ADVANCED SERIES TRUST AST New Discovery Asset Allocation Portfolio SUBADVISORY AGREEMENT
EXECUTION COPY
ADVANCED
SERIES TRUST
AST New Discovery Asset Allocation Portfolio
SUBADVISORY AGREEMENT
Agreement
made as of this 14th day of March, 2012
between Prudential Investments LLC (PI), a New York limited liability company and AST Investment
Services, Inc. (formerly American Skandia Investment Services, Inc.) (AST), a Maryland corporation (together, the Co-Managers), and
X.X. XxXxx, LP, a Pennsylvania
limited partnership (X.X.
XxXxx or the Subadviser),
WHEREAS,
the Co-Managers have entered into a Management Agreement (the Management Agreement) dated May 1, 2003, with Advanced Series
Trust (formerly American Skandia Trust), a Massachusetts business trust (the Trust) and a diversified, open-end management
investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), pursuant to which PI and AST
act as Co-Managers of the Trust; and
WHEREAS, the Co-Managers, acting pursuant to the Management Agreement, desire to retain
the Subadviser to provide investment advisory services to the Trust and one or more of its series as specified in Schedule A
hereto (individually and collectively, with the Trust, referred to herein as the Trust) and to manage such portion of the Trust as
the Co-Managers 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 Co-Managers and the Board of Trustees of the Trust, the Subadviser shall manage such portion of the Trust’s portfolio as delegated to the Subadviser by the Co-Managers, including the purchase, retention and disposition thereof, in accordance with the Trust’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 Trust's investments as the Co-Managers shall direct, and shall
determine from time to time what investments and securities will be purchased, retained, sold or loaned by the Trust, 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 Amended and Restated Declaration of Trust of
the Trust, the By-laws of the Trust, the Prospectus of the Trust, and the Trust’s valuation procedures as provided to it by
the Co-Managers (the Trust Documents) and with the instructions and directions of the Co-Managers and of the Board of Trustees of
the Trust, co-operate with the Co-Managers' (or their designees') personnel responsible for monitoring the Trust’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 Co-Managers shall provide Subadviser timely with copies of any updated Trust Documents.
(iii) The
Subadviser shall determine the securities and futures contracts to be purchased or sold by such portion of the Trust's portfolio,
as applicable, and may 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 Trust's Prospectus or as the Board of Trustees may direct in writing from time to
time. In providing the Trust 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 Co-Managers (or Subadviser) to the Trust each shall have discretion to effect investment
transactions for the Trust 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 Trust 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 Co-Managers (or the Subadviser) with respect to the Trust 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.
On occasions when the Subadviser deems the purchase or sale of a security or futures contract to be
in the best interest of the Trust 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 Trust and to such other clients.
(iv) The Subadviser shall maintain all
books and records with respect to the Trust’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 Trust’s
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 Trust with respect
to any matter discussed herein, including, without limitation, the valuation of the Trust’s securities.
(v) The
Subadviser or an affiliate shall provide the Trust's Custodian on each business day with information relating to all transactions
concerning the portion of the Trust’s assets it manages, and shall provide the Co-Managers with such information upon request
of the Co-Managers.
(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 Co-Managers
understand and agree that if the Co-Managers manage the Trust in a “manager-of-managers” style, the Co-Managers 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.
(vii) The Subadviser acknowledges that the Co-Managers and the Trust
intend to rely on Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under the 1940 Act, and the Subadviser hereby agrees
that it shall not consult with any other subadviser to the Trust with respect to transactions in securities for the Trust’s
portfolio or any other transactions of Trust 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 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 Trust’s books and records required to be
maintained by the Subadviser pursuant to paragraph 1(a) hereof and shall timely furnish to the Co-Managers all information
relating to the Subadviser’s services hereunder needed by the Co-Managers to keep the other books and records of the Trust
required by Rule 31a-1 under the 1940 Act or any successor regulation. The Subadviser agrees that all records which it
maintains for the Trust are the property of the Trust, and the Subadviser will surrender promptly to the Trust any of such records
upon the Trust’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 1(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 furnish to the Co-Managers 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.
(f) The Subadviser shall be responsible for the voting of all shareholder proxies with respect to the
investments and securities held in the Trust’s portfolio, subject to such reasonable reporting and other requirements as
shall be established by the Co-Managers.
(g) The Subadviser acknowledges that it is responsible for evaluating whether market
quotations are readily available for the Trust’s portfolio securities and whether those market quotations are reliable for
purposes of valuing the Trust’s portfolio securities and determining the Trust’s net asset value per share and promptly
notifying the Co-Managers upon the occurrence of any significant event with respect to any of the Trust’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 Co-Managers, the Subadviser
(through a qualified person) will assist the valuation committee of the Trust or the Co-Managers in valuing securities of the
Trust as may be required from time to time, including making available information of which the Subadviser has knowledge related
to the securities being valued.
2. The Co-Managers shall continue to have responsibility
for all services to be provided to the Trust 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 Co-Managers shall provide (or cause
the Trust’s custodian to provide) timely information to the Subadviser regarding such matters as the composition of assets in
the portion of the Trust managed by the Subadviser, cash requirements and cash available for investment in such portion of the
Trust, 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 Trust that affect the duties of the Subadviser).
3. For the
services provided pursuant to this Agreement, the Co-Managers shall pay the Subadviser as full compensation therefor, a fee equal
to the percentage of the Trust’s average daily net assets of the portion of the Trust managed by the Subadviser as described
in the attached Schedule A. Expense caps or fee waivers for the Trust that may be agreed to by the Co-Managers, but not agreed to
by the Subadviser, shall not cause a reduction in the amount of the payment to the Subadviser by the Co-Managers.
4. The
Subadviser shall not be liable for any error of judgment or for any loss suffered by the Trust or the Co-Managers 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 Co-Managers or the Trust
may have against the Subadviser under federal or state securities laws. The Co-Managers 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 Co-Managers' 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 Co-Managers, 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 Trust 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 Fund, or by the Co-Managers 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 Co-Managers of the 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 of control (as defined in the 0000 Xxx) 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 Co-Managers at Gateway Center Three, 000 Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, XX 00000-0000, Attention: Secretary (for PI) and Xxx Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxx, 00000, Attention: Secretary (for AST); (2) to the Trust at Gateway Center Three, 000 Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, XX 00000-0000, Attention: Secretary; or (3) to the Subadviser at X.X. XxXxx, LP, Xxx Xxxxxxx Xxxxxx - Xxxxxx Xxxxx, Xxxxxxxxxx, XX 00000, Attention: Chief Compliance 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 Trust 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 Co-Managers agree to furnish the Subadviser at its principal office all prospectuses, proxy statements, and reports to shareholders 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. During the term of this Agreement, the Co-Managers also agree to furnish the Subadviser, upon request, representative samples of marketing and sales literature or other material prepared for distribution to shareholders of the Trust or the public, which make reference to the Subadviser. The Co-Managers further agree to prospectively make reasonable changes to such materials upon the Subadviser’s written request, and to implement those changes in the next regularly scheduled production of those materials. All such prospectuses, proxy statements, reports to shareholders, marketing and sales literature or other material prepared for distribution to shareholders of the Trust or the public which make reference to the Subadviser may be furnished to the Subadviser hereunder by electronic mail, 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 Trust 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/ Xxxxxxx
Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Senior Vice
President
AST INVESTMENT SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: President
X.X. XXXXX, LP
By: /s/
Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: CEO & General
Partner
EXECUTION COPY
SCHEDULE A
As compensation for services provided by X.X. XxXxx, LP, Prudential Investments LLC and AST Investment Services, Inc. (formerly American Skandia Investment Services, Inc.) will pay X.X. XxXxx, LP an advisory fee on the net assets managed by X.X. XxXxx, LP that is equal, on an annualized basis, to the following:
| Portfolio Name |
Advisory Fee |
AST New Discovery Asset Allocation Portfolio |
0.20% of sleeve average daily net assets to $100 million; 0.150% of sleeve average daily net assets from $100 million to $200 million; and 0.10% of sleeve average daily net assets exceeding $200 m illion |
Dated as of March 14, 2012.
677031-2
