PRUDENTIAL TAX-MANAGED EQUITY FUND
SUBADVISORY AGREEMENT
Agreement made as of this 8th day of December, 1998 and amended and
restated as of January 1, 2000, between Prudential Investments Fund
Management LLC, a New York limited liability company (PIFM or the Manager),
and The Prudential Investment Corporation, a New Jersey
Corporation (the Subadviser).
WHEREAS, the Manager has entered into a Management Agreement, dated
December 8th, 1998 and amended and restated as of January 1, 2000 (the
Management Agreement), with Prudential Tax-Managed Funds (the Trust), a
Delaware business trust and a diversified open-end management investment
company registered under the Investment Company Act of 0000 (xxx
0000 Xxx) on behalf of its Series the Prudential Tax-Managed Equity Fund
(the Series), pursuant to which PIFM will act as Manager of the Series.
WHEREAS, PIFM desires to retain the Subadviser to provide investment
advisory services to the Series in connection with the management the portfolio
of the Series 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 Board of
Trustees of the Trust, the Subadviser shall manage the investment
operations of the portfolio of the Series and the composition of the
Series' portfolio, including the purchase, retention and disposition
thereof, in accordance with the Series' 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
investments of the Series and determine from time to time
what investments and securities will be purchased, retained,
sold or loaned by the Series, 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
Series and with the instructions and directions of the
Manager and of the Board of Trustees of the Trust 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.
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(iii) The Subadviser shall determine the securities and
futures contracts to be purchased or sold by the Series and
will place orders with or through such persons, brokers,
dealers or futures commission merchants (including but not
limited to Prudential Securities Incorporated) to carry out
the policy with respect to brokerage as set forth in the
Trust's Registration Statement and the Series' Prospectus or
as the Board of Trustees may direct from time to time. In
providing the Series 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 may be used as principal broker for securities
transactions but that no formula has been adopted for
allocation of the Series' investment transaction business.
It is also understood that it is desirable for the Series
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
Series 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 Series 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 Series 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
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consistent with its fiduciary obligations to the Trust and
to such other clients.
(iv) The Subadviser shall maintain all books and
records with respect to the Series' 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.
(v) The Subadviser shall provide the Series' Custodian
on each business day with information relating to all
transactions concerning the Series' 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 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 Series' 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 Series required by Rule 31a-1 under
the 1940 Act. The Subadviser agrees that all records which it
maintains for the Series are the property of the Series and the
Subadviser will surrender promptly to the Series any of such records
upon the Series' 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 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 Series pursuant to the Management Agreement and
shall oversee and review the Subadviser's performance of its duties
under this Agreement.
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3. The Manager shall pay the Subadviser at the annual rate of .325
of 1% of the average daily net assets of the Series up to
$500 million and .285 of 1% of the Series' average daily net
assets over $500 million for 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 Series 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 Series 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 Series, 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 Trust 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.
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 Trust 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
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the Trust 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 INVESTMENTS FUND MANAGEMENT LLC
BY:/s/Xxxxxx X. Xxxxx
----------------------------------
Xxxxxx X. Xxxxx
Executive Vice President
THE PRUDENTIAL INVESTMENT CORPORATION
BY:/s/Xxxx X. Xxxxxxxxxx
---------------------------------
Xxxx X. Xxxxxxxxxx
President
T:\xxxxxx\bible\TXM\Subadviser.PIC.doc
