EXHIBIT INDEX
EXHIBIT A:
Attachment to item 77Q1:
Exhibits
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EXHIBIT A:
INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement")
dated as of December 21, 2001 by and among Excelsior
Venture Investors III, LLC, a Delaware limited liability company
(the "Company"), U.S. Trust Company ("UST"), a Connecticut state
bank and trust company and U. S. Trust Company, N.A. ("USTNA"), a
national banking association.
WHEREAS, the Company is a closed-end, management
investment company that has registered under the Investment
Company Act of 1940, as amended;
WHEREAS, UST is the investment adviser to the Company;
WHEREAS, UST 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 Managers" means the board of managers of the
Company;
(b) "Company" means Excelsior Venture Investors III, LLC;
(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 Manager" has the meaning set forth in
Section 10 hereof;
(e) "Exchange Act" means the Securities Exchange Act of
1934, as amended;
(f) "Indemnified Person" has the meaning set forth in
Section 10 hereof;
(g) "Investment Company Act" means the Investment Company
Act of 1940, as amended;
(h) "Investment Advisory Agreement" means the agreement
between the Company and UST dated as of May 11, 2000
(i) "Manager" means any member of the Board of Managers;
(j) "Operating Agreement" means the Limited Liability
Company Operating Agreement of the Company;
(k) "Registration Statement" means the Registration
Statement of the Company under the Securities Act (File No. 333-
38550);
(l) "Securities Act" means the Securities Act of 1933, as
amended;
(m) "Unit" has the meaning set forth in the Operating
Agreement.
(n) "UST" means U.S. Trust Company;
(o) "USTNA" means United States Trust Company of
California;
2. Appointment. UST 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 Managers of the Company.
3. Delivery of Documents. UST has furnished USTNA with copies
properly certified or authenticated of each of the following:
(a) Certificate of Formation of the Company dated February
18, 2000;
(b) Operating Agreement of the Company dated May 26, 2000;
(c) Investment Advisory Agreement between the Company and
UST dated as of May 11, 2000;
(d) Resolutions of the Board of Managers of the Company
authorizing the appointment of UST as the investment adviser for
the Company and the execution and delivery of the Investment
Advisory Agreement;
(e) Resolutions of the Board of Managers of the Company
authorizing the appointment of USTNA as the Company's investment
sub-adviser and the execution and delivery of this Agreement;
(f) The Company's Registration Statement relating to the
Company's Units including the prospectus and statement of
additional information of the Company.
UST 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 Managers of the Company and the oversight of UST, at the
request of UST, 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 UST, USTNA will determine what
securities and other investments will be purchased, retained or
sold by the Company. At the request of UST, USTNA will perform
any or all of the other duties of UST 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 UST 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 Units, 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 UST and the
Company's Board of Managers 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 Managers, 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, UST will pay USTNA a fee or
fees as may be agreed to in writing by UST and USTNA.
9. Limitation of Liability of the Investment Sub-Adviser.
(a) USTNA hereby is notified expressly of the limitation of
Managers' liability as set forth in the Operating Agreement 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 Manager 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 Managers of the Company who are not "interested
persons" of USTNA ("Disinterested Managers") 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 Managers, 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 Managers 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 Managers.
(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 Managers 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 Managers 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 Managers
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 UST, to: U.S. Trust Company, 000 Xxxx Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000; or (c) if to the Company, to: Excelsior
Venture Investors III, LLC, 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.
U.S. TRUST COMPANY
By: /s/ W. Xxxxxxx Xxxxx
Name: W. Xxxxxxx Xxxxx
Title: President and Chief Executive Officer
U.S. TRUST COMPANY, N.A.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
EXCELSIOR VENTURE INVESTORS III, LLC
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Co-Chief Executive Officer
