Exhibit (D)(2)(xi)
FORM OF SUBADVISORY AGREEMENT WITH
NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
THE TARGET PORTFOLIO TRUST
SMALL CAPITALIZATION VALUE PORTFOLIO
Agreement made as of this ____ day of April, 2002, between Prudential
Investments LLC, a New York limited liability company ("PI" or the "Manager"),
and National City Investment Management Company, a Michigan corporation (the
"Subadviser").
WHEREAS, the Manager has entered into a Management Agreement, dated
November 9, 1992, as amended April 1, 1994 (the "Management Agreement"), with
The Target Portfolio Trust, a Delaware business trust (the "Trust"), on behalf
of the Small Capitalization Value Portfolio (the "Portfolio"), a series of a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), pursuant to which
PI acts as Manager of the Portfolio; and
WHEREAS, PI desires to retain the Subadviser to provide investment
advisory services to the Portfolio and to manage such portion of the Portfolio
as the Manager shall from time to time direct, and the Subadviser is willing to
render such investment advisory services.
NOW, THEREFORE, the parties hereby agree as follows:
1. (a) Subject to the supervision of the Manager and the Board of
Trustees of the Trust, the Subadviser shall manage such portion of the
investment operations of the Portfolio as the Manager shall direct and
shall manage the composition of the Portfolio's portfolio, including
the purchase, retention and disposition thereof, in accordance with the
Portfolio's investment objectives, policies and restrictions as stated
in its prospectus and statement of additional 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:
(i) The Subadviser shall provide supervision of such portion
of the Portfolio's investments as the Manager shall direct and
shall determine from time to time what investments and
securities will be purchased, retained, sold or loaned by the
Portfolio, 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 Agreement and Declaration of Trust and By-Laws of the
Trust, with the Prospectus and with the instructions and
directions of the Manager and of the Board of Trustees of the
Trust, as delivered by the Manager to the Subadviser, and will
conform to and comply with the requirements of the 1940 Act,
the Internal Revenue Code of 1986, as amended, and all other
applicable federal and state laws and regulations.
(iii) The Subadviser shall determine the securities and
futures contracts to be purchased or sold by such portion of
the Portfolio, and will place orders with or through such
persons, brokers, dealers or futures commission merchants
(including but not limited to Prudential Securities
Incorporated or any broker or dealer affiliated with the
Subadviser) to carry out the policy with respect to brokerage
as set forth in the Portfolio's Prospectus or as the Board of
Trustees may direct from time to time. In providing the
Portfolio 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 or any broker or dealer affiliated
with the Subadviser may be used as principal broker for
securities transactions, but that no formula has been adopted
for allocation of the Portfolio's investment transaction
business. It is also understood that it is desirable for the
Portfolio 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
Portfolio 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 Portfolio with such brokers or
futures commission merchants, subject to review by the Trust'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 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 Portfolio 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 Portfolio and to such other
clients.
(iv) The Subadviser shall maintain all books and records with
respect to the Portfolio'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 Trust's Board of Trustees such periodic and
special reports as the Trustees may reasonably request. The
Subadviser shall make reasonably available its
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employees and officers for consultation with any of the
Trustees or officers or employees of the Portfolio with
respect to any matter discussed herein, including, without
limitation, the valuation of the Portfolio's securities.
(v) The Subadviser shall provide the Portfolio's Custodian on
each business day with information relating to all
transactions concerning the portion of the Portfolio's assets
it manages, 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.
Conversely, Subadviser and Manager understand and agree that
if the Manager manages the Portfolio in a
"manager-of-managers" style, the Manager will, among other
things, (i) continually evaluate the performance of the
Subadviser through quantitative and qualitative analysis and
consultations with the Subadviser; (ii) periodically make
recommendations to the Trust's Board as to whether the
contract with one or more subadvisers should be renewed,
modified, or terminated; and (iii) periodically report to the
Trust's Board regarding the results of its evaluation and
monitoring functions. The Subadviser recognizes that its
services may be terminated or modified pursuant to this
process.
(b) The Subadviser shall authorize and permit any of its directors,
officers and employees who may be elected as Trustees or officers of
the Trust 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 directors, officers or
employees.
(c) The Subadviser shall keep the Portfolio'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 records of the Portfolio required by Rule
31a-1 under the 1940 Act. The Subadviser agrees that all records
which it maintains for the Portfolio are the property of the
Portfolio, and the Subadviser will surrender promptly to the
Portfolio any of such records upon the Portfolio'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, as amended, 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
1(d) hereof as the Manager may reasonably request.
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2. The Manager shall continue to have responsibility for all services
to be provided to the Portfolio 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. Each party represents and warrants to the other that it is (a) duly
organized and existing and in good standing under the laws of its state of
organization; (b) duly qualified to conduct its business in all jurisdictions
that require such qualification; and (c) duly authorized to enter into and
perform this Agreement.
4. For the services provided and the expenses assumed pursuant to this
Agreement, the Manager shall pay the Subadviser as full compensation therefor, a
fee equal to the percentage of the Portfolio's average daily net assets of the
portion of the Portfolio managed by the Subadviser as described in the attached
Schedule A. This fee will be computed daily and paid monthly.
5. The Subadviser shall not be liable for any error of judgment or for
any loss suffered by the Portfolio or the Manager in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, 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.
6. This Agreement shall continue in effect for a period of more than
two years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Trust, on behalf
of the Portfolio, at any time, without the payment of any penalty, by the Board
of Trustees of the Trust or by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the Portfolio, or by the Manager or
the Subadviser at any time, without the payment of any penalty, on not more than
60 days' nor less than 30 days' written notice to the other party. 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.
The Subadviser agrees that it will promptly notify the Trust and the Manager of
the occurrence or anticipated occurrence of any event that would result in the
assignment (as defined in the 0000 Xxx) of this Agreement, including, but not
limited to, a change or anticipated change in control (as defined in the 0000
Xxx) of the Subadviser.
Any notice or other communication required to be given pursuant to
Section 5 of this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Manager at Gateway Center Three,
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, XX 00000-0000, Attention: Secretary; (2)
to the Trust at Gateway Center Three, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX
00000-0000, Attention: Secretary; or (3) to the Subadviser at 0000 Xxxx Xxxxx
Xxxxxx, Xxxxxxx 0000, Xxxxxxxxx, XX 00000-0000, Attention: Xxxxxx X. Xxxx.
7. Nothing in this Agreement shall limit or restrict the right of any
of the Subadviser's partners, principals, members, officers or employees who may
also be a Trustee, officer or employee of the Trust or the Portfolio 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
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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.
8. 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 Portfolio 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.
9. This Agreement may be amended by mutual consent, but the consent of
the Portfolio must be obtained in conformity with the requirements of the 1940
Act.
10. This Agreement shall be governed by the laws of the State of New
York. This Agreement together with any other written agreements between the
parties entered into concurrently with this Agreement contain the entire
agreement between the parties with respect to the transactions contemplated
hereby and supersede all previous oral or written negotiations, commitments and
understandings related thereto. No waiver by one party of any obligation of the
other hereunder shall be considered a waiver of any other obligation of such
party. If any portion 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.
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.
PRUDENTIAL INVESTMENTS LLC NATIONAL CITY INVESTMENT
MANAGEMENT COMPANY
By: _____________________________ By: ___________________________
Xxxxxx X. Xxxxx Xxxxxx X. Xxxx
Executive Vice President President and Chief
Investment Officer
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SCHEDULE A
SUBADVISORY AGREEMENT DATED APRIL ___, 2002 BETWEEN PI AND
NATIONAL CITY WITH RESPECT TO THE SMALL CAPITALIZATION VALUE
PORTFOLIO, A SERIES OF THE TARGET
PORTFOLIO TRUST
COMPENSATION SCHEDULE
Annual fee payable, in arrears, to the Subadviser as a percentage of average
daily net assets of the Portfolio managed by the Subadviser:
0.40% on the Portfolio's assets managed by the Subadviser.
As of April ___, 2002
