SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and A I M Capital 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 AIM Balanced Portfolio (the
"Portfolio") under the terms of a management agreement, dated May 4, 1999, 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 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, 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 Portfolio. 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. Any records
required to be maintained by the Sub-advisor 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. The Sub-Advisor further
represents and warrants that it is an investment advisor registered under the
Advisers Act 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
comply with the requirements of the ICA and subchapters L and M (including,
respectively, Section 817(h) and Section 851(b)(1), (2), (3) and (4)) 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 also comply with (i) other applicable
provisions of federal law; (ii) the provisions of the Declaration of Trust and
By-laws of the Trust communicated to the Sub-Advisor pursuant to paragraph 1 of
this Agreement; (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,
and communicated to the Sub-Advisor; (v) the Prospectus and Statement of
Additional Information of the Trust as provided to the Sub-Advisor; 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.
Unless the Investment Manager gives the Sub-Advisor written
instructions to the contrary, the Sub-Advisor shall use its good faith judgment
in a manner that it reasonably believes best serves the interests of the
Portfolio's shareholders to vote or abstain from voting all proxies solicited by
or with respect to the issuers of securities in which assets of the Portfolio
may be invested.
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) A certificate of the inspector of election from the meeting of
shareholders of the Portfolio at which this Agreement was
approved, which certificate indicates that such shareholders have
approved this Agreement;
(e) 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;
(f) The Investment Manager's Management Agreement with the Trust;
(g) The Code of Ethics of the Trust and of the Investment Manager as
currently in effect; and
(h) 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 (g) 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 (h) 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 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 thereafter furnish the Investment Manager,
within 30 days of the time such materials become available to the Sub-Advisor,
with a copy of the Sub-Advisor's audited balance sheet as at the end of each
fiscal year of 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. 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 and, if applicable, legal requirements relating to the use of
broker-dealers affiliated with the Trust.
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 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 overall responsibilities
with respect to the Portfolio and to other clients of the Sub-Advisor as to
which the Sub-Advisor exercises investment discretion. 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.
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 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 supply the
Investment Manager and the Trust with such information as may be necessary to
respond to a specific request of the Trust's Board of Trustees or its agents.
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 Investment Manager and the Trust shall
immediately notify and forward to the Sub-Advisor any legal process served upon
them on behalf of the Sub-Advisor. 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. 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: .45 of 1% of the portion of the
average daily net assets of the Portfolio not in excess of $150 million; plus
.40 of 1% of the portion of the average daily net assets of the Portfolio over
$150 million but not in excess of $300 million; plus .35 of 1% of the portion of
the average daily net assets of the Portfolio in excess of $300 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 date of termination. The fee for the period from the effective
date of the Agreement to the end of the month during which the effective date
occurs shall be prorated according to the proportion that such period bears to
the full monthly period.
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, including without
limitation brokerage expenses and custodian fees. Except as otherwise provided
herein, Investment Manager and the Trust will not be obligated to pay any
expenses of Sub-Advisor.
Unless otherwise agreed in writing by the Investment Manager and
Sub-Advisor, the waiver by the Investment Manager of any fees it is entitled to
receive under the Management Agreement shall not offset the obligation of the
Investment Manager to compensate the Sub-Advisor pursuant to this paragraph 7.
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 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.
10. Liability. The Sub-Advisor shall use its best efforts and judgment and shall
act in good faith in rendering services hereunder. However, so long as the
Sub-Advisor has acted in good faith and has used its best efforts and judgment,
the Sub-Advisor, its officers, directors and employees shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Portfolio, any shareholder of the Portfolio or the Investment Manager in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Sub-Advisor against any liability to the Investment Manager, the Trust or to the
shareholders of the Portfolio to which the Sub-Advisor would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or by reason of the Sub-Advisor's reckless
disregard of its obligations and duties under this Agreement.
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 and other portfolios of the Trust or accounts for other
investors or institutions will be made on a basis that the Sub-Advisor believes
is equitable to all accounts. The Investment Manager and the Trust recognize
that in some cases this procedure may adversely affect the size of the position
obtainable for the Portfolio. In addition, the Investment Manager and the Trust
understand (i) that the persons employed by the Sub-Advisor to assist in the
performance of the Sub-Advisor's duties under this Agreement generally will not
devote their full time to such service, and (ii) the Sub-Advisor and any
affiliate of the Sub-Advisor may engage in and devote time and attention to
other businesses or to rendering services of whatever kind or nature. 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 also 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 or by the Board of Trustees of the Trust or by a vote of the
outstanding voting securities of the Portfolio, 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
Senior Vice President & Chief Operating Officer
Sub-Advisor: A I M Capital Management, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attention: [insert]
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 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 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
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 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, 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; and, provided further, that in
no event shall Sub-Advisor be required to indemnify the Investment Manager for
any consequential damages.
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 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 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; and,
provided further, that in no event shall Investment Manager be required to
indemnify the Sub-Advisor for any consequential damages.
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 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. Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the ICA or the Advisers Act shall be resolved by reference to such
term or provision of the ICA or the Advisers Act 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 or the Advisers Act. In
addition, where the effect of a requirement of the ICA or the Advisers Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order. To the extent
federal law does not apply, this Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
The effective date of this agreement is May 4, 1999.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
Xxxx Xxxxx
Senior Vice President & Chief Operating Officer
Date: Date:
Attest: Attest:
