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)
________________________________________________________________________________
(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:
_____________________________________________________________________________
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 No.: _____________________________________
3) Filing Party: ___________________________________________________________
4) Date Filed: _____________________________________________________________
<PAGE>
SHEPMYERS INVESTMENT COMPANY
Post Office Box 339
Hanover, Pennsylvania 17331
Notice of Annual Meeting of Shareholders
----------------------------------------
April 1, 1998
To the Shareholders of
Shepmyers Investment Company:
The Annual Meeting of Shareholders of Shepmyers Investment Company (the
"Company") will be held on May 11, 1998, at 11:00 A.M. at the Altland House,
Abbottstown, 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 The Rittenhouse Trust Company until April
30, 1999;
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, 1998; 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 22, 1998 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 May 11,
1998 at 11:00 A.M. at the Altland House, Abbottstown, Pennsylvania, and any
adjournment thereof (the "Meeting"). This statement is expected to be mailed to
shareholders on or about April 1, 1998.
Only shareholders of record at the close of business on March 22, 1998 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, 1997, 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 The Rittenhouse Trust Company ("RTC"), 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* 73 1954 Chairman Chairman of the Board
of the and Director, Hanover
Board and Shoe Farms, Inc.
President (Standardbred horse
nursery); President
and Treasurer, Hanover
Shoe Farms, Inc. until
December 1997;
Chairman of the Board
and Director,
Standardbred Horse
Sales Company
(Standardbred horse
auctions); President
and Treasurer,
Standardbred Horse
Sales Company until
December 1997;
Director, Hanover Shoe
-3-
<PAGE>
<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>
Farms Foundation, Inc.;
Chairman of the Board and
Director, Garden State
Horse Sales Company
(Standardbred horse
auctions); President,
Garden State Horse Sales
Company until December
1997; Director, The
Rittenhouse Trust
Company.
G. P. King* 80 1962 Director; Retired.
Vice
President
and
Treasurer
L. S. DeVan 50 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 67 1979 Director Self-employed -
Licensed Battlefield
Guide, Gettysburg
National Military
Park, and accountant,
since May 1992.
-4-
<PAGE>
<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>
R. E. Lemmon, 51 1994 Director Treasurer and
Jr. Director, Hanover Shoe
Farms, Inc.; Treasurer,
Standardbred Horse Sales
Company; President and
Treasurer, Garden State
Horse Sales Company.
R. P. Myers 59 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.
P. F. Spears* 45 1993 Director President/CEO,
Digestive Disease
Center, Inc.; Member,
Advisory Board, Mellon
Bank, York,
Pennsylvania.
-5-
<PAGE>
<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>
J. F. Thompson, 72 1978 Director Marketing Specialist,
III(1) R.J. Reynolds (tobacco
company) until 1995;
Marketing Specialist,
CPS Retail Services
Inc. (tobacco
distributor) during
1995.
C. D. Weber(1) 59 1994 Director President, C.A. Weber
Agency, Inc.
(insurance agency).
</TABLE>
- -----------------
*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 is on the Board of Directors of RTC and 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. 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. RTC
serves as an investment manager for VNA, HHC and Hanover General.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 30(h) of the 1940 Act and Section 16(a) of the Securities Exchange
Act of 1934 require that the directors and officers of Shepmyers Investment
Company (the "Company"), certain affiliated persons of The Rittenhouse Trust
Company ("RTC"), and persons who own more than ten percent of the Company's
shares 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 any
failure to file by the specific due
-6-
<PAGE>
dates. To the Company's knowledge, all of these filing requirements were
satisfied during 1997, except (i) John M. Fuss, a director of the Company, filed
late one report relating to the acquisition of 200 shares, and (ii) Paul E.
Spears, President & Director of the Company, filed late two reports, one
relating to the combining in joint ownership of the 41,585 shares owned by
spouse and 75,567 shares owned by Paul E. Spears, and the other relating to the
acquisition of 1,000 shares. 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 RTC.
----------------------------
The following table sets forth information with respect to Shares
beneficially owned on December 31, 1997 by those directors and officers of the
Company not listed on page 15 as "Principal Shareholders."
-7-
<PAGE>
<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 5,610 *
P. F. Spears................................ 5,000 -0- *
C. D. Weber................................. 1,354 200 *
All directors and
officers as a group......................... 221,157 126,782 45.3%
</TABLE>
- ------------------
*Less than 1%.
W. Bruce McConnel, III (age 55) has served as Secretary to the Company
since 1977. He has been a partner in the law firm of Drinker Biddle & Reath LLP
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 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, 1997:
-8-
<PAGE>
<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>
- ------------------
(1) "Fund Complex" includes Shepmyers Investment Company and NRM Investment
Company, which are advised by RTC, and The Noah Fund for which RTC 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 RTC. RTC
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 26, 1998,
the Company's directors, including a majority of the Company's disinterested
directors, voted to approve the continuation of the Agreement until April 30,
1999 and to recommend its approval by shareholders at the Meeting. 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
Rittenhouse Financial Services, Inc. ("RFS") in that it did not contain the
provision requiring RFS to furnish the Company's Board of
-9-
<PAGE>
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, January
27, 1997 and January 26, 1998, 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 RTC, 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 RTC, the advisory fee, the experience of RTC personnel
providing such services, the resources of RTC, 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 Company's prior investment advisor, RFS, was acquired by The John
Nuveen Company. Mr. Connell, the sole shareholder of RFS, sold all of the
capital stock of RFS to The John Nuveen Company in a transaction that closed on
August 31, 1997. RTC is the entity responsible for managing the Company's
portfolio in consideration of the sale of RFS. RTC was not acquired by The John
Nuveen Company, and Mr. Connel remains RTC's sole shareholder. The Company was
not included among the RFS accounts transferred to The John Nuveen Company as
part of the sale of RFS. RFS personnel responsible for managing the Company's
portfolio continue to provide services as employees of RTC. All obligations and
liabilities of RFS under the Company's existing investment advisory agreement
were assumed by RTC without entering into a new investment advisory agreement in
accordance with Rule 2a-6 of the 1940 Act.
The Agreement provides that RTC 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, RTC is required at its expense to keep the books and
-10-
<PAGE>
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. RTC also bears the expense of obtaining portfolio
pricing information. RTC 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
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. RTC 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 RTC 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 RTC's 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 RTC 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 RTC 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 RTC, 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 RTC 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 RTC 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
-11-
<PAGE>
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, 1997, the Company paid
advisory fees to RFS of $16,644 and to RTC of $8,356, $6,800 of which was paid
to Raymond J. Keefe.
Unless sooner terminated, the Agreement will continue in effect until April
30, 1999, and thereafter for successive yearly periods, provided such
continuance is specifically approved annually in the manner required by the 1940
Act.
Investment Adviser
RTC is located at Two Radnor Corporate Center, Suite 400, Radnor,
Pennsylvania 19087.
The name and principal occupation of the principal executive officer and
each director of RTC as of January 26, 1998 were as follows: George W. Connell,
621 Pembroke Road, Bryn Mawr, Pennsylvania 19010 (Sole Shareholder, President
and Chief Executive Officer); Joseph J. McLaughlin, 322 Barnhill Rd., West
Chester, PA 19382 (President); Binney H.C. Wietlisbach, 730 Laurel Lane, Wayne,
PA 19087 (Vice President); Roland C. Baker, First Penn-Pacific Life Insurance
Company, 1801 S. Meyers Road, Oakbrook Terrace, IL 60181 (President); John W.
Boyer, 539 St. Davids Avenue, St. Davids, PA 19087 Philadelphia Suburban Corp.
(Retired Chairman and Chief Executive Officer); Virginia B. Clark, University of
Pennsylvania, 627 Franklin Building, 3451 Walnut Street, Philadelphia, PA
19104-6285 (Vice President for Development and Alumni Relations); John C.
Garner, Esquire,116 Grays Lane, Haverford, PA 19041, The Rittenhouse Trust
Company (Vice President, Trust and Estates); Nelson G. Harris, Esquire, 551
Walnut Lane, Philadelphia, PA 19128-1742 Tasty Baking Company (Chairman of the
Executive Committee); Charles J. Ingersoll, 417 E. Gowen Avenue, Philadelphia,
PA 19119, The Rittenhouse Trust Company (Executive Vice President and Director
of Banking and Trust Services); Paul M. Ingersoll, 638 Morris Avenue, Bryn Mawr,
PA 19010, Christie's International, Ltd. (Consultant); Edward W. Leisenring,
2575 White Horse, Berwyn, PA 19312 (Consultant); Leonard McCandless, Riddle
Village, Arlington 212, Media, PA 19063-6003, Rittenhouse Financial Services
(Vice President); Frank C.P. McGlinn, Esquire, 729 Millbrook Lane, Haverford, PA
19041, The Fidelity Bank (Retired Executive Vice President); William B.
McNamara, 937 East Haverford Avenue, Suite 201, Bryn Mawr, PA 19010, Haverford
Hotel Partners, Inc. (President); James S. Morgan, P.O. Box 181, 948 South Seas
Plantation Rd., Captiva Island, FL 33924, Rittenhouse Financial
-12-
<PAGE>
Services (Vice President); David M. Robinson, Two Radnor Corporate Center,
100 Matsonford Road, Radnor, PA 19087, The Rittenhouse Trust Company (Director
of Marketing); Bruce A. Rosenfeld, Esquire, Schnader, Harrison, Segal & Lewis,
1600 Market Street, Suite 3600, Philadelphia, PA 19103 (Partner); Robert I.
Smith, P.O. Box 1451, Stowe, VT 05672, The Glenmede Trust Company and the Pew
Charitable Trusts (Retired President and Chief Executive Officer); Paul E.
Spears, Route 194 South, Hanover, PA 17331, Hanover Shoe Farms, Inc.
(President); and Robert G. Wilder, Lewis, Gilman & Kynett, Inc. (Retired
Chairman).
W. Bruce McConnel, III, serves as Secretary to RTC and as Secretary to the
Company. RTC has advised the Company that it currently exercises investment
discretion over advisory accounts having total assets as of December 31, 1997 of
approximately $ 1.5 billion. RTC also performs other financial services to
personal and institutional clients.
RTC 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:
<TABLE>
<CAPTION>
Net Assets
as of
Name of Fund December 31, 1997 Annual Rate of Advisory Fee
------------ ----------------- ---------------------------
<S> <C> <C>
NRM Investment Company $ 17,000,000 $10,000(1)
</TABLE>
- ---------------------------------
(1) RTC 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 RTC 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 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
-13-
<PAGE>
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, 1998. 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.
-14-
<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, 1997:
<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
(Hamilton) Bank 46,456(1)(a) 200,182(1)(a,b) 32.1%
Broad and Chestnut Streets
Philadelphia, PA 19107
First National 46,456(2) 6.0%
Bank of Pennsylvania
Hermitage Square
Hermitage, PA 16148
Paul E. and
Josephine F. Spears 118,152(5) 15.4%
106 Oak Street
Hanover, PA 17331
Charlotte S. DeVan 129,866(1)(a),(3) 13.0%
213 Eichelberger St.
Hanover, PA 17331
Lawrence S. DeVan 7,015 72,970(3) 10.4%
200 Round Hill Road
Greenwich, CT 06831
Robert P. Myers 112,311(4) 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 the 46,456 Shares and shared voting
and investment power with regard to the 100,000 Shares.
(1)(b) Jean MacInnes 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) 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.
(4) Robert P. Myers has voting and investment power over 13,374 Shares; and has
voting and investment power over 98,937 Shares as Executor of the estate of
Henrietta Myers Miller.
(5) Paul E. Spears and Josephine F. Spears share voting and investment power as
Tenants By Entirety over all 118,152 Shares.
---------------------------
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
A shareholder proposal for the Annual Meeting of Shareholders to be held in
1999 must be received by the Company at its principal offices not later than
November 25, 1998, 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: April 1, 1998
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, such advice as
to occasional transactions in specific securities or such other information,
advice or assistance as you may deem
<PAGE>
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 persons as the Fund may direct any statements with
respect to the net asset value, net investment income and tax-exempt interest
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<PAGE>
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.
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<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.
Intending to be legally bound, The Rittenhouse Trust Company hereby assumes
all obligations and liabilities of Rittenhouse Financial Services, Inc. under
this Advisory Agreement.
/s/ George Connell
The Rittenhouse Trust Company
/s/ Paul E. Spears
Shepmyers Investment Company
Dated: August 30, 1997
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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 May
11, 1998, 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 The Rittenhouse Trust Company 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, 1998:
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
<PAGE>
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
