SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and Neuberger&Berman Management Incorporated (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 Neuberger&Berman Mid-Cap Value
Portfolio (the "Portfolio") under the terms of a management agreement, dated May
1, 1998, 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 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 the Trust's Declaration of Trust and By-Laws. Officers,
directors, 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. Investment Manager will promptly furnish
Sub-Advisor with any amendments to such documents. Such amendments will not be
effective with respect to the Sub-Advisor until 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. 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 authorized 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, to the extent necessary in its sole judgment, 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.
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 investment program conducted by the Sub-Advisor for the Portfolio or
which otherwise relates directly or indirectly to the Sub-Advisor's activities
in connection with the Portfolio (such disclosure and information being
hereinafter collectively referred to as "Sub-Advisor Information"), such
Registration Statement or Proxy Statement contains, as of their respective dates
and, if later, the effective date of this Agreement, 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; it being understood that the Sub-Advisor shall have no
responsibility for any other portion of the Registration Statement or Proxy
Statement. The Sub-Advisor further represents and warrants that it is an
investment advisor registered under the Investment Advisers Act of 1940, as
amended, and under the laws of all jurisdictions in which the conduct of its
business hereunder requires such registration.
In furnishing the services under this Agreement, the Sub-Advisor will
use its best efforts to comply with the requirements of the ICA and Sections
817(h) and Section 851(b)(2) and (3)) of the Internal Revenue Code, applicable
to the Portfolio, and the regulations promulgated thereunder. Sub-Advisor shall
comply with (i) other applicable provisions of state or federal law; (ii) the
provision of the Declaration of Trust and By-Laws of the Trust; (iii) policies
and determinations of the Trust and Investment Manager; (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 investment
program of the Portfolio. The Investment Manager acknowledges to the Sub-Advisor
that the Investment Manager also is responsible to the Trust for monitoring
compliance with the foregoing requirements; it being understood that such
acknowledgement shall in no way diminish the Sub-Advisor's responsibilities
under this provision.
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.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has furnished
the Sub-Advisor with copies of each 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;
(h) the Registration Statement of the Trust;
(i) the Proxy Statement relating to this Agreement; and
(j) the Investment Manager's most recent balance sheet.
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. The Investment Manager will advise the Sub-Advisor 30 days prior to the
effective date of any changes in the investment objective, investment policies,
or investment restrictions applicable to the Portfolio.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has
furnished the Investment Manager with 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 furnish the Investment Manager from time to time with
copies, properly certified or otherwise authenticated, of all material
amendments of or supplements to the foregoing, if any. Such amendments or
supplements as to items (a) through (d) above will be provided within 30 days of
the time such materials became available to the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will furnish
all necessary investment 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 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. 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.
With respect to brokerage, 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 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.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information required in the Trust's Registration, in
such form as may be mutually agreed, to review the Portfolio and discuss the
management of it. The Sub-Advisor shall permit books and records maintained by
it 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 both
Investment Manager and legal counsel for 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 Sub-Advisor
Information included 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. 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: .50% of the portion of the net assets
of the Portfolio not in excess of $750 million; .45% of the portion over $750
million but not in excess of $1 billion; and .40% of the portion in excess of $1
billion.
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 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 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 investment advisor under the Investment
Advisers Act of 1940, it will use its reasonable best efforts to maintain such
registration, and 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.
10. Liability. The Sub-Advisor shall give the Portfolio the benefit of the
Sub-Advisor's best judgment and efforts in rendering its services hereunder. As
an inducement to the Sub-Advisor's undertaking to render these services, the
parties agree that, except as provided in Section 14 hereunder, the Sub-Advisor
shall not be liable to the Trust or its shareholders or to the Investment
Manager for any mistake in judgment or for any act or omission resulting in any
loss in connection with any service provided herein in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard for its
obligations hereunder. The Sub-Advisor and the Investment Manager further agree
that the Sub-Advisor shall bear no responsibilities or obligations for any
portfolios of the Trust other than the Portfolio and any other portfolio with
respect to which it serves as sub-advisor.
The Investment Manager agrees that the Sub-Advisor shall not be liable
for any failure to recommend the purchase or sale of any security on behalf of
the Portfolio on the basis of any information which might, in Sub-Advisor's
opinion, constitute a violation of any federal or state laws, rules or
regulations.
11. Other Activities of Sub-Advisor. Investment Manager agrees that the
Sub-Advisor and any of its officers or employees, and persons affiliated with it
or with any such officer 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. Purchases and sales of individual securities on behalf
of the Portfolio or accounts for other investors or institutions will be made on
a basis that is equitable to the Portfolio and other accounts. Nothing in this
agreement shall impose upon the Sub-Advisor any obligation to purchase or sell
or recommend for purchase or sale, for the Portfolio any security which it, its
officers, affiliates or employees may purchase or sell for the Sub-Advisor or
such officer's, affiliate's or employee's own accounts or for the account of any
other client, advisory or otherwise.
12. Continuance and Termination. This Agreement shall remain in full force and
effect for one year from the date 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
by either party to this Agreement, as defined in the ICA, 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 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 address for such party.
Investment Manager: American Skandia Investment Services, Incorporated
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Vice President & Chief Operating Officer
Sub-Advisor: Neuberger&Berman Management Incorporated
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx
General Counsel
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the 1940 Act ("affiliated person") of Investment Manager (which shall not be
deemed to include the Trust or the Portfolio) 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 1940 Act, the Investment
Adviser's Act of 1940 ("Adviser's Act"), under any other statute, at common law
or otherwise, arising out of Sub-Advisor's responsibilities as portfolio manager
of the Portfolio (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 contained in Sub-Advisor Information set forth 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 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 written information furnished to
Investment Manager, the Trust or any affiliated person of the Investment Manager
or the Trust or upon verbal information confirmed by the Sub-Advisor in writing
for the purpose of inclusion in such prospectus or statement of additional
information, 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 requirements set forth in the 1940 Act; provided, however, 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.
The Investment Manager agrees to indemnify and hold harmless
Sub-Advisor, any affiliated person within the meaning of Section 2(a)(3) of the
1940 Act ("affiliated person") of Sub-Advisor and each person, if any who,
within the meaning of Section 15 of the Securities Act of 1933 (the "1933 Act"),
controls ("controlling person") Sub-Advisor, 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 1940 Act, the Investment Adviser's
Act of 1940 ("Adviser's 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
Sub-Advisor Information set forth 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 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 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 for the purpose of inclusion in such
prospectus or statement of additional information; provided, however, that in no
case is Investment 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.
15. Warranty. The Investment Manager represents and warrants that (i) the
appointment of the Sub-Advisor by the 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 Investment Company Act of 1940, 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 of the State of Connecticut.
The effective date of this agreement is May 1, 1998.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
Xxxxxx X. Xxxxxxxxxx
President and Chief Operating Officer
Date: Date:
Attest: Attest:
