INVESTMENT SUB-ADVISORY AGREEMENT
SEI TAX EXEMPT TRUST
AGREEMENT made this 31st day of October, 2001, between SEI Investments
Management Corporation, (the "Adviser") and XxXxxxxxx Investment Management, 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") with the Trust, pursuant to
which the Adviser will act as investment adviser to the New Jersey Municipal
Bond Fund and the California Municipal Bond Fund (the "Portfolios"), each of
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 Portfolios, 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 each Portfolio entrusted to it hereunder
(the "Assets"), including the purchase, retention and disposition of the
Assets, in accordance with each Portfolio's investment objectives,
policies and restrictions as stated in each 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 each 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 instructions and
directions of the Adviser and of the Board of Trustees of the Trust to the
extent copies of such documents, instructions and directions have been
provided in writing to Sub-Adviser 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 each
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 each Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal
securities laws. In executing Portfolio transactions and selecting brokers
or dealers, the Sub-Adviser will
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use its best efforts to seek on behalf of each 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 any
guidelines established by the Board of Trustees of the Trust, 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 a 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 in terms of the overall responsibilities of
the Sub-Adviser to 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 a
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") and the 1940 Act. The Adviser
will periodically provide Sub-Adviser with a current list of all such
affiliated persons, which list will be relied upon by Sub-Adviser.
(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 each Portfolio 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 each Portfolio are
property of that Portfolio and the Sub-Adviser will surrender promptly to
that 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
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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 each 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 do 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 in each Portfolio. The Adviser shall instruct the
custodian and other parties providing services to each Portfolio 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 partners,
officers or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to each 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 instructions
and directions of the Board of Trustees of the Trust (to the extent copies
of such documents, instructions and directions have been provided in
writing to Sub-Adviser), 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. DELIVERY OF DOCUMENTS. The Adviser has furnished or will furnish the
Sub-Adviser with current 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(es) of each Portfolio.
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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(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.
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 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. LIABILITY OF SUB-ADVISER. The Sub-Adviser shall be liable for any loss
suffered by reason of any investment decision, recommendation, or other
action taken or omitted in the performance of the Sub-Adviser's duties
under the Agreement if such loss results from the Sub-Adviser's negligence
or malfeasance, or violation of applicable law in the performance of its
obligations and duties under the Agreement.
7. DURATION AND TERMINATION. This Agreement shall become effective upon its
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
Portfolio(s) 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 a Portfolio
(a) by the Portfolio 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 Portfolio, (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 agreement with the Trust. As used
in this Section 6, the terms "assignment" and "vote of a majority of the
outstanding voting securities"
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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.
8. 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.
9. 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.
10. 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: XxXxxxxxx Investment Management, LLC
0000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, President
11. 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.
12. 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 Section 12, each a
"Portfolio"), the Adviser is entering into this Agreement with the
Sub-Adviser on behalf of the respective Portfolios severally and
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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 Portfolio as if contained in separate agreements
between the Adviser and Sub-Adviser for each such Portfolio. In the event
that this Agreement is made applicable to any additional Portfolios 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 Portfolio so that, for example, the
execution date for purposes of Section 7 of this Agreement with respect to
such Portfolio shall be the execution date of the relevant Schedule.
13. 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 Portfolios 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 XXXXXXXXX INVESTMENT MANAGEMENT, LLC
By:/s/ Xxxx Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
------------------ -----------------------
Name: Xxxx Xxxxxxxxx Name: Xxxxxx X. Xxxxxxxx
--------------- -------------------
Title: Vice President Title: President
--------------- ---------
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SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
XXXXXXXXX INVESTMENT MANAGEMENT, LLC
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
SEI TAX EXEMPT TRUST FEE
-------------------- ---
New Jersey Municipal Bond Fund 0.18% on the first $100 million
0.15% on assets over $100 million
California Municipal Bond Fund 0.18% on the first $100 million
0.15% on assets over $100 million
Agreed and Accepted:
SEI INVESTMENTS MANAGEMENT CORPORATION XXXXXXXXX INVESTMENT MANAGEMENT, LLC
By: /s/ Xxxx Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
------------------- -----------------------
Name: Xxxx Xxxxxxxxx Name: Xxxxxx X. Xxxxxxxx
--------------- -------------------
Title: Vice President Title: President
--------------- ----------
A-1
