DISTRIBUTION SERVICES AGREEMENT
Exhibit (e)(2)
DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made this 7th day of August 2014, by and between ARK Investment Management LLC, a Delaware limited liability company (the “Adviser”), and Foreside Fund Services, LLC, a Delaware limited liability company (the “Distributor”).
WHEREAS, the Adviser serves as investment adviser for certain series and classes, as listed on Exhibit A hereto (each a “Fund” and collectively, the “Funds”) of ARK ETF Trust (the “Trust”) registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (the “ 1940 Act”) as an open-end investment company; and
WHEREAS, pursuant to a distribution agreement by and between the Distributor and the Trust dated as of even date herewith (the “Distribution Agreement”), the Distributor acts as the principal underwriter and distributor of shares of the Funds
WHEREAS, in consideration of Distributor’s agreement to provide certain sales and marketing services as described in the Distribution Agreement, the Adviser has agreed to compensate the Distributor as provided for herein;
NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration the receipt of which is hereby acknowledged, the Adviser and the Distributor hereby agree as follows:
1. Services.
Distributor will provide the Funds and the Adviser with the marketing and sales support services set forth in the Distribution Agreement, which is attached hereto as Exhibit A.
2. Compensation and Expenses.
The Distributor shall be entitled to receive the compensation set forth in Exhibit B hereto or as otherwise agreed to in writing.
3. Term and Termination.
(a) This Agreement will become effective upon the date first set forth above, will continue in effect throughout the term of the Distribution Agreement, and will terminate automatically upon any termination of the Distribution Agreement; provided, however, that, notwithstanding such termination of the Distribution Agreement, the Adviser will continue to pay to Distributor all fees to which Distributor is entitled pursuant to the Distribution Agreement for services performed through such termination date.
This Agreement may be terminated by the Adviser upon 60 days’ written notice to the Distributor in the event the Adviser no longer serves as investment adviser to the Funds; provided that prior to or on such termination date, the Adviser pays to Distributor all compensation due as of such termination date.
4. Rights and Obligations of the Adviser and the Distributor.
The Adviser shall be responsible for the accuracy and completeness of information concerning its organization and sales channels that the Adviser furnishes to the Distributor in connection with the Distributor’s provision of services pursuant to the Distribution Agreement.
5. Representations and Warranties.
| (a) | The Adviser represents and warrants the following: |
(i) this Agreement has been duly authorized by the Adviser and, when executed and delivered, will constitute a legal, valid and binding obligation of the Adviser, enforceable against it in accordance with its terms subject to bankruptcy, insolvency, reorganizations, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties;
(ii) the contractual advisory fees that the Adviser charges the Trust do not contain any component for the purpose of paying for fund distribution; and
(iii) this Agreement has been disclosed to the Board of Trustees of the Funds (the “Board”), and the Adviser has provided all such information to the Board as may be appropriate (or as has been requested by the Board) in connection with the Board’s review or approval of the arrangements contemplated hereunder, including amounts expended by the Adviser hereunder.
| (b) | The Distributor represents and warrants the following: |
(i) it is a duly registered broker-dealer in good standing with FINRA, and shall immediately notify the Adviser should the foregoing no longer be true during the term of this Agreement;
(ii) it is in material compliance with all laws, rules and regulations applicable to it, including but not limited to the rules and regulations promulgated by FINRA;
(iii) this Agreement has been duly authorized by the Distributor and, when executed and delivered, will constitute a legal, valid and binding obligation of the Distributor, enforceable against the Distributor in accordance with its terms subject to bankruptcy, insolvency, reorganizations, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties.
6. Confidentiality.
During the term of this Agreement, the Distributor and the Adviser may have access to confidential information relating to such matters as either party’s business, trade secrets, systems, procedures, manuals, products, contracts, personnel, and clients. As used in this Agreement, “Confidential Information” means information belonging to the Distributor or the Adviser which is of value to such party and the disclosure of which could result in a competitive or other disadvantage to such party. Confidential Information includes, without limitation, financial information, proposals and presentations, reports, forecasts, inventions, improvements and other intellectual property; trade secrets; know-how; designes, processes or formulae; software; market or sales information or plans; customer lists; and business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or faciltiies), and all provisions of this Agreement.
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Confidential Information includes information developed by either party in the course of engaging in the activities provided for in this Agreement, unless: (i) the information is or becomes publicly known through lawful means, (ii) the information is disclosed to the other party by a third party not under an obligation of confidentiality to the party whose Confidential Information is at issue, or (iii) the information is independently developed by a party without reference to the other’s Confidential Information. The parties understand and agree that all Confidential Information shall be kept confidential by the other both during and after the term of this Agreement. Each party shall maintain commercially reasonable information security policies and procedures for protecting Confidential Information. The parties further agree that they will not, without the prior written approval by the other party, disclose such Confidential Information, or use such Confidential Information in any way, either during the term of this Agreement or at any time thereafter. Notwithstanding the foregoing, a party may disclose the other’s Confidential Information if (i) required by law, regulation or legal process or if requested by the SEC or other governmental regulatory agency with jurisdiction over the parties hereto; (ii) requested to by the other party; provided that in the event of (i) the disclosing party shall give the other party reasonable prior notice of such disclosure to the extent reasonably practicable and shall reasonably cooperate with the other party (at such other party’s expense) in any efforts to prevent such disclosure.
In the event of any unauthorized use or disclosure by a Party of any Confidential Information of the Other Party, the Disclosing Party shall promptly (i) notify the Other Party of the unauthorized use or disclosure; (ii) take all reasonable actions to limit the adverse effect on the Other Party of such unauthorized use or disclosure; and (iii) take all reasonable action to protect against a recurrence of the unauthorized use or disclosure.
7. Limitation of Liability; Indemnification.
(a) The Distributor shall not be liable to the Adviser for any action taken or omitted by it in the absence of bad faith, willful misfeasance, gross negligence or reckless disregard by it (or its agents or employees) of its obligations and duties under this Agreement or the Distribution Agreement. The Adviser shall indemnify and hold harmless the Distributor, its affiliates and each of their respective employees, agents, directors and officers from and against, any and all claims, demands, actions and suits, and from and against any and all judgments, liabilities, losses, damages, costs, charges and reasonable counsel fees incurred in connection therewith (collectively, “Losses”) arising out of or related to the arrangement contemplated under this Agreement and/or the Distribution Agreement, except to the extent that Losses result from the Distributor’s bad faith, willful misfeasance, or gross negligence or its reckless disregard of its express obligations and duties hereunder and/or under the Distribution Agreement.
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(b) The Adviser shall not be liable to the Distributor for any action taken or omitted by it in the absence of bad faith, willful misfeasance, gross negligence or reckless disregard by it (or its agents or employees) of its obligations and duties under this Agreement. The Distributor shall indemnify and hold harmless the Adviser its affiliates and each of its respective employees, agents, directors and officers from and against, any and all claims, demands, actions and suits, and from and against any and all judgments, liabilities, losses, damages, costs, charges and reasonable counsel fees incurred in connection therewith (collectively, “Losses”) arising out of or related to the arrangement contemplated under this Agreement, except to the extent that Losses result from the Adviser’s bad faith, willful misfeasance, or gross negligence or reckless disregard of their express obligations and duties hereunder.
8. Notices.
Any notice provided hereunder shall be sufficiently given when sent by registered or certified mail to the party required to be served with such notice at the following address: if to the Adviser, to it at 0000 Xxxxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, Attention: President and if to Distributor, to it at Three Xxxxx Xxxxx, Xxxxxxxx, XX 00000, Attention: Legal, or at such other address as such party may from time to time specify in writing to the other party pursuant to this Section.
9. Assignment.
This Agreement and the rights and duties hereunder shall not be assignable with respect to a Fund by either of the parties hereto except by the specific written consent of the other party. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and permitted assigns.
10. Governing Law.
This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of New York, without regard to the conflict of laws provisions thereof.
11. Miscellaneous.
(a) Paragraph headings in this Agreement are included for convenience only and are not to be used to construe or interpret this Agreement.
(b) This Agreement constitutes the complete agreement of the parties hereto as to the subject matter covered by this Agreement, and supersedes all prior negotiations, understandings and agreements bearing upon the subject matter covered by this Agreement.
(c) If any part, term or provision of this Agreement is held to be illegal, in conflict with any law or otherwise invalid, the remaining portion or portions shall be considered severable and not be affected, and the rights and obligations of the parties shall be construed and enforced as if this Agreement did not contain such part, term or provision.
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(d) This Agreement may be executed in counterparts, each of which shall be an original but all of which, taken together, shall constitute one and the same agreement.
(e) No amendment to this Agreement shall be valid unless made in writing and executed by both parties hereto.
(f) Invoices for fees and expenses due to Distributor hereunder and as set forth in Exhibit B hereto shall be sent by Distributor to the address furnished below unless and until changed by Adviser (Adviser to provide reasonable advance notice of any change of billing address to Distributor):
ARK Investment Management LLC
Attn: Chief Operating Officer
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
e-mail: xxxxxxx@xxx-xxxxxx.xxx
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed all as of the day and year first above written.
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ARK Investment Management LLC |
Foreside Fund Services, LLC |
By: /s/ Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx Title: Chief Operating Officer |
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Exhibit A
Distribution Agreement
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Exhibit B
COMPENSATION OF DISTRIBUTOR
| One-time Fees | Amount |
| Setup fee to include (i) establishment of AP agreements; (ii) advertising review framework/training; and (iii) technology requirements. | $ 10,000 (waived to $5,000 since with Custodian with existing electronic connectivity) payable upon execution of this Agreement |
| Recurring Fees | Rate |
| Asset Fee based on total assets in each fund |
· the first $2 billion – 1.0 basis point
· over $2 billion up to $5 billion – 0.75 basis point
· over $5 billion – 0.50 basis point
(the asset-based fee is subject to a minimum monthly fee of $1,500 per fund)
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OUT-OF-POCKET AND RELATED EXPENSES
Reasonable out-of-pocket expenses incurred by the Distributor in connection with activities primarily intended to result in the sale of Shares, including, without limitation: typesetting, printing and distribution of Prospectuses and shareholder reports; production, printing, distribution and placement of advertising and sales literature and materials; engagement of designers, free-xxxxx writers and public relations firms; long-distance telephone charges; postage; overnight delivery charges; record retention; travel, lodging and meals.
Notes:
| Ø | Fees will be calculated and payable monthly. |
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