INVESTMENT ADVISORY AGREEMENT
EXCELSIOR BUYOUT INVESTORS, LLC
New York, New York
March __, 2003
U.S. Trust Company
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Gentlemen:
We, Excelsior Buyout Investors, LLC (the "Fund") herewith confirm our
agreement with you, U.S. Trust Company, as follows:
1. We propose to engage in the business of investing our assets in
investments of the type, and in accordance with the limitations, specified in
our Certificate of Formation, Limited Liability Company Operating Agreement (the
"Operating Agreement") and Registration Statement filed with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, (the
"1940 Act") and the Securities Act of 1933, as amended, including the Prospectus
forming a part thereof (the "Registration Statement"), all as from time to time
in effect, and in such manner and to such extent as may from time to time be
authorized by our Board of Managers. We enclose copies of the documents listed
above and will furnish you such amendments thereto as may be made from time to
time.
2. (a) We hereby employ you to manage the investment of our assets
as above specified, and, without limiting the generality of the foregoing, to
provide the investment management services specified below.
(b) Subject to the general control of our Board of Managers, you
will (a) act in accordance with the Company's Operating Agreement, the 1940 Act
and the Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Company's assets in accordance with its investment
objective and policies as stated in the Company's Registration Statement as from
time to time in effect, (c) make investment decisions and exercise voting rights
in respect of portfolio investments for the company, and (d) place purchase and
sale orders on behalf of the Company for all investments. To carry out such
decisions, you are hereby authorized, as our agent and attorney-in-fact for our
account and at our risk and in our name, to place orders for the investment of
our assets. In all purchases, sales and other transactions in our portfolio
investments you are authorized to exercise full discretion and act for us in the
same manner and with the same force and effect as the Fund itself might or could
do with respect to such purchases, sales or other transactions, as well as with
respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales or other transactions.
(c) You will report to our Board of Managers at each meeting
thereof all changes in our portfolio since your prior report, and will also keep
us in touch with important
developments affecting our portfolio and, on your initiative, will furnish us
from time to time with such information as you may believe appropriate for this
purpose, whether concerning the individual entities whose securities are
included in our portfolio, the activities in which such entities engage, federal
income tax policies applicable to our investments, or the conditions prevailing
in the economy generally. You will also furnish us with such statistical and
analytical information with respect to our portfolio investments as you may
believe appropriate or as we may reasonably request. In making such purchases
and sales of our portfolio investments, you will comply with the policies set
from time to time by our Board of Managers as well as the limitations imposed by
our Limited Liability Company Operating Agreement and by the provisions of the
Internal Revenue Code and the 1940 Act relating to regulated investment
companies and the limitations contained in the Registration Statement.
(d) You will provide valuations with respect to the investments
held by the Company consistent with the Company's valuation policies and
procedures as in effect from time to time.
(e) It is understood that you may from time to time employ,
subcontract with or otherwise associate with yourself, entirely at your expense,
such persons as you believe to be particularly fitted to assist you in the
execution of your duties hereunder.
(f) You or your affiliates will also furnish us, at your own
expense, such investment advisory supervision and assistance as you may believe
appropriate or as we may reasonably request subject to the requirements of any
regulatory authority to which you may be subject.
3. We agree, subject to the limitations described below, to be
responsible for, and hereby assume the obligation for payment of, all our
expenses, including: (a) brokerage and commission expenses, (b) federal, state
or local taxes, including issue and transfer taxes incurred by or levied on us,
(c) commitment fees and certain insurance premiums, (d) interest charges on
borrowings, (e) charges and expenses of our custodian, (f) charges, expenses and
payments relating to the issuance, redemption, transfer and dividend disbursing
functions for us, (g) recurring and nonrecurring legal and accounting expenses,
including those of the bookkeeping agent, (h) telecommunications expenses, (i)
the costs of organizing and maintaining our existence as a limited liability
company, (j) compensation, including managers' fees, of any of our managers,
officers or employees who are not your officers or employees or of your
affiliates, and costs of other personnel providing clerical, accounting
supervision and other office services to us as we may request, (k) costs of
investor services including, charges and expenses of persons providing
confirmations of transactions in our units, periodic statements to investors,
and recordkeeping and investors' services, (l) costs of investors' reports,
proxy solicitations, and Company meetings, (m) fees and expenses of registering
our units under the appropriate federal securities laws and of qualifying such
units under applicable state securities laws, including expenses attendant upon
the initial registration and qualification of such units and attendant upon
renewals of, or amendments to, those registrations and qualifications, (n)
expenses of preparing, printing and delivering our prospectus and of printing
investor application forms for investor accounts, and (o) payment of the fees
and expenses provided for herein, under the Administration Agreement and
Distribution Agreement.
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4. We will expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder ("Disabling Conduct").
5. In consideration of the foregoing, we will pay you a fee at the
annual rate of 1% of the net asset value of the Fund. Your fee will be
determined and payable as of the end of each quarter.
6. We will indemnify you, your 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 Fund who are not "interested persons" of U.S. Trust
Company ("Disinterested Managers") or (b) independent legal counsel in a written
opinion. The Indemnified Person shall be entitled to advances from us 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 us a written affirmation of its good faith
belief that the standard of conduct necessary for indemnification by us 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 us
for its undertaking; (b) we are 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 us 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
1940 Act.
7. This Agreement will become effective on the date hereof and shall
continue in effect until the second anniversary of the effective date of this
Agreement, and thereafter for successive twelve-month periods, provided that
such continuation is specifically approved at least annually by our Board of
Managers or by a majority vote of the holders of our outstanding voting
securities, as defined in the 1940 Act and the rules thereunder, and, in either
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case, by a majority of those of our Managers who are neither party to this
Agreement nor, other than by their service as managers of the Fund, interested
persons, as defined in the 1940 Act and the rules thereunder, of any such person
who is party to this Agreement. Upon the effectiveness of this Agreement, it
shall supersede all previous agreements between us covering the subject matter
hereof. This Agreement may be terminated at any time, without the payment of any
penalty, by vote of a majority of our outstanding voting securities, as defined
in the 1940 Act and the rules thereunder, or by a vote of a majority of our
entire Board of Managers, on sixty days' written notice to you, or by you on
sixty days' written notice to us.
8. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by you and this agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer," "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the Securities and Exchange Commission.
9. 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.
10. All notices and other communications hereunder shall be in
writing and sent via U.S. mail or hand delivery or by facsimile sending device
or [other electronic media]. Notices, if by U.S. mail or hand delivery, shall be
addressed: (a) if to the Investment Adviser, to: U.S. Trust Company, 000 Xxxx
Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, Attn: ____________ or (b) if to the
Company, to: Excelsior Buyout Investors, LLC, 000 Xxxx Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000.
11. 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 the provisions of the
1940 Act and the regulations thereunder.
12. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your employees or an officer and/or director of yours, who
may also be a manager, officer or employee of ours, or of a person affiliated
with us, as defined in the 1940 Act, to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, company, firm, individual or association.
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If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
EXCELSIOR BUYOUT INVESTORS, LLC
By:
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Name:
Title:
ACCEPTED: March __, 2003
U.S. TRUST COMPANY
By:
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Name:
Title:
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