PRUDENTIAL TAX-MANAGED SMALL-CAP FUND, INC.
AMENDED AND RESTATED MANAGEMENT AGREEMENT
Agreement made this 4th day of April, 1997, as amended and restated
this 23rd day of February, 2001, between Prudential Tax-Managed Small-Cap Fund,
Inc. (formerly, Prudential Small-Cap Quantum Fund, Inc.), a Maryland corporation
(the Fund), and Prudential Investments Fund Management LLC, a New York limited
liability company (the Manager).
WITNESSETH
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 Tax-Managed
Small-Cap 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 Tax-Managed Small-Cap 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 TAX-MANAGED SMALL-CAP 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.
