PRUDENTIAL SMALL COMPANY FUND, INC.
AMENDED AND RESTATED MANAGEMENT AGREEMENT
Agreement made this 31st day of January, 1989, as amended and restated
this 2nd day of February, 2001, between Prudential Small Company Fund, 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 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 Fund, and if the Fund has
more than one Subadviser, the Manager is authorized to allocate the Fund'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 Fund, 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 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
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 Fund's investments, and shall 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 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 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 (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 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.
(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 Fund'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 Fund and its shares of common stock and all
amendments thereto; and
(e) Prospectus and Statement of Additional Information of the Fund.
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 Fund'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 Fund,
(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 Fund'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 Fund 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
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).
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 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 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 Fund 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 "Prudential Small Company Fund, Inc.," 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 "Prudential Small
Company Fund, Inc.," 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.
PRUDENTIAL SMALL COMPANY FUND, 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%
--------------------------------------------------------------------------------
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
Prudential Tax-Managed Equity Fund 0.60% over $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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