Exhibit 99 (4) (o)
SUB-ADVISORY AGREEMENT
Agreement made as of May 30, 2006 between UBS Global Asset Management (Americas)
Inc. ("UBS Global Americas"), a Delaware corporation, and Metropolitan West
Capital Management, LLC ("Sub-Adviser"), a California limited liability company
(the "Agreement").
RECITALS
(1) UBS Global Americas has entered into a Management Agreement dated April 1,
2006 ("Management Agreement"), with UBS PACE Select Advisors Trust ("Trust"), an
open-end management investment company registered under the Investment Company
Act of 1940, as amended ("1940 Act"), with respect to UBS PACE Small/Medium Co
Value Equity Investments ("Portfolio").
(2) UBS Global Americas desires to retain the Sub-Adviser to furnish certain
investment advisory services to UBS Global Americas and the Portfolio 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 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
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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
1st of each year, or more frequently as the Board may reasonably request, with a
written report of the proxies voted during the most recent 12-month period
ending June 30, or such other period as the Board may designate, in a format
that shall comply with the 1940 Act and that shall be acceptable to the Board.
(d) The Sub-Adviser agrees that, in placing orders with brokers, it will obtain
the best net result in terms of price and execution; provided that, on behalf of
the Portfolio or Segment, the Sub-Adviser may, in its discretion, use brokers
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.
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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 Securities and Exchange Commission ("Form ADV")) of
Section 11(a)(1)(H) of the Securities Exchange Act of 1934. In all such
dealings, the Affiliated Broker-Dealers shall be authorized and entitled to
retain any commissions, remuneration or profits which may be made in such
transactions and shall not be liable to account for the same to UBS Global
Americas, the Portfolio or the Trust.
UBS Global Americas further authorizes the Sub-Adviser and its Affiliated
Broker-Dealers to execute agency cross transactions (the "Cross Transactions")
on behalf of the Portfolio and the Trust. Cross Transactions are transactions
which may be effected by the Affiliated Broker-Dealers acting for both the
Portfolio or the Trust and the counterparty to the transaction. Cross
Transactions enable the Sub-Adviser to purchase or sell a block of securities
for the Portfolio or the Trust at a set price and possibly avoid an unfavorable
price movement that may be created through entrance into the market with such
purchase or sale order. As such, the Sub-Adviser believes that Cross
Transactions can provide meaningful benefits for the Portfolio and the Trust and
its clients generally. UBS Global Americas, the Portfolio and the Trust should
be aware, however, that in a Cross Transaction an Affiliated Broker-Dealer will
be receiving commissions from both sides of the trade and, therefore, there is a
potentially conflicting division of loyalties and responsibilities.
(e) The Sub-Adviser will maintain all books and records required to be
maintained pursuant to Rule 31a-1(b)(2)(ii), (3), (5), (6), (7), (9) and (10)
under the 1940 Act and the rules and regulations promulgated thereunder with
respect to transactions by the Sub-Adviser on behalf of the Portfolio or
Segment, and will furnish the Board and UBS Global Americas with such periodic
and special reports as the Board or UBS Global Americas reasonably may request.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Sub-Adviser hereby agrees that all records 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.
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(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-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 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.).
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
0.40% 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.
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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.
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
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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 and all other records relevant
to the Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided UBS Global Americas with a copy of its Form
ADV, as most recently filed with the Securities and Exchange Commission ("SEC"),
and promptly will furnish a copy of all amendments to UBS Global Americas at
least annually.
(d) The Sub-Adviser will notify UBS Global Americas of any change of control of
the Sub-Adviser, including any change of its general partners or 25%
shareholders or 25% limited partners, as applicable, and any changes in the key
personnel who are either the portfolio manager(s) of the Portfolio or senior
management of the Sub-Adviser, in each case prior to or promptly after such
change.
(e) 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 consummation of the
anticipated transaction involving a change in control of the Sub-Advisor
resulting in the automatic termination of the prior agreement between the
parties hereto, 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.
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(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.
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
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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: Xx. Xxxx X.
Xxxxxxxx, President, Metropolitan West Capital Management, LLC, 000 Xxxxxxx
Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, XX 00000 (fax: 000-000-0000).
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.
00 Xxxx 00xx Xxxxxx
Xxxxxx: Xxx Xxxx, XX 00000
By: /s/ Xxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxx Xxxxxxx Name: Xxxxx X. Xxxxxx
Title: Director and Associate Title: Executive Director and Senior
General Counsel Associate General Counsel
METROPOLITAN WEST CAPITAL
MANAGEMENT, LLC
000 Xxxxxxx Xxxxxx Xxxxx Xxxxx 0000
Attest: Xxxxxxx Xxxxx, XX 00000
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
--------------------------------- ------------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxx X. Xxxxxxxx
Title: Executive Assistant Title: President
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