EXHIBIT 99.B5(a)
XXXXXXXX-XXXXXXXXX FUND, INC.
MANAGEMENT AGREEMENT
Agreement, made this 10th day of June, 1991 between Xxxxxxxx-Xxxxxxxxx
Fund, Inc., a Maryland corporation (the Fund), and Prudential Mutual Fund
Management, Inc., a Delaware corporation (the Manager).
W I T N E S S E T H
WHEREAS, the Fund is 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 contact
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 corporate 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 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 shall enter into an agreement, dated the date hereof, with Xxxxxxxx-
Xxxxxxxxx Capital Management (the Subadviser) pursuant to which the Subadviser
shall furnish to the Fund the investment advisory services specified therein in
connection with the management of the Fund. Such agreement in the form attached
as Exhibit A is hereinafter referred to as the "Subadvisory Agreement." The
Manager shall continue to have responsibility for all investment advisory
services furnished pursuant to the Subadvisory Agreement.
2. Subject to the supervision of the Board of Directors of the Fund,
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 and the
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Subadvisory Agreement, the Manager shall manage the investment operations of the
Fund and the composition of the Fund's portfolio, including the purchase,
retention and disposition thereof, in accordance with 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 the Fund's investments
and determine from time to time what investments or securities will be
purchased, retained, sold or loaned by the 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 Articles of
Incorporation, By-laws and Prospectus (hereinafter defined) of the Fund and
with the instructions and directions of the Board of Directors of the Fund and
shall 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 to be purchased or
sold by the Fund and shall place orders pursuant to its determinations with or
through such persons, brokers or dealers (including but not limited to
Prudential Securities Incorporated) in conformity with the policies with respect
to brokerage as set forth in the Fund's Registration Statement and Prospectus
(hereinafter defined) 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 will give primary consideration to securing the most favorable price and
efficient execution. Consistent with this policy, the Manager and the Subadviser
may consider the financial responsibility, research and investment information
and other research services and products provided by brokers or dealers who may
effect or be a party to any such transaction or other transactions to which
other clients of the Manager or the Subadviser 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 Fund's investment transaction business. It is also understood that it is
desirable for the Fund that the Manager and the Subadviser have access to
supplemental investment and market research services and products and security
and economic analysis provided by brokers and that such brokers may execute
brokerage transactions at a higher cost to the Fund than may
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result when allocating brokerage to other brokers on the basis of seeking the
most favorable price and efficient execution. Therefore, the Manager and the
Subadviser are authorized to pay higher brokerage commissions for the purchase
and sale of securities for the Fund to brokers who provide such research
services and products 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 may be
useful to the Manager and the Subadviser in connection with its services to
other clients.
On occasions when the Manager or the Subadviser deems the purchase or
sale of a security to be in the best interest of the Fund as well as other
clients of the Manager or the Subadviser, the Manager or the Subadviser, to the
extent permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities 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 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 shall maintain all books and records with respect to
the Fund'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 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 shall provide the Fund's Custodian on each business
day with information relating to all transactions concerning the Fund'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.
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:
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(a) Articles of Incorporation of the Fund, as filed with the
Secretary of State of Maryland (such Articles of Incorporation, as in effect on
the date hereof and as amended from time to time, are herein called the
"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 Securities and Exchange Commission (the Commission) relating to the
Fund and shares of the Fund's Common Stock and all amendments thereto;
(e) Notification of Registration of the Fund under the 1940 Act
on Form N-8A as filed with the Commission and all amendments thereto; and
(f) Prospectus and Statement of Additional Information of the
Fund (such Prospectus and Statement of Additional Information, as currently in
effect and as amended or supplemented from time to time, being herein called the
"Prospectus").
4. The Manager shall authorize and permit any of its directors,
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 directors, 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
shall 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.
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6. During the term of this Agreement, the Manager shall pay the following
expenses:
(a) the salaries and expenses of all personnel of the Fund and the
Manager except the fees and expenses of directors who are not affiliated persons
of the Manager or the Subadviser,
(b) all expenses incurred by the Manager or by the Fund in connection
with managing the ordinary course of the Fund's business other than those
assumed by the Fund herein, and
(c) the costs and expenses payable to the Subadviser pursuant to the
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 Fund's Assets,
(b) the fees and expenses of directors who are not affiliated persons
of the Manager or the Fund's Subadviser,
(c) out-of-pocket travel expenses for all Directors and other
expenses of Directors' meetings,
(d) 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 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 Fund pursuant to
Section 31 of the 1940 Act and the rules promulgated thereunder, (iii) the
pricing of the shares of the Fund, including the cost of any pricing 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,
(e) the fees and expenses of the Fund's Transfer and Dividend
Disbursing Agent, which may be the Custodian, that relate to the maintenance of
each shareholder account,
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(f) the charges and expenses of legal counsel and independent
accountants for the Fund,
(g) brokers' commissions and any issue or transfer taxes
chargeable to the Fund in connection with its securities and futures
transactions,
(h) all taxes and corporate fees payable by the Fund to federal,
state or other governmental agencies,
(i) the fees of any trade associations of which the Fund may be
a member,
(j) the cost of stock certificates representing, and/or
non-negotiable share deposit receipts evidencing, shares of the Fund,
(k) the cost of fidelity, directors and officers and errors and
omissions insurance,
(l) the fees and expenses involved in registering and
maintaining registration of the Fund and of its shares with the Commission,
registering the Fund as a broker or dealer and qualifying its shares under state
securities laws, including the preparation and printing of the Fund's
registration statements, prospectuses and statements of additional information
for filing under federal and state securities laws for such purposes,
(m) allocable communications expenses with respect to investor
services and all expenses of shareholders' and directors' meetings and of
preparing, printing and mailing reports to shareholders in the amount necessary
for distribution to the shareholders,
(n) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business, and
(o) 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 Fund for any fiscal year
(including the fees payable to the Manager but excluding interest, taxes,
brokerage commissions, distribution fees, litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund's business) exceed the lowest applicable annual expense limitation
established and
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enforced pursuant to the statute or regulations of any jurisdiction in which
shares of the Fund are then qualified for offer and sale, the compensation due
the Manager shall 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
Fund 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 Fund shall pay to the Manager as full compensation therefor a fee
at an annual rate of .95 of 1% of the Fund's average daily net assets computed
daily and payable monthly.
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 reward 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. 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 a conformity with the requirements of the 1940
Act; provided, however, that this Agreement may be terminated by the Fund 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).
11. Nothing in this Agreement shall limit or restrict the right of any
director, 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.
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12. 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.
13. 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 Fund 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 shall 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 Fund as the Manager at any time, or from time to
time, reasonably requests in order to discharge its obligations hereunder.
14. 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.
15. 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, X.X.
00000, Attention: Secretary; or (2) to the Fund at Xxx Xxxxxxx Xxxxx, Xxx Xxxx,
X.X. 00000, Attention: President.
16. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
17. The Fund may use the name "Xxxxxxxx-Xxxxxxxxx Fund, Inc." or any name
including the words "Xxxxxxxx" or "Applegate" only for so long as the
Subadvisory Agreement or any extension, renewal or amendment thereof remains in
effect, including any similar agreement with any organization which shall have
succeeded to the Subadviser's business as Subadviser or any extension, renewal
or amendment.
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thereof. At such time as such an agreement shall no longer be in effect, the
Fund shall (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 Subadviser, or any organization which shall have so succeeded to such
businesses.
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.
XXXXXXXX-XXXXXXXXX FUND, INC.
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------
Xxxx X. Xxxxxxxxx
President
PRUDENTIAL MUTUAL FUND MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Xxxxxx X. Xxxxx
Executive Vice President
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