UNDERWRITING AGREEMENT FOR
CLASS B SHARES OF
NORTHSTAR SPECIAL FUND
AGREEMENT made and entered into by and between NORTHSTAR SPECIAL FUND (the
"Fund"), a Massachusetts business trust, and NORTHSTAR DISTRIBUTORS, INC., a
Minnesota corporation (the "Underwriter").
1. The Fund hereby appoints the Underwriter as its exclusive agent to
promote the sale and to arrange for the sale of Class B shares of beneficial
interest of the Fund, including both unissued shares and treasury shares,
through broker-dealers or otherwise, in all parts of the United States and
elsewhere throughout the world. The Fund agrees to sell and deliver its Class B
shares, upon the terms hereinafter set forth, as long as it has unissued and/or
treasury Class B shares available for sale.
(a) The Fund hereby authorizes the Underwriter, subject to law
and the Declaration of Trust of the Fund, to accept, for the account of the
Fund, orders for the purchase of its Class B shares, satisfactory to the
Underwriter, as of the time of receipt of such orders by the dealer--or as
otherwise described in the Prospectus of the Fund.
(b) The public offering price of Class B shares shall be the
net asset value per share (as determined by or on behalf of the Fund) of the
outstanding Class B shares of the Fund. The net asset value shall be regularly
determined on every business day as of the time of the regular closing of the
New York Stock Exchange and the public offering price shall become effective as
set forth from time to time in the Fund's Prospectus; such net asset value shall
also be regularly determined, and the public offering price shall become
effective, as of such other times for the regular determination of net asset
value as may be required or permitted by rules of the National Association of
Securities Dealers, Inc. ("NASD") or of the Securities and Exchange Commission
("SEC"). The Fund shall furnish, or cause to be furnished, daily to the
Underwriter, with all possible promptness, a detailed computation of net asset
value of its Class B shares.
(c) (i) In consideration of the Underwriter's services as
principal distributor of the Fund's Class B shares pursuant to this Agreement
and in accordance with the provisions of the Fund's Amended and Restated
Distribution and Service Plan (the "Plan") in respect of such shares the Fund
agrees: (I) to pay to the Underwriter or, at the Underwriter's direction, to a
third party, monthly in arrears on or prior to the 5th business day of the
following calendar month (A) a service fee (the "Service Fee") equal to 0.25 of
1% per annum of the average daily net asset value of the Class B shares of the
Fund outstanding from time to time, and (B) the Underwriter's "Allocable
Portion" (as hereinafter defined) of a fee (the "Distribution Fee") equal to
0.75 of 1% per annum of the average daily net asset value of the Class B shares
of the Fund outstanding from time to time, and (II) to withhold from redemption
proceeds in respect of Class B shares of the Fund the Underwriter's Allocable
Portion of the Contingent Deferred Sales Charges ("CDSCs") payable in respect of
such redemption as provided in the Prospectus of the Fund and to pay the same
over to the Underwriter or, at the Underwriter's direction, to a third
1
party, at the time the redemption proceeds in respect of such redemption are
payable to the holder of the Class B shares redeemed.
(ii) The Underwriter will be deemed to have
performed all services required to be performed in order to be entitled to
receive its Allocable Portion of the Distribution Fee payable in respect of the
Class B shares of the Fund upon the settlement date of each sale of a
"Commission Share" (as defined in the Allocation Schedule attached hereto as
Schedule B) of the Fund taken into account in determining the Underwriter's
Allocable Portion of such Distribution Fees.
(iii) Notwithstanding anything to the contrary set
forth in this Agreement or (to the extent waiver thereof is permitted thereby)
applicable law, the Fund's obligation to pay the Underwriter's Allocable
Portion of the Distribution Fees payable in respect of the Class B shares of the
Fund shall not be terminated or modified for any reason (including a termination
of this Agreement) except to the extent required by a change in the Investment
Company Act of 1940 (the "Act"), the rules thereunder or the Conduct Rules of
the NASD, in each case enacted or promulgated after December __, 1997, or in
connection with a "Complete Termination" (as hereinafter defined) of the Plan.
(iv) The Fund will not take any action to waive or
change any CDSC in respect of the Class B shares of the Fund, except as
provided in the Fund's Prospectus or statement of additional information as in
effect as of the date hereof, without the consent of the Underwriter and the
permitted assigns of all or any portion of its rights to its Allocable Portion
of the CDSCs.
(v) Notwithstanding anything to the contrary in this
Agreement, neither the termination of the Underwriter's role as principal
distributor of the Class B shares of the Fund, nor the termination of this
Agreement nor the termination of the Plan will terminate the Underwriter's
right to its Allocable Portion of the CDSCs in respect of the Class B shares of
the Fund.
(vi) Notwithstanding anything to the contrary in
this Agreement, the Underwriter may assign, sell or pledge (collectively,
"Transfer") its rights to the Service Fees and its Allocable Portion of the
Distribution Fees and CDSCs (but not its obligations to the Fund under this
Agreement) to raise funds to make the expenditures related to the distribution
of Class B shares of the Fund and in connection therewith, upon receipt of
notice of such Transfer, the Fund shall pay, or cause to be paid, to the
assignee, purchaser or pledgee (collectively with their subsequent
transferees, "Transferees") such portion of the Underwriter's Service Fees,
Allocable Portion of the Distribution Fees and CDSCs in respect of the Class B
shares of the Fund so Transferred. Except as provided in (iii) above and
notwithstanding anything to the contrary set forth elsewhere in this Agreement,
to the extent the Underwriter has Transferred its rights thereto to raise funds
as aforesaid, the Fund's obligation to pay the Underwriter's Allocable Portion
of the Distribution Fees and CDSCs payable in respect of the Class B shares of
the Fund shall be absolute and unconditional and shall not be subject to
dispute, offset, counterclaim or any defense whatsoever, at law or equity,
including, without limitation, any of the foregoing based on the insolvency or
bankruptcy of the Underwriter (it being understood that such provision is not a
2
waiver of the Fund's right to pursue the Underwriter and enforce such claims
against the assets of the Underwriter other than the Underwriter's right to the
Distribution Fees and CDSCs in respect of the Class B shares of the Fund, which
have been so transferred in connection with such Transfer). The Fund agrees that
each such Transferee is a third party beneficiary of the provisions of this
clause (vi) but only insofar as those provisions relate to Distribution Fees and
CDSCs transferred to such Transferee.
(vii) For purposes of this Agreement, the term
Allocable Portion of Distribution Fees and CDSCs payable in respect of the Class
B shares of the Fund shall mean the portion of such Distribution Fees and CDSCs
allocated to the Underwriter in accordance with the Allocation Schedule attached
hereto as Schedule B.
(viii) For purposes of this Agreement, the term
"Complete Termination" of the Plan in respect of the Fund means a termination of
the Plan involving the complete cessation of the payment of Distribution Fees
in respect of all Class B shares of the Fund, and the termination of the
distribution plans and the complete cessation of the payment of distribution
fees pursuant to every other Distribution Plan pursuant to Rule 12b-1 under the
Act in respect of the Class B shares of the Fund and any successor fund or any
fund acquiring a substantial portion of the assets of the Fund and for every
future class of shares which has substantially similar characteristics to the
Class B shares of the Fund taking into account the manner of payment and amount
of sales charge, contingent deferred sales charge or other similar charges
borne directly or indirectly by the holders of such shares.
(d) The Underwriter may reallow any or all of the Distribution
and Services Fees and CDSCs which it is paid under this Agreement to such
dealers as the Underwriter may from time to time determine.
(e) The Underwriter may fix quantity discounts and other
similar variances or waivers of the CDSC not inconsistent with the provisions of
the Act; provided however, that the Underwriter shall not impose any commission,
permit any quantity discount, or impose any other similar waiver or variance in
connection with the sale of Class B shares except as disclosed in the Prospectus
of the Fund.
2. The Underwriter agrees to devote reasonable time and effort to
enlist investment dealers to sell Class B shares of the Fund and otherwise
promote the sale and distribution and act as Underwriter for the sale and
distribution of the Class B shares of the Fund as such arrangements may
profitably be made; but so long as its does so, nothing herein contained shall
prevent the Underwriter from entering into similar arrangements with other funds
and to engage in other activities. The Fund reserves the right to issue Class B
shares in connection with any merger or consolidation of the Fund with any other
investment company or any personal holding company or in connection with offers
of exchange exempted from Section 22(d) of the Act.
3. To the extent the Fund shall offer (as set forth in the Fund's
Prospectus) to provide physical certificates evidencing ownership of Class B
shares, upon receipt by the Fund at its principal place of business of a written
order from the Underwriter, together with delivery instructions, the Fund shall,
as promptly as practicable, cause certificates for the Class B shares
3
called for in such order to be delivered or credited in such amounts and in
such names as shall be specified by the Underwriter, against payment therefor in
such manner as may be acceptable to the Fund.
4. All sales literature and advertisements used by the Underwriter in
connection with sales of the Class B shares of the Fund shall be subject to the
approval of the Fund. The Fund authorizes the Underwriter in connection with the
sale or arranging for the sale of its Class B shares to give only such
information and to make only such statements or representations as are contained
in the Prospectus or in sales literature or advertisements approved by the Fund
or in such financial statements and reports as are furnished to the Underwriter
pursuant to paragraph 6 below. The Fund shall not be responsible in any way for
any information, statements or representations given or made by the Underwriter
or its representatives or agents other than such information, statements and
representations.
5. The Underwriter, as agent of the Fund, is authorized, subject to the
direction of the Fund, to accept Class B shares for redemption at prices
determined as prescribed in the Prospectus of the Fund. Such price shall reflect
the subtraction of the applicable CDSC, if any, computed in accordance with and
in the manner set forth in the Fund's Prospectus. The Fund shall reimburse the
Underwriter monthly for its out-of-pocket expenses reasonably incurred on behalf
of the Fund in carrying out the foregoing authorization. The Underwriter shall
report all redemptions promptly to the Fund.
6. The Fund shall keep the Underwriter fully informed with regard to
its affairs, shall furnish the Underwriter with a certified copy of all
financial statements, and a signed copy of each report, prepared by independent
public accountants and with such reasonable number of printed copies of each
annual and other periodic report of the Fund as the Underwriter may request, and
shall cooperate fully in the efforts of the Underwriter to sell and arrange for
the sale of its Class B shares and in the performance by the Underwriter of all
its duties under this Agreement.
7. The Fund will pay or cause to be paid expenses (including counsel
fees and disbursements) of any registration of its Class B shares of beneficial
interest under, but not limited to, Federal, state or other regulatory
authority, fees of filing periodic reports with regulatory bodies and of
preparing, setting in type and printing the Prospectus and any amendments
thereto prepared for use in connection with the offering of Class B shares of
the Fund, for fees and expenses incident to the issuance of Class B shares of
beneficial interest, such as the cost of stock certificates (if offered),
issuance taxes, fees of the transfer agent, including the cost of preparing and
mailing notices to shareholders pertaining to transactions with respect to
shareholders' accounts, dividend disbursing agent's costs, including the cost
for preparing and mailing notices confirming shares acquired by shareholders
pursuant to the reinvestment of dividends and distributions, and the mailing to
shareholders of prospectuses, and notices and reports as may be required from
time to time by regulatory bodies or for such other purposes, except for
purposes of sales by the Underwriter as outlined in paragraph 8 hereof.
8. The Underwriter shall pay all of its own costs and expenses (other
than expenses and costs heretofore deemed payable by the Fund and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and
4
distribution of the shares issued or sold hereunder including (a) expenses
of printing copies of the Prospectus to be used in connection with the sale of
Class B shares of the Fund at printer's overrun costs; (b) expenses of printing
and distributing or disseminating any other literature, advertising or selling
aids in connection with the offering of Class B shares for sale (however, the
expenses referred to in (a) and (b) do not include expenses incurred in
connection with the preparation, printing and distribution of the Prospectus or
any report or other communication to shareholders, to the extent that such
expenses are necessarily incurred to effect compliance by the Fund with any
Federal or state law or other regulatory bodies); and (c) expenses of
advertising in connection with such offering; provided, however, that the
Underwriter shall not be required to pay for any such expenses to the extent
that they are paid pursuant to the Fund's distribution plan adopted pursuant to
Rule 12b-1 under the Act.
9. The Fund agrees to register, from time to time as necessary,
additional Class B shares with the SEC, State and other regulatory bodies and to
pay the related filing fees therefor and to file such amendments, reports and
other documents as may be necessary in order that there may be no untrue
statement of a material fact in the Registration Statement or Prospectus or that
their may be no omission to state a material fact therein necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As used in this Agreement, the term "Registration
Statement" shall mean the Registration Statement most recently filed by the Fund
with the SEC and effective under the Securities Act of 1933, as amended, as such
Registration Statement is amended from time to time, and the term "Prospectus"
shall mean the most recent form of prospectus authorized by the Fund for use by
the Underwriter and by dealers.
10. This Agreement may be terminated at any time on not more than 60
days written notice, without payment of a penalty, by the Underwriter, by vote
of a majority of the outstanding voting securities as defined in the Act of the
Class B shares of the Fund or by vote of a majority of the Trustees who are not
"interested persons" of the Fund as defined in the Act and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements.
11. This Agreement shall terminate automatically in the event of its
assignment. The term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Act.
12. This Agreement has been approved by the Trustees of the Fund and
shall continue in effect for two years from its effective date. Thereafter, this
Agreement shall continue for successive annual periods, provided that such
continuance is specifically approved annually by a majority of the Trustees of
the Fund who are not interested persons of the parties hereto as defined in the
Act and either (a) by vote of a majority of the Trustees of the Fund or (b) by
vote of a majority of the outstanding voting securities of the Class B shares of
the Fund, as defined in the Act.
13. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of State of The Commonwealth of Massachusetts and notice is hereby
given that this Agreement is executed on behalf of the Trustees of the Fund as
trustees and not individually and that the obligations of this instrument are
not binding upon the Trustees or holders of shares of the Fund individually but
are binding only upon the assets and property of the Fund.
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized and to become effective as of this
____ day of December, 1997.
Attest: NORTHSTAR SPECIAL FUND
By: ____________________________ By: _____________________________________
Attest: NORTHSTAR DISTRIBUTORS, INC.
By: ____________________________ By: _____________________________________
6
