and to the Fund's custodian, as applicable.

                                       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 Company, Inc., which prior to the Closing was the ultimate
parent of AGAM. Neither CIMCO nor Cypress Holding Company, Inc. was purchased
in the Acquisition, and following the Closing neither has been affiliated with
AGAM. Accounts managed by CIMCO had combined assets, as of March 17, 2000, of
approximately $2.7 billion. CIMCO is located at 125 High Street, Boston, MA
02110.

   CIMCO also serves as investment subadviser to the 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 [RECORD DATE], the CypressTree Senior
Floating Rate Fund held [$   ] in assets. In connection with providing
subadvisory services to the CypressTree Senior Floating Rate Fund, CIMCO
receives a monthly advisory fee at the following annual rates, based on the
size of the CypressTree

                                       9
<PAGE>

Senior Floating Rate Fund: 0.45% for the first $1 billion of average daily
gross assets; 0.40% for average daily gross assets between $1 billion and $2
billion; and 0.35% for average daily gross assets of more than $2 billion.

   CIMCO is a wholly-owned subsidiary of Cypress Holding Company, Inc., a
Delaware corporation with offices located at 125 High Street, Boston, MA,
02110. Cypress Holding Company, Inc. is controlled by its management and by
Berkshire Fund IV, L.P., a Massachusetts investment partnership, which is
sponsored by 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, Houston
                          Branch, Federal Reserve Bank of Dallas (1992-Present),
                          Compaq Computer Corporation (1998-Present), Luby's Inc.
                          (1998-Present), A.H. Belo Corporation (journalism, TV and
                          radio) (1993-Present), and Sysco Corporation (marketing
                          and distribution of food) (1996-Present). Formerly, Board
                          Member, Sisters of Charity of the Incarnate Word (1996-
                          1999).

Dr. Timothy J. Ebner....  Professor and Head, Department of 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,      President, Meharry Medical College, Nashville, Tennessee
 Jr..................... (1994-Present). Nashville Advisory Board Member, First
 Age: 53                 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 in the
  Investment Company Act of 1940, as amended (the "1940 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 1940 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); Vice President,
                                                            Allmerica Financial Services
                                                            (September, 1992-December, 1994)
</TABLE>

   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 the North American Funds, and as Directors of the
    CypressTree Senior Floating Rate Fund, Inc. By virtue of having CAM as
    investment adviser, the North American Funds, the CypressTree Senior
    Floating Rate Fund, Inc. and the North American Senior Floating Rate Fund,
    Inc. were considered to be part of the same "Fund Complex" for these
    purposes.

Director Indemnification

   The Articles of Incorporation and By-Laws of the Fund provide that the Fund
will indemnify its Directors and officers against liabilities and expenses
incurred in connection with litigation in which they may be involved because of
their offices with the Fund, to the fullest extent permitted under the General
Laws of the State of Maryland, except when that indemnification would relieve
any officer or Director of any liability to the Fund or its shareholders by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of his or her duties. The Fund, at its expense, provides liability
insurance for the benefit of its Directors and officers.

Required Vote

   The election of the Directors of the Fund will be by a plurality of all the
votes cast at the Meeting in person or by proxy. Votes cast by proxy or in
person at the Meeting will be counted by persons appointed as tellers by the
Fund.

   The Directors unanimously recommend a vote FOR each of the Nominees.

                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 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                                         Managing Director of
 Clifford............... Director                      Berkshire Partners, LLC.
 One Boston Place
 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

   In addition to voting by mail, you may also give your voting instructions by
touchtone telephone by following the instructions set forth on the proxy card.
SCC, which has been engaged by the advisor to provide proxy-related services,
will record your instructions and, within [ ] hours, send you a letter or
mailgram to confirm your vote. That letter will also provide you with
instructions on how to proceed if the confirmation does not reflect your voting
instructions correctly.

   Telephone Voting. You may give your voting instructions over the telephone
by calling 1-800-[    ]. A representative of SCC will answer your call. When
receiving your instructions by telephone, the SCC representative is required to
ask you for your full name, address, social security or employer identification
number, title (if the person giving the proxy is authorized to act for an
entity, such as a corporation), the number of shares of 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, within [  ] hours, send you a letter or mailgram to
confirm your vote. That letter will also ask you to call SCC immediately if the
confirmation does not reflect your instructions correctly.

   As the Meeting date approaches, you may receive a call from a representative
of SCC if AGAM has not yet received your vote. SCC may ask you for authority,
by telephone or by electronically transmitted instructions, to permit SCC to
sign a proxy on your behalf. SCC will record all instructions it receives from
shareholders by telephone or electronically, and the proxies it signs in
accordance with those instructions, in accordance with the procedures set forth
above. The Directors of the Fund believe those procedures are reasonably
designed to determine accurately the shareholder's identity and voting
instructions.

   Voting by Mail. If you wish to participate in the Meeting, but do not wish
to give a proxy by telephone, you can still complete, sign and mail the proxy
card received with the proxy statement or attend the Meeting in person.

Shareholder Proposals at Future Meetings

   The Fund does not hold regular annual or other meetings of shareholders.
Shareholder proposals to be presented at any future meeting of shareholders of
the Fund must be received by the Fund a reasonable time before that meeting in
order for such proposals to be considered for inclusion in the proxy materials
relating to that meeting.

April 12, 2000

                                       19
<PAGE>

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 10, 2000

                                       20
<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").

                               W I T N E S S E T H

         WHEREAS, the Fund is registered with the Securities and Exchange
Commission as a closed-end management investment company under the Investment
Company Act of 1940, as amended (the "Investment Company Act");

         WHEREAS, the Fund desires to retain the Adviser as investment manager
to furnish certain investment advisory services to the Fund, the and Adviser is
willing to furnish those services;

         NOW THEREFORE, the parties agree as follows:

1.       APPOINTMENT OF ADVISER

         The Fund hereby appoints the Adviser, subject to the supervision of the
Directors of the Fund and the terms of this Agreement, as the investment adviser
for the Fund. The Adviser accepts such appointment and agrees to render the
services and to assume the obligations set forth in this Agreement commencing on
its effective date. The Adviser will be an independent contractor and will have
no authority to act for or represent the Fund in any way or otherwise be deemed
an agent unless expressly authorized in this Agreement or another writing by the
Fund and the Adviser.

2.       DUTIES OF THE ADVISER

a.       Subject to the general supervision of the Directors of the Fund and the
         terms of this Agreement, the Adviser will at its own expense select,
         contract with, and compensate an investment subadviser (the
         "Subadviser") to manage the investments and determine the composition
         of the assets of the Fund; provided, that any contract with the
         Subadviser (the "Subadvisory Agreement") will be in compliance with and
         approved as required by the Investment Company Act. Subject always to
         the direction and control of the Directors of the Fund, the Adviser
         will monitor compliance of the Subadviser with the investment
         objectives and investment policies, as set forth in the Fund's
         registration statement as filed with the Securities and Exchange
         Commission, and review and report to the Directors of the Fund on
         the performance of the Subadviser.

                                      -1-
<PAGE>

b.       The Adviser will oversee the  administration  of certain aspects of the
         Fund's  business and affairs and will furnish to the Fund the following
         services:

         (1)      Office and Other Facilities. The Adviser will furnish to the
                  Fund office space in the offices of the Adviser or in such
                  other place as may be agreed upon by the parties to this
                  Agreement from time to time and such other office facilities,
                  utilities and office equipment as are necessary for the Fund's
                  operations.

         (2)      Directors and Officers. The Adviser agrees to permit
                  individuals who are directors, officers or employees of the
                  Adviser to serve (if duly elected or appointed) as Directors
                  or officers of the Fund, without remuneration from or other
                  cost to the Fund.

         (3)      Other Personnel.  The Adviser will furnish to the Fund, at the
                  Fund's  expense,   any  other  personnel   necessary  for  the
                  operations of the Fund.

         (4)      Reports to Fund. The Adviser will furnish to or place at the
                  disposal of the Fund such information, reports, valuations,
                  analyses and opinions as the Fund may, at any time or from
                  time to time, reasonably request or as the Adviser may deem
                  helpful to the Fund, provided that the expenses associated
                  with any such materials furnished by the Adviser at the
                  request of the Fund will be borne by the Fund.

3.       EXPENSES ASSUMED BY THE FUND

         In addition to paying the advisory fee provided for in Section 5, the
Fund will pay all expenses of its organization, operations and business not
specifically assumed or agreed to be paid by the Adviser as provided in this
Agreement, by the Subadviser as provided in the Subadvisory Agreement, by the
Administrator under an administration agreement, or by the principal underwriter
(the "Distributor") of the Fund's shares, as that term is defined in Section
2(a)(29) of the Investment Company Act, as provided in a distribution agreement.
Without limiting the generality of the foregoing, the Fund, in addition to
certain expenses specifically described in Section 2 above, will pay or arrange
for the payment of the following:

a.       Custody and Accounting Services. All expenses of the transfer, receipt,
         safekeeping, servicing and accounting for the Fund's cash, securities,
         and other property, including all charges of depositories, custodians
         and other agents, if any;

b.       Shareholder Servicing. All expenses of maintaining and servicing
         shareholder accounts, including all charges of the Fund's transfer,
         shareholder recordkeeping, dividend disbursing, repurchase, and other
         agents, if any;

                                      -2-
<PAGE>

c.       Shareholder Communications. All expenses of preparing, setting in type,
         printing, and distributing reports, repurchase notifications, and other
         communications to shareholders;

d.       Shareholder Meetings. All expenses incidental to holding meetings of
         Fund shareholders, including the printing of notices and proxy
         material, and proxy solicitation;

e.       Prospectuses. All expenses of preparing, setting in type, and printing
         of annual or more frequent revisions of the Fund's prospectus and
         statement of additional information and any supplements to those
         documents and of mailing them to shareholders;

f.       Pricing. All expenses of computing the net asset value per share for
         the Fund, including the cost of any equipment or services used for
         obtaining price quotations and valuing its investment portfolio;

g.       Communication Equipment. All charges for equipment or services used for
         communication between the Adviser or the Fund and the custodian,
         transfer agent or any other agent selected by the Fund;

h.       Legal and Accounting Fees and Expenses. All charges for services and
         expenses of the Fund's legal counsel and independent auditors;

i.       Directors and Officers. Except as expressly provided otherwise in
         paragraph 2.b.(2), all compensation of Directors and officers, all
         expenses incurred in connection with the service of Directors and
         officers, and all expenses of meetings of the Directors and Committees
         of Directors;

j.       Federal Registration Fees. All fees and expenses of registering and
         maintaining the registration of the Fund under the Investment Company
         Act and the registration of the Fund's shares under the Securities Act
         of 1933, as amended (the "1933 Act"), including all fees and expenses
         incurred in connection with the preparation, setting in type, printing
         and filing of any registration statement and prospectus under the 1933
         Act or the Investment Company Act, and any amendments or supplements to
         those documents that may be made from time to time;

k.       State Registration Fees. All fees and expenses of qualifying and
         maintaining qualification of the Fund and of the Fund's shares for sale
         under securities laws of various states or jurisdictions, and of
         registration and qualification of the Fund under all other laws
         applicable to the Fund or its business activities (including
         registering the Fund as a broker-dealer, or any officer of the Fund or
         any person as agent or salesman of the Fund in any state);

                                      -3-
<PAGE>

l.       Issue and Repurchase of Fund Shares. All expenses incurred in
         connection with the issue, repurchase, and transfer of Fund shares,
         including the expense of confirming all share transactions, of
         preparing and transmitting certificates for shares of the Fund, and of
         sending notifications of repurchase offers to shareholders;

m.       Bonding and Insurance. All expenses of bond, liability and other
         insurance coverage required by law or regulation or deemed advisable by
         the Fund's Directors including, without limitation, such bond,
         liability and other insurance expense that may from time to time be
         allocated to the Fund in a manner approved by its Directors;

n.       Brokerage Commissions. All brokers' commissions and other charges
         incident to the purchase, sale, or lending of the Fund's portfolio
         securities;

o.       Taxes. All taxes or governmental fees payable by or with respect to the
         Fund to federal, state, or other governmental agencies, domestic or
         foreign, including stamp or other transfer taxes, and all expenses
         incurred in the preparation of tax returns;

p.       Trade Association Fees. All fees, dues, and other expenses incurred in
         connection with the Fund's membership in any trade association or other
         investment organization; and

q.       Nonrecurring and Extraordinary Expenses. Such nonrecurring expenses as
         may arise, including the costs of actions, suits, or proceedings to
         which the Fund is, or is threatened to be made, a party and the
         expenses the Fund may incur as a result of its legal obligation to
         provide indemnification to its Directors, officers, agents and
         shareholders.

4.       COMPENSATION OF ADVISER

a.       The Fund will pay the Adviser a fee, computed daily and paid monthly,
         on or before the last business day of the month, at the following
         annualized rate: 0.85% of the Fund's average daily net assets for
         average daily net assets up to and including $1 billion; 0.80% of the
         Fund's average daily net assets for average daily net assets between $1
         billion and up to and including $2 billion; and 0.75% of the Fund's
         average daily net assets for average daily net assets in excess of $2
         billion. In calculating the net assets of the Fund for purposes of this
         computation, all liabilities of the Fund will be deducted from gross
         assets except the principal amount of any indebtedness for money
         borrowed, including debt securities issued by the Fund.

                                      -4-
<PAGE>

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.

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,

                                      -5-
<PAGE>

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

                                      -6-
<PAGE>

c.       the chief executive officer or controlling stockholder of the Adviser
         or the portfolio manager of the Fund changes.

12.      AMENDMENTS TO THE AGREEMENT

         This Agreement may be amended by written amendment signed by the
parties, provided that the terms of any material amendment shall be approved (i)
by the vote of a majority of the outstanding voting securities of the Fund and
(ii) by the vote of a majority of the Directors of the Fund who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, if such approval is required
by law.

13.      ENTIRE AGREEMENT

         This Agreement contains the entire understanding and agreement of the
parties.

14.      HEADINGS

         The headings in the sections of this Agreement are inserted for
convenience of reference only and will not constitute a part of this Agreement.

15.      NOTICES

         All notices required to be given pursuant to this Agreement will be
delivered or mailed to the last known business address of the Fund or Adviser in
person or by registered mail or a private mail or delivery service providing the
sender with notice of receipt. Notice will be deemed given on the date delivered
or mailed in accordance with this section.

16.      SEVERABILITY

         If any provision of this Agreement is held or made invalid by a court
decision, statute, rule, or otherwise, the remainder of this Agreement will not
be affected.

17.      GOVERNING LAW

         The provisions of this Agreement will be construed and interpreted in
accordance with the laws of the Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of the Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter will control.

                                      -7-
<PAGE>

18.      LIMITATION OF LIABILITY OF ADVISER

         Neither the Adviser nor any of its officers, directors, or employees,
nor any person performing executive, administrative, trading, or other functions
for the Fund (at the direction or request of the Adviser) or the Adviser in
connection with the Adviser's discharge of its obligations undertaken or
reasonably assumed with respect to this Agreement, shall be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except for loss resulting from
willful misfeasance, bad faith, or gross negligence in the performance of its or
his duties on behalf of the Fund or from reckless disregard by the Adviser or
any such person of the duties of the Adviser under this Agreement.

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed under seal by their duly authorized officers as of the
date first set forth above.

                                        NORTH AMERICAN SENIOR FLOATING RATE
                                             FUND, INC.



                                            By:
                                                --------------------------------


                                        American General Asset Management Corp.


                                            By:
                                                --------------------------------

                                      -8-
<PAGE>

                                                                       Exhibit B

                              SUBADVISORY AGREEMENT


                  THIS AGREEMENT is made and entered into as of ______ ___,
2000, between AMERICAN GENERAL ASSET MANAGEMENT CORP. (the "Adviser"), a
Delaware corporation registered under the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), and CYPRESSTREE INVESTMENT MANAGEMENT COMPANY,
INC. (the "Subadviser"), a Delaware corporation also registered under the
Advisers Act.

                                   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.

                                       1
<PAGE>

                                      -2-

2.       DUTIES OF THE SUBADVISER

a.       Investments. The Subadviser is authorized and directed and agrees,
         subject to the stated investment policies and restrictions of the Fund
         as set forth in the Prospectus and subject to the directions of the
         Adviser and the Fund's Board of Directors, to purchase, hold and sell
         investments for the Fund ("Fund Investments") and to monitor on a
         continuous basis the performance of such Fund Investments. Subject to
         the supervision of the Board of Directors and the Adviser and the terms
         and conditions of this Agreement, including without limitation section
         2(b), the Subadviser will: (1) manage the Fund's Assets in accordance
         with the Fund's investment objective, policies and limitations as
         stated in the Prospectus; (2) make investment decisions for the Fund;
         (3) place purchase and sale orders for portfolio transactions for the
         Fund; and (4) manage otherwise uninvested Fund cash. In providing these
         services, the Subadviser will formulate and implement a continuous
         program of investment, evaluation and, if appropriate, sale and
         reinvestment of the Fund's Assets. The Adviser agrees to provide to the
         Subadviser such assistance as may be reasonably requested by the
         Subadviser in connection with its activities under this Agreement,
         including, without limitation, information concerning the Fund, its
         funds available (or to become available) for investment, and generally
         as to the condition of the Fund's affairs.

b.       Compliance with Applicable Laws and Governing Documents. In the
         performance of its duties and obligations under this Agreement, the
         Subadviser will act in conformity with the Prospectus and with the
         instructions and directions received in writing from the Adviser or the
         Board of Directors of the Fund and will comply with the requirements of
         the 1940 Act, the Advisers Act, the Internal Revenue Code of 1986, as
         amended (the "Code") (including the requirements for qualification as a
         regulated investment company) and all other federal and state laws and
         regulations applicable to its services under this Agreement.

         The Adviser will provide the Subadviser with reasonable advance notice
         of any change in the Fund's investment objectives, policies and
         restrictions as stated in the Prospectus, and the Subadviser will, in
         the performance of its duties and obligations under this Agreement,
         manage the Fund Investments consistent with such changes. The Adviser
         acknowledges and agrees that the Prospectus will at all times be in
         compliance with all disclosure requirements under all applicable
         federal and state laws and regulations relating to the Fund, including,
         without limitation, the 1940 Act and the rules and regulations under
         this Agreement, and that the Subadviser will have no liability in
         connection therewith, except as to the accuracy of material information
         furnished in writing by the Subadviser to the Fund or to the Adviser
         specifically for inclusion in the Prospectus. The Subadviser hereby
         agrees to provide to the Adviser in a timely manner such information
         relating to the Subadviser and its relationship to, and actions for,
         the Fund as may be required to be contained in the Prospectus.
<PAGE>

                                      -3-

         In fulfilling these requirements and its other requirements and
         obligations under this Agreement, the Subadviser will be entitled to
         rely on and act in accordance with (1) information provided to it by
         the Fund's administrator, fund accountant, custodian or other service
         provider and (2) instructions, which may be standing instructions, from
         the Adviser. The Adviser agrees to provide or cause to be provided to
         the Subadviser on an ongoing basis upon request by the Subadviser, such
         information as is requested by the Subadviser for the performance of
         its obligations under this Agreement, and the Subadviser will not be in
         breach of any term of this Agreement or be deemed to have acted
         negligently if the Adviser fails to provide or cause to be provided
         such information and the Subadviser relies on the information most
         recently provided to it.

c.       Voting of Proxies. The Subadviser will have the power to vote, either
         in person or by proxy, all securities in which the Fund may be invested
         from time to time, and will not be required to seek instructions from
         the Adviser or the Fund.

d.       Agent. Subject to any other written instructions of the Adviser or the
         Fund, the Subadviser is hereby appointed the Adviser's and the Fund's
         agent and attorney-in-fact for the limited purposes of executing
         account documentation, agreements, contracts and other documents as the
         Subadviser will be requested by brokers, dealers, counterparties and
         other persons in connection with its management of the assets of the
         Fund.

e.       Portfolio Transactions. Subject to the approval of the Board of
         Directors of the Fund, the Subadviser, in carrying out its duties
         hereunder, may cause the Fund to pay a broker-dealer which furnishes
         brokerage or research services as such services are defined under
         Section 28(e) of the Securities Exchange Act of 1934, as amended (the
         "34 Act"), a higher commission than that which might be charged by
         another broker dealer which does not furnish brokerage or research
         services or which furnishes brokerage or research services deemed to be
         of lesser value, if such commission is deemed reasonable in relation to
         the brokerage and research services provided by the broker-dealer,
         viewed in terms of either that particular transaction or the overall
         responsibilities of the Subadviser with respect to the accounts as to
         which it exercises investment discretion (as such term is defined under
         Section 3(a)(35) of the 34 Act).

         It is recognized that the services provided by such brokers or other
         entities may be useful to the Subadviser in connection with the
         Subadviser's services to other clients. On occasions when the
         Subadviser deems the purchase or sale of a security to be in the best
         interests of the Fund as well as other clients of the Subadviser, the
         Subadviser, to the extent permitted by applicable laws and regulations,
         may, but is under no obligation to, aggregate the securities to be sold
         or purchased in order to obtain the most favorable price or lower
         brokerage commissions and efficient
<PAGE>

                                      -4-

         execution. In that event, allocation of securities so sold or
         purchased, as well as the expenses incurred in the transaction, will be
         made by the Subadviser in the manner the Subadviser considers to be the
         most equitable and consistent with its fiduciary obligations to the
         Fund and to its other clients over time. It is recognized that in some
         cases, this procedure may adversely affect the price paid or received
         by the Fund or the size of the position obtainable for, or disposed of
         by, the Fund.

f.       Certain Transactions. The Subadviser and any affiliated person of the
         Subadviser will not purchase securities or other instruments from or
         sell securities or other instruments to the Fund; provided, however,
         the Subadviser may purchase securities or other instruments from or
         sell securities or other instruments to the Fund if the transaction is
         permissible under applicable laws and regulations, including, without
         limitation, the 1940 Act and the Advisers Act and the rules and
         regulations promulgated under both those acts.

         The Subadviser, including its Access Persons (as defined in Rule
         17j-1(e) under the 1940 Act), agrees to observe and comply with Rule
         17j-1 and its Code of Ethics (which will comply in all material
         respects with Rule 17j-1, as amended from time to time). On a quarterly
         basis, the Subadviser will either (i) certify to the Adviser that the
         Subadviser and its Access Persons have complied with the Subadviser's
         Code of Ethics with respect to the Fund's assets or (ii) identify any
         material violations that have occurred with respect to the Fund's
         assets. In addition, the Subadviser will report at least annually to
         the Adviser concerning any other violations of the Subadviser's Code of
         Ethics that required significant remedial action and that were not
         previously reported.

g.       Books and Records. Pursuant both to the 1940 Act and the Advisers Act
         and the rules and regulations promulgated under those acts, the
         Subadviser will maintain separate books and records of all matters
         pertaining to the Fund's assets. The Fund's books and records will be
         available to the Adviser at any time upon reasonable request during
         normal business hours and will be available for telecopying without
         unreasonable delay to the Adviser during any day that the Fund is open
         for business.

h.       Information Concerning Fund Investments and Subadviser. From time to
         time as the Adviser or the Fund may reasonably request (but no less
         often than quarterly), the Subadviser will furnish or cause to be
         furnished the requesting party reports on portfolio transactions and
         reports on Fund Investments held in the portfolio, all in such detail
         as the Adviser or the Fund may reasonably request. The Subadviser will
         also inform the Adviser promptly of changes in portfolio managers
         responsible for Subadviser Assets or of changes in the control of the
         Subadviser. The Subadviser will be available to its officers and
         employees to meet with the Fund's Board of Directors in person on
         reasonable notice to review the Fund Investments and the Subadviser
         will report to the Board of Directors in writing on the Fund
         Investments monthly.
<PAGE>

                                      -5-

i.       Custody Arrangements. The Subadviser will on each business day provide
         the Adviser and the Fund's custodian such information as the Adviser
         and the Fund's custodian may reasonably request relating to all
         transactions concerning the Fund Investments including, without
         limitation, recommendations, in accordance with policies and procedures
         established by the Directors, as to the fair value of securities for
         which market quotes are not available.

3.       INDEPENDENT CONTRACTOR

                  In the performance of its duties under this Agreement, the
Subadviser is an independent contractor and unless otherwise expressly provided
in this Agreement or otherwise authorized in writing, will have no authority to
act for or represent the Fund or the Adviser in any way or otherwise be deemed
an agent of the Fund or the Adviser.

4.       EXPENSES

                  During the term of this Agreement, Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage fees and commissions and other transaction charges, if any) purchased
for the Fund. The Subadviser will not be responsible for any expenses of the
operations of the Fund including, without limitation, brokerage fees and
commissions and other transaction charges, if any. The Subadviser will not be
responsible for the Fund's or the Adviser's expenses.

5.       COMPENSATION

a.       The Adviser will pay the Subadviser a fee, computed daily and paid
         monthly on or before the last business day of the month, at the
         following annualized rate: 0.45% of the Fund's average daily net assets
         for average daily net assets up to and including $1 billion; 0.40% of
         the Fund's average daily net assets for average daily net assets
         between $1 billion and up to and including $2 billion; and 0.35% of the
         Fund's average daily net assets for average daily net assets in excess
         of $2 billion. In calculating the net assets of the Fund, for purposes
         of this computation, all liabilities of the Fund will be deducted from
         gross assets except the principal amount of any indebtedness for money
         borrowed, including debt securities issued by the Fund.

b.       If this Agreement becomes effective or terminates before the end of any
         month, the fee for the period from the effective date to the end of
         such month or from the beginning of the prorated according to the
         proportion which that period bears to the full month in which the
         effectiveness or termination occurs.
<PAGE>

                                      -6-

c.       Notwithstanding any other provision of this Agreement, the Subadviser
         may from time to time agree not to impose all or a portion of its fee
         otherwise payable under this Agreement (in advance of the time such fee
         or portion of the fee would otherwise accrue). Any such fee reduction
         may be discontinued or modified by the Subadviser at any time.

6.       REPRESENTATION AND WARRANTIES OF SUBADVISER

                  The Subadviser represents and warrants to the Adviser and the
Fund as follows:

a.       The Subadviser is registered as an investment adviser under the
         Advisers Act;

b.       The Subadviser is a corporation duly organized and validly existing
         under the laws of the State of Delaware with the power to own and
         possess its assets and carry on its business as it is now being
         conducted;

c.       The execution, delivery and performance by the Subadviser of this
         Agreement are within the Subadviser's powers and have been duly
         authorized by its Board of Directors or shareholders, and no action by
         or in respect of, or filing with, any governmental body, agency or
         official is required on the part of the Subadviser for the execution,
         delivery and performance by the Subadviser of this Agreement, and the
         execution, delivery and performance by the Subadviser of this Agreement
         do not contravene or constitute a default under (i) any provision of
         applicable law, rule or regulation, (ii) the Subadviser's governing
         instruments, or (iii) any material agreement, judgment, injunction,
         order, decree or other instrument binding upon the Subadviser;

d.       The Form ADV of the Subadviser previously provided to the Adviser is a
         true and complete copy of the form filed with the SEC and the
         information contained therein is accurate and complete in all material
         respects.

7.       REPRESENTATIONS AND WARRANTIES OF ADVISER

                  The Adviser represents and warrants to the Subadviser as
follows:

a.       The Adviser is registered as an investment adviser under the Advisers
         Act;

b.       The Adviser is a corporation duly organized and validly existing under
         the laws of the State of Delaware with the power to own and possess its
         assets and carry on its business as it is now being conducted;

c.       The execution, delivery and performance by the Adviser of this
         Agreement are
<PAGE>

                                      -7-

         within the Adviser's powers and have been duly authorized by its Board
         of Directors or shareholders, and no action by or in respect of, or
         filing with, any governmental body, agency or official is required on
         the part of the Adviser for the execution, delivery and performance by
         the Adviser of this Agreement, and the execution, delivery and
         performance by the Adviser of this Agreement do not contravene or
         constitute a default under (i) any provision of applicable law, rule or
         regulation, (ii) the Adviser's governing instruments, or (iii) any
         material agreement, judgment, injunction, order, decree or other
         instrument binding upon the Adviser;

d.       The Form ADV of the Adviser previously provided to the Subadviser is a
         true and complete copy of the form filed with the SEC and the
         information contained therein is accurate and complete in all material
         respects;

e.       The Adviser acknowledges that it has received a copy of the
         Subadviser's Form ADV prior to the execution of this Agreement;

f.       The Fund is in compliance in all material respects, and during the term
         of this Agreement will remain in compliance in all material respects,
         with all federal and state laws, rules and regulations applicable to
         the Fund and the operation of its business (other than those related to
         investment objectives, policies and restrictions over which the
         Subadviser has discretion pursuant to the terms hereof), including,
         without limitation, applicable disclosure and filing obligations for
         prospectuses, statements of additional information, registration
         statements, periodic reports to shareholders and regulatory bodies,
         proxy statements and promotional materials and advertisements; and

g.       The Fund is in compliance in all material respects, and during the term
         of this Agreement will remain in compliance in all material respects,
         with the terms and conditions of the Prospectus (other than those
         related to investment objectives, policies and restrictions over which
         the Subadviser has discretion pursuant to the terms hereof), including,
         without limitation, provisions relating to the computation of the
         Fund's net asset value and those relating to processing purchase,
         exchange and repurchase requests.

8.       SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE INFORMATION

                  All representations and warranties made by the Subadviser and
the Adviser pursuant to Sections 6 and 7, respectively, will survive for the
duration of this Agreement and the parties to this Agreement will promptly
notify each other in writing upon becoming aware that any of the foregoing
representations and warranties are no longer true.
<PAGE>

                                      -8-

9.       LIABILITY

                  Neither the Subadviser nor any of its officers, directors, or
employees, nor any person performing executive, administrative, trading, or
other functions for the Fund (at the direction or request of the Subadviser) or
the Subadviser in connection with the Subadviser's discharge of its obligations
undertaken or reasonably assumed with respect to this Agreement, shall be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates, except for loss
resulting from willful misfeasance, bad faith, or gross negligence in the
performance of its or his or her duties on behalf of the Fund or from reckless
disregard by the Subadviser or any such person of the duties of the Subadviser
under this Agreement.

10.      DURATION AND TERMINATION

a.       This Agreement will become effective on the date of the meeting of the
         shareholders of the Fund, at which meeting this New Subadvisory
         Agreement is approved by the vote of a majority of the outstanding
         voting securities (as defined in the Investment Company Act) of the
         Fund. The Agreement will continue in effect for two years from the date
         of its execution, and from year to year thereafter, but only so long as
         such continuance is specifically approved at least annually either by
         the Directors of the Fund or by the vote of a majority of the
         outstanding voting securities of the Fund, provided that in either
         event such continuance will also be approved by the vote of a majority
         of the Directors of the Fund who are not interested persons (as defined
         in the Investment Company Act) of any party to this Agreement cast in
         person at a meeting called for the purpose of voting on such approval.

b.       If the shareholders of the Fund fail to approve the Agreement or any
         continuance of the Agreement, the Subadviser will continue to act as
         subadviser with respect to the Fund pending the required approval of
         the Agreement or its continuance or of a new contract with the
         Subadviser or a different adviser or other definitive action; provided,
         that the compensation received by the Subadviser in respect of the Fund
         during such period is in compliance with Rule 15a-4 under the
         Investment Company Act.

c.       This Agreement may be terminated at any time, without the payment of
         any penalty, by the Directors of the Fund, by the Adviser, or by the
         vote of a majority of the outstanding voting securities of the Fund, on
         sixty days' written notice to the Subadviser; or by the Subadviser on
         sixty days' written notice to the Fund and the Adviser. This Agreement
         may be terminated immediately in the event of a material breach of any
         provision of this Agreement by the other party to this Agreement. This
         Agreement will automatically terminate, without the payment of any
         penalty, in the event of its assignment (as defined in the Investment
         Company Act), or on termination of the Advisory Agreement.
<PAGE>

                                      -9-

11.      REFERENCE TO SUBADVISERS

                  Neither the Adviser, the Fund nor any affiliated person or
agent of the Adviser or the Fund will make reference to or use the name of
"CypressTree Investment Management Company" or any derivative thereof or logo
associated with that name, except references concerning the identity of and
services provided by the Subadviser to the Fund, which references will not
differ in substance from those included in the Prospectus and this Agreement, in
any advertising or promotional materials without the prior approval of the
Subadviser, which approval will not be unreasonably withheld or delayed.

                  Upon termination of this Agreement in accordance with Section
10(b) hereof, the Adviser, the Fund and the Fund and their affiliates will cease
to make such reference or use such name (or derivative or logo).

12.      PROVISION OF CERTAIN INFORMATION BY SUBADVISER

                  The Subadviser will promptly notify the Fund in writing of the
occurrence of any of the following events:

a.       the Subadviser fails to be registered as an investment adviser under
         the Investment Advisers Act or under the laws of any jurisdiction in
         which the Adviser is required to be registered as an investment adviser
         in order to perform its obligations under this Agreement;

b.       the Subadviser is served or otherwise receives notice of any action,
         suit, proceeding, inquiry or investigation, at law or in equity, before
         or by any court, public board or body, involving the affairs of the
         Fund; and

c.       the chief executive officer or controlling stockholder of the
         Subadviser or the portfolio manager of the Fund changes.

13.      AMENDMENT

                  This Agreement may be amended by written amendment signed by
the parties, provided that the terms of any material amendment shall be approved
(i) by the vote of a majority of the outstanding voting securities of the Fund
and (ii) by the vote of a majority of the Directors of the Fund who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, if such approval is required
by law.
<PAGE>

                                      -10-

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.
<PAGE>

                                      -11-

20.      SEVERABILITY

                  If any provision of this Agreement is held or made invalid by
a court decision, statute, rule, or otherwise, the remainder of this Agreement
will not be affected.

21.      ENTIRE AGREEMENT

                  This Agreement contains the entire understanding and agreement
of the parties.

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.



                                          AMERICAN GENERAL ASSET
                                          MANAGEMENT CORP.


                                          By:
                                                --------------------------------





                                          CYPRESSTREE INVESTMENT
                                          MANAGEMENT COMPANY, INC.


                                          By:
                                                --------------------------------
<PAGE>

[X] PLEASE MARK VOTES
    AS IN THIS EXAMPLE

- --------------------------------------------------------------------------------
                 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 SPECIAL MEETING OF SHAREHOLDERS ON JUNE 22, 2000

The undersigned hereby appoints John I. Fitzgerald, John N. Packs and Cathy Z.
Angellis, and each of them separately, proxies with power of substitution to
each, and hereby authorizes them to represent and to vote, as designated hereon,
at the Special Meeting of Shareholders of 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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