For period ending September 30, 2006
File number 811-7096
EXHIBIT 77Q1
INVESTMENT ADVISORY AND ADMINISTRATION CONTRACT
Contract made as of April 1, 2006, between INVESTMENT GRADE MUNICIPAL INCOME
FUND INC., a Maryland corporation (Fund), and UBS GLOBAL ASSET MANAGEMENT
(AMERICAS) INC. (UBS Global Americas), a Delaware corporation registered
as an investment adviser under the Investment Advisers Act of 1940, as
amended.
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (1940 Act), as a closed-end, diversified management
investment company, and has registered shares of its common stock
(Shares) for sale to the public under the Securities Act of 1933, as
amended (1933 Act); and WHEREAS, the Fund desires to retain UBS Global
Americas as investment adviser and administrator to furnish certain
administrative, investment advisory and portfolio management services
to the Fund and UBS Global Americas 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 Fund hereby appoints UBS Global Americas as investment
adviser and administrator of the Fund for the period and on the terms
set forth in this Contract. UBS Global Americas accepts such appointment
and agrees to render the services set forth herein for the compensation
provided herein.
2. Duties as Investment Adviser.
(a) Subject to the supervision of the Funds Board of Directors (Board),
UBS Global Americas 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.
(b) UBS Global Americas agrees that in placing orders with brokers and
dealers, it will attempt to obtain the best net result in terms of
price and execution; provided that UBS Global Americas may, in its
discretion, purchase and sell portfolio securities to and from brokers
who provide the Fund with research, analysis, advice and similar
services, and UBS Global Americas may pay to those brokers, in return
for such services, a higher commission than may be charged by other
brokers, subject to UBS Global Americas determining in good faith that
such commission is reasonable in terms either of the particular
transaction or of the overall responsibility of UBS Global Americas 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 UBS Global Americas, or any affiliated person
thereof, except in accordance with the federal securities laws and
rules and regulations thereunder. Whenever UBS Global Americas
simultaneously places orders to purchase or sell the same security on
behalf of the Fund and one or more other accounts advised by UBS Global
Americas, such orders will be allocated as to price and amount among
all such accounts in a manner believed to be equitable to each
account. The Fund recognizes that in some cases this procedure may
adversely affect the results obtained for the Fund.
(c) UBS Global Americas will maintain or oversee the maintenance of
all books and records with respect to the securities transactions of
the Fund 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, UBS Global Americas
hereby agrees that all records which it maintains for the Fund are
the property of the Fund, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it
maintains for the Fund and which are required to be maintained by
Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Fund any records which it maintains for the Fund
upon request by the Fund.
(d) UBS Global Americas will oversee the computation of the net
asset value and the net income of the Fund as described in the
currently effective registration statement of the Fund under the
1933 Act and 1940 Act and any amendments or supplements thereto
(Registration Statement) or as more frequently requested by the
Board.
(e) The Fund hereby authorizes UBS Global Americas and any entity
or person associated with UBS Global Americas which is a member of
a national securities exchange to effect any transaction on such
exchange for the account of the Fund, which transaction is permitted
by Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2 2(T) thereunder, and the Fund hereby consents to the retention
of compensation by UBS Global Americas or any person or entity
associated with UBS Global Americas for such transactions in accordance
with Rule 11a2 2(T)(a)(2)(iv).
3. Duties as Administrator. UBS Global Americas will administer the
affairs of the Fund subject to the supervision of the Board and the
following understandings:
(a) UBS Global Americas will supervise all aspects of the operations
of the Fund, including the 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 Fund.
(b) UBS Global Americas will provide the Fund with such corporate,
administrative and clerical personnel (including officers of the
Fund) and services as are reasonably deemed necessary or advisable
by the Board, including the maintenance of certain books and records
of the Fund.
(c) UBS Global Americas will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of
the Funds Registration Statement, proxy material, tax returns and
required reports to the Funds shareholders and the Securities and
Exchange Commission and other appropriate federal or state regulatory
authorities.
(d) UBS Global Americas will provide the Fund 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) UBS Global Americas 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
UBS Global Americas.
4. Further Duties. In all matters relating to the performance of
this Contract, UBS Global Americas will act in conformity with
the Articles of Incorporation, By-Laws and Registration Statement
of the Fund 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 UBS Global Americas Duties as Investment Adviser
and Administrator. UBS Global Americas may enter into one or
more contracts with another party in which UBS Global Americas
delegates to such other party any or all of its duties specified
in Paragraphs 2 and 3 of this Contract, provided that each such
contract imposes on the other party bound thereby all the applicable
duties and conditions to which UBS Global Americas is subject by
Paragraphs 2, 3 and 4 of this Contract, and further provided that
each such contract meets all requirements of the 1940 Act and rules
thereunder.
6. Services Not Exclusive. The services furnished by UBS Global
Americas hereunder are not to be deemed exclusive and UBS Global
Americas 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 UBS Global Americas, who may
also be a director, officer or employee of the Fund, 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, the Fund will bear all
expenses, not specifically assumed by UBS Global Americas,
incurred in its operations and the offering of its Shares or
any preferred stock.
(b) Expenses borne by the Fund will include but not be limited
to the following (which shall be in addition to the fees payable
to and expenses incurred on behalf of the Fund by UBS Global
Americas under this Contract): (1) the costs (including brokerage
commissions) of securities purchased or sold by the Fund and
any losses incurred in connection therewith; (2) expenses incurred
on behalf of the Fund by UBS Global Americas; (3) organizational
expenses of the Fund, whether or not advanced by UBS Global
Americas; (4) filing fees and expenses relating to the registration
and qualification of the Funds Shares under federal and state
securities laws; (5) fees and salaries payable to directors who
are not interested persons of the Fund or UBS Global Americas;
(6) all expenses incurred in connection with the directors
services, including travel expenses; (7) taxes (including any
income or franchise taxes) and governmental fees; (8) costs of
any liability, uncollectible items of deposit and any other
insurance or fidelity bonds; (9) any costs, expenses or losses
arising out of a liability of or claim for damages or other
relief asserted against the Fund for violation of any law;
(10) legal, accounting and auditing expenses, including legal
fees of special counsel for the independent directors;
(11) charges of custodians, transfer agents and other agents;
(12) costs of preparing any share certificates (13) expenses
of printing and distributing reports to shareholders; (14)
any extraordinary expenses (including fees and disbursements
of counsel) incurred by the Fund; (15) fees, voluntary
assessments and other expenses incurred in connection with
membership in investment company organizations; (16) costs
of mailing and tabulating proxies and costs of meetings of
shareholders, the board and any committees thereof, (17) the
cost of investment company literature and other publications
provided to directors and officers; (18) costs of mailing,
stationery and communications equipment; (19) interest charges
on borrowings; and (20) fees and expenses of listing and
maintaining any listing of the Funds Shares on any national
securities exchange; and (21) costs and expenses (including
rating agency fees) associated with the issuance of any
preferred stock.
(c) The Fund may pay directly any expense incurred by it in
its normal operations and, if any such payment is consented
to by UBS Global Americas and acknowledged as otherwise payable
by UBS Global Americas pursuant to this Contract, the Fund may
reduce the fee payable to UBS Global Americas pursuant to
Paragraph 8 hereof by such amount. To the extent that such
deductions exceed the fee payable to UBS Global Americas 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) UBS Global Americas will assume the cost of any compensation
for services provided to the Fund received by the officers
of the Fund and by those directors who are interested persons
of the Fund.(e) The payment or assumption by UBS Global
Americas of any expense of the Fund that UBS Global Americas
is not required by this Contract to pay or assume shall not
obligate UBS Global Americas us to pay or assume the same or
any similar expense of the Fund on any subsequent occasion.
(f) UBS Global Americas will reimburse the Fund if and to the
extent that the aggregate operating expenses of the Fund in
any fiscal year exceed the limits applicable to the Fund under
the applicable securities laws and regulations of any state.
8. Compensation.
(a) For the services provided and the expenses assumed pursuant
to this Contract, the Fund will pay to UBS Global Americas a
fee, computed weekly and payable monthly, at an annual rate of
0.90% of the Funds average weekly net assets.
(b) The fee shall be accrued weekly and payable monthly to
UBS Global Americas on or before the last business day of
the next succeeding calendar month.
(c) If this Contract becomes effective or terminates before
the end of any month, the fees 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 which such period bears
to the full month in which such effectiveness or termination occurs.
9. Limitation of Liability of UBS Global Americas. UBS Global
Americas shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund or its
shareholders in connection with the matters to which this
Contract 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 Contract.
Any person, even though also an officer, partner, employee,
or agent of UBS Global Americas, who may be or become an
officer, director, employee or agent of the Fund shall be
deemed, when rendering services to the Fund or acting with respect
to any business of the Fund, to be rendering such service to
or acting solely for the Fund and not as an officer, partner,
employee or agent or one under the control or direction of UBS
Global Americas even though paid by it.
10. Duration and Termination.
(a) This Contract shall become effective upon the date
first above written, provided that this Contract shall not
take effect unless it has first been approved (i) by a vote
of a majority of those directors of the Fund 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 the Funds outstanding
voting securities.
(b) Unless sooner terminated as provided herein, 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 directors of the Fund
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 by vote of a majority of the
outstanding voting securities of the Fund.
(c) Notwithstanding the foregoing, 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
the Fund on sixty days written notice to UBS Global Americas, or by
UBS Global Americas at any time, without the payment of any penalty,
on sixty days written notice to the Fund. This Contract will
automatically terminate in the event of its assignment.
11. Amendment of This Contract. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument
signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Contract shall
be effective until approved by vote of a majority of the Funds outstanding
voting securities.
12. Governing Law. This Contract shall be construed in accordance with the
laws of the State of Delaware and the 1940 Act. 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.
13. 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 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, sale, sell and security
shall have the same meanings 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
federal securities laws 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 below as of the day and year
first above written.
Attest: /s/Xxxxxx Xxx
Name: Xxxxxx Xxx
Title: Vice President and Assistant Secretary
INVESTMENT GRADE MUNICIPAL INCOME FUND INC.
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Vice President and Treasurer
Attest: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Director and Associate General Counsel
UBS GLOBAL ASSET MANAGEMENT (AMERICAS) INC.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Director and Senior Associate General Counsel
