EXHIBIT 5(d)
FORM OF SUB-ADVISORY AGREEMENT
Agreement made as of , 1997 between XXXXXXXX XXXXXXXX ASSET MANAGEMENT
INC., a Delaware corporation ("Xxxxxxxx Xxxxxxxx"), and XXXXXXXX CAPITAL
MANAGEMENT INTERNATIONAL INC., a New York corporation ("Sub-Adviser"), (the
"Agreement").
RECITALS
(1) Xxxxxxxx Xxxxxxxx has entered into an Investment Advisory and
Administration Contract, dated , 1997 ("Advisory Contract"), with PaineWebber
Investment Trust II ("Trust"), an open-end management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act");
(2) The Trust offers for public sale distinct series of shares of
beneficial interest and may offer additional distinct series in the future;
(3) Under the Advisory Contract, Xxxxxxxx Xxxxxxxx has agreed to
provide certain investment advisory and administrative services to each series
of the Trust as now exists and as hereafter may be established;
(4) The Advisory Contract permits Xxxxxxxx Xxxxxxxx to delegate
certain of its duties as investment advise under the Advisory Contract to a
sub-adviser; and
(5) Xxxxxxxx Xxxxxxxx desires to retain the Sub-Adviser to furnish
certain investment advisory services with respect to the PaineWebber Emerging
Markets Equity Fund ("Fund") series of the Trust, and the Sub-Adviser is willing
to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. Xxxxxxxx Xxxxxxxx hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to the Fund for the period and on the terms
set forth in this Agreement. The Sub-Adviser accepts that appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. Duties as Sub-Adviser.
(a) Subject to the supervision of and any written guidelines adopted by
the Trust's Board of Trustees (the "Board") and Xxxxxxxx Xxxxxxxx, the
Sub-Adviser will provide a continuous investment program for the Fund, including
investment research and management with respect to all securities and
investments and cash equivalents in the Fund. The Sub-Adviser will determine
from time to time what investments will be purchased, retained or sold by the
Fund. The Sub-Adviser will be responsible for placing purchase and sell orders
for investments and for other related transactions. The Sub-Adviser will provide
services under this Agreement in accordance with the Fund's investment
objective, policies and restrictions as stated in the Trust's currently
effective registration statement under the 1940 Act, and any amendments or
supplements thereto ("Registration Statement").
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(b) The Sub-Adviser agrees that, in placing orders with brokers, it
will obtain the best net result in terms of price and execution; provided that,
on behalf of the Fund, the Sub-Adviser may, in its discretion, use brokers who
provide the Fund with research, analysis, advice and similar services to execute
portfolio transactions, and the Sub-Adviser may pay to those brokers in return
for brokerage and research services a higher commission than may be charged by
other brokers, subject to the Sub-Adviser's determining in good faith that such
commission is reasonable in terms either of the particular transaction or of the
overall responsibility of the Sub-Adviser to the Fund and its other clients and
that the total commissions paid by the Fund will be reasonable in relation to
the benefits to the Fund over the long term. In no instance will portfolio
securities be purchased from or sold to the Sub-Adviser, or any affiliated
person thereof, except in accordance with the federal securities laws and the
rules and regulations thereunder. The Sub-Adviser may aggregate sales and
purchase orders with respect to the assets of the Fund with similar orders being
made simultaneously for other accounts advised by the Sub-Adviser or its
affiliates. Whenever the Sub-Adviser simultaneously places orders to purchase or
sell the same security on behalf of the Fund and one or more other accounts
advised by the Sub-Adviser, the orders will be allocated as to price and amount
among all such accounts in a manner believed to be equitable over time to each
account. Xxxxxxxx Xxxxxxxx recognizes that in some cases this procedure may
adversely affect the results obtained for the Fund.
(c) The Sub-Adviser will maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions by the
Sub-Adviser on behalf of the Fund, and will furnish the Board and Xxxxxxxx
Xxxxxxxx with such periodic and special reports as the Board or Xxxxxxxx
Xxxxxxxx reasonably may request. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records that it
maintains for the Fund are the property of the Trust, agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act any records that it
maintains for the Trust and that are required to be maintained by Rule 31a-1
under the 1940 Act, and further agrees to surrender promptly to the Trust any
records that it maintains for the Fund upon request by the Trust.
(d) At such times as shall be reasonably requested by the Board or
Xxxxxxxx Xxxxxxxx, the Sub-Adviser will provide the Board and Xxxxxxxx Xxxxxxxx
with economic and investment analyses and reports as well as quarterly reports
setting forth the Fund's performance and make available to the Board and
Xxxxxxxx Xxxxxxxx any economic, statistical and investment services normally
available to institutional or other customers of the Sub-Adviser.
(e) In accordance with procedures adopted by the Board, as amended from
time to time, the Sub-Adviser is responsible for assisting in the fair valuation
of all portfolio securities and will use its reasonable efforts to arrange for
the provision of a price(s) from a party(ies) independent of the Sub-Adviser for
each portfolio security for which the custodian does not obtain prices in the
ordinary course of business from an automated pricing service.
3. Further Duties. In all matters relating to the performance of this
Agreement, the Sub-Adviser will act in conformity with the Trust's Declaration
of Trust, By-Laws and Registration Statement; and with the written instructions
and written directions of the Board and Xxxxxxxx Xxxxxxxx; and will comply with
the requirements of the 1940 Act and the Investment Advisers Act of 1940, as
amended ("Advisers Act") and the rules under each; Subchapter M of the Internal
Revenue Code ("Code"), as applicable to regulated investment companies; the
diversification requirements applicable to the Fund under Section 817(h) of the
Code; and all other applicable federal and state laws and regulations. Xxxxxxxx
Xxxxxxxx agrees to provide to the Sub-Adviser copies of the Trust's Declaration
of Trust, By-Laws, Registration
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Statement, written instructions and directions of the Board and Xxxxxxxx
Xxxxxxxx, and any amendments or supplements to any of these materials as soon as
practicable after such materials become available; provided, however, that the
Sub-Adviser's duty under this Agreement to act in conformity with any document,
instruction, or guideline produced by the Trust or Xxxxxxxx Xxxxxxxx shall not
arise until it has been delivered to the Sub-Adviser. Any changes to the Fund's
objectives, policies or restrictions will make due allowance for the time within
which the Sub-Adviser shall have to come into compliance.
4. Expenses. During the term of this Agreement, the Sub-Adviser will bear all
expenses incurred by it in connection with its services under this Agreement.
The Sub-Adviser shall not be responsible for any expenses incurred by the Trust,
the Fund or Xxxxxxxx Xxxxxxxx.
5. Compensation.
(a) For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, Xxxxxxxx Xxxxxxxx, not the Fund, will
pay to the Sub-Adviser a fee, computed daily and payable monthly, at an annual
rate of 0.70% of the Fund's average daily net assets and will provide the
Sub-Adviser with a schedule showing the manner in which the fee was computed.
(b) The fee shall be computed daily and payable monthly to the
Sub-Adviser on or before the last business day of the next succeeding calendar
month.
(c) If this Agreement becomes effective or terminates before the end of
any month, the fee for the period from the effective date 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 that such period
bears to the full month in which such effectiveness or termination occurs.
6. Limitation of Liability. The Sub-Adviser shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund, the Trust or
its shareholders or by Xxxxxxxx Xxxxxxxx in connection with the matters to which
this Agreement relates, except a loss resulting 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 Agreement.
Nothing in this paragraph shall be deemed to constitute a limitation or waiver
of any obligation or duty that may not by law be limited or waived.
7. Representations of Sub-Adviser. The Sub-Adviser represents, warrants and
agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment adviser under
the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement; (iii)
has met and will seek to continue to meet, for so long as this Agreement remains
in effect, any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency necessary to
be met in order to perform the services contemplated by this Agreement; (iv) has
the authority to enter into and perform the services contemplated by this
Agreement; and (v) will promptly notify Xxxxxxxx Xxxxxxxx of the occurrence of
any event that would disqualify the Sub-Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise. In addition to being registered as an investment adviser, the
Sub-Adviser is regulated in the conduct of its investment business in the United
Kingdom by the Investment Management Regulatory Organization Limited ("IMRO").
The Sub-Adviser confirms that the Fund is a Non-private Customer as defined by
IMRO.
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(b) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide Xxxxxxxx
Xxxxxxxx and the Board with a copy of such code of ethics, together with
evidence of its adoption. Within fifteen days of the end of the last calendar
quarter of each year that this Agreement is in effect, the president or a
vice-president of the Sub-Adviser shall certify to Xxxxxxxx Xxxxxxxx that the
Sub-Adviser has complied with the requirements of Rule 17j-1 during the previous
year and that there has been no violation of the Sub-Adviser's code of ethics
or, if such a violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of Xxxxxxxx Xxxxxxxx, the
Sub-Adviser shall permit Xxxxxxxx Xxxxxxxx, its employees or its agents to
examine the reports required to be made to the Sub-Adviser by Rule 17j-1(c)(1)
and all other records relevant to the Sub-Adviser's code of ethics.
(c) Not less than 48 hours prior to the signing of this Agreement, the
Sub-Adviser has provided Xxxxxxxx Xxxxxxxx with a copy of its Form ADV, which as
of the date of this Agreement is its Form ADV as most recently filed with the
Securities and Exchange Commission ("SEC"), and promptly will furnish a copy of
all amendments to Xxxxxxxx Xxxxxxxx at least annually.
(d) The Sub-Adviser will notify Xxxxxxxx Xxxxxxxx of any change of
control of the Sub-Adviser, including any change of its general partners or 25%
shareholders, as applicable, and any changes in the key personnel who are either
the portfolio manager(s) of the Fund or senior management of the Sub-Adviser, in
each case prior to or promptly after such change.
8. Services Not Exclusive. The Sub-Adviser may act as an investment adviser to
any other person, firm or corporation, and may perform management and any other
services for any other person, association, corporation, firm or other entity
pursuant to any contract or otherwise, and take any action or do anything in
connection therewith or related thereto, except as prohibited by applicable law;
and no such performance of management or other services or taking of any such
action or doing of any such thing shall be in any manner restricted or otherwise
affected by any aspect of any relationship of the Sub-Adviser to or with the
Trust, Fund or Xxxxxxxx Xxxxxxxx or deemed to violate or give rise to any duty
or obligation of the Sub-Adviser to the Trust, Fund or Xxxxxxxx Xxxxxxxx except
as otherwise imposed by law or agreed upon in writing between the Sub-Adviser
and Xxxxxxxx Xxxxxxxx, the Trust or the Fund.
9. Duration and Termination.
(a)This Agreement shall become effective upon the date first above
written.
(b) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for two years from its effective date. Thereafter, if not
terminated, this Agreement 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 Agreement 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 by vote of a majority of the outstanding voting securities
of the Fund.
(c) Notwithstanding the foregoing, this Agreement 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 the Fund on 60 days'
written notice to the Sub-Adviser. This Agreement may also be terminated,
without the payment of any penalty, by Xxxxxxxx Xxxxxxxx: (i) upon 120 days'
written notice to the Sub-Adviser; (ii) immediately upon material breach by the
Sub-Adviser of any of the representations and warranties set forth in Paragraph
7 of this Agreement; or (iii) immediately if, in the reasonable judgment
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of Xxxxxxxx Xxxxxxxx, the Sub-Adviser becomes unable to discharge its duties and
obligations under this Agreement, including circumstances such as financial
insolvency of the Sub-Adviser or other circumstances that could adversely affect
the Fund. The Sub-Adviser may terminate this Agreement at any time, without the
payment of any penalty, on 120 days' written notice to Xxxxxxxx Xxxxxxxx. This
Agreement will terminate automatically in the event of its assignment or upon
termination of the Advisory Contract as it relates to the Fund.
10. Amendment of this Agreement. No provision of this 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. No amendment of this Agreement shall be effective
until approved (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Agreement or interested persons of any such party, and
(ii) by a vote of a majority of the Fund's outstanding voting securities
(unless, in the case of (ii), the Trust receives an SEC order or no-action
letter permitting it to modify the Agreement without such vote).
11. Governing Law. This Agreement shall be construed in accordance with the
1940 Act and the laws of the State of Delaware, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
12. Miscellaneous. The captions in this Agreement 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
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. As used in this Agreement, the terms
"majority of the outstanding voting securities," "affiliated person,"
"interested person," "assignment," "broker," "investment adviser," "net assets,"
"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 SEC by any
rule, regulation or order. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Agreement is made less
restrictive by a rule, regulation or order of the SEC, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. This Agreement may be signed in counterpart.
13. Notices. Any notice herein required is to be in writing and is deemed to
have been given to the Sub-Adviser or Xxxxxxxx Xxxxxxxx upon receipt of the
same at their respective addresses set forth below.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year first
above written.
XXXXXXXX XXXXXXXX
ASSET MANAGEMENT INC.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attest:
By: _________________________________ By: __________________________________
Name: Name:
Title: Title:
XXXXXXXX CAPITAL MANAGEMENT
INTERNATIONAL INC.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: _______________________________
Attest:
By: __________________________________ By: __________________________________
Name: Name:
Title: Title:
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