DISTRIBUTION AGREEMENT
between
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
and
BACAP DISTRIBUTORS, LLC
Dated as of: _________, 2003
BACAP Distributors, LLC
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs:
BACAP Alternative Multi-Strategy Fund, LLC, a Delaware limited
liability company (the "Fund"), is registered as a closed-end, non-diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and is registering $125,000,000 of its limited
liability company interests ("Interests") under the Securities Act of 1933, as
amended (the "1933 Act"), to be offered for sale in a public offering in
accordance with the terms and conditions set forth in the Prospectus and
Statement of Additional Information included in the Fund's Registration
Statement filed with the Securities and Exchange Commission on Form N-2, as it
may be amended from time to time (the "Prospectus").
In this connection, the Fund desires that your firm, BACAP
Distributors, LLC (the "Distributor"), act as distributor for the sale and
distribution of Interests which have been registered as described above and of
any additional Interests which may become registered during the term of this
Agreement. You have advised the Fund that you are willing to act as the
distributor of Interests, and it is accordingly agreed by and between us as
follows:
1. Appointment of the Distributor. The Fund hereby appoints you as
the sole distributor of Interests in connection with the aforesaid public
offering of Interests, and the Fund further agrees from and after the date of
this Agreement, that it will not, without your consent, sell or agree to sell
any Interests otherwise than through you, except: (a) the Fund may issue
Interests in connection with a merger, consolidation or acquisition of assets
on such basis as may be authorized or permitted by the 1940 Act and the rules
thereunder; and (b) the Fund may issue Interests in connection with the
reinvestment of distributions made by the Fund or of any other investment
company if permitted by the current Prospectus.
2. Sale of Interests. You agree to serve as the distributor of
Interests in accordance with the terms of this Agreement, and to offer
Interests to investors as agent of the Fund either directly or through broker,
dealers and other financial institutions which enter into selling agreements
with you ("Selling Agents"). In connection with the offering of Interests, you
further agree that:
(a) You will use your best efforts to sell Interests, provided,
however, that when requested by the Fund at any time because of market or
other economic considerations or abnormal circumstances of any kind, or when
agreed to by mutual consent between you and the Fund, you will suspend such
efforts. The Fund may also withdraw the offering of Interests at any time when
required by the provisions of any statute, order, rule or regulation of any
governmental body having jurisdiction. It is understood that you do not
undertake to sell all or any specific number or amount of Interests.
(b) You will not make offers or sales of Interests except in
the manner set forth in the Prospectus. We have established procedures that
are to be followed in connection with the offer and sale of Interests and you
agree not to make offers or sales of any Interests and agree to require all
brokers, dealers and other financial institutions that enter into selling
agreements with you not to make any such offers or sales except in compliance
with such procedures. In this regard, you agree that:
(i) No sale of Interests to any one investor will be for
less than the minimum amount as may be specified in the Prospectus
or as the Fund shall advise you.
(ii) No offer or sale of Interests will be made in any
state or jurisdiction, or to any prospective investor located in any
state or jurisdiction, where Interests have not been registered or
qualified for offer and sale under applicable state securities laws
unless Interests are exempt from the registration or qualification
requirements of such laws.
(iii) Sales of Interests will be made only to persons who
are "qualified clients," as that term is defined by Rule 205-3 under
the Investment Advisers Act of 1940, as amended, and who meet such
other eligibility requirements as may be imposed by the Fund and set
forth in the Prospectus.
(c) You will furnish to prospective investors only such
information concerning the Fund and the offering of Interests as may be
contained in the current Prospectus or any written supplements thereto, and
such other materials as you have prepared and which comply with applicable
laws and regulations and with applicable rules and interpretations of National
Association of Securities Dealers Regulation, Inc. ("NASDR"). For purposes of
the offering of Interests, the Fund will furnish to you copies of the
Prospectus (or prior to the effective date of the Fund's registration under
the 1933 Act, copies of the preliminary prospectus) and copies of the Fund's
Statement of Additional Information ("SAI") which shall be furnished by you to
prospective investors as required by applicable law and regulations.
Additional copies of these materials will be furnished in such numbers as you
may reasonably request for purposes of the offering.
(d) The closing of the initial offering of Interests will occur
on such date as we shall agree. Thereafter, Interests shall be offered and
made available for purchase on a monthly basis as described in the current
Prospectus or on such other basis as may be determined by the Fund.
3. Compensation. As compensation for the services to be provided by
the Distributor under this Agreement, you and Selling Agents shall be entitled
to receive compensation as set forth in Appendix A, attached hereto.
4. Purchase of Interests.
(a) As Distributor, you shall have the right, subject to the
terms of this Agreement, to accept or reject orders for the purchase of
Interests at your discretion. Any consideration that you may receive in
connection with a rejected purchase order must be returned promptly.
(b) You agree promptly to issue, or to cause the duly appointed
investor servicing agent of the Fund to issue as your agent, confirmations of
all accepted purchase orders and to transmit a copy of such confirmations to
the Fund. The full subscription amounts payable in connection with each order
for the purchase of Interests by an investor shall be transmitted by you or by
the selling dealer to the Fund's escrow agent, including applicable sales
charges, within the periods specified in the Prospectus.
5. 1933 Act Registration. The Fund agrees that it will use its best
efforts to maintain the effectiveness of its Registration Statement under the
1933 Act (the "Registration Statement"). The Fund further agrees to prepare
and file any amendments to the Registration Statement as may be necessary and
any supplemental data in order to comply with the 1933 Act.
6. 1940 Act Registration. The Fund is registered under the 1940 Act
as a closed-end management investment company, and will use its best efforts
to maintain such registration and to comply with the requirements of the 1940
Act.
7. State Blue Sky Qualification. At your request, the Fund will take
such steps as may be necessary and feasible to qualify Interests for sale in
states, territories or dependencies of the United States, the District of
Columbia, and the Commonwealth of Puerto Rico, in accordance with the laws
thereof, and to renew or extend any such qualification; provided, however,
that the Fund shall not be required to qualify Interests or to maintain the
qualification of Interests in any jurisdiction where it shall deem such
qualification disadvantageous to the Fund.
8. Duties of the Distributor. You agree that:
(a) You will furnish to the Fund any pertinent information
required to be inserted with respect to you as the Distributor within the
purview of all applicable laws and regulations in any reports or registrations
required to be filed by the Fund with any governmental authority;
(b) You will not make any representations inconsistent with the
information contained in the Prospectus;
(c) You will maintain such records as may be reasonably
required for the Fund or its investor servicing agent to respond to member
requests or complaints, and to permit the Fund to maintain proper accounting
records, and you shall make such records available to the Fund and its
investor servicing agent upon request; and
(d) In performing your duties under this Agreement, you shall
comply with all requirements of the Prospectus and all applicable laws, rules
and regulations (including the rules of NASDR) with respect to the purchase,
sale and distribution of Interests.
9. Allocation of Costs. The Fund will pay the cost of composition
and printing of sufficient copies of its Prospectus and of the SAI as shall
reasonably be required in connection with the distribution of Interests to
investors and for periodic distribution to its members and will pay the
expense of registering Interests for sale under federal securities laws and
for qualifying Interests under state blue sky laws pursuant to paragraph 7.
You shall pay the expenses normally attributable to the offering and sale of
Interests, other than those to be paid by the Fund.
10. Indemnification and Exculpation.
(a) The Fund agrees to the indemnification provisions attached
hereto as Appendix B, which form a part of this Agreement
(b) The Distributor shall not be liable to the Fund for any
error or mistake of judgement of law or for any loss suffered by the Fund in
connection with the performance by BACAP of its duties under this Agreement,
except a loss resulting from a breach of fiduciary with respect to the receipt
of compensation for services, or a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of BACAP or any of its officers,
directors, managers, employees or agents (collectively, the "Affiliates") in
the performance of their duties under this Agreement, or from reckless
disregard by BACAP or its Affiliates of their obligations or duties under this
Agreement.
11. Duration. This Agreement will take effect on the date first set
forth above. Unless earlier terminated pursuant to paragraph 12 hereof, this
Agreement shall remain in effect for an initial term of two (2) years from
such date and thereafter shall continue in effect from year to year, so long
as such continuance shall be approved at least annually by the Fund's Board of
Managers (the "Board"), including the vote of the majority of the Managers who
are not parties to this Agreement or "interested persons" (as defined by the
1940 Act and the rules thereunder) of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
12. Termination. This Agreement may be terminated (I) by the
Distributor at any time without penalty upon sixty (60) days' written notice
to the Fund (which notice may be waived by the Fund); or (ii) by the Fund at
any time without penalty upon sixty (60) days' written notice to the
Distributor (which notice may be waived by the Distributor). If this Agreement
is terminated prior to the sale of Interests to the public, the Distributor
shall not be entitled to any compensation hereunder other than reimbursement
of any out-of-pocket expenses that may be payable to the Distributor
hereunder.
13. Condition to Distributor's Obligations. Your obligations to
provide services under this Agreement shall be subject to your receipt of an
opinion of counsel to the Fund as to matters set forth in Appendix C of this
Agreement.
14. Amendment and Assignment. Any amendment to this Agreement shall
be in writing and shall be subject to the approval of the Board, including the
vote of a majority of the Managers who are not "interested persons," as
defined by the 1940 Act and the rules[ ]thereunder, of the Fund or the
Distributor. This Agreement shall automatically and immediately terminate in
the event of its "assignment," as defined by the 1940 Act and the rules
thereunder.
15. Disclaimer of Manager and Member Liability. The Distributor
understands and agrees that the obligations of the Fund under this Agreement
are not binding upon any Manager or member of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor acknowledges in this
regard that it has notice of the provisions of the Limited Liability Company
Agreement of the Fund disclaiming Manager and member liability for acts or
obligations of the Fund.
16. Notices. All written notices given pursuant to this Agreement
shall be sent to a party at the address set forth herein (or such other
address as may be specified by a party in a written notice to the other party)
and shall be deemed given upon receipt.
17. Section Headings. The headings for each paragraph of this
Agreement are for descriptive purposes only, and such headings are not to be
construed or interpreted as part of this Agreement.
If the foregoing is in accordance with your understanding, so
indicate by signing in the space provided below.
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
By: ______________________________________
Name:
Title:
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Accepted:
BACAP DISTRIBUTORS, LLC
By: _______________________________
Name:
Title:
APPENDIX A
FEE SCHEDULE
In consideration of services relating to the distribution of Interests to
investors by the Distributor ("Distribution Services"), the Distributor shall
receive any applicable sales charge assessed upon Investors in accordance with
the purchase of Interests (the "Distribution Fee"). The Distributor, in its
agreement with each Selling Agent, shall designate the portion of the
Distribution Fee attributable to Interests placed by such Selling Agent that
shall be paid to such Selling Agent (which portion may be up to the entire
Distribution Fee attributable to such Interests), and the Distributor shall
pay such designated portion of the Distribution Fee to the Selling Agent.
Payment of Distribution Fees shall be made promptly after the last day of each
calendar month.
APPENDIX B
In connection with the engagement of the Distributor to advise and
assist the Fund (referred to herein as "we", "our" or "us") with the matters
set forth in this Agreement, we hereby agree to indemnify and hold harmless
the Distributor, its affiliated companies, and each of the Distributor's and
such affiliated companies' respective officers, directors, agents, employees
and controlling persons (within the meaning of each of Section 20 of the
Securities Exchange Act of 1934 and Section 15 of the Securities Act of 1933)
(each of the foregoing, including the Distributor, being hereinafter referred
to as an "Indemnified Person") to the fullest extent permitted by law from and
against any and all losses, claims, damages, expenses (including reasonable
fees, disbursements and other charges of counsel), actions (including actions
brought by us or our equity holders or derivative actions brought by any
person claiming through us or in our name), proceedings, arbitrations or
investigations (whether formal or informal), or threats thereof (all of the
foregoing being hereinafter referred to as "Liabilities"), based upon,
relating to or arising out of such engagement or any Indemnified Person's role
therein; provided, however, that we shall not be liable under this paragraph:
(a) for any amount paid in settlement of claims without our consent, unless
our consent is unreasonably withheld, or (b) to the extent that it is finally
judicially determined, or expressly stated in an arbitration award, that such
Liabilities resulted primarily from the willful misconduct, bad faith or gross
negligence of the Indemnified Person seeking indemnification in the
performance of such person's duties under this Agreement, or from the reckless
disregard of such person's obligations or duties under this Agreement. If
multiple claims are brought against any Indemnified Person in an arbitration
or other proceeding and at least one such claim is based upon, relates to or
arises out of the engagement of the Distributor by us or any Indemnified
Person's role therein, we agree that any award, judgment and other Liabilities
resulting therefrom shall be deemed conclusively to be based on, relate to or
arise out of the engagement of the Distributor by us or any Indemnified
Person's role therein, except to the extent that such award or judgment
expressly states that the award or judgment, or any portion thereof, is based
solely upon, relates to or arises out of other matters for which
indemnification is not available hereunder. In connection with our obligation
to indemnify for expenses as set forth above, we further agree to reimburse
each Indemnified Person for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by such
Indemnified Person; provided, however, that if an Indemnified Person is
reimbursed hereunder for any expenses, the amount so paid shall be refunded if
and to the extent it is finally judicially determined, or expressly stated in
an arbitration award, that the Liabilities in question resulted primarily from
the willful misconduct, bad faith or gross negligence of such Indemnified
Person in the performance of such person's duties under this Agreement, or
from the reckless disregard of such person's obligations or duties under this
Agreement. We hereby also agree that neither the Distributor nor any other
Indemnified Person shall have any liability to us (or anyone claiming through
us or in our name) in connection with the Distributor's engagement by us
except to the extent that such Indemnified Person has engaged in willful
misconduct, acted in bad faith or been grossly negligent.
Promptly after the Distributor receives notice of the commencement
of any action or other proceeding in respect of which indemnification or
reimbursement may be sought hereunder, the Distributor will notify us thereof;
but the omission so to notify us shall not relieve us from any obligation
hereunder unless, and only to the extent that, such omission results in our
forfeiture of substantive rights or defenses. If any such action or other
proceeding shall be brought against any Indemnified Person, we shall, upon
written notice given reasonably promptly following your notice to us of such
action or proceeding, be entitled to assume the defense thereof at our expense
with counsel chosen by us and reasonably satisfactory to such Indemnified
Person; provided, however, that any Indemnified Person may at its own expense
retain separate counsel to participate in such defense. Notwithstanding the
foregoing, such Indemnified Person shall have the right to employ separate
counsel at our expense and to control its own defense of such action or
proceeding if, in the reasonable opinion of counsel to such Indemnified
Person, (i) there are or may be legal defenses available to such Indemnified
Person or to other Indemnified Persons that are different from or additional
to those available to us, or (ii) a difference of position or potential
difference of position exists between us and such Indemnified Person that
would make such separate representation advisable; provided, however, that in
no event shall we be required to pay fees and expenses under this indemnity
for more than one firm of attorneys (in addition to local counsel) in any
jurisdiction in any one legal action or group of related legal actions. We
agree that we will not, without the prior written consent of the Distributor,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding relating to the matters contemplated by
the Distributor's engagement (whether or not any Indemnified Person is a party
thereto) unless such settlement, compromise or consent includes an
unconditional release of the Distributor and each other Indemnified Person
from all liability arising or that may arise out of such claim, action or
proceeding.
APPENDIX C
CONDITIONS TO THE DISTRIBUTOR'S OBLIGATIONS
The opinion referred to in paragraph 13 shall state that:
1. The Registration Statement, all preliminary prospectuses and the
final prospectus (in the form filed with the SEC pursuant to Rule 497 under
the Act, as amended or supplemented, the "Prospectus") (except with respect to
the financial statements and schedules thereto and other financial data, as to
which we express no opinion) comply as to form in all material respects with
the requirements of the Act and the applicable rules and regulations
thereunder.
2. The Registration Statement has become effective under the Act; to
our knowledge, no stop order suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus has been
issued and no proceedings for that purpose have been instituted or are
threatened or pending; and any required filing of the Prospectus or any
supplement thereto pursuant to Rule 497 promulgated under the Act have been
made in the manner and within the time period required by Rule 497.
03564.0004 #371802
