Exhibit 99 (4) (n)
SUB-ADVISORY AGREEMENT
Agreement dated as of April 1, 2006 between UBS GLOBAL ASSET MANAGEMENT
(AMERICAS) INC. ("UBS Global Americas"), a Delaware corporation, and ARIEL
CAPITAL MANAGEMENT, LLC, a Delaware limited liability company ("Sub-Adviser")
(the "Agreement").
RECITALS
(1) UBS Global Americas has entered into a Management Agreement dated April
1, 2006 ("Management Agreement") with UBS PACE Select Advisors Trust ("Trust"),
an open-end management investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"), with respect to the UBS PACE
SMALL/MEDIUM CO VALUE EQUITY INVESTMENTS ("Portfolio");
(2) UBS Global Americas desires to retain the Sub-Adviser to furnish
certain investment advisory services to UBS Global Americas and the Portfolio
for a designated portion of the assets ("Segment") of the Portfolio; and
(3) 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. UBS Global Americas hereby appoints the Sub-Adviser as an
investment Sub-Adviser with respect to Portfolio or Segment 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 and direction of the Trust's Board of
Trustees (the "Board") and review by UBS Global Americas, and any written
guidelines adopted by the Board or UBS Global Americas, the Sub-Adviser will
provide a continuous investment program for the Portfolio or Segment, including
investment research and discretionary management with respect to all securities
and investments and cash equivalents in the Portfolio or Segment. The
Sub-Adviser will determine from time to time what investments will be purchased,
retained or sold by the Portfolio or Segment. The Sub-Adviser will be
responsible for placing purchase and sell orders for investments and for other
related transactions for the Portfolio or Segment. The Sub-Adviser understands
that the Portfolio's assets need to be managed so as to permit the Portfolio to
qualify or to continue to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, as amended ("Code"). The Sub-Adviser
will provide services under this Agreement in accordance with the Portfolio'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").
(b) The Sub-Adviser agrees that it will not consult with any other
Sub-Adviser ("Other Sub-Adviser") for the Trust or Portfolio concerning any
transaction by the Portfolio or Segment in securities or other assets, including
(i) the purchase by the Portfolio or Segment of a security issued by the Other
Sub-Adviser, or an affiliate of the Other Sub-Adviser, to the Trust or Portfolio
except as permitted by the 1940 Act or (ii) transactions by the Portfolio or
Segment in any security for which the Other Sub-Adviser, or its affiliate, is
the principal underwriter.
(c) The Sub-Adviser agrees that it will be responsible for voting proxies
of issuers of securities held by the Portfolio or Segment. The Sub-Adviser
further agrees that it will adopt written proxy voting procedures that shall
comply with the requirements of the 1940 Act and the Investment Advisers Act of
1940, and that shall be acceptable to the Board. The Sub-Adviser further agrees
that it will provide the Board on or before August 1st of each year, or more
frequently as the Board may reasonably request, with a written report of the
proxies voted during the most recent 12-month period ending June 30, or such
other period as the Board may designate, in a format that shall comply with the
1940 Act and that shall be acceptable to the Board.
(d) 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 Portfolio or Segment, the Sub-Adviser may, in its discretion, use
brokers who provide the Sub-Adviser with research, analysis, advice and similar
services to execute portfolio transactions on behalf of the Portfolio or
Segment, 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 Portfolio or Segment and its other
clients and that the total commissions paid by the Portfolio or Segment will be
reasonable in relation to the benefits to the Portfolio over the long term. In
no instance will portfolio securities be purchased from or sold to UBS Global
Americas or 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 of the
assets of the Portfolio or Segment 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 Portfolio or Segment 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.
UBS Global Americas recognizes that in some cases this procedure may adversely
affect the results obtained for the Portfolio or Segment.
Subject to the Sub-Adviser's obligations to seek best execution, UBS
Global Americas agrees that the Sub-Adviser, in its sole discretion, may place
transactions on behalf of the Portfolio or Segment and the Trust with any
broker-dealer deemed to be an affiliate of the Sub-Adviser (the "Affiliated
Broker-Dealers") so long as such transactions are effected in conformity with
the requirements (including any applicable exemptions and administrative
interpretations set forth in Part II of the Sub-Adviser's Form ADV Registration
Statement on file
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with the Securities and Exchange Commission ("Form ADV")) of Section 11(a)(1)(H)
of the Securities Exchange Act of 1934. In all such dealings, the Affiliated
Broker-Dealers shall be authorized and entitled to retain any commissions,
remuneration or profits which may be made in such transactions and shall not be
liable to account for the same to UBS Global Americas, the Portfolio or the
Trust.
UBS Global Americas further authorizes the Sub-Adviser and its
Affiliated Broker-Dealers to execute agency cross transactions (the "Cross
Transactions") on behalf of the Portfolio and the Trust. Cross Transactions are
transactions which may be effected by the Affiliated Broker-Dealers acting for
both the Portfolio or the Trust and the counterparty to the transaction. Cross
Transactions enable the Sub-Adviser to purchase or sell a block of securities
for the Portfolio or the Trust at a set price and possibly avoid an unfavorable
price movement that may be created through entrance into the market with such
purchase or sale order. As such, the Sub-Adviser believes that Cross
Transactions can provide meaningful benefits for the Portfolio and the Trust and
its clients generally. UBS Global Americas, the Portfolio and the Trust should
be aware, however, that in a Cross Transaction an Affiliated Broker-Dealer will
be receiving commissions from both sides of the trade and, therefore, there is a
potentially conflicting division of loyalties and responsibilities.
(e) The Sub-Adviser will maintain all books and records required to be
maintained pursuant to Rule 31a-1(b)(2)(ii), (3), (5), (6), (7), (9) and 10
under the 1940 Act and the rules and regulations promulgated thereunder with
respect to transactions by the Sub-Adviser on behalf of the Portfolio or
Segment, and will furnish the Board and UBS Global Americas with such periodic
and special reports as the Board or UBS Global Americas 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 Portfolio
or Segment 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 Portfolio or Segment 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 Portfolio or Segment upon request by the
Trust.
(f) At such times as shall be reasonably requested by the Board or UBS
Global Americas, the Sub-Adviser will provide the Board and UBS Global Americas
with economic and investment analyses and reports as well as quarterly reports
setting forth the performance of the Portfolio or Segment and make available to
the Board and UBS Global Americas any economic, statistical and investment
services that the Sub-Adviser normally makes available to its institutional or
other customers.
(g) 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 one or more parties 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.
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3. FURTHER DUTIES. In all matters relating to the performance of this
Agreement, the Sub-Adviser will act in conformity with the Trust's Trust
Instrument, By-Laws and Registration Statement and with the written instructions
and written directions of the Board and UBS Global Americas; and will comply
with the applicable requirements of the 1940 Act, the Investment Advisers Act of
1940, as amended ("Advisers Act"), and the rules under each, the Code, and all
other applicable federal and state laws and regulations applicable to the Trust
and the Portfolio. UBS Global Americas agrees to provide to the Sub-Adviser
copies of the Trust's Trust Instrument, By-Laws, Registration Statement, written
instructions and directions of the Board and UBS Global Americas, 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 UBS Global Americas shall not arise until it
has been delivered to the Sub-Adviser. Any changes to the objectives, policies
and 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 Portfolio or UBS Global Americas.
5. COMPENSATION.
(a) For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, UBS Global Americas, not the Portfolio, will pay to
the Sub-Adviser a fee, computed daily and payable monthly, at an annual rate of
..30% of the Portfolio's average daily net assets of the Portfolio or Segment
(computed in the manner specified in the Management Agreement), and will provide
the Sub-Adviser with a schedule showing the manner in which the fee was
computed. If the Sub-Adviser is managing a Segment, its fees will be based on
the value of the assets of the Portfolio within the Sub-Adviser's Segment.
(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) For those periods in which UBS Global Americas has agreed to waive all
or a portion of its management fee, UBS Global Americas may ask the Sub-Adviser
to waive the same proportion of its fees, but the Sub-Adviser is under no
obligation to do so.
(d) 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 which 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 Portfolio,
the Trust or its shareholders or
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by UBS Global Americas 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 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 UBS Global Americas 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.
(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 UBS Global
Americas 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, a duly authorized officer
of the Sub-Adviser shall certify to UBS Global Americas that the Sub-Adviser has
complied with the requirements of Rule 17j-1 during the previous year and that
there has been no material 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 UBS Global Americas, the Sub-Adviser
shall permit UBS Global Americas, 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) The Sub-Adviser has provided UBS Global Americas with a copy of its
Form ADV as most recently filed with the Securities and Exchange Commission
("SEC") and promptly will furnish a copy of all amendments to UBS Global
Americas at least annually.
(d) The Sub-Adviser will notify UBS Global Americas of any change of
control of the Sub-Adviser, including any change of its general partners or 25%
shareholders or 25% limited partners, as applicable, and any changes in the key
personnel who are either the portfolio manager(s) of the Portfolio or senior
management of the Sub-Adviser, in each case prior to or promptly after such
change.
(e) The Sub-Adviser agrees that neither it nor any of its affiliates will
in any way refer directly or indirectly to its relationship with the Trust, the
Portfolio, UBS Global Americas or any
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of their respective affiliates in offering, marketing or other promotional
materials without the express written consent of UBS Global Americas.
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, Portfolio or UBS Global Americas or deemed to violate or give
rise to any duty or obligation of the Sub-Adviser to the Trust, Portfolio or UBS
Global Americas except as otherwise imposed by law or by this Agreement.
9. DURATION AND TERMINATION.
(a) This Agreement shall become effective upon the date first above
written, provided that this Agreement 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 Agreement or interested persons of any such party
("Independent Trustees"), cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of the Portfolio's
outstanding voting securities, unless UBS Global Americas has authority to enter
into this Agreement pursuant to exemptive relief from the SEC without a Vote of
the Portfolio's outstanding voting securities.
(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 the Independent Trustees, 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 Portfolio.
(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 Portfolio on 30 days'
written notice to the Sub-Adviser. This Agreement may also be terminated,
without the payment of any penalty, by UBS Global Americas: (i) upon 120 days'
written notice to the Sub-Adviser; (ii) immediately upon material breach by the
Sub-Adviser of any of the representations, warranties and agreements set forth
in Paragraph 7 of this Agreement; or (iii) immediately if, in the reasonable
judgment of UBS Global Americas, 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 Portfolio. The Sub-Adviser may terminate this Agreement at
any time, without the payment of any penalty, on 120 days' written notice to UBS
Global Americas. This Agreement will terminate automatically in the event of its
assignment or upon termination of the Management Agreement.
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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 the Independent
Trustees, and (ii) if the terms of this Agreement shall have changed, by a vote
of a majority of the Portfolio's outstanding voting securities (except in the
case of (ii), pursuant to the terms and conditions of the SEC order 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 New York, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of New York 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
meanings 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 UBS Global Americas upon receipt of the
same at their respective addresses set forth below. All written notices required
or permitted to be given under this Agreement will be delivered by personal
service, by postage mail return receipt requested or by facsimile machine or a
similar means of same delivery which provides evidence of receipt (with a
confirming copy by mail as set forth herein). All notices provided to UBS Global
Americas will be sent to the attention of its General Counsel. All notices
provided to the Sub-Adviser will be sent to the attention of Xxxxxx Xxxxxxxx.
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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.
UBS GLOBAL ASSET
MANAGEMENT (AMERICAS) INC.
0 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attest:
By: /s/ Xxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxx Xxxxxxx Name: Xxxxx X. Xxxxxx
Title: Director Title: Executive Director
ARIEL CAPITAL MANAGEMENT, LLC.
Aon Center
000 Xxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attest:
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxx
--------------------------------- ------------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxx X. Xxxxx
Title: Senior Vice President Title: Vice President
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