INVESTMENT ADVISORY AGREEMENT
This Agreement, made as of this 30th day of April, 1997, by
and between Voyageur Mutual Funds II, Inc., a Minnesota corporation (the
"Company"), on behalf of each Fund represented by a series of shares of common
stock of the Fund that adopts this Agreement (each a "Fund" and, collectively,
the "Funds") (the Funds, together with the date each Fund adopts this Agreement,
are set forth in Exhibit A hereto, which shall be updated from time to time to
reflect additions, deletions or other changes thereto), and Voyageur Fund
Managers, Inc., a Minnesota corporation ("Adviser").
WITNESSETH
WHEREAS, the Company has been organized and operates as an investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, Adviser is an investment adviser registered under the
Investment Advisers Act of 1940, as amended, and engages in the business of
providing investment management services;
WHEREAS, Adviser's indirect parent company completed as of the date of
this Agreement a merger transaction (the "Merger") which resulted in a change of
control of Adviser and assignment (as defined under the 0000 Xxx) and automatic
termination of the investment advisory agreement that was in effect between
Adviser and the Company at the time of the Merger; and
WHEREAS, the Board of Directors of the Company and the shareholders of
the Company have determined that the Company should enter into a new investment
advisory agreement with Adviser to be effective upon consummation of the Merger;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. INVESTMENT ADVISORY SERVICES.
a. The Company hereby engages Adviser on behalf of
the Funds, and Adviser hereby agrees to act, as investment adviser for, and to
manage the investment of the assets of, the Funds.
b. The investment of the assets of each Fund shall at
all times be subject to the applicable provisions of the Articles of
Incorporation, the Bylaws, the Registration Statement, and the current
Prospectus and the Statement of Additional Information, if any, of the Company
and each Fund and shall conform to the policies and purposes of each Fund as set
forth in such documents and as interpreted from time to time by the Board of
Directors of the Company. Within the framework of the investment policies of
each Fund, and subject to such other limitations and directions as the Board of
Directors may from time to time prescribe,
Adviser shall have the sole and exclusive responsibility for the management of
each Fund's assets and the making and execution of all investment decisions for
each Fund, except as set forth in the following paragraph. Adviser shall report
to the Board of Directors regularly at such times and in such detail as the
Board may from time to time determine appropriate, in order to permit the Board
to determine the adherence of Adviser to the investment policies of the Funds.
c. Adviser may, at its expense, select and contract
with one or more registered investment advisers ("Sub-Adviser") for any of the
Funds to perform some or all of the services for such Funds. Such Sub-Adviser
shall be responsible for executing orders for the purchase and sale of portfolio
securities. Adviser will compensate any Sub-Adviser for its services to the
Funds. Adviser may terminate the services of any Sub-Adviser at any time in its
sole discretion, and shall at such time assume the responsibilities of such
Sub-Adviser unless and until a successor Sub-Adviser is selected.
d. Adviser shall, at its own expense, furnish all
office facilities, equipment and personnel necessary to discharge its
responsibilities and duties hereunder. Adviser shall arrange, if requested by
the Company, for officers or employees of Adviser to serve without compensation
from any Fund as directors, officers, or employees of the Company if duly
elected to such positions by the shareholders or directors of the Company (as
required by law).
e. Adviser hereby acknowledges that all records
pertaining to each Fund's investments are the property of the Company, and in
the event that a transfer of investment advisory services to someone other than
Adviser should ever occur, Adviser will promptly, and at its own cost, take all
steps necessary to segregate such records and deliver them to the Company.
f. Subject to the primary objective of obtaining the
best available prices and execution, Adviser will place orders for the purchase
and sale of portfolio securities with such broker/dealers who provide
statistical, factual and financial information and services to the Funds,
Adviser or to any other fund for which Adviser provides investment advisory
services and/or with broker/dealers who sell shares of the Funds or who sell
shares of any other fund for which Adviser provides investment advisory
services. Broker/dealers who sell shares of the funds of which Adviser is
investment manager, shall only receive orders for the purchase or sale of
portfolio securities to the extent that the placing of such orders is in
compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
g. Notwithstanding the provisions of subparagraph (f)
above, and subject to such policies and procedures as may be adopted by the
Board of Directors and officers of the Company, Adviser may ask the Funds and
the Funds may agree to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and Adviser have
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determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member, broker or dealer, viewed in terms of either that particular transaction
or Adviser's overall responsibilities with respect to the Funds and to other
funds and other advisory accounts for which Adviser exercises investment
discretion.
2. COMPENSATION FOR SERVICES.
In payment for the investment advisory and management
services to be rendered by Adviser hereunder, each Fund shall pay to Adviser a
monthly fee, which fee shall be paid to Adviser not later than the fifth
business day of the month following the month in which said services were
rendered. The monthly fee payable by each Fund shall be as set forth in Exhibit
A hereto, which may be updated from time to time to reflect amendments, if any,
to Exhibit A. The monthly fee payable by each Fund shall be based on the average
of the net asset values of all of the issued and outstanding shares of the Fund
as determined as of the close of each business day of the month pursuant to the
Articles of Incorporation, Bylaws, and currently effective Prospectus and
Statement of Additional Information of the Company and the Fund. For purposes of
calculating each Fund's average daily net assets, as such term is used in this
Agreement, each Fund's net assets shall equal its total assets minus (a) its
total liabilities and (b) its net orders receivable from dealers.
3. ALLOCATION OF EXPENSES.
a. In addition to the fee described in Section 2
hereof, each Fund shall pay all its costs and expenses which are not assumed by
Adviser. These Fund expenses include, by way of example, but not by way of
limitation, all expenses incurred in the operation of the Fund and any public
offering of its shares, including, among others, fees (if any) associated with a
plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act ("Plan of
Distribution"), interest, taxes, brokerage fees and commissions, fees of the
directors who are not employees of Adviser or the principal underwriter of the
Fund's shares (the "Underwriter"), or any of their affiliates, expenses of
directors' and shareholders' meetings, including the cost of printing and
mailing proxies, expenses of insurance premiums for fidelity and other coverage,
expenses of redemption of shares, expenses of issue and sale of shares (to the
extent not borne by the Underwriter under its agreement with the Fund), expenses
of printing and mailing stock certificates representing shares of the Fund,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents, accounting services agents, investor servicing agents, and
bookkeeping, auditing, and legal expenses. Each Fund will also pay the fees and
bear the expense of registering and maintaining the registration of the Fund and
its shares with the Securities and Exchange Commission and registering or
qualifying its shares under state or other securities laws and the expense of
preparing and mailing prospectuses and reports to shareholders.
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b. The Underwriter shall bear all advertising and
promotional expenses in connection with the distribution of each Fund's shares,
including paying for prospectuses for new shareholders, except as provided in
the following sentence. No Fund shall use any of its assets to finance costs
incurred in connection with the distribution of its shares except pursuant to a
Plan of Distribution.
4. FREEDOM TO DEAL WITH THIRD PARTIES.
Adviser shall be free to render services to others
similar to those rendered under this Agreement or of a different nature except
as such services may conflict with the services to be rendered or the duties to
be assumed hereunder.
5. REPORTS TO DIRECTORS OF THE FUND.
Appropriate officers of Adviser shall provide the
directors of the Company with such information as is required by any Plan of
Distribution adopted by the Company on behalf of any Fund pursuant to Rule 12b-1
under the 1940 Act.
6. STANDARD OF CARE.
In the absence of willful misfeasance, bad faith,
gross negligence or a reckless disregard of the performance of duties of the
Adviser to the Funds, the Adviser shall not be subject to liabilities to the
Funds or to any shareholders of the Funds for any action or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security, or
otherwise.
7. EFFECTIVE DATE, DURATION AND TERMINATION OF
AGREEMENT.
a. The effective date of this Agreement with respect
to each Fund shall be the date set forth on Exhibit A hereto.
b. Unless sooner terminated as hereinafter provided,
this Agreement shall continue in effect with respect to each Fund for a period
of two years from the date of its execution, and thereafter shall continue in
effect only so long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Company or by the vote of a
majority of the outstanding voting securities of the applicable Fund, and (ii)
by the vote of a majority of the directors of the Company who are not parties to
this Agreement or "interested persons," as defined in the 1940 Act, of Adviser
or of the Company cast in person at a meeting called for the purpose of voting
on such approval.
c. This Agreement may be terminated with respect to
any Fund at any time, without the payment of any penalty, by the Board of
Directors of the Company or by
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the vote of a majority of the outstanding voting securities of such Fund, or by
Adviser, upon 60 days' written notice to the other party.
d. This agreement shall terminate automatically in
the event of its "assignment" (as defined in the 1940 Act).
e. No amendment to this Agreement shall be effective
with respect to any Fund until approved by the vote of: (i) a majority of the
directors of the Company who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of Adviser or of the Company cast in
person at a meeting called for the purpose of voting on such approval; and (ii)
a majority of the outstanding voting securities of the applicable Fund.
f. Wherever referred to in this Agreement, the vote
or approval of the holders of a majority of the outstanding voting securities or
shares of a Fund shall mean the lesser of (i) the vote of 67% or more of the
voting securities of such Fund present at a regular or special meeting of
shareholders duly called, if more than 50% of the Fund's outstanding voting
securities are present or represented by proxy, or (ii) the vote of more than
50% of the outstanding voting securities of such Fund.
8. NOTICES.
Any notice under this Agreement shall be in writing,
addressed, delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for receipt of such notice.
IN WITNESS WHEREOF, the Company and Adviser have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
VOYAGEUR MUTUAL FUNDS II, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Its: Senior Vice President
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VOYAGEUR FUND MANAGERS, INC.
By: /s/ Xxxxx X. Xxxxx
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Its: Chairman, President, Chief Executive Officer
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Exhibit A
to
Investment Advisory Agreement
between
Voyageur Fund Managers, Inc.
and
Voyageur Mutual Funds II, Inc.
EQUIVALENT
MONTHLY ANNUAL
ADVISORY FEE ADVISORY FEE
(as % of average (as % of average
FUND EFFECTIVE DATE daily net assets) daily net assets)
---- -------------- ----------------- -----------------
Series A - Voyageur May 1, 1997 0.50%/12 0.50%
Colorado Tax Free
Fund
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