INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into as of this ______ day of _________,
2002, by and between Alternative Investment Partners, LLC, a Delaware limited
liability company (the "Adviser") and AIP Alternative Strategies Funds, a
Delaware business trust (the "Trust"), regarding Alpha Strategies I Fund, a
series of the Trust (the "Fund").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Board of Trustees of the Trust has approved this Agreement,
and the Adviser is willing to furnish such services upon the terms and
conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment of Investment Adviser. The Trust desires to employ the
Fund's capital by investing and reinvesting in investments of the kind and in
accordance with the limitations specified in its Declaration of Trust dated
______, 2002 (the "Charter"), and in its Prospectus as from time to time in
effect (the "Prospectus"), and in the manner and to the extent as may from time
to time be approved by the Board of Trustees of the Trust. The Trust desires to
employ and hereby appoints the Adviser to act as investment adviser to the Fund.
The Adviser accepts the appointment and agrees to furnish the services for the
compensation set forth below.
2. Delivery of Fund Documents. The Trust has furnished the Adviser with
copies properly certified or authenticated of each of the following:
(a) Charter.
(b) By-Laws-of the Trust, as amended from time to time.
(c) Resolutions of the Trustees of the Trust selecting Alternative
Investment Partners, LLC as Adviser to the Fund and approving the form
of this Agreement.
(d) Fund Prospectus.
The Trust will furnish the Adviser from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
3. Name of Fund. The Trust and the Fund may use the names "AIP Alternative
Strategies Funds" and "Alpha Strategies I Fund" respectively only for so long as
this Agreement or any other Investment Advisory Agreement between the Adviser
and the Fund or any extension, renewal or amendment hereof or thereof remains in
effect, including any similar agreement with any organization which shall have
succeeded to the Adviser's business as investment adviser. At such time as such
an agreement shall no longer be in effect, the Fund will (to the extent that it
lawfully can) cease to use such name or any other name indicating that it is
advised by or otherwise connected with the Adviser or any organization which
shall have so succeeded to the Adviser's business. The Trust acknowledges that
the Adviser may grant the non-exclusive right to use the name "Alpha Strategies
I" to any other corporation or entity, including but not limited to any
investment company of which the Adviser or any subsidiary or affiliate thereof
or any successor to the business thereof shall be an investment adviser.
4. Services Provided by Adviser. Subject to the supervision and direction
of the Board of Trustees of the Trust, the Adviser will, either directly or by
employing suitable Sub-Advisors (a) act in strict conformity with the Trust's
Declaration of Trust, the Investment Company Act of 1940, as amended (the "1940
Act") and the Investment Advisers Act of 1940, as amended, (b) manage the Fund's
portfolio and furnish a continual investment program for the Fund in accordance
with the Fund's investment objective and policies as described in the Fund's
Prospectus, (c) make investment decisions for the Fund, (d) provide the Fund
with investment research and statistical data, advice and supervision, data
processing and clerical services, (e) provide the Fund with office facilities
which may be the Adviser's own offices, (f) determine what securities shall be
purchased for the Fund, what securities shall be held or sold by the Fund, and
allocate assets of the Fund to separate sub-accounts of the approved
Sub-Advisers, and determine what portion of the Fund's assets shall be held
uninvested, (g) review asset allocations and investment policies with the Board
of Trustees of the Fund every quarter, and (h) advise and assist the officers of
the Trust in taking such steps as are necessary or appropriate to carry out the
decisions of the Board of Trustees of the Trust and its committees with respect
to the foregoing matters and the conduct of the business of the Fund. In
addition, the Adviser will furnish the Trust with whatever statistical
information AIP may reasonably request with respect to the securities that the
Fund may hold or contemplate purchasing.
The Adviser will keep the Trust informed of developments materially
affecting the Fund's portfolio, and will, on its own initiative, furnish the
Trust from time to time with whatever information the Adviser believes is
appropriate for this purpose.
5. Allocation of Charges and Expenses. The Adviser will make available,
without expense to the Fund, the services of such of its officers, directors and
employees as may be duly elected officers or trustees of the Fund, subject to
the individual consent of such persons to serve and to any limitations imposed
by law. The Adviser will pay all expenses incurred in performing its investment
advisory services under this Agreement, including compensation of and office
space for officers and employees of the Adviser connected with investment and
economic research, trading and investment management of the Fund. The Adviser
will not be required to pay any investment advisory related expenses of the Fund
other than those specifically allocated to it in this paragraph 5. In
particular, but without limiting the generality of the foregoing, the Fund will
be required to pay: brokerage and other expenses of executing portfolio
transactions; taxes or governmental fees; interest charges and other costs of
borrowing funds; litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business.
6. Compensation of the Adviser. In consideration of the services rendered
pursuant to this Agreement, the Fund will pay to the Adviser, as compensation
for the services provided by the Adviser under this Agreement, a monthly fee of
2.50% (on an annualized basis) of the average net assets of the Fund.
In the event of any termination of this Agreement, the fee provided for in
this paragraph 6 shall be calculated on the basis of a period ending on the last
day on which this Agreement is in effect, subject to a pro rata adjustment based
on the number of days elapsed in the current period as a percentage of the total
number of days in such period.
7. Services to Other Accounts. The Trust understands that the Adviser may
act in the future as investment adviser to fiduciary and other managed accounts,
and the Trust has no objection to the Adviser so acting, provided that whenever
the Fund and one or more other accounts advised by the Adviser are prepared to
purchase, or desire to sell, the same security, available investments or
opportunities for sales will be allocated in a manner believed by the Adviser to
be equitable to each entity. The Trust recognizes that in some cases this
procedure may affect adversely the price paid or received by the Fund or the
size of the position purchased or sold by the Fund. In addition, the Trust
understands that the persons employed by the Adviser to provide service to the
Fund in connection with the performance of the Adviser's duties under this
Agreement will not devote their full time to that service. Moreover, nothing
contained in this Agreement will be deemed to limit or restrict the right of the
Adviser or any "affiliated person" of the Adviser to engage in and devote time
and attention to other businesses or to render services of whatever kind or
nature to other persons or entities, including serving as investment adviser to,
or employee, officer, director or trustee of, other investment companies.
8. Brokerage and Avoidance of Conflicts of Interest. In connection with
purchases or sales of portfolio securities for the account of the Fund, neither
the Adviser nor any of its trustees, officers or employees will act as a
principal or agent or receive any commission with respect to such purchases or
sales. The Adviser or its agents shall arrange for the placing of all orders for
the purchase and sale of portfolio securities for the Fund's account with
brokers or dealers selected by the Adviser. In the selection of such brokers or
dealers and the placing of such orders, the Adviser will use its best efforts to
seek for the Fund the most favorable execution and net price available and will
consider all factors it deems relevant in making such decisions including, but
not limited to, price (including any applicable brokerage commission or dealer
spread), size of order, difficulty of execution, and operational facilities of
the firm involved and the firm's risk in positioning a block of securities.
The parties agree that it is in the interests of the Fund that the Adviser
have access to supplemental investment and market research and security and
economic analyses provided by brokers who may execute brokerage transactions at
a higher cost to the Fund than may result when brokerage is allocated to other
brokers on the basis of the best price and execution. The Adviser is authorized
to place orders for the purchase and sale of securities for the Fund with such
brokers, subject to review by the Fund's Trustees from time to time. In
selecting brokers or dealers to execute a particular transaction and in
evaluating the best price and execution available, the Adviser may consider the
brokerage and research services (as such terms are defined in Section 28(e) of
the Securities Exchange Act of 1934, as amended) provided to the Fund and/or
other accounts over which the Adviser exercises investment discretion.
9. Standard of Care; Limitation of Liability. The Adviser will exercise its
best judgment in rendering the services described in paragraph 4 above. The
Adviser shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or from
reckless disregard by the Adviser of its obligations and duties under this
Agreement, or a loss resulting from a breach of fiduciary duty with respect to
receipt of compensation for services (in which case any award of damages shall
be limited to the period and amount set forth in Section 36(b)(3) of the 1940
Act). Any person, even though an officer, director, employee, or agent of the
Adviser, who may be or become an officer, trustee, employee or agent of the
Fund, will be deemed, when rendering services to the Fund, to be rendering such
services to, or acting solely for, the Fund and not as an officer, director,
employee or agent, or one under the control or direction of the Adviser, even
though paid by it.
10. Duration and Termination of this Agreement. This Agreement shall remain
in force for an initial term of two years and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually by
the vote of a majority of the Trustees who are not interested persons of the
Adviser or of the Fund, cast in person at a meeting called for the purpose of
voting on such approval and by a vote of the Board of Trustees or of a majority
of the outstanding voting securities of the Fund. The aforesaid 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. This Agreement may, on sixty (60) days, written notice,
be terminated at any time without the payment of any penalty, by the Board of
Trustees of the Fund, or by vote of a majority of the outstanding voting
securities of the Fund, or by the Adviser. This Agreement shall automatically
terminate in the event of its assignment. In interpreting the provisions of this
Agreement, the definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "interested person", "assignment" and "majority
of the outstanding voting securities"), as from time to time amended, shall be
applied, subject, however, to such exemptions, as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.
11. Amendment of this Agreement. No provisions of this Agreement may be
amended, changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, change, waiver, discharge or termination is sought, and no amendment
of this Agreement shall be effective until approved by vote of the holders of a
majority of the outstanding voting securities of the Fund and by the Board of
Trustees of the Fund, including a majority of the Trustees who are not
interested persons of the Adviser or of the Fund, cast in person at a meeting
called for the purpose of voting on such approval.
12. Notice. Any notice, advice or report to be given pursuant to this
Agreement shall be delivered or mailed:
To the Adviser at:
Alternative Investment Partners, LLC
000 Xxxxxxxxxxx Xxxx Xx.
Xxxxxxxxx, XX 00000
To the Trust and the Fund at:
AIP Alternative Strategies Funds
000 Xxxxxxxxxxx Xxxx Xx.
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxxx & Xxxxxxx P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
13. Governing Law. This Agreement constitutes the entire agreement of the
parties, shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by New York law in
a manner not in conflict with the provisions of the 1940 Act.
14. Miscellaneous. Neither the holders of Shares of the Fund nor the
Trustees shall be personally liable hereunder. The captions in this Agreement
are included for convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract
between the Trust, on behalf of the Fund, and the Adviser.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
AIP ALTERNTAIVE STRATEGIES FUNDS
By:________________________________
Name:
Title:
ALTERNATIVE INVESTMENT PARTNERS, LLC
By:________________________________
Name:
Title:
