Exhibit (h)(3)
SERVICE AGREEMENT
This Service Agreement ("Agreement") is made as of October 15, 2002 by and
among the Funds described on attached Exhibit A (the "Funds"), each a
Massachusetts business trust, and Prudential Securities Incorporated (PSI), a
Delaware corporation.
RECITALS
WHEREAS, PSI desires to provide personal customer account, maintenance and
related administrative services for customers participating in its COMMAND
Account Program or other programs or accounts that are eligible to have
available account assets swept into Class S shares of the Fund (collectively,
its "Customers"); and
WHEREAS, it is in the best interests of the Funds to make the customer
services of PSI available to Fund shareholders; and
WHEREAS, the Funds desire to appoint PSI to act as servicing agent to
provide personal customer account, maintenance and related administrative
services for its Customers,
NOW, THEREFORE, in consideration of the mutual promises set forth herein,
the parties hereto agree as follows:
1. PERFORMANCE OF SERVICES. PSI agrees to perform the personal customer account,
maintenance and related administrative services specified in Schedule A attached
hereto with respect to Class S shares of the Funds purchased and/or redeemed by
its Customers (the "Services").
2. THE ACCOUNTS. Each COMMAND and other account will be opened upon completion
of the application and such other forms as PSI may require. In connection with
each COMMAND and other account, PSI represents and warrants that it is
authorized to act on behalf of its Customers in relation to such account(s).
3. PURCHASE AND REDEMPTION ORDERS. On each business day (as defined in the
Funds' current prospectus), PSI shall report to the Funds' transfer agent the
purchase and redemption orders that it has received from its Customers prior to
4:00 p.m., Eastern time (i.e., the close of trading) in respect of Class S
shares of the Funds.
4. AGENCY. The Funds hereby appoint PSI as their agent for the limited purpose
of accepting purchase and redemption instructions from its Customers. PSI
represents and warrants that it will not, nor will any of its officers,
employees or agents, make any representations concerning the Funds inconsistent
with those contained in the Funds' current prospectuses or in such supplemental
advertising material approved by the Funds.
5. FUND EXPENSES. PSI shall not bear any of the expenses for the cost of
registration of the Funds' shares, preparation of the Funds' prospectuses, proxy
materials and financial reports, and the preparation of other Fund related
statements and notices required by law, unless agreed to in writing.
6. COMPLIANCE WITH LAWS. PSI shall comply with all laws, rules and regulations
applicable to it by virtue of entering into this Agreement including, but not
limited to any information contained
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in any prospectus, registration statements, annual report, proxy statement, or
item of advertising or marketing material prepared by PSI for, or relating to,
the Funds.
Each party hereto is entitled to rely on any written records or instructions
provided to it by the other party.
7. INDEMNIFICATION. PSI shall indemnify, defend and hold harmless the Funds and
each of their affiliates, directors, officers, employees and agents and each
person who controls the Funds within the meaning of the Securities Act of 1933,
as amended, ("Fund Indemnitees") from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable attorney's fees) they
incur ("Losses") insofar as such Losses arise out of or are based upon (1) the
provision of services by PSI, (2) PSI's negligence, willful misconduct or
violation of applicable law in the performance of its duties and obligations
under this Agreement, or (3) any breach by PSI of any provisions of this
Agreement. This indemnity is in addition to any other liability, which PSI may
otherwise have.
The Funds shall indemnify, defend and hold harmless PSI and each of its
affiliates, directors, officers, employees and agents and each person who
controls them within the meaning, of the Securities Act of 1933, as amended,
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable attorney's fees) they incur ("Losses") insofar as such
Losses arise out of or are based upon (1) the Funds' negligence, willful
misconduct or violation of applicable law in the performance of their duties and
obligations under this Agreement, or (2) any breach by the Funds of any material
provisions of this Agreement. The Funds shall also reimburse PSI for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending against such Losses. This indemnity agreement is in addition to any
other liability that the Funds may otherwise have.
Promptly after receipt by a party entitled to indemnification under this section
(an "Indemnified Party") of notice of the commencement of an investigation,
action, claim or proceeding, such Indemnified Party will, if a claim in respect
thereof is to be made against the indemnifying party under this section, notify
the indemnifying party of the commencement thereof; but the omission to so
notify the indemnifying party will not relieve it from any liability which it
may have to any Indemnified Party otherwise than under this Section. In case any
such action is brought against any Indemnified Party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such Indemnified Party. After
notice from the indemnifying party of its intention to assume the defense of an
action, the Indemnified Party shall bear the expenses of any additional counsel
obtained by it, and the indemnifying party shall not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation. The Indemnified Party may
not settle any action without the written consent of the indemnifying party. The
indemnifying party may not settle any action without the written consent of the
Indemnified Party unless such settlement completely and finally releases the
Indemnified Party from any and all liability. In either event, consent shall not
be unreasonably withheld.
8. FEES. In consideration for the Services to be provided, PSI will be entitled
to receive from the Funds fees as set forth in Schedule B to this Agreement or
as otherwise agreed upon in writing from time to time by the Funds and PSI. The
fee shall be computed daily and payable monthly or at such other interval as
shall be agreed from time to time by the parties hereto.
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The parties agree that the fees are solely for the Services provided by PSI and
its affiliates and do not constitute payment in any manner for investment
advisory, distribution, trustee, or custodial services.
Notwithstanding the foregoing, the service fees payable in respect of any day by
the Funds under this Agreement or any service agreement between the Funds and
Pruco Securities Corporation shall be reduced to the extent necessary to prevent
a Fund's distribution to shareholders of Class S shares of a Fund (taking into
account such service fees) from being reduced to zero or below.
9. RECORDS. PSI agrees that it shall maintain and preserve all records required
by law to be maintained and preserved in connection with providing the Services
to the holders of Class S shares of the Funds, and shall otherwise comply with
all applicable laws, rules, or regulations as they apply to PSI's provision of
the Services.
PSI also agrees that it shall permit the Funds, their officers, agents or
representatives to have reasonable access to all records maintained and prepared
by PSI in connection with its performance of the Services for the purpose of
inspection.
10. CONFIDENTIALITY. PSI agrees that all non-public books, records and
information prepared or maintained by it in connection with the Services shall
remain confidential and shall not be voluntarily disclosed to any other person,
entity or organization unless such disclosure is mandated pursuant to law,
regulation, or judicial process. In the event of any demand served on or
received by PSI for the production or release of any non-public books, records
or information, PSI shall promptly notify the Funds of such demand or request
and PSI shall seek permission from the Funds before making any disclosure of
non-public records or information.
11. REPRESENTATIONS AND WARRANTIES. PSI and the Funds hereby represent and
warrant to each other that each is duly qualified and has all requisite licenses
and authority to conduct its business in all jurisdictions. PSI and the Funds
further represent and warrant to each other that they are each authorized to
enter into this Agreement, and the performance of their obligations hereunder
will not violate or conflict with any governing documents or agreements of
either PSI or the Funds, or any applicable law. PSI hereby further represents
and warrants to the Funds that it has and will continue to have access to the
necessary facilities, equipment and personnel to perform its obligations under
this Agreement.
12. TERMINATION.
(a) Any party may terminate this Agreement by providing 60 days' prior written
notice to the other parties.
(b) Notwithstanding the foregoing, this Agreement may be terminated by any party
(1) at any time by giving 30 days' prior written notice to the other parties in
the event of a material breach of this Agreement by the other party that is not
cured during such 30-day period; and (2) at any time by giving written notice to
the other party (A) upon institution of formal proceedings relating to the
legality of the terms and conditions of this Agreement by the National
Association of Securities Dealers, Inc., the Securities and Exchange Commission
or any other regulatory body provided that the terminating party has a
reasonable belief that the institution of formal proceedings is not without
foundation and will have a material adverse impact on the terminating party, (B)
upon assignment of the Agreement in contravention of the terms hereof, (C) as is
required by law, order, or instruction by a court of competent jurisdiction or a
regulatory body or self-regulatory organization with proper jurisdiction over
the terminating party.
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13. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York applicable to agreements fully
executed and to be performed therein, exclusive of conflicts of laws.
14. AMENDMENT AND WAIVER. No modification of any provision of this Agreement
will be binding unless in writing and executed by the parties. No waiver of any
provision of this Agreement will be binding unless in writing and executed by
the parties. Any valid waiver of a provision set forth herein shall not
constitute a waiver of any other provision of this Agreement. In addition, any
valid waiver shall constitute a present waiver of such provision and shall not
constitute a permanent future waiver of such provision.
15. ASSIGNMENT. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and assigns; provided,
however, that neither this Agreement nor any rights, privileges, duties or
obligations of the parties may be assigned by either party without the written
consent of the other party or as expressly contemplated by this Agreement. For
purposes of this Agreement, "assignment" shall mean an assignment as that term
is defined under the Investment Company Act of 1940, as amended.
16. ENTIRE AGREEMENT. This Agreement contains the full and complete
understanding between the parties with respect to the transactions covered and
contemplated hereunder, and supersedes all prior agreements or understandings
between the parties relating to the subject matter hereof, whether oral or
written, express or implied.
17. NOTICES. All notices hereunder shall be in writing (and shall be deemed to
have been duly given upon receipt) by delivery in person, by facsimile, by
registered or certified mail or by overnight delivery (postage prepaid, return
receipt requested) to the respective parties as follows:
If to the Funds:
COMMAND Money Fund
COMMAND Tax-Free Fund
COMMAND Government Fund
Prudential California Municipal Fund - California Money Market Series
Prudential Municipal Series Fund - New Jersey Money Market Series
Prudential Municipal Series Fund - New York Money Market Series
Prudential Government Securities Trust - U.S. Treasury Money Market Series
Gateway Center Three
000 Xxxxxxxx Xxxxxx, 0xx xxxxx
Xxxxxx, XX 00000
Attention: Secretary
If to PSI:
Prudential Securities Incorporated
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: President
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
COMMAND Money Fund
COMMAND Tax-Free Fund
COMMAND Government Fund
Prudential California Municipal Fund - California Money Market Series
Prudential Municipal Series Fund - New Jersey Money Market Series
Prudential Municipal Series Fund - New York Money Market Series
Prudential Government Securities Trust - U.S. Treasury Money Market Series
By: /s/ Xxxxx X. Xxxxxxx, Xx.
----------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
Title: President
Prudential Securities Incorporated
By: /s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Executive Vice President
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SCHEDULE A
THE SERVICES
1. PSI shall maintain its Customer account records reflecting shares purchased
and redeemed and share balances for each Customer, and shall provide each
Customer with periodic account statements showing all activity in the Funds as
of the statement closing date.
2. PSI shall provide appropriate assistance to any Customer with respect to the
sweep of Customer assets into the Funds by means of a purchase of Fund shares by
such Customer, or by means of a sweep of Customer assets out of the Funds by
means of a redemption of Fund shares.
3. PSI shall transmit prospectuses, proxy materials, shareholder reports, and
other information provided by the Funds with respect to existing shareholders
and required to be sent to shareholders under the Federal securities laws.
4. PSI shall transmit to the Funds purchase orders and redemption requests for
Fund shares arising from its periodic sweep of Customer assets into and out of
Class S shares of the Funds.
5. PSI shall respond to inquiries from holders of Class S shares regarding,
among other things, Class S share prices, account balances, and other applicable
sweep class share information.
6. PSI shall maintain and preserve all records required by law to be maintained
and preserved in connection with providing the Services.
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SCHEDULE B
FEES
Each Fund shall pay to PSI a service fee at the annual rate of 0.25% of the
average daily net assets of each Fund applicable to Class S shares of each Fund.
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EXHIBIT A
COMMAND Money Fund
COMMAND Tax-Free Fund
COMMAND Government Fund
Prudential California Municipal Fund - California Money Market Series
Prudential Municipal Series Fund - New Jersey Money Market Series
Prudential Municipal Series Fund - New York Money Market Series
Prudential Government Securities Trust - U.S. Treasury Money Market Series
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