PRUDENTIAL U.S. EMERGING GROWTH FUND, INC.
AMENDED AND RESTATED MANAGEMENT AGREEMENT
Agreement made this 12th day of October 1996, as amended and restated
this 1st day of January, 2000, and as further amended and restated this 23rd
day of February, 2001, between Prudential U.S. Emerging Growth 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 U.S. Emerging Growth 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 U.S. Emerging Growth 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 U.S. EMERGING GROWTH 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
Prudential 20/20 Focus Fund 0.75% to $1 bil. and
0.70% over $1 bil.
Prudential Index Series Fund 0.30%
Prudential Stock Index Fund
Prudential Natural Resources Fund, Inc. 0.75%
Prudential Sector Funds, Inc.
Prudential Financial Services Fund 0.75%
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.
