PRUDENTIAL EQUITY FUND, INC.
SUBADVISORY AGREEMENT
Agreement made as of this 1st day of February, 2001 between Prudential
Investments Fund Management LLC (PIFM or the Manager) and GE Asset Management,
Inc. (the Subadviser or GEAM).
WHEREAS, the Manager has entered into a Management Agreement, dated
February 1, 2001 (the Management Agreement), with Prudential Equity Fund, Inc.
(the Fund), a diversified, open-end management investment company registered
under the Investment Company Act of 0000 (xxx 0000 Xxx), pursuant to which PIFM
acts as Manager of the Fund; and
WHEREAS, PIFM 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 Directors
of the Fund, the Subadviser shall manage such portion of the investment
operations of the Fund as the Manager shall direct and shall manage 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 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 Articles of
Incorporation, By-Laws and Prospectus of the Fund and with the
instructions and directions of the Manager and of the Board of
Directors of the Fund, cooperate with the Manager's (or its
designee's) 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 and all other
applicable federal and state laws and regulations with respect to the
portion of Fund assets that it manages. 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 such portion of each Fund's
series, as applicable, 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 Fund's Prospectus or as the
Board of Directors 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 (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 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 Board of Directors 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 Board of Directors
such periodic and special reports as the Directors
may reasonably request. The Subadviser shall make reasonably available
its employees and officers for consultation with any of the Directors
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 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
the subadviser 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.
(b) The Subadviser shall authorize and permit any of its directors,
officers and employees who may be elected as Directors 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.
(d) The Subadviser agrees to maintain adequate compliance procedures to
ensure its compliance with the 1940 Act, the Investment Advisers Act of
1940 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.
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. 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.
4. The Subadviser, its officers and directors, and any person who controls
the Subadviser within the meaning of Section 15 of the Securities Act of
1933, as amended, shall not be liable for any error of judgment or for any
loss suffered by the Subadviser, 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.
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 of Directors
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' 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.
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
director, 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.
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: /s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx
Executive Vice President
GE ASSET MANAGEMENT, INC.
BY: /s/ Xxxx Xxxxxx
-------------------
Xxxx Xxxxxx
Vice President and Associate General Counsel
SCHEDULE A
PRUDENTIAL EQUITY FUND, INC.
As compensation for GEAM's services, PIFM will pay GEAM a fee equal, on an
annualized basis, to the following:
0.30 of 1% of the first $50 million of the average daily net assets under GEAM's
management;
0.20 of 1% of the next $250 million of the average daily net assets under GEAM's
management; and
0.15 of 1% over $300 million of the average daily net assets under GEAM's
management.
For purposes of computing the fees set out above, PIFM will aggregate the assets
of The Prudential Series Fund, Inc. - Equity Portfolio and Prudential Equity
Fund, Inc. that are under GEAM's management. The parties may aggregate the
assets of other Prudential mutual fund portfolios which GEAM may subadvise in
the future with the portfolios described above by amending this Schedule A. PIFM
will pay GE the fees set out above on a monthly basis.
