PRUDENTIAL EQUITY FUND, INC.
DISTRIBUTION AGREEMENT
Agreement made as of June 1, 1998, between Prudential Equity Fund,
Inc. (the Fund), and Prudential Investment Management Services LLC, a
Delaware limited liability company (the Distributor).
WITNESSETH
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the Investment Company Act), as a diversified, open-end,
management investment company and it is in the interest of the Fund to offer
its shares for sale continuously;
WHEREAS, the shares of the Fund may be divided into classes and/or
series (all such shares being referred to herein as Shares) and the Fund
currently is authorized to offer Class A, Class B, Class C and Class Z Shares;
WHEREAS, the Distributor is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended, and is engaged in the business
of selling shares of registered investment companies either directly or
through other broker-dealers;
WHEREAS, the Fund and the Distributor wish to enter into an
agreement with each other, with respect to the continuous offering of the
Fund's Shares from and after the date hereof in order to promote the growth
of the Fund and facilitate the distribution of its Shares; and
WHEREAS, the Fund has adopted a plan (or plans) of distribution
pursuant to Rule 12b-1 under the Investment Company Act with respect to
certain of its classes and/or series of Shares (the Plans) authorizing
payments by the Fund to the Distributor with respect to the distribution of
such classes and/or series of Shares and the maintenance of related
shareholder accounts.
NOW, THEREFORE, the parties agree as follows:
Section 1. APPOINTMENT OF THE DISTRIBUTOR
The Fund hereby appoints the Distributor as the principal
underwriter and distributor of the Shares of the Fund to sell Shares to the
public on behalf of the Fund and the Distributor hereby accepts such
appointment and agrees to act hereunder. The Fund hereby agrees during the
term of this Agreement to sell Shares of the Fund through the Distributor on
the terms and conditions set forth below.
Section 2. EXCLUSIVE NATURE OF DUTIES
The Distributor shall be the exclusive representative of the
Fund to act as principal underwriter and distributor of the Fund's Shares,
except that:
2.1 The exclusive rights granted to the Distributor to sell
Shares of the Fund shall not apply to Shares of the Fund issued in connection
with the merger or consolidation of any other investment company or personal
holding company with the Fund or the acquisition by purchase or otherwise of
all (or substantially all) the assets or the outstanding shares of any such
company by the Fund.
2.2 Such exclusive rights shall not apply to Shares issued by
the Fund pursuant to reinvestment of dividends or capital gains distributions
or through the exercise of any conversion feature or exchange privilege.
2.3 Such exclusive rights shall not apply to Shares issued by
the Fund pursuant to the reinstatement privilege afforded redeeming
shareholders.
2.4 Such exclusive rights shall not apply to purchases made
through the Fund's transfer and dividend disbursing agent in the manner set
forth in the currently effective Prospectus of the Fund. The term
"Prospectus" shall mean the Prospectus and Statement of Additional
Information included as part of the Fund's Registration Statement, as such
Prospectus and Statement of Additional Information may be amended or
supplemented from time to time, and the term "Registration Statement" shall
mean the Registration Statement filed by the Fund with the Securities and
Exchange Commission and effective under the Securities Act of 1933, as
amended (Securities Act), and the Investment Company Act, as such
Registration Statement is amended from time to time.
Section 3. PURCHASE OF SHARES FROM THE FUND
3.1 The Distributor shall have the right to buy from the Fund
on behalf of investors the Shares needed, but not more than the Shares needed
(except for clerical errors in transmission) to fill unconditional orders for
Shares placed with the Distributor by investors or registered and qualified
securities dealers and other financial institutions (selected dealers).
3.2 The Shares shall be sold by the Distributor on behalf of
the Fund and delivered by the Distributor or selected dealers, as described
in Section 6.4 hereof, to investors at the offering price as set forth in the
Prospectus.
3.3 The Fund shall have the right to suspend the sale of any or
all classes and/or series of its Shares at times when redemption is suspended
pursuant to
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the conditions in Section 4.3 hereof or at such other times as may be
determined by the Board. The Fund shall also have the right to suspend the
sale of any or all classes and/or series of its Shares if a banking
moratorium shall have been declared by federal or New Jersey authorities.
3.4 The Fund, or any agent of the Fund designated in writing by
the Fund, shall be promptly advised of all purchase orders for Shares
received by the Distributor. Any order may be rejected by the Fund;
provided, however, that the Fund will not arbitrarily or without reasonable
cause refuse to accept or confirm orders for the purchase of Shares. The
Fund (or its agent) will confirm orders upon their receipt, will make
appropriate book entries and upon receipt by the Fund (or its agent) of
payment therefor, will deliver deposit receipts for such Shares pursuant to
the instructions of the Distributor. Payment shall be made to the Fund in
New York Clearing House funds or federal funds. The Distributor agrees to
cause such payment and such instructions to be delivered promptly to the Fund
(or its agent).
Section 4. REPURCHASE OR REDEMPTION OF SHARES BY THE FUND
4.1 Any of the outstanding Shares may be tendered for
redemption at any time, and the Fund agrees to repurchase or redeem the
Shares so tendered in accordance with its Articles of Incorporation as
amended from time to time, and in accordance with the applicable provisions
of the Prospectus. The price to be paid to redeem or repurchase the Shares
shall be equal to the net asset value determined as set forth in the
Prospectus. All payments by the Fund hereunder shall be made in the manner
set forth in Section 4.2 below.
4.2 The Fund shall pay the total amount of the redemption price
as defined in the above paragraph pursuant to the instructions of the
Distributor on or before the seventh day subsequent to its having received
the notice of redemption in proper form. The proceeds of any redemption of
Shares shall be paid by the Fund as follows: (i) in the case of Shares
subject to a contingent deferred sales charge, any applicable contingent
deferred sales charge shall be paid to the Distributor, and the balance shall
be paid to or for the account of the redeeming shareholder, in each case in
accordance with applicable provisions of the Prospectus; and (ii) in the case
of all other Shares, proceeds shall be paid to or for the account of the
redeeming shareholder, in each case in accordance with applicable provisions
of the Prospectus.
4.3 Redemption of any class and/or series of Shares or payment
may be suspended at times when the New York Stock Exchange is closed for
other than customary weekends and holidays, when trading on said Exchange is
restricted, when an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets, or during any other period when the Securities and Exchange
Commission, by order, so permits.
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Section 5. DUTIES OF THE FUND
5.1 Subject to the possible suspension of the sale of Shares as
provided herein, the Fund agrees to sell its Shares so long as it has Shares
of the respective class and/or series available.
5.2 The Fund shall furnish the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares, and
this shall include one certified copy, upon request by the Distributor, of
all financial statements prepared for the Fund by independent public
accountants. The Fund shall make available to the Distributor such number of
copies of its Prospectus and annual and interim reports as the Distributor
shall reasonably request.
5.3 The Fund shall take, from time to time, but subject to the
necessary approval of the Board and the shareholders, all necessary action to
fix the number of authorized Shares and such steps as may be necessary to
register the same under the Securities Act, to the end that there will be
available for sale such number of Shares as the Distributor reasonably may
expect to sell. The Fund agrees to file from time to time such amendments,
reports and other documents as may be necessary in order that there will be
no untrue statement of a material fact in the Registration Statement, or
necessary in order that there will be no omission to state a material fact in
the Registration Statement which omission would make the statements therein
misleading.
5.4 The Fund shall use its best efforts to notify such states
as the Distributor and the Fund may approve of its intention to sell any
appropriate number of its Shares; provided that the Fund shall not be
required to amend its Articles of Incorporation or By-Laws to comply with the
laws of any state, to maintain an office in any state, to change the terms of
the offering of its Shares in any state from the terms set forth in its
Registration Statement, to qualify as a foreign corporation in any state or
to consent to service of process in any state other than with respect to
claims arising out of the offering of its Shares. Any such notification may
be withheld, terminated or withdrawn by the Fund at any time in its
discretion. As provided in Section 9 hereof, the expense of notification and
maintenance of notification shall be borne by the Fund. The Distributor
shall furnish such information and other material relating to its affairs and
activities as may be required by the Fund in connection with such
notifications.
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Section 6. DUTIES OF THE DISTRIBUTOR
6.1 The Distributor shall devote reasonable time and effort to
effect sales of Shares, but shall not be obligated to sell any specific
number of Shares. Sales of the Shares shall be on the terms described in the
Prospectus. The Distributor may enter into like arrangements with other
investment companies. The Distributor shall compensate the selected dealers
as set forth in the Prospectus.
6.2 In selling the Shares, the Distributor shall use its best
efforts in all respects duly to conform with the requirements of all federal
and state laws relating to the sale of such securities. Neither the
Distributor nor any selected dealer nor any other person is authorized by the
Fund to give any information or to make any representations, other than those
contained in the Registration Statement or Prospectus and any sales
literature approved by appropriate officers of the Fund.
6.3 The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and selected dealers, the collection of
amounts payable by investors and selected dealers on such sales and the
cancellation of unsettled transactions, as may be necessary to comply with
the requirements of Securities Exchange Act Rule 10b-10 and the rules of the
National Association of Securities Dealers, Inc. (NASD).
6.4 The Distributor shall have the right to enter into selected
dealer agreements with registered and qualified securities dealers and other
financial institutions of its choice for the sale of Shares, provided that
the Fund shall approve the forms of such agreements. Within the United
States, the Distributor shall offer and sell Shares only to such selected
dealers as are members in good standing of the NASD or are institutions
exempt from registration under applicable federal securities laws. Shares
sold to selected dealers shall be for resale by such dealers only at the
offering price determined as set forth in the Prospectus.
Section 7. PAYMENTS TO THE DISTRIBUTOR
7.1 With respect to classes and/or series of Shares which
impose a front-end sales charge, the Distributor shall receive and may retain
any portion of any front-end sales charge which is imposed on such sales and
not reallocated to selected dealers as set forth in the Prospectus, subject
to the limitations of Rule 2830 of the Conduct Rules of the NASD. Payment of
these amounts to the Distributor is not contingent upon the adoption or
continuation of any applicable Plans.
7.2 With respect to classes and/or series of Shares which
impose a contingent deferred sales charge, the Distributor shall receive and
may retain any contingent deferred sales charge which is imposed on such
sales as set forth in the Prospectus, subject to the limitations of Rule 2830
of the Conduct Rules of the NASD.
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Payment of these amounts to the Distributor is not contingent upon the
adoption or continuation of any Plan.
Section 8. PAYMENT OF THE DISTRIBUTOR UNDER THE PLAN
8.1 The Fund shall pay to the Distributor as compensation for
services under any Plans adopted by the Fund and this Agreement a
distribution and service fee with respect to the Fund's classes and/or series
of Shares as described in each of the Fund's respective Plans and this
Agreement.
8.2 So long as a Plan or any amendment thereto is in effect,
the Distributor shall inform the Board of the commissions and account
servicing fees with respect to the relevant class and/or series of Shares to
be paid by the Distributor to account executives of the Distributor and to
broker-dealers, financial institutions and investment advisers which have
dealer agreements with the Distributor. So long as a Plan (or any amendment
thereto) is in effect, at the request of the Board or any agent or
representative of the Fund, the Distributor shall provide such additional
information as may reasonably be requested concerning the activities of the
Distributor hereunder and the costs incurred in performing such activities
with respect to the relevant class and/or series of Shares.
Section 9. ALLOCATION OF EXPENSES
The Fund shall bear all costs and expenses of the continuous
offering of its Shares (except for those costs and expenses borne by the
Distributor pursuant to a Plan and subject to the requirements of Rule 12b-1
under the Investment Company Act), including fees and disbursements of its
counsel and auditors, in connection with the preparation and filing of any
required Registration Statements and/or Prospectuses under the Investment
Company Act or the Securities Act, and all amendments and supplements
thereto, and preparing and mailing annual and periodic reports and proxy
materials to shareholders (including but not limited to the expense of
setting in type any such Registration Statements, Prospectuses, annual or
periodic reports or proxy materials). The Fund shall also bear the cost of
expenses of making notice filings for the Shares for sale, and, if necessary
or advisable in connection therewith, of qualifying the Fund as a broker or
dealer, in such states of the United States or other jurisdictions as shall
be selected by the Fund and the Distributor pursuant to Section 5.4 hereof
and the cost and expense payable to each such state for continuing
notification therein until the Fund decides to discontinue such notification
pursuant to Section 5.4 hereof. As set forth in Section 8 above, the Fund
shall also bear the expenses it assumes pursuant to any Plan, so long as such
Plan is in effect.
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Section 10. INDEMNIFICATION
10.1 The Fund agrees to indemnify, defend and hold the
Distributor, its officers and directors and any person who controls the
Distributor within the meaning of Section 15 of the Securities Act, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands or liabilities and any reasonable counsel fees incurred in connection
therewith) which the Distributor, its officers, members or any such
controlling person may incur under the Securities Act, or under common law or
otherwise, arising out of or based upon any untrue statement of a material
fact contained in the Registration Statement or Prospectus or arising out of
or based upon any alleged omission to state a material fact required to be
stated in either thereof or necessary to make the statements in either
thereof not misleading, except insofar as such claims, demands, liabilities
or expenses arise out of or are based upon any such untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information furnished by the Distributor to the Fund for use
in the Registration Statement or Prospectus; provided, however, that this
indemnity agreement shall not inure to the benefit of any such officer,
member or controlling person unless a court of competent jurisdiction shall
determine in a final decision on the merits, that the person to be
indemnified was not liable by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations under this Agreement (disabling
conduct), or, in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnified person was not liable
by reason of disabling conduct, by (a) a vote of a majority of a quorum of
Directors or Directors who are neither "interested persons" of the Fund as
defined in Section 2(a)(19) of the Investment Company Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. The
Fund's agreement to indemnify the Distributor, its officers and members and
any such controlling person as aforesaid is expressly conditioned upon the
Fund's being promptly notified of any action brought against the Distributor,
its officers or members, or any such controlling person, such notification to
be given by letter or telegram addressed to the Fund at its principal
business office. The Fund agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issue and sale of any Shares.
10.2 The Distributor agrees to indemnify, defend and hold the
Fund, its officers and Directors and any person who controls the Fund, if
any, within the meaning of Section 15 of the Securities Act, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending against such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which the Fund, its officers and Directors or any such
controlling person may incur under the Securities Act or under common law or
otherwise, but only to the extent that such liability or expense incurred by
the Fund, its
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Directors or officers or such controlling person resulting from such claims
or demands shall arise out of or be based upon any alleged untrue statement
of a material fact contained in information furnished by the Distributor to
the Fund for use in the Registration Statement or Prospectus or shall arise
out of or be based upon any alleged omission to state a material fact in
connection with such information required to be stated in the Registration
Statement or Prospectus or necessary to make such information not misleading.
The Distributor's agreement to indemnify the Fund, its officers and Directors
and any such controlling person as aforesaid, is expressly conditioned upon
the Distributor's being promptly notified of any action brought against the
Fund, its officers and Directors or any such controlling person, such
notification being given to the Distributor at its principal business office.
Section 11. DURATION AND TERMINATION OF THIS AGREEMENT
11.1 This Agreement shall become effective as of the date
first above written and shall remain in force for two years from the date
hereof and thereafter, but only so long as such continuance is specifically
approved at least annually by (a) the Board of the Fund, or by the vote of a
majority of the outstanding voting securities of the applicable class and/or
series of the Fund, and (b) by the vote of a majority of those Directors who
are not parties to this Agreement or interested persons of any such parties
and who have no direct or indirect financial interest in this Agreement or in
the operation of any of the Fund's Plans or in any agreement related thereto
(independent Directors), cast in person at a meeting called for the purpose
of voting upon such approval.
11.2 This Agreement may be terminated at any time, without the
payment of any penalty, by a majority of the independent Directors or by vote
of a majority of the outstanding voting securities of the applicable class
and/or series of the Fund, or by the Distributor, on sixty (60) days' written
notice to the other party. This Agreement shall automatically terminate in
the event of its assignment.
11.3 The terms "affiliated person," "assignment," "interested
person" and "vote of a majority of the outstanding voting securities", when
used in this Agreement, shall have the respective meanings specified in the
Investment Company Act.
Section 12. AMENDMENTS TO THIS AGREEMENT
This Agreement may be amended by the parties only if such
amendment is specifically approved by (a) the Board of the Fund, or by the
vote of a majority of the outstanding voting securities of the applicable
class and/or series of the Fund, and (b) by the vote of a majority of the
independent Directors cast in person at a meeting called for the purpose of
voting on such amendment.
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Section 13. SEPARATE AGREEMENT AS TO CLASSES AND/OR SERIES
The amendment or termination of this Agreement with respect to
any class and/or series shall not result in the amendment or termination of
this Agreement with respect to any other class and/or series unless
explicitly so provided.
Section 14. GOVERNING LAW
The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New Jersey as at the
time in effect and the applicable provisions of the Investment Company Act.
To the extent that the applicable law of the State of New Jersey, or any of
the provisions herein, conflict with the applicable provisions of the
Investment Company Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year above written.
Prudential Investment Management
Services LLC
By: /s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
Executive Vice President
Prudential Equity Fund, Inc.
By: /s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx
Vice President
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