Exhibit No. 4(e)
SUB-ADVISORY AGREEMENT
Agreement made as of August 1, 2001 between XXXXXXX ADVISORS, INC.
("Xxxxxxx Advisors," formerly known as Xxxxxxxx Xxxxxxxx Asset Management Inc.),
a Delaware corporation, and XXXXXXXX MELLON ASSET MANAGEMENT COMPANY LLC
("Sub-Adviser"), a limited liability company (the "Agreement").
RECITALS
(1) Xxxxxxx Advisors 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 PACE MUNICIPAL FIXED
INCOME INVESTMENTS ("Portfolio");
(2) Xxxxxxx Advisors entered into a Sub-Advisory Agreement dated as of
October 10, 2000 (the "Old Sub-Advisory Agreement") with Xxxxxxxx, Ayer & Wood,
Inc. ("Xxxxxxxx") with respect to the Portfolio, pursuant to which Xxxxxxxx
agreed to furnish certain investment advisory services;
(3) Effective August 1, 2001, Xxxxxxxx merged into the Sub-Adviser, a
direct wholly owned subsidiary of Mellon Financial Corporation, and as a result
of this transaction, the Old Sub-Advisory Agreement between Xxxxxxx Advisors and
Xxxxxxxx automatically terminated; and
(4) Xxxxxxx Advisors and the Sub-Adviser wish to enter into a new
Sub-Advisory Agreement embodying substantially the same terms and provisions as
the Old Sub-Advisory Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, Xxxxxxx Advisors and the Sub-Adviser agree as follows:
1. APPOINTMENT. Xxxxxxx Advisors hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to the Portfolio 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 Xxxxxxx Advisors, and any written
guidelines adopted by the Board or Xxxxxxx Advisors, the Sub-Adviser will
provide a continuous investment program for all or a designated portion of
the assets ("Segment") of the Portfolio, including investment research and
discretionary management with respect to all securities and investments and
cash equivalents in the Portfolio or
1
Segment. The Sub-Adviser may from time to time seek research assistance and
may rely upon resources available to it through its affiliated companies to
the extent such actions would not constitute an "assignment" for purposes of
the 1940 Act but in no case shall such assistance and/or reliance relieve the
Sub-Adviser of any of its obligations hereunder, nor shall the Portfolio or
Segment or Xxxxxxx Advisors be responsible for any additional fees or
expenses hereunder as a result. 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 will be responsible for voting proxies of issuers
of securities held by 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, 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
that provide the Sub-Adviser with research, analysis, advice and similar
services to execute portfolio transactions on behalf of the Portfolio, 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 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 over the long term. In no instance will portfolio
securities be purchased from or sold to Xxxxxxx Advisors 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 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. Xxxxxxx Advisors recognizes that in some
cases this procedure may adversely affect the results obtained for the Portfolio
or Segment.
(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 or Segment, and will furnish the Board and Xxxxxxx Advisors with such
periodic and special reports as the Board or Xxxxxxx Advisors 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 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 and that are required to be maintained by Rule 31a-1 under the
1940 Act, and further
2
agrees to surrender promptly to the Trust any records which it maintains for the
Portfolio upon request by the Trust.
(d) At such times as shall be reasonably requested by the Board or
Xxxxxxx Advisors, the Sub-Adviser will provide the Board and Xxxxxxx Advisors
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 Xxxxxxx Advisors 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 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 Xxxxxxx Advisors; 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. Xxxxxxx Advisors 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 Xxxxxxx Advisors, 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 Xxxxxxx Advisors (other than
UBS PaineWebber Inc. and Xxxxxxx Advisors 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 Xxxxxxx Advisors.
5. COMPENSATION.
(a) For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, Xxxxxxx Advisors, 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 up to and including $60
million and 0.15% of the average daily net assets in excess of $60 million 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.
3
(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 Xxxxxxx Advisors 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 series 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, the Trust's custodian, administrator, distributor or any
broker-dealer selected with due care by the Sub-Adviser to effect transactions
for the Portfolio.
In particular, in the event the Sub-Adviser shall manage only a portion of
the Portfolio's investments, 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 Xxxxxxx Advisors 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 Xxxxxxx
Advisors and the Board with a copy of such code of ethics, together with
evidence of its adoption. Within fifteen days of the end of
4
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 Xxxxxxx
Advisors 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 Xxxxxxx Advisors, the Sub-Adviser shall permit Xxxxxxx Advisors, 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 Xxxxxxx Advisors 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 Xxxxxxx Advisors
at least annually.
(d) The Sub-Adviser will notify Xxxxxxx Advisors 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) 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, Xxxxxxx Advisors or any of their respective affiliates in
offering, marketing or other promotional materials without the express written
consent of Xxxxxxx Advisors.
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 Xxxxxxx Advisors 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
5
person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting securities
of the Portfolio.
(c) Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by vote of the Board or by a vote
of a majority of the outstanding voting securities of the Portfolio on 60 days'
written notice to the Sub-Adviser. This Agreement may also be terminated,
without the payment of any penalty, by Xxxxxxx Advisors: (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
Xxxxxxx Advisors, 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 Xxxxxxx Advisors.
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.
6
13. NOTICES. Any notice herein required is to be in writing and is
deemed to have been given to the Sub-Adviser or Xxxxxxx Advisors 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
Xxxxxxx Advisors will be sent to the attention of the General Counsel. All
notices provided to the Sub-Adviser will be sent to the attention of the
Compliance Officer.
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.
XXXXXXX ADVISORS, INC.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attest:
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxx X. Doberman
-------------------------- ----------------------------
Name: Xxxxx X. Xxxxxx Name: Xxx X. Doberman
Title: Director Title: Executive Director
XXXXXXXX MELLON ASSET MANAGEMENT
COMPANY LLC
One Financial Center
Attest: Xxxxxx, XX 00000
By: /s/ Xxxxxxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxxx
-------------------------- ----------------------------
Name: Xxxxxxxxx Xxxxxx Name: Xxxx X. Xxxxxxx
Title: Compliance Officer Title: Treasurer
7
