Exhibit 5a
NORTHSTAR ADVANTAGE SPECIAL FUND
SUBADVISORY AGREEMENT
AGREEMENT made this 1st day of February, 1996 by and between Northstar
Investment Management Corporation, a Delaware Corporation (hereinafter the
"Adviser"), investment adviser for the Northstar Advantage Special Fund
(hereinafter the "Fund") and Navellier Fund Management, Inc., a Delaware
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 June 2 , 1995 (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 the
assets of the Fund 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 of
investments and to direct the sale, redemption, and exchange of investments,
subject to the duty to render to the Trustees of the Fund, the Adviser and the
Custodian written reports of the composition of the portfolio of the Fund as
often as the Trustees of the Fund 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 Fund, provided that
the Subadviser shall have no authority to direct the transfer of the Fund's
funds or assets to itself or other persons and shall have no authority over the
disbursement (as opposed to investment decisions) of funds or assets nor any
custody of any of the Fund's funds or assets; and
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(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 Fund,
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
Fund 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 direct the Subadviser to place
trades through brokers and other agents of the Adviser's choice, subject to such
brokers or agents executing such trades on a "best execution basis", i.e. at the
best price and/or with research or other services which render that broker's
services the most appropriate for the Subadviser's needs, and further that the
Subadviser is satisfied that the dealing and execution quality of such brokers
are satisfactory to the Subadviser; 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 Fund 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 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 Fund 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 Fund directly with the issuer, or with any
broker or dealer, in accordance with applicable policies expressed in the Fund's
Prospectus and/or Statement of Additional Information and in accordance with
applicable legal requirements.
(b) furnish to the Fund whatever non-proprietary reports the Fund may
reasonably request with respect to the Fund's assets or contemplated
investments. In addition, the Subadviser will keep the Fund and the Trustees
informed of developments materially affecting the Fund's portfolio 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
Fund 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 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 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
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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 Fund. For the avoidance of doubt, the Fund 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 Fund 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 Fund to the Transfer Agent and
the Custodian;
c. the reasonable fees and expenses of accountants, auditors, lawyers and
other professional advisors to the Fund;
d. any interest, fee or charge payable on or on account of any borrowing
by the Fund;
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 Fund;
f. the fees of any stock exchange or over-the-counter market on which the
shares 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 Fund or otherwise in connection with its business;
i. the expenses of publishing details and prices of shares 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 Fund or in
relation to the safe custody of the documents of title of any investments;
k. all Trustees communication costs; and
l. all premiums and costs for Fund 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
0.48 of 1 % of the Fund's average daily net assets. The "average daily net
assets" of the Fund shall mean the average of the values placed on the Fund's
net 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 net 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
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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 Fund
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 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 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 Fund 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 4.
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 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 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 investment
companies (whether or not their investment objectives and policies are similar
to those of the Fund) or from engaging in other investment advisory activities.
When the Subadviser recommends the purchase or sale of a security for other
investment companies and other clients, and at the same time the Subadviser
recommends the purchase or sale of the same security for the Fund, it is
understood that in light of its fiduciary duty to the Fund, such transactions
will be executed on a basis that is fair and equitable to the Fund; provided,
however, that 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
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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.
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
affiliates and their 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
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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 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 not
authority to bind Subadviser.
12. USE OF NAME
(a) The Fund may, subject to sub-clause (b) below, use the name, "Navellier
Fund Management, Inc." or any component, abbreviation or other name derived
therefrom 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 Fund during the term hereof of the name of
the Subadviser, Navellier, 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. The name and right to the name Navellier Fund Management, Inc.
or any derivation of the name Navellier shall at all times be owned and be the
sole and exclusive property of Xxxxx Xxxxxxxxx and his affiliated entities.
Navellier Fund Management Inc., by entering into this Agreement, is allowing the
Fund to use the name Navellier and/or derivatives thereof solely by or on behalf
of the Fund. 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 Navellier and/or any derivatives of said name for any
purpose whatsoever.
(b) The Adviser and its affiliates shall not publish or distribute, and
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, 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 Fund timely seeks to obtain approval of disclosure 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 Nevada, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of
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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 Nevada, located in Reno, Nevada.
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. 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.
16. 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 Fund any persons or entities
who are clients of or investors in any fund or investment vehicle managed by any
entity owned by Xxxxx Xxxxxxxxx.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of February 1 , 1996.
Northstar Investment Management Corporation
By: XXXX X. XXXXXX
Chairman and CEO
Navellier Fund Management, Inc.
By: XXXXX X. XXXXXXXXX
President
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