EXHIBIT 5(a)
FORM OF INVESTMENT MANAGEMENT AGREEMENT
AMERICAN SKANDIA ADVISOR FUNDS, INC.
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made this 1st day of June, 1997 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
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 Founders
International Small Capitalization 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 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 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 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 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 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 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 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 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 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 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 June 1,
1997 and by shall continue 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 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, 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 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 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 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: ________________________________________
Xxxxxx X. Xxxxxxxxxx
___________________________________ President & Chief Financial Officer
American Skandia Advisor Funds, Inc.
ASAF Founders International Small Capitalization Fund
Investment Management Agreement
EXHIBIT A
An annual rate of 1.10% of the portion of the average daily net assets of
the Fund not in excess of $100 million; plus 1.00% of the portion over $100
million.
