VOYAGEUR MUTUAL FUNDS III, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of this 19th day of February
1997, by and between Voyageur Mutual Funds III, Inc., a Minnesota corporation
(the "Company"), for and on behalf of each series of the Company (each series is
referred to hereinafter as a "Fund"), and Voyageur Fund Distributors, Inc., a
Minnesota corporation (the "Underwriter"). This Agreement shall apply to each
class of shares offered by the following Funds:
Voyageur Growth and Income Fund (currently offering Classes A, B and C
shares)
Voyageur Growth Stock Fund (currently offering Classes A, B and C
shares)
Voyageur Aggressive Growth Fund (currently offering Classes A, B and C
shares)
Voyageur International Equity Fund (currently offering Classes A, B and
C shares)
Voyageur Tax Efficient Equity Fund (currently offering Classes A, B and
C shares)
WITNESSETH:
1. UNDERWRITING SERVICES
The Company, on behalf of each Fund, hereby engages the Underwriter,
and the Underwriter hereby agrees to act, as principal underwriter for each Fund
in the sale and distribution of the shares of each class of such Fund to the
public, either through dealers or otherwise. The Underwriter agrees to offer
such shares for sale at all times when such shares are available for sale and
may lawfully be offered for sale and sold.
2. SALE OF SHARES
The shares of each Fund are to be sold only on the following terms:
(a) All subscriptions, offers, or sales shall be subject to
acceptance or rejection by the Company. Any offer for or sale
of shares shall be conclusively presumed to have been accepted
by the Company if the Company shall fail to notify the
Underwriter of the rejection of such offer or sale prior to
the computation of the net asset value of such shares next
following receipt by the Company of notice of such offer or
sale.
(b) No share of a Fund shall be sold by the Underwriter (i) for
any consideration other than cash or, pursuant to any exchange
privilege provided for by the applicable currently effective
Prospectus or Statement of Additional Information (hereinafter
referred to collectively as the "Prospectus"), shares of any
other investment company for which the Underwriter acts as an
underwriter, or (ii) except in instances otherwise provided
for by the applicable currently effective Prospectus, for any
amount less than the public offering price per share, which
shall be determined in accordance with the applicable
currently effective Prospectus.
(c) In connection with certain sales of shares, a contingent
deferred sales charge will be imposed in the event of a
redemption transaction occurring within a certain period of
time following such a purchase, as described in the applicable
currently effective Prospectus and Statement of Additional
Information.
(d) The front-end sales charge, if any, for any class of shares of
a Fund may, at the discretion of the Company and the
Underwriter, be reduced or eliminated as permitted by the
Investment Company Act of 1940, and the rules and regulations
thereunder, as they may be amended from time to time (the
"1940 Act"), provided that such reduction or elimination shall
be set forth in the Prospectus for such class, and provided
that the Company shall in no event receive for any shares sold
an amount less than the net asset value thereof. In addition,
any contingent deferred sales charge for any class of shares
of a Fund may, at the discretion of the Company and the
Underwriter, be reduced or eliminated in accordance with the
terms of an exemptive order received from, or any applicable
rule or rules promulgated by, the Securities and Exchange
Commission, provided that such reduction or elimination shall
be set forth in the Prospectus for such class of shares.
(e) The Underwriter shall require any securities dealer entering
into a selected dealer agreement with the Underwriter to
disclose to prospective investors the existence of all
available classes of shares of a Fund and to determine the
suitability of each available class as an investment for each
such prospective investor.
3. REGISTRATION OF SHARES
The Company agrees to make prompt and reasonable efforts to effect and
keep in effect, at its expense, the registration or qualification of each Fund's
shares for sale in such jurisdictions as the Company may designate.
4. INFORMATION TO BE FURNISHED TO THE UNDERWRITER
The Company agrees that it will furnish the Underwriter with such
information with respect to the affairs and accounts of the Company (and each
Fund or class thereof) as the Underwriter may from time to time reasonably
require, and further agrees that the Underwriter, at all reasonable times, shall
be permitted to inspect the books and records of the Company.
5. ALLOCATION OF EXPENSES
During the period of this Agreement, the Company shall pay or cause to
be paid all expenses, costs and fees incurred by the Company which are not
assumed by the Underwriter. The Underwriter agrees to provide, and shall pay
costs which it incurs in connection with providing, administrative or accounting
services to shareholders of each Fund (such costs are referred to as
"Shareholder Servicing Costs"). Shareholder Servicing Costs include all expenses
of the Underwriter incurred in connection with providing administrative or
accounting services to shareholders of each Fund, including, but not limited to,
an allocation of the Underwriter's overhead and payments made to persons,
including employees of the Underwriter, who respond to inquiries of shareholders
regarding their ownership of Fund shares, or who provide other administrative or
accounting services not otherwise required to be provided by the applicable
Fund's investment adviser or transfer agent. The Underwriter shall also pay all
costs of distributing the shares of each Fund ("Distribution Expenses").
Distribution Expenses include, but are not limited to, initial and ongoing sales
compensation (in addition to sales loads) paid to investment executives of the
Underwriter and to other broker-dealers and participating financial
institutions; expenses incurred in the printing of prospectuses, statements of
additional information and reports used for sales purposes; expenses of
preparation and distribution of sales literature; expenses of advertising of any
type; an allocation of the Underwriter's overhead; payments to and expenses of
persons who provide support services in connection with the distribution of Fund
shares; and other distribution-related expenses.
6. COMPENSATION TO THE UNDERWRITER
As compensation for all of its services provided and its costs assumed
under this Agreement, the Underwriter shall receive the following forms and
amounts of compensation:
(a) The Underwriter shall be entitled to receive or retain any
front-end sales charge imposed in connection with sales of
shares of each Fund, as set forth in the applicable current
Prospectus. Up to the entire amount of such front-end sales
charge may be reallowed by the Underwriter to broker-dealers
and participating financial institutions in connection with
their sale of Fund shares. The amount of the front-end sales
charge (if any) may be retained or deducted by the Underwriter
from any sums received by it in payment for shares so sold. If
such amount is not deducted by the Underwriter from such
payments, such amount shall be paid to the Underwriter by the
Company not later than five business days after the close of
any calendar quarter during which any such sales were made by
the Underwriter and payment received by the Company.
(b) The Underwriter shall be entitled to receive or retain any
contingent deferred sales charge imposed in connection with
any redemption of shares of each Fund, as set forth in the
applicable current Prospectus.
(c) Pursuant to the Company's Plan of Distribution adopted in
accordance with Rule 12b-1 under the 1940 Act (the "Plan"):
(i) Class A of each Fund is obligated to pay the Underwriter a
total fee in connection with the servicing of shareholder
accounts of such class and in connection with
distribution-related services provided in respect of such
class, calculated and payable quarterly, at the annual rate of
.25% of the value of the average daily net assets of such
class. All or any portion of such total fee may be payable as
a Shareholder Servicing Fee, and all or any portion of such
total fee may be payable as a Distribution Fee, as determined
from time to time by the Company's Board of Directors. Until
further action by the Board of Directors, all of such fee
shall be designated and payable as a Shareholder Servicing
Fee.
(ii) Class B of each Fund offering shares of such class is
obligated to pay the Underwriter a total fee in connection
with the servicing of shareholder accounts of such class and
in connection with distribution-related services provided in
respect of such class, calculated and payable quarterly, at
the annual rate of 1.00% of the value of the average daily net
assets of such class. All or any portion of such total fee may
be payable as a Shareholder Servicing Fee, and all or any
portion of such total fee may be payable as a Distribution
Fee, as determined from time to time by the Company's Board of
Directors. Until further action by the Board of Directors, a
portion of such total fee equal to .25% per annum of the
average net assets of such class shall be designated and
payable as a Shareholder Servicing Fee and the remainder of
such fee shall be designated as a Distribution Fee.
(iii) Class C of each Fund offering shares of such class is
obligated to pay the Underwriter a total fee in connection
with the servicing of shareholder accounts of such class and
in connection with distribution-related services provided in
respect of such class, calculated and payable quarterly, at
the annual rate of 1.00% of the value of the average daily net
assets of such class. All or any portion of such total fee may
be payable as a Shareholder Servicing Fee, and all or any
portion of such total fee may be payable as a Distribution
Fee, as determined from time to time by the Company's Board of
Directors. Until further action by the Board of Directors, a
portion of such total fee equal to .25% per annum of the
average daily net assets of such class shall be designated and
payable as a Shareholder Servicing Fee and the remainder of
such fee shall be designated as a Distribution Fee.
Average daily net assets shall be computed in accordance with the
applicable currently effective Prospectus. Amounts payable to the Underwriter
under the Plan may exceed or be less than the Underwriter's actual Distribution
Expenses and Shareholder Servicing Costs. In the event such Distribution
Expenses and Shareholder Servicing Costs exceed amounts payable to the
Underwriter under the Plan, the Underwriter shall not be entitled to
reimbursement by the Company.
(d) In each year during which this Agreement remains in effect,
the Underwriter will prepare and furnish to the Board of
Directors of the Company, and the Board will review, on a
quarterly basis, written reports complying with the
requirements of Rule 12b-1 under the 1940 Act that set forth
the amounts expended under this Agreement and the Plan, on a
class by class basis as applicable, and the purposes for which
those expenditures were made.
7. LIMITATION OF THE UNDERWRITER'S AUTHORITY
The Underwriter shall be deemed to be an independent contractor and,
except as specifically provided or authorized herein, shall have no authority to
act for or represent any Fund or the Company.
8. SUBSCRIPTION FOR SHARES--REFUND FOR CANCELLED ORDERS
The Underwriter shall subscribe for the shares of a Fund only for the
purpose of covering purchase orders already received by it or for the purpose of
investment for its own account. In the event that an order for the purchase of
shares of a Fund is placed with the Underwriter by a customer or dealer and
subsequently cancelled, the Underwriter shall forthwith cancel the subscription
for such shares entered on the books of the Fund, and, if the Underwriter has
paid the Fund for such shares, shall be entitled to receive from the Fund in
refund of such payment the lesser of:
(a) the consideration received by the Fund for said shares; or
(b) the net asset value of such shares at the time of cancellation
by the Underwriter.
9. INDEMNIFICATION OF THE COMPANY
The Underwriter agrees to indemnify each Fund and the Company against
any and all litigation and other legal proceedings of any kind or nature and
against any liability, judgment, cost, or penalty imposed as a result of such
litigation or proceedings in any way arising out of or in connection with the
sale or distribution of the shares of such Fund by the Underwriter. In the event
of the threat or institution of any such litigation or legal proceedings against
any Fund, the Underwriter shall defend such action on behalf of the Fund or the
Company at the Underwriter's own expense, and shall pay any such liability,
judgment, cost, or penalty resulting therefrom, whether imposed by legal
authority or agreed upon by way of compromise and settlement; provided, however,
the Underwriter shall not be required to pay or reimburse a Fund for any
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
Company to the Underwriter, or to the Underwriter by a director, officer, or
employee of the Company who is not an "interested person," as defined in the
provisions of the 1940 Act, of the Underwriter, unless the information so
supplied or omitted was available to the Underwriter or the Fund's investment
adviser without recourse to the Fund or the Company or any such person referred
to above.
10. FREEDOM TO DEAL WITH THIRD PARTIES
The Underwriter shall be free to render to others services of a nature
either similar to or different from those rendered under this contract, except
such as may impair its performance of the services and duties to be rendered by
it hereunder.
11. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT
(a) The effective date of this Agreement is set forth in the first
paragraph of this Agreement. Unless sooner terminated as
hereinafter provided, this Agreement shall continue in effect
for a period of one year after the date of its execution, and
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by a
vote of the Board of Directors of the Company, and of the
directors who are not "interested persons" (as defined in the
provisions of the 0000 Xxx) of the Company and have no direct
or indirect financial interest in the operation of the Plan or
in any agreement related to the Plan (including, without
limitation, this Agreement), cast in person at a meeting
called for the purpose of voting on this Agreement.
(b) This Agreement may be terminated at any time with respect to
any Fund or class thereof without the payment of any penalty,
by the vote of a majority of the members of the Board of
Directors of the Company who are not "interested persons" (as
defined in the provisions of the 0000 Xxx) of the Company and
have no direct or indirect financial interest in the operation
of the Plan or in any agreement related to the Plan
(including, without limitation, this Agreement), or by the
vote of a majority of the outstanding voting securities of
such Fund (or class thereof), or by the Underwriter, upon 60
days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of
its "assignment" (as defined by the provisions of the 1940
Act).
(d) Wherever referred to in this Agreement, the vote or approval
of the holders of a majority of the outstanding voting
securities of a Fund (or class thereof) shall mean the lesser
of (i) the vote of 67% or more of the voting securities of
such Fund (or class thereof) present at a regular or special
meeting of shareholders duly called, if more than 50% of the
Fund's (or class's, as applicable) 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 (or class thereof).
12. AMENDMENTS TO AGREEMENT
No material amendment to this Agreement shall be effective until
approved by the Underwriter and by vote of a majority of the Board of Directors
of the Company who are not interested persons of the Underwriter.
13. 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 the Underwriter have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
VOYAGEUR MUTUAL FUNDS III, INC.
By /s/ Xxxx X. Xxxx
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Its President and CEO
VOYAGEUR FUND DISTRIBUTORS, INC.
By /s/ Xxxxx X. Xxxxxxxxxx
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Its President
