INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 1st day of April, 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
00 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: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: President
Date: April 1, 2003
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BANC OF AMERICA CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Administrative Officer
Date: April 1, 2003
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03564.0004 #495101
