EX-99.h.3
FUND ACCOUNTING AND FINANCIAL ADMINISTRATION OVERSIGHT AGREEMENT
THIS AGREEMENT is made as of the 1st day of October, 2007, (the "Effective
Date") by and between Optimum Fund Trust (the "Fund"), on behalf of each of its
series as listed on Schedule A, having its principal place of business at 0000
Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000, and Delaware Service Company, Inc.
("DSC"), a Delaware corporation having its principal place of business at 0000
Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000.
WHEREAS, the Fund is registered with the Securities and Exchange Commission
("SEC") as an investment company under the Investment Company Act of 1940 (the
"1940 Act");
WHEREAS, the Fund has engaged Mellon Bank, N.A. ("Mellon") to provide fund
accounting, financial administration and related services for the Fund pursuant
to the Fund Accounting and Financial Administration Services Agreement, dated as
of October 1, 2007 (the "Mellon Fund Accounting Agreement");
WHEREAS, the Fund desires that DSC perform the fund accounting, financial
administration and related services described in this Agreement for the Fund to
supplement the services provided by Mellon pursuant to the Mellon Fund
Accounting Agreement;
WHEREAS, the Fund also desires that DSC establish and monitor certain
service level requirements with respect to Mellon's performance of its duties
pursuant to the Mellon Fund Accounting Agreement; and
WHEREAS, DSC is willing to perform the aforementioned services on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in exchange for good and valuable consideration, the
receipt and sufficiency of which are acknowledged, and intending to be legally
bound, the Fund and DSC agree as follows:
1. Services
DSC shall perform for the Fund and its series (including all share classes)
listed in Schedule A, the fund accounting, financial administration and related
services set forth in Schedule B to this Agreement ("Services"). The Fund may
add to, or delete from, this Agreement a Fund series and/or class if the Fund
series and/or class is added to, or deleted from, the Mellon Fund Accounting
Agreement. Such addition or deletion must be evidenced by amending Schedule A.
Each existing and future series of the Fund (including all share classes)
covered by this Agreement is individually and collectively referred to as a
"Portfolio." DSC may perform other services for the Fund only upon terms,
conditions and compensation that DSC and the Fund mutually agree to, as
evidenced by an amendment to this Agreement or Schedule B. To the extent that
Mellon does not consent to the addition of a new Portfolio or share class to the
Mellon Fund Accounting Agreement and a different service provider is
engaged to provide the fund accounting and financial administration services for
such Portfolio or share class, DSC agrees to negotiate in good faith with the
Fund concerning the provision of the fund accounting and financial
administration oversight services for such Portfolio or share class given the
scope of services to be provided by the new fund accounting and financial
administration service provider.
2. Compensation and Expenses
A. In return for performing the Services, the Fund shall compensate DSC as
set forth in this Section and in Schedule C to this Agreement. Fees due shall be
accrued daily. If this Agreement is lawfully terminated before the end of any
month, fees shall be calculated on a pro rated basis through the date of
termination and shall be due upon the Agreement's termination date.
B. The Fund will pay all of its own expenses that are incurred in the
Fund's operation and not specifically assumed by DSC. Expenses to be borne by
the Fund include, but are not limited to: pricing, security and other similar
data information vendor services; organizational expenses; costs of services of
the Fund's independent registered public accounting firm ("independent
accountant") and the Fund's outside legal and tax counsel (including such
counsel's review of the Fund's registration statements, proxy materials, federal
and state tax qualification as a regulated investment company and any review of
reports and materials prepared by DSC under this Agreement); costs of any
services contracted for by the Fund directly from parties other than DSC; trade
association dues; costs of trading operations and brokerage fees, commissions
and transfer taxes in connection with the purchase and sale of securities for
the Fund; investment advisory fees; taxes; Fund insurance premiums and other
Fund insurance-related fees and expenses applicable to its operation; costs
incidental to any meetings of shareholders, including, but not limited to, legal
and auditor fees, proxy filing fees and the costs of printing and mailing of any
proxy materials; costs incidental to Fund board meetings, including fees and
expenses of Fund board members, but excluding costs specifically assumed by DSC;
the salary and expenses of any officer, trustee or employee of the Fund who is
not also a DSC employee; registration fees, filing fees, and costs incidental to
the preparation, typesetting, printing and/or distribution, as applicable, of
the Fund's registration statements on Forms X-0X, X-0, X-0, X-0, X-0, and N-14,
as applicable, and any amendments thereto, shareholder reports on Form N-CSR,
Form N-SAR, Form N-Q, Form N-PX, tax returns, and all notices, registrations and
amendments associated with applicable federal and state tax and securities laws;
and other expenses properly payable by the Fund.
C. The Fund agrees to reimburse DSC for its actual out-of-pocket expenses
in providing the Services, including without limitation, the following:
(i) Electronic transmission expenses incurred by DSC in communicating
with the Fund, its investment advisers (which term, for purposes
of this Agreement, shall be interpreted to include any
sub-advisers) or custodian, Mellon, dealers or others as required
for DSC to perform the Services if a Fund officer requests such
electronic transmission and provides DSC with prior written
approval;
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(ii) The cost of creating microfilm, microfiche or electronic copies
of Fund records, and the cost of storage of paper and electronic
copies of Fund records;
(iii) The charges for services provided by the vendors set forth on
Schedule D;
(iv) Any additional expenses reasonably incurred by DSC in the
performance of the Services, provided that: (a) if any individual
expense is less than $1,000, DSC shall provide prior written
notice to the Fund to the extent practicable; and (b) if any
individual expense is $1,000 or more, DSC shall obtain the prior
written consent of an officer of the Fund;
(v) In the event that DSC is requested or authorized by the Fund or
is required by law, summons, subpoena, investigation, examination
or other legal or regulatory process to produce documents or
personnel with respect to the Services, and so long as DSC is not
the subject of the investigation or proceeding in question, the
Fund will reimburse DSC for its actual out-of-pocket expenses
(including reasonable attorneys' fees) incurred in responding to
these requests; and
(vi) Any additional expenses incurred by DSC at the written direction
of a Fund officer.
D. DSC shall be entitled to receive the following amounts:
(i) Any systems development and project fees for new or enhanced
services requested by the Fund (including significant
enhancements required by regulatory changes), and all
systems-related expenses associated with the provision of special
reports and services, in each case as agreed upon by a Fund
officer in advance; and
(ii) Ad hoc reporting fees billed at an agreed upon rate.
E. DSC shall xxxx the Fund on a monthly basis for the fees and expenses
owed to DSC by the Fund under this Agreement. The monthly xxxx shall be set
forth on a detailed invoice in a form mutually agreed upon by DSC and the Fund.
DSC shall send such invoice to the Fund no later than fifteen (15) days after
the last day of each month; provided, however, that the failure by DSC to do so
shall not be considered a breach of this Agreement. The Fund shall pay such
invoice within fifteen (15) days of receipt of such invoice by the Fund. In the
event that the Fund does not receive an invoice within fifteen (15) days after
the last day of a month, the Fund shall have fifteen (15) days from the date of
receipt of such invoice to pay DSC. Any undisputed fees or expenses that are not
paid by the Fund within the required time frame shall be subject to a late fee
of 1.5% of the amount billed for each month that such fees or expenses remain
unpaid, and the late fee shall be due and payable upon demand. If any fees or
expenses are disputed by the Fund, DSC and the Fund shall work together in good
faith to resolve the dispute promptly.
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F. DSC will assume responsibility for the costs of its ordinary and
necessary office facilities (including telephone, telephone transmission, and
telecopy expenses), equipment and personnel to perform the Services, including
the compensation of its employees who serve as Fund trustees or officers. In the
event that DSC is the subject of an examination, subpoena, investigation,
proceeding or legal or regulatory process relating to the Services it provides
to the Fund ("DSC Services Inquiry"), and if DSC requests that the Fund
provides, or if the Fund is required by law, summons, subpoena, investigation,
examination or other legal or regulatory process, to produce documents or
personnel with respect to the Services, then DSC will reimburse the Fund for its
actual out-of-pocket expenses (including reasonable attorneys' fees) incurred in
responding to these requests.
3. Length and Termination of Agreement
A. The term of this Agreement shall begin on the Effective Date and
continue for an initial term of seven (7) years (the "Initial Term"). Unless
otherwise terminated in accordance with its terms, DSC shall either (i) request
that this Agreement be extended for an additional five (5) year period, or (ii)
indicate that this Agreement will be terminated upon the expiration of the
Initial Term or a Renewal Term (as defined below), as the case may be, in either
case by sending a written notice of its intent to the Fund no later than three
(3) months prior to the fifth anniversary of the Effective Date of the Initial
Term or the third anniversary of the effective date of a Renewal Term (as the
case may be). If DSC requests that this Agreement be extended for an additional
five (5) year period and the Fund does not reject such request in writing to DSC
by the sixth anniversary of the Effective Date of the Initial Term or the fourth
anniversary of the effective date of a Renewal Term (as the case may be), this
Agreement shall be extended for an additional five (5) year period (a "Renewal
Term"). If either (a) DSC indicates that this Agreement will be terminated upon
the expiration of the Initial Term or a Renewal Term (as the case may be) by
sending a written notice of its intent to the Fund no later than three (3)
months prior to the fifth anniversary of the Effective Date of the Initial Term
or the third anniversary of the effective date of a Renewal Term (as the case
may be), or (b) the Fund respond to DSC's request to extend for an additional
five (5) year period by rejecting such request in writing to DSC no later than
the sixth anniversary of the Effective Date of the Initial Term or the fourth
anniversary of the effective date of a Renewal Term (as the case may be), this
Agreement shall terminate upon the expiration of the Initial Term or such
Renewal Term (as the case may be). Notwithstanding the foregoing, this Agreement
shall renew automatically in event that the Mellon Fund Accounting Agreement is
renewed.
B. A party may terminate this Agreement for one or more of the following
reasons, provided the terminating party provides the applicable written notice
to the other party or parties of the reason for such termination:
(i) Non-Renewal: DSC or the Fund may decline to extend the terms of
this Agreement beyond the Initial Term under subparagraph A of
this Section;
(ii) Mutual Agreement: The parties may mutually agree in writing to
terminate this Agreement at any time;
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(iii) "For Cause": A party may terminate the Agreement "For Cause," as
defined below, by providing the other party with 60 days' advance
written notice;
(iv) Termination of Investment Manager: Upon the termination of the
investment management agreement(s) between the Fund (on behalf of
its Portfolio(s)) and its investment adviser, whether terminated
by the investment adviser, the Fund, its board of trustees or its
shareholders, this Agreement shall automatically terminate;
provided, however, that neither (a) a change in the Fund's
investment adviser to another investment adviser that is under
common ownership with its investment adviser or its successor,
nor (b) entering into a new investment management agreement with
any such investment adviser shall automatically terminate this
Agreement. In event of the automatic termination of this
Agreement with respect to the Fund due to the termination of its
investment management agreement, DSC agrees to negotiate in good
faith with the Fund in connection with DSC's provision of
Services during the transition to a new fund accounting and
financial administration oversight service provider. For purposes
of this subparagraph B(iv) only, the term "investment adviser"
does not include any subadvisers.
(v) Termination of Mellon Fund Accounting Agreement: This Agreement
shall automatically terminate in the event that the Mellon Fund
Accounting Agreement is terminated, provided that DSC agrees to
negotiate in good faith with the Fund to enter into a new fund
accounting and financial administration oversight agreement
reflecting the appropriate scope of services to be provided by
DSC given the scope of services to be provided by Mellon's
successor as fund accounting provider.
For purposes of subparagraph (iii) above, "For Cause" shall mean:
(a) a material breach of this Agreement that has not been remedied
for 30 days following written notice by the non-breaching party
that identifies in reasonable detail the alleged failure of the
other party to perform, provided that if such default is capable
of being cured, then the defaulting party is entitled to such
longer period as may reasonably be required to cure such default
if the defaulting party has commenced such cure and is diligently
pursuing same, but such cure must be completed within 120 days in
any event;
(b) when a party commits any act or omission that constitutes
negligence, willful misconduct, fraud or reckless disregard of
its duties under this Agreement and that act or omission results
in material adverse consequences to the other party;
(c) a final, unappealable judicial, regulatory or administrative
ruling or order in which the party to be terminated has been
found guilty of criminal or unethical behavior in the conduct of
its business that directly relates to the subject matter of the
Services; or
(d) when a party shall make a general assignment for the benefit of
its creditors or any proceeding shall be instituted by or against
such party to adjudicate it as bankrupt or insolvent, or to seek
to liquidate, wind up, or reorganize such party, or protect or
relieve such party's debts under any law, or to
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seek the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or for a
substantial portion of its assets, which proceeding shall remain
unstayed for sixty (60) days or such party has taken steps to
authorize any of the above actions or has become unable to pay
its debts as they mature.
C. If this Agreement is terminated by any party (regardless of whether it
is terminated pursuant to paragraph B. above or for any reason other than those
specified in paragraph B. above), the Fund shall pay to DSC on or before the
effective date of such termination any undisputed and unpaid fees, and shall
reimburse DSC for any undisputed and unpaid out-of-pocket costs and expenses,
owed to DSC under this Agreement prior to its termination.
D. If either (i) DSC terminates this Agreement with respect to the Fund at
any time for any reason other than those specified in paragraph B. above, or
(ii) the Fund terminates this Agreement with respect to the Fund at any time
"For Cause" under subparagraph B(iii) of this Section, then DSC shall reimburse
the Fund for any Costs and Expenses incurred by the Fund in connection with
converting the Fund to a successor service provider with respect to the
Services, including without limitation the delivery to such successor service
provider, the Fund and/or other Fund service providers any of the Fund's
property, records, data, instruments and documents.
E. If this Agreement is terminated (i) by DSC and/or the Fund, as the case
may be, at any time for "nonrenewal" or "upon mutual agreement" under
subparagraphs B(i) and B(ii), respectively, (ii) by DSC at any time as a result
of the "termination of investment manager" under subparagraph B(iv), (iii) by
the Fund at any time for any reason other than those specified in paragraph B
above, or (iv) by DSC at any time "For Cause" under subparagraph B(iii) of this
Section, the Fund shall reimburse DSC promptly for any Costs and Expenses
incurred by DSC in connection with effecting such termination and converting the
Fund to a successor service provider with respect to the Services, including
without limitation the delivery to such successor service provider, the Fund
and/or other Fund service providers any of the Fund's property, records, data,
instruments and documents.
F. For purposes of this Section 3, "Costs and Expenses" incurred by a party
shall mean any provable, reasonable, customary and direct costs and expenses
actually incurred by such party. For purposes of this Section 3, Costs and
Expenses shall not include any wind-down costs, including, without limitation,
non-cancelable lease payments; severance payments due and payable to DSC or
sub-contractors' personnel; unused equipment expense; and non-cancelable
payments or termination charges regarding hosting and other subcontracting
services that were not incurred at the written direction of the Fund and that
cannot be transferred or redeployed by DSC. Such party must provide the other
party with written evidence of such costs and expenses before the other party is
obligated to pay them. Such party also has a duty to mitigate, and must exercise
its duty to mitigate, such costs and expenses. Except as expressly set forth in
Sections 3 and 9 and Schedule C, no party hereto shall be responsible for any
costs and expenses or damages of any kind whatsoever resulting from, related to
or otherwise in connection with the termination of this Agreement.
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G. In the event of the termination of this Agreement, DSC agrees to
cooperate and act in good faith to ensure an orderly transition to DSC's
successor with respect to the Services provided herein. Without limiting the
generality of the foregoing sentence, DSC agrees that, in the event that this
Agreement is terminated by a party or the parties, DSC shall deliver the Fund's
property, records, data, instruments and documents to the Fund, its successor
service providers and/or its service providers, as the case may be, in a
non-proprietary, commercially available format.
H. The termination of this Agreement with respect to any given Portfolio
shall in no way affect the continued validity of this Agreement with respect to
any other Portfolio.
4. Amendments, Assignment and Delegation
A modification of this Agreement (which term includes all Schedules) will
be effective only if in writing and signed by the parties. No party shall assign
the rights or delegate the duties pursuant to this Agreement without the prior
written consent of the other party, except as follows:
(i) DSC may employ such person or persons it may deem desirable to
assist it in performing the Services without notice to the
Fund;
(ii) DSC may hire a third party to assist it in performing the
Services (each a "Subcontractor"). DSC shall obtain the Fund's
prior written consent before DSC engages a Subcontractor to
provide significant services or functions to assist DSC in
performing the Services under this Agreement;
(iii) DSC may delegate one or more of the functions or assign this
Agreement to any direct or indirect majority-owned affiliate of
Lincoln National Corporation with prior written notice to the
Fund; and
(iv) A Fund merger or reorganization that does not result in a change
in such Fund's investment adviser and where the fund surviving
from such merger or reorganization assumes the duties and
obligations of such Fund under this Agreement shall not require
DSC's consent. For purposes of the this sub-paragraph 4(iv), the
term "investment adviser" does not include any sub-advisers.
With respect to the delegation of duties under (i), (ii) and (iii) above,
DSC shall: (a) be responsible for the acts or omissions of such persons,
Subcontractors or affiliates to the same extent as DSC's own acts or omissions
under this Agreement; (b) be responsible for the compensation of such persons,
Subcontractors or affiliates; and (c) not be relieved of any of its
responsibilities under this Agreement by virtue of the use of such persons,
Subcontractors or affiliates. However, if the Fund instructs DSC to engage a
specific Subcontractor for the performance of any of the Services, DSC will not
be responsible for any acts or omissions by, or compensation payable to, such
Subcontractor.
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This Agreement shall be binding upon, and shall inure to the benefit of,
the parties and their respective successors and permitted assigns.
5. Documentation
The Fund represents that it has provided or made available to DSC (or has
given DSC an opportunity to examine) copies of the following documents, current
as of the Effective Date of this Agreement:
(i) The Agreement and Declaration of Trust evidencing the Fund's form
of organization and any current amendments thereto;
(ii) The By-Laws or procedural guidelines of the Fund;
(iii) Any resolution or other action of the Fund or the Fund's board
establishing or affecting the rights, privileges or other status
of any class of shares of a Portfolio, or altering or abolishing
any such class;
(iv) A copy of a resolution of the Fund board appointing DSC to
provide the Services for each Portfolio and authorizing the
execution of this Agreement and its Schedules;
(v) A copy of the Fund's currently effective prospectus(es) and
statement(s) of additional information ("Registration Statement")
under the Securities Act of 1933 (the "1933 Act") and 1940 Act;
(vi) Copies of all pertinent Fund policies and procedures that affect
the Services that DSC is to provide under this Agreement,
including, but not limited to, those relating to valuation,
pricing, Section 2(a)(41) of the 1940 Act and Rules 2a-4 and 2a-7
thereunder, net asset value errors, and "as-of" processing (e.g.,
relating to error corrections, post-trade revisions or similar
processing policies that may exist); and
(vii) Such other documents that DSC reasonably believes to be
necessary or appropriate in the proper performance of the
Services, subject to the agreement of the Fund, which shall not
be unreasonably withheld.
6. Representations and Warranties of the Fund
The Fund represents and warrants the following:
A. The Fund is duly organized and validly existing, in good standing under
the laws of the jurisdiction of its organization, and qualified to do business
in each jurisdiction in which the nature or conduct of its business requires
such qualification.
B. The Fund has requisite authority and power under its organizational
documents and applicable law to execute, deliver, consummate and perform this
Agreement; this Agreement is legally valid, binding and enforceable against the
Fund; and the Fund has all necessary
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registrations and/or licenses necessary to conduct the activities as described
in the Registration Statement.
C. There is no pending or threatened legal proceeding or regulatory action
that would materially impair the Fund's ability to perform its obligations under
this Agreement. The Fund's performance of its obligations under this Agreement
will not conflict with or result in a breach of any terms or provisions of any
agreement to which the Fund is a party or bound, and does not violate any
applicable law.
D. The execution and delivery of this Agreement have been authorized by the
Fund's trustees and signed by an authorized Fund officer, acting as such, and
neither such authorization by the Fund trustees nor such execution and delivery
by the Fund officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the Fund trustees or
shareholders, but bind only the property of the Fund, as provided in its charter
documents.
7. Representations and Warranties of DSC
DSC represents and warrants to the Fund the following:
A. DSC is duly organized as a corporation in the State of Delaware; is in
good standing; and is qualified to do business in each jurisdiction in which the
nature or conduct of its business requires such qualification.
B. DSC has requisite authority and power under its organizational documents
and applicable law to execute, deliver, consummate and perform this Agreement;
this Agreement is legally valid, binding and enforceable against DSC; and DSC
has all necessary registrations and/or licenses necessary to perform the
Services described in Schedule B.
C. There is no pending or threatened legal proceeding or regulatory action
that would materially impair DSC's ability to provide the Services. DSC's
performance of the Services will not conflict with or result in a breach of any
of the terms or provisions of any agreement to which DSC is a party or bound,
and does not violate any applicable law to which DSC is subject.
D. DSC has completed, obtained and performed all registrations, filings,
approvals, and authorizations, consents or examinations required by any
government or governmental authority to which DSC is subject, to perform the
Services contemplated by this Agreement and will maintain the same in effect for
so long as this Agreement remains in effect.
E. DSC will maintain a fidelity bond and an insurance policy with respect
to errors and omissions coverage in form and amount that are commercially
reasonable in light of DSC's duties and responsibilities under this Agreement.
F. DSC has implemented and maintains reasonable procedures and systems
(including reasonable disaster recovery and business continuity plans and
procedures consistent with legal, regulatory and business needs applicable to
DSC's delivery of the Services) to safeguard the Fund's records and data and
DSC's records, data, equipment facilities and other
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property that DSC uses in the performance of its obligations hereunder from loss
or damage attributable to fire, theft, or any other cause, and DSC will make
such changes to the procedures and systems from time to time as are reasonably
required for the secure performance of its obligations hereunder.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THERE ARE NO EXPRESS OR
IMPLIED REPRESENTATIONS OR WARRANTIES AS TO THE SERVICES UNDER THIS AGREEMENT OR
THE PERFORMANCE THEREOF, INCLUDING WITHOUT LIMITATION, THE MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF THE SERVICES (IRRESPECTIVE OF ANY COURSE OF
DEALING, CUSTOM OR USAGE OF TRADE).
8. Standard of Care
DSC shall act in good faith and exercise reasonable care in performing the
Services under this Agreement. DSC's duties shall be confined to those expressly
set forth herein, and no implied duties are assumed by or may be asserted
against DSC hereunder. In that regard, DSC shall have no responsibility for the
actions or activities of any other party, including service providers, except as
provided in Section 4.
9. Indemnification and Limitation of Liability
A. DSC will not be liable to the Fund for any loss incurred by the Fund as
a result of any error of judgment, mistake of law, act or omission in the course
of, or in connection with the Services rendered by, DSC under the Agreement in
the absence of fraud, negligence or willful misconduct of DSC or the reckless
disregard of its duties under the Agreement.
B. DSC agrees to indemnify, defend and hold harmless the Fund, its
trustees, officers, employees, agents and nominees and their respective
successors and permitted assigns from and against claims, demands, actions,
suits, judgments, liabilities, losses, fines, damages, costs, charges, and
counsel fees (collectively, "Losses") resulting directly and proximately from
DSC's fraud, negligence or willful misconduct in the performance of the
Services, or reckless disregard of its duties under this Agreement.
C. In order for these indemnification provisions to apply, a party seeking
indemnification or to be held harmless shall fully and promptly advise the
indemnifying party in writing of all pertinent facts concerning the situation in
question. The party seeking indemnification will use reasonable care to identify
and notify the indemnifying party in writing promptly concerning any situation
which presents or appears likely to present the probability of an
indemnification claim. However, failure to do so in good faith shall not affect
the rights under this provision unless the indemnifying party are materially
prejudiced by such failure. As to any matter eligible for indemnification, the
indemnified party shall act reasonably and in accordance with good faith
business judgment, and shall not effect any settlement or confess judgment
without the consent of the indemnifying party, which consent shall not be
withheld or delayed unreasonably.
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D. The indemnifying party shall be entitled to participate in the defense
at its own expense, or assume the defense, of any suit brought to enforce any
claims subject to this indemnity provision. If the indemnifying party elects to
assume the defense, it shall be conducted by counsel of its choosing that is
reasonably satisfactory to the indemnified party; the indemnified party shall
bear the fees and expenses of any additional counsel it retains. If the
indemnifying party does not elect to assume the defense of such suit, it will
reimburse the indemnified party for the reasonable fees and expenses of any
counsel the indemnified party retains, which is reasonably satisfactory to the
indemnifying party. The indemnifying party shall not effect any settlement
without the consent of the indemnified party (which shall not be withheld or
delayed unreasonably) unless such settlement imposes no liability,
responsibility or other obligation upon the indemnified party and relieves it of
all fault.
E. The parties shall have a duty to mitigate damages for which the other
party may become responsible.
F. No party hereto shall be liable to any other party for any special,
indirect, incidental or consequential damages of any kind whatsoever.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL
THE FUND, DSC, THEIR AFFILIATES OR ANY OF ITS OR THEIR TRUSTEES, DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR EXEMPLARY, PUNITIVE,
SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS' FEES), LOSS OF BUSINESS, OR LOST PROFITS, EACH OF WHICH
IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER SUCH
DAMAGES WERE FORESEEABLE OR WHETHER A PARTY OR ANY ENTITY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
10. Books and Records, Retention and Rights of Ownership
A. DSC shall maintain on behalf of the Fund all books and records which are
customary or which are legally required to be kept in connection with DSC's
performance of Services, including without limitation those required by Rules
31a-1 and 31a-2 under the 1940 Act ("Records") to the extent that such Records
are not maintained by Mellon in connection with the Mellon Fund Accounting
Agreement. DSC will prepare and maintain such Records at the Fund's expense, and
the Records shall be the Fund's property. DSC will make the Records available
for inspection by the SEC, including giving the SEC access to the Records, and
otherwise surrender the Records promptly in accordance with Rule 31a-3 under the
1940 Act. DSC will allow the Fund and its authorized persons and representatives
to review the Records during DSC's normal business hours or, upon reasonable
notice, at such other times as the Fund may request.
B. Notwithstanding the foregoing, all computer programs, systems and
procedures employed or developed by or on behalf of DSC, or on behalf of DSC by
system providers or vendors used by DSC, to perform the Services that are not
Records are the sole and exclusive property of DSC.
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11. Reports
A. DSC shall furnish reports to the Fund, its other service providers, its
broker/dealers and to others that the Fund designates in writing at such times
as are prescribed pursuant to this Agreement to be provided or completed by DSC,
or as subsequently agreed upon by the parties pursuant to this Agreement or any
amendment thereto.
B. DSC will provide reasonable access to the Fund's independent accountant
as well as internal auditors employed by the Fund's administrator or affiliate
to periodically perform a reasonable review of DSC's internal controls and
procedures relevant to the Services.
12. Notices
Any communication, notice or demand pursuant to this Agreement shall be
properly addressed, in writing and delivered by personal service (including
express or courier service), registered or certified mail, or by facsimile with
proof of proper transmission and a means for confirmation of delivery to
recipient, as follows:
If to DSC:
Delaware Service Company, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Fund:
Optimum Fund Trust
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
12
Attention: Xxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
13. Advice and Reliance
A. DSC may consult with DSC's or the Fund's counsel, independent accountant
and other experts with respect to any matter arising in connection with the
Services performed by DSC, and DSC shall not be liable nor accountable for any
action taken or omitted by it in good faith in accordance with the advice of
such counsel, independent accountant or other experts. DSC shall in no event be
liable to the Fund or any Fund shareholder or beneficial owner for any action
reasonably taken pursuant to such advice.
B. DSC agrees to cooperate with the Fund's independent accountant, to
reasonably support the independent accountant's engagement with the Fund, and to
provide the independent accountant reasonable access to the Records. DSC also
agrees to provide periodic sub-certifications to the Fund's chief compliance
officer and certifying principal executive and financial officers relating to
the Services DSC performs, based on a form of sub-certification that DSC and the
Fund mutually and reasonably agree to, and subject to such limitations as may be
reasonable or necessary to not make a material misstatement, omission or untrue
statement of fact.
14. Compliance with Law
A. In performing the Services, DSC shall comply with all applicable laws,
and its standard of performance shall be in accord with such standards as may be
imposed by law and the requirements of all regulatory authorities.
B. DSC shall use commercially reasonable efforts to make its employees who
are responsible for providing the Services ("Relevant Employees") available to
federal, state and local governmental and regulatory and supervisory authorities
having jurisdiction over the performance of the Services ("Governmental
Authorities") as may be required by such Governmental Authorities pursuant to
applicable law, subpoena or order, and as may be requested by any Governmental
Authorities on behalf of or with respect to the Fund or any of its affiliates or
as may be requested by the Fund to be made available to such Governmental
Authorities.
15. Governing Law and Jurisdiction
This Agreement and performance hereunder and all suits and proceedings
hereunder shall be governed by and construed in accordance with the internal
laws of the Commonwealth of Pennsylvania, without giving effect to conflict of
law principles. Each of the parties to this Agreement expressly and irrevocably
submits to the exclusive jurisdiction of the courts of Pennsylvania and waives
any claims of inconvenient forum or venue. To the extent that the laws
13
of the Commonwealth of Pennsylvania conflict with the applicable provisions of
the 1940 Act, the applicable provisions of the 1940 Act shall control.
16. Services Not Exclusive
A. DSC's Services are not exclusive to the Fund and DSC shall be free to
render similar services to others.
B. DSC shall perform the Services solely as an independent contractor and
no joint venture, partnership, employment, agency or any other relationship is
intended, accomplished or embodied in this Agreement.
C. In performing the Services, DSC is acting solely on behalf of the Fund
and no contractual or service relationship shall be deemed to be established
between DSC and any other person, including without limitation the custodian and
Fund shareholders.
17. Force Majeure and Uncontrollable Events
DSC shall maintain adequate and reliable computer and other equipment
necessary or appropriate to carry out its obligations under this Agreement. Upon
the Fund's reasonable request, DSC shall provide supplemental information
concerning the aspects of its disaster recovery and business continuity plan
that are relevant to the Services. Notwithstanding the foregoing or any other
provision of this Agreement, DSC assumes no responsibility hereunder, and shall
not be liable for, any damage, loss of data, business interruption, delay or any
other loss whatsoever caused by "Force Majeure Events." "Force Majeure Events"
are events beyond the reasonable control of DSC, its agents and its
Subcontractors. In the event of Force Majeure Events, or any disaster that
causes a business interruption, DSC shall act in good faith and follow
applicable procedures in its disaster recovery and business continuity plan and
use all commercially reasonable efforts to minimize service interruptions.
18. Severability
If any provision of this Agreement shall be held or made invalid, the
remainder of this Agreement and the parties' rights and obligations under it
shall not be affected by such action, and the invalid provisions of the
Agreement shall be deemed to be severable only in the jurisdiction that so
determines.
19. Survivability
The following provisions shall survive beyond the expiration and
termination of this Agreement:
o All compensation provisions, including Section 2 Compensation and
Expenses, Section 3.C regarding termination fees and expenses,
and Schedule C;
o Section 4. Amendments, Assignment and Delegation;
o Section 6. Representations and Warranties of the Fund;
14
o Section 7. Representations and Warranties of DSC;
o Section 9. Indemnification and Limitation of Liability;
o Section 10. Books and Records, Retention and Rights of Ownership;
o Section 17. Force Majeure and Uncontrollable Events; and
o Section 18. Severability.
20. Confidential Information
"Confidential Information" of a party shall be maintained confidential by
the other party, and shall include: (a) any data or information that is
competitively sensitive material, and not generally known to the public,
including, but not limited to, information about product plans, marketing
strategies, finances, operations, customer relationships, customer profiles,
customer lists, sales estimates, business plans, and internal performance
results relating to the past, present or future business activities of the Fund
or DSC, their respective subsidiaries and affiliated companies and the
customers, clients and suppliers of any of them; (b) any scientific or technical
information, design, process, procedure, formula, or improvement that is
commercially valuable and secret in the sense that its confidentiality affords
the Fund or DSC a competitive advantage over its competitors; (c) all
confidential or proprietary concepts, documents, reports, data, specifications,
computer software, source code, object code, flow charts, databases, inventions,
know-how, and trade secrets, whether or not patentable or copyrightable; (d)
non-public portfolio holdings information of the Portfolios; and (e) anything
designated as confidential. DSC shall maintain adequate safeguards to prevent
the use of the Confidential Information by DSC, its employees, Subcontractors
and affiliates for any purpose other than performing the Services under this
Agreement. DSC also shall maintain adequate safeguards to limit the
dissemination of a Portfolio's non-public portfolio holdings information to
third parties (x) that assist DSC in the performance of the Services under this
Agreement and have entered into a confidentiality agreement no less restrictive
than the terms in this Agreement and (y) with the prior written consent of an
officer of the Fund.
However, Confidential Information shall not be subject to such
confidentiality obligations if it: (a) is already known to a receiving party at
the time it is obtained; (b) is or becomes publicly known or available through
no wrongful act of a receiving party; (c) is rightfully received from a third
party who, to the best of a receiving party's knowledge, is not under a duty of
confidentiality; (d) is released by a protected party to a third party without
restriction; (e) is required to be disclosed pursuant to the Fund's Registration
Statement or by a requirement of a court order, subpoena, governmental or
regulatory agency or law (provided the disclosing party will promptly provide
the other party written notice of such requirement, to the extent such notice is
permitted); (f) is relevant to the defense of any claim or cause of action
asserted against a receiving party; or (g) has been or is independently
developed or obtained by a receiving party.
15
21. Contract Terms To Be Exclusive
This Agreement constitutes the complete agreement of the parties about the
covered subject matter, and supersedes all prior negotiations, understandings
and agreements bearing upon the covered subject matter.
22. Waiver
A party's waiver of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach by any party. A
party's failure to insist upon strict adherence to any provision of the
Agreement shall not constitute a waiver or deprive such party of the right to
insist upon strict adherence to such provision.
23. Counterparts and Reproduction of Documents
This Agreement may be executed in any number of counterparts, each of which
is deemed an original and all of which together evidence the entire Agreement.
This Agreement and any amendments may be reproduced by any commercially
acceptable process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceedings, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement facsimile or further reproduction of such reproduction shall be
likewise admissible in evidence.
24. Miscellaneous
Paragraph headings in this Agreement are included for convenience only and
are not to be used to construe or interpret this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
OPTIMUM FUND TRUST DELAWARE SERVICE COMPANY, INC.
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
16
SCHEDULE A
TO THE FUND ACCOUNTING
AND FINANCIAL ADMINISTRATION OVERSIGHT AGREEMENT BETWEEN
DELAWARE SERVICE COMPANY, INC. AND
OPTIMUM FUND TRUST
Dated October 1, 2007
Optimum Fund Trust
Optimum Large Cap Growth Fund
Optimum Large Cap Value Fund
Optimum Small Cap Growth Fund
Optimum Small Cap Value Fund
Optimum International Fund
Optimum Fixed Income Fund
SCHEDULE B
TO THE FUND ACCOUNTING
AND FINANCIAL ADMINISTRATION OVERSIGHT AGREEMENT BETWEEN
DELAWARE SERVICE COMPANY, INC. AND
OPTIMUM FUND TRUST
Dated October 1, 2007
DSC shall perform for the Fund and each of its Portfolios the following
fund accounting, financial administration and related services. Unless otherwise
noted, capitalized terms used herein shall have the same meanings assigned to
them in the Agreement.
A. Valuations
1. Participate on the Fund's fair value committee, manage the committee's
decision-making process and provide Mellon with fair value pricing
decisions.
2. Provide oversight of the Fund's pricing process, including maintaining a
relationship with pricing vendors, providing Mellon with sources for prices
obtained through broker/dealer quotes, and reviewing stale pricing reports.
3. Verify that the daily net asset value ("NAV") is disseminated to interested
parties; facilitate resolution of NAV errors, and ensure that corrective
action is implemented, if necessary; review procedures with Mellon to
verify that appropriate controls are in place.
4. Subject to the oversight and approval, if necessary, of the Fund's Board,
select pricing vendors and negotiate and maintain contracts with such
vendors for the benefit of the Fund.
B. Calculation and Payment of Expenses
1. Process and pay invoices on behalf of the Fund until the date Mellon
assumes responsibility for paying approved invoices; effective as of such
date, approve bills for payment by Mellon and provide Mellon with
allocation instructions and wire instructions.
2. Provide Mellon with information on the amount of directors'/trustees' fees
to be accrued and the methodology for allocating these expenses among the
Fund series.
3. Issue checks on behalf of the Fund to directors/trustees for
director/trustee compensation (net of Philadelphia city wage tax) and for
reimbursement of meeting expenses; remit Philadelphia city wage tax on
behalf of directors/trustees with respect to such payments.
4. Provide Mellon with asset-based fee information on an annual basis,
promptly notify Mellon of any changes impacting these fees, and review and
approve Mellon's fee calculations based on timeframes detailed in the
applicable Service Level Document (as defined below).
5. Provide Mellon with any applicable expense limitations and review Fund
series expenses to ensure that expense limitations have been properly
implemented.
6. Review budget assumptions employed by Mellon for new and existing Fund
series, inform Mellon of any significant new items requiring accrual or
changes to current accruals, and review the over accruals/under accruals
and approve non-routine adjustments to journal entries before the year-end
excise tax period.
C. Financial Reporting
1. Manage certifications and sub-certification process as required for
financial reports, data and processes.
2. Review financial reporting information provided by Mellon for prospectuses,
statements of additional information and other disclosure documents and
coordinate completion of financial administration responsibilities.
3. Review reports on Form N-CSR, Form N-SAR and Form N-Q for accuracy,
completeness, and proper financial disclosures in conjunction with Mellon.
Participate in review by, and resolution of comments from, external
auditors when necessary or appropriate.
4. If a closed-end fund, analyze financial data and coordinate tender offer
process with Fund management and the investment manager's legal department,
the investment manager's investment team and Mellon.
5. Support Form N-SAR reporting by completing and reviewing responses to
financial questions.
6. Provide financial data for inclusion in board reports, and furnish
direction to Mellon regarding board reporting requirements. Review
financial information included in board reports prior to distribution.
7. In conjunction with Mellon, provide analysis and recommendations regarding
the impact of new accounting pronouncements on the Fund.
D. Portfolio Securities Transactions and Trade Operations
1. Coordinate notification of, and responses to, voluntary corporate actions
between Mellon and the investment manager's investment team. Facilitate and
ensure issues resolution.
2. Maintain data requirements for order management and trading systems,
including, but not limited to, XIP, Predator, Bloomberg, and Long-Term
Trade.
3. Ensure that information on executed trades is provided to Mellon,
broker/dealers and agents, including information on trades not executed
through trading systems (e.g., derivatives, swaps and currency contracts).
Confirm executed trades with broker/dealers and agents.
4. Provide support and trade maintenance for soft dollar transactions.
5. Provide ad hoc support for trading systems, including testing and
implementation of enhancements and modifications.
6. Manage trade settlement processes between the custodians and broker/dealers
for Fund for standard trades, next day settlements, cash trades and
mortgage-backed securities.
7. Maintain relationships with custodian banks in support of trade settlement
processes.
E. Dividends and Distributions
1. Review dividend projections prepared by Mellon, prepare Section 19(a)
notices and coordinate with the investment manager's legal department to
prepare press releases regarding dividends and distributions.
2. Coordinate dividend process with Mellon, the Fund's transfer agent, Fund
management, and the investment manager's legal department.
3. Ensure timely payout of Fund distributions for both net income and capital
gains, and verify appropriate and timely dissemination of data to
interested parties. Conduct summary level review of distribution
calculations and amounts.
F. Reconciliation and Cash Management
1. Review cash and principal assets reconciliation reports to mitigate
potential NAV impacts resulting from cash, position or share discrepancies.
2. Monitor the daily delivery of investable cash information to the investment
manager's investment team and respond to questions and ensure timely
resolution of issues. Act as liaison between the investment manager's
investment team and Mellon.
G. Fund Performance Information
1. Provide oversight for timely dissemination of performance information and
conduct trend analysis review on performance information.
H. Audit Support
1. In coordination with Mellon, participate in planning and execution of
external audits and coordinate and participate in responses to inquiries
from external auditor.
2. Receive and maintain copy of external audit correspondence.
I. Tax Reporting and Consulting
1. Provide detailed review of all federal, state and city tax returns and
ancillary schedules, including year-end excise tax distributions.
2. Provide consulting services, including interpretation of applicable
regulations, to the Fund and Mellon regarding tax diversification.
3. Ensure that all tax returns are filed in accordance with filing deadlines
and maintain copies of tax returns, including proof of timely mailing.
4. Monitor and be familiar with new and proposed tax legislation through
membership in the Investment Company Institute's tax committee and other
legal, financial and trade organizations. Provide analysis and
recommendations regarding the impact of new tax legislation on the Fund.
5. Prepare non-shareholder tax forms, as required, including Form 1099, for
each member of the board of trustees.
6. Review and provide comments on the tax-related sections of shareholder
reports, Section 19(a) notices, prospectuses, statements of additional
information and other disclosure documents, and audit work preparation.
J. Compliance Monitoring
1. Ensure that diversification tests are completed as prescribed by Internal
Revenue Service and Securities and Exchange Commission regulations.
Facilitate corrective action with the investment manager's investment team
as necessary.
2. Ensure compliance with Subchapter M and Section 4982 of the Internal
Revenue Code.
K. Data Feeds
1. Participate in managing the dissemination of Fund data to third parties by
furnishing Mellon with details regarding new requests and notification of
changes to Fund and Fund management.
L. Performance of Services by Mellon
1. Establish and monitor certain service level requirements as detailed in the
service level documents (each a "Service Level Document") entered into
between DSC and Mellon with respect to Mellon's performance of its duties
pursuant to the Mellon Fund Accounting Agreement with the Fund.
2. Evaluate Mellon's performance against the mutually agreed upon requirements
as detailed in the applicable Service Level Document and recommend
adjustments as necessary.
3. Conduct periodic due diligence review of Mellon's processes as detailed in
the applicable Service Level Document.
4. Ensure that corrective action plans are developed and implemented by Mellon
as a result of a service requirement default as detailed in the applicable
Service Level Documents.
M. Business Continuity
1. Confirm the adequacy of disaster recovery plans with respect to systems and
processes of third party vendors selected by the Fund or DSC and relating
to fund accounting and financial administration.
N. Relationship Management
1. Participate in meetings with Mellon to discuss trends, technology and
strategic direction, and report pertinent information to the Fund board.
2. Represent interests of Fund board at annual meeting with Mellon to discuss
services provided, system functionality and policy/procedural
documentation.
O. Other
1. Review leverage requirements and manage credit facilities on behalf of the
Fund.
2. Monitor the flow of information between Mellon and the Fund's proxy voting
agent. In order to ensure proper voting of proxies received in connection
with securities held by the Portfolio(s), review the Fund's proxy voting
summaries, which will be prepared by Mellon from the records of the proxy
voting agent.
3. If a closed-end fund, act as liaison between Mellon and the investment
manager's investment team, Xxxxx'x Investor Services, Standard & Poor's and
the investment manager's compliance department for closed-end ratings
agency tests, ensuring that communication and corrective action protocols
are maintained.
4. Arrange in good faith for the amendment of the Mellon Fund Accounting
Agreement or the negotiation of new contractual arrangements with another
service provider with respect to new fund accounting or financial
administration services requested by the Funds or required by applicable
law after the date of this Agreement.
SCHEDULE C
TO THE FUND ACCOUNTING
AND FINANCIAL ADMINISTRATION OVERSIGHT AGREEMENT
BETWEEN
DELAWARE SERVICE COMPANY, INC. AND
OPTIMUM FUND TRUST
Dated October 1, 2007
Annual Fee
The Fund shall pay to DSC the following Annual Fees (which are based on the
aggregate average daily net assets of the Fund):
Average Daily Net Assets Annual Fees
First $3 billion of average daily net assets 0.0050%
Next $2 billion of average daily net assets 0.0045%
Next $2.5 billion of average daily net assets 0.0040%
Next $2.5 billion of average daily net assets 0.0030%
Over $10 billion of average daily net assets 0.0025%
SCHEDULE D
TO THE FUND ACCOUNTING
AND FINANCIAL ADMINISTRATION OVERSIGHT AGREEMENT
BETWEEN
DELAWARE SERVICE COMPANY, INC. AND
OPTIMUM FUND TRUST
Dated October 1, 2007
LIST OF AUTHORIZED PRICING VENDORS:
Name of Vendor Types of Securities
Interactive Data Equities (US and Foreign), Taxable
Bonds, Non Taxable Bonds, CDS
Standard & Poor's (including XX Xxxxx) Non Taxable Bonds, Taxable Bonds
Bloomberg Equities, Bonds, Futures, Options
Reuters Exchange Rates, Equities, Taxable Bonds
Markit Data (via Interactive Data) CDS and CDX Swap pricing (this is
either direct or via IDC)
FAIR VALUATION INFORMATION VENDOR(S):
Name of Vendor Types of Securities
Interactive Data Fair Value Service Foreign Equities
LIST OF AUTHORIZED DATA INFORMATION VENDORS:
Name of Vendor Type of Service
GICS Security Classifications
Xcitek Corporate Actions Notifications
S&P - CUSIP CUSIP Database
Securities Class Action Services LLC Class Action Notification
LSE - SEDOL License SEDOL Database
Thomson Financial Municipal Floating Rates
