EXHIBIT 5(b)
FORM OF INVESTMENT ADVISORY AND ADMINISTRATION CONTRACT
Contract made as of , 1997 between PAINEWEBBER INVESTMENT TRUST
II, a Massachusetts business trust ("Trust"), and XXXXXXXX XXXXXXXX ASSET
MANAGEMENT INC. ("Xxxxxxxx Xxxxxxxx"), a Delaware corporation registered as a
broker-dealer under the Securities Exchange Act of 1934, as amended ("1934
Act"), and as an investment adviser under the Investment Advisers Act of 1940,
as amended.
WHEREAS the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company, and
intends to offer for public sale distinct series of shares of beneficial
interest ("Series"), each corresponding to a distinct portfolio; and
WHEREAS the Trust desires to retain Xxxxxxxx Xxxxxxxx as investment
adviser and administrator to furnish certain administrative, investment advisory
and portfolio management services to the Trust and each Series as now exists and
as hereafter may be established, and Xxxxxxxx Xxxxxxxx is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints Xxxxxxxx Xxxxxxxx as investment
adviser and administrator of the Trust and each Series for the period and on the
terms set forth in this Contract. Xxxxxxxx Xxxxxxxx accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. Duties as Investment Adviser.
(a) Subject to the supervision of the Trust's Board of Trustees
("Board"), Xxxxxxxx Xxxxxxxx will provide a continuous investment program for
each Series, including investment research and management with respect to all
securities and investments and cash equivalents in each Series. Xxxxxxxx
Xxxxxxxx will determine from time to time what securities and other investments
will be purchased, retained or sold by each Series.
(b) Xxxxxxxx Xxxxxxxx agrees that in placing orders with brokers, it
will attempt to obtain the best net result in terms of price and execution;
provided that, on behalf of any Series, Xxxxxxxx Xxxxxxxx may, in its
discretion, use brokers who provide the Series with research, analysis, advice
and similar services to execute portfolio transactions on behalf of the Series,
and Xxxxxxxx Xxxxxxxx may pay to those brokers in return for brokerage and
research services a higher commission than may be charged by other brokers,
subject to Xxxxxxxx Xxxxxxxx' determining in good faith that such commission is
reasonable in terms either of the particular transaction or of the overall
responsibility of Xxxxxxxx Xxxxxxxx to such Series and its other clients and
that the total commissions paid by such Series will be reasonable in relation to
the benefits to the Series over the long term. In no instance will portfolio
securities be purchased from or sold to Xxxxxxxx Xxxxxxxx, or any affiliated
person thereof, except in accordance with the federal securities laws and the
rules and regulations thereunder. Whenever Xxxxxxxx Xxxxxxxx simultaneously
places orders to purchase or sell the same security on behalf of a Series and
one or more other accounts advised by Xxxxxxxx Xxxxxxxx, such orders will be
allocated as to price and amount among all such accounts in a manner
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believed to be equitable to each account. The Trust recognizes that in some
cases this procedure may adversely affect the results obtained for the Series.
(c) Xxxxxxxx Xxxxxxxx will oversee the maintenance of all books and
records with respect to the securities transactions of each Series, and will
furnish the Board with such periodic and special reports as the Board reasonably
may request. In compliance with the requirements of Rule 31a-3 under the 1940
Act, Xxxxxxxx Xxxxxxxx hereby agrees that all records which it maintains for the
Trust are the property of the Trust, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for
the Trust and which are required to be maintained by Rule 31a-1 under the 1940
Act and further agrees to surrender promptly to the Trust any records which it
maintains for the Trust upon request by the Trust.
(d) Xxxxxxxx Xxxxxxxx will oversee the computation of the net asset
value and the net income of each Series as described in the currently effective
registration statement of the Trust under the Securities Act of 1933, as
amended, and the 1940 Act and any supplements thereto ("Registration Statement")
or as more frequently requested by the Board.
(e) The Trust hereby authorizes Xxxxxxxx Xxxxxxxx and any entity or
person associated with Xxxxxxxx Xxxxxxxx which is a member of a national
securities exchange to effect any transaction on such exchange for the account
of any Series, which transaction is permitted by Section 11(a) of the 1934 Act
and Rule 11a2-2(T) thereunder, and the Trust hereby consents to the retention of
compensation by Xxxxxxxx Xxxxxxxx or any person or entity associated with
Xxxxxxxx Xxxxxxxx for such transactions in accordance with Rule
11a2-2(T)(a)(2)(iv).
3. Duties as Administrator. Xxxxxxxx Xxxxxxxx will administer the affairs
of the Trust and each Series subject to the supervision of the Board and the
following understandings:
(a) Xxxxxxxx Xxxxxxxx will supervise all aspects of the operations of
the Trust and each Series, including oversight of transfer agency, custodial and
accounting services, except as hereinafter set forth; provided, however, that
nothing herein contained shall be deemed to relieve or deprive the Board of its
responsibility for and control of the conduct of the affairs of the Trust and
each Series.
(b) Xxxxxxxx Xxxxxxxx will provide the Trust and each Series with such
corporate, administrative and clerical personnel (including officers of the
Trust) and services as are reasonably deemed necessary or advisable by the
Board, including the maintenance of certain books and records of the Trust and
each Series.
(c) Xxxxxxxx Xxxxxxxx will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the Trust's
Registration Statement, proxy material, tax returns and required reports to each
Series' shareholders and the Securities and Exchange Commission and other
appropriate federal or state regulatory authorities.
(d) Xxxxxxxx Xxxxxxxx will provide the Trust and each Series with, or
obtain for it, adequate office space and all necessary office equipment and
services, including telephone service, heat, utilities, stationery supplies and
similar items.
(e) Xxxxxxxx Xxxxxxxx will provide the Board on a regular basis with
economic and investment analyses and reports and make available to the Board
upon request any economic, statistical and investment services normally
available to institutional or other customers of Xxxxxxxx Xxxxxxxx.
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4. Further Duties. In all matters relating to the performance of this Contract,
Xxxxxxxx Xxxxxxxx will act in conformity with the Declaration of Trust, By-Laws
and Registration Statement of the Trust and with the instructions and directions
of the Board and will comply with the requirements of the 1940 Act, the rules
thereunder, and all other applicable federal and state laws and regulations.
5. Delegation of Xxxxxxxx Xxxxxxxx' Duties as Investment Adviser and
Administrator. With respect to any or all Series, Xxxxxxxx Xxxxxxxx may enter
into one or more contracts ("Sub-Advisory or Sub-Administration Contract") with
a sub-adviser or sub-administrator in which Xxxxxxxx Xxxxxxxx delegates to such
sub-adviser or sub-administrator any or all its duties specified in Paragraphs 2
and 3 of this Contract, provided that each Sub-Advisory or Sub-Administration
Contract imposes on the sub-adviser or sub-administrator bound thereby all the
duties and conditions to which Xxxxxxxx Xxxxxxxx is subject by Paragraphs 2, 3
and 4 of this Contract, and further provided that each Sub-Advisory or
Sub-Administration Contract meets all requirements of the 1940 Act and rules
thereunder.
6. Services Not Exclusive. The services furnished by Xxxxxxxx Xxxxxxxx
hereunder are not to be deemed exclusive and Xxxxxxxx Xxxxxxxx shall be free to
furnish similar services to others so long as its services under this Contract
are not impaired thereby. Nothing in this Contract shall limit or restrict the
right of any director, officer or employee of Xxxxxxxx Xxxxxxxx, who may also be
a Trustee, officer or employee of the Trust, to engage in any other business or
to devote his or her time and attention in part to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature.
7. Expenses.
(a) During the term of this Contract, each Series will bear all
expenses, not specifically assumed by Xxxxxxxx Xxxxxxxx, incurred in its
operations and the offering of its shares.
(b) Expenses borne by each Series will include but not be limited to
the following (or each Series' proportionate share of the following): (i) the
cost (including brokerage commissions) of securities purchased or sold by the
Series and any losses incurred in connection therewith; (ii) fees payable to and
expenses incurred on behalf of the Series by Xxxxxxxx Xxxxxxxx under this
Contract; (iii) expenses of organizing the Trust and the Series; (iv) filing
fees and expenses relating to the registration and qualification of the Series'
shares and the Trust under federal and/or state securities laws and maintaining
such registrations and qualifications; (v) fees and salaries payable to the
Trust's Trustees and officers who are not interested persons of the Trust or
Xxxxxxxx Xxxxxxxx; (vi) all expenses incurred in connection with the Trustees'
services, including travel expenses; (vii) taxes (including any income or
franchise taxes) and governmental fees; (viii) costs of any liability,
uncollectible items of deposit and other insurance and fidelity bonds; (ix) any
costs, expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Trust or Series for violation of any law and
any indemnification relating thereto; (x) legal, accounting and auditing
expenses, including legal fees of special counsel for those Trustees of the
Trust who are not interested persons of the Trust; (xi) charges of custodians,
transfer agents and other agents; (xii) costs of preparing share certificates;
(xiii) expenses of setting in type and printing prospectuses and supplements
thereto, statements of additional information and supplements thereto, reports
and proxy materials for existing shareholders; (xiv) costs of mailing
prospectuses and supplements thereto, statements of additional information and
supplements thereto, reports and proxy materials to existing shareholders; (xv)
any extraordinary expenses (including fees and disbursements of counsel, costs
of actions, suits or proceedings to which the Trust is a party and the expenses
the Trust may incur as a result of its legal obligation to provide
indemnification to its officers, Trustees, agents and shareholders or Xxxxxxxx
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Xxxxxxxx) incurred by the Trust or Series; (xvi) fees, voluntary assessments and
other expenses incurred in connection with membership in investment company
organizations; (xvii) cost of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xviii) the cost
of investment company literature and other publications provided by the Trust to
its Trustees and officers; and (xix) costs of mailing, stationery and
communications equipment.
(c) The Trust or a Series may pay directly any expenses incurred by it
in its normal operations and, if any such payment is consented to by Xxxxxxxx
Xxxxxxxx and acknowledged as otherwise payable by Xxxxxxxx Xxxxxxxx pursuant to
this Contract, the Series may reduce the fee payable to Xxxxxxxx Xxxxxxxx
pursuant to Paragraph 8 thereof by such amount. To the extent that such
deductions exceed the fee payable to Xxxxxxxx Xxxxxxxx on any monthly payment
date, such excess shall be carried forward and deducted in the same manner from
the fee payable on succeeding monthly payment dates.
(d) Xxxxxxxx Xxxxxxxx will assume the cost of any compensation for
services provided to the Trust received by the officers of the Trust and by
those Trustees who are interested persons of the Trust.
(e) The payment or assumption by Xxxxxxxx Xxxxxxxx of any expenses of
the Trust or a Series that Xxxxxxxx Xxxxxxxx is not required by this Contract to
pay or assume shall not obligate Xxxxxxxx Xxxxxxxx to pay or assume the same or
any similar expense of the Trust or a Series on any subsequent occasion.
8. Compensation.
(a) For the services provided and the expenses assumed pursuant to this
Contract, with respect to the PaineWebber Emerging Markets Equity Fund series,
the Trust will pay to Xxxxxxxx Xxxxxxxx a fee, computed daily and paid monthly,
at an annual rate of 1.20% of such Series's average daily net assets.
(b) For the services provided and the expenses assumed pursuant to this
Contract with respect to any Series hereafter established, the Trust will pay to
Xxxxxxxx Xxxxxxxx from the assets of such Series a fee in an amount to be agreed
upon in a written fee agreement ("Fee Agreement") executed by the Trust on
behalf of such Series and by Xxxxxxxx Xxxxxxxx. All such Fee Agreements shall
provide that they are subject to all terms and conditions of this Contract.
(c) The fee shall be computed daily and paid monthly to Xxxxxxxx
Xxxxxxxx on or before the first business day of the next succeeding calendar
month.
(d) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective day to the end of the month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
9. Limitation of Liability of Xxxxxxxx Xxxxxxxx. Xxxxxxxx Xxxxxxxx and its
delegates, including any Sub-Adviser or Sub-Administrator to any Series or the
Trust, shall not be liable for any error of judgment or mistake of law or for
any loss suffered by any Series, the Trust or any of its shareholders, in
connection with the matters to which this Contract relates, except to the extent
that such a loss results from willful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Contract. Any person, even though also an
officer, director, employee, or agent of Xxxxxxxx Xxxxxxxx, who may be or become
an officer, Trustee, employee or agent of the Trust shall be deemed, when
rendering services to any Series or the Trust or acting with respect to any
business of such Series or the Trust, to be rendering such service to or acting
solely for the
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Series or the Trust and not as an officer, director, employee, or agent or one
under the control or direction of Xxxxxxxx Xxxxxxxx even though paid by it.
10. Limitation of Liability of the Trustees and Shareholders of the Trust. The
Trustees of the Trust and the shareholders of any Series shall not be liable for
any obligations of any Series or the Trust under this Contract, and Xxxxxxxx
Xxxxxxxx agrees that, in asserting any rights or claims under this Contract, it
shall look only to the assets and property of the Trust in settlement of such
right or claim, and not to such Trustees or shareholders.
11. Duration and Termination.
(a) This Contract shall become effective upon the date hereinabove
written provided that, with respect to any Series, this Contract shall not take
effect unless it has first been approved (i) by a vote of a majority of those
Trustees of the Trust who are not parties to this Contract or interested persons
of any such party cast in person at a meeting called for the purpose of voting
on such approval, and (ii) by vote of a majority of that Series' outstanding
voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods of
twelve months each, provided that such continuance is specifically approved at
least annually (i) by a vote of a majority of those Trustees of the Trust who
are not parties to this Contract or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or with respect to any given Series by vote of a majority of
the outstanding voting securities of such Series.
(c) Notwithstanding the foregoing, with respect to any Series this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the board or by a vote of a majority of the outstanding voting
securities of such Series on sixty days' written notice to Xxxxxxxx Xxxxxxxx or
by Xxxxxxxx Xxxxxxxx at any time, without the payment of any penalty, on sixty
days' written notice to the Trust. Termination of this Contract with respect to
any given Series shall in no way affect the continued validity of this Contract
or the performance thereunder with respect to any other Series. This Contract
will automatically terminate in the event of its assignment.
12. Amendment of this Contract. No provision of this Contract 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 Contract as to any given
Series shall be effective until approved by vote of a majority of such Series'
outstanding voting securities.
13. Governing Law. This Contract shall be construed in accordance with the laws
of the State of Delaware, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act, provided, however, that
Section 10 above will be construed in accordance with the laws of the
Commonwealth of Massachusetts. To the extent that the applicable laws of the
State of Delaware or the Commonwealth of Massachusetts conflict with the
applicable provisions of the 1940 Act, the latter shall control.
14. Miscellaneous. The captions in this Contract are 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
Contract shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Contract shall not be affected thereby. This
Contract shall be binding upon and shall
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inure to the benefit of the parties hereto and their respective successors. As
used in this Contract, the terms "majority of the outstanding voting
securities", "affiliated person", "interested person", "assignment", "broker",
"investment adviser", "national securities exchange", "net assets",
"prospectus", "sale", "sell" and "security" shall have the same meaning as such
terms have in the 1940 Act, subject to such exemption as may be granted by the
Securities and Exchange Commission by any rule, regulation or order. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
Contract is relaxed by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
Attest: XXXXXXXX XXXXXXXX ASSET MANAGEMENT INC.
-------------------- By ---------------------------------------
Attest: PAINEWEBBER INVESTMENT TRUST II
-------------------- By ---------------------------------------
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