OPTIMUM QTM FUNDS
Investment Management Agreement
THIS INVESTMENT MANAGEMENT AGREEMENT (this "Agreement") is made as of the
September 12, 2002, by and between Optimum QTM Funds a Delaware business trust
(hereinafter called the "Trust"), on behalf of each series of the Trust listed
in Appendix A hereto, as may be amended from time to time (hereinafter referred
to individually as a "Fund" and collectively as the "Funds"), and MDT Advisers,
a division of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxx, LLC, a Delaware limited liability
company (hereinafter called the "Manager").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is engaged
in the business of supplying investment advice, investment management and
administrative services, as an independent contractor; and
WHEREAS, the Trust desires to retain the Manager to render advice and
services to the Funds pursuant to the terms and provisions of this Agreement,
and the Manager is interested in furnishing said advice and services; and
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
1. Appointment of Manager. The Trust hereby employs the Manager and the
Manager hereby accepts such employment, to render investment advice and
management services with respect to the assets of the Funds for the period and
on the terms set forth in this Agreement, subject to the supervision and
direction of the Trust's Board of Trustees.
2. Duties of Manager.
(a) General Duties. The Manager shall act as investment manager to the
Funds and shall supervise investments of the Funds on behalf of the Funds
in accordance with the investment objectives, programs and restrictions of
the Funds as provided in the Trust's governing documents, including,
without limitation, the Trust's Agreement and Declaration of Trust and
By-Laws, or otherwise and such other limitations as the Trustees may impose
from time to time in writing to the Manager. Without limiting the
generality of the foregoing, the Manager shall: (i) furnish the Funds with
advice and recommendations with respect to the investment of each Fund's
assets and the purchase and sale of portfolio securities for the Funds,
including the taking of such other steps as may be necessary to implement
such advice and recommendations; (ii) furnish the Funds with reports,
statements and other data on securities, economic conditions and other
pertinent subjects which the Trust's Board of Trustees may reasonably
request; (iii) manage the investments of the Funds, subject to the ultimate
supervision and direction of the Trust's Board of Trustees; (iv) provide
persons satisfactory to the Trust's Board of Trustees to act as officers
and employees of the Trust and the Funds (such officers and employees, as
well as certain trustees, may be trustees, directors, officers, partners,
or employees of the Manager or its affiliates) but not including personnel
to provide limited administrative services to the Fund not typically
provided by the Fund's administrator under separate agreement; and (v)
render to the Trust's Board of Trustees such periodic and special reports
with respect to each Fund's investment activities as the Board may
reasonably request.
(b) Brokerage. The Manager shall place orders for the purchase and
sale of securities either directly with the issuer or with a broker or
dealer selected by the Manager. In placing each Fund's securities trades,
it is recognized that the Manager will give primary consideration to
securing the most favorable price and efficient execution, so that each
Fund's total cost or proceeds in each transaction will be the most
favorable under all the circumstances. Within the framework of this policy,
the Manager may consider the financial responsibility, research and
investment information, and other services provided by brokers or dealers
who may effect or be a party to any such transaction or other transactions
to which other clients of the Manager may be a party.
It is also understood that it is desirable for the Funds that the Manager
have access to investment and market research and securities and economic
analyses provided by brokers and others. It is also understood that brokers
providing such services may execute brokerage transactions at a higher cost to
the Funds than might result from the allocation of brokerage to other brokers on
the basis of seeking the most favorable price and efficient execution.
Therefore, the purchase and sale of securities for the Funds may be made with
brokers who provide such research and analysis, subject to review by the Trust's
Board of Trustees from time to time with respect to the extent and continuation
of this practice to determine whether each Fund benefits, directly or
indirectly, from such practice. It is understood by both parties that the
Manager may select broker-dealers for the execution of the Funds' portfolio
transactions who provide research and analysis as the Manager may lawfully and
appropriately use in its investment management and advisory capacities, whether
or not such research and analysis may also be useful to the Manager in
connection with its services to other clients.
On occasions when the Manager deems the purchase or sale of a security to
be in the best interest of one or more of the Funds as well as of other clients,
the Manager, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Manager in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Funds and to such other clients.
3. Best Efforts and Judgment. The Manager shall use its best judgment and
efforts in rendering the advice and services to the Funds as contemplated by
this Agreement.
4. Independent Contractor. The Manager shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Funds in any way, or in any way be deemed an agent for the Trust or
for the Funds. It is expressly understood and agreed that the services to be
rendered by the Manager to the Funds under the provisions of this Agreement are
not to be deemed exclusive, and the Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. Manager's Personnel. The Manager shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall be
deemed to include persons employed or retained by the Manager to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Manager or the Trust's Board of Trustees may desire and reasonably request.
6. Reports by Funds to Manager. Each Fund will from time to time furnish to
the Manager detailed statements of its investments and assets, and information
as to its investment objective and needs, and will make available to the Manager
such financial reports, proxy statements, legal and other information relating
to each Fund's investments as may be in its possession or available to it,
together with such other information as the Manager may reasonably request.
7. Expenses.
(a) With respect to the operation of each Fund, and to the extent not
paid or reimbursed through a plan adopted by the Fund under Rule 12b-1
under the 1940 Act, the Manager is responsible for (i) the compensation of
any of the Trust's trustees, officers, and employees who are affiliates of
the Manager (but not the compensation of employees performing services in
connection with expenses which are the Fund's responsibility under
Subparagraph 7(b) below), (ii) the expenses of printing and distributing
the Funds' prospectuses, statements of additional information, and sales
and advertising materials (but not the legal, auditing or accounting fees
attendant thereto) to prospective investors (but not to existing
shareholders), and (iii) providing office space and equipment reasonably
necessary for the operation of the Funds.
(b) Each Fund is responsible for and has assumed the obligation for
payment of all of its expenses, other than as stated in Subparagraph 7(a)
above, including but not limited to: fees and expenses incurred in
connection with the issuance, registration and transfer of its shares;
brokerage and commission expenses; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Trust for the benefit of the Funds including all fees and
expenses of its custodian, shareholder services agent and accounting
services agent; interest charges on any borrowings; costs and expenses of
pricing and calculating its daily net asset value and of maintaining its
books of account required under the 1940 Act; taxes, if any; expenditures
in connection with meetings of each Fund's shareholders and Board of
Trustees that are properly payable by the Fund; salaries and expenses of
officers and fees and expenses of members of the Trust's Board of Trustees
or members of any advisory board or committee who are not members of,
affiliated with or interested persons of the Manager; insurance premiums on
property or personnel of each Fund which inure to its benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional
information of the Fund or other communications for distribution to
existing shareholders; legal, auditing and accounting fees; trade
association dues; fees and expenses (including legal fees) of registering
and maintaining registration of its shares for sale under federal and
applicable state and foreign securities laws; all expenses of maintaining
and servicing shareholder accounts, including all charges for transfer,
shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of the Funds, if any; and all other charges and
costs of its operation plus any extraordinary and non-recurring expenses,
except as herein otherwise prescribed.
(c) To the extent the Manager incurs any costs by assuming expenses
which are an obligation of a Fund as set forth herein, such Fund shall
promptly reimburse the Manager for such costs and expenses, except to the
extent the Manager has otherwise agreed to bear such expenses. To the
extent the services for which a Fund is obligated to pay are performed by
the Manager, the Manager shall be entitled to recover from such Fund to the
extent of the Manager's actual costs for providing such services.
8. Investment Advisory and Management Fee.
(a) Each Fund shall pay to the Manager, and the Manager agrees to
accept, as full compensation for all administrative and investment
management and advisory services furnished or provided to such Fund
pursuant to this Agreement, a management fee at the annual rate set forth
in the Fee Schedule attached hereto as Appendix A, as may be amended in
writing from time to time by the Trust and the Manager.
(b) The management fee shall be accrued daily by each Fund and paid to
the Manager on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated before the end of any month, the fee to the Manager shall be
prorated for the portion of any month in which this Agreement is in effect
which is not a complete month according to the proportion which the number
of calendar days in the month during which the Agreement is in effect bears
to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The Manager may, but is not required to, waive all or a portion of
its fees and/or reimburse the Funds for other expenses in order to reduce
the operating expenses of the Funds. Any such reduction, reimbursement,
waiver, or payment (collectively "subsidies") shall be applicable only to
such specific subsidy and shall not constitute an agreement to continue
such subsidy in the future. Any such subsidy will be agreed to prior to
accrual of the related expense or fee and will be estimated daily and
reconciled and paid on a monthly basis. The Manager may also agree
contractually to limit a Fund's operating expenses. To the extent such a
voluntary or contractual expense limitation has been agreed to by the
Manager and such limit has been disclosed to shareholders of such Fund in a
prospectus, the limit cannot be changed without first disclosing the change
in an updated prospectus.
The Manager may seek reimbursement in a subsequent fiscal year of any
subsidies made by the Manager either voluntarily or pursuant to contract.
The reimbursement of any subsidy must be approved by the Trust's Board of
Trustees and must be sought no later than the end of the third fiscal year
following the year to which the subsidy relates. The Manager may not
request and receive reimbursement for any subsidies before payment of a
Fund's ordinary operating expenses for the current year and cannot cause a
Fund to exceed any agreed upon expense limitation for that year in making
such reimbursement.
(e) The Manager may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to
this Agreement prior to the time such compensation or reimbursement has
accrued as a liability of the Fund. Any such agreement shall be applicable
only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation
or reimbursement due to the Manager hereunder.
9. Fund Share Activities of Manager's Officers and Employees. The Manager
agrees that neither it nor any of its officers or employees shall take any short
position in the shares of the Funds. This prohibition shall not prevent the
purchase of such shares by any of the officers or bona fide employees of the
Manager or any trust, pension, profit-sharing or other benefit plan for such
persons or affiliates thereof, at a price not less than the net asset value
thereof at the time of purchase, as allowed pursuant to rules promulgated under
the 1940 Act.
10. Conflicts with Trust's Governing Documents and Applicable Laws. Nothing
herein contained shall be deemed to require the Trust or the Funds to take any
action contrary to the Trust's Agreement and Declaration of Trust, By-Laws, or
any applicable statute or regulation, or to relieve or deprive the Board of
Trustees of the Trust of its responsibility for and control of the conduct of
the affairs of the Trust and Funds.
11. Manager's Liabilities.
(a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on
the part of the Manager, the Manager shall not be subject to liability to
the Trust or the Funds or to any shareholder of the Funds for any act 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 by the Funds.
(b) The Funds shall indemnify and hold harmless the Manager and the
directors, shareholders, officers and employees of the Manager (any such
person, an "Indemnified Party") against any loss, liability, claim, damage
or expense (including the reasonable cost of investigating and defending
any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the
Indemnified Party's performance or non-performance of any duties under this
Agreement provided, however, that nothing herein shall be deemed to protect
any Indemnified Party against any liability to which such Indemnified Party
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties under this Agreement.
(c) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or director or officer of the Manager,
from liability in violation of Sections 17(h) and (i) of the 1940 Act.
12. Non-Exclusivity. The Trust's employment of the Manager is not an
exclusive arrangement, and the Trust may from time to time employ other
individuals or entities to furnish it with the services provided for herein. If
this Agreement is terminated with respect to any Fund, this Agreement shall
remain in full force and effect with respect to all other Funds listed on
Appendix A hereto, as the same may be amended. Likewise, the Manager may act as
investment adviser for any other person, and shall not in any way be limited or
restricted from buying, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Manager expressly represents that it will undertake no
activities which will adversely affect the performance of its obligations to the
Fund under this Agreement; and provided further that the Manager will adhere to
a code of ethics governing employee trading and trading for proprietary accounts
that conforms to the requirements of the 1940 Act and the Advisers Act and has
been approved by the Trust's Board of Trustees.
13. Term. This Agreement shall become effective at the time the Trust's
initial Registration Statement under the Securities Act of 1933 with respect to
the shares of the Trust is declared effective by the Securities and Exchange
Commission and shall remain in effect for a period of two (2) years, unless
sooner terminated as hereinafter provided. This Agreement shall continue in
effect thereafter for additional periods not exceeding one (l) year so long as
such continuation is approved for each Fund at least annually by (i) the Board
of Trustees of the Trust or by the vote of a majority of the outstanding voting
securities of each Fund and (ii) the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement nor interested persons thereof, cast
in person at a meeting called for the purpose of voting on such approval.
14. Termination. This Agreement may be terminated by the Trust on behalf of
any one or more of the Funds at any time without payment of any penalty, by the
Board of Trustees of the Trust or by vote of a majority of the outstanding
voting securities of a Fund, upon sixty (60) days' written notice to the
Manager, and by the Manager upon sixty (60) days' written notice to a Fund.
15. Termination by Assignment. This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the 1940 Act.
16. Transfer, Assignment. This Agreement may not be transferred, assigned,
sold or in any manner hypothecated or pledged without the affirmative vote or
written consent of the holders of a majority of the outstanding voting
securities of each Fund.
17. Nonpublic Personal Information. Notwithstanding any provision herein to
the contrary, the Manager hereto agrees on behalf of itself and its directors,
officers, and employees (1) to treat confidentially and as proprietary
information of the Trusts (a) all records and other information relative to the
Funds and their prior, present or potential shareholders (and clients of said
shareholders) and (b) any Nonpublic Personal Information, as defined under
Section 248.3(t) of Regulation S-P ("Regulation S-P)", promulgated under the
Xxxxx-Xxxxx-Xxxxxx Act (the "Act"), and (2) not to use such records and
information for any purpose other than the performance of its responsibilities
and duties hereunder, or as otherwise permitted by the privacy policies adopted
by the Trust, Regulation S-P or the Act, except after prior notification to and
approval in writing by the Trust. Such written approval shall not unreasonably
be withheld by the Trust and may not be withheld where the Manager may be
exposed to civil or criminal contempt proceedings for failure to comply after
being requested to divulge such information by duly constituted authorities, or
when so requested by the Trust.
18. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
19. Definitions. The terms "majority of the outstanding voting securities"
and "interested persons" shall have the meanings as set forth in the 1940 Act.
20. Notice of Declaration of Trust. The Manager agrees that the Trust's
obligations under this Agreement shall be limited to the Funds and to their
assets, and that the Manager shall not seek satisfaction of any such obligation
from the shareholders of the Funds nor from any trustee, officer, employee or
agent of the Trust or the Funds.
21. Captions. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
22. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Massachusetts without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act and the Investment Advisers Act of 1940 and any
rules and regulations promulgated thereunder.
23. Name. The Trust and the Funds may use the name "Optimum Q" or any name
derived from or using the name "Optimum Q" only so long as this Agreement or any
extension, renewal or amendment hereof remains in effect. Within sixty (60) days
from such time as this Agreement shall no longer be in effect, the Trust and the
Funds shall cease to use such a name.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all on the day and
year first above written.
OPTIMUM QTM FUNDS MDT ADVISERS
a division of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxx, LLC
By:/s/ X. Xxxxxx Xxxxxx By: /s/ X. Xxxxxx Xxxxxx
-------------------------- -----------------------------
X. Xxxxxx Xxxxxx X. Xxxxxx Xxxxxx
Title: President Title: President
