SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Voyageur Tax Free Funds, Inc.
Voyageur Intermediate Tax Free Funds, Inc.
Voyageur Insured Funds, Inc.
Voyageur Investment Trust
Voyaguer Investment Trust II
Voyaguer Mutual Funds, Inc.
Voyageur Mutual Funds II, Inc.
Voyageur Mutual Funds III, Inc.
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(Name of Registrant as Specified in its Charter)
[Insert Name]
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
[X] No fee required.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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[PRELIMINARY COPY]
VOYAGEUR TAX FREE FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
90 South Seventh Street
Minneapolis, Minnesota 55402
NOTICE OF SPECIAL JOINT MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 11, 1997
A special joint meeting of shareholders will be held at 9:00 a.m. on
Friday, April 11, 1997 at [90 SOUTH SEVENTH STREET, SUITE 4400, MINNEAPOLIS,
MINNESOTA 55402] for the following mutual funds (individually a "Fund" and
collectively the "Funds"), each of which is a series of one of the registered
investment companies listed above (individually a "Company" and collectively the
"Companies"):
VOYAGEUR TAX FREE FUNDS, INC.
Minnesota Tax Free Fund
North Dakota Tax Free Fund
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
Minnesota Limited Term Tax Free Fund
National Limited Term Tax Free Fund
VOYAGEUR INSURED FUNDS, INC.
Arizona Insured Tax Free Fund
Minnesota Insured Fund
National Insured Tax Free Fund
VOYAGEUR INVESTMENT TRUST
California Insured Tax Free Fund
Florida Insured Tax Free Fund
Florida Tax Free Fund
Kansas Tax Free Fund
Missouri Insured Tax Free Fund
New Mexico Tax Free Fund
Oregon Insured Tax Free Fund
Utah Tax Free Fund
Washington Insured Tax Free Fund
VOYAGEUR INVESTMENT TRUST II
Florida Limited Term Tax Free Fund
VOYAGEUR MUTUAL FUNDS, INC.
Arizona Tax Free Fund
California Tax Free Fund
Iowa Tax Free Fund
Idaho Tax Free Fund
Minnesota High Yield Municipal Bond Fund
National High Yield Municipal Bond Fund
National Tax Free Fund
New York Tax Free Fund
Wisconsin Tax Free Fund
VOYAGEUR MUTUAL FUNDS II, INC.
Colorado Tax Free Fund
VOYAGEUR MUTUAL FUNDS III, INC.
Aggressive Growth Fund
Growth Stock Fund
Growth and Income Fund
International Equity Fund
The meeting will be held for the following purposes:
1. For shareholders of each Company to elect a Board of Directors
or Trustees.
2. For shareholders of each Fund to approve a new Investment
Advisory Agreement, except for International Equity Fund,
National Insured Tax Free Fund, National Limited Term Tax Free
Fund, National Tax Free Fund and Growth and Income Fund.
3. For shareholders of Growth Stock Fund only, to approve a
Sub-Advisory Agreement.
4. For shareholders of each of International Equity Fund,
National Insured Tax Free Fund, National Limited Term Tax Free
Fund and National Tax Free Fund, to approve the liquidation of
their respective Fund and the distribution of such Fund's net
assets to shareholders. For each Fund, approval of the
liquidation will be considered approval of an amendment to the
articles of incorporation of such Fund's Company required to
effect the liquidation.
5. For shareholders of Growth and Income Fund, a series of
Voyageur Mutual Funds III, Inc., to approve an Agreement and
Plan of Reorganization pursuant to which all of the assets of
the Fund would be acquired by a newly formed series of VAM
Institutional Funds, Inc., also called Growth and Income Fund
("New Growth and Income Fund") and shareholders of the Fund
would become shareholders of New Growth and Income Fund. A
vote in favor of the Plan will be considered a vote in favor
of an amendment to the articles of incorporation of Voyageur
Mutual Funds III required to effect the Plan.
6. For shareholders of each Company, to ratify the Board of
Directors'/Trustees' selection of _______________ as the
independent public accountants of such Company for the current
fiscal year.
7. To transact such other business as may properly come before
the meeting.
EACH COMPANY'S BOARD OF DIRECTORS OR TRUSTEES UNANIMOUSLY RECOMMENDS
APPROVAL OF EACH ITEM LISTED ON THIS NOTICE OF SPECIAL MEETING OF SHAREHOLDERS.
Shareholders of record on February 10, 1997 are the only persons
entitled to notice of and to vote at the meeting.
Your attention is directed to the attached Proxy Statement. We hope you
can attend. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE UPCOMING MEETING,
PLEASE FILL IN, SIGN, DATE AND MAIL THE ENCLOSED PROXY OR PROXIES AS PROMPTLY AS
POSSIBLE IN ORDER TO SAVE FURTHER SOLICITATION EXPENSE. WE RESPECTFULLY ASK FOR
YOUR COOPERATION IN RETURNING YOUR PROXY PROMPTLY. A stamped return envelope is
included for your convenience. If you are present at the meeting, you may then
revoke your proxy and vote in person, as explained in the Proxy Statement in the
section entitled "SPECIAL JOINT MEETING OF SHAREHOLDERS--APRIL 11, 1997."
Dated: February 21, 1997 Thomas J. Abood
Secretary
[PRELIMINARY COPY]
PROXY STATEMENT
VOYAGEUR TAX FREE FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
SPECIAL JOINT MEETING OF SHAREHOLDERS--APRIL 11, 1997
The enclosed proxy is solicited by the Board of Directors or Trustees
(hereafter referred to as "Board of Directors") of each open-end investment
company listed above (individually a "Company" and collectively the "Companies")
in connection with a special joint meeting of shareholders of each Company to be
held on April 11, 1997, and any adjournments thereof (the "Meeting"). The series
of the Companies (individually a "Fund" and collectively the "Funds") are set
forth in the table below. The costs of solicitation, including the cost of
preparing and mailing the Notice of Meeting of Shareholders and this Proxy
Statement, will be borne by Lincoln National Corporation ("LNC") and will not be
an expense of the Funds, and the mailing will take place on approximately
February 21, 1997. Representatives of Voyageur Fund Managers, Inc. ("VFM"), the
current investment adviser of each Fund, may, without cost to the Funds, solicit
proxies on behalf of management of the Funds by means of mail, telephone or
personal calls. The address of VFM is that of the Companies as listed above. VFM
has engaged Shareholder Communications Corporation ("SCC") to assist in the
solicitation. Representatives of SCC may telephone shareholders who have not
voted, encouraging them to vote. The estimated cost of engaging SCC, all of
which will be paid by LNC and not by your Fund, is $_____.
A proxy may be revoked before the Meeting by giving written notice of
revocation to the Secretary of the applicable Company, or at the Meeting prior
to voting. Unless revoked, properly executed proxies in which choices are not
specified by the shareholders will be voted "for" each item for which no choice
is specified, in accordance with the recommendation of the applicable Company's
Board of Directors. In instances where choices are specified by the shareholders
in the proxy, those proxies will be voted or the vote will be withheld in
accordance with the shareholder's choice. With regard to the election of
directors, votes may be cast in favor or withheld; votes that are withheld will
be excluded entirely from the vote and will have no effect. Abstentions may be
specified on all proposals other than the election of directors and will be
counted as present for purposes of determining whether a quorum of shares is
present at the Meeting with respect to the item on which the abstention is
noted, and will have the same effect as a vote "against" such item. Under the
Rules of the New York Stock Exchange, if a proposal is considered
"non-discretionary," then brokers who hold Fund shares in street name for
customers are not authorized to vote on such proposal on behalf of their
customers who have not furnished the broker specific voting instructions. If a
broker returns a "non-vote" proxy, indicating a lack of authority to vote on a
proposal, then the shares covered by such non-vote shall not be counted as
present for purposes of calculating the vote with respect to such proposal. So
far as the Board of Directors is aware, no matter other than those described in
this Proxy Statement will be acted upon at the Meeting. Should any other matters
properly come before the Meeting calling for a vote of shareholders, it is the
intention of the persons named as proxies in the enclosed proxy to act upon such
matters according to their best judgment.
Only shareholders of record of each Fund on February 10, 1997, may vote
at the Meeting or any adjournment thereof. As of that date, there were issued
and outstanding common shares of each Fund (shares of beneficial interest with
respect to series of Voyageur Investment Trust and Voyageur Investment Trust II)
as follows:
Common Shares
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VOYAGEUR TAX FREE FUNDS, INC.
Minnesota Tax Free Fund ("Minnesota Fund")
North Dakota Tax Free Fund ("North Dakota Fund")
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
Minnesota Limited Term Tax Free Fund ("Minnesota Limited Term Fund")
National Limited Term Tax Free Fund ("National Limited Term Fund")
VOYAGEUR INSURED FUNDS, INC.
Arizona Insured Tax Free Fund ("Arizona Insured Fund")
Minnesota Insured Fund ("Minnesota Insured Fund")
National Insured Tax Free Fund ("National Insured Fund")
VOYAGEUR INVESTMENT TRUST
California Insured Tax Free Fund ("California Insured Fund")
Florida Insured Tax Free Fund ("Florida Insured Fund")
Florida Tax Free Fund ("Florida Fund")
Kansas Tax Free Fund ("Kansas Fund")
Missouri Insured Tax Free Fund ("Missouri Insured Fund")
New Mexico Tax Free Fund ("New Mexico Fund")
Oregon Insured Tax Free Fund ("Oregon Insured Fund")
Utah Tax Free Fund ("Utah Fund")
Washington Insured Tax Free Fund ("Washington Insured Fund")
VOYAGEUR INVESTMENT TRUST II
Florida Limited Term Tax Free Fund ("Florida Limited Term Fund")
VOYAGEUR MUTUAL FUNDS, INC.
Arizona Tax Free Fund ("Arizona Fund")
California Tax Free Fund ("California Fund")
Iowa Tax Free Fund ("Iowa Fund")
Idaho Tax Free Fund ("Idaho Fund")
Minnesota High Yield Municipal Bond Fund ("Minnesota High Yield Fund")
National High Yield Municipal Bond Fund ("National High Yield Fund")
National Tax Free Fund ("National Fund")
New York Tax Free Fund ("New York Fund")
Wisconsin Tax Free Fund ("Wisconsin Fund")
VOYAGEUR MUTUAL FUNDS II, INC.
Colorado Tax Free Fund ("Colorado Fund")
VOYAGEUR MUTUAL FUNDS III, INC.
Aggressive Growth Fund ("Aggressive Growth Fund")
Growth Stock Fund ("Growth Fund")
Growth and Income Fund ("Growth and Income Fund")
International Equity Fund ("International Fund")
Each shareholder of a Fund is entitled to one vote for each share held. None of
the matters to be presented at the meeting will entitle any shareholder to
cumulative voting or appraisal rights. A list of those persons who, to the
knowledge of Fund management, beneficially owned more than 5% of the voting
shares of any class of any of the Funds as of ________, 1997, is set forth in
Schedule 1 to this Proxy Statement.
In the event that sufficient votes are not received for the adoption of
any proposal, an adjournment or adjournments of the Meeting may be sought. Any
adjournment would require a vote in favor of the adjournment by the holders of a
majority of the shares present at the Meeting (or any adjournment thereof) in
person or by proxy. In such circumstances, the persons named as proxies will
vote in favor of any proposed adjournment.
COPIES OF EACH FUND'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS ARE
AVAILABLE TO SHAREHOLDERS UPON REQUEST. IF YOU WOULD LIKE TO RECEIVE A COPY,
PLEASE CONTACT THE FUNDS AT 90 SOUTH SEVENTH STREET, MINNEAPOLIS, MINNESOTA
55402 OR CALL (800) 553-2143 AND ONE WILL BE SENT, WITHOUT CHARGE, BY
FIRST-CLASS MAIL WITHIN THREE BUSINESS DAYS OF YOUR REQUEST.
The following table illustrates which Proposals are to be voted upon by
shareholders of a Fund:
Proposal Number
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Fund 1 2 3 4 5 6
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Aggressive Growth Fund X X X
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Arizona Insured Tax Free Fund X X X
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Arizona Tax Free Fund X X X
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California Insured Tax Free Fund X X X
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California Tax Free Fund X X X
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Colorado Tax Free Fund X X X
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Florida Insured Tax Free Fund X X X
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Florida Limited Term Tax Free Fund X X X
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Florida Tax Free Fund X X X
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Growth and Income Fund X X X
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Growth Stock Fund X X X X
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Idaho Tax Free Fund X X X
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International Equity Fund X X X
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Iowa Tax Free Fund X X X
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Kansas Tax Free Fund X X X
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Minnesota High Yield Municipal Bond Fund X X X
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Minnesota Insured Fund X X X
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Minnesota Limited Term Tax Free Fund X X X
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Minnesota Tax Free Fund X X X
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Missouri Insured Tax Free Fund X X X
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National High Yield Municipal Bond Fund X X X
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National Insured Tax Free Fund X X X
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National Limited Term Tax Free Fund X X X
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National Tax Free Fund X X X
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New Mexico Tax Free Fund X X X
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New York Tax Free Fund X X X
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North Dakota Tax Free Fund X X X
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Oregon Insured Tax Free Fund X X X
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Utah Tax Free Fund X X X
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Washington Insured Tax Free Fund X X X
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Wisconsin Tax Free Fund X X X
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BACKGROUND
INTRODUCTION
The Meeting has been called as a result of the proposed Merger, as
defined and discussed below. If the Merger is consummated, it will result in the
automatic termination of the investment advisory agreements between the Funds
and VFM, necessitating shareholder approval of new agreements. In addition,
shareholders are being asked to elect eight members to each Company's Board of
Directors, including one director from the current Boards who has been nominated
for reelection. The remaining members of the current Boards are expected to
resign immediately prior to closing of the Merger. All of the proposals on which
shareholders are being asked to vote, other than the reorganization of Growth
and Income Fund, are contingent upon consummation of the Merger. If the Merger
is not consummated, the current Boards of Directors will remain in office, the
current Investment Advisory and Sub-Advisory Agreements will remain in effect,
International Equity Fund, National Insured Tax Free Fund, National Limited Term
Tax Free Fund and National Tax Free Fund will not be liquidated and KPMG Peat
Marwick LLP will remain the Funds' independent public accountants.
THE PROPOSED MERGER
VFM currently serves as the investment adviser to each Fund and
provides the Funds with administrative, accounting, transfer agency and dividend
disbursing services. Voyageur Fund Distributors, Inc. ("VFD"), a wholly owned
subsidiary of VFM, acts as the distributor of each Fund's shares. VFM is an
indirect wholly owned subsidiary of Dougherty Financial Group, Inc. ("DFG"),
which is owned 49.83% by Michael E. Dougherty and 49.83% equally by James O.
Pohlad, Robert C. Pohlad and William M. Pohlad (the "Pohlads").
On January 15, 1997, DFG, Mr. Dougherty, and the Pohlads entered into
an Agreement and Plan of Merger with LNC (the "Merger Agreement"). The Merger
Agreement provides that a wholly owned subsidiary of LNC will be merged with and
into DFG, causing DFG to become a wholly owned subsidiary o f LNC. This
transaction is referred to herein as the "Merger." Prior to the closing date of
the Merger (the "Closing Date") a reorganization will be completed (the
"Reorganization") whereby certain assets of DFG and its subsidiaries, including
all of the assets of VFM used solely or primarily in the private accounts
investment advisory business of VFM, will be sold by DFG to certain newly
organized limited liability companies. Thus, these assets will not be acquired
by LNC in connection with the Merger.
LNC, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services industry,
including insurance and investment management. Delaware Management Company, Inc.
("DMC"), an indirect wholly owned subsidiary of LNC, and its affiliate, Delaware
International Advisers Ltd., serve as the investment advisers to the investment
companies in the Delaware Group of Investment Companies (the "Delaware Group"),
which currently includes 16 open-end funds and two closed-end funds (comprising
48 separate investment portfolios). Delaware Distributors, L.P. ("Delaware
Distributors"), also an indirect wholly owned subsidiary of LNC, serves as the
national distributor for each open-end fund in the Delaware Group. DMC through
its Delaware Investment Advisers division, Delaware International Advisers Ltd.
and certain other subsidiaries of Delaware Management Holdings, Inc. ("DMH")
also provides investment advice with respect to separately managed accounts of
institutional and other clients. DMH, through its subsidiaries, is responsible
for the management of approximately $32 billion.
Under the Merger Agreement, holders of DFG common stock will receive
LNC common stock with a value of approximately $69 million. This amount is
subject to certain adjustments, including a downward adjustment in the event
that the aggregate net assets of the Funds, other than those Funds for which
liquidation has been proposed, and certain other investment companies managed by
VFM (collectively, the "Voyageur Funds") as of the Closing Date is less than 90%
but equal to or greater than 80% of the aggregate net assets of the Voyageur
Funds as of January 14, 1997. In connection with the Reorganization, all issued
and outstanding shares of DFG common stock other than those owned by Mr.
Dougherty and the Pohlads will be redeemed and all outstanding options (other
than those held by certain optionholders receiving compensation under the Merger
Agreement) will be canceled. As a result, immediately prior to consummation of
the Merger, the issued and outstanding shares of DFG will be owned 50% by
Michael E. Dougherty, 16 2/3% by James O. Pohlad, 16 2/3% by Robert C. Pohlad
and 16 2/3% by William M. Pohlad.
The closing of the Merger (the "Closing") is subject to a number of
conditions, including a condition that Voyageur Funds which collectively
represent at least 90% of the aggregate net assets of the Voyageur Funds as of
the Closing Date will, by shareholder vote, have approved new investment
advisory agreements and, with respect to the open-end Voyageur Funds, the Boards
of Directors of such Funds shall have approved new distribution agreements. In
addition, the aggregate net assets of the Voyageur Funds as of the Closing Date
shall not be less than 80% of the aggregate net assets of the Voyageur Funds as
of January 14, 1997, and the net assets of each of Minnesota Insured Fund,
Minnesota Tax Free Fund, Florida Insured Tax Free Fund, Colorado Tax Free Fund
and Arizona Insured Tax Free Fund as of the Closing Date shall not be less than
80% of their net assets as of January 14, 1997.
CONSUMMATION OF THE MERGER
If the Merger is consummated, LNC will own indirectly all of the
outstanding voting securities of VFM, which in turn will own all of the
outstanding voting securities of VFD. Such new ownership will constitute a
change in control of VFM and VFD and will cause the current investment advisory
agreements and distribution agreements of each Fund to terminate automatically
in accordance with their terms, as required by the Investment Company Act of
1940, as amended (the "1940 Act"). Such terminations will necessitate adoption
of new agreements for the provision of investment advisory and distribution
services. Shareholder approvals of the new investment advisory agreements are
required under the 1940 Act and are proposed and described below under "Proposal
Two--Proposal to Approve New Investment Advisory Agreements."
Shareholder approvals of new distribution agreements are not required.
However, such agreements have been approved by the Board of Directors of each
Company, effective as of such approval. Each Company, on behalf of the Funds in
such Company, will enter into new distribution agreements with both VFD and
Delaware Distributors that will be identical in all material respects to such
Company's current distribution agreement. Delaware Distributors and VFD will act
as the co-principal distributors of the Funds' shares. Delaware Distributors, an
indirect wholly owned subsidiary of LNC, is the national distributor for all of
the mutual funds in the Delaware Group. Under their distribution agreements, VFD
and Delaware Distributors will receive payments pursuant to the Funds' Rule
12b-1 Plans of Distribution. The Plans of Distribution, including the Rule 12b-1
fees payable thereunder, will not change as a result of the Merger.
Each Company has also entered into an administrative services agreement
with VFM which, pursuant to its terms, will terminate automatically upon
consummation of the Merger. Under the administrative services agreements, VFM
acts as the Funds' dividend disbursing, transfer, administrative and accounting
services agent to perform dividend-paying functions, to calculate each Fund's
daily share price, to maintain shareholder records and to perform certain
regulatory and compliance related services for the Funds. Following consummation
of the Merger, each Company will enter into a shareholder services agreement
with Delaware Service Company, Inc. ("Delaware Service") pursuant to which
Delaware Service will serve as the shareholder servicing, dividend disbursing
and transfer agent for each Fund and a fund accounting agreement with Delaware
Service pursuant to which Delaware Service will serve as the accounting agent
for each Fund. Delaware Service is an indirect, wholly owned subsidiary of LNC.
In order to provide continuity in the provision of these services to the Funds,
the Merger Agreement requires Dougherty Financial Group LLC ("DFG LLC"), one of
the limited liability companies to be formed in the Reorganization discussed
above, to provide certain transition services to LNC or one of its subsidiaries
after Closing. Accordingly, upon Closing, DFG LLC will enter into a Transition
Services Agreement with DMH, an indirect parent company of Delaware Service and
a wholly owned subsidiary of LNC, pursuant to which, for a period of up to two
years following the Closing Date, DFG LLC shall provide to DMH certain specified
services which may include the following: (a) human resources, supervision,
general administrative, accounting and employee benefits; (b) fund accounting;
(c) transfer agency; (d) legal, tax and compliance; (e) support services for
brokers, wholesalers, marketing, customer support, fulfillment, securities
trading, investment management, the unit investment trust business and the
closed-end funds businesses; (f) hardware and software systems and maintenance;
and (g) third-party vendor relationships. Payments under the Transition Services
Agreement will be the responsibility of DMH and not of the Funds.
To provide continuity of management of the Funds, LNC has offered
employment contracts to Andrew McCullagh and Elizabeth Howell, which have been
accepted. Either Mr. McCullagh or Ms. Howell acts as the portfolio manager for
each of the Funds that is being asked to approve a new investment advisory
agreement other than the following: Florida Limited Term Tax Free Fund, Florida
Insured Tax Free Fund, Florida Tax Free Fund, Iowa Tax Free Fund, New York Tax
Free Fund, Wisconsin Tax Free Fund, National High Yield Municipal Bond Fund,
Growth Stock Fund and Aggressive Growth Fund. LNC has also offered employment to
and received acceptances from others involved in the investment process with Mr.
McCullagh and Ms. Howell, including assistant portfolio managers and research
analysts. In addition, Frank C. Tonnemaker, current president of VFD, has
accepted an employment contract with LNC. Mr. Tonnemaker is expected to serve in
a senior marketing role with responsibility for overseeing the transition of the
Funds' management and distribution.
PROPOSAL ONE
ELECTION OF DIRECTORS
Listed below are the nominees for director to be elected by the
shareholders of each Company. Current members of each Company's Board of
Directors are Clarence G. Frame, Thomas F. Madison, Richard F. McNamara, James
W. Nelson and Robert J. Odegard. Upon closing of the Merger, all of such
individuals other than Mr. Madison will resign, and the nominees set forth below
will take office. Such individuals have been nominated for election by the
current disinterested directors of the Companies. The election of such nominees
is contingent upon consummation of the Merger. It is intended that the enclosed
proxy will be voted for the shares represented thereby for the election of the
persons named below as directors of each Company unless such authority has been
withheld in the proxy. The term of office of each person elected will be until
the next regular meeting of shareholders or until his or her successor is duly
elected and shall qualify. Mr. Madison has been a director of each Company since
May 1, 1994. Messrs. Babich, Knerr, Longstreth, Peck and Stork and Ms. Leven are
currently directors of each investment company in the Delaware Group. Pertinent
information regarding each nominee for the past five years is set forth
following his or her name below.
Principal Occupation and Business Experience
Name and Age During Past 5 Years
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Walter P. Babich (age 69) Director and/or Trustee of the 18 investment
companies in the Delaware Group; Board
Chairman, Citadel Constructors, Inc., 1988
to present; Partner, I&L Investors, 1988 to
1991; Partner, Irwin & Leighton, 1986 to
1988.
Anthony D. Knerr (age 58) Director and/or Trustee of the 18 investment
companies in the Delaware Group; founder and
Managing Director, Anthony Knerr &
Associates, 1991 to present; founder and
Chairman of The Publishing Group, Inc., 1988
to 1990; Executive Vice President/ Finance
and Treasurer, Columbia University, 1982 to
1988; lecturer in English, Columbia
University, 1987 to 1989.
Ann R. Leven (age 56) Director and/or Trustee of the 18 investment
companies in the Delaware Group; Director of
_________ investment companies sponsored by
Aquila Management Corporation, 1985 to
present; Treasurer, National Gallery of Art,
1994 to present; Deputy Treasurer, National
Gallery of Art, 1990 to 1994; Treasurer and
Chief Fiscal Officer, Smithsonian
Institution, 1984 to 1990; Adjunct
Professor, Columbia Business School, 1975 to
1992.
W. Thacher Longstreth (age 76) Director and/or Trustee of the 18 investment
companies in the Delaware Group;
Philadelphia City Councilman, 1984 to
present; Consultant, Packard Press, 1988 to
present; President, MLW, Associates, 1983 to
present; Director, Healthcare Services
Group, 1983 to present; Director Emeritus,
Tasty Baking Company, 1991 to present;
Director, Tasty Baking Company, 1968 to
1991; Vice Chairman, The Winchell Company,
1983 to 1988.
Thomas F. Madison (age 60) Director and/or Trustee of the 16 Voyageur
investment companies since 1994; President
and CEO of MLM Partners, Inc. since 1993;
Chairman of the Board, Communications
Holdings, Inc., since 1996; previously, Vice
Chairman--Office of the CEO, The Minnesota
Mutual Life Insurance Company from February
to September 1994; President of U.S. WEST
Communications-- Markets from 1988 to 1993.
Mr. Madison currently serves on the board of
directors of Valmont Industries, Inc.
(irrigation systems and steel
manufacturing), Eltrax Systems, Inc. (data
communications integration), Minnegasco, and
Span Link Communications (software).
*Jeffrey J. Nick (age 43) President, Chief Executive Officer and
Director of Lincoln National Investment
Companies, Inc.; Managing Director, Lincoln
National UK plc, 1992 to present;
responsible for corporate planning and
development, Lincoln National Corporation,
1989 to 1992; previously, Arthur D. Little,
Inc. (management consultancy); Chase
Investment Bank (merchant banking).
Charles E. Peck (age 71) Director and/or Trustee of the 18 investment
companies in the Delaware Group;
Secretary/Treasurer, Enterprise Homes, Inc.,
1992 to present; Chairman and Chief
Executive Officer, The Ryland Group, Inc.,
1981 to 1990.
*Wayne A. Stork (age 59) Chairman, President, Chief Executive
Officer, Director and/or Trustee of 17
investment companies in the Delaware Group
(which excludes Delaware Pooled Trust,
Inc.), Delaware Management Holdings, Inc.,
DMH Corp., Delaware International Holdings
Ltd. and Founders Holdings, Inc.; Chairman
and Director of Delaware Pooled Trust, Inc.,
Delaware Distributors, Inc. and Delaware
Capital Management, Inc.; Chairman,
President, Chief Executive Officer, Chief
Investment Officer and Director of Delaware
Management Company, Inc.; Chairman, Chief
Executive Officer and Director of Delaware
International Advisers Ltd.; Director of
Delaware Service Company, Inc. and Delaware
Investment & Retirement Services, Inc.;
during the past five years, Mr. Stork has
served in various executive capacities at
different times within the Delaware
organization.
- ----------------------
* Denotes directors who will be considered to be "interested persons" (as
defined by the 1940 Act) of the Companies upon closing of the Merger.
As of January 31, 1997, the current officers and directors of each Fund
as a group beneficially owned less than 1% of each class of outstanding shares
of such Fund, except for John G. Taft who owns beneficially approximately 2% of
Voyageur Aggressive Growth Fund's Class A shares and 4% of International Equity
Fund's Class A shares.
The Board of Directors of each Company has established an Audit
Committee which consists of each of the current directors. If the nominees named
above are elected and the Merger is consummated, it is expected that the Audit
Committee will be reconstituted at the first meeting of the Boards of Directors
following the Closing. The Audit Committee met two times during the most
recently ended fiscal year for each Company. The Companies do not have
nominating or compensation committees.
The functions to be performed by the Audit Committee are to recommend
annually to the Board a firm of independent certified public accountants to
audit the books and records of each Company for the ensuing year; to monitor
that firm's performance; to review with the firm the scope and results of each
audit and determine the need, if any, to extend audit procedures; to confer with
the firm and representatives of each Company on matters concerning the Funds'
financial statements and reports including the appropriateness of its accounting
practices and of its financial controls and procedures; to evaluate the
independence of the firm; to review procedures to safeguard portfolio
securities; to review the purchase by each Company from the firm of non-audit
services; to review all fees paid to the firm; and to facilitate communications
between the firm and each Company's officers and directors.
For the most recently ended fiscal year of each Company, there were
five meetings of the Board of Directors. The only nominee for director at this
Meeting, Mr. Madison, attended all meetings of the Board of Directors and of
committees of which he was a member that were held while he was serving on the
Board of Directors or on such committee.
No compensation is paid by any Company or Fund to its officers or
directors, except that each director who is not an employee of VFM or any of its
affiliates currently receives an annual fee of $26,000 for serving as a director
of all of the open-end and closed-end investment companies for which VFM acts as
investment adviser, plus a $500 fee for each special in-person meeting attended
by such director. Set forth below is the compensation received by each current
director from each Company for its most recently ended fiscal year and the
aggregate compensation received by each such director from all closed-end and
open-end investment companies managed by VFM during the calendar year ended
December 31, 1996.
DIRECTOR
COMPENSATION ------------------------------------------------------------------------
FROM EACH COMPANY MR. FRAME MR. McNAMARA MR. MADISON MR. NELSON MR. ODEGARD
- ------------------------ ------------------------------------------------------------------------
Tax Free Funds $ $ $ $ $
Intermed. Tax Free Funds $ $ $ $ $
Insured Funds $ $ $ $ $
Mutual Funds Inc. $ $ $ $ $
Mutual Funds II $ $ $ $ $
Mutual Funds III $ $ $ $ $
Investment Trust $ $ $ $ $
Investment Trust II $ $ $ $ $
TOTAL COMPENSATION
FROM FUND COMPLEX $ $ $ $ $
After the Merger, each director who is not an employee of DMC or any of
its affiliates will receive an annual fee of $_____.
VOTE REQUIRED
EACH COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF
SUCH COMPANY VOTE IN FAVOR OF THE FOREGOING NOMINEES TO SERVE AS NEW DIRECTORS
OF SUCH COMPANY. The vote of a majority of shares of each Company represented at
the meeting and entitled to vote, provided at least a quorum (10% of the
outstanding shares) is represented in person or by proxy, is sufficient for the
election of the above nominees. Unless otherwise instructed, the proxies will
vote for the above nominees. In the event any of the above nominees are not
candidates for election at the meeting, the proxies will vote for such other
persons as the Board of Directors may designate. Nothing currently indicates
that such a situation will arise.
PROPOSAL TWO
PROPOSAL TO APPROVE NEW INVESTMENT ADVISORY AGREEMENTS
INTRODUCTION
As discussed above, the Merger will cause the current investment
advisory agreement of each Fund (individually a "Current Agreement" and
collectively the "Current Agreements") to terminate automatically in accordance
with its terms, as required by the 1940 Act. Such terminations will necessitate
adoption by each Fund of a new investment advisory agreement for the provision
of such services (individually a "New Agreement" and collectively the "New
Agreements"). Under the 1940 Act, each Fund's New Agreement must be approved by
the Fund's shareholders.
Shareholders of the following Funds are being asked to approve New
Agreements with VFM:
Arizona Fund Minnesota Insured Fund
Arizona Insured Fund Minnesota Limited Term Fund
California Fund Missouri Insured Fund
California Insured Fund New Mexico Fund
Colorado Fund North Dakota Fund
Idaho Fund Oregon Insured Fund
Kansas Fund Utah Tax Free Fund
Minnesota Fund Washington Insured Fund
Minnesota High Yield Fund
For each such Fund, the principal portfolio manager, either Andrew M.
McCullagh, Jr. or Elizabeth H. Howell, will remain unchanged. Biographical
information on Mr. McCullagh and Ms. Howell can be found below under "Executive
Officers of Voyageur Funds."
Shareholders of the following Funds are being asked to approve New
Agreements with DMC:
Aggressive Growth Fund Iowa Fund
Florida Fund National High Yield Fund
Florida Insured Fund New York Fund
Florida Limited Term Fund Wisconsin Fund
Growth Stock Fund
DMC is an indirect wholly owned subsidiary of LNC. Portfolio managers
of the Funds managed by DMC will be individuals currently employed by DMC. Thus,
these Funds will experience a change in portfolio management. However, it is
intended that Growth Stock Fund will continue to be managed by James C. King
pursuant to a sub-advisory agreement. See "Proposal Three--Proposal to Approve a
Sub-Advisory Agreement Pursuant to which Voyageur Asset Management LLC Would
Manage the Assets of Growth Stock Fund." Aggressive Growth Fund will be managed
by Edward N. Antoian and Gerald S. Frey. Florida Insured Fund, Florida Limited
Term Fund, Florida Fund, National High Yield Fund and New York Fund will be
managed by Patrick P. Coyne and Mitchell. L. Conery. Biographical information
for Messrs. Antoian, Frey, King, Coyne and Conery can be found below under
"Executive Officers of Voyageur Funds." Iowa Fund and Wisconsin Fund will be
managed by Ms. Howell.
BOARD OF DIRECTORS RECOMMENDATION
The Boards of Directors of each Company, including the disinterested
directors, voted to approve the New Agreements. For information about each
Board's deliberations and the reasons for its recommendation, please see
"Evaluation of the Merger by the Boards of Directors" near the end of this
Proposal Two.
The Boards of Directors recommend that shareholders of each Fund vote
FOR approval of such Fund's New Agreement.
COMPARISON OF NEW AGREEMENTS AND CURRENT AGREEMENTS
Except as described below, each Fund's New Agreement will contain the
same terms and conditions as are contained in such Fund's Current Agreement,
including the investment advisory fees payable by the Fund. A form of New
Agreement is attached to this Proxy Statement as Exhibit A. The following
discussion is qualified in its entirety by reference to the text of such New
Agreement. If approved by shareholders, the New Agreements will take effect upon
consummation of the Merger.
ADVISORY SERVICES. Pursuant to both the Current Agreements and the New
Agreements, either VFM or DMC, as the case may be (sometimes referred to
hereinafter as the "Adviser"), has the sole and exclusive responsibility for the
management of the respective Fund's portfolio and the making and execution of
all investment decisions for the Fund subject to the objectives and investment
policies and restrictions of the Fund and subject to the supervision of the
Company's Board of Directors; provided that under the New Agreements the Adviser
may retain one or more sub-advisers. See "Ability to Retain a Sub-Adviser"
below. Under the Current Agreements and the New Agreements the Adviser is
required to furnish, at its own expense, office facilities, equipment and
personnel for servicing the investments of each Fund. In addition, the Adviser
is required, if a Company so requests, to arrange for its officers and employees
to serve without compensation from the Funds as directors, officers or employees
of the Companies if duly elected to such positions by the shareholders or
directors of the Companies.
COMPENSATION. Investment advisory fees payable by each Fund under its
Current Agreement are identical to fees which will be payable under its New
Agreement except that, as described in the following paragraph, under certain
Current Agreements, VFM is contractually obligated to waive its advisory fee if
total Fund operating expenses exceed a certain level. As compensation for the
Adviser's services, each Fund is obligated to pay to the Adviser a monthly
investment advisory fee in the amount set forth in the table on page 12, below.
The fee is based on the average daily value of each Fund's net assets at the
close of business of each business day.
FEE AND EXPENSE LIMITATIONS. Under each Fund's Current Agreement (other
than the Current Agreements of Growth Fund, Aggressive Growth Fund and Growth
and Income Fund), VFM is contractually obligated to waive its advisory fee if
and to the extent that aggregate Fund operating expenses exceed 1% of the Fund's
average daily net assets. Fund operating expenses are defined to include, among
other expenses, the advisory fee paid to VFM under the Current Agreement, the
administrative services fee paid to VFM under the Fund's Administrative Services
Agreement and deferred organizational costs, but to exclude interest, taxes,
brokerage fees and commissions, insurance premiums on portfolio securities (with
respect to those Funds that invest in insured municipal bonds) and Rule 12b-1
plan fees. The Current Agreements of Growth Fund, Aggressive Growth Fund and
Growth and Income Fund do not include contractual expense limitation provisions.
The New Agreements will not include any contractual expense limitation
provisions. However, DMC has committed, for a period of two years following the
date of Closing, to voluntarily waive fees and/or pay Fund expenses to the same
extent, if any, as would have been necessary to comply with such contractual
provisions.
Under both the Current Agreements and the New Agreements, all costs and
expenses incurred in the operation of the Funds, to the extent not specifically
assumed by the Adviser or the Funds' distributor, are the responsibility of the
Funds.
ABILITY TO RETAIN A SUB-ADVISER. The Current Agreements provide that
VFM shall have the sole and exclusive responsibility for the management of each
Fund's investment portfolio and for making and executing all investment
decisions for each Fund. Each New Agreement authorizes the Adviser, at its
expense, to retain a sub-adviser or sub-advisers to perform some or all of the
services for which the Adviser is responsible under the New Agreement. Any
retention of a sub-adviser is subject to approval by the Board of Directors and
the shareholders of the respective Fund.
STANDARD OF CARE. The Current Agreements do not contain an explicit
standard of care. The New Agreements provide that, in the absence of willful
misfeasance, bad faith, gross negligence or a reckless disregard of its duties,
the Adviser shall not be liable to the Funds or their shareholders for any
action or omission in the course of, or connected with, rendering services under
the New Agreements or for any losses that may be sustained in the purchase,
holding or sale of any security, or otherwise.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE. The New Agreements
each provide that, subject to the primary objective of obtaining the best
available prices and execution, the Adviser may place orders with brokers or
dealers who provide brokerage and research services to the Adviser or its
advisory clients. The New Agreements also provide that, to the extent consistent
with the Rules of the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc., these orders may be placed with brokers
who sell shares of the Funds to which the Adviser provides advisory services.
The services which may be provided to the Adviser include advice, either
directly or through publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing of
analyses and reports concerning issuers, securities or industries; providing
information on economic factors and trends; assisting in determining portfolio
strategy; providing computer software and hardware used in security analyses;
and providing portfolio performance evaluation and technical market analyses.
Such services will be used by the Adviser in connection with its investment
decision-making process with respect to one or more Funds and accounts that it
manages, and need not be used, or used exclusively, with respect to the Fund or
account generating the brokerage. The New Agreements also provide that higher
commissions are permitted to be paid to broker/dealers who provide brokerage and
research services than to broker/dealers who do not provide such services if
such higher commissions are deemed reasonable in relation to the value of the
brokerage and research services provided. There are no provisions in the Current
Agreements addressing these issues. Disclosure in each Fund's current Prospectus
and Statement of Additional Information provides, however, that the Adviser may
engage in such practices.
TERM. If approved by shareholders, the New Agreements will become
effective upon consummation of the Merger and will have initial terms of two
years. Thereafter, as is also the case with the Current Agreements, each Fund's
New Agreement will continue from year to year only if approved annually (a) by
the Fund's Board of Directors 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 Fund who are not parties to the Agreement or interested persons (as
defined in the 1940 Act) of any such party, cast in person at a meeting of the
Board of Directors of the Fund called for the purpose of voting on such
approval. In the case of both the New Agreements and the Current Agreements,
each Agreement may be terminated by the Fund or by the Adviser on 60 days'
notice to the other party, and terminates automatically upon its assignment.
OTHER INFORMATION RELATED TO ADVISORY AGREEMENTS
The first table below sets forth for each Fund the date of such Fund's
Current Agreement, the date on which such Agreement was last submitted to a vote
of the shareholders of the Fund, the purpose of such submission, the rate of
compensation payable under such Agreement, advisory fees paid to and waived by
VFM for the Fund's last fiscal year and the Fund's net assets at December 31,
1996. The second table sets forth for each Fund's last fiscal year
administrative services fees paid to VFM under the Fund's Administrative
Services Agreement, commissions paid to VFD under the Fund's Distribution
Agreement, and Rule 12b-1 fees paid to VFD under the Fund's Plan of
Distribution.
Date Last Net Assets
Date of Submitted to Purpose of Rate of Advisory Advisory of Fund
Agmt Shareholders Submission Compensation* Fees Paid Fees Waived at 12/31/96
---- ------------ ---------- ------------- --------- ----------- ------------
AZ Insured 11/1/93 10/13/93 (3) 0.50% $1,119,609 $ 0 $212,922,363
AZ Tax Free 3/1/95 (4) (4) 0.50% $ 0 $ 0 $ 0
CA Insured 11/1/93 10/13/93 (3) 0.50% $ 192,101 $ 75,000 $ 37,323,194
CA Tax Free 3/1/95 (4) (4) 0.50% $ 7,369 $ 7,369 $ 1,972,477
CO Tax Free 11/1/93 9/28/94 (2) 0.50% $1,865,515 $ 0 $364,022,636
FL Ltd Term 5/2/94 (4) (4) 0.40% $ 11,429 $ 11,429 $ 4,255,243
FL Insured 11/1/93 10/13/93 (3) 0.50% $1,074,026 $ 25,000 $195,392,923
FL Tax Free 3/1/95 (4) (4) 0.50% $ 29,915 $ 29,915 $ 7,411,424
MN Ltd Term 11/1/93 10/13/93 (3) 0.40% $ 281,038 $ 0 $ 67,569,891
MN Insured 11/1/93 10/13/93 (3) 0.50% $1,518,301 $ 0 $314,820,291
MN Tax Free 11/1/93 10/13/93 (3) 0.50% $2,222,690 $ 0 $437,696,176
MN High Yield 6/3/96 (4) (4) 0.65% $ 17,203 $ 17,203 $ 9,705,551
ID Tax Free 12/1/94 (4) (4) 0.50% $ 131,410 $130,000 $ 33,451,212
IA Tax Free 11/1/93 (4) (4) 0.50% $ 217,160 $ 5,000 $ 42,352,589
KS Tax Free 11/1/93 10/13/93 (3) 0.50% $ 60,154 $ 30,000 $ 12,668,250
MO Insured 11/1/93 10/13/93 (3) 0.50% $ 290,247 $ 95,000 $ 59,885,472
NTL High Yield 11/13/96 (4) (4) 0.65% $ 140,548 $ 35,572 $ 59,192,976
NY Tax Free 11/20/96 (4) (4) 0.50% $ 17,615 $ 17,615 $ 10,351,401
NM Tax Free 11/1/93 10/13/93 (3) 0.50% $ 107,784 $ 0 $ 21,268,754
ND Tax Free 11/1/93 10/13/93 (3) 0.50% $ 175,239 $ 0 $ 34,454,124
OR Insured 11/1/93 10/13/93 (3) 0.50% $ 124,769 $ 65,000 $ 26,031,139
UT Tax Free 11/1/93 10/13/93 (3) 0.50% $ 21,935 $ 21,935 $ 4,258,007
WA Insured 11/1/93 10/13/93 (3) 0.50% $ 12,662 $ 12,662 $ 2,917,416
WI Tax Free 11/1/93 (4) (4) 0.50% $ 141,262 $ 10,000 $ 30,186,630
Agg Growth 5/16/94 (4) (4) 1.00% $ 34,256 $ 25,000 $ 5,442,223
Growth 9/1/95 8/21/95 (1) 1.00% $ 222,957 $ 25,000 $ 32,079,713
- ------------------------
* As a percentage of average daily net assets.
(1) To approve an increase in advisory fees.
(2) To ratify the Advisory Agreement.
(3) To approve a new Advisory Agreement (same terms and fees) with VFM as a
result of a change in control in the Adviser.
(4) Not submitted to public shareholders.
Commissions
Retained by
Administrative VFD under Rule 12b-1
Fees Paid Administrative Distribution Fees Paid Rule 12b-1
to VFM Fees Waived Agreement to VFD Fees Waived
------ ----------- --------- ------ -----------
AZ Insured $307,939 $ 0 $ 40,338 $ 140,267 $ 293,789
AZ Tax Free $ 35,594 $ 34,536 $ 13,217 $ 21,757 $ 2,854
CA Insured $ 85,853 $ 0 $ 14,226 $ 38,694 $ 22,641
CA Tax Free $ 20,859 $ 21,559 $ 1,641 $ 1,892 $ 811
CO Tax Free $438,237 $ 0 $ 68,666 $ 320,190 $ 500,871
FL Ltd Term $ 23,812 $ 21,512 $ 1,233 $ 4,623 $ 5,417
FL Insured $324,664 $ 0 $ 20,261 $ 14,422 $ 483,322
FL Tax Free $ 28,312 $ 30,812 $ 5,271 $ 6,210 $ 3,755
MN Ltd Term $115,484 $ 0 $ 5,306 $ 80,724 $ 124
MN Insured $353,378 $ 0 $ 33,673 $ 55,021 $ 6,996
MN Tax Free $504,689 $ 0 $ 69,682 $ 264,477 $ 8,024
MN High Yield $ 12,121 $ 13,721 $ 20 $ 7,608 $ 0
ID Tax Free $ 64,457 $ 0 $ 32,689 $ 28,358 $ 9,559
IA Tax Free $103,079 $ 0 $ 26,641 $ 9,593 $ 58,179
KS Tax Free $ 42,148 $ 0 $ 7,686 $ 11,977 $ 16,119
MO Insured $130,186 $ 0 $ 29,607 $ 50,306 $ 103,956
NTL High Yield $ 8,025 $ 0 $ 0 $ 27 $ 17,451
NY Tax Free $ 3,400 $ 5,447 $ 1 $ 288 $ 0
NM Tax Free $ 57,384 $ 0 $ 6,724 $ 4,600 $ 41,408
ND Tax Free $ 88,034 $ 0 $ 5,425 $ 2,849 $ 72,351
OR Insured $ 66,238 $ 0 $ 20,166 $ 24,373 $ 33,580
UT Tax Free $ 26,694 $ 8,065 $ 800 $ 2,499 $ 9,557
WA Insured $ 23,166 $ 21,966 $ 2,196 $ 1,938 $ 4,501
WI Tax Free $ 71,833 $ 0 $ 11,170 $ 7,264 $ 21,850
Agg Growth $ 26,121 $ 0 $ 608 $ 227 $ 0
Growth $ 80,534 $ 0 $ 6,662 $ 47,797 $ 0
Growth & Income $ 14,750 $ 10,744 $ 0 $ 30 $ 0
FEES AND EXPENSES
As discussed above, certain Current Agreements contain contractual
expense limitations. The New Agreements will not contain any such limitations.
However, DMC has committed for a period of two years following the date of the
Closing of the Merger to waive fees and/or pay Fund expenses to the same extent,
if any, as would have been necessary had such contractual expense limitations
remained in place. VFM has also undertaken in the current Prospectuses of
certain Funds to voluntarily waive fees or reimburse expenses in addition to
those that it is contractually required to waive or reimburse under the Current
Agreements. DMC has agreed that it will waive fees and/or pay Fund expenses
consistent with such Prospectus disclosed expense limitations at least through
December 31, 1997.
In addition to the contractual and prospectus imposed expense
limitations described above, VFM and VFD have, on a voluntary basis, waived
additional fees and reimbursed additional Fund expenses for certain Funds. The
amount of such voluntary fee waivers and expense reimbursements has varied from
year to year depending on VFM's and VFD's assessment of market conditions.
Senior management of VFM and VFD have reviewed with senior management of DMC,
Delaware Distributors and Delaware Service the amount of fees and expenses that
VFM and VFD expected to waive or reimburse during 1997 and the expected total
expense ratios for each Fund for 1997, and the expected total expense ratios for
each Fund for 1997, after taking into account such fee waivers and expense
reimbursements. DMC currently expects to voluntarily waive fees and/or pay Fund
expenses following the Closing and through December 31, 1997 to the extent
necessary to cause the total expense ratio for Class A of each Fund to be the
same as the total expense ratio that senior management of VFM and VFD projected
for such class of each such Fund during 1997. Expense ratios for Class B and
Class C of each Fund are expected to vary from the expense ratio for Class A by
the amount of the difference in the Rule 12b-1 plan fees payable for each class.
In accordance with DMC's standard process, it is expected that, commencing in
1998, the voluntary fee waivers and expense limitations described in this
paragraph will be reviewed on a semi-annual basis and may be adjusted or
eliminated from time to time based on factors determined by DMC, Delaware
Distributors and Delaware Service to be relevant. Notwithstanding any possible
adjustment or elimination of voluntary fee waivers or expense limitations, fees
paid to VFM or DMC for investment management services after the Closing will not
exceed those set forth in the New Agreements being considered for approval at
the Meeting unless shareholder approval is obtained. Nor will Rule 12b-1 Plan
payments for each class of the Fund exceed the levels set forth in the Funds'
existing Rule 12b-1 Plans, without shareholder approval.
EVALUATION OF THE MERGER BY THE BOARDS OF DIRECTORS
On January 15, 1997, the Boards of Directors of the Companies were
informed by VFM that DFG had entered into the Merger Agreement. After such
notification, the Boards were advised by counsel to the Funds regarding their
fiduciary obligations and the nature and extent of the information that they
should consider requesting in order to evaluate the New Agreements and the
potential impact of the Merger on the Funds and their shareholders. A special
meeting of the Boards was held on January 28, 1997, at which meeting the Boards
met with various executive officers of LNC, DMC, Delaware Distributors and
Delaware Services ("DMH representatives"). These individuals presented to Board
members background information on LNC, information on DMC, including its
experience in municipal bond fund, fixed income fund and equity fund management,
and the structure of and rationale behind the proposed Merger. They also
discussed with Board members the organizational continuity that would follow the
Merger, noting in particular that the majority of the Funds would continue to be
managed by their current portfolio managers. They also discussed the
capabilities of Delaware Distributors and Delaware Service and described the
Transition Services Agreement referred to above that was designed to help
provide continuity with respect to shareholder servicing, fund accounting and
dividend disbursing and transfer agency services. DMH representatives summarized
other benefits that the Merger, in their opinion, could bring to Fund
shareholders, including benefits in the areas of customer service and fund
accounting, improved distribution as a result of the strength of Delaware
Distributors, and access through a net asset value exchange privilege to all
open-end mutual funds in the Delaware Group.
At the meeting, the Boards appointed a special committee made up of
disinterested directors (the "Special Committee") to further consider and make
recommendations to the Boards as to the appropriateness of the proposed
transactions. Those directors who are members of the Special Committee are James
W. Nelson and Thomas F. Madison. On February 5, 1997, the Special Committee
travelled to DMH's headquarters and met with senior management representatives
of DMC, Delaware Distributors and Delaware Service to review various aspects of
the proposed Merger, the background of DMC and its affiliates, DMC's operational
capabilities and compliance functions and future plans for the Funds. The
Special Committee also met with outside counsel to the funds in the Delaware
Group, a representative of Ernst & Young LLP, the independent public accountants
to the funds in the Delaware Group, proposed portfolio managers for some of the
Funds and with certain nominees to the Funds' Boards.
At a meeting on February 7, 1997, the Boards of Directors of the Funds
met to review with the Special Committee the findings of such committee. The
Boards also met with senior management representatives of DMC, Delaware
Distributors and Delaware Service and reviewed substantial additional
information, including information regarding the following points: (a) the
structure of the Merger; (b) the performance and abilities of DMC, including
performance information for funds in the Delaware Group; (c) benefits of the
Merger to Fund shareholders; (d) Fund expenses following the transaction; (e)
proposed staffing and personnel relative to the Funds; (f) organizational style;
(g) the financial condition of LNC and its affiliates; (h) the fact that
consolidations of the Funds currently are not being considered; (i) anticipated
changes in Fund officers and counsel; (j) the compliance philosophy and record
of DMC and its affiliates; (k) distribution, shareholder servicing and fund
accounting; and (l) pro forma profitability information (in connection with
providing advisory, distribution and other services to the Funds) for DMC,
Delaware Distributors and Delaware Service, assuming consummation of the Merger.
A final meeting of the Boards was held on February 14, 1997 for the
purpose of approving the Funds' New Agreements. At such meeting, each Company's
Board recommended that the shareholders of each Fund that is a series of such
Company approve the Fund's New Agreement, to become effective as of the closing
of the Merger. During its deliberations the Board noted, in particular, the
following:
* Each Fund's New Agreement contains substantially the same
material terms and conditions as are contained in the Fund's
Current Agreement except that, as discussed above, the New
Agreements do not contain contractual expense limitation
provisions and they allow the Adviser to retain one or more
sub-advisers.
* DMC has committed, for a period of two years following the
date of Closing, to voluntarily waive fees and/or pay Fund
expenses to the same extent, if any, as would have been
necessary to comply with the contractual expense limitations
in the Current Agreements.
* The Funds will not bear any costs or expenses in connection
with the Merger, including the costs of this proxy
solicitation.
* No change in any Fund's investment objectives or fundamental
policies are contemplated in connection with the Merger.
* The Merger is expected to result in a number of benefits to
shareholders, including access through a net asset value
exchange privilege to all of the open-end mutual funds in the
Delaware Group.
* The Merger is not expected to cause any change in the
investment personnel managing the majority of the Funds.
The Board also considered Section 15(f) of the 1940 Act during its
deliberations. Section 15(f) provides a "safe harbor" from the 1971 case of
ROSENFELD V. BLACK, in which the U.S. Court of Appeals for the Second Circuit
held that an investment adviser is prohibited from benefitting financially in
connection with the sale or assignment of its advisory office to another
investment adviser. Under the ROSENFELD analysis, any compensation received by
an investment adviser or an affiliate thereof in connection with the transfer or
assignment of an investment advisory agreement arguably would be prohibited if
all or any portion of such compensation constitutes consideration for the
assistance by such investment adviser or affiliate thereof in facilitating the
transfer of the investment advisory office to the successor adviser. The Section
15(f) safe harbor is available if two conditions are met. First, for a period of
three years after the transaction at least 75% of the board members of the
investment company must not be "interested persons" (within the meaning of the
1940 Act) of the new or predecessor investment adviser. The Board of Directors
which shareholders are being asked to elect in Proposal One, above, consists of
eight directors, two of whom, Jeffrey J. Nick and Wayne A. Stork, are interested
persons of LNC, and none of whom are interested persons of VFM. Accordingly, the
composition of the proposed Board of Directors would be in compliance with this
provision of Section 15(f). Second, an "unfair burden" must not be imposed upon
the investment company as a result of such transaction or any express or implied
terms, conditions or understandings applicable thereto. The term "unfair burden"
is defined in Section 15(f) to include any arrangement during a two-year period
after the transaction whereby the investment adviser, or any interested person
of any such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its shareholders (other
than fees for bona fide investment advisory or other services) or from any
person in connection with the purchase or sale of securities or other property
to, from or on behalf of the investment company (other than bona fide ordinary
compensation as principal underwriter for such investment company). In
connection therewith, LNC represented to the Board that it will use its best
efforts to assure that the Funds do not execute any portfolio transactions
through an affiliate of LNC for a period of at least two years following
consummation of the Merger.
LNC has represented in the Merger Agreement that neither LNC nor any of
its affiliates has any express or implied understanding or arrangement which
would impose an unfair burden on any of the Funds or would in any way violate
Section 15(f) of the 1940 Act as a result of the transactions contemplated by
the Merger Agreement.
VOTE REQUIRED
THE BOARDS OF DIRECTORS RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE
IN FAVOR OF APPROVAL OF SUCH FUND'S NEW AGREEMENT. Approval of the proposal for
a Fund requires the favorable vote of a majority of the outstanding shares of
such Fund, as defined in the 1940 Act, which means the lesser of the vote of (a)
67% of the shares of the Fund present at a meeting where more than 50% of the
outstanding shares are present in person or by proxy, or (b) more than 50% of
the outstanding shares of the Fund. Unless otherwise instructed, the proxies
will vote to approve the New Agreements.
PROPOSAL THREE
PROPOSAL TO APPROVE A SUB-ADVISORY AGREEMENT
PURSUANT TO WHICH VOYAGEUR ASSET MANAGEMENT LLC
WOULD MANAGE THE ASSETS OF GROWTH STOCK FUND
THE PROPOSED SUB-ADVISORY AGREEMENT
As set forth in Proposal Two, shareholders of Growth Stock Fund are
being asked to approve a new investment advisory agreement with DMC. DMC
believes that Growth Stock Fund is an appropriate addition to the Delaware
Group, since it is not duplicative of any of the Delaware Group's current funds.
However, DMC does not believe that it currently has adequate resources to manage
this type of Fund. Therefore, DMC proposed that the Board of Directors approve a
sub-advisory agreement (the "Sub-Advisory Agreement") between DMC and Voyageur
Asset Management LLC ("VAM LLC"). It is expected that VAM LLC will be a wholly
owned subsidiary of DFG LLC formed as a part of the Reorganization. See
"Background." After the Merger, VAM LLC is expected to conduct the private
account investment advisory business formerly conducted by VFM. The current
portfolio manager for Growth Stock Fund, James C. King, will be an employee of
VAM LLC following the Merger and, if the proposed Sub-Advisory Agreement is
approved, will continue to act as Growth Stock Fund's portfolio manager after
the Merger. Mr. King was a director of VFM and VFD from 1993 through 1995 and
has been a Senior Equity Portfolio Manager of VFD since 1990. He has over 30
years of investment experience. The Board of Directors of Growth Stock Fund has
approved, and recommends that Growth Stock Fund shareholders approve, the
Sub-Advisory Agreement. If approved by shareholders, the Sub-Advisory Agreement
would be effective upon closing of the Merger. The form of Sub-Advisory
Agreement is attached as Exhibit B to this Proxy Statement. The following
discussion is qualified in its entirety by reference to the text of the
Sub-Advisory Agreement.
Under the terms of the Sub-Advisory Agreement, and subject to the
supervision of DMC, VAM LLC will direct the investment of Growth Stock Fund's
assets and will be responsible for the formulation and implementation of a
continuing program for the management of the Fund's assets and resources. VAM
LLC will make all determinations with respect to the investment of the assets of
Growth Stock Fund and will take such steps as may be necessary to implement the
determinations, including the placement of purchase and sale orders on behalf of
the Fund.
The Sub-Advisory Agreement provides that DMC shall pay VAM LLC a
monthly management fee at an annual rate of [0.__%] of Growth Stock Fund's
average daily net assets during each month. VAM LLC's sub-advisory fee will be
paid by DMC, not by Growth Stock Fund.
The Sub-Advisory Agreement will terminate automatically in the event of
its assignment. In addition, the Sub-Advisory Agreement is terminable at any
time, without penalty, by the Board of Directors of Growth Stock Fund or by a
vote of a majority of the Fund's outstanding voting securities on 60 days'
written notice to DMC and VAM LLC, by DMC on 60 days' written notice to VAM LLC,
or by VAM LLC on 60 days' written notice to the DMC. The Sub-Advisory Agreement
shall have an initial term of two years and thereafter shall continue in effect
only so long as such continuance is specifically approved at least annually by
either the Board of Directors of Growth Stock Fund, or by a vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of the Fund,
provided that, in either event, such continuance is also approved by a vote of a
majority of the directors who are not parties to such Agreement, or interested
persons of such parties, cast in person at a meeting called for the purpose of
voting on such approval.
THE BOARD'S CONSIDERATIONS
The Sub-Advisory Agreement was approved by the Growth Stock Fund's
Board of Directors, subject to shareholder approval, at a meeting called for the
purpose of voting on the Sub-Advisory Agreement held February 14, 1997. Prior to
approving the Sub-Advisory Agreement, the Board considered a variety of factors,
including: (a) the historical performance of Growth Stock Fund under current
management; (b) the nature, quality and extent of the services proposed to be
provided by VAM LLC pursuant to the Sub-Advisory Agreement; (c) DMC's role in
supervising VAM LLC in its capacity as sub-adviser to DMC; and (d) the
reasonableness of the proposed fee allocation between DMC and VAM LLC in light
of the reduced investment role but continued overall responsibility of DMC.
VOTE REQUIRED
THE BOARD OF DIRECTORS OF GROWTH STOCK FUND RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE TO APPROVE THE PROPOSED SUB-ADVISORY AGREEMENT.
Adoption of the proposal requires the favorable vote of a majority of the
outstanding shares of the Fund, as defined in the 1940 Act, which means the
lesser of the vote of (a) 67% of the shares of the Fund present at a meeting
where more than 50% of the outstanding shares are present in person or by proxy,
or (b) more than 50% of the outstanding shares of the Fund. Unless otherwise
instructed, the proxies will vote for the approval of the proposed Sub-Advisory
Agreement.
PROPOSAL FOUR
PROPOSAL TO APPROVE THE LIQUIDATION OF
INTERNATIONAL EQUITY FUND, NATIONAL INSURED TAX FREE FUND,
NATIONAL LIMITED TERM TAX FREE FUND
AND NATIONAL TAX FREE FUND
INTRODUCTION
On February 7, 1997, the Boards of Directors of International Equity
Fund, National Insured Tax Free Fund, National Limited Term Tax Free Fund and
National Tax Free Fund (individually a "Liquidating Fund" and collectively the
"Liquidating Funds") considered the recommendation of VFM that such Funds be
liquidated and terminated. A Plan of Liquidation and Termination for each such
Fund (individually a "Plan" and collectively the "Plans") was subsequently
adopted by the Boards on February 14, 1997, subject to shareholder approval. A
copy of the form of Plan is attached as Exhibit C to this Proxy Statement. If
the Plan is approved by a Liquidating Fund's shareholders, the portfolio
securities and other assets of such Fund will be sold, creditors will be paid or
reserves for such payments established, and the net proceeds of such sales will
be distributed to shareholders in cash, pro rata in accordance with their
shareholdings. With respect to each Fund, approval of the Plan will be
considered approval of an amendment to the articles of incorporation of such
Fund's Company required to effect the Plan.
BACKGROUND
In connection with the Merger described at the beginning of this Proxy
Statement under "Background," LNC and VFM determined that neither VFM nor DMC
would act as investment adviser to the Liquidating Funds after consummation of
the Merger. LNC's and VFM's determination was based primarily upon the small
size of each of the Liquidating Funds, the fact that each of the Liquidating
Funds is duplicative of a fund offered within the Delaware Group, and the cost
of and amount of time available to complete a merger of each Liquidating Fund
into its corresponding Delaware Group fund prior to or at the time of Closing.
The Liquidating Funds had the following net asset values as of December 31,
1996:
Fund Net Assets
---- ----------
International Equity Fund $ 2,560,777
National Insured Tax Free Fund $ 32,030,258
National Limited Term Tax Free Fund $ 1,184,425
National Tax Free Fund $ 3,737,821
Shareholders of the Liquidating Funds will be given the opportunity to
invest their redemption or liquidation proceeds in Class A shares of any
open-end mutual fund in the Delaware Group (including the Voyageur Funds that
become members of the Delaware Group as a result of the Merger) at net asset
value, without the imposition of any front-end sales charge, for a period of one
year following the liquidation of the shareholder's Fund.
THE BOARDS' CONSIDERATIONS
At the meeting of the Boards of Directors held on February 7, 1997, VFM
reviewed LNC's conclusion with the Boards. VFM noted that VAM LLC also would not
be in a position to manage the Liquidating Funds after the Merger, since VAM LLC
will be retaining generally only those assets related to the management of
private accounts and certain non-retail mutual funds. VFM also expressed its
opinion that, given the small size of each of the Liquidating Funds, it would be
difficult to find an investment adviser interested in managing such Funds. VFM
then reviewed the tax consequences of a liquidation with the Boards, explaining
that the payment of liquidation distributions will be a taxable event to
shareholders. Finally, VFM informed the Boards that shareholders of the
Liquidating Funds would be given the opportunity to invest their redemption or
liquidation proceeds in Class A shares of any open-end mutual fund in the
Delaware Group (including the Voyageur Funds that become members of the Delaware
Group) at net asset value, without the imposition of any front-end sales charge.
On February 14, 1997, the Boards of Directors, including all of the
independent directors, unanimously approved for each Liquidating Fund the Plan
and determined to recommend that shareholders of each Liquidating Fund approve
its respective Plan.
If shareholders of a Fund do not approve liquidation, the Board of
Directors will meet to determine an alternative course of action. Liquidation of
the Funds is contingent upon consummation of the Merger.
SUMMARY OF THE PLANS AND RELATED TRANSACTIONS
For each Liquidating Fund, such Fund's Plan will become effective upon
consummation of the Merger (the "Effective Date"). From the Effective Date
through the completion of liquidation, VAM LLC will act as the investment
adviser for each Liquidating Fund. As soon as practicable after the Effective
Date of a Liquidating Fund's Plan, such Fund will complete the sale of its
portfolio securities in order to convert its assets to cash. After the Effective
Date, such Fund will not engage in any business activity except for the purpose
of winding up its business and affairs, preserving the value of its assets and
distributing such assets to shareholders after the payment to (or reservation of
assets for payment to) all creditors of the Fund. All contracts entered into by
or on behalf of a Liquidating Fund will terminate upon consummation of the
transactions contemplated by such Fund's Plan. After the Effective Date of a
Liquidating Fund's Plan, and in any event within 60 days thereafter, such Fund
will mail to each shareholder of record who has not redeemed such shareholder's
shares a liquidating distribution equal to the shareholder's proportionate
interest in the remaining assets of the Fund and information concerning the
sources of the liquidating distribution. Shareholders of the Liquidating Funds
may reinvest their redemption proceeds or the proceeds of their liquidating
distributions in Class A shares of any of the mutual funds in the Delaware Group
at net asset value without the imposition of any front-end sales charge.
After the distribution of assets to shareholders, each Liquidating Fund
will be terminated in accordance with its Plan and applicable provisions under
Minnesota law. The Plans provide that the Boards of Directors may authorize such
variations from, or amendments to, the provisions of the Plans as may be
necessary or appropriate to effect the complete liquidation and termination of
the Liquidating Funds in accordance with the purposes to be accomplished by the
Plans.
The adoption of the Plan by a Liquidating Fund will not affect the
right of shareholders of such Fund to redeem shares of such Fund at their then
current net asset value per share any day prior to the day the liquidating
distribution is made.
FEDERAL INCOME TAX CONSEQUENCES
PAYMENT BY A LIQUIDATING FUND OF LIQUIDATION DISTRIBUTIONS TO
SHAREHOLDERS WILL BE A TAXABLE EVENT. BECAUSE THE INCOME TAX CONSEQUENCES FOR A
PARTICULAR SHAREHOLDER MAY VARY DEPENDING ON INDIVIDUAL CIRCUMSTANCES, EACH
SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISER CONCERNING THE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF RECEIPT OF A LIQUIDATING
DISTRIBUTION.
Each Liquidating Fund currently qualifies, and intends to continue to
qualify through the end of the liquidation period, for treatment as a regulated
investment company under the Internal Revenue Code of 1986, as amended, so that
it will be relieved of federal income tax on any investment company taxable
income or net capital gain (the excess of net long-term capital gain over net
short-term capital loss) from the sale of its assets. The payment of liquidation
distributions will be a taxable event to shareholders. Each shareholder will be
viewed as having sold his or her Fund shares for an amount equal to the
liquidation distribution(s) he or she receives. Each shareholder will recognize
gain or loss in an amount equal to the difference between (a) the shareholder's
adjusted basis in the Fund shares, and (b) such liquidation distribution(s). The
gain or loss will be capital gain or loss to the shareholder if the Fund shares
were capital assets in the shareholder's hands and generally will be long-term
if the Fund shares were held for more than one year before the liquidation
distribution is received.
Immediately prior to declaring the liquidating distribution, National
Insured Tax Free Fund, National Limited Term Tax Free Fund and National Tax Free
Fund will declare a dividend of all current but undistributed tax-exempt
interest income. Shareholders will be entitled to treat this amount as an
exempt-interest dividend, I.E., as tax-exempt interest income in their hands.
This tax-exempt dividend will be paid at the same time as the liquidating
distribution, and shareholders will be notified of the portion of the total
distribution that constitutes the tax-exempt interest dividend. The balance of
the liquidating distribution will be treated as an amount realized from the sale
of Fund shares, as discussed above.
Each Liquidating Fund generally will be required to withhold tax at the
rate of 31% with respect to any liquidation distribution paid to individuals and
certain other non-corporate shareholders who fail to certify to the Fund that
their social security number or taxpayer identification number provided to the
Fund is correct and that the shareholder is not subject to backup withholding.
The foregoing summary is generally limited to the material federal
income tax consequences to shareholders who are individual United States
citizens and who hold shares as capital assets. It does not address the federal
income tax consequences to shareholders who are corporations, trusts, estates,
tax-exempt organizations, pension plans, Individual Retirement Accounts or
non-resident aliens. This summary does not address state or local tax
consequences. Shareholders are urged to consult their own tax advisers to
determine the extent of the federal income tax liability they would incur as a
result of receiving a liquidation distribution, as well as any tax consequences
under any applicable state, local or foreign laws.
VOTE REQUIRED
EACH LIQUIDATING FUND'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE IN FAVOR OF APPROVAL OF SUCH FUND'S PLAN. For each Liquidating
Fund, the affirmative vote of a majority of the outstanding shares of the Fund
is required to approve the Plan.
PROPOSAL FIVE
PROPOSAL FOR GROWTH AND INCOME FUND
TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION
INTRODUCTION
Shareholders of Growth and Income Fund (the "Fund") are being asked to
consider and vote upon an Agreement and Plan of Reorganization, dated as of
________, 1997 (the "Plan"), by and between Voyageur Mutual Funds III, Inc.
("Voyageur III"), on behalf of the Fund, and VAM Institutional Funds, Inc. ("VAM
Funds"), on behalf of a newly formed series of VAM which is also called Growth
and Income Fund (the "New Fund"). Pursuant to the Plan, all of the assets of the
Fund would be acquired by New Fund (which, prior to such time, would have no
assets) and shareholders of the Fund would become shareholders of New Fund and
would receive shares in New Fund equal to the value of their holdings in the
Fund on the date of such transaction (the transactions described above are
referred to as the "Fund Reorganization"). The shares to be issued by New Fund
pursuant to the Fund Reorganization ("New Fund Shares") will be issued at net
asset value without a sales charge. A vote in favor of the Plan will be
considered a vote in favor of an amendment to the articles of incorporation of
Voyageur III required to effect the Fund Reorganization as contemplated by the
Plan. The Fund Reorganization is not contingent upon consummation of the Merger.
BACKGROUND
The Fund is currently a series of Voyageur III. Aggressive Growth Fund,
Growth Stock Fund and International Equity Fund are also series of Voyageur III.
As described above, in connection with the Merger, shareholders of Aggressive
Growth Fund and Growth Stock Fund are being asked to approve new investment
advisory agreements with DMC, and shareholders of International Equity Fund are
being asked to approve such Fund's liquidation. In addition, shareholders of
each series of Voyageur III (including the Fund) are being asked to approve a
new Board of Directors for Voyageur III that will consist principally of
individuals who currently serve on the Board of Directors of the investment
companies in the Delaware Group.
Shareholders of the Fund are not being asked to approve a new
investment advisory agreement with DMC. After the Merger, the management of the
Fund will remain essentially unchanged with the Fund continuing to be
sub-advised by Segall Bryant & Hamill ("Segall Bryant"). See "Comparison of Fund
and New Fund" below. Unlike Aggressive Growth Fund and Growth Stock Fund, the
Fund will not become a part of the Delaware Group. For this reason, shareholders
are being asked to approve the Plan. The Plan will in essence cause the Fund to
become, as the New Fund, a series of a different corporate entity, VAM Funds.
VAM Funds will have the same Board of Director as Voyageur III currently has and
will not be affiliated with LNC. The Plan will not result in any other material
changes to shareholders.
THE PLAN
The terms and conditions under which the Fund Reorganization would be
consummated are set forth in the Plan and are summarized below. This summary is
qualified in its entirety by reference to the Plan, a copy of which is attached
as Exhibit D to this Proxy Statement.
The Plan provides that (a) the Fund will transfer all of its assets,
including portfolio securities, cash, cash equivalents, securities, commodities,
futures and interest receivables, to New Fund on the Closing Date in exchange
for the assumption by New Fund of all of the Fund's liabilities, including all
expenses, costs, charges and reserves, as reflected on an unaudited statement of
assets and liabilities of the Fund prepared by the Treasurer of Voyageur III as
of the Valuation Date in accordance with generally accepted accounting
principles consistently applied from the prior audited period, and the delivery
of New Fund Shares; and (b) such New Fund Shares will be distributed to the
shareholders of the Fund on the Closing Date or as soon as practicable
thereafter and outstanding Fund shares will be canceled and retired. The
distribution of New Fund Shares and the cancellation and retirement of
outstanding Fund shares is to be accomplished under the Plan by amending the
articles of incorporation of Voyageur III in the manner provided in the
amendment set forth in Exhibit 1 to the Plan.
For technical reasons, certain of the Fund's existing investment
limitations may be deemed to preclude the Fund from consummating the Fund
Reorganization to the extent that the Fund Reorganization would involve the Fund
holding all of its assets as shares of New Fund until such shares are
distributed to the Fund's shareholders. By approving the Plan, the Fund's
shareholders will be deemed to have agreed to waive each of these limitations.
The number of New Fund Shares to be delivered to the Fund will have an
aggregate net asset value equal to the value of the Fund assets acquired by New
Fund (net of the liabilities assumed by New Fund); these values will be
calculated as of the close of business of the New York Stock Exchange on a
business day not later than the fifth business day following the receipt of the
requisite approval of the Plan by the shareholders of the Fund or at such other
time as the Fund and New Fund may agree (the "Valuation Date"). These New Fund
Shares will be distributed to the former Fund shareholders, with each such
shareholder receiving New Fund Shares with a value equal to the value of their
holdings in the Fund.
New Fund will cause its transfer agent to credit and confirm an
appropriate number of New Fund Shares to each Fund shareholder. Neither the Fund
nor New Fund issues stock certificates.
The Closing Date will be 5:00 p.m., Eastern Time, on the Valuation
Date, or at such other time as the Fund and New Fund may agree. The consummation
of the Fund Reorganization is contingent upon the approval of the Plan by the
shareholders of the Fund and the receipt of the other opinions and certificates
set forth in Sections 6, 7 and 8 of the Plan and the occurrence of the events
described in those Sections, certain of which may be waived by the Fund or New
Fund. The Plan may be amended in any mutually agreeable manner, except that no
amendment may be made subsequent to the Meeting which would detrimentally affect
the value of the New Fund Shares to be distributed. LNC will bear all direct
costs associated with preparation, printing, filing and proxy solicitation
expenses incurred in connection with obtaining requisite shareholder approval of
the Fund Reorganization. In addition, VFM will pay any unamortized
organizational expenses on the books of the Fund immediately prior to the Fund
Reorganization.
The Plan may be terminated and the Fund Reorganization abandoned at any
time, before or after approval by the Fund's shareholders, by mutual consent of
the Fund and New Fund. In addition, either party may terminate the Plan upon the
occurrence of a material breach of the Plan by the other party or if, by
December 31, 1997, any condition set forth in the Plan has not been fulfilled or
waived by the party entitled to its benefits.
Shareholders of the Fund will continue to be able to redeem their
shares at net asset value next determined after receipt of the redemption
request until the close of business on the business day next preceding the
Closing Date. Redemption requests received by the Fund thereafter will be
treated as requests for redemption of shares of New Fund.
TAX ASPECTS OF THE REORGANIZATION
It is intended that the Reorganization will qualify for federal income
tax purposes as a tax-free reorganization under Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that, for federal
income tax purposes, no income, gain or loss will be recognized by the Fund's
shareholders. The Fund has not asked, nor does it plan to ask, the Internal
Revenue Service to rule on the tax consequences of the Reorganization.
As a condition to the closing of the Fund Reorganization, the two funds
will receive an opinion from Dorsey & Whitney LLP, counsel to the funds, based
in part on certain representations to be furnished by each fund, substantially
to the effect that the federal income tax consequences of the Fund
Reorganization will be as follows:
(i) the Fund Reorganization will constitute a reorganization
within the meaning of Section 368(a)(1)(F) of the Code, and New Fund
and the Fund each will qualify as a party to the Fund Reorganization
under Section 368(b) of the Code;
(ii) Fund shareholders will recognize no income, gain or loss
upon receipt, pursuant to the Fund Reorganization, of New Fund shares.
Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of the Fund
which are distributed by the Fund prior to the Fund Reorganization;
(iii) the tax basis of New Fund shares received by each Fund
shareholder pursuant to the Reorganization will be equal to the tax
basis of the Fund shares exchanged therefor;
(iv) the holding period of New Fund shares received by each
Fund shareholder pursuant to the Reorganization will include the period
during which the Fund shareholder held the Fund shares exchanged
therefor, provided that the Fund shares were held as a capital asset on
the date of the Fund Reorganization;
(v) the Fund will recognize no income, gain or loss by reason
of the Fund Reorganization;
(vi) New Fund will recognize no income, gain or loss by reason
of the Fund Reorganization;
(vii) the tax basis of the assets received by the Fund
pursuant to the Fund Reorganization will be the same as the basis of
those assets in the hands of the Fund immediately prior to the Fund
Reorganization;
(viii) the holding period of the assets received by New Fund
pursuant to the Fund Reorganization will include the period during
which such assets were held by the Fund; and
(ix) New Fund will succeed to and take into account the
earnings and profits, or deficit in earnings and profits, of the Fund
immediately prior to the Fund Reorganization.
The foregoing advice is based in part upon certain representations
furnished by the Fund, VFM and certain 5% shareholders of the Fund, of which two
principal ones are: (a) immediately following consummation of the Fund
Reorganization, the shareholders of the Fund will own all of the outstanding
stock of the New Fund and will own such stock solely by reason of their
ownership of stock of the Fund immediately prior to the Fund Reorganization; and
(b) there is no plan or intention on the part of shareholders of the Fund who
own 5% or more of the shares of the Fund and, to the best knowledge of
management of the Fund, there is no plan or intention on the part of the
remaining shareholders of the Fund to sell, exchange or otherwise dispose of any
of the shares of the New Fund stock received in the Fund Reorganization.
SHAREHOLDERS OF THE FUND SHOULD CONSULT THEIR TAX ADVISORS REGARDING
THE EFFECT, IF ANY, OF THE PROPOSED FUND REORGANIZATION IN LIGHT OF THEIR
INDIVIDUAL CIRCUMSTANCES. SINCE THE FOREGOING DISCUSSION RELATES ONLY TO THE
FEDERAL INCOME TAX CONSEQUENCES OF THE FUND REORGANIZATION, SHAREHOLDERS OF THE
FUND SHOULD CONSULT THEIR TAX ADVISORS AS TO STATE AND LOCAL TAX CONSEQUENCES,
IF ANY, OF THE FUND REORGANIZATION.
DISSENTERS' RIGHTS
Pursuant to Sections 302A.471 and 302A.473 of the Minnesota Business
Corporation Act (the "MBCA Sections"), record holders of Fund shares are
entitled to assert dissenters' rights in connection with the Fund Reorganization
and obtain payment of the "fair value" of their shares, provided such
shareholders comply with the requirements of the MBCA Sections. NOTWITHSTANDING
THE PROVISIONS OF THE MBCA SECTIONS, THE DIVISION OF INVESTMENT MANAGEMENT OF
THE COMMISSION HAS TAKEN THE POSITION THAT ADHERENCE TO STATE APPRAISAL
PROCEDURES BY A REGISTERED INVESTMENT COMPANY ISSUING REDEEMABLE SECURITIES
WOULD CONSTITUTE A VIOLATION OF RULE 22c-1 UNDER THE 1940 ACT. THIS RULE
PROVIDES THAT NO OPEN-END INVESTMENT COMPANY MAY REDEEM ITS SHARES OTHER THAN AT
NET ASSET VALUE NEXT COMPUTED AFTER RECEIPT OF A TENDER OF SUCH SECURITY FOR
REDEMPTION. IT IS THE VIEW OF THE DIVISION OF INVESTMENT MANAGEMENT THAT RULE
22c-1 PREEMPTS APPRAISAL PROVISIONS IN STATE STATUTES.
DESCRIPTION OF SHARES
Shares of New Fund to be issued pursuant to the Plan will, when issued,
be fully paid and nonassessable by New Fund and transferable without
restrictions and will have no preemptive or conversion rights.
COMPARISON OF FUND AND NEW FUND
INVESTMENT ADVISER AND SUB-ADVISER. VAM, on behalf of New Fund, will
enter into an investment advisory agreement with VAM LLC. The terms of such
advisory agreement will be identical to the terms of the Fund's current
investment advisory agreement with VFM. As described above, prior to the Merger
DFG will complete a reorganization whereby certain assets of DFG and its
subsidiaries, including certain assets of VFM, will be sold by DFG to certain
newly organized limited liability companies, including VAM LLC. These limited
liability companies will not be acquired by LNC in the Merger. VAM LLC will be
ultimately controlled by the same individuals who currently control VFM, Michael
E. Dougherty, James O. Pohlad, Robert C. Pohlad and William M. Pohlad. It is
expected that those individuals who currently serve as the principal executive
officer and the directors of VFM will, with the exception of Frank Tonnemaker,
serve in such capacities with VAM LLC after the merger. See "Supplemental
Information about Voyageur Fund Managers, Inc." VAM LLC in turn will enter into
a sub-advisory agreement with Segall Bryant &Hamill ("Segall Bryant"), the
Fund's current sub-adviser, containing identical terms to the current
sub-advisory agreement between VFM and Segall Bryant. Ralph Segall, Managing
Director of Segall Bryant, who is primarily responsible for the day-to-day
management of the Fund's portfolio, will continue to act in such capacity for
New Fund.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The investment
objectives, policies and restrictions of New Fund will be identical to those of
the Fund.
DIRECTORS AND EXECUTIVE OFFICERS. As mentioned above, the Directors of
VAM Funds are the same as the current Directors of Voyageur III. The officers of
VAM Funds are the same individuals as listed below under "Executive Officers of
Voyageur Funds." However, Mr. McCullagh and Ms. Howell will resign as officers
of VAM Funds immediately prior to the Merger.
PLAN OF DISTRIBUTION; PRINCIPAL UNDERWRITER. The Plan of Distribution
for New Fund will be identical to the Fund's current Plan of Distribution. VFD
acts as the principal underwriter of the Fund's shares. _____________, one of
the limited liability companies to be formed in the reorganization of DFG, will
act as the principal underwriter of New Fund's shares.
DIVIDEND DISBURSING, TRANSFER, ADMINISTRATIVE AND ACCOUNT SERVICES
AGENT. VFM acts as the Fund's dividend disbursing, transfer, administrative and
account services agent pursuant to an administrative services agreement. VAM LLC
will act in such capacities for New Fund pursuant to an administrative services
agreement that will have identical terms to the current agreement between VFM
and the Fund.
THE BOARD'S CONSIDERATIONS
At a meeting of the Board of Directors of Voyageur III held on February
7, 1997, VFM reviewed the proposed Plan with the Board. In reviewing the Plan
the Board considered the various factors discussed above, including the
following:
(a) The Fund is currently a series of a corporate entity that
will become a part of the Delaware Group, whereas the Fund will not be
advised by DMC or its affiliates;
(b) The Plan will result in no material changes to
shareholders other than a change in the corporate entity of which their
fund is a series, and will allow their fund to be a series of a
corporate entity that will be advised by VAM LLC;
(c) The Board of Directors of VAM Funds will not change as a
result of the Merger and will continue to consist of the same
individuals who currently serve on the Board of Directors of Voyageur
III;
(d) It is anticipated that the Fund Reorganization will
constitute a tax-free reorganization for federal income tax purposes,
and no gain or loss will be recognized by the Fund or its shareholders
for federal income tax purposes as a result of the Fund Reorganization.
Based on the foregoing, at a meeting held on February 14, 1997, the
Board determined that the Fund Reorganization is in the best interests of the
shareholders of the Fund and that the interests of Fund shareholders will not be
diluted as a result thereof, and therefore approved the Plan.
VOTE REQUIRED
THE BOARD OF DIRECTORS OF VOYAGEUR III UNANIMOUSLY RECOMMENDS THAT FUND
SHAREHOLDERS VOTE IN FAVOR OF APPROVAL OF THE PLAN. The affirmative vote of a
majority of the Fund shares entitled to vote is required to approve the Plan.
PROPOSAL SIX
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The 1940 Act provides that every registered investment company shall be
audited at least once each year by independent public accountants selected by a
majority of the directors of the investment company who are not interested
persons of the investment company or its investment adviser. The 1940 Act
requires that the selection be submitted for ratification or rejection by the
shareholders at their next annual meeting following the selection.
KPMG Peat Marwick LLP ("KPMG") has acted as independent public
accountants for each Company since its inception. However, _____________________
______________________________ acts as independent public accountants for the
Delaware Group of investment companies. At the request of LNC, in connection
with certain Funds becoming a part of the Delaware Group, as described elsewhere
herein, the Boards of Directors of the Funds, including a majority who are not
interested persons of VFM or DMC, have appointed __________ to become the
independent public accountants for the Companies for their current fiscal year.
This appointment is contingent upon consummation of the Merger.
KPMG has not rendered any adverse or qualified opinions, or any
disclaimers of opinions, with respect to the Funds, and the Funds have not had
any disagreements with KPMG on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of KPMG, would have caused it
to make a reference to the subject matter of the disagreement in connection with
its reports.
Representatives of __________ are expected to be present at the
meeting. Such representatives will be given the opportunity to make a statement
to the shareholders if they desire to do so and are expected to be available to
respond to any questions that may be raised at the meeting.
VOTE REQUIRED
THE BOARDS OF DIRECTORS RECOMMEND THAT SHAREHOLDERS OF EACH COMPANY
VOTE IN FAVOR OF THE RATIFICATION OF THE SELECTION OF ______________________ AS
THE INDEPENDENT PUBLIC ACCOUNTANTS FOR SUCH COMPANY. For each Company, the vote
of a majority of the shares of the Company represented at the meeting and
entitled to vote, provided at least a quorum (10% of the outstanding shares) is
represented in person or by proxy, is sufficient for the ratification of the
selection of the independent public accountants.
SUPPLEMENTAL INFORMATION ABOUT
VOYAGEUR FUND MANAGERS, INC.
VFM, a Minnesota corporation, is an indirect wholly owned subsidiary of
DFG, which is owned 49.83% by Michael E. Dougherty and 49.83% equally by James
O. Pohlad, Robert C. Pohlad and William M. Pohlad. Mr. Dougherty co-founded the
predecessor of DFG in 1977 and has served as DFG's Chairman of the Board and
Chief Executive Officer since inception. As of January 31, 1997, VFM and its
affiliates served as the investment manager to six closed-end and ten open-end
investment companies (comprising 33 separate investment portfolios),
administered numerous private accounts and managed approximately $11 billion in
assets.
The names and principal occupations of the principal executive officer
and each director of VFM are set forth below. The address of all individuals is
that of the VFM and the Funds.
Name Principal Occupation
- ---- --------------------
Michael E. Dougherty Chairman of VFM; Chairman of VFD and Dougherty
Dawkins, Inc.; Director, Chairman of the Board,
President and Chief Executive Officer of DFG.
John G. Taft Director and President of VFM; Director and Executive
Vice President of VFD.
Jane M. Wyatt Director and Chief Investment Officer of VFM;
Director and Executive Vice President of VFD.
Edward J. Kohler Director and Executive Vice President of VFM;
Director of VFD.
Frank C. Tonnemaker Director and Executive Vice President of VFM; and
Director and President of VFD.
All of such individuals will resign their positions immediately prior
to Closing. It is expected that, after consummation of the Merger, the
individuals who currently serve as the principal executive officer and directors
of DMC will also serve as the principal executive officer and directors of VFM.
See "Supplemental Information about Delaware Management Company, Inc." below.
Information regarding compensation received by VFM pursuant to certain
advisory agreements is set forth above under "Proposal Two--Proposal to Approve
New Investment Advisory Agreements." Set forth below is information regarding
advisory agreements between VFM and certain other open-end and closed-end funds
which have investment objectives similar to those of one or more of the Funds
being asked to approve new investment advisory agreements under Proposal Two:
Rate of Advisory Net Assets of
Fund VFM's Compensation Fees Waived Fund at 12/31/96
- ---- ------------------ ----------- ----------------
Minnesota Municipal Income Fund Inc. Annual rate of .40% of $ 0 $ 58,315,692
average weekly net assets
Minnesota Municipal Income Fund II, Inc. Annual rate of .40% of $ 0 $161,051,362
average weekly net assets
Minnesota Municipal Income Fund III, Inc. Annual rate of .40% of $ 0 $ 38,910,971
average weekly net assets
Arizona Municipal Income Fund, Inc. Annual rate of .40% of $ 0 $ 67,367,446
average weekly net assets
Florida Insured Municipal Income Fund Annual rate of .40% of $ 0 $ 54,439,214
average weekly net assets
Colorado Insured Municipal Income Fund Inc. Annual rate of .40% of $ 0 $107,788,794
average weekly net assets
National Insured Tax Free Fund Annual rate of .50% of $145,000 $ 32,030,258
average daily net assets
National Limited Term Tax Free Fund Annual rate of .40% of $ 4,731 $ 1,184,425
average daily net assets
National Tax Free Fund Annual rate of .50% of $ 12,665 $ 3,737,821
average daily net assets
SUPPLEMENTAL INFORMATION ABOUT
DELAWARE MANAGEMENT COMPANY, INC.
DMC is an indirect, wholly owned subsidiary of DMH. In turn, DMH is an
indirect, wholly-owned subsidiary, and subject to the ultimate control, of LNC.
LNC, an Indiana corporation with headquarters in Fort Wayne, Indiana, is a
diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management. DMC and its
predecessors have been managing the funds in the Delaware Group since 1938. On
December 31, 1996, DMC and its affiliates within the Delaware Group, including
Delaware International Advisers Ltd., were supervising in the aggregate
approximately $32 billion in assets in the various institutional or separately
managed and investment company accounts. DMC is located at One Commerce Square,
Philadelphia, Pennsylvania 19103.
The names and principal occupations of the principal executive officer
and each director of DMC are set forth below. The address of all individuals is
that of DMC.
Name Principal Occupation
- ---- --------------------
Wayne A. Stork Chairman, President, Chief Executive Officer,
Chief Investment Officer and Director of
Delaware Management Company, Inc.; Chairman,
President, Chief Executive Officer, Director
and/or Trustee of 17 investment companies in the
Delaware Group (which excludes Delaware Pooled
Trust, Inc.), Delaware Management Holdings,
Inc., DMH Corp., Delaware International Holdings
Ltd. and Founders Holdings, Inc.; Chairman and
Director of Delaware Pooled Trust, Inc.,
Delaware Distributors, Inc. and Delaware Capital
Management, Inc.; Chairman, Chief Executive
Officer and Director of Delaware International
Advisers Ltd.; Director of Delaware Service
Company, Inc. and Delaware Investment &
Retirement Services, Inc.
Winthrop S. Jessup Executive Vice President and Director of
Delaware Management Company, Inc.; Executive
Vice President of 17 investment companies in the
Delaware Group (which excludes Delaware Pooled
Trust, Inc.) and Delaware Management Holdings,
Inc.; President and Chief Executive Officer of
Delaware Pooled Trust, Inc.; President and
Director of Delaware Capital Management, Inc.;
Executive Vice President and Director of DMH
Corp., Delaware International Holdings Ltd. and
Founders Holdings, Inc.; Vice Chairman and
Director of Delaware Distributors, Inc.; Vice
Chairman of Delaware Distributors, L.P.;
Director of Delaware Service Company, Inc.,
Delaware International Adviser Ltd., Delaware
Management Trust Company and Delaware Investment
& Retirement Services, Inc.
Richard G. Unruh, Jr. Executive Vice President and Director of
Delaware Management Company, Inc.; Executive
Vice President of the 18 investment companies in
the Delaware Group; Senior Vice President of
Delaware Management Holdings, Inc.; Director of
Delaware International Advisers Ltd.
David K. Downes Executive Vice President/Chief Operating
Officer/Chief Financial Officer and Director of
Delaware Management Company, Inc.; Senior Vice
President/Chief Administrative Officer/Chief
Financial Officer of the 18 investment companies
in the Delaware Group; Chairman and Director of
Delaware Management Trust Company and Delaware
Investment & Retirement Services, Inc.;
President/Chief Executive Officer/Chief
Financial Officer and Director of Delaware
Service Company, Inc.; Executive Vice
President/Chief Operating Officer/Chief
Financial Officer and Director of DMH Corp.,
Delaware Distributors, Inc., Founders Holdings,
Inc. and Delaware International Holdings Ltd.;
Executive Vice President/Chief Operating
Officer/Chief Financial Officer of Delaware
Management Holdings, Inc. and Delaware Capital
Management, Inc.; Senior Vice President/Chief
Administrative Officer/Chief Financial Officer
of Delaware Distributors, L.P., Director of
Delaware International Advisers Ltd.
George M. Chamberlain, Jr. Senior Vice President, Secretary and Director of
Delaware Management Company, Inc.; Senior Vice
President and Secretary of the 18 investment
companies in the Delaware Group, Delaware
Management Holdings, Inc. and Delaware
Distributors, L.P.; Executive Vice President,
Secretary and Director of Delaware Management
Trust Company; Senior Vice President, Secretary
and Director of DMH Corp., Delaware
Distributors, Inc., Delaware Service Company,
Inc., Delaware Investment & Retirement Services,
Inc., Founders Holdings, Inc. and Delaware
Capital Management, Inc.; Secretary and Director
of Delaware International Holdings Ltd.,
Director of Delaware International Advisers
Ltd., Attorney.
DMC currently serves as investment adviser for the following funds that
have investment objectives similar to those of one or more of the Funds being
asked to approve new investment advisory agreements under Proposal Two:
[NAME OF FUND, RATE OF COMPENSATION, FEES WAIVED PURSUANT TO ADVISORY AGREEMENT,
NET ASSETS OF FUND AS OF DECEMBER 31, 1996.]
EXECUTIVE OFFICERS OF VOYAGEUR FUNDS
Certain information about the executive officers of the Funds is set
forth below. Unless otherwise indicated, all positions have been held more than
five years.
Position and Term of Office with the Funds and
Name (Age) Business Experience During the Past Five Years
- ---------- ----------------------------------------------
John G. Taft (42) President of the Funds (Executive Vice President
of Colorado Tax Free Fund); President of VFM;
Director of VFM and of VFD since 1993; Executive
Vice President of VFD (since 1995); Management
Committee member of VFM from 1991 to 1993.
Andrew M. McCullagh, Jr. (48) Executive Vice President of the Funds (President
of Colorado Tax Free Fund); Senior Tax Exempt
Portfolio Manager of VFM; previously, Director
of VFM and VFD from 1993 to 1995.
Jane M. Wyatt (42) Executive Vice President of the Funds; Director
and Chief Investment Officer of VFM since 1993;
Director and Executive Vice President of VFD
since 1993; previously, Executive Vice President
and Portfolio Manager of VFM from 1992 to 1993.
Steve Eldredge (40) Vice President of the Funds since 1995; Senior
Tax Exempt Portfolio Manager of VFM since 1995;
previously, portfolio manager for ABT Mutual
Funds, Palm Beach, Florida, from 1989 to 1995.
Elizabeth H. Howell (35) Vice President of the Funds; Senior Tax Exempt
Portfolio Manager of VFM.
James C. King (56) Vice President of the Funds; Senior Equity
Portfolio Manager of VFM since 1993; previously,
Director of VFM and VFD from 1993 to 1995.
Kenneth R. Larsen (33) Treasurer of the Funds; Treasurer of VFM and
VFD; previously, Director, Secretary and
Treasurer of VFM and VFD from 1993 to 1995.
Thomas J. Abood (33) Secretary of the Funds since 1995; Senior Vice
President and General Counsel since 1994 of DFG;
Senior Vice President of VFM, VFD and Voyageur
Companies, Inc. since 1995; previously, Vice
President of VFM and Voyageur Companies, Inc.
from 1994 to 1995; previously, associated with
the law firm of Skadden, Arps, Slate, Meagher &
Flom, Chicago, Illinois from 1988 to 1994.
All of such individuals [EXCEPT MS. HOWELL AND MR. MCCULLAGH] will
resign their positions with the Funds immediately prior to Closing. It is
expected that, after consummation of the Merger, the newly elected Boards of
Directors will elect the following individuals to serve as officers of the
Funds:
Expected Position with Funds and Business
Name (Age) Experience During the Past Five Years
- ---------- -----------------------------------------
Wayne A. Stork (59) Chairman, President, Chief Executive Officer,
Director and/or Trustee of the Funds. See
"Supplemental Information About Delaware
Management Company, Inc." for a description of
Mr. Stork's business experience.
Winthrop S. Jessup (51) Executive Vice President of the Funds. See
"Supplemental Information About Delaware
Management Company, Inc." for a description of
Mr. Jessup's business experience.
Richard G. Unruh, Jr. (57) Executive Vice President of the Funds. See
"Supplemental Information About Delaware
Management Company, Inc." for a description of
Mr. Unruh's business experience.
Paul E. Suckow (49) Executive Vice President/Chief Investment
Officer, Fixed Income of the Funds and of the 18
investment companies in the Delaware Group and
Delaware Management Company, Inc.; Executive
Vice President and Director of Founders
Holdings, Inc.; Senior Vice President/Chief
Investment Officer, Fixed Income of Delaware
Management Holdings, Inc.; Senior Vice President
of Delaware Capital Management, Inc.; Director
of Founders CBO Corporation; Director of HYPPCO
Finance Company Ltd.; before returning to the
Delaware Group in 1993, Mr. Suckow was Executive
Vice President and Director of Fixed Income for
Oppenheimer Management Corporation, New York,
New York from 1985 to 1992; prior to 1985, he
was a fixed-income portfolio manager for the
Delaware Group.
David K. Downes (57) Senior Vice President/Chief Administrative
Officer/ Chief Financial Officer of the Funds.
See "Supplemental Information About Delaware
Management Company, Inc." for a description of
Mr. Downes' business experience.
George M. Chamberlain, Jr. (50) Senior Vice President and Secretary of the
Funds. See "Supplemental Information About
Delaware Management Company, Inc." for a
description of Mr. Chamberlain's business
experience.
Patrick P. Coyne (33) Vice President/Senior Portfolio Manager of the
tax-free Funds and of the tax-free and
fixed-income investment companies in the
Delaware Group, Delaware Management Company,
Inc. and Delaware Capital Management, Inc.;
during the past five years, Mr. Coyne has served
in various capacities within the Delaware
organization.
Mitchell L. Conery (38) Vice President/Senior Portfolio Manager of the
tax-free Funds and of the tax-free and
fixed-income investment companies in the
Delaware Group and Delaware Management Company,
Inc.; from 1995 to 1996, Mr. Conery was an
investment officer with Travelers Insurance and
from 1992 to 1995, he was a research analyst
with CS First Boston. Mr. Conery joined the
Delaware Group in 1997.
Edward N. Antoian (41) Vice President/Senior Portfolio Manager of the
equity Funds and of the equity investment
companies in the Delaware Group, Delaware
Management Company, Inc. and Delaware Capital
Management, Inc.; during the past five years,
Mr. Antoian has served in various capacities
within the Delaware organization.
Gerald S. Frey (50) Vice President/Senior Portfolio Manager of the
equity Funds and of the equity investment
companies in the Delaware Group and Delaware
Management Company, Inc.; before joining the
Delaware Group in 1996, Mr. Frey was a Senior
Director with Morgan Grenfell Capital
Management, New York, New York from 1986 to
1995.
Michael P. Bishof (34) Vice President/Treasurer of the Funds and of the
18 investment companies in the Delaware Group,
Delaware Management Company, Inc., Delaware
Distributors, Inc., Delaware Distributors, L.P.,
Delaware Service Company, Inc., and Founders
Holdings, Inc.; Vice President/Manager of
Investment Accounting of Delaware International
Holdings Ltd.; Assistant Treasurer of Founders
CBO Corporation; before joining the Delaware
Group in 1995, Mr. Bishof was a Vice President
for Bankers Trust, New York, New York from 1994
to 1995, a Vice President for CS First Boston
Investment Management, New York, New York from
1993 to 1994 and an Assistant Vice President for
Equitable Capital Management Corporation, New
York, New York from 1987 to 1993.
SHAREHOLDER PROPOSALS
As series of Minnesota corporations (or, in some instances,
Massachusetts business trusts), the Funds are not required to hold annual
shareholder meetings. Since the Funds do not hold regular meetings of
shareholders, the anticipated date of the next shareholder meeting cannot be
provided. Any shareholder proposal which may properly be included in the proxy
solicitation material for a special shareholder meeting must be received by the
Fund no later than four months prior to the date proxy materials are mailed to
shareholders.
Dated: February 21, 1997 Thomas J. Abood, Secretary
EXHIBIT A
(Changes from Current Agreement are in ITALICS)
INVESTMENT ADVISORY AGREEMENT
This Agreement, made this ___ day of ________, 1997, by and
between ___________ Funds, Inc., a Minnesota corporation (the "Company"), on
behalf of each Fund represented by a series of shares of common stock of the
Fund that adopts this Agreement (each a "Fund" and, collectively, the "Funds")
(the Funds, together with the date each Fund adopts this Agreement, are set
forth in Exhibit A hereto, which shall be updated from time to time to reflect
additions, deletions or other changes thereto), and [Voyageur Fund Managers,
Inc.] [Delaware Management Company, Inc.], a _________ corporation ("Adviser"),
WITNESSETH:
1. INVESTMENT ADVISORY SERVICES.
(a) The Company hereby engages Adviser on behalf of the Funds,
and Adviser hereby agrees to act, as investment adviser for, and to manage the
investment of the assets of, the Funds.
(b) The investment of the assets of each Fund shall at all
times be subject to the applicable provisions of the Articles of Incorporation,
the Bylaws, the Registration Statement, and the current Prospectus and the
Statement of Additional Information, if any, of the Company and each Fund and
shall conform to the policies and purposes of each Fund as set forth in such
documents and as interpreted from time to time by the Board of Directors of the
Company. Within the framework of the investment policies of each Fund, and
subject to such other limitations and directions as the Board of Directors may
from time to time prescribe, Adviser shall have the sole and exclusive
responsibility for the management of each Fund's assets and the making and
execution of all investment decisions for each Fund, except as set forth in the
following paragraph. Adviser shall report to the Board of Directors regularly at
such times and in such detail as the Board may from time to time determine
appropriate, in order to permit the Board to determine the adherence of Adviser
to the investment policies of the Funds.
(c) ADVISER MAY, AT ITS EXPENSE, SELECT AND CONTRACT WITH ONE
OR MORE REGISTERED INVESTMENT ADVISERS ("SUB-ADVISER") FOR ANY OF THE FUNDS TO
PERFORM SOME OR ALL OF THE SERVICES FOR SUCH FUNDS. SUCH SUB-ADVISER SHALL BE
RESPONSIBLE FOR EXECUTING ORDERS FOR THE PURCHASE AND SALE OF PORTFOLIO
SECURITIES. ADVISER WILL COMPENSATE ANY SUB-ADVISER FOR ITS SERVICES TO THE
FUNDS. ADVISER MAY TERMINATE THE SERVICES OF ANY SUB-ADVISER AT ANY TIME IN ITS
SOLE DISCRETION, AND SHALL AT SUCH TIME ASSUME THE RESPONSIBILITIES OF SUCH
SUB-ADVISER UNLESS AND UNTIL A SUCCESSOR SUB-ADVISER IS SELECTED.
(d) Adviser shall, at its own expense, furnish all office
facilities, equipment and personnel necessary to discharge its responsibilities
and duties hereunder. Adviser shall arrange, if requested by the Company, for
officers or employees of Adviser to serve without compensation from any Fund as
directors, officers, or employees of the Company if duly elected to such
positions by the shareholders or directors of the Company (as required by law).
(e) Adviser hereby acknowledges that all records pertaining to
each Fund's investments are the property of the Company, and in the event that a
transfer of investment advisory services to someone other than Adviser should
ever occur, Adviser will promptly, and at its own cost, take all steps necessary
to segregate such records and deliver them to the Company.
(f) SUBJECT TO THE PRIMARY OBJECTIVE OF OBTAINING THE BEST
AVAILABLE PRICES AND EXECUTION, 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 FUNDS, ADVISER OR TO ANY
OTHER FUND FOR WHICH ADVISER PROVIDES INVESTMENT ADVISORY SERVICES AND/OR WITH
BROKER/DEALERS WHO SELL SHARES OF THE FUNDS OR WHO SELL SHARES OF ANY OTHER FUND
FOR WHICH ADVISER PROVIDES INVESTMENT ADVISORY SERVICES. BROKER/DEALERS WHO SELL
SHARES OF THE FUNDS OF WHICH ADVISER IS INVESTMENT MANAGER, 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.
(g) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (f) ABOVE,
AND SUBJECT TO SUCH POLICIES AND PROCEDURES AS MAY BE ADOPTED BY THE BOARD OF
DIRECTORS AND OFFICERS OF THE COMPANY, ADVISER MAY ASK THE FUNDS AND THE FUNDS
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 IT AND 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 ADVISER'S OVERALL RESPONSIBILITIES WITH RESPECT TO THE FUNDS AND TO OTHER
FUNDS AND OTHER ADVISORY ACCOUNTS FOR WHICH ADVISER EXERCISES INVESTMENT
DISCRETION.
2. COMPENSATION FOR SERVICES.
In payment for the investment advisory and management services
to be rendered by Adviser hereunder, each Fund shall pay to Adviser a monthly
fee, which fee shall be paid to Adviser not later than the fifth business day of
the month following the month in which said services were rendered. The monthly
fee payable by each Fund shall be as set forth in Exhibit A hereto, which may be
updated from time to time to reflect amendments, if any, to Exhibit A. The
monthly fee payable by each Fund shall be based on the average of the net asset
values of all of the issued and outstanding shares of the Fund as determined as
of the close of each business day of the month pursuant to the Articles of
Incorporation, Bylaws, and currently effective Prospectus and Statement of
Additional Information of the Company and the Fund. For purposes of calculating
each Fund's average daily net assets, as such term is used in this Agreement,
each Fund's net assets shall equal its total assets minus (a) its total
liabilities and (b) its net orders receivable from dealers.
3. ALLOCATION OF EXPENSES.
(a) In addition to the fee described in Section 2 hereof, each
Fund shall pay all its costs and expenses which are not assumed by Adviser.
These 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 plan of distribution fees (if
any), interest, taxes, brokerage fees and commissions, fees of the directors who
are not employees of Adviser or the principal underwriter of the Fund's shares
(the "Underwriter"), or any of their affiliates, 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
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by the Underwriter under its agreement with the Fund), expenses of
printing and mailing stock certificates representing shares of the Fund,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents, accounting services agents, investor servicing agents, and
bookkeeping, auditing, and legal expenses. Each Fund will also pay the fees and
bear the expense of registering and maintaining the registration of the Fund and
its shares with the Securities and Exchange Commission and registering or
qualifying its shares under state or other securities laws and the expense of
preparing and mailing prospectuses and reports to shareholders.
(b) The Underwriter shall bear all advertising and promotional
expenses in connection with the distribution of each Fund's shares, including
paying for prospectuses for new shareholders, except as provided in the
following sentence. No Fund shall use any of its assets to finance costs
incurred in connection with the distribution of its shares except pursuant to a
Plan of Distribution, if any, adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (as amended, the "1940 Act").
4. FREEDOM TO DEAL WITH THIRD PARTIES.
Adviser shall be free to render services to others similar to
those rendered under this Agreement 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. REPORTS TO DIRECTORS OF THE FUND.
Appropriate officers of Adviser shall provide the directors of
the Company with such information as is required by any plan of distribution
adopted by the Company on behalf of any Fund pursuant to Rule 12b-1 under the
1940 Act.
6. STANDARD OF CARE.
IN THE ABSENCE OF WILLFUL MISFEASANCE, BAD FAITH, GROSS
NEGLIGENCE OR A RECKLESS DISREGARD OF THE PERFORMANCE OF DUTIES OF THE ADVISER
TO THE FUNDS, THE INVESTMENT MANAGER SHALL NOT BE SUBJECT TO LIABILITIES OF THE
FUNDS OR TO ANY SHAREHOLDERS OF THE FUNDS 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.
7. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT.
(a) The effective date of this Agreement with respect to each
Fund shall be the date set forth on Exhibit A hereto.
(b) Unless sooner terminated as hereinafter provided, this
Agreement shall continue in effect with respect to each Fund 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 by
(i) the Board of Directors of the Company or by the vote of a majority of the
outstanding voting securities of the applicable Fund, and (ii) by the vote of a
majority of the directors of the Company who are not parties to this Agreement
or "interested persons", as defined in the 1940 Act, of Adviser or of the
Company cast in person at a meeting called for the purpose of voting on such
approval.
(c) This Agreement may be terminated with respect to any Fund
at any time, without the payment of any penalty, by the Board of Directors of
the Company or by the vote of a majority of the outstanding voting securities of
such Fund, or by Adviser, upon 60 days' written notice to the other party.
(d) This agreement shall terminate automatically in the event
of its "assignment" (as defined in the 1940 Act).
(e) No amendment to this Agreement shall be effective with
respect to any Fund until approved by the vote of: (i) a majority of the
directors of the Company who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of Adviser or of the Company cast in
person at a meeting called for the purpose of voting on such approval; and (ii)
a majority of the outstanding voting securities of the applicable Fund.
(f) Wherever referred to in this Agreement, the vote or
approval of the holders of a majority of the outstanding voting securities or
shares of a Fund shall mean the lesser of (i) the vote of 67% or more of the
voting securities of such Fund present at a regular or special meeting of
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 such Fund.
8. 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 Adviser have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
VOYAGEUR ______________________ FUNDS, INC.
By __________________________________
Its ____________________________
[VOYAGEUR FUND MANAGERS, INC.]
[DELAWARE MANAGEMENT COMPANY, INC.]
By __________________________________
Its ___________________________
Exhibit A
to
Investment Advisory Agreement
between
[Voyageur Fund Managers, Inc.]
[Delaware Management Company, Inc.]
and
Voyageur _____________ Funds, Inc.
MONTHLY
ADVISORY FEE
(as % of average
FUND EFFECTIVE DATE daily net assets)
---- -------------- -----------------
EXHIBIT B
(Changes from Current Agreement are in ITALICS)
SUB-ADVISORY AGREEMENT
Agreement, dated __________, 1997, by and between Delaware
Management Company, Inc. (the "Adviser"), a corporation, and Voyageur Asset
Management LLC, a Minnesota limited liability company ("Sub-Adviser").
WHEREAS, Voyageur Mutual Funds III, Inc., a Minnesota
corporation (the"Company"), on behalf of its 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 ________,
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 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 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 International 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; (l) costs of
certificates representing common shares of the Fund; (m) costs of stationery and
supplies; (n) insurance expenses; (o) association membership dues; (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 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 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, SUB-ADVISER OR TO ANY OTHER FUND FOR WHICH 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
SUB-ADVISER PROVIDES INVESTMENT ADVISORY SERVICES. BROKER/DEALERS WHO
SELL SHARES OF THE FUNDS OF WHICH SUB-ADVISER OR ADVISER IS INVESTMENT
MANAGER, 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 OR 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 IT 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
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 17a-7 under the 1940 Act 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 . of 1% of the
Fund's average daily net assets. This fee will be computed based on net assets
at the beginning of each day and will be paid to Sub-Adviser monthly on or
before the fifteenth day of the month next succeeding the month for 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 . % of the Fund's average daily
net assets. If 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 to reduce 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.
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) After filing with the Securities and 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 as of the date first
set forth above. 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 the vote of 67% or more of such shares if the holders of more
than 50% of such shares are present in person or by proxy or the vote of more
than 50% of such shares, 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 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 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, the 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.
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 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
-------------------------------------
Name:
Title:
VOYAGEUR ASSET MANAGEMENT LLC
By
-------------------------------------
Name:
Title:
EXHIBIT C
_________________ FUND, A SERIES OF __________ FUNDS, INC.
PLAN OF LIQUIDATION AND TERMINATION
The following Plan of Liquidation and Termination (the "Plan") of
________________ Fund (the "Fund"), one of ___ series of ________ Funds, Inc.
(the "Company"), a corporation organized and existing under the laws of the
state of Minnesota, which has operated as an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), is intended to accomplish the complete liquidation
and termination of the Fund in conformity with the provisions of the Company's
Articles of Incorporation and ByLaws, and Minnesota law.
WHEREAS, the Company's Board of Directors (the "Board") has deemed that
it is advisable and in the best interest of the Fund and its shareholders to
liquidate and terminate the Fund, and the Board, on February 7, and February 14,
1997, considered the matter and determined to recommend the liquidation and
termination of the Fund pursuant to this Plan;
NOW, THEREFORE, the liquidation and termination of the Fund shall be
carried out in the manner hereinafter set forth:
1. EFFECTIVE DATE OF PLAN. This Plan shall be effective upon
consummation of the merger of a wholly owned subsidiary of Lincoln National
Corporation ("LNC") with and into Dougherty Financial Group Inc. ("DFG")
pursuant to an Agreement and Plan of Merger by and among LNC, DFG, Michael E.
Dougherty, James O. Pohlad, Robert C. Pohlad and William M. Pohlad, provided
that the Plan has previously been adopted and approved at a meeting of
shareholders of the Fund called for the purpose of voting upon the Plan, by a
vote of holders of more than 50 percent of the outstanding shares of the Fund.
The date of effectiveness of the Plan is hereinafter called the "Effective
Date."
2. CESSATION OF BUSINESS. After the Effective Date, the Company shall
not engage in any business activities on behalf of the Fund except for the
purpose of winding up the Fund's business and affairs, preserving the value of
its assets and distributing its assets to shareholders in accordance with the
provisions of this Plan after the payment to (or reservation of assets for
payment to) all creditors of the Fund. After the Effective Date, the Fund shall
not issue any new shares except in connection with the reinvestment of dividends
or distributions by existing shareholders. Notwithstanding the provisions of
this Plan, the Company shall, prior to making the final liquidating distribution
to Fund shareholders, continue to honor requests for the redemption of Fund
shares received up to and including 4:00 p.m. on the day before the Liquidation
Record Date (as defined in Section 5 below).
3. LIQUIDATION OF ASSETS. As soon as practicable after the Effective
Date and consistent with the terms of the Plan, the Company shall cause the
liquidation of the Fund's assets to cash form.
4. PAYMENT OF DEBTS. As soon as practicable after the Effective Date,
the Company shall determine and pay (or reserve sufficient amounts to pay) the
amount of all known or reasonably ascertainable liabilities of the Fund incurred
or expected to be incurred prior to the date of the liquidating distribution
provided in Section 5 below.
5. LIQUIDATING DISTRIBUTION. As soon as practicable after the Effective
Date, and in any event within sixty (60) days thereafter, the Company will mail
the following to each Fund shareholder of record who has not redeemed its
shares: (i) a liquidating distribution equal to the shareholder's proportionate
interest in the remaining assets of the Fund (after the payment and creation of
the reserves contemplated by Section 4 above); and (ii) information concerning
the sources of the liquidating distribution. On or before such mailing date the
Company will compile the list of remaining shareholders of record entitled to
receive a liquidation distribution. The day on which such list is determined
shall be the "Liquidation Record Date." The payment of the liquidating
distribution and the retirement and cancellation of Fund shares will be effected
pursuant to an amendment to the Articles of Incorporation of the Company in the
form attached hereto as Exhibit 1 (the "Amendment").
6. TERMINATION AND DISSOLUTION. As promptly as practicable after the
completion of the liquidating distribution described in the preceding paragraph,
the Fund shall be terminated pursuant to the terms of this Plan and applicable
provisions of Minnesota law.
7. EXPENSES OF LIQUIDATION AND TERMINATION. All expenses incurred by
the Company in relation to the carrying out of this Plan, other than brokerage
commissions and taxes, if any, shall be borne by Lincoln National Corporation.
8. POWER OF THE BOARD. The Board and, subject to the general direction
of the Board, the officers of the Company, shall have authority to do or to
authorize any or all acts and things as provided for in this Plan and any and
all such further acts and things as they may consider necessary or desirable to
carry out the purposes of this Plan, including without limitation, the execution
and filing of all articles, documents, information returns, tax returns, forms
and other papers which may be necessary or appropriate to implement this Plan or
which may be required by the provisions of the Investment Company Act of 1940,
as amended, the Securities Act of 1933, as amended, and applicable Minnesota
law.
9. AMENDMENTS TO THE PLAN. The Board shall have the authority to
authorize such variations from or amendments to the provisions of this Plan
(other than the terms of the liquidating distribution) as may be necessary or
appropriate to effect the complete liquidation and termination of the Fund and
the distribution of the Fund's assets to Fund shareholders in accordance with
the purposes intended to be accomplished by this Plan.
EXHIBIT 1 TO PLAN OF LIQUIDATION AND TERMINATION
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
____________________ FUNDS, INC.
The undersigned officer of _______________ Funds, Inc. (the
"Corporation"), a corporation subject to the provisions of Chapter 302A of the
Minnesota Statutes, hereby certifies that the Corporation's (a) Board of
Directors, at a meeting held February 14, 1997, and (b) shareholders, at a
meeting held ___________, 1997 adopted the resolutions hereinafter set forth;
and such officer further certifies that the amendments to the Corporation's
Articles of Incorporation set forth in such resolution were adopted pursuant to
Chapter 302A.
WHEREAS, the Corporation is registered as an open-end management
investment company (I.E., a mutual fund) under the Investment Company Act of
1940 and offers its shares to the public in several series, each of which
represents a separate and distinct portfolio of assets; and
WHEREAS, it is desirable and in the best interest of the holders of the
___________________ Fund (the "Fund"), a series of the Corporation, to liquidate
and terminate the Fund pursuant to the Plan of Liquidation and Termination (the
"Plan") approved by Fund shareholders on __________________, 1997;
WHEREAS, the Corporation wishes to provide for the distribution of the
assets of the Fund to its shareholders and the simultaneous cancellation and
retirement of the outstanding shares of the Fund; and
WHEREAS, the Plan requires that, in order to bind all shareholders of
the Fund to the foregoing and, in particular, to bind such shareholders to the
cancellation and retirement of the outstanding shares of the Fund, it is
necessary to adopt an amendment to the Corporation's Articles of Incorporation.
NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Articles of
Incorporation be, and the same hereby are, amended to add the following Article
5E immediately following Article 5 thereof:
5E. (a) For purposes of this Article 5E, the following terms shall have
the following meanings:
"EFFECTIVE DATE" means the date on which the Fund shareholders
adopt and approve the Plan of Liquidation and Termination (the "Plan")
approved by the Fund shareholders on ___________________, 1997.
THE "FUND" means the Series __ Common Shares of the
Corporation, which have been designated _________________________ Fund
in the bylaws of the Corporation.
"LIQUIDATING DISTRIBUTION DATE" means the date, as soon as
practicable after the Effective Date, for the consummation of the
liquidation.
(b) At the Liquidating Distribution Date, the assets belonging to the
Fund shall be distributed, as described in the Plan, among the Fund's
shareholders in proportion to each shareholder's interest in the remaining
assets of the Fund. For purposes of the foregoing, the term "assets belonging
to" has the meaning assigned to it in Article 7(b) of the Corporation's Articles
of Incorporation.
(c) All issued and outstanding shares of the Fund shall simultaneously
be canceled on the Books of the Fund and retired.
(d) From and after the Liquidating Distribution Date, the Fund Shares
canceled and retired pursuant to paragraph (c) above shall have the status of
authorized and unissued Shares of the Corporation without designation as to
series.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed these Articles of Amendment on behalf of the Corporation on
_______________, 1997.
__________________________ FUNDS, INC.
By ____________________________________
Its ______________________________
EXHIBIT D
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
the __ day of ______, 1997, by and between Voyageur Mutual Funds III, Inc.
("Voyageur III"), on behalf of its series Growth and Income Fund, and VAM
Institutional Funds, Inc. ("VAM Funds"), on behalf of its newly formed series
Growth and Income Fund ("New Growth and Income Fund"). Voyageur III and VAM
Funds are Minnesota corporations. As used in this Agreement, the terms "New
Growth and Income Fund" and "Growth and Income Fund" shall be construed to mean,
respectively, "VAM Funds on behalf of New Growth and Income Fund" and "Voyageur
III on behalf of Growth and Income Fund," where necessary to reflect the fact
that a corporate series is generally considered the beneficiary of corporate
level actions taken with respect to the series and is not itself recognized as a
person under law.
This Agreement is intended to be and is adopted as a "plan of
reorganization," within the meaning of Treas. Reg. 1.368-2(g), for a
reorganization under Section 368(a)(1)(F) of the Internal Revenue Code of 1986,
as amended (the "Code"). The reorganization (the "Reorganization") will consist
of the transfer to New Growth and Income Fund of all of the assets of Growth and
Income Fund in exchange for the assumption by New Growth and Income Fund of all
liabilities of Growth and Income Fund and the issuance by New Growth and Income
Fund of shares of common stock, par value $0.01 per share ("New Growth and
Income Fund Shares"), to be distributed, after the Closing Date hereinafter
determined, to the shareholders of Growth and Income Fund in liquidation of
Growth and Income Fund as provided herein, all upon the terms and conditions
hereinafter set forth in this Agreement. The distribution of New Growth and
Income Fund Shares to Growth and Income Fund shareholders and the retirement and
cancellation of Growth and Income Fund shares will be effected pursuant to an
amendment to the Articles of Incorporation of Voyageur III in the form attached
hereto as Exhibit 1 (the "Amendment"), to be adopted by Voyageur III in
accordance with the Minnesota Business Corporation Act.
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. REORGANIZATION AND LIQUIDATION OF GROWTH AND INCOME FUND
1.1. Subject to the terms and conditions set forth herein and in the
Amendment and on the basis of the representations and warranties contained
herein, Growth and Income Fund agrees to assign, deliver and otherwise transfer
the Growth and Income Fund Assets (as defined in paragraph 1.2) to New Growth
and Income Fund and New Growth and Income Fund agrees in exchange therefor to
assume all liabilities of Growth and Income Fund on the Closing Date (as defined
in paragraph 3.1) as set forth in paragraph 1.3 and to deliver to Growth and
Income Fund Shareholders (as defined in paragraph 1.5) the number of New Growth
and Income Fund Shares, including fractional New Growth and Income Fund Shares,
determined in accordance with paragraph 2.2. Such transactions shall take place
at the closing provided for in paragraph 3.1 (the "Closing").
1.2. The "Growth and Income Fund Assets" shall consist of all property,
including, without limitation, all cash, cash equivalents, securities, futures
and interest receivables owned by Growth and Income Fund, and any deferred or
prepaid expenses shown as an asset on Growth and Income Fund's books, on the
Valuation Date (as defined in paragraph 2.1).
1.3. New Growth and Income Fund will assume all liabilities of Growth
and Income Fund, which include, without limitation, all expenses, costs, charges
and reserves reflected on an unaudited Statement of Assets and Liabilities of
Growth and Income Fund prepared by the Treasurer of Growth and Income Fund as of
the Valuation Date in accordance with generally accepted accounting principles
consistently applied from the prior audited period ("Valuation Date Statement").
1.4. On the Closing Date or as soon as practicable thereafter, pursuant
to paragraph 1.1 hereof and the Amendment, Growth and Income Fund will
distribute New Growth and Income Fund Shares received by Growth and Income Fund
pro rata to its shareholders of record determined as of the close of business on
the Valuation Date ("Growth and Income Fund Shareholders"). Thereafter, no
additional shares representing interests in Growth and Income Fund shall be
issued. Such distribution will be accomplished by an instruction, signed by
Growth and Income Fund's Secretary, to transfer New Growth and Income Fund
Shares then credited to Growth and Income Fund's account on the books of New
Growth and Income Fund to open accounts on the books of VAM Funds in the names
of the Growth and Income Fund Shareholders and representing the respective pro
rata number of New Growth and Income Fund Shares due each such Growth and Income
Fund Shareholder. All issued and outstanding shares of Growth and Income Fund
simultaneously will be canceled on Growth and Income Fund's books.
1.5. Ownership of New Growth and Income Fund Shares will be shown on
the books of VAM Fund's transfer agent. New Growth and Income Fund Shares will
be issued in the manner described in New Growth and Income Fund's then-current
Prospectus and Statement of Additional Information, except no front-end sales
charges will be incurred by Growth and Income Fund Shareholders in connection
with New Growth and Income Fund Shares received in the Reorganization.
1.6. Any transfer taxes payable upon issuance of New Growth and Income
Fund Shares in a name other than the registered holder of Growth and Income Fund
Shares on Growth and Income Fund's books as of the close of business on the
Valuation Date shall, as a condition of such issuance and transfer, be paid by
the person to whom New Growth and Income Fund Shares are to be issued and
transferred.
1.7. Any reporting responsibility of Growth and Income Fund is and
shall remain the responsibility of Growth and Income Fund.
1.8. All books and records maintained on behalf of Growth and Income
Fund will be delivered to New Growth and Income Fund and, after the Closing,
will be maintained by New Growth and Income Fund or its designee in compliance
with applicable record retention requirements under the Investment Company Act
of 1940, as amended (the "1940 Act").
2. VALUATION
2.1. The "Valuation Date" shall be a business day not later than the
5th business day following the receipt of the requisite approval of this
Agreement by shareholders of Growth and Income Fund or such other date after
such shareholder approval as may be mutually agreed upon. The value of the
Growth and Income Fund Assets shall be the value of such assets computed as of
4:00 p.m., Eastern time, on the Valuation Date, using the valuation procedures
set forth in New Growth and Income Fund's then current Prospectus and Statement
of Additional Information.
2.2. The New Growth and Income Fund Shares to be issued hereunder will
have an aggregate net asset value equal to the value of the Growth and Income
Fund Assets, net of the liabilities of Growth and Income Fund, determined in
accordance with paragraph 2.1.
2.3. All computations of value shall be made by Voyageur Fund Managers,
Inc. ("VFM") in accordance with its regular practice in pricing Growth and
Income Fund. New Growth and Income Fund shall cause VFM to deliver a copy of its
valuation report at the Closing.
3. CLOSING AND CLOSING DATE
3.1. The Closing shall take place on the Valuation Date as of 5:00
p.m., Eastern time, or at such other day or time as the parties may agree (the
"Closing Date"). The Closing shall be held in a location mutually agreeable to
the parties hereto. All acts taking place at the Closing shall be deemed to take
place simultaneously as of 5:00 p.m., Eastern time, on the Closing Date unless
otherwise provided.
3.2. Portfolio securities held by Growth and Income Fund (together with
any cash or other assets) shall be delivered by Growth and Income Fund to
Norwest Bank Minnesota, N.A. (the "Custodian"), as custodian for New Growth and
Income Fund, for the account of New Growth and Income Fund on or before the
Closing Date in conformity with applicable custody provisions under the 1940 Act
and duly endorsed in proper form for transfer in such condition as to constitute
good delivery thereof in accordance with the custom of brokers. The portfolio
securities shall be accompanied by all necessary federal and state stock
transfer stamps or a check for the appropriate purchase price of such stamps.
Portfolio securities and instruments deposited with a securities depository (as
defined in Rule 17f-4 under the 1940 Act) shall be delivered on or before the
Closing Date by book-entry in accordance with customary practices of such
depository and the Custodian. The cash delivered shall be in the form of a
Federal Funds wire, payable to the order of "Norwest Bank Minnesota, N.A.,
Custodian for Growth and Income Fund, a series of VAM Institutional Funds, Inc."
3.3. In the event that on the Valuation Date, (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted or
(b) trading or the reporting of trading on such Exchange or elsewhere shall be
disrupted so that, in the judgment of both New Growth and Income Fund and Growth
and Income Fund, accurate appraisal of the value of the Growth and Income Fund
Assets is impracticable, the Valuation Date shall be postponed until the first
business day after the day when trading shall have been fully resumed without
restriction or disruption and reporting shall have been restored.
3.4. At the Closing, each party shall deliver to the other such bills
of sale, checks, assignments, share certificates, if any, receipts or other
documents as such other party or its counsel may reasonably request.
4. COVENANTS OF NEW GROWTH AND INCOME FUND AND GROWTH AND INCOME FUND
4.1. Except as otherwise expressly provided herein, Growth and Income
Fund will operate its business in the ordinary course between the date hereof
and the Closing Date, it being understood that such ordinary course will include
customary dividends and other distributions.
4.2. VAM Funds will prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), relating to New Growth and
Income Fund Shares (the "Registration Statement").
4.3. Growth and Income Fund will call a meeting of its shareholders to
consider and act upon this Agreement and the Amendment and to take all other
action necessary to obtain approval of the transactions contemplated herein,
including, if necessary, the waiver of any existing investment limitations that
might otherwise preclude Growth and Income Fund from holding all of its assets
as New Growth and Income Fund Shares until such shares are distributed to Growth
and Income Fund shareholders. Voyageur III will prepare the notice of meeting,
form of proxy and proxy statement (collectively, "Proxy Materials") to be used
in connection with such meeting. VAM Funds will furnish Voyageur III with such
information relating to New Growth and Income Fund as is reasonably necessary
for the preparation of the Proxy Materials.
4.4. Subject to the provisions of this Agreement, New Growth and Income
Fund and Growth and Income Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement.
4.5. As soon after the Closing Date as is reasonably practicable,
Voyageur III (a) shall prepare and file all federal and other tax returns and
reports of Growth and Income Fund required by law to be filed with respect to
all periods ending on or before the Closing Date but not theretofore filed, and
(b) shall pay all federal and other taxes shown as due thereon and/or all
federal and other taxes that were unpaid as of the Closing Date, including
without limitation, all taxes for which the provision for payment was made as of
the Closing Date (as represented in paragraph 5.2(l)).
4.6. New Growth and Income Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act and the 1940
Act as it may deem appropriate in order to continue its operations after the
Closing Date.
5. REPRESENTATIONS AND WARRANTIES
5.1. VAM Funds represents and warrants to Voyageur III as follows:
(a) New Growth and Income Fund is a series of VAM Funds. VAM
Funds is a corporation validly existing and in good standing under the
laws of Minnesota with corporate power to carry on its business as
presently conducted.
(b) VAM Funds is a duly registered management investment
company, and its registration with the Commission as an investment
company under the 1940 Act is in full force and effect.
(c) The Prospectus and Statement of Additional Information of
New Growth and Income Fund will, on the Closing Date, conform in all
materials respects to the applicable requirements of the 1933 Act and
the 1940 Act and the regulations thereunder and will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(d) New Growth and Income Fund is not in, and the execution,
delivery and performance of this Agreement will not result in, a
material violation of any provision of VAM Funds's Articles of
Incorporation or Bylaws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which New Growth and Income
Fund is a party or by which it is bound.
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against VAM Funds or New
Growth and Income Fund or any of its properties or assets which, if
adversely determined, would materially and adversely affect its
financial condition or the conduct of its business; and New Growth and
Income Fund is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects, or is reasonably likely to materially
and adversely affect, its business or its ability to consummate the
transactions herein contemplated.
(f) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the part of VAM
Funds, and this Agreement constitutes a valid and binding obligation of
New Growth and Income Fund enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other laws relating to or
affecting creditors rights and to general equity principles. No other
consents, authorizations or approvals are necessary in connection with
VAM Funds' performance of this Agreement, except such as have been
obtained under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the 1940 Act and such as may be required
under state securities laws;
(g) New Growth and Income Fund Shares to be issued and
delivered to Growth and Income Fund, for the account of the Growth and
Income Fund Shareholders, pursuant to the terms of this Agreement will
at the Closing Date have been duly authorized and, when so issued and
delivered, will be duly and validly issued New Growth and Income Fund
Shares, and will be fully paid and nonassessable with no personal
liability attaching to the ownership thereof;
(h) The information furnished or to be furnished by New Growth
and Income Fund for use in registration statements, proxy materials and
other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with
federal securities and other laws and regulations applicable thereto.
(i) The Proxy Materials, insofar as they relate to New Growth
and Income Fund, will, at the time of the meeting of Growth and Income
Fund's shareholders and on the Closing Date, not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
materially misleading.
5.2 Voyageur III represents and warrants to VAM Funds as follows:
(a) Growth and Income Fund is a series of Voyageur III.
Voyageur III is a corporation validly existing and in good standing
under the laws of Minnesota.
(b) Voyageur III is a duly registered management investment
company, and its registration with the Commission as an investment
company under the 1940 Act and the registration of its shares under the
1933 Act are in full force and effect.
(c) All of the issued and outstanding shares of common stock
of Growth and Income Fund have been offered and sold in compliance in
all material respects with applicable registration requirements of the
1933 Act and state securities laws. Shares of Growth and Income Fund
are registered in all jurisdictions in which they are required to be
registered under state securities laws and other laws, and Voyageur III
is not subject to any stop order and is fully qualified to sell Growth
and Income Fund shares in each state in which such shares have been
registered.
(d) The current Prospectus and Statement of Additional
Information of Growth and Income Fund conform in all material respects
to the applicable requirements of the 1933 Act and the 1940 Act and the
regulations thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) Growth and Income Fund is not in, and the execution,
delivery and performance of this Agreement will not result in, a
material violation of any provision of Voyageur III's Articles of
Incorporation or Bylaws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which Growth and Income Fund is
a party or by which it is bound.
(f) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against Growth and Income Fund
or any of its properties or assets which, if adversely determined,
would materially and adversely affect its financial condition or the
conduct of its business; and Growth and Income Fund knows of no facts
that might form the basis for the institution of such proceedings and
is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and
adversely affects, or is reasonably likely to materially and adversely
affect, its business or its ability to consummate the transactions
herein contemplated.
(g) The Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets and Financial Highlights
of Growth and Income Fund as of April 30, 1996 and for the year then
ended, certified by KPMG Peat Marwick LLP, and the unaudited Statement
of Assets and Liabilities, Statement of Operations, Statement of
Changes in Net Assets and Financial Highlights of Growth and Income
Fund as of October 30, 1996 and for the six months then ended, fairly
present, in all material respects, Growth and Income Fund's financial
condition as of such date, and its results of operations, changes in
its net assets and financial highlights for such period in accordance
with generally accepted accounting principles, and as of such date
there were no known liabilities of Growth and Income Fund (contingent
or otherwise) not disclosed therein that would be required in
accordance with generally accepted accounting principles to be
disclosed therein.
(h) Since the date of the most recent unaudited financial
statements, there has not been any material adverse change in Growth
and Income Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, or any
incurrence by Growth and Income Fund of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as
otherwise disclosed in writing to and acknowledged by New Growth and
Income Fund prior to the date of this Agreement and prior to the
Closing Date. All liabilities of Growth and Income Fund (contingent and
otherwise) are reflected in the Valuation Date Statement. For the
purpose of this subparagraph (h), neither a decline in Growth and
Income Fund's net asset value per share nor a decrease in Growth and
Income Fund's size due to redemptions by Growth and Income Fund
shareholders shall constitute a material adverse change.
(i) Growth and Income Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with
liability to it prior to the Closing Date.
(j) All issued and outstanding shares of Growth and Income
Fund are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and nonassessable with no personal liability
attaching to the ownership thereof. Growth and Income Fund does not
have outstanding any options, warrants or other rights to subscribe for
or purchase any of its shares, nor is there outstanding any security
convertible into any of its shares. All such shares will, at the time
of Closing, be held by the persons and in the amounts recorded by
Growth and Income Fund's transfer agent.
(k) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all
necessary action on the part of Voyageur III and, subject to the
approval of Growth and Income Fund's shareholders, this Agreement
constitutes a valid and binding obligation of Growth and Income Fund
enforceable in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws relating to or affecting creditors' rights
and to general equity principles. No other consents, authorizations or
approvals are necessary in connection with Growth and Income Fund's
performance of this Agreement, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required
under state securities laws.
(l) All material federal and other tax returns and reports of
Growth and Income Fund required by law to be filed on or before the
Closing Date shall have been filed and are correct and all federal and
other taxes shown as due or required to be shown as due on said returns
and reports have been paid or provision has been made for the payment
thereof and, to the best of Growth and Income Fund's knowledge, no such
return is currently under audit and no assessment has been asserted
with respect to any such return and there are no facts that might form
the basis for such proceedings.
(m) For each taxable year since its inception, Growth and
Income Fund has met all the requirements of Subchapter M of the Code
for qualification and treatment as a "regulated investment company" and
neither the execution or delivery of, nor the performance of its
obligations under, this Agreement will adversely affect, and no other
events, to the best of Growth and Income Fund's knowledge, are
reasonably likely to occur which will adversely affect the ability of
Growth and Income Fund to continue to meet the requirements of
Subchapter M of the Code.
(n) At the Closing Date, Growth and Income Fund will have good
and valid title to the Growth and Income Fund Assets, subject to no
liens (other than the obligation, if any, to pay the purchase price of
portfolio securities purchased by Growth and Income Fund which have not
settled prior to the Closing Date), security interests or other
encumbrances, and full right, power and authority to assign, deliver
and otherwise transfer such assets hereunder, and upon delivery and
payment for such assets, New Growth and Income Fund will acquire good
and marketable title thereto, subject to no restrictions on the full
transfer thereof, including any restrictions as might arise under the
1933 Act.
(o) At the time of the meeting of Growth and Income Fund's
shareholders and on the Closing Date, the Proxy Materials will (i)
comply in all material respects with the provisions of the 1934 Act and
the 1940 Act and the regulations thereunder and (ii) not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither Growth and Income Fund nor Voyageur III
shall be construed to have made the foregoing representation with
respect to portions of the Proxy Materials furnished by New Growth and
Income Fund. Any other information furnished by Growth and Income Fund
for use in any other manner that may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete and
shall comply in all material respects with the applicable federal
securities and other laws and regulations thereunder.
(p) Growth and Income Fund has maintained or has caused to be
maintained on its behalf all books and accounts as required of a
registered investment company in compliance with the requirements of
Section 31 of the 1940 Act and the Rules thereunder.
(q) Growth and Income Fund is not acquiring New Growth and
Income Fund Shares to be issued hereunder for the purpose of making any
distribution thereof other than in accordance with the terms of this
Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF GROWTH AND INCOME FUND
The obligations of Growth and Income Fund to consummate the
transactions provided for herein shall be subject, at its election, to the
performance by New Growth and Income Fund of all the obligations to be performed
by it hereunder on or before the Closing Date and, in addition thereto, the
following conditions:
6.1. All representations and warranties of New Growth and Income Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2. New Growth and Income Fund shall have delivered to Growth and
Income Fund a certificate of its President and Treasurer, in a form reasonably
satisfactory to Growth and Income Fund and dated as of the Closing Date, to the
effect that the representations and warranties of VAM Funds made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement, and as to such
other matters as Voyageur III shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF NEW GROWTH AND INCOME FUND
The obligations of New Growth and Income Fund to complete the
transactions provided for herein shall be subject, at its election, to the
performance by Growth and Income Fund of all the obligations to be performed by
it hereunder on or before the Closing Date and, in addition thereto, the
following conditions:
7.1. All representations and warranties of Voyageur III contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
7.2. Growth and Income Fund shall have delivered to New Growth and
Income Fund at the Closing a certificate of its President and its Treasurer, in
form and substance satisfactory to New Growth and Income Fund and dated as of
the Closing Date, to the effect that the representations and warranties of
Growth and Income Fund made in this Agreement are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as New Growth and
Income Fund shall reasonably request.
7.3. Growth and Income Fund shall have delivered to New Growth and
Income Fund a statement, certified by the Treasurer of Voyageur III, of the
Growth and Income Fund Assets and its liabilities, together with a list of
Growth and Income Fund's portfolio securities and other assets showing the
respective adjusted bases and holding periods thereof for income tax purposes,
such statement to be prepared as of the Closing Date and in accordance with
generally accepted accounting principles consistently applied.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF NEW GROWTH AND INCOME
FUND AND GROWTH AND INCOME FUND.
The obligations of Growth and Income Fund and New Growth and Income
Fund hereunder are each subject to the further conditions that on or before the
Closing Date:
8.1. This Agreement and the Amendment and the transactions contemplated
herein and therein shall have been approved by the requisite vote of the holders
of the outstanding shares of Growth and Income Fund in accordance with the
provisions of Voyageur III's Articles of Incorporation, and certified copies of
the resolutions evidencing such approval shall have been delivered to New Growth
and Income Fund.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state blue sky and securities authorities, including
"no-action" positions of and exemptive orders from such federal and state
authorities) deemed necessary by New Growth and Income Fund or Growth and Income
Fund to permit consummation, in all material respects, of the transactions
contemplated herein shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve risk of a material adverse
effect on the assets or properties of New Growth and Income Fund or Growth and
Income Fund.
8.4. On or prior to the Valuation Date, Growth and Income Fund shall
have declared and paid a dividend or dividends and/or other distribution or
distributions that, together with all previous such dividends or distributions,
shall have the effect of distributing to its shareholders all of Growth and
Income Fund's investment company taxable income (computed without regard to any
deduction for dividends paid) and all of its net capital gain (after reduction
for any capital loss carry-forward and computed without regard to any deduction
for dividends paid) for the taxable year during which the Reorganization occurs.
8.5. The parties shall have received an opinion of the law firm of
Dorsey & Whitney LLP (based on such representations as such law firm shall
reasonably request), addressed to VAM Funds and Voyageur III, which opinion may
be relied upon by the shareholders of Growth and Income Fund, substantially to
the effect that the federal income tax consequences of the Reorganization will
be as follows:
(i) the Reorganization will constitute a reorganization within the
meaning of Section 368(a)(1)(F) of the Code, and New Growth
and Income Fund and Growth and Income Fund each will qualify
as a party to the Reorganization under Section 368(b) of the
Code;
(ii) Growth and Income Fund shareholders will recognize no income,
gain or loss upon receipt, pursuant to the Reorganization, of
New Growth and Income Fund shares. Growth and Income Fund
shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of
Growth and Income Fund which are distributed by Growth and
Income Fund prior to the Reorganization;
(iii) the tax basis of New Growth and Income Fund shares received by
each Growth and Income Fund shareholder pursuant to the
Reorganization will be equal to the tax basis of Growth and
Income Fund shares exchanged therefor;
(iv) the holding period of New Growth and Income Fund shares
received by each Growth and Income Fund shareholder pursuant
to the Reorganization will include the period during which the
Growth and Income Fund shareholder held the Growth and Income
Fund shares exchanged therefor, provided that the Growth and
Income Fund shares were held as a capital asset on the date of
the Reorganization;
(v) Growth and Income Fund will recognize no income, gain or loss
by reason of the Reorganization;
(vi) New Growth and Income Fund will recognize no income, gain or
loss by reason of the Reorganization;
(vii) the tax basis of the assets received by New Growth and Income
Fund pursuant to the Reorganization will be the same as the
basis of those assets in the hands of Growth and Income Fund
immediately prior to the Reorganization;
(viii) the holding period of the assets received by New Growth and
Income Fund pursuant to the Reorganization will include the
period during which such assets were held by Growth and Income
Fund; and
(ix) New Growth and Income Fund will succeed to and take into
account the earnings and profits, or deficit in earnings and
profits, of Growth and Income Fund immediately prior to the
Reorganization.
Notwithstanding anything herein to the contrary, neither New Growth and
Income Fund nor Growth and Income Fund may waive the condition set forth in this
paragraph 8.5.
8.6. The Amendment shall have been filed in accordance with applicable
provisions of Minnesota law.
9. FEES AND EXPENSES
9.1. (a) Lincoln National Corporation shall bear all direct expenses
incurred in connection with entering into and carrying out the
provisions of this Agreement, including expenses incurred in connection
with the preparation, printing, filing and solicitation of proxies to
obtain requisite shareholder approvals.
(b) VFM shall pay any unamortized organizational expenses on the
books of Growth and Income Fund immediately prior to the
Reorganization.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. This Agreement constitutes the entire agreement between the
parties.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated herein.
11. TERMINATION
11.1. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by the mutual written consent of Voyageur III and VAM
Funds;
(b) by either VAM Funds or Voyageur III by notice to the
other, without liability to the terminating party on account of such
termination (providing the terminating party is not otherwise in
material default or breach of this Agreement) if the Closing shall not
have occurred on or before December 31, 1997; or
(c) by either New Growth and Income Fund or Growth and Income
Fund, in writing without liability to the terminating party on account
of such termination (provided the terminating party is not otherwise in
material default or breach of this Agreement), if (i) the other party
shall fail to perform in any material respect its agreements contained
herein required to be performed on or prior to the Closing Date, (ii)
the other party materially breaches any of its representations,
warranties or covenants contained herein, (iii) the Growth and Income
Fund shareholders fail to approve this Agreement at any meeting called
for such purpose at which a quorum was present, or (iv) any other
condition herein expressed to be precedent to the obligations of the
terminating party has not been met and it reasonably appears that it
will not or cannot be met.
11.2. (a) Termination of this Agreement pursuant to paragraphs 11.1(a)
or (b) shall terminate all obligations of the parties hereunder and
there shall be no liability for damages on the part of New Growth and
Income Fund or Growth and Income Fund or the directors or officers of
New Growth and Income Fund or Growth and Income Fund, to any other
party or its directors or officers.
(b) Termination of this Agreement pursuant to paragraph 11.1(c)
shall terminate all obligations of the parties hereunder and there
shall be no liability for damages on the part of New Growth and Income
Fund or Growth and Income Fund or the directors or officers of New
Growth and Income Fund or Growth and Income Fund, except that any party
in breach of this Agreement shall, upon demand, reimburse the
non-breaching party for all reasonable out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by this
Agreement, including legal, accounting and filing fees.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the parties; PROVIDED, HOWEVER,
that following the meeting of Growth and Income Fund's shareholders called by
Growth and Income Fund pursuant to paragraph 4.3, no such amendment may have the
effect of changing the provisions for determining the number of New Growth and
Income Fund shares to be issued to the Growth and Income Fund Shareholders under
this Agreement to the detriment of such Growth and Income Fund Shareholders
without their further approval.
13 MISCELLANEOUS
13.1. The article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
13.3. This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota.
13.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
13.5. The obligations and liabilities of VAM Funds hereunder are solely
those of New Growth and Income Fund. It is expressly agreed that no shareholder,
nominee, director, officer, agent or employee of VAM Funds on behalf of New
Growth and Income Fund shall be personally liable hereunder. The execution and
delivery of this Agreement have been authorized by the directors of VAM Funds
and signed by authorized officers of VAM Funds acting as such, and neither such
authorization by such directors nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally.
13.6. The obligations and liabilities of Voyageur III hereunder are
solely those of Growth and Income Fund. It is expressly agreed that no
shareholder, nominee, director, officer, agent or employee of Growth and Income
Fund shall be personally liable hereunder. The execution and delivery of this
Agreement have been authorized by the directors of Voyageur III and signed by
authorized officers of Voyageur III acting as such, and neither such
authorization by such directors nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by a duly authorized officer.
VOYAGEUR MUTUAL FUNDS III, INC., on
behalf of Growth and Income Fund
By _________________________________
Its ________________________________
VAM INSTITUTIONAL FUNDS, INC., on
behalf of Growth and Income Fund
By _________________________________
Its ________________________________
FOR VOYAGEUR FUNDS VOTING ON PROPOSALS 1, 2 AND 6:
[AGGRESSIVE GROWTH FUND
ARIZONA INSURED TAX FREE FUND
ARIZONA TAX FREE FUND
CALIFORNIA INSURED TAX FREE FUND
CALIFORNIA TAX FREE FUND
COLORADO TAX FREE FUND
FLORIDA INSURED TAX FREE FUND
FLORIDA LIMITED TERM TAX FREE FUND
FLORIDA TAX FREE FUND
IDAHO TAX FREE FUND
IOWA TAX FREE FUND
KANSAS TAX FREE FUND
MINNESOTA HIGH YIELD MUNICIPAL BOND FUND
MINNESOTA INSURED FUND
MINNESOTA LIMITED TERM MUNICIPAL BOND FUND
MINNESOTA TAX FREE FUND
MISSOURI INSURED TAX FREE FUND
NATIONAL HIGH YIELD MUNICIPAL BOND FUND
NEW MEXICO TAX FREE FUND
NEW YORK TAX FREE FUND
NORTH DAKOTA TAX FREE FUND
OREGON INSURED TAX FREE FUND
UTAH TAX FREE FUND
WASHINGTON INSURED TAX FREE FUND
WISCONSIN TAX FREE FUND]
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints _______________________________,
____________________________, and _______________________________________, and
each of them, with power to act without the other and with the right of
substitution in each, the proxies of the undersigned to vote all shares of
________________________ [name of Voyageur Fund] Tax Free Fund (the "Fund"),
held by the undersigned at a special meeting of shareholders of the Fund to be
held on April 11, 1997, and at any adjournments thereof, with all the powers the
undersigned would possess if present in person. All previous proxies given with
respect to the meeting are revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the contrary
below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven,
W. Thacher Longstreth, Thomas F. Madison,
Jeffrey J. Nick, Charles E. Peck and Wayne A. Stork
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
_______________________________________________________________________________
2. To vote: FOR __________ AGAINST __________ approval of a new Investment
Advisory Agreement.
6. To vote: FOR __________ AGAINST __________ ABSTAIN __________
ratification of the selection of _______________________ as independent public
accountants for the Fund.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated:_______________________________, 1997
___________________________________________
___________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.
VOYAGEUR GROWTH AND INCOME FUND
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints _______________________________,
____________________________, and _______________________________________, and
each of them, with power to act without the other and with the right of
substitution in each, the proxies of the undersigned to vote all shares of
Voyageur Growth and Income Fund (the "Fund"), held by the undersigned at a
special meeting of shareholders of the Fund to be held on April 11, 1997, and at
any adjournments thereof, with all the powers the undersigned would possess if
present in person. All previous proxies given with respect to the meeting are
revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the contrary
below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven,
W. Thacher Longstreth, Thomas F. Madison,
Jeffrey J. Nick, Charles E. Peck and Wayne A. Stork
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
_______________________________________________________________________________
5. To vote: FOR __________ AGAINST __________ approval of an Agreement and
Plan of Reorganization pursuant to which all of the assets of the Fund would be
acquired by a newly formed series of VAM Institutional Funds, Inc., also called
Growth and Income Fund, and shareholders would become shareholders of the newly
formed series.
6. To vote: FOR __________ AGAINST __________ ABSTAIN __________
ratification of the selection of ________________________ as independent public
accountants for the Fund.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated:_______________________________, 1997
___________________________________________
___________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.
VOYAGEUR GROWTH STOCK FUND
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints _______________________________,
____________________________, and _______________________________________, and
each of them, with power to act without the other and with the right of
substitution in each, the proxies of the undersigned to vote all shares of
Voyageur Growth Stock Fund (the "Fund"), held by the undersigned at a special
meeting of shareholders of the Fund to be held on April 11, 1997, and at any
adjournments thereof, with all the powers the undersigned would possess if
present in person. All previous proxies given with respect to the meeting are
revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the contrary
below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven,
W. Thacher Longstreth, Thomas F. Madison,
Jeffrey J. Nick, Charles E. Peck and Wayne A. Stork
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
_______________________________________________________________________________
2. To vote: FOR __________ AGAINST __________ approval of a new Investment
Advisory Agreement.
3. To vote: FOR __________ AGAINST __________ approval of a Sub-Advisory
Agreement.
6. To vote: FOR __________ AGAINST __________ ABSTAIN __________
ratification of the selection of _______________________ as independent public
accountants for the Fund.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated:_______________________________, 1997
___________________________________________
___________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.
FOR VOYAGEUR FUNDS VOTING ON PROPOSALS 1, 4 AND 6:
[INTERNATIONAL EQUITY FUND, NATIONAL INSURED TAX FREE FUND, NATIONAL LIMITED
TERM TAX FREE FUND AND NATIONAL TAX FREE FUND]
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints _______________________________,
____________________________, and _______________________________________, and
each of them, with power to act without the other and with the right of
substitution in each, the proxies of the undersigned to vote all shares of
________________ [name of Voyageur Fund] (the "Fund"), held by the undersigned
at a special meeting of shareholders of the Fund to be held on April 11, 1997,
and at any adjournments thereof, with all the powers the undersigned would
possess if present in person. All previous proxies given with respect to the
meeting are revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the contrary
below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven,
W. Thacher Longstreth, Thomas F. Madison,
Jeffrey J. Nick, Charles E. Peck and Wayne A. Stork
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
_______________________________________________________________________________
4. To vote: FOR __________ AGAINST __________ approval of the liquidation
of the Fund and the distribution of the Fund's net assets to shareholders.
6. To vote: FOR __________ AGAINST __________ ABSTAIN __________
ratification of the selection of _______________________ as independent public
accountants for the Fund.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated: ______________________________, 1997
___________________________________________
___________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.