EXHIBIT B
SUB-INVESTMENT MANAGEMENT AGREEMENT
BY, BETWEEN AND AMONG
RESERVE PRIVATE EQUITY SERIES
RESERVE MANAGEMENT COMPANY, INC.
AND
-------------------------------
FOR THE
RESERVE ___________________FUND
SUB-INVESTMENT MANAGEMENT AGREEMENT
FOR THE
RESERVE _________________ FUND
THIS AGREEMENT made this __________ day of ____________________, 199__,
by, between and among RESERVE PRIVATE EQUITY SERIES ("Trust"), RESERVE
MANAGEMENT COMPANY, INC., a New Jersey corporation having its principal place of
business in New York (the "Investment Manager") and
____________________________________., a corporation having its principal place
of business in ______________________________________ (the "Sub-Investment
Manager");
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as a non-diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "1940 Act");
WHEREAS, the Trust is authorized to issue an unlimited number of shares
of beneficial interest, no par value in separate series or classes of series
with each such separate series representing an interest in a separate portfolio
of investment securities and other assets;
WHEREAS, the Trust has employed the Investment Manager to act as
investment manager of the Reserve ___________________ Fund ("Fund") as set forth
in the Investment Management Agreement between the Trust and the Investment
Manager dated __________________________, 199__, (the "Investment Management
Agreement");
WHEREAS, the Sub-Investment Manager is engaged in the business of
rendering investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Trust and the Investment Manager desire to retain the
Sub-Investment Manager to render investment management services to the Fund in
the manner and on the terms hereinafter set forth;
The parties agree as follows:
1. Duties of the Sub-Investment Manager. The Sub-Investment Manager
hereby agrees subject to the supervision of the Investment Manager and the Trust
(1) to act as the investment adviser to, and investment manager of, the
Reserve____________________ Fund of the Trust, (2) to manage the investment and
reinvestment of the assets of the Fund for the period and on the terms and
conditions set forth in this Agreement, and (3) during the term hereof, as its
own expense, to render the services and to assume the obligations herein set
forth for the compensation provided for herein.
2. Sub-Investment Management Services. In performing the duties stated
in Paragraph 1 above, the Sub-Investment Manager will regularly provide the
Investment Manager and the Trust with such investment research, advice and
management as the Investment Manager and the Trust may from time to time
consider necessary for the proper management of the Fund. The Sub-Investment
Manager will furnish continuously an investment program and will conduct a
continuous program of evaluation of assets in the Fund. In this connection the
Sub-Investment Manager will provide the Board of Trustees and officers of the
Trust with such statistical information with respect to investments of the Fund
and such periodic and special reports and information as the Investment Manager
or the Trust may reasonably request. In addition the Sub-Investment Manager will
determine which securities or other investments shall be purchased, sold or
exchanged and what portion of the assets of the Fund shall be held in securities
or other assets in which it may invest. In so acting, the Sub-Investment Manager
shall always be subject to, and shall follow at all times (i) any restrictions
of the Trust's Declaration of Trust and By-Laws, as amended from time to time,
(ii) the applicable provisions of the 1940 Act, and any rules and regulations
adopted thereunder, (iii) statements relating to the Fund's investment
objectives, policies and restrictions as the same are set forth in the
prospectus of the Fund and statement of additional information then currently
effective under the Securities Act of 1933, and (iv) any other provision of
state and federal law applicable to it in connection with its duties hereunder.
Should the Board of Trustees of the Trust or the Investment Manager at any time,
however, make any definite determination as to investment policy of the Fund and
notify the Sub-Investment Manager thereof, the Sub-Investment Manager shall be
bound by such determination for the period, if any, specified in such notice or
until similarly notified that such determination has been revoked. The
Sub-Investment Manager shall take, on behalf of the Trust, all actions which it
deems necessary to implement the investment policies of the Fund , determined as
provided above, and in particular shall place orders for the purchase or sale of
securities or other investments for the Fund with brokers or dealers selected by
the Sub-Investment Manager.
3. Purchase and Sale of Assets. Nothing in this Agreement shall preclude
the combining of orders for the sale or purchase of securities or other
investments with other accounts managed by the Sub-Investment Manager, provided
that the Sub-Investment Manager does not favor any account over any other
account and provided that any purchase or sale orders executed contemporaneously
shall be allocated in a manner the Sub-Investment Manager deems equitable among
the accounts involved and at a price which is approximately averaged. Neither
the Sub-Investment Manager, nor any of its principals, directors, officers or
employees, nor any person, firm or corporation controlling, controlled by or
under common control with it shall act as a principal or receive any commission
as agent in connection with the purchase or sale of assets of the Fund.
In placing orders for the purchase or sale of investments for the Fund,
the Sub-Investment Manager shall use its best efforts to obtain for the Fund the
most favorable price and execution available, considering all of the
circumstances, and shall maintain records adequate to demonstrate compliance
with this requirement.
Subject to prior authorization by the Trust's Board of Trustees of
appropriate policies and procedures, the Sub-Investment Manager may, to the
extent authorized by Section 28(e) of the Securities Exchange Act of 1934, cause
the Fund to pay a broker or dealer that provides research and other brokerage
services to the Sub-Investment Manager an amount of commission for effecting a
Fund investment transaction in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction. In the event of
such authorization, and to the extent authorized by said section, the
Sub-Investment Manager shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of
such action.
4. Compensation of the Sub-Investment Manager. For the services rendered
by the Sub-Investment Manager, the Investment Manager shall pay to the
Sub-Investment Manager at the end of each calendar quarter a fee equal to
one-half of the net profit before taxes. Net profit is deemed to be the
comprehensive fee less fund expenses (as defined by the SEC and exemplified by
The Reserve Funds' accounting as audited by PricewaterhouseCooopers LLP or
successor auditors) and all applicable sales and marketing costs of both the
Investment Manager and Sub-Investment Manager. Expenses are allocated to a fund
on an identified cost basis or prorated by assets or number of accounts where
facilities, services or personnel are utilized by more than one fund. The Fund
will be audited annually and its books are open to inspection by the Investment
Manager and Sub-Investment Manager on any reasonable frequency with or without
notice. The Investment Manager shall provide an unaudited Statement of
Operations quarterly of the revenues received from and expenses incurred on
behalf of the Fund.
The payment of the advisory fees and the allocation of charges and
expenses between the Trust and the Investment Manager are set forth in the
Investment Management Agreement. Nothing in this Sub-Investment Management
Agreement shall change or affect that arrangement. The payment of advisory fees
and the apportionment of any expenses related to the services of the
Sub-Investment Manager shall be the sole concern of the Investment Manager and
the Sub-Investment Manager and shall not be the responsibility of the Trust.
5. Books and Records. The Sub-Investment Manager agrees that all books
and records which it maintains for the Trust are the Trust's property, and, in
the event of termination of this Agreement for any reason, the Sub-Investment
Manager agrees to return to the Trust, free from any claim or retention of
rights by the Sub-Investment Manager, all records relating to the Fund. The
Sub-Investment Manager also agrees upon request of the Investment Manager or the
Fund, promptly to surrender the books and records to the requester or make the
books and records available for inspection by representatives of regulatory
authorities and the Investment Manager or the Fund. In connection with its
duties hereunder the Sub-Investment Manager further agrees to maintain, prepare
and preserve books and records in accordance with the 1940 Act and rules
thereunder, including but not limited to, Rule 31a-1 and 31a-2.
The Sub-Investment Manager will use records or information obtained
under this Agreement only for the purposes contemplated hereby, and will not
disclose such records or information in any manner other than as expressly
authorized by the Trust, or if disclosure is expressly required by applicable
Federal or state regulatory authorities or by this Agreement.
6. Liability and Indemnification. In performing its duties hereunder,
the Sub-Investment Manager may rely on all documentation and information
furnished it by the Trust. Except as may otherwise be provided by the 1940 Act,
neither the Sub-Investment Manager nor its officers, directors, employees or
agents shall be subject to any liability for any act or omission in the course
of, connected with or arising out of any services to be rendered hereunder,
except by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Sub-Investment Manager's duties or by reason of reckless
disregard of the Sub-Investments Manager's obligations and duties under this
Agreement. The Sub-Investment Manager shall also comply with the Fund's Code of
Ethics, which has been provided to it.
Investment Manager and Trust agree to hold harmless and indemnify
Sub-Investment Manager from and against any loss, liability, damages or
expenses, including attorney fees, resulting from willful misfeasance, bad faith
or gross negligence by Investment Manager or Trust, or by any officer, director,
employee or agent of either. Further, Investment Manager and Trust agree to
indemnify Sub-Investment Manager for any loss, liability, damages or expenses,
including attorney fees, that may be incurred by Sub-Investment Manager as a
result of a breach, or allegations of a breach, of a fiduciary duty by
Investment Manager or Trust or as a result of a violation, or allegation of a
violation, by Investment Manager or Trust of the federal securities laws,
including but not limited to, the Investment advisers Act of 1940 and the
Investment Company Act of 1940, or of any other federal or state law(s), rule(s)
or regulation(s) applicable to Investment Manager or Trust.
7. Reliance on Documents. The Trust or its agent will provide timely
information to the Sub-Investment Manager regarding such matters as purchases
and redemptions of shares in the Fund, the cash requirements, and cash available
for investment in the Fund, and all other information as may be reasonably
necessary or appropriate in order for the Sub-Investment Manager to perform its
responsibilities hereunder.
The Investment Manager has herewith furnished the Sub-Investment Manager
copies of the Fund's prospectus and statement of additional information, the
Declaration of Trust and By-Laws as currently in effect and agrees during the
continuance of this agreement to furnish the Sub-Investment Manger copies of any
amendments or supplements thereto before or at the time the amendments or
supplements become effective. The Sub-Investment Manager will be entitled to
rely on all such documents furnished to it by the Investment Manager of the
Fund.
8. Approval and Termination of this Agreement. This Agreement and any
amendments hereto shall be approved by vote of the holders of a majority (as
defined in the 0000 Xxx) of the outstanding voting securities of the Fund,
provided, however, that if the shareholders of the Fund fail to approve the
Agreement as provided herein, the Sub-Investment Manager may continue to serve
in such capacity in the manner and to the extent permitted by the Act and the
rules thereunder, and no amendment to this Agreement shall become effective
until so approved.
This Agreement shall become effective as of the date first above
written. Thereafter, it shall continue in effect from year to year, but only so
long as such continuance is specifically approved at least annually by (a) the
Board of Trustees of the Trust, or by the vote of a majority of the outstanding
voting securities of the Fund, and (b) a majority of those trustees who are not
interested persons of any party to this Agreement cast in person at a meeting
called for the purpose of voting on such approval. This Agreement may be
terminated without the payment of any penalty, by the Board of Trustees of the
Trust, by vote of a majority of the outstanding shares of the Fund, or by the
Investment Manager on sixty days' written notice to the Sub-Investment Manager,
or by the Sub-Investment Manager on sixty days' written notice to the Trust or
the Investment Manager. This Agreement shall automatically terminate in the
event of its assignment or in the event of termination of the Investment
Advisory Agreement.
9. Definitions. The terms "assignment," "interested person," and
"majority of the outstanding voting securities," when used in this Agreement,
shall have the respective meanings specified under the Investment Company Act
and the rules thereunder.
10. Governing Law. The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the State of New York as at the
time in effect and the applicable provisions of the 1940 Act. To the extent that
the applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. Shareholder Liability. The Sub-Investment Manager understands and
agrees that the obligations of the Trust under this Agreement are not binding
upon any shareholder of the Trust personally, but bind only the Trust and the
Trust's property. The Sub-Investment Manager represents that it has notice of
the provisions of the Declaration of Trust of the Trust disclaiming shareholder
liability for acts or obligations of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed on the day and year first above written.
RESERVE PRIVATE EQUITY SERIES
Attest:
________________________________ BY:_____________________________
Title:___________________________ Title:___________________________
[INSERT NAME OF SUB ADVISOR]
Attest:
________________________________ BY:_____________________________
Title:___________________________ Title:___________________________
RESERVE MANAGEMENT COMPANY, INC.
Attest:
________________________________ BY:_____________________________
Title:___________________________ Title:___________________________
