PRUDENTIAL TAX-MANAGED FUNDS
PRUDENTIAL TAX-MANAGED EQUITY FUND
AMENDED AND RESTATED MANAGEMENT AGREEMENT
Agreement made this 8th day of December, 1998, as amended and restated as
of January 1, 2000, and as amended and restated this 2nd day of March, 2001,
between Prudential Tax-Managed Funds, a Delaware business trust (the Fund), and
Prudential Investments Fund Management 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 Tax-Managed Equity 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 Trustees of the Fund, the Manager is
authorized to enter into a subadvisory agreement with The Prudential
Investment Corporation, 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 Trustees 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 Portfolio'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
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 Trustees 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 Agreement and
Declaration of Trust of the Fund and the Fund's SEC registration statement
and with the instructions and directions of the Board of Trustees 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 Trustees 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 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 Trustees 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 Trustees 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 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.
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) Agreement and Declaration of Trust;
(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 Trustees 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 beneficial interest and
all amendments thereto; and
(e) Prospectus and Statement of Additional Information of the
Portfolio.
4. The Manager shall authorize and permit any of its officers and employees
who may be elected as Trustees 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 Trustees 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 Fund in connection with the
management of the investment and reinvestment of the Portfolio's assets,
(b) the fees and expenses of Fund Trustees 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 Trustees 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 Trustees' 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
(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
Trustees 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 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 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
Trustees 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 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 "Prudential Tax-Managed Funds and
Prudential Tax-Managed Equity 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 "Prudential Tax-Managed
Funds or Prudential Tax-Managed Equity 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.
PRUDENTIAL TAX-MANAGED FUNDS
By: /s/ Xxxxx X. Xxxxxxx, Xx.
-------------------------
Xxxxx X. Xxxxxxx, Xx.
President
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Xxxxxx X. Xxxxx
Executive Vice President
SCHEDULE A
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Prudential 20/20 Focus Fund 0.75% to $1 bil. and
0.70% over $1 bil.
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Prudential Index Series Fund 0.30%
Prudential Stock Index Fund
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Prudential Natural Resources Fund, Inc. 0.75%
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Prudential Sector Funds, Inc.
Prudential Financial Services Fund 0.75%
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Prudential Health Sciences Fund 0.75%
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Prudential Technology Fund 0.75%
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Prudential Utility Fund 0.60% to $250 mil.
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0.50% next $500 mil.
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0.45% next $750 mil.
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0.40% next $500 mil.
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0.35% next $2 bil.
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0.325% next $2 bil.
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0.30% over $6 bil.
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Prudential Small Company Fund, Inc. 0.70%
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Prudential Tax Managed Funds 0.65% to $500 mil. and 0.60% over
Prudential Tax-Managed Equity Fund $500 mil.
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Prudential Tax-Managed Small-Cap Fund, Inc. 0.60%
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Prudential U.S. Emerging Growth Fund, Inc. 0.60% to $1 bil. and
0.55% above $1 bil.
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The Prudential Investment Portfolios, Inc. 0.65% to $1 bil.
Prudential Active Balanced Fund 0.60% above $1 bil.
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Prudential Xxxxxxxx Equity Opportunity Fund 0.60% to $300 mil.
0.575% above $300 mil.
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Prudential Xxxxxxxx Growth Fund 0.60% to $300 mil
0.575% next 4.7 bil.
0.55% over $5 bil.
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