EXHIBIT (d)(3)
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 (the "1940 Act");
WHEREAS, the Company desires to retain the Investment Adviser
to render investment advisory and other services to the Company for its
Technology Fund portfolio (the "Fund"), 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
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Adviser to act as investment adviser to the Company for the Fund 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. Delivery of Documents. The Company has furnished the
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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 and the execution and
delivery of this Agreement;
(d) Registration Statement under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, on Form N-
1A (No. 2-92665) relating to shares ("Shares") of the Fund covered by this
Agreement, and all amendments thereto:
(e) Notification of Registration of the Company under the
Investment Company Act of 1940, as amended, on Form N-8A as filed with the
Securities and Exchange Commission on August 8, 1984, and all amendments
thereto; and
(f) Prospectuses of the Company relating to the Shares in
effect under the Securities Act of 1933 (such prospectuses 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.
3. Management. Subject to the supervision of the Board of
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Directors of the Company, the Investment Adviser will provide a continuous
investment program for the Fund, including investment research and management
with respect to all securities, investments, cash and cash equivalents in the
Fund. The Investment Adviser will determine from time to time what securities
and other investments will be purchased, retained or sold by the Company for the
Fund. The Investment Adviser will provide the services rendered by it hereunder
in accordance with the Fund's investment objective and policies as stated in the
Prospectus. 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 Shares, or make loans to the Company;
(c) will place orders pursuant to its investment
determinations for the Fund 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 the 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 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
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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 Fund's principal underwriter, the Investment 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
Fund's 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 Fund, its Asset Management
Group personnel will not inquire or take into consideration whether the issuer
of securities proposed for purchase or sale for the Fund's 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 Fund;
(f) will treat confidentially and as proprietary
information of the Company all records and other information relative to the
Fund 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.
4. 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.
5. Books and Records. In compliance with the requirements of
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Rule 31a-3 of the Rules under the Investment Company Act of 1940, the Investment
Adviser hereby agrees that all records which it maintains for the Fund 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 of the Rules.
6. 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 (including brokerage
commissions, if any) purchased for the Funds.
In addition, if the expenses borne by the Fund in any fiscal
year exceed the applicable expense limitations imposed by the securities
regulations of any state in which the
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Shares are registered or qualified for sale to the public, the Investment
Adviser shall reimburse the 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 7 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.
7. Compensation. For the services provided and the expenses
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assumed 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 rate: 1.00% of the
average daily net assets of the Technology Fund.
8. Limitation of Liability of the Investment Adviser. The
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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.
9. Duration and Termination. This Agreement shall be effective
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as 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,
with respect to the Fund, by vote of a majority of the outstanding voting
securities of the Fund; provided, however, that this Agreement may be terminated
by the Company as to the Fund at any time, without the payment of any penalty,
by the Board of Directors of the Company or, with respect to the 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 the
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" and "assignment" shall have the same
meanings as such terms have in the Investment Company Act of 1940.) 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
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Adviser; and (iii) the assumption of the Investment Adviser's obligations by the
affiliate is approved by the Board of Directors of the Company.
10. Amendment of this Agreement. No provision of this
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Agreement may 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 the Fund until approved by vote of
a majority of the 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.
11. Miscellaneous. The captions in this Agreement are included
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for 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
Attest: U.S. TRUST COMPANY
/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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