INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 5th day of November, 1999, by and between TD
WATERHOUSE TRUST, a Delaware business trust, whose address is 100 Wall Street,
New York, New York 10005 (the "Trust") and TD WATERHOUSE ASSET MANAGEMENT, INC.,
a Delaware corporation, whose address is 100 Wall Street, New York, New York
10005 (the "Investment Manager").
W I T N E S S E T H:
WHEREAS, the Trust is an open-end, management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), with one distinct series of shares, TD Waterhouse Dow 30 Fund (the
"Fund"), as more fully described in the Trust's Registration Statement on Form
N-1A under the 1940 Act and the Securities Act of 1933, as amended (the
"Registration Statement"), as filed with the Securities and Exchange Commission
(the "Commission") relating to the Trust and shares of the Trust's beneficial
interest, and all amendments thereto;
WHEREAS, the Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust and the Investment Manager desire to enter into an
agreement to provide for comprehensive management and investment advisory
services to the Fund upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the parties hereto as
follows:
1. Duties of Investment Manager. (a) The Trust hereby employs the
Investment Manager to act as the investment adviser for the Fund and to manage
the investment and reinvestment of the assets of the Fund in accordance with the
investment objectives, policies and restrictions of the Fund as the same are set
forth in the Registration Statement, and in accordance with the requirements of
the 1940 Act and all other applicable state and federal laws, rules and
regulations, subject to the supervision of the Board of Trustees of the Trust
for the period and upon the terms herein set forth. The investment of funds
shall also be subject to all applicable restrictions of the Agreement and
Declaration of Trust and By-Laws of the Trust as may from time to time be in
force. Without limiting the generality of the foregoing, the Investment Manager
shall:
(i) formulate and implement a continuing program for the purchases and
sales of securities for the Fund and regularly report thereon to the Trust's
Board of Trustees; and
(ii) make decisions with respect to and take, on behalf of the Fund,
all actions which appear necessary to carry into effect such purchase and sale
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program and supervisory functions aforesaid, including the placing of orders for
the purchase and sale of securities for the Fund.
(b) Subject to the supervision and direction of the Board of Trustees
of the Trust, the Investment Manager also shall perform or arrange for the
performance of the following administrative and clerical services with respect
to the Fund: (i) maintain and preserve the books and records, including
financial and corporate records, of the Trust as required by law or otherwise
for the proper operation of the Trust; (ii) prepare and, subject to approval by
the Trust, file registration statements, notices, reports and other documents
required by U.S. Federal, state and other applicable laws and regulations (other
than state "blue sky" laws), including proxy materials and periodic reports to
Trust shareholders, oversee the preparation and filing of registration
statements, notices, reports and other documents required by state "blue sky"
laws, and oversee the monitoring of sales of shares of the Trust for compliance
with state securities laws; (iii) calculate and publish, or arrange for the
calculation and publication of, the net asset value of the Fund's shares; (iv)
calculate, or arrange for the calculation of, dividends and distributions and
performance data, and prepare other financial information regarding the Fund;
(v) oversee and assist in the coordination of, and, as the Board may reasonably
request or deem appropriate, make reports and recommendations to the Board on,
the performance of administrative and professional services rendered to the
Trust by others, including the custodian, registrar, transfer agent and dividend
disbursing agent, shareholder servicing agents, accountants, attorneys,
underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and
such other persons in any such other capacity deemed to be necessary or
desirable; (vi) furnish secretarial services to the Trust, including, without
limitation, preparation of materials necessary in connection with meetings of
the Trust's Board of Trustees, including minutes, notices of meetings, agendas
and other Board materials; (vii) provide the Trust with the services of an
adequate number of persons competent to perform the administrative and clerical
functions described herein; (viii) provide the Trust with administrative office
and data processing facilities; (ix) arrange for payment of the Trust's
expenses; (x) provide routine accounting services to the Trust, and consult with
the Trust's officers, independent accountants, legal counsel, custodian,
accounting agent and transfer and dividend disbursing agent in establishing the
accounting policies of the Trust; (xi) prepare such financial information and
reports as may be required by any banks from which the Trust borrows funds;
(xii) develop and implement procedures to monitor the Trust's compliance with
regulatory requirements and with the Fund's investment policies and restrictions
as set forth in the Fund's currently effective Prospectus and Statement of
Additional Information filed under the Securities Act of 1933, as amended; and
(xiii) provide such assistance to the custodian, other Trust service providers
and the Trust's counsel and auditors as generally may be required to carry on
properly the business and operations of the Trust. Notwithstanding anything to
the contrary herein contained, the Trust, and not the Investment Manager, shall
be responsible for and bear the cost of any third party pricing services or any
third party blue sky services.
(c) The Investment Manager accepts such employment and agrees during
such period to render such services and to assume the obligations herein set
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forth for the compensation herein provided. The Investment Manager shall give
the Fund the benefit of its best judgment, efforts and facilities in rendering
its services as an investment manager. The Investment Manager shall for all
purposes herein provided be deemed to be an independent contractor and, unless
otherwise expressly provided or authorized, shall have no authority to act for
or represent the Trust in any way or otherwise be deemed an agent of the Trust.
It is understood and agreed that the Investment Manager, by separate agreements
with the Trust, may also serve the Trust in other capacities. It is further
agreed that the Investment Manager and its officers and directors are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers or directors
of any other firm or corporation, including other investment companies, so long
as its or their services hereunder are not impaired thereby. It is further
agreed that personnel of the Investment Manager may invest in securities for
their own account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the Trust, establishes procedures for
personal investing and restricts certain transactions.
(d) The Investment Manager shall keep any books and records relevant to
the provision of its investment advisory services to the Fund and shall
specifically maintain all books and records with respect to the Fund's
securities and portfolio transactions and shall render to the Trust's Board of
Trustees such periodic and special reports as the Board may reasonably request.
The Investment Manager agrees that all records which it maintains for the Trust
are the property of the Trust and it will surrender promptly to the Trust any
such records upon the Trust's request, provided however that the Investment
Manager may retain a copy of such records. The Investment Manager further agrees
to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such
records kept by the Investment Manager in connection with investment advisory
services provided pursuant hereto.
(e) The Trust has delivered to the Investment Manager copies of each of
the following documents and will deliver to it all future amendments and
supplements thereto, if any:
(i) The Registration Statement; and
(ii) The Prospectus of the Fund (such Prospectus and the related
Statement of Additional Information of the Fund, as currently in
effect and as amended or supplemented from time to time, being
herein collectively called the "Prospectus").
(f) The Trust shall at all times keep the Investment Manager fully
informed with regard to the securities owned by the Fund, its funds available or
to become available for investment, and generally as to the condition of its
affairs. The Trust shall furnish the Investment Manager with a copy of all
financial statements and each report prepared by certified public accountants
with respect to it, and with such other information with regard to its affairs
as the Investment Manager may from time to time reasonably request.
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(g) The Investment Manager may enter into agreements with one or more
other persons, including affiliates of the Investment Manager, to perform any or
all the Investment Manager's duties hereunder, provided that (i) any such
agreement shall have been approved by the Board of Trustees of the Trust; (ii)
the Investment Manager shall be as fully responsible to the Trust for the acts
and omissions of any such service providers as it would be for its own acts or
omissions hereunder; and (iii) the cost of performance of such duties by others
are to be borne and paid by the Investment Manager.
(h) Any investment program undertaken by the Investment Manager
pursuant to this Agreement, as well as any other activities undertaken by the
Investment Manager on behalf of the Fund pursuant thereto, shall at all times be
subject to any directives of the Board of Trustees.
2. Expenses. The Investment Manager shall pay all of its expenses
arising from the performance of its obligations under Section 1 of this
Agreement, including the payment of any persons engaged pursuant to Section
l(g), and shall pay any salaries, fees and expenses of Trust directors or
officers who are employees, officers or directors of the Investment Manager.
The Investment Manager shall not be required to pay any other expenses
of the Trust or the Fund, including (a) the fees and expenses of directors who
are not "interested persons" of the Trust, as defined by the 1940 Act, and
travel and related expenses of the directors for attendance at meetings; (b) the
fees and expenses of the custodian and transfer agent of the Trust or any
pricing service, including but not limited to fees and expenses relating to
Trust accounting, pricing of portfolio shares, and computation of net asset
value; (c) the fees and expenses of calculating yield and/or performance of the
Fund; (d) the charges and expenses of legal counsel and independent accountants;
(e) taxes and corporate fees payable to governmental agencies; (f) the costs of
share certificates and of membership dues of any trade association of which the
Trust is a member; (g) reimbursement of the organization expenses of the Fund;
(h) the fees and expenses involved in registering and maintaining registration
of the Trust and the Fund's shares with the Commission, blue sky service
providers, registering the Trust as a broker or dealer and qualifying the shares
of the Fund (or applying for applicable exemptions, as the case may be) under
state securities laws, including the preparation and printing of the
registration statements and prospectuses for such purposes; (i) allocable
communications expenses with respect to investor services, expenses of
shareholders' and Board of Trustees' meetings and preparing, printing and
mailing proxies, prospectuses and reports to shareholders; (j) costs of
acquiring and disposing of portfolio securities, including but not limited to
brokers' commissions, dealers' mark-ups and any issue or transfer taxes
chargeable in connection with the Fund's transactions; (k) the cost of stock
certificates representing shares of the Fund, if any; (l) insurance expenses,
including, but not limited to, the cost of a fidelity bond, directors and
officers insurance and errors and omissions insurance; and (m) litigation and
indemnification expenses, expenses incurred in connection with mergers, and
other extraordinary expenses not incurred in the ordinary course of the Fund's
business.
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3. Compensation. (a) For the services described in Section 1 hereof,
the Trust, on behalf of the Fund, will pay to the Investment Manager promptly
after the end of each calendar month, an investment management fee computed at
the annual rate applicable to the Fund set forth on Schedule A hereto. The fee
as computed in accordance with Schedule A shall be based upon the net assets of
the Fund as to which this Agreement is then effective. The value of the net
assets for the Fund shall be calculated in accordance with the provisions of the
Fund's Prospectus. For purposes of this Agreement, on each day when net asset
value is not calculated, the net assets of the Fund shall be deemed to be the
net assets of the Fund as of the close of business on the last day on which net
asset value was determined. Except as hereinafter set forth, compensation under
this Agreement shall be calculated and accrued daily and the amounts of the
daily accruals shall be paid monthly in arrears (i.e., the applicable annual fee
rate divided by 365 as applied to each prior day's net assets in order to
calculate the daily accrual). If this Agreement becomes effective subsequent to
the first day of a month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above.
(b) In the event the operating expenses of the Fund including all
management fees, for any fiscal year ending on a date on which this Agreement is
in effect exceed the expense limitation applicable to the Fund imposed by the
securities laws or regulations thereunder of any state or jurisdiction in which
the Fund's shares are qualified for sale, as such limitations may be raised or
lowered from time to time, the Investment Manager shall reduce its management
fee to the extent of such excess and, if required, pursuant to any such laws or
regulations, will reimburse the Fund for any annual operating expenses (after
reductions of all management fees) in excess of any expense limitation that may
be applicable; provided, however, there shall be excluded from such expenses the
amount of any interest, taxes, brokerage commission and extraordinary expenses
(including but not limited to legal claims and liabilities and litigation costs
and any indemnification related thereto) paid or payable by the Trust and
attributable to the Fund. Such reduction, if any, shall be computed and accrued
daily, shall be settled on a monthly basis and shall be based upon the expense
limitation applicable to the Fund as at the end of the last business day of the
month. Should two or more such expense limitations be applicable as at the end
of the last business day of the month, that expense limitation which results in
the largest reduction in the Investment Manager's fee shall be applicable.
4. Brokerage. In managing the assets of the Fund, the Investment
Manager shall purchase securities from or through and sell securities to or
through such persons, brokers or dealers as the Investment Manager shall deem
appropriate in conformity with applicable law and with the terms of the
Registration Statement, and as the Trust's Board of Trustees may direct from
time to time. Without limiting the generality of the foregoing, the Investment
Manager will implement the Trust's policy of seeking the best execution of
orders, which includes best net prices, in effecting purchases and sales of
portfolio securities for the account of the Fund (consistent with this
obligation, when the execution and price offered by two or more persons, brokers
or dealers are comparable, the Investment Manager, in its discretion, purchase
and sell portfolio securities to and from persons, brokers and dealers who
provide the Investment Manager with research advice and other services).
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On occasions when the Investment Manager deems the purchase or sale of
securities to be in the best interest of the Fund and one or more of the other
investment portfolios of the Trust, as well as other clients of the Investment
Manager, the Investment Manager, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be so sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Investment Manager in accordance with its
policy for aggregation of orders, as in effect from time to time.
5. Interested Persons. No Trustee, officer or employee of the Trust
shall receive from the Trust any salary or other compensation as such Trustee,
officer or employee while he or she is at the same time a director, officer or
employee of the Investment Manager or any affiliated person (as defined in the
1940 Act) thereof. The Investment Manager shall authorize and permit any of its
directors, officers and employees who may be elected as Trustees or officers of
the Trust to serve in the capacities in which they are elected, subject to their
individual consent and to any limitations imposed by law. All services to be
furnished by the Investment Manager under this Agreement may be furnished
through the medium of any such directors, officers or employees of the
Investment Manager.
6. Limitation of Liability. Subject to Section 36 of the 1940 Act, the
Investment Manager 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, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Manager in the
performance of its obligations and duties or by reason of its reckless disregard
of its obligations and duties under this Agreement.
7. Non-Exclusive Use of the Name "TD Waterhouse". The Trust
acknowledges that it adopted its name and the name of the Fund through the
permission of the Investment Manager. The Investment Manager hereby consents to
the non-exclusive use by the Trust of the marks "TD Waterhouse", "TD Waterhouse
Family of Funds, Inc.", "TD Waterhouse Trust" and the TD Waterhouse logo only so
long as the Investment Manager (or its affiliate or successor) serves as the
investment manager to one or more portfolios of the Trust. The Trust covenants
and agrees to protect, exonerate, defend, indemnify and hold harmless the
Investment Manager, its officers, agents and employees from and against any and
all costs, losses, claims, damages or liabilities, joint or several, including
all legal expenses which may arise or have arisen out of the Trust's use or
misuse of the name "TD Waterhouse", "TD Waterhouse Trust" or the TD Waterhouse
logo or out of any breach of or failure to comply with this paragraph.
Neither the Trust nor the Fund shall distribute or circulate any
prospectus, proxy statement, sales literature, promotional material or other
printed matter required to be filed with the Securities and Exchange Commission
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under Section 24(b) of the 1940 Act which contains any reference to the
Investment Manager or using the name "TD Waterhouse", "TD Waterhouse Family of
Funds, Inc.", "TD Waterhouse Trust" or the TD Waterhouse logo without the
approval of the Investment Manager and shall submit all such materials requiring
approval of the Investment Manager in draft form, allowing sufficient time for
review by the Investment Manager and its counsel prior to any deadline for
printing. If the Investment Manager or any successor to its business shall cease
to furnish services to the Trust under this Agreement or similar contractual
arrangement, the Trust:
(a) as promptly as practicable, will take all necessary action to cause
its Articles of Incorporation to be amended to accomplish a change of name; and
(b) within 90 days after the termination of this Agreement or such
similar contractual arrangement, shall cease to use in any other manner,
including but not limited to use in any prospectus, sales literature or
promotional material, the name "TD Waterhouse", "TD Waterhouse Family of Funds,
Inc.", "TD Waterhouse Trust" and the TD Waterhouse logo or any name, mark or
logotype derived from or similar to such marks or indicating that the Trust or
the Fund is managed by or otherwise associated with the Investment Manager.
8. Term of Agreement. This Agreement shall become effective upon its
execution by an authorized officer of the respective parties hereto. This
Agreement shall continue in effect for an initial two-year term, and thereafter
from year to year so long as such continuation is specifically approved at least
annually in conformity with the requirements of the 1940 Act with regard to
investment advisory contracts; provided, however, that this Agreement may be
terminated at any time without the payment of any penalty by the Trust, by the
Board or by "vote of a majority of the outstanding voting securities" (as
defined in the 1940 Act) of the Fund, or by the Investment Manager on not less
than 60 days' written notice to the other party. This Agreement shall terminate
automatically in the event of its "assignment" (as defined in the 1940 Act).
Termination of this Agreement shall not affect the right of the
Investment Manager to receive payments on any unpaid balance of the compensation
described in Section 3 hereof earned prior to such termination.
9. Amendments; Partial Invalidity. This Agreement may be amended by
mutual consent, but the consent of the Trust must be obtained in conformity with
the requirements of the 1940 Act. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
10. Notices. All notices or other communications hereunder to either
party shall be in writing and shall be deemed to be received on the earlier of
the date actually received or on the fourth day after postmark if such notice is
mailed first class postage prepaid. Notice shall be addressed: (a) if to the
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Trust, to: President, TD Waterhouse Trust, 100 Wall Street, New York, New York
10005; or (b) if to the Investment Manager, to: President, TD Waterhouse Asset
Management, Inc., 100 Wall Street, New York, New York 10005, or at such other
address as either party may designate by written notice to the other. Notice
shall also be deemed sufficient if given by telex, telecopier, telegram or
similar means of same day delivery (with a confirming copy by mail as provided
herein).
11. Entire Agreement; Governing Law. This Agreement contains the entire
agreement between the parties hereto and supersedes all prior agreements,
understandings and arrangements with respect to the subject matter hereof. This
Agreement shall be construed in accordance with applicable federal law and the
laws of the State of New York. Anything herein to the contrary notwithstanding,
this Agreement shall not be construed to require, or to impose any duty upon,
either of the parties to do anything in violation of any applicable laws or
regulations.
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IN WITNESS WHEREOF, the Trust and the Investment Manager have caused
this Agreement to be executed as of the day and year first above written.
TD WATERHOUSE TRUST
By: /s/ George A. Rio
--------------------------
Name: George A. Rio
Title: President
WITNESS:
/s/ Karen Jacoppo-Wood
----------------------
TD WATERHOUSE ASSET MANAGEMENT, INC.
By: /s/ David Hartman
--------------------------
Name: David Hartman
Title: Chief Investment Officer
WITNESS:
/s/ Michele R. Teichner
-----------------------
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SCHEDULE A
FEES
For the services provided by the Investment Manager under the foregoing
agreement to the Fund, the Investment Manager will receive the following fee:
An annual fee, payable monthly, of .20 of 1% of average daily net assets of the
Fund.
