Exhibit(d)(2)(viii)
SUBADVISORY AGREEMENT WITH
HOTCHKIS AND WILEY CAPITAL MANAGEMENT, LLC
THE TARGET PORTFOLIO TRUST
LARGE CAPITALIZATION VALUE PORTFOLIO
Agreement made as of this 22nd day of October, 2001, between
Prudential Investments Fund Management LLC, a New York limited liability
company ("PIFM" or the "Manager"), and Hotchkis and Wiley Capital Management,
LLC (the "Subadviser"), a Delaware limited liability company.
WHEREAS, the Manager has entered into a Management Agreement, dated
November 9, 1992 (the "Management Agreement"), with The Target Portfolio Trust
(the "Trust"), a Delaware business trust, on behalf of the Large
Capitalization Value Portfolio (the "Portfolio"), a diversified, open-end
management investment company registered under the Investment Company Act of
1940 as amended (the "1940 Act"), pursuant to which PIFM acts as Manager of
the Portfolio; and
WHEREAS, PIFM desires to retain the Subadviser to provide investment
advisory services to the Portfolio and to manage such portion of the Portfolio
as the Manager shall from time to time direct, 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 such portion of
the investment operations of the Portfolio as the Manager shall direct
and shall manage the composition of the Portfolio's portfolio,
including the purchase, retention and disposition thereof, in
accordance with the Portfolio'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 such portion
of the Portfolio'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
Portfolio, 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
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 securities and
futures contracts to be purchased or sold by such portion of
the Portfolio, 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 Portfolio's Prospectus or as the Board of
Trustees may direct from time to time. In providing the
Portfolio 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 Portfolio's investment transaction business.
It is also understood that it is desirable for the Portfolio
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 Portfolio 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 Portfolio with such brokers or futures
commission merchants, subject to review by the Trust's Board of
Trustees 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 Portfolio 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 Portfolio and to such other
clients.
(iv) The Subadviser shall maintain all books and records with
respect to the Portfolio'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
2
employees and officers for consultation with any of the
Trustees or officers or employees of the Portfolio with respect
to any matter discussed herein, including, without limitation,
the valuation of the Portfolio's securities.
(v) The Subadviser shall provide the Portfolio's Custodian
on each business day with information relating to all
transactions concerning the portion of the Portfolio'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, Subadviser and Manager understand and agree that if
the Manager manages the Portfolio 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 authorize and permit any of its directors,
officers and employees who may be elected as Trustees or officers of
the Trust 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 Portfolio'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 Portfolio required by Rule
31a-1 under the 1940 Act. The Subadviser agrees that all records
which it maintains for the Portfolio are the property of the
Portfolio, and the Subadviser will surrender promptly to the
Portfolio any of such records upon the Portfolio'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 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, as amended, 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.
3
2. The Manager shall continue to have responsibility for all
services to be provided to the Portfolio 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. 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 Portfolio's average daily net
assets of the portion of the Portfolio managed by the Subadviser as described
in the attached Schedule A. This fee will be computed daily and paid monthly.
5. The Subadviser shall not be liable for any error of judgment or
for any loss suffered by the Portfolio 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.
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 at least annually in conformity with the requirements of
the 1940 Act; provided, however, that this Agreement may be terminated by the
Trust, on behalf of the Portfolio, 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 Portfolio,
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
Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000-0000, Attention:
Compliance Department.
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 Portfolio
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
4
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.
8. 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 Portfolio 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.
9. This Agreement may be amended by mutual consent, but the
consent of the Portfolio must be obtained in conformity with the requirements
of the 1940 Act.
10. 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 FUND MANAGEMENT LLC HOTCHKIS AND WILEY CAPITAL MANAGEMENT, LLC
By: /s/ XXXXXX X. XXXXX By: /s/ XXXXX XXXXXX
------------------- ----------------
Xxxxxx X. Xxxxx Xxxxx Xxxxxx
Executive Vice President Chief Operating Officer
5
EXHIBIT A
SUBADVISORY AGREEMENT DATED OCTOBER 22, 2001 BETWEEN PIFM
AND HOTCHKIS AND WILEY WITH RESPECT TO THE LARGE
CAPITALIZATION VALUE PORTFOLIO, A SERIES OF THE TARGET PORTFOLIO
TRUST
COMPENSATION SCHEDULE
Annual fee payable to the Subadviser as a percentage of average daily net
assets of the Portfolio managed by the Subadviser:
0.30% on the Portfolio's assets managed by the Subadviser.
As of October 22, 2001
6
