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INVESTMENT MANAGEMENT AGREEMENT
March 29, 0000
Xxxxx & Xx.
Xxxxxxxxx Xxxxxx
Xxx Xxxx Xxx Xxxx 00000
Dear Sirs:
Standby Reserve Fund, Inc. (the "Fund"), a corporation organized under the laws
of the State of Maryland, herewith confirms its agreement with Xxxxx & Co.
("Cowen"), as follows:
The Fund desires to employ its capital by investing and reinvesting the same in
investments of the type and in accordance with the limitations specified in its
Articles of Incorporation and in its Prospectus as from time to time in effect
copies of which have been or will be submitted to such and in such manner and to
such extent as may from time to time be approved by the Directors of the Fund.
The Fund desires to employ Cowen as its investment manager.
1. Services as Investment Manager.
Subject to the direction and control of the Directors of the Fund. Cowen will
assist in supervising all aspects of the Fund's operations. In this connection
it is understood that Cowen will from time to time employ or associate with
itself such person or persons as Cowen may believe to be particularly fitted to
assist it in the performance of this Investment Management Agreement (the
"Agreement"), it being understood that the compensation of such person or
persons shall be paid by Cowen and that no obligation may be incurred on the
Fund's behalf in any such respect. Cowen, a limited partnership formed under the
laws of the State of New York, will notify the Fund of any change in its
membership within a reasonable time after such change.
Subject to the supervision and approval the Directors of the Fund, Cowen will
provide investment management of the Fund's portfolio in accordance with the
Fund's investment objectives and policies as stated in its Prospectus as from
time to time in effect. In connection therewith. Cowen will provide investment
research and supervision of the Fund's investment and conduct a continuous
program of investment, evaluation and, if appropriate, sale and reinvestment of
the Fund's assets. Cowen will furnish
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to the Fund such statistical information, with respect to the investments which
the Fund may hold or contemplate purchasing, as the Fund may reasonably request.
The Fund has to be kept in touch with important developments materially
affecting its portfolio and shall expect Cowen, on its own initiative, to
furnish to the Fund from time to time such information as Cowen may believe
appropriate for this purpose. Cowen shall exercise its best judgment in
rendering these services.
Cowen also will supply office facilities (which may be in Xxxxx'x own offices);
statistical and research data; data processing services clerical, accounting and
bookkeeping services; internal auditing and legal services; internal executive
and administrative services; stationery and office supplies; preparation of
reports to shareholders of the Fund; preparation of tax returns, reports to and
filings with the Securities and Exchange Commission and state Blue Sky
authorities; calculation of the net asset value of shares of the Fund; and
general assistance in all aspects of the Fund's operations.
The Fund understands that Cowen my, to the future act as investment manager,
investment adviser, subinvestment adviser and/or administrator to other
investment companies and the Fund has no objection to Cowen so acting. The Fund
further understands that Cowen now acts and will continue to act as investment
adviser to various fiduciary or other managed accounts, ant the Fund has no
objection to Xxxxx'x so acting. In addition it is understood that the persons
employed by Cowen to assist in the performance of its duties hereunder will not
devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict the right of Cowen or any affiliate of Cowen to
engage in and devote time and attention to other businesses to render services
of whatever kind or nature.
2. Fees; Expenses; Expense Reimbursement.
In consideration of services rendered pursuant to this Agreement, the Fund will
pay Cowen on the first business day of each month a fee at an annual rate of .50
of 1.00% of the Fund's average daily assets. Net asset value shall be computed
at least once a day. The fee for the period from the day of the month this
Agreement is entered into until the end of that month shall be pro-rated
according to the proportion which such period bears to the full monthly period.
Upon any termination of this Agreement before the end of any month, the fee for
such part of a month shall be pro-rated according to the proportion which such
period bears to the full monthly period and shall be payable upon the date of
termination of this Agreement.
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For the purpose of determining fees payable to Cowen, the value of the Fund's
net assets shall be computed in the manner specified is the Fund's Prospectus as
from time to time in effect.
Cowen will bear all expenses in connection with the performance of its services
under this Agreement. The Fund will bear other expenses to be incurred in its
operation including taxes, interest, brokerage fees and commissions, if any,
fees of directors who are not partners, officers or employees of Cowen;
Securities and Exchange Commission fees and state Blue Sky qualification fees;
management, advisory and administration fees; charges of custodians, transfer
and dividend disbursing agents; certain insurance premiums outside auditing and
legal expenses costs of maintenance of corporate existence, costs allocable to
investor services, including allocated telephone and personnel expenses
typesetting and printing of prospectuses for regulatory purposes and for
distribution to shareholders; costs of shareholders' reports and meetings of the
officers, Directors or shareholder of the Fund; and any extraordinary expenses.
If in any fiscal year the aggregate expenses of the Fund (including fees
pursuant to this Agreement, but excluding interest, taxes, brokerage and, with
the prior written consent of the necessary state securities commissions,
extraordinary expenses) exceed the expense limitations of any state having
jurisdiction over the Fund, Cowen will reimburse the Fund for such excess
expense. The expense reimbursement obligation of Cowen is limited to the amount
of its fees hereunder. Such expense reimbursement, if any, will be estimated,
reconciled and paid on a monthly basis.
3. Limitation of Liability.
Cowen shall not be liable as a result of any error of judgment or mistake of law
for any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except for a 1055 resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement. Any
person, even trough also a partner, officer, employee, or agent of Cowen who may
be or become a Director, officer, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting on any business of the
Fund, to be rendering such services to or acting solely for the Fund and not as
a Director, officer, employee, or agent or one under the control or direction of
Cowen even though paid by it.
4. Term
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This Agreement shall become effective on the date first written above and shall
continue until the second anniversary of that date and thereafter shall continue
so long as such continuance is specifically approved at least annually by (i)
the Directors of the Fund or (ii) by a vote of a majority (as defined in the
Investment Company Act of 1940, as amended) of the Fund's outstanding voting
securities, provided that in either event the continuance is also approved by a
majority of the Directors who are not interested persons (as defined in said
Act) of any party to this Agreement, (by vote cast in person at a meeting called
for the purpose of voting such approval). This Agreement is terminable, with our
penalty, on not less than 60 days' notice, by the Directors of the Fund or by
vote of holders of a majority of the Fund's shares or, upon not less than 90
days' notice, by Cowen. This Agreement will also terminate automatically in the
event of its assignment (as defined in said Act).
If the foregoing is in accordance with your understanding, will you kindly so
indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
STANDBY RESERVE FUND, INC.
By: /s/ Xxxxxx Xxxxxxx, Treasurer
Accepted: XXXXX & COMPANY
By: COWEN INCORPORATED, GENERAL PARTNER
By: /s/ Xxxxxxxxx X. Xxxx, Managing Director
