LIBERTY ALL-STAR MID-CAP FUND
FORM OF FUND MANAGEMENT AGREEMENT
FUND MANAGEMENT AGREEMENT dated _____________, 2005, between Liberty All-Star
Mid-Cap Fund, a business trust organized under the laws of the Commonwealth of
Massachusetts (the "Trust"), and Banc of America Investment Advisors, Inc., a
corporation organized under the laws of the State of Delaware ("Manager").
WHEREAS the Trust will operate as an investment company registered under the
Investment Company Act of 1940 ("Investment Company Act") for the purpose of
investing and reinvesting its assets in securities pursuant to the investment
objectives, policies and restrictions set forth in its Declaration of Trust, its
By-Laws and its registration statement on Form N-2 under the Investment Company
Act and the Securities Act of 1933 (the "Registration Statement"), all as
heretofore amended and supplemented; and the Trust desires to avail itself of
the services, information, advice, assistance and facilities of the Manager and
to have the Manager provide or perform for it various administrative, management
and other services; and
WHEREAS the Manager is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and desires to provide
services to the Trust in consideration of and on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the Trust and the Manager agree as follows:
1. EMPLOYMENT OF THE MANAGER. The Trust hereby employs the Manager to manage the
investment and reinvestment of the Trust's assets in the manner set forth in
Section 2(B) of this Agreement, to administer its business and administrative
operations as set forth in Section 2(A) of this Agreement, and to provide the
other services set forth in Section 2 of this Agreement, subject to the
direction of the Board of Trustees and the officers of the Trust, for the
period, in the manner, and on the terms hereinafter set forth. The Manager
hereby accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth. The Manager shall for
all purposes herein be deemed to be an independent contractor and shall, except
as expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
2. OBLIGATION OF AND SERVICES TO BE PROVIDED BY THE MANAGER. The Manager
undertakes to provide the services hereinafter set forth and to assume the
following obligations:
A. Administrative Services.
(1) The Manager shall provide, either directly or through an affiliate,
general administrative services and oversee the operations of the Trust
("Administrative Services"). The Administrative Services shall not include
custodial, transfer agency, or pricing and bookkeeping services, but shall
include, without limitation, the following administrative services:
(i) the maintenance of the Trust's offices within the Manager's offices
and the maintenance of the books and records of the Trust, other than the
books and records maintained by the transfer agent, the custodian or the fund
accountant of the Trust or any other service provider engaged by the Trust
(including the Portfolio Managers (as defined below)), and making
arrangements for the meetings of the Trustees of the Trust, including the
preparation of agendas and supporting materials therefor;
(ii) the preparation of such financial information as is reasonably
necessary for reports to shareholders of the Trust, reports to the Board of
Trustees and the officers of the Trust, and reports of the Trust to the
Securities and Exchange Commission, the Internal Revenue Service and other
Federal and state regulatory agencies;
(iii) the provision of such advice that may be reasonably necessary to
account properly for the Trust's financial transactions and to maintain the
Trust's accounting procedures and records so as to insure compliance with
generally accepted accounting and tax practices and rules;
(iv) the monitoring of the preparation and maintenance by the Trust's
custodian or other agents of all records that may be reasonably required in
connection with the audit performed by the Trust's independent auditors, the
Securities and Exchange Commission, the Internal Revenue Service or other
Federal or state regulatory agencies;
(v) the preparation of communications and reports to shareholders of
the Trust, making arrangements for meetings of such shareholders maintenance
of other communications with shareholders which may include a website and
dedicated telephone line;
(vi) the preparation and filing of all reports and all updating and
other amendments to the Trust's Registration Statements necessary to maintain
the registration of the Trust under the Investment Company Act and the
listing of its common stock on the New York Stock Exchange;
(vii) the preparation of the Trust's tax returns;
(viii) the periodic computation, and reporting as necessary to the
Trustees of the Trust, of the Trust's compliance with its investment
objective, policies and restrictions and the portfolio diversification and
other portfolio requirements of the Investment Company Act and the Internal
Revenue Code of 1986, as amended; and
(ix) the negotiation of agreements or other arrangements with, and
general oversight and coordination of, agents and others retained by the
Trust to provide custodial, transfer agency, net asset value computation,
portfolio accounting, legal, tax and accounting services.
(2) The Manager will permit individuals who are officers or employees of the
Manager to serve (if duly elected or appointed) as officers, Trustees, members
of any committee of the Board of Trustees, members of any advisory board, or
members of any other committee of the Trust, without remuneration or other cost
to the Trust; provided, however, that notwithstanding anything contained herein
to the contrary, the Fund may pay compensation to, and expenses of, the Fund's
chief compliance officer to the extent that the Board of Trustees expressly so
authorizes, regardless of whether such officer is also an officer or employee of
the Manager or an affiliate of the Manager.
(3) The Manager will provide necessary executive and other personnel,
including personnel for the performance of clerical and other office functions,
exclusive of those functions: (a) related to and to be performed under the
Trust's contract or contracts for administration, custodial, accounting,
bookkeeping, transfer, and dividend disbursing agency or other services by any
entity, including the Manager or its affiliates, selected to perform such
services under such contracts; and (b) related to the services to be provided by
any Portfolio Manager pursuant to an Portfolio Management Agreement.
B. Investment Management Services.
(1) The Manager shall have overall supervisory responsibility for the general
management and investment of the Trust's assets and securities portfolio subject
to and in accordance with the investment objectives and policies of the Trust,
and any directions which the Trust's Trustees may issue to the Manager from time
to time.
(2) The Manager shall provide overall investment programs and strategies for
the Trust, shall revise such programs as necessary and shall monitor and report
periodically to the Trustees concerning the implementation of the programs.
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(3) The Trust and the Manager intend to appoint one or more persons or
companies ("Portfolio Managers"), each such Portfolio Manager to have full
investment discretion and to make all determinations with respect to the
investment and reinvestment of the portion of the Trust's assets assigned to
that Portfolio Manager and the purchase and sale of portfolio securities with
those assets, all within the Trust's investment objectives, policies and
restrictions, and the Trust will take such steps as may be necessary to
implement such appointments. The Manager shall not be responsible or liable for
the investment merits of any decision by a Portfolio Manager to purchase, hold
or sell a security for the portfolio of the Trust. The Manager shall advise the
Trustees of the Trust which Portfolio Managers the Manager believes are best
suited to invest the assets of the Trust; shall monitor and evaluate the
investment performance of each Portfolio Manager employed by the Trust; shall
allocate and reallocate the portion of the Trust's assets to be managed by each
Portfolio Manager; shall recommend changes of or additional Portfolio Managers
when deemed appropriate by the Manager shall coordinate and monitor the
investment activities of the Portfolio Managers to ensure compliance with the
Trust's investment policies and restrictions and applicable laws, including the
Investment Company Act and the Internal Revenue Code of 1986, as amended; and
shall have full investment discretion to make all determinations with respect to
the investment of the Trust's assets not then managed by a Portfolio Manager.
(4) The Manager shall render regular reports to the Trust, at regular
meetings of the Trustees, of, among other things, the decisions that it has made
with respect to the allocation of the Trust's assets among Portfolio Managers.
C. Provision of Information Necessary for Preparation of Securities Registration
Statements, Amendments and Other Materials.
The Manager will make available and provide financial, accounting and
statistical information concerning the Manager required by the Trust in the
preparation of registration statements, reports and other documents required by
federal and state securities laws, and such other information as the Trust may
reasonably request for use in the preparation of such documents or of other
materials necessary or helpful for the distribution of the Trust's shares.
D. Other Obligations and Services.
(l) The Manager shall make available its officers and employees to the
Trustees and officers of the Trust for consultation and discussions regarding
the administration and management of the Trust and its investment activities.
(2) The Manager will adopt a written code of ethics complying with the
requirements the Advisers Act and of Rule 17j-1 under the Investment Company Act
and will provide the Trust with a copy of the code of ethics and evidence of its
adoption. Within forty-five (45) days of the end of the last calendar quarter of
each year while this Agreement is in effect, or at any other time required by
the Board of Trustees, the President or a Vice President or other officer of the
Manager shall certify to the Trust that the Manager has complied with the
requirements of Rule 17j-1 during the previous year and that there has been no
violation of the Manager's code of ethics or, if such a violation has occurred,
that appropriate action was taken in response to such violation. Upon the
written request of the Trust, the Manager shall permit the Trust, its employees
or its agents to examine the reports required to be made by the Manager by Rule
17j-1(c)(2)(ii). The Manager will also maintain and implement compliance
procedures that are reasonably designed to ensure its compliance with Rile
206(4)-7 of the Advisers Act and to prevent violations of the Federal Securities
Laws (as defined in Rule 38a-1 under the Act).
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE COMMISSIONS. The Portfolio
Managers, subject to and in accordance with any directions the Trust may issue
from time to time, shall place, in the name of the Trust, orders for the
execution of the Trust's portfolio transactions. When placing such orders, the
obligation of each Portfolio Manager shall be as provided in the applicable
Portfolio Management Agreement. The Manager will oversee the placement of orders
by Portfolio Managers in accordance with their respective Portfolio Management
Agreements and will render regular reports to the Trust of the total brokerage
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business placed on behalf of the Trust by the Portfolio Managers and the manner
in which such brokerage business has been allocated.
The Trust hereby agrees that any entity or person associated with the Manager
that is a member of a national securities exchange is authorized to effect any
transaction on such exchange for the account of the Trust to the extent and as
permitted by Section 11(a)(1)(H) of the Securities Exchange Act of 1934, as
amended ("1934 Act").
Subject to the appropriate policies and procedures approved by the Board of
Trustees, the Manager may, to the extent authorized by Section 28(e) of the 1934
Act, cause the Trust to pay a broker or dealer that provides brokerage or
research services to the Manager, the Portfolio Manager and the Trust an amount
of commission for effecting a Trust transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Manager determines, in good faith, that such amount of
commission is reasonable in relationship to the value of such brokerage or
research services provided in terms of that particular transaction or the
Manager's overall responsibilities to the Trust or its other investment advisory
clients. To the extent authorized by said Section 28(e) and the Board of
Trustees, the Manager shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of
such action.
4. EXPENSES OF THE TRUST. It is understood that the Trust will pay all its
expenses other than those expressly assumed by the Manager herein, which
expenses payable by the Trust shall include:
A. Fees of the Manager;
B. Expenses of all audits by independent public accountants;
C. Expenses of transfer agent, pricing services, bookkeeping services,
registrar, dividend disbursing agent and shareholder record keeping services
(including reasonable fees and expenses payable to the Manager for such
services);
D. Expenses of custodial services including fund accounting and record keeping
services provided by the Custodian;
E. Expenses of obtaining quotations for calculating the value of the Trust's net
assets;
F. Salaries and other compensation of any of its executive officers and
employees who are not officers, directors, stockholders or employees of the
Manager or any of its affiliates;
G. Taxes levied against the Trust and the expenses of preparing tax returns and
reports;
H. Brokerage fees and commissions in connection with the purchase and sale of
portfolio securities for the Trust;
I. Organizational and offering expenses (subject to any written agreement by the
Manager or an affiliate of the Manager to reimburse any portion of such
expenses);
J. Costs, including the interest expense, of borrowing money;
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K. Costs and/or fees incident to Trustee and shareholder meetings of the Trust,
the preparation and mailings of proxy material, prospectuses and reports of
the Trust to its shareholders, the filing of reports with regulatory bodies,
the maintenance of the Trust's legal existence, membership dues and fees of
investment company industry trade associations, the listing (and maintenance
of such listing) of the Trust's shares on stock exchanges, and the
registration of shares with federal and state securities authorities;
L. Legal fees and expenses (including reasonable fees for legal services
rendered by the Manager or its affiliates), including the legal fees related
to the registration and continued qualification of the Trust's shares for
sale;
M. Costs of printing stock certificates representing shares of the Trust, if
any;
N. Trustees' fees and expenses of Trustees who are not directors, officers,
employees or stockholders of the Manager or any of its affiliates;
O. Its pro rata portion of the fidelity bond required by Section 17(g) of the
Investment Company Act, or other insurance premiums; and
P. Fees payable to federal and state authorities in connection with the
registration of the Trust's shares.
Q. Nonrecurring and extraordinary expenses, such as indemnification payments or
damages awarded in litigation or settlements made.
5. ACTIVITIES AND AFFILIATES OF THE MANAGER.
A. The services of the Manager to the Trust hereunder are not to be deemed
exclusive, and the Manager and any of its affiliates shall be free to render
similar services to others. The Manager shall use the same skill and care in
the management of the Trust's assets as it uses in the administration of
other accounts to which it provides asset management, consulting and
portfolio manager selection services, but shall not be obligated to give the
Trust more favorable or preferential treatment vis-a-vis its other clients.
B. Subject to and in accordance with the Declaration of Trust and By-Laws of the
Trust and to Section 10(a) of the Investment Company Act, it is understood
that Trustees, officers, agents and shareholders of the Trust are or may be
interested in the Manager or its affiliates as directors, officers, agents or
stockholders of the Manager or its affiliates; that directors, officers,
agents and stockholders of the Manager or its affiliates are or may be
interested in the Trust as trustees, officers, agents, shareholders or
otherwise; that the Manager or its affiliates may be interested in the Trust
as shareholders or otherwise; and that the effect of any such interests shall
be governed by said Declaration of Trust, By-Laws and the Investment Company
Act.
6. FEES FOR SERVICES: COMPENSATION OF PORTFOLIO MANAGERS. The compensation of
the Manager for its services under this Agreement shall be calculated and paid
by the Fund in accordance with the attached Exhibit A. The Manager will
compensate the Portfolio Managers as provided in the Portfolio Management
Agreement entered into with the Portfolio Managers from time to time.
7. LIABILITIES OF THE MANAGER.
A. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder on the part of the
Manager, the Manager shall not be subject to liability to the Trust or to any
shareholder of the Trust for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
B. No provision of this Agreement shall be construed to protect any Trustee or
officer of the Trust, or the Manager, from liability in violation of Sections
17(h) and (i) of the Investment Company Act.
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8. RENEWAL AND TERMINATION.
A. This Agreement shall continue in effect until ______, 2007, and shall
continue from year to year thereafter provided such continuance is
specifically approved at least annually by (i) the Trust's Board of Trustees
or (ii) a vote of a majority of the outstanding voting securities of the Fund
(as defined in the Investment Company Act), provided that in either event the
continuance is also approved by a majority of the Board of Trustees who are
not "interested persons" (as defined in the Investment Company Act) of any
party to this Agreement ("Independent Trustees"), by vote cast in person at a
meeting called for the purpose of voting on such approval. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the Investment
Company Act and the Rules and Regulations thereunder.
B. This Agreement:
(a) may at any time be terminated without the payment of any penalty either by
vote of the Trustees of the Trust, including a majority of the Independent
Trustees, or by vote of a majority of the outstanding voting securities of
the Trust, on sixty (60) days' written notice to the Manager;
(b) shall immediately terminate in the event of its assignment (as that term is
defined in the Investment Company Act); and
(c) may be terminated by the Manager on sixty (60) days' written notice to the
Trust.
C. Any notice under this Agreement shall be given in writing addressed and
delivered or mailed postpaid, to the other party to this Agreement at its
principal place of business.
9. NO PERSONAL LIABILITY. Reference is hereby made to the Declaration of Trust
dated March 22, 2005 establishing the Trust, a copy of which has been filed with
the Secretary of the Commonwealth of Massachusetts and elsewhere as required by
law, and to any and all amendments thereto so filed or hereafter filed. The name
Liberty All-Star Mid-Cap Fund refers to the Trustees under said Declaration of
Trust, as Trustees and not personally, and no Trustee, shareholder, officer,
agent or employee of the Trust shall be held to any personal liability hereunder
or in connection with the affairs of the Trust, but only the trust estate under
said Declaration of Trust is liable under this Agreement. Without limiting the
generality of the foregoing, neither the Manager nor any of its officers,
directors, shareholders or employees shall, under any circumstances, have
recourse or cause or willingly permit recourse to be had directly or indirectly
to any personal, statutory, or other liability of any shareholder, Trustee,
officer, agent or employee of the Trust or of any successor of the Trust,
whether such liability now exists or is hereafter incurred for claims against
the trust estate, but shall look for payment solely to said trust estate, or the
assets of such successor of the Trust.
10. USE OF NAME. The Trust may use the name "Liberty All-Star," "All-Star," or a
similar name only for so long as this Agreement or any extension, renewal or
amendment hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the Manager's business as investment
adviser. If this Agreement is no longer in effect, the Trust (to the extent it
lawfully can) will cease to use such name or any other name indicating that it
is advised by or otherwise connected with the Manager. The Trust acknowledges
that the Manager may grant the non-exclusive right to use the name "Liberty
All-Star" or "All-Star" to any other corporation or entity, including but not
limited to any investment company of which the Manager or any subsidiary or
affiliate thereof or any successor to the business or any thereof shall be an
investment advisor.
11. SEVERABILITY. 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.
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12. GOVERNING LAW. To the extent that state law has not been preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the Commonwealth of
Massachusetts.
13. INTERPRETATION. Nothing herein contained shall be deemed to require the
Trust to take any action contrary to its Agreement and Declaration of Trust or
By-Laws, or any applicable statutory or regulatory requirements to which it is
subject or by which it is bound, or to relieve or deprive the Trustees of their
responsibility for and control of the conduct of the affairs of the Trust.
14. ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement of the parties.
15. HEADINGS. The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
16. FORCE MAJEURE. The Manager shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Manager shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
17. RECORDS. The records relating to the services provided under this Agreement
shall be the property of the Trust and shall be under its control; however, the
Trust shall furnish to the Manager such records and permit it to retain such
records (either in original or in duplicate form) as it shall reasonably require
in order to carry out its duties. In the event of the termination of this
Agreement, such records shall promptly be returned to the Trust by the Manager
free from any claim or retention of rights therein, provided that the Manager
may retain copies of any such records that are required by law. The Manager
shall keep confidential any information obtained in connection with its duties
hereunder and disclose such information only if the Trust has authorized such
disclosure or if such disclosure is expressly required or lawfully requested by
applicable federal or state regulatory authorities.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
LIBERTY ALL-STAR MID-CAP FUND
By:
--------------------------------
Name:
Title:
BANC OF AMERICA INVESTMENT
ADVISORS, INC.
By:
--------------------------------
Name:
Title:
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EXHIBIT A
MANAGER FEE
For the Administrative Services provided to the Trust pursuant to Section 2(A)
of this Agreement, the Trust will pay to the Manager, on or before the 10th day
of each calendar month, a monthly fee for the previous calendar month in the
amount of l/12th of the following percentage of the average of the net asset
values of the Trust as of the close of the last business day of the New York
Stock Exchange in each calendar week during the preceding calendar month: 0.20%.
For the investment management services provided to the Trust pursuant to Section
2(B) of this Agreement, the Trust will pay to the Manager, on or before the 10th
day of each calendar month, a monthly fee for the previous calendar month in the
amount of l/12th of the following percentage of the average of the net asset
values of the Trust as of the close of the last business day of the New York
Stock Exchange in each calendar week during the preceding calendar month: 1.00%.
The foregoing fees shall be pro-rated for any month during which this Agreement
is in effect for only a portion of the month.
