OPTIMUM QTM FUNDS Investment Management Agreement
Exhibit 99(d)(ii)
OPTIMUM QTM FUNDS
THIS INVESTMENT MANAGEMENT AGREEMENT (this “Agreement”) is made as of the 1st day
of September, 2005, by and between Optimum QTM Funds, a Delaware business trust (the
“Trust”), on behalf of each series of the Trust (each, a “Fund” and collectively, the “Funds”)
listed in Appendix A hereto, as the same may be amended from time to time, and MDT Advisers, a
division of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxx, LLC, a Delaware limited liability company (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 “Investment Company 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 desires to furnish said
advice and services; and
NOW, THEREFORE, in consideration of the covenants and the mutual promises set forth herein,
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 provide management services and to render investment advice and
related 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 (the
“Board”).
2. Duties of Manager.
(a) General Duties. The Manager shall act as investment manager to each of the Funds
and shall supervise investments of each Fund on behalf of the Fund in accordance with the
investment objectives, policies and restrictions of the Fund as set forth in the Fund’s and Trust’s
governing documents, including, without limitation, the Trust’s Agreement and Declaration of Trust
and By-Laws; the Trust’s prospectus, statement of additional information and undertakings; and such
other limitations, policies and procedures as the Trustees may impose from time to time in writing
to the Manager. Without limiting the generality of the
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foregoing, the Manager shall: (i) furnish each Fund with advice and recommendations with
respect to the investment of the Fund’s assets and the purchase and sale of portfolio securities
for the Fund, including the taking of such steps as may be necessary to implement such advice and
recommendations (i.e., placing the orders); (ii) manage and oversee the investments of the Fund,
subject to the ultimate supervision and direction of the Board; (iii) vote proxies for the Fund,
file ownership reports under Section 13 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), for the Fund, and take other related actions on behalf of the Fund; (iv) furnish
reports, statements and other data on securities, economic conditions and other matters related to
the investment of the Fund’s assets which the officers or Trustees of the Trust may reasonably
request; and (v) render to the Trust’s Board of Trustees such periodic and special reports with
respect to the 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 Board 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.
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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 Board 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 pursuant to Rule 12b-1 under the Investment Company 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,
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servicing and accounting for the cash, securities and other property of the Trust for the
benefit of the Fund including the Fund’s portion of all fees and expenses of the Trust’s custodian,
shareholder services agent and accounting services agent; interest charges on any borrowings; costs
and expenses of pricing and calculating the Fund’s daily net asset value and of maintaining its
books of account required under the Investment Company Act; taxes, if any; expenditures in
connection with meetings of each Fund’s shareholders and the Board that are payable by the Fund;
the Fund’s portion of salaries and expenses of officers of the Trust, including without limitation
the Trust’s Chief Compliance Officer (as agreed by the Board) and fees and expenses of members of
the Board 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 or educational program expenses determined appropriate by
the Board; 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) The Manager may voluntarily absorb certain Fund expenses or waive all or a portion of the
Manager’s own advisory fee
(d) 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. In determining the Manager’s actual costs, the Manager may take into
account an allocated portion of the salaries and overhead of personnel performing 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 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.
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(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 prior to 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 Board 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 Investment Company 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
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or regulation, or to relieve or deprive the Board 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. Notwithstanding the
foregoing, federal securities laws and certain state laws impose liabilities under certain
circumstances on persons who have acted in good faith, and therefore nothing herein shall in any
way constitute a waiver or limitation of any rights which the Trust, a Fund or any shareholder of a
Fund may have under any federal securities law or state law.
(b) The Funds shall indemnify and hold harmless the Manager and the directors, members,
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, member or officer of the Manager, from liability in violation of Sections 17(h)
and (i) of the Investment Company 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 Investment
Company Act and the Advisers Act and has been approved by the Board.
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13. Term.
(a) This Agreement shall become effective in respect of each Fund at the time such Fund
commences operations pursuant to an effective amendment to the Trust’s Registration Statement under
the Securities Act of 1933, as amended, 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 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. The terms “majority of the outstanding
voting securities” and “interested persons” shall have the meanings as set forth in the Investment
Company Act.
(b) Each Fund may use the names “Optimum Q” or any name derived from or using the name
“Optimum Q” only for 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 in respect of a Fund, the Fund shall cease to use such a name or any other name connected
with the Manager without the prior written consent of the Manager.
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 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 Investment Company 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 “G-L-B
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 G-L-B 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
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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 Investment Company 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 Investment Company 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/ Xxxx. X. Xxxxx
|
By: /s/ X. Xxxxxx Xxxxxx | |
Xxxx C. Xxxxx
|
X. Xxxxxx Xxxxxx | |
Title: Treasurer
|
Title: President |
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| Appendix A to | ||
| Investment Management | ||
| Agreement |
FEE SCHEDULE
| Effective | ||||||||
| Name of Fund | Applicable Fee | Date | ||||||
Optimum QTM — Small Cap Value Fund |
1.25 | % | September 1, 2005 | |||||
Optimum QTM — Small Cap Growth Fund |
1.25 | % | September 1, 2005 | |||||
Optimum QTM — Small Cap Core Fund |
1.25 | % | September 1, 2005 | |||||
Optimum QTM — Mid Cap Growth Fund |
0.90 | % | September 1, 2005 | |||||
Optimum QTM — Large Cap Growth Fund |
0.75 | % | September 1, 2005 | |||||
Optimum QTM — Tax-Aware All Cap Core Fund |
1.00 | % | September 1, 2005 | |||||
| OPTIMUM QTM FUNDS | MDT ADVISERS, | |||||||
| a division of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxx, LLC | ||||||||
By:
|
/s/ Xxxx X. Xxxxx | By: | /s/ X. Xxxxxx Xxxxxx | |||||
| Xxxx C. Xxxxx | X. Xxxxxx Xxxxxx | |||||||
| Title: Treasurer | Title: President | |||||||
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