THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Prudential Active Balanced Fund
AMENDED AND RESTATED MANAGEMENT AGREEMENT
Agreement made this 23rd day of January, 1998, as amended and restated
this 10th day of November 2000, as amended and restated this 23rd day of
February, 2001, between The Prudential Investment Portfolios, Inc., a Maryland
corporation (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 Active Balanced 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 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 Directors of the Fund, the Manager is authorized to retain more
than one Subadviser for the Portfolio, and if the Fund 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 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 Portfolio 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 Fund 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
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
Portfolio'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 Portfolio'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 Portolio'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) 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 Portfolio and its shares of common stock
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 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 Fund in connection with
the management of the investment and reinvestment of the Portfolio's
assets,
(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 Portfolio,
(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 Portfolio'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
(n) any expenses assumed by the Portfolio 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 Fund. 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 Fund, 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 Portfolio 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 Portfolio 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 Active Balanced 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
Active Balanced 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: /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
------------------------------------------------------ -----------------------------------
Prudential Natural Resources Fund, Inc. 0.75%
------------------------------------------------------ -----------------------------------
Prudential Sector Funds, Inc. 0.75%
Prudential Financial Services Fund
------------------------------------------------------ -----------------------------------
Prudential Health Sciences Fund 0.75%
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Prudential Technology Fund 0.75%
------------------------------------------------------ -----------------------------------
Prudential Utility Fund 0.60% to $250 mil.
------------------------------------------------------ -----------------------------------
0.50% next $500 mil.
------------------------------------------------------ -----------------------------------
0.45% next $750 mil.
------------------------------------------------------ -----------------------------------
0.40% next $500 mil.
------------------------------------------------------ -----------------------------------
0.35% next $2 bil.
------------------------------------------------------ -----------------------------------
0.325% next $2 bil.
------------------------------------------------------ -----------------------------------
0.30% over $6 bil.
------------------------------------------------------ -----------------------------------
Prudential Small Company Fund, Inc. 0.70%
------------------------------------------------------ -----------------------------------
Prudential Tax Managed Funds 0.65% to $500 mil. and 0.60% over
Prudential Tax-Managed Equity Fund $500 mil.
------------------------------------------------------ -----------------------------------
Prudential Tax-Managed Small-Cap Fund, Inc. 0.60%
------------------------------------------------------ -----------------------------------
Prudential U.S. Emerging Growth Fund, Inc. 0.60% to $1 bil. and
0.55% above $1 bil.
------------------------------------------------------ -----------------------------------
The Prudential Investment Portfolios, Inc. 0.65% to $1 bil.
Prudential Active Balanced Fund 0.60% above $1 bil.
------------------------------------------------------ -----------------------------------
Prudential Xxxxxxxx Equity Opportunity Fund 0.60% to $300 mil.
0.575% above $300 mil.
------------------------------------------------------ -----------------------------------
Prudential Xxxxxxxx Growth Fund 0.60% to $300 mil
0.575% next 4.7 bil.
0.55% over $5 bil.
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