<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
SAMARNAN INVESTMENT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / $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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(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):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / 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:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
SAMARNAN
INVESTMENT CORPORATION
PO Box 651/Cleburne, Texas 76033-0651
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 1999
--------------
The Annual Meeting of Shareholders of Samarnan Investment Corporation, a
Texas corporation (the "Company"), will be held on Friday, April 16, 1999, at
10:30 a.m., in the Bellevue Room I of The Fort Worth Club, 306 West Seventh
Street, Fort Worth, Texas, for the following purposes:
PROPOSAL (1) To approve an Amendment to the Investment Advisory Agreement,
dated as of April 1, 1991, pursuant to which Voyageur Asset
Management LLC ("Voyageur") would act as the Company's investment
advisor only for debt securities.
PROPOSAL (2) To approve an Investment Advisory Agreement, dated as of April 1,
1999, between the Company and Westwood Management Corp.
("Westwood") pursuant to which Westwood would act as the
Company's investment advisor only for equity securities.
NOTE: THE APPROVAL OF PROPOSAL 1 IS CONTINGENT UPON THE
APPROVAL OF PROPOSAL 2 AND THE APPROVAL OF PROPOSAL 2 IS
CONTINGENT UPON THE APPROVAL OF PROPOSAL 1 AND NEITHER PROPOSAL 1
OR 2 WILL BE APPROVED UNLESS BOTH PROPOSALS ARE APPROVED.
PROPOSAL (3) To elect seven (7) directors to serve until the next annual
meeting of shareholders and until their successors are elected
and qualified.
PROPOSAL (4) To ratify or reject the selection by the Board of Directors of
Cheshier & Fuller, L.L.P. as the independent certified public
accountants of the Company for the current fiscal year.
(5) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 12, 1999,
shall be entitled to notice of, and to vote at, the meeting or any adjournment
or adjournments thereof.
A Proxy Statement and a Proxy solicited by the Board of Directors are
enclosed herewith. If you do not expect to be present at the meeting, please
sign, date and return the Proxy promptly in the enclosed envelope to which no
postage need be affixed if mailed in the United States. If you attend the
meeting, you may, if you wish, withdraw your Proxy and vote in person.
Prompt response by our shareholders will reduce the time and expense of
solicitation.
BY ORDER OF THE BOARD OF DIRECTORS
GEORGE S. WALLS, JR.
PRESIDENT
CLEBURNE, TEXAS
MARCH 29, 1999
<PAGE>
SAMARNAN
INVESTMENT CORPORATION
PO Box 651/Cleburne, Texas 76033-0651
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 1999
--------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Samarnan Investment Corporation,
a Texas corporation (the "Company"), for use at the annual meeting of
shareholders of the Company to be held on April 16, 1999, and any adjournment
thereof, for the purposes set forth in the accompanying notice of meeting. It is
anticipated that this Proxy Statement and the accompanying Proxy will first be
mailed to shareholders on or about March 29, 1999.
ANNUAL REPORT
The Company will furnish, without charge, a copy of its Annual Report for
1998 and a copy of its most recent Semi-Annual Report succeeding such Annual
Report, if any, to any shareholder upon request. A shareholder may request such
Annual Report and Semi-Annual Report, if any, by filling-in the shareholder's
name and mailing address on the enclosed self-addressed, postage paid card and
mailing it to the Company.
COST OF SOLICITATION
The cost of solicitation of proxies, including the cost of preparing and
mailing this Proxy Statement, will be paid by the Company. Proxies may be
solicited without extra compensation by officers and employees of the Company by
telephone, telegram or personally. Arrangements may also be made with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and the Company may reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.
REVOCATION OF PROXIES
Any Proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the meeting and gives oral notice to the Secretary of
the Company of his or her election to vote in person, without compliance with
any other formalities. In addition, any proxy given pursuant to this
solicitation may be revoked prior to the meeting by delivering an instrument
revoking it or a duly executed proxy bearing a later date to the Secretary of
the Company.
RECORD DATE AND VOTING RIGHTS
The record date of shareholders entitled to vote was taken as of the close
of business on March 12, 1999. On that date the Company had outstanding and
entitled to vote, 1,201,768 shares of Common Stock, par value $1.00 per share,
with each share entitled to one vote on each matter presented for action at the
meeting. All votes cast in person or by proxy will be counted. Cumulative voting
for directors is prohibited.
If the proxy is properly executed, completed and returned by the
shareholder and is not revoked, it will be voted at the meeting in the manner
specified therein. If no specification is made, the proxy will be voted in favor
of each of the proposals.
<PAGE>
QUORUM AND REQUIRED VOTE
The holders of a majority of the number of shares of the Company's
outstanding Common Stock entitled to vote at the meeting, whether present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the meeting. Abstentions and broker non-votes will be counted for
the purpose of determining whether a quorum is present at the meeting.
The affirmative vote of the holders of a majority of the Company's
outstanding Common Stock is required to approve Proposal 1, the amendment (the
"Amendment") to the Investment Advisory Agreement, dated as of April 1, 1991
(the "Voyageur Agreement"), between the Company and Voyageur Asset Management
LLC ("Voyageur") and Proposal 2, the Investment Advisory Agreement, dated as of
April 1, 1999 (the "Westwood Agreement"), between the Company and Westwood
Management Corp. ("Westwood"). It should be noted that the approval of both
Proposal 1 and Proposal 2 is contingent upon the approval of the other and that
neither Proposal will be approved unless both Proposals are approved.
In all other matters except the election of directors, the affirmative vote
of the holders of a majority of the shares present in person or represented by
proxy at the meeting shall be the act of the shareholders. Abstentions will be
treated as votes against a proposal and broker non-votes will have no effect on
the vote. Directors will be elected by a plurality of the votes cast by holders
of shares present in person or represented by proxy at the meeting.
George S. Walls, Jr., President and a director of the Company, and his
sisters, Martha Walls Murdoch and Nancy Walls Devaney, both of whom are
directors of the Company, together beneficially owned or had the right to vote
as of March 12, 1999, an aggregate of 1,088,586 shares (90.58%) of Common Stock.
(For additional information with respect to ownership of the Company's stock by
members of the Walls family and by directors and officers of the Company, see
"Principal Shareholders" and "Election of Directors-Stock Ownership of Directors
and Officers"). The above named members of the Walls family have advised the
Company that it is their present intention and the intention of the other record
owners of such shares to vote all of their shares (i) for Proposal 1, the
approval of the Amendment; (ii) for Proposal 2, the approval the Westwood
Agreement; (iii) for Proposal 3, the election as directors of the nominees named
under "Election of Directors" herein; and (iv) for Proposal 4, the ratification
of the selection of Cheshier & Fuller, L.L.P. as the independent certified
public accountants for the Company. Accordingly, in such event, the approval of
Proposals 1 and 2, Proposal 3, the election of such nominees as directors, and
Proposal 4, the ratification of the selection of such independent certified
public accountants, is assured.
PRINCIPAL SHAREHOLDERS
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned as of March 12, 1999 by those shareholders known to the
Company to own more than 5% of the Company's outstanding Common Stock. Except as
otherwise indicated, (i) each beneficial owner has sole voting and investment
power with respect to the shares set forth opposite such shareholder's name and
(ii) none of the shares shown are known to be shares with respect to which the
listed beneficial owner has the right to acquire beneficial ownership.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OWNED PERCENT OF CLASS
- ---------------- ------------ ----------------
<S> <C> <C>
The George S. Walls Trust B 134,250(a) 11.17%
Cleburne, Texas
Nancy Walls Devaney 391,701(b) 32.59%
Cleburne, Texas
George S. Walls, Jr. 336,552(c) 28.01%
Cleburne, Texas
Martha Walls Murdoch 226,083(d) 18.81%
Cleburne, Texas
</TABLE>
-2-
<PAGE>
- --------------------
(a) These shares are held in a trust created under the last will and testament
of George S. Walls, deceased, for the benefit of the grandchildren of the
late Mr. George S. Walls and his wife, the late Mrs. George S. Walls. Under
the terms of the trust, the trustees may, at their sole discretion, make
distributions from time to time of the income and assets of the trust to
such grandchildren and, upon the death of Nancy Walls Devaney or George S.
Walls, Jr., whichever is the last to die, are required to distribute all of
the assets and income of the trust to such grandchildren. Nancy Walls
Devaney, Martha Walls Murdoch and George S. Walls, Jr. are the Co-Trustees
of such trust.
(b) Includes (i) 5,500 shares owned by the husband of Nancy Walls Devaney; (ii)
25,275 shares held by Mr. and Mrs. Devaney as custodians for their
children; (iii) 75,272 shares held by three trusts for the benefit of the
children of Nancy Walls Devaney who is the sole trustee of each of such
trusts; and (iv) 64,071 shares held by three trusts for the benefit of the
children of Nancy Walls Devaney, of which Nancy Walls Devaney, her husband
Pete Devaney, and George S. Walls, Jr., are the trustees of each of such
trusts; however, Mrs. Devaney disclaims beneficial ownership of all the
shares referred to above in this note (b). Does not include 134,250 shares
held by The George S. Walls Trust B, described in note (a) above, of which
Nancy Walls Devaney is a Co-Trustee, since Mrs. Devaney disclaims
beneficial ownership of such shares.
(c) Includes (i) 5,225 shares owned by Mr. Walls' wife; (ii) 20,850 shares held
by Mr. Walls as custodian for his children; and (iii) 89,895 shares held by
four trusts for the benefit of Mr. Walls' children of which he is the sole
trustee of each such trusts; however, Mr. Walls disclaims beneficial
ownership of all the shares referred to above in this note (c). Does not
include 134,250 shares held by The George S. Walls Trust B, described in
note (a) above, of which George S. Walls, Jr. is a Co-Trustee, since Mr.
Walls disclaims beneficial ownership of such shares.
(d) Includes, 4,500 shares owned by the husband of Martha Walls Murdoch. Does
not include 134,250 shares held by the George S. Walls Trust B, described
in note (a) above, of which Martha Walls Murdoch is a Co-Trustee, since
Mrs. Murdoch disclaims beneficial ownership of such shares.
INVESTMENT ADVISORY AGREEMENTS
INTRODUCTION
The Company has operated as a closed-end, diversified management company
since its registration in April, 1978 under the Investment Company Act of 1940,
as amended (the "1940 Act"). From its inception as a registered investment
company under the 1940 Act, the Company's primary investment objective has been
to receive current income and the preservation of its capital, with little
emphasis on capital appreciation.
To accomplish this and to maximize after-tax income to itself and its
shareholders, the Company having qualified as a "regulated investment company"
under the Internal Revenue Code in each of its fiscal years beginning with the
year ended December 31, 1979, has invested exclusively in debt securities the
interest on which is exempt from Federal income tax ("tax-exempt debt
securities").
At the annual meeting of the Company's shareholders on April 28, 1998, the
shareholders approved a change in the Company's investment objective for the
purpose of broadening such objective to afford the Company more flexibility in
selecting its portfolio securities. The change in investment objective permits
the Company to invest up to 49% of its portfolio in equity securities and debt
obligations, the dividends and interest on which would be taxable for Federal
income tax purposes.
In order to facilitate the change in investment objective, the Board of
Directors has approved a plan whereby a portion of the Company's total
portfolio, to consist of common and preferred stocks, American Depository
Receipts and other types of equity securities, will be designated as an equity
portfolio (the "Equity Portfolio") and the remainder of the portfolio,
consisting of both tax-exempt and taxable debt securities, will be designated as
a debt portfolio (the "Debt Portfolio").
-3-
<PAGE>
After interviewing several investment advisory firms, the Board of
Directors selected Westwood Management Corp. ("Westwood") to be its investment
adviser for all equity securities and to manage the Equity Portfolio.
Voyageur Asset Management LLC ("Voyageur"), or its predecessor Voyageur
Fund Managers, has been the Company's sole investment adviser since April 1,
1991, and will continue to be its investment adviser for all debt securities,
both tax-exempt and taxable, and will manage the Debt Portfolio.
To implement this, it is necessary for the Company to amend its existing
Investment Advisory Agreement with Voyageur and to enter into a separate
investment advisory agreement with Westwood.
The Board of Directors has unanimously approved both an amendment (the
"Amendment") to the Investment Advisory Agreement, dated as of April 1, 1991,
between the Company and Voyageur (the "Voyageur Agreement"), and an Investment
Advisory Agreement, dated as of April 1, 1999, between the Company and Westwood
(the "Westwood Agreement"), subject to approval by the vote of a majority of the
Company's outstanding Common Stock.
At December 31, 1998, the Company's total portfolio valued at market was
$18,683,529. Of this amount, the Board expects to designate over a period of
time approximately $7,400,000 (39.6% of its total portfolio) as its Equity
Portfolio and the remainder of $11,283,529 (60.4% of the total portfolio) as its
Debt Portfolio. This division of the portfolio between the Equity and Debt
Portfolios may be changed from time to time by the Board of Directors, provided
that at least 50% of the value of the Company's total assets at the end of each
of its fiscal quarters must consist of tax-exempt debt securities held in the
Debt Portfolio.
If Proposals 1 and 2 are approved by the shareholders, the Company's annual
operating expenses will be increased. The following table shows the Company's
annual expenses for its fiscal year ended December 31, 1998 and its pro forma
annual expenses assuming the approval of such Proposals.
ANNUAL OPERATING EXPENSES
(as a percentage of net assets at December 31, 1998)
<TABLE>
<CAPTION>
1998 PRO FORMA (1)
-------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
Advisory Fees $ 48,000 (0.26%) $ 85,966 (0.46%)(2)
Other Expenses:
Legal and Professional 36,593 (0.20%) 36,600 (0.20%)
Audit Fees 7,932 (0.04%) 8,500 (0.05%)
Director Fees 9,900 (0.05%) 8,400 (0.04%)
Custodian Fees 6,000 (0.03%) 6,000 (0.03%)
Administrative 12,977 (0.07%) 5,000 (0.03%)
Miscellaneous 1,679 (0.01%) 2,000 (0.01%)
-------------- --------------
Total Other Expenses 75,081 (0.40%) 66,500 (0.36%)
---------------- ----------------
Total Expenses $123,081 (0.66%) $152,446 (0.82%)
</TABLE>
- --------------------
(1) Other Expenses are based on estimated amounts for the current year.
(2) Assumes allocation of $7,400,000 of portfolio assets to Equity Portfolio
and $11,283,529 of portfolio assets to Debt Portfolio.
PROPOSAL 1
THE AMENDMENT TO THE VOYAGEUR AGREEMENT
The Voyageur Agreement was approved by the Company's shareholders at their
annual meeting on April 25, 1991 and thereafter it has been approved annually
for one year periods by the unanimous vote of the Company's Board of Directors
which included those directors who were not "interested persons" as defined in
the 1940 Act. On January 26, 1999, the Board unanimously approved the
continuation of the Voyageur Agreement for one year.
The purpose of the Amendment is basically twofold (i) clarify and limit
Voyageur's investment advisory services under the Voyageur Agreement to those
relating solely to debt securities, and (ii) change the amount of
-4-
<PAGE>
advisory fee payable by the Company under the Voyageur Agreement.
The Voyageur Agreement presently provides that Voyageur, as the Company's
sole investment adviser, will render investment management services and advice
to the Company with respect to all of its portfolio. The Amendment limits
Voyageur's investment advisory services and responsibilities under the Voyageur
Agreement to those of debt securities and the management of the Debt Portfolio.
As a result of the Amendment, Voyageur will not render any investment advice to
the Company with respect to equity securities nor will it be responsible for the
management of the Equity Portfolio.
The Company now pays Voyageur an advisory fee of $12,000 per quarter
($48,000 per annum) under the Voyageur Agreement. The fee is payable within five
days after the end of each calendar quarter. In the event the Voyageur Agreement
is terminated on any day other than the last day of a quarter, the quarterly fee
is proportionally reduced to the number of days Voyageur acted as investment
adviser during such quarter.
At December 31, 1998, the Company had net assets of $18,683,529. The total
advisory fees paid by the Company to Voyageur during 1998 represented
approximately 0.26% of the Company's net assets on that date.
The Amendment changes the fee paid to Voyageur under the Voyageur Agreement
from the fixed amount described above to a fee based upon the value of the
assets in the Debt Portfolio as of the last day of each fiscal quarter of the
Company on which the New York Stock Exchange (the "NYSE") is open for trading
(the "Appraisal Date"). The fee is 0.27% of the appraised value of the assets in
the Debt Portfolio, which is payable on a quarterly basis in arrears with a
minimum fee of $3,000 per annum. If Voyageur serves for less than the whole of
any fiscal quarter, the fee is to be pro-rated for the portion of such quarter
that Voyageur served as investment adviser.
The Amendment provides that the quarterly fee is to be paid within ten days
after the Company's receipt of Voyageur's appraisal of the Debt Portfolio and
its statement of the fee due thereunder.
The Amendment further provides that in making any appraisal, securities
listed on any national securities exchange will be valued at the last quoted
sales price, regular way, on the Appraisal Date on the principal exchange on
which the security is listed; securities listed in the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or traded in the
over-the-counter market will be valued at the closing price or the highest
reported bid price on the Appraisal Date, whichever is available; and
securities not listed on any exchange or in NASDAQ or not traded in the
over-the-counter market, as well as trades that have not been settled on the
Appraisal Date, shall be valued as of the Appraisal Date at fair value as
determined in good faith by Voyageur in accordance with policies approved by
the Board of Directors.
Based upon the Board's proposed designation of $11,283,529 of portfolio
assets to the Debt Portfolio, the total advisory fees payable to Voyageur under
the Amendment on an annual basis would be $30,466, which would be equal to
approximately 0.16% of the Company's net assets at December 31, 1998.
Except as amended and modified by the Amendment, the Voyageur Agreement
will remain in full force and effect and the Amendment will become effective on
the date it is approved by the Company's shareholders.
The foregoing summary of the Amendment is qualified in its entirety by
reference to the Amendment itself, a copy of which is attached hereto as
Exhibit A, which shareholders are urged to read.
INFORMATION REGARDING VOYAGEUR
The following information has been furnished to the Company by Voyageur for
inclusion in this Proxy Statement.
Voyageur is a majority owned subsidiary of Dougherty Financial Group,
L.L.C. ("DFG"). Thirty three percent (33%) of Voyageur is owned in equal parts
by Frank C. Tonnemaker, James C. King and Louis V. Nanne, senior executives of
Voyageur and 67% by DFG. DFG is owned by Michael E. Dougherty 37%, and 37% is
owned in equal parts by James O. Pohlad, Robert C. Pohlad and William M. Pohlad.
The remaining 26% of DFG is owned by three
-5-
<PAGE>
of its employees. Voyageur's address is 90 South Seventh Street, Suite 4300,
Minneapolis, Minnesota 55402.
Steven P. Eldredge is the Company's portfolio manager. Mr. Eldredge is a
Senior Fixed Income Portfolio Manager of Voyageur where he has been employed
since 1995. Prior to joining Voyageur, Mr. Eldredge was a portfolio manager for
ABT Mutual Funds from 1989 through 1995. Mr. Eldredge has over 20 years
experience in portfolio management.
PROPOSAL 2
THE WESTWOOD AGREEMENT
The following summary of the Westwood Agreement is qualified in its
entirety by reference to the copy thereof attached hereto as Exhibit B, which
shareholders are urged to read.
The Westwood Agreement provides that Westwood will render investment advice
to the Company with respect to equity securities and will manage the Equity
Portfolio. Westwood will not render any investment advice with respect to debt
securities nor will it be responsible for the management of the Debt Portfolio.
The Westwood Agreement provides for an advisory fee based upon the
appraised value of the assets in the Equity Portfolio on the Appraisal Date
(which is the same date provided for in the Amendment to the Voyageur Agreement
discussed above). The fee is 0.75% of the appraised value of the assets in the
Equity Portfolio which is payable quarterly in arrears. If Westwood serves for
less than the whole of any quarter, the fee is to be pro rated for the portion
of such quarter that Westwood served as investment adviser.
The quarterly fee is to be paid to Westwood within ten days after the
Company's receipt of Westwood's appraisal of the Equity Portfolio and its
statement of the fee due thereunder.
The criteria for Westwood's appraisal of the assets of the Equity Portfolio
is the same as that for Voyageur's appraisal of the Debt Portfolio described
above.
Based upon the Board's proposed designation of approximately $7,400,000 of
portfolio assets to the Equity Portfolio, the total advisory fees payable to
Westwood on an annual basis would be $55,500, which would be equal to
approximately 0.29% of the Company's net assets at December 31, 1998.
Under the Westwood Agreement, Westwood has agreed to furnish the Company
investment advice and statistical services regarding equity securities,
including placing orders for the purchase and sale of equity securities for the
Company's account. The Company will continue to pay all of its expenses,
including legal and accounting fees, fees and expenses of the Company's transfer
agent, dividend disbursing agent and custodian, director fees, and the expenses
of directors and shareholders meetings. The Company will also pay any brokers'
commissions, transfer taxes or other charges directly relating to the purchase
or sale of equity securities by Westwood for the Company's account.
Westwood will pay all of its own administrative costs and expenses
necessary and incident to its providing the investment advisory services to the
Company under the Westwood Agreement.
The Westwood Agreement will become effective on the date it is approved by
the vote of a majority of the holders of the Company's outstanding Common Stock,
and will continue in effect for one year therefrom, and thereafter for
successive one year periods, provided that each yearly continuation of the
Westwood Agreement is specifically approved, at least annually by (i) the Board
of Directors of the Company or by the vote of a majority of the outstanding
voting securities of the Company, and (ii) by the vote of a majority of the
directors who are not parties to the Westwood Agreement or "interested persons"
(as defined in the 1940 Act) of Westwood or of the Company cast in person at a
meeting duly called for the purpose of voting on such approval.
The Westwood Agreement provides that Westwood will not be liable to the
Company or third parties for acts or omissions not caused by Westwood's willful
misfeasance, bad faith or gross negligence or by the acts or omissions of any
bank, trust company, broker, or other person with whom or into whose possession
any monies or securities and
-6-
<PAGE>
investments may be deposited under the Westwood Agreement, nor will it be
liable for any action taken or omitted to be taken by Westwood on the advice
of its counsel, provided such counsel is reasonably acceptable to the Company.
The Westwood Agreement further provides that Westwood will indemnify the
Company against actions, litigation or other proceedings of any kind or nature
and against any loss, liability, judgment, cost or penalty imposed as a result
of such actions, litigation or proceedings arising out of any willful
misfeasance, bad faith or gross negligence on the part of Westwood in the
performance of its duties under the Westwood Agreement.
Under the Westwood Agreement, Westwood is free to render services to other
clients similar to those it renders to the Company and it may give advice and
take action with respect to those other clients that may differ from the advice
given or the timing it may recommend to the Company. Furthermore, Westwood will
not have any obligation to purchase or sell for the Company's account any
security that it or its principals, affiliates or employees may purchase for
themselves or other clients.
The Westwood Agreement may be terminated at any time without penalty by the
Board of Directors of the Company or by the vote of a majority of its
outstanding voting securities, or by Westwood, on not more than 60 days' written
notice to the other party. The Westwood Agreement will automatically terminate
in the event of its "assignment" as that term is defined in the 1940 Act.
INFORMATION REGARDING WESTWOOD
The following information has been furnished to the Company by Westwood for
inclusion in this Proxy Statement.
Westwood is a registered investment adviser under the Investment Advisers
Act of 1940. Westwood's address is 300 Crescent Court, Suite 1300, Dallas, Texas
75201.
Westwood is a New York corporation which is a wholly owned subsidiary of
Southwest Securities Group, Inc., a Delaware corporation ("Southwest
Securities"). Southwest Securities is a publicly owned holding company with
subsidiaries engaged in providing securities clearing, securities brokerage,
investment banking and investment advisory services. To the knowledge of
Southwest Securities no person owns 10% or more of its voting securities. The
address of Southwest Securities is 1201 Elm Street, Suite 3500, Dallas, Texas
75270.
As of December 31, 1998, Westwood managed $2.3 billion of assets in
separate accounts for corporate plan sponsors, charitable institutions,
educational endowments and public funds.
The name, address, and principal occupation(s) of each principal executive
officer and each director of Westwood is set forth below.
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION(S)
- ---------------- -----------------------
<S> <C>
Susan M. Byrne President, Chief Executive Officer,
300 Crescent Court, Suite 1300 Chief Investment Officer, and Director of
Dallas, Texas 75201 Westwood
Patricia R. Fraze Executive Vice President, Portfolio Manager,
885 Third Avenue, Suite 3010 and Director of Westwood
New York, New York 10021
Lynda J. Calkin Senior Vice President and Portfolio Manager
300 Crescent Court, Suite 1300 of Westwood
Dallas, Texas 75201
-7-
<PAGE>
Jacqueline L. Finley Controller, Secretary and Assistant Treasurer
300 Crescent Court, Suite 1300 of Westwood
Dallas, Texas 75201
Don Buchholz Chairman of the Board of Southwest
1201 Elm Street, Suite 3500 Securities and Director of Westwood
Dallas, Texas 75270
Raymond E. Wooldridge Vice Chairman of the Board of Southwest
1201 Elm Street, Suite 3500 Securities and Director of Westwood
Dallas, Texas 75270
David Glatstein President and Chief Executive Officer of
1201 Elm Street, Suite 3500 Southwest Securities and Director of
Dallas, Texas 75270 Westwood
</TABLE>
Westwood is the sub-advisor for the Gabelli Westwood Equity Fund, the
Liberty All-Star Equity Fund, the Liberty All-Star Equity Fund, Variable Series,
and the Liberty All-Star Growth and Income Fund. All of which are registered
investment companies with similar investment objectives as those intended for
the Company's equity portfolio. Westwood receives fees as a sub-advisor equal to
such percentage of each investment company's net assets as set forth below:
<TABLE>
<CAPTION>
Net Assets Annual Sub-advisor fee
Fund as of 3/3/99 as a % of net assets (1)
- ---- ------------ ------------------------
<S> <C> <C>
Gabelli Westwood Equity Fund $189 million (2)
Liberty All-Star Equity Fund $262 million .40% on the first $80 million
Liberty All-Star Equity Fund, Variable Series $ 10 million .30%
Liberty All-Star Growth and Income Fund $ .6 million .30%
</TABLE>
- --------------------
(1) Annual fees as sub-advisor to these funds do not include compensation for
custodian fees, asset allocation guidance and other ancillary services.
(2) Annual sub-advisor fee is 35% of the net revenue of the advisor.
Susan M. Byrne, President of Westwood will be the Company's portfolio
manager for equity securities. Ms. Byrne, a founder of Westwood in 1983, has
over 15 years experience in equity portfolio management.
PORTFOLIO TRANSACTIONS
Under the Westwood Agreement, Westwood will make decisions with respect to
placing orders for the purchase and sale of the Company's portfolio of equity
securities. The primary consideration in making these decisions is obtaining the
most favorable prices for the Company and efficiency in executing orders.
Westwood has advised the Company that in effecting transactions on the Company's
behalf, Westwood will seek the most favorable price consistent with best
execution.
Westwood receives from brokers in-house research, certain third party
research (generally of economic data), and certain information providing
historic and current market data. Westwood has informal arrangements with
certain brokers who provide "soft dollar" credits for the purchase of research
services. Commissions paid to these brokers are competitive. Accounts receiving
benefit from the research share the cost. A budget for this research is
determined annually and reviewed periodically. Supplemental to selecting a
broker on the best execution basis, this budget may be considered.
Each potential soft dollar arrangement is analyzed by Westwood to determine
whether the use of client brokerage is appropriate and falls under the "safe
harbor" rules of Section 28(e) of the Securities Exchange Act of 1934.
-8-
<PAGE>
Westwood will not effect any brokerage transaction in the Company's
portfolio of equity securities with any broker-dealer affiliated directly or
indirectly with Westwood.
Pursuant to the conditions set forth in the rules of the Securities and
Exchange Commission, the Company may purchase securities from an underwriting
syndicate of which an affiliated broker-dealer of Westwood is a member (but not
directly from such affiliated broker-dealer itself). Such conditions relate to
the price and amount of the securities purchased, the commission or spread paid
and quality of the issuer. The rules further require that such purchases take
place in accordance with the procedures adopted and reviewed periodically by the
Board of Directors of the Company, particularly those directors who are not
"interested persons" of the Company.
Westwood may purchase securities for clients in block trades. This practice
allows the client to participate in volume transactions which may produce better
executions. The same price is allocated to each client.
TRANSACTIONS WITH AFFILIATE OF WESTWOOD
Westwood Trust (formally Trust Company of Texas), a subsidiary of Southwest
Securities and an affiliate of Westwood, has been the custodian for the
Company's securities portfolio since 1992 for an annual fee of $6,000. Westwood
Trust will continue to serve as such custodian for the same annual fee.
Since 1992, Westwood Trust has served as corporate trustee, investment
manager and custodian for the Walls Family Partnership of which George S. Walls,
Jr., Martha Walls Murdoch and Nancy Walls Devaney are the Co-Managing Partners.
This partnership is comprised of the Co-Managing Partners, the children of Mr.
Walls and Mrs. Devaney and certain trusts for the benefit of their children. For
such services, Westwood Trust received during the five year period ended
December 31, 1998 annual fees ranging from .53% to .83% of the net asset value
at year end of the Walls Family Partnership.
In addition, Westwood Trust has since 1992 served as corporate trustee,
investment manager and custodian for The Fleta Ricks Walls Charitable Lead Trust
of which George S. Walls, Jr, Martha Walls Murdoch and Nancy Walls Devaney are
Co-Trustees. For its services, Westwood Trust received during the five year
period ended December 31, 1998 annual fees ranging from .81% to .97% of the net
assets at year end of such Trust.
PROPOSAL 3
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors constituting
the Board of Directors shall be not less than three or more than nine, with the
exact number to be determined from time to time by the Board of Directors. The
Board of Directors has adopted a resolution fixing the number of directors at
seven for the current year.
Each of the following persons is a nominee for director for a term of
office expiring at the annual meeting of shareholders in the year 2000, or when
his or her successor is elected and qualified.
The information set forth below as to the principal occupations or
employment of each of the nominees is for at least five years, with the
exception of Mr. Yater. Since retiring in February 1996, Mr. Yater has managed
his personal investments and those of his family. Prior to his retirement, he
had for more than five years been a partner of Y&Y Partnership, Fort Worth,
Texas (real estate investments) and an officer, director and stockholder of
Stockyard Hotel, Inc., Fort Worth, Texas (hotel operations).
<TABLE>
<CAPTION>
NAME AND PRINCIPAL DIRECTOR
OCCUPATION OR EMPLOYMENT AGE SINCE
------------------------ --- --------
<S> <C> <C>
*Nancy Walls Devaney 51 1978
--Family Manager, Cleburne, Texas
Joseph A. Monteleone 56 1992
--Certified Public Accountant, Fort Worth, Texas
-9-
<PAGE>
*Martha Walls Murdoch 55 1978
--Family Manager, Cleburne, Texas
Steve Sikes 46 1993
--President and Chief Executive Officer
AMSCO Steel Company, Inc.,
Fort Worth Texas (steel fabricating)
Roland Walden 69 1989
--Retired.
Prior thereto, President and Chief Executive Officer
Brazos Bank, National Association, Alvarado, Texas
*George S. Walls, Jr. 59 1978
--President and Chief Executive Officer of the Company
Tolbert F. Yater, III 59 1998
--Personal Investments, Cleburne, Texas
</TABLE>
- --------------------
* George S. Walls, Jr., and his sisters, Nancy Walls Devaney and Martha
Walls Murdoch, may be deemed to be "interested persons" as that term
is defined in Section 2(a)(19) of the Investment Company Act of 1940
and "parents" as that term is defined in the rules and regulations of
the Securities and Exchange Commission by virtue of their ownership of
Common Stock and their family relationship.
Should any of the above named nominees become unable or unwilling to accept
nomination or election, any proxy granted pursuant to this solicitation will be
voted for the election in his or her stead for such other person as management
may recommend. The management has no reason to believe that any of the nominees
will be unable or unwilling to serve if elected. To the knowledge of management,
the nominees intend to serve the entire term for which election is sought.
No officer, director or nominee to the Board of Directors of the Company is
a director, general partner, officer, employee or security holder of Voyageur
Asset Management LLC, the Company's investment advisor, or an affiliate thereof,
or of Westwood Management Corp., a proposed investment adviser to the Company,
or any affiliate thereof.
Since the Board of Directors does not have standing audit, nominating or
compensation committees, the functions that would normally be performed by those
committees are performed by the entire Board of Directors. The Board met five
times during 1998. Each member of the Board attended all of the meetings of the
Board during 1998, except Mr. Sikes who attended 60% of the meetings. Mr. Yater
who was not a director until his election at the annual meeting of shareholders
held on April 28, 1998 has attended all meetings of the Board since his
election.
STOCK OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned by each present director, each nominee for director,
and all directors and officers as a group as of March 12, 1999. Except as
otherwise indicated, (i) each beneficial owner has sole voting and investment
power with respect to the shares set forth opposite such owner's name and (ii)
none of the shares shown are known to be shares with respect to which the listed
beneficial owner had the right to acquire beneficial ownership.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------------ -------------------- --------
<S> <C> <C>
Nancy Walls Devaney 391,701 shares(a)(b) 32.59%
Martha Walls Murdoch 226,083 shares(b)(c) 18.81%
Joseph A. Monteleone None --
Steve Sikes None --
Roland W. Walden 4,400 shares 0.37%
George S. Walls, Jr. 336,552 shares(b)(d) 28.01%
Tolbert F. Yater, III None
All officers and directors
as a group (8 persons) 1,092,986 shares(a)(c)(d)(e) 90.95%
</TABLE>
-10-
<PAGE>
- --------------------
(a) Includes (i) 5,500 shares owned by the husband of Nancy Walls Devaney; (ii)
25,275 shares held by Mr. and Mrs. Devaney as custodians for their
children; (iii) 75,272 shares held by three trusts for the benefit of the
children of Nancy Walls Devaney who is the sole trustee of each such trust;
and (iv) 64,071 shares held by three trusts for the benefit of the children
of Nancy Walls Devaney, of which Nancy Walls Devaney, her husband Pete
Devaney and George S. Walls, Jr., are the trustees of each of such trusts;
however, Mrs. Devaney disclaims beneficial ownership of all the shares
referred to above in this note (a).
(b) Does not include 134,250 shares held by The George S. Walls Trust B
described in note (a) under the caption "Principal Shareholders" above, of
which Nancy Walls Devaney, Martha Walls Murdoch and George S. Walls, Jr.
are Co-Trustees, since Nancy Walls Devaney, Martha Walls Murdoch and George
S. Walls, Jr. disclaim beneficial ownership of such shares.
(c) Includes, 4,500 shares owned by the husband of Martha Walls Murdoch.
(d) Includes (i) 5,225 shares owned by Mr. Walls' wife; (ii) 20,850 shares held
by Mr. Walls as custodian for his children; and (iii) 89,895 shares held by
four trusts for the benefit of Mr. Walls' children of which he is the sole
trustee of each of such trusts; however, Mr. Walls disclaims beneficial
ownership of all the shares referred to above in this note (d).
(e) Includes 134,250 shares (11.17%) held by The George S. Walls Trust B of
which Nancy Walls Devaney, Martha Walls Murdoch and George S. Walls, Jr.
are Co-Trustees, although each of such trustees disclaims beneficial
ownership of such shares.
REMUNERATION
George S. Walls, Jr., President and Chief Executive Officer, and Jerry D.
Wheatley, Secretary and Treasurer, are presently the only officers of the
Company. The Company has no employees. No officer or other employee received any
remuneration from the Company during the year ended December 31, 1998 in his
capacity as an officer or employee; however, the accounting firm of Wheatley &
Cody, P.C., of which Mr. Wheatley is a stockholder received fees from the
Company of $ 6,100 during 1998.
The Company does not have any stock option, bonus, profit sharing or other
compensation plans, contracts, or arrangements or any pension or retirement
plans, contracts or arrangements in which any director, nominee for election as
a director, or officer of the Company may participate.
The Company pays $300 to its directors for each meeting of the Board of
Directors they attend.
The following table sets forth the aggregate compensation paid by the
Company to each of its directors during the year ended December 31, 1998.
<TABLE>
<CAPTION>
AGGREGATE
NAME OF PERSON AND CAPACITY COMPENSATION
IN WHICH REMUNERATION IS RECEIVED FROM THE COMPANY(1)
--------------------------------- -------------------
<S> <C>
*Nancy Walls Devaney - Director $1,500.00
*Martha Walls Murdoch - Director $1,500.00
Joseph A. Monteleone - Director $1,500.00
Steve Sikes - Director $ 900.00
Roland W. Walden - Director $1,500.00
*George S. Walls, Jr. - Director $1,500.00
Tolbert F. Yater, III - Director $1,200.00
</TABLE>
- --------------------
(1) Does not include $6,100 paid to Wheatley & Cody, P.C. of which Jerry D.
Wheatley, Secretary and Treasurer of the Company, is a stockholder.
* George S. Walls, Jr. and his sisters, Nancy Walls Devaney and Martha Walls
Murdoch, may be deemed to be "interested persons" as that term is defined
in Section 2(a)(19) of the Investment Company Act of 1940.
-11-
<PAGE>
PROPOSAL 4
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
A majority of the entire Board of Directors, including a majority of those
members of the Board of Directors who are not "interested persons", as defined
in the Investment Act of 1940, have selected Cheshier & Fuller, L.L.P. as the
Company's independent certified public accountants for the fiscal year ending
December 31, 1999. Cheshier & Fuller, L.L.P. has acted as the Company's
independent certified public accountants since January 1, 1992 and its selection
as the Company's independent certified public accountants for the fiscal year
ended December 31, 1998, was ratified by the shareholders on April 28, 1998.
If the shareholders do not ratify the selection of Cheshier & Fuller,
L.L.P., the selection of another independent auditor will be considered by the
Board of Directors. A representative of Cheshier & Fuller, L.L.P. will be
present at the meeting, will be given the opportunity to make a statement if he
or she desires to do so and will be available to answer appropriate questions
from shareholders.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
The date by which shareholder proposals must be received by the Company for
possible inclusion in the proxy statement and form of proxy relating to the year
2000 annual meeting is December 1, 1999.
MANAGEMENT'S RECOMMENDATIONS
The Board of Directors of the Company has unanimously recommended the
approval of Proposals 1 and 2, and has nominated and recommended to the
shareholders the election of the seven nominees as directors (Proposal 3), and
the ratification of Cheshier & Fuller, L.L.P. as the Company's independent
certified public accountants (Proposal 4).
MISCELLANEOUS
Management of the Company knows of no matter, other than those described
herein, that will be presented for action by the shareholders at the meeting,
but it is intended that the proxies will be exercised upon any other matters and
proposals that may legally come before the meeting, or any adjournment thereof,
in accordance with the discretion of the persons named therein.
Please date, sign and return the Proxy at your earliest convenience in the
enclosed envelope. No postage is required for mailing in the United States. A
prompt return of your Proxy will be appreciated as it will save the expense of
further solicitation.
BY ORDER OF THE BOARD OF DIRECTORS
GEORGE S. WALLS, JR.
PRESIDENT
CLEBURNE, TEXAS
MARCH 29, 1999
-12-
<PAGE>
EXHIBIT A
AMENDMENT TO INVESTMENT ADVISORY AGREEMENT
THIS AMENDMENT (the "Amendment") by and between Samarnan Investment Corporation,
a Texas corporation ("the Fund"), and Voyageur Asset Management LLC, a Minnesota
limited liability corporation ("Fund Managers ), the successor to Voyageur Fund
Managers, a Minnesota general partnership, in a transaction that was not an
"assignment" as that term is defined in the Investment Company Act of 1940, as
amended, whereby the Fund and the Fund Managers do hereby agree that certain
Investment Advisory Agreement, dated as of April 1, 1991 (the "Agreement"), by
and between the Fund and Voyageur Fund Managers be amended as follows:
(1) The first four paragraphs of Section 1 of the Agreement are hereby
amended as follows:
The Fund hereby engages Fund Managers, and Fund Managers hereby agrees
to act, as investment adviser for the Fund as hereinafter provided. Fund
Managers agrees, during the term of this Agreement, continuously to review
and monitor the Fund's total portfolio of cash and investment securities
and, from time to time as Fund Managers in its discretion deems appropriate
and in the Fund's best interests, to make investment recommendations to the
Fund's management with regard to investments in debt securities (including,
but not limited to, recommendations of debt securities that the Fund should
purchase or sell and recommendations regarding the portion of the Fund's
total portfolio that should be invested in securities other than debt
securities or remain uninvested; provided that in making such
recommendations Fund Managers shall at all times be aware of the Fund's
investment policy that provides at least 50% of the value of the Fund's
total assets at the end of each of its fiscal quarters must consist of debt
obligations the interest on which is exempt from Federal income tax under
Section 103 of the Internal Revenue Code, as amended). That portion of the
Fund's total portfolio that consists exclusively of debt securities is
hereinafter called the "Debt Portfolio"; however, notwithstanding anything
to the contrary herein contained, the term "Debt Portfolio" shall not
include any of the following assets of the Fund: cash, demand bank
deposits, bank deposits bearing interest, any other indebtedness which
matures in ninety (90) days or less from the date of purchase or
acquisition by the Fund, or accrued interest on any of the foregoing.
In conducting its review of the Fund's Debt Portfolio and in making
its investment recommendations to the Fund under this Agreement, Fund
Managers shall at all times be guided by the applicable provisions of the
Articles of Incorporation, the Bylaws, the Registration Statement, as
amended, as filed with the Securities and Exchange Commission, and by the
investment objectives and
<PAGE>
Page 2
policies of the Fund as set forth in the Registration Statement, as
amended, and as interpreted from time to time by the Board of Directors
of the Fund. The Fund undertakes and agrees to provide Fund Managers
with current copies of each such documents and to promptly notify Fund
Managers, in writing, in advance of any changes to such documents.
Subject to the authorization by the Fund's management as
hereinafter provided, Fund Managers shall place orders for the purchase and
sale of debt securities for the Fund's account directly with securities
brokers and dealers selected by Fund Managers, and Fund Managers shall
direct the Fund's custodian to pay for any such debt securities purchased
by Fund Managers for the Fund pursuant to this Agreement, and to deliver
such securities that Fund Managers may sell for the Fund's account, in each
case only against receipt of countervalue and to persons other than Fund
Managers. Until Fund Managers otherwise is notified in writing by the Fund,
authorization by the Fund for Fund Managers to purchase or sell debt
securities for the Fund's account may be by either the Chairman of the
Board or the President of the Fund. A written certificate of the signatures
of such Fund officers shall be provided Fund Managers and may be relied
upon by Fund Managers until a replacement certificate is received by Fund
Managers from the Fund. Such certificate may also authorize Fund Managers
to act upon telephonic instructions received by Fund Managers from persons
named in such certificate. Fund Managers shall not be liable to any person
if it acts pursuant to telephonic or written instructions reasonably
believed by Fund Managers to have been received from an authorized person
of the Fund (as named in the most recent certificate received by Fund
Managers from the Fund).
Fund Managers shall report to the Board of Directors regularly at
such times and in such detail as the Board may from time to time reasonably
determine to be appropriate, in order to permit the Board to determine the
adherence of Fund Managers to the investment policies of the Fund.
Additionally, Fund Managers agrees to furnish the Fund's Board of Directors
with such additional reports and other data as the Board of Directors shall
reasonably request including, but not limited to, industry surveys, news of
recent developments, statistical data, and such other information as may
keep the Board properly informed on developments relating to the Fund's
Debt Portfolio.
(2) Section 2 of the Agreement is hereby deleted in its entirety and there
is hereby substituted therefor the following:
The Fund shall pay to Fund Managers, as full compensation for the
services rendered by Fund Managers under this Agreement, a fee based on the
value of the assets in the Debt Portfolio, appraised as described below.
Such fee shall be 0.27% and shall be paid on a quarterly basis in arrears.
The minimum fee shall be
<PAGE>
Page 3
$3,000 per annum. For the purpose of calculating such fee, the value of
the assets in the Debt Portfolio shall be determined as of each
Appraisal Date. If Fund Managers serves for less than the whole of any
fiscal quarter, such fee shall be calculated and shall be payable on a
pro rata basis for the portion of such quarter for which Fund Managers
had served as investment adviser hereunder. The fees due hereunder shall
be paid by the Fund directly to Fund Managers within ten (10) days after
the Fund's receipt of the appraisal described below and Fund Manager's
statement of the fee due thereunder. Fund Managers shall not be
responsible and shall be reimbursed by the Fund for any and all charges
for brokers' commissions, transfer taxes, and other charges incurred
directly related to the purchase or sale of debt securities by Fund
Managers for the Fund's account pursuant to the provisions hereof.
Fund Managers shall provide the Fund with an appraisal of the
Debt Portfolio, summarizing all of its assets, including accrued interest,
as of the last day of each fiscal quarter of the Fund on which the New York
Stock Exchange is open for trading (herein called the "Appraisal Date").
Each security listed on any national securities exchange shall be valued at
the last quoted sales price, regular way, on the Appraisal Date on the
principal exchange on which such security is traded. Each security listed
in the National Association of Securities Dealers Automated Quotation
System or traded in the over-the-counter market shall be valued at the
closing price or the highest reported bid price on the Appraisal Date,
whichever is available. Securities not listed on any national securities
exchange or not listed in the National Association of Securities Dealers
Automated Quotation System or not traded in the over-the-counter market, as
well as trades that have not been settled on the Appraisal Date, shall be
valued on the Appraisal Date at fair value as determined in good faith by
Fund Managers in accordance with policies approved by the Fund's Board of
Directors.
(3) Except as modified and amended by this Amendment, the Agreement shall
remain in full force and effect.
(4) This Amendment shall be effective on the date it is approved by the
vote of a majority of the outstanding voting securities of the Fund.
IN WITNESS WHEREOF, the Fund and Fund Managers have caused this Amendment to be
executed by their duly authorized officers as of the 1st day of April, 1999.
SAMARNAN INVESTMENT CORPORATION VOYAGEUR ASSET MANAGEMENT LLC
By: By:
----------------------------- ---------------------------------
George S. Walls, Jr. James A. Roberts
President Senior Vice President
<PAGE>
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made as of the 1st day of April, 1999, by and between
Samarnan Investment Corporation, a Texas corporation (the "Fund"), and Westwood
Management Corp., a New York corporation ("WMC").
WITNESSETH:
1. INVESTMENT ADVISORY SERVICES
The Fund hereby engages WMC, and WMC hereby agrees to provide investment
advisory services to the Fund as hereinafter provided. The Fund shall place a
portion of the Fund's total portfolio under the supervision of WMC (herein
called the "Equity Portfolio"). WMC agrees, during the terms of this Agreement,
to review and monitor the Fund's Equity Portfolio and from time to time as WMC
in its discretion deems appropriate and in the Fund's interests, to make
investment recommendations to the Fund's management with respect to investment
in equity securities.
WMC shall assume discretion for the investment of the Equity Portfolio, and
shall have full power to supervise and direct the investment of the Equity
Portfolio in accordance with the investment objectives and policies that the
Fund may from time to time provide to WMC in writing. These include, but shall
not be limited to the applicable portions of the Fund's Articles of
Incorporation, Bylaws, Registration Statement, as amended, as filed with the
Securities and Exchange Commission, and other investment objectives and policies
of the Fund as set forth in writing from time to time by the Board of Directors
of the Fund. The Fund undertakes and agrees to provide WMC with current copies
of each such documents and to promptly notify WMC, in writing, in advance of any
changes to such documents.
WMC shall place orders for the purchase and sale of equity securities for
the Fund's account directly with securities brokers and dealers selected by WMC,
and WMC shall direct the Fund's custodian to pay for any such securities
purchased by WMC for the Fund pursuant to this Agreement, and to deliver such
equity securities that WMC may sell for the Fund's account, in each case only
against receipt of countervalue and to persons other than WMC or any "affiliated
person" of WMC (as that term is defined in the Investment Company Act of 1940,
as amended). Until WMC otherwise is notified in writing by the Fund, direction
by the Fund for WMC to purchase or sell specific equity securities for the
Fund's account may be by either the Chairman of the Board or the President of
the Fund. A written certificate of the signatures of such Fund officers shall be
provided WMC and may be relied upon by WMC until a replacement certificate is
received by WMC from the Fund. Such certificate may also authorize WMC to act
upon telephonic instructions received by WMC from persons named in such
certificate. Any person named in any such
<PAGE>
Page 2
certificate is herein called an "authorized person". WMC shall not be liable
to any person if it acts pursuant to telephonic or written instructions
reasonably believed by WMC to have been received from an "authorized person"
of the Fund (as named in the most recent certificate received by WMC from the
Fund).
WMC will not be required to take any action, or render any advice, with
respect to the voting of any of the securities of the Fund.
WMC shall report to the Board of Directors regularly at such times and in
such detail as the Board may from time to time reasonably determine to be
appropriate, in order to permit the Board to determine the adherence of WMC to
the investment policies of the Fund. Additionally, WMC agrees to furnish the
Fund's Board of Directors with such additional reports and other data as the
Board of Directors shall reasonably request including, but not limited to,
industry surveys, news of recent developments, statistical data, and such other
information as may keep the Board properly informed on developments relating to
the Fund's Equity Portfolio.
All information and advice furnished by either party to this Agreement
shall be treated as confidential and shall not be disclosed to third parties
except as required by law, judicial decree, or by rule or regulation of any
regulatory or self-regulatory agency. WMC hereby acknowledges that all records
necessary in the operation of the Fund, including records pertaining to its
shareholders and investments, are the property of the Fund, and in the event
that a transfer of management or investment advisory services to someone other
than WMC should ever occur, WMC will promptly, and at its own cost, take all
steps necessary to segregate such records and deliver them to the Fund.
Notwithstanding the foregoing, WMC may retain copies of such records in
accordance with its customary or appropriate policies or as required by law,
judicial decree, or by rule or regulation of any regulatory or self-regulatory
agency.
2. COMPENSATION FOR SERVICES
The Fund shall pay to WMC, as full compensation for the services rendered
by it under this Agreement, a fee based on the value of the assets in the Equity
Portfolio, appraised as described below. Such fee shall be 0.75% and shall be
paid on a quarterly basis in arrears. For the purpose of calculating such fee,
the value of the assets in the Equity Portfolio shall be determined as of each
Appraisal Date. If WMC serves for less than the whole of any fiscal quarter,
such fee shall be calculated and shall be payable on a pro rata basis for the
portion of such quarter for which WMC has served as investment adviser
hereunder. The fees due hereunder shall be paid by the Fund directly to WMC
within ten (10) days after the Fund's receipt of the appraisal described below
and WMC's statement of the fee due thereunder. WMC shall not be responsible and
shall be reimbursed by the Fund for any and all charges for brokers'
commissions, transfer taxes, and other charges incurred directly related to the
purchase or sale of equity securities by WMC for the Fund's account pursuant to
the provisions hereof.
<PAGE>
Page 3
WMC shall provide the Fund with an appraisal of the Equity Portfolio,
summarizing all of its assets, as of the last day of each fiscal quarter of the
Fund on which the New York Stock Exchange is open for trading (herein called the
"Appraisal Date"). Each security listed on any national securities exchange
shall be valued at the last quoted sale price, regular way, on the Appraisal
Date on the principal exchange on which such security is traded. Each security
listed in the National Association of Securities Dealers Automated Quotation
System or traded in the over-the-counter market shall be valued at the closing
price or the highest reported bid price on the Appraisal Date, whichever is
available. Trades that have not been settled on the Appraisal Date shall be
valued at fair value as determined in good faith by WMC in accordance with
policies approved by the Fund's Board of Directors.
3. ALLOCATION OF EXPENSES
WMC shall bear all of its own administrative costs and expenses necessary
and incident to its providing the investment advisory services rendered by it
hereunder. In addition to the fee described in Section 2 hereof, the Fund shall
pay all its costs and expenses which are not expressly assumed hereunder by WMC.
These Fund expenses include, by way of example, but not by way of limitation,
all expenses incurred in the operation of the Fund and any public offering of
its shares, including, among others, Rule 12b-1 fees (if any), interest, taxes,
brokerage fees and commissions, fees of the directors, expenses of directors'
and shareholders' meetings, including the cost of printing and mailing proxies,
expenses of insurance premiums for fidelity and other coverage, expenses of
issuance and sale of shares, expenses of printing and mailing stock certificates
representing shares of the Fund, association membership dues, charges of
custodians, transfer agents, dividend disbursing agents, administrative agents,
accounting service agents, investor servicing agents, and bookkeeping, auditing,
and legal expenses.
4. FREEDOM TO DEAL WITH THIRD PARTIES
WMC acts as advisor to other clients and may give advice, and take action,
with respect to any of those clients that may differ from the advice given, or
the timing and nature of actions taken, with respect to the Fund. WMC shall not
have obligations to purchase or sell for the Fund, or to recommend for purchase
or sale by the Fund, any security that WMC, its principals, affiliates or
employees may purchase for themselves or any other clients.
5. LIABILITY: INDEMNIFICATION
WMC shall not be liable to the Fund or third parties for acts or omissions
not cause& by WMC's willful misfeasance, bad faith or gross negligence. WMC
shall not be liable for the acts or omissions of any bank, trust company, broker
or other person with whom or into whose possession any monies or securities and
investments may be deposited, pursuant to the provisions of this Agreement or
any other Fund contract. WMC shall not be liable for any actions taken or
omitted to be taken by WMC on the advice of counsel to WMC, provided that said
counsel is reasonably acceptable to the Fund.
<PAGE>
Page 4
WMC agrees to indemnify the Fund against any and all actions, litigation or
other proceedings of any kind or nature and against any loss, liability,
judgment, cost or penalty imposed as a result of such actions, litigation or
proceedings in any way arising out of or in connection with any willful
misfeasance, bad faith or gross negligence on the part of WMC in the performance
of its duties under this Agreement or of any of its directors, officers,
employees, representatives or agents in connection with the responsibilities
assumed by WMC hereunder. In the event of the threat or institution of an
indemnified action, litigation or legal proceedings against the Fund, WMC shall
defend such indemnified action, litigation or proceeding on behalf of the Fund
at its own expense, and shall pay any such loss, liability, judgment, cost or
penalty resulting therefrom, whether imposed by legal authority or agreed upon
by way of compromise and settlement; provided, however, WMC shall not be
required to pay or reimburse the Fund for any loss, liability, judgment, cost or
penalty incurred as a result of action taken or omitted to be taken by WMC
pursuant to the specific direction of, or any information supplied by, or as the
result of the omission to supply information by, the Fund to WMC, or to WMC of
or by a director, officer or employee of the Fund who is not an "interested
person" (as defined in the Investment Company Act of 1940, as amended), of WMC,
or to WMC of or by an "authorized person" (as defined in Section 1 hereof) or by
any person reasonably believed by WMC to be a director, officer, employee or
"authorized person"; provided that the foregoing shall not apply if the
information so supplied or omitted was known, or reasonably should have been
known, to WMC without recourse to the Fund or any such person referred to above.
6. EFFECTIVE DATE. DURATION AND TERMINATION OF AGREEMENT
(a) This Agreement shall become effective on the date it is approved by
the vote of a majority of the outstanding voting securities of the Fund.
(b) Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect for a period of one year from its effective date, and
thereafter for successive yearly periods, provided that each such yearly
continuation of the Agreement is specifically approved at least annually by (i)
the Board of Directors of the Fund or by the vote of a majority of the
outstanding voting securities of the Fund, and (ii) by the vote of a majority of
the directors who are not parties to this Agreement or "interested persons" (as
defined in the Investment Company Act of 1940, as amended) of WMC or of the Fund
cast in person at a meeting called for the purpose of voting on such approval.
WMC agrees to notify the Fund of any change in the ownership of WMC, within a
reasonable time after such change.
(c) This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Directors of the Fund or by the vote of a majority
of the outstanding voting securities of the Fund, or by WMC, on not more than
sixty (60) days' written notice to the other party.
<PAGE>
Page 5
(d) This Agreement shall automatically terminate in the event of its
"assignment" (as defined in the Investment Company Act of 1940, as amended). WMC
shall promptly notify the Fund of any such assignment.
(e) Whenever referred to in this Agreement, the vote or approval of the
holders of a majority of the outstanding voting securities or shares of the Fund
shall mean the lesser of (i) the vote of 67% or more of the voting securities of
the Fund present at a regular or special meeting of shareholders duly called, if
more than 50% of the Fund's outstanding voting securities are present or
represented by proxy, or (ii) the vote of more than 50% of the outstanding
voting securities of the Fund.
7. INVESTMENT ADVISOR
WMC represents and warrants to the Fund that it is a duly registered
investment adviser under the Investment Advisers Act of 1940, as amended, and
agrees to promptly notify the Fund of any change in its status as a registered
investment adviser under that Act.
8. AMENDMENTS TO AGREEMENT
No material amendment to this Agreement shall be effective until approved
by vote of the holders of a majority of the outstanding voting securities of the
Fund.
9. NOTICES
Any notice under this Agreement shall be in writing, addressed, delivered
or mailed, first class postage prepaid, to the other party at such address as
such other party may designate in writing for receipt of such notice.
10. GOVERNING LAW
This Agreement shall be construed in accordance with the substantive laws
of Texas.
IN WITNESS WHEREOF, the Fund and WMC have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
SAMARNAN INVESTMENT CORPORATION WESTWOOD MANAGEMENT CORP.
By: By:
- ---------------------------------- --------------------------------------
George S. Walls, Jr., President Susan M. Byrne, President
<PAGE>
SAMARNAN INVESTMENT CORPORATION
P.O. BOX 651/CLEBURNE, TEXAS 76033
PROXY--ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Martha Walls Murdoch and Nancy Walls
Devaney, or either of them, with power of substitution, as Proxies to vote, as
designated below, all stock of Samarnan Investment Corporation owned by the
undersigned at the Annual Meeting of Shareholders to be held in the Bellevue
Room I of The Fort Worth Club, 306 West 7th Street, Fort Worth, Texas, on April
16, 1999 at 10:30 a.m, upon such business as may properly come before the
meeting, including the following as set forth in the Notice of Annual Meeting of
Shareholders and the Proxy Statement:
PROPOSAL (1) APPROVAL OF THE AMENDMENT TO INVESTMENT ADVISORY AGREEMENT
Approval of the Amendment to the Investment Advisory Agreement
between the Company and Voyageur Asset Management LLC.
[ ] FOR approval [ ] AGAINST approval [ ] ABSTAIN
PROPOSAL (2) APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT
Approval of the Investment Advisory Agreement between the Company
and Westwood Management Corp.
[ ] FOR approval [ ] AGAINST approval [ ] ABSTAIN
(NOTE: PROPOSALS 1 AND 2 ARE CONTINGENT UPON THE APPROVAL OF EACH
OTHER AND NEITHER WILL BE APPROVED UNLESS BOTH SUCH PROPOSALS ARE
APPROVED.)
PROPOSAL (3) ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as marked to the
contrary below).
[ ] WITHHELD AUTHORITY to vote for all nominees listed below.
Nancy Walls Devaney, Martha Walls Murdoch, Roland W. Walden,
Steve Sikes, George S. Walls, Jr., Joseph A. Monteleone, and
Tolbert F.Yater, III
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW:)
-----------------------------------------------------------------
PROPOSAL (4) APPROVAL OF APPOINTMENT OF CHESHIER & FULLER, L.L.C.
[ ] FOR approval [ ] AGAINST approval [ ] ABSTAIN
(Continued, and to be signed, on reverse side)
<PAGE>
(Continued from other side)
(5) IN THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED (1) FOR PROPOSAL 1, THE APPROVAL OF THE AMENDMENT TO THE
INVESTMENT ADVISORY AGREEMENT BETWEEN THE COMPANY AND VOYAGEUR ASSET MANAGEMENT
LLC, (2) FOR PROPOSAL 2, THE INVESTMENT ADVISORY AGREEMENT BETWEEN THE COMPANY
AND WESTWOOD MANAGEMENT CORP., (3) FOR PROPOSAL 3, THE ELECTION OF THE SEVEN
NOMINEES FOR DIRECTORS AND (4) FOR PROPOSAL 4, THE APPROVAL OF THE APPOINTMENT
OF CHESHIER & FULLER, L.L.C.
This proxy may be revoked prior to the exercise of the powers by the proxy
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Dated:_________, 1999
--------------------------------------
(Signature)
--------------------------------------
(Signature, if held jointly)
Note: Where there is more than one owner, each should sign. When signing as an
attorney, administrator, executor, guardian or trustee, please add your title as
such. If executed by a corporation, the proxy should be signed by a duly
authorized officer. If executed by a partnership please sign in the partnership
name by an authorized person.
PLEASE DATE, SIGN AND MAIL PROMPTLY THIS PROXY IN THE ENCLOSED ENVELOPE.
<PAGE>
Please mail a copy of the Samarnan Annual Report for 1998 and a
copy of the Company's most recent Semi-Annual Report succeeding
such Annual Report, if any, to:
_____________________________________________________________
(Name - print or type)
_____________________________________________________________
(Mailing Address - print or type)
_____________________________________________________________
_____________________________________________________________
(Zip code)
(Back of Post Card)
_______________________________________________________________________________
(Front of Post Card)
JERRY D. WHEATLEY, TREASURER
SAMARNAN INVESTMENT CORPORATION
c/o WHEATLEY, CODY AND FOWLER, P.C.
P.O. BOX 134
CLEBURNE, TX 77033-0134
