-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, NerqkYkB7HYe20JN18SUl0LtWJOeQ2nWXhtD2TMzSzFPYY9vB6wgiVdY19NAMkT2 H0+quqAPmuReHt7q6Inh3g== 0000950110-95-000438.txt : 19950612 0000950110-95-000438.hdr.sgml : 19950612 ACCESSION NUMBER: 0000950110-95-000438 CONFORMED SUBMISSION TYPE: DEFS14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950627 FILED AS OF DATE: 19950609 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUDENTIAL TAX FREE MONEY FUND INC CENTRAL INDEX KEY: 0000311561 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 132993505 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: 1934 Act SEC FILE NUMBER: 811-02927 FILM NUMBER: 95546285 BUSINESS ADDRESS: STREET 1: 199 WATER ST CITY: NEW YORK STATE: NY ZIP: 10292 BUSINESS PHONE: 2122142189 MAIL ADDRESS: STREET 1: ONE SEAPORT PLZ STREET 2: ONE SEAPORT PLZ CITY: NEW YORK STATE: NY ZIP: 10292 FORMER COMPANY: FORMER CONFORMED NAME: PRUDENTIAL BACHE TAX FREE MONEY FUND INC DATE OF NAME CHANGE: 19920603 FORMER COMPANY: FORMER CONFORMED NAME: CHANCELLOR TAX FREE MONEY FUND INC DATE OF NAME CHANGE: 19830516 FORMER COMPANY: FORMER CONFORMED NAME: CHANCELLOR TAX EXEMPT DAILY INCOME FUND INC DATE OF NAME CHANGE: 19810811 DEFS14A 1 DEF PROXY STMT & NOTICE OF SPECIAL MEET. INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the registrant /x/ Filed by a party other than the registrant / / Check the appropriate box: / / Preliminary proxy statement /x/ Definitve proxy statement / / Definitive additional materials / / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 Prudential Tax-Free Money Fund - -------------------------------------------------------------------------------- (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Prudential Tax-Free Money Fund - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box): /x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or Rule 14a-6(i)(2). / / $500 per each party per Exchange Act Rule 14a-6(i)(3), or Rule 14a-6(i)(2). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. PRUDENTIAL TAX-FREE MONEY FUND ONE SEAPORT PLAZA NEW YORK, N.Y. 10292 ------------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND NOTICE OF SPECIAL MEETING OF SHAREHOLDERS ------------- To our Shareholders: Notice is hereby given that an Annual Meeting of Shareholders of the Prudential-Bache Tax-Free Money Fund, Inc., doing business as Prudential Tax-Free Money Fund (the Fund), will be held at 9:00 A.M. on June 27, 1995, at 199 Water Street, New York, New York 10292, for the following purposes: 1. To elect Directors. 2. To ratify the selection by the Board of Directors of Price Waterhouse LLP as independent accountants for the fiscal year ending December 31, 1995. 3. To consider and act upon any other business as may properly come before the Annual Meeting or any adjournment thereof. Notice is also hereby given that a Special Meeting of Shareholders of the Fund will be held at 9:00 A.M. on July 19, 1995, at 199 Water Street, New York, New York 10292, for the following purposes: 1. To approve the elimination of the Fund's investment restriction that limits the Fund to investing in only those securities described in the Fund's Prospectus under the caption "Investment Objective and Policies." 2. To approve the elimination of the Fund's investment restriction regarding the purchase and sale of puts, calls or combinations thereof. 3. To approve the elimination of the Fund's investment restriction limiting the Fund's ability to invest in the securities of any issuer in which officers and Directors of the Fund or its investment adviser own more than a specified interest. 4. To approve an amended and restated Distribution and Service Plan. 5. To approve an amendment to the Articles of Incorporation to permit the Board of Directors to classify and reclassify the unissued capital stock of the Fund. 6. To transact such other business as may properly come before the Special Meeting or any adjournment thereof. Only shares of Common Stock of the Fund of record at the close of business on May 26, 1995 are entitled to notice of and to vote at either the Annual or Special Meetings or any adjournment thereof. Dated: June 8, 1995 S. JANE ROSE Secretary - -------------------------------------------------------------------------------- TWO PROXIES ARE ENCLOSED (ONE FOR EACH OF THE MEETINGS). WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETINGS, PLEASE SIGN AND PROMPTLY RETURN BOTH OF THE ENCLOSED PROXIES IN THE ENCLOSED SELF-ADDRESSED STAMPED ENVELOPE. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN BOTH OF YOUR PROXIES PROMPTLY. - -------------------------------------------------------------------------------- PRUDENTIAL TAX-FREE MONEY FUND ONE SEAPORT PLAZA NEW YORK, N.Y. 10292 (800) 225-1852 ------------- PROXY STATEMENT ------------- This proxy statement is furnished by the Board of Directors of Prudential-Bache Tax-Free Money Fund, Inc., doing business as Prudential Tax-Free Money Fund (the Fund), in connection with its solicitation of proxies for use at an Annual Meeting of Shareholders (the Annual Meeting) of the Fund to be held at 9:00 A.M. on June 27, 1995, at 199 Water Street, New York, New York 10292, the Fund's principal executive office. This proxy statement is also being furnished by the Board of Directors of the Fund in connection with its solicitation of proxies for use at a Special Meeting of Shareholders (the Special Meeting), of the Fund to be held at 9:00 A.M. on July 19, 1995 at 199 Water Street, New York, New York 10292. The purposes of the Annual and Special Meetings (collectively, the Meetings) and the matters to be acted upon are set forth in the accompanying Notices of Annual Meeting and Special Meeting. The Fund's most recent Annual Report has previously been sent to shareholders and may be obtained without charge by calling (800) 225-1852 or by writing to the Fund at One Seaport Plaza, New York, New York 10292. The Annual Meeting is being held because of the resignation of Lawrence C. McQuade on April 28, 1995 after which fewer than a majority of the Directors currently in office have been previously elected by shareholders. Under these circumstances, the Investment Company Act of 1940 (the Investment Company Act) requires that a meeting of shareholders be held within 60 days for the purpose of electing Directors. The Special Meeting is being held to consider matters affecting the Fund's investment objective and investment restrictions, changes to the Fund's plan of distribution and to permit classification and reclassification of the Fund's unissued shares. If the accompanying forms of Proxy are properly executed and returned, shares represented by them will be voted at the Meetings, or any adjournments thereof, in accordance with the instructions on the Proxy. However, if no instructions are specified, shares will be voted for the election of the Directors and for the other proposals. A Proxy may be revoked at any time prior to the time it is voted by written notice to the Secretary of the Fund, by execution of a subsequent Proxy or by attendance at a Meeting. If sufficient votes to approve one or more of the proposed items are not received, the persons named as proxies may propose one or 1 more adjournments of a Meeting to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of a majority of those shares present at such Meeting or represented by proxy. When voting on a proposed adjournment, the persons named as proxies will vote for the proposed adjournment all shares that they are entitled to vote with respect to each item, unless directed to disapprove the item, in which case such shares will be voted against the proposed adjournment. In the event that a Meeting is adjourned, the same procedures will apply at a later Meeting date. If a Proxy that is properly executed and returned is accompanied by instructions to withhold authority to vote (an abstention) or represents a broker "non-vote" (that is, a Proxy from a broker or nominee indicating that such person has not received instructions from the beneficial owner or other person entitled to vote shares on a particular matter with respect to which the broker or nominee does not have discretionary power), the shares represented thereby, with respect to matters to be determined by a majority of the votes cast on such matters, will be considered present for purposes of determining the existence of a quorum for the transaction of business but, not being cast, will have no effect on the outcome of such matters. With respect to matters requiring the affirmative vote of a majority of the total shares outstanding, an abstention or broker non-vote will be considered present for purposes of determining the existence of a quorum but will have the effect of a vote against such matters. The close of business on May 26, 1995 has been fixed as the record date for the determination of shareholders entitled to notice of, and to vote at, each Meeting. On that date, the Fund had 442,018,672 shares of Common Stock outstanding and entitled to vote. Each share will be entitled to one vote at each Meeting. It is expected that the Notices of Annual Meeting and Special Meeting, Proxy Statement and forms of Proxy will first be mailed to shareholders on or about June 12, 1995. As of May 26, 1995, management of the Fund does not know of any person or group who owned beneficially 5% or more of the Fund's outstanding shares. The expense of solicitation will be borne by the Fund and will include reimbursement of brokerage firms and others for expenses in forwarding proxy solicitation material to beneficial owners. The solicitation of proxies will be largely by mail. The Board of Directors of the Fund has authorized management to retain Shareholder Communications Corporation, a proxy solicitation firm, to assist in the solicitation of proxies for the Meetings. This cost, including specified expenses, is not expected to exceed $44,000 and will be borne by the Fund. In addition, solicitation may include, without cost to the Fund, telephonic, telegraphic or oral communication by regular employees of Prudential Securities Incorporated (Prudential Securities). Prudential Mutual Fund Management, Inc. (PMF or the Manager), One Seaport Plaza, New York, New York 10292, serves as the Fund's Manager under a 2 management agreement dated as of May 2, 1988 (the Management Agreement). Investment advisory services are provided to the Fund by PMF through its affiliate, The Prudential Investment Corporation (PIC or the Subadviser), Prudential Plaza, Newark, New Jersey 07102, under a Subadvisory Agreement. Both PMF and PIC are indirect subsidiaries of The Prudential Insurance Company of America. Prudential Mutual Fund Distributors, Inc., One Seaport Plaza, New York, New York 10292 (PMFD) serves as the distributor of the Fund's shares. The Fund's transfer agent is Prudential Mutual Fund Services, Inc. (PMFS), Raritan Plaza One, Edison, New Jersey 08837. As of April 30, 1995, PMF served as the manager to 39 open-end investment companies, and as manager or administrator to 30 closed-end investment companies with aggregate assets of more than $46 billion. The Fund has a Board of Directors which, in addition to overseeing the actions of the Fund's Manager and Subadviser, decides upon matters of general policy. - -------------------------------------------------------------------------------- ANNUAL MEETING PROPOSALS - -------------------------------------------------------------------------------- ELECTION OF DIRECTORS (Annual Meeting Proposal No. 1) At the Annual Meeting, five Directors will be elected to hold office until the earlier to occur of the next meeting of shareholders at which Directors are elected or until their terms expire in accordance with the Fund's retirement policy and until their successors are elected and qualify. The Fund's recently adopted retirement policy, generally calls for the retirement of Directors on December 31 of the year in which they reach the age of 72. It is the intention of the persons named in the accompanying form of Proxy for the Annual Meeting to vote for the election of Delayne Dedrick Gold, Arthur Hauspurg, Stephen P. Munn, Richard A. Redeker and Louis A. Weil, III, all of whom except Mr. Redeker are currently Directors. Each of the nominees has consented to be named in this Proxy Statement and to serve as a Director if elected. Only Mr. Hauspurg and Mrs. Gold have previously been elected by shareholders. Mr. Hauspurg was first elected as a Director in 1980. Mrs. Gold was elected as a Director in 1983. Messrs. Munn and Weil were elected as Directors on February 5 and April 30, 1991, respectively. Mr. Redeker is currently not a Director. The Directors have no reason to believe that any of the nominees named above will become unavailable for election as a Director, but if that should occur before the Annual Meeting, proxies will be voted for such persons as the Directors may recommend. The Fund's By-laws provide that the Fund will not be required to hold annual meetings of shareholders if the election of Directors is not required under the Investment Company Act. It is the present intention of the Board of Directors of the Fund not to hold annual meetings of shareholders unless such shareholder action is required. 3 INFORMATION REGARDING DIRECTORS
Shares of Common Stock Name, age, business experience during Position Owned at the past five years and other directorships With Fund May 26, 1995 ------------------------------------------- --------- ------------ Delayne Dedrick Gold (56), Marketing Director -0- and Management Consultant; Director/Trustee of 24 investment companies managed by Prudential Mutual Fund Management, Inc.(PMF). Arthur Hauspurg (69), Trustee and Director 156,107 former President, Chief Executive Officer and Chairman of the Board of Consolidated Edison Company of New York, Inc.; Director of COMSAT Corp.; Director/Trustee of 5 investment companies managed by PMF. Stephen P. Munn (52), Chairman Director 7,093 (since January 1994), Director and President (since 1988) and Chief Executive Officer (1988 - December 1993) of Carlisle Companies Incorporated; Director/Trustee of 5 investment companies managed by PMF. *Richard A. Redeker (51), President, President -0- Chief Executive Officer and Director (since October 1993), PMF; Director and Member of the Operating Committee (since October 1993), Prudential Securities Incorporated; Director (since October 1993) of Prudential Securities Group, Inc.; Executive Vice President, The Prudential Investment Corporation (since January 1994); Director (since January 1994), Prudential Mutual Fund Distributors, Inc. and Prudential Mutual Fund Services, Inc.; formerly Senior Executive Vice President and Director of Kemper Financial Services, Inc. (September 1978 - September 1993); President and Director/Trustee of 38 investment companies managed by PMF. ------- *Indicates "interested" Director, as defined by the Investment Company Act, by reason of his affiliation with Prudential Securities or PMF.
4
Shares of Common Stock Name, age, business experience during Position Owned at the past five years and other directorships With Fund May 26, 1995 ------------------------------------------- --------- ------------ Louis A. Weil, III (54), Publisher and Director 2,657 Chief Executive Officer, Phoenix Newspapers, Inc. (since August 1991); Director of Central Newspapers, Inc. (since September 1991); prior thereto, Publisher of Time Magazine (May 1989 - March 1991); formerly President, Publisher & CEO of The Detroit News (February 1986 - August 1989); formerly member of the Advisory Board, Chase Manhattan Bank-Westchester; Director/Trustee of 12 investment companies managed by PMF.
The Directors and officers of the Fund, as a group, owned beneficially 165,859 shares, representing less than 1% of the outstanding common stock of the Fund as of May 26, 1995. The Fund pays annual compensation of $6,000 plus actual out-of-pocket expenses to each of the Directors not affiliated with PMF or PIC. The Chairman of the Audit Committee receives an additional $200 per year. During the fiscal year ended December 31, 1994, the Fund paid Directors' fees of $30,200 and travel and incidental expenses of approximately $603. Directors may receive their Director's fee pursuant to a deferred fee agreement with the Fund. Under the terms of the agreement, the Fund accrues daily the amount of such Director's fee in installments which accrue interest at a rate equivalent to the prevailing rate applicable to 90-day U.S. Treasury Bills at the beginning of each calendar quarter or, pursuant to an exemptive order of the Securities and Exchange Commission (SEC), at the daily rate of return of the Fund (the Fund rate). Payment of the interest so accrued is also deferred and accruals become payable at the option of the Director. The Fund's obligation to make payments of deferred Directors' fees, together with interest thereon, is a general obligation of the Fund. Pursuant to the terms of the Management Agreement with the Fund, the Manager pays all compensation of officers of the Fund as well as the fees and expenses of all Directors of the Fund who are affiliated persons of the Manager. The following table sets forth the aggregate compensation paid by the Fund for the fiscal year ended December 31, 1994 to the Directors who are not affiliated with the Manager and the aggregate compensation paid to such Directors for service on the Fund's board and that of all other funds managed by PMF (Fund Complex) for the calendar year ended December 31, 1994. 5 Compensation Table
Pension or Retirement Benefits Total Compensation Aggregate Accrued As Estimated From Fund and Fund Compensation From Part of Fund Annual Benefits Complex Paid to Name and Position Fund Expenses Upon Retirement Directors ----------------- ---- -------- --------------- --------- Delayne Dedrick Gold--Director $6,200 None N/A $185,000(24)* Arthur Hauspurg--Director $6,000 None N/A $ 37,500(5)* Stephen P. Munn--Director $6,000 None N/A $ 40,000(6)* Louis A. Weil, III--Director $6,000 None N/A $ 97,500(12)*
- ------------------------ * Indicates number of funds in Fund Complex (including the Fund) to which aggregate compensation relates. There were four meetings of the Fund's Board of Directors held during the fiscal year ended December 31, 1994. The Board of Directors presently has an Audit Committee and a Nominating Committee. The members of the Audit and Nominating Committees are Mrs. Gold and Messrs. Hauspurg, Munn and Weil. The Audit Committee met once during the fiscal year ended December 31, 1994. The Nominating Committee met once during the fiscal year ended December 31, 1994. No Director attended fewer than 75% of the aggregate of the total number of meetings of the Directors, the Audit Committee and Nominating Committee held during the fiscal year for which each such Director has been a member. The Audit Committee makes recommendations to the Directors with respect to the engagement of independent accountants and reviews with the independent accountants the plan and results of the audit engagement and matters having a material effect upon the Fund's financial operations. The Nominating Committee makes recommendations to the Directors with respect to candidates for election as Directors of the Fund. The Nominating Committee does not consider nominees recommended by shareholders to fill vacancies on the Board. The executive officers of the Fund, other than as shown above, are David W. Drasnin, Vice President, having held office since July 19, 1985; Robert F. Gunia, Vice President, having held such office since April 30, 1987; Grace Torres, Treasurer and Principal Financial and Accounting Officer, having held such office since February 7, 1995; Stephen M. Ungerman, Assistant Treasurer, having held office since May 2, 1995; S. Jane Rose, Secretary, having held office since October 18, 1984; and Ronald Amblard, Assistant Secretary, having held such office since September 9, 1988. Mr. Drasnin is 58 years old and is a Vice President and Branch Manager of Prudential Securities. Mr. Gunia is 48 years old and is currently Chief Administrative Officer (since July 1990), Director, Executive Vice President, Treasurer and Chief Financial Officer of PMF and a Senior Vice President of Prudential Securities. He is also Executive Vice President, Treasurer and Comptroller (since March 1991) of PMFD and Director of PMFS. Ms. Torres is 35 years old and is First Vice President (since March 1994) of PMF and First Vice President (since March 1994) of Prudential Securities. Prior thereto, she was a Vice President of Bankers Trust Company. Mr. 6 Ungerman is 42 years old and is First Vice President of PMF (since February 1993). Prior thereto, he was Senior Tax Manager at Price Waterhouse (since 1981). Ms. Rose is 49 years old and is currently a Senior Vice President (since January 1991) and Senior Counsel of PMF and a Senior Vice President and Senior Counsel of Prudential Securities (since July 1992). Prior thereto, she was First Vice President of PMF (June 1987 - December 1990) and Vice President and Associate General Counsel of Prudential Securities. Mr. Amblard is 36 years old and is currently First Vice President (since January 1994) and Associate General Counsel (since January 1992) of PMF and Vice President and Associate General Counsel of Prudential Securities (since January 1992). Prior thereto, he was Assistant General Counsel (August 1988 - December 1991), and an Associate Vice President (January 1989 - December 1990) and Vice President (January 1991 - -December 1993) of PMF. The executive officers of the Fund are elected annually by the Directors. Required Vote Directors must be elected by a vote of a majority of the votes cast at the Annual Meeting in person or by proxy and entitled to vote thereupon, provided that a quorum is present. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS ANNUAL MEETING PROPOSAL NO. 1. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS (Annual Meeting Proposal No. 2) The Board of Directors, including Directors who are not interested persons of the Fund, has selected Price Waterhouse LLP as independent accountants of the Fund for the fiscal year ending December 31, 1995. The ratification of the selection of independent public accountants is to be voted upon at the Annual Meeting and it is intended that the persons named as proxies in the accompanying Annual Meeting Proxy will vote for Price Waterhouse LLP. No representative of Price Waterhouse LLP is expected to be present at the Annual Meeting of Shareholders. The policy of the Board of Directors regarding engaging independent accountants' services is that management may engage the Fund's principal independent public accountants to perform any service(s) normally provided by independent accounting firms, provided that such service(s) meet(s) any and all of the independence requirements of the American Institute of Certified Public Accountants and the SEC. In accordance with this policy, the Audit Committee reviews and approves all services provided by the independent public accountants prior to their being rendered. The Board of Directors of the Fund receives a report from its Audit Committee relating to all services after they have been performed by the Fund's independent accountants. 7 Required Vote The affirmative vote of a majority of the votes cast and entitled to vote thereupon, provided a quorum is present, at the Annual Meeting in person or by proxy, is required for ratification. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS ANNUAL MEETING PROPOSAL NO. 2. OTHER MATTERS (Annual Meeting) No business other than as set forth herein is expected to come before the Annual Meeting, but should any other matter requiring a vote of stockholders arise, including any question as to an adjournment of the Annual Meeting, the persons named as proxies in the enclosed Annual Meeting proxy will vote thereon according to their best judgment in the interests of the Fund. - -------------------------------------------------------------------------------- SPECIAL MEETING PROPOSALS - -------------------------------------------------------------------------------- APPROVAL OF ELIMINATION OF THE FUND'S INVESTMENT RESTRICTION PROHIBITING INVESTMENT IN SECURITIES OTHER THAN CERTAIN MUNICIPAL BONDS AND NOTES (Special Meeting Proposal No. 1) On May 2, 1995, at the request of the Fund's Subadviser, the Board of Directors considered and recommends for shareholder approval elimination of the Fund's Investment Restriction No. 1, which provides that the Fund may not: Invest in securities other than Municipal Bonds and Notes as described under "Investment Objective and Policies." The effect of this restriction is to characterize all of the policies described in the Fund's Prospectus as fundamental. As a result, any modification of those policies would require the affirmative vote of a majority of the outstanding shares at significant cost to the Fund. More specifically, this restriction limits the Fund to investing in securities with maturities of one year or less as described under "Investment Objective and Policies" in the Fund's Prospectus, as previously required by Rule 2a-7 of the Investment Company Act. Although Rule 2a-7 was amended several years ago to permit money market funds to purchase securities with maturities of up to 13 months (or 397 days) and change the quality standards for portfolio securities, the Fund's limitations have thus far not been modified as permitted by Rule 2a-7 due to the need to obtain the approval of a majority of the outstanding shares. In addition, subject to approval of this Special Meeting Proposal No. 1, the 8 Board of Directors approved a change in the Fund's investment policies to permit it to invest in repurchase agreements whereby the seller of a security agrees to repurchase that security from the Fund at a mutually agreed-upon time and price, the income from which will be taxable to the Fund. However, the Directors have adopted a non-fundamental policy to limit the Fund's investments in repurchase agreements to not more than 5% of its total assets. The period of maturity of repurchase agreements is usually quite short, possibly overnight or a few days, although it may extend over a number of months. The resale price is in excess of the purchase price, reflecting an agreed-upon rate of return effective for the period of time the Fund's money is invested in the security. The Fund's repurchase agreements will at all times be fully collateralized in an amount at least equal to the purchase price, including accrued interest earned on the underlying securities. The instruments held as collateral will be valued daily, and if the value of these instruments declines, the Fund will require additional collateral. If the seller defaults and the value of the collateral securing the repurchase agreement declines, the Fund may incur a loss. The Fund expects to participate in a joint repurchase account with other investment companies managed by PMF pursuant to an order of the SEC. Approval of this Special Meeting Proposal will permit the Board of Directors to approve further investments not presently described in this Proxy Statement or the Fund's current Prospectus which are consistent with the Fund's investment objective, which may entail additional risks. Eliminating Investment Restriction No. 1 will afford the Fund greater investment flexibility and permit the Fund to take advantage of the benefits resulting from any further amendment(s) to Rule 2a-7 and other laws and regulations affecting investment companies generally and market developments by permitting it to amend its investment policies without incurring the cost of holding a shareholder meeting. If this proposal is approved, all of the Fund's investment policies other than its investment objective and restrictions and the requirement that under normal market conditions it either (1) invest at least 80% of its net assets in tax-exempt securities or (2) invest its assets so that at least 80% of its income will be tax-exempt) would be considered non-fundamental and subject to change by the Directors without shareholder approval. Policy changes approved by the Directors in the future that do not require shareholder approval will be described in the Fund's prospectus. The Board of Directors believes that approval of Special Meeting Proposal No. 1 is in the best interests of the Fund and its shareholders. Required Vote Approval of Special Meeting Proposal No. 1 requires the affirmative vote of the holders of a majority of the Fund's outstanding voting securities. Under the Investment Company Act, a majority of the Fund's outstanding voting securities is defined as the lesser of (i) 67% of the Fund's outstanding voting shares represented 9 at a meeting at which more than 50% of the Fund's outstanding voting shares are present in person or represented by proxy, or (ii) more than 50% of the Fund's outstanding voting shares. If the proposed change in investment policy is not approved, the current limitations would remain a fundamental policy which could not be changed without the approval of a majority of the outstanding voting securities of the Fund. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS SPECIAL MEETING PROPOSAL NO. 1. APPROVAL OF ELIMINATION OF THE FUND'S INVESTMENT RESTRICTION REGARDING OPTIONS TRANSACTIONS (Special Meeting Proposal No. 2) On May 2, 1995, at the request of the Fund's Subadviser, the Board of Directors considered and recommends for shareholder approval elimination of the Fund's Investment Restriction No. 12, which provides that the Fund may not: Write, purchase or sell puts, calls, or combinations thereof, except that it may obtain rights to resell Municipal Bonds and Notes as set forth under "Investment Objective and Policies." This restriction currently prohibits the Fund from purchasing or selling puts, calls or combinations thereof, except that it permits the Fund to purchase municipal bonds or notes together with the rights to resell such bonds and notes at an agreed upon price or yield within a specified period prior to maturity, commonly known as a "put" or a "tender option", as currently described in the Fund's Prospectus. The Subadviser has expressed the concern that other securities which the Fund is otherwise eligible to purchase may be deemed to be prohibited although they are only subject to a put or call feature because they are not specifically exempted from Investment Restriction No. 12. Removing this restriction will alleviate such concern and afford the Fund greater investment flexibility to invest in securities with put or call features that are otherwise suitable for the Fund in addition to those currently described in its Prospectus. The Board of Directors believes that approval of Special Meeting Proposal No. 2 is in the best interests of shareholders and the Fund. Because the Fund is not required to hold annual meetings of shareholders and does not intend to hold such meetings unless shareholder action is required by the Investment Company Act or the Fund's By-laws, future shareholder consideration to eliminating Investment Restriction No. 12 will require a special meeting of shareholders at considerable cost to the Fund. If such consideration is postponed, the Fund may be deprived of beneficial investment opportunities. In addition to securities only subject to put or call features, although the investment adviser has no present intention of doing so, elimination of 10 Investment Restriction No. 12 would permit the Fund to purchase and sell put and call options and combinations thereof. If elimination of Investment Restriction No. 12 is approved by shareholders, before the Subadviser effects any such options transactions, the Board of Directors will adopt a non-fundamental policy (i.e., a policy which may be changed by the Board of Directors without shareholder approval) relating to such use, including whatever limitations may be appropriate. This policy will be described in the Fund's Prospectus. A call option gives the purchaser, in exchange for a premium paid, the right for a specified period of time to purchase the securities subject to the option at a specified price (exercise price). The writer of a call option, in return for the premium, has the obligation, upon exercise of the option, to deliver, depending upon the terms of the option contract, the underlying securities to the purchaser upon receipt of the exercise price. A put option gives the purchaser, in return for a premium, the right, for a specified period of time, to sell the securities subject to the option to the writer of the put at the specified exercise price. The writer of the put option, in return for the premium, has the obligation, upon exercise of the option, to acquire the securities underlying the option at the exercise price. Participation in the options market involves investment risks and transaction costs to which the Fund would not be subject absent the use of this strategy. If the Subadviser's prediction of movements in the direction of the securities markets is inaccurate, the adverse consequences to the Fund may leave the Fund in a worse position than if such a strategy was not used. Risks inherent in the use of options include (1) dependence on the Subadviser's ability to predict correctly movements in the direction of specific securities being hedged; (2) the fact that skills needed to use these strategies are different from those needed to select portfolio securities; (3) the possible absence of a liquid secondary market for any particular security at any given time; and (4) the possible need to defer closing out certain hedged positions to avoid adverse tax consequences. Required Vote Approval of Special Meeting Proposal No. 2 requires the affirmative vote of the holders of a majority of the Fund's outstanding voting securities, as defined in the Investment Company Act and described under Special Meeting Proposal No. 1 above. If the proposed change in investment policy is not approved, the current limitations would remain a fundamental policy which could not be changed without the approval of a majority of the outstanding voting securities of the Fund. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS SPECIAL MEETING PROPOSAL NO. 2. 11 APPROVAL OF ELIMINATION OF THE FUND'S INVESTMENT RESTRICTION PROHIBITING INVESTMENT IN THE SECURITIES OF ANY ISSUER IN WHICH THE OFFICERS AND DIRECTORS OF THE FUND OR ITS INVESTMENT ADVISER OWN MORE THAN A SPECIFIED INTEREST (Special Meeting Proposal No. 3) On May 2, 1995, at the request of the Fund's Manager, the Board of Directors considered and recommends for shareholder approval elimination of the Fund's Investment Restriction No. 14 which provides that the Fund may not: Purchase or retain the securities of any issuer if officers or directors of the Fund or officers or directors of the Manager responsible for investment decisions concerning the Fund beneficially owning individually more than 1/2 of 1% of securities of such issuer together beneficially own more than 5% of the securities of such issuer. The Manager has advised the Board of Directors that the restriction upon the Fund's investing in companies in which officers and directors of the Fund or the Manager own more than 1/2 of 1% of the outstanding securities of such company was initially adopted to comply with a restriction imposed in connection with the sale of the Fund's shares in Ohio. If the proposal is approved, the Fund would continue to comply with the restriction as a non-fundamental operating policy so long as the Fund sells its shares in Ohio. However, if Ohio were to eliminate the requirement or the Fund stopped offering its shares for sale in Ohio, the Board of Directors could eliminate the operating policy without the necessity of shareholder approval. The Fund does not currently intend to stop offering its shares in Ohio, nor is the Fund or the Fund's Manager aware of any proposal to change the Ohio law. The Board of Directors believes that the adoption of Special Meeting Proposal No. 3 is in the best interests of the Fund and its shareholders. Required Vote Approval of Special Meeting Proposal No. 3 requires the affirmative vote of the holders of a majority of the Fund's outstanding voting securities, as defined in the Investment Company Act and described under Special Meeting Proposal No. 1 above. If the proposed change in investment policy is not approved, the current limitations would remain a fundamental policy which could not be changed without the approval of a majority of the outstanding voting securities of the Fund. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS SPECIAL MEETING PROPOSAL NO. 3. 12 APPROVAL OF AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN (Special Meeting Proposal No. 4) On May 2, 1995, the Fund's Board of Directors approved an amended and restated Distribution and Service Plan pursuant to Rule 12b-1 under the Investment Company Act and an amended and restated Distribution Agreement with PMFD for the Fund (the Proposed Plan and the Proposed PMFD, respectively) and recommends submission of the Proposed Plan to the Fund's shareholders for approval or disapproval at this Special Meeting of Shareholders. The Proposed Distribution Agreement does not require, and is not being submitted for, shareholder approval. The Board of Directors previously adopted a plan of distribution for the Fund's shares pursuant to Rule 12b-1 under the Investment Company Act which was last approved by the Board of Directors on May 2, 1995 and was approved by shareholders on April 28, 1988 (the Existing Plan). Shareholders of the Fund are being asked to approve amendments to the Existing Plan that would change it from a reimbursement type plan to a compensation type plan. The amendments do not change the maximum annual fee that may be paid to PMFD under the Existing Plan, although the possibility exists that expenses incurred by PMFD and for which it is entitled to be reimbursed under the Existing Plan may be less than the fee PMFD will receive under the Proposed Plan. The amendments are being proposed to facilitate administration and accounting. The Board of Directors believes that the Proposed Plan is in the best interest of the Fund and is reasonably likely to benefit the Fund's shareholders. A copy of the Proposed Plan is attached hereto as Exhibit A. The Existing Plan The purpose of the Existing Plan is to reimburse PMFD, the distributor of the Fund's shares, for providing distribution assistance to broker-dealers, including Pruco Securities Corporation (Prusec), an affiliated broker-dealer, and other qualified broker-dealers, if any, whose customers invest in shares of the Fund and to defray the costs and expenses, including the payment of account servicing fees, of the services provided and activities undertaken to distribute shares (Distribution Activities). Under the Existing Plan, the Fund reimburses PMFD for expenses incurred for Distribution Activities at an annual rate of up to .125 of 1% of the average daily net assets of the Fund, computed daily and payable monthly. Pursuant to the Existing Plan, the Directors are provided with, and review, at least quarterly, a written report of the distribution expenses incurred on behalf of the Fund by PMFD. The reports include an itemization of the distribution expenses and the purpose of such expenditures. In addition, as long as the Existing Plan remains in effect, the selection and nomination of Directors who are not interested persons of the Fund shall be committed to the Directors who are not interested persons of the Fund or a committee thereof. 13 The Existing Plan may not be amended to increase materially the amount to be spent for the services described therein without approval by a majority of the holders of shares of the Fund. In addition, all material amendments thereof must be approved by vote of a majority of the Directors, including a majority of the Directors who are not interested persons of the Fund and who have no direct or indirect financial interest in the operation of the Existing Plan or in any agreement related thereto (the Rule 12b-1 Directors), cast in person at a meeting called for the purpose of voting on the Plan. So long as the Existing Plan is in effect, the selection and nomination of the Rule 12b-1 Directors will be committed to the discretion of the Rule 12b-1 Directors. The Existing Plan provides that it shall continue from year to year, provided that such continuance is approved annually by a majority vote of the Board of Directors, including a majority of the Rule 12b-1 Directors. The Existing Plan may be terminated at any time without payment of any penalty by the vote of a majority of the Rule 12b-1 Directors or by the vote of a majority of the outstanding shares of the Fund (as defined in the Investment Company Act) on written notice to any other party to such Plan and will automatically terminate in the event of its assignment (as defined in the Investment Company Act). The Fund will not be obligated to pay expenses incurred under the Existing Plan if it is terminated or not continued. The Proposed Plan The Proposed Plan amends the Existing Plan in one material respect. Under the Existing Plan, the Fund reimburses PMFD for expenses actually incurred for Distribution Activities up to a maximum of .125 of 1% per annum of the average daily net assets of the Fund. The Proposed Plan authorizes the Fund to pay PMFD the same maximum annual fee as compensation for its Distribution Activities regardless of the expenses incurred by PMFD for Distribution Activities. In contrast to the Existing Plan, the amounts payable by the Fund under the Proposed Plan would not be directly related to the expenses actually incurred by PMFD for its Distribution Activities. Consequently, if PMFD's expenses are less than its fees, it will retain its full fees and realize a profit. However, if PMFD's expenses exceed the fees received under the Proposed Plan, the Fund will not be obligated to pay any additional amounts. Since inception of the Existing Plan, the amount of reimbursable expenses incurred thereunder by PMFD have equalled the amounts reimbursed by the Fund. For the fiscal years ended December 31, 1992, 1993 and 1994 PMFD received $836,985, $908,214 and $805,601, respectively, from the Fund under the Existing Plan, representing .125 of 1% of the average daily net assets of the shares, and spent the same amounts for Distribution Activities. Since the maximum annual fee under the Existing Plan is the same as under the Proposed Plan, PMFD would have received the same annual fee under the Proposed Plan as it did under the Existing Plan for the fiscal years ended December 31, 1992, 1993 and 1994. 14 Among the major perceived benefits of a compensation type plan, such as the Proposed Plan, over a reimbursement type plan, such as the Existing Plan, is the facilitation of administration and accounting. Under reimbursement plans, all expenses must be specifically accounted for by the distributor and attributed to the specific class of shares of a fund in order to qualify for reimbursement. Although the Proposed Plan will continue to require quarterly reporting to the Board of Directors of the amounts accrued and paid under the Plan and of the expenses actually borne by the Distributor, there will be no need to match specific expenses to reimbursements, as under the Existing Plan. Thus, the accounting for the Proposed Plan would be simplified and the timing of when expenditures are to be made by the Distributor would not be an issue. These considerations, combined with the reasonable likelihood, although there is no assurance, that the per annum payment rate under the Proposed Plan will not exceed the expenses incurred by PMFD for Distribution Activities, suggest that the costs and efforts associated with a reimbursement plan are unwarranted. In addition to the foregoing factors, in considering whether to approve the Proposed Plan, the Directors reviewed, among other things, the nature and scope of the services to be provided by PMFD, the amount of expenditures under the Existing Plan, the relationship of such expenditures to the overall cost structure of the Fund and comparative data with respect to distribution arrangements adopted by other investment companies. Based upon such review, the Directors, including a majority of the Rule 12b-1 Directors, determined that there is a reasonable likelihood that the Proposed Plan will benefit the Fund and its shareholders. If approved by shareholders, the Proposed Plan will continue in effect from year to year, provided such continuance is approved at least annually by vote of a majority of the Board of Directors, including a majority of the Rule 12b-1 Directors. Required Vote Approval of Special Meeting Proposal No. 4 requires the affirmative vote of the holders of a majority of the Fund's outstanding shares as defined in the Investment Company Act and as described under Special Meeting Proposal No. 1. If the Proposed Plan is not approved, the Existing Plan will continue in its present form. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS SPECIAL MEETING PROPOSAL NO. 4. 15 APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION TO PERMIT THE BOARD OF DIRECTORS TO CLASSIFY AND RECLASSIFY ANY UNISSUED CAPITAL STOCK (Special Meeting Proposal No. 5) On May 2, 1995, the Board of Directors approved a resolution setting forth a proposed amendment (the Proposed Amendment) to the Articles of Incorporation of the Fund to grant it the power to classify and reclassify any unissued shares of the capital stock of the Fund into one or more additional or other classes or series and to designate the rights and preferences thereof, declared that the Proposed Amendment was advisable, and directed that the Proposed Amendment be submitted for consideration and approval by shareholders. A copy of the Proposed Amendment is attached hereto as Exhibit B. The purpose of the Proposed Amendment is to permit the Board of Directors to classify and reclassify unissued shares of the Fund into additional classes of Common Stock and to designate the rights and preferences thereof at a future date without further shareholder approval. Currently, the Fund's Articles of Incorporation authorize only one class of Common Stock. A number of investment companies currently offer multiple classes of shares with, among other things, different sales charges, service fees, exchange privileges and conversion features to cater to the preferences of different investors. In fact, most of the Prudential Mutual Funds currently offer three classes of shares. Although the Fund has no present intention of offering additional classes of shares, unless the Proposed Amendment is approved by shareholders, if and when the Board of Directors should conclude that the issuance of additional classes of shares would be in the best interests of the Fund and its shareholders, a special meeting of shareholders will have to be held at significant cost to seek such approval. The creation of additional classes of shares would offer investors a broader choice of investment alternatives but would not alter the rights and privileges of the shareholders of the existing class. Additional classes of shares would represent identical interests in the Fund's investment portfolio and have the same rights, except that each class (i) would have different arrangements for shareholder services or distribution activities and different expenses related to such arrangements, (ii) would have exclusive voting rights on any matter submitted to shareholders that relates solely to its arrangements and (iii) would have separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class. The Board of Directors believes that the adoption of Special Meeting Proposal No. 5 is in the best interests of the Fund and its shareholders. 16 Required Vote Under Maryland law and the Fund's Articles of Incorporation, an amendment to the Articles of Incorporation requires the affirmative vote of a majority of the Fund's outstanding shares entitled to vote. In the event that shareholders do not approve the Proposed Amendment, the current Articles of Incorporation will continue in its present form. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS SPECIAL MEETING PROPOSAL NO. 5. OTHER MATTERS (Special Meeting) No business other than as set forth herein is expected to come before the Special Meeting, but should any other matter requiring a vote of stockholders arise, including any question as to an adjournment of the Special Meeting, the persons named as proxies in the enclosed Special Meeting proxy will vote thereon according to their best judgment in the interests of the Fund. STOCKHOLDER PROPOSALS A stockholder's proposal intended to be presented at any subsequent meeting of stockholders of the Fund must be received by the Fund at a reasonable time before the Board of Directors makes the solicitation relating to such meeting, in order to be included in the Fund's Proxy Statement and form of proxy relating to such meeting. S. JANE ROSE Secretary Dated: June 8, 1995 STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETINGS AND WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO MARK, DATE AND SIGN BOTH OF THE ENCLOSED PROXIES AND RETURN THEM IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. 17 EXHIBIT A PRUDENTIAL TAX-FREE MONEY FUND Distribution and Service Plan Introduction ------------ The Distribution and Service Plan (the Plan) set forth below which is designed to conform to the requirements of Rule 12b-1 under the Investment Company Act of 1940 (the Investment Company Act) and Article III, Section 26 of the Rules of Fair Practice of the National Association of Securities Dealers, Inc. (NASD) has been adopted by Prudential Tax-Free Money Fund, Inc. (the Fund), and by Prudential Mutual Fund Distributors, Inc., the Fund's distributor (the Distributor). The Fund has entered into a distribution agreement (the Distribution Agreement) pursuant to which the Fund will employ the Distributor to distribute shares issued by the Fund. Under the Plan, the Fund intends to pay to the Distributor as compensation for its services, a distribution and service fee. A majority of the Board of Directors or Trustees of the Fund, including a majority of those Directors or Trustees who are not "interested persons" of the Fund (as defined in the Investment Company Act) and who have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the Rule 12b-1 Directors or Trustees), have determined by votes cast in person at a meeting called for the purpose of voting on this Plan that there is a reasonable likelihood that adoption of this Plan will benefit the Fund and its shareholders. Expenditures under this Plan by the Fund for Distribution Activities (defined below) are primarily intended to result in the sale of shares of the Fund within the meaning of paragraph (a)(2) of Rule 12b-1 promulgated under the Investment Company Act. The purpose of the Plan is to create incentives for the Distributor and/or other qualified broker-dealers and their account executives to provide distribution assistance to their customers who are investors in the Fund, to defray the costs and expenses associated with the preparation, printing and distribution of prospectuses and sales literature and other promotional and distribution activities and to provide for the servicing and maintenance of shareholder accounts. The Plan -------- The material aspects of the Plan are as follows: 1. Distribution Activities ----------------------- The Fund shall engage the Distributor to distribute shares of the Fund and to service shareholder accounts using all of the facilities of the distribution networks of Prudential Securities Incorporated (Prudential Securities) and Pruco Securities Corporation (Prusec), including sales personnel and branch office and central sup- A-1 port systems, and also using such other qualified broker-dealers and financial institutions as the Distributor may select. Services provided and activities undertaken to distribute shares of the Fund are referred to herein as "Distribution Activities." 2. Payment of Service Fee ---------------------- The Fund shall pay to the Distributor as compensation for providing personal service and/or maintaining shareholder accounts a service fee not to exceed .125 of 1% per annum of the average daily net assets of the shares of the Fund (service fee). The Fund shall calculate and accrue daily amounts payable by the shares of the Fund hereunder and shall pay such amounts monthly or at such other intervals as the Board of Directors or Trustees may determine. 3. Payment for Distribution Activities ----------------------------------- The Fund shall pay to the Distributor as compensation for its services a distribution fee which, together with the service fee (described in Section 2 hereof), shall not exceed .125 of 1% per annum of the average daily net assets of the shares of the Fund. The Fund shall calculate and accrue daily amounts payable by the shares of the Fund hereunder and shall pay such amounts monthly or at such other intervals as the Board of Directors or Trustees may determine. The Distributor shall spend such amounts as it deems appropriate on Distribution Activities which include, among others: (a) amounts paid to Prudential Securities for performing services under a selected dealer agreement between Prudential Securities and the Distributor for sale of shares of the Fund, including sales commissions and account servicing fees paid to, or on account of, account executives and indirect and overhead costs associated with Distribution Activities, including central office and branch expenses; (b) amounts paid to Prusec for performing services under a selected dealer agreement between Prusec and the Distributor for sale of shares of the Fund, including sales commissions and account servicing fees paid to, or on account of, agents and indirect and overhead costs associated with Distribution Activities; (c) advertising for the Fund in various forms through any available medium, including the cost of printing and mailing Fund prospectuses, statements of additional information and periodic financial reports and sales literature to persons other than current shareholders of the Fund; and (d) sales commissions (including account servicing fees) paid to, or on account of, broker-dealers and financial institutions (other than Prudential Securities and Prusec) which have entered into selected dealer agreements with the Distributor with respect to shares of the Fund. A-2 4. Quarterly Reports; Additional Information ----------------------------------------- An appropriate officer of the Fund will provide to the Board of Directors or Trustees of the Fund for review, at least quarterly, a written report specifying in reasonable detail the amounts expended for Distribution Activities (including payment of the service fee) and the purposes for which such expenditures were made in compliance with the requirements of Rule 12b-1. The Distributor will provide to the Board of Directors or Trustees of the Fund such additional information as the Board or Trustees shall from time to time reasonably request, including information about Distribution Activities undertaken or to be undertaken by the Distributor. The Distributor will inform the Board of Directors or Trustees of the Fund of the commissions and account servicing fees to be paid by the Distributor to broker-dealers and financial institutions which have selected dealer agreements with the Distributor. 5. Effectiveness; Continuation --------------------------- The Plan shall not take effect until it has been approved by a vote of a majority of the outstanding voting securities (as defined in the Investment Company Act) of the Fund. If approved by a vote of a majority of the outstanding voting securities of the Fund, the Plan shall, unless earlier terminated in accordance with its terms, continue in full force and effect thereafter for so long as such continuance is specifically approved at least annually by a majority of the Board of Directors or Trustees of the Fund and a majority of the Rule 12b-1 Directors or Trustees by votes cast in person at a meeting called for the purpose of voting on the continuation of the Plan. 6. Termination ----------- This Plan may be terminated at any time by vote of a majority of the Rule 12b-1 Directors or Trustees, or by vote of a majority of the outstanding voting securities (as defined in the Investment Company Act) of the Fund. 7. Amendments ---------- The Plan may not be amended to change the service and distribution fee to be paid as provided for in Sections 2 and 3 hereof so as to increase materially the amounts payable under this Plan unless such amendment shall be approved by the vote of a majority of the outstanding voting securities (as defined in the Investment Company Act) of the Fund. All material amendments of the Plan shall be approved by a majority of the Board of Directors or the Trustees of the Fund, including a majority of the Rule 12b-1 Directors or Trustees, by votes cast in person at a meeting called for the purpose of voting on the Plan. A-3 8. Rule 12b-1 Directors or Trustees -------------------------------- While the Plan is in effect, the selection and nomination of the Rule 12b-1 Directors or Trustees who are not "interested persons" of the Fund (non-interested Directors or Trustees) shall be committed to the discretion of the Rule 12b-1 Directors or Trustees. 9. Records ------- The Fund shall preserve copies of the Plan and any related agreements and all reports made pursuant to Section 4 hereof, for a period of not less than six years from the date of effectiveness of the Plan, such agreements or reports, and for at least the first two years in an easily accessible place. Dated: _________, 19__ A-4 EXHIBIT B AMENDMENT TO ARTICLES OF INCORPORATION The Articles of Incorporation of the Corporation are hereby amended by amending Articles V and VII to read, respectively, as follows: ARTICLE V COMMON STOCK SECTION 1. The total number of shares of capital stock which the Corporation shall have authority to issue is 3,000,000,000 shares of Common Stock of the par value of $.01 per share, all of one class, having an aggregate par value of $30,000,000. SECTION 2. The Board of Directors may, in its discretion, classify and reclassify any unissued shares of the capital stock of the Corporation into one or more additional or other classes or series by setting or changing in any one or more respects the designations, conversion or other rights, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such shares and pursuant to such classification or reclassification to increase or decrease the number of authorized shares of any existing class or series. If designated by the Board of Directors, particular classes or series of capital stock may relate to separate portfolios of investments. SECTION 3. Unless otherwise expressly provided in the charter of the Corporation, including any Articles Supplementary creating any class or series of capital stock, the holders of each class and series of capital stock of the Corporation shall be entitled to dividends and distributions in such amounts and at such times as may be determined by the Board of Directors, and the dividends and distributions paid with respect to the various classes or series of capital stock may vary among such classes or series. Expenses related to the distribution of, and other identified expenses that should properly be allocated to, the shares of a particular class or series of capital stock may be charged to and borne solely by such class or series and the bearing of expenses solely by a class or series may be appropriately reflected (in a manner determined by the Board of Directors) and cause differences in the net asset value attributable to, and the dividend, redemption and liquidation rights of, the shares of each such class or series of capital stock. SECTION 4. Unless otherwise expressly provided in the charter of the Corporation, including any Articles Supplementary creating any class or series of capital stock, on each matter submitted to a vote of stockholders, each holder of a share of capital stock of the Corporation shall be entitled to one vote for each share outstanding in such holder's name on the books of the Corporation, irrespective of the class or series thereof, and all shares of all classes and series shall vote together as a single class; provided, however, that (a) as to any matter with respect to which B-1 a separate vote of any class or series is required by the Investment Company Act of 1940, as amended (the "Investment Company Act") and in effect from time to time, or any rules, regulations or orders issued thereunder, or by the Maryland General Corporation Law, such requirement as to a separate vote by that class or series shall apply in lieu of a general vote of all classes and series as described above; (b) in the event that the separate vote requirements referred to in (a) above apply with respect to one or more classes or series, then subject to paragraph (c) below, the shares of all other classes and series not entitled to a separate vote shall vote together as a single class; and (c) as to any matter which in the judgment of the Board of Directors (which shall be conclusive) does not affect the interest of a particular class or series, such class or series shall not be entitled to any vote and only the holders of shares of the one or more affected classes or series shall be entitled to vote. SECTION 5. Unless otherwise expressly provided in the charter of the Corporation, including any Articles Supplementary creating any class or series of capital stock, in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, holders of shares of capital stock of the Corporation shall be entitled, after payment or provision for payment of the debts and other liabilities of the Corporation (as such liabilities may affect one or more of the classes of shares of capital stock of the Corporation), to share ratably in the remaining net assets of the Corporation; provided, however, that in the event the capital stock of the Corporation shall be classified or reclassified into series, holders of any shares of capital stock within such series shall be entitled to share ratably out of assets belonging to such series pursuant to the provisions of Section 7(c) of this Article IV. SECTION 6. Each share of any class of the capital stock of the Corporation, and in the event the capital stock of the Corporation shall be classified or reclassified into series, each share of any class of capital stock of the Corporation within such series shall be subject to the following provisions: (a) The net asset value of each outstanding share of capital stock of the Corporation (or of a class or series, in the event the capital stock of the Corporation shall be so classified or reclassified into series), subject to subsection (b) of this Section 6, shall be the quotient obtained by dividing the value of the net assets of the Corporation (or the net assets of the Corporation attributable or belonging to that class or series as designated by the Board of Directors pursuant to Articles Supplementary) by the total number of outstanding shares of capital stock of the Corporation (or of such class or series, in the event the capital stock of the Corporation shall be classified or reclassified into series). Subject to subsection (b) of this Section 6, the value of the net assets of the Corporation (or of such class or series, in the event the capital stock of the Corporation shall be classified or reclassified into series) shall be determined pursuant to the procedures or methods (which procedures or methods, in the event the capital stock of the Corporation shall be classified or B-2 reclassified into series, may differ from class to class or from series to series) prescribed or approved by the Board of Directors in its discretion, and shall be determined at the time or times (which time or times may, in the event the capital stock of the Corporation shall be classified into classes or series, differ from series to series) prescribed or approved by the Board of Directors in its discretion. In addition, subject to subsection (b) of this Section 6, the Board of Directors, in its discretion, may suspend the daily determination of net asset value of any share of any series or class of capital stock of the Corporation. (b) The net asset value of each share of the capital stock of the Corporation or any class or series thereof shall be determined in accordance with any applicable provision of the Investment Company Act, any applicable rule, regulation or order of the Securities and Exchange Commission thereunder, and any applicable rule or regulation made or adopted by any securities association registered under the Securities Exchange Act of 1934. (c) All shares now or hereafter authorized shall be subject to redemption and redeemable at the option of the stockholder pursuant to the applicable provisions of the Investment Company Act and laws of the State of Maryland, including any applicable rules and regulations thereunder. Each holder of a share of any class or series, upon request to the Corporation (if such holder's shares are certificated, such request being accompanied by surrender of the appropriate stock certificate or certificates in proper form for transfer), shall be entitled to require the Corporation to redeem all or any part of such shares outstanding in the name of such holder on the books of the Corporation (or as represented by share certificates surrendered to the Corporation by such redeeming holder) at a redemption price per share determined in accordance with subsection (a) of this Section 6. (d) Notwithstanding subsection (c) of this Section 6, the Board of Directors of the Corporation may suspend the right of the holders of shares of any or all classes or series of capital stock to require the Corporation to redeem such shares or may suspend any purchase of such shares: (i) for any period (A) during which the New York Stock Exchange is closed, other than customary weekend and holiday closings, or (B) during which trading on the New York Stock Exchange is restricted; (ii) for any period during which an emergency, as defined by the rules of the Securities and Exchange Commission or any successor thereto, exists as a result of which (A) disposal by the Corporation of securities owned by it and belonging to the affected series of capital stock (or the Corporation, if the shares of capital stock of the Corporation have not been classified or reclassified into series) is not reasonably practicable, or (B) it is not reasonably practicable for the Corporation fairly to determine the value of the net assets of the affected series of capital stock, or B-3 (iii) for such other periods as the Securities and Exchange Commission or any successor thereto may by order permit for the protection of the holders of shares of capital stock of the Corporation. (e) All shares of the capital stock of the Corporation now or hereafter authorized shall be subject to redemption and redeemable at the option of the Corporation. The Board of Directors may by resolution from time to time authorize the Corporation to require the redemption of all or any part of the outstanding shares of any classes or series upon the sending of written notice thereof to each holder whose shares are to be redeemed and upon such terms and conditions as the Board of Directors, in its discretion, shall deem advisable, out of funds legally available therefor, at the net asset value per share of that class or series determined in accordance with subsections (a) and (b) of this Section 6 and take all other steps deemed necessary or advisable in connection therewith. (f) The Board of Directors may by resolution from time to time authorize the purchase by the Corporation, either directly or through an agent, of shares of any class or series of the capital stock of the Corporation upon such terms and conditions and for such consideration as the Board of Directors, in its discretion, shall deem advisable out of funds legally available therefor at prices per share not in excess of the net asset value per share of that class or series determined in accordance with subsections (a) and (b) of this Section 6 and to take all other steps deemed necessary or advisable in connection therewith. (g) Except as otherwise permitted by the Investment Company Act, payment of the redemption price for shares of any class or series of the capital stock of the Corporation surrendered to the Corporation for redemption pursuant to the provisions of subsection (c) of this Section 6 or for purchase by the Corporation pursuant to the provisions of subsection (e) or (f) of this Section 6 shall be made by the Corporation within seven days after surrender of such shares to the Corporation for such purpose. Any such payment may be made in whole or in part in portfolio securities or in cash, as the Board of Directors, in its discretion, shall deem advisable, and no stockholder shall have the right, other than as determined by the Board of Directors, to have his or her shares redeemed in portfolio securities. (h) In the absence of any specification as to the purposes for which shares are redeemed or repurchased by the Corporation, all shares so redeemed or repurchased shall be deemed to be acquired for retirement in the sense contemplated by the laws of the State of Maryland. Shares of any class or series retired by repurchase or redemption shall thereafter have the status of authorized but unissued shares of such class or series. SECTION 7. In the event the Board of Directors shall authorize the classification or reclassification of shares into classes or series, the Board of Directors may (but shall not be obligated to) provide that each class or series shall have the fol- B-4 lowing powers, preferences and voting or other special rights, and the qualifications, restrictions and limitations thereof shall be as follows: (a) All consideration received by the Corporation for the issue or sale of shares of capital stock of each series, together with all income, earnings, profits, and proceeds received thereon, including any proceeds derived from the sale, exchange or liquidation thereof, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to the series with respect to which such assets, payments or funds were received by the Corporation for all purposes, subject only to the rights of creditors, and shall be so handled upon the books of account of the Corporation. Such assets, payments and funds, including any proceeds derived from the sale, exchange or liquidation thereof, and any assets derived from any reinvestment of such proceeds in whatever form the same may be, are herein referred to as "assets belonging to" such series. (b) The Board of Directors may from time to time declare and pay dividends or distributions, in additional shares of capital stock of such series or in cash, on any or all series of capital stock, the amount of such dividends and the means of payment being wholly in the discretion of the Board of Directors. (i) Dividends or distributions on shares of any series shall be paid only out of earned surplus or other lawfully available assets belonging to such series. (ii) Inasmuch as one goal of the Corporation is to qualify as a "regulated investment company" under the Internal Revenue Code of 1986, as amended, or any successor or comparable statute thereto, and Regulations promulgated thereunder, and inasmuch as the computation of net income and gains for federal income tax purposes may vary from the computation thereof on the books of the Corporation, the Board of Directors shall have the power, in its discretion, to distribute in any fiscal year as dividends, including dividends designated in whole or in part as capital gains distributions, amounts sufficient, in the opinion of the Board of Directors, to enable the Corporation to qualify as a regulated investment company and to avoid liability for the Corporation for federal income tax in respect of that year. In furtherance, and not in limitation of the foregoing, in the event that a series has a net capital loss for a fiscal year, and to the extent that the net capital loss offsets net capital gains from such series, the amount to be deemed available for distribution to that series with the net capital gain may be reduced by the amount offset. (c) In the event of the liquidation or dissolution of the Corporation, holders of shares of capital stock of each series shall be entitled to receive, as a series, out of the assets of the Corporation available for distribution to such holders, but other than general assets not belonging to any particular series, the assets belonging to such series; and the assets so distributable to the holders of shares B-5 of capital stock of any series shall be distributed, subject to the provisions of subsection (d) of this Section 7, among such stockholders in proportion to the number of shares of such series held by them and recorded on the books of the Corporation. In the event that there are any general assets not belonging to any particular series and available for distribution, such distribution shall be made to the holders of all series in proportion to the net asset value of the respective series determined in accordance with the charter of the Corporation. (d) The assets belonging to any series shall be charged with the liabilities in respect of such series, and shall also be charged with their share of the general liabilities of the Corporation, in proportion to the asset value of the respective series determined in accordance with the charter of the Corporation. The determination of the Board of Directors shall be conclusive as to the amount of liabilities, including accrued expenses and reserves, as to the allocation of the same as to a given series, and as to whether the same or general assets of the Corporation are allocable to one or more classes. SECTION 8. Any fractional share shall carry proportionately all the rights of a whole share, excepting any right to receive a certificate evidencing such fractional share, but including, without limitation, the right to vote and the right to receive dividends. SECTION 9. No holder of shares of Common Stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any shares of the Common Stock of the Corporation of any class or series which it may issue or sell (whether out of the number of shares authorized by the Articles of Incorporation, or out of any shares of the Common Stock of the Corporation acquired by it after the issue thereof, or otherwise). SECTION 10. All persons who shall acquire any shares of capital stock of the Corporation shall acquire the same subject to the provisions of the charter and By-Laws of the Corporation. SECTION 11. Notwithstanding any provision of law requiring action to be taken or authorized by the affirmative vote of the holders of a designated proportion greater than a majority of the shares of any class or series of Common Stock, such action shall be valid and effective if taken or authorized by the affirmative vote of the holders of a majority of the total number of shares of such class or series of Common Stock outstanding and entitled to vote thereupon pursuant to the provisions of these Articles of Incorporation. B-6 ARTICLE VII MISCELLANEOUS The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for creating, defining, limiting and regulating the powers of the Corporation, the directors and the stockholders. SECTION 1. The Board of Directors shall have the management and control of the property, business and affairs of the Corporation and is hereby vested with all the powers possessed by the Corporation itself so far as is not inconsistent with law or these Articles of Incorporation. In furtherance and without limitation of the foregoing provisions, it is expressly declared that, subject to these Articles of Incorporation, the Board of Directors shall have power: (a) To make, alter, amend or repeal from time to time the By-Laws of the Corporation except as such power may otherwise be limited in the By-Laws. (b) To issue shares of any class or series of the capital stock of the Corporation. (c) To authorize the purchase of shares of any class or series in the open market or otherwise, at prices not in excess of their net asset value for shares of that class, series or class within such series determined in accordance with subsections (a) and (b) of Section 6 of Article IV hereof, provided that the Corporation has assets legally available for such purpose, and to pay for such shares in cash, securities or other assets then held or owned by the Corporation. (d) To declare and pay dividends and distributions from funds legally available therefor on shares of such class or series, in such amounts, if any, and in such manner (including declaration by means of a formula or other similar method of determination whether or not the amount of the dividend or distribution so declared can be calculated at the time of such declaration) and to the holders of record as of such date, as the Board of Directors may determine. (e) To take any and all action necessary or appropriate to maintain a constant net asset value per share for shares of any class, series or class within such series. SECTION 2. The directors of the Corporation may receive compensation for their services, subject, however, to such limitations with respect thereto as may be determined from time to time by the holders of shares of capital stock of the Corporation. SECTION 3. Except as required by law, the holders of shares of capital stock of the Corporation shall have only such right to inspect the records, documents, accounts and books of the Corporation as may be granted by the Board of Directors of the Corporation. B-7 SECTION 4. (a) The Corporation shall have as custodian or custodians one or more trust companies or banks of good standing, each having a capital, surplus and undivided profits aggregating not less than fifty million dollars ($50,000,000), and, to the extent required by the Investment Company Act of 1940, the funds and securities held by the Corporation shall be kept in the custody of one or more such custodians, provided such custodian or custodians can be found ready and willing to act, and further provided that the Corporation may use as subcustodians, for the purpose of holding any foreign securities and related funds of the Corporation, such foreign banks as the Board of Directors may approve and as shall be permitted by law. (b) The Corporation shall upon the resignation or inability to serve of its custodian or upon change of the custodian: (i) in case of such resignation or inability to serve, use its best efforts to obtain a successor custodian; (ii) require that the cash and securities owned by the Corporation be delivered directly to the successor custodian; and (iii) in the event that no successor custodian can be found, submit to the stockholders before permitting delivery of the cash and securities owned by the Corporation otherwise than to a successor custodian, the question whether or not this Corporation shall be liquidated or shall function without a custodian. SECTION 5. Any vote of the holders of shares of capital stock of the Corporation authorizing liquidation of the Corporation or proceedings for its dissolution may authorize the Board of Directors to determine, as provided herein, or if provision is not made herein, in accordance with generally accepted accounting principles, which assets are the assets belonging to the Corporation or any series thereof available for distribution to the holders of shares of capital stock of the Corporation or any series thereof (pursuant to the provisions of Section 7 of Article IV hereof) and may divide, or authorize the Board of Directors to divide, such assets among the stockholders of the shares of capital stock of the Corporation or any series thereof in such manner as to ensure that each such holder receives an amount from the proceeds of such liquidation or dissolution that such holder is entitled to, as determined pursuant to the provisions of Sections 3 and 7 of Article IV hereof. B-8 Prudential Tax-Free Money Fund PROXY This Proxy is Solicited on Behalf of the Board of Directors One Seaport Plaza New York, New York 10292 The undersigned hereby appoints S. Jane Rose, Ronald Amblard and Grace Torres, each with the power of substitution, and hereby authorizes each of them to represent and to vote, as designated below, all the shares of Common Stock of Prudential Tax-Free Money Fund held of record by the undersigned on May 26, 1995 at the Annual Meeting of Shareholders to be held on June 27, 1995, or any adjournment thereof. 1. ELECTION OF DIRECTORS |_| FOR all nominees listed below (except as marked to the contrary below) |_| WITHHOLD AUTHORITY to vote for all nominees listed below (Instruction: To withhold authority for any individual nominee strike a line through the nominee's name in the list below.) Delayne D. Gold, Arthur Hauspurg, Stephen P. Munn, Richard A. Redeker and Louis A. Weil, III.
(Continued from other side) 2. To ratify or reject the selection of Price Waterhouse LLP as independent accountants for |_| RATIFY |_| REJECT |_| ABSTAIN the year ending December 31, 1995. 3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. This Proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this Proxy will be voted for Proposals 1 and 2. Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. Date: _________________________________________________________ , 1995 _________________________________________________________________________ Signature _________________________________________________________________________ Signature if held jointly
Prudential Tax-Free Money Fund PROXY This Proxy is Solicited on Behalf of the Board of Directors One Seaport Plaza New York, New York 10292 The undersigned hereby appoints S. Jane Rose, Ronald Amblard and Grace Torres, each with the power of substitution, and hereby authorizes each of them to represent and to vote, as designated below, all the shares of Common Stock of Prudential Tax-Free Money Fund held of record by the undersigned on May 26, 1995 at the Special Meeting of Shareholders to be held on July 19, 1995, or any adjournment thereof. 1. To approve or disapprove the elimination of the Fund's investment restriction that limits |_| APPROVE |_| DISAPPROVE |_| ABSTAIN the Fund to investing in only those securities described in the Fund's prospectus under the caption "Investment Objectives and Policies." 2. To approve or disapprove the elimination of the Fund's investment restriction regarding |_| APPROVE |_| DISAPPROVE |_| ABSTAIN the purchase and sale of puts, calls or combinations thereof. 3. To approve or disapprove the elimination of the Fund's investment restriction limiting |_| APPROVE |_| DISAPPROVE |_| ABSTAIN the Fund's ability to invest in the securities of any issuer in which officers and directors of the Fund or its investment adviser own more than a specified interest. 4. To approve or disapprove an amended and restated distribution and Service Plan. |_| APPROVE |_| DISAPPROVE |_| ABSTAIN 5. To approve or disapprove an amendment to the Articles of Incorporation to permit the |_| APPROVE |_| DISAPPROVE |_| ABSTAIN Board of Directors to classify and reclassify the unissued capital stock of the Fund.
(Continued from other side) 6. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. This Proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this Proxy will be voted for Proposals 1, 2, 3, 4 and 5. Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. Date: _________________________________________________________ , 1995 _________________________________________________________________________ Signature _________________________________________________________________________ Signature if held jointly
Prudential Tax-Free | Many stockholders think their votes are not important. Money Fund | On the contrary, they are vital. Needs | The Annual and Special Meetings on June 27 and July 19, 1995 will have to be adjourned without Your Proxy Vote | conducting any business if less than a majority of the eligible shares are represented. Before | And the Fund, at stockholders' expense, will have to continue to solicit votes until a June 27, 1995 | quorum is obtained. For the Annual | Your vote, then, could be critical in allowing the Fund to hold the meetings as Meeting and Before | scheduled, SO PLEASE BE SURE TO RETURN YOUR PROXY CARDS AS SOON AS POSSIBLE. July 19, 1995 | All stockholders will benefit from your cooperation. For the | Thank you. Special Meeting PLEASE RETURN BOTH PROXY CARDS ====
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