INVESTMENT SUB-ADVISORY AGREEMENT
SEI TAX EXEMPT TRUST
AGREEMENT made this 16th day of April, 1996, between SEI Financial
Management Corporation, (the "Adviser") and Xxxxxxxx, Xxxx & Xxxx, Inc. (the
"Sub-Adviser").
WHEREAS, SEI Tax Exempt Trust, a Massachusetts business trust (the "Trust")
is registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated April 16, 1996 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Intermediate-Term
Municipal Portfolio (the "Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the
direction of the Adviser, determine from time to time what Assets will
be purchased, retained or sold by the Portfolio, and what portion of
the Assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement,
the Sub-Adviser shall act in conformity with the Trust's Declaration
of Trust (as defined herein) and the Prospectus and with the written
instructions and directions of the Adviser and of the Board of
Trustees of the Trust delivered to the Sub-Adviser and will conform to
and comply with the applicable requirements of the 1940 Act,
Subchapter M of the Internal Revenue Code of 1986, and all other
applicable federal and state laws and regulations, as each is amended
from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by
the Portfolio as provided in subparagraph (a) and will place orders
with or through such persons, brokers or dealers to carry out the
policy with respect to brokerage set forth in the Portfolio's
Prospectus delivered to the Sub-Adviser or as the Board of Trustees or
the Adviser may in writing direct from time to time, in conformity
with federal securities laws. In executing Portfolio transactions and
selecting brokers or dealers, the Sub-Adviser will use its best
efforts to seek on behalf of the Portfolio the best overall terms
available. In assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors
that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness
of the commission, if any, both for the specific transaction and on a
continuing basis. In evaluating the best overall terms available, and
in selecting the broker-dealer to execute a particular transaction,
the Sub-Adviser may also consider the brokerage and research services
provided (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934). Consistent with the policies of the
Trust, as disclosed in the Prospectus, the Sub-Adviser is authorized
to pay to a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the
Portfolio which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if,
but only if, the Sub-Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer -- viewed in
terms of that particular transaction or terms of the overall
responsibilities of the Sub-Adviser to its discretionary clients,
including the Portfolio. In addition, the Sub-Adviser is authorized
to allocate purchase and sale orders for securities to brokers or
dealers (including brokers and dealers that are affiliated with the
Adviser, Sub-Adviser or the Trust's principal underwriter) to take
into account the sale of shares of the Trust if the Sub-Adviser
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no
instance, however, will the Portfolio's Assets be purchased from or
sold to the Adviser, Sub-Adviser, the Trust's principal underwriter or
any affiliated person of either the Trust, Adviser, the Sub-Adviser or
the principal underwriter, acting as principal in the transaction,
except to the extent permitted by the Securities and Exchange
Commission ("SEC"), the Investment Advisers Act of 1940, as amended,
and the 1940 Act, and the rules and regulations thereunder.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients, the Sub-Adviser, to the extent permitted by applicable laws
and regulations, may aggregate the securities to be sold or purchased
in order to obtain the best execution and/or a lower brokerage
commission, if any. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to such clients.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act. The Sub-Adviser shall provide to the Adviser or the Board
of Trustees such periodic and special reports, balance sheets or
financial information, and such other information with regard to its
affairs as the Adviser or Board of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the
Assets required to be maintained by the Sub-Adviser under this
Agreement and shall timely furnish to the Adviser all information
relating to the Sub-Adviser's services under this Agreement needed by
the Adviser to keep the other books and records of the Portfolio
required by Rule 31a-1 under the 1940 Act. The Sub-Adviser shall also
furnish to the Adviser any
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other information within the possession or control of the Sub-Adviser
relating to the Assets that is required to be filed by the Adviser or
the Trust with the SEC or sent to shareholders under the 1940 Act
(including the rules adopted thereunder or any exemptive or other
relief that the Adviser or the Trust obtains from the SEC). The
Sub-Adviser agrees that all records that it maintains on behalf of the
Portfolio are property of the Portfolio and the Sub-Adviser will
surrender promptly to the Portfolio any of such records upon the
Portfolio's request; provided, however, that the Sub-Adviser may
retain a copy of such records. In addition, for the duration of this
Agreement, the Sub-Adviser shall preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act any such records as are required to
be maintained by it pursuant to this Agreement, and shall transfer
said records to any successor sub-adviser upon the termination of this
Agreement (or, if there is no successor sub-advisor, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each
business day with information relating to all transactions concerning
the Portfolio's Assets and shall provide the Adviser with such
information upon request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under
this Agreement are not to be deemed exclusive and the Sub-Adviser
shall be free to render similar services to others, as long as such
services to not impair the services rendered to the Adviser or the
Trust. In addition, nothing in this agreement will in any way
restrict the Sub-Adviser, its officers, Directors or employees from
trading in securities for its or their own accounts as permitted by
the 1940 Act and the Sub-Adviser's Code of Ethics, provided that the
Sub-Adviser's Code of Ethics materially complies with the then current
Code of Ethics recommendations of the Investment Company Institute.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to
fulfill its commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
Assets. The Adviser shall instruct the custodian and other parties
providing services to the Portfolio to forward promptly all such
proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's directors, officers or
employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the written instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, Subchapter M of the Internal Revenue Code of 1986, and all other
applicable federal and state laws and regulations, as each is amended from
time to time.
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3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) the Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such
Agreement and Declaration of Trust, as in effect on the date of this
Agreement and as amended from time to time, herein called the
"Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, herein called the
"By-Laws");
(c) the Prospectus;
(d) any order issued by the SEC or other regulatory authority applicable
to the Trust, the Portfolio or the Adviser; and
(e) any other written instructions, directions or policies of the Adviser
or the Trust's board of Trustees applicable to the Sub-Adviser's
duties hereunder.
The Adviser will promptly furnish to the Sub-Adviser any and all amendments or
other changes to the documents specified in this Section 3, and the Sub-Adviser
shall not be charged with complying with any such document or amendment not so
delivered to the Sub-Adviser, unless the Sub-Adviser reasonably should have
known the terms of such document or amendment.
4. COMPENSATION TO THE SUB-ADVISER; EXPENSES. For the services to be provided
by the Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accepts as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s) which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser's management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
The Sub-Adviser shall be responsible for its own expenses in performing its
duties hereunder but shall not be responsible for the expenses of the Trust
or the Portfolio. Without limiting the generality of the foregoing, the
Sub-Adviser shall not be responsible for brokerage commissions, transfer
taxes or fees or custody fees of the Portfolio.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorneys' fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 shall be reduced to the extent that the
claim against, or the loss, liability or damage experienced by the Adviser,
is caused by or is otherwise directly related to the Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
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The Adviser shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorneys' fees and other related expenses) howsoever arising
from or in connection with the performance of the Sub-Adviser's obligations
under this Agreement; provided, however, that the Sub-Adviser's obligation
under this Section 5 shall be reduced to the extent that the claim against,
or the loss, liability or damage experienced by the Adviser, is caused by
or is otherwise directly related to the Adviser's own willful misfeasance,
bad faith or negligence, or to the reckless disregard of its duties under
this Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio. This Agreement shall
continue in effect for a period of more than two years from the date hereof
only so long as continuance is specifically approved at least annually in
conformance with the 1940 Act; provided, however, that this Agreement may
be terminated with respect to the Portfolio (a) by the Portfolio at any
time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the Sub-Adviser, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio. (b) by the Adviser at any
time, without the payment of any penalty, on no more than 60 days' nor less
than 30 days' written notice to the Sub-Adviser, or (c) by the Sub-Adviser
at any time, without the payment of any penalty, on 90 days' written notice
to the Adviser. This Agreement shall terminate automatically and
immediately in the event of its assignment, or in the event of a
termination of the Adviser's agreement with the Trust. As used in this
Section 6, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set forth
in the 1940 Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this Agreement
shall be deemed sufficient if delivered or mailed by registered, certified
or overnight mail, postage prepaid, addressed by the party giving notice to
the other party at the last address furnished by the other party:
To the Adviser at: SEI Financial Management Corporation
000 Xxxx Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
Attention: Legal Department
To the Sub-Adviser at: Xxxxxxxx, Xxxx & Xxxx, Inc.
Xxx Xxxxxxxxx Xxxxxx, Xxxxx 00
Xxxxxx, XX 00000
Attention: President
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10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
11. MISCELLANEOUS.
(a) A copy of the Declaration of Trust is on file with the Secretary of
State of the Commonwealth of Massachusetts, and notice is hereby given
that the obligations of this instrument are not binding personally
upon any of the Trustees, officers or shareholders of the Portfolio or
the Trust.
(b) Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order
of the SEC, whether of special or general application, such provision
shall be deemed to incorporate the effects of such rule, regulation or
order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
SEI Financial Management Corporation Xxxxxxxx, Ayer & Wood, Inc.
By: /s/ Xxxx Xxxxxxxxx By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxx Xxxxxxxxx Name: Xxxxx X. Xxxxxx
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Title: Vice President Title: Treasurer
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SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
XXXXXXXX, XXXX & XXXX, INC.
Pursuant to Section 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Intermediate-Term Municipal Portfolio .18% on the first $125 million
.15% over $125 million
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