INVESTMENT ADVISORY AGREEMENT
This Agreement, made as of this 30th day of April, 1997, by
and between Voyageur Insured Funds, 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 in
control of Adviser and assignment (as defined under the ▇▇▇▇ ▇▇▇) and an
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 (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.
(1) 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.
(2) 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.
(3) 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.
(4) 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).
(5) 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.
(6) 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.
(7) 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
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such instances where it and Adviser have 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.
(1) 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, Rule 12b-1 plan of
distribution fees (if any), 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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(2) 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, if any,
adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (as amended, the "1940 Act").
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.
(1) The effective date of this Agreement with
respect to each Fund shall be the date set forth on
Exhibit A hereto.
(2) 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.
(3) This Agreement may be terminated with respect
to any Fund
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at any time, without the payment of any penalty, by
the Board of Directors of the Company or by 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.
(4) This agreement shall terminate automatically in
the event of its "assignment" (as defined in the 1940
Act).
(5) 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 ▇▇▇▇ ▇▇▇) 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.
(6) 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.
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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 INSURED FUNDS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Its: Senior Vice President
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VOYAGEUR FUND MANAGERS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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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 Insured Funds, 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
Minnesota Insured May 1, 1997 0.50%/12 0.50%
Fund
Series B - Voyageur
Arizona Insured Tax May 1, 1997 0.50%/12 0.50%
Free Fund
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