INVESTMENT ADVISORY CONTRACT
AGREEMENT made this 12th day of February, 1998 by and between ARK
Funds, a Massachusetts business trust (the "Fund"), and Allied Investment
Advisors, Inc., a Maryland corporation (the "Adviser").
WHEREAS, the Fund is registered as an open-end, management series
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, the Fund currently offers nineteen series of units of
beneficial interest ("Shares"), each series representing interests in a separate
investment portfolio, and may offer other series of Shares from time to time
(all such series of Shares hereinafter collectively referred to as the
"Portfolios"); and
WHEREAS, the Fund desires to retain the Adviser to render investment
advisory services to the Fund and to the Portfolios, subject to and in
accordance with the requirements of the Investment Company Act; and
WHEREAS, the Adviser is willing to render such services under the terms
of this Agreement:
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT OF ADVISER. The Fund hereby appoints the Adviser to act
as investment adviser to the Fund and its Portfolios for the period and on such
terms as are set forth in this Agreement. The Adviser hereby accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. DUTIES AS INVESTMENT ADVISER. Subject to the supervision of the
Fund's Board of Trustees ("Board"), the Adviser will be responsible for
providing a continuous investment program for the Fund's Portfolios, including
the provision of investment research and management with respect to all
securities and investments and cash equivalents purchased, sold or held in the
Portfolios and the selection of brokers and dealers through which securities
transactions for the respective Portfolios will be executed. In carrying out its
responsibilities under this Agreement, the Adviser will at all times act in
accordance with the investment objectives, policies and restrictions of each
Portfolio as stated in the Fund's registration statement as it may be amended
from time to time ("Registration Statement") as well as all applicable rules and
regulations of the Securities and Exchange Commission.
The Adviser further agrees that it will:
(a) promptly advise the Fund's custodian and accounting
services agent of each purchase and sale, as the case may be, made on
behalf of each of the Portfolios of any security or other investment
specifying in each case; the name and quantity of the investment
purchased or sold, the unit and aggregate purchase or sale price,
commission paid, the market on which the transaction was effected, the
trade date, the settlement date, the identity of the effecting broker
or dealer and/or such other information as may be reasonably requested
by the custodian and accounting services agent, all in such manner as
may from time to time be reasonably requested by them;
(b) provide, in a timely manner, such information as may be
reasonably requested by the Fund or its authorized agent in connection
with the computation of the net asset value and the net income of each
Portfolio in accordance with the procedures prescribed in the
Registration Statement or as more frequently requested by the Board;
provided, however, that the Adviser shall not be responsible for any
such computation or for the calculation of the net asset value per
share of any of the Fund's Portfolios; and
(c) render regular reports to the Board concerning the
Adviser's performance of its responsibilities under this Agreement and
such other periodic and special reports as the Board may request; in
particular, the Adviser agrees that it will attend meetings of the
Board or validly constituted committees thereof.
3. BROKERAGE TRANSACTIONS. In placing orders with brokers and dealers,
the Adviser shall obtain the most favorable execution of such orders. However,
the Adviser may, in its discretion, purchase and sell portfolio securities to
and from brokers and dealers who provide the Adviser with research, analysis,
advice and similar services, and the Adviser may cause the Fund to pay to those
brokers or dealers, in return for research and analysis, a higher commission or
spread than may be charged by other brokers or dealers, provided that the
Adviser determines in good faith that such commission or spread is reasonable in
terms either of the particular transaction or of the overall responsibility of
the Adviser to the Fund and any other accounts with respect to which the Adviser
exercises investment discretion. In no instance will securities be purchased
from or sold to the Adviser or any affiliated person of the Adviser except in
accordance with the Investment Company Act.
4. DELEGATION. The Adviser may delegate any of its duties as described
in, or derived from, the duties set forth in paragraph 3 of this Agreement,
provided that any such delegation may be made only pursuant to written
agreements which satisfy the requirements of the Investment Company Act and
shall have been approved by the Fund's Board, and by the shareholders of each
Portfolio to which such agreement applies, in accordance with the provisions of
the Investment Company Act.
5. SERVICES NOT EXCLUSIVE. The services furnished by the Adviser
hereunder are not to be deemed exclusive and the Adviser shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby.
6. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the Investment Company Act, the Adviser hereby agrees that all records
which it
maintains for the Fund and/or the Portfolios are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon
request by the Fund. The Adviser further agrees to preserve for the period
prescribed by Rule 31a-2 under the Investment Company Act the records required
to be maintained by Rule 31a-1 under the Investment Company Act.
7. EXPENSES OF THE FUND. All expenses shall be allocated among the
Portfolios in accordance with the Fund's Declaration of Trust and the provisions
of the Investment Company Act. During the term of this Agreement, the Fund will
bear all expenses, not specifically assumed by the Adviser, incurred in the
conduct of its operations, including, without limitation, responsibility for the
following: (a) the cost (including brokerage commissions) of securities
purchased or sold by the Portfolios and any losses incurred in connection
therewith; (b) fees payable to, and expenses incurred on behalf of the Fund by,
the Adviser; (c) expenses of organizing the Fund; (d) filing fees and expenses
relating to the registration and qualification of the Fund's shares and the Fund
under federal and/or state securities laws and maintaining such registrations
and qualifications; (e) fees and salaries payable to the Fund's trustees and
officers; (f) taxes (including any income or franchise taxes) and governmental
fees; (g) costs of any liability, uncollectible items of deposit and other
insurance or fidelity bonds; (h) any costs, expenses or losses arising out of a
liability of or claim for damages or other relief asserted against the Fund for
violation of any law; (i) legal, accounting and auditing expenses, including
legal fees of special counsel at any time retained for those members of the
Board who are not interested persons of the Fund and expenses relating to the
use of consulting services by the Fund provided that the use of such services is
approved by the Fund's trustees; (j) charges of custodians, transfer agents and
other agents; (k) costs of preparing share certificates; (l) expenses of setting
in type and printing prospectuses and supplements thereto for existing
shareholders, reports, shareholder reports, and proxy materials; (m) costs of
mailing prospectuses, statements of additional information and supplements
thereto to existing shareholders as well as shareholder reports and proxy
material; (n) any extraordinary expenses (including fees and disbursements of
counsel) incurred by the Fund; (o) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (p) costs of mailing and tabulating proxies and costs of
shareholders and directors meetings; and (q) the cost of investment company
literature and other publications provided by the Fund to its trustees and
officers.
The Fund may pay directly any expense incurred by it in its normal
operations and, if any such payment is consented to by the Adviser and
acknowledged as otherwise payable by the Adviser pursuant to this Agreement, the
Fund may reduce the fee payable to the Adviser pursuant to this Agreement by
such amount. To the extent that such deductions exceed the fee payable to the
Adviser for any monthly payment period, such excess shall be carried forward and
deducted in the same manner from the fee payable on succeeding monthly payment
dates.
8. EXPENSES OF ADVISER. The Adviser will bear all expenses incurred by
it in performing its duties as investment adviser under this Agreement. The
Adviser may, but is not required to, voluntarily assume any portion or all of
the expenses that the Fund is required to pay under paragraph 7 hereof. In
addition, if the expenses borne by the Fund in any fiscal year exceed the
applicable expense limitations imposed by the securities
regulations of any state in which shares are registered or qualified for sale to
the public, the Adviser will reimburse the Fund for any excess up to the amount
of the fee payable to it during that fiscal year pursuant to this Agreement.
9. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Fund will pay to the Adviser a fee in accordance
with the compensation schedule appended to this Agreement.
10. LIMITATION OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
or any of its Portfolios in connection with the matters to which this Agreement
relates including, without limitation, losses that may be sustained in
connection with the purchase, holding, redemption, or sale of any security on
behalf of any Portfolio of the Fund, except a loss resulting from the willful
misfeasance, bad faith or gross negligence of the Adviser in the performance of
its duties or from reckless disregard by it of its obligations and duties under
this Agreement.
11. DURATION AND TERMINATION. This Agreement shall become effective
upon the date first above written and, unless sooner terminated as provided
herein, shall continue in effect automatically for successive periods of twelve
months each, so long as such continuance is specifically approved with respect
to each Portfolio at least annually by (a) the vote of a majority of those
members of the Board who are not parties to this Agreement or interested persons
of any such party, cast in person at a meeting called for the purpose of voting
on such approval; and (b) all of the members of the Board or by vote of the
holders of a majority of the outstanding voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated with
respect to any Portfolio or the Fund at any time, without the payment of any
penalty by the Fund, upon the vote of the Board or the vote of a majority of the
outstanding voting securities of the Fund and on 60 days' written notice to the
Adviser or by the Adviser at any time, without the payment of any penalty, on 60
days' written notice to the Fund. This Agreement will automatically and
immediately terminate in the event of its assignment. As used in this Agreement,
the terms "majority of the outstanding voting securities," "interested person"
and "assignment" shall have the same meaning as such terms have in the
Investment Company Act.
In the event that this Agreement shall not be approved in the manner
provided herein or shall have been terminated with respect to any Portfolio, the
Adviser and the Fund shall continue to be bound by the terms of this Agreement
with respect to any other Portfolio provided that this Agreement shall have been
approved in the manner contemplated herein with respect to such Portfolio.
12. AMENDMENT OF THIS AGREEMENT. No material provision of this
Agreement may be changed, waived, discharged or terminated except by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no amendment of any
material term of this Agreement shall be effective until approved by the Board
and by the holders of a majority of the Fund's outstanding voting securities.
13. NAME OF THE FUND. The Fund may use the name "ARK Fund" or any name
derived from or using the word "ARK" only for so long as this Agreement or any
extension, renewal or amendment hereof remains in effect. At such time as such
an agreement, shall no longer be in effect, the Fund will (to the extent that it
lawfully can) cease to use such a name or any other name similar thereto.
14. MISCELLANEOUS. The Adviser acknowledges that the Fund is a
Massachusetts business trust, and that the Fund is required by its Declaration
of Trust to limit its liability in all agreements to the assets of the Fund.
Consequently, the Adviser agrees that any claims by it against the Fund may be
satisfied only from the assets of the Fund, and no shareholders, trustees or
officers of the Fund may be held personally liable or responsible for any
obligations arising out of this Agreement.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by Maryland law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
Attest: ARK FUNDS
/s/ Xxxxxx Kondliela By: Xxxxxxx Xxxxxxx
---------------- ---------------
Xxxxxx Kondliela Xxxxxxx Xxxxxxx
Attest: ALLIED INVESTMENT ADVISORS, INC.
/s/ Xxxxxxxx Xxxxx By: Xxxxxxxx X. Xxxxxxx
---------------- -------------------
Xxxxxxxx Xxxxx Xxxxxxxx X. Xxxxxxx
