AMERICAN SKANDIA ADVISOR FUNDS, INC.
INVESTMENT MANAGEMENT AGREEMENT
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THIS AGREEMENT is made this ____ day of ___________, 2001 by and between American Skandia Advisor Funds, Inc., a
Maryland corporation (the "Company"), and American Skandia Investment Services, Incorporated, a Connecticut
corporation (the "Investment Manager").
W I T N E S S E T H
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WHEREAS, the Company is registered as an open-end management investment company under the Investment Company Act
of 1940, as amended (the "ICA"), and the rules and regulations promulgated thereunder; and
WHEREAS, the Investment Manager is an investment adviser registered under the Investment Advisers Act of 1940, as
amended (the "Advisers Act"); and
WHEREAS, the Company and the Investment Manager desire to enter into an agreement to provide for the management
of the assets of the ASAF PBHG Small-Cap Growth Fund (the "Fund") on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable
consideration, the receipt whereof is hereby acknowledged, the parties hereto agree as follows:
1. Management. The Investment Manager shall act as investment manager for the Fund and shall, in such
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capacity, manage the investment operations of the Fund, including the purchase, retention, disposition and
lending of securities, subject at all times to the policies and control of the Board of Directors of the Company
(the "Directors"). The Investment Manager shall give the Fund the benefit of its best judgments, efforts and
facilities in rendering its services as investment manager.
2. Duties of Investment Manager. In carrying out its obligation under paragraph 1 hereof, the Investment
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Manager shall:
(a) supervise and manage all aspects of the Fund's operations:
(b) provide the Fund or obtain for it, and thereafter supervise, such executive, administrative,
clerical and shareholder servicing services as are deemed advisable by the Directors;
(c) arrange, but not pay for, the periodic updating of prospectuses and supplements thereto, proxy
material, tax returns, reports to the Fund's shareholders, reports to and filings with the Securities and
Exchange Commission, state Blue Sky authorities and other applicable regulatory authorities;
(d) provide to the Directors on a regular basis, written financial reports and analyses on the Fund's
securities transactions and the operations of comparable investment companies;
(e) determine what issuers and securities shall be represented in the Fund's portfolio and regularly
report them in writing to the Directors;
(f) formulate and implement continuing programs for the purchases and sales of the securities of such
issuers and regularly report in writing thereon to the Directors; and
(g) take, on behalf of the Fund, all actions which appear to the Company necessary to carry into effect
such purchase and sale programs and supervisory functions as aforesaid, including the placing of orders for the
purchase and sale of portfolio securities.
3. Broker-Dealer Relationships. The Investment Manager is responsible for decisions to buy and sell
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securities for the Fund, broker-dealer selection, and negotiation of the Fund's brokerage commission rates. The
Investment Manager shall determine the securities to be purchased or sold by the Fund 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 Company's Prospectus and Statement of Additional Information as in effect from time
to time (together, the "Registration Statement"), or as the Directors may determine from time to time.
Generally, the Investment Manager's primary consideration in placing Fund securities transactions with
broker-dealers for execution will be to obtain, and maintain the availability of, best execution at the best
available price. The Investment Manager may consider sale of the shares of the Fund in allocating Fund
securities transactions, subject to the requirements of best net price available and most favorable execution.
Consistent with this policy, the Investment Manager, in allocating Fund securities transactions, will
take all relevant factors into consideration, including, but not limited to: the best 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 Fund
on a continuing basis. Subject to such policies and procedures as the Directors may determine, the Investment
Manager shall have discretion to effect investment transactions for the Fund through broker-dealers (including,
to the extent permissible under applicable law, broker-dealers affiliated with the Sub-Adviser) qualified to
obtain best execution of such transactions who provide brokerage and/or research services, as such services are
defined in section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and to cause the
Fund to pay any such broker-dealers 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 Investment Manager determines in good faith that such amount of commission is reasonable in relation to the
value of the brokerage or research services provided by such broker-dealer, viewed in terms of either that
particular investment transaction or the Investment Manager's overall responsibilities with respect to the Fund
and other accounts as to which the Investment Manager exercises investment discretion (as such term is defined in
section 3(a)(35) of the 1934 Act). Such allocation shall be in such amounts and proportions as the Investment
Manager shall determine in good faith in conformity with its responsibilities under applicable laws, rules and
regulations. The Investment Manager will report on such allocations to the Directors regularly as requested by
the Directors, indicating the broker-dealers to whom such allocations have been made and the basis therefor.
4. Control by the Directors. Any investment program undertaken by the Investment Manager pursuant to this
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Agreement, as well as any other activities undertaken by the Investment Manager on behalf of the Company pursuant
hereto, shall at all times be subject to any directives of the Directors.
5. Compliance with Applicable Requirements. In carrying out its obligations under this Agreement, the
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Investment Manager shall at all times conform to:
(a) all applicable provisions of the ICA and the Advisers Act and any rules and regulations adopted
thereunder; and
(b) the provisions of the Registration Statement, including the investment objectives, policies and
restrictions, and permissible investments specified therein; and
(c) the provisions of the Articles of Incorporation of the Company, as amended; and
(d) the provisions of the By-laws of the Company, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Company shall be allocable between the Company and the
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Investment Manager as follows:
(a) The Investment Manager shall furnish, at its expense and without cost to the Company, the services
of a President, Secretary, and one or more Vice Presidents of the Company, to the extent that such additional
officers may be required by the Company for the proper conduct of its affairs.
(b) The Investment Manager shall further maintain, at its expense and without cost to the Company, a
trading function in order to carry out its obligations under subparagraphs (e), (f) and (g) of paragraph 2 hereof
to place orders for the purchase and sale of portfolio securities for the Fund.
(c) Nothing in subparagraph (a) hereof shall be construed to require the Investment Manager to bear:
(i) any of the costs (including applicable office space, facilities and equipment) of the
services of a principal financial officer of the Company whose normal duties consist of
maintaining the financial accounts and books and records of the Company, including the
reviewing of calculations of net asset value and preparing tax returns; or
(ii) any of the costs (including applicable office space, facilities and equipment) of the
services of any of the personnel operating under the direction of such principal financial
officer.
Notwithstanding the obligation of the Company to bear the expense of the functions referred to in
clauses (i) and (ii) of this subparagraph (c), the Investment Manager may pay the salaries, including any
applicable employment or payroll taxes and other salary costs, of the principal financial officer and other
personnel carrying out such functions, and the Company shall reimburse the Investment Manager therefor upon
proper accounting.
(d) All of the ordinary business expenses incurred in the operations of the Company and the offering of
its shares shall be borne by the Company unless specifically provided otherwise in this paragraph 6. These
expenses include, but are not limited to: (i) brokerage commissions, legal, auditing, taxes or governmental fees;
(ii) the cost of preparing share certificates; (iii) custodian, depository, transfer and shareholder service
agent costs; (iv) expenses of issue, sale, redemption and repurchase of shares; (v) expenses of registering and
qualifying shares for sale; (vi) insurance premiums on property or personnel (including officers and directors if
available) of the Company which inure to the Company's benefit; (vii) expenses relating to director and
shareholder meetings; (viii) the cost of preparing and distributing reports and notices to shareholders; (ix) the
fees and other expenses incurred by the Company in connection with membership in investment company
organizations; and (x) and the cost of printing copies of prospectuses and statements of additional information,
as well as any supplements thereto, distributed to shareholders.
7. Delegation of Responsibilities. Upon the request of the Directors, the Investment Manager may perform
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services on behalf of the Company which are not required by this Agreement. Such services will be performed on
behalf of the Company and the Investment Manager's cost in rendering such services may be billed monthly to the
Company, subject to examination by the Company's independent accountants. Payment or assumption by the
Investment Manager of any Company expense that the Investment Manager is not required to pay or assume under this
Agreement shall not relieve the Investment Manager of any of its obligations to the Company nor obligate the
Investment Manager to pay or assume any similar Company expense on any subsequent occasion.
8. Engagement of Sub-Advisers and Broker-Dealers. The Investment Manager may engage, subject to approval
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of the Directors and where required, the shareholders of the Fund, a sub-adviser to provide advisory services in
relation to the Fund. Under such sub-advisory agreement, the Investment Manager may delegate to the sub-adviser
the duties outlined in subparagraphs (e), (f) and (g) of paragraph 2 hereof.
9. Compensation. The Company shall pay the Investment Manager in full compensation for services rendered
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hereunder an annual investment advisory fee. The fee shall be payable monthly in arrears, based on the average
daily net assets of the Fund for each month, at the annual rate set forth in Exhibit A to this Agreement.
10. Non-Exclusivity. The services of the Investment Manager to the Fund are not to be deemed to be
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exclusive, and the Investment Manager shall be free to render investment advisory and corporate administrative or
other services to others (including other investment companies) and to engage in other activities. It is
understood and agreed that officers or directors of the Investment Manager may serve as officers or directors of
the Company, and that officers or directors of the Company may serve as officers or directors of the Investment
Manager to the extent permitted by law; and that the officers and directors of the Investment Manager are not
prohibited from engaging in any other business activity or from rendering services to any other person, or from
serving as partners, officers or directors of any other firm or corporation, including other investment companies.
11. Term and Approval. This Agreement shall become effective on _____________, 2001 and by shall continue
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in force and effect from year to year, provided that such continuance is specifically approved at least annually
by:
(a) the Directors or the vote of a majority of the Fund's outstanding voting securities (as defined in
Section 2(a)(42) of the ICA); and
(b) the affirmative vote of a majority of the Directors who are not parties to this Agreement or
interested persons of a party to this Agreement (other than as Company directors), by votes cast in person at a
meeting specifically called for such purpose.
12. Termination. This Agreement may be terminated at any time without the payment of any penalty or
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prejudice to the completion of any transactions already initiated on behalf of the Fund, by vote of the Directors
or by vote of a majority of the Fund's outstanding voting securities, or by the Investment Manager, on sixty (60)
days' written notice to the other party. The notice provided for herein may be waived by either party. This
Agreement automatically terminates in the event of its "assignment," as such term is defined in the ICA.
13. Liability of Investment Manager and Indemnification. In the absence of willful misfeasance, bad faith,
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gross negligence or reckless disregard of obligations or duties hereunder on the part of the Investment Manager
or any of its officers, directors or employees, it shall not be subject to liability to the Company or to any
shareholder of the Fund for any act or omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of any security.
14. Liability of the Directors and Shareholders. A copy of the Articles of Incorporation of the Company is
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on file with the Secretary of the State of Maryland, and notice is hereby given that this instrument is executed
on behalf of the Directors as directors and not individually and that the obligations of this instrument are not
binding upon any of the Directors or shareholders individually but are binding only upon the assets and property
of the Company. Federal and state 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 Company or the Investment Manager may have under applicable law.
15. Notices. Any notices under this Agreement shall be in writing, addressed and delivered or mailed
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postage paid to the other party at such address as such other party may designate for the receipt of such
notice. Until further notice, it is agreed that the address of the Company shall be [INSERT] and the address of
the Investment Manager shall be Xxx Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxx 00000.
16. Questions of Interpretation. Any question of interpretation of any term or provision of this Agreement
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having a counterpart in or otherwise derived from a term or provision of the ICA, shall be resolved by reference
to such term or provision of the ICA and to interpretations thereof, if any, by the United States courts or, in
the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and
Exchange Commission issued pursuant to the ICA. In addition, where the effect of a requirement of the ICA,
reflected in any provision of this Agreement, is released by rules, regulation or order of the Securities and
Exchange Commission, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate by their
respective officers on the day and year first above written.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
Attest: By: ________________________________________
Xxxxxx X. Xxxxxxx
___________________________________ Vice President
AMERICAN SKANDIA INVESTMENT
SERVICES, INCORPORATED
Attest: By: ________________________________________
Xxxx Xxxxx
___________________________________ Senior Vice President & Chief Operating
Officer
American Skandia Advisor Funds, Inc.
ASAF PBHG Small-Cap Growth Fund
Investment Management Agreement
EXHIBIT A
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An annual rate of .90% of the average daily net assets of the Fund.
