Exhibit 99.B5(b)
COMMAND TAX-FREE FUND
SUBADVISORY AGREEMENT
Agreement made as of this 31st day of October, 1988 between
Prudential Mutual Fund Management Inc., a Delaware Corporation ("PMF" or the
"Manager"), and The Prudential Investment Corporation, a New Jersey Corporation
(the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement, dated
October 31, 1988 (the "Management Agreement"), with Command Tax-Free (the
"Fund"), a Massachusetts business trust and a diversified open-end management
investment company registered under the Investment Company Act of 1940 (the
"1940 Act"), pursuant to which PMF will act as Manager of the Fund.
WHEREAS, PMF desires to retain the Subadviser to provide investment
advisory services to the Fund in connection with the management of the Fund and
the Subadviser is willing to render such investment advisory services.
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the Trustees
of the Fund, the Subadviser shall manage the investment operations
of the Fund and the composition of the Fund's portfolio, including
the purchase, retention and disposition thereof, in accordance with
the Fund's investment objectives, policies and restrictions as
stated in the Prospectus, (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 Fund's
investments and 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 Declaration of Trust, By-Laws and Prospectus of the Fund
and with the instructions and directions of the Manager and of
the Trustees of the Fund and will conform to and comply with
the requirements of
the 1940 Act, the Internal Revenue Code of 1986 and all other
applicable federal and state laws and regulations.
(iii) The Subadviser shall determine the securities to be
purchased or sold by the Fund and will place orders with or
through such person, brokers or dealers (including but not
limited to Prudential-Bache Securities Inc.) to carry out the
policy with respect to brokerage as set forth in the Fund's
Registration Statement and Prospectus or as the Trustees may
direct 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 or dealers 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-Bache Securities Inc. 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 Subadviser have access
to supplemental investment and market research and security
and economic analysis provided by brokers who may execute
brokerage transactions at a higher cost to the Fund 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 for the Fund with such
brokers subject to review by the Fund's 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 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 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
2
regulations, may, but shall be under no obligation to,
aggregate the securities 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 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-l under the 1940 Act and shall
render to the Fund's Trustees such periodic and special
reports as the Trustees may reasonably request.
(v) The Subadviser shall provide the Fund's Custodian on each
business day with information relating to all transactions
concerning the Fund's assets 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.
(b) The Subadviser shall authorize and permit any of its directors,
officers and employees who may be elected as Trustees 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-l under
the 1940 Act. 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,
3
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 any
such records as are required to be maintained by it pursuant to
paragraph 1(a) hereof.
2. The Manager shall continue to have responsibility for all
services to be provided to the Fund pursuant to the Management
Agreement and shall oversee and review the Subadviser's performance
of its duties under this Agreement.
3. The Manager shall reimburse the Subadviser for reasonable costs
and expenses incurred by the Subadviser determined in a manner
acceptable to the Manager in furnishing the services described in
paragraph 1 hereof.
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.
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 Trustees of the Fund or by vote of a majority of
the outstanding votingsecurities (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.
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 Fund to engage in any
other business or to devote his or her time and attention in part to
the management or other aspects
4
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 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 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.
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 MUTUAL FUND MANAGEMENT, INC.
By /s/ [ILLEGIBLE]
-----------------------------------
President
THE PRUDENTIAL INVESTMENT CORPORATION
By /s/ [ILLEGIBLE]
-----------------------------------
Vice President
5
