Exhibit (d)(1)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of May 31, 2000 by and among EXCELSIOR INSTITUTIONAL
TRUST (the "Trust"), a Delaware business trust registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), UNITED STATES TRUST COMPANY OF NEW YORK
("USTNY"), a state-chartered bank and trust company, and U.S. TRUST COMPANY
("UST"), a Connecticut state bank and trust company (UST and USTNY are
collectively referred to herein as the "Adviser").
In consideration of the promises and the mutual covenants herein
contained, the Trust and the Adviser agree as follows:
1. Appointment. The Trust appoints the Adviser to act as investment
adviser to the Trust with respect to the series of the Trust listed on Exhibit A
hereto (the "Series") for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to provide an
investment program for the compensation provided by this Agreement. In providing
the services and assuming the obligations set forth herein, the Adviser may, at
its own expense, employ one or more sub-advisers; provided that the Adviser
understands and agrees that it shall remain fully responsible for the
performance of all the duties set forth in this Agreement and that it shall
supervise the activities of each sub-adviser. Any agreement between the Adviser
and a sub-adviser shall be subject to the renewal, termination and amendment
provisions applicable to this Agreement.
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 and are under the common control of U.S. Trust Corporation 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 Adviser under the
Investment Company Act; and (iii) the use of an affiliate's employees has been
approved by the Board of Trustees of the Trust.
2. Duties of the Adviser. Subject to the direction and control of
the Board of Trustees of the Trust, the Adviser shall:
(a) prepare (or otherwise obtain) and evaluate on both a
macroeconomic and microeconomic level any pertinent research; statistical,
financial and economic data; and other information necessary or appropriate for
the performance of its duties under this Agreement;
(b) formulate and continuously review, supervise, and administer
an investment program for the Series;
(c) determine the securities to be purchased by the Series, and
continuously monitor such securities and the issuers thereof to determine
whether and when to sell, exchange, or take any other action concerning such
securities;
(d) determine whether and how to exercise warrants, voting
rights, or other rights with respect to the Series' securities;
(e) provide valuations with respect to the securities held by the
Series if so requested by the Trustees of the Trust;
(f) render regular reports to the Trust's officers and the Board
of Trustees concerning the investment performance of the Trust, the Adviser's
discharge of its responsibilities under this Agreement, and any other subject as
the Trust's officers or Board of Trustees reasonably may request; and
(g) assist the Trust's officers in connection with the operation
of the Trust and perform any further acts that may be necessary to effectuate
the purposes of this Agreement.
3. Supervision and compliance. The activities of the Adviser shall
be subject at all times to the direction and control of the Board of Trustees of
the Trust and shall comply with: (a) the Trust Instrument and By-Laws of the
Trust; (b) the Registration Statement of the Trust, as it may be amended from
time to time, including the investment objectives and policies set forth
therein; (c) the Investment Company Act and the regulations thereunder; (d) the
Internal Revenue Code of 1986 and the regulations thereunder applicable to
regulated investment companies; (e) any other applicable laws or regulations;
and (f) such other limitations as the Board of Trustees may adopt.
4. Purchase and Sale of Securities. The Adviser shall, at its own
expense, place orders for the purchase, sale or loan of securities by the Trust
either directly with the issuer or with any broker and/or dealer who deals in
such securities.
(a) In placing orders with brokers and/or dealers, the Adviser
shall use its 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 and/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 Adviser may, to the extent
permitted by law, purchase and sell portfolio securities to and from brokers 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 Trust and/or
other accounts over which the Adviser exercises investment discretion. The
Adviser is authorized to pay a broker who provides such brokerage and research
services a commission for effecting a securities transaction which is in excess
of the amount of commission another broker would have charged for effecting that
transaction, if the Adviser determines in good faith that such commission was
reasonable in relation to the value of brokerage and research services provided
by such broker. This determination may be viewed in terms of either that
particular transaction or of the overall responsibilities of the Adviser with
respect to the accounts as to which it exercises investment discretion.
(b) The Adviser may execute transactions through itself and
its affiliates on a securities exchange provided that the commissions paid by
the Trust are "reasonable and fair"
-2-
compared to commissions received by other brokers having comparable execution
capability and provided that the transactions are effected pursuant to
procedures established by the Board of Trustees of the Trust. An affiliated
broker may transmit, clear and settle transactions for the Trust that are
executed on a securities exchange provided that the affiliated broker arranges
for unaffiliated brokers to execute the transactions.
(c) Notwithstanding the foregoing, the Board of Trustees
periodically shall review the commissions paid by the Trust and determine
whether those commissions were reasonable in relation to the brokerage and
research services received. In addition, the Board of Trustees of the Trust, in
its discretion, may instruct the Adviser to effect all or a portion of its
securities transactions with one or more brokers and/or dealers selected by the
Board of Trustees, if it determines that the use of such brokers and/or dealers
is in the best interest of the Trust.
(d) When the Adviser deems the purchase or sale of a security to
be in the best interest of the Trust as well as other customers, the Adviser, to
the extent permitted by applicable law, may aggregate the securities to be so
sold or purchased in order to obtain the best execution or lower brokerage
commissions. The Adviser also may purchase or sell a particular security for one
or more customers in different amounts. Allocation of the securities purchased
or sold in either manner, as well as the expenses incurred in the transactions,
will be made by the Adviser in a manner that is equitable and consistent with
applicable law and regulations and with its fiduciary obligations to the Trust
and to such other customers.
5. Expenses.
(a) The Adviser shall furnish at its own expense all office
space, office facilities, equipment and personnel necessary or appropriate to
the performance of its duties under this Agreement. The Adviser also shall pay
the salaries and fees of all personnel of the Trust or the Adviser performing
services related to the Adviser's duties under this Agreement.
(b) It is understood that the Trust will pay all of its
expenses and liabilities, including compensation of its independent Trustees;
taxes and governmental fees; interest charges; fees and expenses of the Trust's
independent auditors and legal counsel; trade association membership dues; fees
and expenses of any custodian (including safekeeping of funds and securities,
maintenance of books and accounts and calculation of the net asset value of
beneficial interests of the Series), transfer agent and registrar and dividend
disbursing agent of the Trust; expenses of preparing and mailing reports to
investors and regulatory agencies; expenses relating to the issuance,
registration and qualification of shares of the Series, and the preparation,
printing and mailing of prospectuses for such purposes; insurance premiums;
brokerage and other expenses of executing portfolio transactions; expenses of
investors' and Trustees' meetings; organization expenses; and extraordinary
expenses.
6. Compensation of the Adviser. In consideration of the services to
be rendered by the Adviser under this Agreement, the Trust shall pay the Adviser
a fee accrued daily and paid monthly from the Series at an annual rate equal to
that specified in Exhibit A to this Agreement for the Series' average daily net
assets. The fee for any period in which the Adviser serves as investment adviser
pursuant to this Agreement for less than one full month shall be paid for that
portion of the
-3-
month accrued. For purposes of calculating fees, the value of the net assets of
the Series shall be computed in the manner specified in its Registration
Statement on Form N-1A.
7. Services to Others. The services of the Adviser to the Trust are
not to be deemed exclusive, and the Adviser is free to render services to others
and to engage in other activities, provided, however, that those services and
activities do not adversely affect the Adviser's ability to perform its
obligations under this Agreement.
8. Books, Records, and Information. The Adviser shall provide the
Trust with all records concerning the Adviser's activities that the Trust is
required by law to maintain. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 under the Investment
Company Act which are prepared or maintained by the Adviser on behalf of the
Trust are the property of the Trust and will be surrendered promptly to the
Trust on request. The Trust also shall comply with all reasonable requests for
information by the Trust's officers or Board of Trustees, including information
required for the Trust's filings with the Securities and Exchange Commission and
state securities commissions.
9. Limitations on Liability.
(a) The Adviser hereby is notified expressly of the limitation of
shareholder liability as set forth in the Trust Instrument and agrees that any
obligation of the Trust or the Series arising in connection with this Agreement
shall be limited in all cases to the Series and its assets, and the Adviser
shall not seek satisfaction of any such obligation from any Trustee or
shareholder of the Series.
(b) The Adviser shall give the Trust the benefit of its
best judgment and efforts in rendering services under this Agreement. In the
absence of willful malfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser, the
Adviser shall not be liable to the Trust or to any shareholder of the Series for
any act or omission in the course of, or connected with, rendering services
under this Agreement or for any losses that may be sustained in the purchase,
holding or sale of any security. The liability of the Adviser hereunder shall be
joint, but not several.
10. Effective Date; Termination; Amendments.
(a) This Agreement shall be effective as of the date hereof and
unless terminated sooner as provided herein, shall continue until July 31, 2001.
Thereafter, unless terminated sooner as provided herein, this Agreement shall
continue in effect as to the Series for successive annual periods, provided that
such continuance is specifically approved at least annually by the vote of a
majority of the Board of Trustees of the Trust 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 continuance, and either: (i) the vote
of a majority of the outstanding voting securities of the Series; or (ii) the
vote of a majority of the full Board of Trustees.
(b) This Agreement may be terminated at any time, without the
payment of any penalty, either by: (i) the Trust, by action of the Board of
Trustees or by vote of a majority of the
-4-
outstanding voting securities of the Series, on 60 days' written notice to the
Adviser; or (ii) the Adviser, on 90 days' written notice to the Trust. This
Agreement shall terminate immediately in the event of its assignment. 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 Trustees of the
Company.
(c) This Agreement may be amended only if such amendment is
approved by the vote of a majority of the outstanding voting securities of the
Series, if such vote is required by the Investment Company Act, or by the vote
of a majority of the Board of Trustees of the Trust 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.
(d) As used in this Agreement, the terms "specifically
approved at least annually," "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meanings as such terms
have in the Investment Company Act and the regulations thereunder.
11. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Delaware without giving effect to the choice of
law provisions thereof, to the extent that such laws are consistent with
provisions of the Investment Company Act and the regulations thereunder.
12. Miscellaneous. The captions in this Agreement are included
for the convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. Should any
part of this Agreement be held or made invalid by a court decision, statute,
regulation, or otherwise, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors, to the extent permitted by law.
-5-
IN WITNESS WHEREOF, the Trust and the Adviser have caused this
Agreement to be executed and delivered in their names and on their behalf by the
undersigned, duly authorized officers, all as of the day and year first above
written.
EXCELSIOR INSTITUTIONAL TRUST
By: /s/ Xxxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: President and Treasurer
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
U.S. TRUST COMPANY
By: /s/ W. Xxxxxxx Xxxxx
------------------------------------
Name: W. Xxxxxxx Xxxxx
Title: President and Chief Executive Officer
-6-
Exhibit A
to Investment
Advisory Agreement
SCHEDULE OF SERIES AND FEES UNDER INVESTMENT
ADVISORY AGREEMENT
Annual Fee (as a percentage of the
average daily net assets of the
Series Names Series)
------------ -------
Equity Fund 0.65%
Income Fund 0.65%
Total Return Bond Fund 0.65%
Value Equity Fund 0.65%
Optimum Growth Fund 0.65%
-7-
