Exhibit No. 4
INVESTMENT ADVISORY AND ADMINISTRATION CONTRACT
Contract made as of July 1, 1989, between PAINEWEBBER MUNICIPAL SERIES, 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 and
dealers, 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, purchase
and sell portfolio securities to and from brokers and dealers who provide the
Series with research, analysis, advice and similar services, and Xxxxxxxx
Xxxxxxxx may pay to those brokers and dealers, in return for research and
analysis, a higher commission or spread than may be charged by other brokers and
dealers, subject to Xxxxxxxx Xxxxxxxx' determining in good faith that such
commission or spread 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 or spreads 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 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 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
lla2-2(T) thereunder, and the Trust hereby consents to the retention of
compensation by Xxxxxxxx Xxxxxxxx or person or
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entity associated with Xxxxxxxx Xxxxxxxx for such transactions in accordance
with Rule lla2-2(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 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 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.
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,
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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 Paragraph 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 Paragraph 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 and other transaction costs) 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 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
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of any law; (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) incurred by the Trust or Series; (xvi) fees, voluntary
assessments and other expenses incurred in connection with membership in
investment company organizations; (xvii) costs 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 expense 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 hereof 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 expense 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, PaineWebber Classic High Yield
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Municipal Fund and PaineWebber Classic New York Tax-Free Fund will each pay to
Xxxxxxxx Xxxxxxxx a fee, computed daily and paid monthly at an annual rate of
.60% of such Series' 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 last 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 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 Xxxxxxxx Xxxxxxxx. Xxxxxxxx Xxxxxxxx shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the any Series or the Trust 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, 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 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
Series. 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 or such
Series in settlement of such right or claim, and not to such Trustees or
shareholders.
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11. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove 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 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 and 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.
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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 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," "interested person,"
"assignment", "broker," "dealer," "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: PAINEWEBBER MUNICIPAL SERIES
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. X'Xxxxxxx
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Attest: XXXXXXXX XXXXXXXX ASSET MANAGEMENT INC.
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx Xxxxxxxxxxxx
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