For period ending January 31, 2009 Exhibit 77.Q.1
File number 8118764
SubAdvisory Agreement
Agreement made as of October 29, 2008 between UBS Global Asset Management
(Americas) Inc. (UBS Global AM), a Delaware corporation, and Metropolitan
West Capital Management, LLC (SubAdviser), a California limited liability
company (the Agreement).
Recitals
(1) UBS Global AM has entered into a Management Agreement dated as of
August 1, 2008 (Management Agreement), with UBS PACE Select Advisors
Trust (Trust), an openend 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 AM desires to retain the SubAdviser to furnish certain
investment advisory services to UBS Global AM and the Portfolio or a
designated portion of the assets (Segment) of the Portfolio; and
(3) The SubAdviser is willing to furnish such services;
Now, therefore, in consideration of the premises and mutual covenants
herein contained, UBS Global AM and the SubAdviser agree as follows:
1. Appointment. UBS Global AM hereby appoints the SubAdviser as an
investment subadviser with respect to the Portfolio or Segment for the
period and on the terms set forth in this Agreement. The SubAdviser accepts
that appointment and agrees to render the services herein set forth, for
the compensation herein provided.
2. Duties as SubAdviser.
(a) Subject to the supervision and direction of the Trusts Board of Trustees
(the Board) and review by UBS Global AM, and any written guidelines adopted
by the Board or UBS Global AM, the SubAdviser 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 SubAdviser will
determine from time to time what investments will be purchased, retained or
sold by the Portfolio or Segment. The SubAdviser will be responsible for
placing purchase and sell orders for investments and for other related
transactions for the Portfolio or Segment. The SubAdviser understands that
the Portfolios 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 SubAdviser
will provide services under this Agreement in accordance with the Portfolios
investment objective, policies and restrictions as stated in the Trusts
currently effective registration statement under the 1940 Act, and any
amendments or supplements thereto (Registration Statement).
(b) The SubAdviser agrees that it will not consult with any other
subadviser (Other SubAdviser) 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 SubAdviser, or an affiliate of the Other SubAdviser,
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
SubAdviser, or its affiliate, is the principal underwriter.
(c) The SubAdviser agrees that it will be responsible for voting proxies of
issuers of securities held by the Portfolio or Segment. The SubAdviser
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 SubAdviser 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 SubAdviser 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 SubAdviser may, in its discretion,
use brokers that provide the SubAdviser with research, analysis, advice and
similar services to execute portfolio transactions on behalf of the Portfolio
or Segment, and the SubAdviser 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 SubAdvisers determination in good faith that
such commission is reasonable in terms either of the particular transaction
or of the overall responsibility of the SubAdviser 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 AM or the SubAdviser,
or any affiliated person thereof, except in accordance with the federal
securities laws and the rules and regulations thereunder. The SubAdviser
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 SubAdviser or its affiliates.
Whenever the SubAdviser 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 SubAdviser, 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 AM recognizes that in some
cases this procedure may adversely affect the results obtained for the
Portfolio or Segment. Subject to the SubAdvisers obligations to seek
best execution, UBS Global AM agrees that the SubAdviser, in its sole
discretion, may place transactions on behalf of the Portfolio or Segment
and the Trust with any brokerdealer deemed to be an affiliate of the
SubAdviser (the Affiliated BrokerDealers) 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 SubAdvisers 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
BrokerDealers 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 AM, the Portfolio or the
Trust.
UBS Global AM further authorizes the SubAdviser and its Affiliated
BrokerDealers 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 BrokerDealers acting for both the
Portfolio or the Trust and the counterparty to the transaction. Cross
Transactions enable the SubAdviser 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 SubAdviser believes
that Cross Transactions can provide meaningful benefits for the Portfolio
and the Trust and its clients generally. UBS Global AM, the Portfolio and
the Trust should be aware, however, that in a Cross Transaction an Affiliated
BrokerDealer will be receiving commissions from both sides of the trade and,
therefore, there is a potentially conflicting division of loyalties and
responsibilities.
(e) The SubAdviser will maintain all books and records required to be
maintained pursuant to Rule 31a1(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 SubAdviser on behalf of
the Portfolio or Segment, and will furnish the Board and UBS Global AM
with such periodic and special reports as the Board or UBS Global AM
reasonably may request. In compliance with the requirements of Rule 31a3
under the 1940 Act, the SubAdviser 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 31a2 under the 1940
Act any records that it maintains for the Portfolio or Segment and that
are required to be maintained by Rule 31a1 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 AM, the SubAdviser will provide the Board and UBS Global AM 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 AM any economic, statistical and
investment services that the SubAdviser normally makes available to its
institutional or other customers.
(g) In accordance with procedures adopted by the Board, as amended from
time to time, the SubAdviser 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 SubAdviser 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 SubAdviser will seek to act in conformity with the Trusts
Trust Instrument, ByLaws and Registration Statement and with the written
instructions and written directions of the Board and UBS Global 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 Global AM
agrees to provide to the SubAdviser copies of the Trusts Trust Instrument,
ByLaws, Registration Statement, written instructions and directions of the
Board and UBS Global AM, 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 SubAdviser in writing any brokerdealers
that are affiliated with UBS Global AM (other than UBS Financial Services
Inc.).
4. Expenses. During the term of this Agreement, the SubAdviser will bear
all expenses incurred by it in connection with its services under this
Agreement. The SubAdviser shall not be responsible for any expenses incurred
by the Trust, the Portfolio or UBS Global AM.
5. Compensation.
(a) For the services provided and the expenses assumed by the SubAdviser
pursuant to this Agreement, UBS Global AM, not the Portfolio, will pay to
the SubAdviser 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 SubAdviser with a schedule
showing the manner in which the fee was computed. If the SubAdviser
is managing a Segment, its fees will be based on the value of the assets of
the Portfolio within the SubAdvisers Segment.
(b) The fee shall be accrued daily and payable monthly to the SubAdviser
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 prorated 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 SubAdviser 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 AM 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 SubAdviser have any responsibility for any other
portfolio of the Trust, for any portion of the Portfolio not managed by the
SubAdviser or for the acts or omissions of any Other SubAdviser to the Trust
or Portfolio.
In particular, in the event the SubAdviser shall manage only a Segment of the
Portfolio, the SubAdviser shall have no responsibility for the Portfolios
being in violation of any applicable law or regulation or investment policy
or restriction applicable to the Portfolio as a whole or for the Portfolios
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
SubAdviser 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 SubAdviser. The SubAdviser represents, warrants and
agrees as follows:
(a) The SubAdviser (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 AM of
the occurrence of any event that would disqualify the SubAdviser from serving
as an investment adviser of an investment company pursuant to Section 9(a)
of the 1940 Act or otherwise.
(b) The SubAdviser has adopted a written code of ethics complying with the
requirements of Rule 17j1 under the 1940 Act and will provide UBS Global AM
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
SubAdviser shall certify to UBS Global AM that the SubAdviser has complied
with the requirements of Rule 17j1 during the previous year and that there has
been no material Violation of the SubAdvisers 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 AM, the SubAdviser shall
permit UBS Global AM, its employees or its agents to examine the reports
required to be made by the SubAdviser pursuant to Rule 17j1 and all other
records relevant to the SubAdvisers code of ethics.
(c) The SubAdviser has provided UBS Global AM 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 AM at least
annually.
(d) The SubAdviser will notify UBS Global AM of any change of control of the
SubAdviser, 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 SubAdviser, in each case prior to or promptly after such change.
(e) UBS Global AM and the SubAdviser 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 SubAdviser hereunder
are not to be deemed exclusive, and except as the SubAdviser may otherwise
agree in writing, the SubAdviser 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 SubAdviser, 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 Portfolios
outstanding voting securities, unless UBS Global AM has authority to enter
into this Agreement pursuant to exemptive relief from the SEC without a vote
of the Portfolios 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 SubAdviser. This Agreement may also be terminated,
without the payment of any penalty, by UBS Global AM: (i) upon 120 days
written notice to the SubAdviser; (ii) upon material breach by the SubAdviser
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 AM, the SubAdviser becomes unable to discharge its
duties and obligations under this Agreement, including circumstances such
as financial insolvency of the SubAdviser or other circumstances that could
adversely affect the Portfolio. The SubAdviser may terminate this Agreement
at any time, without the payment of any penalty, on 120 days written notice
to UBS Global AM.
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 Portfolios
outstanding voting securities (except in the case of (ii), pursuant to the
terms and conditions of the SEC order permitting it to modify the Agreement
without such vote).
11. Governing Law. This Agreement shall be construed in accordance with the
1940 Act and the laws of the State of New York, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws
of the State of New York conflict with the applicable provisions of the 1940
Act, the latter shall control.
12. Miscellaneous. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors. As used in this Agreement, the terms
majority of the outstanding voting securities, affiliated person, interested
person, assignment, broker, investment adviser, net assets, sale, sell and
security shall have the same meanings as such terms have in the 1940 Act,
subject to such exemption as may be granted by the SEC by any rule, regulation
or order. Where the effect of a requirement of the federal securities laws
reflected in any provision of this Agreement is made less restrictive by a
rule, regulation or order of the SEC, whether of special or general
application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. This Agreement may be signed in counterpart.
13. Notices. Any notice herein required is to be in writing and is deemed to
have been given to the SubAdviser or UBS Global 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
Global AM 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 SubAdviser 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: 0000000000).
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 Xxxxxxxxxx
Name: Xxxx Xxxxxxx Name: Xxxxx Xxxxxxxxxx
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
Xxxxxx: Xxxxxxx Xxxxx, XX 00000
By:/s/Xxxxx Xxxxxxxx By:/s/Xxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx Name: Xxxx Xxxxxxxx
Title: Managing Director Title: President
For period ending January 31, 2009 Exhibit 77.Q.1
File number 8118764
SubAdvisory Agreement
Agreement dated as of February 2, 2009, between UBS Global Asset Management
(Americas) Inc. (UBS Global AM), a Delaware corporation, and Palisade Capital
Management LLC, a New Jersey limited liability company (SubAdviser)
(the Agreement).
Recitals
(1) UBS Global AM has entered into a Management Agreement dated as of
August 1, 2008 (Management Agreement) with UBS PACE Select Advisors Trust
(Trust), an openend management investment company registered under the
Investment Company Act of 1940, as amended (1940 Act), with respect to UBS
PACE Small/Medium Co Growth Equity Investments (Portfolio);
(2) UBS Global AM desires to retain the SubAdviser to furnish certain
investment advisory services to UBS Global AM and the Portfolio or a
designated portion of the assets (Segment) of the Portfolio; and
(3) The SubAdviser 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. UBS Global AM hereby appoints the SubAdviser as an
investment SubAdviser with respect to the Portfolio or Segment for the
period and on the terms set forth in this Agreement. The SubAdviser accepts
that appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. Duties as SubAdviser.
(a) Subject to the supervision and direction of the Trusts Board of Trustees
(the Board) and review by UBS Global AM, and any written guidelines adopted by
the Board or UBS Global AM, the SubAdviser 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 SubAdviser will
determine from time to time what investments will be purchased, retained or
sold by the Portfolio or Segment. The SubAdviser will be responsible for
placing purchase and sell orders for investments and for other related
transactions for the Portfolio or Segment. The SubAdviser understands that
the Portfolios 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 SubAdviser
will provide services under this Agreement in accordance with the Portfolios
investment objective, policies and restrictions as stated in the Trusts
currently effective registration statement under the 1940 Act, and any
amendments or supplements thereto (Registration Statement). The SubAdviser,
on each business day, shall provide UBS Global AM and the Trusts custodian
such information as UBS Global Americas and the Trusts custodian may
reasonably request relating to all transactions concerning the Portfolio or
Segment.
(b) The SubAdviser agrees that it will not consult with any other
SubAdviser (Other SubAdviser) 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 SubAdviser, or an affiliate of the Other SubAdviser, 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 SubAdviser, or its
affiliate, is the principal underwriter.
(c) Unless otherwise instructed by UBS Global AM or the Trust, the
SubAdviser agrees that it will be responsible for voting proxies of issuers
of securities held by the Portfolio or Segment. The SubAdviser 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) (Proxy Voting Policy), and that shall be acceptable
to the Board. The SubAdviser shall also provide its Proxy Voting Policy, and
if requested by UBS Global AM, a summary of such Proxy Voting Policy for
inclusion in the Trusts registration statement, and will provide UBS Global
AM with any material amendment to the Proxy Voting Policy within a reasonable
time after such amendment has taken effect. The SubAdviser 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 SubAdviser 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 SubAdviser may, in its discretion,
use brokers who provide the SubAdviser with research, analysis, advice and
similar services to execute portfolio transactions on behalf of the Portfolio
or Segment, and the SubAdviser 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 SubAdvisers determining in good faith that such
commission is reasonable in terms either of the particular transaction or of
the overall responsibility of the SubAdviser 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
over the long term. In no instance will portfolio securities be purchased from
or sold to UBS Global AM or the SubAdviser, the Trusts principal underwriter,
or any affiliated person thereof, except in accordance with the federal
securities laws and the rules and regulations thereunder. The SubAdviser may
aggregate sales and purchase orders of the assets of the Portfolio or Segment
with similar orders being made simultaneously for other accounts advised by
the SubAdviser or its affiliates. Whenever the SubAdviser 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 SubAdviser,
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 AM
recognizes that in some cases this procedure may adversely affect the results
obtained for the Portfolio or Segment.
Subject to the SubAdvisers obligations to seek best execution, UBS Global AM
agrees that the SubAdviser, in its sole discretion, may place transactions on
behalf of the Portfolio and the Trust or with any brokerdealer deemed to be
an affiliate of the SubAdviser (the Affiliated BrokerDealers) 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 SubAdvisers 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, and in compliance with Rules 17e1 or 10f3 under the 1940
Act or other applicable rules and the Trusts policies and procedures
thereunder. In all such dealings, the Affiliated BrokerDealers 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 AM, the Portfolio or the Trust.
UBS Global AM further authorizes the SubAdviser and its Affiliated
BrokerDealers 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 BrokerDealers acting for both the
Portfolio or the Trust and the counterparty to the transaction. Cross
Transactions enable the SubAdviser 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 SubAdviser believes
that Cross Transactions can provide meaningful benefits for the Portfolio
and the Trust and its clients generally. UBS Global AM, the Portfolio and the
Trust should be aware, however, that in a Cross Transaction an Affiliated
BrokerDealer will be receiving commissions from both sides of the trade and,
therefore, there is a potentially conflicting division of loyalties and
responsibilities. SubAdviser shall effect such Cross Transactions in
compliance with Rule 206(3)2 under the Advisers Act and any other applicable
provisions of the federal securities laws and shall provide UBS Global
Americas with periodic reports describing such agency cross transactions.
(e) The SubAdviser shall maintain separate detailed records of all matters
pertaining to the Portfolio or Segment, including, without limitation,
brokerage and other records of all securities transactions. Any records
required to be maintained and preserved pursuant to the provisions of Rule
31a1 and Rule 31a2 promulgated under the 1940 Act that are prepared or
maintained by the SubAdviser on behalf of the Trust are the property of the
Trust and will be surrendered promptly to the Trust upon request. The
SubAdviser further agrees to preserve for the periods prescribed in Rule 31a2
under the 1940 Act the records required to be maintained under Rule 31a1
under the 1940 Act.
(f) At such times as shall be reasonably requested by the Board or UBS Global
AM, the SubAdviser will provide the Board and UBS Global AM 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 AM any economic, statistical and investment services that the
SubAdviser normally makes available to its institutional or other customers.
(g) In accordance with procedures adopted by the Board, as amended from
time to time, the SubAdviser is responsible for assisting in the fair
valuation of all portfolio securities and will use its reasonable efforts to
arrange for the provision of a price(s) from one or more parties independent
of the SubAdviser for each portfolio security for which the custodian does
not obtain prices in the ordinary course of business from an automated
pricing service.
The SubAdviser also will provide such information or perform such additional
acts as are customarily performed by a subadviser and may be required for
the Trust or UBS Global Americas to comply with their respective obligations
under applicable federal securities laws, including,without limitation, the
1940 Act, Investment Advisers Act of 1940, as amended (Advisers Act), the
1934 Act, the Securities Act of 1933, as amended (the Securities Act), and
any rule or regulation thereunder.
3. Further Duties. In all matters relating to the performance of this
Agreement, the SubAdviser will act in conformity with the Trusts Trust
Instrument, ByLaws and Registration Statement, the Trusts policies and
procedures for compliance by the Trust with the Federal Securities Laws
(as that term is defined in Rule 38a1 under the 1940 Act) provided to the
SubAdviser (together, the Trust Compliance Procedures) and with the written
instructions and written directions of the Board and UBS Global AM; and will
comply with the applicable requirements of the 1940 Act, the Advisers Act,
and the rules under each, the Code, and all other applicable federal and state
laws and regulations applicable to the Trust and the Portfolio. UBS Global AM
agrees to provide to the SubAdviser copies of the Trusts Trust Instrument,
ByLaws, Registration Statement, Trusts Compliance Procedures, written
instructions and directions of the Board and UBS Global AM, and any amendments
or supplements to any of these materials as soon as practicable after such
materials become available; provided, however, that the SubAdvisers duty under
this Agreement to act in conformity with any document, instruction or
guideline produced by the Trust or UBS Global AM shall not arise until it has
been delivered to the SubAdviser. Any changes to the objectives, policies and
restrictions will make due allowance for the time within which the SubAdviser
shall have to come into compliance. UBS Global AM further agrees to identify
to the SubAdviser in writing any brokerdealers that are affiliated with UBS
Global AM (other than UBS Financial Services Inc. and UBS Global Asset
Management (US) Inc.).
In order to assist the Trust and the Trusts Chief Compliance Officer
(the Trust CCO) to satisfy the requirements contained in Rule 38a1 under
the 1940 Act, the SubAdviser shall provide to the Trust CCO: (i) direct
access to the SubAdvisers chief compliance officer (the SubAdviser CCO),
as reasonably requested by the Trust CCO; (ii) quarterly reports confirming
that the SubAdviser has complied with the Trust Compliance Procedures in
managing the Portfolio or Segment; and (iii) quarterly certifications that
there were no Material Compliance Matters (as that term is defined by Rule
38a1(e)(2)) that arose under the Trust Compliance Procedures that related to
the SubAdvisers management of the Portfolio or Segment.
The SubAdviser shall promptly provide the Trust CCO with copies of:
(i) the SubAdvisers policies and procedures for compliance by the
SubAdviser with the Federal Securities Laws (together, the SubAdviser
Compliance Procedures), and (ii) any material changes to the SubAdviser
Compliance Procedures. The SubAdviser shall cooperate fully with the Trust
CCO so as to facilitate the Trust CCOs performance of the Trust CCOs
responsibilities under Rule 38a1 to review, evaluate and report to the Trusts
Board on the operation of the SubAdviser Compliance Procedures, and shall
promptly report to the Trust CCO any Material Compliance Matter arising under
the SubAdviser Compliance Procedures involving the Portfolio or Segment.
The SubAdviser shall provide to the Trust CCO: (i) quarterly reports
confirming the SubAdvisers compliance with the SubAdviser Compliance
Procedures in managing the Portfolio or Segment, and (ii) certifications
that there were no Material Compliance Matters involving the SubAdviser that
arose under the SubAdviser Compliance Procedures that affected the Portfolio
or Segment. At least annually, the SubAdviser shall provide a certification
to the Trust CCO to the effect that the SubAdviser has in place and has
implemented policies and procedures that are reasonably designed to ensure
compliance by the SubAdviser with the Federal Securities Laws.
The SubAdviser will provide UBS Global AM with information (including
information that is required to be disclosed in the Trusts 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 SubAdviser will promptly notify UBS Global AM of any pending
investigation, material litigation, administrative proceeding or any
other significant regulatory inquiry.
The SubAdviser will cooperate promptly and fully with UBS Global AM and/or
the Trust in responding to any regulatory or compliance examinations or
inspections (including information requests) relating to the Trust, the
Portfolio or UBS Global AM brought by any governmental or regulatory
authorities having appropriate jurisdiction (including, but not limited to,
the SEC).
4. Expenses. During the term of this Agreement, the SubAdviser will
bear all expenses incurred by it in connection with its services under this
Agreement. The SubAdviser shall not be responsible for any expenses incurred
by the Trust, the Portfolio or UBS Global AM.
Upon request by UBS Global AM, SubAdviser agrees to reimburse UBS Global
Americas or the Trust for costs associated with generating and distributing
any supplement or amendment to the Prospectuses or SAIs for any Fund
(Supplement) when the SubAdviser is given a copy of a draft of such Supplement
and fails to promptly disclose to the Adviser facts then known to the
SubAdviser or its personnel that would require disclosure (or amendments to
disclosure) in the Funds Prospectuses or SAIs in time for such disclosure or
amendments to disclosure to be included in such Supplement. The SubAdviser
shall bear all reasonable expenses of the Trust, if any, arising out of an
assignment or change in control of the SubAdviser.
5. Compensation.
(a) For the services provided and the expenses assumed by the SubAdviser
pursuant to this Agreement, UBS Global AM, not the Portfolio, will pay to the
SubAdviser a fee, computed daily and payable monthly, at an annual rate of
0.45% of the average daily net assets of the Portfolio or Segment that the
SubAdviser manages up to $100 million and 0.40% of the average daily net
assets of the Portfolio or Segment that the SubAdviser manages in excess of
$100 million (computed in the manner specified in the Management Agreement)
and will provide the SubAdviser with a schedule showing the manner in which
the fee was computed. If the SubAdviser is managing a Segment, its fees will
be based on the value of the assets of the Portfolio within the SubAdvisers
Segment.
(b) The fee shall be computed daily and payable monthly to the SubAdviser
on or before the last business day of the next succeeding calendar month.
(c) For those periods in which UBS Global AM has agreed to waive all or a
portion of its management fee, UBS Global AM may ask the SubAdviser to waive
the same proportion of its fees, but the SubAdviser 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 prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
6. Limitation of Liability.
(a) The SubAdviser 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 AM 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 SubAdviser have any responsibility for any other
portfolio of the Trust, for any portion of the Portfolio not managed by the
SubAdviser or for the acts or omissions of any Other SubAdviser to the Trust
or Portfolio.
In particular, in the event the SubAdviser shall manage only a Segment of the
Portfolio, the SubAdviser shall have no responsibility for the Portfolios
being in violation of any applicable law or regulation or investment policy
or restriction applicable to the Portfolio as a whole or for the Portfolios
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
SubAdviser 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
separate regulated investment company under the Code, unless such violation
was due to the SubAdvisers failure to comply with written guidelines adopted
by the Board or UBS Global AM and provided to the SubAdviser.
7. Representations of SubAdviser. The SubAdviser represents, warrants
and agrees as follows:
(a) The SubAdviser (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 AM
of the occurrence of any event that would disqualify the SubAdviser from
serving as an investment adviser of an investment company pursuant to Section
9(a) of the 1940 Act or otherwise.
(b) The SubAdviser has adopted a written code of ethics complying with the
requirements of Rule 17j1 under the 1940 Act and Rule 204A1 under the Advisers
Act and will provide UBS Global AM 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 SubAdviser shall certify to UBS
Global AM that the SubAdviser has complied with the requirements of Rule
17j1 during the previous year and that there has been no material violation
of the SubAdvisers 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 AM, the SubAdviser shall permit UBS Global AM, its
employees or its agents to examine the reports required to be made to the
SubAdviser by Rule 17j1(c)(1) and all other records relevant to the
SubAdvisers code of ethics.
(c) The SubAdviser has provided UBS Global AM 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 AM at least
annually.
(d) The SubAdviser will notify UBS Global AM of any change of control of the
SubAdviser, 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 SubAdviser, in each case prior to or promptly after such change.
(e) The SubAdviser 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 Global AM or any of their respective affiliates in
offering, marketing or other promotional materials without the express
written consent of UBS Global AM.
(f) The SubAdviser hereby represents that it has implemented policies and
procedures that will prevent the disclosure by it, its employees or its agents
of the Trusts portfolio holdings to any person or entity other than the UBS
Global Americas, the Trusts custodian, or other persons expressly designated
by UBS Global Americas.
8. Services Not Exclusive. The SubAdviser 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
SubAdviser to or with the Trust, Portfolio or UBS Global AM or deemed to
violate or give rise to any duty or obligation of the SubAdviser to the Trust,
Portfolio or UBS Global AM 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
(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 Portfolios
outstanding voting securities, unless UBS Global AM has authority to enter
into this Agreement pursuant to exemptive relief from the SEC without a vote
of the Portfolios 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 SubAdviser. This Agreement may also be
terminated, without the payment of any penalty, by UBS Global AM: (i) upon
120 days written notice to the SubAdviser; (ii) immediately upon material
breach by the SubAdviser 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 AM, the SubAdviser becomes
unable to discharge its duties and obligations under this Agreement,
including circumstances such as financial insolvency of the SubAdviser or
other circumstances that could adversely affect the Portfolio. The SubAdviser
may terminate this Agreement at any time, without the payment of any penalty,
on 120 days written notice to UBS Global AM. 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 the
Independent Trustees, and (ii) if the terms of this Agreement shall have
changed, by a vote of a majority of the Portfolios 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. Confidentiality. The SubAdviser 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 SubAdviser will not
use such information for any purpose other than the performance of its
responsibilities and duties hereunder. Such information may not 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 regulatory authorities. Such information may also be disclosed to
the Board, counsel or third party service providers in the ordinary course
of business.
13. 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 Global AM
and/or its affiliates, and that SubAdviser has the right to use such name
(or derivative or logo) only with the approval of the UBS Global AM and only
so long as the UBS Global AM is Manager to the Trust and/or the Fund.
(b) It is understood that the name Palisade Capital Management LLC or any
derivative thereof or logo associated with those names, are the valuable
property of the SubAdviser and its affiliates and that the Trust and/or the
Fund have the right to use such names (or derivative or logo) in marketing
materials of the Trust with the approval of the SubAdviser and for so long
as the SubAdviser is a SubAdviser to the Fund. Upon termination of this
Agreement, the Company shall forthwith cease to use such names (or
derivatives or logo).
14. 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.
15. Notices. Any notice herein required is to be in writing and is deemed
to have been given to the SubAdviser or UBS Global 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
Global AM will be sent to the attention of the General Counsel. All notices
provided to the SubAdviser will be sent to the attention of Palisade Capital
Management, L.L.C., Attention: Xxxx Xxxxxxx, General Counsel, Xxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxx Xxx, Xxx Xxxxxx 00000; Fax: (000) 0000000; Email:
xxxxxxxx@xxxxxx.xxx.
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
Xxx Xxxx, XX 00000
Attest:
By: /s/Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Director & Associate General Counsel
By: /s/Xxxxx Xxxxxxxxxx
Name: Xxxxx Xxxxxxxxxx
Title: Executive Director & Senior Associate
General Counsel
Palisade Capital Management LLC
Attest:
By: /s/Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: General Counsel
By: /s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Chief Operating Officer
DC 406537.1
