PRUDENTIAL PACIFIC GROWTH FUND, INC.
Distribution Agreement
(Class C Shares)
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Agreement made as of August 1, 1994 and amended and restated as
of June 5, 1995, between Prudential Pacific Growth Fund, Inc., a Maryland
Corporation (the Fund) and Prudential Securities Incorporated, a Delaware
Corporation (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 Class C shares for sale continuously;
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 Class C shares from and after the date hereof in order to promote
the growth of the Fund and facilitate the distribution of its Class C
shares; and
WHEREAS, the Fund has adopted a distribution and service plan
pursuant to Rule 12b-1 under the Investment Company Act (the Plan)
authorizing payments by the Fund to the Distributor with respect to the
distribution of Class C shares of the Fund and the maintenance of Class C
shareholder accounts.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor
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The Fund hereby appoints the Distributor as the principal
underwriter and distributor of the Class C shares of the Fund to sell Class
C 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 Class C shares of the Fund
through the Distributor on the terms and conditions set forth below.
Section 2. Exclusive Nature of Duties
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The Distributor shall be the exclusive representative of the Fund
to act as principal underwriter and distributor of the Fund's Class C
shares, except that:
2.1 The exclusive rights granted to the Distributor to sell
Class C shares of the Fund shall not apply to Class C 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 Class C shares
issued by the Fund pursuant to reinvestment of dividends or capital gains
distributions.
2.3 Such exclusive rights shall not apply to Class C 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 (the Securities Act), and the Investment Company Act, as such
Registration Statement is amended from time to time.
Section 3. Purchase of Class C Shares from the Fund
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3.1 The Distributor shall have the right to buy from the Fund on
behalf of investors the Class C shares needed, but not more than the Class
C shares needed (except for clerical errors in transmission) to fill
unconditional orders for Class C shares placed with the Distributor by
investors or registered and qualified securities dealers and other
financial institutions (selected dealers).
3.2 The Class C 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 its
Class C shares at times when redemption is suspended pursuant to the
conditions in Section 4.3 hereof or at such other times as may be
determined by the Board of Directors. The Fund shall also have the right
to suspend the sale of its Class C shares if a banking moratorium shall
have been declared by federal or New York authorities.
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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 Class C
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 Class C
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 Class C
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 Class C Shares by the Fund
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4.1 Any of the outstanding Class C shares may be tendered for
redemption at any time, and the Fund agrees to repurchase or redeem the
Class C 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 Class C 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
Class C shares shall be paid by the Fund as follows: (a) any applicable
contingent deferred sales charge shall be paid to the Distributor and (b)
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.
4.3 Redemption of Class C 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
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5.1 Subject to the possible suspension of the sale of Class C
shares as provided herein, the Fund agrees to sell its Class C shares so
long as it has Class C shares 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 Class
C 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 of Directors and the shareholders, all
necessary action to fix the number of authorized Class C 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 Class C 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 qualify and maintain
the qualification of any appropriate number of its Class C shares for sales
under the securities laws of such states as the Distributor and the Fund
may approve; 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 Class C 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 Class C shares. Any such
qualification may be withheld, terminated or withdrawn by the Fund at any
time in its discretion. As provided in Section 9.1 hereof, the expense of
qualification and maintenance of qualification 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 qualifications.
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Section 6. Duties of the Distributor
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6.1 The Distributor shall devote reasonable time and effort to
effect sales of Class C shares of the Fund, but shall not be obligated to
sell any specific number of Class C shares. Sales of the Class C 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 Class C 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 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 Class C shares,
provided that the Fund shall approve the forms of such agreements. Within
the United States, the Distributor shall offer and sell Class C shares only
to such selected dealers as are members in good standing of the NASD.
Class C 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
---------------------------
The Distributor shall receive and may retain any contingent
deferred sales charge which is imposed with respect to repurchases and
redemptions of Class C shares as set forth in the Prospectus, subject to
the limitations of Article III, Section 26 of the NASD Rules of Fair
Practice. Payment of these amounts to the Distributor is not contingent
upon the adoption or continuation of the Plan.
Section 8. Payment of the Distributor under the Plan
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8.1 The Fund shall pay to the Distributor as compensation for
services under the Distribution and Service Plan and this Agreement a fee
of 1% (including an asset-based sales charge of .75 of 1% and a service fee
of .25 of 1%) per annum of
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the average daily net assets of the Class C shares of the Fund. Amounts
payable under the Plan shall be accrued daily and paid monthly or at such
other intervals as the Directors may determine. Amounts payable under the
Plan shall be subject to the limitations of Article III, Section 26 of the
NASD Rules of Fair Practice.
8.2 So long as the Plan or any amendment thereto is in effect,
the Distributor shall inform the Board of Directors of the commissions
(including trailer commissions) and account servicing fees to be paid by
the Distributor to account executives of the Distributor and to
broker-dealers and financial institutions which have selected dealer
agreements with the Distributor. So long as the Plan (or any amendment
thereto) is in effect, at the request of the Board of Directors 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.
8.3 Expenses of distribution with respect to the Class C shares
of the Fund include, among others:
(a) sales commissions (including trailer commissions) paid
to, or on account of, account executives of the
Distributor;
(b) indirect and overhead costs of the Distributor
associated with performance of distribution activities,
including central office and branch expenses;
(c) amounts paid to Prusec for performing services under a
selected dealer agreement between Prusec and the
Distributor for sale of Class C shares of the Fund,
including sales commissions and trailer commissions
paid to, or on account of, agents and indirect and
overhead costs associated with distribution activities;
(d) sales commissions (including trailer commissions) paid
to, or on account of, broker-dealers and financial
institutions (other than Prusec) which have entered
into selected dealer agreements with the Distributor
with respect to Class C shares of the Fund;
(e) amounts paid to, or an account of, account executives
of the Distributor or of other broker-dealers or
financial institutions for
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personal service and/or the maintenance of shareholder
accounts; and
(f) advertising for the Fund in various forms through any
available medium, including the cost of printing and
mailing Fund Prospectuses, and periodic financial
reports and sales literature to persons other than
current shareholders of the Fund.
Indirect and overhead costs referred to in clauses (b) and (c) of
the foregoing sentence include (i) lease expenses, (ii) salaries and
benefits of personnel including operations and sales support personnel,
(iii) utility expenses, (iv) communications expenses, (v) sales promotion
expenses, (vi) expenses of postage, stationery and supplies and (vii)
general overhead.
Section 9. Allocation of Expenses
----------------------
9.1 The Fund shall bear all costs and expenses of the continuous
offering of its Class C shares, 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 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 qualification of the Class C 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 qualification therein until the Fund
decides to discontinue such qualification pursuant to Section 5.4 hereof.
As set forth in Section 8 above, the Fund shall also bear the expenses it
assumes pursuant to the Plan with respect to Class C shares, so long as the
Plan is in effect.
Section 10. Indemnification
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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 counsel fees incurred in connection
therewith) which the Distributor, its officers, Directors 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
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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 in writing 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, Director 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 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 Directors 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 Directors, or any such controlling person, such notification to
be given in writing 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 Class C
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 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 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 in writing 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
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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 to be given to
the Distributor in writing at its principal business office.
Section 11. Duration and Termination of this Agreement
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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 Directors of the Fund, or by
the vote of a majority of the outstanding voting securities of the Class C
shares 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 the Fund's Plan or in any agreement
related thereto (Rule 12b-1 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 Rule 12b-1 Directors or by
vote of a majority of the outstanding voting securities of the Class C
shares 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 Directors of the
Fund, or by the vote of a majority of the outstanding voting securities of
the Class C shares of the Fund, and (b) by the vote of a majority of the
Rule 12b-1 Board of Directors cast in person at a meeting called for the
purpose of voting on such amendment.
Section 13. Governing Law
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The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York 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 York, or any of
the provisions herein, conflict
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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 Securities
Incorporated
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Senior Vice President
Prudential Pacific Growth Fund, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
President
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