FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the ___ day of __________, 2002, by and between
BACAP OPPORTUNITY STRATEGY, LLC, a Delaware limited liability company (the
"Fund"), and BACAP ADVISORY PARTNERS, LLC, a Delaware 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 7 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 7
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 members of the Fund ("Members") 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 Act and further provided that
such activities do not violate any provisions of the codes of ethics of BACAP
and its affiliates governing personal securities trading by persons who are
"access persons," as defined by Rule 17j-l under the Investment Company Act.
3. ADDITIONAL SERVICES.
In addition to the investment management services set forth in
paragraph 2 hereof, BACAP also shall, subject to the supervision and control of
the Board, provide certain additional services to the Fund. These services shall
include:
(a) the provision of office space, telephone and utilities;
(b) the provision of administrative and secretarial, clerical and
other personnel as necessary to provide the services required to
be provided under this Agreement;
(c) the general supervision of the entities which are retained by the
Fund to provide administrative services and custody services to
the Fund;
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(d) assist the Fund's shareholder servicing agent in the handling of
Member inquiries regarding the Fund and providing them with
information concerning their investment in the Fund and capital
account balances;
(e) monitoring relations and communications between Members and the
Fund;
(f) assisting in the drafting and updating of disclosure documents
relating to the Fund and assisting in the preparation of offering
materials;
(g) assisting in the preparation of regulatory filings with the
Securities and Exchange Commission and state securities
regulators and other Federal and state regulatory authorities;
(h) preparing reports to and other informational materials for
Members and assisting in the preparation of proxy statements and
other Member communications;
(i) assist in monitoring compliance with regulatory requirements and
with the Fund's investment objective, policies and restrictions
as established by the Board;
(j) reviewing accounting records and financial reports of the Fund,
assisting with the preparation of the financial reports of the
Fund and acting as liaison with the Fund's accounting agent and
independent auditors;
(k) coordinating the preparation and filing of tax returns;
(l) coordinating and organizing meetings of the Board and meetings of
the Members, in each case when called by such persons;
(m) preparing materials and reports for use in connection with
meetings of the Board;
(n) maintaining and preserving those books and records of the Fund
not maintained by the Fund's other service providers, including
the sub-adviser, accounting agent and custodian;
(o) reviewing and arranging for payment of the expenses of the Fund;
(p) assisting the Fund in conducting offers to members of the Fund to
repurchase member interests; and
(q) reviewing regulatory filings of the Fund required under
applicable law.
4. REPORTS.
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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.
5. 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, 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 Members,
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 Members; (i) any entity-level taxes; and (j) such other
expenses as may be approved by the Board. 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.
6. COMPENSATION OF BACAP.
(a) Management Fee. In consideration of the services provided by BACAP
under this Agreement, the Fund agrees to pay BACAP a monthly management fee (the
"Management Fee") computed at the annual rate of 1.00% of the aggregate value of
outstanding Interests determined as of the last day of each month (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.
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7. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) BACAP shall be responsible for the selection of brokers or dealers
to execute the Funds' 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.
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(d) The Fund recognizes that a broker or dealer affiliated with BACAP
or Alkeon Capital Management, LLC, the sub-adviser to the Fund (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 7, BACAP may
also consider sales of Interests as a factor in the selection of brokers or
dealers for its portfolio transactions.
8. 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 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.
9. 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 Member 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 Member and Manager liability for acts and obligations of
the Fund.
10. 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.
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(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 10 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
10 to the fullest extent permitted by law.
11. 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.
12. 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.
13. 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 Opportunity Strategy, LLC
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000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
President
Telecopier: (000) 000-0000
(b) If to BACAP, to:
BACAP Advisory Partners, LLC
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Chief Operating Officer
Telecopier: (000) 000-0000
14. 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.
15. 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 on the day and year first above written.
BACAP OPPORTUNITY STRATEGY, LLC
By: ___________________________
Name:
Title:
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BACAP ADVISORY PARTNERS, LLC
By: ___________________________
Name:
Title:
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