FUND ADMINISTRATION SERVICING 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"), AIP Alternative Strategies Funds, a Delaware
business trust (the "Trust") and U.S. Bancorp Fund Services, LLC, a Wisconsin
limited liability company ("USBFS").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company, and
is authorized to issue shares of beneficial interest in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, USBFS is, among other things, in the business of providing fund
administration services for the benefit of its customers; and
WHEREAS, the Adviser and the Trust desire to retain USBFS to provide fund
administration services for each series of the Trust listed on Exhibit A hereto
(as amended from time to time) (each a "Fund", collectively the "Funds").
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Appointment of USBFS as Administrator
The Adviser and the Trust hereby appoints USBFS as administrator of the
Trust on the terms and conditions set forth in this Agreement, and USBFS
hereby accepts such appointment and agrees to perform the services and
duties set forth in this Agreement.
2. Services and Duties of USBFS
USBFS shall provide the following fund administration services for the
Funds, including but not limited to:
A. General Fund Management:
(1) Act as liaison among all Fund service providers.
(2) Supply:
a. Corporate secretarial services.
b. Office facilities (which may be in USBFS's or its
affiliate's own offices).
c. Non-investment-related statistical and research data as
needed.
(3) Coordinate the Trust's Board of Trustees' (the "Board of
Trustees" or the "Trustees") communication:
a. Establish meeting agendas.
b. Prepare reports for the Board of Trustees based on financial
and administrative data.
c. Evaluate independent auditor.
d. Secure and monitor fidelity bond and director and officer
liability coverage, and make the necessary Securities and
Exchange Commission (the "SEC") filings relating thereto.
e. Prepare minutes of meetings of the Board of Trustees and
Fund shareholders.
f. Recommend dividend declarations to the Board of Trustees,
prepare and distribute to appropriate parties notices
announcing declaration of dividends and other distributions
to shareholders.
g. Provide personnel to serve as officers of the Trust if so
elected by the Board of Trustees, attend Board of Trustees
meetings and present materials for Trustees' review at such
meetings.
(4) Audits:
a. Prepare appropriate schedules and assist independent
auditors.
b. Provide information to the SEC and facilitate audit process.
c. Provide office facilities.
(5) Assist in overall operations of the Fund.
(6) Pay Fund expenses upon written authorization from the Trust.
(7) Monitor arrangements under shareholder services or similar plan.
B. Compliance:
(1) Regulatory Compliance:
a. Monitor compliance with the 1940 Act requirements,
including:
(i) Asset diversification tests.
(ii) Total return and SEC yield calculations.
(iii) Maintenance of books and records under Rule 31a-3.
(iv) Code of Ethics for the disinterested Trustees of the
Fund.
b. Monitor Fund's compliance with the policies and investment
limitations of the Trust as set forth in its current
prospectus (the "Prospectus") and statement of additional
information (the "SAI").
c. Maintain awareness of applicable regulatory and operational
service issues and recommend dispositions.
(2) Blue Sky Compliance:
a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings relating
to the registration of the securities of the Trust so as to
enable the Trust to make a continuous offering of its shares
in all states.
b. Monitor status and maintain registrations in each state.
c. Provide information regarding material developments in state
securities regulation.
(3) SEC Registration and Reporting:
a. Assist Corporate counsel in updating the Prospectus and SAI
and in preparing proxy statements and Rule 24f-2 notices.
b. Prepare annual and semiannual reports, Form N-SAR filings
and Rule 24f-2 notices.
c. Coordinate the printing, filing and mailing of publicly
disseminated Prospectuses and reports.
d. File fidelity bond under Rule 17g-1.
e. File shareholder reports under Rule 30b2-1.
f. Monitor sales of each Fund's shares and ensure that such
shares are properly registered with the SEC and the
appropriate state authorities.
g. File Rule 24f-2 notices.
(4) IRS Compliance:
a. Monitor the Trust's status as a regulated investment company
under Subchapter M, including without limitation, review of
the following:
(i) Asset diversification requirements.
(ii) Qualifying income requirements.
(iii) Distribution requirements.
b. Calculate required distributions (including excise tax
distributions).
C. Financial Reporting:
(1) Provide financial data required by the Fund's Prospectus and SAI.
(2) Prepare financial reports for officers, shareholders, tax
authorities, performance reporting companies, the Board of
Trustees, the SEC, and independent auditors.
(3) Supervise the Trust's custodian and fund accountants in the
maintenance of the Trust's general ledger and in the preparation
of the Fund's financial statements, including oversight of
expense accruals and payments, of the determination of net asset
value of the Trust's net assets and of the Trust's shares, and of
the declaration and payment of dividends and other distributions
to shareholders.
(4) Compute the yield, total return and expense ratio of each class
of each Fund, and each Fund's portfolio turnover rate.
(5) Monitor the expense accruals and notify the Trust's management of
any proposed adjustments.
(6) Prepare monthly financial statements, which include without
limitation the following items:
a. Schedule of Investments.
b. Statement of Assets and Liabilities.
c. Statement of Operations.
d. Statement of Changes in Net Assets.
e. Cash Statement.
f. Schedule of Capital Gains and Losses.
(7) Prepare quarterly broker security transaction summaries.
D. Tax Reporting:
(1) Prepare and file on a timely basis appropriate federal and state
tax returns including, without limitation, Forms 1120/8610 with
any necessary schedules.
(2) Prepare state income breakdowns where relevant.
(3) File Form 1099 Miscellaneous for payments to Trustees and other
service providers.
(4) Monitor wash losses.
(5) Calculate eligible dividend income for corporate shareholders.
3. Compensation
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule set forth on Exhibit B hereto
(as amended from time to time). The Adviser shall pay all fees and
reimbursable expenses within thirty (30) calendar days following receipt of
the billing notice, except for any fee or expense subject to a good faith
dispute. The Adviser shall notify USBFS in writing within thirty (30)
calendar days following receipt of each invoice if the Adviser is disputing
any amounts in good faith. The Adviser shall settle such disputed amounts
within ten (10) calendar days of the day on which the parties agree to the
amount to be paid. With the exception of any fee or expense the Adviser is
disputing in good faith as set forth above, unpaid invoices shall accrue a
finance charge of one and one-half percent (1 1/2%) per month, after the
due date.
4. Indemnification; Limitation of Liability
A. USBFS shall exercise reasonable care in the performance of its duties
under this Agreement. USBFS shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Adviser or
the Trust in connection with matters to which this Agreement relates,
including losses resulting from mechanical breakdowns or the failure
of communication or power supplies beyond USBFS's control, except a
loss arising out of or relating to USBFS's refusal or failure to
comply with the terms of this Agreement or from bad faith, negligence,
or willful misconduct on its part in the performance of its duties
under this Agreement. Notwithstanding any other provision of this
Agreement, if USBFS has exercised reasonable care in the performance
of its duties under this Agreement, the Adviser and the Trust shall
indemnify and hold harmless USBFS from and against any and all claims,
demands, losses, expenses, and liabilities of any and every nature
(including reasonable attorneys' fees) which USBFS may sustain or
incur or which may be asserted against USBFS by any person arising out
of any action taken or omitted to be taken by it in performing the
services hereunder, except for any and all claims, demands, losses,
expenses, and liabilities arising out of or relating to USBFS's
refusal or failure to comply with the terms of this Agreement or from
bad faith, negligence or from willful misconduct on its part in
performance of its duties under this Agreement, (i) in accordance with
the foregoing standards, or (ii) in reliance upon any written or oral
instruction provided to USBFS by any duly authorized officer of the
Adviser or the Trust, such duly authorized officer to be included in a
list of authorized officers furnished to USBFS and as amended from
time to time in writing by resolution of the Board of Trustees.
USBFS shall indemnify and hold the Adviser and the Trust harmless
from and against any and all claims, demands, losses, expenses, and
liabilities of any and every nature (including reasonable attorneys'
fees) that the Adviser or the Trust may sustain or incur or that may
be asserted against the Adviser or the Trust by any person arising out
of any action taken or omitted to be taken by USBFS as a result of
USBFS's refusal or failure to comply with the terms of this Agreement,
its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, USBFS shall take
all reasonable steps to minimize service interruptions for any period
that such interruption continues beyond USBFS's control. USBFS will
make every reasonable effort to restore any lost or damaged data and
correct any errors resulting from such a breakdown at the expense of
USBFS. USBFS agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable
provision for emergency use of electrical data processing equipment to
the extent appropriate equipment is available. Representatives of the
Adviser and the Trust shall be entitled to inspect USBFS's premises
and operating capabilities at any time during regular business hours
of USBFS, upon reasonable notice to USBFS.
Notwithstanding the above, USBFS reserves the right to reprocess
and correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the indemnitor may
be asked to indemnify or hold the indemnitee harmless, the indemnitor
shall be fully and promptly advised of all pertinent facts concerning
the situation in question, and it is further understood that the
indemnitee will use all reasonable care to notify the indemnitor
promptly concerning any situation that presents or appears likely to
present the probability of a claim for indemnification. The indemnitor
shall have the option to defend the indemnitee against any claim that
may be the subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee and thereupon
the indemnitor shall take over complete defense of the claim, and the
indemnitee shall in such situation initiate no further legal or other
expenses for which it shall seek indemnification under this section.
The indemnitee shall in no case confess any claim or make any
compromise in any case in which the indemnitor will be asked to
indemnify the indemnitee except with the indemnitor's prior written
consent.
5. Proprietary and Confidential Information
USBFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the
Adviser and the Trust all records and other information relative to the
Adviser and the Trust and prior, present, or potential shareholders of the
Adviser and the Trust (and clients of said shareholders), and not to use
such records and information for any purpose other than the performance of
its responsibilities and duties hereunder, except after prior notification
to and approval in writing by the Adviser or the Trust, which approval
shall not be unreasonably withheld and may not be withheld where USBFS may
be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities,
or when so requested by the Adviser or the Trust.
Further, USBFS will adhere to the privacy policies adopted by the Adviser
and the Trust pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be
modified from time to time (the "Act"). Notwithstanding the foregoing,
USBFS will not share any nonpublic personal information concerning any of
the Trust's shareholders to any third party unless specifically directed by
the Adviser or the Trust or allowed under one of the exceptions noted under
the Act.
6. Term of Agreement; Amendment
This Agreement shall become effective as of the date first written
above and will continue in effect for a period of three years. Subsequent
to the initial three-year term, this Agreement may be terminated by either
party upon giving ninety (90) days prior written notice to the other party
or such shorter period as is mutually agreed upon by the parties. However,
this Agreement may be amended by mutual written consent of the parties. See
Exhibit C for additional termination conditions.
7. Records
USBFS shall keep records relating to the services to be performed
hereunder in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Adviser and the Trust, but not
inconsistent with the rules and regulations of appropriate government
authorities, in particular, Section 31 of the 1940 Act and the rules
thereunder. USBFS agrees that all such records prepared or maintained by
USBFS relating to the services to be performed by USBFS hereunder are the
property of the Trust and will be preserved, maintained, and made available
in accordance with such applicable sections and rules of the 1940 Act and
will be promptly surrendered to the Trust on and in accordance with its
request.
8. Governing Law
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin, without regard to conflicts of law principles. To the
extent that the applicable laws of the State of Wisconsin, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act,
the latter shall control, and nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or order of the SEC thereunder.
9. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any
of USBFS's duties or responsibilities hereunder is designated by the
Adviser and the Trust by written notice to USBFS, USBFS will promptly, upon
such termination and at the expense of the Adviser, transfer to such
successor all relevant books, records, correspondence, and other data
established or maintained by USBFS under this Agreement in a form
reasonably acceptable to the Adviser and the Trust (if such form differs
from the form in which USBFS has maintained, the Adviser shall pay any
expenses associated with transferring the data to such form), and will
cooperate in the transfer of such duties and responsibilities, including
provision for assistance from USBFS's personnel in the establishment of
books, records, and other data by such successor.
10. No Agency Relationship
Nothing herein contained shall be deemed to authorize or empower USBFS to
act as agent for the other party to this Agreement, or to conduct business
in the name, or for the account, of the other party to this Agreement.
11. Data Necessary to Perform Services
The Adviser, the Trust or its agents shall furnish to USBFS the data
necessary to perform the services described herein at such times and in
such form as mutually agreed upon. If USBFS is also acting in another
capacity for the Adviser or the Trust, nothing herein shall be deemed to
relieve USBFS of any of its obligations in such capacity.
12. Assignment
This Agreement may not be assigned by either party without the prior
written consent of the other parties.
13. Notices
Any notice required or permitted to be given by either party to the
other shall be in writing and shall be deemed to have been given on the
date delivered personally or by courier service, or three (3) days after
sent by registered or certified mail, postage prepaid, return receipt
requested, or on the date sent and confirmed received by facsimile
transmission to the other party's address set forth below:
Notice to USBFS shall be sent to:
U.S. Bancorp Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to the Adviser and the Trust shall be sent to:
Alternative Investment Partners, LLC/AIP Alternative Strategies Funds
000 Xxxxxxxxxxx Xxxx Xx.
Xxxxxxxxx, XX 00000
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer on one or more counterparts as of the date first
above written.
Alternative Investment Partners, LLC U.S. BANCORP FUND SERVICES, LLC
By: ______________________________ By: ________________________________
Title: __________________________ Title: ______________________________
AIP Alternative Strategies FUNDS
By: ______________________________
Title: __________________________
