▇▇▇▇▇▇▇▇▇ CASH RESERVES TRUST
SUB-ADVISORY AGREEMENT
THIS AGREEMENT, made as of June 5, 1998 by and between
AQUILA MANAGEMENT CORPORATION, a New York Corporation (the
"Manager"), ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ and BANC ONE INVESTMENT ADVISORS CORPORATION (the
"Sub-Adviser"), ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇, ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇.
W I T N E S S E T H :
WHEREAS, ▇▇▇▇▇▇▇▇▇ Cash Reserves Trust (the "Trust") is a
Massachusetts business trust which is registered under the
Investment Company Act of 1940 (the "Act") as an open-end,
non-diversified management investment company;
WHEREAS, the Manager has entered into an Advisory and
Administration Agreement as of the date hereof with the
Trust (the "Advisory and Administration Agreement") pursuant to
which the Manager shall act as investment adviser with
respect to the Trust; and
WHEREAS, pursuant to paragraph 2 of the Advisory and
Administration Agreement, the Manager wishes to retain the
Sub-Adviser for purposes of rendering investment advisory
services to the Manager in connection with the Trust upon
the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual promises and
agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. In General
The Manager hereby appoints the Sub-Adviser to render,
to the Manager and to the Trust, investment research and
advisory services as set forth below under the supervision
of the Manager and subject to the approval and direction of the
Board of Trustees of the Trust. The Sub-Adviser shall, all as
more fully set forth herein, act as managerial
investment adviser to the Trust with respect to the
investment of the Trust's assets, and supervise and arrange the
purchase of securities for and the sale of securities
held in the portfolio of the Trust.
2. Duties and Obligations of the Sub-Adviser With Respect To
Investment of the Assets of the Trust
(a) Subject to the succeeding provisions of this
section and subject to the direction and control of the
Manager and the Board of Trustees of the Trust, the Sub-
Adviser shall:
(i) supervise continuously the investment program of
the Trust and the composition of its portfolio;
(ii) determine what securities shall be purchased or
sold by the Trust;
(iii) arrange for the purchase and the sale of
securities held in the portfolio of the Trust;
(iv) Furnish information as to such securities to any
provider of fund accounting services to the Trust;
(v) monitor records of the Trust as to the portfolio,
including prices, maintained by such provider of such
services; and supply, monthly or more frequently as may
be necessary, pricing of the Trust's portfolio based on
available market quotations using a pricing service or
other source of pricing information satisfactory to the
Trust.
(vi) consult with the Manager in connection with its
duties hereunder.
(b) Any investment program furnished by the Sub-Adviser under
this section shall at all times conform to, and be in accordance
with, any requirements imposed by: (1) the
Investment Company Act of 1940 (the "Act") and any rules or
regulations in force thereunder; (2) any other applicable
laws, rules and regulations; (3) the Declaration of Trust
and By-Laws of the Trust as amended from time to time; (4)
any policies and determinations of the Board of Trustees of the
Trust; and (5) the fundamental policies of the Trust, as
reflected in its registration statement under the Act or as
amended by the shareholders of the Trust.
(c) The Sub-Adviser shall give to the Manager and to
the Trust the benefit of its best judgment and effort in
rendering services hereunder, but the Sub-Adviser shall not be
liable for any loss sustained by reason of the adoption
of any investment policy or the purchase, sale or retention of
any security, whether or not such purchase, sale or
retention shall have been based upon (i) its own
investigation and research or (ii) investigation and
research made by any other individual, firm or corporation, if
such purchase, sale or retention shall have been made and such
other individual, firm or corporation shall have been
selected in good faith by the Sub-Adviser.
(d) Nothing in this Agreement shall prevent the Sub-
Adviser or any affiliated person (as defined in the Act) of the
Sub-Adviser from acting as investment adviser or manager for any
other person, firm or corporation and shall not in
any way limit or restrict the Sub-Adviser or any such
affiliated person from buying, selling or trading any
securities for its own or their own accounts or for the
accounts of others for whom it or they may be acting,
provided, however, that the Sub-Adviser expressly represents
that, while acting as Sub-Adviser, it will undertake no
activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this
Agreement.
(e) In connection with its duties to arrange for the
purchase and sale of the Trust's portfolio securities, the
Sub-Adviser shall select such broker-dealers ("dealers") as
shall, in the Sub-Adviser's judgment, implement the policy
of the Trust to achieve "best execution," i.e., prompt,
efficient, and reliable execution of orders at the most
favorable net price. The Sub-Adviser shall cause the Trust to
deal directly with the selling or purchasing principal or market
maker without incurring brokerage commissions unless the Sub-
Adviser determines that better price or execution
may be obtained by paying such commissions; the Trust
expects that most transactions will be principal
transactions at net prices and that the Trust will incur
little or no brokerage costs. The Trust understands that
purchases from underwriters include a commission or
concession paid by the issuer to the underwriter and that
principal transactions placed through dealers include a
spread between the bid and asked prices. In allocating
transactions to dealers, the Sub-Adviser is authorized to
consider, in determining whether a particular dealer will
provide best execution, the dealer's reliability, integrity,
financial condition and risk in positioning the securities
involved, as well as the difficulty of the transaction in
question, and thus need not pay the lowest spread or
commission available if the Sub-Adviser determines in good
faith that the amount of commission is reasonable in
relation to the value of the brokerage and research services
provided by the dealer, viewed either in terms of the
particular transaction or the Sub-Adviser's overall
responsibilities. If, on the foregoing basis, the
transaction in question could be allocated to two or more
dealers, the Sub-Adviser is authorized, in making such
allocation, to consider (i) whether a dealer has provided
research services, as further discussed below; and (ii)
whether a dealer has sold shares of the Trust. Such
research may be in written form or through direct contact
with individuals and may include quotations on portfolio
securities and information on particular issuers and
industries, as well as on market, economic, or institutional
activities. The Trust recognizes that no dollar value can
be placed on such research services or on execution services and
that such research services may or may not be useful to the Trust
and may be used for the benefit of the Sub-Adviser or its other
clients.
(f) The Sub-Adviser agrees to maintain, and to
preserve for the periods prescribed, such books and records with
respect to the portfolio transactions of the Trust as
are required by applicable law and regulation, and agrees
that all records which it maintains for the Trust on behalf of
the Manager shall be the property of the Trust and shall be
surrendered promptly to the Trust or the Manager upon
request.
(g) The Sub-Adviser agrees to furnish to the Manager
and to the Board of Trustees of the Trust such periodic and
special reports as each may reasonably request.
(h) It is agreed that the Sub-Adviser shall have no
responsibility or liability for the accuracy or completeness of
the Trust's Registration Statement under the Act and the
Securities Act of 1933, except for information supplied by
the Sub-Adviser for inclusion therein. The Sub-Adviser
shall promptly inform the Trust as to any information
concerning the Sub-Adviser appropriate for inclusion in such
Registration Statement, or as to any transaction or proposed
transaction which might result in an assignment (as defined in
the Act) of this Agreement.
(i) The Sub-Adviser shall not be liable for any error
in judgment or for any loss suffered by the Trust or its
security holders in connection with the matters to which
this Agreement relates, except a loss resulting from wilful
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.
Nothing in this Agreement shall, or shall be construed to,
waive or limit any rights which the Trust may have under
federal and state securities laws which may impose liability
under certain circumstances on persons who act in good
faith.
(j) To the extent that the Manager is indemnified under the
Trust's Declaration of Trust with respect to the
services provided hereunder by the Sub-Adviser, the Manager
agrees to provide the Sub-Adviser the benefits of such
indemnification.
3. Allocation of Expenses
The Sub-Adviser shall bear all of the expenses it
incurs in fulfilling its obligations under this Agreement. In
particular, but without limiting the generality of the
foregoing: the Sub-Adviser shall furnish, at the Sub-
Adviser's expense, all office space, facilities, equipment
and clerical personnel necessary for carrying out its duties
under this Agreement. The Sub-Adviser shall supply, or cause to
be supplied, to any investment adviser, administrator or
principal underwriter of the Trust all necessary financial
information in connection with such adviser's,
administrator's or principal underwriter's duties under any
agreement between such adviser, administrator or principal
underwriter and the Trust. The Sub-Adviser will also pay
all compensation of the Trust's officers, employees, and
Trustees, if any, who are affiliated persons of the Sub-
Adviser.
4. Compensation of the Sub-Adviser
The Manager agrees to pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation for all
services rendered by the Sub-Adviser as such, a management
fee payable monthly and computed on the net asset value of
the Trust as of the close of business each business day at
the annual rate of 0.33 of 1% of such net asset value.
5. Duration and Termination
(a) This Agreement shall become effective as of the
date first written above following approval by the
shareholders of the Trust and shall, unless terminated as
hereinafter provided, continue in effect until the December 31
next preceding the first anniversary of the effective
date of this Agreement, and from year to year thereafter,
but only so long as such continuance is specifically
approved at least annually (1) by a vote of the Trust's
Board of Trustees, including a vote of a majority of the
Trustees who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such
party, with votes cast in person at a meeting called for the
purpose of voting on such approval, or (2) by a vote of the
holders of a "majority" (as so defined) of the outstanding
voting securities of the Trust and by such a vote of the
Trustees.
(b) This Agreement may be terminated by the Sub-Adviser at
any time without penalty upon giving the Manager and the Trust
sixty days' written notice (which notice may be
waived). This Agreement may be terminated by the Manager or the
Trust at any time without penalty upon giving the Sub-
Adviser sixty days' written notice (which notice may be
waived by the Sub-Adviser), provided that such termination
by the Trust shall be directed or approved by a vote of a
majority of its Trustees in office at the time or by a vote of
the holders of a majority (as defined in the Act) of the voting
securities of the Trust outstanding and entitled to
vote. This Agreement shall automatically terminate in the
event of its assignment (as defined in the Act) or the
termination of the Advisory and Administration Agreement.
6. Notices of Meetings
The Manager agrees that notice of each meeting of the
Board of Trustees of the Trust will be sent to the Sub-
Adviser and that Sub-Adviser will make appropriate
arrangements for the attendance (as persons present by
invitation) of such person or persons as the Sub-Adviser may
designate.
IN WITNESS WHEREOF, the parties hereto have caused the
foregoing instrument to be executed by their duly
authorized officers and their seals to be hereunto affixed, all
as of the day and year first above written.
ATTEST: AQUILA MANAGEMENT CORPORATION
By:
ATTEST: BANC ONE INVESTMENT ADVISORS
CORPORATION
By