BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the ____ day of June, 2005, by and between BACAP
ALTERNATIVE MULTI-STRATEGY FUND, LLC, a Delaware limited liability company (the
"Fund"), and BANC OF AMERICA INVESTMENT ADVISORS, INC., a Delaware corporation
(the "Adviser").
WITNESSETH
WHEREAS, the Fund intends to engage in business as a non-diversified,
closed-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"), and
engages in the business of acting as an investment adviser;
WHEREAS, the Fund desires to retain the Adviser to render investment
advisory and other services to the Fund in the manner and on the terms and
conditions hereinafter set forth; and
WHEREAS, the Adviser desires to be retained to perform such services on
said terms and conditions.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the Fund and the Adviser agree as follows:
1. GENERAL PROVISIONS.
The Fund hereby retains the Adviser to act as the investment adviser to
the Fund and to perform for the Fund such duties and functions as are
hereinafter set forth. In rendering services under this Agreement, the Adviser
shall, as applicable, conform to (a) the provisions of the Investment Company
Act and any rules or regulations thereunder; (b) any other applicable provisions
of Federal or state law; (c) the provisions of the Limited Liability Company
Agreement of the Fund, as amended from time to time (the "LLC Agreement"); (d)
the policies and determinations of the Fund's Board of Managers (the "Board"),
(e) the investment policies and investment restrictions of the Fund as reflected
in the registration statement of the Fund under the Investment Company Act or as
such policies may, from time to time, be amended; and (f) the Prospectus and
Statement of Additional Information of the Fund in effect from time to time. The
appropriate officers and employees of the Adviser shall be available upon
reasonable notice for consultation with any members of the Board or officers of
the Fund with respect to any matters dealing with the business and affairs of
the Fund, including the valuation of any of the portfolio securities of the
Fund.
2. INVESTMENT MANAGEMENT.
(a) The Adviser shall, subject to the supervision and control of the
Board, (i) regularly provide investment advice and recommendations to the Fund
with respect to its investments, investment policies and the purchase and sale
of securities for the Fund; (ii) develop, implement and supervise continuously
the investment program of the Fund and the composition of its portfolio and
determine what
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securities shall be purchased and sold by the Fund; (iii) arrange, subject to
the provisions of paragraph 6 hereof, for the purchase of securities and other
investments for the Fund and the sale or redemption of securities and other
investments held in the portfolio of the Fund; and (iv) take such further
actions with respect to the foregoing as the Adviser shall deem necessary or
advisable.
(b) Notwithstanding subparagraph 2(a), and provided that the Fund shall
not be required to pay any compensation for services other than as provided by
the terms of this Agreement, including the provisions of paragraph 6 hereof, the
Adviser may: (i) obtain investment information, research or assistance from any
other person, firm or corporation to supplement, update or otherwise improve its
investment management services; and (ii) enter into investment sub-advisory
agreements with any registered investment advisers, subject to such approvals of
the Board and investors of the Fund ("Investors") as may be required to comply
with applicable provisions of the Investment Company Act, to provide the Fund
with any or all of the investment advisory services required to be provided by
the Adviser under this Agreement.
(c) Nothing in this Agreement shall prevent the Adviser or any affiliate
thereof from acting as investment adviser for any other person, firm, fund,
corporation or other entity and shall not in any way limit or restrict the
Adviser, or any of its affiliates, or their respective directors, officers,
stockholders or employees from buying, selling or trading any securities or
other investments for its or their own account or for the account of others for
whom it or they may be acting, provided that such activities do not adversely
affect or otherwise impair the performance by the Adviser of its duties and
obligations under this Agreement and under the Investment Advisers Act. To the
extent that the purchase or sale of securities or other investments of the same
issuer may be deemed by the Adviser (or any affiliate) to be suitable for two or
more accounts managed by the Adviser (or any affiliate), the available
securities or investments may be allocated in a manner believed by the Adviser
(or the affiliate) to be equitable to each account. It is recognized that in
some cases this procedure may adversely affect the price paid or received by the
Fund or the size of the position obtainable for or disposed of by the Fund.
3. REPORTS.
The Fund shall, from time to time, furnish or otherwise make available to
the Adviser such financial reports, proxy statements, policies and procedures
and other information relating to the business and affairs of the Fund as the
Adviser may reasonably require in order to discharge its duties and obligations
hereunder.
4. ALLOCATION OF EXPENSES.
All costs and expenses of the Fund not expressly assumed by the Adviser
under this Agreement, shall be paid by the Fund, including, but not limited to:
(a) all costs and expenses directly related to investment transactions and
positions for the Fund's account, including, but not limited to, brokerage
commissions, research fees, reasonable out of pocket expenses incurred in
monitoring and evaluating private investment funds in which the Fund invests
("Underlying Funds") and the managers of such funds, interest and commitment
fees on loans and debit balances, borrowing charges on securities sold short,
dividends on securities sold but not yet purchased, custodial fees, margin fees,
transfer taxes and premiums and taxes withheld on non-U.S. dividends; (b) all
costs and expenses associated with the operation and registration of the Fund,
offering costs and the costs of compliance with any applicable Federal and state
laws; (c) the costs and expenses of holding meetings of the Board and any
meetings of Investors, including costs associated with the preparation and
dissemination of proxy materials; (d) the fees and disbursements of Fund
counsel, legal counsel to the Managers of the Fund, if any, who are not
"interested persons" as defined by the Investment Company Act and the rules
thereunder, independent auditors for the Fund and other consultants and
professionals engaged on behalf of the Fund; (e) the
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Management Fee (as defined below); (f) the fees payable to fund accounting
agents, transfer agents, custodians and other persons providing administrative
services to the Fund; (g) the costs of a fidelity bond and any liability
insurance obtained on behalf of the Fund and/or the Board; (h) all costs and
expenses of preparing, setting in type, printing and distributing reports and
other communications to Investors; (i) any entity-level taxes; and (j) such
other expenses as may be approved by the Board. The Fund is also responsible for
paying its ratable share of the fees and expenses of the Underlying Funds. Any
officers or employees of the Adviser (or any entity controlling, controlled by,
or under common control with the Adviser) who may also serve as officers,
Managers or employees of the Fund shall not receive any compensation from the
Fund for their services, provided, however, that notwithstanding the foregoing,
the Fund may pay compensation to, and expenses of, the Fund's chief compliance
officer to the extent that the Board expressly so authorizes, regardless of
whether such officer is also an officer or employee of the Adviser (or any
entity controlling, controlled by, or under common control with the Adviser).
5. COMPENSATION OF THE ADVISER.
(a) Management Fee. In consideration of the services provided by the
Adviser under this Agreement, the Fund agrees to pay the Adviser a management
fee (the "Management Fee") computed at the annual rate of 1.25% of the aggregate
value of outstanding limited liability company interests of the Fund
("Interests") determined no less frequently than quarterly (before any
repurchases of Interests or the Incentive Allocation (as defined below)).
(b) Incentive Allocation. The Adviser shall have the right as provided by
the LLC Agreement to serve as the Special Advisory Member of the Fund and to
receive in such capacity a performance-based allocation in accordance with the
terms of the LLC Agreement (the "Incentive Allocation"). The Incentive
Allocation, if any, will be computed and credited to the capital account of the
Special Advisory Member as provided by the LLC Agreement.
6. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) The Adviser shall be responsible for the selection of brokers or
dealers to execute the Fund's portfolio transactions. In selecting brokers or
dealers to execute transactions on behalf of the Fund, the Adviser generally
shall seek to obtain the best price and execution for the transactions, taking
into account factors such as price, size of order, difficulty of execution and
operational facilities of a brokerage firm, the scope and quality of the
brokerage services provided, and such brokerage firm's risk in positioning a
block of securities.
(b) Consistent with the principle of seeking best price and execution in
connection with the Fund's portfolio transactions, the Adviser shall have
discretion, in the interests of the Fund, to place orders for the Fund with
brokers or dealers that provide the Adviser with research services (as such
services are defined in Section 28(e)(3) of the Securities Exchange Act of 1934,
as amended (the "1934 Act")), including, without limitation, supplemental
research, market and statistical information, including advice as to the value
of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities, and furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts, which may assist the Adviser in managing the assets of the Fund or
other accounts for which the Adviser or any affiliate of the Adviser exercises
"investment discretion" (as that term is defined in Section 3(a)(35) of the 1934
Act). The Adviser shall have discretion to cause the Fund to pay such brokers or
dealers a commission for effecting a portfolio transaction for the Fund that is
in excess of the amount of commission another broker or dealer adequately
qualified to effect such transaction would have charged for effecting that
transaction, if the Adviser determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage and/or research services
provided
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by such broker or dealer viewed in terms of either that particular transaction
or the overall responsibilities of the Adviser or its affiliates with respect to
accounts as to which they exercise investment discretion. In reaching such
determination, the Adviser will not be required to place or attempt to place a
specific dollar value on the brokerage or research services provided or being
provided by such broker or dealer. In demonstrating that such determinations
were made in good faith, the Adviser shall be prepared to show that all
commissions were allocated for purposes contemplated by this Agreement and that
the total commissions paid by the Fund over a representative period selected by
the Board were reasonable in relation to the benefits to the Fund.
(c) The Adviser shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate applicable to any
particular portfolio transactions or to select any broker or dealer on the basis
of its purported or "posted" commission rate but will, to the best of its
ability, endeavor to be aware of the current level of the charges of eligible
brokers or dealers and to minimize the expense incurred by the Fund for
effecting its portfolio transactions to the extent consistent with the interests
and policies of the Fund.
(d) The Fund recognizes that a broker or dealer affiliated with the
Adviser (i) may act as one of the regular brokers for the Fund so long as it is
lawful for it so to act; (ii) may be a major recipient of brokerage commissions
paid by the Fund; and (iii) may effect portfolio transactions for the Fund only
if the commissions, fees or other remuneration received or to be received by it
are determined in accordance with procedures contemplated by any rule,
regulation or order adopted under the Investment Company Act to be within the
permissible level of such commissions.
(e) Subject to the foregoing provisions of this paragraph 6, the Adviser
may also consider sales of Interests as a factor in the selection of brokers or
dealers for its portfolio transactions.
7. DURATION.
(a) This Agreement will take effect on the date first set forth above.
Unless earlier terminated pursuant to paragraph 11 hereof, this Agreement shall
remain in effect through October 31, 2006 and thereafter shall continue in
effect from year to year, so long as such continuance shall be approved at least
annually by the Board or by the holders of a "majority of the outstanding voting
securities" of the Fund (as defined in the Investment Company Act), subject in
such case to the approval by a vote of the majority of the Managers who are not
parties to this Agreement or "interested persons" (as defined in the Investment
Company Act and the rules thereunder) of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
8. DISCLAIMER OF MEMBER OR MANAGER LIABILITY.
(a) The Adviser understands and agrees that the obligations of the Fund
under this Agreement are not binding upon any Investor or Manager of the Fund
personally, but bind only the Fund and the Fund's property.
(b) The Adviser acknowledges that it has notice of the provisions of the
LLC Agreement disclaiming Investor and Manager liability for acts and
obligations of the Fund.
9. EXCULPATION; INDEMNIFICATION.
(a) The Adviser will use its best efforts in providing services to the
Fund. The Adviser shall not be liable to the Fund for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
performance by the Adviser of its duties under this Agreement, except a loss
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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 the part of the Adviser or any of its officers,
directors, employees or agents (collectively, the "Affiliates") in the
performance of their duties under this Agreement, or from reckless disregard by
the Adviser or its Affiliates of their obligations or duties under this
Agreement.
(b) The Fund shall indemnify and hold harmless the Adviser and its
Affiliates (each, an "Indemnified Person") against any and all losses, claims,
damages or liabilities, joint or several, including, without limitation,
reasonable attorneys' fees and disbursements, reasonably incurred by them in
connection with, or resulting from, their actions or inactions in connection
with the performance of their duties under this Agreement, except those losses,
claims, damages or liabilities resulting from willful misfeasance, bad faith or
gross negligence in the performance by the Indemnified Persons of their duties
under this Agreement, or the reckless disregard of their obligations or duties
under this Agreement.
(c) Notwithstanding any of the foregoing, the provisions of this paragraph
9 shall not be construed so as to relieve the Indemnified Person of, or provide
indemnification with respect to, any liability (including liability under
Federal securities laws, which under certain circumstances, impose liability
even on persons who act in good faith) to the extent (but only to the extent)
that such liability may not be waived, limited or modified under applicable law
or that such indemnification would be in violation of applicable law, but shall
be construed so as to effectuate the provisions of this paragraph 9 to the
fullest extent permitted by law.
10. ASSIGNMENT OR AMENDMENT.
Any amendment to this Agreement shall be in writing and shall be subject
to: (a) the approval of the Board, including the vote of a majority of the
Managers who are not "interested persons," as defined by the Investment Company
Act and the rules thereunder, of the Fund or the Adviser; and (b) the
affirmative vote or written consent of the holders of a "majority of the
outstanding voting securities," as defined by the Investment Company Act, of the
Fund, to the extent a vote of security holders is required by the Investment
Company Act. This Agreement shall automatically and immediately terminate in the
event of its "assignment," as defined in the Investment Company Act.
11. TERMINATION.
This Agreement may be terminated (a) by the Adviser at any time without
penalty upon sixty (60) days' written notice to the Fund (which notice may be
waived by the Fund); or (b) by the Fund at any time without penalty upon sixty
(60) days' written notice to the Adviser (which notice may be waived by the
Adviser), provided that such termination by the Fund shall be directed or
approved by the Board or by the vote of the holders of a "majority of the
outstanding voting securities," as defined by the Investment Company Act, of the
Fund.
12. NOTICES.
Any notice or other communication required to be or that may be given
hereunder shall be in writing and shall be delivered personally, telecopied,
sent by certified, registered or express mail, postage prepaid or sent by
national next-day delivery service and shall be deemed given when so delivered
personally or telecopied, or if mailed, two days after the date of mailing, or
if by next-day delivery service, on the business day following delivery thereto:
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(a) If to the Fund, to:
BACAP Alternative Multi-Strategy Fund, LLC
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxxxx
President
Telecopier: 000-000-0000
(b) If to the Adviser, to:
Banc of America Investment Advisors, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxx
President
Telecopier: 000-000-0000
13. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of The Commonwealth of
Massachusetts applicable to agreements made and to be performed entirely within
The Commonwealth of Massachusetts (without regard to any conflicts of law
principles thereof). Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Investment Company Act shall be resolved by reference to such
term or provision of the Investment Company Act and to interpretations thereof,
if any, by the United States courts or, in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission ("SEC") issued pursuant to the Investment Company Act.
In addition, where the effect of a requirement of the Investment Company Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
14. DEFINITIONS.
The terms and provisions of the Agreement shall be interpreted and defined
in a manner consistent with the terms and provisions of the Investment Company
Act and the rules thereunder.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
By: _______________________________
Name: Xxxxxxxx Xxxxxxxxxx
Title: President
BANC OF AMERICA INVESTMENT ADVISORS, INC.
By: ________________________________
Name: Xxxxx Xxxx
Title: President
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