Exhibit No. 5(a)
INVESTMENT ADVISORY AND ADMINISTRATION CONTRACT
Contract made as of January 28, 1993 between PAINEWEBBER SECURITIES
TRUST, a Massachusetts business trust ("Trust"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ASSET
MANAGEMENT INC. ("▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇"), 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as
investment adviser and administrator of the Trust and each Series for the period
and on the terms set forth in this Contract. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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"), ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ will determine from time to time what securities and other investments
will be purchased, retained or sold by each Series.
(b) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ may pay to those brokers in return for brokerage and
research services a higher commission than may be charged by other brokers,
subject to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' determining in good faith that such commission is
reasonable in terms either of the particular transaction or of the overall
responsibility of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or any affiliated person thereof, except in
accordance with the federal securities laws and the rules and regulations
thereunder. Whenever ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ simultaneously places orders to
purchase or sell the same security on behalf of a Series and one or more other
accounts advised by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 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) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and any entity or
person associated with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or any person or entity associated with
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for such transactions in accordance with Rule
11a2-2(T)(a)(2)(iv).
3. Duties as Administrator. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ will administer the
affairs of the Trust and each Series subject to the supervision of the Board and
the following understandings:
(a) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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
noting 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) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the Trust's
Registration Statement, proxy material, tax
2
returns and required reports to each Series' shareholders and the Securities
and Exchange Commission and other appropriate federal or state regulatory
authorities.
(d) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
4. Further Duties. In all matters relating to the performance of this
Contract, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' Duties as Investment Adviser and
Administrator. With respect to any or all Series, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ may enter
into one or more contracts ("Sub-Advisory or Sub-Administration Contract") with
a sub-adviser or sub-administrator in which ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
hereunder are not to be deemed exclusive and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ under this
Contract; (iii) expenses of organizing the Trust and the Series; (iv) filing
fees and expenses relating
3
to the registrations and qualification of the Series' shares and the Trust
under federal and/or securities laws and maintaining such registration and
qualifications; (v) fees and salaries payable to the Trust's Trustees and
officers who are not interested persons of the Trust or ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
(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; (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) 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 ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and acknowledged as otherwise payable by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ pursuant to
this Contract, the Series may reduce the fee payable to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
pursuant to Paragraph 8 thereof by such amount. To the extent that such
deductions exceed the fee payable to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of any expenses of
the Trust or a Series that ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is not required by this Contract to
pay or assume shall not obligate ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 Small Cap Value Fund series, the Trust
will pay to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ a
4
fee, computed daily and paid monthly, at an annual rate of 1.00% 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
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. 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 ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 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
5
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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or
by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 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.
6
Attest: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ASSET MANAGEMENT INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------- -------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
First Vice President
Attest: PAINEWEBBER SECURITIES TRUST
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇
---------------------- -------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇
Secretary and Vice President
7