EXHIBIT 99.5(e)
PRUDENTIAL XXXXXX FUND
(formerly The Prudential Institutional Fund)
MANAGEMENT AGREEMENT
Agreement, made this 30th day of October, 1996 between Prudential
Xxxxxx Fund, a Delaware business trust (the Trust), and Prudential Mutual Fund
Management LLC, a limited liability company (the Manager).
W I T N E S S E T H
WHEREAS, the Trust is a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended (the 1940 Act);
WHEREAS, the shares of beneficial interest of the Trust are divided into
separate series or funds (each a Fund), each of which is established pursuant to
a resolution of the Trustees of the Trust, and the Trustees may from time to
time terminate such Funds or establish and terminate additional Funds; and
WHEREAS, the Trust desires to retain the Manager to render or contract to
obtain as hereinafter provided investment advisory services to the Trust, and
the Manager is willing to render such investment advisory services;
NOW, THEREFORE, the parties agree as follows:
1. The Trust hereby appoints the Manager to act as manager of the Trust and
administrator of its corporate 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. The Manager is
authorized to enter into subadvisory agreements for investment advisory services
in connection with the management of the Trust and each Fund thereof. Any such
agreement may be entered into by the Manager on such terms and in such manner as
may be permitted by the 1940 Act and the rules thereunder. The Manager will
continue to have responsibility for all investment advisory services furnished
pursuant to any such investment advisory agreements. The Manager will review the
performance of all subadvisers, as well as the Distributor, Transfer Agent and
Custodian and make recommendations to the Trustees of the Trust with respect to
the retention and renewal of contracts.
2. Subject to the supervision of the Trustees of the Trust, the Manager
shall administer the Fund's corporate 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, the Manager shall manage the investment operations of the Trust and each
Fund thereof and the composition of each Fund's portfolio, including the
purchase, retention and disposition thereof, in accordance with the Trust's and
the Fund's investment objectives, policies and restrictions as stated in the
Prospectus (hereinafter defined) and subject to the following understandings:
(a) The Manager shall provide supervision of each Fund's investments
and determine from time to time what investments or securities will be
purchased, retained, sold or loaned
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by each Fund, 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 Declaration of
Trust, By-Laws and Prospectus (hereinafter defined) of the Trust and with
the instructions and directions of the Trustees of the Trust and will
conform to and comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations.
(c) The Manager shall determine the securities and futures contracts
to be purchased or sold by each 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 Trust's Registration Statement and Prospectus (hereinafter
defined) or as the Trustees may direct from time to time. In providing the
Trust with investment supervision, it is recognized that the Manager will
give primary consideration to securing the most favorable price and
efficient execution. Consistent with this policy, the Manager 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 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 Trust's investment transaction business. It is also understood that
it is desirable for the Trust that the Manager have access to supplemental
investment and market research and security and economic analysis provided
by brokers or futures commission merchants and that such
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brokers may execute brokerage transactions at a higher cost to the Trust
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 is authorized to pay higher
brokerage commissions for the purchase and sale of securities and futures
contracts for the Trust to brokers or futures commission merchants who
provide such research and analysis, subject to review by the Trustees of
the Trust 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 in connection
with its services to other clients.
On occasions when the Manager deems the purchase or sale of a security
or a futures contract to be in the best interest of the Trust as well as
other clients of the Manager or the Subadviser, the Manager, 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, the Trust and to
such other clients.
(d) The Manager shall maintain all books and records with respect to
each Fund's portfolio transactions and shall render to the Trustees of the
Trust such periodic and special reports as the Board may reasonably
request.
(e) The Manager shall be responsible for the financial and accounting
records to be
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maintained by the Trust (including those being maintained by the Trust's
Custodian).
(f) The Manager shall provide the Trust's Custodian on each business
day with information relating to all transactions concerning the Trust's
assets.
(g) The investment management services of the Manager to the Trust
under this Agreement are not to be deemed exclusive, and the Manager shall
be free to render similar services to others.
3. The Trust has delivered to the Manager copies of each of the following
documents and will deliver to it all future amendments and supplements thereto,
if any:
(a) Agreement and Declaration of Trust, as filed with the Secretary of
State of Delaware (such Agreement and Declaration of Trust, as in effect on
the date hereof and as amended from time to time, are herein called the
"Declaration of Trust");
(b) By-Laws of the Trust (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 Trustees of the Trust 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 Securities and Exchange Commission (the Commission) relating to
the Trust and shares of beneficial interest of the Trust and all amendments
thereto;
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the Commission and all amendments thereto; and
(f) Prospectus of the Trust (such Prospectus and Statement of
Additional
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Information, each as currently in effect and as amended or supplemented
from time to time, being herein collectively called the "Prospectus").
4. The Manager 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. All services to be furnished by the
Manager under this Agreement may be furnished through the medium of any such
directors, officers or employees of the Manager.
5. The Manager shall keep the Trust'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 Trust are the property of the Trust and it
will surrender promptly to the Trust any such records upon the Trust'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 personnel of the Trust and the
Manager except the fees and expenses of Trustees who are not affiliated
persons of the Manager or the Trust's investment adviser,
(ii) all expenses incurred by the Manager or by the Trust in
connection with managing the ordinary course of the Trust's business other
than those assumed by the Trust herein, and
(iii) the costs and expenses payable pursuant to any subadvisory
agreements.
The Trust assumes and will pay the expenses described below:
(a) the fees and expenses incurred by the Trust in connection with the
management of the investment and reinvestment of each Fund's assets,
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(b) the fees and expenses of Trustees who are not affiliated persons
of the Manager or a Fund's investment adviser,
(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 Trust and
the providing of any such records to the Manager useful to the Manager in
connection with the Manager's responsibility for the accounting records of
the Trust pursuant to Section 31 of the 1940 Act and the rules promulgated
thereunder, (iii) the pricing of the shares of the Trust, including the
cost of any pricing service or services which may be retained pursuant to
the authorization of the Trustees of the Fund, and (iv) for both mail and
wire orders, the cashiering function in connection with the issuance and
redemption of the Trust's securities,
(d) the fees and expenses of the Trust's Transfer and Dividend
Disbursing Agent, which may be the Custodian, that relate to the
maintenance of each shareholder account,
(e) the charges and expenses of legal counsel and independent
accountants for the Trust,
(f) brokers' commissions and any issue or transfer taxes chargeable to
the Trust in connection with its securities and futures transactions,
(g) all taxes and corporate fees payable by the Trust to federal,
state or other governmental agencies,
(h) the fees of any trade associations of which the Trust may be a
member,
(i) the cost of share certificates representing, and/or non-negotiable
share deposit receipts evidencing, shares of the Trust,
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(j) the cost of fidelity, directors and officers and errors and
omissions insurance,
(k) the fees and expenses involved in registering and maintaining the
registration of the Trust and of its shares with the Securities and
Exchange Commission, registering the Trust as a broker or dealer and
qualifying its shares under state securities laws, including the
preparation and printing of the Trust's registration statements,
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 to shareholders in the amount
necessary for distribution to the shareholders, and
(m) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Trust's business, and
(n) any expenses assumed by the Fund pursuant to a Plan of
Distribution adopted in conformity with Rule 12b-1 under the 1940 Act.
7. In the event the expenses of the Trust for any fiscal year (including
the fees payable to the Manager but excluding interest, taxes, brokerage
commissions, distribution fees and litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the Trust's
business) exceed the lowest applicable annual expense limitation established and
enforced pursuant to the statute or regulations of any jurisdictions in which
shares of the Trust are then qualified for offer and sale, the compensation due
the Manager will be reduced by the amount of such excess, or, if such reduction
exceeds the compensation payable to the Manager, the Manager will pay to the
Trust the amount of such reduction which exceeds the amount of such
compensation.
8. For the services provided and the expenses assumed pursuant to this
Agreement, the Trust
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will pay to the Manager as full compensation therefor fees as set forth below.
These fees will be computed daily and will be paid to the Manager monthly. Any
reduction in the fees payable and any payments by the Manager to the Trust
pursuant to paragraph 7 shall be made monthly. Any such reductions or payments
are subject to readjustment during the year.
Rate as a percentage of
Name of Fund average daily net assets
------------ ------------------------
Stock Index Fund .30 of 1%
Active Balanced Fund .65 of 1%
9. 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.
10. The Trust shall indemnify the Manager and hold it harmless from and
against all damages, liabilities, costs and expenses (including reasonable
attorneys' fees and amounts reasonably paid in settlement) incurred by the
Manager in or by reason of any pending, threatened or completed action, suit,
investigation or other proceeding (including an action or suit by or in the
right of the Trust or its security holders) arising out of or otherwise based
upon any action actually or allegedly taken or omitted to be taken by the
Manager in connection with the performance of any of its duties or obligations
under this Agreement; provided, however, that nothing contained herein shall
protect
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or be deemed to protect the Manager against or entitle or be deemed to entitle
the Manager to indemnification in respect of any liability to the Trust or its
security holders to which the Manager would otherwise be subject 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 duties and obligations
under this Agreement.
11. 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 Trust or any
Fund at any time, without the payment of any penalty, by the Trustees of the
Trust or by vote of a majority of the outstanding voting securities (as defined
in the 0000 Xxx) of a 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).
12. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Manager 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 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.
13. Except as otherwise provided herein or authorized by the Trustees of
the Trust 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 Trust in any way or otherwise be deemed an agent of the Trust.
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14. During the term of this Agreement, the Trust 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 Trust 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 Trust 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 Trust shall furnish
or otherwise make available to the Manager such other information relating to
the business affairs of the Trust as the Manager at any time, or from time to
time, reasonably requests in order to discharge its obligations hereunder.
15. This Agreement may be amended by mutual consent, but the consent of the
Trust must be obtained in conformity with the requirements of the 1940 Act.
16. 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 Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, Attention: Secretary; or (2) to the Trust at Prudential Plaza, 000
Xxxxx Xxxxxx, Xxxxxx, XX 00000-0000, Attention: Assistant Secretary.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without reference to choice of law principles
thereof and in accordance with the 1940 Act. In the case of any conflict the
1940 Act shall control.
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18. The Trust may use the name "Prudential Xxxxxx 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
Trust 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 Trust use the name "Prudential Xxxxxx 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.
19. The Trust is a business trust organized under the Delaware Business
Trust Act pursuant to a certificate of trust dated May 11, 1992. The Trust is a
series trust and all debts, liabilities, obligations and expenses of a
particular Fund shall be enforceable only against the assets of that Fund and
not against the assets of any other Fund or of the Trust as a whole. Neither the
Trustees, officers, agents or shareholders of the Trust assume any personal
liability for obligations entered into on behalf of the Trust (or a Fund
thereof).
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 XXXXXX FUND
By /s/ XXXXXX X. XXXXX
----------------------------------
Xxxxxx X. Xxxxx
PRUDENTIAL MUTUAL FUND MANAGEMENT LLC
By /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
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