MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of this 31st day of October, 1986 by and between
TrustFunds Liquid Asset Trust (the "Trust"), a Massachusetts business trust, and
SEI Financial Management Corporation (the "Manager"), a Delaware corporation.
WHEREAS the Trust is a diversified open-end investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS the Manager is willing to provide, or oversee the performance of
others who will provide management, administrative, transfer agent and
unitholder servicing services to the Trust's Treasury Portfolio, Agency
Portfolio, Commercial Portfolio, Prime Obligation Portfolio, Institutional Cash
Portfolio, and such other portfolios as the Trust and the Manager may agree on
(collectively, "Portfolios"), on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Manager hereby agree as follows:
ARTICLE 1. Retention of the Manager. The Trust hereby retains the
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Manager to act as the Manager and Unitholder Servicing Agent of the Portfolios
and to furnish the Portfolios with the management, administrative, transfer
agent and unitholder servicing services as set forth below. The Manager hereby
accepts such employment to perform the duties set forth below. The Manager
shall, for all purposes herein, be deemed to be an independent contractor and,
unless otherwise expressly provided or authorized, shall have no authority to
act for or represent the Trust in any way and shall not be deemed an agent of
the Trust. All of the Manager's duties shall be subject always to the
objectives, policies and restrictions contained in the Trust's current
registration statement under the 1940 Act, to the Trust's Declaration of Trust
and By-Laws, to the provisions of the 1940 Act, and to any other guidelines that
may be established by the Trust's Trustees. The Manager shall calculate the
daily net asset value of the Portfolios in accordance with the procedures
prescribed in the Trust's Registration Statement and such other procedures as
may be established by the Trustees of the Trust.
ARTICLE 2. Evaluation Services. The Manager shall oversee and monitor
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the performance of the Portfolios' investment adviser and shall furnish to the
Trust such information, evaluations, analyses and opinions regarding said
performance as the Trustees may, from time to time, reasonably request;
provided, however, that the Manager shall have no authority to make and shall
not make investment decisions for the Portfolios nor furnish any advice with
respect to the desireability of making such investment decisions.
ARTICLE 3. Transfer Agent Services. The Manager will act as Transfer
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Agent for the Portfolios and, as such, will record in an account (the "Account")
the total number of units of beneficial interest ("Units") of each Portfolio
issued and outstanding from time to time and will maintain Unit transfer records
in which it will note the names and registered addresses of Unitholders, and the
number of Units from time to time owned by each of them. Each Unitholder will be
assigned one or more account numbers. The Manager is authorized to set up
accounts and record transactions in the accounts on the basis of instructions
received from Unitholders when accompanied by remittance in appropriate amount
as provided in the Trust's then current prospectus. The Trust will not issue
certificates representing its Units. Whenever Units are purchased or issued, the
Manager shall credit the Account with the Units issued, and credit the proper
number of Units to the appropriate Unitholder. Likewise, whenever the Manager
has occasion to redeem Units owned by a Unitholder, the Trust authorizes the
Manager to process the transaction by making appropriate entries in its Unit
transfer records and debiting the Account.
Upon receipt by the Trust's Wire Agent (currently the United States
National Bank of Oregon) on behalf of the Manager of funds through the Federal
Reserve wire system or conversion into Federal funds of funds transmitted by
other means, for the purchase of Units in accordance with the Trust's current
prospectus, the Manager shall notify the Trust of such deposits on a daily
basis. The Manager shall credit the Unitholder's account with the number of
units purchased according to the price of the Units in effect for such purchases
determined in the manner set forth in the Trust's then current prospectus. The
Manager shall process each order for the redemption of Units from or on behalf
of a Unitholder, and shall cause cash proceeds to be wired in Federal funds. The
requirements as to instruments of transfer and other documentation, the
applicable redemption price and the time of payment shall be as provided in the
then current prospectus, subject to such supplemental requirements consistent
with such prospectus as may be established by mutual agreement between the Trust
and Manager. If the Manager or the Trust determines that a request for
redemption does not comply with the requirements for redemption, the Manager
shall promptly so notify the Unitholder, together with the reason therefor, and
shall effect such redemption at the price next determined after receipt of
documents complying with said standards. On each day that the Trust's custodian
banks and the New York Stock Exchange are open for business ("Business Day"),
the Manager shall notify the Custodian of the amount of cash or other assets
required to meet payments made pursuant to the provisions of this paragraph, and
the Trust shall instruct the Custodian to make available from time to time
sufficient funds or other assets therefor. The authority of the Manager to
perform its responsibilities under this paragraph shall be suspended upon
receipt by it of notification from the Securities and Exchange Commission or the
Trustees of the suspension of the determination of the Trust's net asset value.
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In registering transfers, the Manager may rely upon the opinion of counsel
in not requiring complete documentation, in registering transfers without
inquiry into adverse claims, in delaying registration for purposes of such
inquiry, or in refusing registration where in its judgment an adverse claim
requires such refusal.
The Trust warrants that it has or shall deliver to the Manager, as transfer
agent:
(a) a copy of the Declaration of Trust of the Trust, incorporating all
amendments thereto, certified by the Secretary or Assistant Secretary of the
Trust;
(b) an opinion of counsel to the Trust with respect to (i) the legality
and continuing existence of the Trust, (ii) the legality of its outstanding
Units of beneficial interest, and (iii) the number of units authorized for
issuance and that upon issuance they will be validly issued; and
(c) the Trust's Secretary's or Assistant Secretary's certificate as to the
authorized outstanding Units of the Trust, its address to which notices may be
sent, the names and specimen signatures of its officers who are authorized to
sign instructions or requests to the Manager on behalf of the Trust, and the
name and address of legal counsel to the Trust. In the event of any future
amendment or change in respect of any of the foregoing, prompt written
notification of such change shall be given by the Trust to the Manager, together
with copies of all relevant resolutions, instruments or other documents,
specimen signatures, certificates, opinions or the like as the Manger may deem
necessary or appropriate.
ARTICLE 4. Dividend Disbursing Agent. The Manager shall act as Dividend
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Disbursing Agent for the Trust and, as such, in accordance with the provisions
of the Trust's Declaration of Trust and then current prospectus, shall prepare
and wire or credit income and capital gains distributions to Unitholders. The
Trust agrees that it shall promptly inform the Manager of the declaration of any
dividend or distribution of its Units, and that on or before the payment date of
a distribution, it shall instruct the Custodian to make available, at the
instruction of the Dividend Disbursing Agent, sufficient funds for the cash
amount to be paid out. If a Unitholder is entitled to receive additional Units
by virtue of any such distribution or dividend, appropriate credits will be made
to the Unitholder's account.
ARTICLE 5. Other Administrative Services. in addition to the services
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described above, the Manager shall perform or supervise the performance by
others of other administrative services in connection with the operations of the
Portfolios, and, on behalf of the Trust, will investigate, assist in the
selection of and conduct relations with custodians, depositories, accountants,
underwriters, brokers and dealers, corporate
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fiduciaries, insurers, banks and persons in any other capacity deemed to be
necessary or desirable for the Portfolios' operation. The Manager shall provide
the Trust with regulatory reporting and related bookkeeping services, all
necessary office space, equipment, personnel compensation and facilities
(including facilities for Unitholders' and Trustees' meetings) for handling the
affairs of the Portfolios and such other services as the Manager shall, from
time to time, determine to be necessary to perform its obligations under this
Agreement. The Manager shall make reports to the Trust's Trustees concerning the
performance of its obligations hereunder; furnish advice and recommendations
with respect to other aspects of the business and affairs of the Portfolios as
the Trust shall determine desirable; and shall provide the Portfolios'
Unitholders with the reports described in the Trust's current prospectus. Also,
the Manager will perform other services for the Trust as agreed to from time to
time, including, but not limited to, preparation and mailing of appropriate
federal income tax forms; mailing the annual reports of the Trust; preparing
an annual list of Unitholders; furnishing the Trust with such reports regarding
the sale and redemption of Units as may be required in order to comply with
federal and state securities law; and mailing notices of Unitholders' meetings,
proxies and proxy statements, for all of which the Trust will pay the Manager's
out-of-pocket expenses.
ARTICLE 6. Allocation of Charges and Expenses.
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(A) The Manager. The Manager shall furnish at its own expense the
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executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Manager shall also provide the items which
it is obligated to provide under this Agreement, and shall pay all compensation,
if any, of officers of the Trust as well as all Trustees of the Trust who are
affiliated persons of the Manager or of any affiliated corporation; provided,
however, that unless otherwise specifically provided, the Manager shall not be
obligated to pay the compensation of any employee of the Manager retained by the
Trustees of the Trust to perform services on behalf of the Trust.
(B) The Trust. The Trust assumes and shall pay or cause to be paid all
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other expenses of the Trust not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information proxy
solicitation material and notices to existing Unitholders, all expenses incurred
in connection with the issuing and redeeming Trust Units, the costs of custodial
services, the cost of initial and ongoing registration of the Trust's Units
under federal and state securities laws, fees and out-of-pocket expenses of
Trustees who are not affiliated persons of the Manager or any affiliated
corporation, insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, all fees and charges of investment
advisers to the Trust, and distribution expenses in accordance with the Trust's
Distribution Plan.
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ARTICLE 7. Compensation of the Manager
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(A) Management Fee. For the services to be rendered, the facilities
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furnished and the expenses assumed by the Manager pursuant to this Agreement,
the Trust shall pay to the Manager compensation at an annual rate specified in
the Schedules which are attached hereto and made a part of this Agreement
("Schedules"). Such compensation shall be calculated and accrued daily, and
paid to the Manager monthly (subject to any expenses to be borne by the Manager
under Article 7(B) herein). If this Agreement becomes effective subsequent to
the first day of a month or terminates before the last day of a month, the
Manager's compensation for that part of the month in which this Agreement is in
effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above. Payment of the Manager's compensation for the
preceding month shall be made promptly after completion of the
computations by paragraph (B) of this Article 7.
(B) Excess Expenses. If the expenses of any Portfolio for any fiscal year
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(including fees and other amounts payable to the Manager, but excluding
interest, taxes, brokerage costs, litigation and other extraordinary costs) as
calculated every Business Day would exceed (i) the annual rate for any Portfolio
as specified in the attached Schedules or (ii) the expense limitations imposed
on investment companies by any applicable stature or regulatory authority of any
jurisdiction in which Units are qualified for offer and sale, the Manager shall
bear such excess cost of such portfolio. However, the Manager will not bear
expenses of the Trust or any Portfolio thereof to an extent which would result
in the Trust's inability to qualify as a regulated investment company under
provisions of the Internal Revenue Code. Payment of expenses by the Manager
pursuant to this Article 7(B) shall be settled on a monthly basis (subject to
fiscal year end reconciliation) by a reduction in the fee payable to Manager for
such month pursuant to Article 7(A) above and, if such reduction shall be
insufficient to offset such expenses, by reimbursing the Trust. Any excess
expenses borne under Article 7(B)(i) (including any fees waived by the Manager)
or such excess expenses of the Trust borne by the Manager since May 25, 1984
pursuant to earlier agreements between the Manager and the Trust may be
recovered by the Manager from the Trust when such recovery would not cause the
applicable Portfolio's expenses to exceed the expense limitation set forth in
the attached Schedules.
(C) Compensation From Transactions. The Trust hereby authorizes any
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entity or person associated with the Manager which is a member of a national
securities exchange to effect any transaction on the exchange for the account of
the Trust which is permitted by Section 11(a) of the Securities Exchange Act of
1934 and Rule 11a2-2(T) thereunder, and the Trust hereby consents to the
retention of compensation for such transactions in accordance with Rule
11a2-2(T)(a)(2)(iv).
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(D) Survival of Compensation Rates. All rights of compensation under this
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Agreement shall survive the termination of this Agreement.
ARTICLE 8. Limitation of Liability of the Manager. The duties of the
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Manager shall be confined to those expressly set forth herein, and no implied
duties are assumed by or may be asserted against the Manager hereunder. The
Manager shall not be liable for any error of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties hereunder, except as may
otherwise be provided under provisions of applicable state law which cannot be
waived or modified hereby. (As used in this Article 8, the term "Manager" shall
include directors, officers and employees and other corporate agents of the
Manager as well as that corporation itself.) So long as the Manager acts in good
faith and with due diligence and without gross negligence, the Trust assumes
full responsibility and shall indemnify the Manager and hold it harmless from
and against any and all actions, suits and claims, whether groundless or
otherwise, and from and against any and all losses, damages, costs, charges,
reasonable counsel fees, and disbursements, payments, expenses and liabilities
(including reasonable investigation expenses) arising directly or indirectly out
of said management and transfer, dividend disbursing and unitholder servicing
agency relationship to the Trust or any other service rendered to the Trust
hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement. The rights hereunder
shall include the right to reasonable advances of defense expenses in the event
of any pending or threatened litigation with respect to which indemnification
hereunder may ultimately be merited. In order that the indemnification provision
contained herein shall apply, however, it is understood that if in any case the
Trust may be asked to indemnify or hold the Manager harmless, the Trust shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the Manager will use all reasonable
care to identify and notify the Trust promptly concerning any situation which
presents or appears likely to present the probability of such a claim for
indemnification against the Trust, but failure to do so in good faith shall not
affect the rights thereunder.
The Manager may apply to the Trust at any time for instructions and may
consult counsel for the Trust or its own counsel and with accountants and other
experts with respect to any matter arising in connection with the Manager's
duties, and the Manager shall not be liable or accountable for any action taken
or omitted by it in good faith in accordance with such instruction or with the
opinion of such counsel, accountants or other experts. Also, the Manager shall
be protected in acting upon any document which it reasonably believes to be
genuine and to have been signed by the proper person or persons.
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Nor shall the Manager be held to have notice of any change of authority of any
officer, employee or agent of the Trust until receipt of written notice thereof
from the Trust.
ARTICLE 9. Activities of the Manager. The services of the Manager
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rendered to the Trust are not to be deemed to be exclusive. The Manager is free
to render such services to others and to have other businesses and interests. It
is understood that Trustees, officers, employees and Unitholders of the Trust
are or may be or become interested in the Manager, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Manager and its counsel are or may be or become
similarly interested in the Trust, and that the Manager may be or become
interested in the Trust as a Unitholder or otherwise.
ARTICLE 10. Duration and Termination of this Agreement. This Agreement,
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unless terminated sooner as provided herein, shall remain in effect for two
years after the date of the Agreement and shall continue in effect for
successive periods of one year if such continuance is specifically approved at
least annually (i) by the Trustees of the Trust and (ii) by the vote of a
majority of the Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a Board of Trustees
meeting called for the purpose of voting on such approval. This Agreement may be
terminated at any time and without penalty by the Trustees of the Trust or by
the Manager on not less than 30 days nor more than 60 days written notice to the
other party hereto. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at the
designated mailing address of such party.
This Agreement shall not be assignable by either party without the written
consent of the other party.
ARTICLE 11. Amendments. This Agreement may be amended by the parties
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hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Trustees of the Trust, who are not parties to this Agreement or
interested persons of any such party, cast in person at a Board of Trustees
meeting called for the purpose of voting on such approval. For special cases,
the parties hereto may amend such procedures set forth herein as may be
appropriate or practical under the circumstances, and the Manager may
conclusively assume that any special procedure which has been approved by the
Trust does not conflict with or violate any requirements of its Declaration of
Trust, By-Laws or prospectus, or any rule, regulation or requirement of any
regulatory body.
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ARTICLE 12. Trustees' Liability. A copy of the Declaration of Trust of
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the Trust is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Trust as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees,
officers or Unitholders of the Trust individually, but binding only upon the
assets and property of the Trust.
ARTICLE 13. Certain Records. The Manager shall maintain customary records
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in connection with its duties as specified in this Agreement. Any records
required to be maintained and preserved pursuant to Rules 31a-1 and 31a-2 under
the 1940 Act which are prepared or maintained by the Manager on behalf of the
Trust shall be prepared and maintained at the expense of the Manager, but shall
be the property of the Trust and will be made available to or surrendered
promptly to the trust on request. In case of any request or demand for the
inspection of such records by another party, the Manager shall notify the Trust
and follow the Trust's instructions as to permitting or refusing such
inspection; provided that the Manager may exhibit such records to any person in
any case where it is advised by its counsel that it may be held liable for
failure to do so, unless (in cases involving potential exposure only to civil
liability) the Trust has agreed to indemnify the Manager against such liability.
ARTICLE 14. Definitions of Certain Terms. The Terms "interested person"
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and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 15. Governing Law. This Agreement shall be construed in
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accordance with the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Massachusetts, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 16. Multiple Originals. This Agreement may be executed in two or
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more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute by one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
TRUSTFUNDS LIQUID ASSET TRUST
By [SIGNATURE APPEARS HERE]
------------------------------------
President
SEI FINANCIAL MANAGEMENT CORPORATION
By [SIGNATURE APPEARS HERE]
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Executive Vice President
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Schedule A to Management Agreement
Between TrustFunds Liquid Asset Trust and
SEI Financial Management Corporation
Dated October 31, 1986
TrustFunds Liquid Asset Trust (the "Trust") and SEI Financial Management
Corporation ("Manager") hereby agree as follows with respect to Article 7 of the
Management Agreement between the Manager and the Trust date October 31, 1986
("Agreement").
1. The annual rate of compensation for the following Trust Portfolios
pursuant to Article 7(A) of the Agreement shall be as follows:
(a) Treasury Portfolio: .36% of the average daily net assets of the
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Portfolio.
(b) Agency Portfolio: .36% of the average daily net assets of the
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Portfolio.
(c) Commercial Portfolio: .36% of the average daily net assets of
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the Portfolio.
(d) Prime Obligation Portfolio: .36% of the average daily net assets
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of the Portfolio.
(e) Institutional Cash Portfolio: .36% of the average daily net
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assets of the Portfolio.
2. The annual rate of expenses for the following Trust Portfolios pursuant
to Article 7(B)(i) of the Agreement shall be as follows:
(a) Treasury Portfolio: .44% of the average daily net assets of the
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Portfolio.
(b) Agency Portfolio: .44% of the average daily net assets of the
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Portfolio.
(c) Commercial Portfolio: .44% of the average daily net assets of
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the Portfolio:
(d) Prime Obligation Portfolio: .44% of the average daily net assets
--------------------------
of the Portfolio:
(e) Institutional Cash Portfolio: .44% of the average daily net
----------------------------
assets of the Portfolio.
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