Exhibit 77(Q1)
For period ending January 31, 2011
File number 811-8764
SUB-ADVISORY AGREEMENT
Agreement dated as of November 4, 2010 between UBS Global Asset Management
(Americas) Inc. (UBS Global AM), a Delaware corporation, and Pzena
Investment Management, LLC, (Sub- Adviser), a Delaware limited liability
company (the Agreement).
RECITALS
(1) UBS Global AM has entered into a Management Agreement dated as
of August 1, 2008 (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 UBS PACE International Emerging Markets Equity Investments
(Portfolio); and
(2) UBS Global AM is authorized to retain one or more sub-advisers
to furnish certain investment advisory services to UBS Global AM and
the Portfolio;
(3) UBS Global AM desires to retain the Sub-Adviser to furnish
certain investment advisory services to UBS Global AM and the Portfolio
or a designated portion of the assets (Segment) of the Portfolio; and
(4) The Sub-Adviser is willing to furnish such services;
Now therefore, in consideration of the premises and mutual covenants
herein contained, UBS Global AM and the Sub-Adviser agree as follows:
1. Appointment. UBS Global AM hereby appoints the Sub-Adviser
as an investment sub-adviser with respect to the 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 Trusts Board
of Trustees (the Board) and review by UBS Global AM, and any written
guidelines adopted by the Board or UBS Global AM 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 Portfolios
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 Portfolios
investment objective, policies and restrictions as stated in the Trusts
currently effective registration statement under the 1940 Act, and any
amendments or supplements thereto (Registration Statement). The
Sub-Adviser, on each business day, shall provide UBS Global AM and the
Trusts custodian such information as UBS Global AM and the Trusts
custodian may reasonably request relating to all transactions concerning
the Portfolio or Segment.
UBS Global AM hereby designates and appoints the Sub-Adviser as its and
the Portfolios limited purpose agent and attorney-in-fact, without further
prior approval of UBS Global AM (except as expressly provided for herein
or as may be required by law) to make and execute, in the name and on behalf
of the Portfolio, all agreements, instruments and other documents and to
take all such other action which the Sub-Adviser considers necessary or
advisable to carry out its duties hereunder. By way of example and not by
way of limitation, in connection with any purchase for the Portfolio or
Segment of securities or instruments that are not registered under the
U.S. Securities Act of 1933, as amended (the Securities Act), the Sub-Adviser
shall have the full power and authority, among other things, to: (i) commit
to purchase such securities for the Portfolio on the terms and conditions
under which such securities are offered; (ii) execute such account opening
and other agreements, instruments and documents (including, without
limitation, purchase agreements, subscription documents, ISDA and other
swap and derivative documents), and make such commitments, as may be
required in connection with the purchase and sale of such securities or
instruments; (iii) represent that the Portfolio is an accredited investor
as defined in Rule 501 (a) of Regulation D under the Securities Act and a
Qualified Institutional Buyer as defined in Rule 144A (a) (1) (i) under
the Securities Act; and (iv) commit that such securities will not be
offered or sold by the Portfolio except in compliance with the registration
requirements of the Securities Act or an exemption therefrom. This power-of-
attorney is a continuing power-of-attorney and shall remain in full force
and effect until revoked by UBS Global AM or the Trust in writing, but any
such revocation shall not affect any transaction initiated prior to receipt
by the Sub-Adviser of such notice.
(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) Unless otherwise instructed by UBS Global AM or the Trust, the Sub-
Adviser agrees that it will be responsible for voting proxies of issuers
and responding to all corporate actions for 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, as amended (Advisers Act) (Proxy Voting
Policy), and that shall be acceptable to the Board In addition, UBS Global
AM acknowledges and agrees that the Sub-Adviser shall not have any
responsibility to initiate, consider or participate in any class action or
other litigation against or involving any issue of securities held or
formerly held in the Portfolio or Segment or to advise or take any action
on behalf of UBS Global AM with respect to any such actions or litigation.
The Sub-Adviser will forward any information received by it about such
actions to UBS Global AM.
The Sub-Adviser shall also provide its Proxy Voting Policy, and if
requested by UBS Global AM, a summary of such Proxy Voting Policy for
inclusion in the Trusts registration statement, and will provide UBS
Global AM with any material amendment to the Proxy Voting Policy within
a reasonable time after such amendment has taken effect. 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 upon the request of UBS Global AM or
the Board, Sub-Adviser shall exercise the rights incident to the
securities held by the Portfolio or Segment in the context of a
bankruptcy or other reorganization. The Sub-Adviser further agrees
that it will keep UBS Global AM fully informed about any such
actions that it intends to take.
(e) The Sub-Adviser agrees that it will place orders with brokers
in accordance with best execution policies, taking into account
best price as an important factor in this decision, provided that,
on behalf of the Portfolio or Segment, the Sub-Adviser may, in its
discretion, use brokers that 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-Advisers determination 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 or Segment over the long
term. In no instance will portfolio securities be purchased from
or sold to UBS Global AM or the Sub-Adviser, the Trusts principal
underwriter, 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 with respect to 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 AM recognizes that in some cases this procedure may adversely
affect the results obtained for the Portfolio or Segment.
Subject to the Sub-Advisers obligations to seek best execution,
UBS Global AM 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
(including affiliated FCMs) 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-Advisers Form ADV Registration Statement
on file with the Securities and Exchange Commission (Form
ADV)) of Section 11(a)(1)(H) of the Securities Exchange Act
of 1934 (the 1934 Act), and in compliance with Rules 17e-1
or 10f-3 under the 1940 Act or other applicable rules and
the Trusts policies and procedures thereunder. 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 AM, the Portfolio or the
Trust. In the event Sub-Adviser becomes affiliated (as deemed
under the federal securities laws) with a broker-dealer during
the term of this Agreement, Sub-Adviser shall obtain the
approval of the Trusts Board of Trustees prior to commencement
of transactions with such broker-dealer on behalf of the Portfolio
or the Trust.
UBS Global AM 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 AM, 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.
Sub-Adviser shall effect such Cross Transactions in compliance
with Rule 206(3)-2 under the Advisers Act, Rule 17a-7 under the
1940 Act, and any other applicable provisions of the federal
securities laws and shall provide UBS Global AM with periodic
reports describing such agency cross transactions. UBS Global
AM understands that the authority of the Sub-Adviser to execute
agency Cross Transactions for the Portfolio is terminable at
will without penalty, effective upon receipt by the Sub-Adviser
of written notice from UBS Global AM, and that the failure to
terminate such authorization will result in its continuation.
(f) The Sub-Adviser shall maintain separate detailed records of
all matters pertaining to the Portfolio or Segment, including,
without limitation, brokerage and other records of all
securities transactions. Any records required to be maintained
and preserved pursuant to the provisions of Rule 31a-1 and Rule
31a-2 promulgated under the 1940 Act that are prepared or
maintained by the Sub-Adviser on behalf of the Trust are the
property of the Trust and will be surrendered promptly to the
Trust upon request. The Sub-Adviser further agrees to preserve
for the periods prescribed in Rule 31a-2 under the 1940 Act the
records required to be maintained under Rule 31a-1 under the
1940 Act, and will furnish the Board and UBS Global AM with
such periodic and special reports as the Board or UBS Global
AM may request.
(g) At such times as shall be reasonably requested by the
Board or UBS Global AM, the Sub-Adviser will provide the Board
and UBS Global AM 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
AM any economic, statistical and investment services that the Sub-
Adviser normally makes available to its institutional or other
customers.
(h) In accordance with procedures adopted by the Board, as amended
from time to time, the Sub-Adviser is responsible for assisting the
Board and UBS Global AM in the fair valuation of all portfolio
securities in the Portfolio or Segment and will use its reasonable
efforts to arrange for the provision of a price or prices 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.
The Sub-Adviser also will provide such information or perform such
additional acts as are customarily performed by a Sub-Adviser and may
be required for the Trust or UBS Global AM to comply with their
respective obligations under applicable federal securities laws,
including, without limitation, the 1940 Act, the Advisers Act, the
1934 Act, the Securities Act, and any rule or regulation thereunder.
3. Further Duties. In all matters relating to the performance of
this Agreement, the Sub-Adviser will seek to act in conformity with
the Trusts Trust Instrument, By-Laws and Registration Statement, the
Trusts policies and procedures for compliance by the Trust with the
Federal Securities Laws (as that term is defined in Rule 38a-1 under
the 1940 Act) provided to the Sub-Adviser (together, the Trust
Compliance Procedures) and with the written instructions and written
directions of the Board and UBS Global AM, which has been provided
to the Sub-Adviser, and will comply with the requirements of the
1940 Act, and the Advisers Act, and the rules under each, the Code,
and all other federal and state laws and regulations applicable to
the Trust and the Portfolio. UBS Global AM agrees to provide to the
Sub-Adviser copies of the Trusts Trust Instrument, By-Laws, Registration
Statement, Trusts Compliance Procedures, written instructions and
directions of the Board and UBS Global AM, and any amendments or
supplements to any of these materials as soon as practicable after
such materials become available. UBS Global AM further agrees to
identify to the Sub-Adviser in writing any broker-dealers that are
affiliated with UBS Global AM (other than UBS Financial Services Inc.
and UBS Global Asset Management (US) Inc.).
In order to assist the Trust and the Trusts Chief Compliance Officer
(the Trust CCO) to satisfy the requirements contained in Rule 38a-1
under the 1940 Act, the Sub-Adviser shall provide to the Trust CCO:
(i) direct access to the Sub-Advisers chief compliance officer
and/or other senior compliance personnel, as reasonably requested
by the Trust CCO; (ii) quarterly reports confirming that the Sub-
Adviser has complied with the Trust Compliance Procedures in
managing the Portfolio or Segment; and (iii) quarterly
certifications that there were no Material Compliance Matters
(as that term is defined by Rule 38a-1(e)(2)) that arose under
the Trust Compliance Procedures that related to the Sub-Advisers
management of the Portfolio or Segment.
The Sub-Adviser shall promptly provide the Trust CCO with copies
of: (i) the Sub-Advisers policies and procedures for compliance by
the Sub-Adviser with the Federal Securities Laws (together, the
Sub-Adviser Compliance Procedures), and (ii) any material changes
to the Sub-Adviser Compliance Procedures. The Sub-Adviser shall
cooperate fully with the Trust CCO so as to facilitate the Trust
CCOs performance of the Trust CCOs responsibilities under Rule
38a-1 to review, evaluate and report to the Trusts Board on the
operation of the Sub-Adviser Compliance Procedures, and shall
promptly report to the Trust CCO any Material Compliance Matter
arising under the Sub-Adviser Compliance Procedures involving the
Portfolio or Segment. The Sub-Adviser shall provide to the Trust
CCO: (i) quarterly reports confirming the Sub-Advisers compliance
with the Sub-Adviser Compliance Procedures in managing the Portfolio
or Segment, and (ii) certifications that there were no Material
Compliance Matters involving the Sub-Adviser that arose under the
Sub-Adviser Compliance Procedures that affected the Portfolio or
Segment. At least annually, the Sub-Adviser shall provide a
certification to the Trust CCO to the effect that the Sub-Adviser
has in place and has implemented policies and procedures that are
reasonably designed to ensure compliance by the Sub-Adviser with
any applicable Federal Securities Laws, subject to such
interpretations as may be contained in the Trust Compliance
Procedures.
The Sub-Adviser will promptly provide UBS Global AM with information
(including information that is required to be disclosed in the Trusts
registration statement) with respect to the portfolio managers responsible
for the Portfolio or Segment and any changes in the portfolio managers
responsible for the Portfolio or Segment.
The Sub-Adviser will promptly notify UBS Global AM of any pending
investigation, material litigation, administrative proceeding or any other
significant regulatory inquiry.
The Sub-Adviser will cooperate promptly and fully with UBS Global AM and/or
the Trust in responding to any regulatory or compliance examinations or
inspections (including information requests) relating to the Trust,
the Portfolio or UBS Global AM brought by any governmental or regulatory
authorities having appropriate jurisdiction (including, but not limited to,
the Securities and Exchange Commission (SEC)).
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 AM, except as
otherwise specifically provided herein.
Upon request by UBS Global AM, Sub-Adviser agrees to reimburse UBS Global
AM or the Trust for costs associated with generating and distributing
any Registration Statement (as defined herein) for when the Sub-Adviser
is given a copy of a draft of such Registration Statement and fails to
promptly disclose to UBS Global AM facts then known to the Sub-Adviser
or its personnel that would require disclosure (or amendments to
disclosure) in the Funds Registration Statement in time for such
disclosure or amendments to disclosure to be included in such
Registration Statement. The Sub-Adviser shall bear all reasonable
expenses of the Trust, if any, arising out of an assignment or
change in control of the Sub-Adviser.
5. Compensation.
(a) For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, UBS Global AM, not the Portfolio, will pay to
the Sub-Adviser a fee, computed daily and payable monthly, at an annual
rate of 0.81% on the first $10 million, 0.65% on the next $40 million,
0.59% on the next $50 million, 0.52% on the next $200 million and 0.49%
on assets in excess of $300 million of the average daily net assets of
the Portfolio or Segment allocated to its management (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-Advisers Segment.
(b) The fee shall be accrued 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 AM has agreed to waive all or
a portion of its management fee, UBS Global AM 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 pro-rated according to the
proportion which such period bears to the full month in that such
effectiveness or termination occurs.
6. Limitation of Liability.
(a) 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 by UBS Global AM 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.
(b) In no event will the Sub-Adviser have any responsibility for
any other portfolio of the Trust, for any portion of the Portfolio
not managed by the Sub-Adviser or for the acts or omissions of any
Other Sub-Adviser to the Trust or Portfolio. In particular, in the
event the Sub-Adviser shall manage only a Segment of the Portfolio,
the Sub-Adviser shall have no responsibility for the Portfolios
being in violation of any applicable law or regulation or investment
policy or restriction applicable to the Portfolio as a whole or for
the Portfolios failing to qualify as a regulated investment company
under the Code, if the securities and other holdings of the Segment
of the Portfolio managed by the Sub-Adviser are such that such
Segment would not be in such violation or fail to so qualify if
such Segment were deemed a separate series of the Trust or a
separate regulated investment company under the Code, unless such
violation was due to the Sub-Advisers failure to comply with written
guidelines adopted by the Board or UBS Global AM and provided to
the Sub-Adviser.
Nothing in this section 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 AM 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 Rule 204A-1
under the Advisers Act and will provide UBS Global AM 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 AM 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-Advisers
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 AM, the Sub-Adviser shall permit UBS Global AM, its
employees or its agents to examine the reports required to be made by
the Sub-Adviser pursuant to 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 AM with a copy of its
Form ADV, as most recently filed with the SEC, and promptly will
furnish a copy of all amendments to UBS Global AM at least annually.
UBS Global AM hereby consents to the Sub-Advisers use of electronic
mail to satisfy its disclosure delivery requirements under the federal
securities laws, such consent to remain effective until such time as
it is revoked in writing by UBS Global AM.
(d) The Sub-Adviser will notify UBS Global AM 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 as soon after such change as possible.
(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 AM or any of their respective
affiliates in offering, marketing or other promotional materials
without the express written consent of UBS Global AM.
(f) The Sub-Adviser hereby represents that it has implemented policies
and procedures that will prevent the disclosure by it, its employees
or its agents of the Trusts portfolio holdings to any person or entity
other than UBS Global AM, the Trusts custodian, or other persons
expressly designated by UBS Global AM. The Sub-Adviser further
represents that it implemented policies and procedures to prevent it,
its employees and agents from trading on the basis of any material
non-public information provided by UBS Global AM, the Trust, their
affiliates or agents.
8. Services Not Exclusive. The services furnished by the Sub-Adviser
hereunder are not to be deemed exclusive, and except as the
Sub-Adviser may otherwise agree in writing, the Sub-Adviser shall
be free to furnish similar services to others so long as its services
under this Agreement are not impaired thereby. Nothing in this
Agreement shall limit or restrict the right of any director,
officer or employee of the Sub-Adviser, 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.
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 Portfolios
outstanding voting securities, unless UBS Global AM has authority
to enter into this Agreement pursuant to exemptive relief from the
SEC without a vote of the Portfolios 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 AM; (i) upon 120 days written
notice to the Sub-Adviser; (ii) 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 AM,
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 AM. This Agreement will terminate
automatically in the event of its assignment or upon termination
of the Investment Advisory Agreement, as it relates to this Portfolio.
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 whom enforcement
of the change, waiver, discharge or termination is sought. To the
extent required by applicable law, 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 Portfolios 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. Confidentiality. The Sub-Adviser will treat as proprietary
and confidential any information obtained in connection with its
duties hereunder, including all records and information
pertaining to the Portfolio and its prior, present or potential
shareholders. The Sub-Adviser will not use such information for
any purpose other than the performance of its responsibilities
and duties hereunder. Such information may not be disclosed except
after prior notification to and approval in writing by the
Portfolio or if such disclosure is expressly required or
requested by applicable federal or state or other regulatory
authorities.
13. Use of Name.
(a) It is understood that the names UBS and PACE or any derivative thereof
or logo associated with that name is the valuable property of UBS Global
AM and/or its affiliates, and that Sub-Adviser has the right to use such
name (or derivative or logo) only with the approval of UBS Global AM and
only so long as UBS Global AM is Manager to the Trust and/or the
Portfolio.
(b) It is understood that the name Pzena Investment Management, LLC or
any derivative thereof or logo associated with those names, are the
valuable property of the Sub-Adviser and its affiliates and that the
Trust and/or the Portfolio have the right to use such names (or
derivative or logo) in offering materials of the Trust with the
approval of the Sub-Adviser and for so long as the Sub-Adviser is a
Sub-Adviser to the Portfolio. Upon termination of this Agreement,
the Trust shall forthwith cease to use such names (or derivatives or
logo).
14. 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.
15. Notices. Any notice herein required is to be in writing and is
deemed to have been given to the Sub-Adviser or UBS Global AM 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 AM will be sent to the attention of: General
Counsel, UBS Global Asset Management (Americas) Inc., 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000. All notices provided to the
Sub-Adviser will be sent to the attention of: Xxxxxxx X. Xxxxxx,
Managing Principal, Head of Business Development and Client Services,
Pzena Investment Management, LLC, 000 X. 00xx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000.
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.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attest:
By: /s/Xxxx Xxxxxxx By:/s/Xxxxxx X. Xxxxxxxx
Name: Xxxx Xxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: Director Title: Executive Director
Pzena Investment Management, LLC
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attest:
By: /s/Xxxxxx X. Xxxxxx By: /s/Xxxx X. Xxxxx
Name: Xxxxxx X. Xxxxxx Name: Xxxx X. Xxxxx
Title: Counsel Title: Managing Principal
Exhibit 77(Q1)
For period ending January 31, 2011
File number 811-8764
SUB-ADVISORY AGREEMENT
Agreement dated as of November 8, 2010 between UBS Global Asset Management
(Americas) Inc. (UBS Global AM), a Delaware corporation, and X.X. Xxxxxx
Investment Management, Inc., (Sub- Adviser), a corporation existing under
the laws of the State of Delaware, (the Agreement).
RECITALS
(1) UBS Global AM has entered into a Management Agreement dated as of August
1, 2008 (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 UBS PACE
International Equity Investments (Portfolio); and
(2) UBS Global AM is authorized to retain one or more sub-advisers to furnish
certain investment advisory services to UBS Global AM and the Portfolio;
(3) UBS Global AM desires to retain the Sub-Adviser to implement Sub-Advisers
EAFE Opportunities strategy for the Portfolio and to furnish certain
investment advisory services therewith to UBS Global AM and the Portfolio or
a designated portion of the assets (EAFE Opportunities Segment) of the
Portfolio; and
(4) The Sub-Adviser is willing to furnish such services;
(5) This Agreement shall apply only to those services provided by the
Sub-Adviser to the Portfolio in respect of the EAFE Opportunities Segment.
Now therefore, in consideration of the premises and mutual covenants herein
contained, UBS Global AM and the Sub-Adviser agree as follows:
1. Appointment. UBS Global AM hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to the EAFE Opportunities 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 Trusts Board of
Trustees (the Board) and review by UBS Global AM, and any written
guidelines adopted by the Board or UBS Global AM the Sub-Adviser will
provide a continuous investment program for the EAFE Opportunities Segment,
including investment research and discretionary management with respect to
all securities and investments and cash equivalents in the EAFE
Opportunities Segment. The Sub-Adviser will determine from time to time
what investments will be purchased, retained or sold by the EAFE
Opportunities Segment. The Sub-Adviser will be responsible for placing
purchase and sell orders for investments and for other related transactions
for the EAFE Opportunities Segment. The Sub-Adviser understands that the
Portfolios 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 Portfolios investment objective, policies and restrictions
as stated in the Trusts currently effective registration statement under
the 1940 Act, and any amendments or supplements thereto (Registration
Statement). The Sub-Adviser, on each business day, shall provide UBS
Global AM and the Trusts custodian such information as UBS Global AM and
the Trusts custodian may reasonably request relating to all transactions
concerning the EAFE Opportunities Segment.
UBS Global AM hereby designates and appoints the Sub-Adviser as its and
the Portfolios limited purpose agent and attorney-in-fact, without
further prior approval of UBS Global AM (except as expressly provided
for herein or as may be required by law) to make and execute, in the
name and on behalf of the Portfolio, all agreements, instruments and
other documents and to take all such other action which the Sub-Adviser
considers necessary or advisable to carry out its duties hereunder.
By way of example and not by way of limitation, in connection with
any purchase for the EAFE Opportunities Segment of securities or
instruments that are not registered under the U.S. Securities Act of
1933, as amended (the Securities Act), the Sub-Adviser shall have
the full power and authority, among other things, to: (i) commit to
purchase such securities for the Portfolio on the terms and
conditions under which such securities are offered; (ii) execute
such account opening and other agreements, instruments and documents
(including, without limitation, purchase agreements, subscription
documents, ISDA and other swap and derivative documents), and make
such commitments, as may be required in connection with the purchase
and sale of such securities or instruments; (iii) represent that the
Portfolio is an accredited investor as defined in Rule 501 (a) of
Regulation D under the Securities Act and a Qualified Institutional
Buyer as defined in Rule 144A (a) (1) (i) under the Securities Act;
and (iv) commit that such securities will not be offered or sold by
the Portfolio except in compliance with the registration
requirements of the Securities Act or an exemption therefrom. This
power-of-attorney is a continuing power-of-attorney and shall remain
in full force and effect until revoked by UBS Global AM or the Trust
in writing, but any such revocation shall not affect any transaction
initiated prior to receipt by the Sub-Adviser of such notice.
(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 EAFE Opportunities Segment
in securities or other assets, including (i) the purchase by the
EAFE Opportunities 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 EAFE Opportunities Segment in any
security for which the Other Sub-Adviser, or its affiliate,
is the principal underwriter.
(c) Unless otherwise instructed by UBS Global AM or the Trust,
the Sub-Adviser agrees that it will be responsible for voting
proxies of issuers of securities held by the EAFE Opportunities
Segment. The Sub-Adviser represents that it has adopted written
proxy voting procedures that comply with the requirements of
the 1940 Act and the Investment Advisers Act of 1940, as amended
(Advisers Act) (Proxy Voting Policy). The parties agree that
the Sub-Advisers obligation under this sub-paragraph to vote
proxies is subject to the fulfillment of the condition that the
Proxy Voting Policies are acceptable to the Board. The Sub-
Adviser shall also provide its Proxy Voting Policy, and if
requested by UBS Global AM, a summary of such Proxy Voting
Policy for inclusion in the Trusts registration statement, and
will provide UBS Global AM with any material amendment to the
Proxy Voting Policy within a reasonable time after such
amendment has taken effect. 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 upon the request of UBS Global
AM or the Board, Sub-Adviser shall provide reasonable assistance in
exercising the rights incident to the securities held by the EAFE
Opportunities Segment in the context of a bankruptcy or other
reorganization. The Sub-Adviser further agrees that it will keep
UBS Global AM fully informed about any such actions that it intends
to take. The Sub-Adviser will not be required to advise or take any
action on behalf of the Trust in any class action, unless instructed
by UBS Global AM.
(e) The Sub-Adviser agrees that it will place orders with brokers in
accordance with best execution policies, taking into account best
price, as an important factor in this decision, provided that, on
behalf of the EAFE Opportunities Segment, the Sub-Adviser may,
in its discretion, use brokers that provide the Sub-Adviser with
research, analysis, advice and similar services to execute portfolio
transactions on behalf of the EAFE Opportunities 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-Advisers determination 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 EAFE Opportunities Segment and its other clients and that the
total commissions paid by the EAFE Opportunities Segment will be
reasonable in relation to the benefits to the EAFE Opportunities
Segment over the long term. In no instance will portfolio
securities be purchased from or sold to UBS Global AM or the
Sub-Adviser, the Trusts principal underwriter, 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 with respect to the assets
of the EAFE Opportunities 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 EAFE
Opportunities 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 AM recognizes
that in some cases this procedure may adversely affect the results
obtained for the EAFE Opportunities Segment.
Subject to the Sub-Advisers obligations to seek best execution,
UBS Global AM agrees that the Sub-Adviser, in its sole discretion,
may place transactions on behalf of the EAFE Opportunities
Segment and the Trust with any broker-dealer deemed to be an
affiliate (including affiliated FCMs) 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-Advisers Form ADV Registration
Statement on file with the Securities and Exchange Commission
(Form ADV)) of Section 11(a)(1)(H) of the Securities Exchange
Act of 1934 (the 1934 Act), and in compliance with Rules 17e-1
or 10f-3 under the 1940 Act or other applicable rules and the
Trusts policies and procedures thereunder. 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 AM, the Portfolio or the Trust. In the event
Sub-Adviser becomes affiliated (as deemed under the federal
securities laws) with a broker-dealer during the term of this
Agreement, Sub-Adviser shall obtain the approval of the Trusts
Board of Trustees prior to commencement of transactions with such
broker-dealer on behalf of the Portfolio or the Trust.
UBS Global AM 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 AM, 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. Sub-Adviser shall effect such Cross Transactions
in compliance with Rule 206(3)-2 under the Advisers Act, Rule 17a-7
under the 1940 Act, and any other applicable provisions of the federal
securities laws and shall provide UBS Global AM with periodic reports
describing such agency cross transactions. UBS Global AM understands
that the authority of the Sub-Adviser to execute agency Cross
Transactions for the Portfolio is terminable at will without penalty,
effective upon receipt by the Sub-Adviser of written notice from UBS
Global AM, and that the failure to terminate such authorization will
result in its continuation.
(f) The Sub-Adviser shall maintain separate detailed records of all
matters pertaining to the EAFE Opportunities Segment, including,
without limitation, brokerage and other records of all securities
transactions. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the 1940 Act that are prepared or maintained by the Sub-Adviser
on behalf of the Trust are the property of the Trust and will be
surrendered promptly to the Trust upon request, provided, however,
that Sub-Adviser may retain copies of such records to the extent
necessary to comply with applicable law or regulation. The Sub-Adviser
further agrees to preserve for the periods prescribed in Rule 31a-2
under the 1940 Act the records required to be maintained under Rule
31a-1 under the 1940 Act, and will furnish the Board and UBS Global AM
with such periodic and special reports as the Board or UBS Global AM
may request.
(g) At such times as shall be reasonably requested by the Board or UBS
Global AM, the Sub-Adviser will provide the Board and UBS Global AM
with economic and investment analyses and reports as well as quarterly
reports setting forth the performance of the EAFE Opportunities Segment
and make available to the Board and UBS Global AM any economic,
statistical and investment services that the Sub-Adviser normally makes
available to its institutional or other customers.
(h) In accordance with procedures adopted by the Board, as amended from
time to time, the Sub-Adviser is responsible for assisting the Board and
UBS Global AM in the fair valuation of all portfolio securities in the
EAFE Opportunities Segment and will use its reasonable efforts to
arrange for the provision of a price or prices 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.
The Sub-Adviser also will provide such information or perform such
additional acts as are customarily performed by a Sub-Adviser and
may be required for the Trust or UBS Global AM to comply with their
respective obligations under applicable federal securities laws,
including, without limitation, the 1940 Act, the Advisers Act, the
1934 Act, the Securities Act, and any rule or regulation thereunder.
3. Further Duties. In all matters relating to the performance of
this Agreement, the Sub-Adviser will seek to act in conformity with
the Trusts Trust Instrument, By-Laws and Registration Statement,
the Trusts policies and procedures for compliance by the Trust with
the Federal Securities Laws (as that term is defined in Rule 38a-1
under the 1940 Act) provided to the Sub-Adviser (together, the
Trust Compliance Procedures) and with the written instructions and
written directions of the Board and UBS Global AM, and will comply
with the requirements of the 1940 Act, and the Advisers Act, and
the rules under each, the Code, and all other federal and state
laws and regulations applicable to the Trust and the Portfolio.
UBS Global AM agrees to provide to the Sub-Adviser copies of the
Trusts Trust Instrument, By-Laws, Registration Statement, Trusts
Compliance Procedures, written instructions and directions of the
Board and UBS Global AM, and any amendments or supplements to any
of these materials as soon as practicable after such materials
become available. UBS Global AM further agrees to identify to the
Sub-Adviser in writing any broker-dealers that are affiliated with
UBS Global AM (other than UBS Financial Services Inc. and UBS
Global Asset Management (US) Inc.).
In order to assist the Trust and the Trusts Chief Compliance
Officer (the Trust CCO) to satisfy the requirements contained in Rule
38a-1 under the 1940 Act, the Sub-Adviser shall provide to the Trust
CCO: (i) direct access to the Sub-Advisers chief compliance officer
and/or other senior compliance personnel, as reasonably requested by
the Trust CCO; (ii) quarterly reports confirming that the Sub-Adviser
has complied with the Trust Compliance Procedures in managing the
EAFE Opportunities Segment; and (iii) quarterly certifications that
there were no Material Compliance Matters (as that term is defined
by Rule 38a-1(e)(2)) that arose under the Trust Compliance Procedures
that related to the Sub-Advisers management of the EAFE Opportunities
Segment.
The Sub-Adviser represents and warrants that it shall maintain a
compliance program in accordance with Rule 206(4)-7 under the Advisers
Act (Sub-Adviser Compliance Program) and shall promptly provide the
Trust CCO with copies of: (i) the Sub-Advisers Compliance Program,
and (ii) any material changes to the Sub-Adviser Compliance Program.
The Sub-Adviser shall cooperate fully with the Trust CCO so as to
facilitate the Trust CCOs performance of the Trust CCOs responsibilities
under Rule 38a-1 to review, evaluate and report to the Trusts Board on
the operation of the Sub-Adviser Compliance Program, and shall promptly
report to the Trust CCO any material violation of the Sub-Adviser
Compliance Program involving the EAFE Opportunities Segment. The
Sub-Adviser shall provide to the Trust CCO: (i) quarterly reports
confirming the Sub-Advisers compliance with the Sub-Adviser Compliance
Program in managing the EAFE Opportunities Segment, and (ii)
certifications that there were no material violations of the Sub-Adviser
Compliance Program involving the Sub-Adviser that affected the EAFE
Opportunities Segment. At least annually, the Sub-Adviser shall provide
a certification to the Trust CCO to the effect that the Sub-Adviser has
in place and has implemented policies and procedures that are reasonably
designed to ensure compliance by the Sub-Adviser with any applicable
federal securities laws, subject to such interpretations as may be
contained in the Trust Compliance Procedures.
The Sub-Adviser will promptly provide UBS Global AM with information
(including information that is required to be disclosed in the Trusts
registration statement) with respect to the portfolio managers
responsible for the EAFE Opportunities Segment and any changes in the
portfolio managers responsible for the EAFE Opportunities Segment.
The Sub-Adviser will promptly notify UBS Global AM of any pending
investigation, material litigation or administrative proceeding or
any other significant regulatory inquiry.
The Sub-Adviser will cooperate promptly and fully with UBS Global
AM and/or the Trust in responding to any regulatory or compliance
examinations or inspections (including information requests) relating to the
Trust, the Portfolio or UBS Global AM brought by any governmental or
regulatory authorities having appropriate jurisdiction (including, but not
limited to, the Securities and Exchange Commission (SEC)).
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 AM, except as otherwise
specifically provided herein.
Upon request by UBS Global AM, Sub-Adviser agrees to reimburse UBS Global
AM or the Trust for costs associated with generating and distributing any
Registration Statement (as defined herein) for when the Sub-Adviser is
given a copy of a draft of such Registration Statement and fails to
promptly disclose to UBS Global AM facts then known to the Sub-Adviser or
its personnel that would require disclosure (or amendments to disclosure)
in the Portfolios Registration Statement in time for such disclosure or
amendments to disclosure to be included in such Registration Statement.
The Sub-Adviser shall bear all reasonable expenses of the Trust, if any,
arising out of an assignment or change in control of the Sub-Adviser.
5. Compensation.
(a) For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, UBS Global AM, not the Portfolio, will pay
to the Sub-Adviser a fee, computed daily and payable monthly, at an
annual rate of 0.35% on the first $150 million, and 0.30% on assets in
excess of $150 million of the average daily net assets of the EAFE
Opportunities Segment allocated to its management (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.
(b) The fee shall be accrued 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 AM has agreed to waive all or a
portion of its management fee, UBS Global AM 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 pro-rated according to the proportion which
such period bears to the full month in that such effectiveness or termination
occurs.
6. Limitation of Liability.
(a) 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 by UBS Global AM 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.
(b) In no event will the Sub-Adviser have any responsibility under this
Agreement for any other portfolio of the Trust, for any portion of the
Portfolio not managed by the Sub-Adviser, or for any portion of the Portfolio
other than the EAFE Opportunities Segment or for the acts or omissions of any
Other Sub-Adviser to the Trust or Portfolio. The Sub-Adviser shall have no
responsibility under this Agreement for the Portfolios being in violation
of any applicable law or regulation or investment policy or restriction
applicable to the Portfolio as a whole or for the Portfolios failing to
qualify as a regulated investment company under the Code, if the securities
and other holdings of the EAFE Opportunities Segment of the Portfolio managed
by the Sub-Adviser are such that such EAFE Opportunities Segment would not be
in such violation or fail to so qualify if such EAFE Opportunities Segment
were deemed a separate series of the Trust or a separate regulated investment
company under the Code, unless such violation was due to the Sub-Advisers
failure to comply with written guidelines adopted by the Board or UBS
Global AM and provided to the Sub-Adviser.
Nothing in this section 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 AM 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 Rule 204A-1 under
the Advisers Act and will provide UBS Global AM 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 AM 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-Advisers 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 AM,
with respect to violations of the Sub-Advisers code of ethics
potentially affecting the EAFE Opportunities Segment the Sub-Adviser
shall permit UBS Global AM, its employees or its agents to examine the
reports (or summaries of reports) required to be made by the Sub-Adviser
pursuant to Rule 17j-1(c)(1) evidencing enforcement of the Sub-Advisers
code of ethics.
(c) The Sub-Adviser has provided UBS Global AM with a copy of its Form
ADV, as most recently filed with the SEC, and promptly will furnish a
copy of all amendments to UBS Global AM at least annually.
(d) The Sub-Adviser will notify UBS Global AM 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 as soon after such change as possible.
(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 AM or any of their
respective affiliates in offering, marketing or other promotional
materials without the express written consent of UBS Global AM.
(f) The Sub-Adviser hereby represents that it has implemented
policies and procedures that will prevent the disclosure by it,
its employees or its agents of the Trusts portfolio holdings to
any person or entity other than UBS Global AM, the Trusts
custodian, or other persons expressly designated by UBS Global
AM. The Sub-Adviser further represents that it implemented
policies and procedures to prevent it, its employees and agents
from trading on the basis of any material non-public information
provided by UBS Global AM, the Trust, their affiliates or agents.
UBS Global AM acknowledges that the Sub-Adviser manages other
accounts, including other mutual funds following the same
investment strategy as the Portfolio and that those other
accounts may have different portfolio holdings disclosure policies.
The Sub-Adviser hereby represents that any such disclosure by
Sub-Adviser does not and will not indicate that the Portfolio
follows the same strategy.
8. Services Not Exclusive. The services furnished by the Sub-Adviser
hereunder are not to be deemed exclusive, and except as the Sub-Adviser
may otherwise agree in writing, the Sub-Adviser shall be free to
furnish similar services to others so long as its services under this
Agreement are not impaired thereby. Nothing in this Agreement shall
limit or restrict the right of any director, officer or employee of
the Sub-Adviser, 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.
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 Portfolios outstanding voting
securities, unless UBS Global AM has authority to enter into this
Agreement pursuant to exemptive relief from the SEC without a vote
of the Portfolios 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
AM; (i) upon 120 days written notice to the Sub-Adviser; (ii) 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
AM, 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 AM. This Agreement will terminate automatically in the event of
its assignment or upon termination of the Investment Advisory
Agreement, as it relates to this Portfolio.
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 whom enforcement of
the change, waiver, discharge or termination is sought. To the extent
required by applicable law, 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 Portfolios 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. Confidentiality.
(a) The Sub-Adviser will treat as proprietary and confidential any
information obtained in connection with its duties hereunder, including
all records and information pertaining to the Portfolio and its prior,
present or potential shareholders. The Sub-Adviser will not use such
information for any purpose other than the performance of its
responsibilities and duties hereunder. Such information may not be
disclosed except after prior notification to and approval in writing
by the Portfolio or if such disclosure is expressly required or
requested by applicable federal or state or other regulatory authorities.
(b) Neither UBS Global AM nor the Portfolio shall disclose information
of a confidential nature regarding the Sub-Adviser acquired in
consequence of this Agreement, except for information provided to
service providers to the Portfolio or if required or requested by
federal, state or other regulatory authorities.
(c) Notwithstanding the provisions of 12(a), to the extent that any
market counterparty with whom the Sub-Adviser deals requires information
relating to the Portfolio or the EAFE Opportunities Segment (including,
but not limited to, the identity of UBS Global AM or the Portfolio and
market value of the Portfolio or EAFE Opportunities Segment), the
Sub-Adviser shall be permitted to disclose such information to the
extent necessary to effect transactions on behalf of the EAFE
Opportunities Segment in accordance with the terms of this Agreement.,
provided that such market counterparty acts in accordance with the rules
and regulations applicable to it in dealing with such information.
13. Use of Name.
(a) It is understood that the names UBS and PACE or any derivative
thereof or logo associated with that name is the valuable property
of UBS Global AM and/or its affiliates, and that Sub-Adviser has
the right to use such name (or derivative or logo) only with the
approval of UBS Global AM and only so long as UBS Global AM is
Manager to the Trust and/or the Portfolio.
(b) It is understood that the name X.X. Xxxxxx Investment
Management, Inc., JPMorgan Asset Management or JPMorgan Chase & Co.
or any derivative thereof or logo associated with those names, are the
valuable property of the Sub-Adviser and its affiliates and that the
Trust and/or the Portfolio have the right to use such names (or
derivative or logo) in offering materials of the Trust with the
approval of the Sub-Adviser and for so long as the Sub-Adviser is a
Sub-Adviser to the Portfolio. Upon termination of this Agreement,
the Trust shall forthwith cease to use such names (or derivatives or
logo).
14. 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.
15. Notices. Any notice herein required is to be in writing and is
deemed to have been given to the Sub-Adviser or UBS Global AM 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 day delivery which provides evidence of receipt (with a
confirming copy by mail as set forth herein). All notices
provided to UBS Global AM will be sent to the attention of:
General Counsel, UBS Global Asset Management (Americas) Inc.,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000. All notices
provided to the Sub-Adviser will be sent to the attention of:
Mutual Funds- Legal, X.X. Xxxxxx Investment Management Inc. 000
Xxxx Xxxxxx, Xxx Xxxx, XX 00000.
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.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attest:
By:/s/Xxxx Xxxxxxx By:/s/Xxxxxx X. Xxxxxxxx
Name: Xxxx Xxxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: Director Title: Executive Director
XX Xxxxxx Investment Management, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attest:
By:/s/Xxx Xxxxxx By:/s/Xxxxx Xxxxxx
Name: Xxx Xxxxxx Name: Xxxxx Xxxxxx
Title: Vice President Title: Vice President
Exhibit 77(Q1)
For period ending January 31, 2011
File number 811-8764
SUB-ADVISORY AGREEMENT
Agreement dated as of November 4, 2010 between UBS Global Asset Management
(Americas) Inc. (UBS Global AM), a Delaware corporation, and Delaware
Management Company, a series of Delaware Management Business Trust,
(Sub- Adviser), a Delaware business trust (the Agreement).
RECITALS
(1) UBS Global AM has entered into a Management Agreement dated as of
August 1, 2008 (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 UBS PACE International Emerging Markets Equity
Investments (Portfolio); and
(2) UBS Global AM is authorized to retain one or more sub-advisers
to furnish certain investment advisory services to UBS Global AM and
the Portfolio;
(3) UBS Global AM desires to retain the Sub-Adviser to furnish
certain investment advisory services to UBS Global AM and the Portfolio
or a designated portion of the assets (Segment) of the Portfolio; and
(4) The Sub-Adviser is willing to furnish such services;
Now therefore, in consideration of the premises and mutual covenants
herein contained, UBS Global AM and the Sub-Adviser agree as follows:
1. Appointment. UBS Global AM hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to the 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 Trusts Board of
Trustees (the Board) and review by UBS Global AM, and any written
guidelines adopted by the Board or UBS Global AM 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 Portfolios 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 Portfolios
investment objective, policies and restrictions as stated in the
Trusts currently effective registration statement under the 1940
Act, and any amendments or supplements thereto (Registration
Statement). The Sub-Adviser, on each business day, shall provide
UBS Global AM and the Trusts custodian such information as UBS
Global AM and the Trusts custodian may reasonably request
relating to all transactions concerning the Portfolio or Segment.
UBS Global AM hereby designates and appoints the Sub-Adviser as its and
the Portfolios limited purpose agent and attorney-in-fact, without
further prior approval of UBS Global AM (except as expressly provided
for herein or as may be required by law) to make and execute, in the name
and on behalf of the Portfolio, all agreements, instruments and other
documents and to take all such other action which the Sub-Adviser considers
necessary or advisable to carry out its duties hereunder. By way of example
and not by way of limitation, in connection with any purchase for the
Portfolio or Segment of securities or instruments that are not registered
under the U.S. Securities Act of 1933, as amended (the Securities Act),
the Sub-Adviser shall have the full power and authority, among other
things, to: (i) commit to purchase such securities for the Portfolio on
the terms and conditions under which such securities are offered; (ii)
establish and execute such account opening and other agreements,
instruments and documents (including, without limitation,
purchase agreements, subscription documents, ISDA and other swap and
derivative documents), and make such commitments, as may be required in
connection with the purchase and sale of such securities or instruments;
(iii) represent that the Portfolio is an accredited investor as defined
in Rule 501 (a) of Regulation D under the Securities Act and a Qualified
Institutional Buyer as defined in Rule 144A (a) (1) (i) under the Securities
Act; and (iv) commit that such securities will not be offered or sold by
the Portfolio except in compliance with the registration requirements
of the Securities Act or an exemption therefrom. This power-of-attorney
is a continuing power-of-attorney and shall remain in full force and
effect until revoked by UBS Global AM or the Trust in writing, but any
such revocation shall not affect any transaction initiated prior to
receipt by the Sub-Adviser of such notice.
(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) Unless otherwise instructed by UBS Global AM or the Trust, 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, as amended (Advisers Act) (Proxy Voting Policy), and that
shall be acceptable to the Board. The Sub-Adviser shall also provide
its Proxy Voting Policy, and if requested by UBS Global AM, a summary
of such Proxy Voting Policy for inclusion in the Trusts registration
statement, and will provide UBS Global AM with any material amendment
to the Proxy Voting Policy within a reasonable time after such amendment
has taken effect. 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-Advisor shall be responsible for notifying UBS Global AM of
any bankruptcy or other reorganization affecting any security held in
the Portfolio or Segment allocated to its management. The Sub-Adviser
agrees that upon the request of UBS Global AM or the Board, Sub-Adviser
shall exercise the rights incident to the securities held by the
Portfolio or Segment in the context of such bankruptcy or other
reorganization. The Sub-Adviser further agrees that it will keep UBS
Global AM fully informed about any such actions that it intends to take.
(e) The Sub-Adviser agrees that it will place orders with brokers in
accordance with best execution policies, taking into account best price
as an important factor in this decision, provided that, on behalf of the
Portfolio or Segment, the Sub-Adviser may, in its discretion, use brokers
that 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-Advisers determination 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 or Segment over the long
term. In no instance will portfolio securities be purchased from or
sold to UBS Global AM or the Sub-Adviser, the Trusts principal underwriter,
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 with respect to 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 AM recognizes that in
some cases this procedure may adversely affect the results obtained for
the Portfolio or Segment.
Subject to the Sub-Advisers obligations to seek best execution, UBS
Global AM 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 (including affiliated FCMs) 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-Advisers Form ADV Registration Statement on file
with the Securities and Exchange Commission (Form ADV)) of Section 11(a)
(1)(H) of the Securities Exchange Act of 1934 (the 1934 Act), and in
compliance with Rules 17e-1 or 10f-3 under the 1940 Act or other
applicable rules and the Trusts policies and procedures thereunder.
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 AM, the Portfolio or the Trust. In the event Sub-
Adviser becomes affiliated (as deemed under the federal securities laws)
with a broker-dealer during the term of this Agreement, Sub-Adviser
shall obtain the approval of the Trusts Board of Trustees prior to
commencement of transactions with such broker-dealer on behalf of the
Portfolio or the Trust.
UBS Global AM 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 AM, 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. Sub-Adviser shall effect such Cross Transactions in
compliance with Rule 206(3)-2 under the Advisers Act, Rule 17a-7 under
the 1940 Act, and any other applicable provisions of the federal securities
laws and shall provide UBS Global AM with periodic reports describing
such agency cross transactions. UBS Global AM understands that the authority
of the Sub-Adviser to execute agency Cross Transactions for the Portfolio is
terminable at will without penalty, effective upon receipt by the Sub-Adviser
of written notice from UBS Global AM, and that the failure to terminate
such authorization will result in its continuation.
(f) The Sub-Adviser shall maintain separate detailed records of all matters
pertaining to the Portfolio or Segment, including, without limitation,
brokerage and other records of all securities transactions. Any records
required to be maintained and preserved pursuant to the provisions of Rule
31a-1 and Rule 31a-2 promulgated under the 1940 Act that are prepared or
maintained by the Sub-Adviser on behalf of the Trust are the property of the
Trust and will be surrendered promptly to the Trust upon request. The Sub-
Adviser further agrees to preserve for the periods prescribed in Rule 31a-2
under the 1940 Act the records required to be maintained under Rule 31a-1
under the 1940 Act, and will furnish the Board and UBS Global AM with such
periodic and special reports as the Board or UBS Global AM may request.
(g) At such times as shall be reasonably requested by the Board or UBS Global
AM, the Sub-Adviser will provide the Board and UBS Global AM 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 AM any economic, statistical and investment services that
the Sub-Adviser normally makes available to its institutional or other
customers.
(h) In accordance with procedures adopted by the Board, as amended from
time to time, the Sub-Adviser is responsible for assisting the Board and
UBS Global AM in the fair valuation of all portfolio securities in the
Portfolio or Segment and will use its reasonable efforts to arrange for
the provision of a price or prices 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.
The Sub-Adviser also will provide such information or perform such
additional acts as are customarily performed by a Sub-Adviser and
may be required for the Trust or UBS Global AM to comply with their
respective obligations under applicable federal securities laws,
including, without limitation, the 1940 Act, the Advisers Act, the
1934 Act, the Securities Act, and any rule or regulation thereunder.
3. Further Duties. In all matters relating to the performance of this
Agreement, the Sub-Adviser will seek to act in conformity with the
Trusts Trust Instrument, By-Laws and Registration Statement, the
Trusts policies and procedures for compliance by the Trust with
the Federal Securities Laws (as that term is defined in Rule 38a-1
under the 1940 Act) which have been previously provided to the
Sub-Adviser (together, the Trust Compliance Procedures) and with
the written instructions and written directions of the Board and
UBS Global AM, which have been previously provided to the
Sub-Adviser, and will comply with the requirements of the 1940
Act, and the Advisers Act, and the rules under each, the Code,
and all other federal and state laws and regulations applicable to
the Trust and the Portfolio. UBS Global AM agrees to provide to the
Sub-Adviser copies of the Trusts Trust Instrument, By-Laws,
Registration Statement, Trusts Compliance Procedures, written
instructions and directions of the Board and UBS Global AM, and
any amendments or supplements to any of these materials as soon as
practicable after such materials become available. UBS Global
AM further agrees to identify to the Sub-Adviser in writing any
broker-dealers that are affiliated with UBS Global AM (other
than UBS Financial Services Inc. and UBS Global Asset Management
(US) Inc.).
In order to assist the Trust and the Trusts Chief Compliance
Officer (the Trust CCO) to satisfy the requirements contained
in Rule 38a-1 under the 1940 Act, the Sub-Adviser shall provide
to the Trust CCO: (i) direct access to the Sub-Advisers chief
compliance officer and/or other senior compliance personnel,
as reasonably requested by the Trust CCO; (ii) quarterly
reports confirming that the Sub-Adviser has complied with the
Trust Compliance Procedures in managing the Portfolio or
Segment; and (iii) quarterly certifications that there were no
Material Compliance Matters (as that term is defined by Rule
38a-1(e)(2)) that arose under the Trust Compliance Procedures
that related to the Sub-Advisers management of the Portfolio
or Segment.
The Sub-Adviser shall promptly provide the Trust CCO with copies of:
(i) the Sub-Advisers policies and procedures for compliance by the
Sub-Adviser with the Federal Securities Laws (together, the Sub-Adviser
Compliance Procedures), and (ii) any material changes to the Sub-Adviser
Compliance Procedures. The Sub-Adviser shall cooperate fully with the
Trust CCO so as to facilitate the Trust CCOs performance of the Trust
CCOs responsibilities under Rule 38a-1 to review, evaluate and report
to the Trusts Board on the operation of the Sub-Adviser Compliance
Procedures, and shall promptly report to the Trust CCO any Material
Compliance Matter arising under the Sub-Adviser Compliance Procedures
involving the Portfolio or Segment. The Sub-Adviser shall provide
to the Trust CCO: (i) quarterly reports confirming the Sub-Advisers
compliance with the Sub-Adviser Compliance Procedures in managing
the Portfolio or Segment, and (ii) certifications that there were no
Material Compliance Matters involving the Sub-Adviser that arose under
the Sub-Adviser Compliance Procedures that affected the Portfolio or
Segment. At least annually, the Sub-Adviser shall provide a
certification to the Trust CCO to the effect that the Sub-Adviser has
in place and has implemented policies and procedures that are
reasonably designed to ensure compliance by the Sub-Adviser with any
applicable Federal Securities Laws, subject to such interpretations
as may be contained in the Trust Compliance Procedures that UBS Global
AM or the Trust have made known to the Sub-Adviser.
The Sub-Adviser will promptly provide UBS Global AM with information
(including information that is required to be disclosed in the Trusts
registration statement) with respect to the portfolio managers
responsible for the Portfolio or Segment and any changes in the
portfolio managers responsible for the Portfolio or Segment.
The Sub-Adviser will promptly notify UBS Global AM of any pending
investigation, material litigation, administrative proceeding or
any other significant regulatory inquiry.
The Sub-Adviser will cooperate promptly and fully with UBS
Global AM and/or the Trust in responding to any regulatory or
compliance examinations or inspections (including information
requests) relating to the Trust, the Portfolio or UBS Global
AM brought by any governmental or regulatory authorities having
appropriate jurisdiction (including, but not limited to, the
Securities and Exchange Commission (SEC)).
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 AM, except
as otherwise specifically provided herein.
Upon request by UBS Global AM, Sub-Adviser agrees to reimburse UBS
Global AM or the Trust for costs associated with generating and
distributing any Registration Statement (as defined herein) when the
Sub-Adviser is given a copy of a draft of such Registration and
fails to promptly disclose to UBS Global AM facts then known to
the Sub-Adviser or its personnel that would require disclosure
(or amendments to disclosure) in the Funds Registration Statement
in time for such disclosure or amendments to disclosure to be
included in such Registration Statement. The Sub-Adviser shall
bear all reasonable expenses of the Trust, if any, arising out
of an assignment or change in control of the Sub-Adviser.
5. Compensation.
(a) For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, UBS Global AM, not the Portfolio, will pay
to the Sub-Adviser a fee, computed daily and payable monthly, at an
annual rate of 0.60% on the first $10 million, and 0.50% on assets in
excess of $10 million of the average daily net assets of the Portfolio
or Segment allocated to its management (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-Advisers Segment.
(b) The fee shall be accrued 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 AM has agreed to waive all or
a portion of its management fee, UBS Global AM 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 pro-rated according to the proportion which
such period bears to the full month in that such effectiveness or
termination occurs.
6. Limitation of Liability.
(a) 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 by UBS Global AM 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.
(b) In no event will the Sub-Adviser have any responsibility for any other
portfolio of the Trust, for any portion of the Portfolio not managed by
the Sub-Adviser or for the acts or omissions of any Other Sub-Adviser to
the Trust or Portfolio. In particular, in the event the Sub-Adviser shall
manage only a Segment of the Portfolio, the Sub-Adviser shall have no
responsibility for the Portfolios being in violation of any applicable
law or regulation or investment policy or restriction applicable to the
Portfolio as a whole or for the Portfolios failing to qualify as a
regulated investment company under the Code, if the securities and
other holdings of the Segment of the Portfolio managed by the Sub-
Adviser are such that such Segment would not be in such violation or
fail to so qualify if such Segment were deemed a separate series of the
Trust or a separate regulated investment company under the Code, unless
such violation was due to the Sub-Advisers failure to comply with
written guidelines adopted by the Board or UBS Global AM and provided
to the Sub-Adviser.
Nothing in this section 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 AM 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 Rule 204A-1
under the Advisers Act and will provide UBS Global AM 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 AM 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-Advisers 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 AM,
the Sub-Adviser shall permit UBS Global AM, its employees or its agents
to examine the reports required to be made by the Sub-Adviser pursuant
to Rule 17j-1(c)(1) and all other records relevant to the Sub-Advisers
code of ethics.
(c) The Sub-Adviser has provided UBS Global AM with a copy of its Form ADV,
as most recently filed with the SEC, and promptly will furnish a copy of all
amendments to UBS Global AM at least annually.
(d) The Sub-Adviser will notify UBS Global AM 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 as soon after such change as possible.
(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 AM or any of their respective
affiliates in offering, marketing or other promotional materials without
the express written consent of UBS Global AM.
(f) The Sub-Adviser may include the Portfolios performance in
calculating its composites, provided that Sub-Adviser may not separately
disclose the Funds performance (or the performance of Sub-Advisers
segment of the Fund) in connection therewith.
(g) The Sub-Adviser hereby represents that it has implemented policies and
procedures that are reasonably designed to prevent the disclosure by it,
its employees or its agents of the Trusts portfolio holdings to any person
or entity other than UBS Global AM, the Trusts custodian, or other persons
expressly designated by UBS Global AM. The Sub-Adviser further represents
that it implemented policies and procedures reasonably designed to prevent
it, its employees and agents from trading on the basis of any material
non-public information provided by UBS Global AM, the Trust, their
affiliates or agents.
8. Services Not Exclusive. The services furnished by the Sub-Adviser hereunder
are not to be deemed exclusive, and except as the Sub-Adviser may otherwise
agree in writing, the Sub-Adviser shall be free to furnish similar services
to others so long as its services under this Agreement are not impaired
thereby. Nothing in this Agreement shall limit or restrict the right of
any director, officer or employee of the Sub-Adviser, 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.
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
Portfolios outstanding voting securities, unless UBS Global AM has authority
to enter into this Agreement pursuant to exemptive relief from the SEC
without a vote of the Portfolios 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 AM;
(i) upon 120 days written notice to the Sub-Adviser; (ii) 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 AM,
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 AM. This Agreement will terminate
automatically in the event of its assignment or upon termination of
the Investment Advisory Agreement, as it relates to this Portfolio.
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 whom enforcement of
the change, waiver, discharge or termination is sought. To the extent
required by applicable law, 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 Portfolios 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. Confidentiality. The Sub-Adviser will treat as proprietary and
confidential any information obtained in connection with its duties
hereunder, including all records and information pertaining to the
Portfolio and its prior, present or potential shareholders. The Sub-
Adviser will not use such information for any purpose other than the
performance of its responsibilities and duties hereunder. Such
information may not be disclosed except after prior notification to
and approval in writing by the Portfolio or if such disclosure is
expressly required or requested by applicable federal or state or
other regulatory authorities.
13. Use of Name.
(a) It is understood that the names UBS and PACE or any derivative
thereof or logo associated with that name is the valuable property
of UBS Global AM and/or its affiliates, and that Sub-Adviser has the
right to use such name (or derivative or logo) only with the
approval of UBS Global AM and only so long as UBS Global AM is
Manager to the Trust and/or the Portfolio.
(b) It is understood that the name Delaware Management Company or
any derivative thereof or logo associated with those names, are
the valuable property of the Sub-Adviser and its affiliates and
that the Trust and/or the Portfolio have the right to use such
names (or derivative or logo) in offering materials of the Trust
with the approval of the Sub-Adviser and for so long as the Sub-
Adviser is a Sub-Adviser to the Portfolio. Upon termination of
this Agreement, the Trust shall forthwith cease to use such
names (or derivatives or logo).
14. 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.
15. Notices. Any notice herein required is to be in writing and is
deemed to have been given to the Sub-Adviser or UBS Global AM 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 AM will be sent to the attention of: General Counsel,
UBS Global Asset Management (Americas) Inc., 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, XX 00000. All notices provided to the Sub-
Adviser will be sent to the attention of: Xxxxxxxx Xxxxx, Senior
Vice President, Delaware Management Company, Xxx Xxxxxxxx Xxxxxx,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000.
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.
Attest:
By:/s/Xxxx Xxxxxxx
UBS Global Asset Management (Americas) Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
By:/s/Xxxxxx X. Xxxxxxxx
Name: Xxxx Xxxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: Director Title: Executive Director
Attest:
By:/s/Xxxx Xxxx XXxxxxx Delaware Management Company, a series
of Delaware Management Business Trust
By: /s/Xxxxxxx X. Xxxxx
Name: Xxxx Xxxx XXxxxxx Name: Xxxxxxx X. Xxxxx
Title: Executive Administrative Assistant Title: President
