MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of this 23rd day of May, 1986 by and between
TrustFunds Tax Exempt 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 management, administrative,
transfer agent and unitholder servicing services to the Trust's Eastern
Portfolio, Western Portfolio and such other portfolios as the Trust and the
Manager may agree on ("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 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 the
performance of the Portfolios' investment advisers 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 desirability of making such investment decisions.
ARTICLE 3. TRANSFER AGENT SERVICES. The Manger will act as Transfer 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 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
shares 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.
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
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(iii) the number of Units authorized for issuance and stating that upon
issuance they will be validly issued and nonassessable; 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 Manager may deem necessary or appropriate.
ARTICLE 4. DIVIDEND DISBURSING AGENT. The Manager shall act as Dividend
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 on 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
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 fiduciaries, insurers, banks and
persons in any other capacity deemed to be necessary or desirable for the
Portfolio's 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 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.
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ARTICLE 6. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE MANAGER. The Manager shall furnish at its own expense the
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 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 Trust
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
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 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.
ARTICLE 7. COMPENSATION OF THE MANAGER.
(A) MANAGEMENT FEE. For the services to be rendered, the facilities
furnished and the expenses assumed by the Manager pursuant to this Agreement,
the Trust shall pay to the Manager compensation at an annual rate of .36% of the
average daily net assets of each Portfolio. (The annual rate of compensation
with respect to any Portfolio other than the Eastern Portfolio or Western
Portfolio shall be as agreed upon by the parties to this Agreement.) 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 contemplated by paragraph (B)
of this Article 7.
(B) EXCESS EXPENSES. If the expenses of any Portfolio for any fiscal year
(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) an annual rate of 1.0% of a
Portfolio's average daily net asset value (or, with respect to a Portfolio other
than the Eastern Portfolio or Western Portfolio, such other annual rate as
agreed to by the parties to this Agreement), or (ii) the expense limitations
imposed on investment companies by any applicable statute or regulatory
authority of any jurisdiction in which Units are qualified for offer and sale,
the
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manager shall bear such excess cost. However, the Manager will not bear
expenses of the Trust 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 any Portfolio 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 Trust's expenses
to exceed the expense limitation set forth in this paragraph.
(C) COMPENSATION FROM TRANSACTIONS. The Trust hereby authorizes any
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).
(D) SURVIVAL OF COMPENSATION RATES. All rights of compensation under this
Agreement shall survive the termination of this Agreement.
ARTICLE 8. LIMITATION OF LIABILITY OF THE MANAGER. The duties of the
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, 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 concern-
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ing 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 effect the rights hereunder.
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 or presented by the proper person or persons.
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
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,
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
hereto only if such amendment is specifically approved (i) by the vote of a
majority of 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. 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
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
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"
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
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
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but 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 TAX EXEMPT TRUST
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
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President
SEI FINANCIAL MANAGEMENT CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
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Senior Vice President
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