EX-99.(H)(2) 3 v427360_ex99-h2.htm FUND ADMINISTRATION AND ACCOUNTING AGREEMENT

 

Exhibit (h)(2)

 

 

FUND ADMINISTRATION AND ACCOUNTING AGREEMENT

 

THIS AGREEMENT is made as of September 24, 2014 by and between ARK ETF Trust, a Delaware statutory trust (the “Trust”) and The Bank of New York Mellon, a New York corporation authorized to do a banking business (“BNY Mellon”).

 

W I T N E S S E T H :

 

WHEREAS, the Trust desires to retain BNY Mellon to provide for the portfolios identified on Exhibit A hereto, as may be amended from time to time (each, a “Series” or “Fund”) the services described herein, and BNY Mellon is willing to provide such services, all as more fully set forth below;

 

NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein, the parties hereby agree as follows:

 

1. Definitions.

 

Whenever used in this Agreement, unless the context otherwise requires, the following words shall have the meanings set forth below:

 

“1933 Act” means the Securities Act of 1933, as amended.

 

“1934 Act” means the Securities Exchange Act of 1934, as amended.

 

1940 Act” means the Investment Company Act of 1940, as amended.

 

Authorized Person” shall mean each person, whether or not an officer or an employee of the Trust, duly authorized by the Board to execute this Agreement and to give Instructions on behalf of the Trust as set forth in Exhibit B hereto and each Authorized Person’s scope of authority may be limited by setting forth such limitation in a written document signed by both parties hereto. From time to time the Trust may deliver a new Exhibit B to add or delete any person and BNY Mellon shall be entitled to rely on the last Exhibit B actually received by BNY Mellon.

 

 

 

 

 

BNY Mellon Affiliate” shall mean any office, branch, or subsidiary of The Bank of New York Mellon Corporation.

 

Board” shall mean the Trust’s board of directors, board of trustees, general partner or manager, as applicable.

 

Confidential Information” shall have the meaning given in Section 21 of this Agreement.

 

Documents” shall mean such other documents, including but not limited to, Board resolutions, including resolutions of the Trust’s Board authorizing the execution, delivery and performance of this Agreement by the Trust, and opinions of outside counsel, as BNY Mellon may reasonably request from time to time, in connection with its provision of services under this Agreement.

 

"Instructions" shall mean Oral Instructions or written communications actually received by BNY Mellon by S.W.I.F.T., tested telex, letter, facsimile transmission, or other method or system specified by BNY Mellon as available for use in connection with the services hereunder, from an Authorized Person or person believed in good faith to be an Authorized Person.

 

Investment Advisor” shall mean the entity identified by the Funds to BNY Mellon as the entity having investment responsibility with respect to the Funds.

 

Net Asset Value” shall mean the per share value of a Fund, calculated in the manner described in the Funds’ Offering Materials.

 

Offering Materials” shall mean the Funds’ currently effective prospectus and most recently filed registration statement with the SEC relating to shares of the Fund.

 

Organizational Documents” shall mean certified copies of the Trust’s articles of incorporation, certificate of incorporation, certificate of formation or organization, certificate of limited partnership, bylaws, limited partnership agreement, memorandum of association, limited liability company agreement, operating agreement, confidential offering memorandum, material contracts, Offering Materials, all SEC exemptive orders issued to the Trust, required filings or similar documents of formation or organization, as applicable, delivered to and received by BNY Mellon.

 

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Oral Instructions” shall mean oral instructions received by BNY Mellon under permissible circumstances specified by BNY Mellon, in its sole discretion, as being from an Authorized Person or person believed in good faith by BNY Mellon to be an Authorized Person.

 

SEC” means the United States Securities and Exchange Commission.

 

Securities Laws” means the 1933 Act, the 1934 Act and the 1940 Act.

 

Shares” means the shares of beneficial interest of any series or class of the Fund.

 

2. Appointment.

 

The Trust hereby appoints BNY Mellon as its agent for the term of this Agreement to perform the services described herein. BNY Mellon hereby accepts such appointment and agrees to perform the duties hereinafter set forth.

 

3. Representations and Warranties.

 

The Trust hereby represents and warrants to BNY Mellon that:

 

(a) It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;

 

(b) This Agreement has been duly authorized, executed and delivered by the Trust in accordance with all requisite action of the Board and constitutes a valid and legally binding obligation of the Trust, enforceable in accordance with its terms;

 

(c) The Trust is in good standing and qualified to do business in each jurisdiction in which the nature or conduct of its business requires such qualification, except where such qualification does not have a material adverse effect on the Trust.

 

(d) It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, has made and will continue to make all necessary material filings including tax filings and has obtained all material regulatory licenses, approvals and consents necessary to carry on its business as now conducted; there is no material statute, regulation, rule, order or judgment binding on it and no provision of its Organizational Documents, nor of any mortgage, indenture, credit agreement or other material contract binding on it or affecting its property which would prohibit its execution or performance of this Agreement;

 

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(e) The terms of this Agreement, including the fees and expenses associated with this Agreement and any benefits accruing to BNY Mellon or to the Investment Advisor to or sponsor of the Funds in connection with this Agreement, have been fully disclosed to the Board of the Trust and that, if required by applicable law, such Board has approved or will approve the terms of this Agreement;

 

(f) Each person named on Exhibit B hereto is duly authorized by the Trust to be an Authorized Person hereunder;

 

(g) It has implemented, and is acting in accordance with, procedures reasonably designed to ensure that it will make publically available each calculation of net asset value provided by BNY hereunder to Authorized Participants at the time BNY Mellon provides such calculation to Authorized Participants; and

 

(h) The Trust shall promptly notify BNY Mellon in writing of any and all material legal proceedings filed or commenced against any Fund, the Investment Advisor or the Board, to the extent such notification is not prohibited by law or regulatory authority.

 

The BNY Mellon hereby represents and warrants to the Fund that:

 

(a) It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;

 

(b) This Agreement has been duly authorized, executed and delivered in accordance with all requisite action and constitutes a valid and legally binding obligation of BNY Mellon, enforceable in accordance with its terms;

 

(c) It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, has made and will continue to make all necessary material filings including tax filings and has obtained all material regulatory licenses, approvals and consents necessary to carry on its business as now conducted; there is no material statute, regulation, rule, order or judgment binding on it and no mortgage, indenture, credit agreement or other material contract binding on it or affecting its property which would prohibit its execution or performance of this Agreement; and

 

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(d) BNY Mellon has, and shall continue to have, access to the facilities, personnel and equipment required to fully perform its duties and obligations hereunder.

 

4. Delivery of Documents.

 

The Trust shall promptly provide, deliver, or cause to be delivered from time to time, to BNY Mellon the Fund’s Organizational Documents, a copy of any and all SEC exemptive orders issued to the Trust, and, at BNY Mellon’s reasonable request, Documents and other materials used in the distribution of Shares and all amendments thereto as may be necessary for BNY Mellon to perform its duties hereunder. BNY Mellon shall not be deemed to have notice of any information (other than information supplied by BNY Mellon) contained in such Organizational Documents, Documents or other materials until they are actually received by BNY Mellon.

 

5. Duties and Obligations of BNY Mellon.

 

(a) Subject to the direction and control of the Trust’s Board and the provisions of this Agreement, BNY Mellon shall provide to the Funds the administrative services and the valuation and computation services listed on Schedule I attached hereto.

 

(b) In performing hereunder, BNY Mellon shall provide, at its expense, office space, facilities, equipment and personnel.

 

(c) BNY Mellon shall not provide any services relating to the management, investment advisory or sub-advisory functions of the Funds, distribution of shares of the Funds or other services normally performed by the Funds’ counsel or independent auditors and the services provided by BNY Mellon do not constitute, nor shall they be construed as constituting, legal advice or the provision of legal services for or on behalf of the Funds or any other person, and the Funds acknowledge that BNY Mellon does not provide public accounting or auditing services or advice and will not be making any tax filings, or doing any tax reporting on its behalf, other than those specifically agreed to hereunder. The scope of services provided by BNY Mellon under this Agreement shall not be increased as a result of new or revised regulatory or other requirements that may become applicable with respect to the Funds if such an increase in the scope of services would require more than 50 hours of additional work per year, unless the parties hereto expressly agree in writing to any such increase in the scope of services.

 

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(d) The Trust shall cause its officers, advisors, sponsor, distributor, legal counsel, independent accountants, current administrator (if any), transfer agent, and any other service provider to cooperate with BNY Mellon and to provide BNY Mellon, upon reasonable request, with such information, documents and advice relating to the Funds as is within the possession or knowledge of such persons, and is necessary in order to enable BNY Mellon to perform its duties hereunder. In connection with its duties hereunder, BNY Mellon shall not be responsible for, under any duty to inquire into, or be deemed to make any assurances with respect to the accuracy, validity or propriety of any information, documents or advice provided to BNY Mellon by any of the aforementioned persons unless such persons are relying on information provided by BNY Mellon. BNY Mellon shall not be liable for any loss, damage or expense resulting from or arising out of the failure of the Trust to cause any information, documents or advice to be provided to BNY Mellon as provided herein and shall be held harmless by the Trust when acting in reasonable reliance upon such information, documents or advice relating to such Fund. All fees or costs charged by such persons shall be borne by the appropriate Fund. In the event that any services performed by BNY Mellon hereunder rely, in whole or in part, upon information obtained from a third party service utilized or subscribed to by BNY Mellon which BNY Mellon in its reasonable judgment deems reliable, BNY Mellon shall not have any responsibility or liability for, under any duty to inquire into, or deemed to make any assurances with respect to, the accuracy or completeness of such information.

 

(e) Nothing in this Agreement shall limit or restrict BNY Mellon, any BNY Mellon Affiliate or any officer or employee thereof from acting for or with any third parties, and providing services similar or identical to same or all of the services provided hereunder.

 

(f) The Trust shall furnish BNY Mellon with any and all instructions, explanations, information, specifications and documentation deemed necessary by BNY Mellon in the performance of its duties hereunder, including, without limitation, the amounts or written formula for calculating the amounts and times of accrual of Fund liabilities and expenses, and the value of any securities lending related collateral investment account(s). BNY Mellon shall not be required to include as Fund liabilities and expenses, nor as a reduction of net asset value, any accrual for any federal, state, or foreign income taxes unless the Fund shall have specified to BNY Mellon in Instructions the precise amount of the same to be included in liabilities and expenses or used to reduce net asset value. The Funds shall also furnish BNY Mellon with bid, offer, or market values of securities if BNY Mellon notifies such Fund that same are not available to BNY Mellon from a security pricing or similar service utilized, or subscribed to, by BNY Mellon which the Fund directs BNY Mellon to utilize, and which BNY Mellon in its judgment deems reliable at the time such information is required for calculations hereunder. At any time and from time to time, the Funds also may furnish BNY Mellon with bid, offer, or market values of securities and instruct BNY Mellon in Instructions to use such information in its calculations hereunder. BNY Mellon shall at no time be required or obligated to commence or maintain any utilization of, or subscriptions to, any securities pricing or similar service. In no event shall BNY Mellon be required to determine, or have any obligations with respect to, whether a market price represents any fair or true value, nor to adjust any price to reflect any events or announcements, including, without limitation, those with respect to the issuer thereof, it being agreed that all such determinations and considerations shall be solely for the Fund.

 

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(g) BNY Mellon may apply to an Authorized Person of any Fund for Instructions with respect to any matter arising in connection with BNY Mellon’s performance hereunder for such Fund, and BNY Mellon shall not be liable for any action taken or omitted to be taken by it in good faith without negligence or willful misconduct in accordance with such Instructions. Such application for Instructions may, at the option of BNY Mellon, set forth in writing any action proposed to be taken or omitted to be taken by BNY Mellon with respect to its duties or obligations under this Agreement and the date on and/or after which such action shall be taken. BNY Mellon shall not be liable for any action taken or omitted to be taken in accordance with a proposal included in any such application on or after the date specified therein unless, prior to taking or omitting to take any such action, BNY Mellon has received Instructions from an Authorized Person in response to such application specifying the action to be taken or omitted.

 

(h) BNY Mellon may, with respect to questions of law specifically regarding an Instruction or Oral Instruction, obtain the advice of counsel at its own expense and shall be fully protected with respect to anything done or omitted by it in good faith in conformity with such advice, provided that, any such action or omission by BNY Mellon is consistent with BNY Mellon’s rights and responsibilities under this Agreement and/or the laws, rules and regulations applicable to BNY Mellon.

 

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(i) Notwithstanding any other provision contained in this Agreement or Schedule I attached hereto, BNY Mellon shall have no duty or obligation to determine, or advise or notify the Funds of the effect under any federal, state, or foreign income tax laws of the Funds making or not making any distribution or dividend payment, or any election with respect thereto. Further, BNY Mellon is not responsible for the identification of securities requiring U.S. tax treatment that differs from treatment under U.S. generally accepted accounting principles. BNY Mellon is solely responsible for processing such securities, as identified by the Funds or their Authorized Persons, in accordance with U.S. tax laws and regulations.

 

(j) BNY Mellon shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement and Schedule I attached hereto, and no covenant or obligation shall be implied against BNY Mellon in connection with this Agreement.

 

(k) BNY Mellon, in performing the services required of it under the terms of this Agreement, shall be entitled to reasonably rely fully on the accuracy and validity of any and all Instructions, explanations, information, specifications, Documents and documentation furnished to it by the Trust and shall have no duty or obligation to review the accuracy, validity or propriety of such Instructions, explanations, information, specifications, Documents or documentation, including, without limitation, evaluations of securities; the amounts or formula for calculating the amounts and times of accrual of Funds’ liabilities and expenses; the amounts receivable and the amounts payable on the sale or purchase of securities; and amounts receivable or amounts payable for the sale or redemption of Fund Shares effected by or on behalf of the Fund.  In the event BNY Mellon’s computations hereunder rely, in whole or in part, upon information, including, without limitation, bid, offer or market values of securities or other assets, or accruals of interest or earnings thereon, from a pricing or similar service utilized, or subscribed to, by BNY Mellon which a Fund directs BNY Mellon to utilize, and which BNY Mellon in its reasonable judgment deems reliable, BNY Mellon shall not be responsible for, under any duty to inquire into, or deemed to make any assurances with respect to, the accuracy or completeness of such information. Without limiting the generality of the foregoing, BNY Mellon shall not be required to inquire into any valuation of securities or other assets by the Funds or any third party described in this sub-section (k) even though BNY Mellon in performing services similar to the services provided pursuant to this Agreement for others may receive different valuations of the same or different securities of the same issuers.

 

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(l) BNY Mellon, in performing the services required of it under the terms of this Agreement, shall not be responsible for determining whether any interest accruable to the Funds is or will be actually paid, but will accrue such interest until otherwise instructed by such Fund.

 

(m) BNY Mellon shall not be responsible for damages (including without limitation damages caused by delays, failure, errors, interruption or loss of data) which occurring directly or indirectly by reason of circumstances beyond its reasonable control in the performance of its duties under this Agreement, including, without limitation, labor difficulties within or without BNY Mellon, mechanical breakdowns, flood or catastrophe, acts of God, failures of transportation, interruptions, loss, or malfunctions of utilities, action or inaction of civil or military authority, national emergencies, public enemy, war, terrorism, riot, sabotage, non-performance by a third party, failure of the mails, communications, computer (hardware or software) services, or functions or malfunctions of the internet, firewalls, encryption systems or security devices caused by any of the above.  Nor shall BNY Mellon be responsible for delays or failures to supply the information or services specified in this Agreement where such delays or failures are caused by the failure of any person(s) other than BNY Mellon to supply any instructions, explanations, information, specifications or documentation deemed necessary by BNY Mellon in the performance of its duties under this Agreement.

 

6. Allocation of Expenses.

 

Except as otherwise provided herein, all costs and expenses arising or incurred in connection with the performance of this Agreement shall be paid by the appropriate Fund, including but not limited to, organizational costs and costs of maintaining corporate existence, taxes, interest, brokerage fees and commissions, insurance premiums, compensation and expenses of such Fund’s trustees, directors, officers or employees, legal, accounting and audit expenses, management, advisory, sub-advisory, administration and shareholder servicing fees, charges of custodians, transfer and dividend disbursing agents, expenses (including clerical expenses) incident to the issuance, redemption or repurchase of Fund shares or membership interests, as applicable, fees and expenses incident to the registration or qualification under the Securities Laws, state or other applicable securities laws of the Fund or its shares or membership interests, as applicable, costs (including printing and mailing costs) of preparing and distributing Offering Materials, reports, notices and proxy material to the Fund’s shareholders or members, as applicable, all expenses incidental to holding meetings of the Fund’s trustees, directors and shareholders, and extraordinary expenses as may arise, including litigation affecting the Fund and legal obligations relating thereto for which the Fund may have to indemnify its trustees, directors, officers, managers, and/or members, as may be applicable.

 

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7. Portfolio Compliance Services.

 

(a) If Schedule I contains a requirement for BNY Mellon to provide the Funds with portfolio compliance services, such services shall be provided pursuant to the terms of this Section 7 (the “Portfolio Compliance Services”). The precise compliance review and testing services to be provided shall be as directed by the Funds and as mutually agreed in writing between BNY Mellon and the Funds, and the results of BNY Mellon’s Portfolio Compliance Services shall be detailed in a portfolio compliance summary report (the “Compliance Summary Report”) prepared on a periodic basis as mutually agreed. Each Compliance Summary Report shall be subject to review and approval by the Funds. BNY Mellon shall have no responsibility or obligation to provide Portfolio Compliance Services other that those services specifically listed in Schedule I.

 

(b) The Funds will examine each Compliance Summary Report delivered to it by BNY Mellon and notify BNY Mellon of any error, omission or discrepancy within ten (10) days of its receipt. The Funds agree to notify BNY Mellon promptly in writing if it fails to receive any such Compliance Summary Report. The Funds further acknowledge that unless it notifies BNY Mellon of any error, omission or discrepancy within 10 days, such Compliance Summary Report shall be deemed final and shall not be reissued. In addition, if the Funds learn of any out-of-compliance condition before receiving a Compliance Summary Report reflecting such condition, the Funds will notify BNY Mellon of such condition within one (1) business day after discovery thereof.

 

(c) While BNY Mellon will endeavor to identify out-of-compliance conditions, BNY Mellon does not and could not for the fees charged, make any guarantees, representations or warranties with respect to its ability to identify all such conditions. In the event of any errors or omissions in the performance of Portfolio Compliance Services, the Funds’ sole and exclusive remedy and BNY Mellon’s sole liability shall be limited to re-performance by BNY Mellon of the Portfolio Compliance Services affected and in connection therewith the correction of any error or omission, if practicable and the preparation of a corrected report, at no cost to the Fund.

 

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8. Rule 38a-1 and Regulatory Administration Services.

 

(a) If Schedule I contains a requirement for BNY Mellon to provide the Funds with compliance support services related to Rule 38a-1 promulgated under the 1940 Act and/or Regulatory Administration services, such services shall be provided pursuant to the terms of this Section 7 (such services, collectively hereinafter referred to as the “Regulatory Support Services”).

 

(b) Notwithstanding anything in this Agreement to the contrary, the Regulatory Support Services provided by BNY Mellon under this Agreement are administrative in nature and do not constitute, nor shall they be construed as constituting, legal advice or the provision of legal services for or on behalf of the Funds or any other person.

 

(c) All work product produced by BNY Mellon in connection with its provision of Regulatory Support Services under this Agreement is subject to review and approval by the Funds and by the Funds’ legal counsel. The Regulatory Support Services performed by BNY Mellon under this Agreement will be at the request and direction of the Funds and/or their chief compliance officer (the “Fund’s CCO”), as applicable. BNY Mellon disclaims liability to the Funds, and the Funds are solely responsible, for the selection, qualifications and performance of the Funds’ CCO and the adequacy and effectiveness of the Funds’ compliance program.

 

9. Standard of Care; Indemnification.

 

(a) Except as otherwise provided herein, BNY Mellon and any BNY Mellon Affiliate shall not be liable for any costs, expenses, damages, liabilities or claims (including reasonable attorneys’ and accountants’ fees related thereto) (“Losses”) incurred by or asserted against the Funds, except those costs, expenses, damages, liabilities or claims arising out of BNY Mellon’s own negligence, bad faith, willful misconduct or reckless disregard of its obligations under this Agreement. In no event shall BNY Mellon or any BNY Mellon Affiliate be liable to any Fund or any third party for any special, indirect or consequential damages, or lost profits or loss of business, arising under or in connection with this Agreement, even if previously informed of the possibility of such damages and regardless of the form of action. BNY Mellon and any BNY Mellon Affiliate shall not be liable for any loss, damage or expense, including counsel fees and other costs and expenses of a defense against any claim or liability, resulting from, arising out of, or in connection with its performance hereunder, including its actions or omissions, the incompleteness or inaccuracy of any specifications or other information furnished by the Funds, unless such loss, damage or expense arises out of BNY Mellon’s own negligence, bad faith, willful misconduct or reckless disregard of its obligations under this Agreement.

 

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(b) The Funds shall indemnify and hold harmless BNY Mellon from and against any and all Losses (including those arising from claims asserted by the Funds) which are sustained or incurred or which may be asserted against BNY Mellon, by reason of or as a result of any action taken or omitted to be taken by BNY Mellon without negligence, bad faith, willful misconduct, reckless disregard of its obligations under this Agreement or in breach of its representations and warranties at Section 3 above, or in reliance upon (i) the Funds’ Offering Materials or Documents (excluding information provided by BNY Mellon) or (ii) any Instructions by and Authorized Person; provided, that the Funds shall not indemnify BNY Mellon nor any BNY Mellon Affiliate for costs, expenses, damages, liabilities or claims for which BNY Mellon is liable under the preceding sub-section 9(a). This indemnity shall be a continuing obligation of the Fund, its successors and assigns, notwithstanding the termination of this Agreement. Without limiting the generality of the foregoing, the Funds shall indemnify BNY Mellon against and hold BNY Mellon harmless from any loss, damage or expense, including reasonable counsel fees and other reasonable costs and expenses of a defense against any claim or liability, arising from any one or more of the following:

 

I. Errors in records or instructions, explanations, information, specifications or documentation of any kind, as the case may be, supplied to BNY Mellon by any third party described above or by or on behalf of the Funds;

 

II. Action or inaction taken or omitted to be taken by BNY Mellon pursuant to Instructions of the Funds or otherwise without negligence, bad faith, willful misconduct or reckless disregard of its obligations under this Agreement;

 

III. Any improper use by the Funds or their agents, distributor or investment advisor of any valuations or computations supplied by BNY Mellon pursuant to this Agreement;

 

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IV. The method of valuation of the securities and the method of computing each Series’ net asset value; or

 

V. Any valuations of securities, other assets, or the net asset value provided by the Funds.

 

(c) Actions taken or omitted in reasonable reliance on Instructions or upon any information, order, indenture, stock certificate, membership certificate, power of attorney, assignment, affidavit or other instrument believed by BNY Mellon in good faith to be from an Authorized Person.

 

(d) BNY Mellon agrees to indemnify the Funds and hold the Funds harmless from and against any and all Losses sustained or incurred by or asserted against the Funds and determined by an arbiter of appropriate jurisdiction to be a direct result of BNY Mellon’s negligence, bad faith, willful misconduct or reckless disregard of its obligations under this Agreement, including reasonable fees and expenses of counsel incurred by the Funds in a successful defense of claims by BNY Mellon; provided however, that BNY Mellon shall not indemnify the Funds for those Losses arising out of the Funds’ own negligence, bad faith, willful misconduct or reckless disregard of its obligations under this Agreement. This indemnity shall be a continuing obligation of BNY Mellon, its successors and assigns, notwithstanding the termination of this Agreement.

 

10. Compensation.

 

For the services provided hereunder, the Funds agree to pay BNY Mellon such compensation as is mutually agreed to in writing by the Funds and BNY Mellon from time to time and such out-of-pocket expenses (e.g., telecommunication charges, postage and delivery charges, costs of independent compliance reviews, record retention costs, reproduction charges and transportation and lodging costs) as are incurred by BNY Mellon in performing its duties hereunder. Except as hereinafter set forth, compensation shall be calculated and accrued daily and paid monthly. The Funds authorize BNY Mellon to debit such Fund’s custody account for all amounts due and payable hereunder. BNY Mellon shall deliver to the applicable Fund invoices for services rendered after debiting such Fund’s custody account with an indication that payment has been made. Upon termination of this Agreement before the end of any month, the compensation for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the effective date of termination of this Agreement. For the purpose of determining compensation payable to BNY Mellon, a Fund’s net asset value shall be computed at the times and in the manner specified in the Fund’s Offering Materials.

 

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11. Records; Visits.

 

(a) The books and records pertaining to the Funds which are in the possession or under the control of BNY Mellon shall be the property of the Funds. The Funds and Authorized Persons shall have access to such books and records at all times during BNY Mellon’s normal business hours. Upon the reasonable request of a Fund, copies of any such books and records shall be provided by BNY Mellon to the Fund or to an Authorized Person, at the Fund’s expense.

 

(b) BNY Mellon shall keep all books and records with respect to each Series’ books of account, records of each Series’ securities transactions and all other books and records as BNY Mellon is required to maintain pursuant to Rule 31a-1 of the 1940 Act in connection with the services provided hereunder.

 

12. Term of Agreement.

 

(a) This Agreement shall be effective on the date first written above and, unless terminated pursuant to its terms, shall continue until 11:59 PM on the date which is the third anniversary of such date (the “Initial Term”), at which time this Agreement shall terminate, unless renewed in accordance with the terms hereof.

 

(b) This Agreement shall automatically renew for successive terms of one (1) year each (each, a “Renewal Term”), unless the Funds or BNY Mellon gives written notice to the other party of its intent not to renew and such notice is received by the other party not less than ninety (90) days prior to the expiration of the Initial Term or the then-current Renewal Term (a "Non-Renewal Notice"). In the event a party provides a Non-Renewal Notice, this Agreement shall terminate at 11:59 PM on the last day of the Initial Term or Renewal Term, as applicable.

 

(c) If a party materially breaches this Agreement (a “Defaulting Party”) the other party (the “Non-Defaulting Party”) may give written notice thereof to the Defaulting Party ("Breach Notice"), and if such material breach shall not have been remedied within thirty (30) days after the Breach Notice is given, then the Non-Defaulting Party may terminate this Agreement by giving written notice of termination to the Defaulting Party ("Breach Termination Notice"), in which case this Agreement shall terminate as of 11:59 PM on the 30th day following the date the Breach Termination Notice is given, or such later date as may be specified in the Breach Termination Notice (but not later than the last day of the Initial Term or then-current Renewal Term, as appropriate). In all cases, termination by the Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party of any other rights it might have under this Agreement or otherwise against the Defaulting Party.

 

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(d) Notwithstanding any other provision of this Agreement, BNY Mellon may in its sole discretion terminate this Agreement immediately by sending notice thereof to the Funds upon the happening of any of the following: (i) a Fund commences as debtor any case or proceeding under any bankruptcy, insolvency or similar law, or there is commenced against the Fund any such case or proceeding; (ii) a Fund commences as debtor any case or proceeding seeking the appointment of a receiver, conservator, trustee, custodian or similar official for the Fund or any substantial part of its property or there is commenced against a Fund any such case or proceeding; (iii) a Fund makes a general assignment for the benefit of creditors; or (iv) a Fund admits in any recorded medium, written, electronic or otherwise, its inability to pay its debts as they come due. BNY Mellon may exercise its termination right under this Section 11(d) at any time after the occurrence of any of the foregoing events notwithstanding that such event may cease to be continuing prior to such exercise, and any delay in exercising this right shall not be construed as a waiver or other extinguishment of that right. Any exercise by BNY Mellon of its termination right under this Section 11(d) shall be without any prejudice to any other remedies or rights available to BNY Mellon and shall not be subject to any fee or penalty, whether monetary or equitable. Notwithstanding the provisions of Section 18, notice of termination under this Section 11(d) shall be considered given and effective when given, not when received.

 

(e) Notwithstanding any other provision of this Agreement, the Trust may in its sole discretion terminate this Agreement with respect to a Series if such Series liquidates, merges or reorganizes into another entity or if the Series is liquidated and terminated.

 

13. Amendment.

 

This Agreement may not be amended, changed or modified in any manner except by a written agreement executed by BNY Mellon and the Trust to be bound thereby.

 

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14. Assignment; Subcontracting.

 

(a) This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable or delegable by any Fund without the written consent of BNY Mellon, or by BNY Mellon without the written consent of the affected Fund.

 

(b) Notwithstanding the foregoing: (i) BNY Mellon may assign or transfer this Agreement to any BNY Mellon Affiliate or transfer this Agreement in connection with a sale of a majority or more of its assets, equity interests or voting control upon written consent of the Trust, and the assignee or transferee agrees to be bound by all terms of this Agreement in place of BNY Mellon; (ii) BNY Mellon may subcontract with, hire, engage or otherwise outsource to any BNY Mellon Affiliate with respect to the performance of any one or more of the functions, services, duties or obligations of BNY Mellon under this Agreement but any such subcontracting, hiring, engaging or outsourcing shall not relieve BNY Mellon of any of its liabilities hereunder; (iii) BNY Mellon may subcontract with, hire, engage or otherwise outsource to an unaffiliated third party with respect to the performance of any one or more of the functions, services, duties or obligations of BNY Mellon under this Agreement but any such subcontracting, hiring, engaging or outsourcing shall require the prior written consent of the Trust; and (iv) BNY Mellon, in the course of providing certain additional services requested by the Fund, including but not limited to, Typesetting services (“Vendor Eligible Services”) as further described in Schedule I, may in its sole discretion, enter into an agreement or agreements with a financial printer, or electronic services provider (“Vendor”) to provide BNY Mellon with the ability to generate certain reports or provide certain functionality. BNY Mellon shall not be obligated to perform any of the Vendor Eligible Services unless an agreement between BNY Mellon and the Vendor for the provision of such services is then-currently in effect, and shall not relieve BNY Mellon of any of its liabilities hereunder. Upon request, BNY Mellon will disclose the identity of the Vendor and the status of the contractual relationship, and the Trust is free to attempt to contract directly with the Vendor for the provision of the Vendor Eligible Services.

 

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(c) As compensation for the Vendor Eligible Services rendered by BNY Mellon pursuant to this Agreement, the Funds will pay to BNY Mellon such fees as may be agreed to in writing by the Funds and BNY Mellon. In turn, BNY Mellon will be responsible for paying the Vendor’s fees. For the avoidance of doubt, BNY Mellon anticipates that the fees it charges hereunder will be more than the fees charged to it by the Vendor, and BNY Mellon will retain the difference between the amount paid to BNY Mellon hereunder and the fees BNY Mellon pays to the Vendor as compensation for the additional services provided by BNY Mellon in the course of making the Vendor Eligible Services available to the Funds.

 

15. Governing Law; Consent to Jurisdiction.

 

This Agreement shall be construed in accordance with the laws of the State of New York, without regard to conflict of laws principles thereof. The Funds hereby consent to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder, and waives to the fullest extent permitted by law its right to a trial by jury. To the extent that in any jurisdiction any Fund may now or hereafter be entitled to claim, for itself or its assets, immunity from suit, execution, attachment (before or after judgment) or other legal process, such Fund irrevocably agrees not to claim, and it hereby waives, such immunity.

 

16. Severability.

 

In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations shall not in any way be affected or impaired thereby, and if any provision is inapplicable to any person or circumstances, it shall nevertheless remain applicable to all other persons and circumstances.

 

17. No Waiver.

 

Each and every right granted to BNY Mellon hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of BNY Mellon to exercise, and no delay in exercising, any right will operate as a waiver thereof, nor will any single or partial exercise by BNY Mellon of any right preclude any other or future exercise thereof or the exercise of any other right.

 

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18. Notices.

 

All notices, requests, consents and other communications pursuant to this Agreement in writing shall be sent as follows:

 

if to the Fund, at

 

c/o ARK Investment Management LLC

155 West 19th Street, Fifth Floor

New York, NY 10011

 

if to BNY Mellon, at

 

BNY Mellon
2 Hanson Place
Brooklyn, NY 11217
Attention: ETF Operations

 

with a copy to:

 

The Bank of New York Mellon
One Wall Street
New York, New York 10286
Attention: Legal Dept. – Asset Servicing
 

or at such other place as may from time to time be designated in writing. Notices hereunder shall be effective upon receipt.

 

19. Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original; but such counterparts together shall constitute only one instrument.

 

20. Several Obligations.

 

The parties acknowledge that the obligations of the Funds hereunder are several and not joint, that no Fund shall be liable for any amount owing by another Fund and that the Funds have executed one instrument for convenience only.

 

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21. Confidentiality.

 

(a) Each party shall keep confidential any information relating to the other party’s business (“Confidential Information”). Confidential Information shall include (a) any data or information that is competitively sensitive material, and not generally known to the public, including, but not limited to, information about product plans, marketing strategies, finances, operations, customer relationships, customer profiles, customer lists, sales estimates, business plans, and internal performance results relating to the past, present or future business activities of the Trust or BNY Mellon and their respective subsidiaries and affiliated companies; (b) any scientific or technical information, design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords the Trust or BNY Mellon a competitive advantage over its competitors; (c) all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, know-how, and trade secrets, whether or not patentable or copyrightable; and (d) anything designated as confidential. Notwithstanding the foregoing, information shall not be Confidential Information and shall not be subject to such confidentiality obligations if it: (a) is already known to the receiving party at the time it is obtained; (b) is or becomes publicly known or available through no wrongful act of the receiving party; (c) is rightfully received from a third party who, to the best of the receiving party’s knowledge, is not under a duty of confidentiality; (d) is released by the protected party to a third party without restriction; (e) is requested or required to be disclosed by the receiving party pursuant to a court order, subpoena, governmental or regulatory agency request or law; (f) is relevant to the defense of any claim or cause of action asserted against the receiving party; (g) is Fund information provided by BNY Mellon in connection with an independent third party compliance or other review; (h) is released in connection with the provision of services under this Agreement; or (i) has been or is independently developed or obtained by the receiving party. The provisions of this Section 21 shall survive termination of this Agreement for a period of one (1) year after such termination.

 

(b) The Bank of New York Mellon Corporation is a global financial organization that provides services to clients through its affiliates and subsidiaries in multiple jurisdictions (the “BNY Mellon Group”). The BNY Mellon Group may centralize functions including audit, accounting, risk, legal, compliance, sales, administration, product communication, relationship management, storage, compilation and analysis of customer-related data, and other functions (the “Centralized Functions”) in one or more affiliates, subsidiaries and third-party service providers. Solely in connection with the Centralized Functions, (i) the Funds consent to the disclosure of and authorizes BNY Mellon to disclose information regarding the Funds (“Customer-Related Data”) to the BNY Mellon Group and to its third-party service providers who are subject to confidentiality obligations with respect to such information and (ii) BNY Mellon may store the names and business contact information of the Fund’s employees and representatives on the systems or in the records of the BNY Mellon Group or its service providers. The BNY Mellon Group may aggregate Customer-Related Data with other data collected and/or calculated by the BNY Mellon Group, and notwithstanding anything in this Agreement to the contrary the BNY Mellon Group will own all such aggregated data, provided that the BNY Mellon Group shall not distribute the aggregated data in a format that identifies Customer-Related Data with a particular customer. The Funds confirm that they are authorized to consent to the foregoing.

 

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22. Non-Solicitation.

 

During the term of this Agreement and for one (1) year thereafter, the Funds shall not (with the exceptions noted in the immediately succeeding sentence) knowingly solicit or recruit for employment or hire any of BNY Mellon’s employees, and the Funds shall cause the Funds’ sponsor and any affiliates of the Funds to not (with the exceptions noted in the immediately succeeding sentence) knowingly solicit or recruit for employment or hire any of BNY Mellon’s employees. To “knowingly” solicit, recruit or hire within the meaning of this provision does not include, and therefore does not prohibit, solicitation, recruitment or hiring of a BNY Mellon employee by the Funds, the Funds’ sponsor or an affiliate of the Fund if the BNY Mellon employee was identified by such entity solely as a result of the BNY Mellon employee’s response to a general advertisement by such entity in a publication of trade or industry interest or other similar general solicitation by such entity.

 

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be executed by their duly authorized officers and their seals to be hereunto affixed, all as of the latest date set forth below.

 

ARK ETF TRUST

 

By: /s/ Jane A. Kanter

on behalf of each Series

identified on Exhibit A

attached hereto

 

Name: Jane A. Kanter

 

Title: Secretary

 

Date: September 24, 2014

 

 

THE BANK OF NEW YORK MELLON

 

By: /s/ Stephen Cook

Name: Stephen Cook

Title: Managing Director

 

Date: 10/3/14

 

 

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EXHIBIT A

 

Series

 

 

 

 

 

EXHIBIT B

 

I,       [Name]       , of [Fund Name] , a [State] [corporation/trust] (the “Fund”), do hereby certify that:

 

The following individuals serve in the following positions with the Fund, and each has been duly elected or appointed by the Board of the Fund to each such position and qualified therefor in conformity with the Fund’s Organizational Documents, and the signatures set forth opposite their respective names are their true and correct signatures. Each such person is designated as an Authorized Person under the Fund Administration and Accounting Agreement dated as of ___________________, 201__, between the Fund and The Bank of New York Mellon.

 

Name Position Signature
                                                                                                                              

 

 

 

 

 

SCHEDULE I

 

Schedule of Services

 

 

All services provided in this Schedule of Services are subject to the review and approval of the appropriate Fund officers, Fund counsel and accountants of the Fund, as may be applicable. The services included on this Schedule of Services may be provided by BNY Mellon or a BNY Mellon Affiliate, collectively referred to herein as “BNY Mellon”.

 

VALUATION AND COMPUTATION ACCOUNTING SERVICES

 

BNY Mellon shall provide the following valuation and computation accounting services for the Fund:

 

§Journalize investment, capital share and income and expense activities;

§Maintain individual ledgers for investment securities;

§Maintain historical tax lots for each security;

§Reconcile cash and investment balances of the Fund with the Fund’s custodian and provide the Fund’s investment adviser, as applicable, with the beginning cash balance available for investment purposes upon request;

§Calculate various contractual expenses;

§Calculate capital gains and losses;

§Calculate daily distribution rate per share;

§Determine net income;

§Obtain security market quotes and currency exchange rates from pricing services approved by the Fund’s investment adviser, or if such quotes are unavailable, then obtain such prices from the Fund’s investment adviser, and in either case, calculate the market value of the Fund’s investments in accordance with the Fund's valuation policies or guidelines; provided, however, that BNY Mellon shall not under any circumstances be under a duty to independently price or value any of the Fund's investments itself or to confirm or validate any information or valuation provided by the investment adviser or any other pricing source, nor shall BNY Mellon have any liability relating to inaccuracies or otherwise with respect to such information or valuations;

§Compute net asset value;

·Such net asset value reports and statements shall be provided to the Fund at _____ p.m. New York time and to Authorized Participants at _____ p.m. New York time, in each case by such means as BNY Mellon and the Fund may agree upon from time to time.

§Transmit or make available a copy of the daily portfolio valuation to the Fund’s investment adviser;

§Publish basket to NSCC on for each day on which trading occurs on the NYSE;

§Compute yields and portfolio average dollar-weighted maturity as applicable; and

§Compute portfolio turnover rate for inclusion in the annual and semi-annual shareholder reports.

 

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FINANCIAL REPORTING

 

BNY Mellon shall provide the following financial reporting services for the Fund:

 

§Financial Statement Preparation & Review

·Prepare the Fund’s annual and semi-annual shareholder reports1 for shareholder delivery and for inclusion in Form N-CSR;

·Prepare the Fund’s quarterly schedule of portfolio holdings1 for inclusion in Form N-Q;

·Prepare, circulate and maintain the Fund’s financial reporting production calendar;

·Prepare and file (or coordinate the filing of) the Fund’s Form N-SAR; and

·Prepare and file (or coordinate the filing of) the Fund’s Form 24f-2.

 

§Typesetting Services 2

·Create financial compositions for the applicable financial report and related EDGAR files;

·Maintain country codes, industry class codes, security class codes and state codes;

·Map individual general ledger accounts into master accounts to be displayed in the applicable financial reports;

·Create components that will specify the proper grouping and sorting for display of portfolio information;

·Create components that will specify the proper calculation and display of financial data required for each applicable financial report (except for identified manual entries, which BNY Mellon will enter);

·Process, convert and load security and general ledger data;

·Include data in financial reports provided from external parties to BNY Mellon which, includes, but is not limited to: shareholder letters, “Management Discussion and Analysis” commentary, notes on performance, notes to financials, report of independent auditors, Fund management listing, service providers listing and Fund spectrums;

·Document publishing, including the output of print-ready PDF files and EDGAR html files (such EDGAR html files will be limited to one per the applicable financial report and unless mutually agreed to in writing between BNY Mellon and the Fund, BNY Mellon will use the same layout for production data for every successive reporting period);

·Generate financial reports using the Vendor’s capabilities which include the following:

ofront/back cover;

otable of contents;

oshareholder letter;

oManagement Discussion and Analysis commentary;

osector weighting graphs/tables;

odisclosure of Fund expenses;

oschedules of investments;

ostatement of net assets;

ostatements of assets and liabilities;

ostatements of operation;

ostatements of changes;

ostatements of cash flows;

 

 

 

1 Requires “Typesetting Services” as described herein.

 

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ofinancial highlights;

onotes to financial statements;

oreport of independent registered public accounting firm;

otax information; and

oadditional Fund information as mutually agreed in writing between BNY Mellon and the Fund.

 

·Unless mutually agreed in writing between BNY Mellon and the Fund, BNY Mellon will use the same layout and format for every successive reporting period for the typeset reports. At the request of the Fund and upon the mutual written agreement of BNY Mellon and the Fund as to the scope of any changes and additional compensation of BNY Mellon, BNY Mellon will, or will cause the Vendor to change format or layout of reports from time to time.

 

TAX SERVICES

 

BNY Mellon shall provide the following tax services for the Fund:

 

§Tax Provision Preparation

·Prepare fiscal year-end tax provision analysis;

·Process tax adjustments on securities identified by the Fund that require such treatment;

·Prepare ROCSOP adjusting entries; and

·Prepare financial statement footnote disclosures.

 

§Excise Tax Distributions Calculations

·Prepare calendar year tax distribution analysis;

·Process tax adjustments on securities identified by the Fund that require such treatment; and

·Prepare annual tax-based distribution estimate for the Fund.

 

§Other Tax Services

·Prepare for execution and filing, the federal and state income and excise tax returns;

·Prepare year-end Investment Company Institute broker/dealer reporting and prepare fund distribution calculations disseminated to broker/dealers; and

·Coordinate U.S.C. Title 26 Internal Revenue Code (“IRC”) §855 and excise tax distribution requirements.

 

§Uncertain Tax Provisions

·Documentation of all material tax positions taken by the Fund with respect to specified fiscal years and identified to BNY Mellon (“Tax Positions”);

·Review of the Fund’s: (i) tax provision work papers, (ii) excise tax distribution work papers, (iii) income and excise tax returns, (iv) tax policies and procedures, and (v) Subchapter M compliance work papers;

·Determine as to whether or not Tax Positions have been consistently applied, and documentation of any inconsistencies;

 

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·Review relevant statutory authorities;

·Review tax opinions and legal memoranda prepared by tax counsel or tax auditors to the Fund;

·Review standard mutual fund industry practices, to the extent such practices are known to, or may reasonably be determined by, BNY Mellon; and

·Delivery of a written report to the applicable Fund detailing such items.

 

FUND ADMINISTRATION SERVICES

 

BNY Mellon shall provide the following fund administration services for the Fund:

 

§In accordance with Instructions received from the Fund, and subject to portfolio limitations as provided by such Fund to BNY Mellon in writing from time to time, monitor such Fund’s compliance, on a post-trade basis, with such portfolio limitations, provided that BNY Mellon maintains in the normal course of its business all data necessary to measure the Fund’s compliance;

 

§Monitor the Fund’s status as a regulated investment company under Subchapter M of the IRC and Subchapter L of the IRC (if required).

 

§Establish appropriate expense accruals and compute expense ratios, maintain expense files and coordinate the payment of Fund approved invoices;

 

§Calculate Fund approved income and per share amounts required for periodic distributions to be made by the applicable Fund;

 

§Calculate total return information;

 

§Coordinate the Fund’s annual audit;

 

§Supply various normal and customary portfolio and Fund statistical data as requested on an ongoing basis; and

 

§If the chief executive officer or chief financial officer of the Fund is required to provide a certification as part of the Fund’s Form N-Q or Form N-CSR filing pursuant to regulations promulgated by the SEC under Section 302 of the Sarbanes-Oxley Act of 2002, provide a sub-certification in support of certain matters set forth in the aforementioned certification. Such sub-certification is to be in such form and relating to such matters as agreed to by BNY Mellon in advance. BNY Mellon shall be required to provide the sub-certification only during the term of the Agreement and only if it receives such cooperation as it may request to perform its investigations with respect to the sub-certification. For clarity, the sub-certification is not itself a certification under the Sarbanes-Oxley Act of 2002 or under any other law, rule or regulation.

 

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REGULATORY ADMINISTRATION SERVICES

 

BNY Mellon shall provide the following regulatory administration services for the Fund:

 

§Maintain a regulatory calendar for the Fund listing various SEC filing and Board approval deadlines;

 

§Assemble and distribute board materials for quarterly meetings of the Board, including the drafting of agendas and resolutions for such quarterly meetings of the Board (with final selection of agenda items made by Fund counsel);

 

§Attend (in-person or telephonically) quarterly Board meetings and draft minutes thereof;

 

§Prepare and coordinate the filing of annual post-effective amendments to the Fund’s registration statement (not including the initial registration statement or related to the addition of one or more classes of shares or series);

 

§Prepare and coordinate the filing of Forms N-CSR, N-Q, and N-PX, as applicable (with the Fund supplying the voting records in the format required by BNY Mellon);

 

§Assist the Fund in the handling of SEC examinations by providing requested documents in the possession of BNY Mellon that are on the SEC examination request list; and

 

§Assist in the preparation of notices of annual or special meetings of shareholders and proxy materials relating to such meetings2.

 

§38a-1 Compliance Support Services

 

·Provide compliance policies and procedures related to services provided by BNY Mellon and, if mutually agreed, certain of the BNY Mellon Affiliates; summary procedures thereof; and periodic certification letters.

 

§eBoard Book Services: Permit persons or entities entering a valid password to have electronic access, via an Internet-based secure website, to current quarterly board meeting materials and such other board meeting materials as may be agreed between BNY Mellon and a Fund.

 

 

 

2 Separate fees will apply for the noted services.

 

 

 

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