EXHIBIT (5)
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 15th day of October, 1996, by and between
WATERHOUSE INVESTORS CASH MANAGEMENT FUND, INC., a Maryland corporation, whose
address is 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Fund") and WATERHOUSE
ASSET MANAGEMENT, INC., a Delaware corporation, whose address is 00 Xxxx Xxxxxx,
Xxxxx Xxxxxx, Xxx Xxxx 00000 (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-1A under the 1940 Act and the Securities Act of 1933, as amended (the
"Registration Statement"), as filed with the Securities and Exchange Commission
(the "Commission") relating to the 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:
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(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;
(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 provision 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
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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.
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 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 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
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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' xxxx-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 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
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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, and that the Fund is subject to the provisions of that
certain Sublicense Agreement between the Investment Manager and the Fund
dated December 12, 1995. The Investment Manager hereby consents to the non-
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exclusive use by the Fund of the marks "Waterhouse", "Waterhouse Investors Cash
Management Fund" and the Waterhouse logo only so long as the Investment Manager
(or its affiliate or successor) 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",
"Waterhouse Investors Cash Management Fund" or the Waterhouse logo or out of any
breach of or failure to comply with this paragraph.
Neither the Fund nor any Portfolio shall distribute or
circulate any prospectus, proxy statement, sales literature, promotional
material or other printed matter required to be filed with the Securities and
Exchange Commission under Section 24(b) of the 1940 Act which contains any
reference to the Investment Manager or using the name "Waterhouse", "Waterhouse
Investors Cash Management Fund" or the Waterhouse logo without the approval of
the Investment Manager and shall submit all such materials requiring approval of
the Investment Manager in draft form, allowing sufficient time for review by the
Investment Manager and its counsel prior to any deadline for printing. If the
Investment Manager or any successor to its business shall cease to furnish
services to 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", "Waterhouse Investors Cash
Management Fund" and the Waterhouse logo or any name, xxxx or logotype derived
from or similar to such marks 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 until
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 0000 Xxx) 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).
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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., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; or (b) if to the Investment
Manager, to: President, Waterhouse Asset Management, Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, 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.
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.
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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.
By: /s/ Xxxxxx X. Xxxxx
Vice President and Assistant Secretary
WITNESS:
/s/ Xxxxxxx X. Xxxxxx
WATERHOUSE ASSET MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Senior Vice President
WITNESS:
/s/ Xxxxxxx X. Xxxxxx
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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.
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