Exhibit 4(u)
SUB-ADVISORY AGREEMENT
Agreement made as of September 28, 2004 between UBS GLOBAL ASSET MANAGEMENT
(US) INC., a Delaware corporation ("UBS Global AM"), and MONDRIAN INVESTMENT
PARTNERS Limited ("Sub-Adviser"), a limited company organized under the laws of
the United Kingdom (the "Agreement").
RECITALS
(1) UBS Global AM has entered into a Management Agreement dated June 15,
1995 ("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"), a series of the Trust; and
(2) 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
(3) 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 Trust's 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, all or a designated portion of
the assets, including investment research and discretionary management with
respect to all securities and investments and cash equivalents in the Portfolio
or Segment. The Sub-Adviser will determine from time to time what investments
will be purchased, retained or sold by the Portfolio or Segment. The Sub-Adviser
will be responsible for placing purchase and sell orders for investments and for
other related transactions for the Portfolio or Segment. The Sub-Adviser
understands that the Portfolio's assets need to be managed so as to permit the
Portfolio to qualify or to continue to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code, as amended ("Code"). The
Sub-Adviser will provide services under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Trust's currently effective registration statement under the 1940 Act, and any
amendments or supplements thereto ("Registration Statement").
(b) The Sub-Adviser agrees that it will not consult with any other
Sub-Adviser ("Other Sub-Adviser") for the Trust or Portfolio concerning any
transaction by the Portfolio or Segment in securities or., other assets,
including (i) the purchase by the Portfolio or Segment of a security issued by
the Other Sub-Adviser, or an affiliate of the Other Sub-Adviser,
to the Trust or Portfolio except as permitted by the 1940 Act or (ii)
transactions by the Portfolio or Segment in any security for which the Other
Sub-Adviser, or its affiliate, is the principal underwriter.
(c) The Sub-Adviser agrees that it will be responsible for voting
proxies of issuers of securities held by the Portfolio or Segment. The
Sub-Adviser further agrees that it will adopt written proxy voting procedures
that shall comply with the requirements of the 1940 Act and the Investment
Advisers Act of 1940, as amended ("Advisers Act"), and that shall be acceptable
to the Board. The Sub-Adviser further agrees that it will provide the Board on
or before August 1" of each year, or more frequently as the Board may reasonably
request, with a written report of the proxies voted during the most recent
12-month period ending June 30, or such other period as the Board may designate,
in a format that shall comply with the 1940 Act and that shall be acceptable to
the Board.
(d) The Sub-Adviser agrees that, in placing orders with brokers, it will
obtain the best net result in terms of price and execution. 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-Adviser's 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 and the Trust with any broker-dealer
deemed to be an affiliate of the Sub-Adviser (the "Affiliated Broker-Dealers")
so long as such transactions arc effected in conformity with the requirements
(including any applicable exemptions and administrative interpretations set
forth in Part II of the Sub-Adviser's Form ADV Registration Statement on file
with the Securities and Exchange Commission ("Form ADV")) of Section 11(a)(1)(H)
of the Securities Exchange Act of 1934. In all such dealings, the Affiliated
Broker-Dealers shall be authorized and entitled to retain any commissions,
remuneration or profits which may be made in such transactions and shall not be
liable to account for the same to UBS Global AM, 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 pricee 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.
(e) The Sub-Adviser will maintain all books and records required
to be maintained pursuant to Rule 31a-1(b)(2)(ii)(3), (5), (6), (7), (9) and
(10) under the 1940 Act and the rules and regulations promulgated thereunder
with respect to transactions by the Sub-Adviser on behalf of the Portfolio or
Segment, and will furnish the Board and UBS Global AM with such periodic and
special reports as the Board or UBS Global AM reasonably may request. In
compliance with the requirements of Rule 31 a-3 under the 1940 Act, the
Sub-Adviser hereby agrees that all records which it maintains for the Portfolio
or Segment are the property of the Trust, agrees to preserve for the periods
prescribed by Rule 3la-2 under the 1940 Act any records which it maintains for
the Portfolio or Segment and which arc required to be maintained by Rule 31a-1
under the 1940 Act, and further agrees to surrender promptly to the Trust any
records which it maintains for the Portfolio Or Segment upon request by the
Trust.
(f) 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.
(g) In accordance with procedures adopted by the Board, as
amended from time to time, the Sub-Adviser is responsible for assisting in the
fair valuation of all portfolio securities 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.
3. FURTHER DUTIES. In all matters relating to the performance of this
Agreement, the Sub-Advisor will seek to act in conformity with the Trust's Trust
Instrument, By-Laws and Registration Statement and with the written
instructions and written directions of the Board and UBS Global AM and will
comply with the applicable requirements of the 1940 Act, 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 Trust's Trust Instrument, By-Laws,
Registration Statement, 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; PROVIDED, HOWEVER,
that the Sub-Adviser's duty under this Agreement to act in conformity with any
document, instruction or guideline produced by the Trust or UBS Global AM shall
not arise until it has been delivered to the Sub-Adviser. Any changes to the
objectives, policies and restrictions will make due allowance for the time
within which the Sub-Adviser shall have to come into compliance. 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 AM itself).
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.
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 0.65% up to $150 million, 0.55% next $100 million. and 0.50% on assets
in excess of $250 million of the average daily net assets of the Portfolio or
Segment (computed in the manner specified in the Management Agreement), and will
provide the Sub-Adviser with a schedule showing the manner in which the fee was
computed. If the Sub-Adviser is managing a Segment, its fees will be based on
the value of the assets of the Portfolio within the Sub-Adviser's Segment.
(b) The fee shall be 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 portion of the Portfolio's Segment of the Portfolio, the Sub-Adviser shall
have no responsibility for the Portfolio's being in violation of any applicable
law or regulation or investment policy or restriction applicable to the
Portfolio as a whole or for the Portfolio's 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.
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 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 violation of the Sub-Adviser's code of
ethics or, IF SUCH a violation has occurred, that appropriate action was taken
in response to such violation. `Upon the written request of UBS Global 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-l(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 Securities and Exchange Commission
("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 SubAdviser, including any change of its general partners or 25%
shareholders or 25% limited partners, as applicable, and any changes in the key
personnel who are either the portfolio manager(s). of the Portfolio or senior
management OF THE Sub-Adviser, in each case prior to or promptly AFTER such
change.
(e) UBS Global AM and the Sub-Adviser agree that neither of them
nor any of their affiliates, will in any way refer directly or indirectly to
their relationship with one another or any of their respective affiliates in
offering, marketing or other promotional materials without the express written
consent of the other, which consent will be promptly provided and not
unreasonably withheld.
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 (1) by a vote of a majority of those trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
("Independent Trustees"), cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of the Portfolio's
outstanding voting securities; unless UBS Global AM has authority to enter into
this Agreement pursuant to exemptive relief from the SEC without a vote of the
Portfolio's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Agreement
shall continue in effect for two years from its effective date. Thereafter, if
not terminated, this Agreement shall continue automatically for successive
periods of twelve months each, provided that such continuance is specifically
approved at least annually (i) by a vote of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by the Board or by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by vote of the Board
or by a vote of a majority of the outstanding voting securities of the Portfolio
on 60 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 SubAdviser 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 Management Agreement, as it related 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 Portfolio's outstanding
voting securities (except in the case of (ii), pursuant to the terms and
conditions of the SEC order permitting it to modify the Agreement without such
vote).
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the 1940 Act and the laws of the State of New York, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of New York conflict with the applicable provisions of the 1940 Act,
the latter shall control.
12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon AND shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding; voting securities,"
"affiliated person," "interested person," "assignment," "broker," "investment'
adviser," "net assets," "sale," "sell" and "security" shall have the same
meanings as such terms have in the 1940 Act, subject to such exemption as may be
granted by the SEC by any rule, regulation or order. Where the effect of a
requirement of the federal securities laws reflected in any provision of this
Agreement is made less restrictive by a rule, regulation or order of the SEC,
whether of special or general application, such provision shall be deemed to
incorporate the effect of SUCH rule, regulation or order. This Agreement may be
signed in counterpart.
13. NOTICES. Any notice herein required is to be in writing and is
deemed to have been given to the Sub-Adviser or UBS Global 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 mai I as set forth herein), All notices provided to
UBS Global AM will be sent to the attention of Xxxx Xxxxxx, General Counsel. All
notices provided to the Sub-Adviser will be sent to the attention of Xxxxx X.
Xxxxxxx, Vice President Mondrian Investment Partners Limited 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.
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 (US) INC.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attest:
By: /s/ Xxxxx Xxxxxxxxx By: /s/ Xxxxxxx Xxxx
------------------------- -------------------------
Name: Xxxxx Xxxxxxxxx Name: Xxxxxxx Xxxx
Title: Director Title: Executive Director
Attest:
By: /s/ Xxxxx Xxxxxxxxx By: /s/ Xxxx Xxxxxx
------------------------- -------------------------
Name: Xxxxx Xxxxxxxxx Name: Xxxx Xxxxxx
Title: Director Title: Executive Director
MONDRIAN INVESTMENT PARTNERS
LIMITED
00 Xxxxxxxxx, xxxxx Xxxxx
Xxxxxx XX0 X0XX
Attest:
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------- -------------------------
Name: Xxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxx
Title: Chief Compliance Officer Title: Managing Director & CIO
