SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and Alliance Capital Management L.P. (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 Alliance Growth Portfolio (the
"Portfolio") under the terms of a management agreement, dated May 1, 2000, 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 will obtain and evaluate information deemed pertinent
by it 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 directly or
indirectly to and provided to or reviewed by the Sub-Advisor, such Registration
Statement or Proxy Statement contains, as of the date of such review, 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 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
comply with the requirements of the ICA and subchapters L and M (including,
respectively, Section 817(h) and Section 851(b)(1), (2) and (3)) of the Internal
Revenue Code, applicable to the Portfolio, and the regulations promulgated
thereunder. Sub-Advisor shall comply with the following as provided (except in
the case of clause (i)) to the Sub-Advisor (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.
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.
In performing its obligations under this Agreement, the Sub-Advisor may
rely upon the accuracy and completeness of information provided to it by or on
behalf of the Investment Manager or the Portfolio's Custodian or Administrator
if the Sub-Advisor cannot readily verify such information from records that it
can reasonably keep as Sub-advisor.
The Sub-Advisor shall be responsible for the preparation and filing of
Schedule 13G and Form 13-F reflecting the Portfolio's securities holdings. The
Sub-Advisor shall not be responsible for the preparation or filing of any other
reports, required of the Portfolio by any governmental or regulatory agency,
except as expressly agreed to in writing. It is understood that the Sub-Advisor
is not responsible for daily pricing of the Portfolio's assets.
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;
(g) The Trust's registration statement; 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 reasonably promptly after 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 audited 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 for its use, 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 and of other funds managed by the Sub-Advisor or its
affiliates, as well as recommendations of the Investment Manager, subject to the
requirements of best net price and most favorable execution.
The Investment Manager recognizes that a broker-dealer affiliated with
the Sub-Adviser (i) may act as one of the Portfolio's regular brokers so long as
it is lawful for it so to act; (ii) may be a major recipient of brokerage
commissions paid by the Portfolio; and (iii) may effect portfolio transactions
for the Portfolio only if expressly approved by the Trustees, and if the
commissions, fees or other remuneration received or to be received by it are
determined in accordance with procedures contemplated by any rule, regulation or
order adopted under the ICA for determining the permissible level of such
commissions.
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 in violation of this Agreement 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 ongoing responsibilities of the Sub-Advisor and its affiliates with
respect to the Portfolio and/or other accounts for which they exercise
investment discretion. In reaching such determination, the Sub-Advisor will not
be required to place or attempt to place a specific dollar value on the
brokerage and/or research services provided or being provided by such broker.
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 as may reasonably be requested by the
Investment Manager concerning the transactions, performance and compliance of
the Portfolio so that the Investment Manager may review such matters and discuss
the management of the Portfolio. 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 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 (1) any changes in
any information concerning the Sub-Advisor or the investment program for the
Portfolio disclosed in the Registration Statement, or (2) any violation of any
requirement, provision, policy or restriction that the Sub-Advisor is required
to comply with under paragraph 1 of this Agreement.
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 an annual rate equal to .40% of the combined average
daily net assets of the Portfolio and the series of American Skandia Advisor
Funds, Inc. that is managed by the Sub-Advisor and identified by the Sub-Advisor
and the Investment Manager as being similar to the Portfolio.
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 by it 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 that the
Investment Manager provides to the Sub-Advisor 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 for as long as such registration is required for the party to carry
out its obligations under this Agreement, 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 use its best efforts and good faith in the
performance of its services 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 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 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 the use of 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 officers or employees 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 of the Sub-Advisor's clients or class of clients
in the allocation of investment opportunities, so that to the extent
practicable, such opportunities will be allocated among the Sub-Advisor's
clients over a period of time on a fair and equitable basis. 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, pursuant to its requirements. 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 its general partners or 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: Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Senior Vice President and Counsel
Copy to:
Xx Xxxxxxxx
Xxxxxxx Xxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
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 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 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 and in conformity with 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
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 of 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 Sub-Advisor shall not be liable to the
Investment Manager or the Portfolio for any losses that may be sustained as a
result of (1) instructions provided by the Sub-Advisor to the Investment Manager
or the Portfolio's Custodian or Administrator if the recipient had reason to
believe that such instruction was not genuine or authorized, or (2) delays in or
the inaccuracy of information that the Sub-Advisor cannot reasonably verify as
provided in paragraph 1 of 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 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; 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 has obtained all
requisite corporate and governmental authorizations necessary to perform the
services contemplated to be performed by it hereunder.
16. Amendment. This agreement may be amended by mutual written consent of the
parties, subject to the provisions of the ICA.
17. Governing Law. This agreement is made under, and shall be governed by and
construed in accordance with, the laws of the State of Connecticut, except to
the extent governed by the federal securities laws.
18. Counterparts. This agreement may be executed in one or more counterparts,
each of which shall be deemed an original.
The effective date of this agreement is May 1, 2000.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISER:
By: Alliance Capital Management Corporation,
its General Partner
-------------------------------- -----------------------------------------
Xxxx Xxxxx Xxxx X. Xxxxxx
Senior Vice President & Chief Senior Vice President, Counsel and Assistant
Operating Officer Secretary
Date: _________________________ Date:_________________________
Attest: _________________________ Attest:________________________