SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-12
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transactions applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identity the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
40 West 57th Street
New York, NY 10019
------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF INVESTORS
TO BE HELD ON MAY 27, 2005
------------------------------------------------------------------------
To the Members:
NOTICE IS HEREBY GIVEN that a SPECIAL MEETING OF INVESTORS (the "Special
Meeting") of the BACAP Alternative Multi-Strategy Fund, LLC (the "Fund") will be
held on May 27, 2005 at 2:00 p.m., Eastern Time, at the offices of the Fund's
agent, PFPC Inc., at 760 Moore Road, King of Prussia, Pennsylvania 19406. The
Special Meeting is being held to consider and vote on the following proposals:
Proposal 1: To elect a Manager to the Board of Managers of the Fund;
Proposal 2: To approve a new Investment Advisory Agreement between the Fund
and Liberty Asset Management Company; and
Proposal 3: To transact such other business as may properly come before the
Special Meeting and any adjournments thereof.
Investors of record of the Fund at the close of business on April 5, 2005 (the
"Record Date") are entitled to notice of, and to vote on, the proposals at the
Special Meeting or any adjournment thereof.
Investors are invited to attend in person. If you plan to attend the Special
Meeting, please indicate this on the enclosed proxy card and return it promptly
in the enclosed envelope. You may also cast your vote by completing, signing,
and returning the enclosed proxy card by mail in the envelope provided. Whether
you will be able to attend or not, PLEASE VOTE so that a quorum will be present
at the Special Meeting.
If you have any questions before you vote, please contact the Fund by calling
toll-free (888) 786-9977.
By Order of the Board of Managers
Lawrence R. Morgenthal
President
BACAP Alternative Multi-Strategy Fund, LLC
IMPORTANT NOTICE
At a Special Meeting of Investors of the Fund to be held on May 27, 2005,
Investors will have the opportunity to vote on two proposals relating to the
Fund. We recommend that you read the entire enclosed Proxy Statement, which
describes the proposals in more detail. For your convenience, we have provided
some "Questions and Answers" to assist you in reviewing these proposals.
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
AND THE PROXY STATEMENT
Q. WHY IS THE FUND HOLDING A SPECIAL MEETING?
A. The Fund's Board of Managers (the "Board") is seeking Investor approval
for the election of a Manager to the Board of Managers ("Proposal 1") and
approval for a new Investment Advisory Agreement between the Fund and
Liberty Asset Management Company ("Proposal 2").
Q. WHY IS A SHAREHOLDER VOTE NECESSARY?
A. The Investment Company Act of 1940, as amended (the "1940 Act"), requires
Investors to vote on an investment advisory agreement whenever there is a
change in the investment adviser. Therefore, the Board is holding the
Special Meeting to ensure the Fund's continued compliance with the 1940
Act by providing a forum for Investors to approve the Fund's Investment
Advisory Agreement with Liberty Asset Management Company.
Q. WILL THE NEW INVESTMENT ADVISORY AGREEMENT DIFFER SUBSTANTIALLY FROM THE
CURRENT INVESTMENT ADVISORY AGREEMENT?
A. No. The proposed new Investment Advisory Agreement contains substantially
similar provisions and does not differ significantly in substance from the
current Investment Advisory Agreement under which services are provided to
the Fund. If approved, the new Investment Advisory Agreement will continue
for an initial term running through October 31, 2006 and may continue
annually thereafter upon approval by a vote of a majority of the
outstanding voting securities of the Fund or by the Board.
Q. HOW DOES THE BOARD SUGGEST THAT I VOTE?
A. After careful consideration, the Board unanimously recommends that you
vote "FOR" each proposal. All of the Managers are "Independent Managers,"
meaning that they are not "interested persons" of the Fund as defined in
the 1940 Act.
Q. WILL MY VOTE MAKE A DIFFERENCE?
A. Yes. Your vote is needed to ensure that each separate proposal can be
acted upon. We encourage all Investors to participate in the governance of
the Fund. A plurality of the votes cast is required for approval of
Proposal 1. Approval of Proposal 2 requires the affirmative vote of
Investors holding a majority of the value of the Fund's capital accounts
on the Record Date.
2
In addition, your immediate response on the enclosed proxy card will help
save the costs of any further solicitations.
Q. WHO CAN I CALL IF I HAVE QUESTIONS?
A. We will be pleased to answer your questions about this proxy solicitation.
Please call the Fund toll-free at (888) 786-9977 between 8:30 a.m. and
5:00 p.m., Eastern Time, Monday through Friday.
Q. HOW DO I VOTE?
A. You may use the enclosed postage-paid envelope to mail your proxy card or
you may attend the meeting in person.
3
PROXY STATEMENT
SPECIAL MEETING OF INVESTORS TO BE HELD ON MAY 27, 2005
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Managers (the "Board") of BACAP Alternative
Multi-Strategy Fund, LLC (the "Fund") for use at the Special Meeting of
Investors of the Fund (the "Special Meeting") to be held on May 27, 2005 at 2:00
p.m. Eastern Time at the offices of the Fund's agent, PFPC Inc., 760 Moore Road,
King of Prussia, Pennsylvania 19406. This Proxy Statement and the accompanying
proxy card were mailed to Investors on or about April 22, 2005. The close of
business on April 5, 2005 has been fixed as the record date (the "Record Date")
for the determination of Investors entitled to notice of and to vote at the
Special Meeting. Investors vote in proportion to their capital account balances
on the Record Date. At the close of business on the Record Date, the total of
the capital account balances of all Investors was approximately $71 million
(excluding capital account balances of Banc of America Capital Management, LLC
("BACAP" or the "Adviser"), the Fund's investment adviser). (The Fund generally
computes its net asset value as of the last business day of each month.
Investors' capital account balances as of the Record Date are based on the
Fund's computation of its net asset value as of March 31, 2005 and new
investments in the Fund that Investors made as of April 1, 2005.)
All proxies solicited by the Board that are properly executed and
received by the Fund's Secretary before the Special Meeting will be voted at the
Special Meeting in accordance with the Investors' instructions. Any Investor may
revoke the Investor's proxy at any time before the vote by notifying the Fund of
revocation in writing, delivering to the Secretary a duly executed proxy card
bearing a later date, or attending the Special Meeting in person, requesting
return of any previously-delivered proxy and voting by ballot at the Special
Meeting. If no instruction is given on a signed and returned proxy card for any
proposal, it will be voted "FOR" all proposals as to which no instruction is
given and the proxies may vote, in their discretion, with respect to other
matters not now known to the Board that may be presented at the Special Meeting.
The presence in person or by proxy of Investors holding a majority of the
total number of votes eligible to be cast by all Investors as of the Record Date
constitutes a quorum. Votes cast by proxy or in person at the Special Meeting
will be counted by persons appointed by the Fund as inspectors of election for
the Special Meeting. The inspectors will count the total number of votes cast
"for" approval of a proposal for purposes of determining whether sufficient
affirmative votes have been cast. Shares represented by proxies that reflect
abstentions and "broker non-votes" (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners or
the persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter) will be counted as shares
that are present and entitled to vote on the matter for purposes of determining
the presence of a quorum. With respect to the election of Managers, neither
abstentions nor broker non-votes have an effect on the outcome of the proposal.
With respect to any other proposal, abstentions and broker non-votes have the
effect of a negative vote.
If sufficient votes in favor of any of the proposals set forth in the
Notice of the Special Meeting are not received by the time scheduled for the
Special Meeting, or if a quorum is not present or represented at the Special
Meeting, the persons named as proxies may propose adjournments of the Special
Meeting for a reasonable period or periods of time to permit further
solicitation of proxies. In addition, the persons named as proxies may propose
one or more adjournments if they determine such action is advisable. Any
adjournment will require the affirmative vote of a majority of the votes
entitled to be cast on the question present in person or by proxy at the session
of the Special Meeting to be adjourned. In the event of an adjournment, no
additional notice is required other than announcement at the Special Meeting.
With respect
4
to any proposal, the persons named as proxies will vote in favor of adjournment
those proxies that they are entitled to vote in favor of the proposal and will
vote against any such adjournment those proxies required to be voted against the
proposal. The Fund pays the costs of any additional solicitation and of any
adjourned session. Any proposals for which sufficient favorable votes have been
received by the time of the Special Meeting may be acted upon and considered
final regardless of whether the Special Meeting is adjourned with respect to any
other proposal.
The affirmative vote of a plurality of the votes cast (measured by
capital account balances) is necessary to elect Managers to the Board. There is
no cumulative voting in the election of Managers. For the purposes of the
election of Managers, abstentions and broker non-votes will not be considered
votes cast, and do not affect the plurality vote required. The approval of the
proposed new Investment Advisory Agreement requires the affirmative vote
(measured by capital account balances) of "a majority of the outstanding voting
securities" of the Fund, which is defined in the Investment Company Act of 1940,
as amended (the "1940 Act"), to mean the vote (i) of 67 percent or more of the
interests present at the Special Meeting, if the holders of more than 50 percent
of the interests of the Fund outstanding as of the Record Date are present or
represented by proxy, or (ii) of more than 50 percent of the interests of the
Fund outstanding as of the Record Date, whichever is less. Investors do not have
any appraisal or similar rights of dissenters with respect to any of the
proposals to be acted upon at the Special Meeting.
YOU MAY OBTAIN A COPY, WITHOUT CHARGE, OF THE FUND'S ANNUAL REPORT FOR
THE FISCAL YEAR ENDED MARCH 31, 2004 OR THE FUND'S SEMI-ANNUAL REPORT FOR THE
SIX MONTH PERIOD ENDED SEPTEMBER 30, 2004 BY WRITING THE FUND AT 40 WEST 57TH
STREET, NEW YORK, NY 10019 OR BY CALLING TOLL-FREE (888) 786-9977. THESE REPORTS
HAVE BEEN PREVIOUSLY MAILED TO INVESTORS.
5
PROPOSAL 1
ELECTION OF MANAGER
The Board is proposing that Investors approve the election of Alan Brott
to serve as a Manager of the Fund ("Manager Nominee"). Mr. Brott currently
serves as a Manager of the Fund, and has done so since June 27, 2003, when he
was selected by the Nominating Committee of the Board, which is comprised
entirely of the Independent Managers of the Board, and appointed by the full
Board. "Independent Managers" are Managers who are not "interested persons" of
the Fund as that term is defined in the 1940 Act.
INFORMATION REGARDING MANAGER NOMINEE
The name and age of the Manager Nominee, his principal occupation during
the past five years and certain of his other affiliations are provided below.
The Manager Nominee will not serve as an officer of the Fund. The Manager
Nominee has agreed to continue to serve if elected at the Special Meeting. It is
the intention of the persons designated as proxies in the Proxy, unless
otherwise directed therein, to vote at the Special Meeting for the election of
the Manager Nominee. If the Manager Nominee is unable or unavailable to serve,
the persons named as proxies will vote for such other nominee(s) as the Board
may recommend.
<Table>
<Caption>
------------------------------------------------------------------------------------------------
NUMBER OF
PRINCIPAL FUNDS IN
LENGTH OF OCCUPATION(S) FUND
TIME HELD DURING COMPLEX*
POSITION SERVED, AND THE OVERSEEN OTHER
NAME, AGE AND WITH THE TERM OF PAST FIVE BY DIRECTORSHIPS
MAILING ADDRESS FUND OFFICE YEARS NOMINEE HELD
--------------- -------- ----------- ------------- --------- -------------
------------------------------------------------------------------------------------------------
Alan Brott (61) c/o Manager Since 2003; Consultant 3 None
BACAP Alternative indefinite (financial),
Multi-Strategy Fund, term. since October
LLC 40 West 57th 1991;
Street Associate
New York, NY 10019 Professor,
Columbia
University
Graduate
School of
Business,
since
September
2000.
------------------------------------------------------------------------------------------------
</Table>
* The "Fund Complex" consists of all registered investment companies advised by
the Adviser and its affiliates or that hold themselves out to investors as
companies related to the Fund for purposes of investment or investor services.
INFORMATION REGARDING CURRENT INVESTOR-ELECTED MANAGERS OF THE FUND
The names and ages of the current Managers of the Fund (other than the
Manager Nominee), their principal occupations during the past five years and
certain of their other affiliations are provided below. The Board held four
meetings during the Fund's most recent fiscal year.
6
<Table>
<Caption>
------------------------------------------------------------------------------------------------
NUMBER OF
PRINCIPAL FUNDS IN
LENGTH OF OCCUPATION(S) FUND
TIME HELD DURING COMPLEX*
POSITION SERVED, AND THE OVERSEEN OTHER
NAME, AGE AND WITH THE TERM OF PAST FIVE BY DIRECTORSHIPS
MAILING ADDRESS FUND OFFICE YEARS MANAGER HELD
--------------- -------- ----------- ------------- --------- -------------
------------------------------------------------------------------------------------------------
Thomas W. Brock (57) Manager Since 2003; Adjunct 3 Blythedale
c/o BACAP Alternative indefinite Professor, Children's
Multi-Strategy Fund, term. Columbia Hospital and
LLC 40 West 57th University WestHab.
Street Graduate
New York, NY 10019 School of
Business,
since 1998;
Chairman,
CEO, Salomon
Brothers
Asset
Management,
Inc. from
1993 to 1998.
------------------------------------------------------------------------------------------------
Thomas G. Yellin (51) Manager Since 2003; President, PJ 3 None
c/o BACAP Alternative indefinite Productions,
Multi-Strategy Fund, term. since
LLC 40 West 57th December
Street 2002;
New York, NY 10019 Executive
Producer, ABC
News from
August 1989
to December
2002.
------------------------------------------------------------------------------------------------
</Table>
* The "Fund Complex" consists of all registered investment companies advised by
the Adviser and its affiliates or that hold themselves out to investors as
companies related to the Fund for purposes of investment or investor services.
BOARD COMMITTEES
The Board has established a Nominating Committee comprised of Messrs.
Brock, Brott and Yellin. The duties and functions of the Nominating Committee
include reviewing candidates for and making nominations of Independent Managers
to the Board, periodically reviewing the composition of the Board to determine
whether for any reason it may be appropriate to add new Managers, and reviewing
the membership of each committee established by the Board. The Nominating
Committee operates under a charter that was adopted by the Board on January 13,
2003 and is attached as Appendix A. The Nominating Committee does not have a
policy with regard to the consideration of any Manager candidates recommended by
Investors, as the Fund does not hold annual meetings to elect Managers. During
the Fund's most recent fiscal year, the Nominating Committee held no meetings.
7
The Board has established an Audit Committee. The Audit Committee is
responsible for overseeing the Fund's accounting and financial reporting
processes and audits of the Fund's financial statements, the Fund's internal
controls and, as appropriate, the internal controls of certain service providers
and for acting as a liaison between the Fund's independent accountants and the
Board. The Audit Committee may have additional functions and responsibilities as
deemed appropriate by the Board and the Audit Committee. The Audit Committee
operates under a charter that was most recently approved by the Board on March
28, 2005 and is attached as Appendix B. The Audit Committee is required to meet
at least twice annually. During the Fund's most recent fiscal year the Audit
Committee held four meetings.
The Board of Managers, including a majority of the Independent Managers,
selected PricewaterhouseCoopers LLP ("PWC") as independent accountants for the
Fund for the fiscal years ended March 31, 2004 and March 31, 2005, respectively.
PWC has advised the Fund that, to the best of its knowledge and belief, as of
its report dated March 23, 2005, no PWC professional had any direct or material
indirect ownership interest in the Fund inconsistent with independent
professional standards pertaining to accountants. It is expected that
representatives of PWC will not be present at the Special Meeting, but will be
available by telephone to respond to appropriate questions that may arise and to
make a statement if the representatives choose to do so.
In connection with the audited financial statements included in the
Fund's Annual Report for its fiscal year ended March 31, 2004, the Audit
Committee met on May 20, 2004 and June 16, 2004 to review and discuss the
audited financial statements with management and the independent accountants,
and discussed the results of the audit of these financial statements with the
independent accountants.
The Audit Committee has received the written disclosures and letter from
the independent accountants required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and has discussed with
the independent accountants their independence. The Audit Committee discussed
with the independent accountants the accounting principles applied by the Fund
and such other matters brought to the attention of the Audit Committee by the
independent accountants required by Statement of Auditing Standards No. 61,
Communications With Audit Committees, as currently modified or supplemented.
Based on the foregoing review and discussion, the Audit Committee
recommended to the Board that the audited financial statements for the fiscal
year ended March 31, 2004 be included in the Fund's annual report to Investors
for that year.
The members of the Audit Committee are Messrs. Brock, Brott and Yellin,
each of whom is an Independent Manager. The Fund has not determined whether the
members of the Audit Committee (and Nominating Committee) are "independent"
under the rules of any national securities exchange or national securities
association registered under the Securities Exchange Act of 1934, as amended.
The Fund's interests are not listed or traded on any registered national
securities exchange and are not listed, traded or quoted on any stock market
subject to the rules of any national securities association. The Audit Committee
members are not professionally engaged in the practice of auditing or accounting
and are not experts in the fields of auditing or accounting, including in
respect of auditor independence. Members of the Audit Committee rely without
independent verification on the information provided to them and on the
representations made by management and the independent accountants. Accordingly,
the Audit Committee's oversight does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or appropriate internal controls and procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committee's considerations and discussions referred to
above do not assure that the audit of the Fund's financial statements has been
carried out in accordance with generally accepted auditing standards, that the
8
financial statements are presented in accordance with generally accepted
accounting principles or that the Fund's accountants are in fact "independent."
INDEPENDENT ACCOUNTANTS' FEES
The following paragraphs include information about the fees paid to the
Fund's independent accountants for the two most recent fiscal years. Because the
most recent fiscal year ended March 31, 2005, shortly before this Proxy
Statement was printed, the figures for amounts billed for the past fiscal year
are good faith estimates and the actual figures may vary.
AUDIT FEES
Audit Fees are fees related to the audit of and review of the Fund's
financial statements included in annual reports and registration statements and
other services that are normally provided by the independent accountants in
connection with statutory and regulatory filings or engagements. Aggregate Audit
Fees billed to the Fund by the independent accountants for the fiscal years
ended March 31, 2005 and March 31, 2004 were $60,000 (estimate) and $65,000,
respectively.
AUDIT-RELATED FEES
Audit-Related Fees are fees for assurance and related services provided
by the independent accountants that are reasonably related to the performance of
the audit of the Fund's financial statements and are not reported as Audit Fees.
In the Fund's fiscal year ended March 31, 2005 and March 31, 2004, Audit-
Related Fees included certain agreed-upon procedures performed for semi-annual
shareholder reports and technical research on accounting and disclosure matters.
Aggregate Audit-Related Fees billed to the Fund by the independent accountants
for the fiscal years ended March 31, 2005 and March 31, 2004 were $4,500
(estimate) and $4,500, respectively.
TAX FEES
Tax Fees are fees associated with tax compliance, tax advice and tax
planning. Tax Fees in the Fund's fiscal years ended March 31, 2004 and March 31,
2005 were primarily for research and advice on tax matters. Aggregate Tax Fees
billed to the Fund by the independent accountants for the fiscal years ended
March 31, 2005 and March 31, 2004 were $15,000 (estimate) and $15,000,
respectively. Please note that the Fund's tax year-end is December 31. Tax Fees
for the fiscal year ended March 31, 2005 include amounts accrued but not yet
billed by the independent accountants.
ALL OTHER FEES
All Other Fees are fees for products and services provided by the
independent accountants, other than the services reported above under "Audit
Fees," "Audit-Related Fees" and "Tax Fees." Aggregate All Other Fees billed to
the Fund by the independent accountants for the fiscal years ended March 31,
2005 and March 31, 2004 were $0 (estimate) and $0, respectively.
PRE-APPROVAL POLICIES AND PROCEDURES; NON-AUDIT FEES BILLED TO ADVISER AND
AFFILIATES
Before the independent accountants are engaged to render (i) audit and
non-audit services (including audit-related, tax and all other) to the Fund, and
(ii) non-audit services to the Fund's investment adviser or any control
affiliate of the investment adviser that relate directly to the Fund's
operations and financial reporting, the engagement is approved by the Fund's
Audit Committee. A "control affiliate" of the
9
Fund's investment adviser is an entity controlling, controlled by, or under
common control with the investment adviser that provides ongoing services to the
Fund. The investment adviser and control affiliates are collectively referred to
as "Adviser Entities."
The Audit Committee uses a combination of specific (on a case-by-case
basis as potential services are contemplated) and general (pre-determined list
of permitted services) pre-approvals. Unless a type of service has received
general pre-approval, it requires specific pre-approval by the Audit Committee
if it is to be provided by the independent accountants. The Policy does not
delegate the Audit Committee's responsibilities to pre-approve services
performed by the independent accountants to Fund management.
The pre-approval requirements described above for services to the Adviser
Entities that provide ongoing services to the Fund (to the extent such services
relate directly to the Fund's operations and financial reporting) became
effective on May 6, 2003. During the fiscal years ended March 31, 2004 and March
31, 2005, there were no Audit-Related Fees, Tax Fees or All Other Fees billed to
Adviser Entities that were required to be approved pursuant to these
pre-approval requirements. None of the Audit-Related Fees, Tax Fees and All
Other Fees required to be approved during these fiscal years were approved under
the "de minimus" exception provided by applicable regulation.
AGGREGATE NON-AUDIT FEES
The aggregate non-audit fees billed by PWC for services rendered to the
Fund, and to the Adviser Entities for the last two fiscal years are set forth in
the table below:
<Table>
<Caption>
-------------------------------------------------------------------------------------------
AGGREGATE NON-AUDIT
NON-AUDIT FEES BILLED FEES BILLED BY PWC
BY PWC TO ADVISER TO FUND AND ADVISER
ENTITIES THAT PROVIDE ENTITIES THAT PROVIDE
FISCAL YEAR NON-AUDIT FEES ON-GOING SERVICES TO ONGOING SERVICES TO
ENDING BILLED TO THE FUND THE FUND THE FUND
----------- ------------------ --------------------- ---------------------
-------------------------------------------------------------------------------------------
March 31, 2005 $19,500 $0 $19,500
-------------------------------------------------------------------------------------------
March 31, 2004 $19,500 $0 $19,500
-------------------------------------------------------------------------------------------
</Table>
COMPENSATION OF MANAGERS AND MANAGER NOMINEES
Each Manager is compensated at the rate of $6,000 per annum plus $1,000
per Board meeting attended. The Fund also reimburses the Managers for
meeting-related expenses. The Fund provides no pension or retirement benefits to
the Managers.
The following table shows aggregate compensation paid to the current
Managers and Manager Nominee by the Fund and total compensation from all
investment companies for which the Adviser or an affiliated person of the
Adviser serves as investment adviser. All compensation is reported for the
Fund's fiscal year ended March 31, 2005.
10
<Table>
<Caption>
---------------------------------------------------------------------------------------------
PENSION OR
RETIREMENT ESTIMATED TOTAL
BENEFITS ANNUAL COMPENSATION
NAME OF AGGREGATE ACCRUED AS RETIREMENT FROM THE
MANAGER/MANAGER COMPENSATION PART OF FUND BENEFITS UPON FUND AND FUND
NOMINEE FROM THE FUND EXPENSES RETIREMENT COMPLEX
--------------- ------------- ------------ ------------- -------------
---------------------------------------------------------------------------------------------
MANAGERS
---------------------------------------------------------------------------------------------
Thomas W. Brock $11,500 None None $28,125*
---------------------------------------------------------------------------------------------
Thomas G. Yellin $12,500 None None $29,125*
---------------------------------------------------------------------------------------------
MANAGER NOMINEE
---------------------------------------------------------------------------------------------
Alan Brott $12,500 None None $29,125*
---------------------------------------------------------------------------------------------
</Table>
* Serves on the boards of two investment companies in the Fund Complex, in
addition to serving on the Board of the Fund.
The table below sets forth the dollar range of equity securities
beneficially owned as of the Record Date by each Manager and Manager Nominee in
the Fund, and, on an aggregate basis, in any registered investment companies
overseen by the Manager or Manager Nominee in the "family of investment
companies" that includes the Fund.
<Table>
<Caption>
------------------------------------------------------------------------------------------
AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES OVERSEEN BY
NAME OF MANAGER/MANAGER NOMINEE IN
MANAGER/MANAGER DOLLAR RANGE OF EQUITY FAMILY OF INVESTMENT
NOMINEE SECURITIES IN THE FUND COMPANIES
--------------- ---------------------- --------------------------
------------------------------------------------------------------------------------------
MANAGERS
------------------------------------------------------------------------------------------
Thomas W. Brock None None
------------------------------------------------------------------------------------------
Thomas G. Yellin None None
------------------------------------------------------------------------------------------
MANAGER NOMINEE
------------------------------------------------------------------------------------------
Alan Brott None None
------------------------------------------------------------------------------------------
</Table>
As of the Record Date, the Independent Managers and their immediate
family members did not own, beneficially or of record, any securities in the
Adviser, or in any persons (other than a registered investment company) directly
or indirectly controlling, controlled by or under common control with the
Adviser.
11
PROPOSAL 2
APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT
The Board is proposing that Investors approve a new Investment Advisory
Agreement to be entered into between the Fund and Liberty Asset Management
Company (the "Proposed Adviser"). A form of the proposed Investment Advisory
Agreement (the "Proposed Investment Advisory Agreement") is attached as Appendix
C.
The Proposed Investment Advisory Agreement contains provisions
substantially similar to and does not differ significantly in substance from the
current Investment Advisory Agreement between the Fund and BACAP under which
investment advisory services are currently provided to the Fund. The management
fee rate provided in the Proposed Investment Advisory Agreement is identical to
the fee rate provided in the current Investment Advisory Agreement. The
differences are described below under "Information Concerning the Proposed
Investment Advisory Agreement."
REASONS FOR THE PROPOSAL AND MANAGEMENT RECOMMENDATION
Fund management recently recommended to the Board that, due to
organizational realignments of entities supporting Bank of America's investment
management business, the Proposed Adviser replace BACAP as investment adviser
for the Fund. The Proposed Adviser and BACAP are both indirect, wholly-owned
subsidiaries of Bank of America Corporation.
The Bank of America investment management group is in the process of
consolidating the oversight of various financial products into the Proposed
Adviser. The investment professionals and other personnel within BACAP who are
primarily responsible for performing BACAP's responsibilities as investment
adviser to the Fund are proposed to become officers or employees of the Proposed
Adviser, and in that capacity will perform the same functions with respect to
the Fund as they now perform in their capacity as officers or employees of
BACAP.
The Board met on March 28, 2005 to consider the approval of the Proposed
Investment Advisory Agreement with the Proposed Adviser. The Board, on behalf of
the Fund, requested and reviewed various materials relating to the Proposed
Adviser, including materials furnished by the Proposed Adviser. These materials
included information about the Proposed Adviser's personnel, organizational
structure, operations and financial condition. At the Board meeting, the Board
had the opportunity to meet with the representatives of the Proposed Adviser.
The Board gave particular consideration to matters relating to the
organizational capabilities of the Proposed Adviser, including:
-- the fact that substantially all of the key personnel of BACAP who
currently are involved in providing services to the Fund are also,
or will become, employees of the Proposed Adviser and will continue
to provide services to the Fund if the Proposed Investment Advisory
Agreement is approved;
-- the investment approach currently employed by BACAP and intended to
be employed by the Proposed Adviser in the management of the Fund;
-- the research capabilities of the Proposed Adviser;
-- the nature of the Proposed Adviser and the Proposed Adviser's
experience and resources, including the experience of relevant
personnel (including those presently employed by BACAP)
12
and the availability of these resources following the expected
reorganization of certain BACAP personnel and resources to the
Proposed Adviser; and
-- the Proposed Adviser's resources, practices and procedures to
address regulatory compliance matters.
The Board concluded that the Proposed Adviser has sufficient resources to
fulfill effectively the Proposed Adviser's duties under the Proposed Investment
Advisory Agreement and that the Proposed Adviser appeared prepared to manage the
Fund's investment program and fulfill the Proposed Adviser's fiduciary duties as
investment adviser to the Fund. The Board also concluded that the fact that the
Proposed Adviser would have personnel familiar with the Fund and would employ an
investment approach the same as that employed by BACAP meant that a transition
to the Proposed Adviser as the Fund's investment adviser should not be
disruptive to the Fund.
The Board also considered other information of the type regularly
reviewed when evaluating whether to continue or approve an advisory agreement,
including:
-- the terms of the Proposed Investment Advisory Agreement, which the
Board noted were substantially the same as those of the Fund's
current Investment Advisory Agreement;
-- the standard of care applicable to the Proposed Adviser under the
Proposed Investment Advisory Agreement;
-- the Fund's investment performance and expense ratio and the
investment performance and expense ratio of other investment
companies with similar investment styles to the Fund;
-- the structure of, and the method used to determine, the
compensation of portfolio managers;
-- information regarding the fees paid by certain similar registered
and private funds managed by BACAP and the Proposed Adviser; and
-- information compiled by BACAP and a third party intended to
indicate average performance over various periods by the universe
of fund of hedge fund products and information with respect to the
Fund's performance under different market conditions and during
different phases of market cycles, the volatility of such returns,
and other factors identified by BACAP as contributing to
performance.
The Board concluded that the scope and quality of services to be provided
to the Fund under the Proposed Investment Advisory Agreement was consistent with
the Fund's operational requirements. In reaching this conclusion, the Board
considered the Fund's experience and performance under the current Investment
Advisory Agreement, under which BACAP provides the same services as the Proposed
Adviser is proposed to provide under the Proposed Investment Advisory Agreement.
The Board then gave substantial consideration to the fees payable under
the Proposed Investment Advisory Agreement, including:
-- the actual dollar amount of fees to be paid to the Proposed Adviser
(based on amounts paid to BACAP under the current Investment
Advisory Agreement) and the Proposed Adviser's anticipated expenses
in providing its services, and the fact that the Proposed Adviser
or its affiliates provide other services to the Fund and its
Investors and receive payment for these services;
-- so-called "fallout benefits" to the Proposed Adviser, such as any
incremental increase to its reputation derived from serving as
investment adviser to the Fund; and
13
-- a comparison of the fees payable under the Proposed Investment
Advisory Agreement to fees paid under investment advisory
agreements to investment advisers serving other investment
companies with similar investment programs to the Fund, which
assisted the Board in evaluating the reasonableness of the fees to
be paid to the Proposed Adviser.
The Board also considered the effective fees under the Proposed
Investment Advisory Agreement, as a percentage of assets at different Fund asset
levels, and possible economies of scale to the Proposed Adviser. In this regard
the Board considered the amount of assets in the Fund; the information provided
by the Proposed Adviser relating to its estimated costs; and information
comparing the fee rate to be charged by the Proposed Adviser (which does not
include fee breakpoints) with fee rates charged by other unaffiliated investment
managers to their clients. The Board also took into account the arrangement
currently in place under which BACAP absorbed certain expenses of the Fund to
cap the Fund's expense ratio, and that the Fund was expected to benefit from a
similar arrangement if the Proposed Adviser were retained as investment adviser.
After deliberation, the Board concluded that the fees to be paid to the
Proposed Adviser under the Proposed Investment Advisory Agreement were
reasonable in light of the services the Proposed Adviser would provide, its
costs and the reasonably foreseeable Fund asset levels.
The Board then voted to recommend the Proposed Investment Advisory
Agreement to the Fund's Investors for their approval. For the reasons described
above, the Board unanimously recommends that Investors of the Fund vote to
approve the Proposed Investment Advisory Agreement.
INFORMATION CONCERNING THE CURRENT ADVISER
BACAP is a North Carolina limited liability company registered as an
investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"). BACAP has its principal offices at 101 S. Tryon Street,
Charlotte, North Carolina 28255. As of December 31, 2004, BACAP had
approximately $124 billion in assets under management.
The following person is an officer and/or manager of BACAP and an officer
of the Fund: Lawrence R. Morgenthal (President of the Fund and Managing Director
of BACAP).
14
The following table sets forth the names, addresses, positions, and
principal occupations of BACAP's principal executive officer, other officers,
and managers.
<Table>
<Caption>
------------------------------------------------------------------------------------------
CURRENT POSITION(S)
NAME AND ADDRESS WITH BACAP PRINCIPAL OCCUPATION(S)
---------------- ------------------- -----------------------
------------------------------------------------------------------------------------------
Keith Banks President and Manager Columbia Management
100 Federal Street (chief executive officer) Group (Chief Executive
Boston, MA 02110 Officer, Chief Investment
Officer and President)
------------------------------------------------------------------------------------------
Roger Sayler Managing Director and Columbia Management Group,
590 Madison Avenue Manager Inc. (Chief Operating
New York, NY 10022 Officer)
------------------------------------------------------------------------------------------
Peter Taube Chief Financial Officer and Columbia Management Group
40 West 57th Street Treasurer (Senior Vice President,
New York, NY 10019 Finance)
------------------------------------------------------------------------------------------
Mary Mullin Chief Compliance Officer Columbia Management Group
40 West 57th Street (Senior Vice President,
New York, NY 10019 Corporate Compliance)
------------------------------------------------------------------------------------------
</Table>
BACAP is a wholly-owned subsidiary of Bank of America, N.A, and a
wholly-owned indirect subsidiary of Bank of America Corporation. Bank of America
Corporation is located at 100 N. Tryon Street, Charlotte, North Carolina 28255.
INFORMATION CONCERNING THE PROPOSED ADVISER
The Proposed Adviser is a Delaware corporation registered as an
investment adviser under the Advisers Act. The Proposed Adviser provides
investment management services to the Liberty All-Star Equity Fund, Liberty
All-Star Growth Fund, Inc., and Columbia Management Multi-Strategy Hedge Fund,
LLC, three closed-end management investment companies. The Proposed Adviser has
its principal offices at One Financial Center, Boston, Massachusetts 02110. As
of December 31, 2004, the Proposed Adviser had approximately $1.7 billion in
assets under management.
The following persons are officers and/or directors of the Proposed
Adviser and officers of the Fund: Lawrence R. Morgenthal (President of the Fund,
and Executive Vice President of the Proposed Adviser); David A. Rozenson
(Secretary and Chief Legal Officer of the Fund and Assistant Secretary of the
Proposed Adviser).
15
The following table sets forth the names, addresses, positions, and
principal occupations of the Proposed Adviser's principal executive officer,
other officers, and directors.
<Table>
<Caption>
----------------------------------------------------------------------------------------------
CURRENT POSITION(S)
NAME AND ADDRESS WITH THE PROPOSED ADVISER PRINCIPAL OCCUPATION(S)
---------------- ------------------------- -----------------------
----------------------------------------------------------------------------------------------
Keith Winn President, Director (chief Bank of America (Senior Vice-
100 Federal Street, 25th Floor executive officer) President, Group Executive,
Boston, MA 02110 Investment Services Group)
----------------------------------------------------------------------------------------------
Sandra Spies Executive Vice President, Bank of America (Director,
100 Federal Street, 3rd Floor Director Consulting Services Group)
Boston, MA 02110
----------------------------------------------------------------------------------------------
Daniel McNamara Executive Vice President Bank of America (Managing
100 Federal Street, 3rd Floor Director, Consulting Services
Boston, MA 02110 Group)
----------------------------------------------------------------------------------------------
Lawrence R. Morgenthal Executive Vice President Bank of America (Managing
40 West 57th Street, 33rd Floor Director, Alternative
New York, NY 10019 Investment Group)
----------------------------------------------------------------------------------------------
Kevin O'Shea Executive Vice President Bank of America (Managing
100 Federal Street, 3rd Floor Director, Retirement Plan
Boston, MA 02110 Services)
----------------------------------------------------------------------------------------------
C. Brooks Englehardt Executive Vice President Bank of America (Director,
100 Federal Street, 3rd Floor Regional Investment
Boston, MA 02110 Consultants, Consulting
Services Group)
----------------------------------------------------------------------------------------------
Alpesh Rathod Chief Compliance Officer Bank of America (Vice
40 West 57th Street, 33rd Floor President, Senior Compliance
New York, NY 10019 Manager)
----------------------------------------------------------------------------------------------
</Table>
The Proposed Adviser is a direct wholly-owned subsidiary of Columbia
Management Group, Inc. which in turn is wholly-owned by Fleet National Bank,
which in turn is wholly-owned by Bank of America Corporation.
The Proposed Adviser currently serves as the investment adviser to the
Columbia Management Multi-Strategy Hedge Fund, LLC. The Columbia Management
Multi-Strategy Hedge Fund, LLC is a specialized investment vehicle that is
registered under the 1940 Act as a closed-end, non-diversified, management
investment company and invests in a portfolio of partnerships and other
investment vehicles that pursue non-traditional investment strategies. As of
March 31, 2005, the Columbia Management Multi-Strategy Hedge Fund, LLC had
approximately $170 million in assets under management. For its investment
management services to the Columbia Management Multi-Strategy Hedge Fund, LLC,
the Proposed Adviser receives an annual management fee of 1.0%, payable monthly,
based on average net assets. In addition, the Proposed Adviser is also entitled
to receive a special incentive allocation equal to 10% of the amount, if any, in
excess of (a) profit net of losses (after taking into account expenses,
including the management fee) allocated to each investor's capital account over
(b) the greater of (i) the hurdle rate which is equal to the rate of return for
the one year U.S. Treasury Note and (ii) the balance of any loss carryforwards
from prior periods. The Proposed Adviser is also reimbursed up to $25,000 per
calendar year for any out-of-pocket expenses in connection with providing
investment management services to the Columbia Management Multi-Strategy Hedge
Fund, LLC.
16
INFORMATION CONCERNING THE CURRENT INVESTMENT ADVISORY AGREEMENT
BACAP serves as the current investment adviser for the Fund pursuant to
the Fund's current Investment Advisory Agreement. Under the current Investment
Advisory Agreement, BACAP is responsible for, subject to the supervision and
control of the Board, (i) regularly providing 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) developing,
implementing and supervising continuously the investment program of the Fund and
the composition of its portfolio and determining what securities shall be
purchased and sold by the Fund, (iii) arranging 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) taking such
further actions with respect to the foregoing as the Adviser deems necessary or
advisable.
In consideration of services provided by the Adviser, the Fund pays the
Adviser a management fee computed at the annual rate of 1.25% of the aggregate
value of outstanding interests, determined no less frequently than quarterly,
before reduction for any repurchases of interests or the Incentive Allocation
(as defined below). In addition, the Adviser serves as the Special Advisory
Member of the Fund and receives in that capacity a performance-based allocation
in accordance with the terms of the Fund's Limited Liability Company Agreement.
For each fiscal year in which an Investor has earned an annualized return on its
capital account greater than 6% (the "Hurdle Rate"), 10% of the excess of the
net profits over the Hurdle Rate and any Loss Carryforward (as defined below)
will be reallocated to the Adviser (the "Incentive Allocation"). Specifically,
with respect to an Investor, the Incentive Allocation generally will be made as
of the end of each fiscal year and upon the repurchase by the Fund of the
Investor's interest (or any portion thereof). Under the loss carryforward
provision (described in detail in the Fund's Limited Liability Company
Agreement), no Incentive Allocation will be made with respect to a particular
Investor for a fiscal year until any net loss previously allocated to the
capital account of such Investor has been offset by subsequent net profits (the
"Loss Carryforward"). If an Investor's capital account is reduced (as a result
of a Fund repurchase of an Investor's interest), the Investor's Loss
Carryforward, if any, will be reduced on a pro rata basis.
The current Investment Advisory Agreement provides that the Adviser is
not 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 the Investment Advisory 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 the Adviser or any of its officers, directors,
employees or agents (collectively, the "Affiliates") in the performance of their
duties under the Investment Advisory Agreement, or from reckless disregard by
the Adviser or its Affiliates of their obligations or duties under the
Investment Advisory Agreement.
The current Investment Advisory Agreement, dated April 1, 2003, was
approved by the Fund's initial Investor in connection with the organization of
the Fund, and was last approved by the Managers at a meeting held for that
purpose on March 28, 2005. The current Investment Advisory Agreement remains in
effect from year to year if specifically approved at least annually by vote of
"a majority of the outstanding voting securities" of the Fund, as defined under
the 1940 Act, or by the Board and, in either event, by the vote of a majority of
the Independent Managers, cast in person at a meeting called for that purpose.
The current Investment Advisory Agreement provides for termination by the Board
or by the Fund's Investors (by a vote of "a majority of the outstanding voting
securities" of the Fund) without penalty at any time on sixty (60) days' written
notice to BACAP, or by BACAP on sixty (60) days' written notice to the Fund. The
current Investment Advisory Agreement will be terminated if and when the
Proposed Investment Advisory Agreement becomes effective.
During the fiscal year ended March 31, 2005, the aggregate fees that the
Adviser received under the current Investment Advisory Agreement, including
Incentive Allocations, were approximately $957,500
17
(estimate). During the fiscal year ended March 31, 2005, the Fund paid the
following fees to BACAP's affiliates: $186,000 (estimate) to BACAP Distributors,
LLC for administration services and $186,000 (estimate) to BACAP Distributors,
LLC for investor services. Investors may pay a front-end load in connection with
their investments in the Fund.
INFORMATION CONCERNING THE PROPOSED INVESTMENT ADVISORY AGREEMENT
The Proposed Investment Advisory Agreement contains provisions
substantially similar to the current Investment Advisory Agreement. The Proposed
Adviser is required to provide the same services to the Fund, and is entitled to
the same management fee and incentive allocation, as is provided for in the
Fund's current Investment Advisory Agreement with BACAP and outlined in the
preceding paragraphs. The dates of execution, effectiveness and initial term of
the Proposed Investment Advisory Agreement will be different from those of the
current Investment Advisory Agreement. In addition, the governing law has
changed from North Carolina to Massachusetts, and a provision has been added
stating that the Fund may pay compensation to its chief compliance officer if
the Board of Managers expressly so authorizes, regardless of whether the Fund's
chief compliance officer is also an employee of the Proposed Adviser or its
affiliates. For a complete understanding of the Proposed Investment Advisory
Agreement, please refer to Appendix C.
If approved by Investors, the Proposed Investment Advisory Agreement will
continue in effect until October 31, 2006 and may continue thereafter from year
to year if specifically approved at least annually by the vote of "a majority of
the outstanding voting securities" (as defined in the 1940 Act) of the Fund or
by the Board, and, in either event, by the vote of a majority of the Managers
who are not parties to the Proposed Investment Advisory Agreement or "interested
persons" (as defined in the 1940 Act) of any such party, cast in person at a
meeting called for this purpose.
If the Proposed Investment Advisory Agreement is not approved by the
Investors of the Fund, the Managers of the Fund will consider what other action
is appropriate based upon the best interests of the Fund's Investors. Until that
decision is made, the current Investment Advisory Agreement will continue in
effect if the Proposed Investment Advisory Agreement is not approved by the
Investors of the Fund.
18
OTHER BUSINESS
The Board knows of no business other than that specifically mentioned in
the Notice of Special Meeting of Investors that will be presented for
consideration at the Special Meeting. If other business should properly come
before the Special Meeting, the proxy holders will vote thereon in their
discretion.
19
OTHER INFORMATION
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the knowledge of the Fund, as of the Record Date, no current Manager
of the Fund held any investment in the Fund, and the officers and Managers of
the Fund owned, as a group, less than 1% of the outstanding capital account
balances of the Fund.
Appendix D to this Proxy Statement lists the persons that, to the
knowledge of the Fund, held beneficially 5% or more of the outstanding interests
in the Fund (measured by capital account balances, exclusive of capital accounts
of any Special Advisory Member) as of the Record Date.
VOTE REQUIRED AND RECOMMENDATION
Approval of the election of Mr. Brott to serve as a Manager of the Fund
requires the affirmative vote of a plurality of votes cast at the Special
Meeting. Approval of the Proposed Investment Advisory Agreement requires the
affirmative vote of "a majority of the outstanding voting securities" (as
defined in the 1940 Act) of the Fund (measured by capital account balances,
exclusive of capital accounts of any Special Advisory Member).
THE BOARD OF MANAGERS OF THE FUND UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" EACH PROPOSAL.
EXPENSES
BACAP will bear the expenses incurred in connection with the Special
Meeting, including printing, mailing, solicitation and vote tabulation expenses,
legal fees, and out-of-pocket expenses.
SOLICITATION OF PROXIES
Solicitation will be primarily by mail, but officers of the Fund or
regular employees of the Adviser or the Fund's placement agents may also solicit
without compensation by telephone, e-mail or personal contact.
ADVISER
BACAP is the Fund's investment adviser, with principal offices at 101 S.
Tryon Street, Charlotte, North Carolina 28255.
ADMINISTRATOR
BACAP Distributors, LLC, 101 S. Tryon St., Charlotte, North Carolina
28255, serves as administrator of the Fund (the "Administrator"). The
Administrator provides, or arranges to provide, certain accounting,
administrative and transfer agency services to the Fund. The Administrator and
the Fund have retained SEI Investments Global Funds Services, One Freedom Valley
Drive, Oaks, Pennsylvania 19956, to provide certain sub-administrative services.
DISTRIBUTOR
BACAP Distributors, LLC, 101 S. Tryon Street, Charlotte, North Carolina
28255, an affiliate of the Adviser, serves as the Fund's distributor.
20
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New
York, 10036 serves as the Fund's independent public accountants.
OFFICERS OF THE FUND
Officers of the Fund are elected annually by the Board and hold office
until their successors are elected or appointed or until they resign, are
removed or are otherwise disqualified to serve. The principal executive officers
of the Fund, together with their positions with the Fund and their principal
occupations for the last five years, are listed on Appendix E.
INVESTOR PROPOSALS AND COMMUNICATIONS WITH THE BOARD
The Fund is not required to hold annual meetings of Investors and
currently does not intend to hold meetings unless Investor action is required
under the 1940 Act. Investors holding 25% or more of the total number of votes
eligible to be cast by Investors may call an Investor meeting. Due to the
limited number of Investors in the Fund, the Board has not adopted formal
procedures for Investor communications with the Board. Any Investor proposals
for any future meetings of Investors must be submitted to the Fund within a
reasonable time before the Fund begins to print and mail proxy materials for the
such meeting.
DELIVERY OF PROXY STATEMENT
The SEC has adopted rules that permit investment companies and
intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy
statements with respect to two or more Investors sharing the same address by
delivering a single proxy statement addressed to those Investors. This practice,
which is commonly referred to as "householding," potentially means extra
convenience for Investors and cost savings for companies. We are only delivering
one proxy statement to multiple Investors sharing an address, unless you have
instructed us not to do so. If, at any time, you no longer wish to participate
in "householding" and would prefer to receive a separate proxy statement, please
notify your financial adviser or placement agent or direct a written request to
the Fund, 40 West 57th Street, New York, NY 10019, or call toll free (888)
786-9977, and we will deliver a separate copy of the proxy statement to you
promptly. Investors who currently receive multiple copies of the proxy statement
at their address and would like to request "householding" of their
communications should contact their financial adviser or placement agent or the
Fund directly.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
Section 30(h) of the 1940 Act, and the rules thereunder, require that the Fund's
Managers and certain officers, the investment adviser, certain persons
affiliated with the investment adviser, and persons who own more than 10% of a
registered class of the Fund's securities, file reports of ownership and changes
of ownership with the Securities and Exchange Commission. Managers, officers,
and greater than 10% Investors are required by SEC regulations to furnish the
Fund with copies of all Section 16(a) forms they file.
Based solely upon the Fund's review of the copies of such forms it
receives and written representations from certain of such persons, the Fund
believes that during the fiscal year ended March 31, 2005, these persons
complied with all such applicable filing requirements.
21
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
David A. Rozenson, Secretary
April 22, 2005
22
APPENDIX A
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
NOMINATING COMMITTEE CHARTER
January 13, 2003
SECTION 1. MEMBERSHIP
(a) The Nominating Committee ("Committee") of the Board of Managers
(the "Board") of BACAP Alternative Multi-Strategy Fund, LLC (the
"Fund") shall be composed of Managers who are not "interested
persons" of the Fund, as defined in the Investment Company Act of
1940, as amended (the "1940 Act"), and who are appointed by the
Board from time to time.
(b) The Committee shall appoint its Chairperson.
SECTION 2. PURPOSES
(a) The Committee shall oversee the composition of both the Board and
the various committees of the Fund to ensure that competent and
capable candidates fill these positions.
(b) The Committee shall ensure that the selection of each Manager is
conducted in such a fashion so as to enhance the independence of
disinterested managers whose primary loyalty is to the Investors
of the Fund.
SECTION 3. DUTIES AND POWERS
(a) The Committee shall review candidates for, and make nominations
of independent managers to the Board. In carrying out this duty,
the Committee shall:
(i) evaluate the candidates' qualifications and their
independence from the Fund's investment adviser and other
principal service providers;
(ii) select persons who are "independent" in terms of both the
letter and the spirit of the 1940 Act; and
(iii) consider the effect of any relationships beyond those
delineated in the 1940 Act that might impair independence,
such as business, financial or family relationships with
managers or service providers.
(b) The Committee shall periodically review the composition of the
Board to determine whether for any reason it may be appropriate
to add new Managers.
(c) The Committee shall review the membership of each committee
established by the Board.
A-1
SECTION 4. PROCEDURAL MATTERS
(a) The Committee shall meet periodically as it deems necessary.
(b) The Committee shall review its operations periodically and
recommend changes to this Charter to the Board as appropriate.
(c) The Committee shall prepare minutes of and report to the Board on
its meetings.
(d) The Committee shall have the authority to make reasonable
expenditures, including expenditures to retain experts and
counsel, related to the aforementioned duties and tasks that will
be reimbursed by the Fund.
A-2
APPENDIX B
BACAP OPPORTUNITY STRATEGY, LLC
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
COLUMBIA MANAGEMENT MULTI-STRATEGY HEDGE FUND, LLC
AUDIT COMMITTEE CHARTER
1. Composition. The Audit Committees shall be composed entirely of
Board members who are not "interested" persons of the BACAP Opportunity
Strategy, LLC, BACAP Alternative Multi-Strategy Fund, LLC or Columbia Management
Multi-Strategy Hedge Fund, LLC (each a "Fund" and, collectively, the "Funds") or
any investment adviser or principal underwriter, as defined in the Investment
Company Act of 1940, to any Fund. The full Board of Managers shall designate the
members of the Committee and shall either designate the Chairman or shall
approve the manner of selection of the Chairman.
2. Oversight. The function of each Audit Committee is oversight.
Management* and the internal accounting staff are primarily responsible for the
preparation of a Fund's financial statements and the independent auditors are
responsible for auditing those financial statements. Management is also
responsible for maintaining appropriate systems for accounting and internal
control, and the independent auditors are primarily responsible for considering
such controls in connection with their financial statement audits. The
independent auditors for the Funds are accountable to the Funds' Boards and
Audit Committees. The Audit Committees have the authority and responsibility to
select, evaluate and, where appropriate, replace the independent auditors, as
have the full Boards.
3. Specific Responsibilities and Powers. Each Fund's Audit
Committee has the responsibility and power to:
(a) (i) review annually with management and the independent auditors
their separate evaluations of the adequacy and effectiveness of
the Fund's system of internal controls; (ii) review with
management and the independent auditors: any significant audit
findings related to the Fund's systems for accounting, reporting
and internal controls; and any recommendations for the
improvement of internal control procedures or particular areas
where new or more detailed controls or procedures are desirable.
(b) approve, and recommend to the full Board for its ratification and
approval in accord with applicable law, the selection and
appointment of an independent auditor for each Fund prior to the
engagement of such independent auditor;
(c) pre-approve all audit and non-audit services provided to each
Fund by its independent auditor, directly or by establishing
pre-approval policies and procedures pursuant to which such
services may be rendered, provided however, that the policies and
procedures are detailed as to the particular service and the
Audit Committee is informed of each service, and such policies do
not include delegation to management of the Audit Committee's
responsibilities under the Securities Exchange Act of 1934 or
applicable rules;
- ------------------------------------
* For purposes of this Charter, the term management means the appropriate
officers of a Fund, and its investment adviser(s), administrator(s) and other
key service providers (other than the independent auditors). Also for purposes
of this Charter, the phrase internal accounting staff means the appropriate
officers and employees of a Fund, and its investment adviser(s),
administrator(s) and other key service providers (other than the independent
auditors).
B-1
(d) pre-approve all non-audit services provided by a Fund's
independent auditor to the Fund's investment adviser (except a
sub-adviser whose role is primarily portfolio management and is
subcontracted or overseen by another investment adviser) and any
entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the
Fund, if the engagement relates directly to the operations and
financial reporting of the Fund;
(e) consider management reports from the auditor and discussions with
management to identify: conflicts of interest between management
and the independent auditor as a result of employment
relationships; the provision of prohibited non-audit services to
a Fund by its independent auditor; violations of audit partner
rotation requirements; and prohibited independent auditor
compensation arrangements whereby individual auditors are
compensated based on selling non-audit services to the Fund;
(f) (i) ensure that the independent auditors submit on a periodic
basis to the Audit Committee a formal written statement
delineating all relationships between the independent auditors
and the Fund; (ii) actively engage in a dialogue with the
independent auditors with respect to any disclosed relationships
or services that may impact the objectivity and independence of
the independent auditors; and (iii) recommend that the Board take
appropriate action in response to such formal written statement
to satisfy themselves of the independent auditors' independence;
(g) meet with the Fund's independent auditors and management,
including private meetings, as appropriate, to: (i) review the
form and substance of the Fund's financial statements and reports
and to report the result of such meetings to the full Board; (ii)
review the arrangements for and the scope of the annual audit and
any special audits or other special services; (iii) discuss any
matters of concern arising in connection with the audits of the
Fund's financial statements, including any adjustments to such
statements recommended by the independent auditors, or other
results of audits; (iv) consider the quality and adequacy of the
internal accounting staff; (v) consider the independent auditors'
comments with respect to the appropriateness and adequacy of the
Fund's financial policies, procedures and internal accounting
controls (including computer system controls and controls over
the daily net asset valuation process and the adequacy of the
computer systems and technology used in the Fund's operations)
and review management's responses thereto; (vi) review the
matters about which Statement on Auditing Standards No. 61
(Codification of Statements on Auditing Standards, AU sec. 380)
requires discussion; and (vii) review with the independent
auditors their opinions as to the fairness of the financial
statements;
(h) consider the effect on the Fund of: (i) any changes in accounting
principles or practices proposed by management or the independent
auditors; (ii) any changes in service providers, such as Fund
accountants or administrators, that could impact the Fund's
internal controls; or (iii) any changes in schedules (such as
fiscal or tax year-end changes) or structures or transactions that
require special accounting activities or resources;
(i) review the fees charged by the independent auditors for audit and
non-audit services; and
(j) report its activities to the full Board on a regular basis and
make such recommendations with respect to the matters described
above and other matters as the Committee may deem necessary or
appropriate.
B-2
4. Subcommittees. The Audit Committee may form and delegate
authority to one or more subcommittees (which may consist of one or more Audit
Committee members), as it deems appropriate from time to time. Any decision of a
subcommittee to pre-approve audit or non-audit services shall be presented to
the full Audit Committee at its next meeting.
5. Miscellaneous.
(a) A Fund's Audit Committee shall meet at least twice annually
and is empowered to hold special meetings as circumstances
require. The Committee shall record minutes of its meetings
and shall invite management, counsel and representatives of
service providers to attend meetings and provide
information as it, in its sole discretion, considers
appropriate.
(b) A Fund's Audit Committee shall be available at all times to
meet with appropriate officers of the Fund and with
internal accounting staff for consultation on audit,
accounting and related financial matters.
(c) A Fund's Audit Committee shall be given the resources and
authority appropriate to discharge its responsibilities,
including the authority to retain special counsel and other
experts or consultants at the expense of the Fund.
The Committee shall have such further responsibilities as are given to it from
time to time by the Board. The Committee shall consult, on an ongoing basis,
with management, the independent auditors and counsel as to legal or regulatory
developments affecting its responsibilities.
Approved: March 28, 2005
B-3
APPENDIX C
PROPOSED INVESTMENT ADVISORY AGREEMENT
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 27th day of May, 2005, by and between BACAP
ALTERNATIVE MULTI-STRATEGY FUND, LLC, a Delaware limited liability company (the
"Fund"), and LIBERTY ASSET MANAGEMENT COMPANY, a Delaware limited liability
company (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.
C-1
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 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
C-2
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 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
C-3
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 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.
C-4
(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
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.
C-5
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
40 West 57th Street
New York, NY 10019
Attention: Lawrence Morgenthal
President
Telecopier: 646-313-4708
(b) If to the Adviser, to:
Liberty Asset Management Company
100 Federal Street
Boston, MA 02110
Attention: Keith Winn
President
Telecopier: 617-434-0255
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.
C-6
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: Lawrence Morgenthal
Title: President
LIBERTY ASSET MANAGEMENT COMPANY
By:
---------------------------------------
Name: Keith Winn
Title: President
C-7
APPENDIX D
As of April 1, 2005, to the Fund's knowledge, the following entities or
persons owned beneficially and of record more than 5% of the outstanding
interests in the Fund:
<Table>
<Caption>
- -----------------------------------------------------------------
NAME AND ADDRESS OF PERCENT OF FUND
BENEFICIAL AND RECORD OWNER INTERESTS OWNED
- -----------------------------------------------------------------
NB Funding LLC 24.67%
101 South Tryon Street
Charlotte, NC 28255
- -----------------------------------------------------------------
</Table>
D-1
APPENDIX E
The following table provides information about the executive officers of
the Fund. Officers of the Fund who are officers or employees of the Adviser or
its affiliates are not compensated by the Fund.
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------
NAME, POSITION HELD
AGE AND WITH THE FUND AND PRINCIPAL OCCUPATION
MAILING ADDRESS LENGTH OF TIME SERVED DURING THE PAST 5 YEARS
- ----------------------------------------------------------------------------------------------
Lawrence M. President since 2003 Managing Director, Banc of America Capital
Morgenthal Management, LLC since 2002; Senior Managing
(Age 37) Director, Weiss, Peck & Greer (an
40 West 57th Street investment firm) from 1998 to 2002.
New York, NY 10019
- ----------------------------------------------------------------------------------------------
Patti A. Stoll Vice President since 2004 Managing Director, Product Management,
(Age 49) Product Development and Marketing,
100 Federal Street Alternative Investment Group, Bank of
Boston, MA 02110 America Corporation, since April 2004;
Managing Director, Alternative Investments
Group, FleetBoston Financial, 1999 to 2004.
- ----------------------------------------------------------------------------------------------
Eric D. Pisauro Treasurer since 2004 Director, Alternative Investment Group
(Age 35) Funds' Operations and Administration, Bank
40 West 57th Street of America since August 2004; Accounting
New York, NY 10019 Director of Alternative Investments, PFPC
Inc., September 2001 to July 2004; Vice
President and Controller of Quantitative
Financial Strategies, Inc. (a currency
hedge fund manager), May 1993 to September
2001.
- ----------------------------------------------------------------------------------------------
David Rozenson Secretary since 2003 Associate General Counsel, Bank of America
(Age 50) Corporation, since April 2004; Senior
One Financial Center Counsel, FleetBoston Financial, 1996 to
Boston, MA 02111 2004; Associate General Counsel, Columbia
Management Group, since November, 2002;
Secretary of the Liberty All-Star Funds,
since December, 2003.
- ----------------------------------------------------------------------------------------------
Mary Joan Hoene Chief Compliance Officer Senior Vice President and Chief Compliance
(Age 55) since 2004 Officer of the Columbia Funds, The Galaxy
100 Federal Street Funds, Nations Funds and of the Liberty
Boston, MA 02110 All-Star Funds since August 2004 and the
BACAP Registered Hedge Funds and Columbia
Management Multi-Strategy Hedge Fund since
October 2004 (formerly Partner, Carter,
Ledyard & Milburn LLP from January 2001 to
August 2004; Counsel, Carter, Ledyard &
Milburn LLP from November 1999 to December
2000; Vice President and Counsel, Equitable
Life Assurance Society of the United States
from April 1998 to November 1999).
- ----------------------------------------------------------------------------------------------
</Table>
E-1
PROXY CARD PROXY CARD
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
SPECIAL MEETING OF INVESTORS - MAY 27, 2005
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF MANAGERS OF THE
FUND FOR THE SPECIAL MEETING OF INVESTORS TO BE HELD ON MAY 27, 2005.
The undersigned hereby appoints Eric Pisauro, David C. Lebisky and Christine
Pierangeli as proxies, each with the power to appoint his or her substitute and
to cast on behalf of the undersigned all votes that the undersigned is entitled
to cast at the Special Meeting of Investors of BACAP Alternative Multi-Strategy
Fund, LLC (the "Special Meeting") to be held at 2:00 p.m., Eastern Time, on May
27, 2005 at the offices of the Fund's agent, PFPC Inc., at 760 Moore Road, King
of Prussia, Pennsylvania 19406 and at any adjournment thereof, in the manner
directed on the reverse with respect to the matters referred to in the Proxy
Statement for the Special Meeting, receipt of which is hereby acknowledged, and
in the Proxies' discretion with respect to such other matters that properly come
before the meeting or any adjournment thereof.
IF THIS PROXY IS PROPERLY EXECUTED, THE VOTES ENTITLED TO BE CAST BY THE
UNDERSIGNED WILL BE VOTED AS SPECIFIED. IF THIS PROXY CARD IS PROPERLY EXECUTED
BUT NO SPECIFICATION IS MADE FOR ANY ONE OR MORE OF THE PROPOSALS, THE VOTES
ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE VOTED "FOR" ALL PROPOSALS AS TO
WHICH NO SPECIFICATION IS MADE.
Date:_____________ ,____________
___________________________________________________
Signature(s) (if held jointly) (SIGN IN THE BOX)
NOTE: This proxy must be signed exactly
as your name(s) appears hereon. If
signing as an attorney, executor,
guardian or in some representative
capacity or as an officer of a
corporation, please indicate this by
adding an appropriate title. A proxy
with respect to an interest held in the
name of two or more persons is valid if
executed by one of them unless at or
before exercise of the proxy the Fund
receives specific written notice to the
contrary from any one of them.
23
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS. [X]
THE BOARD OF MANAGERS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
MANAGER NOMINEE AND "FOR" THE APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT.
1. ELECTION OF MANAGER FOR WITHHOLD
nominee AUTHORITY
ALAN BROTT listed to vote for
nominee
listed at left
[ ] [ ]
FOR AGAINST ABSTAIN
2. APPROVAL OF A NEW
INVESTMENT ADVISORY AGREEMENT
BETWEEN THE FUND AND LIBERTY
ASSET MANAGEMENT COMPANY.
[ ] [ ] [ ]
GRANT WITHHOLD
3. TO TRANSACT SUCH OTHER
BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
[ ] [ ]
CHECK HERE IF YOU PLAN TO
ATTEND THE MEETING
(___ PERSON(S) WILL ATTEND).
[ ]
IMPORTANT
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE STRONGLY
URGE YOU TO REVIEW, COMPLETE AND RETURN YOUR PROXY CARD AS SOON AS POSSIBLE.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR CAPITAL ACCOUNT BALANCE.
PLEASE SIGN AND DATE ON THE REVERSE SIDE BEFORE MAILING.
24