Prudential Value Fund
(formerly Prudential Equity Income Fund)
Interim Subadvisory Agreement
-----------------------------
Agreement made as of this 7th day of September, 2000 between Prudential
Investments Fund Management LLC (the Manager) and Xxxxxxxx Associates LLC (the
Subadviser or Xxxxxxxx).
WHEREAS, the Manager has entered into a Management Agreement, dated March
1, 1988, and amended and restated as of June 1, 1995 (the Management
Agreement), with Prudential Value Fund (formerly Prudential Equity Income Fund)
(the Fund), a diversified, open-end management investment company registered
under the Investment Company Act of 0000 (xxx 0000 Xxx); and
WHEREAS, The Prudential Investment Corporation (PIC) has provided
subadvisory services to the Fund under a Subadvisory Agreement dated March 1,
1988 with PIFM, as amended and restated as of January 1, 2000; and
WHEREAS, certain investment advisory responsibilities are being
transitioned from PIC to Xxxxxxxx; and
WHEREAS, PIFM desires to retain the Subadviser to provide investment
advisory services to the Fund, and the Subadviser is willing to render such
investment advisory services; and
WHEREAS, this Agreement is intended to supersede the Subadvisory Agreement,
dated March 1, 1988, between the Manager and PIC with respect to the Fund.
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and the Board of Trustees
of the Fund, the Subadviser shall manage the investment operations of the
Fund and one or more of its series as specified in Section 5 below, if any
(individually and collectively, with the Fund, referred to as the Fund),
and the composition of the Fund's portfolio, including the purchase,
retention and disposition thereof, in accordance with the Fund's investment
objectives, policies and restrictions as stated in the Prospectus and
Statement of Investment Information (such Prospectus and Statement of
Additional Information as currently in effect and as amended or
supplemented from time to time, being herein called the "Prospectus"), and
subject to the following understandings:
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(i) The Subadviser shall provide supervision of the Fund's
investments and determine from time to time what investments and
securities will be purchased, retained, sold or loaned by the Fund,
and what portion of the assets will be invested or held uninvested as
cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Subadviser shall act in conformity with the Articles
of Incorporation, By-Laws and Prospectus of the Fund and with the
instructions and directions of the Manager and of the Board of
Trustees of the Fund, and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of 1986 and
all other applicable federal and state laws and regulations. In
connection therewith, the Subadviser shall, among other things,
prepare and file such reports as are, or may in the future be,
required by the Securities and Exchange Commission.
(iii) The Subadviser shall determine the securities and futures
contracts to be purchased or sold by the Fund, and will place orders
with or through such persons, brokers, dealers or futures commission
merchants (including but not limited to Prudential Securities
Incorporated) to carry out the policy with respect to brokerage as
set forth in the Fund's Prospectus or as the Board of Trustees may
direct from time to time. In providing the Fund with investment
supervision, it is recognized that the Subadviser will give primary
consideration to securing the most favorable price and efficient
execution. Within the framework of this policy, the Subadviser may
consider the financial responsibility, research and investment
information and other services provided by brokers, dealers or
futures commission merchants who may effect or be a party to any such
transaction or other transactions to which the Subadviser's other
clients may be a party. It is understood that Prudential Securities
Incorporated may be used as principal broker for securities
transactions, but that no formula has been adopted for allocation of
the Fund's investment transaction business. It is also understood
that it is desirable for the Fund that the Subadviser have access to
supplemental investment and market research and security and economic
analysis provided by brokers or futures commission merchants who may
execute brokerage transactions at a higher cost to the Fund than may
result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and efficient execution. Therefore,
the Subadviser is authorized to place orders for the purchase and
sale of securities and futures contracts for the Fund with such
brokers or futures commission merchants, subject to review by the
Fund's Board of Trustees from time to time with respect to the extent
and continuation of this practice. It is understood that the
services provided by such brokers or futures commission merchants may
be
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useful to the Subadviser in connection with the Subadviser's services
to other clients.
On occasions when the Subadviser deems the purchase or sale of
a security or futures contract to be in the best interest of the Fund
as well as other clients of the Subadviser, the Subadviser, to the
extent permitted by applicable laws and regulations, may, but shall
be under no obligation to, aggregate the securities or futures
contracts to be sold or purchased in order to obtain the most
favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities or futures
contracts so purchased or sold, as well as the expenses incurred in
the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients.
(iv) The Subadviser shall maintain all books and records with
respect to the Fund's portfolio transactions required by
subparagraphs (b)(5), (6), (7), (9), (10) and (11) and paragraph (f)
of Rule 31a-1 under the 1940 Act, and shall render to the Fund's
Board of Trustees such periodic and special reports as the Board of
Trustees may reasonably request. The Subadviser shall make
reasonably available its employees and officers for consultation with
any of the Board's members or officers or employees of the Fund with
respect to any matter discussed herein, including, without
limitation, the valuation of the Fund's securities.
(v) The Subadviser shall provide the Fund's Custodian on each
business day with information relating to all transactions concerning
the Fund's assets, and shall provide the Manager with such
information upon request of the Manager.
(vi) The investment management services provided by the Subadviser
hereunder are not to be deemed exclusive, and the Subadviser shall be
free to render similar services to others.
(b) The Subadviser shall authorize and permit any of its trustees,
officers and employees who may be elected as Trustees or officers of the
Fund to serve in the capacities in which they are elected. Services to be
furnished by the Subadviser under this Agreement may be furnished through
the medium of any of such trustees, officers or employees.
(c) The Subadviser shall keep the Fund's books and records required to be
maintained by the Subadviser pursuant to paragraph 1(a) hereof and shall
timely furnish to the Manager all information relating to the Subadviser's
services hereunder needed by the Manager to keep the other books and
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records of the Fund required by Rule 31a-1 under the 1940 Act. The
Subadviser agrees that all records which it maintains for the Fund are the
property of the Fund, and the Subadviser will surrender promptly to the
Fund any of such records upon the Fund's request, provided, however, that
the Subadviser may retain a copy of such records. The Subadviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any such records as are required to be maintained by it pursuant to
paragraph 1(a) hereof.
(d) The Subadviser agrees to maintain adequate compliance procedures to
ensure its compliance with the 1940 Act, the Investment Advisers Act of
1940 and other applicable state and federal regulations.
(e) The Subadviser shall furnish to the Manager copies of all records
prepared in connection with (i) the performance of this Agreement and (ii)
the maintenance of compliance procedures pursuant to paragraph (d) hereof
as the Manager may reasonably request.
2. The Manager shall continue to have responsibility for all services to
be provided to the Fund pursuant to the Management Agreement and, as more
particularly discussed above, shall oversee and review the Subadviser's
performance of its duties under this Agreement.
3. The Manager shall pay the Subadviser for the services described in
paragraph 1 hereof as full compensation therefor, a fee equal to an annual
rate of the average daily net assets of the Fund under the management of
the Subadviser as described in the attached schedule A.
The compensation earned by the Subadviser under this Agreement shall
be held in an interest-bearing escrow account with the Fund's custodian or
a bank. If a majority of the Fund's outstanding voting securities approve
an agreement with the Subadviser by the end of the 150-day period
beginning with the effective date of this Agreement, the amount in the
escrow account (including interest earned) shall be paid to the
Subadviser. If a majority of the Fund's outstanding voting securities do
not approve an agreement with the Subadviser by the end of the 150-day
period beginning with the effective date of this Agreement, the Subadviser
shall be paid, out of the escrow account, the lesser of (i) any costs
incurred by the Subadviser in performing this Agreement (plus interest
earned on that amount while in escrow); or (ii) the total amount in the
escrow account (including interest earned).
4. The Subadviser shall not be liable for any error of judgment or for any
loss suffered by the Fund or the Manager in connection with the matters to
which this Agreement relates, except a loss resulting from willful
misfeasance,
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bad faith or gross negligence on the Subadviser's part in the performance
of its duties or from its reckless disregard of its obligations and duties
under this Agreement.
5. This Agreement shall continue in effect for a period of up to 150 days
from the date hereof until an agreement with the Subadviser is approved by
a majority of the Fund's outstanding voting securities; provided, however,
that this Agreement may be terminated by the Board of Trustees of the Fund
or a majority of the Fund's outstanding voting securities on not more than
10 days written notice to the Manager and the Subadviser. This Agreement
shall terminate automatically in the event of its assignment (as defined
in the 0000 Xxx) or upon the termination of the Management Agreement.
6. Nothing in this Agreement shall limit or restrict the right of any of
the Subadviser's trustees, officers, or employees who may also be a
Trustee, officer or employee of the Fund 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 business, whether of a similar or a dissimilar
nature, nor limit or restrict the Subadviser's right to engage in any
other business or to render services of any kind to any other corporation,
firm, individual or association.
7. During the term of this Agreement, the Manager agrees to furnish the
Subadviser at its principal office all Prospectuses, proxy statements,
reports to shareholders, sales literature or other material prepared
for distribution to shareholders of the Fund or the public, which
refer to the Subadviser in any way, prior to use thereof and not to
use material if the Subadviser reasonably objects in writing five
business days (or such other time as may be mutually agreed) after
receipt thereof. Sales literature may be furnished to the Subadviser
hereunder by first-class or overnight mail, facsimile transmission
equipment or hand delivery.
8. This Agreement may be amended by mutual consent, but the consent of
the Fund must be obtained in conformity with the requirements of the 1940
Act.
9. This Agreement shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
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PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
BY: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Xxxxxx X. Xxxxx
Executive Vice President
XXXXXXXX ASSOCIATES LLC
BY: /s/ Xxxxx X. Xxxxxx
-------------------------------------------
Xxxxx X. Xxxxxx
Senior Vice President
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Schedule A
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Prudential 20/20 Focus Fund 0.375%
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Prudential Diversified Funds
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Prudential Diversified Conservative Growth Fund 0.375%
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Prudential Diversified Moderate Growth Fund 0.375%
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Prudential Diversified High Growth Fund 0.375%
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Prudential Equity Fund, Inc. 0.250% to $500 mil.
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0.226% next $500 mil.
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0.203% over $1 bil.
--------------------------------------------------------------------------------
Prudential Europe Growth Fund, Inc. 0.375%
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Prudential Global Genesis Fund, Inc. 0.500%
--------------------------------------------------------------------------------
Prudential Natural Resources Fund, Inc. 0.375%
--------------------------------------------------------------------------------
Prudential Pacific Growth Fund, Inc. 0.375%
--------------------------------------------------------------------------------
Prudential Real Estate Securities Fund 0.375%
--------------------------------------------------------------------------------
Prudential Sector Funds, Inc.
--------------------------------------------------------------------------------
Prudential Financial Services Fund 0.375%
--------------------------------------------------------------------------------
Prudential Technology Fund 0.375%
--------------------------------------------------------------------------------
Prudential Utility Fund 0.300% to $250 mil.
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0.238% next $500 mil.
--------------------------------------------------------------------------------
0.203% next $750 mil.
--------------------------------------------------------------------------------
0.170% next $500 mil.
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0.140% next $2 bil.
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0.122% next $2 bil.
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0.105% over $6 bil.
--------------------------------------------------------------------------------
Prudential Small Company Fund, Inc. 0.455%
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Prudential U.S. Emerging Growth Fund, Inc. 0.300%
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Prudential Value Fund (formerly Prudential Equity 0.300% to $500 mil.
Income Fund) 0.238% next $500 mil.
0.214% next $500 mil.
0.191% over $1.5 bil.
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Prudential World Fund, Inc., Global Series 0.375%
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