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EXHIBIT (d)(2)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT executed as of _________ __, 2000 by and between Allied
Investment Advisors, Inc., a Maryland corporation (the "Adviser") AIB Govett,
Inc., a Maryland corporation (the "Sub-Adviser"), and ARK Funds, a Massachusetts
business trust (the "Trust"), on behalf of its International Equity Portfolio,
Emerging Markets Portfolio, and International Equity Selection Portfolio
(collectively, the "Funds");
WHEREAS, the Adviser is the investment adviser for each of the
portfolios of the Trust, an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser as its agent to
furnish investment advisory services for the Funds;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Appointment. The Adviser hereby appoints the Sub-Adviser to
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provide certain sub-investment advisory services to the Funds for the period and
on the terms set forth in this Agreement. The Sub-Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
2. Delivery of Documents. The Adviser has furnished the
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Sub-Adviser with copies properly certified or authenticated of each of the
following:
(a) The Trust's Agreement and Declaration of Trust, as
filed with the Secretary of State of the Commonwealth of Massachusetts
on March 19, 1993, and all amendments and supplements thereto or
restatements thereof (such Declaration, as presently in effect and as
it shall from time to time be amended or restated, is herein called the
"Declaration of Trust");
(b) The Trust's By-Laws and all amendments thereto;
(c) Resolutions of the Trust's Board of Trustees
authorizing the appointment of the Sub-Adviser and approving this
Agreement;
(d) The Trust's Registration Statement on Form N-1A under
the Securities Act of 1933, as amended (the "1933 Act"), (File No.
33-53690) and under the 1940 Act (File No. 811-7310), as filed with the
Securities and Exchange Commission ("SEC") and all amendments thereto
insofar as such Registration Statement and such amendments relate to
the Funds; and
(e) The Trust's most recent prospectus and Statement of
Additional Information for the Funds (such prospectus and Statement of
Additional
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Information, as presently in effect, and all amendments and supplements
thereto, are herein collectively called the "Prospectus").
The Adviser will furnish the Sub-Adviser from time to time
with copies of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Trust's Board of
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Trustees and the Adviser, the Sub-Adviser will furnish an investment program in
respect of, and make investment decisions for, all assets of the Funds and place
all orders for the purchase and sale of securities, all on behalf of the Funds.
In the performance of its duties, the Sub-Adviser will satisfy its fiduciary
duties to the Funds (as set forth in Section 8, below), and will monitor the
investments of each of the Funds, and will comply with the provisions of the
Trust's Declaration of Trust and By-Laws, as amended from time to time, and the
stated investment objectives, policies and restrictions of the respective Funds.
The Sub-Adviser and the Adviser will each make its officers and employees
available to the other from time to time at reasonable times to review
investment policies of the Funds and to consult with each other regarding the
investment affairs of the Funds. The Sub-Adviser shall also make itself
available to the Board of Trustees at such times as the Board of Trustees shall
reasonably request.
The Sub-Adviser represents and warrants that it is in
compliance with all applicable rules and regulations of the SEC pertaining to
its investment advisory activities and agrees that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to fiduciary accounts for
which it has investment responsibilities;
(b) will conform with all applicable rules and regulations of
the SEC pertaining to its investment advisory activities;
(c) will place orders pursuant to its investment
determinations for the Funds either directly with the issuer or with
any broker or dealer. In placing orders with brokers or dealers, the
Sub-Adviser will attempt to obtain the best combination of prompt
execution of orders in an effective manner and at the most favorable
price. Consistent with this obligation, when the execution and price
offered by two or more brokers or dealers are comparable, the
Sub-Adviser may, in its discretion, purchase and sell portfolio
securities to and from brokers and dealers who provide the Sub-Adviser
with research, analysis, advice and other services. In no instance will
portfolio securities be purchased from or sold to any affiliated person
of either the Trust, the Adviser, or the Sub-Adviser, except as may be
permitted under the 1940 Act;
(d) will report regularly to the Adviser and will make
appropriate persons available for the purpose of reviewing at
reasonable times with representatives of the Adviser and the Board of
Trustees the management of each of the Funds, including, without
limitation, review of the respective investment strategies of the
Funds, the performance of the Funds in relation to standard industry
indices, interest rate considerations and general conditions affecting
the marketplace and will provide various other reports from time to
time as reasonably requested by the Adviser;
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(e) will maintain books and records with respect to the Funds'
securities transactions and will furnish the Adviser and the Trust's
Board of Trustees such periodic and special reports as the Board of
Trustees or the Adviser may request; and
(f) will act upon instructions from the Adviser not
inconsistent with the fiduciary duties hereunder.
The Sub-Adviser shall have the right to execute and deliver, or cause
its nominee to execute and deliver, all proxies and notices of meetings and
other notices affecting or relating to the securities each of the Funds.
4. Books and Records. In compliance with the requirements of Rule
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31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which
it maintains for the Funds, on behalf of the Trust, are the property of the
Trust and further agrees to surrender promptly to the Trust any of such records
upon the Trust's request. The Sub-Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
5. Expenses. During the term of this Agreement, the Sub-Adviser
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will pay all expenses incurred by it in connection with its activities under
this Agreement.
6. Compensation. For the services to be provided by the
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Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-Adviser,
and the Sub-Adviser agrees to accept as full compensation therefor, a
sub-advisory fee as set forth on the Fee Schedule attached to this Agreement.
7. Services to Others. The Adviser understands, and has advised
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the Trust's Board of Trustees, that the Sub-Adviser now acts, and may in the
future act, as an investment adviser to fiduciary and other managed accounts,
and as investment adviser, sub-investment adviser, and/or administrator to other
investment companies. The Adviser has no objection to the Sub-Adviser's acting
in such capacities, provided that whenever the Fund and one or more other
investment companies advised by the Sub-Adviser have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a formula believed by the Sub-Adviser to be equitable to each
company. The Adviser recognizes, and has advised the Trust's Board of Trustees,
that in some cases this procedure may adversely affect the size of the position
that the Fund may obtain in a particular security. In addition, the Adviser
understands, and has advised the Trust's Board of Trustees, that the persons
employed by the Sub-Adviser to assist in the Sub-Adviser's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement will be deemed to limit or restrict the right of the
Sub-Adviser or any of its affiliates to engage in and devote time and attention
to other businesses or to render services of whatever kind or nature so long as
its services under this Agreement are not impaired thereby.
8. Limitation of Liability of Sub-Adviser. The Sub-Adviser shall
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not be liable for any error of judgement or mistake of law or for any loss
suffered by the Funds or the Adviser in
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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 the Funds, except a
loss resulting from the willful misfeasance, bad faith or gross negligence of
the Sub-Adviser in the performance of its duties or from reckless disregard by
it of its obligations and duties under this Agreement.
9. Duration and Termination. This Agreement will become effective
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as of the date hereof provided that it has been approved by vote of a majority
of the outstanding voting securities of the Funds in accordance with the
requirements under the 1940 Act, and, unless sooner terminated as provided
herein, will continue in effect for successive periods of 12 months, each ending
on the day preceding the anniversary of the Agreement's effective date of each
year, provided that such continuation is specifically approved at least annually
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(a) by the vote of a majority of those members of the Trust's Board of Trustees
who are not interested persons of the Trust, the Sub-Adviser, or the Adviser,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the vote of a majority of the Trust's Board of Trustees or, as to
each Fund, by the vote of the holders of a majority of the outstanding voting
securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to
either or all Funds at any time, without the payment of any penalty, by the
Adviser, by vote of the Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities of the Fund on sixty (60) days' written
notice to the Sub-Adviser and by the Sub-Adviser on sixty (60) days' written
notice to the Adviser and the Trust. This Agreement will terminate automatically
upon termination of the investment advisory agreement between the Trust and the
Adviser. 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" have the
same meaning of such terms in the 1940 Act).
10. Amendment of this Agreement. No material provision of this
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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.
11. Miscellaneous. The captions in this Agreement are included for
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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 is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby.
The names "ARK Funds" and "Trustees of ARK Funds" refer respectively to
the Trust created by, and the Trustees, as trustees but not individually or
personally, acting from time to time under, the Declaration of Trust, to which
reference is hereby made and a copy of which is on file at the office of the
Secretary of State of the Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "ARK Funds" entered in the name or on behalf thereof
by any of the Trustees, representatives or agents are made not individually but
only in such capacities and are not binding upon any of the Trustees,
shareholders or representatives of the Trust personally, but bind only the
assets of the Trust. Persons dealing with a Fund must look solely to the assets
of the Trust belonging to the Fund for the enforcement of any claims against the
Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
ALLIED INVESTMENT ADVISORS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
AIB GOVETT, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
ARK FUNDS
By:_______________________________
Name:_____________________________
Title:____________________________
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