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AMERICAN SKANDIA TRUST
SUB-ADVISORY AGREEMENT
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THIS AGREEMENT is between American Skandia Investment Services, Incorporated and Prudential Investments LLC (the
"Investment Manager") and American Century Investment Management, Inc. (the "Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust organized with one or more series of
shares, and is registered as an investment company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment Manager to act as investment manager for
the AST American Century Income & Growth Portfolio (the "Portfolio") under the terms of a management agreement, dated May
1, 2003, with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have approved the engagement of the
Sub-Advisor to provide investment advice and other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with investment advisory services in
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connection with a continuous investment program for the Portfolio which is to be managed in accordance with the
investment objective, investment policies and restrictions of the Portfolio as set forth in the Prospectus and Statement
of Additional Information of the Trust and in accordance with applicable provisions of the Trust's Declaration of Trust
and By-laws provided to the Sub-Advisor from time to time by the Investment Manager. Officers and employees of
Sub-Advisor will be available to consult with Investment Manager and the Trust, their officers, employees and Trustees
concerning the business of the Trust, as reasonably requested from time to time. Investment Manager will promptly
furnish Sub-Advisor with any amendments to any of the foregoing documents (the "Documents"). Any amendments to the
Documents will not be deemed effective with respect to the Sub-Advisor until the Sub-Advisor's receipt thereof.
Subject to the supervision and control of the Investment Manager, which is in turn subject to the supervision and
control of the Trust's Board of Trustees, the Sub-Advisor will in its discretion determine and select the securities to
be purchased for and sold from the Portfolio from time to time and will place orders with and give instructions to
brokers, dealers and others for all such transactions and cause such transactions to be executed. Custody of the
Portfolio will be maintained by a custodian bank (the "Custodian") and the Investment Manager will authorize the
Custodian to honor orders and instructions by employees of the Sub-Advisor designated by the Investment Manager to settle
transactions in respect of the Portfolio. No assets may be withdrawn from the Portfolio other than for settlement of
transactions on behalf of the Portfolio except upon the written authorization of appropriate officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to the withdrawal. The Sub-Advisor shall not
be responsible for the provision of administrative, bookkeeping or accounting services to the Trust. The Sub-Advisor
shall supply the Investment Manager and the Trust with such information as is specifically provided herein, as required
by the ICA or the Investment Advisers Act of 1940, as amended (the "Advisers Act") in connection with the Sub-Advisor's
management of the Portfolio, or as may be requested by the Trust's Board of Trustees. Any records required to be
maintained under the ICA shall be the property of the Trust and surrendered to the Trust promptly upon request or upon
termination of this Agreement. The Sub-Advisor may retain copies of any records surrendered to the Trust.
To the extent deemed necessary by the Sub-Advisor in connection with the investment program for the Portfolio,
the Sub-Advisor will obtain and evaluate pertinent information about significant developments and economic, statistical
and financial data, domestic, foreign or otherwise, whether affecting the economy generally or the Portfolio, and
concerning the individual issuers whose securities are included in the Portfolio or the activities in which they engage,
or with respect to securities which the Sub-Advisor considers desirable for inclusion in the Portfolio or such other
information as the Sub-Advisor deems relevant.
The Sub-Advisor represents that it reviewed the Registration Statement of the Trust, including any amendments or
supplements thereto, and any Proxy Statement relating to the approval of this Agreement, as filed with the Securities and
Exchange Commission and represents and warrants that with respect to disclosure about the Sub-Advisor or information
relating to the Sub-Advisor or the Sub-Advisor's activities in connection with the investment program for the Portfolio,
such Registration Statement or Proxy Statement contains, as of the date thereof, no untrue statement of any material fact
and does not omit any statement of material fact which was required to be stated therein or necessary to make the
statements contained therein not misleading.
Sub-Advisor shall use its best judgment, effort, and advice in rendering services under this Agreement.
In furnishing the services under this Agreement, the Sub-Advisor will comply with the requirements of the ICA and
subchapter M (including and Section 851(b)(1), (2) and (3)) and Section 817(h) of the Internal Revenue Code, applicable
to the Portfolio, and the regulations promulgated thereunder, to the extent such compliance is within the Sub-Advisor's
control. Sub-Advisor shall comply with (i) other applicable provisions of state or federal law; (ii) the provisions of
the Declaration of Trust and By-laws of the Trust communicated to the Sub-Advisor by the Investment Manager in writing;
(iii) policies and determinations of the Trust and Investment Manager communicated to the Sub-Advisor in writing; (iv)
the fundamental policies and investment restrictions of the Trust, as set out in the Trust's registration statement under
the ICA, or as amended by the Trust's shareholders; (v) the Prospectus and Statement of Additional Information of the
Trust; and (vi) investment guidelines or other instructions received in writing from Investment Manager. Sub-Advisor
shall supervise and monitor the activities of its representatives, personnel and agents in connection with the investment
program of the Portfolio.
Nothing in this Agreement shall be implied to prevent the Investment Manager from engaging other sub-advisors to
provide investment advice and other services in relation to portfolios of the Trust for which Sub-Advisor does not
provide such services, or to prevent Investment Manager from providing such services itself in relation to such
portfolios. The Sub-Advisor and the Investment Manager understand and agree that if the Investment Manager manages the
Portfolio in a "manager-of-managers" style, the Investment Manager will, among other things, (i) continually evaluate the
performance of the Sub-Advisor through quantitative and qualitative analysis and consultations with the Sub-Advisor, (ii)
periodically make recommendations to the Trust's Board as to whether the contract with one or more sub-advisors should be
renewed, modified or terminated, and (iii) periodically report to the Trust's Board regarding the results of its
evaluation and monitoring functions. The Sub-Advisor recognizes that its services may be terminated or modified pursuant
to this process.
The Sub-Advisor acknowledges that the Investment Manager and the Trust intend to rely on Rules 17a-10 and 10f-3
under the ICA, to the extent applicable, and the Sub-Advisor hereby agrees that it shall not consult with any other
Sub-Advisor to the Portfolio or the Trust with respect to transactions in securities for the Portfolio's portfolio or any
other transactions of Portfolio assets. The Sub-Advisor further acknowledges that it shall not consult with any other
sub-advisor of the Portfolio that is a principal underwriter or an affiliated person of a principal underwriter with
respect to transactions in securities for the Portfolio's portfolio or any other transactions of Portfolio assets, and
that its investment advisory responsibilities as set forth in this Agreement are limited to such discrete portion of the
Portfolio's portfolio as determined by the Investment Manager.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has furnished the Sub-Advisor with copies of each
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of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the Sub-Advisor as Sub-Advisor to the
Investment Manager and approving the form of this agreement;
(d) The resolutions of the Trustees selecting the Investment Manager as investment manager to the Trust and
approving the form of the Investment Manager's Management Agreement with the Trust;
(e) The Investment Manager's Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Investment Manager as currently in effect; and
(g) A list of companies the securities of which are not to be bought or sold for the Portfolio because of
non-public information regarding such companies that is available to Investment Manager or the Trust, or
which, in the sole opinion of the Investment Manager, it believes such non-public information would be
deemed to be available to Investment Manager and/or the Trust.
The Investment Manager will furnish the Sub-Advisor from time to time with copies, properly certified or
otherwise authenticated, of all amendments of or supplements to the foregoing, if any. Such amendments or supplements as
to items (a) through (f) above will be provided within 30 days of the time such materials became available to the
Investment Manager. Such amendments or supplements as to item (g) above will be provided not later than the end of the
business day next following the date such amendments or supplements become known to the Investment Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has furnished the Investment Manager with
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copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have authorized to give written and/or oral
instructions to Custodians of Trust assets for the Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will thereafter furnish the Investment Manager with copies, properly certified or otherwise
authenticated, of all material amendments of or supplements to items (a), (c) and (d) above within 30 days of the time
such materials become available to the Sub-Advisor. With respect to item (b) above, the Sub-Advisor will timely furnish
the Investment Manager with a copy of the document, properly certified or otherwise authenticated, upon request by the
Investment Manager.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will furnish all necessary investment
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facilities, including salaries of personnel required for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. Sub-Advisor is responsible for decisions to buy and sell securities for the
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Portfolio, broker-dealer selection, and negotiation of its brokerage commission rates. Sub-Advisor shall determine the
securities to be purchased or sold by the Portfolio pursuant to its determinations with or through such persons, brokers
or dealers, in conformity with the policy with respect to brokerage as set forth in the Trust's Prospectus and Statement
of Additional Information, or as the Board of Trustees may determine from time to time. Generally, Sub-Advisor's primary
consideration in placing Portfolio securities transactions with broker-dealers for execution is to obtain and maintain
the availability of best execution at the best net price and in the most effective manner possible. The Sub-Advisor may
consider sale of the shares of the Portfolio, as well as recommendations of the Investment Manager, subject to the
requirements of best net price and most favorable execution.
Consistent with this policy, the Sub-Advisor will take the following into consideration: the best net price
available; the reliability, integrity and financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker-dealer to the investment performance of the
Portfolio on a continuing basis. Accordingly, the cost of the brokerage commissions to the Portfolio may be greater than
that available from other brokers if the difference is reasonably justified by other aspects of the portfolio execution
services offered. Subject to such policies and procedures as the Board of Trustees of the Trust may determine, the
Sub-Advisor shall not be deemed to have acted unlawfully or to have breached any duty solely by reason of its having
caused the Portfolio to pay a broker-dealer that provides research services to the Sub-Advisor for the Portfolio's use an
amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the Sub-Advisor determines in good faith that such
amount of commission was reasonable in relation to the value of the research services provided by such broker, viewed in
terms of either that particular transaction or the Sub-Advisor's ongoing responsibilities with respect to the Portfolio.
The Sub-Advisor is further authorized to allocate the orders placed by it on behalf of the Portfolio to such
broker-dealers who also provide research or statistical material, or other services to the Portfolio or the Sub-Advisor.
Such allocation shall be in such amounts and proportions as the Sub-Advisor shall determine in good faith in conformity
with its responsibilities under applicable laws, rules and regulations and the Sub-Advisor will report on said
allocations to the Investment Manager regularly as requested by the Investment Manager and, in any event, at least once
each calendar year if no specific request is made, indicating the brokers to whom such allocations have been made and the
basis therefor. Notwithstanding the above, nothing shall require the Sub-Advisor to use a broker that provides research
services or to use a particular broker that the Investment Manager has recommended.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager monthly, quarterly and annual
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reports concerning transactions and performance of the Portfolio, including information requested for inclusion in the
Trust's Registration Statement, in such form as may be mutually agreed, to review the Portfolio and discuss the
management of it. The Sub-Advisor shall permit the financial statements, books and records with respect to the Portfolio
to be inspected and audited by the Trust, the Investment Manager or their agents at all reasonable times during normal
business hours. The Sub-Advisor shall immediately notify and forward to the Investment Manager and the Trust any legal
process served upon it on behalf of the Investment Manager or the Trust. The Sub-Advisor shall promptly notify the
Investment Manager of any changes in any information concerning the Sub-Advisor or the Sub-Advisors activities in
connection with the investment program for the Portfolio required to be disclosed in the Trust's Registration Statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the Sub-Advisor is computed at an annual rate.
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The fee is payable monthly in arrears, based on the average daily net assets of the Portfolio for each month, at the
annual rates shown below.
For all services rendered, the Investment Manager will calculate and pay the Sub-Advisor at the annual rate of:
..40% of the portion of the average daily net assets of the Portfolio not in excess of $100 million; plus .35% of the
portion of the net assets over $100 million but not in excess of $500 million; plus .30% of the portion of the net assets
in excess of $500 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value of the Portfolio shall be valued as set
forth in the then current registration statement of the Trust. If this agreement is terminated, the payment shall be
prorated to the effective date of termination.
Investment Manager and Sub-Advisor shall not be considered as partners or participants in a joint venture.
Sub-Advisor will pay its own expenses for the services to be provided pursuant to this Agreement and will not be
obligated to pay any expenses of Investment Manager or the Trust. Except as otherwise provided herein, Investment
Manager and the Trust will not be obligated to pay any expenses of Sub-Advisor.
8. Confidential Treatment. It is understood that any information or recommendation supplied by the Sub-Advisor in
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connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the
Investment Manager, the Trust or such persons the Investment Manager may designate in connection with the Portfolio. It
is also understood that any information supplied to Sub-Advisor in connection with the performance of its obligations
hereunder, particularly, but not limited to, any list of securities which, on a temporary basis, may not be bought or
sold for the Portfolio, is to be regarded as confidential and for use only by the Sub-Advisor in connection with its
obligation to provide investment advice and other services to the Portfolio.
9. Representations of the Parties. Each party to this Agreement hereby acknowledges that it is registered as an
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investment advisor under the Advisers Act, that it will use its reasonable best efforts to maintain such registration,
and that it will promptly notify the other if it ceases to be so registered, if its registration is suspended for any
reason, or if it is notified by any regulatory organization or court of competent jurisdiction that it should show cause
why its registration should not be suspended or terminated. Each party further acknowledges that it is registered under
the laws of all jurisdictions in which the conduct of its business hereunder requires such registration.
10. Liability. The Sub-Advisor shall use its best efforts and good faith in the performance of its services
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hereunder. However, so long as the Sub-Advisor has acted in good faith and has used its best efforts, then in the
absence of willful misfeasance, bad faith, gross negligence or reckless disregard for its obligations hereunder, it shall
not be liable to the Trust or its shareholders or to the Investment Manager for any act or omission resulting in any loss
suffered in any portfolio of the Trust in connection with any service to be provided herein. The Federal laws impose
responsibilities under certain circumstances on persons who act in good faith, and therefore, nothing herein shall in any
way constitute a waiver of limitation of any rights which the Trust or Investment Manager may have under applicable law.
The Investment Manager agrees that, subject to the investment objective, investment policies and investment
restrictions of the Portfolio as set forth in the Trust's Registration Statement as in effect from time to time, the
Sub-Advisor's adherence to an investment style generally used by the Sub-Advisor in managing any of its domestic or
foreign equity or fixed income mutual funds shall not be considered a failure by the Sub-Advisor to use its best
judgment, efforts and advice under this Agreement. The Investment Manager shall consult from time to time with the
Sub-Advisor to review the Sub-Advisor's performance under this Agreement. In the event that any claim is made by the
Investment Manager against the Sub-Advisor based upon a failure by the Sub-Advisor to use its best judgment, efforts and
advice in rendering services under this Agreement, the Investment Manager shall bear the burden of proving such failure.
11. Other Activities of Sub-Advisor. Investment Manager agrees that the Sub-Advisor and any of its partners or
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employees, and persons affiliated with it or with any such partner or employee may render investment management or
advisory services to other investors and institutions, and such investors and institutions may own, purchase or sell,
securities or other interests in property the same as or similar to those which are selected for purchase, holding or
sale for the Portfolio, and the Sub-Advisor shall be in all respects free to take action with respect to investments in
securities or other interests in property the same as or similar to those selected for purchase, holding or sale for the
Portfolio. The Investment Manager understands that the Sub-Advisor shall not favor or disfavor any client or class of
clients in the allocation of investment opportunities, so that to the extent practical, such opportunities will be
allocated among clients over a period of time on a fair and equitable basis. Notwithstanding paragraph 8 above, nothing
in this agreement shall impose upon the Sub-Advisor any obligation to (i) purchase or sell, or recommend for purchase or
sale, for the Portfolio any security which it, its partners, affiliates or employees may purchase or sell for the
Sub-Advisor or such partner's, affiliate's or employee's own accounts or for the account of any other client, advisory or
otherwise; or (ii) to abstain from the purchase or sale of any security for the Sub-Advisor's other clients, advisory or
otherwise, that the Investment Manager has placed on the list provided pursuant to paragraph 2(g) above.
12. Continuance and Termination. This Agreement shall remain in full force and effect for one year from the date
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hereof, and is renewable annually thereafter by specific approval of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio. Any such renewal shall be approved by the vote of a
majority of the Trustees who are not interested persons under the ICA, cast in person at a meeting called for the purpose
of voting on such renewal. This agreement may be terminated without penalty at any time by the Investment Manager or
Sub-Advisor upon 60 days written notice, and will automatically terminate in the event of its assignment (as defined in
the ICA) by either party to this Agreement or (provided Sub-Advisor has received prior written notice thereof) upon
termination of the Investment Manager's Management Agreement with the Trust.
13. Notification. Sub-Advisor will notify the Investment Manager within a reasonable time of any change in the
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personnel of the Sub-Advisor with responsibility for making investment decisions in relation to the Portfolio or who have
been authorized to give instructions to a Custodian of the Trust.
Any notice, instruction or other communication required or contemplated by this agreement shall be in writing.
All such communications shall be addressed to the recipient at the address set forth below, provided that either party
may, by notice, designate a different contact person and/or address for such party.
Investment Manager: American Skandia Investment Services, Incorporated
Gateway Center Three
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Executive Vice President
Sub-Advisor: American Century Investment Management, Inc.
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Executive Vice President & Chief Operating Officer
Trust: American Skandia Trust
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Law Department
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless Investment Manager, any affiliated person
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within the meaning of Section 2(a)(3) of the ICA ("affiliated person") of Investment Manager and each person, if any who,
within the meaning of Section 15 of the Securities Act of 1933 (the "1933 Act"), controls ("controlling person")
Investment Manager, against any and all losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which Investment Manager or such affiliated person or controlling person may become subject under
the 1933 Act, the ICA, the Advisers Act, under any other statute, at common law or otherwise, arising out of
Sub-Advisor's responsibilities hereunder (1) to the extent of and as a result of the willful misconduct, bad faith, or
gross negligence by Sub-Advisor, any of Sub-Advisor's employees or representatives or any affiliate of or any person
acting on behalf of Sub-Advisor, or (2) as a result of any untrue statement or alleged untrue statement of a material
fact relating to the Sub-Advisor or the Sub-Advisor's activities in connection with the investment program for the
Portfolio contained in a prospectus or statement of additional information covering the Portfolio or the Trust or any
amendment thereof or any supplement thereto or the omission or alleged omission to state therein such a material fact
required to be stated therein or necessary to make the statement therein not misleading, if such a statement or omission
was made in reliance upon and in conformity with written information furnished to the Investment Manager, the Trust or
any affiliated person of the Investment Manager or the Trust by the Sub-Advisor or upon verbal information confirmed by
the Sub-Advisor in writing or (3) to the extent of, and as a result of, the failure of the Sub-Advisor to execute, or
cause to be executed, Portfolio transactions according to the standards and requirements of the ICA; provided, however,
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that in no case is Sub-Advisor's indemnity in favor of Investment Manager or any affiliated person or controlling person
of Investment Manager deemed to protect such person against any liability to which any such person would otherwise be
subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement; and, provided further, that in the case of an
alleged untrue statement or omission of a material fact for which the Sub-Advisor provides this indemnity, the Investment
Manager shall reimburse the Sub-Advisor for all amounts paid pursuant to this indemnity unless a court of competent
jurisdiction shall issue a final judgment finding that such an untrue statement or omission of material fact did occur.
The Investment Manager agrees to indemnify and hold harmless Sub-Advisor, any affiliated person of Sub-Advisor
and each controlling person of Sub-Advisor, if any, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which Sub-Advisor or such affiliated person or controlling
person may become subject under the 1933 Act, the ICA, the Advisers Act, under any other statute, at common law or
otherwise, arising out of Investment Manager's responsibilities as investment manager of the Portfolio (1) to the extent
of and as a result of the willful misconduct, bad faith, or gross negligence by Investment Manager, any of Investment
Manager's employees or representatives or any affiliate of or any person acting on behalf of Investment Manager, or (2)
as a result of any untrue statement or alleged untrue statement of a material fact contained in a prospectus or statement
of additional information covering the Portfolio or the Trust or any amendment thereof or any supplement thereto or the
omission or alleged omission to state therein such a material fact required to be stated therein or necessary to make the
statement therein not misleading, if such a statement or omission was made by the Trust other than in reliance upon and
in conformity with written information furnished by Sub-Advisor, or any affiliated person of the Sub-Advisor or other
than upon verbal information confirmed by the Sub-Advisor in writing; provided, however, that in no case is Investment
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Manager's indemnity in favor of Sub-Advisor or any affiliated person or controlling person of Sub-Advisor deemed to
protect such person against any liability to which any such person would otherwise be subject by reason of willful
misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement. It is agreed that the Investment Manager's indemnification obligations
under this Section 14 will extend to expenses and costs (including reasonable attorneys fees) incurred by the Sub-Advisor
as a result of any litigation brought by the Investment Manager alleging Sub-Advisor's failure to perform its obligations
and duties in the manner required under this Agreement unless judgment is rendered for the Investment Manager.
15. Warranty. The Investment Manager represents and warrants that (i) the appointment of the Sub-Advisor by the
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Investment Manager has been duly authorized and (ii) it has acted and will continue to act in connection with the
transactions contemplated hereby, and the transactions contemplated hereby are, in conformity with the ICA, the Trust's
governing documents and other applicable laws.
The Sub-Advisor represents and warrants that it is authorized to perform the services contemplated to be
performed hereunder.
16. Governing Law. This agreement is made under, and shall be governed by and construed in accordance with, the laws
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of the State of Connecticut.
The effective date of this agreement is May 1, 2003.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
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Xxxxxx X. Xxxxx
Executive Vice President
Date: Date:
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Attest: Attest:
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