Exhibit (g)(1)
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, dated [ ], 2004 between BTOP50 CTA Index Fund
(the "Fund"), a Delaware statutory trust, and Asset Alliance Advisors, Inc.
(the "Adviser"), a Delaware corporation.
WHEREAS, Adviser has agreed to furnish investment advisory
services to the Fund, a closed-end management investment company registered
under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, this Agreement has been approved in accordance with
the provisions of the 1940 Act, and the Adviser is willing to furnish such
services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual premises and
covenants herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, it is agreed by and between the
parties hereto as follows:
1. In General. The Adviser agrees, all as more fully set
forth herein, to act as investment adviser to the Fund with respect to the
investment of the Fund's assets and to supervise and arrange for the
day-to-day operations of the Fund and the purchase of securities for and the
sale of securities held in the investment portfolio of the Fund.
2. Duties and Obligations of the Adviser with Respect to
Investment of Assets of the Fund. Subject to the succeeding provisions of this
section and subject to the direction and control of the Fund's Board of
Trustees, the Adviser shall (i) act as investment adviser for and supervise
and manage the investment and reinvestment of the Fund's assets and in
connection therewith have complete discretion in purchasing and selling
securities and other assets for the Fund and in voting, exercising consents
and exercising all other rights appertaining to such securities and other
assets on behalf of the Fund; (ii) supervise continuously the investment
program of the Fund and the composition of its investment portfolio; (iii)
arrange, subject to the provisions of paragraph 4 hereof, for the purchase and
sale of securities and other assets held in the investment portfolio of the
Fund; and (iv) provide investment research to the Fund.
3. Duties and Obligations of Adviser with Respect to the
Administration of the Fund. The Adviser also agrees to furnish office
facilities and equipment and clerical, bookkeeping and administrative services
(other than such services, if any, provided by the Fund's Administrator,
Custodian, Transfer Agent and Dividend Disbursing Agent and other service
providers) for the Fund. The duties and obligations of the Adviser set forth
herein may be delegated to and performed by the Fund's Administrator,
Custodian,
Transfer Agent and Dividend Disbursing Agent. To the extent requested by the
Fund, the Adviser agrees to provide the following administrative services:
(a) Oversee the determination and publication of
the Fund's net asset value in accordance with the Fund's policy as adopted
from time to time by the Board of Trustees;
(b) Oversee the maintenance the Fund's Custodian
and Transfer Agent and Dividend Disbursing Agent of certain books and records
of the Fund as required under Rule 31a-1(b)(4) of the 1940 Act and maintain
(or oversee maintenance by such other persons as approved by the Board of
Trustees) such other books and records required by law or for the proper
operation of the Fund;
(c) Oversee the preparation and filing of the
Fund's federal, state and local income tax returns and any other required tax
returns;
(d) Review the appropriateness of and arrange for
payment of the Fund's expenses;
(e) Prepare for review and approval by officers of
the Fund financial information for the Fund's semi-annual and annual reports,
proxy statements and other communications with shareholders required or
otherwise to be sent to Fund shareholders, and arrange for the printing and
dissemination of such reports and communications to shareholders;
(f) Prepare for review by an officer of the Fund
the Fund's periodic financial reports required to be filed with the Securities
and Exchange Commission ("SEC") on Form N-SAR, Form N-CSR and such other
reports, forms and filings, as may be mutually agreed upon;
(g) Prepare reports relating to the business and
affairs of the Fund as may be mutually agreed upon and not otherwise
appropriately prepared by the Fund's custodian, counsel or auditors;
(h) Make such reports and recommendations to the
Board of Trustees concerning the performance of the independent accountants as
the Board of Trustees may reasonably request or deems appropriate;
(i) Make such reports and recommendations to the
Board of Trustees concerning the performance and fees of the Fund's Custodian
and Transfer and Dividend disbursing agent as the Board of Trustees may
reasonably request or deems appropriate;
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(j) Oversee and review calculations of fees paid to
the Fund's service providers;
(k) Oversee the Fund's portfolio and perform
necessary calculations as required under Section 18 of the 1940 Act;
(l) Consult with the Fund's officers, independent
accountants, legal counsel, custodian, accounting agent and transfer and
dividend disbursing agent in establishing the accounting policies of the Fund
and monitor financial and shareholder accounting services;
(m) Review implementation of any share purchase
programs authorized by the Board of Trustees;
(n) Determine the amounts available for
distribution as dividends and distributions to be paid by the Fund to its
shareholders; prepare and arrange for the printing of dividend notices to
shareholders; and provide the Fund's dividend disbursing agent and custodian
with such information as is required for such parties to effect the payment of
dividends and distributions and to implement the Fund's dividend reinvestment
plan;
(o) Prepare such information and reports as may be
required by any banks from which the Fund borrows funds;
(p) Provide such assistance to the Custodian and
the Fund's counsel and auditors as generally may be required to properly carry
on the business and operations of the Fund;
(q) Assist in the preparation and filing of Forms
3, 4, and 5 pursuant to Section 16 of the Securities Exchange Act of 1934 and
Section 30(f) of the 1940 Act for the officers and Trustees of the Fund, such
filings to be based on information provided by those persons;
(r) Respond to or refer to the Fund's officers or
transfer agent, shareholder (including any potential shareholder) inquiries
relating to the Fund;
(s) Assist in administration of repurchases of
Common Shares from investors; and
(t) Supervise any other aspects of the Fund's
administration as may be agreed to by the Fund and the Adviser.
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All services are to be furnished through the medium of any
directors, officers or employees of the Adviser or its affiliates as the
Adviser deems appropriate in order to fulfill its obligations hereunder.
The Fund will reimburse the Adviser or its affiliates for
all out-of-pocket expenses incurred by them in connection with the performance
of the administrative services described in this paragraph 3.
4. Covenants. In the performance of its duties under this
Agreement, the Adviser shall:
(a) (i) at all times seek to conform to, and act in
accordance with, any requirements imposed by the provisions of the 1940 Act
and the Investment Advisers Act of 1940, and all applicable Rules and
Regulations of the SEC; (ii) any other applicable provision of law; (iii) the
provisions of the Agreement and Declaration of Trust, and By-Laws of the Fund,
as such documents are amended from time to time; (iv) the investment objective
and policies of the Fund as set forth in its Registration Statement on Form
N-2; and (v) any policies and determinations of the Board of Trustees of the
Fund communicated to the Adviser in writing;
(b) place orders either directly with the issuer or
with any broker or dealer. Subject to the other provisions of this paragraph,
in placing orders with brokers and dealers, the Adviser will attempt to obtain
the best price and the most favorable execution of its orders. In placing
orders, the Adviser will consider the experience and skill of the firm's
securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, the Adviser may
select brokers on the basis of the research, statistical and pricing services
they provide to the Fund and other clients of the Adviser. Information and
research received from such brokers will be in addition to, and not in lieu
of, the services required to be performed by the Adviser hereunder. A
commission paid to such brokers may be higher than that which another
qualified broker would have charged for effecting the same transaction,
provided that the Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Adviser to the Fund and its other clients and that the total commissions
paid by the Fund will be reasonable in relation to the benefits to the Fund
over the long-term. In no instance, however, will the Fund's securities be
purchased from or sold to the Adviser, or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) treat confidentially and as proprietary
information of the Fund all records and other information relative to the
Fund, and the Fund's prior, current or potential shareholders, and will not
use such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Fund, which approval shall not be unreason-
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ably withheld and may not be withheld where the Adviser 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 Fund.
5. Services Not Exclusive. Nothing in this Agreement shall
prevent the Adviser or any officer, employee or other affiliate thereof from
acting as investment adviser for any other person, firm or corporation, or
from engaging in any other lawful activity, and shall not in any way limit or
restrict the Adviser or any of its officers, employees or agents from buying,
selling or trading any securities for its or their own accounts or for the
accounts of others for whom it or they may be acting; provided, however, that
the Adviser will undertake no activities which, in its judgment, will
adversely affect the performance of its obligations under this Agreement.
6. Books and Records. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Adviser hereby agrees that all records
which it maintains for the Fund are the property of the Fund and further
agrees to surrender promptly to the Fund any such records upon the Fund's
request. The Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act.
7. Agency Cross Transactions. From time to time, the Adviser
or brokers or dealers affiliated with it may find themselves in a position to
buy for certain of their brokerage clients (each an "Account") securities
which the Adviser's investment advisory clients wish to sell, and to sell for
certain of their brokerage clients securities which advisory clients wish to
buy. Where one of the parties is an advisory client, the Adviser or the
affiliated broker or dealer cannot participate in this type of transaction
(known as a cross transaction) on behalf of an advisory client and retain
commissions from one or both parties to the transaction without the advisory
client's consent. This is because in a situation where the Adviser is making
the investment decision (as opposed to a brokerage client who makes his own
investment decisions), and the Adviser or an affiliate is receiving
commissions from both sides of the transaction, there is a potential
conflicting division of loyalties and responsibilities on the Adviser's part
regarding the advisory client. The SEC has adopted a rule under the Investment
Advisers Act of 1940 which permits the Adviser or its affiliates to
participate on behalf of an Account in agency cross transactions if the
advisory client has given written consent in advance. By execution of this
Agreement, the Fund authorizes the Adviser or its affiliates to participate in
agency cross transactions involving an Account. The Fund may revoke its
consent at any time by written notice to the Adviser.
8. Expenses. During the term of this Agreement, the Adviser
will bear all costs and expenses of its employees and any overhead incurred in
connection with its duties hereunder and shall bear the costs of any salaries
or Trustees fees of any officers or Trustees of the Fund who are affiliated
persons (as defined in the 0000 Xxx) of the Ad-
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viser; provided that the Board of Trustees of the Fund may approve
reimbursement to the Adviser of the pro rata portion of the salaries, bonuses,
health insurance, retirement benefits and all similar employment costs for the
time spent on Fund operations (other than the provision of investment advice
and administrative services required to be provided hereunder) of all
personnel employed by the Adviser who devote substantial time to Fund
operations or the operations of other investment companies advised by the
Adviser.
9. Compensation of the Adviser. (a) The Fund agrees to pay
to the Adviser and the Adviser agrees to accept as full compensation for all
services rendered by the Adviser as such, a monthly fee (the "Investment
Advisory Fee") in arrears at an annual rate equal to 1.00% of the month end
value of the Fund's total assets no later than seven (7) calendar days after
each month end. For any period less than a month during which this Agreement
is in effect, the fee shall be prorated according to the proportion which such
period bears to a full month of 28, 29, 30 or 31 days, as the case may be.
(b) For purposes of this Agreement, the net assets
of the Fund shall be calculated pursuant to the procedures adopted by
resolutions of the Trustees of the Fund for calculating the value of the
Fund's assets or delegating such calculations to third parties.
10. Indemnity. (a) The Fund hereby agrees to indemnify the
Adviser, and each of the Adviser's directors, officers, employees, agents,
associates and controlling persons and the directors, partners, members,
officers, employees and agents thereof (including any individual who serves at
the Adviser's request as director, officer, partner, member, Trustee or the
like of another entity) (each such person being an "Indemnitee") against any
liabilities and expenses, including amounts paid in satisfaction of judgments,
in compromise or as fines and penalties, and counsel fees (all as provided in
accordance with applicable state law) reasonably incurred by such Indemnitee
in connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
investigative body in which such Indemnitee may be or may have been involved
as a party or otherwise or with which such Indemnitee may be or may have been
threatened, while acting in any capacity set forth herein or thereafter by
reason of such Indemnitee having acted in any such capacity, except with
respect to any matter as to which such Indemnitee shall have been adjudicated
not to have acted in good faith in the reasonable belief that such
Indemnitee's action was in the best interest of the Fund and furthermore, in
the case of any criminal proceeding, so long as such Indemnitee had no
reasonable cause to believe that the conduct was unlawful; provided, however,
that (1) no Indemnitee shall be indemnified hereunder against any liability to
the Fund or its shareholders or any expense of such Indemnitee arising by
reason of (i) willful misfeasance, (ii) bad faith, (iii) gross negligence or
(iv) reckless disregard of the duties involved in the conduct of such
Indemnitee's position (the conduct referred to in such clauses (i) through
(iv) being sometimes referred to herein as "disabling conduct"), (2) as
to any matter disposed of by settlement or a compromise payment by such
Indemnitee, pursuant
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to a consent decree or otherwise, no indemnification either for said payment
or for any other expenses shall be provided unless there has been a
determination that such settlement or compromise is in the best interests of
the Fund and that such Indemnitee appears to have acted in good faith in the
reasonable belief that such Indemnitee's action was in the best interest of
the Fund and did not involve disabling conduct by such Indemnitee and (3) with
respect to any action, suit or other proceeding voluntarily prosecuted by any
Indemnitee as plaintiff, indemnification shall be mandatory only if the
prosecution of such action, suit or other proceeding by such Indemnitee was
authorized by a majority of the full Board of Trustees of the Fund.
(b) The Fund shall make advance payments in
connection with the expenses of defending any action with respect to which
indemnification might be sought hereunder if the Fund receives a written
affirmation of the Indemnitee's good faith belief that the standard of conduct
necessary for indemnification has been met and a written undertaking to
reimburse the Fund unless it is subsequently determined that such Indemnitee
is entitled to such indemnification and if the Trustees of the Fund determine
that the facts then known to them would not preclude indemnification. In
addition, at least one of the following conditions must be met: (A) the
Indemnitee shall provide a security for such Indemnitee-undertaking, (B) the
Fund shall be insured against losses arising by reason of any lawful advance,
or (C) a majority of a quorum consisting of Trustees of the Fund who are
neither "interested persons" of the Fund (as defined in Section 2(a)(19) of
the 0000 Xxx) nor parties to the proceeding ("Disinterested Non-Party
Trustees") or an independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Indemnitee
ultimately will be found entitled to indemnification.
(c) All determinations with respect to
indemnification hereunder shall be made (1) by a final decision on the merits
by a court or other body before whom the proceeding was brought that such
Indemnitee is not liable or is not liable by reason of disabling conduct, or
(2) in the absence of such a decision, by (i) a majority vote of a quorum of
the Disinterested Non-Party Trustees of the Fund, or (ii) if such a quorum is
not obtainable or, even if obtainable, if a majority vote of such quorum so
directs, independent legal counsel in a written opinion. All determinations
that advance payments in connection with the expense of defending any
proceeding shall be authorized shall be made in accordance with the
immediately preceding clause (2) above.
The rights accruing to any Indemnitee under these
provisions shall not exclude any other right to which such Indemnitee may be
lawfully entitled.
11. Limitation on Liability. (a) The Adviser will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Adviser or by the Fund in connection with the performance of this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or 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 it of its duties under this
Agreement.
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(b) Notwithstanding anything to the contrary
contained in this Agreement, the parties hereto acknowledge and agree that, as
provided in Section 5.1 of Article V of the Declaration of Trust, this
Agreement is executed by the Trustees and/or officers of the Fund, not
individually but as such Trustees and/or officers of the Fund, and the
obligations hereunder are not binding upon any of the Trustees or Shareholders
individually but bind only the estate of the Fund.
12. Duration and Termination. This Agreement shall become
effective as of the date hereof and, unless sooner terminated with respect to
the Fund as provided herein, shall continue in effect for a period of two
years. Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Fund for successive periods of 12 months, provided such
continuance is specifically approved at least annually by both (a) the vote of
a majority of the Fund's Board of Trustees or the vote of a majority of the
outstanding voting securities of the Fund at the time outstanding and entitled
to vote, and (b) by the vote of a majority of the Trustees who are not parties
to this Agreement or interested persons of any party to this Agreement, cast
in person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund at
any time, without the payment of any penalty, upon giving the Adviser 60 days'
notice (which notice may be waived by the Adviser), provided that such
termination by the Fund shall be directed or approved by the vote of a
majority of the Trustees of the Fund in office at the time or by the vote of
the holders of a majority of the voting securities of the Fund at the time
outstanding and entitled to vote, or by the Adviser on 60 days' written notice
(which notice may be waived by the Fund). This Agreement will also immediately
terminate in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings of such terms in the 1940 Act.)
13. Notices. Any notice under this Agreement shall be in
writing to the other party at such address as the other party may designate
from time to time for the receipt of such notice and shall be deemed to be
received on the earlier of the date actually received or on the fourth day
after the postmark if such notice is mailed first class postage prepaid.
14. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York for contracts
to be performed entirely therein without reference to choice of law principles
thereof and in accordance with the applicable provisions of the 1940 Act.
16. Miscellaneous. 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
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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 shall be binding on, and shall inure to the benefit of the parties
hereto and their respective successors.
17. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused the
foregoing instrument to be executed by their duly authorized officers, all as
of the day and the year first above written.
BTOP50 CTA INDEX FUND
By:_________________________________
Name: Xxxxxxx X. Xxxxx
Title: President
ASSET ALLIANCE ADVISORS, INC.
By:________________________________
Name: Xiao-Hong-Jing
Title: Senior Vice President
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