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EXHIBIT 99.B5C
SUB-ADVISORY AGREEMENT
Agreement, dated as of April 30, 1997, by and between Delaware
Management Company, Inc. ("Adviser"), a Delaware corporation, and Voyageur Asset
Management LLC, a Delaware limited liability company ("Sub-Adviser").
WHEREAS, Voyageur Mutual Funds III, Inc., a Minnesota
corporation (the "Company"), on behalf of the Voyageur Growth Stock Fund, a
separately managed series of the Company (the "Fund"), has appointed Adviser as
the Fund's investment adviser pursuant to an Investment Advisory Agreement dated
as of April 30, 1997 (the "Advisory Agreement"); and
WHEREAS, pursuant to the terms of the Advisory Agreement,
Adviser desires to appoint Sub-Adviser as its sub-adviser for the Fund, and
Sub-Adviser is willing to act in such capacity upon the terms set forth herein;
and
WHEREAS, pursuant to the terms of the Advisory Agreement, the
Company has approved the appointment of Sub-Adviser as a sub-adviser for the
Fund.
NOW, THEREFORE, in consideration of the mutual agreements
herein made, Adviser and Sub-Adviser agree as follows:
1. Adviser hereby employs Sub-Adviser to serve as sub-adviser
for, and to manage the investment of the assets of, the Fund as set forth
herein. Sub-Adviser hereby accepts such employment and agrees, for the
compensation herein provided, to assume all obligations herein set forth and to
bear all expenses of its performance of such obligations (but no other
expenses). Sub-Adviser shall not be required to pay expenses of the Fund,
including, but not limited to (a) brokerage and commission expenses; (b)
federal, state, local and foreign taxes, including issue and transfer taxes
incurred by or levied on the Fund; (c) interest charges on Fund borrowings; (d)
the Fund's organizational and offering expenses, whether or not advanced by
Adviser; (e) the cost of other personnel providing services to the Fund; (f)
fees and expenses of registering or otherwise qualifying the shares of the Fund
under applicable state securities laws; (g) expenses of printing and
distributing reports to shareholders; (h) costs of shareholders' meetings and
proxy solicitation; (i) charges and expenses of the Fund's custodian and
registrar, transfer agent and dividend disbursing agent; (j) compensation of the
Company's officers, directors and employees that are not Affiliated Persons or
Interested Persons (as defined in Section 2(a)(19) of the Investment Company Act
of 1940, as amended (the "1940 Act"), and the rules, regulations and releases
relating thereto) of Adviser; (k) legal and auditing expenses of the Fund; (1)
costs of certificates representing common shares of the Fund; (m) costs of Fund
stationery and supplies; (n) insurance expenses of the Fund; (o) association
membership dues of the Fund; (p) the fees and expenses of registering the Fund
and its shares with the Securities and Exchange Commission; (q) travel expenses
of officers and employees of Sub-Adviser to the extent such expenses relate to
the attendance of such persons at meetings at the request of the Board of
Directors of the Company; and (r) all other charges and costs of the Fund's
operation unless otherwise
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explicitly provided herein. Sub-Adviser shall for all purposes herein be deemed
to be an independent contractor and shall, except as expressly provided or
authorized (whether herein or otherwise) have no authority to act for or on
behalf of the Fund in any way or otherwise be deemed an agent of the Fund.
2. Sub-Adviser shall direct the Fund's investments in
accordance with applicable law, applicable provisions of the Articles of
Incorporation and Bylaws (which shall be provided to Sub-Adviser on the date
hereof and any changes thereto shall be promptly provided to the Sub-Adviser
thereafter), and the investment objective, policies and restrictions set forth
in the Fund's then-effective Registration Statement under the Securities Act of
1933, as amended, including the Prospectus and Statement of Additional
Information of the Fund contained therein, subject to the supervision of the
Company, its officers and directors, and Adviser and in accordance with the
investment objectives, policies and restrictions from time to time prescribed by
the Board of Directors of the Company and communicated by Adviser to Sub-Adviser
and subject to such further limitations as Adviser may from time to time impose
by written notice to Sub-Adviser.
3. Sub-Adviser shall formulate and implement a continuing
program for managing the investment of the Fund's assets, and shall amend and
update such program from time to time as financial and other economic conditions
warrant. Sub-Adviser shall make all determinations with respect to managing the
investment of the Fund's assets and shall take such steps as may be necessary to
implement the same, including the placement of purchase and sale orders on
behalf of the Fund.
4. Sub-Adviser shall furnish such reports to Adviser as
Adviser may reasonably request for Adviser's use in discharging its obligations
under the Advisory Agreement, which reports may be distributed by Adviser to the
Company's Board of Directors at periodic meetings of the Board of Directors and
at such other times as may be reasonably requested by the Board of Directors.
Copies of all such reports shall be furnished to Adviser for examination and
review within a reasonable time prior to the presentation of such reports to
Company's Board of Directors.
5. Sub-Adviser shall select the brokers and dealers that will
execute the purchases and sales of securities for the Fund and markets on or in
which such transactions will be executed and shall place, in the name of the
Fund or its nominee, all such orders.
(a) Subject to the primary objective of obtaining the best
available prices and execution, Sub-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 Fund, to Adviser, to
Sub-Adviser or to any other fund for which Adviser or
Sub-Adviser provides investment advisory services and/or with
broker/dealers who sell shares of the Fund or who sell shares
of any
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other fund for which Adviser or Sub-Adviser provides
investment advisory services. Broker/dealers who sell shares
of the funds for which Adviser or Sub-Adviser provides
investment 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 such policies and procedures as may be adopted
by the Board of Directors and officers of the Company,
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 have charged for effecting that transaction,
in such instances where the Fund and 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
Sub-Adviser's overall responsibilities with respect to the
Fund and to other funds and other advisory accounts for which
Adviser or Sub-Adviser exercises investment discretion.
(c) It is understood that certain other clients of Sub-Adviser
may have investment objectives and policies similar to those
of the Fund, and that Sub-Adviser may, from time to time, make
recommendations that result in the purchase or sale of a
particular security by its other clients simultaneously with
the Fund. If transactions on behalf of more than one client
during the same period increase the demand for securities
being purchased or the supply of securities being sold, there
may be an adverse effect on price or quantity. In such event,
Sub-Adviser shall allocate advisory recommendations and the
placing of orders in a manner that is deemed equitable by
Sub-Adviser to the accounts involved, including the Fund. When
two or more of the clients of Sub-Adviser (including the Fund)
are purchasing or selling the same security on a given day
from the same broker or dealer, such transactions may be
averaged as to price.
(d) Sub-Adviser agrees that it will not purchase or sell
securities for the Fund in any transaction in which it,
Adviser or any "affiliated person" of the Company, Adviser or
Sub-Adviser or any affiliated person of such "affiliated
person" is acting as principal; provided, however, that
Sub-Adviser may effect transactions pursuant to Rule 00x-
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0 xxxxx xxx 0000 Xxx in compliance with the Fund's
then-effective policies concerning such transactions.
(e) Sub-Adviser agrees that it will not execute any portfolio
transactions for the Fund with a broker or dealer or futures
commission-merchant which is an "affiliated person" of the
Company, Adviser or Sub-Adviser or an "affiliated person" of
such an "affiliated person" without the prior written consent
of Adviser. In effecting any such transactions with the prior
written consent of Adviser, Sub-Adviser shall comply with
Section 17(e)(1) of the 1940 Act, other applicable provisions
of the 1940 Act, if any, the then-effective Registration
Statement of the Fund under the Securities Act of 1933, as
amended and the Fund's then-effective policies concerning such
transactions.
(f) Sub-Adviser shall promptly communicate to Adviser and, if
requested by Adviser, to the Company's Board of Directors,
such information relating to portfolio transactions as Adviser
may reasonably request. The parties understand that the Fund
shall bear all brokerage commissions in connection with the
purchases and sales of portfolio securities for the Fund and
all ordinary and reasonable transaction costs in connection
with purchases of such securities in private placements and
subsequent sales thereof.
6. Sub-Adviser may (at its cost except as contemplated by
paragraph 5 of this Agreement) employ, retain or otherwise avail itself of the
services and facilities of persons and entities within its own organization or
any other organization for the purpose of providing Sub-Adviser, Adviser or the
Fund with such information, advice or assistance, including but not limited to
advice regarding economic factors and trends and advice as to transactions in
specific securities, as Sub-Adviser may deem necessary, appropriate or
convenient for the discharge of its obligations hereunder or otherwise helpful
to Adviser or the Fund, or in the discharge of Sub-Adviser's overall
responsibilities with respect to the other accounts for which it serves as
investment manager or investment adviser.
7. Sub-Adviser shall cooperate with and make available to
Adviser, the Fund and any agents engaged by the Fund, Sub-Adviser's expertise
relating to matters affecting the Fund.
8. For the services to be rendered under this Agreement, and
the facilities to be furnished for each fiscal year of the Fund, Adviser shall
pay to Sub-Adviser a monthly management fee at the annual rate of 0.50% of the
Fund's average daily net assets. This fee will be computed based on the average
of the net assets of the Fund as of the close of each business day, calculated
as set forth in the Advisory Agreement, and will be paid to Sub-Adviser monthly
on or before the fifteenth day of the month next succeeding the month for
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which the fee is paid. The fee shall be prorated for any fraction of a fiscal
year at the commencement and termination of this Agreement.
Pursuant to the Advisory Agreement, Adviser receives monthly
from the Fund compensation at the annual rate of 1.00% of the Fund's average
daily net assets. If Adviser or any affiliate of Adviser has undertaken in the
Fund's Registration Statement as filed under the 1940 Act or elsewhere to waive
all or part of its fee under the Advisory Agreement or any other agreement with
the Fund and/or to pay certain Fund expenses, or to reduce any such fee upon
order of the Board of Directors or the vote of a majority of the outstanding
voting securities of the Fund, Sub-Adviser's fee payable under this Agreement
will be proportionately waived or reduced, such that Sub-Adviser's fee would be
in an amount equal to one-half of the compensation actually received by Adviser,
after taking in account all such waivers or payments of Fund expenses by Adviser
or any of its affiliates.
9. Sub-Adviser represents, warrants and agrees that:
(a) Sub-Adviser is registered as an "investment adviser" under
the Investment Advisers Act of 1940 ("Advisers Act") and is
currently in compliance and shall at all times continue to
comply with the requirements imposed upon it by Advisers Act
and other applicable laws and regulations. Sub-Adviser agrees
to (i) supply Adviser with such documents as Adviser may
reasonably request to document compliance with such laws and
regulations and (ii) immediately notify Adviser of the
occurrence of any event which would disqualify Sub-Adviser
from serving as an investment adviser of an investment company
pursuant to any applicable law or regulation.
(b) Sub-Adviser will maintain, keep current and preserve on
behalf of the Company all records required or permitted by the
1940 Act in the manner provided by such Act. Sub-Adviser
agrees that such records are the property of the Company, and
will be surrendered to the Company promptly upon request.
(c) Sub-Adviser will complete such reports concerning
purchases or sales of securities on behalf of Sub-Adviser as
Adviser may from time to time require to document compliance
with the 1940 Act, Advisers Act, the Internal Revenue Code,
applicable state securities laws and other applicable laws and
regulations or regulatory and taxing authorities in countries
other than the United States.
(d) Sub-Adviser has furnished Adviser with a copy of
Sub-Adviser's currently effective Form ADV. After filing with
the Securities and
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Exchange Commission any amendment to its Form ADV, Sub-Adviser
will promptly furnish a copy of such amendment to Adviser.
(e) Sub-Adviser will immediately notify Adviser of the
occurrence of any event which would disqualify Sub-Adviser
from serving as an investment adviser of an investment company
pursuant to Section 9 of the 1940 Act or any other applicable
statute or regulation.
10. Adviser represents, warrants and agrees that:
(a) It has been duly authorized by the Board of Directors of
the Company to delegate to Sub-Adviser the provision of the
services contemplated hereby.
(b) Adviser and the Company are currently in compliance and
shall at all times continue to comply with the requirements
imposed upon Adviser and the Company by applicable law and
regulations.
11. Sub-Adviser will not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund or its shareholders in
connection with the performance of its duties under this Agreement, except a
loss resulting from willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard by it of its
duties under this Agreement.
12. This Agreement shall become effective on May 1, 1997.
Wherever referred to in this Agreement, the vote or approval of the holders of a
majority of the outstanding voting securities or shares of the Fund shall mean
(a) the vote of 67% or more of the voting securities of such Fund present at
such meeting if the holders of more than 50% of the outstanding voting
securities of the Fund are present in person or by proxy, or (b) the vote of
more than 50% of the outstanding voting securities of the Fund, whichever is
less.
Unless sooner terminated as hereinafter provided, this
Agreement shall continue in effect 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 (a) by the Board of
Directors of the Company or by the vote of a majority of the outstanding voting
securities of the Fund, and (b) by the vote of a majority of the directors of
the Company who are not parties to this Agreement or Interested Persons of
Adviser, Sub-Adviser or the Company, cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated at any time without the
payment of any penalty (a) by the vote of the Board of Directors of the Company
or by the vote of the holders of a majority of the outstanding voting securities
of the Fund, upon 60 days' written
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notice to Adviser and the Sub-Adviser, or (b) by Adviser, upon 60 days' written
notice to the Sub-Adviser; or (c) by the Sub-Adviser, upon 60 days' written
notice to Adviser. This Agreement shall automatically terminate in the event of
its assignment as defined in the 1940 Act and the rules thereunder, provided,
however, that such automatic termination shall be prevented in a particular case
by an order of exemption from the Securities and Exchange Commission or a
no-action letter of the staff of the Commission to the effect that such
assignment does not require termination as a statutory or regulatory matter.
This Agreement shall automatically terminate upon completion of the dissolution,
liquidation or winding up of the Fund. This Agreement shall terminate
automatically upon termination of the Advisory Agreement.
13. No amendment to or modification of this Agreement shall be
effective unless and until approved by the vote of a majority of the outstanding
shares of the Fund.
14. This Agreement shall be binding upon, and inure to the
benefit of, Adviser and Sub-Adviser, and their respective successors.
15. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
16. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended
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from time to time, this Agreement shall be administered, construed and enforced
according to the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers thereunto duly authorized in
multiple counterparts, each of which shall be an original but all of which shall
constitute one of the same instrument.
DELAWARE MANAGEMENT COMPANY, INC.
By /s/ Xxxxx X. Xxxxx
____________________________
Name: Xxxxx X. Xxxxx
Title: Chairman of the Board,
President, Chief
Executive Officer and
Director
VOYAGEUR ASSET MANAGEMENT LLC
By /s/ Xxxxxx X. Xxxxx
____________________________
Name: Xxxxxx X. Xxxxx
Title: Secretary
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