EXHIBIT 5(f)
SUB-ADVISORY AGREEMENT
AGREEMENT made as of September 1, 0000 xxxxxxx XXXXXX XXXXXX TRUST
COMPANY OF NEW YORK, a New York corporation (herein called "U.S. Trust"), and
United States Trust Company of California, a national bank organized under the
laws of the United States (herein called "U.S. Trust California").
WHEREAS, Excelsior Tax-Exempt Funds, Inc. (the "Company") is
registered as an open-end, management investment company under the Investment
Company Act of 1940;
WHEREAS, U.S. Trust is an investment adviser to the Company's
California Tax-Exempt Income Fund (the "Fund");
WHEREAS, U.S. Trust desires to retain U.S Trust California to
render investment sub-advisory services to the Company for the Fund, and U.S.
Trust California 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. U.S. Trust hereby appoints U.S. Trust
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California to act as investment sub-adviser to the Company for the Fund for the
period and on the terms set forth in this Agreement. U.S. Trust California
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. Delivery of Documents. U.S. Trust has furnished U.S.
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Trust California 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 U.S. Trust as the investment adviser for the
Fund and the execution and delivery of the Investment Advisory Agreement with
respect to the Fund;
(d) Resolutions of the Board of Directors of the Company
authorizing the appointment of U.S. Trust California as
the Fund's investment sub-adviser and the execution and delivery of this
Agreement;
(e) Post-Effective Amendment No. 19 to the Company's
Registration Statement under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "1940 Act"), on Form N-1A (No.
2-93068) relating to the Company's shares representing interests in the Fund;
(f) Notification of Registration of the Company under the
1940 Act, as amended, on Form N-8A as filed with the Securities and Exchange
Commission on August 31, 1984, and all amendments thereto; and
(g) Prospectuses and statements of additional information
of the Company relating to the Company's shares representing interests in the
Fund in effect under the Securities Act of 1933 (such prospectuses, statements
of additional information and supplements thereto, as presently in effect and
as from time to time amended and supplemented, herein called the "Prospectus").
U.S. Trust will furnish U.S Trust California from time to time with
copies of all amendments of or supplements to the foregoing, if any.
3. Sub-Advisory Services. Subject to the supervision of the
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Board of Directors of the Company and the oversight of U.S. Trust, U.S. Trust
California will provide a continuous investment program for the Fund, including
investment research and management with respect to all securities and
investments of the Fund. U.S. Trust California will determine, subject to U.S.
Trust's approval, what securities and other investments will be purchased,
retained or sold by the Company for the Fund including, with the assistance of
U.S. Trust if required, the Fund's investments in futures. U.S. Trust California
will provide the services rendered by it hereunder in accordance with the Fund's
investment objectives and policies as stated in the Prospectus. U.S. Trust
California 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 Fund shares, or make loans to the Company;
(c) will manage the Fund's overall cash positions;
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(d) 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, U.S.
Trust California 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, U.S. Trust California 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 U.S. Trust California 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 xxxxxx, X.X. Trust California is authorized to pay to a
broker or dealer who provides such brokerage and research services a commission
for effecting a securities transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if U.S. Trust California 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 U.S. Trust
California 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, U.S. Trust, U.S. Trust California or any
affiliated person thereof except as permitted by the Securities and Exchange
Commission;
(e) will maintain books and records with respect to the
securities and other investment transactions entered into pursuant to this
Agreement and will render to U.S. Trust and the Company's Board of Directors
such periodic and special reports as they may request;
(f) 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 U.S. Trust California may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such
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information by duly constituted authorities, or when so requested by the
Company. Nothing contained herein, however, shall prohibit U.S. Trust
California 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 sub- advisory
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services rendered by U.S. Trust California hereunder are not to be deemed
exclusive, and U.S. Trust California 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 under the 0000 Xxx, X.X. Xxxxx Xxxxxxxxxx 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. U.S. Trust California further agrees to preserve for
the periods prescribed by Rule 31a-2 the records required to be maintained by
Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement, U.S. Trust
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California will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities
and other investments (including brokerage commissions and other transaction
charges, if any) purchased for the Fund.
In addition, U.S. Trust California will pay U.S. Trust an amount
equal to 83% of each expense reimbursement made by U.S. Trust to the Company
with respect to the Fund under the second paragraph of Section 6 of the
Investment Advisory Agreement relating to the Fund.
7. Compensation. For the services provided and the expenses
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assumed pursuant to this Agreement, U.S. Trust will pay U.S. Trust California
and U.S. Trust California will accept as full compensation therefor a fee,
computed daily and payable monthly, at the annual rate of .50% of the average
daily net assets of the Fund.
8. Limitation of Liability of the Sub-Adviser. U.S. Trust
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California 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 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 U.S.
Trust California in the performance of its duties or from reckless disregard by
it of its obligations and duties under this Agreement.
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9. Duration and Termination. This Agreement shall become
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effective upon its execution as of the date first written above and, unless
sooner terminated as provided herein, shall continue until through July 31,
1997. Thereafter, if not terminated, this Agreement shall continue in effect
as to the Fund for successive periods of 12 months each, provided such
continuance is specifically approved at least annually 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 by
the Board of Directors of the Company or the vote of a majority of the
outstanding voting securities of the Fund; provided, however, that this
Agreement may be terminated as to the Fund at any time, without the payment of
any penalty, by U.S. Trust or by the Company (by the Board of Directors of the
Company or by vote of a majority of the outstanding voting securities of the
Fund) on 60 days' written notice to U.S. Trust California, and will
automatically terminate upon the termination of the Investment Advisory
Agreement between U.S. Trust and the Company with respect to the Fund. This
Agreement may be terminated as to the Fund by U.S. Trust California at any
time, without payment of any penalty, on 90 days' written notice to the Company
and U.S. Trust. 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 1940 Act.)
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.
11. Miscellaneous. The captions in this Agreement are
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included 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.
UNITED STATES TRUST COMPANY
Attest: OF NEW YORK
_________________________ By: /s/ Xxxxx X. Xxxxxxx
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[Seal]
UNITED STATES TRUST COMPANY
Attest: OF CALIFORNIA
_________________________ By: /s/ Xxxxxxx Xxxxxxx
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[Seal]
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