EXHIBIT (d)(4)
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT, made this ___ day of ________, 1999, among The Prudential Series
Fund, Inc. (the "Fund"), a Maryland corporation, The Prudential Insurance
Company of America ("Prudential"), a New Jersey insurance company, and Xxxxxxxx
Associates LLC (the "Subadviser"), a New York limited liability corporation.
WHEREAS, the Fund is a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, Prudential and the Subadviser are both registered as investment
advisers under the Investment Advisers Act of 1940; and
WHEREAS, the Fund is authorized to issue shares of beneficial interest in
separate Portfolios, with each such Portfolio representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, Prudential has entered into an advisory agreement (the "Management
Agreement") with the Fund, pursuant to which Prudential will manage the
operations of the Fund; and
WHEREAS, the fund and Prudential desire to retain the Subadviser to provide
investment advisory services to a portion of the assets of the 20/20 Focus
Portfolio of the Fund (the " 20/20 Portfolio") and a portion of the assets of
the Diversified Conservative Growth Portfolio (the "DCG Portfolio" and,
collectively with the 20/20 Portfolio, the "Portfolios), and the Subadviser is
willing to render such services.
NOW, THEREFORE, the parties agree as follows:
1. Appointment. The Fund and Prudential hereby appoint the Subadviser to
provide day-to-day investment management of such portion of the
Portfolios as Prudential shall direct, from time to time, for the
period and on the terms set forth in this Agreement, subject to the
direction of the Board of Directors of the Fund (the "Board") and
Prudential. The Subadviser accepts such appointment and agrees to
render the services described herein for the compensation provided in
paragraph 14.
2. Services of Prudential. Subject to the supervision of the Board and
Prudential, the Subadviser shall provide day-to-day investment
management to such portion of the Portfolios as Prudential shall
direct, from time to time. More particularly:
(a) The Subadviser will provide investment research and conduct a
continuous program of evaluation, investment, sales, and reinvestment of such
portion of the Portfolios' assets as Prudential shall direct, from time to time,
by determining the securities and other investments that will be purchased,
entered into, sold, or exchanged, when these transactions will be executed, and
what securities and other investments in which each Portfolio may invest. The
Subadviser will provide services in
accordance with the Portfolios' investment objective or objectives, policies,
and restrictions as stated in the Fund's registration statement under the
Securities Act of 1933 and the 1940 Act as filed with the Securities and
Exchange Commission ("SEC") and amended from time to time (the "Registration
Statement") and in accordance with any written instructions and directions of
Prudential or the Board.
(b) The Subadviser shall meet periodically with Prudential to review and
agree upon current investment strategies and programs in the light of
anticipated cash flows. The Subadviser shall comply with reasonable requests
made by Prudential so that Prudential can fulfill its monitoring and oversight
responsibilities under the Management Agreement.
(c) The Subadviser shall provide to Prudential the information and
documents Prudential reasonably requests so that it may keep the records of the
Portfolios and otherwise manage the Fund and the Portfolios as required by the
Management Agreement. The Subadviser shall provide such information and
documents to the custodian or other entities as directed by Prudential.
(d) The Subadviser shall report to the Board on the investment program for
the portions of the Portfolios for which it is responsible as frequently as the
Board may request, and will furnish the Board such periodic and special reports
as the Board may reasonably request.
(e) The Subadviser will manage the portions of the Portfolios for which it
is responsible so that it will comply with the diversification requirements of
Section 817(h) of the Internal Revenue Code.
3. Investment Opportunities. When investment opportunities arise that may
be appropriate for more than one client for which the Subadviser
serves as investment manager or adviser, the Subadviser may allocate
investments among them in a manner that the Subadviser believes to be
equitable to each client involved. The allocations will be based on
each client's investment objectives and its current cash and
investment positions. The Subadviser may from time to time buy a
particular security for one or more clients while at the same time it
sells such securities for another. On occasions when the subadviser
deems the purchase or sale of a security to be in the best interest of
a Portfolio as well as any other investment advisory client, the
Subadviser may, to the extent permitted by applicable laws and
regulations, including, but not limited to Section 17(d) of the 1940
Act, but shall not be obligated to, aggregate the securities to be
sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in the
Registration Statement. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Subadviser in a manner it believes to
be equitable to each client involved. All records pertaining to such
allocation shall be available to Prudential.
4. Broker-Dealer Selection. The Subadviser is responsible for
broker-dealer selection and negotiation of brokerage commission rates.
The
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Subadviser's primary consideration in effecting a security transaction
will be to obtain the most favorable price and best execution. It may
also take into account the capability of the broker in effecting
difficult trades and trades in large amounts and the value to the
Portfolios of research services provided to the Subadviser by the
broker. Subject to the representations in the Registration Statement
and such policies as the Board may determine and consistent with
Section 28(3) of the Securities Exchange Act of 1934, the Subadviser
shall not be deemed to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused the
Portfolios to pay a broker-dealer for effecting a Portfolio investment
transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if
the Subadviser or its affiliate determines in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed
in terms of either that particular transaction or the Subadviser's
overall responsibilities with respect to the Portfolios and to its
other clients as to which it exercises investment discretion. Subject
to the representations in the Registration Statement and such policies
as the Board may determine and consistent with the federal securities
laws, the Subadviser shall not be deemed to have breached any duty
created by this Agreement or otherwise solely by using a broker who is
an affiliated person of the Subadviser, as that term is defined in the
1940 Act.
5. Conformity with Applicable Law. The Subadviser, in the performance of
its duties and obligations under this Agreement, shall act in
conformity with the Registration Statement and with the instructions
and directions of the Board and will conform to, and comply with, all
mandatory requirements of the 1940 Act and all other applicable
federal and state securities laws and regulations and state insurance
law governing separate account investments.
6. Employees. All services to be furnished by the Subadviser under this
Agreement may be furnished through the medium of any directors,
officers or employees of the Subadviser.
7. Exclusivity. The services of the Subadviser under this Agreement are
not to be deemed exclusive, and the Subadviser, or any affiliate
thereof, shall be free to render similar services to other investment
companies and other clients (whether or not their investment
objectives and policies are similar to those of the Portfolios) and to
engage in other activities. The Fund understands that the Subadviser
now serves, and will continue to serve, as investment manager or
adviser to other investment companies and to clients that are not
investment companies. The Fund understands that the employees of the
Subadviser who assist in the performance of the services called for by
this Agreement will also devote time to rendering similar services to
the other entities for which the Subadviser also acts as investment
manager or adviser.
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8. Confidential Treatment. It is understood that any information or
recommendations supplied by the Subadviser in connection with the
performance of its obligations hereunder is to be regarded as
confidential and for use only by the Fund, Prudential in its capacity
as Investment Adviser to the Fund, or such persons as Prudential may
designate in connection with the Portfolios. It is also understood
that any information supplied to the Subadviser in connection with the
performance of its obligations hereunder, particularly, but not
limited to, any list of securities which, on a temporary basis, may
not be bought or sold for the Portfolios, is to be regarded as
confidential and for use only by the Subadviser in connection with its
obligation to provide investment advice and other services to the
Portfolios.
9. Documents. Prudential has delivered copies of each of the following
documents to the Subadviser and will deliver to it all future
amendments and supplements thereto, if any:
(a) the Fund's articles of incorporation and by-laws;
(b) The Registration Statement;
(c) the Code of Ethics of the Fund as currently in effect; and
(d) a list of companies the securities of which are not to be bought or
sold for the Portfolios because of non-public information regarding
such companies that is available to Prudential, or which, in the sole
opinion of Prudential, would be deemed to be available to Prudential
or the Fund.
(e) The current Prospectus, Statement of Additional Information and Part C
of the Fund's Registration Statement, and all amendments and
supplements thereto, will be furnished promptly to the Subadviser
after filing with the SEC and the Subadviser will be notified in
writing or by telephone as to the date on which such amendments or
supplements are to become effective.
Prudential will furnish the Subadviser from time to time with copies, properly
certified or otherwise authenticated, of all amendments of or supplements to the
foregoing, if any. Such amendments or supplements as to items (a) through (c)
above will be provided within 30 days of the time such materials become
available to Prudential. Revisions to Item (d) shall be provided the same day
such revisions are determined by Prudential.
10. Delivery of Documents to Prudential. The Subadviser has furnished
Prudential with copies of each of the following documents:
(a) The Subadviser's Form ADV as filed with the SEC;
(b) The Subadviser's most recent balance sheet;
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(c) Separate lists of persons who the Subadviser wishes to have authorized
to give written and/or oral instructions to custodians of the Fund's
assets for the Portfolios;
(d) The Code of Ethics of the Subadviser as currently in effect.
The Subadviser will furnish Prudential from time to time with copies, properly
certified or otherwise authenticated if requested by Prudential, of all material
amendments of or supplements to the foregoing, if any. Such amendments or
supplements as to items (a) through (d) above will be provided within 30 days of
the time such materials became available to the Subadviser.
11. Records. The Subadviser agrees to maintain and to preserve records
relating to the Fund as required by the 1940 Act. The Subadviser
further agrees that all records which it maintains for the Fund are
the property of the Fund to the extent provided in the 1940 Act, and
it will promptly surrender any of such records (or copies, printouts
or computerized forms thereof) upon request provided, however, that
Subadviser may maintain copies (or originals) of all such records to
the extent required by law or in accordance with customary business
practices.
12. Compliance. The Subadviser agrees that it shall promptly notify
Prudential and the Fund in the event that:
(a) The SEC has censured the Subadviser; placed limitations upon is
activities, functions or operations; suspended or revoked its registration
as an investment adviser; or commenced proceedings or an investigation that
may result in any of these actions; or
(b) the Subadviser has a reasonable basis for believing that one of the
Portfolios has ceased to comply or might not comply with the
diversification provisions of Section 817(h) of the Internal Revenue Code
or the regulations thereunder.
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13. Expenses.
(a) The Subadviser will pay all expenses incurred by it in connection with
its activities under this Agreement, including all rent and other expenses
involved in providing office space and equipment required by the Subadviser
and the salaries and expenses of all personnel of the Subadviser.
(b) The Portfolios will bear the respective expenses incurred in its
individual operation, including but not limited to redemption and
transaction expenses, daily accounting services (including maintaining for
a Portfolio a daily trial balance, investment ledger, and other accounts
and documents computing a Portfolio's daily net asset value per share, and
computing daily cash flow and transaction status information), advisory
fees to Prudential (but not to the Subadvisers), brokerage, shareholder
servicing costs, pricing costs, interest taxes, and the charges of the
custodians and transfer agent.
(c) The Fund will pay all other expenses not attributable to a specific
Portfolio, but these expenses will be allocated proportionately among all
of the portfolios of the Fund on the basis of the value of their respective
aggregate net assets. These expenses include, without limitation:
insurance, legal expenses, auditing fees, state franchise and Blue Sky
qualification fees, if any, the cost of printing stock certificates,
proxies, and shareholder reports, SEC fees, the expense of registering
securities issued by the Fund under applicable securities laws, the fees
and expenses of all directors of the Fund who are not affiliated persons of
Prudential, of any Prudential subsidiary, or of the Subadviser and
litigation and other extraordinary or non-recurring expenses.
(d) Prudential shall pay the fee of the Subadviser. Prudential shall pay
for maintaining any Prudential staff and personnel who perform accounting
services in connection with the preparation of financial statements
required for the Fund's semiannual reports to shareholders and clerical,
administrative and similar services for the Fund, other than investor
services and daily Fund accounting services, which shall be paid for the
Fund. Prudential shall also pay for the equipment, office space, and
related facilities necessary to perform these services and shall pay the
fees or salaries of all officers and directors of the Fund who are
affiliated persons of Prudential or of any Prudential subsidiary. The Fund
shall reimburse Prudential for the expenses of maintaining personnel who
perform investor services and, if applicable, daily accounting services for
the Fund.
14. Compensation.
(a) 20/20 Portfolio. As compensation for the services performed and
expenses incurred by the Subadviser under this Agreement in respect of the
20/20 Portfolio, Prudential (not the Fund) shall pay to the Subadviser an
investment management fee.
The fee will be a daily charge, payable quarterly, based on the annual
rates set forth in the following schedule:
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0.30 of 1% on the first $300 million of the 20/20 Portfolio's average
daily net assets under the Subadviser's management; and
0.25 of 1% on the balance of the 20/20 Portfolio's average daily net
assets under the Subadviser's management.
(b) DCG Portfolio. As compensation for the services performed and expenses
incurred by the Subadviser under this Agreement in respect of the DCG Portfolio,
Prudential (not the Fund) shall pay to the Subadviser an investment management
fee.
The fee will be a daily charge, payable quarterly, based on the annual
rates set forth in the following schedule:
0.30 of 1% on the first $300 million of the DCG Portfolio's average
daily net assets under the Subadviser's management; and
0.25 of 1% on the balance of the DCG Portfolio's average daily net
assets under the Subadviser's management.
15. Limitation on Liability of Subadviser. Neither Subadviser nor any of
its officers, directors, employees or agents shall be liable for any error
of judgment or mistake of law or for any loss suffered by the Portfolios,
the Fund or Prudential in connection with the matters to which this
Agreement relates, except for a loss resulting from willful misfeasance,
bad faith or gross negligence on the Subadviser's part in the performance
of its duties on behalf of the Fund or from reckless disregard of its
obligations and duties under this Agreement.
16. Warranty.
(a) Prudential represents and warrants that (i) the appointment of the
Subadviser by Prudential has been duly authorized and (ii) it has acted and
will continue to act in connection with the transactions contemplated
hereby, and the transactions contemplated hereby are, in conformity with
the 1940 Act, the Fund's governing documents and other applicable laws.
(b) The Fund represents and warrants that the approval of this Agreement by
the Fund has been duly authorized.
(c) The Subadviser represents and warrants that it is authorized to perform
the services contemplated to be performed hereunder.
17. Continuation and Termination. This Agreement shall take effect on the
date first written above, and shall continue in effect, unless sooner
terminated as provided herein, for two years from such date and shall
continue from year to year thereafter so long as such continuance is
specifically approved at least annually (i) by the vote of a majority
of the Board; or (ii) by vote of a majority of the outstanding voting
shares of the
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respective Portfolios; provided, further, in either event that
continuance is also approved by the vote of a majority of the Board
who are not parties to this Agreement or "interested persons" (as
defined in the 0000 Xxx) of the Fund, Prudential or the Subadviser,
cast in person at a meeting called for the purpose of voting on such
approval. This Agreement may be terminated by the Fund at any time,
without the payment of any penalty, by vote of a majority of the
entire Board or by a vote of a majority of the outstanding voting
shares of the respective Portfolio, on sixty (60) days' written notice
to Prudential and the Subadviser. This Agreement may be terminated by
Prudential at any time, without the payment of any penalty, on ninety
(90) days' written notice to the Fund and the Subadviser. This
Agreement may be terminated by the Subadviser at any time, without the
payment of any penalty, on ninety (90) days' written notice to the
Fund and Prudential. This Agreement will automatically and immediately
terminate in the event of its "assignment" (as defined in the 1940
Act).
18. Independent Contractor. The Subadviser shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Board from time to
time, have no authority to act for or represent the Fund in any way or
otherwise be deemed its agent.
19. Notice. Notices of any kind to be given to the Fund and to Prudential
shall be in writing and shall be duly given if sent by first class
mail or delivered to the Fund at 0 Xxxxxxx Xxxxxx, 0xx Xxxxx, 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000, Attn: Secretary, or at such
other address or to such individual as shall be specified by the Fund
(with proper notice to Prudential and the Subadviser). Notices of any
kind to be given to the Subadviser shall be in writing and shall be
duly given if sent by first class mail or delivered to the Subadviser
at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attn:_________________or at such other address or to such individual
as shall be specified by the Subadviser (with proper notice to the
Fund and Prudential).
20. Counterparts. This agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
21. Applicable law. This Agreement shall be governed by the laws of New
Jersey, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of 1940,
or any rules or order of the SEC thereunder.
22. Captions. The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below on the day and year first above
written.
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THE PRUDENTIAL SERIES FUND, INC.
_____________________________ By:_____________________________
Witness Name
Title
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
_____________________________ By:_____________________________
Witness Name
Title
XXXXXXXX ASSOCIATES LLC
_____________________________ By:_____________________________
Witness Name
Title
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