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EXHIBIT 7(d)
INTERIM INVESTMENT ADVISORY CONTRACT
THIS Contract, made as of this 8th day of December, 2000, by and between
SAMARNAN INVESTMENT CORPORATION, a Texas corporation (the "Fund"), and VOYAGEUR
ASSET MANAGEMENT INC., a Minnesota corporation ("VAM").
WITNESSETH:
1. Investment Advisory Services
The Fund hereby engages VAM, and VAM hereby agrees to act, as investment
adviser for the Fund as hereinafter provided. VAM agrees, during the term of
this Contract, continuously to review and monitor the Fund's total portfolio of
cash and investment securities and, from time to time as VAM in its discretion
deems appropriate and in the Fund's best interests, to make investment
recommendations to the Fund's management with regard to investments in debt
securities (including, but not limited to, recommendations of debt securities
that the Fund should purchase or sell and recommendations regarding the portion
of the Fund's total portfolio that should be invested in securities other than
debt securities or remain uninvested; provided that in making such
recommendations VAM shall at all times be aware of the Fund's investment policy
that provides at least 50% of the value of the Fund's total assets at the end of
each of its fiscal quarters must consist of debt obligations the interest on
which is exempt from Federal income tax under Section 103 of the Internal
Revenue Code, as amended). That portion of the Fund's total portfolio that
consists exclusively of debt securities is hereinafter called the "Debt
Portfolio"; however, notwithstanding anything to the contrary herein contained,
the term "Debt Portfolio" shall not include any of the following assets of the
Fund: cash, demand bank deposits, bank deposits bearing interest, any other
indebtedness which matures in ninety (90) days or less from the date of purchase
or acquisition by the Fund, or accrued interest on any of the foregoing.
In conducting its review of the Fund's Debt Portfolio and in making its
investment recommendations to the Fund under this Contract, VAM shall at all
times be guided by the applicable provisions of the Articles of Incorporation,
the Bylaws, the Registration Statement, as amended, as filed with the Securities
and Exchange Commission, and by the investment objectives and policies of the
Fund as set forth in the Registration Statement, as amended, and as interpreted
from time to time by the Board of Directors of the Fund. The Fund undertakes and
agrees to provide VAM with current copies of each such documents and to promptly
notify VAM, in writing, in advance of any changes to such documents.
Subject to the authorization by the Fund's management as hereinafter
provided, VAM shall place orders for the purchase and sale of debt securities
for the Fund's account directly with securities brokers and dealers selected by
VAM, and VAM shall direct the Fund's custodian to pay for any such debt
securities purchased by VAM for the Fund pursuant to this Contract, and to
deliver such securities that VAM may sell for the Fund's account, in each case
only against receipt of countervalue and to persons other than VAM. Until VAM
otherwise is notified in writing by the Fund, authorization by the Fund for VAM
to purchase or sell debt securities for the Fund's account may be by either the
Chairman of the Board or the President of the Fund. A written certificate of the
signatures of such Fund officers shall be provided to VAM and may be relied upon
by VAM until a replacement certificate is received by VAM from the Fund. Such
certificate may also authorize VAM to act upon telephonic instructions received
by VAM from persons named in such certificate. VAM shall not be liable to any
person if it acts pursuant to telephonic or written instructions reasonably
believed by VAM to have been received from an authorized person of the Fund (as
named in the most recent certificate received by VAM from the Fund).
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VAM shall report to the Board of Directors regularly at such times and
in such detail as the Board may from time to time reasonably determine to be
appropriate, in order to permit the Board to determine the adherence of VAM to
the investment policies of the Fund. Additionally, VAM agrees to furnish the
Fund's Board of Directors with such additional reports and other data as the
Board of Directors shall reasonably request including, but not limited to,
industry surveys, news of recent developments, statistical data, and such other
information as may keep the Board properly informed on developments relating to
the Fund's Debt Portfolio.
VAM hereby acknowledges that all records necessary in the operations of
the Fund, including records pertaining to its shareholders and investments, are
the property of the Fund, and in the event that a transfer of management or
investment advisory services to someone other than VAM should ever occur, VAM
will promptly, and at its own cost, take all steps necessary to segregate such
records and deliver them to the Fund.
2. Compensation for Services
The Fund shall pay to VAM, as full compensation for the services
rendered by VAM under this Contract, a fee based on the value of the assets in
the Debt Portfolio, appraised as described below. Such fee shall be 0.27% per
annum and shall be paid on a quarterly basis in arrears. The minimum fee shall
be $3,000 per annum. For the purpose of calculating such fee, the value of the
assets in the Debt Portfolio shall be determined as of each Appraisal Date. If
VAM serves for less than the whole of any fiscal quarter, such fee shall be
calculated and shall be payable on a pro rata basis for the portion of such
quarter for which VAM had served as investment adviser hereunder. The fees due
hereunder shall be paid by the Fund into the escrow account, as provided for
below in this Section 2, within ten (10) days after the Fund's receipt of the
appraisal described below and VAM's statement of the fee due thereunder. VAM
shall not be responsible and shall be reimbursed by the Fund for any and all
charges for brokers' commissions, transfer taxes, and other charges incurred
directly related to the purchase or sale of debt securities by VAM for the
Fund's account pursuant to the provisions hereof.
VAM shall provide the Fund with an appraisal of the Debt Portfolio,
summarizing all of its assets, including accrued interest, as of the last day of
each fiscal quarter of the Fund on which the New York Stock Exchange is open for
trading (herein called the "Appraisal Date"). Each security listed on any
national securities exchange shall be valued at the last quoted sales price,
regular way, on the Appraisal Date on the principal exchange on which such
security is traded. Each security listed in the National Association of
Securities Dealers Automated Quotation System or traded in the over-the-counter
market shall be valued at the closing price or the highest reported bid price on
the Appraisal Date, whichever is available. Securities not listed on any
national securities exchange or not listed in the National Association of
Securities Dealers Automated Quotation System or not traded in the
over-the-counter market, as well as trades that have not been settled on the
Appraisal Date, shall be valued on the Appraisal Date at fair value as
determined in good faith by VAM in accordance with policies approved by the
Fund's Board of Directors.
All fees payable to VAM hereunder shall be paid by the Fund to either
the Fund's custodian or to a bank selected by the Fund who shall hold such fees
in an interest-bearing escrow account, subject to the following conditions:
(a) If a majority of the Fund's outstanding voting securities approve a
definitive investment advisory agreement with VAM prior to May 7,
2001, the Fund will pay, or caused to be paid, to VAM the full
amount in the escrow account, including interest earned thereon; or
(b) If a majority of the Fund's outstanding voting securities do not
approve a definitive investment advisory agreement with VAM prior to
May 7, 2001, the Fund will pay, or caused to be paid, to VAM out of
the escrow account an amount equal to the lesser of:
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INTERIM INVESTMENT ADVISORY CONTRACT PAGE 3
(i) the amount of any costs incurred by VAM in performing its
obligations hereunder, plus interest earned on that amount
while in escrow; or
(ii) the full amount of the escrow account, including interest
earned thereon while in escrow.
Any fees payable to VAM as provided for in the preceding paragraph shall be paid
to it within 60 days following the termination of this Contract.
3. Allocation of Expenses
VAM shall bear all of its own costs and expenses necessary and incident
to its providing the investment advisory services rendered by it hereunder. In
addition to the fee described in Section 2 hereof, the Fund shall pay all of its
costs and expenses which are not expressly assumed hereunder by the VAM. The
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 fees (if any), interest, taxes,
brokerage fees and commissions, fees of the directors, 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
issue and sale of shares, expenses of the printing and mailing stock
certificates representing shares of the Fund, association membership dues,
charges of custodians, transfer agents, dividend disbursing agents,
administrative agents, accounting services agents, investor servicing agents and
bookkeeping, auditing and legal expenses.
4. Freedom to Deal With Third Parties
VAM shall be free to render services to others similar to those rendered
under this Contract 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. Liability; Indemnification
VAM shall be liable for its acts and omissions caused by its willful
misfeasance, bad faith or gross negligence in the performance of its duties
under this Contract, and nothing herein shall protect VAM against any such
liability to the Fund or its shareholders; provided, however, that VAM shall not
be liable for acts and omission not caused by VAM's willful misfeasance, bad
faith or gross negligence; and provided further that VAM shall not be liable for
the acts and omissions of any agent employed by VAM, nor for those of any bank,
trust company, broker or other person with whom or into whose possession any
monies or securities and investments may be deposited, pursuant to the
provisions of this Contract or any other Fund contract; and provided further
that VAM shall not be liable for any defect in title of any property acquired,
nor for any loss unless it shall occur through its own willful default, and
provided further that VAM shall not be liable for any action taken or omitted to
be taken by VAM on the advice of counsel to VAM, provided that said counsel is
reasonably acceptable to the Fund.
VAM agrees to indemnify the Fund against any and all actions, litigation
and other proceedings of any kind or nature and against any loss, liability,
judgment, cost or penalty imposed as a result of such actions, litigation or
proceedings in any way arising out of or in connection with any willful
misfeasance, bad faith or gross negligence on the part of VAM in the performance
of its duties under this Contract or any of its directors, officers, employees,
representatives or agents in connection with the responsibilities assumed by VAM
hereunder. In the event of the threat or institution of any such action,
litigation or legal proceedings against the Fund, VAM shall defend such action,
litigation or proceedings on behalf of the Fund at its own expense, and shall
pay any such loss, liability, judgment, cost or penalty resulting therefrom,
whether imposed by legal authority or agreed upon by way of compromise and
settlement; provided, however, VAM
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shall not be required to pay or reimburse the Fund for any loss, liability,
judgment, cost or penalty incurred as a result of information supplied by, or as
the result of the omission to supply information by, the Fund to VAM, or to VAM
by a director, officer or employee of the Fund who is not an "interested person"
(as defined in the Investment Company Act of 1940, as amended) of VAM, unless
the information so supplied or omitted was known, or reasonably should have been
known, to VAM without recourse to the Fund or any such person referred to above.
6. Effective Date. Duration and Termination of Contract
(a) The effective date of this Contract shall be December 8, 2000.
(b) Unless sooner terminated as hereinafter provided, this Contract
shall automatically terminate (i) on May 7, 2001; or (ii) the
date upon which a definitive investment advisory agreement with
VAM is approved by the vote of a majority of the outstanding
voting securities of the Fund, provided that for the purposes of
any fees payable to VAM under Section 2 of this Contract, the
termination date shall be the effective date of such definitive
investment advisory agreement.
(c) This Contract may be terminated at any time, without the payment
of penalty, by the Board of Directors of the Fund or by vote of
a majority of the outstanding voting securities of the Fund, or
by VAM, upon not more than ten (10) calendar days' written
notice to the other party.
(d) This Contract shall automatically terminate in the event of its
"assignment" (as defined in the Investment Company Act of 1940,
as amended). Upon such assignment, the Fund will be promptly
notified.
(e) Wherever referred to in this Contract, the vote or approval of
the holders of a majority of the outstanding voting securities
or shares of the Fund shall mean the lesser of (i) the vote of
67% or more of the voting securities of the Fund present at a
regular or special meeting of the 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 the Fund.
7. Amendments to Contract
No material amendment to this Contract shall be effective until approved
by vote of the holders of a majority of the outstanding voting securities of the
Fund.
8. Notices
Any notice under this Contract 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 the receipt of such notice.
9. Governing Law
This Contract shall be construed in accordance with the laws of the
State of Minnesota.
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shall not be required to pay or reimburse the Fund for any loss, liability,
judgment, cost or penalty incurred as a result of information supplied by, or as
the result of the omission to supply information by, the Fund to yAM, or to VAM
by a director, officer or employee of the Fund who is not an "interested person"
(as defined in the Investment Company Act of 1940, as amended) of yAM, unless
the information so supplied or omitted was known, or reasonably should have been
known, to VAM without recourse to the Fund or any such person referred to above.
6. Effective Date. Duration and Termination of Contract
(a) The effective date of this Contract shall be December 8, 2000.
(b) Unless sooner terminated as hereinafter provided, this Contract
shall automatically terminate (i) on May 7, 2001; or (ii) the
date upon which a definitive investment advisory agreement with
VAM is approved by the vote of a majority of the outstanding
voting securities of the Fund, provided that for the purposes of
any fees payable to VAM under Section 2 of this Contract, the
termination date shall be the effective date of such definitive
investment advisory agreement.
(c) This Contract may be terminated at any time, without the payment
of penalty, by the Board of Directors of the Fund or by vote of
a majority of the outstanding voting securities of the Fund, or
by yAM, upon not more than ten (10) calendar days' written
notice to the other party.
(d) This Contract shall automatically terminate in the event of its
"assignment" (as defined in the Investment Company Act of 1940,
as amended). Upon such assignment, the Fund will be promptly
notified.
(e) Wherever referred to in this Contract, the vote or approval of
the holders of a majority of the outstanding voting securities
or shares of the Fund shall mean the lesser of (i) the vote of
67% or more of the voting securities of the Fund present at a
regular or special meeting of the 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 the Fund.
7. Amendments to Contract
No material amendment to this Contract shall be effective until approved
by vote of the holders of a majority of the outstanding voting securities of the
Fund.
8. Notices
Any notice under this Contract 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 the receipt of such notice.
9. Governing Law
This Contract shall be construed in accordance with the laws of the
State of Minnesota.
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IN WITNESS WHEREOF, the Fund and VAM have caused this Contract to be
executed by their duly authorized officers as of the day and year first above
written.
SAMARNAN INVESTMENT CORPORATION
By:
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Xxxxxx X. Xxxxx, Xx.
President
VOYAGEUR ASSET MANAGEMENT INC.
By:
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Xxxx X. Xxxx
Chief Executive Officer
