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EXHIBIT (4)(ii)
PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2
Subadvisory Agreement
Agreement made as of this 23rd day of March, 2001 between Prudential
Investments Fund Management LLC (PIFM or the Manager) and Xxxxxxxx Associates
LLC (the Subadviser or Xxxxxxxx).
WHEREAS, the Manager has entered into a Management Agreement, dated March
23, 2001 (the Management Agreement), with Prudential Variable Contract Account-2
(the Fund), a diversified open-end management investment company registered
under the Investment Company Act of 0000 (xxx 0000 Xxx), pursuant to which PIFM
will act as Manager of the Fund; 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
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and the Committee of
the Fund, the Subadviser shall manage the investment operations of 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 (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
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 Plan of Operations, Rules and Regulations, Prospectus of the
Fund, and the instructions and directions of the Manager and of
the Committee 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
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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 Committee of the Fund
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
Committee 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 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 Committee such periodic and
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special reports as the Committee may reasonably request. The
Subadviser shall make reasonably available its employees and
officers for consultation with any of the Committee members,
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.
Conversely, Subadviser and Manager understand and agree that
Manager manages the Fund in a manager-of-managers style, which
contemplates that Manager will, among other things, (i)
continually evaluate the performance of the Subadviser through
quantitative and qualitative analysis and consultations with such
Subadviser (ii) periodically make recommendations to the Fund's
Committee as to whether the contract with one or more Subadvisers
should be renewed, modified, or terminated and (iii) periodically
report to the Fund's Committee regarding the results of its
evaluation and monitoring functions. 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 Committee members
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 directors, 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 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 of the Commission under the 1940 Act any such records as are
required to be maintained by it pursuant to paragraph 1(a) hereof.
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
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discussed above, shall oversee and review the Subadviser's performance of its
duties under this Agreement.
3. 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.
4. For the services provided pursuant to this Agreement, the Manager
shall pay the Subadviser as full compensation therefor, an annual fee (payable
quarterly) equal to 0.125% of the Fund's average daily net assets under the
management of the Subadviser.
5. 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 Fund at any
time, without the payment of any penalty, by the Committee of the Fund 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' 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.
6. Nothing in this Agreement shall limit or restrict the right of any
of the Subadviser's directors, officers, or employees who may also be a
Committee member, 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 participants, sales literature or other material prepared for
distribution to participants in 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.
9. This Agreement shall be governed by the laws of the State of New
Jersey.
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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 FUND MANAGEMENT LLC
BY:
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Xxxxxx X. Xxxxx
Executive Vice President
XXXXXXXX ASSOCIATES LLC
BY:
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Xxxxx X. Xxxxxx
Senior Vice President
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