DELAWARE GROUP INCOME FUNDS, INC.
STRATEGIC INCOME FUND
SUB-ADVISORY AGREEMENT
AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation (the "Investment Manager"), and DELAWARE INTERNATIONAL
ADVISERS LTD., a U.K. company (the "Sub- Adviser").
W I T N E S S E T H:
WHEREAS, DELAWARE GROUP INCOME FUNDS, INC., a Maryland corporation (the
"Fund"), has been organized and operates as an investment company registered
under the Investment Company Act of 1940 and engages in the business of
investing and reinvesting its assets in securities; 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; and
WHEREAS, the Investment Manager and the Fund on behalf of the Strategic
Income Fund series (the "Series") have entered into an agreement dated as of
September 30, 1996 (the "Investment Management Agreement") whereby the
Investment Manager will provide investment advisory services to the Fund on
behalf of the Series; and
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;
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, subject
always to the Investment Manager's control and supervision, to manage the
foreign securities portion of the Series' portfolio and to furnish the
Investment Manager with investment recommendations, asset allocation advice,
research and other investment services with respect to foreign securities,
subject to the direction of the Board 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 to purchase and sell on behalf of the Series, shall effect
the purchase and sale of investments in furtherance of the Series' objectives
and policies, and shall furnish the Board of Directors
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of the Fund with such information and reports regarding the Series' investments
as the Investment Manager deems appropriate or as the Directors of the Fund may
reasonably request.
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, redemption 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.
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. Directors, officers and employees of the
Sub-Adviser who are directors, officers and/or employees of the Fund shall not
receive any compensation from the Fund for acting in such dual capacity.
In the conduct of the respective businesses of the parties hereto and
in the performance of this Agreement, the Fund, the Investment Manager and the
Sub-Adviser may share facilities
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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 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 such 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
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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. As compensation for the services to be rendered to the Fund by the
Sub-Adviser under the provisions of this Agreement, the Investment Manager shall
pay to the Sub-Adviser a monthly fee equal to one-third of the fee paid to the
Investment Manager under the terms of the Investment Management Agreement.
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.
5. The services to be rendered by the Sub-Adviser to the Fund 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
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render the services provided for in this Agreement shall not be
impaired thereby.
6. The Sub-Adviser, its directors, officers, employees, agents and
shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of duties of the Sub-Adviser to the
Fund, the Sub-Adviser shall not be subject to liabilities to the Fund 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.
8. This Agreement shall be executed and become effective as of the date
written below. 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 vote of a majority of
the outstanding voting securities of the Series 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
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meeting called for the purpose of voting on such approval. 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 vote of a majority of the outstanding voting
securities of the Series. 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 4 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.
9. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
10. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities;" "interested
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person;" and "assignment" shall have the meanings defined in the Investment
Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
having it signed by their duly authorized officers as of the 30th day of
September, 1996.
DELAWARE MANAGEMENT COMPANY,
INC.
Attest:/s/ Xxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
-------------------------- ----------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Assistant Secretary Title: Senior Vice President/
Chief Financial Officer/
Chief Administrative Officer
DELAWARE INTERNATIONAL ADVISERS LTD.
Attest: /s/ Xxxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxxx
-------------------------- ----------------------------------
Name: Xxxx Xxxxxxxx Name: Xxxxx X. Xxxxxx
Title: Secretary Title: Managing Director/
Chief Investment Officer
Agreed to and accepted as of the day and year first above written:
DELAWARE GROUP INCOME FUNDS, INC.
for the STRATEGIC INCOME FUND
Attest: /s/ Xxxxxxxx X. Maestro By: /s/ Xxxxx X. Xxxxx
-------------------------- ----------------------------------
Name: Xxxxxxxx X. Maestro Name: Xxxxx X. Xxxxx
Title: Assistant Secretary Title: Chairman/President/
Chief Financial Officer
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