Exhibit 5(c)
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
SUBADVISORY AGREEMENT
AGREEMENT made this day of August, 1996 by and between Northstar Investment
Management Corporation, Delaware Corporation (hereinafter the "Adviser"),
investment adviser for the Northstar Advantage Income and Growth Fund
(hereinafter the "Fund") and Xxxxxx/Xxxxxxx Capital Management, Inc., a Virginia
corporation (hereinafter the "Subadviser").
WHEREAS, the Adviser has been retained by the Fund, 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 Fund pursuant to an Investment Advisory Agreement dated November
1, 1993 (the "Investment Advisory Agreement"); and
WHEREAS, the Fund's Trustees, including a majority of the Trustees who
are not "interested persons," as defined in the 1940 Act, and the Fund's
shareholders have approved the appointment of the Subadviser to perform certain
investment advisory services for the Fund pursuant to this Subadvisory Agreement
with the Adviser and the Subadviser is willing to perform such services for the
Fund;
WHEREAS, the Subadviser is or will be registered as an investment
adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act")
prior to performing its services for the Fund under this Agreement;
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 Fund 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 those
assets of the Fund which are designated by the Adviser for investment in common
stocks (the "Assets"), with power on behalf of and in the name of the Fund at
Subadviser's discretion; subject at all times to the supervision of the Adviser
and the Trustees of the Fund:
(a) to direct the purchase, subscription or other acquisition, and the
sale, redemption, and exchange of the Assets, subject to the duty to render to
the Trustees of the Fund and the Adviser such written reports regarding the
Assets as often as the Adviser or the Trustees of the Fund shall reasonably
require; provided however that all investment decisions and orders shall be
communicated to the Adviser, who shall select brokers and dealers to execute
such purchase and sell orders.
(b) to make all decisions relating to the timing of investment
transactions relating to the Assets, and to engage such consultants, analysts
and experts in connection therewith as may be considered necessary or
appropriate;
(c) 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 Fund
or the Adviser may give in writing to the Subadviser with regard to any of the
foregoing powers shall, unless the contrary is expressly stated herein, override
the general authority given by this provision.
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) coordinate with the Adviser to (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 Prospectus and Statement of Additional Information for the Fund, and with
any applicable procedures adopted by the Trustees in writing and made available
to Subadviser; (ii) manage the Assets in accordance with the investment
requirements for regulated investment companies under Subchapter M of the Code
and regulations issued thereunder, and (iii) review on a daily basis and confirm
as accurate the previous day's valuations of the securities comprising the
Assets;
(b) furnish to the Fund whatever non-proprietary reports the Fund may
reasonably request with respect to the Assets or contemplated investments. In
addition, the Subadviser will keep the Fund and the Trustees informed of
developments materially affecting the Assets and shall, on the Subadviser's own
initiative, furnish to the Fund from time to time whatever information the
Subadviser believes appropriate for this purpose;
(c) make available to the Fund's administrator, Northstar
Administrators Corp. (the "Administrator"), the Adviser, and the Fund, promptly
upon their request, such copies of its investment records and ledgers with
respect to the Assets as may be required to assist the Adviser, the
Administrator and the Fund in their compliance with applicable laws and
regulations. The Subadviser will furnish the Trustees with such periodic and
special reports regarding the Fund as they may reasonably request;
(d) immediately notify the Adviser and the Fund in the event that the
Subadviser or any of its principals: (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 Fund and the Adviser immediately of
any material fact known to the Subadviser respecting or relating to the
Subadviser that is not contained in the Fund'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 Fund, 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.
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 first $125 million of the average daily net asset value of the
Assets; 0.25 of 1% of the net asset value of the Assets exceeding $125 million
up to $250 million; and 0.30 of 1% of the average daily net asset value of the
Assets exceeding $250 million. The "average daily net asset value" of the Assets
shall mean the value placed on the Assets as of 4:00 p.m. (New York time) on
each day on which the net asset value of the Fund is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act or, if the Fund 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 the Assets of the Fund shall always be
determined pursuant to the applicable provisions of the Fund'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 purposes of this Section 4, the value of the Assets as last determined
shall be deemed to be the value of the 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 Fund's portfolio may lawfully be determined, on that day. If the
determination of the net asset value of the shares of the Fund has been so
suspended
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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 Assets as
last determined (whether during or prior to such month). If the Fund 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
5. Books and Records. The Subadviser agrees to maintain such books and
records with respect to its services to the Fund 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 Fund and will be surrendered promptly
to the Fund upon its request and the Subadviser further agrees that it will
furnish 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 Fund are being conducted in
accordance with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Subadviser shall
exercise its best business judgment and reasonable care 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 Fund or the holders of the Fund'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 Fund or to holders
of the Fund'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 Fund.
7. Services Not Exclusive. It is understood that the services of the
Subadviser are not exclusive, and that nothing in this Subadvisory Agreement
shall prevent the Subadviser, its affiliates or its or their officers, directors
and employees from providing similar services to other clients or from engaging
in other investment advisory activities; provided however, that Subadviser
agrees that it shall not provide investment advisory services to any other
investment company (as defined in Section 3 of the 0000 Xxx) (whether or not the
investment objective and policies are similar to those of the Fund) for as long
as this Subadvisory Agreement is in effect. The Subadviser is not required to
recommend to the Fund the same investments it recommends to its other clients.
In connection with purchases or sales of portfolio securities for the account of
the Fund, neither the Subadviser nor any of its directors, officers or employees
shall act as a principal or agent or receive any commission. If the Subadviser
provides any advice to its clients concerning the shares of the Fund, the
Subadviser shall act solely as investment counsel for such clients and not in
any way on behalf of the Fund.
8. Duration and Termination. This Subadvisory Agreement shall continue
in effect for a period of two years unless sooner terminated as provided herein.
Notwithstanding the foregoing, this Subadvisory Agreement may be terminated: (a)
at any time without penalty by the Fund or Adviser upon the vote of a majority
of the Trustees or by vote of the majority of the Fund'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 (60) days'
written notice to the Fund or Adviser. This Subadvisory Agreement will also
terminate automatically in the event of its assignment (as defined in the 0000
Xxx) or the assignment or termination of the Investment Advisory Agreement.
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 Fund, and (ii) a majority
of the Trustees of the Fund, 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.
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10. Indemnification. (a) The Adviser hereby agrees to indemnify the
Subadviser 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 hereunder 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 Fund,
governmental or regulatory agency, or any other person; claims arising from any
wrongful act by the Fund or any of the Fund's trustees, officers, employees, or
representatives, or by the Adviser, its officers, employees or representatives,
or from any actions by the Fund's distributors or any representative of the
Fund; 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 Fund 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 Fund 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
respective agents and employees) failure to perform its duties and assume its
obligations hereunder, or from any wrongful act of Subadviser or its failure to
act in performing this Agreement, including 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 Fund and shares issued by the Fund, 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.
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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 Fund
in any way or otherwise be deemed to be an agent of the Fund. Likewise, the
Fund, the Adviser and their respective affiliates, agents and employees shall
not be deemed agents of the Subadviser and shall have no authority to bind
Subadviser.
12. Use of Names.
(a) The Fund may, subject to sub-clause (b) below, use the name,
"Xxxxxx/Xxxxxxx" or the name of any principal of Xxxxxx/Xxxxxxx, or any
component, abbreviation or other name derived therefrom for promotional purposes
only for so long as this Subadvisory 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
Fund during the term hereof of the name of the Subadviser or any of its
principals, or any derivative thereof, 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 Fund. At
the conclusion of this Subadvisory Agreement or in the event of any termination
of this Subadvisory 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 and/or any derivatives of said name for any purpose
whatsoever.
(b) The Adviser and its affiliates on one hand, and the Subadviser on
the other, shall not publish or distribute, and the Adviser shall cause the Fund
not to publish or distribute to Fund 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 on one hand and the Adviser or its
affiliates on the other, unless the other party shall have consented in writing
to such references in the form and context in which they appear; provided
however, that where the Adviser or the Fund timely seeks to obtain approval of
the Subadviser of disclosure required to be contained in any documents required
to be filed by the Fund, 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 Massachusetts, 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 Massachusetts located in Boston, Massachusetts.
(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
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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. Attorneys' Fees. In the event of a material breach of this Agreement by any
party hereto, the prevailing party, as determined by the trier of fact, shall be
entitled to reasonable attorneys' fees and costs as determined by the court in
such action, in addition to any other damages awarded.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the date and year set forth
above.
Northstar Investment Management Corporation
By:_____________________________________
Xxxx X. Xxxxxx
Chairman and CEO
Xxxxxx/Xxxxxxx Capital Management, Inc.
By:______________________________________
Xxxx X. Xxxxxx
President
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