EXHIBIT (D)(12)
FORM OF SUBADVISORY AGREEMENT WITH
MERCURY ADVISORS
Strategic Partners Opportunity Funds
(formerly, Strategic Partners Series)
Strategic Partners Mid-Cap Value Fund
Agreement made as of this 22nd day of April, 2002, between Prudential
Investments LLC, a New York limited liability company ("PI" or the "Manager"),
and Fund Asset Management, L.P., doing business as Mercury Advisors (the
"Subadviser"), a Delaware limited partnership.
WHEREAS, the Manager has entered into a Management Agreement, dated
February 26, 2002 (the "Management Agreement"), with Strategic Partners
Opportunity Funds, a Delaware business trust (the "Trust"), on behalf of the
Strategic Partners Mid-Cap Value Fund (the "Fund"), a series of a
non-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 Fund; and
WHEREAS, PI desires to retain the Subadviser to provide investment
advisory services to the Fund and to manage such portion of the assets and
investment operations of the Fund as the Manager shall from time to time direct
(the "Segment"), 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 the Segment and
shall manage the composition of the Segment's portfolio, including the
purchase, retention and disposition thereof, in accordance with the
Fund'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 the Segment's
investments and shall determine from time to time what
investments and securities will be purchased, retained, sold
or loaned by the Segment, and what portion of the assets
thereof will be invested or held uninvested as cash. At the
inception of the Fund's operations, the Manager shall allocate
approximately 50% of the Fund's assets to the Segment.
Thereafter, under normal market conditions, in order to
maintain the allocation of approximately 50% of the Fund's
assets to the Segment, the Manager shall (1) allocate
approximately 50% of all of the Fund's daily cash inflows
(that is, purchases and reinvested distributions) and outflows
(that is, redemptions and expense items) to the Segment; (2)
periodically adjust the allocation of the Fund's daily cash
inflows and outflows between the Segment and
the remainder of the Fund's assets; or (3) otherwise rebalance
the Fund's assets. The Manager will base the timing of any
reallocations on the best interests of the Fund and its
shareholders.
(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 assets to be
purchased or sold by the Segment as provided herein and will
place orders with or through such persons, brokers or dealers
to carry out the policy with respect to brokerage set forth in
the Trust's registration statement or as the Board of Trustees
or the Manager may direct from time to time, in conformity
with federal securities laws and to the extent consistent with
best execution principles as established by the Securities and
Exchange Commission ("SEC"). In executing Fund transactions
and selecting brokers or dealers, the Subadviser will use its
best efforts to seek on behalf of the Fund the best overall
terms available. In assessing the best overall terms available
for any transaction, the Subadviser shall consider all factors
that it deems relevant, including the breadth of the market in
the security, the price of the security, the financial
condition and execution capability of the broker or dealer,
and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the
Subadviser may also consider the brokerage and research
services provided (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934). Consistent with any
guidelines established by the Board of Trustees of the Trust,
the Subadviser is authorized to negotiate and pay to a broker
or dealer who provides such brokerage and research services a
commission for executing a transaction for the Fund which is
in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if, but only
if, the Subadviser determines in good faith that such
commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or
dealer viewed in terms of that particular transaction or in
terms of the overall responsibilities of the Subadviser to the
Fund. In addition, the Subadviser is authorized to allocate
purchase and sale orders for securities to brokers or dealers
(including brokers and dealers that are affiliated with the
Manager, Subadviser or the Trust's principal underwriter) to
take into account the sale of shares of the Fund if the
Subadviser believes that the quality of the transaction and
the commission are comparable to what they would be with other
qualified firms. In no instance, however, will the Segment's
assets be purchased from or sold to the Manager, Subadviser,
the Trust's principal underwriter, or any affiliated person of
either the Trust, Adviser,
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the Subadviser or the principal underwriter, acting as
principal in the transaction, except to the extent permitted
by the SEC and the 1940 Act.
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 Trust's Board of Trustees such periodic and
special reports as the Trustees may reasonably request. The
Subadviser shall make reasonably available its employees and
officers for consultation with any of the Trustees 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 Segment, and shall provide the Manager with
such information upon the reasonable 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 Fund 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 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 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
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are the property of the Fund, and the Subadviser will surrender
within three business days to the Fund any of such records upon the
Fund's reasonable 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.
(c) 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.
(d) 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.
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. 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. (a) 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 Fund's
average daily net assets of the portion of the Fund managed by the
Subadviser as described in the attached Schedule A. This fee will be
computed daily and paid monthly.
(b) Except for expenses specifically assumed or agreed to be paid by
the Subadviser pursuant hereto, the Subadviser shall not be liable for
any organizational, operational or business expenses of the Manager or
the Trust including, without limitation, (a) interest and taxes, (b)
brokerage commissions and other costs in connection with the purchase
or sale of securities or other investment instruments with respect to
the Fund, and (c) custodian fees and expenses. Any reimbursement of
advisory fees required by any expense limitation provision of any law
shall be the sole responsibility of the Manager. The Manager and the
Subadviser shall not be considered as partners or participants in a
joint venture. The Subadviser will pay its own expenses incurred in
furnishing the services to be provided by it pursuant to this
Agreement.
5. (a) 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, 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.
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(b) Each party to this Agreement shall indemnify and hold harmless the
other party from and against any and all claims, losses, liabilities or
damages (including reasonable attorney's fees and other related
expenses) howsoever arising from or in connection with the performance
of the indemnifying party's obligations under this Agreement; provided,
however, that the indemnifying party's obligation under this Section 5
shall be reduced to the extent that the claim against, or the loss,
liability or damage experienced by the indemnified party is caused by
or is otherwise directly related to the indemnified party's own willful
misfeasance, bad faith or gross negligence, or to the reckless
disregard of its duties under this Agreement.
(c) The Manager acknowledges and agrees that the Subadviser makes no
representation or warranty, expressed or implied, that any level of
performance or investment result will be achieved by the Fund or the
Segment or that the Fund or the Segment will perform comparably with
any standard or index, including other clients of the Subadviser,
whether public or private.
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 for an initial period of two years, and at least annually thereafter,
in conformity with the requirements of the 1940 Act; provided, however, that
this Agreement may be terminated by the Trust, on behalf of the Fund, 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 Fund, 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 000 Xxxxxxxx Xxxx
Xxxx, Xxxxxxxxxx, XX 00000, Attention: Xxxxx X. Xxxxx, Esq.
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 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.
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8. During the term of this Agreement, the Manager agrees to furnish the
Subadviser at the address designated for delivery of notices in Section 6 hereto
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 or the Segment 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. Until the Manager delivers any revisions or supplements to the
documents described above to the Subadviser, the Subadviser shall be fully
protected in relying on the versions of such documents previously furnished by
the Manager to the Subadviser.
9. Notwithstanding any provision herein to the contrary, each party
hereto agrees that any Nonpublic Personal Information, as defined under Section
248.3(t) of Regulation S-P ("Regulation S-P"), promulgated under the
Xxxxx-Xxxxx-Xxxxxx Act (the "Act"), disclosed by a party hereunder is for the
specific purpose of permitting the other party to perform the services set forth
in this Agreement. Each party agrees that, with respect to such information, it
will comply with Regulation S-P and the Act and that it will not disclose any
Nonpublic Personal Information received in connection with this Agreement to any
other party, except to the extent as necessary to carry out the services set
forth in this Agreement and consistent with such other party's privacy notice to
its customers, or as otherwise permitted by Regulation S-P or the Act.
10. 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.
11. 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 FUND ASSET MANAGEMENT, L.P.
(D/B/A MERCURY ADVISORS)
By:__________________________________ By: __________________________________
Xxxxxx X. Xxxxx Xxxxxx X. Xxxx
Executive Vice President President
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Schedule A
Subadvisory Agreement dated April 22, 2002 between PI and
Fund Asset Management, L.P.
(d/b/a Mercury Advisors) with respect to the
Strategic Partners Mid-Cap Value Fund, a series of
Strategic Partners Opportunity Funds
Compensation Schedule
With respect to the Fund, the annual fee payable to the Subadviser as a
percentage of average daily net assets of the Fund managed by the Subadviser:
0.55% on the first $1 billion in Fund assets, 0.45% on Fund assets over $1
billion.
As of April 22, 2002
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