Exhibit No. EX-99.h.2
ADMINISTRATION CONTRACT
Contract made as of ____________ ___, 2006, between THE UBS FUNDS, a
Delaware statutory trust ("Trust"), and UBS GLOBAL ASSET MANAGEMENT (AMERICAS)
INC. ("UBS Global AM"), a Delaware corporation registered as an investment
adviser under the Investment Advisers Act of 1940, as amended, and as a
broker-dealer under the Securities Exchange Act of 1934, as amended ("1934
Act").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company, and
currently has multiple distinct series of shares of beneficial interest, which
correspond to distinct portfolios and have been designated as the funds listed
on Exhibit A, as it may be amended from time to time (each a "Fund" and,
collectively, "Funds"); and
WHEREAS, the Trust desires to retain UBS Global AM as administrator to
furnish certain administrative services to the Trust with respect to the Funds,
and UBS Global AM is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints UBS Global AM as administrator of
the Trust and each Fund for the period and on the terms set forth in this
Contract. UBS Global AM accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. Duties as Administrator. UBS Global AM shall furnish, at its own
expense, the executive, supervisory and clerical personnel necessary in order to
administer the affairs of the Trust and each Fund subject to the supervision of
the Trust's Board of Trustees ("Board"). In carrying out the terms of this
Contract, UBS Global AM shall:
(a) provide office space, equipment and facilities (which may
include UBS Global AM's or its affiliates) for maintaining the Trust's
organization, for meetings of the Trust's Board and shareholders, and
for performing administrative services hereunder;
(b) supervise and manage all aspects of the Funds' operations
(other than investment advisory activities), assist in the selection
of and supervise relations with, and monitor the performance of,
custodians, depositories, transfer and pricing agents, accountants,
attorneys, underwriters, brokers and dealers, insurers and other
persons in any capacity deemed to be necessary and desirable by the
Board;
(c) provide certain internal clerical and legal services, and
stationery and office supplies;
(d) provide accounting services, including:
1) determining and arranging for the publication of the net
asset value of each Fund;
2) preparing financial information for presentation to the
Trust's Board;
3) preparing and monitoring the Trust's annual expense
budget, and establishing daily accruals;
4) calculating contractual expenses and coordinating payment
of Fund expenses;
5) calculating periodic dividend rates to be declared in
accordance with guidelines and supervising the Trust's transfer agent
with respect to the payment of dividends and other distributions to
shareholders;
6) calculating total return (and, if applicable, yield)
information as described in the current prospectuses and statement of
additional information;
7) coordinating audit packages for use by independent public
accountants;
8) responding to regulatory audits;
(e) provide non-investment related statistical and research data
and such other reports, evaluations and information as the Funds may
request from time to time;
(f) monitor each Fund's compliance with the current registration
statement, the 1940 Act, the Internal Revenue Code and other
applicable laws and regulations;
(g) prepare, to the extent requested by the Trust, and coordinate
with Trust's counsel, prospectuses, statements of additional
information, registration statements, proxy statements and annual and
semi-annual reports to shareholders;
(h) arrange for the printing and mailing (at the Fund's expense)
of an annual list of shareholders, proxy statements and other reports
or other materials provided to the Funds' shareholders;
(i) supervise and facilitate the solicitation of proxies
solicited by the Trust for all shareholder meetings, including the
tabulation process for shareholder meetings;
(j) support outside auditors in preparing and filing all the
Funds' federal and state tax returns and required tax filings;
(k) prepare periodic reports to and filings with the Securities
and Exchange Commission (the "SEC") and state Blue Sky authorities
with the advice of the Funds' counsel;
(l) maintain the Trust's existence, and during such times as the
shares of the Funds are publicly offered, maintain the registration
and qualification of the Funds' shares under federal and state law;
(m) coordinate the Trust's board meeting schedule, initiate the
agenda and coordinate production of board meeting materials;
(n) provide individuals acceptable to the Trustees for
nomination, appointment, or election as officers of the Trust, who
will be responsible for the management of certain of the Trust's
affairs as determined by the Trustees;
(o) keep and maintain the financial accounts and records of the
Funds;
(p) analyze and propose changes to shareholder services designed
to enhance the value or convenience of the Funds as an investment
vehicle;
(q) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the
1940 Act as such bonds and policies are approved by the Trust's Board
of Trustees;
(r) provide the Board on a regular basis with reports and
analyses of each Fund's operations and the operations of comparable
investment companies; and
(s) take any other actions which appear to UBS Global AM and the
Board necessary to carry into effect the purposes of this Contract.
3. Further Duties. In all matters relating to the performance of this
Contract, UBS Global AM will act in conformity with the Agreement and
Declaration of Trust, By-Laws, and registration statement of the Trust and with
the instructions and directions of the Board and will comply with the
requirements of the 1940 Act, the rules thereunder, and all other applicable
federal and state laws and regulations.
4. Delegation of UBS Global AM's Duties as Administrator. With respect to
any or all Funds, UBS Global AM may enter into one or more contracts
("Sub-Administration Contract") with one or more sub-administrators in which UBS
Global AM delegates to such sub-administrators any or all of its duties
specified in Paragraph 2 of this Contract, provided that each Sub-Administration
Contract imposes on the sub-administrator bound thereby all the corresponding
duties and conditions to which UBS Global AM is subject by Paragraph 2 of this
Contract and all the duties and conditions of Paragraph 3 of this Contract.
5. Services Not Exclusive. The services furnished by UBS Global AM
hereunder are not to be deemed exclusive and UBS Global AM shall be free to
furnish similar services to others so long as its services under this Contract
are not impaired thereby or unless otherwise agreed to by the parties hereunder
in writing. Nothing in this Contract shall limit or restrict the right of any
director, officer or employee of UBS Global AM, 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.
6. Expenses.
(a) During the term of this Contract, each Fund will bear all
expenses, not specifically assumed by UBS Global AM, incurred in its
operations and the offering of its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following (or each Fund's proportionate share of the following): (i) fees
payable to and expenses incurred on behalf of the Fund by UBS Global AM
under this Contract; (ii) expenses of organizing the Trust and the Fund;
(iii) filing fees and expenses relating to the registration and
qualifications of the Fund's shares and the Trust under federal and/or
state securities laws and maintaining such registration and qualifications;
(iv) fees and salaries payable to the Trust's Trustees and officers who are
not interested persons of the Trust or UBS Global AM; (v) all expenses
incurred in connection with the Trustees' services, including travel
expenses; (vi) taxes (including any income or franchise taxes) and
governmental fees; (vii) costs of any liability, uncollectible items of
deposit and other insurance and fidelity bonds; (vii) any costs, expenses
or losses arising out of a liability of or claim for damages or other
relief asserted against the Trust or Fund for violation of any law; (ix)
legal, accounting and auditing expenses, including legal fees of special
counsel for those Trustees of the Trust who are not interested persons of
the Trust; (x) charges of custodians, transfer agents and other agents;
(xi) costs of preparing share certificates; (xii) expenses of setting in
type and printing prospectuses and supplements thereto, statements of
additional information and supplements thereto, reports and proxy materials
for existing shareholders; (xiii) costs of mailing prospectuses and
supplements thereto, statements of additional information and supplements
thereto, reports and proxy materials to existing shareholders; (xiv) any
extraordinary expenses (including fees and disbursements of counsel, costs
of actions, suits or proceedings to which the Trust is a party and the
expenses the Trust may incur as a result of its legal obligation to provide
indemnification to its officers, Trustees, agents and shareholders)
incurred by the Trust or Fund; (xv) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xvi) cost of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xvii) the
cost of investment company literature and other publications provided by
the Trust to its Trustees and officers; (xviii) costs of mailing,
stationery and communications equipment; (xix) expenses incident to any
dividend, withdrawal or redemption options; (xx) charges and expenses of
any outside pricing service used to value portfolio securities; (xxi)
interest on borrowings of the Trust; and (xxii) fees or expenses related to
license agreements with respect to securities indices.
(c) The Trust or a Fund may pay directly any expenses incurred by it
in its normal operations and, if any such payment is consented to by UBS
Global AM and acknowledged as otherwise payable by UBS Global AM pursuant
to this Contract, the Fund may reduce the fee payable to UBS Global AM
pursuant to Paragraph 7 thereof by such amount. To the extent that such
deductions exceed the fee payable to UBS Global AM on any monthly payment
date, such excess shall be carried forward and deducted in the same manner
from the fee payable on succeeding monthly payment dates.
(d) UBS Global AM will assume the cost of any compensation for
services provided to the Trust received by the officers of the Trust and by
those Trustees who are interested persons of the Trust.
(e) The payment or assumption by UBS Global AM of any expenses of the
Trust or a Fund that UBS Global AM is not required by this Contract to pay
or assume shall not obligate UBS Global AM to pay or assume the same or any
similar expense of the Trust or a Fund on any subsequent occasion.
7. Compensation.
(a) For the services provided and the expenses assumed pursuant to
this Contract, each Fund will pay to UBS Global AM a fee, computed daily
and paid monthly, at an annual rate of 0.075% of average daily net assets
of such Fund. No Fund shall be responsible for payment owed by any other
Fund.
(b) The fee shall be computed daily and paid monthly to UBS Global AM
on or before the first business day of the next succeeding calendar month.
(c) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective day to the end of the
month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
8. Limitation of Liability of UBS Global AM. UBS Global AM shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
any Fund, the Trust or any of its shareholders, in connection with the matters
to which this Contract relates, except to the extent that such a loss results
from negligence, willful misfeasance, bad faith or gross negligence on its part
in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Contract. Any person, even though also an
officer, director, employee, or agent of UBS Global AM, who may be or become an
officer, Trustee, employee or agent of the Trust shall be deemed, when rendering
services to any Fund or the Trust or acting with respect to any business of such
Fund or the Trust, to be rendering such services to or acting solely for the
Fund or the Trust and not as an officer, director, employee, or agent or one
under the control or direction of UBS Global AM even though paid by it.
9. Limitation of Liability of the Trustees and Shareholders of the Trust.
No Trustee, shareholder, officer, employee or agent of any Fund shall be liable
for any obligations of any Fund or the Trust under this Contract, and UBS Global
AM agrees that, in asserting any rights or claims under this Contract, it shall
look only to the assets and property of the Trust in settlement of such right or
claim, and not to any Trustee, shareholder, officer, employee or agent.
Moreover, this Contract shall be deemed to create a separate agreement with the
Trust acting on behalf of its respective series listed on Exhibit A hereto, as
though the Trust had separately executed an identical agreement for all of its
respective series. For each reference in this Agreement to Trust shall be deemed
a reference solely to the particular series to which the provision relates. In
no circumstances shall the rights, obligations or remedies with respect to a
particular series constitute a right, obligation or remedy applicable to any
other series.
10. Confidentiality. UBS Global AM shall have the right to use any list of
shareholders of the Fund or any other list of investors which it obtains in
connection with its provision of services under this Contract; provided,
however, that UBS Global AM shall not sell or knowingly provide such list or
lists to any unaffiliated person. UBS Global AM agrees on behalf of itself and
its employees to treat confidentially all records and other information relative
to the Trust and the Funds and its prior, present or potential shareholders. In
accordance with Section 248.11 of Regulation S-P (17 CFR 248.1-248.30) ("Reg
S-P"), UBS Global AM will not directly, or indirectly through an affiliate,
disclose any non-public personal information, as defined in Reg S-P, received
from the Fund to any person that is not affiliated with the Fund or with UBS
Global AM and provided that any such information disclosed to an affiliate of
UBS Global AM shall be under the same limitations of non-disclosure.
11. Equipment Failures. In the event of equipment failures beyond UBS
Global AM's control, UBS Global AM shall, at no additional expense to the Trust,
take reasonable steps to minimize service interruptions but shall have no
liability with respect thereto. UBS Global AM shall develop and maintain a plan
for recovery from equipment failures which may include contractual arrangements
with appropriate parties making reasonable provision for emergency use of
electronic data processing equipment to the extent appropriate equipment is
available.
12. Certain Records. UBS Global AM shall maintain customary records in
connection with its duties as specified in this Agreement. Any records required
to be maintained and preserved pursuant to Rules 31a-1 and 31a-2 under the 1940
Act which are prepared or maintained by UBS Global AM on behalf of the Trust
shall be prepared and maintained at the expense of UBS Global AM, but shall be
the property of the Trust and will be made available to or surrendered promptly
to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, UBS Global AM shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that UBS
Global AM may exhibit such records to any person in any case where it is advised
by its counsel that it may be held liable for failure to do so, unless (in cases
involving potential exposure only to civil liability) the Trust has agreed to
indemnify UBS Global AM against such liability.
13. Termination. This Contract shall become effective upon the date
hereinabove written and may be terminated at any time, with respect to any Fund
without the payment of any penalty, by vote of the Board or by vote of a
majority of a Fund's outstanding voting securities or on sixty days' written
notice to UBS Global AM or by UBS Global AM at any time, without the payment of
any penalty, on sixty days' written notice to the Trust. Termination of this
Contract with respect to any given Fund shall in no way affect the continued
validity of this Contract or the performance thereunder with respect to any
other Fund.
14. Amendment of this Contract. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
15. Governing Law. This Contract shall be construed in accordance with the
laws of the State of New York, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act, provided, however, that
Section 9 above will be construed in accordance with the laws of the State of
Delaware. To the extent that the applicable laws of the State of New York or the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
16. Miscellaneous. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "interested person," "investment adviser," "majority of outstanding
voting securities" and "prospectus," shall have the same meaning as such terms
have in the 1940 Act, subject to such exemption as may be granted by the
Securities and Exchange Commission by any rule, regulation or order. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
contract is relaxed by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
UBS GLOBAL ASSET UBS GLOBAL ASSET
MANAGEMENT (AMERICAS) INC. MANAGEMENT (AMERICAS) INC.
By: By:
Name: Name:
Title: Title:
THE UBS FUNDS THE UBS FUNDS
By: By:
Name: Name:
Title: Title:
Exhibit A
1. UBS U.S. Bond Fund
2. UBS High Yield Fund
3. UBS U.S. Large Cap Equity Fund
4. UBS U.S. Large Cap Value Equity Fund
5. UBS U.S. Large Cap Growth Fund
6. UBS U.S. Small Cap Equity Fund
7. UBS U.S. Small Cap Growth Fund
8. UBS U.S. Real Estate Equity Fund
9. UBS Global Allocation Fund
10. UBS Global Equity Fund
11. UBS Global Bond Fund
12. UBS Absolute Return Bond Fund
13. UBS Dynamic Alpha Fund
14. UBS International Equity Fund
15. UBS Emerging Markets Debt Fund
16. UBS Emerging Markets Equity Fund
17. UBS U.S. Mid Cap Growth Equity Fund
18. UBS U.S. Equity Alpha Fund
