SUBADVISORY AGREEMENT
PRUDENTIAL INVESTMENT PORTFOLIOS, INC. 14
Prudential Floating Rate Income Fund
Agreement
made as of this 30th
day of March,
2011,
between Prudential Investments LLC (PI or
the Manager), a New York limited liability company, and Prudential
Investment Management, Inc. (PIM), a New Jersey corporation.
WHEREAS,
the Manager has entered into a
Management Agreement (the Management Agreement) dated March
11, 2011,
with Prudential Investment Portfolios, Inc. 14,
a Maryland corporation (the Fund)
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 act as Manager of the Prudential
Floating Rate Income Fund, a series of the Fund
(individually and collectively, with the Fund referred to herein as the Fund);
and
WHEREAS, the Manager,
acting pursuant to the Management Agreement, desires
to retain Prudential Fixed Income
(PFI and together with PIM the Subadviser),
which is a division of PIM, 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 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 Articles
of Incorporation of the Fund, as
amended, the By-laws of the Fund,
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 Directors
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 Directors 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
and/or 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 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 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
manage 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 17e-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 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 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 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 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, nonpublic information by the Subadviser and its employees as required by the Xxxxxxx
Xxxxxxx and Securities Fraud Enforcement Act of 1988, a copy of which it shall provide to the Manager and the
Fund upon reasonable request. The Subadviser shall assure that its employees comply in all material respects with
the provisions of Section 16 of the 1934 Act, and to cooperate reasonably with the Manager for purposes of filing
any required reports with the Securities and Exchange Commission (the Commission) or such other regulator having
appropriate jurisdiction.
(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 1(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 Fund,
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-under the 0000 Xxx) 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-1(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 Directors
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. Liability for
payment of compensation by the Manager
to the Subadviser under this Agreement is contingent upon the Manager’
receipt of payment from the Fund for
management services described under the Management Agreement between the Fund
and the Manager.
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' 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 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. 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 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 Manager
at Gateway Center Three, 000 Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, XX 00000-0000,
Attention: Secretary; (2) to the Fund
at Gateway Center Three, 000 Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, XX 00000-0000,
Attention: Secretary; or (3) to the Subadviser at Gateway
Center Two, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000, 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 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
agree 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/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Executive
Vice President
Prudential Investment Management, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
SCHEDULE A
PRUDENTIAL INVESTMENT PORTFOLIOS, INC. 14
As compensation for services provided by Prudential Investment Management, Inc. (PIM), Prudential Investments LLC (the Manager) will pay PIM, on behalf of the Prudential Fixed Income (PFI and together with PIM the Subadviser), an advisory fee on the net asset value of the portion of the Fund’s portfolio that is managed by the Subadviser that is equal, on an annualized basis, to the following:
| Portfolio Name |
Advisory Fee |
Prudential Floating Rate Income Fund |
0.35% of the Fund’s average daily net assets. |
Dated as of March 30, 2011.
