"COMPREHENSIVE FEE"
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT ("Agreement'), dated the ____ day of ______, 2001, made and
entered into by and between THE RESERVE FUND, a Massachusetts business trust
(the "Trust"), each of its investment series listed on Schedule A, as such
schedule is amended from time to time, (each, a "Portfolio" and, collectively,
the Portfolio) and RESERVE MANAGEMENT COMPANY, INC., a New Jersey corporation
having its principal place of business in New York (the "Manager").
WHEREAS, the Trust is a non-diversified management investment company and
is registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest, par value of $.001 per share, 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;
The parties agree as follows:
1. INVESTMENT ADVISORY SERVICES. The Manager shall select and manage each
Portfolio's investments and shall determine what investments shall be made or
disposed of by each Portfolio and shall effect such acquisitions and
dispositions, all in furtherance of each Portfolio's investment objective and
policies, subject to the overall control and direction of the Trust's Board of
Trustees. The Manager shall report on such activities to the Board of Trustees
of the Trust and shall submit such reports and other information thereon as the
Board of Trustees shall from time to time request. Notwithstanding any other
provision hereof, the Manager, with the approval of the Board of Trustees, may
contract with one or more Sub-Investment Managers to perform any of the
investment management services; provided, however, any compensation paid will be
the sole responsibility of the Manager.
2. OTHER SERVICES AND ASSUMPTION OF CERTAIN EXPENSES. The Manager shall
furnish to the Trust, on behalf of each Portfolio: (i) the services of a
President and such other executive officers as may be requested by each
Portfolio, (ii) office space and customary office facilities to the extent that
each Portfolio's activities occur in New York, (iii) maintain Portfolio records
not otherwise maintained by each Portfolio's custodian, distributor or
sub-investment managers, and (iv) all accounting, administrative, clerical,
secretarial and statistical services as may be required by each Portfolio for
the operation of its business and compliance with applicable laws. The Manager
shall pay the compensation of all officers of the Trust on behalf of each
Portfolio and all customary operating and other expenses of each Portfolio
except interest charges, taxes, brokerage fees and commissions, extraordinary
legal and accounting fees, state (bluesky) and SEC registration fees, and other
extraordinary expenses including expenses incurred in connection with litigation
proceedings, other claims and the legal obligations of the Trust to indemnify
its trustees, officers, employees, shareholders, distributors and other agents
of the Trust, payments made pursuant to the Trust's Distribution Plan, and the
fees of the disinterested Trustees. The Manager may contract with other parties
to perform any of the ordinary administrative services required of the Manager;
provided, however any such compensation will be the responsibility of the
Manager.
3. COMPENSATION OF THE MANAGER. Each Portfolio shall pay to the Manager a
comprehensive fee on behalf of each Class as set forth in Schedule A. Such fee
shall represent compensation to the Manager for "Investment Advisory Services"
as previously described under Paragraph 1, and for "Other Services and
Assumption of Certain Expenses" as previously described in paragraph 2 hereof, a
management fee at an annual rate of 0.80% of the average daily net asset value
of each class of each Portfolio (the "Management Fee").
The Management Fee shall be computed and accrued daily and shall be paid by
each Portfolio to the Manager daily.
4. COMPLIANCE WITH APPLICABLE REQUIREMENTS. This Agreement will be
performed in accordance with the requirements of the 1940 Act and the Investment
Advisers Act of 1940, as amended, and the rules and regulations under such acts,
to the extent that the subject matter of the Agreement is within the purview of
such acts and such rules and regulations. The Manager will assist the Trust on
behalf of each Portfolio in complying with the requirements of the 1940 Act, and
the Securities Act of 1933, as amended (the "1933 Act'), and the rules and
regulations under such acts and in qualifying as a regulated investment company
under the Internal Revenue Code of 1986, as amended, and applicable regulations
of the Internal Revenue Service thereunder. In carrying out its obligations
under this Agreement the Manager shall at all times conform to the provisions of
the Declaration of Trust and By-Laws, the provisions of the currently effective
Registration Statement of the Trust under the 1940 Act and the 1933 Act, and any
other applicable provisions of state or Federal law.
5. TERMINATION. This Agreement shall be in effect until the close of
business on June 30, 2002 and shall continue in effect from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually by (i) either the Board of Trustees of the Trust or a majority
vote of the outstanding voting securities of each Portfolio, provided, however,
that if the shareholders of each Portfolio fail to approve the Agreement, as
provided herein, the Manager may continue to serve in such capacity in the
manner and to the extent permitted by the 1940 Act, and the rules thereunder,
and (ii) the vote of a majority of the Trustees of the Trust who are not parties
to this Agreement or interested persons (as defined in the 0000 Xxx) of either
party of this Agreement, cast in person at a meeting called for the purpose of
voting on such approval.
Notwithstanding anything herein to the contrary, this Agreement may be
terminated at any time, without payment of any penalty, by the Board of Trustees
of the Trust or by vote of a majority of the outstanding voting securities of
each Portfolio, on 60 days' written notice to the Manager, or by the Manager on
like notice to the Trust.
The name "Reserve" shall be deemed to have been licensed to the Trust by
the Manager. In the event of termination of this Agreement, the Manager may
terminate or revoke such license on 90 days' written notice to the Trust. On or
before the date of such revocation or termination, the Trust will change its
name to another name which does not include the word "Reserve."
6. NON-ASSIGNABILITY. This Agreement shall not be assignable by either
party hereto and shall automatically terminate forthwith in the event of such
assignment (within the meaning of the 1940 Act).
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7. APPROVAL OF AGREEMENT AND AMENDMENTS. This Agreement and any material
amendments hereto shall be approved by vote of the holders of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of each Portfolio;
provided, however, that if the shareholders of each Portfolio fail to approve
the Agreement as provided herein, the Manager may continue to serve in such
capacity in the manner and to the extent permitted by the 1940 Act and the rules
thereunder.
8. NON-EXCLUSIVITY. The services of the Manager to the Trust are not to be
deemed exclusive and the Trust agrees that the Manager is free to act as
investment manager to various investment companies and other managed accounts.
For purposes of this Agreement and the undertakings provided for herein, the
Manager shall at all times be considered as an independent contractor, and shall
not be considered as an agent of the Trust and shall have no authority to act
for or represent the Trust in any way.
9. LIABILITY OF THE MANAGER. In performing its duties hereunder, the
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 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 Manager's duties or by
reason of reckless disregard of the Manager's obligations and duties under this
Agreement.
10. NOTICES. Any notices and communications required hereunder shall be in
writing and shall be deemed given when delivered in person or when sent by
first-class, registered or certified mail to the Manager or to the Trust at 0000
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such addresses as either
party may from time to time specify by notice to the other.
11. 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 1940 Act and the rules thereunder.
12. GOVERNING LAW. The terms and 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.
13. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall be deemed to be severable.
14. SHAREHOLDER LIABILITY. The 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 each Portfolio and the
property of each Portfolio. The 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.
15. ENFORCEMENT LIMITED TO PORTFOLIO. The Manager understands and agrees
that any debts, liabilities, obligations, and expenses incurred, contracted for
or otherwise existing under this
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Agreement shall be enforceable against the assets of each Portfolio only, and
not against the assets of the Trust, generally, or the assets of any other
separate series of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed on the day and year first above written.
THE RESERVE FUND
By
--------------------------------
President
ATTEST:
-------------------------
Secretary
RESERVE MANAGEMENT COMPANY, INC.
By
--------------------------------
President
ATTEST
-------------------------
Secretary
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SCHEDULE A
PRIMARY II FUND
U.S. GOVERNMENT II FUND
U.S. TRESAURY II FUND
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