SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and American Century Investment 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 American Century International
Growth Portfolio II (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 actions 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 provided to the
Sub-Advisor from time to time by the Investment Manager. Officers 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, as reasonably requested from time to time. 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.
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.
The Sub-Advisor represents that it reviewed the Registration Statement of the
Trust, including any amendments or supplement thereto, 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 the Sub-Advisor, such Registration Statement contains, as of the
date hereof, 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 Investment Manager 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 manager or information relating directly or indirectly
to the Investment Manager, such Registration Statement or Proxy Statement
contains, as of the date hereof, 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.
Sub-Advisor shall use its best judgment, effort, and advice in rendering
services under this Agreement.
In furnishing the services under this Agreement, the Sub-Advisor will comply
with the requirements of the ICA and subchapter M (including Section 851(b)(1),
(2), and (3)) and Section 817(h) 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 comply with
(i) other applicable provisions of state or federal law; (ii) the provision of
the Declaration of Trust and By-laws of the Trust communicated to the
Sub-Advisor by the Investment Manager in writing; (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; (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 or to prevent Investment Manager from providing such services itself in
relation to such portfolios.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has furnished
the Sub-Advisor with copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof,
(b) The By-laws of the Trust in effect on the date hereof,
(c) The resolutions of the Trustees approving the engagement of the
Sub-Advisor as Sub-Advisor to the Investment Manager and approving the
form of this agreement;
(d), The resolutions of the Trustees selecting the Investment Manager as
Investment Manager to the Trust and approving the form of the
Investment Manager's Management Agreement with the Trust;
(e) The Investment Manager's Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Investment Manager as
currently in effect; and
(g) A list of companies the securities of which are not to be bought or
sold for the Portfolio because of nonpublic 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 (f) above will be provided within 30 days of the time such materials
became available to the Investment Manager. Such amendments or supplements as to
item (g) above will be provided not later than the end of the business day next
following the date such amendments or supplements become known to the Investment
Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has
furnished the Investment Manager with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange
Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have
authorized to give written and/or oral instructions to Custodians of
Trust assets for the Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will furnish the Investment Manager from time to time with
copies, properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any. Such amendments or supplements as to items
(a), (c) and (d) above will be provided within 30 days of the time such
materials become available to the Sub-Advisor. With respect to item (b) above,
the Sub-Advisor will timely furnish the Investment Manager with a copy of the
document, properly certified or otherwise authenticated, upon request by the
Investment Manager.
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
shares of the Portfolio, as well as recommendations of the Investment Manager,
subject to the requirements of best net price and most favorable execution.
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 continual
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 such services to the
Sub-Advisor for the Portfolio's use an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
Sub-Advisor determines in good faith that such amount of commission was
reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the
Sub-Advisors ongoing responsibilities with respect to the Portfolio. The
Sub-Advisor is further authorized to allocate the orders placed by it on behalf
of the Portfolio to such broker-dealers who also provide research or statistical
material, or other services to the Portfolio or the Sub-Advisor. Such allocation
shall be in such amounts and proposals as the Sub-Advisor shall determine and
the Sub-Advisor will report on said allocations to the Investment Manager 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. Notwithstanding the
above, nothing shall require the Sub-Advisor to use a broker that provides
research services or to use a particular broker that the Investment Manager has
recommended.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning the transactions, performance
and compliance of the Portfolio, in such form as may be mutually agreed, 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
regarding the Sub-Advisor or the investment program for the Portfolio disclosed
in the Trust's Registration Statement, or (2) any violation of any requirement,
provision, policy or restriction that the Sub-Advisor is required to comply with
under paragraph 1of 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 the annual rate of .45 of 1% of the combined average daily
net assets of the Portfolio and the other series of the Trust and American
Skandia Master Trust that are managed by the Sub-Adviser and identified by the
Sub-Adviser 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 pursuant to this Agreement and will not be obligated to
pay any expenses of Investment Manager of the Trust. Except as otherwise
provided herein, Investment Manager and the Trust will not be obligated to pay
any expenses of Sub-Advisor.
8. Confidential Treatment It is understood that any information or
recommendation supplied by the Sub-Advisor in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Investment Manager, the Trust or such persons the Investment Manager may
designate in connection with the Portfolio. It is also understood that any
information supplied to Sub-Advisor in connection with the performance of its
obligations hereunder, particularly, but not limited to, any list of securities
which, on a temporary basis, may not be bought or sold for the Portfolio, is to
be regarded as confidential and for use only by the Sub-Advisor in connection
with its obligation to provide investment advice and other services to the
Portfolio.
9. Representations of the Parties. Each party to this Agreement hereby
acknowledges that it is registered as an investment advisor under the Investment
Advisers Act of 1940, it will use its reasonable best efforts to maintain such
registration, and it will promptly notify the other if it ceases to be so
registered, if its registration is suspended for any reason, or if it is
notified by any regulatory organization or court of competent jurisdiction that
it should show cause why its registration should not be suspended or terminated.
Each party further acknowledges that it is registered under the laws of all
jurisdictions in which the conduct of its business hereunder requires such
registration.
The Investment Manager hereby represents that it has provided to the Sub-Advisor
a true, correct and complete copy of the Registration Statement of the Trust as
in effect on the date of this Agreement, including any amendments and
supplements thereto, and agrees to provide to Sub-Advisor true, correct and
complete copies of any amendments and supplements thereto subsequent to the date
of this Agreement.
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 resulting in any loss
suffered in any portfolio of the Trust 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 which might, in Sub-Advisor's opinion,
constitute a violation of any federal or state laws, rules or regulations. The
Investment Manager shall consult from time to time with the Sub-Advisor to
review the Sub-Advisor's performance under this Agreement. In the event that any
claim is made by the Investment Manager against the Sub-Advisor based upon a
failure by the Sub-Advisor to use its best judgment, efforts and advice in
rendering services under this Agreement, the Investment Manager shall bear the
burden of proving such failure. The Investment Manager agrees that, subject to
the investment objective, investment policies and investment restrictions of the
Portfolio as set forth in the Trust's Registration Statement as in effect from
time to time, the fact that the Sub-Advisor may adhere to an investment style
for the Portfolio that is generally used by the Sub-Advisor in managing any of
its other domestic or foreign equity or fixed income mutual funds shall not mean
that the Sub-Advisor has failed to use its best judgment, efforts and advice
under this Agreement.
11. Other Activities of Sub-Advisor. Investment Manager agrees that the
Sub-Advisor and any of its partners or employees, and persons affiliated with it
or with any such partner 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. The Investment Manager understands that the Sub-Advisor
shall not favor or disfavor any client or class of clients in the allocation of
investment opportunities, so that to the extent practical, such opportunities
will be allocated among clients over a period of time on a fair and equitable
basis. Notwithstanding paragraph 8 above, nothing in this agreement shall impose
upon the Sub-Advisor any obligation to (i) purchase or sell, or recommend for
purchase or sale, for the Portfolio any security which it, its partners,
affiliates or employees may purchase or sell for the Sub-Advisor or such
partner's, affiliate's or employee's own accounts or for the account of any
other client, advisory or otherwise, or (ii) to abstain from the purchase or
sale of any security for the Sub-Advisor's other clients, advisory or otherwise,
that the Investment Manager has placed on the list provided pursuant to
paragraph 2(g) above.
12. Continuance and Termination. This Agreement shall remain in full force and
effect for one year from the date hereof, and is renewable annually thereafter
by specific approval of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio. Any such renewal
shall be approved by the vote of a majority of the Trustees who are not
interested persons under the ICA, cast in person at a meeting called for the
purpose of voting on such renewal. This agreement may be terminated without
penalty at any time by the Investment Manager or Sub-Advisor upon 60 days
written notice, and will automatically terminate in the event of its assignment
(as defined in the ICA) by either party to this Agreement, 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 audited 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. American Century Investment Management, Inc.
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Executive Vice President & Chief Operating Officer
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 Advisees Act of 1940 ("Advisers Act"), under any other statute, at
common law or otherwise arising out of Sub-Advisor's responsibilities hereunder
(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 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 standards and 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; 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 (1) a court
of competent jurisdiction shall issue a final judgment that such an untrue
statement or omission of material fact did occur, or (2) in the case of a claim
or other matter disposed of by settlement or similar agreement among the
parties, Investment Manager and Sub-Advisor shall have received a written
opinion from independent legal counsel agreeable to the Investment Manager and
Sub-Advisor to the effect that, based on a review of readily available facts,
such an untrue statement or omission of material fact did occur.
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 Advisers Act, under any other
statute, at common law or otherwise, arising out of Investment Managers
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 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 and in conformity
with 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 man 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. It is agreed that the Investment Manager's indemnification
obligations under this paragraph 14 will extend to expenses and costs (including
reasonable attorneys' fees) incurred by the Sub-Advisor as a result of any
litigation brought by the Investment Manager alleging Sub-Advisor's failure to
perform its obligations and duties in the manner required under this Agreement
unless judgment is rendered for the Investment Manager.
15. Warranty. The Investment Manager represents and wan-ants 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 Trusts 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. 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.
The effective date of this agreement is May 1, 2000
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
__________________________________ ______________________________
Xxxx Xxxxx
Senior Vice President &
Chief Operating Officer
Date: Date:
_______________________ _____________________
Attest: Attest:
___________________________ ____________________________