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EXHIBIT (4)(i)
PRUDENTIAL VARIABLE CONTRACT ACCOUNT - 11
Management Agreement
Agreement made this 20th day of April, 2001, between Prudential
Variable Contract Account -11, a separate account of The Prudential Insurance
Company of America (the Fund), and Prudential Investments Fund Management LLC,
a New York limited liability company (the Manager).
W I T N E S S E T H
WHEREAS, the Fund is a diversified, open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
1940 Act); and
WHEREAS, the Fund desires to retain the Manager to render or contract
to obtain as hereinafter provided investment advisory services to the Fund and
the Fund also desires to avail itself of the facilities available to the
Manager with respect to the administration of its day to day business affairs,
and the Manager is willing to render such investment advisory and
administrative services;
NOW, THEREFORE, the parties agree as follows:
1. The Fund hereby appoints the Manager to act as manager of the Fund
and as administrator of its business affairs for the period and on the terms
set forth in this Agreement. The Manager accepts such appointment and agrees
to render the services herein described, for the compensation herein provided.
The Manager is authorized to enter into a subadvisory agreement with
Prudential Investment Management, Inc. (Prudential Investments), or any other
sub-adviser, whether or not affiliated with Prudential (each, a Subadviser)
pursuant to which such Subadviser shall furnish to the Fund the investment
advisory services in connection with the management of the Fund (each, a
Subadvisory Agreement). The Manager is authorized to retain more than one
Subadviser, and if there is more than one Subadviser, the Manager is
authorized to allocate the Fund's assets among the Subadvisers. The Manager
will continue to have responsibility for all investment advisory services
furnished pursuant to any Subadvisory Agreement. The Fund and Manager
understand and agree that Manager will manage the Fund in a
manager-of-managers style, which contemplates that Manager will, among other
things, (i) continually evaluate the performance of each 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. The Fund recognizes that
a Subadviser's services may be terminated or modified pursuant to this
process, and that the Manager may appoint a new Subadviser for a Subadviser
that is so removed.
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2. Subject to the supervision of the Committee of the Fund, the
Manager shall administer the Fund's business affairs and, in connection
therewith, shall furnish the Fund with office facilities and with clerical,
bookkeeping and recordkeeping services at such office facilities and, subject
to Section 1 hereof and any Subadvisory Agreement, the Manager shall manage
the investment operations of the Fund and the composition of the Fund's
portfolio investments, including the purchase, retention and disposition
thereof, in accordance with the Fund's investment objectives, policies and
restrictions as stated in the Fund's SEC registration statement, and subject
to the following understandings:
(a) The Manager (or a Subadviser under the Manager's
supervision) shall provide supervision of the Fund's investments, and
shall determine from time to time what investments or 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.
(b) The Manager, in the performance of its duties and
obligations under this Agreement, shall act in conformity with the
Plan of Operations, Rules and Regulations of the Fund, the Fund's SEC
registration statement, and the instructions and directions of the
Committee of the Fund, and will conform to and comply with the
requirements of the 1940 Act and all other applicable federal and
state laws and regulations. In connection therewith, the Manager
shall, among other things, prepare and file (or cause to be prepared
and filed) such reports as are, or may in the future be, required by
the Securities and Exchange Commission.
(c) The Manager (or the Subadviser under the Manager's
supervision) shall determine the securities and futures contracts to
be purchased or sold by the Fund and will place orders pursuant to its
determinations with or through such persons, brokers, dealers or
futures commission merchants (including but not limited to Prudential
Securities Incorporated) in conformity with the policy with respect to
brokerage as set forth in the Fund's SEC Registration Statement or as
the Committee may direct from time to time. In providing the Fund
with investment supervision, it is recognized that the Manager (or the
Subadviser under the Manager's supervision) will give primary
consideration to securing the most favorable price and efficient
execution. Consistent with this policy, the Manager (or Subadviser
under the Manager's supervision) 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 other clients of the Manager (or Subadviser) may be a party. It
is understood that Prudential Securities Incorporated (or a
broker-dealer affiliated with a 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
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understood that it is desirable for the Fund that the Manager (or
Subadviser) have access to supplemental investment and market research
and security and economic analysis provided by brokers or futures
commission merchants, and that such brokers or FCMs may execute
brokerage transactions at a higher cost to the Fund than may result
when allocating brokerage to other brokers or futures commission
merchants on the basis of seeking the most favorable price and
efficient execution. Therefore, the Manager (or the Subadviser under
the Manager's supervision) is authorized to pay higher brokerage
commissions for the purchase and sale of securities and futures
contracts for the Fund to brokers or futures commission merchants who
provide such research and analysis, 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 broker or futures commission merchant may be useful
to the Manager (or the Subadviser) in connection with its services to
other clients.
On occasions when the Manager (or a Subadviser under the
Manager's supervision) deems the purchase or sale of a security or a
futures contract to be in the best interest of the Fund as well as
other clients of the Manager (or the Subadviser) the Manager (or
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 so 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 Manager (or the
Subadviser) in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such
other clients.
(d) The Manager (or the Subadviser under the Manager's
supervision) shall maintain all books and records with respect to the
Fund's portfolio transactions and shall render to the Fund's Committee
such periodic and special reports as the Committee may reasonably
request.
(e) The Manager (or the Subadviser under the Manager's
supervision) shall be responsible for the financial and accounting
records to be maintained by the Fund (including those being maintained
by the Fund's Custodian).
(f) The Manager (or the Subadviser under the Manager's
supervision) shall provide the Fund's Custodian on each business day
information relating to all transactions concerning the Fund's assets.
(g) The investment management services of the Manager to the
Fund under this Agreement are not to be deemed exclusive, and the
Manager shall be free to render similar services to others.
(h) The Manager shall make reasonably available its
employees and
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officers for consultation with any of the Committee members or
officers or employees of the Fund with respect to any matter discussed
herein, including, without limitation, the valuation of the Fund's
securities.
3. The Fund has delivered to the Manager copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) Rules and Regulations of the Fund (such Rules and
Regulations, as in effect on the date hereof and as amended from time
to time, are herein called the "Rules and Regulations");
(b) Certified resolutions of the Committee members of the
Fund authorizing the appointment of the Manager and approving the
form of this agreement;
(c) Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-3 (the Registration
Statement), as filed with the Securities and Exchange Commission (the
Commission) relating to the Fund and its shares of beneficial interest
and all amendments thereto; and
(d) Prospectus and Statement of Additional Information of
the Fund.
4. The Manager shall authorize and permit any of its 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. All services to be
furnished by the Manager under this Agreement may be furnished through the
medium of any such officers or employees of the Manager.
5. The Manager shall keep the Fund's books and records required to
be maintained by it pursuant to paragraph 2 hereof. The Manager agrees that
all records which it maintains for the Fund are the property of the Fund, and
it will surrender promptly to the Fund any such records upon the Fund's
request, provided however that the Manager may retain a copy of such records.
The Manager 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
the Manager pursuant to Paragraph 2 hereof.
6. During the term of this Agreement, the Manager shall pay the
following expenses:
(a) the salaries and expenses of all Committee members and
officers and employees of the Fund and the Manager,
(b) all expenses incurred by the Manager in connection with
managing the ordinary course of the Fund's business, other than those
assumed by the Fund herein,
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(c) the costs and expenses payable to a Subadviser pursuant
to a Subadvisory Agreement,
(d) the registration of the Fund and its shares of capital
stock for the offer or sale under federal and state securities laws,
(e) the preparation, printing and distribution of
prospectuses for the Fund, and advertising and sales literature
referring to the Fund for use and offering any security to the public,
(f) the preparation and distribution of reports and acts of
the Fund required by and under federal and state securities laws,
(g) the legal and auditing services that may be required by
the Fund,
(h) the conduct of annual and special meetings of persons
having voting rights, and
(i) the custodial and safekeeping services that may be
required by the Fund.
7. The Fund assumes and will pay the expenses described below:
(a) brokers' commissions, issue or transfer taxes and other
charges and fees directly attributable to the Fund in connection with
its securities and futures transactions,
(b) all taxes and corporate fees payable by the Fund to
federal, state or other governmental agencies,
(c) the cost of fidelity, Committee members' and officers'
and errors and omissions insurance,
(d) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the
Fund's business, and
(e) any expenses assumed by the Fund pursuant to a
Distribution and Service Plan adopted in a manner that is consistent
with Rule 12b-1 under the 1940 Act.
8. For the services provided and the expenses assumed pursuant to
this Agreement, the Fund will pay to the Manager as full compensation therefor
a fee at the annual rate of 0.25% of the Fund's average daily net assets.
9. The Manager shall not be liable for any error of judgment or
for any loss
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suffered by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in Section
36(b)(3) of the 0000 Xxx) or loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
10. 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 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 1940 Act). Manager shall provide written notice
to the New Jersey Department of Banking and Insurance (NJ) at least 30 days in
advance of Manager's termination of this Agreement, and shall notify NJ of a
termination of this Agreement initiated by the Committee or securityholders
immediately after it learns of such termination.
11. Nothing in this Agreement shall limit or restrict the right of
any officer or employee of the Manager 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 dissimilar nature, nor limit or restrict
the right of the Manager to engage in any other business or to render services
of any kind to any other corporation, firm, individual or association.
12. Except as otherwise provided herein or authorized by the
Committee of the Fund from time to time, the Manager shall for all purposes
herein be deemed to be an independent contractor, and shall have no authority
to act for or represent the Fund in any way or otherwise be deemed an agent of
the Fund.
13. During the term of this Agreement, the Fund agrees to furnish
the Manager 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 in any way
to the Manager, prior to use thereof and not to use such material if the
Manager reasonably objects in writing within five business days (or such other
time as may be mutually agreed) after receipt thereof. In the event of
termination of this Agreement, the Fund will continue to furnish to the
Manager copies of any of the above- mentioned materials which refer in any way
to the Manager. Sales literature may be furnished to the Manager hereunder by
first-class or overnight mail, facsimile transmission equipment or hand
delivery. The Fund shall furnish or otherwise make available to the Manager
such other information relating to
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the business affairs of the Fund as the Manager at any time, or from time to
time, reasonably requests in order to discharge its obligations hereunder.
14. 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. No amendment or modification of this Agreement shall be
effective unless the amendment or modification is: (a) filed with the New
Jersey Department of Banking and Insurance (the NJDBI) at least 30 days prior
to the proposed effective date; (b) not disapproved by the NJDBI; (c) made in
writing; and (d) signed by the parties hereto.
15. 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 Prudential Investments Fund
Management LLC at Gateway Center Three, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX
00000-0000, Attention: Secretary; or (2) to Prudential Variable Contract
Account-11 at Gateway Center Three, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX
00000-0000, Attention: President.
16. This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey.
17. This Agreement supercedes any previous investment management
agreement with respect to the Fund.
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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 VARIABLE CONTRACT ACCOUNT - 11
By: /s/ Xxxxx X. Xxxxxxx, Xx.
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Xxxxx X. Xxxxxxx, Xx.
Chairman, The Prudential Variable Contract Account - 11
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
By: Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Executive Vice President
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