Exhibit 10.1
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INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") dated
as of December 21, 2001 by and among Excelsior Private Equity Fund II,
Inc., a Maryland corporation (the "Company"), United States Trust Company
of New York, a New York bank and trust company ("UST"), U.S. Trust Company,
a Connecticut state bank and trust company ("USTCT," and together with UST,
the "Managing Investment Adviser") and U.S. Trust Company, N.A. ("USTNA") a
national banking association.
WHEREAS, the Company is a closed-end, management
investment company that has elected to be treated as a business development
company under the Investment Company Act of 1940, as amended;
WHEREAS, the Managing Investment Adviser is the
investment adviser to the Company;
WHEREAS, the Managing Investment Adviser desires to
retain USTNA to render investment sub-advisory services to the Company, and
USTNA is willing to so render such services;
NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained, it is agreed between the parties hereto
as follows:
1. Definitions. As used in this Agreement, the following terms
have the meanings set forth below:
(a) "Board of Directors" means the board of directors of the
Company;
(b) "Company" means Excelsior Private Equity Fund II, Inc.;
(c) "Disabling Conduct" means, on the part of the investment
sub-adviser, any willful misfeasance, bad faith, or gross negligence in the
performance of its duties owed to the Company, or reckless disregard of its
obligations and duties owed to the Company;
(d) "Disinterested Director" has the meaning set forth in Section
10 hereof;
(e) "Director" means any member of the Board of Directors;
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended;
(g) "Indemnified Person" has the meaning set forth in Section 10
hereof;
(h) "Investment Company Act" means the Investment Company Act of
1940, as amended;
(i) "Investment Advisory Agreement" means the management agreement
between the Managing Investment Adviser and the Company, as amended, dated
May 13, 1997;
(j) "Organizational Documents" means the articles of incorporation
and by-laws of the Company, each as amended from time to time;
(k) "Registration Statement" means the Registration Statement of
the Company under the Securities Act, as amended or supplemented from time
to time;
(l) "Securities Act" means the Securities Act of 1933, as amended;
(m) "Share" has the meaning set forth in the Registration
Statement;
(n) "UST" means the United States Trust Company of New York;
(o) "USTCT" means U.S. Trust Company;
(p) "USTNA" means United States Trust Company, N.A.
2. Appointment. The Managing Investment Adviser hereby appoints
USTNA to act as investment sub-adviser to the Company for the period and on
the terms set forth in this Agreement. USTNA accepts such appointment and
agrees to render the services herein set forth for the compensation herein
provided. USTNA 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 sub-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, and (ii) the use of an affiliate's
employees does not result in an assignment of this agreement under the
Investment Company Act; and (iii) the use of an affiliate's employees has
been approved by the Board of Directors of the Company.
3. Delivery of Documents. The Managing Investment Adviser has
furnished USTNA with copies properly certified or authenticated of each of
the following:
(a) The Organizational Documents of the Company;
(b) Investment Advisory Agreement;
(c) Resolutions of the Board of Directors authorizing the
appointment of the Managing Investment Adviser as such and the execution
and delivery of the Investment Advisory Agreement;
(d) Resolutions of the Board of Directors authorizing the
appointment of the USTNA as investment sub-adviser and the execution and
delivery of the Investment Advisory Agreement;
(e) The Registration Statement.
The Managing Investment Adviser will furnish USTNA from time to
time with copies of all amendments of or supplements to the foregoing, if
any.
4. Sub-Advisory Services. Subject to the supervision of the Board
of Directors of the Company and the oversight of the Managing Investment
Adviser, at the request of the Managing Investment Adviser, USTNA will
provide a continuous investment program for the Company, including
investment research and management with respect to all securities and
investments of the Company. At the request of the Managing Investment
Adviser, USTNA will determine what securities and other investments will be
purchased, retained or sold by the Company. At the request of the Managing
Investment Adviser, USTNA will perform any or all of the other duties of
the Managing Investment Adviser under the Investment Advisory Agreement.
USTNA will provide the services rendered by it hereunder in accordance with
the Company's investment objectives and policies as stated in the
Prospectus, the Company's policies and procedures and the requirements
applicable to the Managing Investment Adviser under the Investment Advisory
Agreement. USTNA further agrees that it:
(a) will conform with all applicable rules and regulations of the
Securities and Exchange Commission, 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
Company Shares, or make loans to the Company;
(c) will place orders pursuant to its investment determinations
for the Company either directly with the issuer or with any broker or
dealer selected by it. In placing orders with brokers and/or dealers, USTNA
shall use its best efforts to obtain 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,
USTNA 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 Exchange Act) to or for the
benefit of the Company and/or other accounts over which USTNA or any of its
affiliates exercises investment discretion. USTNA is authorized to pay to 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 USTNA determines in good faith that such commission was reasonable in
relation to the value of the 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 USTNA with
respect to the accounts as to which it exercises investment discretion;
(d) will maintain books and records with respect to the securities
and other investment transactions entered into pursuant to this Agreement
and will render to the Managing Investment Adviser and the Company's Board
of Directors such periodic and special reports as they may request;
(e) will treat confidentially and as proprietary information of
the Company all records and other information relative to the Company 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 USTNA 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 USTNA 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 sub-advisory services
rendered by USTNA hereunder are not to be deemed exclusive, and USTNA 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. USTNA shall provide the Company with all
records concerning USTNA's activities that the Company 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 USTNA on behalf of the Company are
the property of the Company and will be surrendered promptly to the Company
on request. The Company also shall comply with all reasonable requests for
information by the Company's officers or Board of Directors, including
information required for the Company's filings with the Securities and
Exchange Commission and state securities commissions.
7. Expenses.
(a) USTNA 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. USTNA shall pay the
salaries and fees of all officers and employees of the Company performing
services related to USTNA's duties under this Agreement.
(b) It is understood that the Company will pay all of its expenses
and liabilities, including all of such fees and expenses as set forth in
the Investment Advisory Agreement.
8. Compensation. For the services provided and the expenses
assumed pursuant to this Agreement, the Managing Investment Adviser will
pay USTNA a fee or fees as may be agreed to in writing by the Managing
Investment Adviser and USTNA.
9. Limitation of Liability of USTNA.
(a) USTNA hereby is notified expressly of the limitation of
Directors' liability as set forth in the Organizational Documents and
agrees that any obligation of the Company arising in connection with this
Agreement shall be limited in all cases to the Company and its assets, and
USTNA shall not seek satisfaction of any such obligation from any Director
of the Company.
(b) USTNA shall give the Company the benefit of its best judgment
and efforts in rendering services under this Agreement. In the absence of
Disabling Conduct, USTNA shall not be liable to the Company or to any
member of the Company or any other person 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.
10. Indemnification. The Company will indemnify USTNA, its
affiliates and each of their officers, directors, employees, members and
agents (each an "Indemnified Person") against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) incurred by any of them in
connection with or resulting from the actions or inactions of any
Indemnified Person in connection with the performance of or under this
Agreement not resulting from Disabling Conduct by the respective
Indemnified Person. Indemnification shall be made only following: (i) a
final decision on the merits by a court or other body before whom the
proceeding was brought that the Indemnified Person was not liable by reason
of Disabling Conduct; or (ii) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the
Indemnified Person was not liable by reason of Disabling Conduct by (a) the
vote of a majority of a quorum of Directors of the Company who are not
"interested persons" of USTNA ("Disinterested Directors") or (b)
independent legal counsel in a written opinion. The Indemnified Person
shall be entitled to advances from the Company for payment of the
reasonable expenses incurred by it in connection with the matter as to
which it is seeking indemnification in the manner and to the fullest extent
permissible under the Delaware Limited Liability Company Act. The
Indemnified Person shall provide to the Company a written affirmation of
its good faith belief that the standard of conduct necessary for
indemnification by the Company has been met and a written undertaking to
repay any such advance if it should ultimately be determined that the
standard of conduct has not been met. In addition, at least one of the
following additional conditions shall be met: (a) the Indemnified Person
shall provide security in form and amount acceptable to the Company for its
undertaking; (b) the Company is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of Disinterested Directors, or
independent legal counsel, in a written opinion, shall have determined,
based on a review of facts readily available to the Company at the time the
advance is proposed to be made, that there is reason to believe that the
Indemnified Person will ultimately be found to be entitled to
indemnification.
No provision of this Agreement shall be construed to protect any
Indemnified Person from liability in violation of Section 17(h) or (i) of
the Investment Company Act.
11. Effective Date; Termination; Amendments.
(a) This Agreement shall be effective as of the date first above
written and, unless terminated sooner as provided herein, shall continue
until the second anniversary of the execution of this Agreement.
Thereafter, unless terminated sooner as provided herein, this Agreement
shall continue in effect for successive annual periods, provided that such
continuance is specifically approved at least annually 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 continuance, and either:
(i) the vote of a majority of the outstanding voting securities of the
Company; or (ii) the vote of a majority of the full Board of Directors.
(b) This Agreement may be terminated at any time, without the
payment of any penalty, either by: (i) the Company, by action of the Board
of Directors or by vote of a majority of the outstanding voting securities
of the Company, on 60 days' written notice to USTNA; or (ii) USTNA, on 90
days' written notice to the Company. This Agreement shall terminate
immediately in the event of its assignment.
(c) An affiliate of USTNA may assume USTNA's obligations under
this Agreement provided that: (i) the affiliate is qualified to act as an
investment sub-adviser to the Company under applicable law; (ii) the
assumption will not result in a change of actual control or management of
USTNA; and (iii) the assumption of USTNA's obligations by the affiliate is
approved by the Board of Directors of the Company.
(d) This Agreement may be amended only if such amendment is
approved, to the extent required by the Investment Company Act, by the vote
of a majority of the outstanding voting securities of the Company and by
vote of a majority of the Board of Directors 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.
(e) 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.
12. Notices. All notices and other communications hereunder shall
be in writing or by confirm in telegram, cable, telex, or facsimile sending
device. Notices shall be addressed: (a) if to USTNA, to: U.S. Trust
Company, N.A., 5 Palo Alto Square, 9th Floor, 0000 Xx Xxxxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000; (b) if to the Managing Investment Adviser, to: U.S.
Trust Company, 000 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000; or (c) if
to the Company, to: Excelsior Private Equity Fund II, Inc., 000 X. 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxx X. Xxxx.
13. Governing Law. This Agreement shall be construed in accordance
with the laws of the state of New York without giving effect to the choice
of law provisions thereof, to the extent that such laws are consistent with
the provisions of the Investment Company Act and the regulations
thereunder.
14. 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.
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 PRIVATE EQUITY FUND II, INC.
By: ____________________________________
Name: Xxxxx X. Xxxx
Title: President
U.S. TRUST COMPANY OF NEW YORK
By: ____________________________________
Name:
Title:
U.S. TRUST COMPANY
By: ____________________________________
Name:
Title:
U.S. TRUST COMPANY, N.A.
By: ___________________________________
Name:
Title:
