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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Waterhouse Investors Cash Management Fund, Inc.
(Name of Registrant as Specified In Its Charter)
Waterhouse Investors Cash Management Fund, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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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[X] 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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WATERHOUSE INVESTOR SERVICES, INC.
Waterhouse Securities, Inc.
Member New York Stock Exchange SIPC
National Headquarters
100 Wall Street
New York, New York 10005 (212) 806-3586
July 12, 1996
Lawrence M. Waterhouse, Jr.
Chairman & Chief Executive Officer
Proxy & Vote
Investment Management Agreement
Waterhouse Asset Management, Inc.
Dear Shareholder,
As a fellow shareholder in the Waterhouse Investors Cash Management
Fund, Inc. (the "Fund") I wanted to write a personal note explaining the
enclosed proxy and ask you to vote in favor of the proposal continuing
Waterhouse Asset Management, Inc. as the Fund's investment manager.
Waterhouse Investor Services, Inc., of which Waterhouse Asset
Management, Inc. is a subsidiary, has agreed to a merger with and into a newly
formed subsidiary of The Toronto-Dominion Bank--the fifth largest bank in Canada
and the sixteenth largest in North America with nearly $80 billion in total
assets as of December 31, 1995. The Toronto-Dominion Bank also owns and operates
the largest discount broker in Canada.
Under the Investment Company Act of 1940, which governs the Fund's
operations, a shareholder vote is required whenever there is a change in control
of the Fund's investment manager--Waterhouse Asset Management, Inc. Therefore,
as an investor/shareholder in the Fund, it is necessary for you to approve a new
investment management agreement with Waterhouse Asset Management, Inc.
The new agreement is identical to the existing investment management agreement
with Waterhouse Asset Management, Inc.
Your Fund's Board has approved the proposal and recommends it to you for
your approval. Your vote is important and I urge you to vote in its favor.
I thank you for your confidence and support.
Sincerely,
/s/ Lawrence M. Waterhouse, Jr.
<PAGE>
WATERHOUSE INVESTORS CASH MANAGEMENT FUND, INC.
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
August 28, 1996
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To the Shareholders of Waterhouse Investors Cash Management Fund, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Meeting") of
shareholders of each of the Money Market, U.S. Government and Municipal
Portfolios (the "Portfolios") of Waterhouse Investors Cash Management Fund, Inc.
(the "Fund") will be held at The Continental Club, 180 Maiden Lane, 41st Floor,
New York, New York 10018, on Wednesday, August 28, 1996 at 10:00 a.m., Eastern
Time, and at any adjournments thereof for the following purposes:
1. To approve the Investment Management Agreement between the Fund on
behalf of each Portfolio and Waterhouse Asset Management, Inc. (the "Investment
Manager"), the terms of which are identical to the existing Investment
Management Agreement between the Fund and the Investment Manager, effective upon
the closing of a merger of the indirect parent of the Investment Manager,
Waterhouse Investor Services, Inc., with and into a newly formed subsidiary of
The Toronto-Dominion Bank, as more fully described in the enclosed proxy
statement.
2. To transact other business as may properly come before the Meeting
or any adjournments thereof.
Only shareholders of record of each Portfolio at the close of business
on June 28, 1996 are entitled to receive notice of and to vote at the Meeting,
and at any and all adjournments thereof on all matters relating to that
Portfolio.
By Order of the Board of Directors,
Elizabeth A. Bachman
Assistant Secretary
New York, New York
July 12, 1996
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YOUR VOTE IS IMPORTANT REGARDLESS OF HOW MANY
SHARES YOU OWNED ON THE RECORD DATE.
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IF YOU CANNOT ATTEND THE MEETING, PLEASE FILL IN, DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD OR CARDS IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES.
<PAGE>
WATERHOUSE INVESTORS CASH MANAGEMENT FUND, INC.
100 Wall Street
New York, New York 10005
PROXY STATEMENT
Special Meeting of Shareholders
August 28, 1996
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors to be used at the Special Meeting (the
"Meeting") of shareholders of each of the Money Market, U.S. Government and
Municipal Portfolios (each, a "Portfolio," and collectively, the "Portfolios")
of Waterhouse Investors Cash Management Fund, Inc. (the "Fund") to be held at
The Continental Club, 180 Maiden Lane, 41st Floor, New York, New York 10018, on
Wednesday, August 28, 1996 at 10:00 a.m., Eastern Time, and at any adjournments
thereof. It is anticipated that this proxy statement and the accompanying form
or forms of proxy first will be mailed to shareholders on or about July 19,
1996.
Voting, Quorum
The Fund was incorporated in Maryland on August 16, 1995 and is a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). Shares of each
Portfolio have the exclusive right to vote on matters affecting only the rights
of the holders of shares of such Portfolio, including the proposal to approve a
new Investment Management Agreement being presented at the Meeting.
Each share of a Portfolio is entitled to one vote on each matter
submitted to a vote of the shareholders of that Portfolio at the Meeting. Shares
held by two or more persons (whether as joint tenants, co-fiduciaries or
otherwise) will be voted as follows unless a written instrument or court order
providing to the contrary has been filed with the Secretary of the Fund: (1) if
only one votes, his vote will bind all; (2) if more than one votes, the vote of
the majority will bind all; and (3) if more than one votes and the vote is
evenly divided, the vote will be cast proportionately, or any person voting the
stock (or any beneficiary) may apply to a court of competent jurisdiction to
appoint an additional person to act with the persons voting the stock and the
stock shall then be voted as determined by a majority of those persons and the
person appointed by the court.
Under the 1940 Act, approval of the proposal to approve the new
Investment Management Agreement (the "Proposal") requires the affirmative vote
of (i) 67% or more of the shares of each Portfolio (to which the matter is being
submitted) present in person at the Meeting or represented by proxy, if holders
of more than 50% of the shares of such Portfolio outstanding on the record date
are present, in person or by proxy, or (ii) more than 50% of the outstanding
shares of the respective Portfolio on the record date, whichever is less. In
tallying shareholder votes, abstentions and broker non-votes (i.e., proxies sent
in by brokers and other nominees which cannot be voted on a proposal because
instructions have not been received from the beneficial owners), if any, will be
counted for purposes of determining whether a quorum is present for purposes of
convening the Meeting. Abstentions will have the effect of votes "AGAINST" the
Proposal. If, by the time scheduled for the Meeting, a quorum of shareholders of
each Portfolio is not present or if a quorum of each Portfolio's shareholders is
present but sufficient votes in favor of the Proposal are not received, the
persons present in person or by proxy (or the persons named as proxies) may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies from shareholders of any Portfolio which has not received sufficient
votes. Any such adjournment will require the affirmative
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vote of a majority of the shares of the Portfolio present in person or
represented by proxy at the session of the Meeting to be adjourned. The persons
named as proxies will vote in favor of any such adjournment if they determine
that such adjournment and additional solicitation are reasonable and in the
interests of the respective Portfolio's shareholders.
If the accompanying form or forms of proxy are properly executed and
returned in time to be voted at the Meeting, the shares covered thereby will be
voted in accordance with the instructions marked thereon by the shareholder.
Executed proxies that are unmarked will be voted "FOR" the Proposal. Any proxy
may be revoked at any time prior to its exercise by providing written notice of
revocation to the appropriate Portfolio, by delivering a duly executed proxy
bearing a later date, or by attending the Meeting and voting in person.
All of the shares of each Portfolio are held in the nominee name of
Waterhouse Securities, Inc. ("Waterhouse Securities"), an affiliate of the
investment manager of the Fund, Waterhouse Asset Management, Inc. (the
"Investment Manager"), for the benefit of its customers. Waterhouse Securities
has advised the Fund that it will request instructions of its customers on how
to vote their shares on the Proposal. The New York Stock Exchange has indicated
to Waterhouse Securities that in the event Waterhouse Securities does not
receive voting instructions from its customers with respect to the Proposal,
Waterhouse Securities may vote in its discretion any shares with respect to
which instructions have not been received. Waterhouse Securities has advised the
Fund that it intends to vote any shares with respect to which instructions are
not received "FOR" the Proposal.
Solicitation of Proxies
The entire cost of this solicitation, including the cost of the Meeting
and the cost of printing, assembling and mailing of proxy materials will be
borne by Waterhouse Securities. Solicitation may be made by mail, telephone,
telegram or in person. As described above, management may also request
broker-dealer firms, as well as banks, custodians, nominees and fiduciaries to
obtain authorization for the execution of proxies, and may reimburse them for
expenses incurred by them in connection therewith. Waterhouse Securities may, at
its own expense, also retain a proxy solicitation firm to assist in the
solicitation of proxies. Proxies may be recorded pursuant to telephone or
electronically transmitted instructions obtained pursuant to procedures
reasonably designed to verify that such instructions have been authorized.
Voting Securities and Principal Holders Thereof
The only voting securities of each Portfolio are its common stock par
value $0.0001 per share. The Board of Directors of the Fund has fixed the close
of business on June 28, 1996 as the record date for the determination of
shareholders entitled to notice of and to vote at the Meeting. As of the record
date, the following number of shares with respect to each Portfolio were
outstanding:
<TABLE>
<CAPTION>
Number of Shares
Name of Portfolio Outstanding
- ----------------- ----------------
<S> <C>
Money Market Portfolio ............................. 1,200,587,161
U.S. Government Portfolio .......................... 321,783,373
Municipal Portfolio ................................ 214,534,834
</TABLE>
As of the record date, no shareholder was known to own beneficially 5%
or more of any Portfolio's shares. As of the same date, the Directors of the
Fund owned beneficially less than 1% of the shares of each Portfolio of the
Fund.
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APPROVAL OF NEW INVESTMENT MANAGEMENT AGREEMENT
Introduction
The Investment Manager serves as investment manager to all the
Portfolios of the Fund. The Investment Manager is a wholly-owned subsidiary of
Waterhouse National Bank, which is a wholly-owned subsidiary of Waterhouse
Investor Services, Inc. ("Waterhouse"). Waterhouse has entered into an Agreement
and Plan of Merger, dated April 9, 1996 (the "Merger Agreement") with The
Toronto-Dominion Bank, a Canadian chartered bank ("TD") and TD/Oak, Inc., a
Delaware corporation and wholly-owned subsidiary of TD ("TD/Oak"). The Merger
Agreement provides, among other things, for the merger (the "Merger") of
Waterhouse with and into TD/Oak. See "Information Concerning TD and the Merger"
below.
Consummation of the Merger will constitute an "assignment," as that
term is defined in the 1940 Act, of the current Investment Management Agreement
(the "Current Management Agreement") between the Investment Manager and the
Fund, on behalf of each Portfolio. As required by the 1940 Act, the Current
Management Agreement provides for its automatic termination upon assignment, as
that term is defined in the 1940 Act. In anticipation of the Merger, a new
Investment Management Agreement (the "New Management Agreement") between the
Investment Manager and the Fund, on behalf of each Portfolio, is being proposed
for approval by shareholders of each Portfolio. A copy of the New Management
Agreement is attached hereto as Exhibit A. The New Management Agreement is
identical to the Current Management Agreement.
Board of Directors' Recommendation
The Board of Directors of the Fund met on June 12, 1996 to consider the
Merger and its anticipated effects upon the Investment Manager and the
investment management and other services provided to the Fund by the Investment
Manager and its affiliates. The Board of Directors, including all of the
Directors who are not parties to the Current or New Management Agreements or
interested persons of any such party, voted to approve the New Management
Agreement and to recommend it to shareholders for their approval.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Directors' Considerations" below.
The Board of Directors of the Fund recommends that shareholders vote
FOR the approval of the New Management Agreement.
Current Management Agreement and New Management Agreement
The Current and New Management Agreements are identical. Both the
Current and New Management Agreements provide that the Investment Manager will
act as investment adviser for each Portfolio and will manage the investment and
reinvestment of the assets of each Portfolio in accordance with the investment
objective, policies and restrictions of such Portfolio and in accordance with
the requirements of the 1940 Act and other applicable law, subject to the
supervision of the Fund's Board of Directors. Without limiting the generality of
the foregoing, the Investment Manager will formulate guidelines and lists of
approved investments for each Portfolio, make decisions with respect to and
place orders for that Portfolio's purchases and sales of portfolio securities
and maintain records relating to such purchases and sales. The Investment
Manager is also required to render to the Board periodic and special reports as
the Board may reasonably request.
The compensation arrangements under the New Management Agreement are
the same as under the Current Management Agreement. For the services furnished
to each Portfolio, the Portfolio is obligated to pay the
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Investment Manager an annual investment management fee, accrued daily and
payable monthly, on a graduated basis equal to .35 to 1% of the first $1 billion
of average daily net assets of each such Portfolio, .34 of 1% of the next $1
billion, and .33 of 1% of average daily net assets of each Portfolio over $2
billion. The Investment Manager has previously agreed to waive a portion of its
fee payable by the Municipal Portfolio through October 31, 1997, so that the
actual fee payable annually by such Portfolio during such period will be equal
to .25 of 1% of its average daily net assets. In the event the Merger is
consummated and the New Management Agreement takes effect, the Investment
Manager has agreed to extend this waiver relating to the Municipal Portfolio
until the second anniversary of the closing of the Merger (i.e., approximately
August 30, 1998).
The Investment Manager is responsible for the payment of all expenses
incurred by it in performing its obligations under both the Current and New
Management Agreements, as well as for the payment of any salaries, fees and
expenses of Fund Directors who are "interested persons" of the Fund or Fund
officers who are employees, officers or directors of the Investment Manager. The
Investment Manager is not required to pay any other expenses of the Fund or
Portfolios, including (a) the fees and expenses of Directors who are not
"interested persons" of the Fund, 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 Fund or any pricing service,
including, but not limited to, fees and expenses relating to Fund accounting,
pricing of portfolio shares, and computation of net asset value; (c) the fees
and expenses of calculating yield and/or performance of the Portfolios; (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 Fund
is a member; (g) reimbursement of each Portfolio's share of the organizational
expenses of the Fund; (h) the fees and expenses involved in registering and
maintaining registration of the Fund and the Portfolios' shares with the
Securities and Exchange Commission, blue sky service providers, registering the
Fund as a broker or dealer and qualifying the shares of the Portfolios (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 Directors'
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 Portfolios'
transactions; (k) the cost of stock certificates representing shares of the
Portfolios, 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 Portfolios' business.
The Investment Manager has agreed to reimburse each Portfolio
consistent with the most restrictive applicable state limitations then in
effect. As of the date hereof, the most restrictive expense limitation is 2-1/2%
of the first $30 million, 2% of the next $70 million and 1-1/2% of average net
assets in excess of $100 million of a Portfolio for any fiscal year. When
calculating each Portfolio's expenses for purposes of this regulation, each
Portfolio may exclude interest, taxes, brokerage commissions and extraordinary
expenses, as well as a portion of its custodian fees attributable to investments
in foreign securities. In addition, in order to increase the yield to investors,
the Investment Manager (and its affiliates) may, in its (or their) sole
discretion voluntarily, from time to time, waive or reduce its (or their) fees
on assets of each of the Portfolios, which would have the effect of lowering
that Portfolio's overall expense ratio and increasing yield to investors during
the time such fees are waived or reduced, as the case may be.
Both the Current and New Management Agreements provide that the
Investment Manager will not be liable for any error of judgment or mistake of
law, or for any loss suffered by a Portfolio in connection with the matters to
which such Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the Investment Manager's part in the
performance of its obligations and duties, or by reason of its reckless dis-
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regard of its obligations and duties under the Agreement. The services of the
Investment Manager to the Portfolios under the Current Management Agreement are
not exclusive and it is free to render similar services to others.
The New Management Agreement will take effect as of the date of the
consummation of the Merger, which is currently expected to occur on or about
August 30, 1996. The New Management Agreement will be in effect for an initial
term ending on the same date as would the Current Management Agreement but for
the Merger (i.e., December 12, 1997), and may continue thereafter from year to
year as to each Portfolio if specifically approved at least annually by vote
of a "majority of the outstanding voting securities" of the Portfolio, as
defined in the 1940 Act, or by the Board of Directors, and, in either event,
the vote of a majority of the Directors who are not parties to the agreement
or interested persons of any such party, cast in person at a meeting called for
such purpose. The New Management Agreement, as with the Current Management
Agreement, may be terminated as to any Portfolio at any time upon 60 days
prior written notice, without penalty, by either party, or by a majority vote
of the outstanding shares of a Portfolio with respect to that Portfolio, and
will terminate automatically upon assignment.
The Investment Manager has acted as investment manager for each
Portfolio since inception. The Current Management Agreement is dated December
12, 1995. It was approved by the Directors of the Fund and initial shareholder
of each Portfolio on December 12, 1995.
Information Concerning TD and the Merger
The following information concerning TD has been provided to the Fund
by TD. The information concerning the Merger has been provided to the Fund by
the Investment Manager.
TD, a Canadian chartered bank subject to the provisions of the Bank Act
of Canada, was formed through the amalgamation on February 1, 1955 of The Bank
of Toronto (established 1855) and The Dominion Bank (established 1869). The
principal business of TD is to offer a wide range of financial services to
individuals, corporate and commercial enterprises, financial institutions and
governments throughout Canada. TD also offers a broad range of credit and
non-credit services to corporations, financial institutions and governments in
the United States and conducts treasury and wholesale corporate operations in
the world's major financial centers outside North America. As of December 31,
1995, TD was the fifth largest chartered bank in Canada and the sixteenth
largest in North America (in terms of total assets) with assets of more than
C$108 billion (approximately U.S.$79 billion) and shareholders' equity of
approximately C$6.2 billion (approximately U.S. $4.6 billion) as of that date.
TD operates one of the largest retail brokers in Canada, and management of TD
believes that it conducts the largest discount brokerage operation in Canada
based on number of accounts and number of trades. The address of TD's principal
executive offices is: P.O. Box 1, Toronto-Dominion Centre, King Street West and
Bay Street, Toronto, Ontario M5K 1A2, Canada and its telephone number is (416)
982-8222.
Under the Merger Agreement, at the effective time of the Merger (the
"Effective Time") Waterhouse will merge with and into TD/Oak. TD/Oak will be
the surviving corporation in the Merger (the "Surviving Corporation") and will
continue its corporate existence under Delaware law under the name "Waterhouse
Investor Services, Inc." At the Effective Time of the Merger, each issued and
outstanding share of Waterhouse's common stock, par value $.01 per share
("Waterhouse Common Stock") (other than shares held by TD, Waterhouse or their
respective subsidiaries, which, subject to certain exceptions, will be
cancelled, and shares held by persons who exercise dissenters' rights under
Delaware law ("Dissenting Shares")) will be converted into the following: (i)
for each such share of Waterhouse Common Stock with respect to which an
election to receive Common Shares, without par value, of TD ("TD Common Shares")
has been effectively made on or prior to 5:00 p.m. on the business day preceding
the date of the Special Meeting of Stockholders of Waterhouse currently expected
to occur on or about August 15, 1996 (the "Special Meeting"), and not revoked,
properly withdrawn or lost prior thereto (the "Electing Shares") the right to
receive that number of TD Common Shares with a market value equal to U.S.$38.00
(based
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on the average of the daily weighted average price of TD Common Shares on
the Toronto Stock Exchange (the "TSE") for the fifteen consecutive business days
ending at the close of business on the tenth business day prior to the closing
date of the Merger (the "Determination Date"), translated into U.S. dollars on a
daily basis based on the spot exchange rate as published in The Wall Street
Journal, Eastern Edition (the "Exchange Ratio"), provided that the Exchange
Ratio shall not be less than 1.81790 or greater than 2.45952, and (ii) for each
such share of Waterhouse Common Stock other than Electing Shares, Dissenting
Shares and shares of Waterhouse Common Stock to be cancelled pursuant to the
Merger Agreement ("Non-Electing Shares"), the right to receive U.S. $38.00 in
cash (the "Cash Price"); provided that (x) no more than 65% of the shares of
Waterhouse Common Stock outstanding immediately prior to the Effective Time
(excluding shares of Waterhouse Common Stock to be cancelled pursuant to the
Merger Agreement) will be converted into TD Common Shares (the "Maximum Stock
Election Number"), and (y) the maximum number of shares of Waterhouse Common
Stock that may be converted into the Cash Price may not exceed that number
equal to (i) 35% of the shares of Waterhouse Common Stock outstanding
immediately prior to the Effective Time (excluding any shares of Waterhouse
Common Stock to be cancelled pursuant to the Merger Agreement), less (ii) the
sum of (a) the number of Dissenting Shares and (b) the number of shares equal
to the number of record holders of Waterhouse Common Stock immediately prior
to the Effective Time (the "Maximum Cash Number"), with proration in the event
that elections by Waterhouse stockholders exceed either such percentage. In
addition, cash will be paid in lieu of the issuance of fractional TD Common
Shares. The aggregate purchase price for the transaction, including cash and
securities, is approximately U.S.$525 million.
Subject to the limitation described below, record holders of shares of
Waterhouse Common Stock will be entitled to make an unconditional election (an
"Election") on or prior to the business day next preceding the date of the
Special Meeting to receive TD Common Shares in exchange for their Waterhouse
Common Stock. If the aggregate number of Electing Shares exceed the Maximum
Stock Election Number, then the number of Electing Shares to be converted into
the right to receive TD Common Shares in the Merger will be reduced pro rata by
multiplying the number of Electing Shares covered by each Election by a
proration factor (the "TD Common Shares Proration Factor"), determined by
dividing the Maximum Stock Election Number by the total number of Electing
Shares. The number of Electing Shares covered by each Election which are
converted into the right to receive TD Common Shares will be that number which
results from multiplying the total number of such Electing Shares by the TD
Common Shares Proration Factor. Electing Shares which as a result of
proration are not converted into the right to receive TD Common Shares will be
converted into the right to receive the Cash Price.
If the aggregate number of Non-Electing Shares at the Effective Time
exceeds the Maximum Cash Number, then the number of Non-Electing Shares to be
converted into the right to receive the Cash Price in the Merger will be reduced
pro rata by multiplying the number of Non-Electing Shares by a proration factor
(the "Cash Proration Factor"), determined by dividing the Maximum Cash Number by
the total number of Non-Electing Shares. The number of a holder's Non-Electing
Shares to be converted into the right to receive the Cash Price will be that
number which results from multiplying the number of its Non-Electing Shares by
the Cash Proration Factor. Non-Electing Shares which as a result of proration
are not converted into the right to receive the Cash Price will be converted
into the right to receive TD Common Shares on the basis described above.
The obligations of TD and Waterhouse to consummate the Merger are
subject to various conditions, including obtaining the requisite approval of
Waterhouse stockholders; obtaining requisite regulatory approvals from the Board
of Governors of the Federal Reserve System, the Canadian Minister of Finance,
the Superintendent of Financial Institutions Canada, the banking authorities of
the State of New York, and certain other U.S. federal and state and Canadian
governmental authorities and industry self-regulatory organizations, in each
case without the imposition of certain burdensome conditions in connection with
obtaining such regulatory approvals; receipt of opinions of counsel at the
closing of the Merger in respect of certain U.S. federal income tax consequences
of the Merger; and approval for listing on the New York Stock Exchange and the
TSE, subject to official notice of issuance, of the TD Common Shares to be
issued pursuant to the Merger. In addition, the obligation
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of TD to consummate the Merger is also subject to not more than 7.5% of the
outstanding shares of Waterhouse Common Stock being Dissenting Shares and to
Lawrence M. Waterhouse, Jr., the Chairman and Chief Executive Officer of
Waterhouse, having entered into an employment agreement which provides for an
employment term ending (subject to earlier termination or resignation) six years
from the date thereof. The Merger Agreement permits any condition (other than a
condition required in order to comply with applicable law) to be waived by the
party benefitted thereby.
Information about the Investment Manager, its Affiliates and Distributor
The Investment Manager is a Delaware corporation and is a registered
investment adviser under the Investment Advisers Act of 1940. The Investment
Manager does not currently serve as an investment adviser to any investment
company other than the Fund.
In addition to serving as investment manager to the Fund, the
Investment Manager also serves as the Fund's administrator pursuant to an
Administration Agreement. The Administration Agreement provides for the payment
by each Portfolio to the Investment Manager of an administration fee at the
annual rate of .10 of 1% of the average daily net assets of such Portfolio. The
Board of Directors of the Fund, including the Directors who are not parties to
such agreement or interested persons of such parties, have approved the
continuation of the Administration Agreement following consummation of the
Merger.
The Investment Manager is a wholly-owned subsidiary of Waterhouse
National Bank, which is a wholly-owned subsidiary of Waterhouse, a publicly-held
bank holding company whose shares are listed on the Exchange. The offices of
Waterhouse are located at 100 Wall Street, 29th Floor, New York, New York 10005.
The offices of the Investment Manager and Waterhouse National Bank are located
at 50 Main Street, White Plains, New York 10606 and One North Lexington Avenue,
White Plains, New York 10601, respectively.
Waterhouse National Bank serves as the Fund's transfer agent and
dividend disbursing agent pursuant to a Transfer Agency and Dividend Disbursing
Agency Agreement and receives a fee from each Portfolio at the annual rate of
.20 of 1% of each Portfolio's average daily net assets. Waterhouse National Bank
has subcontracted certain transfer agency and dividend disbursing agency
services to Waterhouse Securities and National Investors Services Corp.
("NISC"), both affiliates of the Investment Manager, pursuant to a Sub-Transfer
Agency and Dividend Disbursing Agency Agreement. Waterhouse National Bank and
not the Fund compensates Waterhouse Securities and NISC for such services.
Waterhouse Securities serves as a shareholder servicing agent for each Portfolio
of the Fund pursuant to a Shareholder Services Agreement with the Fund. The fee
payable under the Fund's Shareholder Servicing Plan and pursuant to such
agreement is currently at the annual rate of .20 of 1% of average daily net
assets of the Money Market Portfolio, .17 of 1% of the average daily net assets
of the U.S. Government Portfolio and .11 of 1% of the average daily net assets
of the Municipal Portfolio.
The Fund's Board of Directors, including the Directors who are not
parties to such agreements or interested persons of such parties has approved
the continuation of the Transfer Agency and Dividend Disbursing Agency
Agreement, the Sub-Transfer Agency and Dividend Disbursing Agency Agreement, and
the Shareholder Services Agreement with Waterhouse Securities following
consummation of the Merger.
Waterhouse, through its principal subsidiary, Waterhouse Securities,
currently is one of the leading providers of nationwide discount brokerage and
related financial services in the United States. The Waterhouse National Bank
offers various low-cost cash management services and other financial and loan
products primarily to the customers of Waterhouse Securities.
7
<PAGE>
Listed below are the principal occupations for the principal executive
officers and directors of the Investment Manager. The address for each of the
following persons denoted with an asterisk ("*") is 100 Wall Street, New York,
New York 10005. The address for each of the following persons denoted with a
double asterisk ("**") is 50 Main Street, White Plains, New York 10606.
**Dennis C. Borecki, Director, President and Chief Operating Officer of
the Investment Manager.
**Kenneth C. Ebbitt, Chairman and Chief Executive Officer of the
Investment Manager.
**David Hartman, Senior Vice President and Chief Investment Officer of
the Investment Manager.
*Richard H. Neiman, Director, Executive Vice President, General Counsel
and Secretary of the Investment Manager. Mr. Neiman has also served as
Director, Executive Vice President, General Counsel and Secretary of Waterhouse
since July 1994. Mr. Neiman also serves in similar capacities for Waterhouse
Securities and Waterhouse National Bank.
*Frank J. Petrilli, Director of the Investment Manager. Mr. Petrilli
has also served as President, Chief Operating Officer and a Director of
Waterhouse since February 1995. Mr. Petrilli has served as a Director of
Waterhouse National Bank since March 1995.
*Kenneth I. Coco, Senior Vice President, Chief Financial Officer and
Treasurer of the Investment Manager. Mr. Coco has also served as Executive Vice
President--Administration of Waterhouse Securities since September 1979.
*Christine A. Waterhouse, Senior Vice President of the Investment
Manager.
*Lawrence M. Waterhouse, Jr., Director of the Investment Manager. Mr.
Waterhouse has served as Chairman of the Board and Chief Executive Officer of
Waterhouse since its inception in 1987. Mr. Waterhouse is the founder of
Waterhouse Securities and has served as Chief Executive Officer since its
inception in March 1979. Mr. Waterhouse has also served as Chairman of
Waterhouse National Bank since July 1994. Mr. Waterhouse controls over 25% of
the voting common stock of Waterhouse and therefore may be considered a control
person with respect to Waterhouse.
None of the Officers or Directors of the Fund are officers, employees,
directors or shareholders of the Investment Manager. However, George F.
Staudter, the Chairman of the Board of Directors of the Fund, serves as a
director of Waterhouse. Mr. Staudter was one of three independent directors of
Waterhouse who participated with Mr. Waterhouse in negotiating the terms and
conditions of the Merger. As of May 21, 1996, Mr. Staudter owned 8,744 shares
of Waterhouse and options to purchase an additional 8,100 shares and is expected
to receive director's fees from Waterhouse for his services on behalf of
Waterhouse. As of the same date, Anthony J. Pace, a Director of the Fund,
owned options to purchase 14,844 shares of Waterhouse. A.J. Pace & Co. Inc.,
an investment management firm of which Mr. Pace serves as President and Chief
Executive Officer, as financial adviser to Waterhouse, is expected to receive
a fee in connection with the Merger.
The distributor of the Fund is Funds Distributor, Inc. ("FDI"), One
Exchange Place, Tenth Floor, Boston, Massachusetts 02109, pursuant to an
agreement between the Fund and FDI.
8
<PAGE>
Board of Directors' Considerations
On April 10, 1996, the Board of Directors of the Fund was informed that
Waterhouse, TD and TD/Oak had signed the Merger Agreement, pursuant to which TD
would acquire Waterhouse through the merger of Waterhouse with and into TD/Oak.
The Board was subsequently provided with financial and other information
relating to TD. In addition, counsel to the Fund and the independent Directors
prepared and distributed a memorandum relating to the Board's fiduciary
obligations.
At a meeting on June 12, 1996, the Directors discussed the information
provided by TD and reviewed their fiduciary obligations. A senior executive of
TD, who was present by invitation, presented a review of matters, including TD's
history, strategy and general plans. A discussion ensued with respect to TD's
plans for the Investment Manager and the Fund. The Board was assured that TD is
committed to maintaining the level and quality of services currently being
provided to the Fund by the Investment Manager and its affiliates and that the
Merger will not result in any change in any Portfolio's investment objective or
policies. The Board was also advised that it is anticipated that management and
employees of the Investment Manager and its affiliates would remain unchanged
following the Merger.
In connection with the Board's approval of the New Management
Agreement, the Board took into account that the New Management Agreement,
including the terms relating to the services to be provided and the fees and
expenses payable by each Portfolio, is on the same terms as the Current
Management Agreement. The Board also considered that no changes are contemplated
to any Portfolio's investment objectives or policies. The Board also considered,
among other factors, the nature and quality of services provided by the
Investment Manager and its affiliates; investment performance of each Portfolio,
both of the Portfolio itself and relative to competitive investment companies;
and investment management fees and expense ratios of each Portfolio and
competitive investment companies. The Board also discussed the Merger and the
potential effects of a business combination of Waterhouse and TD. The Board
considered that TD is a large, well-established bank with substantial resources
that is committed to providing the Fund with top quality services.
The Board also reviewed and re-approved all of the other agreements
between the Fund and the Investment Manager or its affiliates on identical terms
to the respective agreements currently in effect. Such agreements include the
Administration Agreement between the Fund and the Investment Manager, the
Shareholder Services Agreement between the Fund and Waterhouse Securities, the
Transfer Agency and Dividend Disbursing Agency Agreement between the Fund and
Waterhouse National Bank, and the Sub-Transfer Agency and Dividend Disbursing
Agency Agreement among Waterhouse National Bank, Waterhouse Securities and NISC.
Certain of such agreements may be deemed to terminate upon consummation of the
Merger, and the Board believed it was appropriate to review all of the
agreements involving the Investment Manager and its affiliates at the June 12,
1996 Board Meeting.
In connection with their consideration of the New Management Agreement
and the other agreements described above, the Board took into account the
provisions of Section 15(f) of the 1940 Act. That section provides that an
investment adviser to a registered investment company, and the affiliates of
such adviser (such as Waterhouse and its shareholders), may receive any amount
or benefit in connection with a sale of any interest in such investment adviser
which results in an assignment of an investment advisory contract if the
following two conditions are satisfied: (1) for a period of three years after
such assignment, at least 75% of the board of directors of the investment
company cannot be "interested persons" (as defined in the 1940 Act) of the new
investment adviser or its predecessor; and (2) no "unfair burden" (as defined in
the 1940 Act) may be imposed on the investment company as a result of the
assignment or any express or implied terms, conditions or understandings
applicable thereto.
9
<PAGE>
With respect to the first condition of Section 15(f) relating to Board
composition, the Fund's Board presently consists of five Directors, two of whom,
George F. Staudter and Anthony J. Pace, are "interested persons" of the
Investment Manager. Mr. Pace has indicated that he will resign from the Fund's
Board of Directors, effective upon consummation of the Merger. The number of
Directors constituting the entire Board will be reduced from five to four as of
such date, with the result that the composition of the Board would meet the
requirements of Section 15(f).
With respect to the second condition of Section 15(f), the term "unfair
burden" is defined to include any arrangement during the two-year period after
the transaction whereby the investment 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 shareholders (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 bona fide ordinary compensation
as principal underwriter for such investment company). In connection with
discussion at the June 12, 1996 meeting, the Directors asked management of the
Investment Manager whether the Investment Manager would continue the current
waiver of management fees relating to the Municipal Portfolio beyond October 31,
1997. The Investment Manager subsequently voluntarily agreed to extend the
waiver in question until the second anniversary of the consummation of the
Merger. In addition, the Board, after considering the provisions of Section
15(f), subsequently determined to continue to limit payments under the Fund's
Shareholder Servicing Plan beyond October 31, 1997 until the second anniversary
of the consummation of the Merger to .20 of 1% of average daily net assets in
the case of the Money Market Portfolio, .17 of 1% of average daily net assets in
the case of the U.S. Government Portfolio, and .11 of 1% of average daily net
assets in the case of the Municipal Portfolio. In the absence of such
limitation, the fee payable by each Portfolio under the Shareholder Servicing
Plan would be at the annual rate of up to .25 of 1% of average daily net assets.
Both Waterhouse and TD have indicated that they know of no agreement,
understanding or arrangement that could result in an unfair burden being imposed
on the Fund.
As a result of their deliberations, at the meeting on June 12, 1996,
the Board of Directors of the Fund, including all of the Directors of the Fund
who are not interested persons of the Fund or the Investment Manager, voted to
approve the New Management Agreement and to recommend it to the shareholders of
each Portfolio for their approval. The Board of Directors recommends that
shareholders vote FOR the New Management Agreement.
10
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no other business to be brought before
the meeting.
NEXT MEETING OF SHAREHOLDERS
The Fund is not required and does not intend to hold annual or other
periodic meetings of shareholders except as required by the 1940 Act. The next
meeting of the shareholders of each Portfolio will be held at such time as the
Board of Directors may determine or at such time as may be legally required. Any
shareholder proposal intended to be presented at such meeting must be received
by a Portfolio at the Fund's office a reasonable time prior to the meeting, as
determined by the Board of Directors, to be included in the Portfolio's proxy
statement and form of proxy relating to such meeting, and must satisfy all other
legal requirements.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD OR CARDS AND RETURN EACH
SUCH CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
Elizabeth A. Bachman
Assistant Secretary
Dated: July 12, 1996
11
<PAGE>
Exhibit A
<PAGE>
Investment Management Agreement
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this day of , l996, by and between
WATERHOUSE INVESTORS CASH MANAGEMENT FUND, INC., a Maryland corporation,
whose address is 100 Wall Street, New York, New York 10005 (the "Fund") and
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 Fund is an open-end, diversified management investment
company, registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), with distinct series of shares each having its own investment
objectives, policies and restrictions, including the Fund's Money Market
Portfolio, U.S. Government Portfolio and Municipal Portfolio (each, a
"Portfolio"), and including such other Portfolios as may hereafter be offered by
the Fund, all as more fully described in the Fund's Registration Statement on
Form N-lA 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 Fund and shares of the Fund's capital stock,
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 Fund and the Investment Manager desire to enter into an
agreement to provide for comprehensive management and investment advisory
services to each Portfolio 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 Fund hereby employs the
Investment Manager to act as the investment adviser for each of the Portfolios
and to manage the investment and reinvestment of the assets of each Portfolio in
accordance with the investment objectives, policies and restrictions of each
such Portfolio 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 Directors of the Fund for the period and upon the terms herein set forth. The
investment of funds shall also be subject to all applicable restrictions of the
Articles of Incorporation and By-laws of the Fund as may from time to time be
in force. Without limiting the generality of the foregoing, the Investment
Manager shall:
(i) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or a Portfolio specifically,
and whether concerning the individual issuers whose securities are included in a
Portfolio or the activities in which such issuers engage, or with respect to
securities which the Investment Manager considers desirable for inclusion in a
Portfolio;
(ii) determine which issuers and securities shall be represented in
a Portfolio and regularly report thereon to the Fund's Board of Directors;
A-1
<PAGE>
(iii) formulate and implement continuing programs for the purchases
and sales of securities of such issuers and lists of approved investments for
each Portfolio and regularly report thereon to the Fund's Board of Directors;
(iv) make decisions with respect to and take, on behalf of each
Portfolio, all actions which appear necessary to carry into effect such purchase
and sale programs and supervisory functions aforesaid, including the placing of
orders for the purchase and sale of securities for such Portfolio.
(b) The Investment Manager accepts such employment and agrees during
such period to render such services and to assume the obligations herein set
forth for the compensation herein provided. The Investment Manager shall give
each Portfolio 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 Fund in any way or otherwise be deemed an agent of the
Fund. It is understood and agreed that the Investment Manager, by separate
agreements with the Fund, may also serve the Fund 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 Fund, establishes procedures for
personal investing and restricts certain transactions.
(c) The Investment Manager shall keep any books and records relevant
to the provisions of its investment advisory services to each Portfolio and
shall specifically maintain all books and records with respect to each
Portfolio's securities and portfolio transactions and shall render to the Fund's
Board of Directors such periodic and special reports as the Board may
reasonably request. The Investment Manager agrees that all records which
it maintains for the Fund are the property of the Fund and it will surrender
promptly to the Fund any such records upon the Fund'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.
(d) The Fund 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").
(e) The Fund shall at all times keep the Investment Manager fully
informed with regard to the securities owned by each Portfolio, its funds
available or to become available for investment, and generally as to the
condition of its affairs. The Fund 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.
(f) 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 any Portfolio pursuant thereto, shall at all
times be subject to any directives of the Board of Directors.
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<PAGE>
2. Expenses. The Investment Manager shall pay all of its expenses
arising from the performance of its obligations under Section 1 of this
Agreement and shall pay any salaries, fees and expenses of Fund 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 Fund or the Portfolios, including (a) the fees and expenses of
directors who are not "interested persons" of the Fund, 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
Fund or any pricing service, including but not limited to fees and expenses
relating to Fund accounting, pricing of portfolio shares, and computation of net
asset value; (c) the fees and expense of calculating yield and/or performance of
the Portfolios; (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 Fund is a member; (g) reimbursement of each
Portfolio's share of the organization expenses of the Fund; (h) the fees and
expenses involved in registering and maintaining registration of the Fund and
the Portfolios' shares with the Commission, blue sky service providers,
registering the Fund as a broker or dealer and qualifying the shares of the
Portfolios (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 Directors' 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 Portfolios' transactions; (k) the cost of
stock certificates representing shares of the Portfolios, 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
Portfolios' business.
3. Compensation. (a) For the services described in Section 1 hereof,
the Fund, on behalf of each Portfolio, 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 such Portfolio set forth on Schedule A
hereto. The fee as computed in accordance with Schedule A shall be based upon
the net assets of each Portfolio as to which this Agreement is then effective.
The value of the net assets for each Portfolio 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 any Portfolio
shall be deemed to be the net assets of such Portfolio 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 a Portfolio 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 such
Portfolio imposed by the securities laws or regulations thereunder of any state
or jurisdiction in which the Portfolio'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 Portfolio 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 Fund and attributable to the Portfolio. Such reduction,
if any, shall be computed and accrued daily, shall be settled on a
A-3
<PAGE>
monthly basis and shall be based upon the expense limitation applicable to the
Portfolio 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 each Portfolio, 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 Fund's Board of Directors may direct from
time to time. Without limiting the generality of the foregoing, the Investment
Manager will implement the Fund'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 each Portfolio.
On occasions when the Investment Manager deems the purchase or sale
of securities to be in the best interest of one or more Portfolios 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, which has been approved by the Fund's Board of Directors.
5. Interested Persons. No director, officer or employee of the Fund
shall receive from the Fund any salary or other compensation as such director,
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 directors or officers of
the Fund 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 any Portfolio 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 "Waterhouse". The Fund
acknowledges that it adopted its name through the permission of the Investment
Manager. The Investment Manager hereby consents to the non-exclusive use by the
Fund of the name "Waterhouse" only so long as the Investment Manager serves as
the investment manager to one or more Portfolios. The Fund 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 Fund's use or misuse of the
name "Waterhouse" or out of any breach of or failure to comply with this
paragraph.
A-4
<PAGE>
Neither the Fund nor any Portfolio shall distribute or circulate any
prospectus, proxy statements, sales literature, promotional material or other
printed matter required to be filed with the Securities and Exchange Commission
under Section 24(b) of the 1940 Act which contains any reference to the
Investment Manager or using the name "Waterhouse" 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 all Portfolios under this Agreement or similar contractual
arrangement, the Fund:
(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 "Waterhouse" or any name, mark or logotype
derived from it or similar to it or indicating that the Fund or any Portfolio 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 with respect to each Portfolio for a period
from the date hereof through December 12, 1997, 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, on behalf of any or all of the
Portfolios, by the Fund, by the Board or, with respect to any Portfolio, by
"vote of a majority of the outstanding voting securities" (as defined in the
1940 Act) of that Portfolio, 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 Fund 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
Fund, to: President, Waterhouse Investors Cash Management Fund, Inc., 100 Wall
Street, New York, New York 10005; or (b) if to the Investment Manager, to:
President, 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. Separate Portfolios. This Agreement shall be construed to be
made by the Fund as a separate agreement with respect to each Portfolio, and
under no circumstances shall the rights, obligations or remedies with respect to
a particular Portfolio be deemed to constitute a right, obligation or remedy
applicable to any other Portfolio.
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<PAGE>
12. 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.
IN WITNESS WHEREOF, the Fund and the Investment Manager have caused
this Agreement to be executed as of the day and year first above written.
WATERHOUSE INVESTORS CASH
MANAGEMENT FUND. INC.
ATTEST: By:
WATERHOUSE ASSET MANAGEMENT, INC.
ATTEST: By:
A-6
<PAGE>
SCHEDULE A
Fees
For the services provided by the Investment Manager under the foregoing
agreement to each of the following Portfolios, the Investment Manager will
receive the following fees:
In the case of each of the Money Market Portfolio, the U.S. Government Portfolio
and the Municipal Portfolio an annual investment management fee, payable
monthly, on a graduated basis equal to .35 of 1% of the first $1 billion of
average daily net assets of each Portfolio, .34 of 1% of the next $1 billion,
and .33 of 1% of average daily net assets of each Portfolio over $2 billion.
<PAGE>
NEW PROXY CARD
WATERHOUSE INVESTORS CASH MANAGMENT FUND, INC.
Special Meeting of Shareholders of the Money Market Portfolio
to be held on 8/28/96 at 10:00 a.m. EDT for Holders as of 6/28/96
To our clients:
We have been requested to forward to you the enclosed proxy material relative
to securities held by us in your account but not registered in your name. Such
securities can be voted only by us as the holder of record. We shall be
pleased to vote your securities in accordance with your wishes, if you will
execute the form and return it to us promptly in the business reply envelope,
also enclosed. It is understood that, if you sign without otherwise marking
the form, the securities will be voted as recommended by the Board of Directors
on all matters to be considered at the meeting.
We urge you to send in your instructions so that we may vote your securities in
accordance with your wishes. However, the Rules of the New York Stock Exchange
provide that if instructions are not received from you by the tenth day before
the meeting, the proxy may be given at discretion by the holder of record of
the securities on the tenth day, if proxy material was mailed at least 15 days
prior to the meeting date; on the fifteenth day if proxy material was mailed 25
days or more prior to the meeting date. If you are unable to communicate with
us by such date, we will, nevertheless follow your instructions, even if our
discretionary vote has already been given, provided your instructions are
received prior to the meeting date.
Directors:
Shareholders are not being requested to vote upon the election of directors at
this meeting
Proposal:
To approve the Investment Management Agreement between Waterhouse Investors
Cash Management Fund, Inc. on behalf of the Money Market Portfolio and the
Investment Manager, the terms of which are identical to the existing investment
management agreement between Waterhouse Investors Cash Management Fund, Inc.
and the Investment Manager, effective upon the closing of the merger of the
indirect parent of the Investment Manager, as described in the statement.
Note:
Such other business as may properly come before the meeting or any adjournment
thereof.
Please indicate your proposal by firmly placing an "x" in the appropriate box
with blue or black ink only.
FOR / / AGAINST / / ABSTAIN / /
Place "x" here if you plan to attend and vote your shares at the meeting / /
Please sign exactly as your name appears hereon.
- --------------------------------------------------------------------------------
SIGNATURE DATE SIGNATURE (IF HELD JOINTLY)
<PAGE>
NEW PROXY CARD
WATERHOUSE INVESTORS CASH MANAGMENT FUND, INC.
Special Meeting of Shareholders of the U.S. Government Portfolio
to be held on 8/28/96 at 10:00 a.m. EDT for Holders as of 6/28/96
To our clients:
We have been requested to forward to you the enclosed proxy material relative
to securities held by us in your account but not registered in your name. Such
securities can be voted only by us as the holder of record. We shall be
pleased to vote your securities in accordance with your wishes, if you will
execute the form and return it to us promptly in the business reply envelope,
also enclosed. It is understood that, if you sign without otherwise marking
the form, the securities will be voted as recommended by the Board of Directors
on all matters to be considered at the meeting.
We urge you to send in your instructions so that we may vote your securities in
accordance with your wishes. However, the Rules of the New York Stock Exchange
provide that if instructions are not received from you by the tenth day before
the meeting, the proxy may be given at discretion by the holder of record of
the securities on the tenth day, if proxy material was mailed at least 15 days
prior to the meeting date; on the fifteenth day if proxy material was mailed 25
days or more prior to the meeting date. If you are unable to communicate with
us by such date, we will, nevertheless follow your instructions, even if our
discretionary vote has already been given, provided your instructions are
received prior to the meeting date.
Directors:
Shareholders are not being requested to vote upon the election of directors at
this meeting
Proposal:
To approve the Investment Management Agreement between Waterhouse Investors
Cash Management Fund, Inc. on behalf of the U.S. Government Portfolio and the
Investment Manager, the terms of which are identical to the existing investment
management agreement between Waterhouse Investors Cash Management Fund, Inc.
and the Investment Manager, effective upon the closing of the merger of the
indirect parent of the Investment Manager, as described in the statement.
Note:
Such other business as may properly come before the meeting or any adjournment
thereof.
Please indicate your proposal by firmly placing an "x" in the appropriate box
with blue or black ink only.
FOR / / AGAINST / / ABSTAIN / /
Place "x" here if you plan to attend and vote your shares at the meeting / /
Please sign exactly as your name appears hereon.
- --------------------------------------------------------------------------------
SIGNATURE DATE SIGNATURE (IF HELD JOINTLY)
<PAGE>
NEW PROXY CARD
WATERHOUSE INVESTORS CASH MANAGMENT FUND, INC.
Special Meeting of Shareholders of the Municipal Portfolio
to be held on 8/28/96 at 10:00 a.m. EDT for Holders as of 6/28/96
To our clients:
We have been requested to forward to you the enclosed proxy material relative
to securities held by us in your account but not registered in your name. Such
securities can be voted only by us as the holder of record. We shall be
pleased to vote your securities in accordance with your wishes, if you will
execute the form and return it to us promptly in the business reply envelope,
also enclosed. It is understood that, if you sign without otherwise marking
the form, the securities will be voted as recommended by the Board of Directors
on all matters to be considered at the meeting.
We urge you to send in your instructions so that we may vote your securities in
accordance with your wishes. However, the Rules of the New York Stock Exchange
provide that if instructions are not received from you by the tenth day before
the meeting, the proxy may be given at discretion by the holder of record of
the securities on the tenth day, if proxy material was mailed at least 15 days
prior to the meeting date; on the fifteenth day if proxy material was mailed 25
days or more prior to the meeting date. If you are unable to communicate with
us by such date, we will, nevertheless follow your instructions, even if our
discretionary vote has already been given, provided your instructions are
received prior to the meeting date.
Directors:
Shareholders are not being requested to vote upon the election of directors at
this meeting
Proposal:
To approve the Investment Management Agreement between Waterhouse Investors
Cash Management Fund, Inc. on behalf of the Municipal Portfolio and the
Investment Manager, the terms of which are identical to the existing investment
management agreement between Waterhouse Investors Cash Management Fund,
Inc. and the Investment Manager, effective upon the closing of the merger of the
indirect parent of the Investment Manager, as described in the statement.
Note:
Such other business as may properly come before the meeting or any adjournment
thereof.
Please indicate your proposal by firmly placing an "x" in the appropriate box
with blue or black ink only.
FOR / / AGAINST / / ABSTAIN / /
Place "x" here if you plan to attend and vote your shares at the meeting / /
Please sign exactly as your name appears hereon.
- --------------------------------------------------------------------------------
SIGNATURE DATE SIGNATURE (IF HELD JOINTLY)
