SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
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OFFITBANK INVESTMENT FUND, INC.
(the "Company")
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.
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4) Proposed maximum aggregate value of transaction:
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5) Total Fee Paid:
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[Letterhead of OFFITBANK]
OFFITBANK INVESTMENT FUND, INC.
Dear Client:
OFFITBANK Holdings, Inc., the sole shareholder of OFFITBANK ("OFFITBANK"), has
entered into a merger agreement in which OFFITBANK will merge into Wachovia
Corporation ("Wachovia"). Wachovia is one of the leading banks in the United
States, with a notable presence in the Southeast and a national and
international client base. The merger of OFFITBANK with Wachovia will provide
our clients the benefit of a broader base of resources and products, as well as
the long-term continuity which is critical for trust and estate services. Most
importantly, OFFITBANK will continue to operate under own name as a distinct
Wachovia company, providing wealth management services in precisely the same
manner as we have for fifteen years.
In order to complete this merger and to provide continuity of investment
advisory services to The OFFITBANK Investment Fund, Inc. you are being asked to
approve a new advisory agreement between your fund and OFFITBANK and to elect an
additional independent director of the Funds. The new agreement is essentially
identical to the current advisory agreement. It is necessary to approve a new
agreement because under the Investment Company Act of 1940 the merger will
result in the automatic termination of the Investment Advisory agreements
between The OFFITBANK Investment Fund, Inc. and OFFITBANK.
Please be assured that there is no increase to the advisory fee rates in the
proposed advisory agreements. The Board of Directors has voted unanimously in
favor of each proposal and recommends that you vote "FOR" them as well.
The following information is designed to answer your questions and help you cast
your proxy as a shareholder of the Funds, and is being provided as a supplement
to, not a substitute for, your proxy materials which I urge you to carefully
review. If you have any questions, please do not hesitate to call me or any of
my colleagues.
Q. Why are the Proposals being recommended?
A. As required under the Investment Company Act of 1940, consummation of
the merger will cause the automatic termination of the advisory
agreements between The OFFITBANK Investment Fund, Inc. and OFFITBANK.
Therefore, in order to ensure continuity in the management of the
Funds, shareholders are being asked to approve new advisory agreements
between the Funds and OFFITBANK.
Q. How will the fees and expenses of the Funds be affected?
A. The annual rate of the contractual investment advisory, administrative
and distribution fees applicable to each Fund will remain the same.
Q. As a shareholder, what do I need to do?
A. Please read the enclosed proxy statement and vote now by completing,
signing and returning the enclosed proxy ballot form(s) in the prepaid
envelope by July _____, 1999.
Sincerely,
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Morris W. Offit
President
YOUR VOTE IS IMPORTANT. Please read the enclosed proxy statement and vote now by
completing, signing and returning the enclosed proxy ballot form(s) in the
prepaid envelope. If you own shares in more than one fund, you will receive a
proxy card for each of your Funds. Please vote and return EACH proxy card you
receive. EVERY VOTE COUNTS. If you have any questions, please call. Shareholder
Communications at 1800-000-0000.
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OFFITBANK INVESTMENT FUND, INC.
(the "Company")
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on (_________, 1999)
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of
OFFITBANK INVESTMENT FUND, INC. (the "Company") will be held in (______________)
on (___________), 1999 at (_______), Eastern Time, to consider and vote on the
following matters:
1. To approve or disapprove a new investment advisory agreement between the
Company and OFFITBANK, to become effective upon the closing of the
proposed merger of OFFITBANK Holdings, Inc., the sole shareholder of
OFFITBANK, with the Wachovia Corporation. No fee increase is proposed;
2. To elect one additional director to serve until his successor is duly
elected and shall qualify; and
3. To transact any other business, not currently contemplated, that may
properly come before the meeting in the discretion of the proxies or
their substitutes.
Shareholders of record at the close of business on (___________), 1999
are entitled to vote at this meeting or any adjournment thereof.
By order of the Board of Directors,
/s/Mr. Wallace Mathai-Davis
Secretary
IF YOU CANNOT BE PRESENT AT THE SPECIAL MEETING, WE URGE YOU TO FILL IN, SIGN
AND PROMPTLY RETURN THE ENCLOSED PROXY IN ORDER THAT THE SPECIAL MEETING MAY BE
HELD AND A MAXIMUM NUMBER OF SHARES MAY BE VOTED.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION,
WE ASK THAT YOU MAIL YOUR PROXY PROMPTLY NO MATTER HOW MANY
SHARES YOU OWN.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
PROPOSALS.
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OFFITBANK INVESTMENT FUND, INC.
(the "Company")
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on (__________, 1999)
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PROXY STATEMENT
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This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors (also referred to as the "Board" or the
"Directors") of OFFITBANK Investment Fund, Inc. (the "Company") of proxies for
use at the special meeting of shareholders or at any adjournment thereof. The
proxy statement and form of proxy were first mailed to shareholders on or about
(_____________, 1999).
The purpose of the meeting is to consider the approval of any investment
advisory agreements between OFFITBANK (the "Adviser") and the Company as a
result of a proposed transaction whereby the Adviser's parent company, OFFITBANK
Holdings, Inc., will merge with the Wachovia Corporation or an affiliate thereof
("Wachovia"), and the Adviser will become a distinct Wachovia company. Upon
completion of such transaction, it is currently anticipated that the Adviser
will continue to carry on its business with its current management at its
current location. Shareholders are also being asked to elect a new director,
subject to consummation of the proposed transaction.
A proxy, if properly executed, duly returned and not revoked, will be
voted in accordance with the specifications thereon. A proxy which is properly
executed that has no voting instructions with respect to a proposal will be
voted for that proposal. A shareholder may revoke a proxy at any time prior to
use by filing with the Secretary of the Company an instrument revoking the
proxy, by submitting a proxy bearing a later date, or by attending and voting at
the meeting.
The Company has retained Alamo Direct to solicit proxies for the special
meeting. Alamo Direct is responsible for mailing proxy material to shareholders,
soliciting brokers, custodians, nominees and fiduciaries, tabulating the
returned proxies and performing other proxy solicitation services. The
anticipated cost of such services is approximately $10,000, and will be paid by
the Adviser. The Adviser will also pay the printing and postage costs of the
solicitation.
In addition to solicitation through the mail, proxies may be solicited
by officers, employees and agents of the Adviser without cost to the Adviser .
Such solicitation may be by telephone, facsimile or otherwise. The Adviser will
reimburse brokers, custodians,
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nominees and fiduciaries for the reasonable expenses incurred by them in
connection with forwarding solicitation material to the beneficial owner of
shares held of record by such persons.
Outstanding Shares and Voting Requirements
The Board of Directors has fixed the close of business on (________),
1999 as the record date for the determination of shareholders entitled to vote
at the special meeting of shareholders or any adjournment thereof. The Company
is composed of eight separate funds, the OFFITBANK High Yield Fund, OFFITBANK
Emerging Markets Fund, OFFITBANK Latin America Equity Fund, OFFITBANK U.S.
Government Securities Fund, OFFITBANK Mortgage Securities Fund, OFFITBANK
California Municipal Fund, OFFITBANK New York Municipal Fund, and the OFFITBANK
National Municipal Fund, (individually a "Fund" and collectively, the "Funds"),
each of which is represented by a separate series of the Company's shares. The
Fund offers two classes of shares, Select Shares and Advisor Shares. As of the
record date there were _____________ shares of beneficial interest, no par
value, of the Company outstanding, comprised of ____________ shares of the
OFFITBANK High Yield Fund, ____________ shares of the OFFITBANK Emerging Markets
Fund, ____________ shares of the OFFITBANK Latin America Equity Fund,
____________ shares of the OFFITBANK U.S. Government Securities Fund,
____________ shares of the OFFITBANK Mortgage Securities Fund, ____________
shares of the OFFITBANK California Municipal Fund, ____________ shares of the
OFFITBANK New York Municipal Fund, and ____________ shares of the OFFITBANK
National Municipal Fund. All full shares of the Company are entitled to one
vote, with proportionate voting for fractional shares.
As of the record date, the officers and Directors of the Company
beneficially owned less than 1% of the shares of each Fund. As of the record
date, certain persons owned of record 5% or more of the outstanding shares of
certain Funds. Additional information relating to such persons is included under
the section "Additional Information" herein.
Description of Voting
Approval of Proposal 1 requires the affirmative vote of a "majority of
the outstanding voting securities," within the meaning of the Investment Company
Act of 1940, as amended (the "1940 Act") of each Fund. The term "majority of the
outstanding voting securities" is defined under the 1940 Act to mean: (a) 67% or
more of the outstanding shares present at the meeting, if the holders of more
than 50% of the outstanding shares are present or represented by proxy, or (b)
more than 50% of the outstanding shares of a Fund, whichever is less. Approval
of Proposal 2 requires a plurality of the votes cast together at the meeting by
the shareholders of the Company.
If the meeting is called to order but a quorum is not represented at the
meeting, the persons named as proxies may vote the proxies which have been
received to adjourn the meeting to a later date. If a quorum is present at the
meeting but sufficient votes to approve the proposals described herein are not
received, the persons named as proxies may propose
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one or more adjournments of the meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a majority of
those shares represented at the meeting in person or by proxy. The persons named
as proxies will vote those proxies received which voted in favor of the proposal
in favor of such an adjournment and will vote those proxies received which voted
against the proposal against any such adjournment. A shareholder vote may be
taken on one or more of the proposals in this proxy statement prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate. Abstentions and "broker non-votes" are counted for purposes of
determining whether a quorum is present but do not represent votes cast with
respect to a proposal. "Broker non-votes" are shares held by a broker or nominee
for which an executed proxy is received by the Company, but are not voted as to
one or more proposals because instructions have not been received from the
beneficial owners or persons entitled to vote and the broker or nominee does not
have discretionary voting power.
MATTERS TO BE ACTED ON
PROPOSAL NO. 1
APPROVAL OF NEW MANAGEMENT AGREEMENTS
TERMS OF THE MERGER. Pursuant to the Agreement and Plan of Merger (the
"Merger Agreement") dated May 13, 1999, between OFFITBANK Holdings, Inc. and the
Wachovia Corporation ("Wachovia"), Wachovia has agreed to acquire all of the
outstanding common stock of OFFIT Holdings in exchange for newly issued common
stock of Wachovia through a merger transaction (the "Merger"). OFFITBANK (the
"Adviser") is a wholly-owned subsidiary of OFFIT Holdings. As a result of the
Merger, the Adviser will become a wholly-owned, direct subsidiary of Wachovia.
The value of the common stock to be issued in the Merger will depend upon the
trading price of Wachovia at the time of the Merger and the formula for exchange
noted in the Merger Agreement.
The consummation of the Merger is subject to the satisfaction of various
conditions subsequent to closing, including, but not limited to, soliciting
shareholder approval of new investment advisory agreements for the Funds;
ensuring that composition of the Company's Board of Directors is in compliance
with Section 15(f) of the 1940 Act; receipt by the parties of certain tax
opinions; receipt by the parties of all necessary approvals and authorizations
from governmental or self-regulatory authorities; and the receipt of all
necessary consents or approvals of all persons or entities other than
governmental authorities. After consummation of the Merger, it is expected that
the Adviser will continue to operate with substantially the same investment
personnel and officers. In addition, no changes in the Adviser's method of
operation, or the location where it conducts its principal business, are
contemplated.
Under the 1940 Act, a transaction which results in a change of control
or management of an investment adviser may be deemed an "assignment." The 1940
Act further provides that an investment advisory agreement will automatically
terminate in the event of its assignment. The Merger constitutes a "change of
control" of the Adviser for purposes of the 1940 Act and will cause the
"assignment" and resulting termination of the present advisory agreements.
Accordingly, the Board of Directors recommends that the new investment
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advisory agreement (the "New Management Agreement") between the Company and the
Adviser, on behalf of each Fund, be approved by shareholders of the applicable
Fund. Section 15 of the 1940 Act provides that when a change in the control of
an investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any amount or benefit in connection therewith as long as two
conditions are satisfied. First, an "unfair burden" must not be imposed on the
investment company as a result of the transaction relating to the change of
control, or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" includes any arrangement during the
two-year period after the change in control whereby the investment adviser (or
predecessor or successor adviser), or any interested person of any such adviser,
receives or is entitled to receive any compensation, directly or indirectly,
from the investment company or its security holders (other than fees for bona
fide investment advisory or other services) or from any person in connection
with the purchase or sale of securities or other property to, from, or on behalf
of the investment company (other than fees for bona fide principal underwriting
services). No such compensation arrangements are contemplated as a result of the
Merger.
The second condition is that, during the three-year period immediately
following consummation of the transaction, at least 75% of the Company's Board
of Directors must not be "interested persons" of the investment adviser or
predecessor investment adviser within the meaning of the 1940 Act. No interested
person of the Adviser within the meaning of the 1940 Act will serve on the Board
of Directors of the Company during such period if such service would cause this
condition to be violated.
PRESENT MANAGEMENT AGREEMENTS. The Adviser currently provides investment
advisory services to the Funds pursuant to investment advisory agreements dated
February 7, 1994 with respect to the OFFITBANK High Yield Fund and OFFITBANK
Emerging Markets Fund (the "High Yield and Emerging Markets Agreement"),
February 8, 1995 with respect to the OFFITBANK Latin America Equity Fund,
OFFITBANK California Municipal Fund, OFFITBANK New York Municipal Fund, and the
OFFITBANK National Municipal Fund (the "Latin America, California, New York, and
National Agreement"), and June 1, 1997 with respect to the OFFITBANK U.S.
Government Securities Fund and OFFITBANK Mortgage Securities Fund (the "U.S.
Government and Mortgage Securities Agreement") (collectively "Present Management
Agreements"). The Present Management Agreements were last approved by the Board
on December 17, 1998.
Pursuant to the Present Management Agreements, the Adviser makes
investment strategy decisions for the Funds, manages the investment and
reinvestment of all the Funds' assets, places purchase and sale orders on behalf
of the Funds, and provides continuous supervision of each Fund's investment
portfolio. Under the High Yield and Emerging Markets Agreement, the OFFITBANK
High Yield Fund pays the Adviser a management fee of .85% for the first
$200,000,000 of average daily net assets, .75% on the next $400,000,000, and
.65% of amounts in excess of $600,000,000, and the OFFITBANK Emerging Markets
Fund pays the Adviser a management fee of .90% of the first $200,000,000 of net
assets and .80% on amounts in excess thereof. For the fiscal year ended December
31, 1998, the OFFITBANK High Yield Fund paid the Adviser an aggregate
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management fee of $11,091,248, while the OFFITBANK Emerging Markets Fund paid
the Adviser an aggregate management fee of $1,960,803. The level of management
fees under the High Yield and Emerging Markets Agreement will remain the same
under the New Management Agreement.
Under the Latin America, California, New York, and National Agreement,
the OFFITBANK Latin America Equity Fund pays the Adviser a management fee of
1.00% of the Fund's average daily net assets, the OFFITBANK California Municipal
Fund, OFFITBANK New York Municipal Fund, and the OFFITBANK National Municipal
Fund each pay the Adviser a management fee of .35% of each Fund's average daily
net assets. For the fiscal year ended December 31, 1998, the OFFITBANK Latin
America Equity Fund paid the Adviser an aggregate management fee of $370,195,
the OFFITBANK California Municipal Fund paid the Adviser an aggregate management
fee of $761 (with $28,008 having been waived), the OFFITBANK New York Municipal
Fund paid the Adviser an aggregate management fee of $113,193 (with $90,180
having been waived), and the OFFITBANK National Municipal Fund paid the Adviser
an aggregate management fee of $15,988 (with $32,995 having been waived). The
level of management fees under the Latin America, California, New York, and
National Agreement will remain the same under the New Management Agreement.
Under the U.S. Government and Mortgage Securities Agreement, the
OFFITBANK U.S. Government Securities Fund and OFFITBANK Mortgage Securities Fund
each pay the Adviser a management fee of .35% of each Fund's average daily net
assets. For the fiscal year ended December 31, 1998, the OFFITBANK U.S.
Government Securities Fund paid the Adviser an aggregate management fee of
$29,017 (with $38,093 having been waived), and the OFFITBANK Mortgage Securities
Fund paid the Adviser an aggregate management fee of $41,751 (with $78,778
having been waived). The level of management fees under the U.S. Government and
Mortgage Securities Agreement will remain the same under the New Management
Agreement.
NEW MANAGEMENT AGREEMENT. The terms and conditions of the New Management
Agreement are substantially identical in all material respects to those of the
Present Management Agreements. A form of the New Management Agreement for the
Funds is attached as Exhibit A. If the New Management Agreement is approved by
shareholders of the Funds, it will become effective upon the consummation of the
Merger. The New Management Agreement provides that it will remain in force for
an initial term of two years, and from year to year thereafter, subject to
annual approval by (a) the Board of Directors or (b) a vote of a majority (as
defined in the 1940 Act) of the outstanding shares of a Fund; provided that in
either event continuance is also approved by a majority of the Independent
Directors, by a vote cast in person at a meeting called for the purpose of
voting such approval. The New Management Agreement may be terminated at any
time, on sixty days' written notice, without the payment of any penalty, by the
Board of Directors, by a vote of a majority of the outstanding voting securities
of the applicable Fund, or by the Adviser. The New Management Agreement
automatically terminates in the event of its assignment, as defined by the 1940
Act and the rules thereunder.
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The New Management Agreement provides that the Adviser shall not be
liable for any action taken or omitted to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within the
discretion or rights conferred upon it by such Agreement, or in accordance with
specific instructions from the Company, provided that such acts or omissions
shall not have resulted from the Adviser's willful misfeasance, bad faith or
gross negligence, a violation of the standard of care established by and
applicable to the Adviser in its actions under such Agreement, or breach of its
obligations thereunder.
The descriptions set forth in this proxy statement of the New Management
Agreement are qualified in their entirety by reference to Exhibit A.
In the event that shareholders of a Fund do not approve the New
Management Agreement with respect to such Fund and the Merger is consummated,
the Board of Directors will promptly seek to obtain for such Fund interim
advisory services either from the Adviser or from another advisory organization.
Thereafter, the Board of Directors would either negotiate a new investment
advisory agreement with an advisory organization selected by the Board or make
other appropriate arrangements, in either event subject to approval by the
shareholders of the Fund. In the event the Merger is not consummated for any
reason, the Adviser will continue to serve as the investment adviser of the
Funds pursuant to the terms of the Present Management Agreement.
INFORMATION CONCERNING WACHOVIA. Wachovia is a North Carolina
corporation whose principal banking subsidiary is Wachovia Bank, National
Association. Wachovia has 752 branches and 1,381 ATMs throughout the
Southeastern United States. Wachovia also has bank-related subsidiaries engaged
in large corporate and institutional relationship management and business
development, corporate leasing, remittance processing and discount brokerage
services. Based on its consolidated asset size and market capitalization at
March 31, 1999, Wachovia was ranked 16th among domestic U.S. bank holding
companies in each of these categories. At that date, Wachovia had consolidated
assets of $65.3 billion, deposits of $40.3 billion and shareholders' equity of
$5.4 billion.
INFORMATION CONCERNING THE ADVISER. The Adviser is a wholly-owned
subsidiary of OFFITBANK Holdings, Inc. The Adviser was formed in 1983 as Offit
Associates, a registered investment adviser. In 1990, the Adviser converted to a
New York State trust bank. Currently, the Adviser provides wealth management
services for individuals, family groups, nonprofit organizations and other
institutions. Certain of the employees of the Adviser hold positions with the
Funds as directors or officers. Mr. Offit is Chairman of the Board of Directors
and President of the Funds, Mr. Mathai-Davis is Secretary and Treasurer of the
Funds, and Vincent M. Rella and Stephen B. Wells are Assistant Treasurers of the
Funds. Mr. Offit is Chairman of the Adviser and Messrs. Mathai-Davis, Rella and
Wells are Managing Directors of the Adviser. The address of each executive
officer of the Adviser is 520 Madison Avenue, New York, New York 10022.
Mr. Offit is the only member of the Adviser's board who has an interest
in the Merger other than as a shareholder or employee. As part of the Merger,
Mr. Offit entered into an employment agreement with Wachovia whereby he would
provide services to Wachovia that are consistent with his background and
expertise. The employment agreement becomes effective on the effective date of
the Merger. In addition, Mr. Offit entered into a non-compete agreement which
will restrict Mr. Offit from employment opportunities in similar industries. Mr.
Offit has also been invited to join Wachovia's board upon completion of the
Merger.
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Mr. Offit from employment opportunities in similar industries. Mr. Offit has
also been invited to join Wachovia's board upon completion of the merger.
The Adviser serves as investment adviser to the following affiliated
registered investment companies listed below:
<TABLE>
<CAPTION>
<S> <C>
OFFITBANK INVESTMENT FUND, OFFITBANK VARIABLE INSURANCE
INC. FUND, INC.
(consisting of the following portfolios): (consisting of the following portfolios):
OFFITBANK High Yield Fund OFFITBANK VIF-High Yield Fund
OFFITBANK Emerging Markets Fund OFFITBANK VIF-Emerging Markets
OFFITBANK Latin America Equity Fund Fund
OFFITBANK New York Municipal Fund
OFFITBANK California Fund OFFITBANK VIF-Total Return Fund
OFFITBANK National Municipal Fund OFFITBANK VIF-U.S. Government
OFFITBANK U.S. Government Fund Securities Fund
OFFITBANK Mortgage Securities Fund OFFITBANK VIF-U.S. Small Cap Fund
</TABLE>
INFORMATION CONCERNING OFFIT HOLDINGS. OFFITBANK Holdings, Inc., a
privately held holding company headquartered in New York City, is the parent
company and sole shareholder of the Adviser. Offit Holdings became the parent
holding company of the Adviser due to the Adviser's reorganization that was
effected on January 1, 1999. Pursuant to an exchange agreement among Offit
Holdings and the then shareholders of the Adviser, Offit Holdings exchanged its
shares for all of the Adviser's shares. Consequently, all shareholders of the
Adviser became shareholders of Offit Holdings and the Adviser became a
wholly-owned subsidiary of Offit Holdings.
[EVALUATION BY THE BOARD OF DIRECTORS. On June 23, 1999, the Board of
Directors, including each of the Independent Directors, by vote cast in person,
unanimously approved, subject to the required shareholder approval described
herein, the New Management Agreement. Prior to such approval, the Independent
Directors met separately with their counsel, which did not represent Wachovia,
for the purpose of assisting them in reaching a determination with respect to
the New Management Agreements.
In considering approval of the New Management Agreement, the Board of
Directors carefully evaluated information they deemed necessary to enable them
to determine whether the New Management Agreement will be in the best interests
of each Fund and its shareholders. In making this recommendation, the Directors
evaluated the experience of the Adviser's key personnel in investing, the
quality of services the Adviser is expected to provide to the Funds and the
compensation proposed to be paid to the Adviser. The Directors have given
careful consideration to all factors deemed to be relevant to the Company,
including, but not limited to: (1) the fees and expense ratios of comparable
mutual funds; (2) the performance of the Funds as compared to similar mutual
funds; (3) the
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nature and quality of the services expected to be rendered to the Company by the
Adviser; (4) the distinct investment objective and policies of each Fund; (5)
that the compensation payable to the Adviser under the New Management Agreements
will be at the same rate as the compensation now payable to the Adviser under
the Present Management Agreement; (6) that the terms of the New Management
Agreements are substantially identical in all material respects as the terms of
the Present Management Agreements except for different effective and termination
dates; (7) the history, reputation, qualification and background of the Adviser
and Wachovia and their respective financial conditions, as well as the
qualifications of their personnel; and (8) the substantial benefits expected to
be realized as a result of the Adviser's ownership by Wachovia, such as the
potential for increasing Fund assets and the opportunity to gain access to
Wachovia's managerial and technological resources.
In making the determination to recommend approval of the New Management
Agreement to shareholders of the Company, the Board of Directors gave
substantial weight to the Adviser's representations that (i) the Merger should
benefit the Adviser and the Funds by preserving the Adviser's independent
management structure and portfolio management style, while providing stability
from a strengthening balance sheet, more attractive financial incentives to the
Adviser's employees and increased resources for the Adviser's operations; (ii)
the Merger will not materially affect the advisory operations of the Adviser or
the level or quality of advisory services provided to the Funds; (iii) the same
personnel of the Adviser who currently provide services to the Company are
expected to continue to do so after the Merger; (iv) the Company will not be
subject to any unfair burden as a result of the Merger; (v) access to Wachovia's
broad managerial, financial and technological resources should allow the Adviser
to increase the range and quality of services provided to the Company; and (vi)
the Merger could potentially result in an increase in assets of the Funds,
thereby possibly reducing the effective rate of the Adviser's fees and other
expenses of the Funds. In considering approval of the New Management Agreement,
the Board of Directors reviewed the most recent audited financial statements of
the Adviser and of Wachovia. The Board of Directors believes that the Merger
should benefit the Adviser and the Funds and that the Funds should receive
investment advisory services under the New Management Agreement equal or
superior to those currently received under the Present Management Agreements, at
the same fee levels. The Board of Directors therefore unanimously recommends
approval of the New Management Agreement by shareholders of each Fund.]
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THE NEW
MANAGEMENT AGREEMENTS.
PROPOSAL NO. 2
ELECTION OF BOARD MEMBER
[The Board of Directors is currently comprised of four persons, three of
whom have been elected by shareholders. You are being asked to ratify the
appointment of the Director that has not been elected by shareholders so that
the entire Board will be comprised of Directors who have been elected by
shareholders.
At a meeting of the Board of Directors held June 23, 1999, the
Independent Directors of the Board (those Directors that are not "interested
persons" of the Adviser or the Fund) recommended the nomination of Mr. Stephen
Peck to serve as an Independent Director of the Company. The full Board approved
the nomination and Mr. Peck is currently serving as a Director of the Company.
The nomination of Mr. Peck was necessary to satisfy (i) certain conditions to
closing of the Merger and (ii) Section 15(f) of the 1940 Act (discussed above)
whereby, for a period of three years following the Merger, at least 75% of the
Company's Board of Directors must generally be comprised of persons who were
elected by shareholders and are not "interested persons" of the investment
adviser or predecessor investment adviser.
It is the intention of the persons named in the accompanying form of
proxy to vote "FOR" the election of Mr. Peck, who has consented to being named
in this Proxy Statement and has agreed to serve if elected. The Independent
Directors reserve the right to substitute another person or persons of their
choice if Mr. Peck is unable to serve as a director for any reason.]
The Board has designated an audit committee to provide advice with
respect to accounting, auditing and financial matters affecting the Company. The
Audit Committee is comprised of Mr. Landau and The Very Reverend Morton and
meets periodically. For the fiscal year ended December 31, 1998, the Audit
Committee met two times. The Board met five times during the fiscal year ended
December 31, 1998.
INFORMATION REGARDING NOMINEE'S
PRINCIPAL OCCUPATION AND OTHER INFORMATION
Amount of
Beneficial
Name and Principal Occupation Ownership
During the Past Five Years and of Shares of the
Directorships of Public Companies Age Funds
64 N/A
Stephen M. Peck: Investment Officer,
Gildner Gagnon, Howe & Co. LLC (1989-
Present); Director, Harnischfeger, Inc. and
Fresenious Medical Care.
-9-
<PAGE>
CURRENT DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation(s)
Name and Age With the Fund Past 5 Years
- ------------ --------------- ------------
<S> <C> <C>
Morris W. Offit* Chairman of the President and Director, OFFITBANK
Age: 62 Years Board, President, (investment adviser) (1983 - present);
and Director one additional Chairman of the
Board, President and Director
position with the OFFITBANK Fund
Complex.
Edward J. Landau Director Of Counsel, Wolf, Block Schorr and
Age: 71 years Solis-Cohen, LLP (2/1/98-present);
Member, Lowenthal, Landau, Fischer
& Bring, P.C. (1960-1/31/98); Director,
Revlon Group Inc., Revlon Consumer
Products Inc.; Pittsburgh Annealing
Box and Clad Metals Inc.; one
additional Director position with
the OFFITBANK Fund Complex.
The Very Reverend James Director President, Interfaith Center of New
Parks York (1/1/98 - present); formerly
Age: 74 Years Dean of Cathedral of St. John the
Divine (1972 - 1996); one additional
Director position with the OFFITBANK
Fund Complex.
Mr. Wallace Mathai-Davis Secretary and Managing Director, OFFITBANK
Age: 55 Years Treasurer (Investment adviser) (1986 - present);
one additional Officer position with
the OFFITBANK Fund Complex.
</TABLE>
* "Interested person" of the Fund as defined in the 1940 Act.
The Company pays each Director who is not also an officer or affiliated
person an annual fee of $10,000 and a fee of $1,250 for each Board of Directors
and Board committee meeting attended and reimburses such Director for all
out-of-pocket expenses relating to attendance at meetings. Directors who are
affiliated with the Adviser do not receive compensation from the Company but are
reimbursed for all out-of-pocket expenses relating to attendance at meeting.
-10-
<PAGE>
DIRECTOR COMPENSATION
(The following table shows the compensation paid by the Company to the Directors
for 1998)
<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement from Registrant
Aggregate Benefits Estimated and Fund
Compensation Accrued Annual Complex*
From the as Part of Full Benefits Upon Paid to
Name of Director Registrant Expenses Retirement Directors
- ---------------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Morris W. Offit $0 $0 $0 $0
Edward J. Landau $18,750.00 $0 $0 $23,000.00
The Very
Reverend
James Parks
Morton $18,750.00 $0 $0 $23,000.00
</TABLE>
* For this purpose, the "Fund Complex" consists of the Company and The
OFFITBANK Variable Insurance Fund, Inc., which constitute all of the
regulated investment companies advised by the Adviser.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THE NEW
NOMINEE FOR THE BOARD.
ADDITIONAL INFORMATION
As of the record date, ________, 1999, the name, address and share
ownership of each person who owned of record 5% of more of the outstanding
shares of the Company (or any Fund) are listed in the following table:
[ADD 5% SHAREHOLDER INFO]
OTHER MATTERS
The Board does not know of any other business to be brought before the
meeting. If any other matters properly come before the meeting, proxies will
vote on such matters in their discretion.
-11-
<PAGE>
REPORTS TO SHAREHOLDERS AND FINANCIAL STATEMENTS
The Company's annual report for the fiscal year ended December 31, 1998
is available at no charge by writing to the Company at P.O. Box 8701,
Wilmington, Delaware 19899, or by calling the Company toll-free at
1-800-618-9510.
SHAREHOLDER PROPOSALS
The Company is not required to hold annual meetings of shareholders and
currently does not intend to hold such meetings unless shareholder action is
required in accordance with the 1940 Act or the Company's Articles of
Incorporation. A shareholder proposal to be considered for inclusion in the
proxy statement at any subsequent meeting of shareholders must be submitted a
reasonable time before the proxy statement for that meeting is mailed. Whether a
proposal submitted will be included in the proxy statement will be determined in
accordance with applicable federal and state laws.
By Order of the Board of the
OFFITBANK INVESTMENT FUND, INC.
Mr. Wallace Mathai-Davis
Secretary
Dated: ________, 1999
SHAREHOLDERS ARE REQUESTED TO FILL IN, DATE AND SIGN THE PROXY CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED PREPAID ENVELOPE.
-12-
<PAGE>
EXHIBIT A
FORM OF NEW MANAGEMENT AGREEMENT
INVESTMENT ADVISORY AGREEMENT
THE OFFITBANK INVESTMENT FUND, INC.
P.O. Box 8701
Wilmington, DE 19899
__________________, 1999
OFFITBANK
520 Madison Avenue
New York, New York 10022
Dear Sir or Madam:
This will confirm the agreement between the undersigned (the "Company") and you
(the "Investment Adviser") as follows:
1. The Company proposes to engage in the business of investing and
reinvesting the assets of the OFFITBANK High Yield Fund, OFFITBANK Emerging
Markets Fund, OFFITBANK Latin America Equity Fund, OFFITBANK U.S. Government
Securities Fund, OFFITBANK Mortgage Securities Fund, OFFITBANK California
Municipal Fund, OFFITBANK New York Municipal Fund, and OFFITBANK National
Municipal Fund (individually a "Fund", collectively the "Funds") in the manner
and in accordance with the investment objectives and limitations specified in
the Company's Articles of Incorporation and Articles Supplementary (the
"Articles") and the currently effective prospectus, including the documents
incorporated by reference therein (the "Prospectus"), relating to the Company
and the Funds, included in the Company's Registration Statement an amended from
time to time (the "Registration Statement"), filed by the Company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Securities
Act of 1933, as amended. Copies of the documents referred to in the preceding
sentence have been furnished to the Investment Adviser. Any amendments to these
documents shall be furnished to the Investment Adviser.
2. The Company employs the Investment Adviser to (a) make investment
strategy decisions for the Funds, (b) manage the investing and reinvesting of
the Funds' assets as specified in paragraph 1, (c) place purchase and sale
orders on behalf of the Funds and, (d) provide continuous supervision of each
Fund's investment portfolio.
3. (a) The Investment Adviser shall, at its expense, provide the Funds
with office space, furnishings and equipment and personnel required by it to
perform the services to be provided by the Investment Adviser pursuant to this
Agreement.
-13-
<PAGE>
(b) Except as provided in subparagraph (a), the Company shall be
responsible for all of the Funds' expenses and liabilities, including taxes;
interest; fees (including fees paid to its directors who are not affiliated with
the Investment Adviser or any of its affiliates); fees payable to the Securities
and Exchange Commission; state securities qualification fees; costs of preparing
and printing prospectuses for regulatory purposes and for distribution to
existing shareholders; advisory and administration fees, charges of the
custodian and transfer agent; insurance premiums; auditing and legal expenses;
costs of shareholders' reports and shareholders' meetings; any extraordinary
expenses; and brokerage fees and commissions, if any, in connection with the
purchase or sale of portfolio securities.
4. As manager of the Funds' assets, the Investment Adviser shall make
investments for the Funds' account in accordance with the investment objectives
and limitations set forth in the Articles, the Prospectus, the 1940 Act, the
provisions of the Internal Revenue Code of 1986, as amended, relating to
regulated investment companies, applicable banking laws and regulations, and
policy decisions adopted by the Company's Board of Directors from time to time.
The Investment Adviser shall advise the Company's officers and Board of
Directors, at such times as the Company's Board of Directors may specify, of
investments made for the Funds' accounts and shall, when requested by the
Company's officers or Board of Directors, supply the reasons for making such
investments.
5. The Investment Adviser is authorized on behalf of the Company, from
time to time when deemed to be in the best interests of the Company and to the
extent permitted by applicable law, to purchase and/or sell securities in which
the Investment Adviser or any of its affiliates underwrites, deals in and/or
makes a market and/or may perform or seek to perform investment banking services
for issuers of such securities. The Investment Adviser is further authorized, to
the extent permitted by applicable law, to select brokers for the execution of
trades for the Company, which broker may be an affiliate of the Investment
Adviser, provided that the best competitive execution price is obtained at the
time of the trade execution.
6. In consideration of the Investment Adviser's undertaking to render
the services described in this agreement, the Company agrees that the Investment
Adviser shall not be liable under this agreement for any error of judgment or
mistake of law or for any loss suffered by the Company in connection with the
performance of this agreement, provided that nothing in this agreement shall be
deemed to protect or purport to protect the Investment Adviser against any
liability to the Company or its stockholders to which the Investment Adviser
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Investment Adviser's duties under this
agreement or by reason of the Investment Adviser's reckless disregard of its
obligations and duties hereunder.
7. In consideration of the services to be rendered by the Investment
Adviser under this agreement, the Company shall pay the Investment Adviser
monthly fees on the first Business Day (as defined in the Prospectus) of each
month based upon the average daily net assets of each Fund during the preceding
month (as determined on the days and at the time set forth in the Prospectus for
determining net asset value per share) at the following annual rates; .85% for
the first $200,000,000 of assets, .75% on the next $400,000,000, and
-14-
<PAGE>
.65% of amounts in excess of $600,000,000 for the OFFITBANK High Yield Fund;
.90% of the first $200,000,000 of net assets and .80% on amounts in excess
thereof for the OFFITBANK Emerging Markets Fund; 0.35% for the assets of the
OFFITBANK Latin America Equity Fund; 0.35% for the assets of the OFFITBANK U.S.
Government Securities Fund; 0.35% for the assets of the OFFITBANK Mortgage
Securities Fund; 0.35% for the assets of the OFFITBANK California Municipal
Fund; 0.35% for the assets of the OFFITBANK New York Municipal Fund; and 0.35%
for the assets of the OFFITBANK National Municipal Fund. If the fees payable to
the Investment Adviser pursuant to this paragraph 7 begins to accrue before the
end of any month or if this agreement terminates before the end of any month,
the fees for the period from such date to the end of such month or from the
beginning of such month to the date of termination, as the case may be, shall be
prorated according to the proportion which such period bears to the full month
in which such effectiveness or termination occurs. For purposes of calculating
each such monthly fee, the value of the Funds' net assets shall be computed in
the manner specified in the Prospectus and the Articles for the computation of
the value of the Funds' net assets in connection with the determination of the
net asset value of shares of the Funds' capital stock.
8. This agreement shall continue in effect until two years from the date
hereof and thereafter with respect to each Fund for successive annual periods,
provided that such continuance is specifically approved at least annually (a) by
the vote of a majority of such Fund's outstanding voting securities (as defined
in the 1940 Act) or by the Company's Board of Directors and (b) by the vote,
cast in person at a meeting called for the purpose, of a majority of the
Company's directors who are not parties to this agreement or "interested
persons" (as defined in the 1940 Act) of any such party. This agreement may be
terminated by any Fund at any time, without the payment of any penalty, by a
vote of a majority of such Fund's outstanding voting securities (as defined in
the 1940 Act) or by a vote of a majority of the Company's entire Board of
Directors on 60 days' written notice to the Investment Adviser or by the
Investment Adviser on 60 days' written notice to the Company. This agreement may
remain in effect with respect to a Fund even if it has been terminated in
accordance with this paragraph with respect to the other Funds. This agreement
shall terminate automatically in the event of its assignment (as defined in the
1940 Act).
9. Upon expiration or earlier termination of this agreement, the Company
shall, if reference to "OFFITBANK" is made in the corporate name of the Company
or in the names of the Funds and if the Investment Adviser requests in writing,
as promptly as practicable change its corporate name and the names of the Funds
so as to eliminate all reference to "OFFITBANK", and thereafter the Company and
the funds shall cease transacting business in any corporate name using the words
"OFFITBANK" or any other reference to the Investment Adviser or "OFFITBANK". The
foregoing rights of the Investment Adviser and obligations of the Company shall
not deprive the Investment Adviser, or any affiliate thereof which has
"OFFITBANK" in its name, of, but shall be in addition to, any other rights or
remedies to which the Investment Adviser and any such affiliate may be entitled
in law or equity by reason of any breach of this agreement by the Company, and
the failure or omission of the Investment Adviser to request a change of the
Company's or the Funds" name or a cessation of the use of the name of
"OFFITBANK" as described in this paragraph
-15-
<PAGE>
9 shall not under any circumstances be deemed a waiver of the right to require
such change or cessation at any time thereafter for the same or any subsequent
breach.
10. Except to the extent necessary to perform the Investment Adviser's
obligations under this agreement, nothing herein shall be deemed to limit or
restrict the right of the Investment Adviser, or any affiliate of the Investment
Adviser, or any employee of the Investment Adviser, to engage in any other
business or to devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or to render
services of any kind to any other corporation, firm, individual or association.
11. This agreement shall be governed by the laws of the State of
Maryland.
If the foregoing correctly sets forth the agreement between the Company
and the Investment Adviser, please so indicate by signing and returning to the
Company the enclosed copy hereof.
Very truly yours,
THE OFFITBANK INVESTMENT FUND, INC.
By:
------------------------
ACCEPTED:
OFFITBANK
By:
---------------------
-16-
<PAGE>
OFFITBANK INVESTMENT FUND, INC.
OFFITBANK __________ FUND
SPECIAL MEETING OF SHAREHOLDERS -- __________, 1999
Please refer to the Proxy Statement for a discussion of these matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF BENEFICIAL INTEREST OF THE OFFITBANK
___________ FUND HEREBY CONSTITUTES AND APPOINTS ___________ AND ____________,
OR EITHER OF THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED, WITH FULL POWER
OF SUBSTITUTION, TO VOTE THE SHARES LISTED BELOW AS DIRECTED, AND UPON ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF,
AND HEREBY REVOKES ANY PRIOR PROXIES. To vote, mark an X in blue or black ink on
the proxy card below. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF OFFITBANK INVESTMENT FUND, INC.
- ------Detach card at perforation and mail in postage paid envelope provided-----
1. Approval of the proposed Investment Advisory Agreement between the
Company and OFFITBANK
FOR AGAINST ABSTAIN
|_| |_| |_|
2. Election of a director to serve as a member of the Board of Directors of
OFFITBANK Investment Fund, Inc. The nominee is: Mr. Stephen M. Peck.
FOR NOMINEE WITHHOLD
|_| |_|
<PAGE>
- ------Detach card at perforation and mail in postage paid envelope provided-----
OFFITBANK INVESTMENT FUND, INC.
OFFITBANK ________ FUND
PROXY
This proxy, when properly executed and returned, will be voted in the manner
directed herein by the undersigned. If no direction is made, this proxy will be
voted FOR approval of Proposal 1 and for the election of the nominee.
Please sign exactly as name appears on this card. When account is joint tenants,
all should sign. When signing as administrator, trustee or guardian, please give
title. If a corporation or partnership, sign in entity's name and by authorized
person.
x____________________________
x____________________________
Dated:___________________, 1999
