PRUDENTIAL INVESTMENT PORTFOLIOS 12 Prudential Short Duration Muni High Income Fund SUBADVISORY AGREEMENT
PRUDENTIAL INVESTMENT PORTFOLIOS 12
Prudential Short Duration Muni High Income Fund
Agreement made as of this 23rd day of May, 2014 between Prudential Investments LLC (PI or the Manager), a New York limited
liability company, and Prudential Investment Management, Inc. (PIM or the Subadviser), a New Jersey corporation.
WHEREAS, the Manager has entered into a Management Agreement
(the Management Agreement) dated May 23, 2014, with Prudential Investment Portfolios 12, a Delaware business trust (the Trust),
on behalf of its series, Prudential Short Duration Muni High Income Fund, 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 Prudential
Short Duration Muni High Income Fund (the Fund), a series of the Trust; and
WHEREAS, the Manager, acting pursuant to the Management Agreement, desires to retain the Subadviser to provide investment advisory services to the Fund and to manage such portion of the Fund as the Manager shall from time to time direct, 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
Board of Trustees of the Trust, the Subadviser shall manage such portion of the Fund's portfolio as delegated to the Subadviser
by the Manager, including the purchase, retention and disposition thereof, in accordance with the Fund's investment objectives,
policies and restrictions as stated in its then current 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 Fund'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 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 copies of the Agreement and Declaration of Trust of the Trust,
as amended, the By-laws of the Trust, the Prospectus of the Fund, and the Fund's valuation procedures and any other procedures
adopted by the Board applicable to the Fund (and any amendments thereto) as provided to it by the Manager (the Fund Documents)
and with the instructions and directions of the Manager and of the Board of Trustees of the Fund, co-operate with the Manager'
(or their designees') personnel responsible for monitoring the Fund's compliance 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.
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 (the Commission). The Manager shall provide Subadviser timely with copies of
any updated Fund Documents.
(iii) The Subadviser shall determine the securities and futures contracts to be purchased or sold by such portion of the Fund's portfolio, as applicable, and may place orders with or through such persons, brokers, dealers or futures commission merchants (including but not limited to any broker, dealer or futures commission merchants affiliated with the Manager or the Subadviser) to carry out the policy with respect to brokerage as set forth in the Fund's Prospectus or as the Board of Trustees may direct in writing 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. The Manager (or Subadviser) to the Fund each shall have discretion to effect investment transactions for the Fund through broker-dealers (including, to the extent legally permissible, broker-dealers affiliated with the Subadviser(s)) qualified to obtain best execution of such transactions 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 the Fund to pay any such broker-dealers an amount of commission
for effecting a portfolio transaction in excess of the amount
of commission another broker-dealer would have charged for effecting that transaction, if the brokerage or research services provided
by such broker-dealer, viewed in light of either that particular investment transaction or the overall responsibilities of the
Manager (or the Subadviser) with respect to the Fund and other accounts as to which they or it may exercise investment discretion
(as such term is defined in Section 3(a)(35) of the 1934 Act), are reasonable in relation to the amount of commission. Pursuant
to the rules promulgated under Section 326 of the USA Patriot Act, broker-dealers are required to obtain, verify and record information
that identifies each person who opens an account with them. In accordance therewith, broker-dealers whom the Subadviser selects
to execute transactions in the Fund's account may seek identifying information about the Fund.
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 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 effected by it as 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 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 or an affiliate shall provide the Fund's
custodian (the Custodian) on each business day with information relating to all transactions concerning the portion of the Fund'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, the
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 Fund's Board as to whether the contract
with one or more subadvisers should be renewed, modified, or terminated, and (iii) periodically report to the Fund'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.
(vii) The Subadviser acknowledges that the Manager and the Fund intend to rely on Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17 e-1 under the 1940 Act, and the Subadviser hereby agrees that it shall not consult with any other subadviser to the Fund with respect to transactions in securities for the Fund's portfolio or any other transactions of Fund assets.
(b) The Subadviser shall authorize and permit any of its directors, officers and employees who may be elected as Trustees 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 l(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 or any successor regulation. 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 or any
successor regulation any such records as are required to be maintained by it pursuant to paragraph l(a) hereof.
(d) In connection with its duties under this Agreement, 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 maintain a written code of ethics
(the Code of Ethics) that it reasonably believes complies with the requirements of Rule 17j-1 under the 1940 Act and Rule 204A-1
under the Advisers Act, a copy of which shall be provided to the Manager and the Fund, and shall institute procedures reasonably
necessary to prevent any Access Person (as defined in Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act) from
violating its Code of Ethics. The Subadviser shall follow such Code of Ethics in performing its services under this Agreement.
Further, the Subadviser represents that it maintains adequate compliance procedures to ensure its compliance with the 1940 Act,
the Advisers Act, and other applicable federal and state laws and regulations. In particular, the Subadviser represents that it
has policies and procedures regarding the detection and prevention of the misuse of material, non public information by the Subadviser
and its employees as required by the applicable federal securities laws.
(f)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 l(d) hereof as the Manager may reasonably request.
(g) The Subadviser shall be responsible for the voting of
all shareholder proxies with respect to the investments and securities held in the Fund's portfolio, subject to such reasonable
reporting and other requirements as shall be established by the Manager.
(h) The Subadviser acknowledges that it is responsible for
evaluating whether market quotations are readily available for the Fund's portfolio securities, evaluating whether those market
quotations are reliable for purposes of valuing the Fund's portfolio securities, evaluating whether those market quotations are
reliable for determining the Fund's net asset value per share and promptly notifying the Manager upon the occurrence of any significant
event with respect to any of the Fund's portfolio securities in accordance with the requirements of the 1940 Act and any related
written guidance from the Commission and the Commission staff. Upon reasonable request from the Manager, the Subadviser (through
a qualified person) will assist the valuation committee of the Fund or the Manager in valuing securities of the Fund as may be
required from time to time, including making available information of which the Subadviser has knowledge related to the securities
being valued.
(i) The Subadviser shall provide the Manager with any information reasonably requested regarding its management of the Fund's portfolio required for any shareholder report, amended registration statement, or prospectus supplement to be filed by the Fund with the Commission. The Subadviser shall provide the Manager with any reasonable certification, documentation or other information reasonably requested or required by the Manager for purposes of the certifications of shareholder reports by the Fund's principal financial officer and principal executive officer pursuant to the Sarbanes Oxley Act of 2002 or other law or regulation. The Subadviser shall promptly inform the Fund and the Manager if the Subadviser becomes aware of any information in the Prospectus that is (or will become) materially inaccurate or incomplete.
(j) The Subadviser shall comply with the Fund Documents provided to the Subadviser by the Manager or the Fund. The Subadviser shall
notify the Manager as soon as reasonably practicable upon detection of any material breach of such Fund Documents.
(k) The Subadviser shall keep the Fund and the Manager informed of developments relating to its duties as Subadviser of which the
Subadviser has, or should have, knowledge that would materially affect the Fund. In this regard, the Subadviser shall provide the
Trust, the Manager, and their respective officers with such periodic reports concerning the obligations the Subadviser has assumed
under this Agreement as the Fund and the Manager may from time to time reasonably request. Additionally, prior to each Board meeting,
the Subadviser shall provide the Manager and the Board with reports regarding the Subadviser's management of the Fund's portfolio
during the most recently completed quarter, in such form as may be mutually agreed upon by the Subadviser and the Manager. The
Subadviser shall certify quarterly to the Fund and the Manager that it and its "Advisory Persons" (as defined in Rule
17j-1 under the ▇▇▇▇ ▇▇▇) have complied materially with the requirements of Rule 17j-1 under the 1940 Act during the previous quarter
or, if not, explain what the Subadviser has done to seek to ensure such compliance in the future.
Annually, the Subadviser shall furnish a written report, which complies with the requirements of Rule 17j-1 and Rule 38a-1 under the 1940 Act, concerning the Subadviser's Code of Ethics and compliance program, respectively, to the Fund and the Manager. Upon written request of the Fund or the Manager with respect to material violations of the Code of Ethics directly affecting the Fund, the Subadviser shall permit representatives of the Fund or the Manager to examine reports (or summaries of the reports) required to be made by Rule 17j-l(d)(1) relating to enforcement of the Code of Ethics.
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. The Manager shall provide (or cause the Custodian to
provide) timely information to the Subadviser regarding such matters as the composition of assets in the portion of the Fund managed
by the Subadviser, cash requirements and cash available for investment in such portion of the Fund, and all other information as
may be reasonably necessary for the Subadviser to perform its duties hereunder (including any excerpts of minutes of meetings of
the Board of Trustees of the Fund that affect the duties of the Subadviser).
3. For the services provided 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. Expense caps or fee waivers
for the Fund that may be agreed to by the Manager, but not agreed to by the Subadviser, shall not cause a reduction in the amount
of the payment to the Subadviser by the Manager.
4. 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, provided, however, that nothing in this Agreement shall be deemed to waive any rights the Manager or the Fund may have against the Subadviser under federal or state securities laws. The Manager shall indemnify the Subadviser, its affiliated persons, its officers, directors and employees, for any liability and expenses, including attorneys' fees, which may be sustained as a result of the Manager's willful misfeasance, bad faith, gross negligence, reckless disregard of its duties hereunder or violation of applicable law, including, without limitation, the 1940 Act and federal and state securities laws. The Subadviser shall indemnify the Manager, their affiliated persons, their officers, directors and employees, for any liability and expenses, including attorneys' fees, which may be sustained as a result of the Subadviser's willful misfeasance, bad faith, gross negligence, or reckless disregard of its duties hereunder or violation of applicable law, including, without limitation, the 1940 Act and federal and state securities laws.
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 Board or by vote of a majority of the outstanding
voting securities (as defined in the ▇▇▇▇ ▇▇▇) 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 ▇▇▇▇ ▇▇▇) or upon the termination of the Management Agreement.
The Subadviser agrees that it will promptly notify the Fund and the Manager of the occurrence of any event that would result in
the assignment (as defined in the ▇▇▇▇ ▇▇▇) of this Agreement, including, but not limited to, a change of control (as defined in
the ▇▇▇▇ ▇▇▇) of the Subadviser. Any notice or other communication required to be given pursuant to this Agreement shall be deemed
duly given if delivered or mailed by registered mail, postage prepaid, (1) to the Manager at Gateway Center Three, ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇- 4077, Attention: Secretary; (2) to the Fund at Gateway Center Three, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Secretary; or (3) to the Subadviser at Gateway Center Two, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, Attention: Chief Legal Officer.
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 Trustee, 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 shareholders, sales literature
or other material prepared for distribution to shareholders of 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, but the consent of the Fund must be obtained in conformity with the requirements of the 1940 Act.
9. This Agreement shall be governed by the laws of the State of New York.
10. 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, shall be resolved by reference to such term or provision of the 1940 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 Commission issued pursuant to the 1940 Act. In addition, where the effect of a requirement of the 1940 Act, reflected
in any provision of this Agreement, is related by rules, regulation or order of the Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
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
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
PRUDENTIAL INVESTMENT MANAGEMENT, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
SCHEDULE A
PRUDENTIAL INVESTMENT PORTFOLIOS 12
As compensation for services provided by Prudential Investment Management, Inc. (PIM), Prudential Investments LLC ( the Manager)
will pay PIM an advisory fee on the net asset value of the portion of the Fund's portfolio that is managed by PIM that
is equal, on an annualized basis, to the following:
| Fund | Advisory Fee |
| Prudential Short Duration Muni High Income Fund | 0.275% of average daily net assets |
Dated as of May 23, 2014.