EXHIBIT (D)(6)
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Prudential Xxxxxxxx Value Fund
Management Agreement
Agreement made this [ ]th day of [ ], 2002, between The
Prudential Investment Portfolios, Inc., a Maryland corporation (the Fund), and
Prudential Investments LLC, a New York limited liability company (the Manager).
W I T N E S S E T H
WHEREAS, the Fund is a diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the 1940 Act); and
WHEREAS, the Fund desires to retain the Manager to render or
contract to obtain as hereinafter provided investment advisory services to the
Fund and the Fund also desires to avail itself of the facilities available to
the Manager with respect to the administration of its day-to-day business
affairs, and the Manager is willing to render such investment advisory and
administrative services;
NOW, THEREFORE, the parties agree as follows:
1. The Fund hereby appoints the Manager to act as manager of
the Fund and its series, Prudential Xxxxxxxx Value Fund (the Portfolio) and as
administrator of its business affairs for the period and on the terms set forth
in this Agreement. The Manager accepts such appointment and agrees to render the
services herein described, for the compensation herein provided. Subject to the
approval of the Board of Directors of the Fund, the Manager is authorized to
enter into a subadvisory agreement with The Prudential Investment Management,
Inc., Xxxxxxxx Associates LLC, or any other subadviser, whether or not
affiliated with the Manager (each, a Subadviser), pursuant to which such
Subadviser shall furnish to the Fund the investment advisory services in
connection with the management of the Fund (each, a Subadvisory Agreement).
Subject to the approval of the Board of Directors of the Fund, the Manager is
authorized to retain more than one Subadviser for the Portfolio, and if the
Portfolio has more than one Subadviser, the Manager is authorized to allocate
the Fund's assets among the Subadvisers. The Manager will continue to have
responsibility for all investment advisory services furnished pursuant to any
Subadvisory Agreement. The Fund and Manager understand and agree that the
Manager may manage the Fund in a "manager-of-managers" style with either a
single or multiple subadvisers, which contemplates that the Manager will, among
other things and pursuant to an Order issued by the Securities and Exchange
Commission (SEC):(i) continually evaluate the performance of the Subadviser to
the Portfolio, if applicable, through quantitative and qualitative analysis and
consultations with such 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 Fund
recognizes that a Subadviser's services may be terminated or
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modified pursuant to the "manager-of-managers" process, and that the Manager may
appoint a new Subadviser for a Subadviser that is so removed.
2. Subject to the supervision of the Board of Directors of the Fund,
the Manager shall administer the Fund's business affairs and, in connection
therewith, shall furnish the Fund with office facilities and with clerical,
bookkeeping and recordkeeping services at such office facilities and, subject to
Section 1 hereof and any Subadvisory Agreement, the Manager shall manage the
investment operations of the Fund and 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 the Fund's SEC registration statement, and subject to the following
understandings:
(a) The Manager (or a Subadviser under the Manager's supervision)
shall provide supervision of the Portfolio's investments, and shall
determine from time to time what investments or 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.
(b) The Manager, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Articles of
Incorporation of the Fund and the Fund's SEC registration statement and
with the instructions and directions of the Board of Directors of the
Fund, and will conform to and comply with the requirements of the 1940 Act
and all other applicable federal and state laws and regulations. In
connection therewith, the Manager shall, among other things, prepare and
file (or cause to be prepared and filed) such reports as are, or may in
the future be, required by the SEC.
(c) The Manager (or the Subadviser under the Manager's supervision)
shall determine the securities and futures contracts to be purchased or
sold by the Portfolio and will place orders pursuant to its determinations
with or through such persons, brokers, dealers or futures commission
merchants (including but not limited to Prudential Securities
Incorporated) in conformity with the policy with respect to brokerage as
set forth in the Fund's Registration Statement or as the Board of
Directors may direct from time to time. In providing the Fund with
investment supervision, it is recognized that the Manager (or the
Subadviser under the Manager's supervision) will give primary
consideration to securing the most favorable price and efficient
execution. Consistent with this policy, the Manager (or Subadviser under
the Manager's supervision) 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 other
clients of the Manager (or Subadviser) may be a party. It is understood
that Prudential Securities Incorporated (or a broker-dealer affiliated
with a Subadviser) may be used as principal broker for securities
transactions, but that no formula has been adopted for allocation of the
Fund's investment transaction business. It is also understood that it is
desirable for the Fund that the Manager (or Subadviser) have access to
supplemental investment and market research and security and economic
analysis provided by brokers or futures commission
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merchants, and that such brokers or futures commission merchants may
execute brokerage transactions at a higher cost to the Fund than may
result when allocating brokerage to other brokers or futures
commission merchants on the basis of seeking the most favorable price
and efficient execution. Therefore, the Manager (or the Subadviser
under the Manager's supervision) is authorized to pay higher brokerage
commissions for the purchase and sale of securities and futures
contracts for the Fund to brokers or futures commission merchants who
provide such research and analysis, subject to review by the Fund's
Board of Directors from time to time with respect to the extent and
continuation of this practice. It is understood that the services
provided by such broker or futures commission merchant may be useful
to the Manager (or the Subadviser) in connection with its services to
other clients.
On occasions when the Manager (or a Subadviser under the
Manager's supervision) deems the purchase or sale of a security or a
futures contract to be in the best interest of the Fund as well as other
clients of the Manager (or the Subadviser), the Manager (or 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 so 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 Manager (or the Subadviser) in the manner it
considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(d) The Manager (or the Subadviser under the Manager's
supervision) shall maintain all books and records with respect to the
Fund's portfolio transactions and shall render to the Fund's Board of
Directors such periodic and special reports as the Board may reasonably
request.
(e) The Manager (or the Subadviser under the Manager's
supervision) shall be responsible for the financial and accounting
records to be maintained by the Fund (including those being maintained
by the Fund's Custodian).
(f) The Manager (or the Subadviser under the Manager's
supervision) shall provide the Fund's Custodian on each business day
information relating to all transactions concerning the Fund's assets.
(g) The investment management services of the Manager to the
Fund under this Agreement are not to be deemed exclusive, and the
Manager shall be free to render similar services to others.
(h) The Manager 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.
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3. The Fund has delivered to the Manager copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) Articles of Incorporation;
(b) By-Laws of the Fund (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the
"By-Laws");
(c) Certified resolutions of the Board of Directors of the
Fund authorizing the appointment of the Manager and
approving the form of this agreement;
(d) Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-1A (the Registration
Statement), as filed with the SEC relating to the Fund and its shares of
common stock and all amendments thereto; and
(e) Prospectus and Statement of Additional Information of the
Fund.
4. The Manager shall authorize and permit any of its officers
and employees who may be elected as Directors or officers of the Fund to serve
in the capacities in which they are elected. All services to be furnished by the
Manager under this Agreement may be furnished through the medium of any such
officers or employees of the Manager.
5. The Manager shall keep the Fund's books and records required
to be maintained by it pursuant to Paragraph 2 hereof. The Manager agrees that
all records which it maintains for the Fund are the property of the Fund, and it
will surrender promptly to the Fund any such records upon the Fund's request,
provided however that the Manager may retain a copy of such records. The Manager
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 the Manager
pursuant to Paragraph 2 hereof.
6. During the term of this Agreement, the Manager shall pay
the following expenses:
(i) the salaries and expenses of all employees of the Fund and
the Manager, except the fees and expenses of Directors
who are not affiliated persons of the Manager or any Subadviser,
(ii) all expenses incurred by the Manager in connection with
managing the ordinary course of the Fund's business, other than those
assumed by the Fund herein, and
(iii) the fees, costs and expenses payable to a Subadviser
pursuant to a Subadvisory Agreement.
The Fund assumes and will pay the expenses described below:
(a) the fees and expenses incurred by the Portfolio in
connection with the management of the investment and
reinvestment of the Fund's assets,
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(b) the fees and expenses of Fund Directors who are not "interested
persons" of the Fund within the meaning of the 1940 Act,
(c) the fees and expenses of the Custodian that relate to (i) the
custodial function and the recordkeeping connected therewith, (ii) preparing
and maintaining the general accounting records of the Fund and the
provision of any such records to the Manager useful to the Manager in
connection with the Manager's responsibility for the accounting records of
the Fund pursuant to Section 31 of the 1940 Act and the rules promulgated
thereunder, (iii) the pricing or valuation of the shares of the Fund,
including the cost of any pricing or valuation service or services which
may be retained pursuant to the authorization of the Board of Directors of
the Fund, and (iv) for both mail and wire orders, the cashiering function
in connection with the issuance and redemption of the Fund's securities,
(d) the fees and expenses of the Fund's Transfer and Dividend Disbursing
Agent that relate to the maintenance of each shareholder account,
(e) the charges and expenses of legal counsel and independent
accountants for the Fund,
(f) brokers' commissions and any issue or transfer taxes chargeable to
the Fund in connection with its securities and futures transactions,
(g) all taxes and corporate fees payable by the Fund to federal,
state or other governmental agencies,
(h) the fees of any trade associations of which the Fund may
be a member,
(i) the cost of share certificates representing, and/or non-negotiable
share deposit receipts evidencing, shares of the Fund,
(j) the cost of fidelity, directors' and officers' and errors
and omissions insurance,
(k) the fees and expenses involved in registering and maintaining
registration of the Fund and of its shares with the Securities and Exchange
Commission, and paying notice filing fees under state securities laws,
including the preparation and printing of the Fund's registration statement
and the Fund's prospectuses and statements of additional information for
filing under federal and state securities laws for such purposes,
(l) allocable communications expenses with respect to investor
services and all expenses of shareholders' and Directors' meetings and
of preparing, printing and mailing reports and notices to shareholders
in the amount necessary for distribution to the shareholders,
(m) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business, and
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(n) any expenses assumed by the Fund pursuant to a Distribution
and Service Plan adopted in a manner that is consistent with Rule 12b-1
under the 1940 Act.
7. For the services provided and the expenses assumed
pursuant to this Agreement, the Fund will pay to the Manager as full
compensation therefor a fee at the annual rate(s) as described on the attached
Schedule A with respect to the average daily net assets of the Portfolio. This
fee will be computed daily, and will be paid to the Manager monthly.
8. The Manager shall not be liable for any error of judgment or
for any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in Section
36(b)(3) of the 0000 Xxx) or loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
9. 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 with
respect to the Portfolio at any time, without the payment of any penalty, by the
Board of Directors of the Fund or by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of the Portfolio, or by the
Manager 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
1940 Act).
10. Nothing in this Agreement shall limit or restrict the right
of any officer or employee of the Manager 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 dissimilar nature, nor limit or restrict the right of
the Manager to engage in any other business or to render services of any kind to
any other corporation, firm, individual or association.
11. Except as otherwise provided herein or authorized by the
Board of Directors of the Fund from time to time, the Manager shall for all
purposes herein be deemed to be an independent contractor, and shall have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
12. During the term of this Agreement, the Fund agrees to
furnish the Manager 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 in any way
to the Manager, prior to use thereof and not to use such material if the Manager
reasonably objects in writing within five business days (or such other time as
may be mutually agreed) after receipt thereof. In the event of termination of
this Agreement, the Fund will continue to furnish to the Manager copies of any
of the above- mentioned materials which refer in any way to the Manager. Sales
literature may be furnished to the Manager hereunder by
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first-class or overnight mail, facsimile transmission equipment or hand
delivery. The Fund shall furnish or otherwise make available to the Manager such
other information relating to the business affairs of the Fund as the Manager at
any time, or from time to time, reasonably requests in order to discharge its
obligations hereunder.
13. 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.
14. 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; or
(2) to the Fund at Gateway Center Three, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX
00000-0000, Attention: President.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. The Fund may use the name "The Prudential Investment
Portfolios, Inc./Prudential Xxxxxxxx Value Fund," or any name including the word
"Prudential" only for so long as this Agreement or any extension, renewal or
amendment hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the Manager's business as Manager or
any extension, renewal or amendment thereof remain in effect. At such time as
such an agreement shall no longer be in effect, the Fund will (to the extent
that it lawfully can) cease to use such a name or any other name indicating that
it is advised by, managed by or otherwise connected with the Manager, or any
organization which shall have so succeeded to such businesses. In no event shall
the Fund use the name "The Prudential Investment Portfolios, Inc./Prudential
Xxxxxxxx Value Fund," or any name including the word "Prudential" if the
Manager's function is transferred or assigned to a company of which The
Prudential Insurance Company of America does not have control.
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.
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
By: _____________________
Xxxxx X. Xxxxxxx, Xx.
President
PRUDENTIAL INVESTMENTS LLC
By: _______________________
Xxxxxx X. Xxxxx
Executive Vice President
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Schedule A
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Prudential Xxxxxxxx Value Fund 0.70% to $1 bil.
0.65% over $1 bil.
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