AMERICAN SKANDIA TRUST
SUB-ADVISORY AGREEMENT
----------------------
THIS AGREEMENT is between American Skandia Investment Services, Incorporated and Prudential Investments LLC (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, 2003, 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. The Sub-Advisor and the Investment Manager understand and agree that if the Investment Manager manages the
Portfolio in a "manager-of-managers" style, the Investment Manager will, among other things, (i) continually evaluate the
performance of the Sub-Advisor through quantitative and qualitative analysis and consultations with the Sub-Advisor, (ii)
periodically make recommendations to the Trust's Board as to whether the contract with one or more sub-advisors should be
renewed, modified or terminated, and (iii) periodically report to the Trust's Board regarding the results of its
evaluation and monitoring functions. The Sub-Advisor recognizes that its services may be terminated or modified pursuant
to this process.
The Sub-Advisor acknowledges that the Investment Manager and the Trust intend to rely on Rules 17a-10 and 10f-3
under the ICA, to the extent applicable, and the Sub-Advisor hereby agrees that it shall not consult with any other
Sub-Advisor to the Portfolio or the Trust with respect to transactions in securities for the Portfolio's portfolio or any
other transactions of Portfolio assets. The Sub-Advisor further acknowledges that it shall not consult with any other
sub-advisor of the Portfolio that is a principal underwriter or an affiliated person of a principal underwriter with
respect to transactions in securities for the Portfolio's portfolio or any other transactions of Portfolio assets, and
that its investment advisory responsibilities as set forth in this Agreement are limited to such discrete portion of the
Portfolio's portfolio as determined by the Investment Manager.
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
Gateway Center Three
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Executive Vice President
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
Trust: American Skandia Trust
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Law Department
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, 2003.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISER:
By: Alliance Capital Management Corporation,
its General Partner
________________________________ _________________________________________
Xxxxxx X. Xxxxx
Executive Vice President
Date: _________________________ Date:_________________________
Attest: _________________________ Attest:________________________