For period ending September 30, 2006
File number 811-7528
Insured Municipal Income Fund Inc.
INVESTMENT ADVISORY AND ADMINISTRATION CONTRACT
Contract made as of April 1, 2006, between INSURED 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 intends to register 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, 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, as amended, 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 frees
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 and offering 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
expense, 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; (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 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
paid 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 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 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 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
INSURED MUNICIPAL INCOME FUND INC.
By: /s/_Thomas 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
