EXHIBIT (d)(1)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of May 31, 2000 by and among EXCELSIOR FUNDS, INC.,
a Maryland corporation (herein called the "Company"), U.S. TRUST COMPANY
("UST"), a Connecticut state bank and trust company, and UNITED STATES TRUST
COMPANY OF NEW YORK ("USTNY"), a New York state-chartered bank and trust company
(together with UST, the "Investment Adviser").
WHEREAS, the Company is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940;
WHEREAS, the Company desires to retain the Investment Adviser to
render investment advisory and other services to the Company for its Latin
America Fund, Pacific/Asia Fund, Pan European Fund, Emerging Markets Fund, and
International Fund portfolios ("the Funds"), and the Investment Adviser is
willing to so render such services;
NOW, THEREFORE, this Agreement
WITNESSETH:
In consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints the Investment Adviser
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to act as investment adviser to the Company for the Funds for the period and on
the terms set forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided. The Investment Adviser may, in its discretion,
provide such services through its own employees or the employees of one or more
affiliated companies that are qualified to act as investment adviser to the
Company under applicable law provided (i) that all persons, when providing
services hereunder, are functioning as part of an organized group of persons,
(ii) the use of an affiliate's employees does not result in a change of actual
control or management of the Investment Adviser under the 1940 Act; and (iii)
the use of an affiliate's employees has been approved by the Board of Directors
of the Company.
2. Sub-Adviser. It is understood that the Investment Adviser may
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from time to time employ or associate with itself such person or persons as the
Investment Adviser believes to be fitted to assist it in the performance of this
Agreement; provided, however, that the compensation of such person or persons
shall be paid by the Investment Adviser and that the Investment Adviser shall be
as fully responsible to the Company for the acts and omissions of any such
person as it is for its own acts and omissions. Without limiting the generality
of the foregoing, it is agreed that the sub-advisory services to the Funds shall
be provided by person or persons agreeable to the Investment Adviser and
approved in accordance with the provisions of the Investment Company Act of 1940
(the "1940 Act"). Such sub-adviser is hereinafter referred to as the
"Sub-Adviser."
3. Delivery of Documents. The Company has furnished or will furnish,
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as the case may be, the Investment Adviser with copies properly certified or
authenticated of each of the following:
(a) Articles of Incorporation of the Company;
(b) By-Laws of the Company;
(c) Resolutions of the Board of Directors of the Company
authorizing the appointment of the Investment Adviser as investment adviser for
the Funds and the execution and delivery of this Agreement;
(d) Resolutions of the Board of Directors of the Company
authorizing the appointment of the Sub-Adviser for the Funds and the execution
and delivery of the Sub-Advisory Agreement between the Investment Adviser and
the Sub-Adviser relating to the Fund;
(e) Registration Statement under the Securities Act of 1933, as
amended, and the 1940 Act on Form N-1A (No. 2-92665) relating to shares of the
Company's Class F Common Stock, $.001 par value, representing interests in the
International Fund; Class P Common Stock, $.001 par value, representing
interests in the Latin America Fund; Class Q Common Stock, $.001 par value
representing interests in the Pacific/Asia Fund; Class R Common Stock, $.001 par
value representing interests in the Pan European Fund; and Class W Common Stock,
$.001 par value, representing interests in the Emerging Markets Fund, and all
amendments thereto;
(f) Notification of Registration of the Company under the 1940
Act on Form N-8A, as filed with the Securities and Exchange Commission on August
8, 1984, and all amendments thereto; and
(g) Prospectuses and statements of additional information of the
Company relating to the Company's shares in effect under the Securities Act of
1933 (such prospectuses, statements of additional information and supplements
thereto, as presently in effect and as from time to time amended and
supplemented, herein called the "Prospectus").
The Company will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing, if any.
4. Management. Subject to the supervision of the Board of Directors
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of the Company, the Investment Adviser will provide continuous investment
advisory assistance and portfolio management advice for the Funds in accordance
with the Funds' respective investment objective and policies as stated in the
Prospectus.
Investment Adviser's responsibilities include:
(i) Advising the Sub-Adviser with respect to U.S. economic
factors and trends;
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(ii) Assisting and consulting with the Sub-Adviser in
connection with the Funds' continuous investment program;
(iii) Approving lists of foreign countries recommended by
the Sub-Adviser for investments of the Funds;
(iv) Placing orders with respect to purchases and sales of
the securities of U.S. issuers as described in the Prospectus;
(v) Managing, in cooperation with the Sub-Adviser, the
Funds' short-term cash balance positions denominated in U.S. dollars
to preserve required liquidity of the Funds' assets including placing
of orders for U.S. money market instruments;
(vi) Monitoring the Sub-Adviser's investment procedures;
and
(vii) Periodically reviewing, evaluating and reporting to
the Company's Board of Directors with respect to the performance of
the Sub-Adviser under the Sub-Advisory Agreement.
The Investment Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations of
the Securities and Exchange Commission (herein called the "Rules"), and will in
addition conduct its activities under this Agreement in accordance with
applicable law, including but not limited to applicable banking law;
(b) will not make loans for the purpose of purchasing or
carrying Fund shares, or make loans to the Company;
(c) will place orders, if any, pursuant to its investment
determinations for the Funds either directly with the issuer or with any broker
or dealer selected by it. In placing orders with brokers and dealers, the
Investment Adviser will use its reasonable best efforts to obtain the best net
price and the most favorable execution of its orders, after taking into account
all factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. Consistent
with this obligation, the Investment Adviser may, to the extent permitted by
law, purchase and sell portfolio securities to and from brokers and dealers who
provide brokerage and research services (within the meaning of Section 28(e) of
the Securities Exchange Act of 1934) to or for the benefit of any Fund and/or
other accounts over which the Investment Adviser or any of its affiliates
exercises investment discretion. Subject to the review of the Company's Board of
Directors from time to time with respect to the extent and continuation of the
policy, the Investment Adviser is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for effecting a
securities transaction for any Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Investment Adviser determines in good faith that such
commission was
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reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of the Investment Adviser with
respect to the accounts as to which it exercises investment discretion. In no
instance will portfolio securities be purchased from or sold to the Funds'
principal underwriter, the Investment Adviser, Sub-Adviser, or any affiliated
person thereof except as permitted by the Securities and Exchange Commission;
(d) will maintain books and records with respect to the Funds'
securities transactions and will render to the Company's Board of Directors such
periodic and special reports as the Board may request;
(e) will maintain a policy and practice of conducting its Asset
Management Group independently of its Banking Group. When the Investment Adviser
makes investment recommendations for the Funds, its Asset Management Group
personnel will not inquire or take into consideration whether the issuer of
securities proposed for purchase or sale for the Funds' account are customers of
the Banking Group. In dealing with commercial customers, the Banking Group will
not inquire or take into consideration whether securities of those customers are
held by the Funds;
(f) will treat confidentially and as proprietary information of
the Company all records and other information relative to the Funds and prior,
present or potential shareholders, and will not use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the
Company, which approval shall not be unreasonably withheld and may not be
withheld where the Investment Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Company. Nothing contained herein, however, shall prohibit the Investment
Adviser from advertising or soliciting the public generally with respect to
other products or services, regardless of whether such advertisement or
solicitation may include prior, present or potential shareholders of the
Company.
5. Services Not Exclusive. The investment management services
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rendered by the Investment Adviser hereunder are not to be deemed exclusive, and
the Investment Adviser shall be free to render similar services to others so
long as its services under this Agreement are not impaired thereby.
6. Books and Records. In compliance with the requirements of Rule
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31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all records
which it maintains for the Funds are the property of the Company and further
agrees to surrender promptly to the Company any of such records upon the
Company's request. The Investment Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 the records required to be maintained by Rule
31a-1 under the 1940 Act.
7. Expenses. During the term of this Agreement, the Investment
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Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities, commodities, and other
investments (including brokerage commissions and other transaction charges, if
any) purchased or sold for the Funds.
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In addition, if the expenses borne by any Fund in any fiscal year
exceed the applicable expense limitations imposed by the securities regulations
of any state in which its shares are registered or qualified for sale to the
public, the Investment Adviser shall reimburse such Fund for a portion of any
such excess in an amount equal to the proportion that the fees otherwise payable
to the Investment Adviser bear to the total amount of investment advisory and
administration fees otherwise payable by the Fund up to the amount of the fees
payable to the Investment Adviser during such fiscal year pursuant to paragraph
8 hereof; provided, however, that notwithstanding the foregoing, the Investment
Adviser shall reimburse the Fund for a portion of such excess expenses in an
amount equal to the proportion that the fees otherwise payable to the Investment
Adviser bear to the total amount of investment advisory and administration fees
otherwise payable by the Fund regardless of the amount of fees paid to the
Investment Adviser during such fiscal year to the extent that the securities
regulations of any state in which the Shares are registered or qualified for
sale so require.
8. Compensation. For the services provided and the expenses assumed
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pursuant to this Agreement, the Company will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee, computed
daily and payable monthly, at the following annual rates: 1.00% of the average
daily net assets of each of the Latin America Fund, the Pacific/Asia Fund, the
Pan European Fund and the International Fund; and 1.25% of the average daily net
assets of the Emerging Markets Fund.
9. Limitation of Liability of the Investment Adviser. Subject to
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the provisions of Paragraph 2 above, concerning the Investment Adviser's
responsibility for the acts and omissions of person's employed by or associated
with the Investment Adviser, the Investment Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates, except the
Investment Adviser shall be jointly, but not severally, liable for 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 Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
10. Duration and Termination. This Agreement shall be effective as
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of the date hereof and unless sooner terminated as provided herein, shall
continue until July 31, 2001. Thereafter, if not terminated, this Agreement
shall continue in effect as to a particular Fund for successive periods of 12
months each, provided such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Board of
Directors of the Company who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Board of Directors of the Company or by
vote of a majority of the outstanding voting securities of such Fund; provided,
however, that this Agreement may be terminated by the Company as to any Fund at
any time, without the payment of any penalty, by the Board of Directors of the
Company or, with respect to any Fund, by vote of a majority of the outstanding
voting securities of such Fund on 60 days' written notice to the Investment
Adviser, or by the Investment Adviser as to any Fund at any time, without
payment of any penalty, on 90 days' written notice to the Company. This
Agreement will immediately terminate in the event of its assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested person"
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and "assignment" shall have the same meanings as such terms have in the 1940
Act.) An affiliate of the Investment Adviser may assume the Investment Adviser's
obligations under this Agreement provided that (i) the affiliate is qualified to
act as an investment adviser to the Company under applicable law; (ii) the
assumption will not result in a change of actual control or management of the
Investment Adviser; and (iii) the assumption of the Investment Adviser's
obligations by the affiliate is approved by the Board of Directors of the
Company.
11. Amendment of this Agreement. No provision of this Agreement may
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be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective with respect to a Fund until approved by vote of a majority of such
Fund's outstanding voting securities, if such vote is required by the 1940 Act,
or by the vote of a majority of the Board of Directors of the Company who are
not parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such amendment.
12. Miscellaneous. The captions in this Agreement are included for
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convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by New York law.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
EXCELSIOR FUNDS, INC.
Attest:
/s/ W. Xxxxx XxXxxxxx By: /s/ Xxxxxxxxx X. Xxxxxx
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Secretary Title: President and Treasurer
U.S. TRUST COMPANY
Attest:
/s/ W. Xxxxx XxXxxxxx By: /s/ W. Xxxxxxx Xxxxx
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Title: President and Chief Executive
Officer
UNITED STATES TRUST COMPANY
Attest: OF NEW YORK
/s/ W. Xxxxx XxXxxxxx By: /s/ Xxxxxxx X. Xxxxx
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Title: Executive Vice President
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