For period
ending
January 31,
2017
Exhibit 77Q1
File number
811-8764
Interim SUB-ADVISORY AGREEMENT
Agreement dated as of October 20, 2016 between
UBS Asset Management (Americas) Inc. ("UBS AM"),
a Delaware corporation, and Sapience Investments,
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) Small/Medium
Co Value Equity 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 Portfolio or Segment for the period and on the
terms set forth in this Agreement. The Sub-Adviser
accepts that appointment and agrees to render the
services herein set forth, for the compensation
herein provided.
2. Duties as Sub-Adviser.
(a) Subject to the supervision and direction
of the Trust's Board of Trustees (the "Board") and
review by UBS AM, and any written guidelines
adopted by the Board or UBS AM the Sub-Adviser
will provide a continuous investment program for
the Portfolio or Segment, including investment
research and discretionary management with
respect to all securities and investments and cash
equivalents in the Portfolio or Segment. The Sub-
Adviser will determine from time to time what
investments will be purchased, retained or sold by
the Portfolio or Segment. The Sub-Adviser will be
responsible for placing purchase and sell orders for
investments and for other related transactions for
the Portfolio or Segment. The Sub-Adviser
understands that the Portfolio's assets need to be
managed so as to permit the Portfolio to qualify or
to continue to qualify as a regulated investment
company 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").
The Sub-Adviser, on each business day, 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 Portfolio or 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,
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 Portfolio or 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 Portfolio 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 Portfolio 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-
Adviser is responsible for identifying and complying
with all applicable laws and regulations of the
jurisdiction in which the security is traded. The Sub-
Adviser 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 Portfolio or Segment in securities
or other assets, including (i) the purchase by the
Portfolio or Segment of a security issued by the
Other Sub-Adviser, or an affiliate of the Other Sub-
Adviser, to the Trust or Portfolio except as
permitted by the 1940 Act or (ii) transactions by the
Portfolio or Segment in any security for which the
Other Sub-Adviser, or its affiliate, is the principal
underwriter.
(c) 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 Portfolio or Segment. The Sub-Adviser
further agrees that it will adopt written proxy voting
procedures that shall comply with the requirements
of the 1940 Act and the Investment Advisers Act of
1940, as amended ("Advisers Act") ("Proxy Voting
Policy"), and that shall be acceptable 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
exercise the rights incident to the securities held by
the Portfolio or 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 in accordance with its best
execution policies, as disclosed in the Sub-Adviser's
Form ADV Registration Statement ("Form ADV") on
file with the Securities and Exchange Commission
(the "SEC"), taking into account best price as an
important factor in this decision, provided that, on
behalf of the Portfolio or Segment, the Sub-Adviser
may, in its discretion, use brokers that provide the
Sub-Adviser with research, analysis, advice and
similar services to execute portfolio transactions on
behalf of the Portfolio or Segment, and the Sub-
Adviser may pay to those brokers in return for
brokerage and research services a higher
commission than may be charged by other brokers,
subject to the Sub-Adviser's determination in good
faith that such commission is reasonable in terms
either of the particular transaction or of the overall
responsibility of the Sub-Adviser to the Portfolio or
Segment and its other clients and that the total
commissions paid by the Portfolio or Segment will
be reasonable in relation to the benefits to the
Portfolio or Segment over the long term. In no
instance will portfolio securities be purchased from
or sold to UBS AM or the Sub-Adviser, the Trust's
principal underwriter, or any affiliated person
thereof specifically 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 Portfolio or Segment with similar orders being
made simultaneously for other accounts advised by
the Sub-Adviser or its affiliates. Whenever the Sub-
Adviser simultaneously places orders to purchase or
sell the same security on behalf of the Portfolio or
Segment and one or more other accounts advised
by the Sub-Adviser, the orders will be allocated as to
price and amount among all such accounts in a
manner believed to be equitable over time to each
account. UBS AM recognizes that in some cases this
procedure may adversely affect the results obtained
for the Portfolio or Segment.
Subject to the Sub-Adviser's obligations 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 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) 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
deemed under the federal securities laws) 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 Portfolio or the Trust.
UBS AM further authorizes the Sub-Adviser and its
Affiliated Broker-Dealers to execute agency cross
transactions ( "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, the Portfolio and the Trust should be
aware, however, that in a Cross Transaction an
Affiliated Broker-Dealer will be receiving
commissions from both sides of the trade and,
therefore, there is a potentially conflicting division
of loyalties and responsibilities. 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 Portfolio
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 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
31a-1 and Rule 31a-2 promulgated under the 1940
Act that are prepared or maintained by the Sub-
Adviser on behalf of the Trust are the property of
the Trust and will be surrendered promptly to the
Trust upon request. The Sub-Adviser further agrees
to preserve for the periods prescribed in
Rule 31a-2 under the 1940 Act the records required
to be maintained under Rule 31a-1 under the 1940
Act, and will 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 Portfolio or Segment 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 all portfolio
securities in the Portfolio or Segment and will use its
reasonable efforts to arrange for the provision of a
price or prices from one or more parties
independent of the Sub-Adviser for each portfolio
security for which the custodian does not obtain
prices in the ordinary course of business from an
automated pricing service.
The Sub-Adviser also will provide such information
or perform such additional acts as are customarily
performed by a Sub-Adviser and may be required
for the Trust or UBS AM to 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, 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
become available. UBS AM further agrees during
the term of this Agreement 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, 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 Portfolio or 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 Portfolio or
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 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 Portfolio or
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 Portfolio or
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 Portfolio
or 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, subject to such interpretations as may be
contained in the Trust Compliance Procedures.
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.
The Sub-Adviser will cooperate promptly and fully
with UBS 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 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 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 (including brokerage
and other transactional costs) 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 and fails to promptly
disclose to UBS AM facts then known to the Sub-
Adviser or its personnel that would require
disclosure (or amendments to disclosure) in the
Fund's Registration Statement in time for such
disclosure or amendments to disclosure to be
included in such Registration Statement. The Sub-
Adviser shall bear all reasonable expenses of the
Trust, if any, arising out of an assignment or change
in control of the Sub-Adviser.
5. Compensation.
(a) Sub-Adviser shall waive all fees accrued
under this Agreement until such time as this
Agreement is replaced by a Sub-Advisory
Agreement approved at an in-person meeting of a
majority of non-interested Trustees as described in
Section 9b of this Agreement.
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 its part in the performance of its
duties or from reckless disregard by it of its
obligations and duties under this Agreement.
(b) In no event will the Sub-Adviser have any
responsibility for any other portfolio of the Trust, for
any portion of the Portfolio not managed by the
Sub-Adviser or for the acts or omissions of any
Other Sub-Adviser to the Trust or Portfolio. In
particular, in the event the Sub-Adviser shall
manage only a Segment of the Portfolio, the Sub-
Adviser shall have no responsibility for the
Portfolio's being in violation of any applicable law or
regulation or investment policy or restriction
applicable to the Portfolio as a whole or for the
Portfolio's failing to qualify as a regulated
investment company under the Code, if the
securities and other holdings of the Segment of the
Portfolio managed by the
Sub-Adviser are such that such Segment would not
be in such violation or fail to so qualify if such
Segment were deemed a separate series of the
Trust or a separate regulated investment company
under the Code, 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. Within fifteen days of
the end of the last calendar quarter of each year that
this Agreement is in effect, a duly authorized officer
of the Sub-Adviser shall certify to 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. 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)(2) 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 the key personnel who are either
the portfolio manager(s) of the Portfolio or senior
management of the Sub-Adviser, in each case prior
to or 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 that will
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. The Sub-Adviser further represents that it
implemented policies and procedures 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: (1) it will register with the
Commodity Futures Trading Commission (the
"CFTC") as a commodity trading advisor and
become a member of the National Futures
Association (the "NFA"), if required in light of the
nature of its activities, and will continue to be so
registered, if required, for so long as this Agreement
remains in effect; (2) it will comply with the
Commodity Exchange Act (the "CEA") and the rules
of the CFTC and the NFA to the extent applicable;
and (3) it will provide all information reasonably
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 has (i) a sanctions policy in place and
communicated to all employees and (ii) adequate
sanctions compliance controls reasonably designed
to ensure compliance with US, UN, EU and Swiss
sanctions laws and regulations and local applicable
sanctions laws (the "Sanctions Laws"). The Sub-
Adviser further represents and warrants that (i) it
will not undertake investments or engage in activity
that involves either directly or indirectly countries,
regimes, jurisdictions or sanctioned parties
(individuals / entities) subject to any Sanctions Laws
and (ii) 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. Services Not Exclusive. The services
furnished by the Sub-Adviser hereunder are not to
be deemed exclusive, and except as the Sub-Adviser
may otherwise agree in writing, the Sub-Adviser
shall be free to furnish similar services to others so
long as its services under this Agreement are not
impaired thereby. Nothing in this Agreement shall
limit or restrict the right of any director, officer or
employee of the Sub-Adviser, who may also be a
trustee, officer or employee of the Trust, to engage
in any other business or to devote his or her time
and attention in part to the management or other
aspects of any other business, whether of a similar
nature or a dissimilar nature. Nothing in this
Agreement shall impose upon the Sub-Adviser any
obligation to purchase or sell on behalf of the
Portfolio, any security (including long and short
positions) which the Sub-Adviser, or its affiliates, or
its or their owners, directors, officers or employees
may purchase or sell for its or their own account(s)
or for the account of any other client. UBS AM
acknowledges that the Sub-Adviser's ability, and
that of its affiliates, to effect or recommend
transactions may be restricted by applicable
regulatory requirements in the United States and
elsewhere or by its or their internal policies designed
to comply with such requirements. Consequently,
there may be periods when the Sub-Adviser may
not initiate or recommend certain types of
transactions in certain investments when the Sub-
Adviser or its affiliates are performing services or
when aggregated position limits have been reached,
and Client will not be advised of that fact.
9. Duration and Termination.
(a) This Agreement shall become effective
upon the date first above written, provided that this
Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those
trustees of the Trust who are not parties to this
Agreement or interested persons of any such party
("Independent Trustees"), cast in person at a
meeting called for the purpose of voting on such
approval, and (ii) by vote of a majority of the
Portfolio's outstanding voting securities, unless 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
150 days from its effective date or until such time as
a new Sub-Advisory Agreement is specifically
approved (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 purpose;
and (ii) by the Board or by a 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.
10. Amendment of this Agreement. No
provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against
whom enforcement of the change, waiver,
discharge or termination is sought. To the extent
required by applicable law, no amendment of this
Agreement shall be effective until approved (i) by a
vote of a majority of the Independent Trustees, and
(ii) if the terms of this Agreement shall have
changed, by a vote of a majority of the Portfolio's
outstanding voting securities (except in the case of
(ii), pursuant to the terms and conditions of the SEC
order permitting it to modify the Agreement
without such vote).
11. Governing Law. This Agreement shall be
construed in accordance with the 1940 Act and the
laws of the State of New York, without giving effect
to the conflicts of laws principles thereof. To the
extent that the applicable laws of the State of New
York conflict with the applicable provisions of the
1940 Act, the latter shall control.
12. 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.
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 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 Sapience 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).
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 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., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. All notices
provided to the Sub-Adviser will be sent to the
attention of: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Compliance
Officer.
In witness whereof, the parties hereto have caused
this instrument to be executed by their duly
authorized signatories as of the date and year first
above written.
UBS Asset Management
(Americas) Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇: ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
By: /s/▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇
Title: Director Title: Managing Director
Sapience Investments, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By:____________ By: /s/▇▇▇▇▇ ▇▇▇▇▇
Name: Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Title: Chief Executive Officer & Chief Investment Officer
9