Exhibit No. 4(h)
SUB-ADVISORY AGREEMENT
Agreement made as of October 4, 1999 between XXXXXXXX XXXXXXXX ASSET
MANAGEMENT INC., a Delaware corporation ("Xxxxxxxx Xxxxxxxx"), and ARIEL CAPITAL
MANAGEMENT, INC., an Illinois corporation ("Sub-Adviser" or "Ariel") (the
"Agreement").
RECITALS
(1) Xxxxxxxx Xxxxxxxx has entered into a Management Agreement dated June
15, 1995 ("Management Agreement") with PaineWebber PACE Select Advisors Trust
(formerly known as Managed Accounts Services Portfolio Trust ("Trust"), an
open-end management investment company registered under the Investment Company
Act of 1940, as amended ("1940 Act"), with respect to the PACE SMALL/MEDIUM
COMPANY VALUE EQUITY INVESTMENTS ("Portfolio") series of the Trust;
(2) Xxxxxxxx Xxxxxxxx desires to allocate the portfolio investments of
the Portfolio between a small capitalization segment and a medium capitalization
segment (the "mid-cap segment"), and to retain the Sub-Adviser to furnish
certain investment advisory services with respect to the mid-cap segment of the
investments 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, the parties agree as follows:
1. APPOINTMENT. Xxxxxxxx Xxxxxxxx hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to the mid-cap segment of the Portfolio's
investments 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 Xxxxxxxx Xxxxxxxx, and any written
guidelines adopted by the Board or Xxxxxxxx Xxxxxxxx, the Sub-Adviser will
provide a continuous investment program with respect to the mid-cap segment of
the Portfolio's investments, including investment research and management to all
securities and investments and cash equivalents in the Portfolio allocated by
Xxxxxxxx Xxxxxxxx to the mid-cap segment of the Portfolio's investments. The
Sub-Adviser will determine from time to time what investments will be purchased,
retained or sold by the Portfolio in the mid-cap segment of the Portfolio's
investments. The Sub-Adviser will be responsible for placing purchase and sell
orders for investments and for other related transactions with respect to the
mid-cap segment of the Portfolio's investments. 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, 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, the Sub-Adviser may, in its discretion, use brokers
who provide the Sub-Adviser with research, analysis, advice and similar services
to execute portfolio transactions, 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 determining 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 and its
other clients and that the total commissions paid by the Portfolio will be
reasonable in relation to the benefits to the Portfolio over the long term. In
no instance will portfolio securities be purchased from or sold to 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 of the assets of the
Portfolio 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 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. Xxxxxxxx Xxxxxxxx
recognizes that in some cases this procedure may adversely affect the results
obtained for the Portfolio.
(c) The Sub-Adviser will maintain all books and records required to be
maintained pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to transactions by the Sub-Adviser on behalf of the
Portfolio, and will furnish the Board and Xxxxxxxx Xxxxxxxx with such periodic
and special reports as the Board or Xxxxxxxx Xxxxxxxx reasonably may request. In
compliance with the requirements of Rule 3la-3 under the 1940 Act, the
Sub-Adviser hereby agrees that all records that it maintains for the Portfolio
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 Trust and
that are required to be maintained by Rule 31a-l under the 1940 Act, and further
agrees to surrender promptly to the Trust any records that it maintains for the
Portfolio upon request by the Trust.
(d) At such times as shall be reasonably requested by the Board or
Xxxxxxxx Xxxxxxxx, the Sub-Adviser will provide the Board and Xxxxxxxx Xxxxxxxx
with economic and investment analyses and reports as well as quarterly reports
setting forth the performance of the mid-cap segment of the Portfolio's
investments and make available to the Board and Xxxxxxxx Xxxxxxxx any economic,
statistical and investment services that the Sub-Adviser normally makes
available to its institutional or other customers.
(e) 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
-2-
and will use its reasonable efforts to arrange for the provision of a price(s)
from a party(ies) 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 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 Xxxxxxxx Xxxxxxxx and will comply with
the applicable requirements of the 1940 Act, the Investment Advisers Act of
1940, as amended ("Advisers Act"), the rules under each, Subchapter M of the
Internal Revenue Code as applicable to regulated investment companies, and all
other applicable federal and state laws and regulations. Xxxxxxxx Xxxxxxxx
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 Xxxxxxxx Xxxxxxxx, 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
Xxxxxxxx Xxxxxxxx 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.
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 Xxxxxxxx Xxxxxxxx.
5. COMPENSATION.
(a) For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, Xxxxxxxx Xxxxxxxx, not the Portfolio,
will pay to the Sub-Adviser a fee, computed daily and payable monthly, at an
annual rate of .30% of the Portfolio's average daily net assets 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. Under this fee arrangement, the Sub-Adviser will receive fees
based on the value of portfolio assets under its management as these assets have
been allocated to it by Xxxxxxxx Xxxxxxxx.
(b) The fee shall be computed 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 Xxxxxxxx Xxxxxxxx has agreed to waive
all or a portion of its management fee, Xxxxxxxx Xxxxxxxx may ask the
Sub-Adviser to waive the same proportion of its fees, but the Sub-Adviser is
under no obligation to do so.
-3-
(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 prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
6. LIMITATION OF LIABILITY. 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 Xxxxxxxx Xxxxxxxx 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. Nothing in this paragraph 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 Xxxxxxxx Xxxxxxxx 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 Xxxxxxxx
Xxxxxxxx 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, the president or a
vice-president of the Sub-Adviser shall certify to Xxxxxxxx Xxxxxxxx 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 Xxxxxxxx Xxxxxxxx, the
Sub-Adviser shall permit Xxxxxxxx Xxxxxxxx, its employees or its agents or the
appropriate regulatory authority to examine the reports required to be made to
the Sub-Adviser by Rule 17j-1 (c) (1) and all other records relevant to the
Sub-Adviser's code of ethics.
-4-
(c) The Sub-Adviser has provided Xxxxxxxx Xxxxxxxx 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 Xxxxxxxx Xxxxxxxx
at least annually.
(d) The Sub-Adviser will notify Xxxxxxxx Xxxxxxxx of any change of
control of the Sub-Adviser, including any change of its general partners or 25%
shareholders, 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) The Sub-Adviser agrees that neither it nor any of its affiliates
will in any way refer directly or indirectly to its relationship with the Trust,
the Portfolio, Xxxxxxxx Xxxxxxxx or any of their respective affiliates in
offering, marketing or other promotional materials without the express written
consent of Xxxxxxxx Xxxxxxxx.
8. SERVICES NOT EXCLUSIVE. The Sub-Adviser may act as an investment
adviser to any other person, firm or corporation, and may perform management and
any other services for any other person, association, corporation, firm or other
entity pursuant to any contract or otherwise, and take any action or do anything
in connection therewith or related thereto, except as prohibited by applicable
law; and no such performance of management or other services or taking of any
such action or doing of any such thing shall be in any manner restricted or
otherwise affected by any aspect of any relationship of the Sub-Adviser to or
with the Trust, Portfolio or Xxxxxxxx Xxxxxxxx or deemed to violate or give rise
to any duty or obligation of the Sub-Adviser to the Trust, Portfolio or Xxxxxxxx
Xxxxxxxx except as otherwise imposed by law or by this Agreement.
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, 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.
(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 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 those trustees of the Trust who are not
parties to this Agreement or interested persons of any such party, 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
-5-
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 Xxxxxxxx Xxxxxxxx: (i) upon 120 days' written notice to the
Sub-Adviser; (ii) immediately 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 Xxxxxxxx
Xxxxxxxx, 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 Xxxxxxxx Xxxxxxxx. This
Agreement will terminate automatically in the event of its assignment or upon
termination of the Management Agreement.
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 which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until 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, 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 Delaware, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of Delaware 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 written notice herein required to be given to the
Sub-Adviser or Xxxxxxxx Xxxxxxxx shall be deemed to have been given upon receipt
of the same at their respective addresses set forth below.
-6-
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
Attest: XXXXXXXX XXXXXXXX ASSET MANAGEMENT INC.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. X'Xxxxxxx
---------------------------- --------------------------------
Xxxxxx X. Xxxxx Name: Xxxxxx X. X'Xxxxxxx
Vice President Title: Senior Vice President
Attest: ARIEL CAPITAL MANAGEMENT, INC.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx Xxxxxx
---------------------------- --------------------------------
Xxxxx X. Xxxxxxxx Name: Xxxxxxx Xxxxxx
Executive Vice President Title: Senior Vice President
-7-
