INVESTMENT ADVISORY AGREEMENT
Exhibit (d)(1)
AGREEMENT, made as of this ___day of ___, 2008, between OOK Advisors, LLC (the “Advisor”),
an Oklahoma limited liability company with a principal place of business at One Leadership Square,
000 Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, XX, 00000 and OOK, Inc., a Maryland corporation (the
“Company”) with a principal place of business at One Leadership Square, 000 Xxxxx Xxxxxxxx, Xxxxx
000, Xxxxxxxx Xxxx, XX, 00000.
WHEREAS, the Advisor is registered as an investment adviser under the Investment Advisers Act
of 1940, as amended (the “Advisers Act”);
WHEREAS, the Company is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the “1940 Act”) and is authorized to issue shares in
one or more series; and
WHEREAS, the Company desires to retain the Advisor to serve as investment adviser to each of
the Funds listed on Schedule A hereto, as such Schedule A may be amended or supplemented form time
to time by mutual agreement (each, a “Fund” and collectively the “Funds”) and the Advisor is
willing to perform these services on the terms and conditions set forth in this Agreement.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. The Company and Funds
The Company is engaged in business of investing and reinvesting its assets in securities of
the type and in accordance with the limitations specified in its Articles of Incorporation, By-Laws
and Registration Statement filed with the Securities and Exchange Commission (the “Securities
Act”), including the prospectuses forming a part thereof and statements of additional information
relating to the Funds contained therein, and as may be supplemented from time to time, all in such
manner and to such extent as may from time to time be authorized by the Board of Directors of the
Company (the “Board”). The Board is authorized to approve the issuance by the Company of unissued
shares in any number of additional classes or series. The Company has delivered copies of the
documents listed in this Section to the Advisor and will from time to time furnish the Advisor with
any amendments thereof.
2. Appointment of the Advisor
The Company hereby appoints the Advisor, subject to the direction and control of the Board, to
manage the investment and reinvestment of the assets in the Funds and, without limiting the
generality of the foregoing, to provide the other services specified in Section 3 hereof.
The Advisor shall be deemed to be an independent contractor and shall, unless otherwise
expressly provided for or authorized in this agreement or another writing by the Company and the
Advisor, have no authority to act for or represent the Company in any way or otherwise be deemed an
agent of the Company.
3. Duties and Obligations of the Advisor
(a) The Advisor will manage the investment operations and composition of each Fund and render
investment advice for each Fund. The Advisor shall make decisions with respect to all purchases and
sales of securities and other investment assets of the Funds. The services provided by the Advisor
shall include: (i) furnishing continuously an investment program for each Fund; (ii) managing the
investment and reinvestment of each Fund’s assets; (iii) determining which investments shall be
purchased, held, sold or exchanged for each Fund and what portion, if any, of the assets of each
Fund shall be held uninvested; (iv) making changes on behalf of the Company in the investments for
each Fund; (v) vote proxies for the Company, file ownership reports under Section 13 of the
Securities Exchange Act of 1934 (the “1934 Act”) and take other actions on behalf of the Funds as a
shareholder of the underlying securities contained in the Funds’ portfolios and (vi) rendering
reports to the Company’s officers and the Board concerning the Advisor’s discharge of the foregoing
responsibilities. To carry out such duties and responsibilities, the Advisor is hereby authorized,
as agent and attorney-in-fact for the Company, for the account of, at the risk of and in the name
of the Funds, to place orders and issue instructions for the Funds. In all purchases, sales and
other transactions in securities for the Funds, the Advisor is authorized to exercise full
discretion and act for the Funds in the same manner and with the same force and effect as the Funds
might or could do with respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales or other transactions.
(b) The Advisor will report to the Board at each regular meeting thereof all material changes
in the investments in the Funds since the prior report, and will also keep the Board informed of
important developments affecting the Company, the Funds and the Advisor, and on its own initiative
will furnish the Board from time to time with such information as the Advisor may believe
appropriate, whether concerning the individual companies whose securities are held by the Funds,
the industries in which they engage, or the economic, social or political conditions prevailing in
each country in which the Funds maintain investments. The Advisor will also furnish the Board with
such statistical and analytical information with respect to securities in the Funds as the Advisor
may believe appropriate or as the Board reasonably may request. The Advisor shall discharge all of
its duties and responsibilities under this Agreement subject to the supervision and control of the
Board and will comply with the policies established from time to time by the Board as well as the
limitations imposed by the Company’s Articles of Incorporation, By-Laws and Registration Statement
under the 1940 Act and in the Internal Revenue Code of 1986, as amended, the Company’s compliance
manual, the investment objectives, policies and restrictions of the Funds, and applicable laws and
regulations.
(c) The Advisor will from time to time employ or associate with such persons as the Advisor
believes to be appropriate or necessary to assist in the execution of the Advisor’s duties
hereunder; provided, however, that the employment of or sub-contracting with any such person shall
not relieve the Advisor of its responsibilities or liabilities hereunder; and provided further that
the Advisor shall not have the authority to subcontract advisory responsibilities without the
consent of the Company. The cost of performance of such duties shall be borne and paid by the
Advisor.
(d) The Advisor shall maintain, or cause to be maintained records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required to be maintained by
the Funds under the 1940 Act. The Advisor shall prepare and maintain, or cause to be prepared and
maintained, in such form, for such periods and in such locations as may be
required by applicable law, all documents and records relating to the services provided by the
Advisor pursuant to this Agreement required to be prepared and maintained by the Funds. The books
and records pertaining to the Funds that are in the possession of the Advisor shall be property of
the Company. The Company, or the Company’s authorized representatives, shall have access to such
books and records at all times during the Advisor’s normal business hours. Upon the reasonable
request of the Company, copies of any such books and records shall be provided promptly by the
Advisor to the Company or the Company’s authorized representatives.
(e) The Advisor will provide, or arrange for the provision of, transfer agency, custody, fund
administration and accounting and all other non-distribution related services necessary for the
Funds’ operation, subject in each case to the approval of the Board. The Advisor will also provide
supervisory personnel who will be responsible for supervising and monitoring the performance of the
Company’s service providers in connections with their duties. Such personnel may be employees of
the Advisor or employees of affiliates of the Advisor or of other organizations. The Advisor will
also administer the Company’s business affairs, provides office facilities and equipment and
certain clerical, bookkeeping and administrative services and will permit its officers and
employees to serve without compensation as officers, directors or employees of the company.
4. Delegation of Responsibilities
The Advisor may carry out any of its obligations or responsibilities under this Agreement by
engaging, subject to supervision by the Advisor, one or more Sub-Advisors who are registered as
investment advisers pursuant to the Advisers Act (“Sub-Advisor”). Each Sub-Advisor’s engagement
will be evidenced by a separate written agreement approved by the Board and, if required under the
1940 Act, by the shareholders of the Funds (unless the Commission or its staff has given
authorization or issued an interpretation or no-action letter dispensing with the requirement of
shareholder approval). The Advisor shall not be liable hereunder for any act or omission of any
Sub-Advisor, except for failure to exercise good faith in the engagement of the Sub-Advisor and for
failure to exercise appropriate supervision of such Sub-Advisor, and as may otherwise be agreed in
writing. The Advisor shall be solely responsible for compensating any Sub-Advisor for services
rendered under any sub-advisory agreement. The Advisor may, from time to time and at any time,
terminate any respect to the Funds or engage another Sub-Advisor without obtaining the approval of
the shareholders of the Funds unless required by the federal securities laws.
5. Broker — Dealer Relationships
In connection with the purchase and sale of securities for the Funds, the Advisor is
responsible for broker-dealer selection and negotiation of brokerage commission rates. The
Advisor’s primary consideration in effecting a security transaction will be to obtain best price
and execution. In selecting a broker-dealer to execute each particular transaction for the Funds
the Advisor may take in consideration various factors including, but not limited to: the best price
available; the reliability, integrity and financial condition of the broker-dealer; and the size
and the difficulty in executing the order. Accordingly, the price to the Funds in any transaction
way be less favorable than that available from another broker-dealer if the difference is
reasonably justified by other aspects of the portfolio execution services offered. Subject not be
deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of having caused the Funds to pay a broker or dealer that provides brokerage
and research services to the Advisor an amount of commission for effecting a transaction in
excess of the amount of commission another broker or dealer would have charged for effecting that
transaction, if the Advisor determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the overall responsibilities of the
Advisor with respect to the Funds and to other clients of the Advisor. The Advisor may delegate any
of its duties and responsibilities as to the selection of broker-dealers to any Sub-Advisor
appointed in accordance with the provisions of Section 4 of this Agreement.
6. Advisory Fees/Allocation of Expenses
(a) For the services to be provided by the Advisor hereunder with respect to each Fund, the
Company shall pay to the Advisor a unitary advisory fee at the rate set forth on Schedule A
attached hereto. Schedule A shall be amended from time to time to reflect the addition and/or
termination of any Fund as a Fund hereunder and to reflect any change in the Advisory fees payable
with respect to any Fund duly approved in accordance with Section 12(b) hereunder. All fees payable
hereunder shall be accrued daily and paid as soon as practical after the last day of each month.
In any case of commencement or termination of this Agreement with respect to any Fund during
any calendar month, the fee with respect to such Fund for that month shall be reduced
proportionately based upon the number of calendar days during which it is in effect, and the fee
shall be computed upon the average daily net assets of such Fund for the days during which it is in
effect.
(b) The Advisor shall pay its own expenses in connection with the services to be provided by
it pursuant to this Agreement. In addition, the Advisor shall be responsible for the compensation
of officers or employees of the Company who are also officers or employees of the Advisor, except
as may otherwise be determined by the Board. The Advisor agrees to pay all fees and expenses of any
Sub-Advisor, and shall pay, or cause a Sub-Advisor to pay, all fees and expenses of any other
Sub-Advisor, the Transfer-Agent, the Administrator and Accounting Agent, and the Custodian engaged
by the Advisor on behalf of the Company. The Company is responsible for the payment of all other
expenses associated with its operation including, but not limited to, (i) brokerage and other
expenses (such as stamp taxes) connected with the execution of portfolio transactions or in
connection with creation and redemption transactions, (ii) taxes, (iii) interest on borrowings,
(iv) legal fees or expenses in connection with any arbitration, litigation or pending or threatened
arbitration or litigation, including any settlements in connection therewith, (v) compensation and
expenses of the Directors of the Company who are not officers, directors, partners or employees of
the Advisor, and Sub-Advisor, or their affiliates (the “Independent Directors”) as well as the cost
of Directors’ Meetings, (vi) compensation and expenses of counsel to the Fund and counsel to the
Independent Directors, (vii) if approved by the Board, compensation and expenses of the Company’s
chief compliance officer and expenses associated with the Company’s compliance program, (viii) fees
and expenses of the Company’s independent auditors, (ix) registration fees, expenses associated
with compliance by the Fund with mandatory regulatory mandates including those reports, and
extraordinary expenses, (x) distribution fees and expenses paid by the Company under any
distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act, (xi) the cost of director and
officer errors and omissions insurance coverage, (xii) the Funds’ pro-rata portion of dues, fees
and charges of any trade associations of which the Company is a member, (xiii) certain
out-of-pocket expenses,
including, but not limited to cost of obtaining prices for security valuations (including
manual broker quotes), Federal Reserve charges related to securities transactions, postage and
insurance on physical transfer items, telecommunication charges, and proxy voting execution, advice
and reporting etc. and (xiv) the advisory fee payable to the Advisor hereunder. The payment of
assumption by the Advisor of any expense of the Company that the Advisor is not required by this
agreement to pay or assume shall not obligate the Advisor to pay or assume the same or any similar
expense of the Company on any subsequent occasion.
7. Limitation of Liability Under the Company’s Articles of Incorporation
The Advisor acknowledges and agrees that, with respect to any potential claim it may have
against officers or directors of the Company relating to the subject matter of this Agreement, such
claim is subject to the limitation contained in the Company’s Articles of Incorporation relating to
the liability of directors and officers of the Company to its stockholders for money damages.
8. Provision of Certain Information by the Advisor
The Advisor will promptly notify the Company in writing of the occurrence of any of the
following events:
(a) the Advisor fails to be registered as an investment adviser under the Advisors Act or
under the laws of any jurisdiction in which the Advisor is required to be registered as an
investment adviser in order to perform its obligations under this Agreement;
(b) the Advisor is served or otherwise receives notice of any action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court, governmental, regulatory or
administrative authority or body, or any self-regulatory body public board or body, involving the
affairs of the Advisor or the Company;
(c) it becomes ineligible to serve as an investment advisor to the Company, or any of its
employees, officers or directors become ineligible to act in such capacity, pursuant to Section 9
of the 1940 Act, or other applicable law or regulation, and
(d) the parent company of the Advisor or the portfolio manager of any Fund changes or the
Advisor otherwise is subject to a change in corporate ownership that may constitute a “change of
control” under the Advisers Act or the 1940 Act.
9. Limitation of Liability of the Advisor
Neither the Advisor nor its officers, directors, employees, agents, affiliated persons or
controlling persons or their respective assigns shall be liable for any error of judgment or
mistake of law or for any loss suffered by the Company, the Funds or its shareholders in connection
with the matters to which this Agreement relates; provided that no provision of this Agreement
shall be deemed to protect the Advisor against any liability to the Company, the Funds or its
shareholders resulting from any willful misfeasance, bad faith or gross negligence in the
performance of its duties or obligations hereunder, the reckless disregard of its duties or
obligations hereunder, or breach of its fiduciary duty to the Company, any Fund or its
shareholders.
10. Force Majeure
Notwithstanding any other provision of this Agreement, the Advisor shall not be liable for any
loss suffered by the Company, the Funds or its shareholders caused directly or indirectly by
circumstances beyond the Advisor’s reasonable control including, without limitation, government
restrictions, exchange or market rulings, suspensions of trading, acts of civil or military
authority, national emergencies, labor difficulties, fires, earthquakes, floods or other
catastrophes, acts of God, wars, riots, acts of terrorism or failures of communications or power
supply. In the event of equipment breakdowns beyond its reasonable control, the Advisor shall take
reasonable steps to minimize service interruptions, but shall have no liability with respect
thereto.
11. Confidentiality
The Advisor will treat confidentially and as proprietary information of the Company all
records and other information relative to the Funds and prior, present or potential shareholders,
including Nonpublic Personal Information, as defined in Regulation S-P under the Xxxxx-Xxxxx-
Xxxxxx Act (the “G-L-B Act”), and will not use such records and information for any purpose other
than performance of its responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Company, which approval shall not be unreasonably withheld and may
not be withheld where the Advisor may be exposed to civil or criminal contempt proceedings for
failure to comply, when so requested by the Company or when otherwise permitted by the G-L-B Act.
Nothing contained herein, however, shall prohibit the Advisor from advertising or soliciting the
public generally with respect to other products or services, regardless of whether such
advertisement or solicitation may include prior, present or potential shareholders of the Company.
12. Duration, Amendment and Termination
(a) Duration. This Agreement shall become effective with respect to each Fund on the date
hereof and, with respect to any Fund added to this Agreement subsequent to the date hereof, on the
date Schedule A is amended to reflect such additional Fund in accordance with paragraph (b) below.
Unless terminated in accordance with this Section 12, the Agreement shall remain in full forces and
effect for two years from the date hereof with respect to each Fund and, with respect to each Fund
added to this Agreement subsequent to the date hereof, for two years from the date on which such
Fund becomes a Fund hereunder. Subsequent to such initial periods of effectiveness, this Agreement
shall continue in full force and effect for additional annual terms so long as such continuance
with respect to such Fund is specifically approved at least annually (i) by either the Board or by
vote of a “majority of the outstanding voting securities” (as defined in the 0000 Xxx) of such
Fund, and (ii) in either event, by the vote of a majority of the directors who are not parties to
this Agreement or “interested persons” (as defined in the 0000 Xxx) of any such party (“Independent
Directors”) cast in person at a meeting called for the purpose of voting on such approval. If the
shareholders of any Fund fail to approve the Agreement or any continuance of the Agreement as
provided herein, the Advisor may continue to serve hereunder in the manner and to the extent
permitted by the 1940 Act and rules and regulations thereunder. The foregoing requirement that
continuance of this Agreement be “specifically approved at least annually” shall be construed in a
manner consistent with the 1940 Act and the rules and regulations thereunder.
(b) Amendment. No provision of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or termination is sought. If shareholder
approval of an amendment is required under the 1940 Act, no such amendment shall become effective
until approved by a vote of the majority of the outstanding shares of the affected Funds.
Otherwise, a written amendment of this Agreement is effective upon the approval of the Board and
the Advisor.
(c) Termination. As required under the 1940 Act, this Agreement may be terminated as to any
Fund at any time, without the payment of any penalty, by the Company (by vote of the Board or by
vote of a majority of the outstanding voting securities of the particular Fund), or by the Advisor
on sixty (60) days’ written notice. The notice provided for herein may be waived by the party
entitled to receipt thereof. This Agreement will immediately terminate in the event of its
assignment. This Agreement may also be terminated immediately by the Company or the Advisor in the
event that the other party (i) breaches a material term of this Agreement or (ii) commits a
material violation of any governing law. As used in this Agreement, the terms “majority of the
outstanding voting securities,” “interested persons” and “assignment” shall have the same meanings
as such terms have in the 1940 Act.
13. Services Not Exclusive
The services of the Advisor to the Company hereunder are not to be deemed exclusive, and the
Advisor shall be free to render similar services to others (including other investment companies
and to engage in other activities) so long as its services hereunder are not impaired thereby. It
is understood and agreed that officers or directors of the Advisor may serve as officers or
directors of the Company and that officers or directors of the Company may serve as officers or
directors of the Advisor, to the extend that such services may be permitted by law, and that the
officers and directors of the Advisor are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from serving as partners, officers,
directors or trustees on any other firm or trust, including other investment advisory companies.
14. Indemnification by the Advisor.
The Company shall not be responsible for, and the Advisor shall indemnify and hold the
Company, the Funds and its directors, officers and agents harmless from and against, any and all
losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or
attributable to the willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties on the part of the Advisor or any of its officers, directors, employees or
agents.
15. Indemnification by the Fund.
In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of
duties hereunder on the part of the Advisor or any of its officers, directors, employees or agents,
the Company hereby agrees to indemnify and hold harmless the Advisor, its parent, affiliates and
their respective officers, directors, employees and agents and controlling persons of each of them
against any loss, liability, claim, damage or expense (including reasonable attorney’s fees and the
reasonable cost and expense of investigating and defending any alleged loss, liability, claim,
damage or expense) and whether such actions, suits or proceedings are brought at law or in equity
or whether brought by a private party or a governmental entity, bureau, agency or instrumentality,
of any kind, arising from (i) the advertising, solicitation, sale, purchase or pledge of
securities, whether of the Company or other securities (ii) actions undertaken by the Funds or
their officers, directors, employees or affiliates, (iii) resulting from any violations of the
securities, laws, rules, regulations, statutes and codes, whether federal or of any state, by the
Company or their officers directors, employees or affiliates, (iv) arising out of or based upon
this Agreement or by reason of its performance of services provided hereunder or, (v) (a) arising
out of or based upon any Sub-Advisory agreement entered into by the Advisor pursuant to Section 4
hereof or (b) by reason of the performance of the Sub-Advisor of its services pursuant to any such
Sub-Advisory Agreement. Federal and state securities laws impose liabilities under certain
circumstances on persons who act in good faith, and nothing herein shall constitute a waiver of
limitation of any rights which a Fund may have and which may not be waived under any applicable
federal or state securities laws.
16. Miscellaneous
(a) Notice. All notices required to be given pursuant to this Agreement shall be delivered or
mailed to the last known business address of the Company or the Advisor in person or by registered
mail or a private mail or delivery service providing the sender with notice of receipt. Notice
shall be deemed given on the date delivered or mailed in accordance with this section.
(b) Severability. Should any portion of this Agreement for any reason be held to be void in
law or in equity, the Agreement shall be construed, insofar as is possible, as if such portion had
never been contained herein.
(c) Applicable Law. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York (without giving effect to its conflict of law principles) and the
applicable provisions of the 1940 Act. To the extent that the applicable laws of the State of New
York, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control.
(d) Execution by Counterpart. This Agreement may be executed in any number of counterparts,
all of which together shall constitute the entire understanding and agreement of the parties with
respect to the subject matter contained herein.
(e) Entire Agreement. This Agreement constitute the entire understanding and agreement of the
parties with respect to the subject matter contained herein.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed as of the
date first set forth above.
| OOK, INC. |
||||
| By: | /s/ | |||
| Name: | ||||
| Title: | ||||
| OOK ADVISORS, LLC |
||||
| By: | /s/ | |||
| Name: | ||||
| Title: | ||||
Schedule A
Dated ______, 2008
Between OOK, Inc.,
and OOK Advisors, LLC
Name of Fund; Fee
| OOK Oklahoma Exchange-Traded Fund | 0.50% of Net Asset Value |
