INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT (the "Agreement"), dated as
of____ __, 2000 by and between Excelsior Venture Partners III, LLC, a
Delaware limited liability company (the "Company") and U.S. Trust Company,
a Connecticut state chartered bank and trust company (the "Investment
Adviser").
W I T N E S S E T H
WHEREAS, the Company has been organized as a Delaware
limited liability company to engage in the business of a closed-end
management investment company, and has elected to be regulated as a
business development company under the Investment Company Act of 1940, as
amended; and
WHEREAS, the Company seeks to retain U.S. Trust Company to
provide certain investment advisory and administrative services; and
WHEREAS, U.S. Trust Company is willing to furnish such
investment advisory and administrative services to the Company on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
promises herein contained and other good and valuable consideration, the
Company and U.S. Trust Company hereby agree 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 Partners III,
LLC;
(c) "Disabling Conduct" means, on the part of the
Investment 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 12 hereof;
(e) "Exchange Act" means the Securities Exchange Act
of 1934, as amended;
(f) "Indemnified Person" has the meaning set forth in
Section 12 hereof;
(g) "Investment Adviser" means U.S. Trust Company;
(h) "Investment Sub-Adviser" means United States
Trust Company of New York;
(i) "Investment Company Act" means the Investment
Company Act of 1940, as amended;
(j) "Manager" means any member of the Board of
Managers;
(k) "Operating Agreement" means the Limited Liability
Company Operating Agreement of the Company;
(l) "Registration Statement" means the Registration
Statement of the Company under the Securities Act (File No. 333-30986);
(m) "Securities Act" means the Securities Act of
1933, as amended;
(n) "Unit" has the meaning set forth in the Operating
Agreement.
2. Appointment. The Company hereby appoints U.S. Trust
Company to act as the investment adviser to the Company for the period and
on the terms set forth in this Agreement. U.S. Trust Company accepts such
appointment and agrees to be responsible for finding, evaluating,
structuring and monitoring the Company's investments and assisting in the
administration of the Company's affairs, for the compensation provided by
this Agreement.
The Investment 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 investment 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; (ii)
the use of an affiliate's employees does not result in a change of actual
control or management of the investment adviser; and (iii) the use of an
affiliate's employees has been approved by the Board of Managers of the
Company. The Investment Adviser is expressly authorized to enter into an
Investment Sub-Advisory agreement with the Investment Sub-Adviser in
substantially the form attached hereto as Appendix A.
3. Duties of the Investment Adviser. Subject to the
direction and control of the Board of Managers, the Investment Adviser
shall:
(a) 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) identify, evaluate, structure, monitor and
dispose of the Company's investments;
(c) make available and, if requested by entities in
which the Company has invested or is proposing to invest, render managerial
assistance to, and exercise management rights in, such entities;
(d) determine the securities to be purchased by the
Company, 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 including the making of follow-on investments in
portfolio companies when appropriate;
(e) determine whether and how to exercise warrants,
voting rights or other rights with respect to the Company's portfolio
securities;
(f) select broker-dealers to carry out the Company's
securities transactions, including broker-dealers who are affiliated with
the Investment Adviser or the Company;
(g) provide valuations with respect to the securities
held by the Company consistent with the Company's valuation policies and
procedures as in effect from time to time;
(h) provide, at its expense, office space, equipment,
facilities and supplies and clerical services necessary for the operation
of the Company;
(i) keep and maintain certain of the books and
records of the Company;
(j) assist in the administration of members' accounts
and in communications and correspondence with members;
(k) prepare or assist in the preparation of
accounting, management and other reports;
(l) conduct relations with distributors, custodians,
depositories, transfer agents, accountants, attorneys, any selling agent,
any escrow agent, insurers, banks and such other persons in any such other
capacity deemed necessary or desirable for the operation of the Company;
(m) render regular reports to the Company's officers
and the Board of Managers concerning the investment performance of the
Company, the Investment Adviser's discharge of its responsibilities under
this Agreement and any other subject as the Company's officers or the Board
of Managers reasonably may request; and
(n) assist the Company's officers in connection with
the operation of the Company and perform any further acts that may be
necessary to effectuate the purposes of this Agreement or that may be
requested by the Company.
4. Supervision and Compliance. The activities of the
Investment Adviser shall be subject at all times to the direction and
control of the Board of Managers and shall comply with: (a) the Certificate
of Formation of the Company and the Operating Agreement, as such documents
are amended from time to time; (b) the investment objective and policies of
the Company as initially set forth in the Registration Statement as such
objective and policies may be amended from time to time with advance notice
to the Investment Adviser; (c) the applicable provisions of the Investment
Company Act and the applicable regulations thereunder; (d) any other
applicable laws or regulations; and (e) such other limitations as the Board
of Managers may adopt.
5. Delegation. In performing its duties under this Agreement
and assuming the obligations set forth herein, the Investment Adviser may,
at its own expense and subject to the requirements of the Investment
Company Act, employ certain of its affiliates or other entities; provided
that the Investment 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 such affiliate
or other entity. Any agreement between the Investment Adviser and an
affiliate or other such entity shall be subject to the renewal, termination
and amendment provisions applicable to this Agreement.
6. Purchase and Sale of Securities. The Investment Adviser
shall place orders for the purchase, sale or loan of securities by the
Company 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 Investment Adviser 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, the Investment 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 Exchange Act) to or for the benefit of the Company and/or
other accounts over which the Investment Adviser exercises investment
discretion. The Investment 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
Investment 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 Investment Adviser with respect to the accounts as to which it
exercises investment discretion.
(b) the Investment Adviser may execute transactions
through itself and its affiliates on a securities exchange provided that
the commissions paid by the Company 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 Managers. An affiliated broker may
transmit, clear and settle transactions for the Company 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
Managers periodically shall review the commissions paid by the Company to
determine whether those commissions were reasonable in relation to the
brokerage and research services received. In addition, the Board of
Managers, in its discretion, may instruct the Investment Adviser to effect
all or a portion of its securities transactions with one or more brokers
and/or dealers selected by the Board of Managers, if it determines that the
use of such brokers and/or dealers is in the best interest of the Company.
(d) When the Investment Adviser deems the purchase or
sale of a security to be in the best interest of the Company as well as
other customers, the Investment 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
Investment 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 Investment Adviser in a manner that is
equitable and consistent with applicable law and regulations, any
guidelines adopted by the Board of Managers and with its obligations to the
Company and to such other customers. The Investment Adviser shall not be
obligated to make any particular opportunity available to the Company, but
shall seek to allocate investment opportunities in a manner that it
believes to be equitable.
7. Expenses.
(a) The Investment 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 Investment Adviser shall pay the salaries and fees of all
officers and employees of the Company performing services related to the
Investment Adviser's duties under this Agreement. The Investment Adviser
also shall pay the fee payable to the Investment Sub-Adviser.
(b) It is understood that the Company will pay all of
its expenses and liabilities, including fees and expenses of the Managers;
fees and expenses of the Investment Adviser; expenses of the Investment
Sub-Adviser; fees and expenses of registering the Company's Units under
federal and state securities laws; interest; taxes; fees and expenses of
the Company's legal counsel and independent accountants; fees and expenses
of the Company's administrator, transfer agent and custodian; expenses of
printing and mailing Unit certificates, reports to members, notices to
members and proxy statements; reports to regulatory bodies; brokerage and
other expenses in connection with the execution, recording and settlement
of portfolio security transactions; expenses in connection with the
acquisition and disposition of portfolio securities or the registration of
privately issued portfolio securities; costs of third party evaluations or
appraisals of the Company (or its assets) or its actual investments;
expenses of membership in investment company and other trade associations;
expenses of fidelity bonding and other insurance premiums; expenses of
members' meetings; fees payable to the National Association of Securities
Dealers, Inc., if any, in connection with the offering of the Company's
Units; indemnification costs and expenses; fees and expenses of counsel to
the members of the Board of Managers that are not interested persons of the
Company (within the meaning of the Investment Company Act) and the
Company's other business and operating expenses.
8. Compensation of the Investment Adviser. In consideration
of the services to be rendered by the Investment Adviser under this
Agreement, the Company shall:
(a) pay the Investment Adviser a fee (i) from the
commencement of operations through the end of the fiscal quarter in which
the fifth anniversary of the closing of the first sale of Units to the
public occurs (the "Anniversary Quarter"), at the annual rate of 2.0% of
the average quarterly net assets of the Company, determined as of the end
of each fiscal quarter and (ii) after the Anniversary Quarter, at the
annual rate of 1.0% of the average quarterly net assets of the Company,
determined as of the end of each fiscal quarter; with such fee payable
quarterly in arrears on the last day of each fiscal quarter; and
(b) admit the Investment Adviser as a member of the
Company with the rights of an Investment Adviser set forth in the Operating
Agreement.
9. Services to Others. The services of the Investment
Adviser to the Company are not to be deemed exclusive and the Investment
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 Investment Adviser's ability to perform its
obligations under this Agreement.
10. Books, Records, and Information. The Investment Adviser
shall provide the Company with all records concerning the Investment
Adviser'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 the Investment Adviser 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.
11. Limitations on Liability.
(a) The Investment Adviser 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 the Investment Adviser shall not seek
satisfaction of any such obligation from any Manager of the Company.
(b) The Investment Adviser shall give the Company the
benefit of its best judgment and efforts in rendering services under this
Agreement. In the absence of Disabling Conduct, the Investment Adviser
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.
12. Indemnification. The Company will indemnify the
Investment Adviser, 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 the Investment Adviser ("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.
13. 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 the Investment
Adviser; or (ii) the Investment Adviser, on 90 days' written notice to the
Company. This Agreement shall terminate immediately in the event of its
assignment.
(c) An affiliate of the Investment Adviser may assume
the Investment Adviser's obligations under this Agreement provided that:
(i) the affiliate is qualified to act as an investment adviser to the
Company under applicable law; (ii) the assumption will not result in a
change of actual control or management of the Investment Adviser; and (iii)
the assumption of the Investment Adviser'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.
14. 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 the Investment
Adviser, to: U.S. Trust Company, 000 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx
00000 or (b) if to the Company, to: Excelsior Venture Partners III, LLC,
000 X. 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxx X. Xxxx.
15. 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.
16. 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 Company and the Investment 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.
EXCELSIOR VENTURE PARTNERS III, LLC
By:
------------------------------------------
Name: Xxxxx X. Xxxx
Title: President and Co-Chief Executive
Officer
U.S. TRUST COMPANY
By: _____________________________________
Name:
Title:
APPENDIX A
INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") dated as of
, 2000 by and among Excelsior Venture Partners III, LLC, a Delaware
limited liability company (the "Company"), 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.
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, UST is the investment adviser to the Company;
WHEREAS, UST desires to retain USTNY to render investment
sub-advisory services to the Company, and USTNY 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 Partners 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 , 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. 333-30986);
(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) "USTNY" means United States Trust Company of New
York;
2. Appointment. UST hereby appoints USTNY to act as
investment sub-adviser to the Company for the period and on the terms set
forth in this Agreement. USTNY accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
USTNY 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 USTNY 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 __________, 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 USTNY 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 USTNY 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, USTNY 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, USTNY will determine
what securities and other investments will be purchased, retained or sold
by the Company. At the request of UST, USTNY will perform any or all of the
other duties of UST under the Investment Advisory Agreement. USTNY 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. USTNY 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, USTNY 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, USTNY 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 USTNY
or any of its affiliates exercises investment discretion. USTNY 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 USTNY 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 USTNY 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 USTNY 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 USTNY 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 USTNY hereunder are not to be deemed exclusive, and
USTNY 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. USTNY shall provide the Company with
all records concerning USTNY'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 USTNY 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) USTNY 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. USTNY
shall pay the salaries and fees of all officers and employees of the
Company performing services related to USTNY'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 USTNY a fee or fees as may
be agreed to in writing by UST and USTNY.
9. Limitation of Liability of the Investment Sub-Adviser.
(a) USTNY 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 USTNY shall not seek satisfaction of any such obligation from any
Manager of the Company.
(b) USTNY shall give the Company the benefit of its
best judgment and efforts in rendering services under this Agreement. In
the absence of Disabling Conduct, USTNY 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 USTNY, 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 USTNY ("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 USTNY; or (ii)
USTNY, on 90 days' written notice to the Company. This Agreement shall
terminate immediately in the event of its assignment.
(c) An affiliate of USTNY may assume USTNY'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 USTNY; and (iii) the assumption of USTNY'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 USTNY, to: United
States Trust Company of New York, 000 X. 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
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 Partners 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: ____________________________________
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
By: ___________________________________
Name:
Title:
EXCELSIOR VENTURE PARTNERS III, LLC
By: ____________________________________
Name:
Title:
