INVESTMENT SUB-ADVISORY AGREEMENT
SEI TAX EXEMPT TRUST
AGREEMENT made this 28th day of September, 2000, between SEI Investments
Management Corporation, (the "Adviser") and Deutsche Asset Management, 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 August 29, 2000 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser acts as investment adviser to the Pennsylvania Municipal Bond
Fund (the "Fund"), which is a separate 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 Fund, 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 Fund entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Fund's investment objectives, policies and
restrictions as stated in the Fund'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 Fund, 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
instructions and directions of the Adviser and of the Board of
Trustees of the Trust and will conform to and comply with the
requirements of the 1940 Act, 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 Fund 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 Fund's Registration Statement (as defined herein) or as
the Board of Trustees or the Adviser may direct from time to time, in
conformity with all federal securities laws. In executing Fund
transactions and selecting brokers or dealers, the Sub-Adviser will
use its best efforts to seek on behalf of the Fund 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 any guidelines
established by the Board of Trustees of the Trust and Section 28(e) of
the Exchange Act, the Sub-Adviser is authorized to pay to a broker or
dealer who provides such brokerage and research services a commission
for executing a Fund transaction for the Fund 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 in terms of the overall responsibilities of the
Sub-Adviser to its discretionary clients, including the Fund. 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) and 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
Fund'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") and the 1940 Act.
(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 Fund required
by Rule 31a-1 under the 1940 Act. The Sub-Adviser shall also
2
furnish to the Adviser any other information 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 Fund are property of the
Fund and the Sub-Adviser will surrender promptly to the Fund any of
such records upon the Fund'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-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Fund's custodian on each business
day with information relating to all transactions concerning the
Fund'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.
(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
securities held as Assets in the Fund. The Adviser shall instruct the
custodian and other parties providing services to the Fund to promptly
forward misdirected 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 Fund 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 instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3
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, are herein called the
"By-Laws");
(c) Prospectus of the Fund.
4. COMPENSATION TO THE SUB-ADVISER. 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 accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule 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.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the Sub-Adviser's failure to perform
obligations under this Agreement; with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person
acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims 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. Pursuant to the exemptive relief
obtained in the SEC order dated April 29, 1996, Investment Company Act
No. 21921, a majority of the outstanding voting securities of the Fund is
not required, and the Sub-Adviser acknowledges that it and any other
sub-adviser so selected and approved shall be without the protection (if
any) accorded by the shareholder approval of an investment adviser's
receipt of compensation under Section 36(b) of the 1940 Act. 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 Fund: (a) by the Fund at
any time, without the payment of any penalty, by the vote of a majority
4
of Trustees of the Trust or by the vote of a majority of the outstanding
voting securities of the Fund; (b) by the Adviser 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; 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 Advisory 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 Investments Management Corporation
Xxx Xxxxxxx Xxxxxx Xxxxx
Xxxx, XX 00000
Attention: Legal Department
To the Sub-Adviser at: Deutsche Asset Management, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: President
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
5
of this instrument are not binding upon any of the Trustees, officers
or shareholders of the Fund 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 effect of such rule, regulation or
order.
6
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 INVESTMENTS MANAGEMENT CORPORATION
By: /s/Xxxx Xxxxxxxxx
-----------------
Name: Xxxx Xxxxxxxxx
--------------
Title: Senior Vice President
---------------------
Attest: Xxxxx X. Xxxxx
--------------
DEUTSCHE ASSET MANAGEMENT, INC.
By: /s/Xxxxx X. Xxxxx
-----------------
Name: Xxxxx X. Xxxxx
--------------
Title: Managing Director
-----------------
Attest:
--------------------------
7
SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
DEUTSCHE ASSET MANAGEMENT, INC.
Pursuant to Article 4, the Trust shall pay the Adviser compensation at an annual
rate as follows:
SEI TAX EXEMPT TRUST
Pennsylvania Municipal Bond Fund 0.20%
8
