Exhibit (d)(2)
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
diversified management investment company under the Investment Company Act of
1940, as amended (the "Investment Company Act"), U.S. TRUST COMPANY ("UST"), a
Connecticut state bank and trust company, and UNITED STATES TRUST COMPANY OF NEW
YORK ("USTNY"), a New York state-chartered bank and trust company (together with
UST, 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 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 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 Adviser to the Trust 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. Sub-Adviser. It is understood that the Adviser may from time to
time employ or associate with itself such person or persons as the Adviser
believes to be fitted to assist it in the performance of this Agreement;
provided, however, that the compensation of such person or persons shall be paid
by the Adviser and that the Adviser shall be as fully responsible to the Trust
for the acts and omissions of any such person as it is for its own acts and
omissions. Without limiting the generality of the foregoing, it is agreed that
the sub-advisory services to the Series shall be provided by person or persons
agreeable to the Adviser and approved in accordance with the provisions of the
Investment Company Act of 1940. Such sub-adviser is hereinafter referred to as
the "Sub-Adviser."
3. Duties of the Adviser. Subject to the direction and control of
the Board of Trustees of the Trust, the Adviser's responsibilities include:
(i) Advising the Sub-Adviser with respect to U.S. economic
factors and trends;
(ii) Assisting and consulting with the Sub-Adviser in
connection with the Series' continuous investment program;
(iii) Approving lists of foreign countries recommended by the
Sub-Adviser for investments of the Series;
(iv) Placing orders with respect to purchases and sales of
the securities of U.S. issuers as described in the Prospectus;
(v) Managing, in cooperation with the Sub-Adviser, the
Fund's short-term cash balance positions denominated in U.S. dollars to preserve
required liquidity of the Series' assets including placing of orders for U.S.
money market instruments;
(vi) Monitoring the Sub-Adviser's investment procedures; and
(vii) Periodically reviewing, evaluating and reporting to the
Trust's Board of Trustee with respect to the performance of the Sub-Adviser
under the Sub-Advisory Agreement.
The Adviser further agrees that it:
(a) will 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) will formulate and continuously review, supervise, and
administer an investment program for the Series;
(c) will 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) will determine whether and how to exercise warrants, voting
rights, or other rights with respect to the Series' securities;
(e) will provide valuations with respect to the securities held by
the Series if so requested by the Trustees of the Trust
(f) will 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
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(g) will 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.
4. 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.
5. 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" 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
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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.
6. 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.
7. 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 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.
8. 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.
9. 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.
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Any records required to be maintained and preserved pursuant to the provisions
of Rule 31a-l 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.
10. 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.
11. 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 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 Adviser may assume the
Adviser's obligations under this Agreement provided that (i) the affiliate is
qualified to act as an investment adviser to the Trust under applicable law;
(ii) the assumption will not result in a change of actual control or management
of the Adviser; and (iii) the assumption of the Adviser's obligations under this
Agreement is approved by the Board of Trustees of the Trust.
(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 vote of a
majority of the Board of Trustees of the Trust
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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.
12. 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.
13. 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.
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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.
Attest: EXCELSIOR INSTITUTIONAL
TRUST
/s/ W. Xxxxx XxXxxxxx By: /s/ Xxxxxxxxx X. Xxxxxx
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Secretary Title: President and Treasurer
Attest: U.S. TRUST COMPANY
/s/ W. Xxxxx XxXxxxxx By: /s/ W. Xxxxxxx Xxxxx
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Title: President and Chief
Executive Officer
Attest: UNITED STATES TRUST COMPANY
OF NEW YORK
/s/ W. Xxxxx XxXxxxxx By: /s/ Xxxxxxx X. Xxxxx
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Title: Executive Vice President
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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)
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International
Equity Fund 1.00%
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