NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
A Series of the Northstar Advantage Trust
TWO PICKWICK PLAZA, GREENWICH, CONNECTICUT 06830
MAY 30, 1996
Dear Shareholder:
A Special Meeting of the Shareholders of the Northstar Advantage Income and
Growth Fund (the "Fund") will be held at 10 a.m. EST on July 15,1996, at the
offices of the Fund. Formal notice of the Meeting appears on the next page,
followed by the proxy statement. We hope that you can attend the meeting in
person; however, we urge you in any event to vote your shares by completing and
returning the enclosed proxy card in the envelope provided at your earliest
convenience.
At the Meeting, Shareholders will be asked to consider and vote upon a proposal
to consider and approve a subadvisory agreement (the "Subadvisory Agreement")
between Northstar Investment Management Corporation, the Fund's investment
adviser ("Northstar" or the "Adviser"), and Wilson/Bennett Capital Management,
Inc. ("Wilson/Bennett" or the "Subadviser"). The Subadviser will be given
responsibility for managing that portion of the Fund's assets invested in common
stocks and will be paid by the Adviser. Accordingly, the Subadvisory Agreement
will not increase the fees paid by the Fund for investment advisory services. It
is intended that the Subadvisory Agreement, if approved, will become effective
on or about August 1, 1996.
Detailed information about the proposed subadvisory arrangement and the reasons
for it are contained in the enclosed materials. The Trustees of the Fund have
concluded that the proposed Subadvisory Agreement, and the arrangements
contemplated thereby, are in the best interest of the Fund and its shareholders
and recommend that you vote FOR the Proposal.
PLEASE EXERCISE YOUR RIGHT TO VOTE BY COMPLETING, DATING AND SIGNING THE
ENCLOSED PROXY CARD. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE HAS BEEN ENCLOSED
FOR YOUR CONVENIENCE. IT IS IMPORTANT THAT YOU VOTE AND THAT YOUR VOTE BE
RECEIVED BY NO LATER THAN JULY 12, 1996.
We appreciate your participation and prompt response in this matter, and thank
you for your continued support.
Sincerely,
/s/ Mark L. Lipson
Mark L. Lipson
President
<PAGE>
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
A SERIES OF THE NORTHSTAR ADVANTAGE TRUST
TWO PICKWICK PLAZA, GREENWICH, CONNECTICUT 06830
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 15, 1996
To the Shareholders of Northstar Advantage Income and Growth Fund:
Notice is hereby given that a Special Meeting (the "Meeting") of Shareholders of
Northstar Advantage Income and Growth Fund (the "Fund"), a series of the
Northstar Advantage Trust, a Massachusetts business trust, will be held at the
offices of the Fund on July 15, 1996, at 10:00 a.m., or at such adjourned time
as may be necessary for the holders of a majority of the shares of the Fund to
vote, for the following purposes:
(1) To approve a Sub-Advisory Agreement for the Fund between Northstar
Investment Management Corporation and Wilson/Bennett Capital Management,
Inc.
(2) To transact such other business as may properly come before the Special
Meeting.
The Trustees of the Trust have fixed the close of business on May 17, 1996 as
the record date for determining shareholders entitled to notice of and to vote
at the Meeting or any adjournment thereof.
By Order of the Trustees
/s/ Mark L. Lipson
Mark L. Lipson, President
Greenwich, Connecticut
May 30, 1996
SHAREHOLDERS ARE URGED TO VOTE PROMPTLY ON THIS MATTER. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO COMPLETE, DATE AND SIGN
THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED FOR
THAT PURPOSE. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON
THE INSIDE COVER. SHAREHOLDERS WHO HOLD SHARES IN MORE THAN ONE ACCOUNT WILL
RECEIVE A PROXY PACKAGE FOR EACH ACCOUNT. YOU MUST RETURN SEPARATE PROXY CARDS
FOR EACH SEPARATE ACCOUNT.
THE PROMPT RETURN OF YOUR PROXY WILL AVOID THE EXPENSE OF FURTHER MAILINGS.
<PAGE>
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JULY 15, 1996
This proxy statement is being furnished in connection with the solicitation of
proxies by Northstar Advantage Income and Growth Fund (the "Fund") for the
Special Meeting of Shareholders to be held on July 15, 1996, or any adjournment
thereof. At the Special Meeting, Shareholders of the Fund will be asked to
approve a subadvisory agreement (the "Subadvisory Agreement"), a copy of which
is attached hereto as Exhibit A, between Northstar Investment Management
Corporation ("Northstar" or the "Adviser"), the Fund's current investment
adviser, and Wilson/Bennett Capital Management, Inc. ("Wilson/Bennett" or the
"Subadviser"). The terms of the Subadvisory Agreement and the purposes for the
proposed arrangement are set forth herein. It is anticipated that the first
mailing to shareholders of proxies and proxy statements will be on or about June
10, 1996.
Adoption of the Subadvisory Agreement is subject to approval of at least a
majority of the shareholders of the Fund (as defined in the Investment Company
Act of 1940, as amended (the "1940 Act")). The Trustees of the Fund have
reviewed the terms of the Subadvisory Agreement, and, having found it to be in
the best interest of the Fund and its shareholders, unanimously recommend that
shareholders approve the Subadvisory Agreement.
May 17, 1996 has been chosen as the record date to determine shareholders
entitled to vote at the Meeting. Shareholders are entitled to one vote for each
share held, which may be cast by proxy or by personally appearing at the
Meeting. On May 17, 1996 there were 18,116,622 shares of the Fund outstanding,
of which the Trustees and officers of the Fund as a group beneficially owned
less than l%. The Fund has one shareholder who owns beneficially 5% or more of
the outstanding shares of the Fund. Norwest Bank Minnesota, N.A., as trustee for
the ReliaStar Pension Plan and Trust, owned 2,114,000 shares as of May 17, 1996.
The address for Norwest is P.O. Box 1450 NW 8477, Minneapolis, MN 55480-8477.
The enclosed form of proxy, if properly executed and returned, will be voted in
accordance with the instructions specified thereon. If no choice is specified,
the proxy will be voted FOR the Subadvisory Agreement, and, in the discretion of
the proxies named on the proxy card, on any other matter properly brought before
the Meeting. Shares represented in person or by proxy (including shares which
abstain or do not vote with respect to one or more proposals presented for
shareholder approval, including "broker non-votes") will be counted for purposes
of determining the number of shares that are present and are entitled to vote
with respect to any particular proposal, but will not be counted as a vote in
favor of such proposal. Accordingly, an abstention from voting on a proposal or
a broker non-vote will have the same legal effect as a vote against the
proposal. "Broker non-votes" exist where a proxy received from a broker
indicates that the broker does not have discretionary authority to vote the
shares on the matter.
The enclosed proxy is revocable by you at any time prior to the exercise thereof
by submitting a written notice of revocation or a subsequently executed proxy.
Signing and mailing the proxy will not affect your right to give a later proxy
or to attend the Meeting and vote your shares in person.
In the event that a quorum is present at the Meeting but sufficient votes to
approve the proposal are not received, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a majority of
those shares represented at the Meeting in person or by proxy. If a quorum is
present, the persons named as proxies will vote those proxies which they are
entitled to vote FOR the proposal in favor of such an adjournment and will vote
those proxies required to be voted AGAINST the proposal against any such
adjournment. A shareholder vote may be taken on the proposals in this proxy
statement prior to any such adjournment if sufficient votes have been received
for approval.
The costs of soliciting proxies in the accompanying form for the Special
Meeting, including the costs of preparing, printing and mailing the accompanying
Notice of Special Meeting, the President's letter and this proxy statement and
the costs of the Special Meeting will be borne by the Fund. Proxy material will
also be distributed through brokers, custodians and nominees to beneficial
owners, and the Fund will reimburse such parties for reasonable charges and
expenses. In addition to the use of the mails, proxies may be solicited by
telephone or telegraph by officers and Trustees of the Fund, or their agents, on
behalf of the Trustees of the Fund, expenses of which shall be charged to the
Fund. The Fund has not retained a proxy solicitor. It may, however, retain
Shareholder Communications Corporation ("SCC"), a proxy soliciting firm, to
assist with proxy soliciting activities to obtain the necessary shareholder
representation. If retained, SCC would charge a fee of approximately $5,000 for
a solicitation of this size, and would contact shareholders to ask if they would
be willing to have their votes recorded by telephone. Although each shareholder
will receive a copy of this proxy statement and may vote by mail using the
enclosed proxy card(s), shareholder's vote may be taken by telephone by SCC,
subject to procedures designed to authenticate shareholders' identities and to
confirm voting instructions. COPIES OF THE FUND'S 1995 ANNUAL REPORT WILL BE
FURNISHED TO SHAREHOLDERS WITHOUT CHARGE, UPON REQUEST TO NORTHSTAR AT (800)
595-7827.
PROPOSAL ONE: APPROVAL OR DISAPPROVAL OF THE
SUBADVISORY AGREEMENT
INTRODUCTION. On April 25, 1996, a majority of the Trustees of the Fund who are
not parties to such agreement or interested persons (as defined in the 1940 Act)
of any such party (the "Independent Trustees"), and a majority of the entire
Board of Trustees met in person and approved, subject to the required
shareholder approval described herein, the Subadvisory Agreement, and
recommended approval of the Subadvisory Agreement by shareholders of the Fund.
At a subsequent telephonic meeting of the Trustees held on May 13, 1996, the
Board ratified its approval and acted on certain additional matters related to
adoption of the Subadvisory Agreement. The form of the Subadvisory Agreement is
attached to this proxy statement as Exhibit A.
The Subadvisory Agreement, if approved by vote of the holders of a majority of
the outstanding shares of the Fund (as defined in the 1940 Act), will become
effective on or about August 1, 1996, and will continue in effect for an initial
term of two years. Thereafter, the Subadvisory Agreement will continue in effect
from year to year, subject to approval annually by the Trustees of the Fund or
vote of the holders of a majority of the outstanding shares of the Fund (as
defined in the 1940 Act), and also, in either event, to approval by a majority
of the Independent Trustees. For this purpose, the vote of the holders of a
majority of the outstanding shares of the Fund means the lesser of either (i)
the vote of 67% or more of the shares of the Fund present at the Meeting if the
holders of more than 50% of the outstanding Fund shares are present or
represented by proxy or (ii) the vote of the holders of more than 50% of the
outstanding shares of the Fund ("1940 Act Majority"). In the event that
shareholders of the Fund do not approve the Subadvisory Agreement for the Fund,
Northstar would continue to serve as Adviser to the Fund without the services of
the Subadviser, and the Trustees of the Fund may consider other possible courses
of action to accomplish the purposes for which the Proposal has been made,
subject, as required, to approval by the shareholders of the Fund.
THE TRUSTEES OF THE FUND BELIEVE THAT THE SUBADVISORY AGREEMENT BETWEEN
NORTHSTAR AND THE SUBADVISER IS IN THE BEST INTEREST OF THE FUND AND ITS
SHAREHOLDERS AND, ACCORDINGLY, HAVE APPROVED THE SUBADVISORY AGREEMENT AND
RECOMMEND THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
BACKGROUND AND REASONS FOR THE PROPOSED ARRANGEMENT. Northstar has served as the
investment adviser to the Fund since the inception of its operations pursuant to
an investment advisory agreement (the "Agreement") dated November 8, 1993. The
Agreement was approved by the shareholders of the Fund most recently on November
8, 1993. The Fund is a series of the Northstar Advantage Trust and its
investment objective is to seek current income balanced with the objective of
achieving capital appreciation. The Agreement was effective for an initial term
of two years, and on October 31, 1995 was renewed for one year by a vote in
person of a majority of the Trustees, including a majority of the independent
trustees. Unless sooner terminated in accordance with its terms, the Agreement
may be renewed from year to year, provided that its continuation is specifically
approved at least annually: (a) by a vote of the majority of the outstanding
shares of the Fund or by its Trustees, and (b) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval.
Pursuant to the Agreement and subject to the direction of the Trustees,
Northstar is charged with administering the investment advisory business of the
Fund. In discharging its responsibilities, the Adviser may recommend retaining,
and with the approval of the Fund retain, one or more subadvisers to perform all
2
or a part of the advisory function. A Subadviser, if one be selected and
approved, would be subject to the supervision and control of the Adviser and of
the Trustees of the Fund.
At the Regular Meeting of the Trustees held on April 25, 1996, Northstar
recommended that the Trustees consider and approve using the services of the
Subadviser to manage the equity component of the Fund's portfolio. This
recommendation was based upon a number of considerations, including the
additional research and analytical support and technical expertise that a
Subadviser could provide, as will as the Adviser's overall goal of achieving
enhanced investment performance. Northstar noted that it had reviewed the
credentials of several advisers including Wilson/Bennett. Northstar deemed
Wilson/Bennett well qualified to provide the type of advisory services sought
for the Fund in light of Wilson/Bennett's investment experience and technical
expertise, the investment objective of the Fund, the Adviser's performance goals
for the Fund and in particular the equity component of the Fund, and the cost of
the Subadviser's services. Northstar believed that Wilson/Bennett's investment
philosophy and conservative investment style were compatible with the Fund's
objective and style, and that the resources of the firm, its positive reputation
and strong performance record in the area of large capitalization equity
investing would benefit the Fund and its shareholders. In connection with its
review of information provided by Northstar, the Trustees invited Mr. John
Fisher, a principal of Wilson/Bennett, to present information and statistics
relating to the Subadviser.
After review of relevant information relating to the Subadviser and the terms of
the proposed subadvisory arrangement, the Trustees concluded that entering into
the Subadvisory Agreement would be in the best interests of the Fund and its
shareholders. In considering the Subadvisory Agreement, the Trustees evaluated,
as set forth more fully below, materials furnished by Northstar and
Wilson/Bennett, the firm's experience in providing investment services to
individuals and institutions, the background and experience of the firm's
principals, its investment management style and procedures, as well as the
firm's reputation, integrity, and financial resources. Among other things, the
Trustees also considered the investment services that Northstar would continue
to provide and the demonstrated skills and capabilities of Northstar's current
management, it resources and facilities, its proposed method of allocating the
Fund's assets among equities, fixed income securities and convertible
securities, the manner and extent of its oversight over investment in the equity
sector, and the fact that Northstar would remain primarily responsible for
provision of quality investment management services to the Fund. The Trustees
also found that the advisory services to the Fund could be enhanced by the
investment and research services and resources available from Wilson/Bennett.
After reviewing and considering the information and data presented, the Trustees
concluded that approval of the Subadvisory Agreement would offer a reasonable
prospect of enhancing the Fund's performance by making available to it
additional investment, research, analytical and technical resources at no
additional cost to the Fund and its shareholders.
EVALUATION BY THE TRUSTEES. The terms of the Subadvisory Agreement were reviewed
by the Trustees, including the Independent Trustees, at the Regular Meeting held
on April 25, 1996, and subsequently at a Special Meeting held on May 13, 1996.
In considering whether to approve the Subadvisory Agreement and to submit it to
shareholders for their approval, the Trustees considered a number of factors.
Initially, the Trustees reviewed the Adviser's reasons for proposing the
subadvisory arrangement, including, in particular, the investment performance of
the Fund over the short term and longer term, the effects of the Fund's
performance on the Underwriter's ability to sell shares of the Fund and to
maintain investors in the Fund, and how the Adviser proposed to meet the
challenges currently faced by it and the Underwriter in advising and
distributing shares of the Fund. Based upon information presented by Northstar,
the Trustees concluded that utilizing the resources of a qualified investment
advisory firm that specializes in the equity investments of the Fund could
enhance the Fund's performance and therefore prove to be the best use of the
Fund's and Northstar's resources in managing the Fund's investment operations.
In this context, it was noted that all fees to be paid to the Subadviser for its
service would be paid by Northstar, so that the Fund would incur no additional
advisory expense as a result of the arrangement. Thereafter, the Trustees
reviewed the services and qualifications of the Subadviser, including the
anticipated benefits to the Fund that would be achieved by retaining the
Subadviser. Specifically, the Trustees reviewed (1) the Wilson/Bennett
organization, including its corporate structure, financial resources, and the
credentials of the firm's investment, research and technical personnel; (2) the
range of services to be provided by the Subadviser, its research and technical
capabilities, and the skills and capabilities of its staff to provide investment
and related services; and (3) the nature of its advisory services and the nature
of the clients served by the firm, none of which were registered investment
3
companies such as the Fund. The Trustees also considered the level of the fee to
be paid to the Subadviser and the respective responsibilities of the Subadviser
and the Adviser to the Fund under the subadvisory arrangement.
Finally, the Trustees reviewed performance data supplied by the Subadviser, and
the Subadviser's specific management objectives for the Fund. In this context,
Mr. Fisher summarized the investment philosophy and techniques of the firm and
how these philosophies and techniques have produced positive performance
results.
TERMS OF THE SUBADVISORY AGREEMENT. The Subadvisory Agreement delegates to the
Subadviser responsibility for the management of the Fund's assets allocated for
investment in common stocks, with full discretion, consistent with the Fund's
investment objective. Accordingly, Wilson/Bennett will be responsible for
selecting common stocks for purchase, and determining the timing for the
purchase and sale by the Fund of common stocks. Northstar, as Adviser, will be
responsible for overseeing the advisory services of the Subadviser, monitoring
the operations and compliance functions applicable to investments in the Fund,
designating the percentage of Fund assets to be managed by the Subadviser, and
selecting and communicating purchase and sale orders to brokers and dealers who
execute orders for the Fund. The Adviser and the Subadviser will be subject to
the overall supervision of the Fund's Trustees.
The Subadvisory Agreement provides that Northstar, at its own expense, will pay
the Subadviser an annual fee. Accordingly, the Subadvisory Agreement will not
increase the fees paid by the Fund for investment advisory services. The
Subadviser will be paid an annual fee equal to 0.20 of 1% of the first $125
million of average daily net assets of the Fund managed by the Subadviser,
increasing to 0.25 of 1% for the next $125 million, and to 0.30 of 1% for the
net assets managed by the Subadviser in excess of $250 million. This fee is
calculated and accrued daily and paid to the Subadviser monthly. The annual
advisory fee paid by the Fund to Northstar is 0.75 of 1% of the average daily
net assets of the Fund.
The Subadvisory Agreement provides that the Subadviser shall exercise its best
judgment and reasonable care in rendering its services thereunder. The
Subadviser shall not be liable to the Fund and its shareholders for its acts or
omissions in rendering the services to be provided under the Subadvisory
Agreement except for damages arising from or resulting by reason of the
Subadviser's 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 the Subadvisory Agreement.
WILSON/BENNETT CAPITAL MANAGEMENT, INC. Wilson/Bennett Capital Management, Inc.
("Wilson/Bennett") is registered as an investment adviser under the Investment
Advisers Act of 1940 and the laws of the State of Virginia. Wilson/Bennett's
principal address is Suite 250, 8260 Greensboro Drive, McLean, Virginia 22102.
The Subadviser is a Virginia company organized as a Subchapter-S corporation,
equally owned by John W. Fisher and James B. Moloney. The Subadviser currently
manages $57 million of assets for individuals, pension plans and corporations.
Wilson/Bennett is not affiliated with any brokerage firms and limits its service
exclusively to making buy/sell decisions for its clients.
John Fisher is the controlling principal, President and sole director of the
Subadviser. He is responsible for making final buy/sell decisions for, and
ultimately the total performance of, all accounts of the Subadviser. James
Moloney's primary responsibility is to provide ongoing support to, and
development of, the Subadviser's stock screens, whereby the Subadviser, assisted
by its proprietary software, selects from a universe of large capitalization
stocks those issues which meet dividend and capitalization requirements, among
other criteria established by the Subadviser. Thereafter, selected stocks from
this group are purchased based upon fundamental analysis. Stocks are generally
purchased with a view to long term holding; however, those stocks no longer
meeting the fundamental and technical criteria on which they were selected will
be sold without regard to the holding period.
Messrs. Fisher and Moloney are supported by an operations manager and a research
analyst, each of whom also serves as a trader for the Subadviser. Pursuant to
the Subadvisory Agreement, no trading will be conducted by the Subadviser on the
behalf of the Fund's account, and the selection of brokers and dealers to
execute trades directed by the Subadviser will be made by the Adviser.
Administrative and operational support staff for the Subadviser are employed by
an affiliated entity, Wilson/Bennett Company, LLC ("WBC"), a limited liability
company organized in Virginia, and equally owed indirectly by Messrs. Fisher and
Moloney.
4
Mr. Fisher will serve as portfolio manager of the Fund's assets allocated for
investment in common stocks, and as such, will be the persons primarily
responsible for the day-to-day investment management of those assets of the
Fund. Mr. Fisher will co-manage the Fund with Margaret Patel, a portfolio
manager employed by the Adviser and currently a co-manager of the Fund. Ms.
Patel will make all determinations related to the allocation of the Fund's
assets to cash and to investment in the various sectors of the market, will
direct all trades, and will remain the person primarily responsible for the
day-to-day investment management of those assets of the Fund allocated for
investment in investment grade fixed income securities and convertible
securities.
Mr. Fisher serves as President and sole Director of the Subadviser, which is his
principal occupation. He also serves as a director of WBC. His business address
is the principal address of the Subadviser.
The Subadviser does not currently act as adviser or subadviser for any fund with
an investment objective similar to the fund; however, at a meeting of
shareholders of the Northstar/NWNL Income and Growth Fund on July 15, 1996, the
shareholders of that fund will vote on a proposed subadvisory agreement with the
Subadviser. Pursuant to the terms of the proposed subadvisory agreement the
Subadviser would be paid an annual fee of .20 of 1% of the first $125 million of
average daily net assets of the Fund, .25 of 1% of the next $125 million, and
.30 of 1% of the amount over $250 million, provided that no fee would be paid
until net assets of the fund reached $50 million. The Northstar/NWNL Income and
Growth Fund had assets of $9,628,000 at May 24, 1996.
If the New Subadvisory Agreement is approved by shareholders of the Fund, it is
expected that it will be executed and become effective on or about August 1,
1996. The Subadvisory Agreement may be terminated without payment of any penalty
by the Fund or the 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 by the Subadviser without cause,
at any time without penalty, upon sixty (60) days' written notice to the Fund or
the Adviser. Otherwise, the Subadvisory Agreement will remain in effect for two
years and thereafter will continue in effect from year to year, provided that
such continuation is approved annually by the Trustees of the Fund or by vote of
a majority of the outstanding voting securities of the Fund, and by the vote,
cast in person at a meeting duly called and held, of a majority of the
Independent Trustees of the Fund. The Subadvisory Agreement will automatically
terminate in the event of its assignment (as defined in the 1940 Act) or the
assignment or termination of the Agreement.
VOTE REQUIRED FOR APPROVAL. Adoption of the Subadvisory Agreement set forth
herein requires the approval by a 1940 Act Majority of the Fund's outstanding
voting securities.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE FUND VOTE TO APPROVE
THE SUBADVISORY AGREEMENT.
ADDITIONAL INFORMATION ABOUT THE ADVISER. Northstar currently serves as the
investment adviser to the Fund pursuant to the Agreement. The Adviser's
principal offices are located at Two Pickwick Plaza, Greenwich, Connecticut
06830. Northstar was organized in July of 1993 as a Delaware corporation.
Northstar, and its affiliated companies, Northstar Administrators Corp., the
Fund's administrator, and Northstar Distributors, Inc., the Fund's underwriter,
are each wholly-owned by NWNL Northstar, Inc., which is held 80% by ReliaStar
Financial Corp. ("ReliaStar") and 20% by members of senior management of the
Northstar companies. ReliaStar is a New York Stock Exchange listed company, with
over $15 billion in assets, and $1.3 billion in shareholders' equity as of March
31, 1996. ReliaStar, through its subsidiaries, specializes in the life and
health insurance businesses, issuing and distributing individual life insurance,
annuities and mutual funds, group life and health insurance and life and health
reinsurance, and provides related investment management services.
Northstar registered with the Securities and Exchange Commission under the
Investment Advisers Act of 1940 in August of 1993, and began advising mutual
funds in November of 1993. Through May of 1995, Northstar advised the Northstar
Advantage Trust (formerly the NWNL Northstar Series Trust), comprised of the
Northstar Advantage High Total Return Fund (formerly the NWNL Northstar High
Yield Bond Fund), the former Northstar Multi-Sector Bond Fund, and the Fund. In
June of 1995, while continuing to advise the Northstar Advantage Trust,
Northstar entered into investment advisory agreements for six additional
investment companies, the Northstar Advantage Special Fund, the Northstar
5
Advantage Growth Fund, the Northstar Advantage Income Fund, the Northstar
Advantage Government Securities Fund, the Northstar Advantage High Yield Fund,
and the Northstar Advantage Strategic Income Fund. Northstar has also served
since May of 1994 as investment adviser to the Northstar/NWNL Trust, an open end
management investment company comprised of four funds that serve as underlying
investment vehicles for variable products issued through Northstar-affiliated
insurance companies, Northwestern National Life Insurance Company, Northern Life
Insurance Company and Bankers Security Life Insurance Society.
After assuming the advisory function for the six additional Northstar Advantage
Funds on June 2, 1995, and after giving effect to a reorganization of the
Northstar Advantage Multi-Sector Bond Fund into the Northstar Advantage
Strategic Income Fund on October 27, 1995, Northstar serves as adviser to eight
mutual funds marketed through investment dealers (the "Northstar Advantage
Funds") and to the four Northstar funds serving as investment vehicles for
variable life and annuity products. With these Funds and two private accounts
with total assets of approximately $58 million, Northstar managed assets in
excess of $l.3 billion as of April 30, 1996.
Northstar acts as adviser to one fund with an investment objective similar to
the Fund. That fund, the Northstar/NWNL Income and Growth Fund, had net assets
of $9,628,000 at May 24, 1996, and paid an annual advisory fee to Northstar of
.75 of 1% of the average daily net assets of the fund.
Northstar Administrators Corp., an affiliate of the Adviser, serves as
administrator for the Fund pursuant to an Administrative Services Agreement
initially entered into between the administrator and the Fund on November 8,
1993. After an initial two-year term, the Trustees renewed the agreement for one
year at a meeting held on October 31, 1995, and the agreement will continue from
year to year provided such continuance is approved by a majority of the Fund's
Trustees, including a majority of the Independent Trustees. The administrator
provides the overall business management and administrative services necessary
to the proper conduct of the Fund's business, except for those services
performed by the Fund's Adviser and except for services provided by other
service providers to the Fund pursuant to separate service contracts, for which
the Administrator acts as liaison. The Administrator receives 0.10 of 1% of the
average daily net assets of the Fund for its services under the Administrative
Services Agreement plus $5 per account per year.
Northstar Distributors Inc., also an affiliate of the Adviser, serves as
Underwriter of the Fund's shares pursuant to Underwriting Agreements for the
Class A, Class B and Class C shares. The Underwriter conducts a continuous
offering pursuant to a "best efforts" arrangement, requiring it to take and pay
for only such securities as may be sold to the public through investment
dealers.
TERMS OF THE NORTHSTAR INVESTMENT ADVISORY AGREEMENT WITH THE FUND. Pursuant to
the Agreement, the Adviser, at its expense, offers the Fund advice and
assistance with respect to the selection, acquisition, holding and disposal of
securities, maintains all books and records required under the 1940 Act to the
extent not maintained by the Fund's custodian and will render to the Trustees
such periodic and special reports as the Trustees may reasonable request.
Northstar pays the salary and expenses of all personnel of the Fund and
Northstar required to perform the services under the Agreement and all expenses
incurred by Northstar and the Fund in connection with the performance of
Northstar's responsibilities under the Agreement. The Fund bears all other
expenses incurred in the operation of the Fund, including interest charges,
taxes, fees and commissions of every kind, expenses of issue, sale, repurchase
or redemption of shares, expenses of registering or qualifying shares for sale,
all charges of custodians (including sums as custodian and for keeping books,
performing portfolio valuations and rendering other services to the Fund),
transfer agents, permits, registrars, auditors, and legal counsel, expenses of
preparing, printing and distributing to shareholders prospectuses, reports and
notices to shareholders, and all costs incident to the Fund's organization and
existence.
For its services, Northstar is compensated at an annual rate of 0.75 of 1% of
the Fund's average daily net assets. This fee is higher than the fees paid by
most mutual funds, but the Trustees believe that these fees are warranted by the
resources needed to evaluate the particular securities in which the Fund
invests. The Adviser has agreed to reimburse the Fund in any year in which the
Fund's total operating expenses exceed the most restrictive limitation imposed
from time to time by states where the Fund's shares are qualified for sale.
Currently, the only state expense limitation provision applicable to the Fund
limits annual expenses to 2.5% of the first $30 million of average net assets,
2.0% of the next $70 million of such assets and 1.5% of any such assets in
excess of $100 million. Taxes, brokerage costs, interest expenses, extraordinary
expenses and expenses incurred pursuant to the Fund's Rule 12b-1 plan are
excluded from this limitation.
6
The Agreement provides that the Adviser is not liable for any act or omission in
the course of or in connection with rendering services thereunder in the absence
of willful misfeasance, bad faith, or gross negligence in fulfilling its
obligations or duties. The Agreement permits the Adviser to render services to
others and to engage in other activities.
The Agreement provides for its automatic termination in the event of its
assignment (as defined in the 1940 Act) or may be terminated at any time without
payment of any penalty upon no more than 60 nor less than 30 days' written
notice by Northstar, by the Trustees of the Fund, or by the affirmative vote of
the holders of a majority of the outstanding voting securities of the Fund (as
defined in the 1940 Act).
FEES PAID TO NORTHSTAR BY THE FUND. During the Fund's fiscal year ended October
31, 1995, the Adviser was paid investment advisory fees of $1,158,432 by the
Fund, and Northstar Administrators was paid administrative service fees of
$154,457. Aggregate commissions paid by the Fund to Northstar Distributors, Inc.
pursuant to Underwriting Agreements for each class of shares during the same
period were $51,769. For the semi-annual period beginning November 1, 1995 and
ending April 30, 1996, the Fund paid to the respective parties investment
advisory fees of $752,922, administrative service fees of $121,460, and
aggregate commissions of $16,104.
Northstar's directors and principal executive officers, and their principal
occupations including any position with the Fund, are shown below. Unless
otherwise indicated, the business address of each director and officer is Two
Pickwick Plaza, Greenwich, Connecticut, 06830.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION POSITION WITH FUND
- --- --- ---
<S> <C> <C>
John G. Turner Chairman/CEO of ReliaStar Chairman
20 Washington Ave. South Financial Corp.; Director of Northstar
Minneapolis, MN 55401
John Flittie President/COO of ReliaStar None
20 Washington Ave. South Director of Northstar
Minneapolis, MN 55401
Mark L. Lipson Chairman/CEO and Director President
of Northstar; Chairman and Director
of Northstar Distributors Inc. and
Northstar Administrators Corp.
Robert J. Adler Executive Vice President of Northstar; None
President, Northstar Distributors, Inc.
Thomas Ole Dial Executive Vice President/CIO Vice President Fixed Income of
Northstar
Margaret Patel Managing Director, Northstar Vice President
Geoffrey Wadsworth Vice President, Investments, Northstar Vice President
Agnes Mullady Senior Vice President/CFO of Vice President and
Northstar; Executive VP, Northstar Treasurer
Administrators; VP/Treasurer of
Northstar Distributors, Inc.
John D. Diefenbach Assistant Vice President, Investments, Assistant Vice President
Northstar
</TABLE>
7
<PAGE>
MISCELLANEOUS
OTHER BUSINESS. The Trustees know of no other business to be brought before the
meeting. However, if any other matters properly come before the meeting, it is
their intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named as proxies in the enclosed form of proxy.
SHAREHOLDER PROPOSALS. As a general matter, the Fund does not hold regular
annual or other meetings of shareholders. Any shareholder who wishes to submit
proposals for consideration at a special meeting of the Fund's shareholders
should send such proposal to the Fund, c/o Northstar Investment Management
Corporation at Two Pickwick Plaza, Greenwich, Connecticut 06830. Proposals must
be received within a reasonable time prior to the date of the meeting. Timely
submission of a proposal does not necessarily mean that such proposal will be
included.
By Order of the Trustees
President
Greenwich, Connecticut
May 30, 1996
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED REPLY ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
8
<PAGE>
EXHIBIT A
9
<PAGE>
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 Wilson/Bennett 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 8, 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 covenants 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 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 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 for a period including any month end when the Subadviser's
compensation is payable pursuant to this Section, the Subadviser's compensation
2
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 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 clients (whether or not the investment objective and policies
are similar to those of the Fund). 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 1940
Act) 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.
3
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.
4
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,
"Wilson/Bennett" or the name of any principal of Wilson/Bennett, 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 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 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 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 delivery or transmission when normal business hours
5
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: /s/ Mark L. Lipson
-------------------------------
Mark L. Lipson
Chairman and CEO
Wilson/Bennett Capital Management, Inc.
By: /s/ John W. Fisher
-------------------------------
John W. Fisher
President
6
<PAGE>
NORTHSTAR ADVANTAGE TRUST
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
-------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
JULY 15, 1996
----------------------------
PROXY SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned shareholder of NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND (the
"Fund"), a series of the NORTHSTAR ADVANTAGE TRUST, a Massachusetts business
trust, hereby appoints Mark L. Lipson and Agnes Mullady, and each of them, with
full power of substitution and revocation, as proxies to represent the
undersigned at the Special Meeting of Shareholders of the Fund, which shall be
held on July 15, 1996, at 10:00 a.m., New York City time at the offices of the
Fund, Two Pickwick Plaza, Greenwich, Connecticut, and at any and all
adjournments thereof, and thereat to vote all shares of the Fund which the
undersigned would be entitled to vote, with all powers the undersigned would
possess if personally present, in accordance with the following instructions:
1. FOR_____ AGAINST_____ ABSTAIN_____ as to the proposal to
approve a Subadvisory Agreement for the Fund between Northstar
Investment Management Corporation, investment adviser to the
Fund, and Wilson/Bennett Capital Management, Inc.
and, in their discretion, upon such other business as may properly come before
the meeting or any adjournments thereof.
If more than one of the proxies, or their substitutes, are present at the
meeting or at any adjournment thereof, they jointly (or, if only one is present
and voting, then that one) shall have authority and may exercise all the powers
granted hereby. This proxy, when properly executed, will be voted in
accordancewith the instructions marked hereon by the undersigned. In the absence
of contrary instructions, this proxy will be voted FOR the proposal.
The undersigned hereby acknowledges receipt of the accompanying Notice of
Meeting and Proxy Statement, dated May 30, 1996.
IMPORTANT: PLEASE INSERT DATE OF SIGNING.
Dated: __________________, 1996
---------------------------------
Signature of Shareholder(s) (if held jointly)
THIS PROXY SHALL BE SIGNED EXACTLY AS YOUR NAME(S) APPEAR HEREON. IF AS
ATTORNEY, EXECUTOR, GUARDIAN OR IN SOME OTHER CAPACITY OR AS AN OFFICER OF A
CORPORATION, PLEASE STATE CAPACITY OR TITLE AS SUCH.
