Exhibit 99.(4)(u)
FORM OF SUB-ADVISORY AGREEMENT
Agreement made as of April 1, 2006 between UBS GLOBAL ASSET MANAGEMENT
(AMERICAS) INC. ("UBS Global Americas"), a Delaware corporation, and X.X. XXXXXX
INVESTMENT MANAGEMENT INC. (the "Sub-Adviser"), a corporation existing under the
laws of the State of Delaware.
RECITALS
(1) UBS Global Americas has entered into a Management Agreement dated
April 1, 2006 ("Management Agreement") with UBS PACE Select Advisors 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");
(2) UBS Global Americas is authorized to retain one or more sub-advisers
to furnish certain investment advisory services to UBS Global Americas and the
Portfolio;
(3) UBS Global Americas desires to retain the Sub-Adviser to furnish
certain investment advisory services to UBS Global Americas and 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 Americas and the Sub-Adviser agree as follows:
1. APPOINTMENT. UBS Global Americas 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 Americas, and any written
guidelines adopted by the Board or UBS Global Americas, the Sub-Adviser will
provide a continuous investment program for the Portfolio or Segment, including
investment research and discretionary management with respect to all securities
and investments and cash equivalents in the Portfolio or Segment. The
Sub-Adviser will determine from time to time what investments will be purchased,
retained or sold by the Portfolio or Segment. The Sub-Adviser will be
responsible for placing purchase and sell orders for investments and for other
related transactions for the Portfolio or Segment. The Sub-Adviser understands
that the Portfolio's assets need to be managed so as to permit the Portfolio to
qualify or to continue to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, as amended ("Code"). The Sub-Adviser
will provide services under this Agreement in accordance with the Portfolio's
investment objective, policies and restrictions as stated in the Trust's
currently effective registration statement under the 1940 Act, and any
amendments or supplements thereto ("Registration Statement").
(b) The Sub-Adviser agrees that it will not consult with any other
sub-adviser ("Other Sub-Adviser") for the Trust or Portfolio concerning any
transaction by the Portfolio or Segment in securities or other assets, including
(i) the purchase by the Portfolio or Segment of a security issued by the Other
Sub-Adviser, or an affiliate of the Other Sub-Adviser, to the Trust or Portfolio
except as permitted by the 1940 Act or (ii) transactions by the Portfolio or
Segment in any security for which the Other Sub-Adviser, or its affiliate, is
the principal underwriter.
(c) The Sub-Adviser agrees that it will be responsible for voting proxies
of issuers of securities held by the Portfolio or Segment. The Sub-Adviser
further agrees that it will adopt written proxy voting procedures that shall
comply with the requirements of the 1940 Act and the Investment Advisers Act of
1940. 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.
(d) The Sub-Adviser agrees that, in placing orders with brokers, it will
seek the best overall terms available. In assessing the best overall terms
available for any transaction, the Sub-Adviser will consider factors it deems
relevant, including, without limitation, the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of the commission, if
any, for the specific transaction and on a continuing basis. In selecting
brokers, the Sub-Adviser may, on behalf of the Portfolio or Segment and in the
Sub-Adviser's 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-Adviser's
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 Americas or the
Sub-Adviser, or any affiliated person thereof, except in accordance with the
federal securities laws and the rules and regulations thereunder. The
Sub-Adviser may aggregate sales and purchase orders 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 Americas recognizes that in some cases this procedure may adversely
affect the results obtained for the Portfolio or Segment.
Subject to the Sub-Adviser's obligations to seek best execution, UBS Global
Americas agrees that the Sub-Adviser, in its sole discretion, may place
transactions on behalf of the Portfolio or Segment and the Trust with any
broker-dealer deemed to be an affiliate of the Sub-Adviser (the "Affiliated
Broker-Dealers") so long as such transactions are effected in conformity with
the requirements (including any applicable exemptions and administrative
interpretations set forth in Part II of the Sub-Adviser's Form ADV Registration
Statement on file with the
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Securities and Exchange Commission ("Form ADV")) of Section 11(a)(1)(H) of the
Securities Exchange Act of 1934. In all such dealings, the Affiliated
Broker-Dealers shall be authorized and entitled to retain any commissions,
remuneration or profits which may be made in such transactions and shall not be
liable to account for the same to UBS Global Americas, the Segment, the
Portfolio or the Trust.
UBS Global Americas further authorizes the Sub-Adviser and its Affiliated
Broker-Dealers to execute agency cross transactions (the "Cross Transactions")
on behalf of the Portfolio or Segment and the Trust. Cross Transactions are
transactions that may be effected by the Affiliated Broker-Dealers acting for
both the Portfolio or Segment 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 Segment 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 or Segment and the Trust and its clients generally. UBS Global
Americas, the Portfolio or Segment and the Trust should be aware, however, that
in a Cross Transaction an Affiliated Broker-Dealer will be receiving commissions
from both sides of the trade and, therefore, there is a potentially conflicting
division of loyalties and responsibilities.
(e) The Sub-Adviser will maintain all books and records required to be
maintained pursuant to Rule 31a-1(b)(2)(ii), (3), (5), (6), (7), (9) and (10)
under the 1940 Act and the rules and regulations promulgated thereunder with
respect to transactions by the Sub-Adviser on behalf of the Portfolio or
Segment, and will furnish the Board and UBS Global Americas with such periodic
and special reports as the Board or UBS Global Americas reasonably may request.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Sub-Adviser hereby agrees that all records which it maintains for the Portfolio
or Segment are the property of the Trust, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records that it maintains for
the Portfolio or Segment and that are required to be maintained by Rule 31a-1
under the 1940 Act, and further agrees to surrender promptly to the Trust any
records 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 Americas, the Sub-Adviser will provide the Board and UBS Global Americas
with economic and investment analyses and reports as well as quarterly reports
setting forth the performance of the Portfolio or Segment and make available to
the Board and UBS Global Americas any economic, statistical and investment
services that the Sub-Adviser normally makes available to its institutional or
other customers.
(g) In accordance with procedures adopted by the Board, as amended from
time to time, the Board or the Fund's fair valuation committee may consult with
the Sub-Adviser from time to time to seek the Sub-Adviser's assistance in the
Board's or the fair valuation committee's fair valuation of portfolio securities
in the Portfolio or Segment. The Sub-Adviser will use its reasonable efforts to
assist the Portfolio's custodian in obtaining sources (independent of the
Sub-Adviser) for a price or prices for each portfolio security for which the
custodian does not obtain prices in the ordinary course of business from an
automated pricing service.
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3. FURTHER DUTIES. In all matters relating to the performance of this
Agreement, the Sub-Adviser will 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 Americas; and will comply
with the requirements of the 1940 Act, and the Investment Advisers Act of 1940,
as amended ("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 Americas agrees to provide to the Sub-Adviser copies of
the Trust's Trust Instrument, By-Laws, Registration Statement, written
instructions and directions of the Board and UBS Global Americas, and any
amendments or supplements to any of these materials as soon as practicable after
such materials become available; and further agrees to identify to the
Sub-Adviser in writing any broker-dealers that are affiliated with UBS Global
Americas (other than UBS Financial Services Inc. and UBS Global Americas
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 Americas.
5. COMPENSATION.
(a) For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, UBS Global Americas, not the Portfolio, will pay to
the Sub-Adviser a fee, computed daily and payable monthly, at an annual rate of
0.20% 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-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) 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 Americas in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
(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.
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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 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.
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 Americas of the occurrence of
any event that would disqualify the Sub-Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise.
(b) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide UBS Global
Americas and the Board with a copy of such code of ethics, together with
evidence of its adoption. Within fifteen days of the end of the last calendar
quarter of each year that this Agreement is in effect, a duly authorized officer
of the Sub-Adviser shall certify to UBS Global Americas that the Sub-Adviser has
complied with the requirements of Rule 17j-1 during the previous year and that
there has been no material violation of the Sub-Adviser's code of ethics or, if
such a violation has occurred, that appropriate action was taken in response to
such violation. Upon the written request of UBS Global Americas, the Sub-Adviser
shall permit UBS Global Americas, its employees or its agents to examine the
reports required to be made by the Sub-Adviser pursuant to Rule 17j-1 with
respect to access persons of the Portfolio.
(c) The Sub-Adviser has provided UBS Global Americas with a copy of its
Form ADV, as most recently filed with the Securities and Exchange Commission
("SEC"), and promptly will furnish a copy of all amendments to UBS Global
Americas at least annually.
(d) The Sub-Adviser will notify UBS Global Americas of any change of
control of the Sub-Adviser, including any change of its general partners or 25%
shareholders or 25% limited partners, as applicable, in each case prior to or
promptly after such change. In addition, the Sub-Adviser will notify UBS Global
Americas of any changes in the key personnel who are
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either the portfolio manager(s) of the Portfolio or senior management of the
Sub-Adviser as soon as practicable after such change.
(e) UBS Global Americas 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 (i) by a vote of a majority of those trustees of the Trust who are
not parties to this Agreement or interested persons of any such party
("Independent Trustees"), cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of the Portfolio's
outstanding voting securities, unless UBS Global Americas has authority to enter
into this Agreement pursuant to exemptive relief from the SEC without a vote of
the Portfolio's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for two years from its effective date. Thereafter, if not
terminated, this Agreement shall continue automatically for successive periods
of twelve months each, provided that such continuance is specifically approved
at least annually (i) by a vote of a majority of the Independent Trustees, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting securities
of the Portfolio.
(c) Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of the Portfolio on 30 days'
written notice to the Sub-Adviser. This Agreement may also be terminated,
without the payment of any penalty, by UBS Global Americas: (i) upon 120 days'
written notice to the Sub-Adviser; (ii) upon material breach by the Sub-Adviser
of any of the representations, warranties and agreements set forth in Paragraph
7 of this Agreement; or (iii) immediately if, in the reasonable judgment of UBS
Global Americas, the Sub-Adviser becomes unable to discharge its duties and
obligations under this Agreement, including circumstances such as financial
insolvency of the Sub-Adviser or other circumstances that could adversely affect
the Portfolio. The Sub-Adviser may terminate this Agreement at any time, without
the payment of any penalty, on 120 days' written notice to UBS Global Americas.
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This Agreement will terminate automatically in the event of its assignment or
upon termination of the Management 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 Portfolio's outstanding
voting securities (except in the case of (ii), pursuant to the terms and
conditions of the SEC order permitting it to modify the Agreement without such
vote).
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the 1940 Act and the laws of the State of New York, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of New York conflict with the applicable provisions of the 1940 Act,
the latter shall control.
12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"affiliated person," "interested person," "assignment," "broker," "investment
adviser," "net assets," "sale," "sell" and "security" shall have the same
meanings as such terms have in the 1940 Act, subject to such exemption as may be
granted by the SEC by any rule, regulation or order. Where the effect of a
requirement of the federal securities laws reflected in any provision of this
Agreement is made less restrictive by a rule, regulation or order of the SEC,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order. This Agreement may be
signed in counterpart.
13. NOTICES. Any notice herein required is to be in writing and is deemed
to have been given to the Sub-Adviser or UBS Global Americas upon receipt of the
same at their respective addresses set forth below. All written notices required
or permitted to be given under this Agreement will be delivered by personal
service, by postage mail return receipt requested or by facsimile machine or a
similar means of same delivery which provides evidence of receipt (with a
confirming copy by mail as set forth herein). All notices provided to UBS Global
Americas will be sent to the attention of General Counsel, UBS Global Asset
Management (Americas) Inc., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000. All notices
provided to the Sub-Adviser will be sent to the attention of Xxxxxxx X.
Xxxxxxxx, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000.
14. DELEGATION TO THIRD PARTIES. Except where prohibited by applicable law
or regulation, the Sub-Adviser may delegate or may employ a third party to
perform any accounting, administrative, reporting and ancillary services
required to enable the Sub-Adviser to perform its functions under this
Agreement, but the Sub-Adviser's liability to UBS Global
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Americas or the Portfolio shall not be affected thereby. Notwithstanding any
other provision of the Agreement, the Sub-Adviser may provide information about
UBS Global Americas and the Portfolio or Segment to any such Affiliate or other
third party for the purposes of this Clause, provided that such the third party
is subject to a confidentiality agreement that specifically prevents the misuse
of any such information, including portfolio holdings. The Sub-Adviser will act
in good faith and with due diligence in the selection, use and monitoring of
third parties and shall be solely responsible for any loss, mistake, negligence
or misconduct caused by such third party
15. TRADE SETTLEMENT AT TERMINATION. Termination will be without prejudice
to the completion of any transaction already initiated. On, or after, the
effective date of termination, the Sub-Adviser shall be entitled, without prior
notice to UBS Global Americas or the Portfolio, to direct the Custodian to
retain and/or realize any assets of the Portfolio as may be required to settle
transactions already initiated, and to pay any outstanding liabilities of the
Sub-Adviser. Following the date of effective termination, any new transactions
will only be executed by mutual agreement between UBS Global Americas and the
Sub-Adviser.
16. DISCLOSURE.
(a) Neither UBS Global Americas, the Portfolio or the Sub-Adviser shall
disclose information of a confidential nature acquired in consequence of this
Agreement, except for information which they may be entitled or bound to
disclose by law, regulation or which is disclosed to their advisers where
reasonably necessary for the performance of their professional services or, in
the case of the Sub-Adviser, as permitted in accordance with the above clause
(Delegation to Third Parties).
(b) Notwithstanding the provisions of 16(a), to the extent that any market
counterparty with whom the Sub-Adviser deals requires information relating to
the Portfolio or Segment (including, but not limited to, the identity of UBS
Global Americas or the Portfolio and market value of the Portfolio or Segment),
the Sub-Adviser shall be permitted to disclose such information to the extent
necessary to effect transactions on behalf of the Portfolio or Segment in
accordance with the terms of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
UBS GLOBAL ASSET
MANAGEMENT (AMERICAS) INC.
0 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attest:
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Title:
X.X. XXXXXX INVESTMENT
MANAGEMENT, INC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attest:
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Title:
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