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INVESTMENT MANAGEMENT AGREEMENT
March 29, 0000
Xxxxx & Xx.
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Standby Tax-Exempt 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:
1.Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Articles of Incorporation as amended, and in its Prospectus and Statement of
Additional Information as from time to time in effect, and in such manner and
to such extent as may from time to time be approved by the Board of Directors
of the Fund. Copies of the Fund's Prospectus, Statement of Additional
Information and Articles of Incorporation amended, amended, have been or will
be submitted to Cowen. The Fund desires to employ and hereby appoints Cowen to
act as its investment manager. Cowen accepts the appointment and agrees to
furnish the services set forth below for the compensation set forth below.
2. Services as Investment Manager
Subject to the supervision and direction of the Board of Directors of the Fund,
Cowen will (a) act in strict conformity with the Fund's Articles of
Incorporation and by-laws, the Investment Company Act of 1940 and the
investment Advisers Act of 1940, as the same may from time to time be amended,
(b) manage the Fund's portfolio in accordance with the Fund's investment
objective and policies as stated in its Prospectus and Statement of Additional
Information as from time to time in effect, (c) make general investment
decisions for the Fund, including decisions concerning (i) the specific types
of securities to be held by the Fund and the proportion of the Fund's assets
that should be allocated to such investments during particular market cycles
(ii) the specific issuers whose securities will be purchased or sold by the
Fund, (iii) the extent to which taxable securities will be purchased for and
held by the Fund, (iv) the appropriate maturity of its
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portfolio investments and (v) the appropriate average weighted maturity of its
portfolio in light of current market conditions and (d) 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 stationary 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. In providing those services, Cowen will
supervise the Fund's investments generally and conduct a continual program of
evaluation of the Fund's assets.
In connection with the performance of its duties under this Agreement, 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 Agreement, it being understood that the
compensation of such person or persons shall be put 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.
3. Information Provided to tile Fund; Books and Records
(a) Cowen will keep the Fund informed of developments materially
affecting the Fund's portfolio, and will, on its own initiative furnish the
Fund from time to time with whatever information Cowen believes is appropriate
for this purpose.
(b) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act of 1940, Cowen hereby agrees that all records
which it maintains for the Fund are the property of the Fund and further agrees
to surrender promptly to the Fund any of such records upon the Fund's request.
4. Standard of Care
Cowen shall exercise is best judgment in rendering the services listed in
paragraph 2 above. Cowen shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing herein shall be
deemed to protect or purport to protect Cowen against any liability to
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the Fund or to its shareholders to which Cowen would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its past in the
performance of its duties or by reason of Xxxxx'x reckless disregard of its
obligations and duties under this Agreement.
Any person, eves though 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.
5. Compensation
In consideration of the services rendered pursuant to this Agreement, the Fund
will pay Cowen on the first business day of each month a fee for the previous
month, calculated daily, at the annual rate of .50 of 1.00% of the Fund's
average daily net assets. Upon any termination of this Agreement before the end
of a month, the fee for such part of that month shall be prorated according to
the proportion that such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. For the purpose of
determining fees payable to Cowen, the value of the Fund's net assets shall be
computed at the times and in the manner specified in the Fund's Prospectus or
Statement of Additional Information as from time to time in effect.
6. Expenses
Cowen will bear all expenses in connection with the performance of its services
under this Agreement. The Fund will bear certain other expenses to be incurred
in its operation, including: taxes, interest brokerage fees and commissions, if
any; fees of directors of the fund who are not officers or employees of Cowen;
Securities and Exchange Commission fees and state Blue Sky qualification fees
management advisory and administration fees; charges of custodians and transfer
and dividend disbursing agents; certain insurance premiums; outside auditing
and legal expenses; costs of maintenance of corporate existence; costs
attributable to investor services, including, without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders costs of shareholders' reports and meetings of the
shareholders, officers or Board of Directors of the Fund; and any extraordinary
expenses.
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7. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund (including fees
pursuant to this Agreement, but excluding interest, taxes, brokerage and, if
permitted by state commissions, extraordinary expenses) exceed the expense
limitation of any state having jurisdiction over the Fund, Cowen will reimburse
the Fund for such excess expense. Xxxxx'x expense reimbursement obligation will
be limited to the amount of its fees received pursuant to this Agreement.
However, Cowen shall reimburse the Fund for such excess expenses regardless of
the amount of fees paid to it during such fiscal year to the extent that the
securities regulations of any state in which Fund shares are registered and
qualified for sale so require. Such expense reimbursement, if any, will be
estimated, reconciled and paid on a monthly basis.
8. Services to Other Companies or Accounts
The Fund understands that Cowen now acts and will continue to act as
investment adviser to fiduciary and other managed accounts and now acts and
will continue to act as investment manager, investment adviser, sub-investment
adviser and/or administrator to one or more other investment companies, and the
Fund has no objection to Xxxxx'x so acting, provided that whenever the Fund and
one or more other accounts or investment companies advised by Cowen have
available funds for investment, investments suitable and appropriate for each
will be allocated in a manner believed to be equitable to each entity. The Fund
recognizes that in some cases this procedure may adversely affect the size of
the position obtainable for the Fund. In addition the Fund understands that the
persons employed by Cowen to assist in the performance of Xxxxx'x 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 or to
sender services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective on the date first above written 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 (a) the Board of Directors of the Fund or (b) a vote of a "majority" (as
defined in the Investment Company Act of 1940) of the Fund's outstanding voting
securities, provided that in either event the
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continuance is also approved by a majority of the Board of 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
on such approval This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board of Directors of the Fund or by vote of holders of
a majority of the Fund's shares, or upon 90 days' written notice, by Cowen.
This Agreement will also terminate automatically in the event of its assignment
(as defined in said Act and the Rules thereunder).
10. Amendment of this Agreement
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no material amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Fund.
11. Miscellaneous
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall
be held or made invalid by court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be invalidated or rendered unenforceable
thereby. This Agreement shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by New York law.
If the foregoing is in accordance with your understanding, kindly indicate your
acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
STANDBY TAX-EXEMPT RESERVE FUND, INC.
/s/ Xxxxxx Xxxxxxx, Treasurer
Accepted and Agreed:
XXXXX & CO.
By: COWEN INCORPORATED, GENERAL PARTNER
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/s/ Xxxxxxxxx X. Xxxx, Managing Director
