NORTHSTAR GALAXY TRUST RESEARCH ENHANCED INDEX PORTFOLIO
SUBADVISORY AGREEMENT
AGREEMENT made this 30th day of April, 1999 by and between Northstar
Investment Management Corporation, a Delaware corporation (hereinafter the
"Adviser"), investment adviser for the Northstar Galaxy Trust Research Enhanced
Index Portfolio, a series of the Northstar Galaxy Trust (the "Trust"),
(hereinafter the "Portfolio") and X.X. Xxxxxx Investment Management Inc., a
Delaware corporation (hereinafter the "Subadviser").
WHEREAS, the Adviser has been retained by the Trust, an open-end
diversified management investment company registered under the Investment
Company Act of 1940, as amended (the " 1940 Act"), to provide investment
advisory services to the Portfolio pursuant to an Investment Advisory Agreement
dated May 2, 1994 (the "Investment Advisory Agreement"); and
WHEREAS, the Trustees of the Trust, including a majority of the Trustees
who are not "interested persons," as defined in the 1940 Act, and the
Portfolio's shareholders have approved the appointment of the Subadviser to
perform certain investment advisory services for the Portfolio pursuant to this
Subadvisory Agreement with the Adviser and the Subadviser is willing to perform
such services for the Portfolio;
WHEREAS, the Subadviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual convenants
herein contained, it is agreed between the Adviser and the Subadviser as
follows:
1. APPOINTMENT. The Adviser hereby appoints the Subadviser to perform
advisory services to the Portfolio for the periods and on the terms set forth in
this Subadvisory Agreement. The Subadviser accepts such appointment and agrees
to furnish the services herein set forth, for the compensation herein provided.
2. DUTIES OF SUBADVISER. The Adviser hereby authorizes Subadviser to manage
the investment and reinvestment of cash and investments comprising the assets of
the Portfolio with power on behalf of and in the name of the Portfolio at
Subadviser's discretion; subject at all times to the supervision of the Adviser
and the Trustees of the Trust:
(a) to direct the purchase, subscription or other acquisition of
investments and to direct the sale, redemption, and exchange of investments,
subject to the duty to render to the Trustees of the Trust, the Adviser and the
Custodian written reports of the composition of the portfolio of the Portfolio
as often as the Trustees of the Trust shall reasonably require;
(b) to make all decisions relating to the manner, method and timing of
investment transactions, to select brokers, dealers and other intermediaries by
or through whom such transactions will be effected, and to engage such
consultants, analysts and experts in connection therewith as may be considered
necessary or appropriate;
(c) to direct banks, brokers or custodians to disburse funds or assets
solely in order to execute investment transactions for the Portfolio, provided
that the Subadviser shall have no other authority to direct the transfer of the
Portfolio's funds or assets to itself or other persons and shall have no other
authority over the disbursement (as opposed to investment decisions) of funds or
assets nor any custody of any of the Portfolio's funds or assets; and
(d) to take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder; PROVIDED THAT any specific or
general directions which the Trustees of the Trust, or the Adviser may give to
the Subadviser with regard to any of the foregoing powers shall, unless the
contrary is expressly stated therein, override the general authority given by
this provision to the extent that the Trustees of the Trust may, at any time and
from time to time, direct, either generally or to a limited extent and either
alone or in concert with the Adviser or the Subadviser (provided that such
directions would not cause the Subadviser to violate any fiduciary duties or any
laws with regard to the Subadviser's duties and responsibilities), all or any of
the same as they shall think fit and, in particular, the Adviser shall have the
right to request the Subadviser to place trades through brokers and other agents
of the Adviser's choice, subject to the Subadviser's judgment that such brokers
or agents will execute such trades on the best overall terms available, taking
into consideration factors the Subadviser deems relevant including, without
limitation, the price of the security, research or other services which render
that broker's services the most appropriate for the Subadviser's needs, the
financial condition and dealing and execution capability of the broker or dealer
and the reasonableness of the commission, if any, for the specific transaction
and on a continuing basis; and PROVIDED FURTHER that nothing herein shall be
construed as giving the Subadviser power to manage the aforesaid cash and
investments in such a manner as would cause the Portfolio to be considered a
"dealer" in stocks, securities or commodities for U.S. federal income tax
purposes.
The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's performance
of the duties delineated in subparagraphs (a)-(d) of this provision.
The Subadviser further agrees that, in performing its duties hereunder, it
will
(a) (i) comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act, the Internal Revenue Code (the "Code") and all
other applicable federal and state laws and regulations, the current Prospectus
and Statement of Additional Information for the Portfolio supplied to the
Subadviser by the Adviser, and with any applicable procedures adopted by the
Trustees in writing supplied to the Subadviser by the Adviser; (ii) manage the
Portfolio in accordance with the investment requirements for regulated
investment companies under Subchapter M of the Code and regulations issued
thereunder; (iii) direct the placement of orders pursuant to its investment
determinations for the Portfolio directly with the issuer, or with any broker or
dealer, in accordance with applicable policies expressed in the Portfolio's
Prospectus and/or Statement of Additional Information and in accordance with
applicable legal requirements.
(b) furnish to the Portfolio whatever non-proprietary reports the
Portfolio may reasonably request with respect to the Portfolio's assets or
contemplated strategies. In addition, the Subadviser will keep the Portfolio and
the Trustees informed of developments materially affecting the Portfolio's
portfolio and shall, on the Subadviser's own initiative, furnish to the
Portfolio from time to time whatever information the Subadviser believes
appropriate for this purpose;
(c) make available to the Portfolio's administrator, Northstar
Administrators Corp. (the "Administrator"), the Adviser, and the Portfolio,
promptly upon their request, such copies of its investment records and ledgers
with respect to the Portfolio as may be required to assist the Adviser, the
Administrator and the Portfolio in their compliance with applicable laws and
regulations. The Subadviser will furnish the Trustees with such periodic and
special reports regarding the Portfolio as they may reasonably request;
(d) immediately notify the Adviser and the Portfolio in the event that
the Subadviser or any of its affiliates: (i) becomes aware that it is subject to
a statutory disqualification that prevents the Subadviser from serving as an
investment adviser pursuant to this Subadvisory Agreement; or (ii) becomes aware
that it is the subject of an administrative proceeding or enforcement action by
the Securities and Exchange Commission ("SEC") or other regulatory authority.
The Subadviser further agrees to notify the Portfolio and the Adviser
immediately of any material fact known to the Subadviser respecting or relating
to the Subadviser that is not contained in the Trust's Registration Statement,
or any amendment or supplement thereto, but that is required to be disclosed
therein, and of any statement contained therein that becomes untrue in any
material respect. The Portfolio, Adviser, Administrator, and their Affiliates
shall likewise immediately notify the Subadviser if any of them becomes aware of
any regulatory action of the type described in this subparagraph 2(d).
3. ALLOCATION OF CHARGES AND EXPENSES. The Subadviser shall pay all
expenses associated with the management of its business operations in performing
its responsibilities hereunder, including the cost of its own overhead,
research, compensation and expenses of its directors, officers and employees,
and other internal operating costs; provided, however, that the Subadviser shall
be entitled to reimbursement on a monthly basis by the Adviser of all reasonable
out-of-pocket expenses properly incurred by it in connection with serving as
subadviser to the Portfolio. For the avoidance of doubt, the Portfolio shall
bear its own overhead and other internal operating costs (whether incurred
directly or by the Adviser or the Subadviser) including, without limitation:
(a) the costs incurred by the Portfolio in the preparation and
printing of the Prospectus or any offering literature (including any form of
advertisement or other solicitation materials calculated to lead to investors
subscribing for shares);
(b) all fees and expenses on behalf of the Portfolio to the Transfer
Agent and the Custodian;
(c) the reasonable fees and expenses of accountants, auditors, lawyers
and other professional advisors to the Portfolio;
(d) any interest, fee or charge payable on or on account of any
borrowing by the Portfolio;
(e) fiscal and governmental charges and duties relating to the
purchase, sale, issue or redemption of shares and increases in authorized share
capital of the Portfolio;
(f) the fees of any stock exchange or over-the-counter market on which
shares of the Portfolio may from time to time be listed, quoted or dealt in and
the expenses of obtaining any such listing, quotation or permission to deal;
(g) the fees and expenses (if any) payable to Trustees;
(h) brokerage, fiscal or governmental charges or duties in respect of
or in connection with the acquisition, holding or disposal of any of the assets
of the Portfolio or otherwise in connection with its business;
(i) the expenses of publishing details and prices of shares of the
Portfolio in newspapers and other publications;
(j) all expenses incurred in the convening of meetings of shareholders
or in the preparation of agreements or other documents relating to the Portfolio
or in relation to the safe custody of the documents of title of any investments;
(k) all Trustees communication costs; and
(1) all premiums and costs for Portfolio insurance and blanket
fidelity bonds.
4. COMPENSATION. As compensation for the services provided by the
Subadviser under this Agreement, the Adviser will pay the Subadviser at the end
of each calendar month an advisory fee computed daily at an annual rate equal to
0.20 of 1% of the Portfolio's average daily net assets. The "average daily net
assets" of the Portfolio shall mean the average of the values placed on the
Portfolio's net assets as of 4:00 p.m. (New York time) on each day on which the
net asset value of the Portfolio is determined consistent with the provisions of
Rule 22c-1 under the 1940 Act or, if the Portfolio lawfully determines the value
of its net assets as of some other time on each business day, as of such other
time. The value of net assets of the Portfolio shall always be determined
pursuant to the applicable provisions of the Trust's Declaration of Trust and
the Registration Statement. If, pursuant to such provisions, the determination
of net asset value is suspended for any particular business day, then for the
purposes of this Section 4, the value of the net assets of the Portfolio as last
determined shall be deemed to be the value of its net assets as of the close of
regular trading on the New York Stock Exchange, or as of such other time as the
value of the net assets of the Portfolio's portfolio may lawfully be determined,
on that day. If the determination of the net asset value of the shares of the
Portfolio has been so suspended for a period including any month end when the
Subadviser's compensation is payable pursuant to this Section, the Subadviser's
compensation payable at the end of such month shall be computed on the basis of
the value of the net assets of the Portfolio as last determined (whether during
or prior to such month). If the Portfolio determines the value of the net assets
of its portfolio more than once on any day, then the last such determination
thereof on that day shall be deemed to be the sole determination thereof on that
day for the purposes of this Section 4.
5. BOOKS AND RECORDS. The Subadviser agrees to maintain such books and
records with respect to its services to the Portfolio as are required by Section
31 under the 1940 Act, and rules adopted thereunder, and by other applicable
legal provisions, and to preserve such records for the periods and in the manner
required by applicable laws or regulations. The Subadviser also agrees that
records it maintains and preserves pursuant to Rules 31a-2 under the 1940 Act
(excluding trade secrets or intellectual property rights) in connection with its
services hereunder are the property of the Portfolio and will be surrendered
promptly to the Portfolio upon its request and the Subadviser farther agrees
that it will famish to regulatory authorities having the requisite authority any
information or reports in connection with its services hereunder which may be
requested in order to determine whether the operations of the Portfolio are
being conducted in accordance with applicable laws and regulations.
6. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Subadviser shall
exercise its best judgment in rendering the services provided by it under this
Subadvisory Agreement. The Subadviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Portfolio or the
holders of the Portfolio's shares or by the Adviser in connection with the
matters to which this Subadvisory Agreement relates, provided that nothing in
this Subadvisory Agreement shall be deemed to protect or purport to protect the
Subadviser against liability to the Portfolio or to holders of the Portfolio's
shares or to the Adviser to which the Subadviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Subadviser's reckless disregard of
its obligations and duties under this Subadvisory Agreement. As used in this
Section 6, the term "Subadviser" shall include any officers, directors,
employees or other affiliates of the Subadviser performing services for the
Portfolio.
7. SERVICES NOT EXCLUSIVE. The Advisor understands that the Subadviser now
acts, will continue to act and may act in the future as investment advisor to
fiduciary and other managed accounts and as investment advisor to other
investment companies, and, except as may be separately agreed to from time to
time between the Advisor and the Subadviser, the Trust has no objection to the
Subadviser so acting, provided that whenever the Portfolio and one or more other
accounts or investment companies advised by the Subadviser have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with a methodology believed to be equitable to each entity. The
Subadviser agrees to allocate similar opportunities to sell securities. The
Advisor recognizes that, in some cases, this procedure may limit the size of the
position that may be acquired or sold for the Portfolio. In addition, the
Adviser understands that the persons employed by the Subadviser to assist in the
performance of the Shareholder's duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed to limit or
restrict the right of the Subadviser or any affiliate of the Subadviser to
engage in and devote time and attention to other business or to render services
of whatever kind or nature.
8. DURATION AND TERMINATION. This Subadvisory Agreement shall become
effective as of the date of its execution and shall continue in effect for a
period of two years from the date of execution. Thereafter, this Subadvisory
Agreement shall continue automatically for successive annual periods, provided
such continuance is specifically approved at least annually by (i) the Trust's
Trustees or (ii) a vote of a "majority" (as defined in the 0000 Xxx) of the
Portfolio's outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Trust's Trustees who are not
"interested persons" (as defined in the 0000 Xxx) of any party to this
Subadvisory Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Subadvisory Agreement may be terminated: (a) at any time without penalty by the
Portfolio or the Adviser upon the vote of a majority of the Trustees or by vote
of a majority of the Portfolio's outstanding voting securities, upon sixty (60)
days written notice to the Subadviser, or (b) by the Subadviser without cause at
any time without penalty, upon sixty (60) days written notice to the Trust or
the Adviser. This Subadvisory Agreement will terminate automatically five
business days after the Subadviser receives written notice of the termination of
the Investment Advisory Agreement. This Subadvisory Agreement will also
terminate automatically in the event of its assignment (as defined in the 1940
Act).
9. AMENDMENTS. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by both parties, and no material amendment of this Subadvisory Agreement
shall be effective until approved by an affirmative vote of (i) a majority of
the outstanding voting securities of the Portfolio, and (ii) a majority of the
Trustees of the Trust, including a majority of Trustees who are not interested
persons of any party to this Subadvisory Agreement, cast in person at a meeting
called for the purpose of voting on such approval, if such approval is required
by applicable law.
10. INDEMNIFICATION. (a) The Adviser hereby agrees to indemnify the
Subadviser and its affiliates from and against all liabilities, losses,
expenses, reasonable attorneys' fees and costs (other than attorneys' fees and
costs in relation to the preparation of this Agreement; each party bearing
responsibility for its own such costs and fees) or damages (other than
liabilities, losses, expenses, attorneys fees and costs or damages arising from
the Subadviser failing to meet the standard of care required in Section 6 of
this Subadvisory Agreement in the performance by the Subadviser of, or its
failure to perform, the services required hereunder), arising from the Adviser's
(its affiliates and their respective agents and employees) failure to perform
its duties or assume its obligations hereunder, or from its wrongful actions or
omissions, including, but not limited to, any claims for non-payment of advisory
fees; claims asserted or threatened by any shareholder of the Portfolio,
governmental or regulatory agency, or any other person; claims arising from any
wrongful act by the Portfolio or any of the Portfolio's trustees, officers,
employees, or representatives, or by the Adviser, its officers, employees or
representatives, or from any actions by the Portfolio's distributors or any
representative of the Portfolio; any action or claim against the Subadviser
based on any alleged untrue statement or misstatement of material fact in any
registration statement, prospectus, shareholder report or other information or
materials covering shares filed or made public by the Portfolio or any amendment
thereof or supplement thereto, or the failure or alleged failure to state
therein a material fact required to be stated in order that the statements
therein are not misleading, provided that such claim is not based upon
information provided to the Adviser by the Subadviser or approved by the
Subadviser in the manner provided in paragraph 12(b) of this Agreement, or which
facts or information the Subadviser failed to provide or disclose. With respect
to any claim for which the Subadviser shall be entitled to indemnity hereunder,
the Adviser shall assume the reasonable expenses and costs (including any
reasonable attorneys' fees and costs) of the Subadviser of investigating and/or
defending any claim asserted or threatened by any party, subject always to the
Adviser first receiving a written undertaking from the Subadviser to repay any
amounts paid on its behalf in the event and to the extent of any subsequent
determination that the Subadviser was not entitled to indemnification hereunder
in respect of such claim.
(b) The Subadviser hereby agrees to indemnify the Adviser, its
affiliates and the Portfolio from and against all liabilities, losses, expenses,
reasonable attorneys' fees and costs (other than attorneys' fees and costs in
relation to the preparation of this Agreement; each party bearing responsibility
for its own such costs and fees) or damages (other than liabilities, losses,
expenses, attorneys fees and costs or damages arising from the Adviser's failure
to perform its responsibilities hereunder or claims arising from its acts or
failure to act in performing this Agreement) arising from Subadviser's (its
affiliates and their respective agents and employees) willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of the
Subadviser's reckless disregard of its obligations and duties under this
Subadvisory Agreement, or arising from failure to act in any action or claim
against the Adviser based on any alleged untrue statement or misstatement of a
material fact made or provided by or with the consent of Subadviser contained in
any registration statement, prospectus, shareholder report or other information
or materials relating to the Portfolio and shares issued by the Portfolio, or
the failure or alleged failure to state a material fact therein required to be
stated in order that the statements therein are not misleading, which fact
should have been made or provided by the Subadviser to the Adviser. With respect
to any claim for which the Adviser is entitled to indemnity hereunder, the
Subadviser shall assume the reasonable expenses and costs (including any
reasonable attorneys' fees and costs) of the Adviser of investigating and/or
defending any claim asserted or threatened by any party, subject always to the
Subadviser first receiving a written undertaking from the Adviser to repay any
amounts paid on its behalf in the event and to the extent of any subsequent
determination that the Adviser was not entitled to indemnification hereunder in
respect of such claim.
(c) In the event that the Subadviser or Adviser is or becomes a party
to any action or proceedings in respect of which indemnification may be sought
hereunder, the party seeking indemnification shall promptly notify the other
party thereof. After becoming notified of the same, the party from whom
indemnification is sought shall be entitled to participate in any such action or
proceeding and shall assume any payment for the full defense thereof with
counsel reasonably satisfactory to the party seeking indemnification. After
properly assuming the defense thereof, the party from whom indemnification is
sought shall not be liable hereunder to the other party for any legal or other
expenses subsequently incurred by such party in connection with the defense
thereof, other than damages, if any, by way of judgment, settlement, or
otherwise pursuant to this provision. The party from whom indemnification is
sought shall not be liable hereunder for any settlement of any action or claim
effected without its written consent, which consent shall not be unreasonably
withheld.
11. INDEPENDENT CONTRACTOR. Subadviser shall for all purposes of this
Agreement be deemed to be an independent contractor and, except as otherwise
expressly provided herein, shall have no authority to act for, bind or represent
the Portfolio in any way or otherwise be deemed to be an agent of the Portfolio.
Likewise, the Portfolio, the Adviser and their respective affiliates, agents and
employees shall not be deemed agents of the Subadviser and shall have not
authority to bind Subadviser.
12. USE OF NAME. (a) The Portfolio may, subject to sub-clause (b) below,
use the name, "X.X. Xxxxxx Investment Management Inc." or "X.X. Xxxxxx" for
promotional purposes only for so long as this Agreement (or any extension,
renewal or amendment thereof) continues in force, unless the Subadviser shall
specifically consent in writing to such continued use thereafter. Any permitted
use by the Portfolio during the term hereof of the name of the Subadviser or
X.X. Xxxxxx shall in no way prevent the Subadviser or any of it shareholders or
any of their successors, from using or permitting the use of such name (whether
singly or in any combination with any other words) for, by or in connection with
an entity or enterprise other than the Portfolio. The name and right to the name
X.X. Xxxxxx Investment Management Inc. or any derivation of the name X.X. Xxxxxx
shall at all times be owned and be the sole and exclusive property of X.X.
Xxxxxx and its affiliated entities. X.X. Xxxxxx Investment Management Inc., by
entering into this Agreement, is allowing the Portfolio to use the name X.X.
Xxxxxx Investment Management Inc. and/or X.X. Xxxxxx solely by or on behalf of
the Portfolio. At the conclusion of this Agreement or in the event of any
termination of this Agreement or if the Subadviser's services are terminated for
any reason, each of the authorized parties and their respective employees,
representatives, affiliates, and associates agree that they shall immediately
cease using the name X.X. Xxxxxx Investment Management Inc. and/or X.X. Xxxxxx
of said name for any purpose whatsoever.
(b) The Adviser and its affiliates shall not publish or distribute,
and shall cause the Portfolio not to publish or distribute to Portfolio
shareholders, prospective investors, sales agents or members of the public any
disclosure document, offering literature (including any form of advertisement or
other solicitation materials calculated to lead investors to subscribe for and
purchase shares of the Fund) or other document referring by name to the
Subadviser or any of its affiliates, unless the Subadviser shall have consented
in writing to such references in the form and context in which they appear;
provided however, that where the Portfolio timely seeks to obtain approval of
disclosure contained in any documents required to be filed by the Portfolio, and
such approval is not forthcoming on or before the date on which such documents
are required by law to be filed, the Subadviser shall be deemed to have
consented to such disclosure.
13. MISCELLANEOUS.
(a) This Subadvisory Agreement shall be governed by the laws of the
State of New York, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder. In the event of any litigation in which the Adviser and the
Subadviser are adverse parties and there are no other parties to such
litigation, such action shall be brought in the United States District Court for
the State of New York, located in New York, New York.
(b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument.
14. NOTICES. Any notice, instruction or other instrument required or
permitted to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or sent
by prepaid registered mail, express mail or by facsimile to the parties at such
offices or such other address as may be notified by either party from time to
time. Such notice, instruction or other instrument shall be deemed to have been
served, in the case of a registered letter at the expiration of seventy-two (72)
hours after posting; in the case of express mail, within twenty-four (24) hours
after dispatch; and in the case of facsimile, immediately on dispatch, and if
delivered outside normal business hours it shall be deemed to have been received
at the next time after delivery or transmission when normal business hours
commence. Evidence that the notice, instruction or other instrument was properly
addressed, stamped and put into the post shall be conclusive evidence of
posting.
15. NON-SOLICITATION. Adviser, its affiliates and their respective agents
(including brokers engaged in marketing and selling shares of the Fund), and
each of their employees and affiliates agree not to knowingly solicit to invest,
or accept or retain as investors, in the Portfolio any persons or entities who
are clients of or investors in any portfolio or investment vehicle managed by
any entity owned or affiliated with X.X. Xxxxxx Investment Management Inc.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of April 30, 1999.
Northstar Investment Management Corporation
By: /s/ XXXX X. XXXXXX
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XXXX X. XXXXXX
Chairman and CEO
X.X. Xxxxxx Investment Management Inc.
By: /s/ XXXXX X. XXXXXXX
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XXXXX X. XXXXXXX
Vice President
