AMERICAN SKANDIA TRUST
SUB-ADVISORY AGREEMENT
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THIS AGREEMENT is between American Skandia Investment Services, Incorporated and Prudential Investments LLC (the
"Investment Manager") and Xxxxxxxxx Xxxxxx 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 Xxxxxxxxx Xxxxxx Mid-Cap 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
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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, to the extent necessary in its sole judgment, 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 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 to the Sub-Advisor or the investment program conducted by the Sub-Advisor for
the Portfolio or which otherwise relates directly or indirectly to the Sub-Advisor's activities in connection
with the Portfolio (such disclosure and information being hereinafter collectively referred to as "Sub-Advisor
Information"), such Registration Statement or Proxy Statement contains, as of their respective dates and, if
later, the effective date of this Agreement, 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; it being understood that the Sub-Advisor shall have no responsibility for any other
portion of the Registration Statement or Proxy Statement.. 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 use its best efforts to comply
with the requirements of the ICA and Sections 817(h) and 851(b)(2) and (3) 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. Notwithstanding
the above, the Sub-Advisor shall have no responsibility to monitor compliance with limitations or restrictions
for which it has not received sufficient information from the Investment Manager or its authorized agents to
enable the Sub-Advisor to monitor compliance with such limitations or restrictions. Sub-Advisor shall supervise
and monitor the investment program of the Portfolio. The Investment Manager acknowledges to the Sub-Advisor that
the Investment Manager also is responsible to the Trust for monitoring compliance with the foregoing
requirements; it being understood that such acknowledgement shall in no way diminish the Sub-Advisor's
responsibilities under this provision.
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.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has furnished the Sub-Advisor with copies
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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) A list of companies the securities of which are not to be bought or sold for the Portfolio;
(h) the Registration Statement of the Trust;
(i) the Proxy Statement relating to this Agreement; and
(j) the Investment Manager's most recent balance sheet.
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. The Investment Manager will advise the Sub-Advisor 30 days prior to the effective date of
any changes in the investment objective, investment policies, or investment restrictions applicable to the
Portfolio.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has furnished the Investment Manager
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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 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
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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
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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. The Sub-Advisor may consider sale of the shares of the Portfolio, as
well as recommendations of the Investment Manager, subject to the requirements of best net price and most
favorable execution.
With respect to brokerage, 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 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 Sub-Advisor's 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 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
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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 books and records maintained by it 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 Sub-Advisor Information included
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
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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 the portion of the net assets of the Portfolio not in excess of $100 million; and .40% of the
portion in excess of $100 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 expenses for the services to be provided 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
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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
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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 give the Portfolio the benefit of the Sub-Advisor's best judgment and
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efforts in rendering its services hereunder. As an inducement to the Sub-Advisor's undertaking to render these
services, the parties agree that, except as provided in Section 14 hereunder, the Sub-Advisor shall not be liable
to the Trust or its shareholders or to the Investment Manager for any mistake in judgment or for any act or
omission resulting in any loss in connection with any service provided herein in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard for its obligations hereunder. The Sub-Advisor
and the Investment Manager further agree that the Sub-Advisor shall bear no responsibilities or obligations for
any portfolios of the Trust other than the Portfolio and any other portfolio with respect to which it serves as
sub-advisor.
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 officers
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or employees, and persons affiliated with it or with any such officer 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. Purchases and sales of individual securities on behalf of the
Portfolio or accounts for other investors or institutions will be made on a basis that is equitable to the
Portfolio 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 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
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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
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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
Prudential Investments LLC
Gateway Center Three
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Executive Vice President
Sub-Advisor: Xxxxxxxxx Xxxxxx Management, Inc.
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: General Counsel
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
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affiliated person within the meaning of Section 2(a)(3) of the 1940 Act ("affiliated person") of Investment
Manager (which shall not be deemed to include the Trust or the Portfolio) 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 Sub-Advisor Information set forth 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 for the purpose of inclusion in such prospectus or statement of
additional information, 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 set forth in the 1940
Act; provided, however, that in no case is Sub-Advisor's indemnity in favor of Investment Manager or any
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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 ("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 Sub-Advisor Information set forth 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 for the purpose of inclusion in such
prospectus or statement of additional information; provided, however, that in no case is Investment Manager's
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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
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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 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,
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the laws of the State of Connecticut.
The effective date of this agreement is October 31, 2003.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
__________________________________ _____________________________________
Xxxxxx X. Xxxxx
Executive Vice President
Date: Date:
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Attest: Attest:
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