AMERICAN SKANDIA ADVISOR FUNDS, INC.
INTERIM SUB-ADVISORY AGREEMENT
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THIS INTERIM AGREEMENT is between American Skandia Investment Services, Incorporated (the "Investment Manager")
and Xxxx Xxxxx Management, Inc. (the "Sub-Adviser").
W I T N E S S E T H
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WHEREAS, American Skandia Advisor Funds, Inc. (the "Company") is a Maryland corporation organized with one or
more series of shares and is registered as an open-end management investment company under the Investment Company
Act of 1940, as amended (the "ICA"); and
WHEREAS, the Investment Manager and the Sub-Adviser each is an investment adviser registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Board of Directors of the Company (the "Directors") has engaged the Investment Manager to act as
investment manager for the XXXX Xxxxx All-Cap Growth Fund (the "Fund"), one series of the Company, under the
terms of a management agreement with the Company, dated September 11, 2000 (the "Management Agreement"); and
WHEREAS, the Investment Manager, acting pursuant to the Management Agreement, wishes to engage the Sub-Adviser to
provide investment advice and other investment services on an interim basis pursuant to rule 15a-4 under the ICA
as set forth below.
NOW, THEREFORE, the Investment Manager and the Sub-Adviser agree as follows:
1. Investment Services. The Sub-Adviser will formulate and implement a continuous investment program for
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the Fund conforming to the investment objective, investment policies and restrictions of the Fund as set forth in
the Prospectus and Statement of Additional Information of the Company as in effect from time to time (together,
the "Registration Statement"), the Articles of Incorporation and By-laws of the Company, and any investment
guidelines or other instructions received by the Sub-Adviser in writing from the Investment Manager from time to
time. Any amendments to the foregoing documents will not be deemed effective with respect to the Sub-Adviser
until the Sub-Adviser's receipt thereof. The appropriate officers and employees of the Sub-Adviser will be
available to consult with the Investment Manager, the Company and the Directors at reasonable times and upon
reasonable notice concerning the business of the Company, including valuations of securities which are not
registered for public sale, not traded on any securities market or otherwise may be deemed illiquid for purposes
of the ICA; provided it is understood that the Sub-Adviser is not responsible for daily pricing of the Fund's
assets.
Subject to the supervision and control of the Investment Manager, which in turn is subject to the
supervision and control of the Directors, the Sub-Adviser in its discretion will determine which issuers and
securities will be purchased, held, sold or exchanged by the Fund or otherwise represented in the Fund's
investment portfolio from time to time and, subject to the provisions of paragraph 3 of this Agreement, will
place orders with and give instructions to brokers, dealers and others for all such transactions and cause such
transactions to be executed. The Sub-Adviser may delegate certain of its investment advisory and other
responsibilities and duties hereunder to one or more sub-sub-advisers. The Investment Manager hereby permits the
Sub-Adviser to delegate to Massachusetts Financial Services ("MFS") the day-to-day operations of the Fund subject
to a written interim sub-sub-advisory agreement between the Sub-Adviser and MFS. Under the terms of such
sub-sub-advisory agreement, MFS shall be responsible for managing the investment program of the Fund in the Xxxxx
style of investment management. Custody of the Fund 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-Adviser designated by the Sub-Adviser to settle transactions in respect of the Fund. No assets may be
withdrawn from the Fund other than for settlement of transactions on behalf of the Fund except upon the written
authorization of appropriate officers of the Company who shall have been certified as such by proper authorities
of the Company prior to the withdrawal.
The Sub-Adviser will not be responsible for the provision of administrative, bookkeeping or accounting
services to the Fund except as specifically provided herein, as required by the ICA or the Advisers Act or as may
be necessary for the Sub-Adviser to supply to the Investment Manager, the Fund or the Fund's shareholders the
information reasonably required to be provided by the Sub-Adviser hereunder. Any records maintained hereunder
shall be the property of the Fund and surrendered promptly upon request.
In furnishing the services under this Agreement, the Sub-Adviser will comply with and use its best
efforts to enable the Fund to conform to the requirements of: (i) the ICA and the regulations promulgated
thereunder; (ii) Subchapter M of the Internal Revenue Code and the regulations promulgated thereunder; (iii)
other applicable provisions of state or federal law; (iv) the Articles of Incorporation and By-laws of the
Company; (v) policies and determinations of the Company and the Investment Manager provided to the Sub-Adviser in
writing; (vi) the fundamental and non-fundamental investment policies and restrictions applicable to the Fund, as
set out in the Registration Statement of the Company in effect, or as such investment policies and restrictions
from time to time may be amended by the Fund's shareholders or the Directors and communicated to the Sub-Adviser
in writing; (vii) the Registration Statement; and (viii) investment guidelines or other instructions received in
writing from the Investment Manager. Notwithstanding the foregoing, the Sub-Adviser shall have no responsibility
to monitor compliance with limitations or restrictions for which information from the Investment Manager or its
authorized agents is required to enable the Sub-Adviser to monitor compliance with such limitations or
restrictions unless such information is provided to the Sub-adviser in writing. The Sub-Adviser shall supervise
and monitor the activities of its representatives, personnel and agents in connection with the investment program
of the Fund.
Nothing in this Agreement shall be implied to prevent the Investment Manager from engaging other
sub-advisers to provide investment advice and other services to the Fund or to series or portfolios of the
Company for which the Sub-Adviser does not provide such services, or to prevent the Investment Manager from
providing such services itself in relation to the Fund or such other series or portfolios.
The Sub-Adviser shall be responsible for the preparation and filing of Schedule 13-G and Form 13-F on
reflecting the Fund's securities holdings. The Sub-Adviser shall not be responsible for the preparation or
filing of any other reports required of the Fund by any governmental or regulatory agency, except as expressly
agreed in writing.
2. Investment Advisory Facilities. The Sub-Adviser, at its expense, will furnish all necessary investment
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facilities, including salaries of personnel, required for it to execute its duties hereunder.
3. Execution of Fund Transactions. In connection with the investment and reinvestment of the assets of the
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Fund, the Sub-Adviser is responsible for the selection of broker-dealers to execute purchase and sale
transactions for the Fund in conformity with the policy regarding brokerage as set forth in the Registration
Statement, or as the Directors may determine from time to time, as well as the negotiation of brokerage
commission rates with such executing broker-dealers. Generally, the Sub-Adviser's primary consideration in
placing Fund investment transactions with broker-dealers for execution will be to obtain, and maintain the
availability of, best execution at the best available price.
Consistent with this policy, the Sub-Adviser, in selecting broker-dealers and negotiating brokerage
commission rates, 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 Sub-Adviser 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 Sub-Adviser 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 Sub-Adviser's overall responsibilities with
respect to the Fund and other accounts as to which the Sub-Adviser exercises investment discretion (as such term
is defined in section 3(a)(35) of the 1934 Act). Allocation of orders placed by the Sub-Adviser on behalf of the
Fund to such broker-dealers shall be in such amounts and proportions as the Sub-Adviser shall determine in good
faith in conformity with its responsibilities under applicable laws, rules and regulations. The Sub-Adviser will
submit reports on such allocations to the Investment Manager regularly as reasonably requested by the Investment
Manager, in such form as may be mutually agreed to by the parties hereto, indicating the broker-dealers to whom
such allocations have been made and the basis therefor.
Subject to the foregoing provisions of this paragraph 3, the Sub-Adviser may also consider sales of
shares of the Fund, or may consider or follow recommendations of the Investment Manager that take such sales into
account, as factors in the selection of broker-dealers to effect the Fund's investment transactions.
Notwithstanding the above, nothing shall require the Sub-Adviser to use a broker-dealer which provides research
services or to use a particular broker-dealer which the Investment Manager has recommended.
4. Reports by the Sub-Adviser. The Sub-Adviser shall furnish the Investment Manager monthly, quarterly and
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annual reports, as may reasonably be requested by the Investment Manager concerning the transactions,
performance, and compliance of the Fund so that the Investment Manager may review such matters and discuss the
management of the Fund. The Sub-Adviser shall permit the books and records maintained with respect to the Fund
to be inspected and audited by the Company, the Investment Manager or their respective agents at all reasonable
times during normal business hours upon reasonable notice. The Sub-Adviser shall immediately notify both the
Investment Manager and the Company of any legal process served upon it in connection with its activities
hereunder, including any legal process served upon it on behalf of the Investment Manager, the Fund or the
Company. The Sub-Adviser shall promptly notify the Investment Manager of (1) any changes in any information
regarding the Sub-Adviser or the investment program for the Fund required to be disclosed in the Company's
Registration Statement, or (2) any violation of any requirement, provision, policy or restriction that the
Sub-advisor is required to comply with under Section 1 of this Agreement.
5. Compensation of the Sub-Adviser. The amount of the compensation to the Sub-Adviser is computed at an
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annual rate. 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.
In computing the fee to be paid to the Sub-Adviser, the net asset value of the Fund shall be valued as
set forth in the Registration Statement. If this Agreement is terminated, the payment described herein shall be
prorated to the date of termination.
The Investment Manager and the Sub-Adviser shall not be considered as partners or participants in a
joint venture. The Sub-Adviser 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 the Investment Manager, the Fund or the Company.
Except as otherwise specifically provided herein, the Investment Manager, the Fund and the Company will not be
obligated to pay any expenses of the Sub-Adviser.
6. Delivery of Documents to the Sub-Adviser. The Investment Manager has furnished the Sub-Adviser with
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true, correct and complete copies of each of the following documents:
(a) The Articles of Incorporation of the Company, as in effect on the date hereof;
(b) The By-laws of the Company, as in effect on the date hereof;
(c) The resolutions of the Directors approving the engagement of the Sub-Adviser as portfolio
manager of the Fund and approving the form of this Agreement;
(d) The resolutions of the Directors selecting the Investment Manager as investment manager to the
Fund and approving the form of the Management Agreement;
(e) The Management Agreement;
(f) The Code of Ethics of the Company and of the Investment Manager, as in effect on the date
hereof; and
(g) A list of companies the securities of which are not to be bought or sold for the Fund.
The Investment Manager will furnish the Sub-Adviser 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 become
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. Any amendments or supplements to the foregoing will not be deemed effective with respect to
the Sub-Adviser until the Sub-Adviser's receipt thereof. The Investment Manager will provide such additional
information as the Sub-Adviser may reasonably request in connection with the performance of its duties hereunder.
7. Delivery of Documents to the Investment Manager. The Sub-Adviser has furnished the Investment Manager
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with true, correct and complete copies of each of the following documents:
(a) The Sub-Adviser's Form ADV as filed with the Securities and Exchange Commission as of the date
hereof;
(b) The Sub-Adviser's most recent balance sheet;
(c) Separate lists of persons who the Sub-Adviser wishes to have authorized to give written and/or
oral instructions to Custodians of Company assets for the Fund; and
(d) The Code of Ethics of the Sub-Adviser, as in effect on the date hereof.
The Sub-Adviser 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 will be provided within 30 days of the time such materials become available to the Sub-Adviser. Any
amendments or supplements to the foregoing will not be deemed effective with respect to the Investment Manager
until the Investment Manager's receipt thereof. The Sub-Adviser will provide additional information as the
Investment Manager may reasonably request in connection with the Sub-Adviser's performance of its duties under
this Agreement.
8. Confidential Treatment. The parties hereto understand that any information or recommendation supplied
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by the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as
confidential and for use only by the Investment Manager, the Company or such persons the Investment Manager may
designate in connection with the Fund. The parties also understand that any information supplied to the
Sub-Adviser in connection with the performance of its obligations hereunder, particularly, but not limited to,
any list of securities which may not be bought or sold for the Fund, is to be regarded as confidential and for
use only by the Sub-Adviser in connection with its obligation to provide investment advice and other services to
the Fund.
9. Representations of the Parties. Each party hereto hereby further represents and warrants to the other
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that: (i) it is registered as an investment adviser under the Advisers Act and is registered or licensed as an
investment adviser under the laws of all jurisdictions in which its activities require it to be so registered or
licensed; and (ii) it will use its reasonable best efforts to maintain each such registration or license in
effect at all times during the term of this Agreement; and (iii) 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; and (iv) it is duly authorized to enter into this Agreement and to perform its
obligations hereunder.
The Sub-Adviser further represents that it has adopted a written Code of Ethics in compliance with Rule
17j-1(b) of the ICA. The Sub-Adviser shall be subject to such Code of Ethics, and shall not be subject to any
other Code of Ethics, including the Investment Manager's Code of Ethics, unless specifically adopted by the
Sub-Adviser. The Investment Manager further represents and warrants to the Sub-Adviser that (i) the appointment
of the Sub-Adviser by the Investment Manager has been duly authorized and (ii) it has acted and will continue to
act in connection with the transactions contemplated hereby, and the transactions contemplated hereby are, in
conformity with the ICA, the Company's governing documents and other applicable law.
10. Liability. In the absence of wilful misfeasance, bad faith, gross negligence or reckless disregard for
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its obligations hereunder, the Sub-Adviser shall not be liable to the Company, the Fund, the Fund's shareholders
or the Investment Manager for any act or omission resulting in any loss suffered by the Company, the Fund, the
Fund's shareholders or the Investment Manager 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 or limitation of any rights which the Company, the Fund or the
Investment Manager may have under applicable law.
11. Other Activities of the Sub-Adviser. The Investment Manager agrees that the Sub-Adviser and any of its
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partners or employees, and persons affiliated with the Sub-Adviser or with any such partner or employee, may
render investment management or advisory services to other investors and institutions, and that such investors
and institutions may own, purchase or sell, securities or other interests in property that are the same as,
similar to, or different from those which are selected for purchase, holding or sale for the Fund. The
Investment Manager further acknowledges that the Sub-Adviser in all respects shall be free to take action with
respect to investments in securities or other interests in property that are the same as, similar to, or
different from those selected for purchase, holding or sale for the Fund. The Investment Manager understands
that the Sub-Adviser shall not favor or disfavor any of the Sub-Adviser's clients or class of clients in the
allocation of investment opportunities, so that to the extent practical, such opportunities will be allocated
among the Sub-Adviser's clients over a period of time on a fair and equitable basis. Nothing in this Agreement
shall impose upon the Sub-Adviser any obligation (i) to purchase or sell, or recommend for purchase or sale, for
the Fund any security which the Sub-Adviser, its partners, affiliates or employees may purchase or sell for the
Sub-Adviser or such partner's, affiliate's or employee's own accounts or for the account of any other client of
the Sub-Adviser, advisory or otherwise, or (ii) to abstain from the purchase or sale of any security for the
Sub-Adviser's other clients, advisory or otherwise, which the Investment Manager has placed on the list provided
pursuant to paragraph 6(g) of this Agreement.
12. Termination. This Agreement shall remain in full force and effect for a period of 120 days at which
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time the Agreement will automatically terminate.
13. Notification. The Sub-Adviser will notify the Investment Manager within a reasonable time of any change
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in the personnel of the Sub-Adviser with responsibility for making investment decisions in relation to the Fund
(the "Portfolio Manager(s)") or who have been authorized to give instructions to the Custodian. The Sub-adviser
shall be responsible for reasonable out-of-pocket costs and expenses incurred by the Investment Manager, the Fund
or the Company to amend or supplement the Company's prospectus to reflect a change the in Portfolio Manager(s) or
otherwise to comply with the ICA, the Securities Act of 1933, as amended (the "1933 Act") or any other applicable
statute, law, rule or regulation, as a result of such change; provided, however, that the Sub-Adviser shall not
be responsible for such costs and expenses where the change in Portfolio Manager(s) reflects the termination of
employment of the Portfolio Manager(s) with the Sub-Adviser and its affiliates or is the result of a request by
the Investment Manager or is due to other circumstances beyond the Sub-Adviser's control.
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 recipient and/or 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-Adviser: Xxxx Xxxxx Management, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Executive Vice President
Company: American Skandia Advisor Funds, Inc.
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
14. Indemnification. The Sub-Adviser agrees to indemnify and hold harmless the Investment Manager, any
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affiliated person within the meaning of Section 2(a)(3) of the ICA ("affiliated person") of the Investment
Manager and each person, if any who, within the meaning of Section 15 of the 1933 Act, controls ("controlling
person") the Investment Manager, against any and all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses), to which the Investment Manager or such affiliated person or
controlling person of the Investment Manager may become subject under the 1933 Act, the ICA, the Advisers Act,
under any other statute, law, rule or regulation at common law or otherwise, arising out of the Sub-Adviser's
responsibilities hereunder (1) to the extent of and as a result of the wilful misconduct, bad faith, or gross
negligence by the Sub-Adviser, any of the Sub-Adviser's employees or representatives or any affiliate of or any
person acting on behalf of the Sub-Adviser, or (2) as a result of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, including 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 by the Sub-Adviser to the Investment Manager,
the Fund, the Company or any affiliated person of the Investment Manager, the Fund or the Company or upon verbal
information confirmed by the Sub-Adviser in writing, or (3) to the extent of, and as a result of, the failure of
the Sub-Adviser to execute, or cause to be executed, portfolio investment transactions according to the
requirements of the ICA; provided, however, that in no case is the Sub-Adviser's indemnity in favor of the
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Investment Manager or any affiliated person or controlling person of the Investment Manager deemed to protect
such person against any liability to which any such person would otherwise be subject by reason of wilful
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 the Sub-Adviser, any affiliated person of
the Sub-Adviser and each controlling person of the Sub-Adviser, if any, against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other expenses), to which the Sub-Adviser or
such affiliated person or controlling person of the Sub-Adviser may become subject under the 1933 Act, the ICA,
the Advisers Act, under any other statute, law, rule or regulation, at common law or otherwise, arising out of
the Investment Manager's responsibilities as investment manager of the Fund (1) to the extent of and as a result
of the wilful misconduct, bad faith, or gross negligence by the Investment Manager, any of the Investment
Manager's employees or representatives or any affiliate of or any person acting on behalf of the Investment
Manager, or (2) as a result of any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, including 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 other than in reliance upon and in conformity
with written information furnished by the Sub-Adviser, or any affiliated person of the Sub-Adviser or other than
upon verbal information confirmed by the Sub-Adviser in writing; provided, however, that in no case is the
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Investment Manager's indemnity in favor of the Sub-Adviser or any affiliated person or controlling person of the
Sub-Adviser deemed to protect such person against any liability to which any such person would otherwise be
subject by reason of wilful 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 Section 14 will extend to expenses and costs
(including reasonable attorneys fees) incurred by the Sub-Adviser as a result of any litigation brought by the
Investment Manager alleging the Sub-Adviser's failure to perform its obligations and duties in the manner
required under this Agreement unless judgment is rendered for the Investment Manager.
15. Conflict of Laws. The provisions of this Agreement shall be subject to all applicable statutes, laws,
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rules and regulations, including, without limitation, the applicable provisions of the ICA and rules and
regulations promulgated thereunder. To the extent that any provision contained herein conflicts with any such
applicable provision of law or regulation, the latter shall control. The terms and provisions of this Agreement
shall be interpreted and defined in a manner consistent with the provisions and definitions of the ICA.
16. Amendments, Waivers, etc. Provisions of this Agreement may be changed, waived, discharged or terminated
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only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. This Agreement (including Exhibit A hereto) may be amended at any time by written
mutual consent of the parties, subject to the requirements of the ICA and rules and regulations promulgated and
orders granted thereunder.
17. Governing State Law. This Agreement is made under, and shall be governed by and construed in accordance
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with, the laws of the State of Connecticut.
18. Severability. Each provision of this Agreement is intended to be severable. If any provision of this
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Agreement is held to be illegal or made invalid by court decision, statute, rule or otherwise, such illegality or
invalidity will not affect the validity or enforceability of the remainder of this Agreement.
The effective date of this agreement is September 17, 2001.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISER:
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Xxxxxxx X. Xxxx
Executive Vice President
Date: ____________________________ Date: ____________________________
Attest: ____________________________ Attest: ____________________________
American Skandia Advisor Funds, Inc.
XXXX Xxxxx All-Cap Growth Fund
Interim Sub-Advisory Agreement
EXHIBIT A
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An annual rate equal to the following percentages of the combined average daily net assets of the Fund
and all series of American Skandia Trust that are managed by the Sub-Adviser: .40% of the portion of the combined
average daily net assets not in excess of $500 million; plus .35% of the portion over $500 million but not in
excess of $1 billion; plus .30% of the portion over $1 billion but not in excess of $1.5 billion; plus .25% of
the portion in excess of $1.5 billion.
