SUBADVISORY AGREEMENT
THE PRUDENTIAL SERIES FUND, INC.
THIS AGREEMENT is made this ___ day of ___________, 2000, between Prudential
Investments Fund Management LLC (the "Manager"), a New York Limited Liability
Corporation, and A I M Capital Management, Inc. (the "Sub-Adviser"), a Texas
corporation.
WHEREAS, The Prudential Series Fund, Inc. (the "Company") represents that it is
registered under the Investment Company Act of 1940, as amended (the "1940 Act")
as an open-end, management investment company, consisting of multiple series of
investment portfolios, and that currently it is governed by an investment
advisory agreement, dated July 14, 1988, with The Prudential Insurance Company
of America;
WHEREAS, the Manager represents that it is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act") as an investment adviser
and engages in the business of acting as an investment adviser;
WHEREAS, the Sub-Adviser represents that it is registered under the Advisers Act
as an investment adviser and engages in the business of acting as an investment
adviser;
WHEREAS, the Company represents that the Board of Directors of the Company is
authorized to classify or reclassify authorized but unissued shares of the
Company, and as of the date of this Agreement the Company's Board of Directors
has authorized the issuance of series of shares representing interests in
investment portfolios; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital relating to each portfolio
listed in Schedule A hereto (each, a "Portfolio") by investing and reinvesting
in investments of the kind and in accordance with the investment objective(s),
policies and limitations specified in the prospectuses (the "Prospectus") and
the statements of additional information (the "Statement") filed with the
Securities and Exchange Commission as part of the Company's Registration
Statement on Form N-1A, as amended or supplemented from time to time, and in the
manner and to the extent as may from time to time be approved by the Board of
Directors of the Company (the "Board"). Copies of the Registration Statement,
Prospectus and the Statement have been or will be provided to the Sub-Adviser.
The Manager agrees promptly to provide copies of all amendments and supplements
to the current Registration Statement, Prospectus and the Statement to the
Sub-Adviser on or before the effective date thereof on an on-going basis. Until
the Manager delivers any such amendment or supplement to the Sub-Adviser, the
Sub-Adviser shall be fully protected in relying on the Prospectus and Statement
as previously furnished to the Sub-Adviser. The Company employs the Manager as
the manager to each Portfolio pursuant to the Management Agreement, and the
Company and the Manager desire to employ and hereby appoint the Sub-Adviser to
act as the sub-investment adviser to each Portfolio. The Sub-Adviser accepts the
appointment and agrees to furnish the services for the compensation set forth
below.
2. SERVICES AS SUB-ADVISER
Subject to the supervision, direction and approval of the Board and the Manager,
the Sub-Adviser shall conduct a continual program of investment, evaluation and,
if appropriate in the view of the Sub-Adviser, sale and reinvestment of each
Portfolio's assets. The Sub-Adviser is authorized, in its sole discretion and
without prior
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consultation with the Manager, to: (a) manage each Portfolio's assets in
accordance with such Portfolio's investment objective(s) and policies as stated
in the Prospectus and the Statement; (b) make investment decisions for each
Portfolio; (c) place purchase and sale orders for portfolio transactions on
behalf of each Portfolio; and (d) employ professional portfolio managers and
securities analysts who provide research services to each Portfolio.
The Manager agrees that the Sub-Adviser shall not be liable for any failure to
recommend the purchase or sale of any security on behalf of any Portfolio on the
basis of any information which might, in the Sub-Adviser's opinion, constitute a
violation of any federal or state laws, rules or regulations.
In addition, (i) the Sub-Adviser shall furnish the Manager daily information
concerning portfolio transactions and quarterly and annual reports concerning
transactions and performance of each Portfolio in such form as may be mutually
agreed by the Manager and the Sub-Adviser, and the Sub-Adviser agrees to review
such Portfolio and discuss the management thereof with the Manager and the
Board.
(ii) Unless the Manager gives the Sub-Adviser written instructions to the
contrary, the Sub-Adviser shall use its good faith judgment in a manner which it
reasonably believes best serves the interests of each Portfolio's shareholders
to vote or abstain from voting all proxies solicited by or with respect to the
issuers of securities in which assets of each Portfolio may be invested.
(iii) The Sub-Adviser shall maintain and preserve such records related to each
Portfolio's transactions as required under the 1940 Act. The Manager shall
maintain and preserve all books and other records not related to the Portfolio
transactions as required under the 1940 Act. The Sub-Adviser shall timely
furnish to the Manager all information relating to the Sub-Adviser's services
hereunder reasonably requested by the Manager. The Sub-Adviser agrees that all
records which it maintains for a Portfolio are the property of the Company and
the Sub-Adviser will surrender promptly to the Company copies of any of such
records.
(iv) The Sub-Adviser shall maintain compliance procedures for each Portfolio
that it reasonably believes are adequate to ensure each Portfolio's compliance
with (A) the 1940 Act and the rules and regulations promulgated thereunder and
(B) such Portfolio's investment objective(s) and policies as stated in the
Prospectus and Statement. The Sub-Adviser shall maintain compliance procedures
that it reasonably believes are adequate to ensure its compliance with the
Advisers Act.
(v) In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the 1940 Act and will use its best efforts to
cause each Portfolio to comply with the adequate diversification requirements of
Section 817(h)(2) and the Subchapter M qualification requirements of Section
851(b)(2) and (3) of the Internal Revenue Code, applicable to each Portfolio,
and the regulations promulgated thereunder, to the extent such compliance is
within the Sub-Advisor's control.
(vi) The Sub-Adviser has adopted a written code of ethics that it reasonably
believes complies with the current requirements of Rule 17j-1 under the 1940
Act, which it will provide to the Company. The Sub-Adviser has policies and
procedures regarding the detection and prevention and the misuse of material,
nonpublic information by the Sub-Adviser and its employees as required by the
Xxxxxxx Xxxxxxx and Securities Fraud Enforcement Act of 1988.
3. BROKERAGE
The Sub-Adviser is responsible for decisions to buy and sell securities for each
Portfolio, broker-dealer selection, and negotiation of brokerage commission
rates. It is the Sub-Adviser's general policy in selecting a broker to effect a
particular transaction to seek to obtain "best execution," which means prompt
and efficient execution of the transaction at the best obtainable price with
payment of commissions which are reasonable in relation to the value of the
brokerage services provided by the broker.
Consistent with this policy, the Sub-Adviser, in selecting broker-dealers and
negotiating brokerage commission rates, will take all relevant factors into
consideration, including, but not limited to: the best price available; the
reliability,
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integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the applicable Portfolio on a
continuing basis. Subject to such policies and procedures as the Board may
determine, the Sub-Adviser shall have discretion to effect investment
transactions for each Portfolio through broker-dealers (including, to the extent
permissible under applicable law, broker-dealers affiliated with the
Sub-Adviser) who provide brokerage and/or research services, as such services
are defined in section 28(e) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and to cause such Portfolio to pay any such broker-dealers an
amount of commission 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 Sub-Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage or research services provided by such broker-dealer, viewed in terms
of either that particular investment transaction or the Sub-Adviser's overall
responsibilities with respect to such Portfolio and other accounts as to which
the Sub-Adviser exercises investment discretion (as such term is defined in
section 3(a)(35) of the 1934 Act). Allocation of orders placed by the
Sub-Adviser on behalf of a Portfolio to such broker-dealers shall be in such
amounts and proportions as the Sub-Adviser shall determine in good faith in
conformity with its responsibilities under applicable laws, rules and
regulations. The Sub-Adviser will submit reports on such allocations to the
Manager regularly as requested by the Manager, in such form as may be mutually
agreed to by the parties hereto, indicating the broker-dealers to whom such
allocations have been made and the basis therefor.
4. INFORMATION PROVIDED TO THE COMPANY AND THE MANAGER
The Sub-Adviser shall keep the Company and the Manager informed of developments
materially affecting each Portfolio's holdings, and shall, on its own
initiative, furnish the Company and the Manager from time to time with whatever
information the Sub-Adviser believes is appropriate for this purpose.
5. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, the
Manager will pay the Sub-Adviser an annual fee calculated at the rate specified
in Schedule B hereto. The fee is calculated daily and paid quarterly. The fee
for the period from the Effective Date (defined below) of the Agreement to the
end of the month during which the Effective Date occurs shall be prorated
according to the proportion that such period bears to the full quarterly period.
Upon any termination of this Agreement before the end of a quarter, the fee for
such part of that quarter shall be prorated according to the proportion that
such period bears to the full quarterly period and shall be payable upon the
date of termination of this Agreement. For the purpose of determining fees
payable to the Sub-Adviser, the value of each Portfolio's net assets shall be
computed at the times and in the manner specified in the Prospectus and/or the
Statement of Additional Information.
6. EXPENSES
The Sub-Adviser shall bear all expenses incurred by it in connection with the
performance of its services under this Agreement. Each Portfolio will bear
certain other expenses to be incurred in its operation, including, but not
limited to, investment advisory fees, sub-advisory fees (other than sub-advisory
fees paid pursuant to this Agreement) and administration fees; fees for
necessary professional and brokerage services; costs relating to local
administration of securities; fees for any pricing service; the costs of
regulatory compliance; and pro rata costs associated with maintaining the
Company's legal existence and shareholder relations. All other expenses not
specifically assumed by the Sub-Adviser hereunder or by the Manager under the
Management Agreement are borne by the applicable Portfolio or the Company.
7. STANDARD OF CARE
The Sub-Adviser shall exercise its best judgment and shall act in good faith in
rendering the services listed in paragraphs 2 and 3 above. The Sub-Adviser, its
officers, directors and employees shall not be liable for any error of
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judgment or mistake of law or for any loss suffered by any Portfolio, any
shareholder of any Portfolio or the Manager in connection with the matters to
which this Agreement relates, provided that nothing in this Agreement shall be
deemed to protect or purport to protect the Sub-Adviser against any liability to
the Manager, the Company or to the shareholders of any Portfolio to which the
Sub-Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or by
reason of the Sub-Adviser's reckless disregard of its obligations and duties
under this Agreement.
8. TERM OF AGREEMENT
This Agreement shall become effective as of _________, 2000 (the "Effective
Date") and shall continue for an initial two-year term and shall continue
thereafter so long as such continuance is specifically approved at least
annually as required by the 1940 Act. This Agreement is terminable with respect
to any Portfolio, without penalty, on 60 days' written notice, by the Board or
by vote of holders of a majority (as defined in the 1940 Act and the rules
thereunder) of the outstanding voting securities of such Portfolio, or upon 60
days' written notice, by the Sub-Adviser. This Agreement will also terminate
automatically in the event of its assignment (the term "assignment" having the
meaning defined in Section 2(a)(4) of the 1940 Act and the rules thereunder).
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
It is understood that the Sub-Adviser now acts, will continue to act and may act
in the future as investment manager or adviser to fiduciary and other managed
accounts, and as investment manager or adviser to other investment companies,
including any offshore entities, or accounts, and the Company has no objection
to the Sub-Adviser's so acting, provided that whenever a Portfolio and one or
more other investment companies or accounts managed or advised by the
Sub-Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula believed to
be equitable to each company and account. The Company and the Manager recognize
that in some cases this procedure may adversely affect the size of the position
obtainable for such Portfolio. In addition, it is understood that the persons
employed by the Sub-Adviser to assist in the performance of the Sub-Adviser's
duties under this Agreement will not devote their full time to such service and
nothing contained in this Agreement shall be deemed to limit or restrict the
right of the Sub-Adviser or any affiliate of the Sub-Adviser to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature.
10. NOTICES
Any notices under this Agreement shall be in writing, addressed and delivered or
mailed postage paid to the other parties at such address as such other parties
may designate for the receipt of such notice. Until further notice to the other
parties, it is agreed that the address of each party is as follows:
(a) To the Manager:
Prudential Investments Fund Management LLC
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000-0000
Attn: General Counsel
(c) To the Sub-Adviser:
A I M Capital Management, Inc.
President
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn.: President
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cc: General Counsel
11. REPRESENTATIONS
The Company represents that a copy of the Articles of Incorporation together
with all amendments thereto, is on file with the Secretary of State of Maryland.
Each of the parties hereto represents that the Agreement has been duly
authorized, executed and delivered by all required action.
12. USE OF NAME
The names "A I M Capital Management, Inc.", "AIM Capital Management", "AIM
Capital" or "AIM" (collectively the "AIM Names") may be used only as provided in
the Agreement with respect to Trademarks and Fund Names among A I M Management
Group Inc., the Sub-Adviser and the Manager. At such times as this Agreement
shall no longer be in effect, the Company and Manager shall cease to use such
names or any other name indicating that it is advised by or otherwise connected
with the Sub-Adviser and shall promptly change its name accordingly. The Company
and Manager each acknowledge that it has authority to use the AIM Names through
permission of the Sub-Adviser, and agrees that the Sub-Adviser reserves to
itself and any successor to its business the right to grant the non-exclusive
right to use the aforementioned names or any similar names to any other
corporation or entity, including but not limited to any investment company of
which the Sub-Adviser or any subsidiary or affiliate thereof or any successor to
the business of any thereof shall be the investment adviser.
13. SEVERABILITY
If any provision of this Agreement is found to be unenforceable, then this
Agreement shall be deemed to be amended by modifying such provision to the
extent necessary to make it legal and enforceable while preserving its intent.
The remainder of this Agreement shall not be affected by such modification.
14. QUESTIONS OF INTERPRETATION
Any question of interpretation of any term or provision of this Agreement having
a counterpart in or otherwise derived from a term or provision of the 1940 Act
or the Advisers Act shall be resolved by reference to such term or provision of
the 1940 Act or the Advisers Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and Exchange Commission
issued pursuant to said Acts. In addition, where the effect of a requirement of
the 1940 Act or the Advisers Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the Securities and Exchange Commission,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first written above.
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC
Attest:______________________ By: _________________________
Name: _________________________
Title: _________________________
A I M CAPITAL MANAGEMENT, INC.
Attest:______________________ By: _________________________
Name: _________________________
Title: _________________________
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SCHEDULE A
Portfolios
----------
SP AIM Aggressive Growth Portfolio
SP AIM Growth and Income Portfolio
A-1
SCHEDULE B
Fee Schedule
------------
Pursuant to Section 5 of the Sub-Advisory Agreement between Prudential
Investments Fund Management LLC and A I M Capital Management, Inc. (the
"Sub-Adviser"), the fees payable to the Sub-Adviser shall be calculated by
applying the following rates to the average daily net assets of each Portfolio
as indicated below:
SP AIM GROWTH AND INCOME PORTFOLIO
Net Assets Rate
---------- ----
First $500 million..................................................... 0.55%
Over $500 million...................................................... 0.50%
SP AIM AGGRESSIVE GROWTH PORTFOLIO
Net Assets Rate
---------- ----
First $200 million..................................................... 0.60%
Over $200 million...................................................... 0.55%
B-1
