Exhibit 99.B(d)(3)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI TAX EXEMPT TRUST
AGREEMENT made as of this 12th day of November, 2003 between SEI
Investments Management Corporation (the "Adviser") and Xxxxxxxx Xxxxxx Asset
Management Company LLC (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") (the "Advisory Agreement") with
the Trust, pursuant to which the Adviser acts as investment adviser to the
series of the Trust set forth on Schedule A attached hereto (the "Fund"), as
such Schedule may be amended by mutual agreement of the parties hereto; 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, Internal Revenue Code of 1986, as
amended (the "Code"), 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 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 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 the policies of the Trust, as disclosed in the Prospectus 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 portfolio 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"), 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 Fund 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 Fund 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 Fund required
by Rule 31a-1 under the 1940 Act. The Sub-Adviser shall also 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 do 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) (i) Except under the circumstances set forth in subsection (ii),
the Sub-Adviser shall not be responsible for reviewing proxy
solicitation
materials or voting and handling proxies in relation to the
securities held as Assets in the Fund. If the Sub-Adviser
receives a misdirected proxy, it shall promptly forward such
misdirected proxy to the Adviser.
(ii) The Sub-Adviser hereby agrees that upon 60 days' written notice
from the Adviser, the Sub-Adviser shall assume responsibility
for reviewing proxy solicitation materials and voting proxies
in relation to the securities held as Assets in the Fund. As of
the time the Sub-Adviser shall assume such responsibilities
with respect to proxies under this sub-section (ii), the
Adviser shall instruct the custodian and other parties
providing services to the Fund to promptly forward misdirected
proxies to the Sub-Adviser.
(i) In performance of its duties and obligations under this Agreement, the
Sub-Adviser shall not consult with any other sub-adviser to the Fund
or a sub-adviser to a portfolio that is under common control with the
Fund concerning the Assets, except as permitted by the policies and
procedures of the Fund. The Sub-Adviser shall not provide investment
advice to any assets of the Fund other than the Assets.
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 written instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Code, and all other applicable federal and state laws and
regulations, as each is amended from time to time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies 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) the Prospectus;
(d) any order issued by the SEC or other regulatory authority applicable
to the Trust, the Fund 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 accept as full compensation
therefor, a sub-advisory fee at the rate specified in Schedule B which is
attached hereto and made part of this Agreement. The fee will be calculated
based on the average daily 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 Fund. 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 Fund.
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 attorney's 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 Paragraph 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.
The Adviser shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorney's fees and other related expenses) howsoever arising
from or in connection with the performance of the Adviser's obligations
under this Agreement; provided, however, that the Adviser's obligation
under this Paragraph 5 shall be reduced to the extent that the claim
against, or the loss, liability or damage experienced by the Sub-Adviser,
is caused by or is otherwise directly related to the Sub-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
approval by the Trust's Board of Trustees and its execution by the parties
hereto. Pursuant to the exemptive relief obtained in the SEC Order dated
April 29, 1996, Investment Company Act Release No. 21921, approval of the
Agreement by 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 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
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
Advisory Agreement with the Trust. As used in this Paragraph 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 Xxxx
Xxxx, XX 00000
Attention: Legal Department
To the Sub-Adviser at: Xxxxxxxx Mellon Asset Management
Company LLC
Xxx Xxxxxx Xxxxx, Xxxxx 000-0000
Xxxxxx, XX 00000
Attention: President
10. NON-HIRE/NON-SOLICITATION. The Sub-Adviser hereby agrees that so long as
the Sub-Adviser provides services to the Adviser or the Trust and for a
period of one year following the date on which the Sub-Adviser ceases to
provide services to the Adviser and the Trust, the Sub-Adviser shall not
for any reason, directly or indirectly, on the Sub-Adviser's own behalf or
on behalf of others, hire any person employed by the Adviser, whether or
not such person is a full-time employee or whether or not any person's
employment is pursuant to a written agreement or is at-will. The
Sub-Adviser further agrees that, to the extent that the Sub-Adviser
breaches the covenant described in this paragraph, the Adviser shall be
entitled to pursue all appropriate remedies in law or equity.
11. 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.
In the event the terms of this Agreement are applicable to more than one
portfolio of the Trust (for purposes of this Paragraph 11, each a "Fund"),
the Adviser is entering into this Agreement with the Sub-Adviser on behalf
of the respective Funds severally and not jointly, with the express
intention that the provisions contained in each numbered paragraph hereof
shall be understood as applying separately with respect to each Fund as if
contained in separate agreements between the Adviser and Sub-Adviser for
each such Fund. In the event that this Agreement is made applicable to any
additional Funds by way of a Schedule executed subsequent to the date first
indicated above, provisions of such Schedule shall be deemed to be
incorporated into this Agreement as it relates to such Fund so that, for
example, the execution date for purposes of Paragraph 6 of this Agreement
with respect to such Fund shall be the execution date of the relevant
Schedule.
12. 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 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.
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 written
above.
SEI INVESTMENTS MANAGEMENT CORPORATION XXXXXXXX XXXXXX ASSET MANAGEMENT
COMPANY LLC
By: By:
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxx
-------------------------------------- ---------------------------------
Name: Name:
Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxx
-------------------------------------- ---------------------------------
Title: Title:
Vice President Chief Executive Officer
-------------------------------------- ---------------------------------
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
XXXXXXXX MELLON ASSET MANAGEMENT COMPANY LLC
AS OF NOVEMBER 12, 2003
SEI TAX EXEMPT TRUST
Pennsylvania Municipal Bond Fund
SCHEDULE B
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
XXXXXXXX XXXXXX ASSET MANAGEMENT COMPANY LLC
AS OF NOVEMBER 12, 2003
Pursuant to Paragraph 4, the Adviser shall pay the Sub-Adviser compensation at
an annual rate as follows:
SEI TAX EXEMPT TRUST
Pennsylvania Municipal Bond Fund
Agreed and Accepted:
SEI INVESTMENTS MANAGEMENT CORPORATION XXXXXXXX MELLON ASSET MANAGEMENT
COMPANY LLC
By: By:
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxx
-------------------------------------- ---------------------------------
Name: Name:
Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxx
-------------------------------------- ---------------------------------
Title: Title:
Vice President Chief Executive Officer
-------------------------------------- ---------------------------------
