FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the [___] day of [_____], 2003, by and
between BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC, a Delaware limited
liability company (the "Fund"), and Banc of America Capital Management, LLC, a
North Carolina limited liability company ("BACAP").
W I T N E S S E T H
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, BACAP 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 BACAP to render investment
advisory and other services to the Fund in the manner and on the terms and
conditions hereinafter set forth; and
WHEREAS, BACAP 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 BACAP agree as follows:
1. GENERAL PROVISIONS.
The Fund hereby retains BACAP 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, BACAP
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 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, as may be amended
from time to time. The appropriate officers and employees of BACAP 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) BACAP 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 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 BACAP 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, BACAP 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 BACAP under this Agreement.
(c) Nothing in this Agreement shall prevent BACAP 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 BACAP,
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 BACAP of its duties
and obligations under this Agreement and under the Investment Advisers. To the
extent that the purchase or sale of securities or other investments of the
same issuer may be deemed by BACAP (or any affiliate) to be suitable for two
or more accounts managed by BACAP (or any affiliate), the available securities
or investments may be allocated in a manner believed by BACAP (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 BACAP such financial reports, proxy statements, policies and
procedures and other information relating to the business and affairs of the
Fund as BACAP 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 BACAP
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
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 BACAP (or any entity controlling, controlled by,
or under common control with BACAP) who may also serve as officers, Managers
or employees of the Fund shall not receive any compensation from the Fund for
their services.
5. COMPENSATION OF BACAP.
(a) Management Fee. In consideration of the services provided by
BACAP under this Agreement, the Fund agrees to pay BACAP a management fee (the
"Management Fee") computed at the annual rate of 1.25% of the aggregate value
of outstanding Interests determined no less frequently than quarterly (before
any repurchases of Interests or the Incentive Allocation (as defined below)).
(b) Incentive Allocation. BACAP 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) BACAP 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, BACAP 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, BACAP shall
have discretion, in the interests of the Fund, to place orders for the Fund
with brokers or dealers that provide BACAP 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 BACAP in managing the assets of
the Fund or other accounts for which BACAP or any affiliate of BACAP exercises
"investment discretion" (as that term is defined in Section 3(a)(35) of the
1934 Act). BACAP 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 BACAP determines, in good faith, that such
commission is reasonable in relation to the value of the brokerage and/or
research services provided by such broker or dealer viewed in terms of either
that particular transaction or the overall responsibilities of BACAP or its
affiliates with respect to accounts as to which they exercise investment
discretion. In reaching such determination, BACAP 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, BACAP 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) BACAP 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
BACAP (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, BACAP
may also consider sales of Interests as a factor in the selection of brokers
or dealers for its portfolio transactions.
7. DURATION.
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 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 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) BACAP 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) BACAP 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) BACAP will use its best efforts in providing services to the
Fund. BACAP 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 BACAP of its duties under 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 the part of BACAP 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 BACAP or its Affiliates of their obligations or duties under this
Agreement.
(b) The Fund shall indemnify and hold harmless BACAP 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; (b) the affirmative vote or written
consent of the holders of a "majority of the outstanding voting securities" of
the Fund," as defined by the Investment Company Act, 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 BACAP 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 BACAP (which notice may be waived by BACAP),
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" of the Fund, as defined by the Investment Company Act.
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:
(a) If to the Fund, to:
BACAP Alternative Multi-Strategy Fund, LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
President
Telecopier: (000) 000-0000
(b) If to BACAP, to:
Banc of America Capital Management, LLC
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Chief Administrative Officer
Telecopier: (000) 000-0000
13. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of North
Carolina applicable to agreements made and to be performed entirely within the
State of North Carolina (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.
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
By:
Name:
Title:
Date: _______________
BANC OF AMERICA CAPITAL MANAGEMENT, LLC
By:
Name:
Title:
Date: _______________
03564.0004 #371819
