DELAWARE GROUP ADVISER FUNDS, INC.
SUB-ADVISORY AGREEMENT
AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation ("Investment Manager"), and XXXXX & XXXXX, INC., an Indiana
corporation ("Sub-Adviser").
W I T N E S S E T H:
WHEREAS, DELAWARE GROUP ADVISER FUNDS, INC., a Maryland corporation
("Fund"), on behalf of the Enterprise Fund ("Portfolio"), has been organized and
operates as an investment company registered under the Investment Company Act of
1940 ("1940 Act") and engages in the business of investing and reinvesting its
assets in securities, and
WHEREAS, the Investment Manager and the Fund have entered into an
agreement of even date herewith ("Investment Management Agreement") whereby the
Investment Manager will provide investment advisory services to the Fund on
behalf of the Portfolio; and
-1-
WHEREAS, the Investment Management Agreement permits the Investment
Manager to hire one or more sub-advisers to assist the Investment Manager in
providing investment advisory services to the Fund on behalf of the Portfolio;
and
WHEREAS, the Investment Manager and the Sub-Adviser are registered
investment advisers under the Investment Advisers Act of 1940 and engage in the
business of providing investment management services.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Investment Manager hereby employs the Sub-Adviser to manage the
investment and reinvestment of the Portfolio's assets, subject to the direction
of the Fund's Board of Directors and officers of the Fund for the period and on
the terms hereinafter set forth. The Sub-Adviser hereby accepts such employment
and agrees during such period to render the services and assume the obligations
herein set forth for the compensation herein provided. The Sub-Adviser shall for
all purposes herein be deemed to be an independent contractor, and shall, unless
otherwise expressly provided and authorized, have no authority to act for or
represent the Fund in any way, or in any way be deemed an agent of the Fund. The
Sub-Adviser shall regularly make decisions as to what securities and other
instruments to purchase and sell on behalf of the Portfolio, shall effect the
purchase and sale of such investments, as agent of the Fund on behalf of the
Portfolio, in furtherance of the Portfolio's objectives and policies and shall
furnish the Board of Directors of the Fund with such
-2-
information and reports regarding its activities as the Investment Manager deems
appropriate or as the Directors of the Fund may reasonably request consistent
with the provisions of Section 15(c) of the 1940 Act.
In the performance of its duties and obligations under this Agreement,
the Sub-Adviser shall act in conformity with the Articles of Incorporation,
By-Laws and Prospectus of the Fund and with the instructions and directions of
the Investment Manager and of the Board of Directors of the Fund and will
conform to and comply with the requirements of the 1940 Act, the Internal
Revenue Code of 1986 and all other applicable federal and state laws and
regulations.
2. Under the terms of the Investment Management Agreement, the Fund
shall conduct its own business and affairs and shall bear the expenses and
salaries necessary and incidental thereto including, but not in limitation of
the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures; dealing
with its own shareholders; the payment of dividends; transfer of stock,
including issuance and repurchase of shares; preparation of share certificates;
reports and notices to shareholders; calling and holding of shareholders'
meetings; miscellaneous office expenses; brokerage commissions; custodian fees;
legal and accounting fees; taxes; and federal and state registration fees.
-3-
Directors, officers and employees of the Sub-Adviser may be directors,
officers and employees of other funds which have employed the Sub-Adviser as
sub-adviser or investment manager.
-4-
In the conduct of the respective business of the parties hereto and in
the performance of this Agreement, the Fund, the Investment Manager and the
Sub-Adviser may share facilities common to each, with appropriate proration of
expenses between and among them.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Sub-Adviser will place orders for the purchase and
sale of portfolio securities and other instruments with such broker/dealers who
provide statistical, factual and financial information and services to the Fund,
to the Investment Manager, to the Sub-Adviser or to any other fund for which
the Investment Manager or Sub-Adviser provides investment advisory services
and/or with broker/dealers who sell shares of the Fund or who sell shares of any
other fund for which the Investment Manager or Sub-Adviser provides investment
advisory services. Broker/dealers who sell shares of the funds for which the
Investment Manager or Sub-Adviser provides advisory services 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.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to the policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Sub-Adviser may ask the Fund and the
Fund 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
-5-
have charged for effecting that transaction, in such instances where it and the
Sub-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 the Sub-Adviser's overall responsibilities with
respect to the Fund and to other funds and other advisory accounts for which the
Investment Manager or the Sub-Adviser exercises investment discretion.
4. The Sub-Adviser shall maintain all books and records with respect to
the Portfolio's portfolio transactions required by subparagraphs (b) (5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act and
shall render to the Fund's Board of Directors such periodic and special reports
as the Board may reasonably request.
The Sub-Adviser shall keep the Portfolio's books and records
required to be maintained by the Sub-Adviser pursuant to this Paragraph 4 and
shall timely furnish to the Investment Manager all information relating to the
Sub-Adviser's services hereunder needed by the Investment Manager to keep the
other books and records of the Portfolio required by Rule 31a-1 under the 1940
Act. The Sub-Adviser agrees that all records which it maintains for the
Portfolio are the property of the Fund and the Sub-Adviser will surrender
promptly to the Fund any of such records upon the Fund's request, provided
however that the Sub-Adviser may retain a copy of such records. The Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 of the
Securities and Exchange Commission under the
-6-
1940 Act any such records as are required to be maintained by it pursuant to
this Paragraph 4.
5. As compensation for the services to be rendered to the Fund for the
benefit of the Portfolio by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser a fee at an
annual rate of .50% of the average daily net assets on the first $150 million of
the Portfolio, and .35% of the average daily net assets over $150 million of the
Portfolio. The fee shall be computed daily and will be paid to the Sub-Adviser,
quarterly, in arrears.
If this Agreement is terminated prior to the end of any calendar month,
the Sub-Advisory fee shall be prorated for the portion of any month in which
this Agreement is in effect according to the proportion which the number of
calendar days, during which the Agreement is in effect, bears to the number of
calendar days in the month, and shall be payable within 10 days after the date
of termination.
6. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Portfolio under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby; provided, however,
except for advisory arrangements implemented prior to the date of this
Agreement, during the term of this Agreement, the Sub-Adviser, will not, without
the written consent of the Investment Manager, which consent will not be
unreasonably withheld, render
-7-
investment management (or similar services) to another registered investment
company (or portfolio thereof) which the Investment Manager reasonably
determines would be in competition with and which has investment policies
similar to those of the Portfolio.
7. The Investment Manager agrees that it shall not use the
Sub-Adviser's name or otherwise refer to the Sub-Adviser in any materials
distributed to third parties, including the Portfolio's shareholders, without
the prior written consent of the Sub-Adviser.
8. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of its duties as Sub-Adviser to the
Fund, the Sub-Adviser shall not be subject to liability to the Fund, to the
Investment Manager or to any shareholder of the Fund 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.
9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Portfolio. It shall continue in effect for a period of two
years and may be renewed thereafter only so long as such renewal and continuance
is specifically approved at least annually by the Board of Directors or by the
vote of a majority of the outstanding voting securities of the Portfolio and
only if the terms and the renewal hereof have been approved by the vote of a
majority of the Directors of the Fund who are not parties hereto or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval.
-8-
Notwithstanding the foregoing, this Agreement may be terminated by the
Investment Manager or the Fund at any time, without the payment of a penalty, on
sixty days' written notice to the Sub-Adviser, of the Investment Manager's or
the Fund's intention to do so, in the case of the Fund, pursuant to action by
the Board of Directors of the Fund or pursuant to the vote of a majority of the
outstanding voting securities of the Portfolio. The Sub-Adviser may terminate
this Agreement at any time, without the payment of a penalty on sixty days'
written notice to the Investment Manager and the Fund of its intention to do so.
Upon termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Investment Manager to pay to
the Sub-Adviser the fee provided in Paragraph 5 hereof, prorated to the date of
termination. This Agreement shall automatically terminate in the event of its
assignment. This Agreement shall automatically terminate upon the termination of
the Investment Management Agreement.
10. This Agreement shall extend to and bind the successors of the
parties hereto. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original. This Agreement shall become effective
when one or more counterparts have been signed and delivered by each of the
parties hereto.
-9-
11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities", "interested person", and "assignment"
shall have the meaning defined in the 1940 Act.
-10-
IN WITNESS WHEREOF, the parties hereto have caused their corporate
seals to be affixed and duly attested and their presents to be signed by their
duly authorized officers as of the 4th day of May, 1996.
DELAWARE MANAGEMENT COMPANY, INC.
By: /s/Xxxxx X. Xxxxx
--------------------------------------------
Xxxxx X. Xxxxx
Chairman, President, Chief Executive Officer
Chief Investment Officer
Attest: /s/Xxxx X. Xxxxxx
--------------------------------------------
Xxxx X. Xxxxxx
Vice President/Assistant Secretary
LINCOLN INVESTMENT MANAGEMENT, INC.
By: /s/Xxxxxx Xxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxx
Attest: /s/Xxxxx Xxxx Xxxxxx
--------------------------------------------
Xxxxx Xxxx Xxxxxx
Agreed to and accepted as of the day and year first above written:
DELAWARE GROUP ADVISER FUNDS, INC.
on behalf of the Corporate Income Fund
By: /s/Xxxxx X. Xxxxxx
-----------------------------------------------------
Xxxxx X. Xxxxxx
Senior Vice President/Chief Administrative Officer/
Chief Financial Officer
Attest: /s/Xxxx X. Xxxx
-----------------------------------------------------
Xxxx X. Xxxx
Vice President/Assistant Secretary
-11-
