EXHIBIT (d)(2)(xi)
SUBADVISORY AGREEMENT WITH
NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
THE TARGET PORTFOLIO TRUST
SMALL CAPITALIZATION VALUE PORTFOLIO
Agreement made as of this 29 day of April, 2002, between Prudential
Investments LLC, a New York limited liability company ("PI" or the "Manager"),
and National City Investment Management Company, a Michigan corporation (the
"Subadviser").
WHEREAS, the Manager has entered into a Management Agreement, dated
November 9, 1992, as amended April 1, 1994 (the "Management Agreement"), with
The Target Portfolio Trust, a Delaware business trust (the "Trust"), on behalf
of the Small Capitalization Value Portfolio (the "Portfolio"), a series of a
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 Portfolio; and
WHEREAS, PI desires to retain the Subadviser to provide investment
advisory services to the Portfolio and to manage such portion of the Portfolio
as the Manager shall from time to time direct, 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 such portion of the investment
operations of the Portfolio as the Manager shall direct and shall manage
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 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 such portion of the
Portfolio'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 Portfolio, 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 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 securities and futures
contracts to be purchased or sold by such portion of the Portfolio,
and will 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 Portfolio's Prospectus or as the
Board of Trustees may direct from time to time. In providing the
Portfolio 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. It is understood that Prudential Securities Incorporated or
any broker or dealer affiliated with the Subadviser may be used as
principal broker for securities transactions, but that no formula
has been adopted for allocation of the Portfolio's investment
transaction business. It is also understood that it is desirable for
the Portfolio that the Subadviser have access to supplemental
investment and market research and security and economic analysis
provided by brokers or futures commission merchants who may execute
brokerage transactions at a higher cost to the Portfolio than may
result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and efficient execution. Therefore,
the Subadviser is authorized to place orders for the purchase and
sale of securities and futures contracts for the Portfolio with such
brokers or futures commission merchants, subject to review by the
Trust's Board of Trustees from time to time with respect to the
extent and continuation of this practice. It is understood that the
services provided by such brokers or futures commission merchants
may be useful to the Subadviser in connection with the Subadviser's
services to other clients.
On occasions when the Subadviser deems the purchase or sale of a
security or futures contract to be in the best interest of the
Portfolio 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 Portfolio and to
such other clients.
(iv) The Subadviser shall maintain all books and records with
respect to the Portfolio'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
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employees and officers for consultation with any of the Trustees or
officers or employees of the Portfolio with respect to any matter
discussed herein, including, without limitation, the valuation of
the Portfolio's securities.
(v) The Subadviser shall provide the Portfolio's Custodian on each
business day with information relating to all transactions
concerning the portion of the Portfolio'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, Subadviser
and Manager understand and agree that if the Manager manages the
Portfolio 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 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 Portfolio'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
Portfolio required by Rule 31a-1 under the 1940 Act. The Subadviser agrees that
all records which it maintains for the Portfolio are the property of the
Portfolio, and the Subadviser will surrender promptly to the Portfolio any of
such records upon the Portfolio'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 under the 1940 Act any such
records as are required to be maintained by it pursuant to paragraph 1(a)
hereof.
(d) 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 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.
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2. The Manager shall continue to have responsibility for all services to
be provided to the Portfolio 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. 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 Portfolio's average daily net assets of the
portion of the Portfolio managed by the Subadviser as described in the attached
Schedule A. This fee will be computed daily and paid monthly.
5. The Subadviser shall not be liable for any error of judgment or for any
loss suffered by the Portfolio 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.
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 at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Trust, on behalf
of the Portfolio, 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 ▇▇▇▇ ▇▇▇) of the Portfolio, 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 ▇▇▇▇ ▇▇▇) 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 ▇▇▇▇ ▇▇▇) of this Agreement, including, but not
limited to, a change or anticipated change in control (as defined in the ▇▇▇▇
▇▇▇) 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,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Secretary; (2)
to the Trust at Gateway Center Three, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇, Attention: Secretary; or (3) to the Subadviser at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇.
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 Portfolio 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
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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.
8. During the term of this Agreement, the Manager agrees 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 Portfolio 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.
9. This Agreement may be amended by mutual consent, but the consent of the
Portfolio must be obtained in conformity with the requirements of the 1940 Act.
10. 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 NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Executive Vice President President and Chief Investment Officer
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SCHEDULE A
SUBADVISORY AGREEMENT DATED APRIL 29, 2002 BETWEEN PI AND
NATIONAL CITY WITH RESPECT TO THE SMALL CAPITALIZATION
VALUE PORTFOLIO, A SERIES OF THE TARGET PORTFOLIO TRUST
COMPENSATION SCHEDULE
Annual fee payable, in arrears, to the Subadviser as a percentage of average
daily net assets of the Portfolio managed by the Subadviser:
0.40% on the Portfolio's assets managed by the Subadviser.
As of April 29, 2002
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