SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[ ] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
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SunAmerica Senior Floating Rate Fund, Inc.
(Name of Registrant as Specified in its Charter)
----------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
(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:
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(4) Date Filed:
[LOGO]
AIG SunAmerica SunAmerica Senior
Asset Management Floating Rate Fund, Inc.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311
February 11, 2005
Dear Shareholder:
SunAmerica Senior Floating Rate Fund, Inc.(the "Fund") has called a
Special Meeting of Shareholders (the "Meeting") to approve a new sub-advisory
agreement with AIG Global Investment Corp. ("AIGGIC") following the resignation
of Stanfield Capital Partners LLC ("Stanfield"). The Investment Company Act of
1940 requires shareholder approval of the sub-advisory agreement with AIGGIC.
As a result, a new sub-advisory agreement is being submitted for approval at
the Meeting.
The Board of Directors of the Fund believes that the proposal set forth in
the Notice of Special Meeting and accompanying Proxy Statement is important and
recommends that you read the enclosed materials carefully and then provide a
vote in favor of the proposal.
You will receive a proxy card. There are several ways to vote your shares
including mail, telephone, and the Internet. Please refer to the proxy card for
more information on how to vote. Your vote is important. If we do not receive a
response by one of these methods, you may receive a telephone call from our
proxy solicitor, ADP Investor Communication Services, reminding you to vote.
Shareholders are urged to vote using any of the available options to
ensure a quorum at the meeting. Your vote is important regardless of the size
of your shareholding.
We appreciate your cooperation and continued support.
Sincerely,
/s/ Vincent Marra
President
SUNAMERICA SENIOR FLOATING
RATE FUND, INC.
IMPORTANT NEWS FOR SHAREHOLDERS OF
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
While we encourage you to read the full text of the enclosed Proxy
Statement, here is a brief overview of the matter affecting the SunAmerica
Senior Floating Rate Fund, Inc. (the "Fund") that requires a shareholder vote.
Q: WHO IS ASKING FOR MY VOTE?
A: The Board of Directors (the "Board") of the Fund has requested your vote at
a special shareholders meeting to be held at 10:00 a.m., Eastern time, on
March 31, 2005 (the "Meeting") at Harborside Financial Center, 3200 Plaza
5, Jersey City, NJ 07311.
Q: WHY DID YOU SEND ME THIS BOOKLET?
A: You are receiving these proxy materials because you have the right to vote
on an important proposal concerning your investment in the Fund.
Q. WHAT PROPOSAL AM I BEING ASKED TO VOTE ON?
A. You are being asked to vote on the approval of a new sub-advisory agreement
(the "New Agreement") between AIG SunAmerica Asset Management Corp.
("SAAMCo") and AIG Global Investment Corp. ("AIGGIC"). Because the Fund's
former sub-adviser, Stanfield Capital Partners, LLC ("Stanfield"), decided
to withdraw from the sub-advisory business, the Fund needed to find and
hire a new sub-adviser.
The resignation of Stanfield took effect on December 31, 2004. To ensure
the uninterrupted receipt by the Fund of sub-advisory services during the
period between the resignation of Stanfield and the Meeting, the Fund's
Board, at a meeting held on December 20, 2004, approved an interim
sub-advisory agreement between SAAMCo and AIGGIC (the "Interim Agreement"),
which became effective as of the resignation of Stanfield and will remain
in effect for 150 days or until the approval of a new agreement that will
replace it. On January 12, 2005, for the reasons described in the Proxy
Statement, the Board approved the New Agreement that provides for the
engagement of AIGGIC as the Fund's sub-adviser on a continuing basis. You
are being asked to approve the New Agreement.
The terms of the New Agreement (and the Interim Agreement) are
substantially similar in all material respects to the previously existing
sub-advisory agreement with Stanfield (the "Former Agreement"), except for
the identity of the sub-adviser (AIGGIC), the effective date, and the
termination date. The New Agreement will have, as is customary for
investment advisory agreements, an initial term of two years and a
provision that it will continue thereafter if approved annually by a vote
of either the Board or the shareholders of the Fund. If the New Agreement
is approved, it will take effect immediately.
Q. WILL THE FEES PAID FOR SUB-ADVISORY SERVICES CHANGE?
A. No. The fees payable by SAAMCo to AIGGIC under the New Agreement are the
same as those payable by SAAMCo to Stanfield under the Former Agreement.
Q. HOW MANY VOTES ARE NEEDED TO APPROVE THE PROPOSAL?
A. Approval of the New Agreement requires approval by a majority of the
outstanding voting shares of the Fund. This majority is defined by the
Investment Company Act as the lesser of (1) 67% or more of the voting
shares of the Fund present at the Meeting, provided that holders of more
than 50% of the Fund's outstanding voting shares are present or represented
by proxy, or (2) more than 50% of the Fund's outstanding voting shares.
Q. WHAT IF YOU DO NOT HAVE ENOUGH VOTES TO MAKE THIS DECISION BY THE SCHEDULED
MEETING DATE?
A. If we do not receive sufficient votes to hold the Meeting, we, or a proxy
solicitation firm, may contact you by mail or telephone to encourage you to
vote. Shareholders should review the proxy materials and cast their vote to
avoid additional mailings or telephone calls. If we do not have enough
votes to approve the proposals by the time of the shareholder meeting at
10:00 a.m. on March 31, 2005, the meeting may be adjourned to permit
further solicitation of proxy votes.
Q. HOW DOES THE FUND'S BOARD RECOMMEND THAT I VOTE?
A. After careful consideration, the Fund's Board, including the non-interested
directors, recommends that you vote FOR the proposal.
Q. HOW CAN I VOTE MY SHARES?
A. Please choose one of the following options to vote your shares:
o By mail, with the enclosed proxy card;
o By touch-tone telephone, with a toll-free call to the telephone number
that appears on your proxy card;
o Through the Internet, by using the Internet address located on your
proxy card and following the instructions on the site; or
o In person at the Meeting.
Your proxy is important and will help avoid the additional expense of
another solicitation. Thank you for promptly submitting your vote.
ii
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311
----------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 31, 2005
----------------------------
To Our Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Meeting") of
Shareholders of the SunAmerica Senior Floating Rate Fund, Inc. (the "Fund")
will be held on March 31, 2005 at 10:00 a.m., Eastern time, at the Fund's
offices at Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311,
for the purpose of considering the proposals set forth below:
1. To approve the investment sub-advisory agreement between AIG
SunAmerica Asset Management Corp. ("SAAMCo") and AIG Global Investment
Corp. ("AIGGIC") as sub-adviser.
2. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Only shareholders of record at the close of business on January 13, 2005,
are entitled to vote at the Meeting and any adjournment thereof. You may vote
by mail, touch-tone telephone, Internet or in person. Please provide your vote
promptly.
By order of the Board of Directors,
/s/ Vincent Marra
President
SUNAMERICA SENIOR FLOATING
RATE FUND, INC.
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311
----------------------------
PROXY STATEMENT
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Special Meeting of Shareholders
March 31, 2005, 10:00 A.M.
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of the SunAmerica Senior
Floating Rate Fund, Inc. (the "Fund") for use at the special meeting
("Meeting") of shareholders of the Fund ("Shareholders") to be held at the
Fund's offices at Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ,
07311 on March 31, 2005, at 10:00 A.M., Eastern time, and at any adjournment
thereof. This Proxy Statement is being mailed to Shareholders on or about
February 11, 2005 on behalf of the Board.
Execution of a proxy will not in any way affect a Shareholder's right to
attend the Meeting and vote in person, and any Shareholder giving a proxy has
the right to revoke it at any time by written notice addressed to and received
by the Secretary of the Fund prior to the exercise of the proxy or by attending
the Meeting and revoking the proxy in person.
The Board has fixed the close of business on January 13, 2005 as the
record date (the "Record Date") for the determination of Shareholders entitled
to notice of and to vote at the Meeting.
As of the Record Date, 24,610,445 shares of the Fund were issued and
outstanding, including 23,841 Class A shares, 2,930,789 Class B shares,
18,691,282 Class C shares, and 2,964,533 Class D shares.
1
The name, address and percentage of ownership of Shareholders that owned
of record 5% or more of each class of shares of the Fund as of the Record Date
are as follows:
Percentage
Name Address Ownership
- -----------------------------------------------------------------
Lyle & Louise Berndt 1001 Pine Street Apt. 46 10%
Burlington, WI 53105
- -----------------------------------------------------------------
NFSC/FMTC IRA 1160 Sagebrook Way 20%
FBO Janice Rivenburg Webster, NY 14580
- -----------------------------------------------------------------
Merrill Lynch, Pierce, 4800 Deer Lake Drive East 13%
Fenner & Smith, Inc. 2nd Floor
FBO its customers Jacksonville, FL 32246
- -----------------------------------------------------------------
Carabec Partnership P.O. Box 42456 5%
Urbandale, IA 50323
- -----------------------------------------------------------------
To the knowledge of management, members of the Board, both individually
and as a group, owned less than 1% of the outstanding shares of each class of
the Fund as of the Record Date.
While not expected, the Fund may solicit proxies from Shareholders by mail
or by telephone communications from officers or employees of AIG SunAmerica
Asset Management Corp. ("SAAMCo"), the Fund's adviser, or its affiliates, who
will not receive any compensation for their solicitation services from the
Fund. In addition, a professional proxy solicitation firm may also assist in
the solicitation of voting instructions. In connection with the solicitation of
proxies, the Fund will furnish a copy of this Proxy Statement to all
Shareholders. The estimated cost of solicitation is $25,000.
Shareholders may also provide their proxies through telephone touch-tone
voting or Internet voting. These options require Shareholders to input a
control number, which is located on each proxy card. Subsequent to inputting
these numbers, Shareholders will be prompted to provide their vote on the
proposal. Shareholders will have an opportunity to review their vote and make
any necessary changes before submitting their vote and terminating their
telephone call or Internet connection.
If a Shareholder wishes to participate in the Meeting, but does not wish
to give his or her proxy by telephone or Internet, the Shareholder may submit
the proxy card originally sent with the Proxy Statement or attend in person.
Proxies executed by Shareholders may be revoked by: (i) a written instrument
received by the Secretary of the Fund at any time before they are exercised;
(ii) delivery of a later-dated proxy; or (iii) by attendance at the Meeting and
voting in person.
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Each Shareholder shall be entitled to exercise the voting rights of shares
owned of which he is a Shareholder ("Shares"). All outstanding full Shares,
irrespective of class, are entitled to one vote and each fractional Share is
entitled to the corresponding fractional vote. Shares of the Fund will be voted
in the aggregate with respect to the approval of the sub-advisory agreement.
The proposal described in this Proxy Statement and the fund affected are
shown in the table below.
PROPOSAL AFFECTED FUND
1. Approval of a sub-advisory SunAmerica Senior Floating Rate Fund
agreement with AIG Global
Investment Corp. ("AIGGIC")
A quorum for the transaction of business at the Meeting is constituted
with respect to the Fund by the presence in person or by proxy of holders of a
majority of the shares of the Fund entitled to vote at the Meeting. If a proxy
is properly executed and returned accompanied by instructions to withhold
authority, or is marked with an abstention, the shares represented thereby will
be considered to be present at the Meeting for determining the existence of a
quorum for the transaction of business with respect to the Fund.
Approval of Proposal No. 1 requires approval by the lesser of (1) 67% or
more of the voting shares of the Fund present at the Meeting, provided that
holders of more than 50% of the Fund's outstanding voting shares are present or
represented by proxy, or (2) more than 50% of the Fund's outstanding voting
shares.
Abstentions and "broker non-votes" (i.e., shares held by brokers or
nominees as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote or (ii) the broker or nominee
does not have discretionary voting power on a particular matter) will have the
same effect on Proposal No. 1 as a vote "AGAINST". Unmarked voting instructions
from Shareholders will be voted in favor of the proposal. The Fund may adjourn
the Meeting to the extent permitted by law, if necessary to obtain additional
proxies from Shareholders. The Fund and SAAMCo will split evenly the costs of
preparing and distributing to Shareholders additional proxy materials, if
required in connection with any adjournment.
The Fund is a closed-end, non-diversified management investment company
organized in Maryland in 1998 and registered under the Investment Company Act
of 1940, as amended (the "1940 Act"). The Fund consists of multiple classes.
The costs of the Meeting, including the solicitation of proxies, will be
split evenly between the Fund and SAAMCo. In addition to the solicitation of
proxies by mail, directors and agents of the Fund may solicit proxies in person
or by telephone.
3
Copies of the Fund's Annual Report for the most recently completed fiscal
year and Semi-Annual Report are available without charge to Shareholders. To
obtain a copy, call the Funds at (800) 858-8850 ext. 5660, or write to the
Funds at Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311.
AIG SunAmerica Capital Services, Inc. ("SACS"), the Fund's distributor,
and SAAMCo, the Fund's adviser, are both located at Harborside Financial
Center, 3200 Plaza S, Jersey City, NJ 07311.
PROPOSAL NO. 1
Approval of a Sub-Advisory Agreement with AIGGIC
SAAMCo is the administrator and investment adviser of the Fund. As such,
SAAMCo has overall responsibility for the general management and day-to-day
operations of the Fund, but may employ one or more investment sub-advisers to
make the investment decisions for all or a portion of the Fund. SAAMCo
previously contracted with Stanfield Capital Partners LLC ("Stanfield") to
manage the investment and reinvestment of the Fund's assets (the "Former
Agreement"). On December 31, 2004, Stanfield resigned as a sub-adviser to the
Fund due to its retirement from the sub-advisory business.
At a telephone meeting held on December 20, 2004, the Board unanimously
approved the interim sub-advisory agreement between SAAMCo and AIGGIC (the
"Interim Agreement"). The Interim Agreement was approved by the Board pursuant
to Rule 15a-4 under the 1940 Act, to ensure the uninterrupted receipt by the
Fund of investment advisory services during the period between the resignation
of Stanfield, which took effect on December 31, 2004, and the Meeting. This
Rule, under certain circumstances, allows interim sub-advisory agreements to
take effect, and to remain in effect for up to 150 days, without receiving
prior shareholder approval, as long as the fees payable under such agreement do
not exceed the fees payable under the predecessor agreement that had been
approved by the shareholders. The Interim Agreement will terminate on the
earlier of the effective date of the new sub-advisory agreement between SAAMCo
and AIGGIC (the "New Agreement") or 150 days after the resignation of
Stanfield.
At an in-person meeting held on January 12, 2005, the Board approved the
New Agreement. The 1940 Act requires Shareholder approval of the New Agreement.
The New Agreement will replace the Interim Agreement with AIGGIC on behalf of
the Fund. A copy of the form of New Agreement is attached as Exhibit A to this
Proxy Statement.
4
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE TO APPROVE THE NEW AGREEMENT WITH AIGGIC.
Terms of the Former Agreement
The date of the Former Agreement is November 16, 2001. The Board,
including a majority of the non-interested directors, last approved the Former
Agreement, on August 31, 2004. The Former Agreement was last approved by
Shareholders on October 19, 2001. Under the Former Agreement, SAAMCo paid
Stanfield, a sub-advisory fee based on the Fund's average daily net asset
value, computed and paid monthly, at the following rates:
Senior Floating Rate Fund
Sub-Adviser Sub-Advisory Fee
- --------------- ------------------------
Stanfield $ 0 - 1B 0.25%
> $1 B 0.20%
For the Fund's most recent fiscal year ended December 31, 2004, SAAMCo
received $1,663,171 in advisory fees of which $489,192 was paid to Stanfield in
sub-advisory fees for rendering sub-advisory services to the Fund under the
Former Agreement and of which SAAMCo retained $1,173,979. During the same
period, no commissions on portfolio transactions were paid to any affiliated
brokers.
The Former Agreement was terminated on December 31, 2004 due to
Stanfield's resignation. Stanfield decided to withdraw from the sub-advisory
business and resigned from its position as sub-adviser to the Fund effective
December 31, 2004.
Information about AIGGIC
AIGGIC is a corporation organized under the laws of the State of New
Jersey, with its principal place of business at 70 Pine Street, New York, New
York 10270. AIGGIC is an indirect, wholly-owned subsidiary of American
International Group, Inc. ("AIG") and is part of the AIG Global Investment
Group ("AIGGIG"). AIGGIG comprises a group of international investment adviser
companies (including AIGGIC), which provide advice, investment products and
asset management services to clients around the world. As of September 30,
2004, AIGGIG managed approximately $450 billion, of which approximately $384
billion relates to AIG affiliates and $66 billion relates to client assets.
AIGGIC is a registered investment adviser that has provided investment
management services to corporations, foundations, endowments, pension and
profit sharing plans, trusts, estates and other institutions and individuals
since 1983.
5
The directors and principal executive officers of AIGGIC are listed
below. Unless otherwise indicated, the address for each is 70 Pine Street, New
York, New York 10270. No officers or directors of the Fund are officers,
directors, employees, shareholders or general partners of AIGGIC. No officers or
directors of the Fund have any material interest in AIGGIC, or in any material
transaction in which AIGGIC or an affiliate is a party.
Name and Address Position at AIGGIC Principal Occupation(s)
- --------------------------------------------------------------------------
Gordon S. Massie Managing Director Head of Leveraged
Finance Group
- --------------------------------------------------------------------------
Steven S. Oh Managing Director Portfolio Manager
- --------------------------------------------------------------------------
John G. Lapham, III Managing Director Portfolio Manager
- --------------------------------------------------------------------------
Win Jay Neuger Chairman, Chief Executive Same
Officer and Director
- --------------------------------------------------------------------------
Hans Danielsson Director and Senior Same
Managing Director
- --------------------------------------------------------------------------
Edward Easton Director Same
Matthews
- --------------------------------------------------------------------------
Ernest Theodore Director Same
Patrikis
- --------------------------------------------------------------------------
Richard Waldo Scott Director and Senior Same
Managing Director
- --------------------------------------------------------------------------
Terms of the New Agreement
Under the specific terms of the New Agreement, AIGGIC would be
responsible, subject to oversight by SAAMCo as the Fund's primary investment
adviser, and by the Board of the Fund, for managing the investment and
reinvestment of the Fund's assets in a manner consistent with the Fund's
investment objectives, policies and restrictions, and applicable federal and
state law. As such, AIGGIC's investment authority would include whatever powers
the Fund may possess with respect to its assets, including the power to
exercise rights, options, warrants, conversion privileges, redemption
privileges, and to tender securities pursuant to a tender offer. AIGGIC would
not, however, be responsible for voting proxies or participating in class
actions and/or other legal proceedings on behalf of the Fund, but would provide
such assistance as is reasonably requested by SAAMCo.
The terms of the New Agreement further specify that AIGGIC would make
decisions with respect to all purchases, sales, and other transactions of
securities and
6
other investment assets for the Fund. To carry out such decisions, AIGGIC would
have full discretion and be authorized to place orders and issue instructions
with respect to those transactions for the Fund.
For providing ongoing services under the New Agreement, AIGGIC would be
entitled to receive ongoing sub-advisory fees based on the Fund's average daily
net asset value, computed and paid monthly, at the rates in the chart below.
SAAMCo would be solely responsible for paying these fees.
Sub-Adviser Sub-Advisory Fee
- ------------- --------------------
AIGGIC $0 - 1B 0.25%
> $1 B 0.20%
The proposed sub-advisory fees and asset breakpoint levels under the New
Agreement are the same as those under the Former Agreement. Any change would
not have affected Shareholder fees because AIGGIC is paid solely out of the
advisory fees from SAAMCo.
The New Agreement also requires AIGGIC to report to the Board important
developments affecting the Fund or AIGGIC. On its own initiative, AIGGIC should
provide any other information to the Board or SAAMCo that it may believe is
appropriate, such as information relating to the individual companies whose
securities are held by the Fund, the industries in which they engage, or the
economic, social or political conditions prevailing in each country in which
the Fund maintains investments. In addition, the New Agreement requires that
AIGGIC furnish the Board and SAAMCo with statistical and analytical information
regarding securities held by the Fund, as AIGGIC may believe appropriate or
upon reasonable request by the Board or SAAMCo.
Under the terms of the New Agreement, AIGGIC is responsible for the
purchase and sale of securities for the Fund, broker-dealer selection, and
negotiation of brokerage commission rates. The New Agreement specifies that
AIGGIC's primary consideration in effecting a security transaction will be to
obtain for the Fund the best price and execution available under the
circumstances. However, the price to the Fund in any transaction may be less
favorable than that available from another broker-dealer if AIGGIC determines
in good faith that the amount of commission is reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of AIGGIC with respect to the Fund and to other clients of
AIGGIC. Accordingly, AIGGIC will not be deemed to have acted unlawfully or to
have breached any duty under the New Agreement, subject to any policies
determined by the Board, solely because AIGGIC may cause the Fund to pay a
broker who provides certain research and brokerage services to AIGGIC an amount
of commission for effecting a portfolio investment transaction that exceeds
7
the amount of commission that another broker or dealer would have charged for
effecting that transaction. AIGGIC would also be responsible for the
maintenance of documents and records required by the 1940 Act relating to the
orders for purchase and sale of portfolio securities of the Fund, as well as
for other records that SAAMCo reasonably requests to be maintained.
Provided the investment objective of the Fund is adhered to, the New
Agreement also provides that AIGGIC may aggregate sales and purchase orders of
securities held in the Fund with similar orders for other portfolios that
AIGGIC manages that are made simultaneously, if, in AIGGIC's reasonable
judgment, such aggregation will result in an overall economic benefit to the
Fund and AIGGIC acknowledges sole responsibility for complying with all
applicable pronouncements and interpretations of the Securities and Exchange
Commission (the "SEC") regarding the aggregation of trades. The allocation of
securities so purchased or sold shall be made by AIGGIC in the manner that it
considers to be the most equitable and consistent with its fiduciary duties to
the Fund and other clients. AIGGIC may from time to time employ or sub-contract
certain persons appropriate or necessary to assist in the execution of its
duties at its expense, so long as such persons do not relieve AIGGIC of its
responsibilities or liabilities under the New Agreement.
AIGGIC will pay its own expenses for services to be provided by it under
the New Agreement. Except for expenses assumed by AIGGIC or by SAAMCo under the
primary advisory agreement, the Fund is responsible for all of the ordinary
business expenses incurred in its operations and in the offering of its shares,
including, but not limited to: brokerage commissions; taxes; legal, auditing or
governmental fees; the cost of preparing share certificates; custodian,
transfer agent and shareholder service agent costs; expenses of issue, sale,
redemption and repurchase of shares; expenses of registering and qualifying
shares for sale; expenses relating to Board and Shareholder meetings; the fees
and other expenses incurred by the Fund in connection with membership in
investment company organizations; the cost of preparing and distributing
reports and notices to Shareholders, and the cost of printing prospectuses and
other materials to Shareholders.
In carrying out its obligations under the New Agreement, AIGGIC would be
obligated to comply with investment guidelines, policies and restrictions
established by the Board that have been communicated in writing to AIGGIC; all
applicable provisions of the 1940 Act and the Investment Advisers Act of 1940
(the "Advisers Act"), and any rules and regulations adopted by the SEC
thereunder; the registration statement of the Fund as it may be amended from
time to time; the provisions of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"); and any other applicable provisions of state or
federal law and any rules and regulations adopted thereunder, to the extent
that such laws, rules or regulations impact AIGGIC's provision of services as
described herein.
8
If approved by Shareholders, the New Agreement will continue in effect for
two years (unless terminated earlier) from the date of shareholder approval,
and will thereafter continue from year to year, provided that the continuance
of the New Agreement is approved annually by vote of the Board including a
majority of the "non-interested" directors, or by a vote of "a majority of the
outstanding voting securities" of the Fund (as defined in Section 2(a)(42) of
the 1940 Act). The New Agreement may be terminated at any time without penalty
by vote of the Board, vote of a majority of the Fund's outstanding voting
securities, or by SAAMCo or AIGGIC upon 60 days' written notice to the other
party. Consistent with the federal securities laws, the New Agreement also
would terminate upon any "assignment" (as defined in the 1940 Act). If
Shareholders fail to approve the New Agreement, the Board will consider what
further action is appropriate.
Board Consideration and Approval of the New Agreement
At a meeting held on January 12, 2005, the Board approved the New
Agreement succeeding Stanfield with AIGGIC.
In approving the New Agreement and selecting AIGGIC as the new
sub-adviser, and the fees to be paid under the New Agreement, the Board,
including the independent directors advised by independent legal counsel,
considered and concluded the following:
Reasons for Replacing Stanfield with AIGGIC
The Board considered SAAMCo's reasons for proposing that AIGGIC succeed
Stanfield as the sub-adviser to the Fund, including: AIGGIC's experience and
above-average investment performance record using an income investment style in
managing other funds and accounts with similar investment objectives as the
Fund, including its U.S. Leveraged Loan Composite, which measures
collateralized loan obligations and leveraged loan products managed by AIGGIC,
and the potential for enhanced performance of the Fund using such a management
style. The Board also took into consideration the risk adjusted performance and
portfolio risk statistics of AIGGIC's account and that it compared favorably to
the peer average. In addition, the Board considered that a new sub-advisory
relationship with AIGGIC would provide an opportunity for the Fund to continue
to be managed in close alignment with an income investment style. The Board
further considered the experience level and tenure of the AIGGIC portfolio
management team.
The Board concluded that these reasons supported its selection of AIGGIC.
9
Investment Sub-Advisory Fee Rates
The Board considered that the proposed sub-advisory fee rate payable by
SAAMCo to AIGGIC under the New Agreement is the same as the sub-advisory fee
rate payable by SAAMCo to Stanfield under the Former Agreement. The Board noted
that any change in the investment sub-advisory fee rate payable to AIGGIC would
have no direct impact on Fund or Shareholders because these fees are payable by
SAAMCo and there is no change in the investment advisory fee rate payable by
the Fund to SAAMCo.
The Board received comparative analysis of sub-advisory fees paid by other
floating rate funds. The Board reviewed the advisory fees of these other funds,
which ranged from 0.80% to 0.95% and found that while neither the highest nor
the lowest, the advisory fees of the Fund fell within the range of fees
reviewed. In addition, the Board reviewed information that these other funds
paid sub-advisory fees, to an affiliated sub-adviser, which ranged from 0.36%
to 0.40%. The Board noted that the proposed sub-advisory fee rates to AIGGIC
fell below this range.
The Board also compared AIGGIC's proposed sub-advisory fee rate with the
sub-advisory fee rates applicable to other similar funds in the SunAmerica
Funds complex.
As a result of the above considerations, the Board concluded that AIGGIC's
proposed sub-advisory fee rates under the New Agreement were reasonable in
comparison to other sub-advisory fee rates.
Nature, Extent and Quality of Services
The Board received and considered information regarding the nature and
extent of services provided to the Fund by Stanfield under the Former Agreement
and those that would be provided to the Fund by AIGGIC under the New Agreement,
noting that the nature and extent of services under the Former Agreement and
New Agreement were substantially similar in that Stanfield and AIGGIC were each
required to provide day-to-day portfolio management services and comply with
all Fund policies and applicable rules and regulations. The Board also received
and considered information regarding the nature and extent of services
currently being provided by AIGGIC to other SunAmerica funds under an existing
investment sub-advisory agreement and those that would be provided to the Fund
by AIGGIC under the New Agreement, noting that the nature and extent of
services under both agreements were substantially similar in that AIGGIC was
required to provide day-to-day portfolio management services and comply with
all Fund policies and applicable rules and regulations.
With respect to the quality of services, the Board considered, among other
things, the background and experience of AIGGIC's senior management and the
expertise of, and amount of attention expected to be given to the Fund by,
10
investment analysts and both junior and senior investment personnel of AIGGIC.
The Board noted that the AIGGIC Leveraged Loan Group manages $3.7 billion of
institutional bank loans invested in approximately 295 issuers. The Board also
reviewed the qualifications, backgrounds and responsibilities of the team
members primarily responsible for day-to-day portfolio management services for
the Fund. AIGGIC's Leverage Loan Group consists of 20 dedicated leveraged loan
investment and operation professionals. This group brings together professional
investment managers with diverse experience in commercial banking, accounting,
investment banking, distressed debt, sell-side analysis, private placements and
general corporate management. In further evaluating the quality of services
anticipated to be provided by AIGGIC, the Board was informed that, in
management's judgment, AIGGIC has the size, visibility and resources to attract
and retain highly qualified investment professionals, including research and
advisory personnel. In particular, the Board was informed that AIGGIC's
portfolio management team members have an average industry experience of
approximately nine years, the average tenure with AIGGIC of the portfolio
management team members is three years. As of September 30, 2004, AIGGIG (which
includes AIGGIC) managed approximately $450 billion, of which approximately
$384 billion relates to AIG affiliates and $66 billion relates to client
assets.
The Board concluded that it was satisfied with the nature, extent and
quality of the investment sub-advisory services anticipated to be provided to
the Fund by AIGGIC and that there was a reasonable basis on which to conclude
that the quality of investment sub-advisory services to be provided by AIGGIC
under the New Agreement should equal or exceed the quality of investment
sub-advisory services provided by Stanfield under the Former Agreement. The
Board also concluded that the services anticipated to be provided by AIGGIC to
the Fund compared favorably to those provided by Stanfield to the Fund under
the Former Agreement and those currently being provided by AIGGIC to funds of
SunAmerica, based on the above considerations.
Fund Performance
The Board received and considered information about the Fund's historical
performance and noted that the Fund's performance, over the relevant periods,
was close but somewhat below the median of the group of funds that was most
similar to the Fund (the "Peer Group"), as well as lagged an appropriate
benchmark index, the Credit Suisse First Boston ("CSFB") Leveraged Loan Index,
over relevant periods. (The CSFB Leveraged Loan Index is an unmanaged
representative index of tradable, senior, secured, U.S. dollar-denominated
leveraged loans. It is not possible to invest directly in an Index.)
In addition, the Board received and considered information about the
performance of AIGGIC's U.S. Leveraged Loan Composite. The Board noted
11
that for the 1-year, 2-year and 3-year periods, the account outperformed the
CSFB Leveraged Loan Index. Also, the Board considered that the performance of
AIGGIC's U.S. Leveraged Loan Composite adjusted to reflect the Fund's current
expense ratio of 1.75% was in line with the CSFB Leveraged Loan Index and
performed better than the Fund over the various periods.
While aware that past performance is not necessarily indicative of future
results, the Board concluded that the historical performance of registered
investment companies and private accounts advised by AIGGIC was in line with
that of the Fund and that it was reasonable to believe that AIGGIC would
provide satisfactory performance in the future.
AIGGIC Profitability
Because the engagement of AIGGIC is new, there is no historical
profitability with regard to its arrangements with the Fund. The Board
considered that any projection of profitability would be uncertain, given that
such a projection would depend on many assumptions, which are by their nature,
speculative. Accordingly, the Board did not request or consider AIGGIC's
profitability with regard to its approval of the New Agreement.
Economies of Scale
The Board received and considered information about the potential of both
SAAMCo and AIGGIC to experience economies of scale as the Fund grows in size.
The Board noted that SAAMCo's advisory fee rate and AIGGIC's proposed
sub-advisory fee rate contain breakpoints and, accordingly, each reflects the
potential to share economies of scale. Even though the asset levels at which
breakpoints were provided in the sub-advisory fee rate did not directly
correspond to the asset levels at which breakpoints were provided in the
advisory fee rate, the Board concluded that the breakpoint structure and levels
established the potential for the sharing of economies of scale among SAAMCo,
AIGGIC and Shareholders as the Fund grows.
The Board also noted the voluntary fee waiver and/or expense reimbursement
arrangements currently provided by SAAMCo for the Fund, that the Fund's net
total annual operating expense ratio was capped at 1.45% of its average daily
net assets for Class A and Class B shares, at 1.50% for Class C shares, and at
1.25% for Class D shares, and that such expense caps would continue
indefinitely but may be terminated at any time. The Board also considered that
it annually reviews the Fund's net operating expense ratios and compares them
to those of other funds in its Peer Group.
12
Other Benefits to AIGGIC
The Board considered potential "fall-out" or ancillary benefits
anticipated to be received by AIGGIC and its affiliates as a result of AIGGIC's
relationship with the Fund. Such benefits are expected to include benefits
attributable to the Fund's relationship with AIGGIC (such as soft-dollar
credits, which are credits obtained with portfolio brokerage commissions that
are used to purchase research products and services from brokers) and benefits
potentially derived from an increase in AIGGIC's business as a result of
AIGGIC's relationship with the Fund (such as the ability to market to other
prospective clients).
The Board concluded that other ancillary benefits that AIGGIC and its
affiliates could be expected to receive with regard to providing investment
advisory and other services to the Fund, such as those noted above, were not
unreasonable.
Conclusion
Considering all of these factors, the Board approved the selection of
AIGGIC as sub-adviser and concluded that the sub-advisory fees to be paid to
AIGGIC were reasonable.
The Board unanimously recommends that you vote for approval of
the New Agreement with AIGGIC.
If the proposal passes, AIGGIC will become the Fund's new sub-adviser and
will be paid the sub-advisory fee described above. If the proposal fails, the
Board will consider the selection of an alternative sub-adviser and the
submission of a new sub-advisory contract to shareholders for approval. The
Interim Agreement will expire on its 150th day (May 19, 2005). If a contract
with a new sub-adviser is not approved prior to the expiration of the Interim
Agreement, SAAMCo, the Fund's primary investment adviser, will provide
investment advice to the Fund.
13
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Exhibit A
SUBADVISORY AGREEMENT
THIS SUBADVISORY AGREEMENT is made and entered into as of January 12,
2005, between AIG SUNAMERICA ASSET MANAGEMENT CORP. (the "Adviser"), a Delaware
corporation registered under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and AIG GLOBAL INVESTMENT CORP. (the "Subadviser"), a New
Jersey corporation also registered under the Advisers Act.
W I T N E S S E T H
WHEREAS, the Adviser, pursuant to an Advisory Agreement (the "Advisory
Agreement") with SunAmerica Senior Floating Rate Fund, Inc., a Maryland
Corporation (the "Fund"), has been retained to act as investment adviser for
the Fund; and
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 and such
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other activities as more fully described in the Subadviser's Part II of
its Form ADV referenced in Section 7(d).
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 Investments 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, including the manner, method and timing of
such investment transactions; 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 Investments. 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
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disclosure requirements under all applicable federal and state laws
and regulations relating to the Fund, including, without limitation,
the 1940 Act and the rules and regulations under this Agreement, and
that the Subadviser will have no liability in connection therewith,
except as to the accuracy of material information furnished in writing
by the Subadviser to the Fund or to the Adviser specifically for
inclusion in the Prospectus. The Subadviser hereby agrees to provide
to the Adviser in a timely manner such information relating to the
Subadviser and its relationship to, and actions for, the Fund as may
be required to be contained in the Prospectus.
In fulfilling these requirements and its other requirements and
obligations under this Agreement, the Subadviser will be entitled to
rely on and act in accordance with (1) information provided to it by
the Fund's administrator, fund accountant, custodian or other service
provider and (2) instructions, which may be standing instructions,
from the Adviser. The Adviser agrees to provide or cause to be
provided to the Subadviser on an ongoing basis upon request by the
Subadviser, such information as is requested by the Subadviser for the
performance of its obligations under this Agreement, and the
Subadviser will not be in breach of any term of this Agreement or be
deemed to have acted negligently if the Adviser fails to provide or
cause to be provided such information and the Subadviser relies on the
information most recently provided to it.
c. Voting of Proxies. The Fund has appointed Investor Responsibility
Research Center as the proxy-voting agent and will vote all such
proxies in accordance with the proxy voting policies and procedures
adopted by the Board of Directors. With respect to certain vote items,
a Fund may request guidance or a recommendation from the adviser,
administrator or subadviser of the Fund. The Subadviser shall not have
responsibilities in connection with proxy voting for a Fund unless it
is affirmatively requested to make a proxy voting recommendation.
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
A-3
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
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
A-4
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 its management of 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 make available its officers and
employees to meet with the Fund's Board of Directors in person on
reasonable notice to review the Fund Investments and the Subadviser
will report to the Board of Directors in writing on the Fund
Investments monthly.
i. Custody Arrangements. The Subadviser will on each business day provide
the Adviser and the Fund's custodian such information as the Adviser
and the Fund's custodian may reasonably request relating to all
transactions concerning the Fund Investments including, without
limitation, recommendations, in accordance with policies and
procedures established by the Directors, as to the fair value of
securities for which market quotes are not available.
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.
A-5
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. The Subadviser shall be responsible for travel expenses
(airfare, meals, lodging and other transportation) undertaken at the
request of the Adviser ("Travel Expenses") in an amount not to exceed
$50,000 per annum. Travel Expenses in excess of $50,000 per annum shall be
borne by the Adviser. In addition, it is understood and acknowledged that
the Subadviser shall not be responsible for legal fees and expenses
incurred for advice in connection with the actual or pending bankruptcy,
restructuring or default of Fund assets.
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: 0.25% of the Fund's average daily net
assets for average daily net assets up to and including $1 billion;
and 0.20% of the Fund's average daily net assets in excess of $1
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 such month to the date of
termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which the
effectiveness or termination occurs.
c. Notwithstanding any other provision of this Agreement, the Subadviser
may from time to time agree not to impose all or a portion of its fee
otherwise payable under this Agreement (in advance of the time such
fee or portion of the fee would otherwise accrue). Any such fee
reduction may be discontinued or modified by the Subadviser at any
time.
d. The waiver, if any, by the Adviser of its Advisory Fee from the Fund
shall not affect the payment of the fee to the Subadviser set forth in
subsection (a) above.
A-6
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 New Jersey 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 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;
A-7
d. The Form ADV of the Adviser previously provided to the Subadviser is a
true and complete copy of the form filed with the SEC and the
information contained therein is accurate and complete in all material
respects;
e. The Adviser acknowledges that it has received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement;
f. The Fund is in compliance in all material respects, and during the
term of this Agreement will remain in compliance in all material
respects, with all federal and state laws, rules and regulations
applicable to the Fund and the operation of its business (other than
those related to investment objectives, policies and restrictions over
which the Subadviser has discretion pursuant to the terms hereof),
including, without limitation, applicable disclosure and filing
obligations for prospectuses, statements of additional information,
registration statements, periodic reports to shareholders and
regulatory bodies, proxy statements and promotional materials and
advertisements; and
g. The Fund is in compliance in all material respects, and during the
term of this Agreement will remain in compliance in all material
respects, with the terms and conditions of the Prospectus (other than
those related to investment objectives, policies and restrictions over
which the Subadviser has discretion pursuant to the terms hereof),
including, without limitation, provisions relating to the computation
of the Fund's net asset value and those relating to processing
purchase, exchange and repurchase requests.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE INFORMATION
All representations and warranties made by the Subadviser and the
Adviser pursuant to Sections 6 and 7, respectively, will survive for the
duration of this Agreement and the parties to this Agreement will promptly
notify each other in writing upon becoming aware that any of the foregoing
representations and warranties are no longer true.
9. LIABILITY
Neither the Subadviser nor any of its officers, directors, or
employees, nor any person performing executive, administrative, trading,
or other functions for the Fund (at the direction or request of the
Subadviser) or the Adviser 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
A-8
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.
As to any matters not expressly provided for by this Agreement, the
Subadviser shall be in all cases fully protected in acting or refraining
from acting hereunder or thereunder in accordance with the instruction of
the Adviser.
10. DURATION AND TERMINATION
a. This Agreement shall become effective as of the date hereof, and
unless sooner terminated as provided herein, shall continue in effect
for two years from its effective date. Thereafter, this Agreement
shall continue in effect, subject to the termination provisions and
all other terms and conditions hereof, only so long as such
continuance is approved at least annually by the vote of a majority of
the Board of Directors who are not parties to this Agreement or
interested persons of any such parties, cast in person at a meeting
called for the purpose of voting on such approval.
b. This Agreement may be terminated at any time, without the payment of
any penalty, by the Directors of the Fund, by the Adviser, or by the
vote of a majority of the outstanding voting securities of the Fund,
on sixty days' written notice to the Subadviser; or by the Subadviser
on sixty days' written notice to the Fund and the Adviser. This
Agreement may be terminated immediately in the event of a material
breach of any provision of this Agreement by the other party to this
Agreement. This Agreement will automatically terminate, without the
payment of any penalty, in the event of its assignment (as defined in
the Investment Company Act), or on termination of the Advisory
Agreement.
11. REFERENCE TO ADVISER AND SUBADVISER
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 "AIG
Global Investment Corp." 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).
A-9
The Adviser consents to the use of its name in materials produced by
the Subadviser which lists the Adviser as a client utilizing the services
of the Subadviser.
12. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Fund in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Adviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, public board or body, involving the affairs of
the Fund; and
c. the chief executive officer or controlling stockholder of the
Subadviser or the portfolio manager of the Fund changes.
13. AMENDMENT
This Agreement may be amended by written amendment signed by the
parties, provided that the terms of any material amendment shall be
approved (i) by the vote of a majority of the outstanding voting
securities of the Fund and (ii) by the vote of a majority of the Directors
of the Fund who are not interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by law.
14. CONFIDENTIALITY
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. The Subadviser will not disclose or use any records or
information obtained pursuant to this Agreement in any manner whatsoever
except as expressly authorized in this Agreement or as reasonably required
to execute transactions on behalf of the Portfolios, and will keep
confidential any non-public information obtained directly as a result of
this service relationship, and the Subadviser shall disclose such
non-public information only if the Adviser or the Board of Directors has
authorized such disclosure by prior written consent, or if such
information is or hereafter otherwise is known by the Subadviser or has
been disclosed, directly or indirectly, by the Adviser or the Fund to
others becomes ascertainable from
A-10
public or published information or trade sources, or if such disclosure is
expressly required or requested by applicable federal or state regulatory
authorities, or to the extent such disclosure is reasonably required by
auditors or attorneys of the Subadviser in connection with the performance
of their professional services or as may otherwise be contemplated by this
Agreement. Notwithstanding the foregoing, the Subadviser may disclose the
total return earned by the Portfolios and may include such total return in
the calculation of composite performance information.
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 State of New York, or any of the applicable
provisions of the Investment Company Act. To the extent that the laws of the
State of New York, 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.
A-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.
AIG SUNAMERICA ASSET MANAGEMENT CORP.
By: ------------------------------------------
Peter A. Harbeck
President and CEO
AIG GLOBAL INVESTMENT CORP.
By: ------------------------------------------
A-12
PROXY TABULATOR
P.O. BOX 9132
HINGHAM, MA 02043-9132
- --------------------------
999 999 999 999 99 <-
- --------------------------
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
*** THREE EASY WAYS TO VOTE YOUR PROXY. ***
- --------------------------------------------------------------------------------
VOTE BY TELEPHONE VOTE ON THE INTERNET VOTE BY MAIL
1) Read the Proxy Statement 1) Read the Proxy Statement 1) Read the Proxy Statement.
and have this card at hand. and have this card at hand. 2) Check the appropriate box
2) Call 1-800-690-6903. 2) Go to www.proxyweb.com. on the reverse side.
3) Follow the simple recorded 3) Follow the simple on-screen 3) Sign and date the Proxy card.
instructions. instructions. 4) Return the Proxy card in the
envelope provided.
- --------------------------------------------------------------------------------
SUNAMERICA SENIOR FLOATING RATE FUND
SPECIAL MEETING OF SHAREHOLDERS
MARCH 31, 2005
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned holder of shares of beneficial interest of the above-referenced
Fund (the "Fund"), hereby appoints PETER A. HARBECK and JOSEPH P. KELLY, and
each of them, with full power of substitution and revocation, as proxies to
represent the undersigned at the Special Meeting of Shareholders of the Fund to
be held at the principal office of the Fund, Harborside Financial Center, 3200
Plaza 5, Jersey City, NJ 07311, on Thursday, March 31, 2005 at 10:00 A.M.,
Eastern Standard Time, and at any and all adjournments thereof, and to vote all
shares of beneficial interest of the Fund which the undersigned would be
entitled to vote, with all powers the undersigned would possess if personally
present, in accordance with the instructions on this proxy. The Fund shall vote
as indicated on the reverse side, and in its own discretion, upon such other
business as may properly come before the meeting.
Dated:____________________
PLEASE VOTE, DATE, SIGN AND PROMPTLY RETURN IN
THE ACCOMPANYING ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE U.S.
-----------------------------------------------
-----------------------------------------------
Signature (Sign in the Box)
Note: Please sign this proxy as your name appears
on the books of the Fund. Joint owners should each
sign personally. Trustees and other fiduciaries
should indicate the capacity in which they sign,
and where more than one name appears, a majority
must sign. If a corporation, this signature should
be that of an authorized officer who should state
his or her title.
SunAmerica Senior Floating Rate Fund - SP
MIS EDITS: # OF CHANGES___/___PRF1___PRF 2___
OK TO PRINT AS IS*_______________*By signing this form you are
authorizing MIS to print this form in its current state.
________________________________________________________________
SIGNATURE OF PERSON AUTHORIZING PRINTING DATE
LABEL BELOW FOR MIS USE ONLY!
PO#M9648
SUNAMERICA #994
SENIOR FLOATING RATE FUND
ORIGINAL 2UP OVERSIZE 1/24/05 TD
SCOTT P.(SUNAMERICA SENIOR FLOATING RATE FUND MAR 2005 SP)
Please fill in box(es) as shown using black or blue ink or number 2 pencil. [X]
PLEASE DO NOT USE FINE POINT PENS.
WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE
VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
THE PROPOSALS SET FORTH BELOW AND IN THE DISCRETION OF THE PROXIES WITH RESPECT
TO ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND ANY
ADJOURNMENTS THEREOF. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE ACCOMPANYING
NOTICE OF SPECIAL MEETING AND PROXY STATEMENT.
1 To approve a new sub-advisory agreement FOR AGAINST ABSTAIN
between AIG SunAmerica Asset Management [ ] [ ] [ ]
Corp. and AIG GlobalInvestment Corp.
Note Address Change:__________________________
__________________________
__________________________
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
SunAmerica Senior Floating Rate Fund - SP
SunAmerica Senior Floating Rate Fund - SP
MIS EDITS: # OF CHANGES___/___PRF1___PRF 2___
OK TO PRINT AS IS*_______________*By signing this form you are
authorizing MIS to print this form in its current state.
________________________________________________________________
SIGNATURE OF PERSON AUTHORIZING PRINTING DATE
LABEL BELOW FOR MIS USE ONLY!
PO#M9648
SUNAMERICA #994
SENIOR FLOATING RATE FUND
ORIGINAL 2UP OVERSIZE 1/24/05 TD
SCOTT P.(SUNAMERICA SENIOR FLOATING RATE FUND MAR 2005 SP)