EXHIBIT (d)(iv)
SUB-ADVISORY CONTRACT
This agreement (the "Contract"), dated as of January , 2003, is between
Guardian Investor Services LLC, a Delaware limited liability company (the
"Manager"), and UBS Global Asset Management (Americas) Inc., a Delaware
corporation (the "Sub-Adviser").
RECITALS
(1) Manager has entered into an Investment Advisory Contract, dated
as of December 20, 2001 ("Advisory Contract"), with The Park
Avenue Portfolio, a Massachusetts business trust (the "Trust"),
together with Fee Appendices each dated as of January 28, 2003
with respect to the series of the Trust designated as The
Guardian UBS Large Cap Value Fund and The Guardian UBS Small Cap
Value Fund (each, a "Series" and collectively, the "Series");
(2) Manager wishes to retain the Sub-Adviser to furnish certain
investment advisory services to Manager and each Series; and
(3) The Sub-Adviser is willing to furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, Manager and the Sub-Adviser agree as follows:
1. Appointment. Manager hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to each Series for the period and on the
terms set forth in this Contract. The Sub-Adviser accepts that appointment and
agrees to render the services herein set forth, in exchange for the compensation
herein provided. The Sub-Adviser shall, for all purposes herein, be deemed to be
an independent contractor and shall not, except as expressly provided or
authorized, have the authority to act for or to represent the Series or the
Manager in any way or otherwise be deemed an agent of the Series or the Manager.
The Sub-Adviser's appointment hereunder with respect to each Series shall be
deemed to reflect a separate contractual arrangement, which has been combined
into a single agreement for administrative convenience.
2. Duties as Sub-Adviser.
(a) Subject to the supervision and direction of the Trust's Board of
Trustees (the "Board") and review by Manager, and any written guidelines adopted
by the Board or Manager and furnished to the Sub-Adviser, the Sub-Adviser will
provide a continuous investment program for all or a designated portion of the
assets ("Segment") of the Series, including investment research and
discretionary management with respect to all securities and investments and cash
equivalents in the Series or Segment. The Sub-Adviser will determine from time
to time what investments will be purchased, retained or sold by the Series or
Segment. The Sub-Adviser will be responsible for placing purchase and sell
orders with broker-dealers, which may include broker-dealers affiliated with
Sub-Adviser, subject to compliance with Rule 17e-1 under the Investment Company
Act of 1940, as amended (the "1940 Act") and other applicable legal
requirements, for investments and for other related transactions for the Series
or Segment. Manager delegates to Sub-Adviser and Sub-Adviser shall have the
responsibility and authority to vote proxies solicited by, or with respect to,
the issuers of securities held in the Series or the Sub-Adviser's Segment of the
Series. Manager
shall provide (or cause the Series' custodian to provide) to Sub-Adviser all
proxy solicitation materials that it receives and shall assist Sub-Adviser in
its efforts to conduct the proxy voting process. The Sub-Adviser will provide
services under this Contract in accordance with the Series' 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 (the "Registration Statement").
(b) The Sub-Adviser agrees that, in placing orders with
broker-dealers, it will seek to obtain the best net result in terms of price and
execution; provided that, on behalf of each Series, the Sub-Adviser may, in its
discretion, use broker-dealers that provide the Sub-Adviser with research,
analysis, advice and similar services to execute portfolio transactions on
behalf of the Series or Segment, and the Sub-Adviser may pay to those
broker-dealers in return for brokerage and research services a higher commission
than may be charged by other broker-dealers, subject to the Sub-Adviser's
determining in good faith that such commission is reasonable in terms either of
the particular transaction or of the overall responsibility of the Sub-Adviser
and its affiliates to the Series or its other clients over which they have
investment discretion and that the total commissions paid by the Series or
Segment will be reasonable in relation to the benefits to the Series over the
long term. In no instance will portfolio securities be purchased from or sold to
the Manager, the Trust or the Sub-Adviser, or any affiliated person thereof,
except in accordance with the federal securities laws and the rules and
regulations thereunder. The Sub-Adviser may aggregate sales and purchase orders
with respect to the assets of the Series 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 Series 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 over a period of time on a fair and equitable basis
relative to each account. Manager recognizes that in some cases this procedure
may adversely affect the results obtained for the Series or Segment.
(c) The Sub-Adviser will maintain, in connection with the
Sub-Adviser's investment advisory obligations provided to the Series, all books
and records required to be maintained pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions by the
Sub-Adviser on behalf of each Series or Segment, and will furnish the Board and
Manager with such periodic and special reports as the Board or Manager
reasonably may request. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Sub-Adviser hereby agrees that all records that it maintains
for the Series are the property of the Trust, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records that it maintains for
the Trust and that are required to be maintained by Rule 31a-1 under the 1940
Act, and further agrees to surrender promptly to the Trust any records or copies
thereof that it maintains for the Series upon request by the Trust or Manager;
provided, however, that Sub-Adviser may retain copies of any records to the
extent required for it to comply with applicable law. Notwithstanding the
foregoing, the Sub-Adviser has no responsibility for the maintenance of the
Trust's records, except insofar as directly related to the services provided to
the Series.
(d) At such times as shall be reasonably requested by the Board or
Manager, the Sub-Adviser will provide the Board and Manager with economic and
investment analyses and reports as well as quarterly reports setting forth the
performance of the Series or Segment and make available
to the Board and Manager any economic, statistical and investment services that
the Sub-Adviser normally makes available to its institutional or other
customers.
(e) The Sub-Adviser shall make its portfolio management, compliance
and other personnel available to consult with the Board and Manager, including
by facilitating their attendance as may reasonably be requested at Board
meetings, and provide such reports as the Manager or the Board shall reasonably
request from time to time. In addition, the Sub-Adviser agrees to provide annual
certifications to the Manager and the Board regarding its compliance program.
3. Further Duties. In all matters relating to the performance of
this Contract, the Sub-Adviser will (a) act in conformity with each Series'
investment objective, policies, strategies and restrictions as stated in the
Trust's Registration Statement and with the written instructions and written
directions of the Board or the Manager, subject to receipt of such additional
information as may be required from the Manager and provided in accordance with
this Contract, and (b) comply, in connection with the Sub-Adviser's investment
advisory obligations provided to the Series, with the requirements of the 1940
Act and the Investment Advisers Act of 1940, as amended ("Advisers Act") and
with the rules under each, (c) manage the Series so that, to the extent within
the control of Sub-Adviser, the Series will qualify at all times as a regulated
investment company under Subchapter M of the Internal Revenue Code ("Code"), as
applicable to regulated investment companies; and (d) comply with all other
federal and state laws and regulations applicable to the Trust and the Series.
Without limiting the generality of the foregoing, the duties of the
Sub-Adviser shall include the preparation and filing of periodic reports on Form
13F with the Securities and Exchange Commission (the "SEC") and cooperation with
examinations of the Series or the Manager by the SEC or other regulatory body.
Sub-Adviser does not represent or warrant that it will achieve the
investment objective of the Series.
4. Duties of Manager. Manager agrees to provide to the Sub-Adviser
copies of the Trust's Registration Statement, written instructions and
directions of the Board and Manager, and any amendments or supplements to any of
these materials as soon as practicable after such materials become available;
and further agrees to identify to the Sub-Adviser in writing any broker-dealers
that are affiliated with the Manager or the Trust. Manager shall provide (or
cause the Series' custodian to provide) timely information to Sub-Adviser
regarding such matters as the composition of assets of the Series, cash
requirements and cash available for investment in the Series, and all other
reasonable information as may be necessary for Sub-Adviser to perform its duties
and responsibilities herein.
5. Compensation.
(a) For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Contract in respect of each Series, Manager will
pay to the Sub-Adviser a sub-advisory fee, specified in Exhibit A to this
Contract. If the Sub-Adviser is managing a Segment, its fees will be based on
the value of assets of the Series within the Sub-Adviser's Segment.
(b) If this Contract becomes effective or terminates as to a Series
before the calendar 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
that such period bears to the full month in which such effectiveness or
termination occurs with respect to such Series.
6. Allocation of Charges and Expenses. The Sub-Adviser assumes and
shall pay for maintaining the staff and personnel necessary to perform its
obligations under this Contract and all other expenses that it may incur in its
performance hereunder.
7. Limitation of Liability. Neither the Sub-Adviser, nor any of its
directors, officers, employees, agents, or affiliates shall be liable for any
error of judgment or mistake of law or for any loss suffered by a Series, the
Trust, its shareholders or by the Manager in connection with the matters to
which this Contract relates, except for losses resulting from the Sub-Adviser's,
or any of its directors', officers', employees', agents' (excluding any
broker-dealer selected by Sub-Adviser), or affiliates' (a) willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
(b) from the reckless disregard of its obligations and duties under this
Contract. Nothing in this paragraph shall be deemed a limitation or waiver of
any obligation or duty that may not by law be limited or waived.
8. Indemnification.
(a) The Manager agrees to indemnify and hold harmless the
Sub-Adviser and its affiliates from and against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) (each, a
"Loss" and collectively, "Losses") incurred by Sub-Adviser arising from or based
upon the Manager's willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reckless disregard of its obligations and
duties under this Contract; provided however, that in no case is the Manager's
indemnity in favor of any person deemed to protect such other person against any
Loss arising from such other person's willful misfeasance, bad faith or gross
negligence in the performance of its duties under this Contract or reckless
disregard of its obligations and duties under this Contract.
(b) The Sub-Adviser agrees to indemnify and hold harmless the
Manager, its affiliates and each Series and the Trust, from and against any and
all Losses incurred by Manager arising from or based upon the Sub-Adviser's
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reckless disregard of its obligations and duties under this
Contract; provided however, that in no case is the Sub-Adviser's indemnity in
favor of any person deemed to protect such other person against any Loss arising
from such other person's willful misfeasance, bad faith or gross negligence in
the performance of its duties under this Contract or reckless disregard of it
obligations and duties under this Contract.
(c) The Sub-Adviser agrees that it shall bear any costs, fees or
expenses associated with any Sub-Adviser error constituting a breach of the
Sub-Adviser's duties and obligations under this Contract.
9. Representations of the Sub-Adviser.
(a) The Sub-Adviser (i) is registered as an investment adviser under
the Advisers Act; (ii) is not prohibited by the 1940 Act, the Advisers Act, or
any other applicable federal, state, regulatory, or industry self-regulatory
agency's requirements, from performing the investment advisory services
contemplated by this Contract; (iii) has the authority to enter into and perform
the services contemplated by this Contract; (iv) will promptly notify Manager of
any event that would disqualify the Sub-Adviser from providing, or impair the
Sub-Adviser's ability to provide, investment advisory services as a sub-adviser
of an investment company pursuant to Section 9(a) of the 1940 Act or a provision
of the Advisers Act; and (v) will immediately forward upon receipt to the
Manager, for itself and as agent for the Trust, any correspondence from the SEC
or other regulatory authority that directly relates to a Series or Segment and
any response thereto from Sub-Adviser.
(b) The Sub-Adviser has adopted a written code of ethics and
appropriate procedures complying with the requirements of Rule 17j-1 under the
1940 Act and has provided Manager and the Board with a copy of such code of
ethics. Manager acknowledges receipt of Sub-Adviser's current code of ethics. In
the event of a material violation of the Sub-Adviser's code of ethics, the
appropriate compliance person of Sub-Adviser shall notify the Manager reasonably
promptly of the nature of the violation and any actions taken as a result of
such violation. Within thirty days of the end of the last calendar quarter of
each full or partial year that this Contract is in effect (or more frequently if
required by Rule 17j-1 or as the Trust may reasonably request), the appropriate
compliance person of Sub-Adviser shall provide any certifications required by
Rule 17j-1, as in effect from time to time, to Manager 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.
(c) The Sub-Adviser has provided Manager with a copy of its Form ADV
(including Part II thereof), as most recently filed with the SEC, and undertakes
to provide amendments to its Form ADV reasonably promptly following the filing
of such amendments with the SEC.
10. 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 similar services to others so long as its services under this
Contract are not impaired thereby or unless otherwise agreed to by the parties
hereunder in writing. Nothing in this Contract shall limit or restrict the right
of any trustee, 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.
11. Duration and Termination. The provisions of this Section 11
shall apply severally to each Series.
(a) This Contract shall become effective as to a Series upon the
latest of (i) the date of its execution by both parties, (ii) the date of its
approval by a vote of a majority of those Trustees of the Trust who are not
parties to this Contract or interested persons of any such party
("Independent Trustees"), cast in person at a meeting called for the purpose of
voting on such approval or (iii) if required by the 1940 Act, the date of its
approval by a majority of the respective Series' outstanding voting securities,
unless in the case of (iii), the Trust complies with the terms of any SEC
exemptive order or rule permitting it to enter into or modify the Contract
without such vote.
(b) Unless sooner terminated as provided herein as to a Series, this
Contract shall continue in effect for 2 years from its effective Date.
Thereafter, if not terminated as to a Series, this Contract shall automatically
renew and continue thereafter for successive periods of 12 consecutive months
each; subject to the condition that such continuance is specifically approved at
least annually: (i) by a vote of a majority of Independent Trustees, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by either the Board or by a vote of a majority of the outstanding voting
securities of such Series.
(c) Notwithstanding the foregoing, with respect to a Series, this
Contract 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 such Series on 60 days' written notice to the Sub-Adviser. The
Manager may also terminate the Contract immediately upon prior written notice to
Sub-Adviser, without payment of penalty, in the event of (i) material breach by
the Sub-Adviser of any of the representations and warranties set forth in
Paragraph 9 of this Contract, or (ii) if, in the reasonable judgment of Manager,
the Sub-Adviser becomes unable to discharge its duties and obligations under
this Contract. The Sub-Adviser may terminate this Contract at any time, without
payment of any penalty, on 90 days' written notice to Manager. This Contract
will terminate automatically in the event of its assignment or upon termination
of the Advisory Contract as it relates to the respective Series, as applicable,
except to the extent permitted by paragraph 18 hereof.
12. Amendment of this Contract. This Contract may not be waived,
modified, or amended without such waiver, modification, or amendment written in
an instrument signed by all parties hereto. No amendment of this Contract as to
a Series shall be effective until approved by vote of (i) a majority of the
Independent Trustees and (ii) a majority of such Series' outstanding voting
securities unless in the case of (ii), the Trust complies with the terms of any
SEC exemptive order or rule permitting it to modify to the Contract without such
vote. A party's failure to insist at any time upon strict compliance with this
Contract will not constitute a waiver by either party of any of its rights.
13. Governing Law. This Contract 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.
14. Miscellaneous. This Contract, including any Exhibits, contains
the entire understanding between Manager and the Sub-Adviser, with respect to
its subject matter and supercedes all prior and contemporaneous oral and written
understandings and agreements. The captions in this Contract 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 Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the
remainder of this Contract shall not be affected thereby. This Contract shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors. As used in this Contract, the terms "majority of the
outstanding voting securities," "affiliated person," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "net assets," "sale,"
"sell" and "security" shall have the same meaning 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 Contract 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 Contract 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 Manager upon receipt of the same
at their respective addresses set forth below. All written notices required or
permitted to be given under this Contract will be delivered by personal service,
by postage mail - return receipt requested or by facsimile machine or a similar
means of same day delivery which provides evidence of receipt (with a confirming
copy by mail as set forth herein). All notices provided to Manager will be sent
to the attention of Xxxxxxx X. Xxxxxxxx, Compliance Officer, Guardian Investor
Services LLC, 00 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx 00000, Mail Station
A-261, telephone (000) 000-0000; fax (000) 000-0000. All notices provided to the
Sub-Adviser will be sent to the attention of Xxxx Xxxxxxx, UBS Global Asset
Management (Americas) Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000.
16. Use of Name of Sub-Adviser.
(a) Without the prior express written consent of the Sub-Adviser,
Manager agrees that it shall not (i) use the name, logo, insignia, or other
identifying xxxx of Sub-Adviser or any affiliated person of Sub-Adviser, or (ii)
describe Sub-Adviser, or any affiliated person of Sub-Adviser, in any manner, in
any materials, including registration statements and marketing and sales
materials, without providing such materials to Sub-Adviser within a reasonable
time prior to such proposed use, and providing Sub-Adviser reasonable time to
approve, modify or reject such materials. Sub-Adviser agrees that it shall not
unreasonably withhold approval of any such materials.
(b) Manager and Sub-Adviser agree that, as between the parties, the
Sub-Adviser owns all rights, title, and interest to (and shall remain the
exclusive owner of) all intellectual property rights related to "UBS". During
the term of this Agreement, and only for as long as this Agreement or any
extension, renewal, or amendment hereof remains in effect, Sub-Adviser grants to
Manager a non-exclusive, non-transferable license to use "UBS" only in the
following Series' names: "The Guardian UBS Large Cap Value Fund" and "The
Guardian UBS Small Cap Value Fund". Manager agrees that in the event that this
Agreement is transferred or assigned (in accordance with this Agreement) to an
entity that is not an affiliated person of Sub-Adviser or upon termination of
this Agreement with respect to a Series, Manager shall immediately take all
steps, in accordance with applicable law, to (i) delete "UBS" from the name of
such Series, (ii) cease to use "UBS" or any similar name in any registration
statement for such Series, or in any marketing materials pertaining to such
Series, and (iii) legally change the name of such Series by seeking the
requisite Board approvals and by subsequently filing the required documentation
with the appropriate state and federal agencies.
17. Disclosure. Manager acknowledges receipt of the Sub-Adviser's
Form ADV, Part II, more than forty-eight (48) hours prior to execution of this
Contract.
18. Supplemental Services. The Sub-Adviser may enter into
arrangements with other persons affiliated with the Sub-Adviser or with
unaffiliated third parties to better enable the Sub-Adviser to fulfill its
obligations under this Contract for the provision of certain personnel and
facilities to the Sub-Adviser, at its own expense and subject to the Sub-Adviser
retaining overall responsibility for the acts and omissions of such persons.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the dates written below.
Guardian Investor Services LLC UBS Global Asset Management (Americas) Inc.
By: By:
------------------------------ -----------------------------------
Name: Name:
---------------------------- ---------------------------------
Title: Title:
---------------------------- --------------------------------
Date: Date:
---------------------------- ---------------------------------
By: By:
------------------------------ -----------------------------------
Name: Name:
---------------------------- ---------------------------------
Title: Title:
---------------------------- --------------------------------
Date: Date:
---------------------------- ---------------------------------
EXHIBIT A
ANNUAL ADVISORY FEE
PAYABLE BY
FUND MANAGER TO SUB-ADVISER
---- ----------------------
(as a percentage of average
daily net assets)
The Guardian UBS Large Cap Value Fund 0.43%
The Guardian UBS Small Cap Value Fund 0.60% for the first $50 million
in average daily net assets
0.55% for average daily net assets
above $50 million
