SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / 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 Rule 14a-11(c) or Rule 14a-12
Shepmyers Investment Company
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/x/ No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
SHEPMYERS INVESTMENT COMPANY
Post Office Box 339
Hanover, Pennsylvania 17331
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 25, 1997
To the Shareholders of
Shepmyers Investment Company:
The Annual Meeting of Shareholders of Shepmyers Investment Company (the
"Company") will be held on April 28, 1997, at 11:00 A.M. at the offices of
Hanover Shoe Farms, Inc., Route 194 South, Hanover, Pennsylvania, for the
following purposes:
1. To elect nine directors;
2. To approve or disapprove the continuation of the
existing Advisory Agreement between the Company and
Rittenhouse Financial Services, Inc. until April 30, 1998;
3. To ratify or reject the selection of Ernst & Young
LLP as the Company's independent certified public accountants
for the year ending December 31, 1997; and
4. To transact such other business as may properly
come before the meeting.
The subjects referred to above are discussed in the Proxy Statement
attached to this notice. Each shareholder is invited to attend the Annual
Meeting of Shareholders in person. Shareholders of record at the close of
business on March 24, 1997 have the right to vote at the meeting. If you cannot
be present at the meeting, we urge you to fill in, sign, and promptly return the
enclosed proxy in order that the meeting can be held and a maximum number of
shares may be voted.
W. Bruce McConnel, III
Secretary
<PAGE>
SHEPMYERS INVESTMENT COMPANY
Post Office Box 339
Hanover, Pennsylvania 17331
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Shepmyers Investment Company (the
"Company") for use at the Annual Meeting of Shareholders, to be held on April
28, 1997 at 11:00 A.M. at the offices of Hanover Shoe Farms, Inc., Route 194
South, Hanover, Pennsylvania, and any adjournment thereof (the "Meeting"). This
statement is expected to be mailed to shareholders on or about March 26, 1997.
Only shareholders of record at the close of business on March 24, 1997
will be entitled to vote at the Meeting. On that date, there were 768,238 shares
of the Company's common stock ("Shares") outstanding and entitled to be voted at
the Meeting. Each Share is entitled to one vote, except that shareholders have
the right to vote cumulatively in the election of directors by multiplying the
number of Shares which they are entitled to vote by the number of directors to
be elected at the Meeting, and either casting the whole number of such votes for
one candidate or distributing them among any two or more candidates. The
candidates for election receiving the highest number of votes will be elected
directors. Your proxy may be revoked by you at any time prior to its exercise by
attending the Meeting and voting in person or by giving written notice of
revocation to the Secretary of the Company. Mere presence at the Meeting without
such notice will not revoke your proxy.
The Company will bear the cost of soliciting proxies in the
accompanying form. In addition to the use of the mails, proxies may be solicited
by officers, directors, and regular employees of the Company, personally or by
telephone or telegraph.
The Company's Annual Report, containing financial statements for the
year ended December 31, 1996, has been mailed to shareholders. It is not to be
regarded as proxy-soliciting material. The COMPANY WILL FURNISH TO SHAREHOLDERS
UPON REQUEST, WITHOUT CHARGE, COPIES OF ITS ANNUAL REPORT BY CALLING INVESTORS
TRUST COMPANY AT 1-800-826-5534 OR BY WRITING TO INVESTORS TRUST COMPANY AT 2201
RIDGEWOOD ROAD, #180, WYOMISSING, PENNSYLVANIA 19610, ATTN: RODNEY R. KLINE.
-2-
<PAGE>
ELECTION OF DIRECTORS
At the Meeting, nine directors, constituting the entire Board of
Directors, are to be elected. If elected, each director will hold office until
the next Annual Meeting of Shareholders and until his successor is elected and
qualified. The persons named as proxies in the accompanying proxy have been
designated by the Board of Directors and intend to vote for the nominees named
below, all of whom are presently serving as directors. All of the Company's
directors were elected by the shareholders at the Annual Meeting of Shareholders
held last year. Paul Frey Spears, a director of the Company, is the son of P. E.
Spears, Chairman of the Board and President of the Company. Mr. P. E. Spears
owns certificates of deposit issued by Rittenhouse Trust Company ("RTC"), an
affiliate of Rittenhouse Financial Services, Inc. ("RFS"), the Company's
investment adviser. During the past five years, Mr. R. E. Lemmon, Jr., a
director of the Company, owned certificates of deposit issued by RTC.
The following persons have consented to being nominated and to serve if
elected. If any of the nominees should withdraw or otherwise become unavailable
for election as a director, the proxies will be voted for such other persons as
the Board of Directors may recommend, unless the Board of Directors reduces the
number of directors. The proxies shall have full authority and discretion to
vote cumulatively for all or as many candidates or substitutes as the proxies so
voting shall determine.
<TABLE>
<CAPTION>
Principal Occupa-
Position tion(s) for the
Director with the Past Five Years and
Name Age Since Company Current Affiliations
- ---- --- -------- -------- --------------------
<S> <C> <C> <C> <C>
P. E. Spears* 72 1954 Chairman President, Treasurer,
of the and Director, Hanover
Board and Shoe Farms, Inc.
President (Standardbred horse
nursery); President,
Treasurer, and Director,
Standardbred Horse Sales
Company (Standardbred
horse auctions); Director,
Hanover Shoe Farms
Foundation, Inc.;
President, Garden State
Horse Sales Company
(Standardbred horse
auctions); and President
and
-3-
<PAGE>
Principal Occupa-
Position tion(s) for the
Director with the Past Five Years and
Name Age Since Company Current Affiliations
- ---- --- -------- -------- --------------------
Director, Lawrence B.
Sheppard Foundation,
Inc. until December
1992.
G. P. King* 79 1962 Director; Retired.
Vice
President
and
Treasurer
L. S. DeVan 49 1977 Director Director and Chief
Financial Officer,
Cyberlab, Inc. (design and
manufacture of laboratory
automation equipment);
Director and Treasurer,
Lawrence B. Sheppard
Foundation, Inc.; Managing
General Partner of Horse
Racing and Breeding
Partnerships; and Vice
President, Municipal Bond
Department, Goldman, Sachs
& Co. until January 1995.
J. M. Fuss (1) 66 1979 Director Self-employed -
Licensed Battlefield
Guide, Gettysburg National
Military Park, and
accountant, since May
1992; Vice President,
Controller, Treasurer,
Chief Financial Officer
and Secretary C. & J.
Clark America, Inc.
(formerly The Hanover
Shoe, Inc.) until May
1992; Director, Vice
President, Treasurer and
Secretary C. & J. Clark
Retail, Inc. until May
1992; Director, CJC
Financial Company until
May 1992; and
-4-
<PAGE>
Principal Occupa-
Position tion(s) for the
Director with the Past Five Years and
Name Age Since Company Current Affiliations
- ---- --- -------- -------- --------------------
Assistant Treasurer, C. & J.
Clark, Inc. and C. & J.
Clark North America, Ltd.
until May 1992.
R. E. Lemmon, Jr. 50 1994 Director Controller and
Director, Hanover Shoe
Farms, Inc.; Controller,
Standardbred Horse Sales
Company; Treasurer, Garden
State Horse Sales Company.
R. P. Myers 58 1975 Director Consultant, Veterina-
rian Services; Member,
Montana Board of
Veterinary Medical
Examiners; Coroner of
Gallatin County, Montana;
Secretary, Treasurer and
Executive Director of the
Montana Veterinarian
Medical Association until
1993; and Owner and
Operator of the M Quarter
Circle Livestock Ranch,
Gallatin Gateway, Montana
until 1991.
P. F. Spears* 44 1993 Director President/CEO,
Digestive Disease
Center, Inc.
-5-
<PAGE>
Principal Occupa-
Position tion(s) for the
Director with the Past Five Years and
Name Age Since Company Current Affiliations
- ---- --- -------- -------- --------------------
J. F. Thompson, III (2) 71 1978 Director Marketing Specialist,
R.J. Reynolds (tobacco
company) until 1995.
C. D. Weber (2) 58 1994 Director President, C.A. Weber
Agency, Inc.
(insurance agency).
</TABLE>
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* Messrs. P. E. Spears and King are "interested persons" of the Company
as defined in the Investment Company Act of 1940 (the "1940 Act") because
they serve as officers of the Company. Mr. P. E. Spears also is an
"interested person" of the Company because he owns certificates of deposit
issued by RTC. Mr. P. F. Spears is an "interested person" because he is a
member of the immediate family of an affiliated person of the Company,
Mr. P. E. Spears.
(1) Mr. J. M. Fuss serves as a trustee and member of administrative
committees for employee benefit plans operated by C.& J. Clark America,
Inc., of which RFS is an investment manager.
(2) Mr. Thompson serves as a director of: 1) the Visiting Nurse Association of
Hanover and Spring Grove (a non-profit healthcare services company) ("VNA"),
and 2) Hanover Health Corporation ("HHC"), and Mr. Weber serves as a
director of Hanover General Hospital ("Hanover General") and as vice
chairman of HHC. RFS serves as an investment manager for VNA, HHC and
Hanover General.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 30(f) of the 1940 Act and Section 16(a) of the
Exchange Act require the Company's directors and officers, certain affiliated
persons of RFS, and persons who own more than ten percent of the Company's
shares to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of Shares of the Company. Specific
due dates have been established and the Company is required to disclose in this
Proxy Statement any failure to file by the specific due dates. To the Company's
knowledge, all of these filing requirements were satisfied during 1996 except
that (i) Lawrence S. DeVan, a director of the Company, did not file on a timely
basis one report relating to his appointment as co-trustee with CoreStates
(Hamilton) Bank with respect to 1,460 Shares, and (ii) Robert P. Myers, a
director of the Company, did not file on a timely basis two reports, one
relating to two separate
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<PAGE>
acquisitions of 1,085 Shares each and one relating to his right to vote 98,937
Shares as the executor of the estate of Henrietta Myers Miller. In making this
disclosure, the Company has relied on copies of reports that were furnished to
it and written representations of its directors, officers and RFS.
----------------------------
The following table sets forth information with respect to Shares
beneficially owned on December 31, 1996 by those directors and officers of the
Company not listed on page 13 as "Principal Shareholders."
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
----------------------------------
Sole Voting Shared Voting
or Investment or Investment Percent
Name Power Power of Class
- ---- ------------- ------------- --------
<S> <C> <C> <C>
G. P. King.............................. 18,510 6,417 3.2%
J. M. Fuss.............................. 1,400 5,400 *
P. F. Spears............................ 5,000 -0- *
C. D. Weber............................. 1,354 200 *
All directors and
officers as a group..................... 221,157 126,572 45.3%
</TABLE>
- ---------------------
*Less than 1%.
W. Bruce McConnel, III (age 54) has served as Secretary to the Company
since 1977. He has been a partner in the law firm of Drinker Biddle & Reath
since 1977. The law firm receives legal fees as counsel to the Company and as
counsel to the Company's investment adviser. Mr. McConnel also serves as
Secretary to the Company's investment adviser.
The Board of Directors met four times during the last fiscal year. All
of the directors attended at least 75% of the meetings. The Board has no audit
or nominating committees. Officers of the Company are elected by the Board of
Directors and serve at its pleasure. Mr. P. E. Spears has served as the
Company's President since 1977, and Mr. G. P. King has served as the Company's
Vice President and Treasurer since 1977.
Each director receives an annual retainer of $600 plus $250 for each
Board of Directors meeting attended. The Chairman of the Board is paid $15,000
annually and all other officers receive $100 annually. Directors and officers
are also reimbursed
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<PAGE>
for their out-of-pocket expenses incurred in attending Board meetings.
The following table provides information concerning the compensation of
each of the Company's directors for services rendered during the Company's
fiscal year ended December 31, 1996:
<TABLE>
<CAPTION>
COMPENSATION TABLE
Pension or Total(1)
Aggregate Retirement Benefits Estimated Compensation
Compensation Accrued as Part Annual Benefits From Company
Name of Person From Company of Company Expenses Upon Retirement And Fund Complex
- -------------- ------------ ------------------- --------------- ----------------
<S> <C> <C> <C> <C>
P.E. Spears $16,600 None None $16,600
G.P. King $1,450 None None $1,450
L.S. DeVan $1,600 None None $1,600
J.M. Fuss $1,600 None None $1,600
R.E. Lemmon, Jr. $1,600 None None $1,600
R.P. Myers $1,350 None None $1,350
P.F. Spears $1,600 None None $1,600
J.F. Thompson $1,600 None None $1,600
C.D. Weber $1,600 None None $1,600
</TABLE>
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(1) "Fund Complex" includes Shepmyers Investment Company and NRM Investment
Company, which are advised by RFS, and The Noah Fund for which RFS
serves as sub-advisor.
APPROVAL OR DISAPPROVAL OF THE EXISTING ADVISORY AGREEMENT
Background
At the Meeting, shareholders of the Company will be asked to approve
the continuation of the existing investment advisory agreement with RFS. RFS
currently serves as the Company's investment adviser under an advisory agreement
dated as of April 30, 1996 (the "Agreement"). The Agreement was initially
approved by vote of the Company's shareholders holding a majority of the
outstanding Shares of the Company on April 26, 1996.
At a meeting of the Company's Board of Directors held on January 27,
1997, the Company's directors, including a majority of the Company's
disinterested directors, voted to approve the continuation of the Agreement
until April 30, 1998
-8-
<PAGE>
and to recommend its approval by shareholders at the Meeting. The year before,
on January 29, 1996, the Company's Board of Directors, including a majority of
the Company's disinterested directors, voted to initially approve the Agreement
which differed from the then existing advisory agreement between the Company and
RFS in that it did not contain the provision requiring RFS to furnish the
Company's Board of Directors within 60 days after the end of each of RFS's
fiscal years copies of its financial statements (including a statement of
operations and a balance sheet) for the prior fiscal year audited by independent
certified public accountants. At the time the Agreement was approved on January
29, 1996 and January 27, 1997, Mr. P. E. Spears owned certificates of deposit
issued by RTC.
Board Consideration and Recommendation
The Board of Directors, including a majority of directors who are not
"interested persons" of the Company or RFS, approved the continuation of the
Agreement after considering such information as they believed to be relevant
including, for example, the nature and quality of the advisory services provided
to the Company by RFS, the advisory fee, the experience of RFS personnel
providing such services, the resources of RFS, and the Company's investment
performance. The directors believe that the Agreement is in the best interests
of the Company and recommend its approval by shareholders at the Meeting.
The approval or disapproval of the Agreement is being submitted to the
Company's shareholders at the Meeting as a matter of policy. If the Agreement is
not approved by a majority of the outstanding Shares of the Company, the Board
of Directors will reconsider its terms. A copy of the Agreement is attached as
Exhibit A. The following summary of the Agreement is qualified in its entirety
by reference to such Exhibit.
Description of the Agreement
The Agreement provides that RFS shall, at its expense, maintain a
continuous review of the Company's portfolio, determine what securities should
be purchased or sold by the Company and what portion of its assets should remain
uninvested. In addition, RFS is required at its expense to keep the books and
records of the Company; to maintain a continuous record of the Company's
portfolio investments; to furnish related reports and other data which the Board
may request; and to compute the net asset value of the Company's Shares at such
time as the Board may direct. RFS also bears the expense of obtaining portfolio
pricing information. RFS is required to furnish the Company, at the Company's
expense, with the services of persons whose duties shall include supervising the
preparation of (except for the legal and auditing aspects) the Company's public
financial statements, reports to shareholders, and any other reports or
-9-
<PAGE>
statements required by regulatory authorities or otherwise, and stenographic,
telephone, telegraphic, mailing, and other facilities as the Board may request
in connection with the operation of the Company. RFS is not required to give the
Company preferential treatment as compared with the treatment given to any other
investment company or customer.
Municipal bonds are normally purchased and sold in principal
transactions and brokerage commissions are normally not paid by the Company in
connection with its transactions. No commissions were paid by the Company last
year. The Agreement authorizes RFS to recommend and cause the Company to pay
brokerage commissions in excess of commissions which might be charged by other
brokers, where a determination is made that the amount of commission paid is
reasonable in relation to the brokerage and research services provided by the
broker to the Company, viewed in terms of the particular transactions or RFS'
overall responsibilities with respect to the Company. Brokers are selected on
the basis of best execution, price, and availability of securities which meet
the Company's investment objectives.
The Agreement provides that RFS will notify the Board promptly of any
material decrease in the assets under its management or any other material
adverse change in its business.
The Agreement also provides that RFS shall be liable only for willful
misfeasance, bad faith, or gross negligence in the performance of its duties or
reckless disregard of its obligations thereunder, and that RFS, subject to the
foregoing, shall not be liable for any action taken or omitted in good faith on
the advice of counsel, provided that such counsel is satisfactory to the
Company. The Agreement may be terminated at any time without payment of any
penalty on 30 days' written notice by RFS and may be terminated by the Company's
Board of Directors or by a vote of the holders of a majority of its outstanding
shares upon 24 hours' notice. The Agreement will terminate automatically in the
event of its assignment.
The Agreement provides for the payment of an annual fee to RFS at the
flat rate of $25,000, paid monthly. Of this $25,000 annual fee, $6,800 is to be
allocated to Raymond J. Keefe for accounting services provided to the Company.
The Agreement provides that the fee will be reduced in any fiscal year of the
Company by the amount that the expenses of the Company (including such fee but
excluding taxes, brokerage commissions, interest, and extraordinary expenses)
exceed the applicable expense limitations imposed by state securities
regulations or authorities. The Company has not to date been subject to such
expense limitations. During its fiscal year ended December 31, 1996, the Company
paid advisory fees to RFS of $25,000, $6,800 of which was paid to Raymond J.
Keefe.
-10-
<PAGE>
Unless sooner terminated, the Agreement will continue in effect until
April 30, 1998, and thereafter for successive yearly periods, provided such
continuance is specifically approved annually in the manner required by the 1940
Act.
Investment Adviser
RFS, a registered investment adviser, is located at Two Radnor
Corporate Center, Suite 420, 100 Matsonford Road, Radnor, Pennsylvania 19087.
The name and principal occupation of the principal executive officer
and each director of RFS as of February 5, 1997 were as follows: George W.
Connell, 121 Cheswold Lane, Haverford, Pennsylvania 19041 (Sole Shareholder,
Principal Executive Officer and a director), David Robinson, 1129 South New
Street, West Chester, Pennsylvania 19382 (Chief Operating Officer and a
director) and Bruce Rosenfield, 132 Fairview Road, Penn Valley, Pennsylvania
19072 (a director).
W. Bruce McConnel, III, serves as Secretary to RFS and as Secretary to
the Company. RFS has advised the Company that it currently exercises investment
discretion over advisory accounts having total assets as of December 31, 1996 of
approximately $5.63 billion. RFS also performs other financial services to
personal and institutional clients.
RFS serves as investment adviser to another investment company, NRM
Investment Company ("NRM"), which has an investment objective similar to that of
the Company. The following table sets forth certain information with respect to
NRM:
Net Assets
as of
Name of Fund January 31, 1997 Annual Rate of Advisory Fee
------------ ---------------- ---------------------------
NRM Investment Company $ 17,105,638 $10,000(1)
- -----------------
(1) RFS provides NRM with investment advisory services on a non-
discretionary basis. Its activities are limited to making recommendations
with respect to purchases and sales of securities in accordance with NRM's
investment policies, its registration statement and the requirements of the
1940 Act and the Internal Revenue Code of 1986. In contrast to these
non-discretionary advisory services, the Company's advisory agreement
provides that RFS shall, at its expense, use its own staff and facilities to
maintain a continuous review of the Company's portfolio, to determine what
securities should
-11-
<PAGE>
be purchased or sold by the Company and what portion of its assets should
remain uninvested.
RELATIONSHIP WITH AND RATIFICATION OF
INDEPENDENT PUBLIC ACCOUNTANTS
A majority of the members of the Board of Directors who are not
"interested persons" of the Company (as defined in the 1940 Act) selected Ernst
& Young LLP ("Ernst & Young"), the Company's auditors beginning in 1978, as
independent certified public accountants for the Company for the year ending
December 31, 1997. The ratification of the selection of independent certified
public accountants is to be voted upon at the Meeting, and it is intended that
the persons named in the accompanying proxy will vote in favor of ratification.
The selection of independent accountants is being submitted for ratification at
the Meeting as required by the Securities Exchange Act of 1934. Ernst & Young
has informed the Company that it has no material direct or indirect interest in
the Company. A representative of Ernst & Young is expected to be present at the
Meeting, will have an opportunity to make a statement and will be available to
respond to appropriate questions.
Votes Required for Approval of Matters at the Meeting
Presence at the Meeting in person or by proxy of the holders of a
majority of the Shares of the Company entitled to vote is necessary to
constitute a quorum. Under the 1940 Act, approval of the Agreement at the
Meeting requires the affirmative vote of the holders of a "majority of the
outstanding Shares" which, as used in this proxy statement, means the lesser of
(i) 67% of the Company's voting Shares present at the Meeting if the holders of
more than 50% of the outstanding voting Shares are present in person or by
proxy, or (ii) more than 50% of the Company's outstanding voting Shares. For
purposes of determining the affirmative vote of a "majority of the outstanding
Shares," an abstention or the failure to vote, including a broker non-vote,
will be the equivalent to voting against approval of the Agreement.
-12-
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information concerning persons
known by the Company to own beneficially more than 5% of its Shares on
December 31, 1996:
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
--------------------
Sole Voting or Shared Voting or Percent of
Name and Address Investment Power Investment Power Class
- ---------------- ---------------- ---------------- ----------
<S> <C> <C> <C>
CoreStates 146,456(1)(a) 100,182(1)(b) 32.1%
(Hamilton) Bank
Broad and Chestnut Streets
Philadelphia, PA
First National 46,456(2) 6.0%
Bank of Pennsylvania
Hermitage Square
Hermitage, PA 16148
Paul E. Spears 75,567 41,585(3) 15.2%
106 Oak Street
Hanover, PA
Josephine F. Spears 41,585(4) 5.4%
106 Oak Street
Hanover, PA
Lawrence S. DeVan 7,015 72,970(5) 10.4%
200 Round Hill Road
Greenwich, CT
Robert P. Myers 112,311(6) 14.6%
P.O. Box 389
Belgrade, MT 59714
</TABLE>
- --------------------------
(1)(a) CoreStates (Hamilton) Bank serves as Trustee U/A dated 2/6/40
executed by H.D. Sheppard for the benefit of Charlotte S. DeVan
with respect to 46,456 Shares; and CoreStates (Hamilton) Bank
serves as Trustee with Charlotte S. DeVan UDT Lawrence B. Sheppard
dated 4/21/59 with respect to 100,000 Shares. CoreStates
(Hamilton) Bank has sole voting and investment power over all
146,456 Shares.
(1)(b) Henrietta Myers Miller, Original Trustee, shares voting and
investment power with CoreStates (Hamilton) Bank, Successor
Trustee to Edna Powl Myers for Robert Clinton Myers, 2nd et al U/A
dated 5/7/63 with respect to 83,660 Shares; CoreStates (Hamilton)
Bank serves as Trustee U/W of Lawrence B. Sheppard and has shared
voting and investment power over 13,602 Shares with Russell C.
Williams; and Lawrence S. DeVan has shared voting and investment
power over 2,920 shares with CoreStates (Hamilton) Bank.
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<PAGE>
(2) First National Bank of Pennsylvania is the successor trustee to S.E.
Bank N.A. U/A dated 2/6/40 executed by H.D. Sheppard for the benefit of
Alma S. Tolhurst. First National Bank of Pennsylvania has sole voting
and investment power over all 46,456 Shares.
(3) Paul E. Spears has shared voting and investment power over all 41,585
Shares with his wife, Josephine F. Spears.
(4) Josephine F. Spears has shared voting and investment power over all
41,585 Shares with her husband, Paul E. Spears.
(5) Lawrence S. DeVan has shared investment power over 12,980 and 29,866 of
these Shares with his father W. Todd DeVan and his mother Charlotte S.
DeVan, respectively, has shared voting and investment power over 2,920
of these Shares with CoreStates (Hamilton) Bank and has shared voting
and investment power over 27,204 of these Shares with Provident
National Bank.
(6) Robert P. Myers has voting and investment power over 13,374 Shares; and
has voting power over 98,937 Shares as Executor of the estate of
Henrietta Myers Miller.
---------------------------
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
A shareholder proposal for the Annual Meeting of Shareholders
to be held in 1998 must be received by the Company at its principal offices not
later than November 25, 1997, in order for the proposal to be included in the
Company's proxy materials relating to its next Annual Meeting.
OTHER MATTERS
No business other than the matters described above is expected
to come before the Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment of the Meeting,
the persons named in the enclosed proxy will vote thereon according to their
best judgment in the interests of the Company.
Dated: March 25, 1997
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING
AND WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
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<PAGE>
ADVISORY AGREEMENT Exhibit A
April 30, 1996
Rittenhouse Financial Services, Inc.
Two Radnor Corporate Center
Suite 400
100 Matsonford Road
Radnor, Pennsylvania 19087
Gentlemen:
Shepmyers Investment Company, a Pennsylvania corporation (the
"Fund"), is an investment company registered under the Investment Company Act of
1940 which invests and reinvests its assets in a portfolio of securities and
investments. The Fund hereby engages you to act as its Investment Manager to
render investment advisory and administrative services subject to the terms and
conditions herein set forth.
SECTION 1. Investment Management Services.
You shall use your staff and other facilities to conduct and
maintain a continuous review of the Fund's portfolio of securities and
investments, and shall from time to time determine what securities should be
purchased or sold by the Fund, what portion of the assets of the Fund should
remain uninvested, and the extent to which the Fund should otherwise use its
investment powers. In conducting such review and making such determinations, you
shall follow the Fund's investment policies as delineated and limited by the
statements contained in documents filed with the Securities and Exchange
Commission, as amended from time to time, the policies and restrictions set
forth in this Agreement or otherwise adopted by the Board of Directors, and the
provisions of the Investment Company Act of 1940 and the rules promulgated
thereunder, so that at all times the Fund shall be in compliance with its
policies and restrictions and the Investment Company Act of 1940. The Fund
agrees to supply you with copies of all such documents and to notify you of any
changes in its investment policies and restrictions on a timely basis.
In rendering such investment management services to the Fund
pursuant to this Agreement, you may at your own expense employ, retain or
otherwise avail yourself of the services or facilities of other persons or
organizations for the purpose of providing you or the Fund with such statistical
and other factual information, such advice regarding economic factors and
trends,
<PAGE>
such advice as to occasional transactions in specific securities or such other
information, advice or assistance as you may deem necessary, appropriate or
convenient for the discharge of your obligations hereunder or otherwise helpful
to the Fund.
You and any person performing executive, administrative or
trading functions for the Fund whose services were made available to the Fund by
you are authorized to recommend that the Fund pay, or cause the Fund to pay,
brokerage commissions to any member of a securities exchange or securities
broker or dealer which may be in excess of the amount which another member of
such an exchange or broker or dealer would have charged for effecting such
transaction, if you or such officer or employee determine in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services (as such term is defined in Section 28(e)(3) of
the Securities Exchange Act of 1934 and the rules, regulations and releases of
the Securities and Exchange Commission thereunder) provided by such member or
broker or dealer with respect to your investment management services hereunder,
viewed in terms of either that particular transaction or your overall
responsibilities with respect to the Fund.
SECTION 2. Resumes and Reports.
You shall at your own expense maintain a continuous record of
all the investments and securities which comprise the Fund's portfolio and shall
furnish to the Board of Directors of the Fund (the "Board"), at any time it so
requests reports with respect to its portfolio in the form prescribed by the
Board. You shall also render to the Board, at its regularly scheduled meetings,
and at such other times as the Board may request, a report on all matters
pertaining to your services as Investment Manager hereunder, in the form
prescribed by the Board. In addition, at your own expense you shall furnish the
Fund with such reports and other data as the Board shall request, including,
without limitation, 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 portfolio, or similar data relating to
securities which you include in the portfolio of the Fund.
SECTION 3. Other Duties and Services.
You shall at your own expense keep the books and records of
the Fund, and on behalf of the Fund shall compute the net asset value, net
investment income and tax-exempt interest income of the Fund (in accordance with
any instructions of the Board of Directors) at such times as the Board may
direct. You may obtain, at your expense, pricing information from brokers,
dealers or others to assist you in computing such net asset value. You shall
perform such other services as are reasonably incidental to the foregoing
duties. You shall furnish to the Fund and to such other
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<PAGE>
persons as the Fund may direct any statements with respect to the net asset
value, net investment income and tax-exempt interest income of the Fund, at such
times, and in such forms, as the Fund may prescribe.
When and if the Board so requests, you shall furnish the Fund
at its expense the services of a person or persons satisfactory to the Fund
whose duties shall include supervising the preparation of (except for the legal
and auditing aspects thereof) the Fund's public financial statements and
reports, its reports to shareholders and others, and any statements or reports
to regulatory authorities of the United States, or states thereof in which the
Fund has qualified its shares for sale.
In addition, you shall furnish to the Fund at its expense
stenographic, telephone, telegraphic, mailing, and other facilities as the Board
may request in connection with the operations of the Fund. It is the intent of
this Agreement that through your staff you shall supply at the Fund's expense
such services as are deemed by the Board to be necessary or desirable and proper
for the continuous operation of the Fund. However, you shall not be required to
perform (a) those services customarily performed by the members of the Board;
(b) those services customarily performed by the officers; or (c) those services
customarily performed by the custodian, transfer agent, registrar, dividend
disbursing agent, independent accountants, broker, dealer or legal counsel.
SECTION 4. Multiple Capacities.
Nothing contained in this Agreement shall be deemed to
prohibit you from acting, and being separately compensated for acting, in one or
more capacities on behalf of the Fund. Whenever you shall be required to act in
multiple capacities on behalf of the Fund, either under this Agreement or by
virtue of this and any other agreement between you and the Fund, you shall
maintain the appropriate separate accounts and records for each such capacity.
The Fund understands that you may act in one or more capacities on behalf of
other investment companies and customers. While information and recommendations
supplied to the Fund shall, in your judgment, be appropriate under the
circumstances and in light of the investment objective of the Fund, they may be
different from the information and recommendations supplied by you to other
investment companies and customers. You shall give the Fund equitable treatment
under the circumstances in receiving information, recommendations and any other
services requested of you, but you shall not be required to give preferential
treatment to the Fund as compared with the treatment given to any other
investment company or customer. It is agreed that all advice and recommendations
will be held in confidence and will be used only with respect to the Fund.
-3-
<PAGE>
SECTION 5. Payment of Expenses.
Unless otherwise provided herein, you shall assume and pay all
of your own costs and expenses incurred in rendering the advisory and other
services required to be furnished by you under this Agreement. The Fund agrees
to assume and pay, or reimburse you for, its operating expenses, including,
without limitation, taxes, interest charges, custodians, transfer agents and
registrars and costs incurred in preparing shareholder reports and proxy
materials. The Fund will also pay any brokerage commissions on its portfolio
transactions.
SECTION 6. Compensation for Services.
As compensation for your services, the Fund will pay to you,
on the last business day in each month a monthly fee of $2,083.33. This fee
shall be reduced in any fiscal year of the Fund by the amount that the expenses
of the Fund, including such fee but excluding taxes, brokerage commissions,
interest, and extraordinary expenses, exceed the applicable expense limitations
imposed by state securities regulations or authorities. Reductions shall be made
at the time of each monthly payment on an estimated basis, if appropriate, and
an adjustment to reflect the reduction on an annual basis shall be made, if
necessary, in the fee payable with respect to the last month in any fiscal year
of the Fund. You shall promptly refund any amount paid in excess of the fee
determined to be due for such year.
Such compensation for your services as is provided for in this
Section shall be the only compensation to which you shall be entitled under this
Agreement.
If this Agreement shall become effective subsequent to the
first day of a month, or shall terminate before the last day of a month, your
compensation shall be pro rated for such fraction of the month during which this
Agreement is in effect.
SECTION 7. Liability of the Investment Adviser.
You shall be liable only for willful misfeasance, bad faith or
gross negligence in the performance of your duties or reckless disregard of your
obligations under this Agreement, and nothing herein shall protect you against
any such liability to the Fund or its shareholders. You shall not be liable for
the acts and omissions of any agent (other than a director, officer or employee
of yours) employed by you, nor for those of any bank, trust company, broker or
other person with whom or into whose hands any moneys, shares of the Fund or
securities and investments may be deposited or come, pursuant to the provisions
of this Agreement. You shall not be liable for any defects in title of any
property acquired, nor for any loss unless it shall occur through your own
willful default. Subject to the foregoing, you shall not be liable
-4-
<PAGE>
for any action taken or omitted in good faith on the written advice of counsel,
provided that such counsel is satisfactory to the Fund.
SECTION 8. Additional Covenants.
You shall promptly notify the Board in writing if at any time
a material decrease in the amount of assets which you manage or other material
adverse change in your business or financial condition occurs or is reasonably
expected to occur.
SECTION 9. Termination of Agreement and Assignment.
This Agreement may be terminated at any time, without the
payment of any penalty, (i) on 30 days' written notice by you or (ii) on 24
hours' notice by the Fund, acting pursuant to a resolution adopted by the Board
or by the vote of the holders of a majority of the outstanding shares of the
Fund. This Agreement shall automatically terminate in the event of its
assignment. Termination shall not affect the rights of the parties which have
accrued prior thereto.
SECTION 10. Duration of Agreement.
This Agreement shall be effective April 30, 1996 and, unless
sooner terminated, shall continue until April 30, 1997. Thereafter it shall
continue for successive yearly periods, provided that such continuance is
specifically approved annually in the manner required by the Investment Company
Act of 1940.
SECTION 11. Definition.
When used in this Agreement, the term "a majority of the
outstanding shares of the Fund" means the lesser of (1) 67% of the Fund's shares
present at a meeting if the holders of more than 50% of the outstanding shares
are present in person or by proxy, or (2) more than 50% of the outstanding
shares of the Fund, and the terms "assignment" and "interested persons" shall
have the meanings given such terms in the Investment Company Act of 1940.
SECTION 12. Concerning Applicable Provisions of Law.
This Agreement shall be subject to all applicable provisions
of law, including, without limitation, the applicable provisions of the
Investment Company Act of 1940. To the extent that any provision herein
contained conflicts with any such applicable provisions of law, the latter shall
control.
This Agreement is executed and delivered in Hanover,
Pennsylvania, and the laws of the Commonwealth of Pennsylvania shall govern its
construction, validity and effect.
-5-
<PAGE>
If the agreement set forth herein is acceptable to you, please
so indicate by executing the enclosed copy of this letter and returning the same
to the undersigned, whereupon this letter shall constitute a binding agreement
between the parties hereto.
Yours very truly,
SHEPMYERS INVESTMENT COMPANY
/s/ Paul E. Spears
-----------------------------------
Paul E. Spears, President
Accepted:
/s/ George Connell
- -----------------------------------
RITTENHOUSE FINANCIAL SERVICES, INC.
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<PAGE>
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF
SHEPMYERS INVESTMENT COMPANY
----------------------------
The undersigned hereby appoints Shirley J. Kuhn and James E.
Harvey and each of them, attorneys with full power of substitution and
revocation, to attend the Annual Meeting of Shareholders of Shepmyers Investment
Company on April 28, 1997, and any adjournment thereof (the "Meeting"), and to
vote all Shares which the undersigned would be entitled to vote if personally
present upon the following matters, as set forth in the Notice of Annual Meeting
of Shareholders and related Proxy Statement, and upon such other business as may
properly come before the Meeting:
1. Election of Directors:
/ / FOR all nominees listed below (except as
marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all
nominees listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH HIS NAME IN THE LIST BELOW:
P.E. Spears R.P. Myers
G.P. King P.F. Spears
L.S. DeVan J.F. Thompson, III
J.M. Fuss C.D. Weber
R.E. Lemmon, Jr.
2. Proposal to approve the continuation of the existing Advisory
Agreement between the Company and Rittenhouse Financial Services,
Inc. in the form attached as Exhibit A to the Proxy Statement:
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to ratify the selection of Ernst & Young LLP as the
Company's independent certified public accountants for the
year ending December 31, 1997:
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
4. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the Meeting.
ALL PROXIES WILL BE VOTED, AND WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS
NOTED HEREON. IN THE ABSENCE OF INSTRUCTIONS, THIS PROXY WILL BE TREATED AS
GRANTING AUTHORITY TO VOTE IN FAVOR OF THE ELECTION OF DIRECTORS (INCLUDING
AUTHORITY TO VOTE CUMULATIVELY) AND WILL BE VOTED FOR PROPOSALS 2, 3 AND 4
ABOVE.
The undersigned hereby revokes any
proxy or proxies heretofore given
to vote such Shares at said
Meeting or any adjournment
thereof.
----------------------------------
----------------------------------
----------------------------------
Sign here exactly as name(s)
appear on left.
Dated:
---------------------------
PLEASE DATE, SIGN, AND RETURN THIS PROXY
IN THE ENCLOSED ADDRESSED ENVELOPE
