For period ending
July 31, 2017
Exhibit 77Q1
File number
811-8764
SUB-ADVISORY AGREEMENT
Agreement dated as of September 6, 2017 between
UBS Asset Management (Americas) Inc. ("UBS AM"), a
Delaware corporation, and Kettle Hill Capital Management,
LLC ("Sub- Adviser"), a Delaware limited liability company
(the "Agreement").
RECITALS
(1) UBS AM has entered into a Management Agreement
dated as of August 1, 2008 ("Management Agreement"),
with PACE(r) 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 PACE(r) Alternative Strategies Investments
("Portfolio"); and
(2) UBS AM is authorized to retain one or more sub-
advisers to furnish certain investment advisory services to
UBS AM and the Portfolio;
(3) UBS AM desires to retain the Sub-Adviser to furnish
certain investment advisory services to UBS AM and the
Portfolio or a designated portion of the assets ("Segment")
of 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 AM and the Sub-
Adviser agree as follows:
1. Appointment. UBS AM hereby appoints the Sub-
Adviser as an investment sub-adviser with respect to the
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"), oversight by UBS AM and
any applicable written guidelines adopted by the Board or
UBS AM, the Sub-Adviser will provide a continuous
investment program for the Segment, including
investment research and discretionary management with
respect to all securities and investments and cash
equivalents in the Segment. The Sub-Adviser will
determine from time to time what investments will be
purchased, retained or sold by the Segment. The Sub-
Adviser will be responsible for placing purchase and sell
orders for investments and for other related transactions
for the 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"), subject to any written investment guidelines
or instructions provided by the Board or UBS AM with
respect to the Segment. The Sub-Adviser, on each
business day (as such term is defined in the Portfolio's
then-current prospectus), shall provide UBS AM and the
Trust's custodian such information as UBS AM and the
Trust's custodian may reasonably request relating to all
transactions concerning the Segment.
UBS AM hereby designates and appoints the Sub-Adviser
as its and the Portfolio's limited purpose agent and
attorney-in-fact, without further prior approval of UBS AM
(except as expressly provided for herein or as may be
required by law) to make and execute, in the name and on
behalf of the Portfolio with respect to the Segment, all
agreements, instruments and other documents and to take
all such other action which the Sub-Adviser considers
necessary or advisable to carry out its duties hereunder. By
way of example and not by way of limitation, in connection
with any purchase for the Segment of securities or
instruments that are not registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"),
the Sub-Adviser shall have the full power and authority,
among other things, to: (i) commit to purchase such
securities for the Segment on the terms and conditions
under which such securities are offered; (ii) execute such
account opening and other agreements, instruments and
documents (including, without limitation, purchase
agreements, subscription documents, ISDA and other swap
and derivative documents), and make such commitments,
as may be required in connection with the purchase and
sale of such securities or instruments; (iii) represent that
the Portfolio is an "accredited investor" as defined in Rule
501 (a) of Regulation D under the Securities Act and a
"Qualified Institutional Buyer" as defined in Rule 144A (a)
(1) (i) under the Securities Act; and (iv) commit that such
securities will not be offered or sold by the Segment except
in compliance with the registration requirements of the
Securities Act or an exemption therefrom. This power-of-
attorney is a continuing power-of-attorney and shall
remain in full force and effect until revoked by UBS AM or
the Trust in writing, but any such revocation shall not affect
any transaction initiated prior to receipt by the Sub-Adviser
of such notice.
When investing in non-US securities, the Sub-Advisor is
responsible for identifying and complying with all
applicable laws and regulations of the jurisdiction in which
the security is traded. The Sub-Advisor shall use the degree
of care, diligence and skill that a reasonably prudent
investment manager would exercise under the
circumstances not to establish or add to existing positions
in securities that are subject to any applicable foreign
ownership limits or levels ("FOL'') at a time when it is
reasonably foreseeable that such purchases will have to be
sold due to FOL limits or levels.
(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 Segment in
securities or other assets, including (i) the purchase by the
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 Segment in any security for which the
Other Sub-Adviser, or its affiliate, is the principal
underwriter.
(c) Unless otherwise instructed by UBS AM or the Trust,
the Sub-Adviser agrees that it will be responsible for voting
proxies of issuers of securities held by the Segment. The
Sub-Adviser further agrees that it has adopted or will adopt
written proxy voting procedures that comply with the
requirements of the 1940 Act and the Investment Advisers
Act of 1940, as amended ("Advisers Act") ("Proxy Voting
Policy"), and shall provide a copy of such Proxy Voting
Policy to the Board. The Sub-Adviser shall also provide its
Proxy Voting Policy, and if requested by UBS AM, a
summary of such Proxy Voting Policy for inclusion in the
Trust's registration statement, and will provide UBS AM
with any material amendment to the Proxy Voting Policy
within a reasonable time after such amendment has taken
effect. 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 upon the request of UBS
AM or the Board, Sub-Adviser shall use reasonable efforts
to exercise any known rights incident to the securities held
by the Segment in the context of a bankruptcy or other
reorganization. The Sub-Adviser further agrees that it will
keep UBS AM fully informed about any such actions that it
intends to take.
(e) The Sub-Adviser agrees that it will place orders with
brokers, and seek to obtain best execution, in accordance
with the Sub-Adviser's brokerage and trading policies,
taking into account best price as an important factor in this
decision In using brokers to execute portfolio transactions
on behalf of the Segment, the Sub-Adviser may, in its
discretion, use brokers that provide the Sub-Adviser with
research, analysis, advice and similar services, 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
Segment and its other clients and that the total
commissions paid by the Segment will be reasonable in
relation to the benefits to the Segment over the long term.
In no instance will the Sub-Adviser, in its management of
the Segment, purchase portfolio securities from, or sell
portfolio securities to, UBS AM or the Sub-Adviser, the
Portfolio's principal underwriter, or any affiliated person
thereof identified by UBS AM to the Sub-Adviser, 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 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 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 AM recognizes that in some cases this
procedure may adversely affect the results obtained for the
Segment.
Subject to the Sub-Adviser's obligation to seek best
execution, UBS AM 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 (including affiliated Futures
Commissions Merchants (FCMs)) 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 2A 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
(the "1934 Act"), and in compliance with Rules 17e-1 or 10f-
3 under the 1940 Act or other applicable rules and the
Trust's policies and procedures thereunder. 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 AM, the
Portfolio or the Trust. In the event Sub-Adviser becomes
affiliated (as defined under the 1940 Act) with a broker-
dealer during the term of this Agreement, Sub-Adviser
shall obtain the approval of the Trust's Board of Trustees
prior to commencement of transactions with such broker-
dealer on behalf of the Segment.
UBS AM further authorizes the Sub-Adviser and its
Affiliated Broker-Dealers (if any) 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 AM is
aware 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. Sub-Adviser shall
effect such Cross Transactions in compliance with Rule
206(3)-2 under the Advisers Act, Rule 17a-7 under the 1940
Act, and any other applicable provisions of the federal
securities laws and shall provide UBS AM with periodic
reports describing such agency cross transactions. UBS AM
understands that the authority of the Sub-Adviser to
execute agency Cross Transactions for the Segment is
terminable at will without penalty, effective upon receipt
by the Sub-Adviser of written notice from UBS AM, and
that the failure to terminate such authorization will result in
its continuation.
(f) The Sub-Adviser shall, in accordance with the
applicable provisions of Rule 31a-1 and Rule 31a-2 under
the 1940 Act, maintain separate detailed records of all
matters pertaining to its management of the Segment,
including, without limitation, brokerage and other records
of all securities transactions. Any such records required to
be maintained by the Portfolio or the Trust pursuant to
Rule 31a-1 and Rule 31a-2 prepared or maintained by the
Sub-Adviser are the property of the Trust and will be
surrendered promptly to the Trust upon request; provided,
however, that the Sub-Adviser may make copies of such
records to the extent required by applicable law. The Sub-
Adviser further agrees to furnish the Board and UBS AM
with such periodic and special reports as the Board or UBS
AM may request.
(g) At such times as shall be reasonably requested by the
Board or UBS AM, the Sub-Adviser will provide the Board
and UBS AM with economic and investment analyses and
reports as well as quarterly reports setting forth the
performance of the Segment and analysis hereof and
make available to the Board and UBS AM any economic,
statistical and investment services that the Sub-Adviser
normally makes available to its institutional or other
customers.
(h) In accordance with procedures adopted by the Board,
as amended from time to time, the Sub-Adviser is
responsible for assisting the Board and UBS AM in the fair
valuation of any portfolio securities in the Segment
requiring such fair valuation and, upon request, 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.
The Sub-Adviser also will provide such information or
perform such additional acts as it typically performs as a
sub-adviser with respect to a registered investment
company or series thereof and that may be necessary for
the Sub-Adviser to provide or perform so that the Trust or
UBS AM may comply with their respective obligations
under applicable federal securities laws, including, without
limitation, the 1940 Act, the Advisers Act, the 1934 Act, the
Securities Act, and any rule or regulation thereunder.
3. Further Duties. In all matters relating to the
performance of this Agreement, and to the extent
applicable to the Sub-Adviser, the Sub-Adviser will seek to
act in conformity with the Trust's Trust Instrument, By-
Laws and Registration Statement, the Trust's policies and
procedures for compliance by the Trust with the Federal
Securities Laws (as that term is defined in Rule 38a-1 under
the 1940 Act) provided to the Sub-Adviser (together, the
"Trust Compliance Procedures") and with the written
instructions and written directions of the Board and UBS
AM, 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 AM agrees to
provide to the Sub-Adviser copies of the Trust's Trust
Instrument, By-Laws, Registration Statement, Trust's
Compliance Procedures, written instructions and directions
of the Board and UBS AM, and any amendments or
supplements to any of these materials as soon as
practicable after such materials are made available to the
Sub-Adviser. UBS AM further agrees to identify to the Sub-
Adviser in writing any broker-dealers that are affiliated with
UBS AM (other than UBS Financial Services Inc. and UBS
Asset Management (US) Inc.).
In order to assist the Trust and the Trust's Chief
Compliance Officer (the "Trust CCO") to satisfy the
requirements contained in Rule 38a-1 under the 1940 Act
with respect to the Portfolio, the Sub-Adviser shall provide
to the Trust CCO: (i) direct access to the Sub-Adviser's
chief compliance officer and/or other senior compliance
personnel, as reasonably requested by the Trust CCO; (ii)
quarterly reports confirming that the Sub-Adviser has
complied with the Trust Compliance Procedures in
managing the Segment; and (iii) quarterly certifications
that there were no Material Compliance Matters (as that
term is defined by Rule 38a-1(e)(2)) that arose under the
Trust Compliance Procedures that related to the Sub-
Adviser's management of the Segment.
The Sub-Adviser shall promptly provide the Trust CCO with
copies of: (i) the Sub-Adviser's policies and procedures for
compliance by the Sub-Adviser with the Federal Securities
Laws (together, the "Sub-Adviser Compliance Procedures"),
and (ii) any material changes to the Sub-Adviser
Compliance Procedures. The Sub-Adviser shall cooperate
fully with the Trust CCO and respond to requests so as to
facilitate the Trust CCO's performance of the Trust CCO's
responsibilities under Rule 38a-1 to review, evaluate and
report to the Trust's Board on the operation of the Sub-
Adviser Compliance Procedures, and shall promptly report
to the Trust CCO any Material Compliance Matter arising
under the Sub-Adviser Compliance Procedures involving
the Segment. The Sub-Adviser shall provide to the Trust
CCO: (i) quarterly reports confirming the Sub-Adviser's
compliance with the Sub-Adviser Compliance Procedures
in managing the Segment, and (ii) certifications that there
were no Material Compliance Matters involving the Sub-
Adviser that arose under the Sub-Adviser Compliance
Procedures that affected the Segment. At least annually,
the Sub-Adviser shall provide a certification to the Trust
CCO to the effect that the Sub-Adviser has in place and has
implemented policies and procedures that are reasonably
designed to ensure compliance by the Sub-Adviser with
any applicable Federal Securities Laws.
The Sub-Adviser will promptly provide UBS AM with
information (including information that is required to be
disclosed in the Trust's Registration Statement) with
respect to the portfolio managers responsible for the
Portfolio or Segment and any changes in the portfolio
managers responsible for the Portfolio or Segment.
The Sub-Adviser will promptly notify UBS AM of any
pending investigation, material litigation, administrative
proceeding or any other significant regulatory inquiry
known to the Sub-Adviser and of which the Sub-Adviser is
subject.
The Sub-Adviser will cooperate with UBS AM and/or the
Trust and respond to requests in responding to any
regulatory or compliance examinations or inspections
(including information requests) relating to the Trust, the
Portfolio or UBS AM brought by any governmental or
regulatory authorities having appropriate jurisdiction
(including, but not limited to, the Securities and Exchange
Commission ("SEC")).
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 AM, except as otherwise
specifically provided herein.
Upon request by UBS AM, Sub-Adviser agrees to reimburse
UBS AM or the Trust for costs associated with generating
and distributing any Registration Statement (as defined
herein) for when the Sub-Adviser is given a copy of a draft
of such Registration Statement, is provided an opportunity
to review the disclosures contain therein and provide UBS
AM or the Trust or any of their respective agents with
modifications to such disclosures, and does not notify UBS
AM, the Trust or any of their respective agents of a material
fact known to the Sub-Adviser respecting or relating to the
Sub-Adviser that is not contained in the Registration
Statement, but that is required to be disclosed therein to
avoid such disclosure from being misleading. The Sub-
Adviser shall bear all reasonable expenses of the Trust, if
any, arising out of and relating primarily to, an assignment
or change in control of the Sub-Adviser.
5. Compensation.
(a) For the services provided and the expenses assumed by
the Sub-Adviser pursuant to this Agreement, UBS AM, not
the Portfolio, will pay to the Sub-Adviser a fee, computed
daily and payable monthly, at an annual rate of % 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) For those periods in which UBS AM has agreed to waive
all or a portion of its management fee, UBS AM may ask
the Sub-Adviser to waive the same proportion of its fees,
but the Sub-Adviser is under no obligation to do so.
(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 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 AM in
connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance,
bad faith or negligence on the part of the Sub-Adviser in
the performance of its duties pursuant to this Agreement
or from reckless disregard by the Sub-Adviser 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
manages less than 100% of the assets in the Portfolio, and
has managed such Segment in accordance with Section
2(a) of this Agreement, the Sub-Adviser shall have no
responsibility for the Portfolio's being in violation of any
applicable law or regulation, or any investment objective,
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, unless
such violation was due to the Sub-Advisers failure to
comply with written guidelines adopted by the Board or
UBS AM and provided to the Sub-Adviser.
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 AM 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 Rule 204A-1 under the Advisers Act and will
provide UBS AM and the Board with a copy of such code of
ethics, together with evidence of its adoption. On an
annual basis or otherwise upon request, a duly authorized
officer of the Sub-Adviser shall certify to UBS AM 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 within the time frame
requested by UBS AM. Upon the written request of UBS
AM, the Sub-Adviser shall permit UBS AM, its employees
or its agents to examine the reports required to be made by
the Sub-Adviser pursuant to Rule 17j-1(c)(1) and all other
records relevant to the Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided UBS AM with a copy of
its Form ADV, as most recently filed with the SEC, and
promptly will furnish a copy of all amendments to UBS AM
at least annually.
(d) The Sub-Adviser will notify UBS AM 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 a member of
the Sub-Adviser's key personnel who is either a portfolio
manager of the Portfolio or senior officer of the Sub-
Adviser, in each case prior to or as soon after such change
as possible.
(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, UBS AM or any of
their respective affiliates in offering, marketing or other
promotional materials without the express written consent
of UBS AM.
(f) The Sub-Adviser hereby represents that it has
implemented policies and procedures reasonably designed
to prevent the disclosure by it, its employees or its agents
of the Trust's portfolio holdings to any person or entity
other than UBS AM, the Trust's custodian, or other persons
expressly designated by UBS AM or as permitted by the
Trust's portfolio holdings disclosure policy. The Sub-
Adviser further represents that it implemented policies and
procedures reasonably designed to prevent it, its
employees and agents from trading on the basis of any
material non-public information provided by UBS AM, the
Trust, their affiliates or agents.
(g) the Sub-Adviser hereby represents, warrants and
agrees that, if required by applicable law, it is (1) registered
as a "commodity trading advisor" under the Commodity
Exchange Act (the "CEA") and is a member of the National
Futures Association (the "NFA") and will continue to be so
registered, if required, for so long as this Agreement
remains in effect; (2) it will comply with the CEA and the
rules of the CFTC and the NFA to the extent applicable; and
(3) it will provide all information available to it that is
reasonably requested, and is required, by UBS AM to fulfill
any disclosure and reporting obligations of UBS AM with
respect to the Portfolio under the CEA and the rules of the
CFTC and the NFA.
(h) The Sub-Adviser hereby represents and warrants that it
will have a sanctions procedure, along with the appropriate
compliance monitoring procedures, in place pertaining to
the management of the Segment. The Sub-Adviser further
represents and warrants that the Segment will not invest in
securities / issuers mentioned on the "Sanctions Securities
List (SSSL)" and the list of "Companies Verifiably Involved
in Controversial Weapons (Ethix List)" provided by UBS and
updated from time to time.
8. Representations of UBS AM. UBS AM represents,
warrants and agrees that it (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; and (ii) has the authority to enter into and
perform the services contemplated by this Agreement and
its investment advisory agreement with the Trust with
respect to the Portfolio.
9. Services Not Exclusive. The services furnished by the
Sub-Adviser hereunder are not to be deemed exclusive and
the Sub-Adviser shall be free to furnish the same, similar
and/or dissimilar 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 or other
investment company, 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.
10. 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 AM 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 AM; (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 AM, 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 AM. This Agreement will terminate
automatically in the event of its assignment or upon
termination of the Investment Advisory Agreement, as it
relates to this Portfolio.
11. 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).
12. 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.
13. Confidentiality. The Sub-Adviser will treat as
proprietary and confidential any information obtained in
connection with its duties hereunder, including all records
and information pertaining to the Portfolio and its prior,
present or potential shareholders. The Sub-Adviser will not
use such information for any purpose other than the
performance of its responsibilities and duties hereunder.
Such information may not be disclosed except after prior
notification to and approval in writing by the Portfolio or if
such disclosure is expressly required or requested by
applicable federal or state or other regulatory authorities.
14. Use of Name.
(a) It is understood that the names UBS and PACE or any
derivative thereof or logo associated with that name is the
valuable property of UBS AM and/or its affiliates, and that
Sub-Adviser has the right to use such name (or derivative
or logo) only with the approval of UBS AM and only so long
as UBS AM is Manager to the Trust and/or the Portfolio.
(b) It is understood that the name Kettle Hill or any
derivative thereof or logo associated with those names, are
the valuable property of the Sub-Adviser and its affiliates
and that the Trust and/or the Portfolio have the right to use
such names (or derivative or logo) in offering materials of
the Trust with the approval of the Sub-Adviser and for so
long as the Sub-Adviser is a Sub-Adviser to the Portfolio.
Upon termination of this Agreement, the Trust shall
forthwith cease to use such names (or derivatives or logo).
15. 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.
16. Notices. Any notice herein required is to be in writing
and is deemed to have been given to the Sub-Adviser or
UBS AM 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 AM will be sent to the attention of:
General Counsel, UBS Asset Management (Americas) Inc.,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000. All
notices provided to the Sub-Adviser will be sent to the
attention of: Kettle Hill Capital Management, LLC, 000
Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, Attention:
Xxxxx Xxxx.
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 Asset Management
(Americas) Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxxxxx: Xxx Xxxx, XX 00000
By:_/s/ Xxxx Xxxxxxx__ By:___/s/ Xxxxxxx
XxxXxxxxx____________
Name: Xxxx Xxxxxxx Name: Xxxxxxx
XxxXxxxxx
Title: Director Title: Executive
Director
Kettle Hill Capital
Management, LLC
000 Xxxxx Xxxxxx, Xxxxx 0000
New York, NY 10017
By:___/s/_Bryan
Kiss___________________
Name: Xxxxx Xxxx
Title: CFO
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