Exhibit (D)(4)
PRUDENTIAL SHORT-TERM BOND FUND, INC.
(PRUDENTIAL SHORT-TERM CORPORATE BOND FUND)
(XXXXXX ULTRA SHORT BOND FUND)
FORM OF AMENDED AND RESTATED MANAGEMENT AGREEMENT
Agreement made as of February ___, 2003 between Prudential Short-Term Bond
Fund, Inc., a Maryland corporation (the "Fund") with respect to Prudential
Short-Term Corporate Bond Fund (the "Short-Term Corporate Bond Fund") and Xxxxxx
Ultra Short Bond Fund (the "Ultra Short Bond Fund") (each a "Series"), and
Prudential Investments LLC (formerly known as Prudential Mutual Fund Management,
Inc.) a New York Limited Liability Corporation (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, this Agreement was initially effective as of July 25, 1989 with
respect to the Fund and Short-Term Corporate Bond Fund;
WHEREAS, the shares of the Fund are divided into separate series or funds
(each a Series), each of which is established pursuant to a resolution of the
Board of Directors of the Fund (Board of Directors), and the Directors may from
time to time terminate such Series or establish and terminate additional Series;
WHEREAS, this Agreement is hereby amended and restated as of February ____,
2003 with respect to the Ultra Short Bond Fund;
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 corporate affairs, and the
Manager is willing to render such investment advisory and administrative
services;
NOW, THEREFORE, the parties agree as follows:
1. The Fund hereby appoints the Manager to act as manager of the Fund and
administrator of its corporate affairs for the period and on the terms set forth
in this Agreement. The Manager accepts such appointment and agrees to render the
services herein described, for the compensation herein provided. The Manager is
authorized to enter into an agreement with Prudential Investment Management,
Inc. ("PIM") (formerly known as The Prudential Investment Corporation) pursuant
to which PIM shall furnish to the Fund and each Series thereof the investment
advisory services in connection with the management of the Fund (the
"Subadvisory Agreement").
2. With respect to Ultra Short Bond Fund, the Manager is authorized to
enter into additional sub-advisory agreements, including the Subadvisory
Agreement, for investment advisory services in connection with the management of
such Series, each, an "Additional Subadvisory Agreement". Any such agreement may
be entered into by the Manager on such terms and in such manner as may be
permitted by the 1940 Act and the rules thereunder and any order of exemption
issued by the Securities and Exchange Commission. The Manager will continue to
have responsibility for all investment advisory services furnished pursuant to
any such sub-advisory agreements. The Manager will review the performance of all
sub-advisers (each an Adviser), and make
recommendations to the Directors of the Fund with respect to the retention and
renewal of contracts. The Manager will continue to have responsibility for all
investment advisory services furnished pursuant to the Subadvisory Agreement and
any Additional Subadvisory Agreement, with respect to Ultra Short Bond.
3. Subject to the supervision of the Board of Directors of the Fund, the
Manager shall administer the Fund's corporate affairs and, in connection
therewith, shall furnish the Fund with office facilities and with clerical,
bookkeeping and recordkeeping services at such office facilities and, subject to
Section 1 hereof and the Subadvisory Agreement, and any Additional Subadvisory
Agreement with respect to Ultra Short Bond Fund, the Manager shall manage the
investment operations of the Fund and each Series thereof and the composition of
each Series of the Fund's portfolio, including the purchase, retention and
disposition thereof, in accordance with each Series' investment objectives,
policies and restrictions as stated in the Prospectuses (hereinafter defined)
and subject to the following understandings:
(a) The Manager shall provide supervision of each Series' investments
and determine from time to time what investments or securities will be
purchased, retained, sold or loaned by the Series, and what portion of its
assets will be invested or held uninvested as cash.
(b) The Manager, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Articles of
Incorporation, By-Laws and Prospectus (hereinafter defined) of the Fund and
with the instructions and directions of the Board of Directors of the Fund
and will conform
to and comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations.
(c) The Manager shall determine the securities and futures contracts
to be purchased or sold by each Series 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, and, with respect to Ultra Short Bond Fund,
brokers, dealers and futures commissions merchants which are "affiliated
persons" of an Adviser) in conformity with the policy with respect to
brokerage as set forth in the Fund's Registration Statement and
Prospectuses (hereinafter defined) or as the Board of Directors may direct
from time to time. In providing the Fund with investment supervision, it is
recognized that the Manager will give primary consideration to securing the
most favorable price and efficient execution. Consistent with this policy,
the Manager 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, with respect to Ultra Short Bond Fund, an Adviser, may be a party. It
is understood that Prudential Securities Inc. or, with respect to Ultra
Short Bond Fund, a broker which is an "affiliated person" of an Adviser,
may be used as principal broker for securities transactions but that no
formula has been adopted for allocation of the Fund's investment
transaction business. It is also understood that it is desirable for the
Fund that the Manager and, with respect to Ultra Short Bond Fund, each
Adviser,
have access to supplemental investment and market research and security and
economic analysis provided by brokers or futures commission merchants and
that such brokers 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 and, with respect to
Ultra Short Bond Fund, each Adviser, 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 in connection with
its services to other clients.
On occasions when the Manager (or, with respect to Ultra Short Bond
Fund, an Adviser) 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, with respect to Ultra
Short Bond Fund, the Adviser,) 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 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 with respect to Ultra Short Bond
Fund, the Adviser) in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Series, the Fund and to
such other clients.
(d) The Manager shall maintain all books and records with respect to
the portfolio transactions of the Fund, and each Series thereof, and shall
render to the Fund's Board of Directors such periodic and special reports
as the Board may reasonably request.
(e) The Manager shall be responsible for the financial and accounting
records to be maintained by the Fund and each Series thereof (including
those being maintained by the Custodian).
(f) The Manager shall provide the Fund's Custodian on each business
day with information relating to all transactions concerning the Fund's
assets.
(g) The investment management services of the Manager to the Fund
under this Agreement are not to be deemed exclusive, and the Manager shall
be free to render similar services to others.
4. 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 of the Fund, as filed with the Secretary
of State of Maryland (such Articles of Incorporation, as in effect on the
date hereof and as amended from time to time, are herein called the
"Articles of Incorporation");
(b) By-Laws of the Fund (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Board of Directors of the Fund
authorizing the appointment of the Manager and approving the form of this
agreement;
(d) Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended, on Form N-1A (the "Registration Statement"), as filed
with the Securities and Exchange Commission (the "Commission") relating to
the Fund and shares of the Fund's Common Stock and all amendments thereto;
(e) Notification of Registration of the Fund under the 1940 Act on
Form N-8A as filed with the Commission and all amendments thereto; and
(f) Prospectus(es) of the Series (such Prospectus(es) and Statement(s)
of Additional Information of the Fund, as currently in effect and as
amended or supplemented from time to time, being herein called the
"Prospectus").
5. The Manager shall authorize and permit any of its directors,
officers and employees who may be elected as directors or officers of the Fund
to serve in the capacities in which they are elected. All services to be
furnished by the Manager under this Agreement may be furnished through the
medium of any such directors, officers or employees of the Manager.
6. The Manager shall keep the books and records of the Fund and each
Series thereof, required to be maintained by it pursuant to paragraph 3 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 3 hereof.
7. During the term of this Agreement, the Manager shall pay the
following expenses:
(i) the salaries and expenses of all personnel of the Fund and the
Manager except the fees and expenses of directors who are not affiliated
persons of the Manager or the Fund's investment adviser,
(ii) all expenses incurred by the Manager or by the Fund in connection
with managing the ordinary course of the Fund's business other than those
assumed by the Fund herein, and
(iii) the costs and expenses payable to PIM and/or, with respect to
Ultra Short Bond Fund, any Adviser, pursuant to the Subadvisory Agreement
and/or additional Subadvisory Agreements, respectively. 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 each Series' assets,
(b) the fees and expenses of directors who are not affiliated persons
of the Manager or the Fund's investment adviser and/or Advisers,
(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 providing of any
such records to the Manager useful to the Manager in connection with the
Manager's responsibility for the accounting records of the Fund pursuant to
Section 31 of the 1940 Act and the rules promulgated thereunder, (iii) the
pricing of the shares of the Fund, including the cost of any pricing
service or services which may be retained pursuant to the authorization of
the Board of Directors of the Fund, and (iv) for both mail and wire orders,
the cashiering function in connection with the issuance and redemption of
the Fund's securities,
(d) the fees and expenses of the Fund's Transfer and Dividend
Disbursing Agent, which may be the Custodian, that relate to the
maintenance of each shareholder account,
(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 stock 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, registering the Fund as a broker or dealer and qualifying its
shares under state securities laws, including the preparation and printing
of the Fund's registration statements, prospectuses and statements of
additional information for filing under federal and state securities laws
for such purposes,
(l) allocable communications expenses with respect to investor
services and all expenses of shareholders' and directors' meetings and of
preparing, printing and mailing reports to shareholders in the amount
necessary for distribution to the shareholders,
(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 Plan of
Distribution adopted in conformity with Rule 12b-1 under the 1940 Act.
8. In the event the expenses of any Series of the Fund for any fiscal
year (including the fees payable to the Manager but excluding interest, taxes,
brokerage commissions, distribution fees and litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund's business) exceed the lowest applicable annual expense limitation
established and enforced pursuant to the statute or regulations of any
jurisdictions in which shares of that Series are then qualified for offer and
sale, the compensation due the Manager will be reduced by the amount of such
excess, or, if such reduction exceeds the compensation payable to the Manager,
the
Manager will pay to the Series the amount of such reduction which exceeds the
amount of such compensation.
9. 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 an annual rate of .50 of 1% of the Short-Term Corporate Bond Fund's average
daily net assets with respect to the Short-Term Corporate Bond Fund and at an
annual rate of .60 of 1% of the Ultra Short Bond Fund's average daily net assets
up to $1 billion and .55% of the average daily net assets of the Ultra Short
Bond Fund over $1 billion with respect to the Ultra Short Bond Fund. This fee
will be computed daily and will be paid from the net assets of each respective
Series. This fee will be computed daily and will be paid to the Manager monthly.
Any reduction in the fee payable and any payment by the Manager to the Fund
pursuant to paragraph 8 shall be made monthly. Any such reductions or payments
are subject to readjustment during the year.
10. Nothing in this Agreement shall prohibit the Manager from paying
any expenses which might be considered as indirectly financing any activity
primarily intended to result in the sale of Fund shares.
11. 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.
12. This Agreement shall continue in effect for a period of more than
two years from the initial effective date with respect to a Series and
thereafter 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 either Series by the Fund
at any time, without the payment of any penalty, by the Board of Directors of
the Fund or by vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of the relevant Series, 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).
13. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Manager who may also be a director, officer
or employee of the Fund to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any business,
whether of a similar or dissimilar nature, nor limit or restrict the right of
the Manager to engage in any other business or to render services of any kind to
any other corporation, firm, individual or association.
14. 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.
15. 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.
16. 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.
17. 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 Xxxxxxx Xxxxxx Xxxxx, Xxxxxx, Xxx
Xxxxxx., 00000, Attention: Secretary or (2) to the Fund at Xxxxxxx Xxxxxx Xxxxx,
Xxxxxx, Xxx Xxxxxx 00000, Attention: President.
18. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
19. The Fund is a series Fund and all debts, liabilities, obligations
and expenses of a particular Series shall be enforceable only against the assets
of that Series and not against the assets of the other Series or of the Fund as
a whole.
20. The Fund may use the name "Prudential Short-Term Bond Fund, Inc."
or "Prudential Short-Term Corporate Bond Fund" and "Xxxxxx Ultra Short Bond
Fund" and any name including the word "Prudential" or "Xxxxxx" only for so
long as this Agreement or any extension, renewal or amendment thereof 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 hereof 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 Short-Term Bond Fund, Inc." or "Xxxxxx Ultra Short Bond Fund" or
any name including the word "Prudential" or "Xxxxxx" if the Manager's function
is transferred or assigned to a company of which Prudential Financial, Inc. 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 SHORT-TERM BOND
FUND, INC.
By: ___________________________
Xxxxx X. Xxxxxxx, Xx.
President
PRUDENTIAL INVESTMENTS LLC
By: ___________________________
Xxxxxx X. Xxxxx
Executive Vice President and Chief
Administrative Officer
