Exhibit (d)(12)
SUBADVISORY AGREEMENT WITH
MERCURY ADVISORS
Strategic Partners Opportunity Funds
(formerly, Strategic Partners Series)
Strategic Partners Mid-Cap Value Fund
Agreement made as of this 22nd day of April, 2002, between Prudential
Investments LLC, a New York limited liability company ("PI" or the "Manager"),
and Fund Asset Management, L.P., doing business as Mercury Advisors (the
"Subadviser"), a Delaware limited partnership.
WHEREAS, the Manager has entered into a Management Agreement, dated
February 26, 2002 (the "Management Agreement"), with Strategic Partners
Opportunity Funds, a Delaware business trust (the "Trust"), on behalf of the
Strategic Partners Mid-Cap Value Fund (the "Fund"), a series of a
non-diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), pursuant to which
PI acts as Manager of the Fund; and
WHEREAS, PI desires to retain the Subadviser to provide investment
advisory services to the Fund and to manage such portion of the assets and
investment operations of the Fund as the Manager shall from time to time direct
(the "Segment"), 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 the Segment and
shall manage the composition of the Segment's portfolio, including the
purchase, retention and disposition thereof, in accordance with the
Fund'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 the Segment's
investments and shall determine from time to time what investments
and securities will be purchased, retained, sold or loaned by the
Segment, and what portion of the assets thereof will be invested
or held uninvested as cash. At the inception of the Fund's
operations, the Manager shall allocate approximately 50% of the
Fund's assets to the Segment. Thereafter, under normal market
conditions, in order to maintain the allocation of approximately
50% of the Fund's assets to the Segment, the Manager shall (1)
allocate approximately 50% of all of the Fund's daily cash
inflows (that is, purchases and reinvested distributions) and
outflows (that is, redemptions and expense items) to the Segment;
(2) periodically adjust the allocation of the Fund's daily cash
inflows and outflows between the Segment and
the remainder of the Fund's assets; or (3) otherwise rebalance the
Fund's assets. The Manager will base the timing of any
reallocations on the best interests of the Fund and its
shareholders.
(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 assets to be purchased or
sold by the Segment as provided herein and will place orders with
or through such persons, brokers or dealers to carry out the
policy with respect to brokerage set forth in the Trust's
registration statement or as the Board of Trustees or the Manager
may direct from time to time, in conformity with federal
securities laws and to the extent consistent with best execution
principles as established by the Securities and Exchange
Commission ("SEC"). In executing Fund transactions and selecting
brokers or dealers, the Subadviser will use its best efforts to
seek on behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any transaction,
the Subadviser shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission,
if any, both for the specific transaction and on a continuing
basis. In evaluating the best overall terms available, and in
selecting the broker-dealer to execute a particular transaction,
the Subadviser may also consider the brokerage and research
services provided (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934). Consistent with any
guidelines established by the Board of Trustees of the Trust, the
Subadviser is authorized to negotiate and pay to a broker or
dealer who provides such brokerage and research services a
commission for executing a transaction for the Fund which is in
excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if, but only if, the
Subadviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer viewed in terms of
that particular transaction or in terms of the overall
responsibilities of the Subadviser to the Fund. In addition, the
Subadviser is authorized to allocate purchase and sale orders for
securities to brokers or dealers (including brokers and dealers
that are affiliated with the Manager, Subadviser or the Trust's
principal underwriter) to take into account the sale of shares of
the Fund if the Subadviser believes that the quality of the
transaction and the commission are comparable to what they would
be with other qualified firms. In no instance, however, will the
Segment's assets be purchased from or sold to the Manager,
Subadviser, the Trust's principal underwriter, or any affiliated
person of either the Trust, Adviser,
2
the Subadviser or the principal underwriter, acting as principal in
the transaction, except to the extent permitted by the SEC and the
1940 Act.
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 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 Fund and to such other
clients.
(iv) The Subadviser shall maintain all books and records with
respect to the Fund'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 employees and officers for consultation
with any of the Trustees 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 shall provide the Fund's Custodian on each
business day with information relating to all transactions
concerning the Segment, and shall provide the Manager with such
information upon the reasonable 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 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 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 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. The Subadviser agrees that all records which it maintains for the
Fund
3
are the property of the Fund, and the Subadviser will surrender within
three business days to the Fund any of such records upon the Fund's
reasonable 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.
(c) 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.
(d) 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.
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.
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. (a) 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 Fund's average daily net
assets of the portion of the Fund managed by the Subadviser as described in
the attached Schedule A. This fee will be computed daily and paid monthly.
(b) Except for expenses specifically assumed or agreed to be paid by the
Subadviser pursuant hereto, the Subadviser shall not be liable for any
organizational, operational or business expenses of the Manager or the
Trust including, without limitation, (a) interest and taxes, (b) brokerage
commissions and other costs in connection with the purchase or sale of
securities or other investment instruments with respect to the Fund, and
(c) custodian fees and expenses. Any reimbursement of advisory fees
required by any expense limitation provision of any law shall be the sole
responsibility of the Manager. The Manager and the Subadviser shall not be
considered as partners or participants in a joint venture. The Subadviser
will pay its own expenses incurred in furnishing the services to be
provided by it pursuant to this Agreement.
5. (a) 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.
4
(b) Each party to this Agreement shall indemnify and hold harmless the
other party from and against any and all claims, losses, liabilities or
damages (including reasonable attorney's fees and other related expenses)
howsoever arising from or in connection with the performance of the
indemnifying party's obligations under this Agreement; provided, however,
that the indemnifying party's obligation under this Section 5 shall be
reduced to the extent that the claim against, or the loss, liability or
damage experienced by the indemnified party is caused by or is otherwise
directly related to the indemnified party's own willful misfeasance, bad
faith or gross negligence, or to the reckless disregard of its duties under
this Agreement.
(c) The Manager acknowledges and agrees that the Subadviser makes no
representation or warranty, expressed or implied, that any level of
performance or investment result will be achieved by the Fund or the
Segment or that the Fund or the Segment will perform comparably with any
standard or index, including other clients of the Subadviser, whether
public or private.
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 for an initial period of two years, and at least annually thereafter,
in conformity with the requirements of the 1940 Act; provided, however, that
this Agreement may be terminated by the Trust, on behalf of the Fund, 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 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 Xxxxxxxx Xxxx
Xxxx, Xxxxxxxxxx, XX 00000, Attention: Xxxxx X. Xxxxx, Esq.
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 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.
5
8. During the term of this Agreement, the Manager agrees to furnish the
Subadviser at the address designated for delivery of notices in Section 6 hereto
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 or the Segment 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. Until the Manager delivers any revisions or supplements to the
documents described above to the Subadviser, the Subadviser shall be fully
protected in relying on the versions of such documents previously furnished by
the Manager to the Subadviser.
9. Notwithstanding any provision herein to the contrary, each party hereto
agrees that any Nonpublic Personal Information, as defined under Section
248.3(t) of Regulation S-P ("Regulation S-P"), promulgated under the
Xxxxx-Xxxxx-Xxxxxx Act (the "Act"), disclosed by a party hereunder is for the
specific purpose of permitting the other party to perform the services set forth
in this Agreement. Each party agrees that, with respect to such information, it
will comply with Regulation S-P and the Act and that it will not disclose any
Nonpublic Personal Information received in connection with this Agreement to any
other party, except to the extent as necessary to carry out the services set
forth in this Agreement and consistent with such other party's privacy notice to
its customers, or as otherwise permitted by Regulation S-P or the Act.
10. 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.
11. 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 LLC FUND ASSET MANAGEMENT, L.P.
(D/B/A MERCURY ADVISORS)
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxx
-------------------- ------------------
Xxxxxx X. Xxxxx Xxxxxx X. Xxxx
Executive Vice President President
6
Schedule A
Subadvisory Agreement dated April 22, 2002 between PI and
Fund Asset Management, L.P.
(d/b/a Mercury Advisors) with respect to the
Strategic Partners Mid-Cap Value Fund, a series of
Strategic Partners Opportunity Funds
Compensation Schedule
With respect to the Fund, the annual fee payable to the Subadviser as a
percentage of average daily net assets of the Fund managed by the Subadviser:
0.55% on the first $1 billion in Fund assets, 0.45% on Fund assets over $1
billion.
As of April 22, 2002
7
