ADVANCED SERIES TRUST AST New Discovery Asset Allocation Portfolio SUBADVISORY AGREEMENT
ADVANCED
SERIES TRUST
AST New Discovery Asset Allocation Portfolio
SUBADVISORY AGREEMENT
Agreement
made as of this 21st 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 Bradford & Xxxxxx LLC
(Xxxxxxxx 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 any
broker or dealer affiliated with the Co-Managers or 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. Liability for payment of
compensation by the Co-Managers to the Subadviser under this Agreement is contingent upon the Co-Managers’
receipt of payment from the Trust for management services described under the Management Agreement between the
Fund and the Co-Managers. 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
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000,
Attention: __________________.
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
BRADFORD & XXXXXX LLC
By: /s/
Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title:
SCHEDULE A
As compensation for services provided by Bradford & Xxxxxx LLC, Prudential Investments LLC and AST Investment Services, Inc. (formerly American Skandia Investment Services, Inc.) will pay Bradford & Xxxxxx LLC an advisory fee on the net assets managed by Bradford & Xxxxxx LLC that is equal, on an annualized basis, to the following:
| Portfolio Name |
Advisory Fee |
AST New Discovery Asset Allocation Portfolio |
For Sleeve Average Daily Net Assets to $100 million |
Dated as of March 21, 2012.
706474-2
