SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and Pacific Investment Management Company (the
"Sub-Advisor"), a Delaware General Partnership.
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 PIMCO Limited Maturity Bond
Portfolio (the "Portfolio") under the terms of a management agreement, dated
May 1, 1995, 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. 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 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, 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 the Sub-Advisor, 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. 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.
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 manager or information relating directly or
indirectly to the Sub-Advisor, 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 Investment Manager further represents and warrants that it is
an invest adviser registered under the ICA and under the laws of all
jurisdictions in which the conduct of its business hereunder requires such
registration.
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 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. 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; (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 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) 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, 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-Advisors
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 on, if the
Sub-Advisor determines in good faith that such amount of commission was
reasonable hi 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.
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 required in the Trust's
Registration, in such form as may be mutually agreed, to review the Portfolio
and discuss the management of it. The Sub-Advisor shall permit the financial
statements, books and 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 any changes in any information 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: .65 of 1% of' the portion of the
net assets of the Portfolio not in excess of $75 million; plus .60 of 1% of
the portion of the net assets over $75 million but not in excess of $150
million; and .55 of 1% of the portion in excess of $150 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.
Investment Manager and Sub-Advisor shall not be considered as
partners or participants in a joint venture. Sub-Advisor will pay its own
owners 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.
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.
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 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 institution, will be made on a basis that is equitable to
all portfolios of the Trust and other accounts. 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
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.
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 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 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: Xxxxxx X. Xxxxxxxxxx
President & Chief Operating Officer
Sub-Advisor. Pacific Investment Management Company
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
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 ("Advisees 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 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.
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 ('Advisees 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 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.
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. 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, 1996.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
/s/Xxxxxx Xxxxxxxxxx /s/Xxxxx Xxxxx
Xxxxxx Xxxxxxxxxx Xxxxx Xxxxx
President & Chief Operating Officer
Date: Date: May 14, 1996
Attest: /s/Xxxx Xxxxx X'Xxxxx Attest: /s/Xxxxxxx X. Xxxx
Xxxx Xxxxx X'Xxxxx Xxxxxxx X. Xxxx
