As filed with Securities and Exchange Commission on March 23, 2000
Registration No. 2-66073
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
POST-EFFECTIVE AMENDMENT NO. 25 X
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
AMENDMENT NO. 25 X
NRM INVESTMENT COMPANY
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Rosemont Business Campus
Suite 112, Building 3
919 Conestoga Road
Rosemont, Pennsylvania 19010
----------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number: (610) 525-0904
John H. McCoy, President, NRM Investment Company
Rosemont Business Campus
Suite 112, Building 3
919 Conestoga Road
Rosemont, Pennsylvania 19010
---------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
_______ immediately upon filing pursuant to paragraph (b)
_______ on [date] pursuant to paragraph (b)
___x___ 60 days after filing pursuant to paragraph (a)(1)
_______ on [date] pursuant to paragraph (a)(1)
_______ 75 days after filing pursuant to paragraph (a)(2)
_______ on [date] pursuant to paragraph (a) of Rule 485
DECLARATION PURSUANT TO RULE 24f-2
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Section (a) (1) of Rule 24f-2. The Rule
24f-2 Notice for the Registrant's fiscal year ending August 31, 1999 was filed
on October 27, 1999, and the notice for the current fiscal year ending August
31, 2000 will be filed no later than October 30, 2000.
<PAGE>
NRM INVESTMENT COMPANY
Rosemont Business Campus
Rosemont, Pennsylvania 19010
NRM Investment Company (the "Company") is a no-load, open-end, diversified
investment company which seeks interest income exempt from federal income taxes
by investing one half or more of all of its assets in tax-exempt obligations
with maturities generally not exceeding twenty years from date of purchase, and
by investing up to one half of its assets in non-exempt obligations, or common
or preferred shares. An additional consideration respecting all investments is
preservation of capital.
This Prospectus sets forth concisely the information about the Company that
a prospective investor ought to know before investing. Investors should read
this Prospectus and retain it for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offering
made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offering by the Company in any
jurisdiction in which such offering may not lawfully be made.
December 30, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
----
Summary of Risk and Return; Investments, Risks, and
Performance................................................... 1
Investment Objectives and Strategies................. 1
Summary of Principal Risks of Investing in the Fund.. 1
Bar Chart and Table............................................. 2
Fees and Expenses of the Company................................ 3
Investment Objectives, Principal Investments Strategies
and Related Risks............................................. 4
Municipal Bonds - Currently Available Securities..... 5
Municipal Bonds - When Issued Securities............. 5
Common and Preferred shares.......................... 6
Other Investments.................................... 7
Turnover............................................. 7
Risks of Investing in the Fund....................... 7
Management's Discussion of Fund Performance..................... 8
Graph........................................................... 10
Total Return Calculation........................................ 11
Management of the Company....................................... 11
Investment Advisor................................... 11
Pending Legal Proceedings............................ 13
Capital Stock........................................ 14
Shareholder Information......................................... 14
Pricing of Shares.................................... 14
Purchase of Shares................................... 15
Redemption of Fund Shares............................ 15
Dividends............................................ 16
Taxes................................................ 16
Financial Highlights............................................ 19
Application Form................................................ 20
Terms and Conditions................................. 21
<PAGE>
SUMMARY OF RISK AND RETURN
INVESTMENTS, RISKS, AND PERFORMANCE
Investment Objectives and Strategies
The Fund invests no less than fifty-one percent of its assets in municipal
bonds. Interest income from these is generally exempt from Federal Income Tax to
the Fund. So long as it invests more than half of its assets in municipals, Fund
distributions of interest to its shareholders from these tax-free sources will
likewise be free from federal tax. The Fund's objective in this regard is to
select suitable municipal bonds to earn and distribute tax-free interest. The
Fund's directors plan to invest the remaining part of the Fund assets in stock
or other instruments of high quality, United States companies with a market
capitalization of at least $5 billion; taxable treasury bonds, and taxable
corporate bonds rated "A" or better by Standard & Poor or Moody's rating
service. The directors will not be limited in their investments, however,
except as provided by law.
To accomplish the foregoing objectives, the Fund has employed an investment
advisor to be aware of and analyze the municipal bond market to recommend
advantageous purchases and sales. By so doing, it tries to maintain bonds of
short duration, competitive rates, with little risk of principal. The same
advisor will make recommendations regarding the stock, and corporate and
Treasury bonds. The advisor for both taxable and non-taxable investments, in
part, relies upon outside sources such as brokerage firms to make its
recommendations.
Summary of Principal Risks of Investing in the Fund
The risks of investing in the Company's fund include the economic condition
of the municipalities that issue the bonds the Company buys. The issuer may fail
to make principal payment or payment on time or its issue may lose its tax
status. Interest rates change constantly and most often affect the value of the
bonds. Normally if rates increase, the value of the portfolio decreases. To the
extent the Company invests in other than municipal bonds, there is a risk that
the businesses in which the Company invests will fail or that market conditions
will lessen the value of its stock or other security. An additional risk
peculiar to investing in this Company is that, for the period of 1974 through
1979 it operated as a steel company; its waste generation has led to
environmental proceedings in the past and one is pending. See "Pending Legal
Proceedings." For any of the foregoing reasons or for other risks including
those hereafter described, loss of money is a risk of investing in the fund. For
a more complete discussion of risks of investing in the fund, see "Risks of
Investing in the Fund" later in this prospectus.
1
<PAGE>
Bar Chart and Table
The bar chart and table shown below provide an indication of the risks of
investing in the Fund by showing changes in the Fund's performance from year to
year and by showing how the Fund's average annual returns for 1, 5, and 10 years
compare to those of a broad-based securities market index. How the Fund has
performed in the past is not necessarily an indication of how the Fund will
perform in the future.
NRM Investment Company Bar Chart
Period: August 1990 through August 1999
------- --------------------------------
90 2.7%
91 3.0%
92 9.1%
93 16.7%
94 2.8%
95 7.5%
96 5.1%
97 6.7%
98 7.8%
99 1.6%
<TABLE>
<CAPTION>
Average Annual Total
Returns (for period
ending 08/31/99) Past One Year Past 5 years Past 10 Years
- -------------------- ------------- ------------ -------------
<S> <C> <C> <C>
NRM Investment Co. 1.56% 5.72% 6.22%
Lehman Bros. Municipal
5 YR GO 2.21% 4.84% 6.12%
</TABLE>
2
<PAGE>
FEES AND EXPENSES OF THE COMPANY
This table describes the expenses that you may pay if you buy and hold
shares of the Fund. The Fund charges no shareholder fees, sales loads, exchange
fee or redemption fees of any kind.
Annual Fund Operating Expenses
The following are expenses that are deducted from Fund Assets:
Management Fees .06%(1)
(1) This percentage results from applying a fixed fee of $10,000 per year
against the Fund's 1999 average asset value. Should the assets increase the
percentage will decrease; if they decrease, the percentage will increase
proportionately.
Other Expenses .36%(2)
(2) "Other expenses" include fees for custodian, legal, other professionals, and
the directors; insurance; capital stock tax; and miscellaneous expenses. Such
expenses are expected to recur without significant change. An exception applies
to legal fees which are significantly higher during periods of litigation. Also,
certain accruals or payments of recoveries against the Company are considered
extraordinary expenses and accordingly are not included in "Other Expenses." To
illustrate, during fiscal years ending August 31, 1996 and August 31, 1997, the
Company accrued, respectively, $111,000 and $34,000 relative to a single item of
environmental litigation. They represented .65% and .20% of average net assets
for those years. Had they been included in "Other Expenses" for those years,
they would have, for 1996, increased expenses from .37% to .96% and, for 1997,
from .37% to .57%. During the fiscal year ending August 31, 1998, the Federal
Environmental Protection Agency advanced an additional claim, which because of
its materiality, its being non-recurring and atypical to normal business
activity, and is not being of a nature normally considered in evaluating
operating results, the Board deemed it to be extraordinary. For the fiscal year
ending August 31, 1999, the Company accrued expenses of $100,000 in regard to
this liability. Had this sum been included in "Other Expenses" for fiscal 1999,
it would have increased expenses from .36% to .94%. See "PENDING
3
<PAGE>
LEGAL PROCEEDINGS" for a description of the current claim.
Total Annual Fund Operating Expenses .42%
Example:
This example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$4 $13 $23 $53
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
The purpose of the foregoing table is to assist the investor in
understanding the various costs and expenses that an investor in the fund will
bear directly or indirectly. A more complete description of management fees is
included in the prospectus under "MANAGEMENT OF THE COMPANY."
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENTS STRATEGIES,
and RELATED RISKS
Objectives
The Company is a no-load, open-end, diversified investment company. It has
a two-part objective. For at least fifty-one percent of its assets it will
invest in high-grade municipal bonds with short to medium duration, and other
investment quality instruments whose income is free from Federal Income Tax. The
Company plans to invest the rest of the assets in common or preferred shares or
other instruments of United States companies with large market capitalizations,
or in high quality taxable notes and bonds or convertible instruments. In either
category, the Company will buy with the objective of preserving capital yet
taking advantage of market undervaluations. Except as provided by law, however,
the Company's Board of Directors shall be unrestricted in purchasing or selling
securities. There can be no assurance that the Company's objectives will be
achieved. The investment objectives may not be changed without a vote of the
holders of a majority of the outstanding shares of the Company.
4
<PAGE>
Municipal Bonds - Currently Available Securities
As above, the Company intends to invest no less than one half of all of its
assets in debt obligations issued by or on behalf of states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies, instrumentalities or authorities ("Municipal
Bonds"), the interest from which, in the opinion of counsel to the issuer, is
exempt from federal income tax. The Company presently intends to invest in
obligations with maturities generally less than twenty years from date of
purchase, but such obligations will not necessarily be held until maturity.
Generally, Municipal Bonds with longer maturities tend to produce higher yields
and are subject to greater market fluctuations as a result of changes in
interest rates than are Municipal Bonds with shorter maturities and lower
yields.
The two principal classifications of Municipal Bonds are "general
obligation" and "revenue" or "special obligation" bonds. General obligation
bonds are secured by the issuer's pledge of its faith, credit and taxing power
for the payment of principal and interest. Revenue or special obligation bonds
are payable only from the revenues derived from a particular facility or class
of facilities or, in some cases, from the proceeds of a special excise tax or
other specific revenue source such as from the user of the facility being
financed. Qualified private activity bonds are in most cases revenue bonds and
do not generally constitute the pledge of the credit or taxing power of the
municipal issuer of such bonds; instead they are dependent for the payment of
principal and interest on the credit standing of the private corporate user of
the facility. The portfolio may also include "moral obligations" bonds which are
normally issued by special purpose public authorities. If an issuer of moral
obligation bonds is unable to meet its obligations, the repayment of such bonds
becomes a moral commitment but not a legal obligation of the state or
municipality in question.
Municipal Bonds - When Issued Securities
The Company may purchase Municipal Bonds on a "when-issued" or delayed
delivery basis for delivery at a future specified date at a stated price and
yield. The Company would generally not pay for such securities or start earning
interest on them until they are received. The Company records when-issued
securities as an asset on the date of the purchase commitment. Thereafter the
securities are subject to changes in value based upon changes in the general
level of interest rates. To the extent that the Company remains substantially
fully invested at the same time that it has purchased "when-issued" or delayed
delivery securities, as it would generally do, there will be greater
fluctuations in its net assets than if the Company set aside cash to satisfy its
purchase commitment. The Company does not intend to purchase "when-issued" or
delayed delivery
5
<PAGE>
securities for speculative purposes but only in furtherance of
its investment objective.
If the Company sells a "when-issued" or delayed delivery security before
delivery, any gain or loss would not be tax-exempt. When the Company engages in
"when-issued" or delayed delivery transactions, it relies on the seller to
consummate the trade. Failure of the seller to do so may result in the Company
incurring a loss or missing the opportunity to obtain a price considered to be
advantageous.
Other Tax Free Investments Excluded
Because of tax and financial risks inherent in advance refunding bonds,
501(c)(3) bonds, Blind pools and so called gray box and black box issues, the
Company does not plan to invest in these instruments.
Common and Preferred Shares
and Other Instruments
The Company, as above, may make investments of less than one half of all of
its assets in common or preferred shares or other financial instruments. Except
as provided by law, the Company in so doing will not be barred from any sale or
purchase. Although not restricted in its investments, the Company's board of
directors, acting as a committee, normally relies upon its investment advisor
and follows the advisor's investment philosophy.4 That philosophy which will be
the Company's emphasis in making investment choices, is to build and protect the
purchasing power of the Company's portfolio over time while minimizing risk. To
accomplish these two goals, it recommends a fully invested portfolio and
focusing on company earnings as the driver of its stock price. Accordingly the
Advisor emphasizes consistency and predictability of earnings growth (and
related dividend growth), share growth from general or sector economic
conditions, and the selected company's position in the industry. The Advisor's
Investment Selection Committee normally considers an equity investment only if
it meets the following criteria: it is rated "A" or better by a major rating
company; it has predictable and consistent earnings and dividend growth; the
issuer is an industry leader with a capitalization of $5 billion or more and is
listed on a major United States exchange.
The directors will normally purchase shares or other instruments for
investment and not for short term trading purposes. Nevertheless, such shares or
instruments will be sold whenever the Company determines that it is no longer
compatible with the Company's objectives and purposes. There can be no assurance
that the purchases or sales individually or as a group, will produce either
income or gain. The shares are subject to market conditions that change
frequently and cannot be predicted with accuracy.
- ----------
(3) See infra under "Investment Advisor."
6
<PAGE>
Other Investments
As a temporary investment or to maintain liquidity, the Company also may
hold a portion of its assets in cash or invest in any one or a combination of
the following: investment grade debt securities; money market instruments,
maturing in 12 months or less, such as domestic bank certificates of deposit (of
domestic banks which are insured by the Federal Deposit Insurance Corporation
and have total assets at the time of purchase of $1.5 billion); obligations of,
or guaranteed by, the United States Government and its agencies and
instrumentalities; tax-exempt commercial paper and municipal funds (subject to
investment restrictions); and repurchase agreements entered into with domestic
banks where the underlying securities are any of the foregoing. These
investments normally produce lower returns than the municipal bonds and common
and preferred shares explained under the preceding heading and accordingly will
lower the income from investment operations and average annual returns for
measuring periods. To the extent the Company invests in money market instruments
or municipal funds there will be a duplication of management fees which will
also tend to lower income from investments and annual returns.
Portfolio Turnover
The Company will not be restricted in engaging in active and frequent
trading of portfolio securities to achieve its principal investments strategies,
although in the past five fiscal years the portfolio turnover rate has not
exceed 28.98%, and in the year ending August 31, 1999 was 3.27%. To the extent
the Company engages in trades it is likely that it will recognize gain which
will increase the taxable income flowing through to the shareholders or loss
which will decrease the net asset value of the Company and its shares. Trading
in bonds will incur expenses measured by the difference between bid and asked
prices; trading in other securities will incur commission expenses reducing net
asset value.
In purchasing and selling municipal bonds, common and preferred shares, or
other investments, the Company's Board of Directors will not be restricted
except as previously set forth in this Prospectus and in the Statement of
Additional Information.
Risks of Investing in the Fund
Generally the risks associated with the Company's investments in tax free
obligations involve the financial conditions of the state or municipal issuers.
Changes in economic conditions or the policies of the issuers could have a
significant effect upon the value of the securities which the Company owns.
Further, market rates of interest have a direct bearing upon the value of the
Company's securities regardless of the status of the issuers. The Company
depends upon Counsel for municipal issuers to opine upon the
7
<PAGE>
tax free status of the investments. A risk inherent in investing in municipal
issues is that the Internal Revenue Service may assert that the issue is not tax
free, or if initially tax free may have since lost qualified status.
The investments the Company makes other than in tax free bonds will be
subject to all of the market risks generally associated with conditions within
the issuer, within the issuer's industry, or within the economy as a whole.
Although the Company will purchase only such investments as the advisor believes
to be undervalued, there is no certainty that this objective will be met.
An additional risk is the remaining liability of the Company itself for
activities it conducted before it became an investment company. As shown under
the heading of PENDING LEGAL PROCEEDINGS, a matter involving environmental
issues is pending with respect to the Company's activities when it was an
operating steel processing plant. There were like proceedings in the past,
settled or successfully resisted. The pending matter is considered material.
Presently counsel for the Company has determined that the Company's share of a
contracted obligation to clean the first phase of an environmentally damaged
site will be $100,000. The Company's remaining obligation is of such an
indefinite nature that counsel is unable to predict an amount or range of
liability; accordingly, the Company has not accrued any amount as an expense. If
and when amounts are accrued, they will decrease the net asset value of the fund
and, as a consequence, the share values of the investors' shares. Based upon the
foregoing or based upon other factors affecting the market generally or the Fund
in particular, there is a risk of losing money by investing in the Fund.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
In a pre-emptive strike against inflation, the Federal Reserve has recently
raised the federal Funds Rate twice to 5.25%. The economy may continue to move
forward over the next several months with GDP final demand growing around a 4%
pace. Consumers are likely to sustain spending at a strong rate as employment
remains high and consumer confidence is at near record levels. Some hints of
slower economic growth are beginning to appear but the evidence is far from
overwhelming. The recent shift toward a more positive yield curve is a sign that
investor expectations are shifting from a deflationary to an inflationary bias.
Between August, 1998 and August, 1999 Municipal bond rates in the
intermediate range increased approximately 60 basis points. This increase in
interest rates has curtailed total returns in that sector. Throughout the year
we have continued to emphasize high current income along with high credit
quality in our bond selections. The credit quality of the portfolio remained
very strong during the fiscal year with 100% of the bonds rated investment grade
or better. Approximately 70% of the portfolio's holdings were rated "AAA", the
highest bond rating. During the period we shortened
8
<PAGE>
the average maturity from 17.0 to 16.0 years.
In addition, we have maintained broad diversification over a range of
different kinds of tax exempt bonds including general obligations, housing,
hospital and revenue bonds.
The following page is a line graph comparing the initial account value and
subsequent account values at the end of each of the most recently completed ten
fiscal years of the Company, assuming a $10,000 investment in the Company at the
beginning of the first fiscal year, to the same investment over the same periods
in Lehman Bros. 5 year Municipal Index. Material in the table and the graph
showing past performance is not predictive of future performance.
9
<PAGE>
Plot Points for NRM Investment Company Graph
Period: August 1990 through August 1999
NRM INDEX
------ ------
90 10,000 10,000
91 10,300 11,010
92 11,235 12,104
93 13,111 13,174
94 13,477 13,390
95 14,490 14,448
96 15,231 14,984
97 16,253 15,537
98 17,527 16,596
99 17,801 16,963
10
<PAGE>
NRM Investment Company
Total Return Calculation
Ending Redeemable Value
Annualized Return $1000 Invested
----------------- -----------------------
1 Year 1.56% $1,015.60
5 Year 5.72% 1,228.43
10 Year 6.22% 1,780.06
*Past Performance is not predictive of future performance.
MANAGEMENT OF THE COMPANY
The business and affairs of the Company are managed by the Company's Board
of Directors. The Company's by-laws provide for five directors and all positions
are filled. Two of the directors serving, including John H. McCoy, Jr. and
George W. Connell, are "interested persons" within the meaning of that term
under the Investment Company Act of 1940. The sole compensation of the directors
is $400 per meeting which normally are limited to four per year. The Statement
of Additional Information contains the names of and the general background
information concerning each director of the Company.
Investment Advisor
Rittenhouse Trust Company ("RTC"), a Pennsylvania state chartered
commercial bank and trust company, is the Company's investment advisor. Its
office is at Suite 450, No. 3 Radnor Corporate Center, Radnor, Pennsylvania
19087. RTC is qualified to act as an investment advisor for the Company under
the applicable banking laws of the Commonwealth of Pennsylvania.
RTC provides investment supervisory services to the Company on a
non-discretionary basis. Its activities are limited to making recommendations
with respect to purchases and sales of securities in accordance with the
Company's investment policies, the provisions of the Company's registration
statement, the requirements of the Investment Company Act of 1940 and the
requirements of the Internal Revenue Code of 1986.
Mr. George Connell, a 1958 graduate of the University of Pennsylvania and
former first Vice President of Drexel Burnham Lambert, Incorporated, is RTC's
director and sole shareholder. Mr. Joseph McLaughlin is RTC's president. Since
the time the Company most recently employed RTC, Mr. Connell and Mr. McLaughlin
have been responsible to the Directors for day-to-day recommendations regarding
the Company's portfolio.
11
<PAGE>
In addition to being a principal of RTC, Mr. Connell has been engaged in
some or all of the various enterprises described herein for a period in excess
of five years.
In addition to being president of RTC, Mr. McLaughlin is its chief
operating officer, serves on the board of directors, is a member of the
executive committee and its investment selection committee. Previously, he was
vice president and manager of the Private Client Group of Rittenhouse Financial
Services. Prior to joining Rittenhouse, he was a vice president at J.P. Morgan &
Company and a manager at Peat, Marwick, Mitchell & Co. He is a Certified Public
Accountant, serves on the Board of Directors of Philadelphia Hospitality, Inc.
and is a member of the Philadelphia Estate Planning Council. He is President of
St. Joseph's University Accounting Alumni Association and a member of the Board
of Governors in the College of Business and Administration at St. Joseph's
University, from which he graduated.
From December 9, 1992 through July 15, 1997, Rittenhouse Financial Services
Inc. (RFS) served as the Company's investments advisor. Mr. Connell organized
RFS in 1979. Through September 1, 1997 he was chairman, chief executive officer,
chief investment officer and sole shareholder of RFS; he was also the chief
executive officer of Rittenhouse Financial Securities (a registered broker
dealer) which is a subsidiary of The Rittenhouse Trust Company. On September 1,
1997 RFS was acquired by The John Nuveen Company.
On October 7, 1997 the Board of NRM ratified an amendment to the advisory
agreement dated September 3, 1997 transferring the investment advisory account
and agreement from RFS to The Rittenhouse Trust Company. The assignment did not
result in a change of actual control or management of the investment manager.
Since November 27, 1992, the members of the Company's Board of Directors
acting as a committee, and taking the advisor's recommendations into account (1)
have made decisions with respect to all purchases and sales of the Company's
portfolio (2) have directed the maintenance of records and (3) have been
responsible for the day-to-day management of the portfolio; further, the Board
also arranges for (4) the services of an independent certified public
accountant; (5) custodial and transfer agency services; (6) the computation of
net asset value by RTC; (7) the providing of fidelity bond coverage; (8) the
providing of other administrative services and facilities necessary to conduct
the Company's business; and (9) the providing of certain services necessary to
comply with federal securities laws. The Company assumes all expenses therefor.
For the services provided by RTC, the Company pays RTC $10,000 annually in
quarterly installments. This is a fixed fee amount and accordingly is not based
upon assets under management. However, for the past year, the fee was equal to
.06% of the Company's average net assets.
12
<PAGE>
Pending Legal Proceedings
In recent years, the Company has been identified as a Potentially
Responsible Party ("PRP") in two environmental proceedings asserted by the
United States Environmental Protection Agency. They are denominated the
Strasburg landfill in Newlin Township, Chester County, Pennsylvania, and
Boarhead Farms situate in Bridgeton Township in northern Bucks County, Pa.
During the fiscal year ended August 31, 1998, the Strasburg PRPs agreed
among themselves to a settlement offer of the EPA claims for the consideration
of $2,500,000 and of a contributing PRP claim for an additional $273,000. The
Company's share of the combined amount was $141,500. The EPA and the
contributing PRP accepted these sums. The PPRs paid and the EPA accepted the
agreed amount on January 8, 1999, and the contributing PRP accepted its agreed
amount at the same time.
The settlement agreement has "reopeners" allowing for an assertion of
liability for contamination to groundwater to the extent based upon newly
discovered information, and for natural resource damage. In counsel's view, it
is unlikely that there will be additional claims regarding the reopeners.
Accordingly this claim should no longer be regarded as material; however, it is
mentioned here since it is not possible to give absolute assurance in this
regard.
The Boarhead matter is ongoing, unresolved and material. In November 1998
EPA issued a Record of Decision ("ROD") relative to estimated future cleanup
costs. Those together with EPA's remedial costs already incurred total
$26,000,000.
To date there are six named PRPs sharing in a defense group ("the Group")
and the Fund's share, should it remain in the Group (see below), is one half of
one share. (The Company and another of the six owned an alleged waste generator
at different times and are considered one member.) The Group's investigation has
identified approximately 23 others who are arguably PRPs. The Group will attempt
to bring in as many of the 23 as possible to share expenses and liability, and
otherwise resolve or try the matter.
After the ROD was distributed, EPA gave certain PRPs special notices to
remediate. The Company was not among them. The Company's interpretation of this
circumstance is that the EPA, based upon evidence available to it at the time,
determined that the Company was not sufficiently linked to the site to warrant a
cleanup direction. Nevertheless other PRPs who did receive special notices have
pointed out evidence which may lead to a link between the Company and the
Boarhead site. The Company will continue to examine whatever evidence is
presented that may create such a link. Based thereon it will make a decision
whether it will remain a member of the Group. If at any time it declines to
participate further with the Group, it will be exposed to contribution claims
from those remaining and will lose contribution protection afforded under CERCLA
(The Superfund Act).
13
<PAGE>
The Company is contractually committed to pay a one half per capita share
of the first phase of the Boarhead cleanup. The total cost for this phase is
approximately $1 million, of which the Company's share is approximately
$100,000. During the first phase cleanup and pending the determination of
responsibilities for later phases of the program, the Group will engage in
allocation taking into account existing and what is expected to be later
discovered evidence. Based thereon, the $100,000 commitment may be increased,
decreased or remain static. By the same means, the Company will judge its cost
exposure for the later and larger cleanup phases.
Counsel expects the least the Company may expect to incur in regard to this
project is the approximate $100,000 presently committed and accrued. However, at
this time in light of the unknown number of participants, the uncertainty of the
ROD's estimates for future operation costs and related cleanup expense, the
issue of linkage, the absence of knowledge of evidence to be presented to the
Group's allocator, counsel is unable to predict an amount or range of liability
beyond $100,000. The Fund will resist all claims vigorously.
Capital Stock
As of October 12, 1999, the Company's president and chairman of the board,
John H. McCoy owned beneficially and of record approximately 66% of the
Company's outstanding shares and controlled the Company. As of the same date,
five shareholders owned beneficially approximately 86% of the Company's
outstanding shares. In addition to Mr. McCoy, these included directors Francis
J. Rainer (5.6%); Joseph V. Somers (5.5%); Thomas F. Kilcullen, Jr. (4.75%) and
a non-affiliated shareholder, Samuel R., Gilbert, Jr. (4.7%) A redemption of a
significant number of shares by one or more of these shareholders could require
the Company to liquidate portfolio securities to obtain all or a portion of the
redemption proceeds. The liquidation of portfolio securities under these
circumstances could be disadvantageous to the Company's remaining shareholders
and could so reduce the Company's total assets that continued operation as an
investment company would not be economically feasible. The recovery or booking
of environmental claims against the Company after a significant redemption would
likewise be disadvantageous to the remaining shareholders. If the major
shareholders redeemed and an environmental claim was recovered against the
Company at or about the same time, the reduction in net worth for the remaining
shareholders could be significant.
SHAREHOLDER INFORMATION
Pricing of Shares
The net asset value per share for purposes of both purchases and
redemptions is determined by the Adviser as of the close of trading (normally at
4:00 p.m. New York City time) on each
14
<PAGE>
day on which the New York Stock Exchange is open for trading, other than a day
during which no share was tendered for redemption and no order to purchase or
sell a share was received. It is computed by dividing the value of all portfolio
securities and other assets, less liabilities, by the number of shares
outstanding on such date. Portfolio securities for which market quotations are
readily available (other than debt securities maturing in 60 days or less) are
valued at market value. Securities for which market quotations are not readily
available are valued at their fair value by the Adviser under the supervision
and responsibility of the Company's Board of Directors. Absent unusual
circumstances, portfolio securities maturing in 60 days or less are valued at
amortized cost.
Purchase of Shares
Those wishing to make purchases of the Company's shares may send a check
and completed application (see the form attached to this prospectus) directly to
Laurel Trust Company, 551 Main Street, Johnstown, Pa., 15907. Full and
fractional shares will be purchased for the shareholder's account at the net
asset value per share next computed after receipt of the order. Initial
investments must be for at least one share. There is no minimum investment for
additional shares and such investment should be accompanied by the "stub" from a
confirmation sent from the Company's transfer agent to the shareholder after
each prior transaction. The Company imposes no sales charge on purchases of its
shares.
Redemption of Fund Shares
The Company will redeem its shares at their net asset value next computed
after the receipt of a written redemption request submitted according to the
following procedures: if certificates have been issued for the shares to be
redeemed, the certificates must be either endorsed or accompanied by a stock
power, signed exactly as the shares are registered. If certificates have not
been issued, a signed stock power must accompany the request or the request
itself must be in similar form. In either case, unless the redemption proceeds
are less than $1,000, the signature(s) on the certificate(s), stock power(s) or
request must be guaranteed by a member firm of a national securities exchange or
a commercial bank. (Note: the required signature guarantee is not a
"notarization" as commonly understood, and accordingly is not accomplished by
using the services of a notary public.) Additional documents may be required for
shares redeemed by corporate, partnership or fiduciary accounts.
Payment of the redemption proceeds will be made after receipt of a
redemption request containing the information and providing the documentation
specified in the preceding paragraph. Payment will be made as soon as possible,
and in the absence of unusual circumstances, no later than seven days after
receipt of the
15
<PAGE>
request. Unusual circumstances which could delay payment are those determined by
the Securities and Exchange Commission, or during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday closings),
during which trading on the New York Stock Exchange is restricted, or for such
other periods as the Securities and Exchange Commission may permit. The proceeds
paid upon redemption may be more or less than the shareholder's cost, depending
on the value of the Company's portfolio securities at the time of redemption.
Redemption requests should be tendered to Laurel Trust Company 551 Main Street,
Johnstown, Pa., 15907. For purchase and redemption information call 814 536
2110.
Dividends
The Company normally distributes its investment company income quarterly
and its capital gain net income at least annually.
In calculating interest income, premiums on securities are amortized but
discounts (except for original issue discounts) are not accreted. Dividend
accruals are normally made as of the ex-dividend dates of companies in which the
Company owns shares. In determining amounts of capital gain to be distributed,
any capital loss carryovers from prior years will be offset against current
capital gains.
All distributions of net investment income and any capital gains paid by
the Company will be paid by checks mailed to the shareholders, or by written
request by a shareholder, will be reinvested in additional shares of the Company
without sales charge at the net asset value per share as determined at the close
of business on the payment date. Confirmation statements reflecting additional
shares purchased through reinvestment of distributions will be mailed to all
shareholders who do not receive their distributions in cash.
Taxes
The Company qualified for the fiscal year ended August 31, 1999 and
intends to continue to qualify for and elect the special tax treatment afforded
regulated investment companies under Subchapter M of the Internal Revenue Code.
It emphasizes investments in municipal bonds. From such bond income, it will pay
"exempt-interest" dividends of not less than 90% of its tax exempt net income
which may be treated by the Company's shareholders as items of interest
excludable from their gross income. The exempt interest treatment of the
dividends to shareholders will continue for as long as the Company holds no less
than 50% of its assets in securities exempt from Federal tax. As heretofore
indicated the Company intends to invest more than 50% of its assets in
securities the ordinary income from which is exempt from federal tax. Ordinary
and capital gain income from sources other than exempt securities will be taxed
to the shareholders whether the income is received in the form of a cash
16
<PAGE>
distribution or reinvested to acquire additional shares.
Interest on newly issued Municipal Bonds, the proceeds of which are used to
provide financing for persons other than states and local governmental units
(such bonds sometimes referred to as "private activity bonds") will generally be
tax exempt if certain qualification requirements are met by the issuer, but for
the most part in computing alternative minimum tax will be treated as an item of
tax preference for individual and corporate shareholders; accordingly, it is
anticipated that the Company, in purchasing new issues, will favor governmental
operations bonds over private activity bonds.
Any gain the Company recognizes on the disposition of exempt-interest
securities it purchases after April 30, 1993 and which is attributable to
accrued market discount will be taxed to the shareholders as ordinary income;
the balance of the gain, if any, will be taxed to the Company or the
shareholders as capital gain.
Exempt-interest dividends may be taxable to investors under state or local
law as dividend income even though all or a portion of such distributions may be
derived from interest on tax-exempt obligations which, if realized directly,
would be exempt from such income taxes. For Pennsylvania residents, an exclusion
from Pennsylvania State personal taxable income is allowed for dividends or
distributions received from the Company to the extent they were earned by the
Company from interest on Pennsylvania State and Local Government obligations.
If a shareholder receives an exempt-interest dividend with respect to any
share of the Company held for six months or less, any loss on the sale or
exchange of such share shall be disallowed to the extent of the amount of the
exempt-interest dividend. If a shareholder redeems any shares between dividend
record dates, the amount of any undistributed interest income will be included
in the net asset value per share and will increase the capital gain (or decrease
the capital loss) realized by the shareholder upon redemption. Capital gains
realized upon redemption are not exempt from federal income taxes.
Although exempt interest dividends are excludable from shareholders' gross
income, such dividends are taken into account in determining whether a portion
of social security benefits will be subjected to income tax under Section 86 of
the Internal Revenue Code.
Under the Code, interest on indebtedness incurred or continued to purchase
or carry tax-exempt securities (which would in whole or in part include shares
issued by the Company) will not be deductible by the borrower. Under procedures
established by the Internal Revenue Service, a purpose to use borrowed funds to
purchase or carry tax-exempt securities may be shown by either direct or
circumstantial evidence. To the extent interest expense is incurred to purchase
taxable investments, deductions therefore are generally limited to the amount of
the net taxable investment income.
17
<PAGE>
Under the Code, corporate shareholders of the Company may be required to
pay an alternative minimum tax based in part upon the difference between the
shareholders' taxable income and its adjusted current earnings. In effect this
may require a tax for corporate shareholders on exempt interest dividends.
In addition to exempt interest dividends, the Company will pay dividends of
at least 98% of the ordinary income it receives from investments generating
taxable income on a calendar year basis; 98% of its capital gain net income
(amounts, if any, in excess of current or carryover losses) for every year
ending on October 31; and, 100% of any undistributed amounts of ordinary and
capital gain income from the preceding calendar year. These sums are fully
taxable to the shareholders. Moreover, since five or fewer shareholders own more
than half of the Company's stock, and since its ordinary income is from
dividends and interest, it is a personal holding company within the meaning of
section 542 of the Code. The Company's ordinary income (exclusive of tax-free
interest) is personal holding company income and to the extent not distributed
is subject to a penalty tax of 39.6% over corporate regular tax. Accordingly,
for this additional reason, it is the Company's policy to distribute all of the
Company's income currently.
The foregoing is only a brief summary of some of the important tax
considerations generally affecting the Company and its shareholders. No attempt
is made to present a detailed explanation of the federal, state and local income
tax treatment of the Company or its shareholders. This discussion is not
intended as a substitute for careful tax planning. Accordingly, potential
investors in the Company are urged to consult their tax advisors with specific
reference to their own tax situations.
In general, dividend record dates are set by the directors to occur on
approximately the 23rd day of February, May, August and November. Shareholders
will be advised annually within 60 days of the end of the Company's taxable year
as to the federal income tax consequences of distributions made during such
year, and will be similarly advised after the end of each calendar year.
18
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights table is intended to help you understand
the Fund's financial performance for the past 5 years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned on an investment in
the Fund (assuming reinvestment of all dividends and distributions). This
information for years 1996 through 1999 has been audited by Beard & Company,
Inc. independent auditors, whose report, along with the Fund's financial
statements, are included in the SAI or annual report, which is available upon
request. For the year ending August 31, 1995, Ernest & Young, LLP audited the
information.
<TABLE>
<CAPTION>
Year Ended August 31
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
- --------------
(for a share outstanding
throughout the indicated
year)
Net asset value, beginning of year $4.041 $3.968 $3.933 $3.964 $3.909
Income from investment operations:
Net investment income .191 .222 .221 .210 .237
Net realized and unrealized gain
(loss) on investments (.125) .087 .041 (.004) .056
------ ------ ------ ------ ------
Total from investment operations .066 .309 .262 .206 .293
Less distributions:
Distributions from capital gains (.002) (.015)
Dividends from net investment income (.161) (.221) (.221) (.210) (.237)
Distribution in excess of net
investment income (.023) -0- (.006) (.027) (.001)
------ ------ ------ ------ ------
Total distributions (.186) (.236) (.227) (.237) (.238)
------ ------ ------ ------ ------
Net asset value end of year $3.921 $4.041 $3.968 $3.933 $3.964
====== ====== ====== ====== ======
TOTAL RETURN 1.567% 7.84% 6.71% 5.11% 7.52%
RATIOS\SUPPLEMENTAL DATA
Net assets, end of year (in thousands) $15,824 $17,341 $17,015 $16,847 $16,982
Ratio of expenses to average net assets .99% .42% .57% 1.02% .37%
Ratio of net investment income to
average net assets 4.72% 5.50% 5.56% 5.24% 6.08%
Portfolio turnover rate 3.27% 12.57% 28.98% 6.24% 22.73%
</TABLE>
*See note 3 on following page
19
<PAGE>
APPLICATION FORM: NRM INVESTMENT COMPANY
Mail to: Laurel Trust Company, 551 Main Street, Johnstown, Pa., 15907.
- -----------------------------------------------------------------
REGISTRATION: Individual Tenants in Common Trustees
Joint Tenants Custodian Other
- -----------------------------------------------------------------
(Name) Social Security No.
(Tax Identification No.)
- -----------------------------------------------------------------
(Name) Social Security No.
(Tax Identification No.)
- -----------------------------------------------------------------
PERMANENT MAILING ADDRESS: ____________________________________
Street Address City State Zip
GIFTS TO MINORS _________________________________As Custodian for
- -----------------------------------------------------------------
Minor's First Name Initial Last Name Age Minor S.S. No.
Under the _______________________Uniform Gifts to Minors Act.
State
Initial order, payment enclosed
If this Application accompanies a check for the purchase of investment
company shares, I enclose a check payable to Laurel Trust Company, and would
like you to:
Issue Certificate, or hold shares in account at Bank
Check here if dividends and distribution are to be reinvested at net asset
value without sales charge.
- -------------------------------------------------------------------------------
This application is made in accordance with the provisions of the current
Prospectus of the Company, a copy of which I have received, and the applicable
terms and conditions on the reverse side. I am of legal age in the State of my
residence.
- -------------------------------------------------------------------------------
Date Signature of co-owner
20
<PAGE>
Terms and Conditions
Purchases of Company Shares:
Initial Purchase: Upon receipt of the application form from the subscriber, and
accompanied by any necessary funds, Laurel Trust Company, acting as agent for
the subscriber, will purchase as many shares (including fractional shares) of
the Company as may be purchased at the net asset value next computed after
receipt of the application form and payment to Laurel Trust Company, 551 Main
Street, Johnstown, Pa., 15907. Fractional shares shall be purchased to the
nearest one-thousandth (1/1000) of a share. Initial purchases must be for at
least one share.
Subsequent Purchases: Upon receipt of additional funds, Laurel Trust Company
will purchase additional shares (including fractional shares) in the same manner
as above. Additional purchases must be for at least one share.
The Company reserves the right in its discretion to reject all or any portion of
a purchase order and return the accompanying payment.
I hereby certify that the Tax Identification No. contained herein is true,
correct and complete and that I am not subject to backup withholding under
Section 3406 (a)(1)(C) of the Internal Revenue Code.
- ------------------------------------------------------------------
Date Signature of co-owner
21
<PAGE>
[PROSPECTUS OUTSIDE BACK COVER]
The Company's Statement of Additional Information contains additional
information about the Fund, which in large part expands the discussion contained
in the prospectus and which may be of interest to some investors. This
additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. The Statement of Additional
Information and the Fund's annual and semi-annual reports are available, without
charge, upon request, by calling the Fund's Custodian and Transfer Agent, Laurel
Trust Company, 551 Main Street, Johnstown, Pa., 15907; personnel at Investor's
Trust will be available to receive shareholder inquires and to furnish other
pertinent information to interested people.
Information about the Fund (including the SAI) can be reviewed and copied
at the Commission's Public Reference Room in Washington, D.C. Information on the
operation of the Commissions' Public Reference Room may be obtained by calling
the Commission at 1-800 SEC 0330 and asking for the public reference file and
referring to the Fund's Investment Company Act file number of 2-66073. The
reports and other information about the Fund are available on the Commission's
Internet site at http://www.sec.gov. Copies of this information may be obtained,
upon payment of a duplicating fee, by writing the Public Reference Section of
the Commission, Washington, D.C. 20549-6009
22
<PAGE>
NRM INVESTMENT COMPANY
Statement of Additional Information
December 30, 1999
This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the current Prospectus for NRM Investment Company (the
"Company"), dated December 30, 1999. Because this Statement of Additional
Information is not a prospectus, no investment in shares of the Company should
be made solely upon the information contained herein. A copy of the Prospectus
for the Company may be obtained by writing Laurel Trust Company, 551 Main
Street, Johnstown, Pa., 15907 or by calling (814) 536-2110.
<PAGE>
NRM INVESTMENT COMPANY
Statement of Additional Information
December 30, 1999
Table of Contents
-----------------
PAGE
----
Statement of Additional Information....................... 1
Fund History.............................................. 1
Description of the Fund; Its Investments and Risks........ 1
Investment Objective and Policies.................... 1
Investment Policies and Restrictions................. 3
Management of the Fund.................................... 4
Control Persons and Principal Holders of Securities....... 7
Advisory Services......................................... 8
Portfolio Transactions and Brokerage Commissions.......... 8
The Company's Common Stock................................ 9
Purchase, Redemption, Pricing of Shares;..................
Underwriting............................................ 9
Other Information of Interest to Investors................ 10
Other Services....................................... 10
Accounting........................................... 10
Custodian and Transfer Agent......................... 10
Auditors............................................. 10
Counsel.............................................. 10
Taxation of the Fund...................................... 11
State and Local...................................... 12
Report of Independent Auditor.............................
Financial Statements......................................
<PAGE>
NRM INVESTMENT COMPANY
Statement of Additional Information
December 30, 1999
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read in conjunction with
the Prospectus of the Company having the same date as this Statement of
Additional Information. Much of the information contained in this Statement of
Additional Information expands upon subjects discussed in the Prospectus. No
investment in shares of the Company should be made without first reading the
Prospectus of the Company.
FUND HISTORY
The Company was incorporated on April 12, 1974, under the laws of the
Commonwealth of Pennsylvania, as National Rolling Mills Co. Through August 30,
1979, the Company was actively engaged in operations as a steel processing
plant. On August 31, 1979, the Company changed its name to NRM Investment
Company and registered with the Securities and Exchange Commission as an
open-end, diversified management investment company.
DESCRIPTION OF THE FUND
ITS INVESTMENTS AND RISKS
Investment Objective and Policies
The Company is an open-end, management investment company. As stated in the
Prospectus, it intends to invest fifty-one percent or more of its assets in
Municipal Bonds. Municipal Bonds include debt obligations issued to obtain funds
for various public purposes, including the construction of a wide range of
public facilities, refunding of outstanding obligations, and obtaining funds for
general operating expenses and loans to other public institutions and
facilities. In addition, certain types of private activity bonds are issued by
or on behalf of public authorities to obtain funds to provide privately operated
facilities. Such obligations are included within the term "Municipal Bonds" if
the interest paid thereon is exempt from federal income tax. (See reference to
"private activity bonds" under the discussion "TAXES" in the prospectus).
Municipal Bonds
1
<PAGE>
also include short-term tax-exempt municipal obligations such as tax
anticipation notes, bond anticipation notes, revenue anticipation notes, and
Public Housing Authority notes that are fully secured by a pledge of the full
faith and credit of the United States. Opinions relating to the validity of
Municipal Bonds and to the exemption of interest thereon from federal income
taxes are rendered by bond counsel to the respective issuing authorities at the
time of issuance. Neither the Company nor the advisor will review the
proceedings relating to the issuance of Municipal Bonds or the basis for such
opinions.
The District of Columbia, each state, each of its political subdivisions,
agencies, instrumentalities and authorities, and each multi-state agency of
which a state is a member, is a separate "issuer" as that term is used in the
Prospectus and this Statement of Additional Information. The non-governmental
user of facilities financed by private activity bonds is also considered to be
an issuer.
The issuer's obligations under its Municipal Bonds are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or state legislatures imposing a moratorium on
the payment of principal and interest or imposing other constraints or
conditions upon enforcement of such obligations. There is also the possibility
that as a result of litigation or other conditions, the power or ability of
issuers to meet their obligations for the payment of interest and principal on
their Municipal Bonds may be materially adversely affected. As explained in the
prospectus, General Obligation bonds are those secured by the taxing authority
of the issuer; the risks inherent in such investments are only that the
municipality by reason of insolvency, bankruptcy, or court imposed bar on
collection would prohibit or postpone payment. Revenue bonds imply additional
risk. Unlike general obligation bonds, these bonds are dependent entirely upon
the income from the operation financed by the borrowing and not upon the
municipality's general taxing power. Should the project fail the Fund would lose
its investment. Private Activity Bonds bear still greater risk. Here the
borrower although an issuer of the debt is a private concern borrowing funds
from a conventional lender through a program created by an authority; should the
borrower's project fail, there is no recourse to the municipality and the Fund
would lose its investment.
The Fund will invest forty-nine percent or less of its assets in stock,
securities and instruments other than municipal bonds. For this portion of the
Fund it plans to emphasize in securities from issuers with large market
capitalizations and of investment grade quality ranked "A" or better by major
rating services. (By emphasizing in these areas, the Fund will not exclude the
purchase or sale of any stock, security or other instrument should the directors
deem it to be for the Fund's benefit.) As discussed under the next heading, it
will not
2
<PAGE>
concentrate in any business or sector and, for no less than seventy-five percent
of the Fund's assets will remain diversified, investing no more than five
percent of its assets in any one issuer, nor acquire more than ten percent of
the voting stock of any issuer. General market conditions and unforeseeable
downturns in any business or sector would adversely impact the Fund's capital
and could lead to losses for the individual investor.
Risks inherent in investing even in large capitalization issuers is the
inability of the directors or their advisor to predict shifts in general or
sector economic conditions which might have an adverse effect on the value of
the shares or other instruments the Fund purchases. Also, particular issuers in
which the Fund invests may suffer reversals regardless of outside economic
conditions leading to depression in value of their stock or other instruments
and a consequent downturn in net asset value of the Fund and its shares.
In addition to the investment limitations stated in the Prospectus, the
Company is subject to the following limitations which may be changed only by a
vote of a majority of the outstanding shares of the Company (as defined under
"Miscellaneous" in the Company's Prospectus dated as of this date).
Investment Policies and Restrictions
The Company may not:
1. Borrow money except from banks for temporary purposes and then in
amounts not in excess of 10% of the value of the Company's assets at the time of
such borrowing; or mortgage, pledge or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of the Company's assets at the
time of such borrowing. (This borrowing provision is not for investment
leverage, but to facilitate management of the portfolio where the liquidation of
portfolio securities is deemed to be disadvantageous or inconvenient.)
2. Purchase securities on margin (except that it may obtain such short-term
credits as may be necessary for clearance of purchases and sales of securities);
make short sales of securities; or maintain a short position;
3. Make loans to other persons, except that the Company may purchase or
hold Municipal Bonds or other debt instruments in accordance with its investment
objective, policies, and restrictions;
4. Underwrite any issue of securities, except to the extent that the
purchase of Municipal Bonds directly from the
3
<PAGE>
issuer thereof in accordance with the Company's investment objective, policies,
and restrictions may be deemed to be underwriting;
5. Purchase or sell commodities or commodity contracts or real estate
(except that the Company may invest in Municipal Bonds secured by real estate or
interests therein); invest in oil, gas, or their mineral exploration or
development programs;
6. Purchase any private activity bond where the payment of principal and
interest are the responsibility of an issuer (including its predecessors and
unconditional guarantors) which at the time of purchase had been in operation
for less than three years;
7. Issue any class of senior security or sell any senior security of which
it is an issuer, except that the Company may borrow money as set forth in
paragraph 1. above;
8. Purchase any security of any issuer if as a result more than 5% of the
value of its assets would be invested in the securities of that issuer, except
that up to 25% of the Company's assets may be invested without regard to this
limitation;
9. Purchase the securities of any other investment company except as part
of a merger, consolidation, or reorganization or purchase of assets approved by
the Company's stockholders; provided, that the Company may purchase shares of
any registered, open-end investment company if immediately after such purchase,
the Company will not own more than 3% of the outstanding voting stock of any one
investment company;
10. Knowingly invest more than 10% of the value of the Company's assets in
securities with legal or contractual restrictions on resale; and
11. Invest more than 25% of its total assets in securities of
nongovernmental issuers engaged in related trades or businesses.
The foregoing percentage limitations will apply at the time of the
investment or other transaction and, except as provided in the next sentence,
shall not be considered violated unless an excess or deficiency occurs
immediately after and as a result of such investment or transaction. The Company
will not permit its borrowing to exceed 10% of its assets at any time for more
than three business days; should there be an excess of borrowing as a result of
a decrease in the value of the portfolio, the Company shall repay such portion
of the debt as is necessary to maintain the 10% ratio.
MANAGEMENT OF THE FUND
The Fund is managed by its board of directors with the authority
4
<PAGE>
and responsibilities enumerated in the Pennsylvania Business Corporation Law of
1988. In addition, the Board acts as a committee of the whole in making
investment decisions for the Fund. The Board appoints the Company's officers.
The directors and officers of the Company and their addresses and principal
occupations during the past five years are as follows:
Position During Past
Name and Address with Registrant Five Years
- ---------------- --------------- ----------
John H. McCoy* Director, **Former President
1010 Broadmoor Road Chairman, and of National Rolling
Bryn Mawr, PA 19010 President Mills, Inc., a steel
rolling plant. Prior
thereto, he was
President and Direc-
tor of National
Rolling Mills Co.
Joseph V. Somers Director **Former President of
1518 Mt. Pleasant Rd. Somers Construction
Villanova, PA 19085 Company and Vice
President of Indus-
trial Lift Truck Co.
Francis J. Rainer Director C.P.A. and former
410 Howard Road President,
Gladwyn, PA 19035 Rainer & Company, a
professional accounting
corporation.
He is also Vice-
Chairman of the
Board of Delaware
Valley Savings Bank
Thomas F. Kilcullen, Jr. Director **Former Vice Presi-
4 Carriage Way Treasurer, and dent, Treasurer
Berwyn, PA 19312 Secretary and Secretary of
National Rolling
Mills Inc. Prior
thereto, he was Vice
President and Treas-
urer of National
Rolling Mills Co.
George W. Connell* Director Chairman, Chief
#3 Radnor Corporate Ctr. Executive Officer,
Suite 450 Director and sole
100 Matsonford Road shareholder of The
Radnor, PA 19087 Rittenhouse Trust
Company, a commer-
cial bank and trust
company acting as
the Company's in-
vestment advisor,
5
<PAGE>
CEO and Director
Of Rittenhouse Trust
Securities, a registered
brokerage dealer,
Member of the
Investment Committee
of Rittenhouse
Financial Services,
Inc., a John Nuveen
Company.
- ----------
* Interested Director
**Retired for more than five years.
6
<PAGE>
Since registering as an investment company under the Investment Company Act
of 1940, the Company has not paid and does not expect to pay any remuneration to
any of its officers. The company pays each director a fee of $400 for each
meeting of the Board of Directors attended and reimburses the directors for
their related out-of-pocket expenses. For the past year the payments were as
follows:
NRM INVESTMENT COMPANY
FISCAL YEAR DIRECTORS FEES
<TABLE>
<CAPTION>
MEETING
DATE KILCULLEN MCCOY SOMERS RAINER CONNELL TOTAL
---- --------- ----- ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
9/24/98 250.00 250.00 250.00 250.00 250.00 1,250.00
12/17/98 400.00 400.00 400.00 400.00 400.00 2,000.00
3/18/99 - 400.00 - 400.00 400.00 1,200.00
6/18/99 400.00 400.00 400.00 400.00 400.00 2,000.00
F/Y TOTAL 1,050.00 1,450.00 1,050.00 1,450.00 1,450.00 6,450.00
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of October 12, 1999 John H. McCoy owned beneficially and of record
2,817,680 of the Company's outstanding voting securities and controlled the
Company. His control is sufficient to appoint all members of the board of
directors and carry out the business of the Company without the affirmative vote
of any other shareholder or group of shareholders. The Company's principal
shareholders are as follows:
Percentage of
Name and address Ownership
- ------------------------------------------------
John H. McCoy 66%
1010 Broadmoor Road
Bryn Mawr, Pa 19010
Francis J. Rainer 5.6%
410 Howard Road
Gladwyn, Pa., 19035
Joseph V. Somers 5.5%
1518 Mt. Pleasant Road
Villanova, PA 19085
Samuel R. Gilbert, Jr. 4.7%
3 Turtle Lane, The Landings
Savannah, GA 31411
Thomas F. Kilcullen, Jr. 4.7%
4 Carriage Way
Berwyn, PA 19312
7
<PAGE>
The percent owned is based on the number of outstanding shares of common
stock at October 12, 1999. All such shares are owned of record and beneficially.
All officers and directors of the Company, as a group owned as of October 12,
1999, 3,646,248 of the Company's common stock or 85% of its outstanding voting
securities.
ADVISORY SERVICES
Rittenhouse Trust Company Services, Inc. ("RTC"), a Delaware Corporation
located at Three Radnor Corporate Center, Radnor, Pa., 19087-4514, has been
retained by the Company to act as investment advisor under an Advisory Agreement
dated November 30, 1992 with Rittenhouse Financial Services and amended by
assignment on September 3, 1997 to Rittenhouse Trust Company not resulting in a
change of actual control or management and terminable at will, without penalty,
at the discretion of the Board of Directors.
RTC's sole shareholder, George Connell, controls the advisor. His
qualifications, affiliations, and business history are contained in the
prospectus. He is a board member of the Company and accordingly an interested
person.
Under the Advisory Agreement, Rittenhouse assumes no responsibilities to
the Company except, as provided in the prospectus, to make recommendations to
the Company's board respecting the purchases and sales of securities on a
nondiscretionary basis and to adhere to the provisions of the Investment
Advisors' Act of 1940 and other pertinent securities laws. For the services
provided, the Company has agreed to pay RTC, on a quarterly basis, a fee at an
annual flat rate of $10,000. In determining net asset value, the Company accrues
RTC's fees on a daily basis.
The agreement provides that except for violations of securities laws, RTC
shall not be liable for any action it takes for services rendered or not
rendered or for any mistakes of judgment or otherwise.
For each of the fiscal years ending August 31, 1997, August 31, 1998, and
August 31, 1999, the Company paid RTC $10,000.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Purchases and sales of portfolio securities will normally (but not
exclusively) be transacted with the issuer or with a primary market maker acting
as principal on a net basis with no brokerage commissions being paid by the
Company. Transactions placed through dealers serving as primary market makers
reflect the spread between the bid and the asked prices. The Company will also
purchase underwritten issues. However, when purchasing equity issues the
directors have authorized the Advisor to execute transactions that may result in
the Company paying some commissions.
8
<PAGE>
In years after August 31, 1999 it is expected that the Company will pay
commissions on its purchase of equity investments. However, in the year ended
August 31, 1999 and in the two preceding fiscal years the Company paid no
commissions in respect to portfolio transactions.
The policy of the Advisor will be to seek "best execution" when placing
portfolio transactions for the Company. "Best execution" means prompt and
reliable execution at a price the Advisor has reason to believe represents the
lowest cost, including any commission in the case of a purchase, or the greatest
proceeds reasonably available. Subject to and in accordance with the provisions
of section 28(e) of the Securities Exchange Act of 1934, the Advisory Agreement
authorizes the Advisor to place orders for the purchase and sale of the
Company's securities with brokers or dealers who provide the Advisor with access
to supplemental research and security and economic analysis even though such
brokers and dealers execute such transactions at a higher net cost to the
Company than may result if other firms were used. These various services may
also be useful to the Advisor in connection with its services to their advisory
clients. The extent and continuation of this policy is subject to the review of
the Company's Board of Directors. During the past fiscal year, the Advisor did
not use this provision of the agreement; all transactions were with a single
broker/dealer but at best execution as tested periodically by seeking other
quotations.
The Company does not expect its annual portfolio turnover rate to exceed
100%, but the rate of turnover will not be a limiting factor (as in fiscal 1991)
when the Company deems it desirable to sell or purchase securities. The
Company's portfolio turnover rates during the fiscal years ended August 31, 1999
and August 31, 1998 were 3.27% and 12.57% respectively.
THE COMPANY'S COMMON STOCK
The Company was incorporated on April 12, 1974 under the laws of the
Commonwealth of Pennsylvania. Each share in the Company has a par value of $.01
and has equal voting, dividend and liquidation rights. Shareholders are entitled
to one vote for each full share held, and fractional votes for fractional shares
held. The shares are not restricted in either trading or retaining, there are no
material obligations associated with owning the Company's shares other than
investment risk and litigation risks described in the prospectus, there are no
preemptive, conversion or cumulative voting rights. Accordingly, holders of more
than 50% of the shares voting for the election of directors can elect all of the
directors.
PURCHASE, REDEMPTION, PRICING OF SHARES; UNDERWRITING
The Funds shares are offered to the public as described in the prospectus.
There are no special purchase plans or methods; and there are no sales loads of
any kind. Shares are offered to the public at net asset value determined as
described in the prospectus.
9
<PAGE>
The Company has no underwriter.
OTHER INFORMATION OF INTEREST TO INVESTORS
Other Services
Accounting
Raymond J. Keefe, a certified public accountant with principal offices at 6
St. Albans Ave., Newtown Square, Pennsylvania 19073, provides certain
administrative services to the Company. Mr. Keefe maintains the books and
records of the Company, compiles its monthly and semi-annually financial
statements, computes its net asset value and net income under the supervision of
the advisor, prepares its federal and state income tax returns, and provides
assistance in the preparation of its semi-annual and annual reports to the
Securities and Exchange Commission. Mr. Keefe bears all expenses in connection
with the performance of his services. For the services provided and expenses
assumed, the Company pays Mr. Keefe on a quarterly basis an annual fee of
$6,000.
Custodian and Transfer Agent
Laurel Trust Company, ("Laurel") serves as the Company's Custodian and
Transfer Agent. As Custodian, Laurel holds the Company's assets subject to the
instructions of the Company's officers.
Auditors
Beard & Company, Inc. independent auditors, with offices at One Park Plaza,
P.O. Box 311, Reading, Pennsylvania 19603 serves as the Company's auditors. The
financial statements of NRM Investment Company appearing in the 1996, 1997, 1998
and 1999 annual reports to shareholders for the years ended August 31, 1996,
August 31, 1997 August 31, 1998, and August 31, 1999, have been audited by Beard
& Company, Inc., independent auditors, as set forth in their report thereon
included therein, and are incorporated by reference into this Statement of
Additional Information.
In the past Ernst & Young LLP independent auditors, with offices at
Harrisburg, Pennsylvania served as the Company's auditors. The financial
highlights of NRM Investment Company appearing in the 1999 annual report to
Shareholders for the years ended August 31, 1990 through August 31, 1995 have
been audited by Ernst & Young LLP, independent auditors.
Counsel
Messrs. Henderson, Wetherill, O'Hey & Horsey, Suite 902, One Montgomery
Plaza, P.O. Box 751, Norristown, PA 19404, counsel to the Company, have passed
upon the legality of the shares offered hereby.
10
<PAGE>
TAXATION OF THE FUND
As stated in the prospectus, the Company is qualified under Subchapter M of
the Internal Revenue Code; those provisions normally permit a deduction for the
Company from its taxable income of distributions made to the Company's
shareholders from its earnings. A failure to qualify under Subchapter M would
result in a tax on the Company based upon its earned income, and an additional
tax on the shareholders based upon their distributions.
In general, a tax is imposed upon the Company based upon its investment
company taxable income and its net capital gains which in each case are not
distributed to its shareholders. In general, the Company's investment company
taxable income will be its taxable income (determined in the same manner as an
ordinary corporation), adjusted by excluding net long term capital gains over
short term capital losses and further adjusted by excluding any net operating
losses and by including the dividends paid deduction. The Company's capital
gains subject to tax are computed separately and are based upon the excess of
its long term capital gains over its net short term capital losses. Currently
there are no undistributed capital gains. The Company intends to distribute
"exempt-interest" dividends as described in the Company's prospectus and
distribute at least 98% of its ordinary income for each calendar year, 98% of
its capital gain net income, if any, computed on the basis of an October 31st
fiscal year, and 100% of undistributed adjusted taxable income amounts from the
previous year. Accordingly, it is unlikely that the Company will pay any income
tax. However, should the Company retain any earnings, it will be taxed on its
undistributed investment company taxable income and capital gains and may be
subject to an excise tax. To the extent income is distributed (whether in cash
or additional shares) it will be exempt, or taxable to the shareholders as
ordinary, or capital gain income, in proportion to the Company's receipt of such
income. Since the Company has earnings and profits generated in years before it
was an investment company, distributions to shareholders over and above the
Company's income for a period will be taxable to the shareholders to the extent
of the prior earnings and profits and will not be treated immediately as a
return of capital.
The Company is a personal holding company as defined by Sec. 542 of the
Code. Retained income will be taxed at the highest corporate tax rate. The
Company requested and on August 5, 1986 received a private ruling from the
Internal Revenue Service relating to investments in taxable securities. The
ruling interpreted the Tax Reform Act of 1984 in such a way as to confirm the
Company's ability to make investments in securities generating taxable income
without having to first make an accumulated earnings and profits distribution.
Currently, the Company has no capital loss carryovers to offset gains in
securities.
11
<PAGE>
Section 852 (b)(5) of the Code provides, in effect, that if, at the close
of each quarter of its taxable year, at least 50% of the Company's total assets
consists of tax free obligations, the income from such investments may be passed
through to the shareholders, and for federal tax purposes, excluded by them from
gross income reporting. By reason of this provision, the Company does not intend
to invest 50% or more of its assets in securities generating taxable income.
If and to the extent declared by the Board of Directors, net realized
long-term capital gains will be distributed annually. See "Dividends." The
Company will have no tax liability with respect to net realized long-term
capital gains which are distributed although the distributions will be taxable
to shareholders as gain from the sale on exchange of a capital asset held for
more than one year regardless of a shareholder's holding period of shares of the
Company. Such distributions will be designated as a capital gain dividend in a
written notice mailed by the Company to the shareholders not later than sixty
days after the close of the Company's taxable year.
State and Local. Depending upon the extent of the Company's activities in
states and localities in which it maintains offices, in which its agents or
independent contractors are located, or in which it is otherwise deemed to be
conducting business, the Company may be subject to the tax laws of such states
or localities.
The foregoing discussion, as well as that contained in the Company's
Prospectus, is only a summary of some of the important tax considerations
generally affecting the Company and its shareholders. No attempt is made to
present a detailed explanation of the federal income tax treatment of the
Company or its shareholders and this discussion is not intended as a substitute
for careful tax planning. Accordingly, potential investors in the Company are
urged to consult their tax Advisors with specific reference to their own tax
situations.
12
<PAGE>
NRM INVESTMENT COMPANY
FINANCIAL REPORT
AUGUST 31, 1999
<PAGE>
CONTENTS
Page
------
INDEPENDENT AUDITOR'S REPORT
ON THE FINANCIAL STATEMENTS ...................... 1
FINANCIAL STATEMENTS
Statement of assets and liabilities .............. 2
Schedule of investments .......................... 3-6
Statement of operations .......................... 7
Statements of changes in net assets .............. 8
Financial highlights ............................. 9 and 10
Notes to financial statements .................... 11-14
<PAGE>
[In the printed document there appears a bar chart
with the following plot points depicted]
NRM INVESTMENT COMPANY
10 YEAR RETURNS
1990 2.7%
1991 3.0%
1992 9.1%
1993 16.7%
1994 2.8%
1995 7.5%
1996 5.1%
1997 6.7%
1998 7.8%
1999 1.6%
During the 10-year period shown in the bar chart, the highest annual return was
16.7% (fiscal year ending 8/31/93) and the lowest annual return was 1.6% (fiscal
year ending 8/31/99)
Average Annual Total Returns
(For period ending 08/31/99) Past One Year Past 5 Years Past 10 Years
- ---------------------------- ------------- ------------ -------------
NRM Investment Company 1.56% 5.72% 6.22%
Lehman Bros. Municipal 5 YR GO 2.21% 4,84% 6.12%
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Shareholders and Board of Directors
NRM Investment Company
Rosemont, Pennsylvania
We have audited the accompanying statement of assets and liabilities of NRM
Investment Company, including the schedule of investments, as of August 31,
1999, the related statements of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the four years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the years ended August 31, 1990
through August 31, 1995 were audited by other auditors whose report, dated
September 29, 1995, expressed an unqualified opinion on the financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of NRM
Investment Company at August 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the four years in the
period then ended, in conformity with generally accepted accounting principles.
/s/ BEARD & COMPANY, INC.
-------------------------
BEARD & COMPANY, INC.
Harrisburg, Pennsylvania
October 11, 1999
-1-
<PAGE>
NRM INVESTMENT COMPANY
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
August 31, 1999
- -------------------------------------------------------------------------------
ASSETS
Investments at value (cost $16,451,154) $16,731,138
Interest receivable 217,861
Prepaid expense 3,477
-----------
Total assets 16,952,476
-----------
LIABILITIES
Accrued expenses and other liabilities 128,225
-----------
NET ASSETS
Net assets, applicable to 4,291,307 outstanding shares,
equivalent to $ 3.92 a share $16,824,251
===========
See Notes to Financial Statements.
-2-
<PAGE>
NRM INVESTMENT COMPANY
SCHEDULE OF INVESTMENTS
- ------------------------------------------------------------------------------
August 31, 1999
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Municipal Bonds - 98.6% Amount Value
- -------------------------------- ---------- ----------
<S> <C> <C>
General Obligation Bonds - 18.6%:
Leominster, Massachusetts, 6.25%, due 4/01/08 $ 300,000 $ 321,060
Upper Dublin Pennsylvania School District, 5.50%,
due 11/15/08 200,000 201,280
Lowell, Massachusetts, 5.50%, due 1/15/10 300,000 306,360
New York City, New York, 6.45%, due 8/1/10, pre-refunded 5,000 5,457
New York City, New York, 6.45%, due 8/01/10 195,000 205,959
Nevada State Colorado River Commission, Ltd Tax,
6.50%, due 10/01/12 400,000 422,880
Burgettstown, Pennsylvania, Washington County,
4.85%, due 2/01/14, callable 2/01/05 at 100 (FGIC) 125,000 116,638
Lowell, Massachusetts, 5.50%, due 12/15/15, callable 12/15/06 at 102
(AMBAC) 330,000 332,409
San Francisco, California City and County, Park
Improvement series, 5.25%, due 6/15/16, callable
6/15/05 at 102 (MBIA) 300,000 291,750
Richmond, Virginia, 6.25%, due 1/15/18, callable
1/15/01 at 102 870,000 911,325
----------
Total General Obligation Bonds 3,115,118
----------
Housing Finance Agency Bonds - 37.8%:
New Mexico Mortgage Finance Authority, Single-Family Mortgage Rev.,
7.90%, due 7/01/00 30,000 30,507
Rock Island, Illinois Residential Mortgage Revenue Refunding, 7.70%,
due 9/01/08, callable 9/01/02
at 102 85,000 91,188
Ford County, Kansas Single-Family Mortgage Revenue Refunding Bonds,
7.90%, due 8/01/10, callable
8/01/02 at 103, 8/01/05 at 100 130,000 136,331
Fort Worth, Texas Housing Finance Corporation, Home Mortgage Revenue
Refunding Series 1991, 8.50%,
due 10/01/11, callable 10/01/01 at 103 255,000 269,229
Odessa, Texas Housing Finance Corporation, Home Mortgage Revenue
Refunding, 8.45%, due 11/01/11, callable 11/01/05 at 103 210,391 219,627
Montana State Housing, Single-Family Mortgage,
7.65%, due 10/01/10, callable 10/01/00 at 102 35,000 36,242
City of Hobbs, New Mexico, Single-Family Mortgage Refunding Revenue
Bonds, 8.75%, due 7/01/11,
callable 7/01/02 at 103, 7/01/05 at 100 65,000 69,134
</TABLE>
-3-
<PAGE>
NRM INVESTMENT COMPANY
SCHEDULE OF INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
August 31, 1999
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Municipal Bonds - 98.6% (Continued) Amount Value
- ----------------------------------- --------- ---------
<S> <C> <C>
Housing Finance Agency Bonds - 37.8% (Continued):
Cameron County, Texas Housing Finance Corporation, Single-Family
Mortgage Revenue Refunding, 6.20%,
due 3/01/13, callable 9/01/05 at 100 $ 225,000 $ 232,132
Alabama Housing Finance Authority, 4.60%, due 4/1/11, callable 10/1/08
at 102, callable 10/1/10 at 100 100,000 93,780
Vicksburg, Mississippi Lease Housing Corp., 5.80%,
due 8/15/13 125,000 126,350
California Housing Finance Agency, Home Mortgage, 10.25%, due 2/01/14,
callable 2/01/99 at 100 60,000 60,054
Connecticut State Housing Finance Authority, 5.60%,
due 5/15/14, callable 5/15/03 at 102 200,000 200,920
Nevada Housing Division, Single-Family Mortgage,
7.35%, due 10/01/15 115,000 119,060
Louisiana Public Facilities Authority, Multi-Family Housing, 7.75%, due
11/01/16, callable 11/01/01 at 102 500,000 525,500
Pennsylvania Housing Finance Agency, Single-Family Mortgage, 5.45%, due
10/01/17, callable 10/01/03 at 102 150,000 146,070
Utah State Housing Finance Agency, Single-Family Mortgage, 6.30%, due
1/01/18 175,000 182,018
Maryland State Community Development Administration, Department of
Housing, 5.60%, due 4/01/18 185,000 185,740
Alaska State Housing Finance Corporation, 5.90%, due 12/01/19, callable
6/01/07 at 102 (MBIA) 250,000 252,300
Troy, New York Housing Development Corp., Multi-Family Housing, 8.10%,
due 2/01/22, callable 12/01/02 at 100 1,315,000 1,524,874
Quaker Hill Housing Corporation, Multi-Family, 7.55%,
due 2/01/22 600,000 633,900
St. Alphios Housing Corporation, Multi-Family, 8.20%,
due 2/01/24 1,125,000 1,194,187
----------
Total Housing Finance Agency Bonds 6,329,143
----------
Hospital Revenue Bonds - 12.8%:
Dauphin County, Pennsylvania Hospital Authority,
HAPSCO Group, William Penn Hospital Project,
5.50%, due 7/01/07 300,000 308,310
Falls Township Pennsylvania Hospital Authority, Delaware Valley Medical
Center, 6.90%, due 8/01/11, callable 8/01/02 at 102 285,000 290,529
Rhode Island State Health and Educational Building Corp., New England
Tech, 5.90%, due 3/01/10 100,000 102,550
</TABLE>
-4-
<PAGE>
NRM INVESTMENT COMPANY
SCHEDULE OF INVESTMENTS (CONTINUED)
- -------------------------------------------------------------------------------
August 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Municipal Bonds - 98.6% (Continued) Amount Value
- ----------------------------------- --------- ---------
<S> <C> <C>
Hospital Revenue Bonds - 12.8% (Continued):
Rochester, Minnesota, Health Care Facilities Revenue (Mayo
Foundation/Mayo Medical Center), 6.25%, due 11/15/12 $ 500,000 $ 500,000
Indiana Health Facilities Authority (Deaconess Hospital), 5.75%, due
3/01/15, callable 3/01/03 at 102 (MBIA) 100,000 101,610
Connecticut State Health and Educational Facilities Authority (Kimball
Hospital), 5.375%, due 7/01/16, callable 7/01/06 at 102 350,000 344,120
Montgomery County, Pennsylvania Higher Educational &
Health Authority (Holy Redeemer Health), 5.25%, due 10/01/17,
callable 10/01/07 at 101 (AMBAC) 200,000 190,960
Fulton DeKalb, Georgia Hospital Authority, 5.50%, due 1/01/20, callable
7/01/03 at 102 (MBIA) 200,000 195,880
University of California Hospital Revenue (UC Davis Medical Center),
5.75%, due 7/01/20, callable 7/01/06 at 101 (AMBAC) 100,000 100,760
----------
Total Hospital Revenue Bonds 2,134,719
----------
Other Revenue Bonds - 29.4%:
Washington State Public Power Supply Nuclear Project #1, 5.60%, due
7/01/05 200,000 206,640
San Francisco City & County Redevelopment Finance Authority, 4.30%, due
8/01/06, callable 8/01/03 at 100 100,000 97,370
Lee County, Florida Certificates of Participation, 4.70%,
due 10/01/06 100,000 99,870
Fitzgerald, Michigan School District, 5.00%, due 5/01/08, callable
5/01/06 at 100 200,000 200,760
Clark County, Nevada Airport Authority, 5.125%, due 6/1/06, callable
6/1/03 at 101 (MBIA) 100,000 101,650
Grand Rapids, Michigan Downtown Development Authority, 6.60%, due
6/01/08, callable 6/01/06 at 100 365,000 396,609
Alaska Industrial Development and Export Authority,
6.20%, due 4/01/10 245,000 254,947
New Jersey Economic Development Authority, Health Care Corp., 6.0%, due
7/01/11 200,000 208,480
Clark County, Washington Public Utility District, Electric System
Revenue, 5.10%, due 1/01/12, callable
1/01/08 at 100 200,000 195,180
Texas Muni Power Agency, 5.25%, due 9/01/12, callable 9/01/03 at 100
(MBIA) 100,000 99,870
</TABLE>
-5-
<PAGE>
NRM INVESTMENT COMPANY
SCHEDULE OF INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
August 31, 1999
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Municipal Bonds - 98.6% (Continued) Amount Value
- ----------------------------------- --------- ---------
<S> <C> <C>
Other Revenue Bonds - 29.4% (Continued):
Suffolk County, New York Water Authority, 5.00%, due 6/01/15, callable
6/01/03 at 102 (MBIA) $ 175,000 $ 165,970
Vallejo, California Water Improvement Project (Soland County), 5.70%,
due 5/01/16, callable 5/01/06 at 102 (FSA) 100,000 102,050
Philadelphia, Pennsylvania Water and Waste Water, 5%, due 6/15/16,
callable 6/15/03 at 100 (FSA) 150,000 140,085
Allegheny County Pennsylvania Airport Revenue
(Pittsburgh International), 5.00%, due 1/01/17,
callable 1/01/08 at 101 (MBIA) 385,000 357,434
Muhlenberg, Pennsylvania School District, 5.20%,
due 4/01/17, callable 4/01/06 at 100 (MBIA) 250,000 238,675
New Jersey Economic Development Authority, (Devereux Foundation),
5.50%, due 5/01/17, callable 5/01/07 at
101 (MBIA) 270,000 268,812
Washington State Public Power Supply, Project No. 1, 5.125%, due
7/1/17, callable 7/1/08 at 102 200,000 184,420
Brazos River Authority, Texas (Houston Light and Power), 5.60%, due
12/01/17, callable 12/01/03 at 102 (MBIA) 100,000 99,410
Tacoma, Washington Solid Waste Utility, 5.50%, due 12/01/17, callable
12/01/07 at 101 (AMBAC) 350,000 345,940
New York State LOC Government Assistance Corporation, 5.50%, due
4/01/18, callable 4/01/03 at 102 290,000 285,969
Los Angeles, California Convention and Exhibition Center, 5.375%, due
8/15/18, callable 8/15/03 at 102 (MBIA) 385,000 378,417
Santa Monica-Malibu, California Unified School District, 5.50%, due
8/01/18, prerefunded 8/01/03 at 102 200,000 211,700
Chicago, Illinois Water Revenue, 5.25%, due 11/01/18,
callable 11/01/07 at 102 (FGIC) 200,000 189,540
Easton, Pennsylvania Area Joint Sewer Authority,
5.05%, due 12/01/18, callable 12/01/07 at 101 (FSA) 100,000 91,960
-----------
Total Other Revenue Bonds 4,921,758
-----------
Total Municipal Bonds (Cost $ 16,220,754) 16,500,738
-----------
Short-Term Investments - at cost approximating value - 1.4%,
Federated Pennsylvania Municipal Cash Fund #8 230,400
-----------
Total Investments - 100% (Cost $16,451,154) $16,731,138
===========
</TABLE>
See Notes to Financial Statements.
-6-
<PAGE>
NRM INVESTMENT COMPANY
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
Year Ended August 31, 1999
- ------------------------------------------------------------------------------
Investment income, interest $ 991,730
---------
Expenses:
Investment advisory fees 10,000
Custodian fees 10,300
Transfer and dividend disbursing agent fees 2,700
Legal and professional fees 35,402
Directors' fees 6,450
Insurance 1,785
Capital stock tax 2,934
Provision for environmental claim 100,000
Miscellaneous 3,092
---------
172,663
---------
Net investment income 819,067
---------
Realized and unrealized gain on investments:
Net realized gain from investment transactions 25
Net unrealized depreciation of investments (537,425)
---------
Net loss on investments (537,400)
---------
Net increase in net assets resulting from operations $ 281,667
=========
See Notes to Financial Statements.
-7-
<PAGE>
NRM INVESTMENT COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Years Ended August 31, 1999 1998
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income $ 819,067 $ 951,392
Net realized gain from investment transactions 25 97,634
Net unrealized appreciation (depreciation) of investments (537,425) 273,544
------------ ------------
Net increase in net assets resulting
from operations 281,667 1,322,570
Distributions to shareholders, dividends from net
investment income (789,597) (948,154)
Distributions to shareholders, dividends from
capital gains (8,583) (63,443)
Capital share transactions, net increase from capital
share transactions 138 15,049
------------ ------------
Total increase (decrease) in net assets (516,375) 326,022
Net assets:
Beginning of year 17,340,626 17,014,604
------------ ------------
End of year $ 16,824,251 $ 17,340,626
============ ============
</TABLE>
See Notes to Financial Statements.
-8-
<PAGE>
NRM INVESTMENT COMPANY
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Years Ended August 31, 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA (for a share outstanding
throughout the indicated year)
Net asset value, beginning of year $ 4.041 $ 3.968 $ 3.933 $ 3.964 $ 3.909
Net investment income .191 .222 .221 .210 .237
Net realized and unrealized gain (loss) on
investments (.125) .087 .041 (.004) .056
-----------------------------------------------------------------
Total from investment operations .066 .309 .262 .206 .293
Less distributions:
Dividends from capital gains (.002) (.015) -- -- --
Dividends from net investment income (.161) (.221) (.221) (.210) (.237)
Distribution in excess of net investment
income (.023) -- (.006) (.027) (.001)
-----------------------------------------------------------------
Total distributions (.186) (.236) (.227) (.237) (.238)
-----------------------------------------------------------------
Net asset value, end of year $ 3.921 $ 4.041 $ 3.968 $ 3.933 $ 3.964
=================================================================
TOTAL RETURN 1.56% 7.84% 6.71% 5.11% 7.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) $16,824 $17,341 $17,015 $16,847 $16,982
Ratio of expenses to average net assets .99% .42% .57% 1.02% .37%
Ratio of net investment income to average net
assets 4.72% 5.50% 5.56% 5.24% 6.08%
Portfolio turnover rate 3.27% 12.57% 28.98% 6.24% 22.73%
</TABLE>
See Notes to Financial Statements.
-9-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Years Ended August 31, 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA (for a share outstanding
throughout the indicated year) $ 4.022 $ 3.540 $ 3.488 $ 3.635 $ 3.835
Net asset value, beginning of year .229 .453 .265 .059 .157
Net investment income
(.115) .137 .055 .051 (.065)
Net realized and unrealized gain (loss) on ---------------------------------------------------------------------------
investments
.114 .590 .320 .110 .092
Total from investment operations
-- -- -- -- --
Less distributions: (.227) (.108) (.265) (.059) (.157)
Dividends from capital gains
Dividends from net investment income -- -- (.003) (.198) (.135)
Distribution in excess of net investment ---------------------------------------------------------------------------
income
(.227) (.108) (.268) (.257) (.292)
---------------------------------------------------------------------------
Total distributions
$ 3.909 $ 4.022 $ 3.540 $ 3.488 $ 3.635
===========================================================================
Net asset value, end of year
2.79% 16.69% 9.08% 3.00% 2.69%
TOTAL RETURN
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) $ 16,745 $ 17,636 $ 15,260 $ 15,659 $ 16,268
Ratio of expenses to average net assets .49% (5.03)% .81% 6.04% 3.90%
Ratio of net investment income to average net
assets 5.77% 11.93% 7.25% 1.54% 4.07%
Portfolio turnover rate 13.56% 40.06% 64.84% 101.88% 46.10%
</TABLE>
-10-
<PAGE>
NRM INVESTMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
1
- ------------------------------------------------------------------
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of business:
NRM Investment Company (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company. The following is a summary
of significant accounting policies consistently followed by the
Fund in the preparation of its financial statements.
Valuation of investments:
Investments in securities (other than debt securities maturing in
60 days or less) traded in the over-the-counter market, and listed
securities for which no sale was reported on the last business day
of the year, are valued based on prices furnished by a pricing
service. This service determines the valuations using a matrix
pricing system based on common bond features such as coupon rate,
quality and expected maturity dates. Securities for which market
quotations are not readily available are valued by the Investment
Advisor under the supervision and responsibility of the Fund's
Board of Directors. Investments in securities that are traded on a
national securities exchange are valued at the closing prices.
Short-term investments are valued at amortized cost, which
approximates value.
Investment transactions and related investment income:
Investment transactions are accounted for on the date the
securities are purchased or sold (trade date). Realized gains and
losses from investment transactions are reported on the basis of
identified cost for both financial and federal income tax
purposes. Interest income is recorded on the accrual basis for
both financial and income tax reporting. In computing investment
income, the Fund amortizes premiums over the life of the security,
unless said premium is in excess of any call price, in which case
the excess is amortized to the earliest call date. Discounts are
accreted over the life of the security.
Transactions with shareholders:
Fund shares are sold and redeemed at the net asset value.
Transactions of these shares are recorded on the trade date.
Dividends and distributions are recorded by the Fund on the
ex-dividend date.
Federal income taxes:
It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies
and distribute substantially all of its net investment income and
realized net gain from investment transactions to its shareholders
and, accordingly, no provision has been made for federal income
taxes.
-11-
<PAGE>
NRM INVESTMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
1
- -----------------------------------------------------------------
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
2
- -----------------------------------------------------------------------------
INVESTMENT ADVISOR AND MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement which provides that the
Fund will pay to the investment advisor, as compensation for services
provided and expenses assumed, a fee at the annual flat rate of $
10,000. The president of the investment advisor is on the Board of
Directors of the Fund.
Advisory fees for the year ended August 31, 1999 amounted to $ 10,000.
3
- --------------------------------------------------
COST, PURCHASES AND SALES OF INVESTMENT SECURITIES
Cost of purchases and proceeds from sales and maturities of investment
securities, other than short-term investments, aggregated $ 556,641 and
$ 617,464 respectively, during the year ended August 31, 1999.
At August 31, 1999, the cost of investment securities owned is the same
for financial reporting and federal income tax purposes. Net unrealized
appreciation of investment securities is $ 279,984 (aggregate gross
unrealized appreciation of $ 475,708 less aggregate unrealized
depreciation of $ 195,724).
-12-
<PAGE>
NRM INVESTMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
4
- -----------------------
ENVIRONMENTAL LIABILITY
The Fund has been identified as a potentially responsible party ("PRP")
by the Environmental Protection Agency ("EPA") in remedial activities
related to two environmental matters.
During 1999, the Fund paid $ 141,500, which was fully accrued as of
August 31, 1998, for remediation costs related to one matter, which
represents its share of a settlement offer made to the EPA and a
contribution claim against the Fund by another PRP involved in the same
matter. The Fund's legal counsel confirmed and advised that the
settlement agreement allows for future assertions, but that it is
likely that there will be no additional claims made with regard to this
matter.
With regard to the other matter, the Fund has been named as a PRP in a
claim asserted by the EPA. The number of other PRPs is currently
unknown as is the amount of future remedial costs, however, these costs
are considered to be material. The Fund's legal counsel has indicated
that it is not possible to predict a possible outcome for the claim,
however, the Fund is contractually committed to pay a portion of the
first phase of the cleanup. The Fund's share of this is approximately $
100,000 which was accrued at August 31, 1999. The Fund intends to
vigorously resist this claim.
5
- ----------------------------------------------------------
TRANSACTIONS IN CAPITAL STOCK AND COMPONENTS OF NET ASSETS
Transactions in fund shares were as follows:
<TABLE>
<CAPTION>
Years Ended August 31,
1999 1998
----------------------------------------------------
SHARES AMOUNT Shares Amount
----------------------------------------------------
<S> <C> <C> <C> <C>
Additional shares purchased -- $ -- 3,713 $ 14,997
Issued to shareholders in reinvestment of
dividends from net investment income 34 138 13 52
--------------------------------------------------
Net increase 34 $ 138 3,726 $ 15,049
==================================================
</TABLE>
-13-
<PAGE>
NRM INVESTMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
5
- ----------------------------------------------------------
TRANSACTIONS IN CAPITAL STOCK AND COMPONENTS OF NET ASSETS
(CONTINUED)
The components of net assets at August 31, 1999 and 1998 are as
follows:
<TABLE>
<CAPTION>
1999 1998
---------------------------------
<S> <C> <C>
Capital shares - par value $ .01 per share, 4,291,307
shares and 4,291,273 shares issued and outstanding
at August 31, 1999 and 1998 (10,000,000 full and
fractional shares authorized); and capital paid-in $ 16,641,291 $ 16,641,153
Accumulated net realized loss on investment transactions - -
Undistributed net realized gain on investment transactions - 8,434
Unrealized appreciation of investments 279,984 817,410
Overdistributed net investment income (97,024) (126,371)
------------------------------------
Net assets $ 16,824,251 $ 17,340,626
====================================
</TABLE>
-14-
<PAGE>
PART C
OTHER INFORMATION
(1) Item 23 - (a)(i) Articles of Incorporation are attached as Exhibit 23(a)(1)
(ii) Amendment to Articles of Incorporation attached as
Exhibit 23(a)(2)
(iii) Amendment to Articles of Incorporation
attached as Exhibit 23(a)(3)
(b)(i) By-Laws are attached as Exhibit 23(b)(1)
(ii) Amendment to By-Laws attached as Exhibit
23(b)(2)
(iii) Amendment to By-Laws attached as Exhibit
23(b)(3)
(c) None
(d)(i) Investment Advisory Agreement dated November 30,
1992 attached as Exhibit 23(d)(1)
(ii) Addendum to advisory agreement dated September 3,
1997, attached as Exhibit 23(d)(2)
(e) Not applicable
(f) Not applicable
(g)(i) Custodian Agreement, dated March 9, 2000 is attached
hereto as 23(g)(1)
(h)(i) Administration Agreement is attached as 23(h)(1)
(i) Opinion of Counsel, pursuant to Registrant's Rule 24f-2
Notice, attached as 23(i)
(j) (i) Consent of Henderson, Wetherill, O'Hey & Horsey
attached as 23(j)(1).
(ii) Consent of Beard & Company, Inc. attached as 23(j)(2).
(l) None
(m) None
(n) None
<PAGE>
Item 24. Not applicable
Item 25. Under the Company's bylaws (see Exhibit 23 b hereto) the Company with
certain exceptions indemnifies its directors and officers against
expenses incurred defending claims relative to Company business and the
Company has the power to purchase and maintain liability insurance on
behalf of the same individuals.
Item 26. The business of Rittenhouse Trust Company, Inc., is summarized under
"Advisory Agreement" in the Prospectus constituting Part I of this
Registration Statement, which summary is incorporated herein by
reference.
Item 27. Not applicable
Item 28. Books and other documents required to be maintained by section 31(a) of
the 1940 Act and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated
thereunder, are maintained by Raymond J. Keefe, 6 St. Albans Avenue,
Newtown Square, Pennsylvania 19073 except records relating to the
custody of the Company's assets and the shareholder records which are
maintained by Laurel Trust Company, 551 Main Street, Johnstown, Pa.,
15907 and Registrant's articles of incorporation, By-Laws and Minute
Books which are maintained by its Secretary, at the Company's principal
executive offices, Conestoga Road, Rosemont, Pennsylvania, 19010.
Item 29. Not applicable
Item 30. Not applicable
<PAGE>
NRM INVESTMENT COMPANY
Power of Attorney
I hereby appoint John H. McCoy and Thomas F. Kilcullen, Jr., and each of
them, attorney for me and in my name and on my behalf to sign the registration
Statement on Form N-1A of NRM Investment Company and any amendments thereto to
be filed with the Securities and Exchange Commission under the Securities Act of
1933 or the Investment Company Act of 1940, and generally to do and perform all
things necessary to be done in that connection.
I have signed this Power of Attorney on October 7, 1999.
/s/Francis J. Rainer
------------------------------
Francis J. Rainer
<PAGE>
NRM INVESTMENT COMPANY
Power of Attorney
I hereby appoint John H. McCoy and Thomas F. Kilcullen, Jr., and each of
them, attorney for me and in my name and on my behalf to sign the registration
Statement on Form N-1A of NRM Investment Company and any amendments thereto to
be filed with the Securities and Exchange Commission under the Securities Act of
1933 or the Investment Company Act of 1940, and generally to do and perform all
things necessary to be done in that connection.
I have signed this Power of Attorney on October , 1999.
/s/Joseph V. Somers
-----------------------------
Joseph V. Somers
<PAGE>
NRM INVESTMENT COMPANY
Power of Attorney
I hereby appoint John H. McCoy and Thomas F. Kilcullen, Jr., and each of
them, attorney for me and in my name and on my behalf to sign the registration
Statement on Form N-1A of NRM Investment Company and any amendments thereto to
be filed with the Securities and Exchange Commission under the Securities Act of
1933 or the Investment Company Act of 1940, and generally to do and perform all
things necessary to be done in that connection.
I have signed this Power of Attorney on October , 1999.
/s/George W. Connell
---------------------------
George W. Connell
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Rosemont, Pennsylvania
on October 26, 1999.
NRM INVESTMENT COMPANY
By: /s/John H. McCoy
--------------------
John H. McCoy
President
Pursuant to the requirement of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/John H.McCoy President (Chief
------------------- Executive Officer) 10/26/99
John H. McCoy
/s/Thomas F. Kilcullen Treasurer(Chief
---------------------- Financial and
Thomas F. Kilcullen Accounting Officer)
and Secretary 10/26/99
The Post-Effective Amendment No. 25 has also been signed by John H. McCoy,
Attorney-In-Fact, on behalf of the following directors on the Date indicated:
JOSEPH V. SOMERS
FRANCIS J. RAINER
GEORGE W. CONNELL
Date 10/26/99
EXHIBIT INDEX
Exhibit/Item
- ------------
(1) Item 23 - (a)(i) Articles of Incorporation are attached as Exhibit 23(a)(1)
<PAGE>
(ii) Amendment to Articles of Incorporation attached as Exhibit
23(a)(2)
(iii) Amendment to Articles of Incorporation attached as
Exhibit 23(a)(3)
(b)(i) By-Laws are attached as Exhibit 23(b)(1)
(ii) Amendment to By-Laws attached as Exhibit 23(b)(2)
(iii) Amendment to By-Laws attached as Exhibit 23(b)(3)
(c) None
(d)(i) Investment Advisory Agreement dated November 30,
1992 attached as Exhibit 23(d)(1)
(ii) Addendum to advisory agreement dated September 3,
1997, attached as Exhibit 23(d)(2)
(e) Not applicable
(f) Not applicable
(g)(i) Custodian Agreement, dated March 9, 2000 is attached
hereto as 23(g)(1)
(h)(i) Administration Agreement is attached as 23(h)(1)
(i) Opinion of Counsel, pursuant to Registrant's Rule 24f-2
Notice, attached as 23(i)
(j)(i) Consent of Henderson, Wetherill, O'Hey & Horsey
attached as 23(j)(1).
(ii) Consent of Beard & Company, Inc. attached as 23(j)(2).
(l) None
(m) None
(n) None
(2) Item 24. None
(3) Item 25. The indemnity provisions are set forth under Item 25,part C.
(4) Item 26. The business of Rittenhouse Trust Company, Inc., is
summarized under "Advisory Agreement" in the Prospectus
constituting Part I of this Registration Statement, which
summary is incorporated herein by reference.
<PAGE>
(5) Item 27 Not applicable
(6) Item 28 Books and other documents required to be maintained by section
31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated
thereunder, are maintained by Raymond J. Keefe, 6 St. Albans Avenue,
Newtown Square, Pennsylvania 19073 except records relating to the custody
of the Company's assets and the shareholder records which are maintained by
Laurel Trust Company, 551 Main Street, Johnstown, Pa., 15907. Registrant's
articles of incorporation, By-Laws and Minute Books which are maintained by
its Secretary, at the Company's principal executive offices, Conestoga
Road, Rosemont, Pennsylvania, 19010.
(7) Item 29 Not applicable
(8) Item 30 Not applicable
AMENDED AND RESTATED ARTICLES OF
INCORPORATION OF NATIONAL ROLLING MILLS CO.
RESOLVED, that the Articles of Incorporation of National Rolling Mills Co.
be and they are hereby amended so as to read, in their entirety, as follows:
1st. The name of the Corporation is NRM Investment Company.
2nd. The location and post office address of the Corporation's registered
office is Morehall Road, Malvern, Pennsylvania 19355.
3rd. The Corporation is incorporated under the Pennsylvania Business
Corporation Law for the purpose of engaging in the business of an investment
company, and shall have unlimited power to engage in and to do any lawful act
concerning any or all lawful business for which corporations may be incorporated
under said Pennsylvania Business Corporation Law.
4th. The Corporation is to exist perpetually.
5th. The aggregate number of shares which the Corporation shall have
authority to issue is 1,000,000 shares of common stock of the par value of $.10
each.
In each election of directors, shareholders shall not have cumulative
voting rights.
6th. The Corporation is further expressly empowered as follows:
(a) The Corporation may from time to time enter into written contracts
with any persons, partnerships (general or limited), associations, trusts or
corporations to act as investment managers and/or in other capacities for the
Corporation and to provide such advice and/or other services as the Board of
Directors of the Corporation may from time to time consider necessary or
desirable and proper for the proper management of the Corporation's portfolio
of securities and investments, and also to provide such research and
statistical service, office space, and/or financial, bookkeeping and other
services and facilities for the Corporation as the Board of Directors may
deem necessary or desirable and proper. The compensation payable by the
Corporation under any such contract shall be such as is deemed fair and
equitable by the Board of Directors.
(b) The Corporation may appoint one or more distributors, underwriters
and/or agents for the sale of its shares, may allow them commission,
discounts or "spreads" on the sale of such shares, and may make and perform
such contract or contracts with them as the Board of Directors of the
Corporation in its discretion may deem necessary or desirable and proper.
(c) The Corporation may employ and pay such custodian or custodians for
the safekeeping of all or any of the property of the Corporation and of its
shares, such
<PAGE>
dividend disbursing agent or agents, such brokers and such transfer
agent or agents and registrar or registrars for its shares, and may make and
perform such contracts for the aforesaid purposes as the Board of Directors
in its discretion may deem necessary or desirable and proper. The Board of
Directors may cause any or all of the property of the Corporation to be
transferred to or to be acquired and held in the name of a custodian so
appointed or in the name of any nominee or nominees of the Corporation or
nominee or nominees of such custodian satisfactory to the Board of Directors.
(d) The same person, partnership (general or limited), association,
trust or corporation may be employed as investment adviser and/or distributor
and/or underwriter and/or custodian and/or broker and/or in other multiple
capacities and may receive compensation from the Corporation in as many
capacities in which such persons, partnerships (general or limited),
associations, trusts or corporations shall serve the Corporation.
Neither the foregoing provisions nor any other provisions of these
Articles of Incorporation shall be deemed to require the Corporation to enter
into contracts or arrangements or take any other action referred to in this
Article 6th. Such contracts or arrangements shall not be required to be made
and such action shall not be required to be taken except as determined by the
Board of Directors.
Neither the foregoing provisions nor any other provisions of these
Articles of Incorporation shall protect or purport to protect any director or
officer of the Corporation against any liability to the Corporation or its
stockholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
In compliance with the requirements of section 806 of the Business Corporation
Law, act of May 5, 1933 (P.L. 364)(15 P.S. ss.1806), the undersigned
corporation, desiring to amend its Articles, does hereby certify that:
1. The name of the corporation is:
NRM Investment Company
- --------------------------------------------------------------------------------
2. The location of its registered office in this Commonwealth is (the
Department of State is hereby authorized to correct the following statement
to confirm to the records of the Department):
Morehall Road
- --------------------------------------------------------------------------------
(Number) (Street)
Malvern Pennsylvania 19355
- --------------------------------------------------------------------------------
(City) (Zip Code)
3. The statute by or under which it was incorporated is:
Pennsylvania Business Corporation Law
- --------------------------------------------------------------------------------
4. The date of its incorporation is: April 12, 1974
-------------------------------------------
5. (Check, and if appropriate, complete one of the following):
|X| The meeting of the shareholders of the corporation at which the
amendment was adopted was held at the time and place and pursuant to the kind
and period of notice herein stated.
Time: The fourth day of December, 1980.
---------- ---------- --
Place: Morehall Road, Malvern, Pennsylvania 19355
-------------------------------------------------------------------------
Kind and period of notice written notice to shareholders on October 27, 1980.
------------------------------------------------------
- --------------------------------------------------------------------------------
|_| The amendment was adopted by a consent in writing, setting forth the
action so taken, signed by all of the shareholders entitled to vote thereon and
filed with the Secretary of the corporation.
6. At the time of the action of shareholders:
(a) The total number of shares outstanding was:
3,600,000
- --------------------------------------------------------------------------------
(b) The number of shares entitled to vote was:
3,600,000
- --------------------------------------------------------------------------------
<PAGE>
7. In the action taken by the shareholders:
(a) The number of shares voted in favor of the amendment was:
3,510,000
- --------------------------------------------------------------------------------
(b) The number of shares voted against the amendment was:
-0-
- --------------------------------------------------------------------------------
8. The amendment adopted by the shareholders set forth in full, is as follows:
See Exhibit A attached hereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer and its
corporate seal, duly attested by another such officer, to be hereunto affixed
this twelfth day of December, 1980.
------- -------- --
NRM Investment Company
-------------------------------
(Name of Corporation)
Attest:
By:
- ------------------------------ ----------------------------
(Signature) (Signature)
Assistant Secretary President
- ------------------------------ --------------------------------
(Title Secretary, (Title President,
Assistant Secretary, etc.) Vice President, etc.)
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
In compliance with the requirements of section 806 of the Business Corporation
Law, act of May 5, 1933 (P.L. 364)(15 P.S. ss.1806), the undersigned
corporation, desiring to amend its Articles, does hereby certify that:
1. The name of the corporation is:
NRM Investment Company
- --------------------------------------------------------------------------------
2. The location of its registered office in this Commonwealth is (the
Department of State is hereby authorized to correct the following statement
to confirm to the records of the Department):
Morehall Road
- --------------------------------------------------------------------------------
(Number) (Street)
Malvern Pennsylvania 19355
- --------------------------------------------------------------------------------
(City) (Zip Code)
3. The statute by or under which it was incorporated is:
Pennsylvania Business Corporation Law
- --------------------------------------------------------------------------------
4. The date of its incorporation is: April 12, 1974
-------------------------------------------
5. (Check, and if appropriate, complete one of the following):
|X| The meeting of the shareholders of the corporation at which the
amendment was adopted was held at the time and place and pursuant to the kind
and period of notice herein stated.
Time: The eleventh day of January , 1980.
-------- --------- --
Place: Morehall Road, Malvern, Pennsylvania 19355
-------------------------------------------------------------------------
Kind and period of notice written notice to shareholders on December 26, 1979.
------------------------------------------------------
|_| The amendment was adopted by a consent in writing, setting forth the
action so taken, signed by all of the shareholders entitled to vote thereon and
filed with the Secretary of the corporation.
6. At the time of the action of shareholders:
(a) The total number of shares outstanding was:
3,600,000
- --------------------------------------------------------------------------------
(b) The number of shares entitled to vote was:
3,600,000
- --------------------------------------------------------------------------------
<PAGE>
7. In the action taken by the shareholders:
(a) The number of shares voted in favor of the amendment was:
265,000
- --------------------------------------------------------------------------------
(b) The number of shares voted against the amendment was:
-0-
- --------------------------------------------------------------------------------
8. The amendment adopted by the shareholders set forth in full, is as follows:
See Exhibit A attached hereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer and its
corporate seal, duly attested by another such officer, to be hereunto affixed
this eleventh day of January , 1980.
-------- --------- --
NRM Investment Company
-------------------------------
(Name of Corporation)
Attest:
By:
- ------------------------------ ----------------------------
(Signature) (Signature)
Assistant Secretary President
- ------------------------------ --------------------------------
(Title Secretary, (Title President,
Assistant Secretary, etc.) Vice President, etc.)
BY-LAWS
of
NRM Investment Company
(A Pennsylvania Corporation)
(as amended through September 10, 1979)
Section 1. MEETINGS OF SHAREHOLDERS
Section 1.01. Place of Meeting. Meetings of shareholders of the
Corporation shall be held at such place, within the Commonwealth or
Pennsylvania or elsewhere, as may be fixed by the Board of Directors. If no
place is so fixed, they shall be held at the office of the Corporation in
Section 1.02. Annual Meeting. The annual meeting of shareholders, for the
election of directors and the transaction of any other business which may be
brought before the meeting, shall be held, unless the Board of Directors
shall fix some other hour or date therefor, at 10 o'clock A.M. on the second
Tuesday in July in each year, if not a legal holiday under the laws of
Pennsylvania, and, if a legal holiday, then on the next succeeding secular
day not a legal holiday under the laws of Pennsylvania. If for any reason
such meeting is not held at the time fixed therefor, such election may be
held at subsequent a meeting called for that purpose.
Section 1.03. Notice of Meetings. Notice of every annual meeting of
shareholders shall be given by the Secretary.
Notice of all meetings of shareholders shall be given to each
shareholder of record entitle to vote at the meeting, at least ten days prior
to the day named for the meeting, unless a greater period of notice is by law
required in a particular case.
Section 1.04. Organization. At every meeting of the shareholders, the
President, or in his absence, a Vice President, or in the absence of the
President and all the Vice Presidents, a chairman chosen by the shareholders,
share act as chairman; and the Secretary, or in his absence, a person
appointed by the chairman, shall act as secretary.
Section 1.05. Voting. Except as otherwise specified herein or in the
Articles or provided by law, all matters shall be decided by the vote of the
shareholders present, in person or by proxy, entitled to cast at least a
majority of the vote which all shareholders present are entitled to cast,
although such vote be less than a majority of the votes which all the
shareholders entitled to vote thereon would be entitled to cast.
<PAGE>
In each election of directors, the candidates receiving the highest
number of votes, up to the number of directors to be elected in such
election, shall be elected.
Section 1.06. Participation in Meetings. One or more shareholders may
participate in a meeting of the shareholders by means of conference telephone
or similar communications equipment by which all persons participating in the
meeting can hear each other.
Section 2. DIRECTORS
Section 2.01. Number and Term of Office. The number of directors of the
Corporation shall be three. Each director shall be elected for the term of
one year, except that the first directors of the Corporation shall serve only
until the first annual meeting.
Section 2.02. Resignations. Any director may resign at any time by giving
written notice to the Board of Directors, to the President, or to the
Secretary. Such resignation shall take effect at the time of the receipt of
such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make effective.
Section 2.03. Annual Meeting. Immediately after each annual election of
directors, the Board of Directors shall meet for the purpose of organization,
election of officers, and the transaction of other business, at the place
where such election of directors was held. Notice of such meeting need not be
given. In the absence of a quorum at said meeting, the same may be held at
any other time and place which shall be specified in a notice given as
hereinafter provided for special meeting of the Board of Directors.
Section 2.04. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and place as shall be designated from
time to time by standing resolution of the Board. Notice of such meeting need
not be given. If the date fixed for any such regular meeting be a legal
holiday under the laws of the State where such meeting is to be held, then
the same shall be held on the next succeeding secular day not a legal holiday
under the laws of said State, or at such other time as may be determined by
resolution of Board. At such meetings the directors may transact such
business as may be brought before the meeting.
<PAGE>
Section 2.05. Special Meetings. Special meetings of the Board of
Directors may be called by the President, by a Vice President, or by two or
more of the directors, and shall be held at such time and place as shall be
designated in the call for the meeting. Written notice of each special
meeting shall be given, by or at the direction of the person or persons
authorized to call such meeting, to each director, at least one day prior to
the day named for the meeting.
Section 2.06. Organization. Every meeting of the Board of Directors
shall be presided over by the Chairman of the Board, if one has been selected
and is present, and, if not, the President, or in the absence of the Chairman
of the Board or the President, a Vice President, or in the absence of the
Chairman of the Board, the President, and all the Vice Presidents, a chairman
chosen by a majority of the directors present. The Secretary, or in his
absence, a person appointed by the chairman, shall act as secretary.
Section 2.07. Participation in Meetings. One or more directors may
participate in a meeting of the Board or a committee of the Board by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other.
Section 2.08. Compensation of Directors. Each director shall be entitled
to receive a fee, in such amount, if any, as may from time to time be fixed
by the Board of Directors, for each meeting of the Board or any committee
thereof, regular or special, attended by him. Directors may also be
reimbursed by the Corporation for all reasonable expenses incurred in
travelling to and from the place of each meeting of the Board or any such
committee.
Section 3. COMMITTEES
Section 3.01. Executive Committee. If an Executive Committee or one or
more other committees is or are designated by the Board of Directors to
exercise the authority of the Board in the management of the Corporation,
such committee(s) shall keep regular minutes of its or their proceedings and
report the same to the Board at each regular meeting.
Section 3.02. Other Committees. The Board of Directors may, at any time
and from time to time, appoint such standing committees and/or special
committees, consisting of directors or others, to perform such duties and
make such investigations and reports as the Board shall by resolution
determine. Such committees shall determine their
<PAGE>
own organization and times and places of meeting, unless otherwise directed
by such resolution.
Section 4. OFFICERS
Section 4.01. Number. The officers of the Corporation shall be a
President, a Secretary, a Treasurer, and may include a Chairman of the Board
and one or more Vice Presidents, one or more Assistant Secretaries, one or
more Assistant Treasurers, and such other officers as the Board of Directors
may from time to time determine.
Section 4.02. Qualifications. The officers shall be natural persons of
full age.
Section 4.03. Election and Term of Office. The officers of the
Corporation shall be elected by the Board of Directors at its annual meeting,
but the Board may elect officers or fill vacancies among the officers at any
other meeting. Subject to earlier termination of office, each officer shall
hold office for one year and until his successor shall have been elected and
qualified.
Section 4.04. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, or to the President, or to the
Secretary of the Corporation. Any such resignation shall take effect at the
time of the receipt of such notice or at any later time specified therein;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 4.05. Chairman of the Board. If there is a Chairman of the
Board, he shall preside at the meetings of the Board. Such Chairman shall
also perform such other duties as may be specified by the Board from time to
time as do not conflict with the duties of the President.
Section 4.06. The President. The President shall be the chief executive
officer of the corporation and shall have general supervision over the
business and operations of the Corporation, subject, however, to the control
of the Board of Directors. He shall sign, execute, and acknowledge, in the
name of the Corporation, deeds, mortgages, bonds, contracts, and other
instruments authorized by the Board, except in cases where the signing and
execution thereof shall be expressly delegated by the Board to some other
officer or agent of the Corporation; and, in general, he shall perform all
duties incident to the office of President, and such other duties as from
time to time may be assigned to him by the Board.
<PAGE>
Section 4.07. The Vice Presidents. In the absence or disability of the
President or when so directed by the President, any Vice President designated
by the Board of Directors may perform all the duties of the President, and,
when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the President; provided, however, that no Vice President
shall act as a member of or as chairmen of any special committee of which the
President is a member or chairman by designation or ex-officio, except when
designated by the Board. The Vice Presidents shall perform such other duties
as from time to time may be assigned to the respectively by the Board or the
President.
Section 4.08. The Secretary. The Secretary shall record all the votes of
the shareholders and of the directors and the minutes of the meetings of the
shareholders and of the Board of Directors in a book or books to be kept for
that purpose; he shall see that notices of meetings of the Board and
shareholders are given and that all records and reports are properly kept and
filed by the Corporation as required by law; he shall be the custodian of the
seal of the Corporation and shall see that it is affixed to all documents to
be executed on behalf of the Corporation under its seal; and, in general, he
shall perform all duties as may from time to time be assigned to him by the
Board or the President.
Section 4.09. Assistant Secretaries. In the absence or disability of the
Secretary or when so directed by the Secretary, any Assistant Secretary may
perform all the duties of the Secretary, and, when so acting, shall have all
the powers of, and be subject to all the restrictions upon, the Secretary.
The Assistant Secretaries shall perform such other duties as from time to
time may be assigned to the respectively by the Board of Directors, the
President, or the Secretary.
Section 4.10. The Treasurer. The Treasurer shall have charge of all the
receipts and disbursements of the Corporation and shall have or provide for
the custody of its funds and securities; he shall have full authority to
receive and give receipts for all money due and payable to the Corporation,
and to endorse checks, drafts, and warrants in its name and on its behalf and
to give full discharge for the same; he shall deposit all funds of the
Corporation, except such as may be required for current use, in such banks or
other places of deposit as the Board of Directors may from time to time
designate; and, in general, he shall perform all duties incident to the
office of Treasurer and such other duties as may from time to time be
assigned to him by the Board or the President.
Section 4.11. Assistant Treasurers. In the absence or disability of the
Treasurer or when so directed by the Treasurer, any Assistant Treasurer may
perform all the duties of the Treasurer, and, when so acting, shall have all
the powers of, and be subject to all the restrictions upon, the Treasurer.
The Assistant Treasurer shall perform such other
<PAGE>
duties as from time to time may be assigned to the respectively by the Board
of Directors, the President, or the Treasurer.
Section 4.12. Compensation of Officers and Others. The compensation of
all officers shall be fixed from time to time by the Board of Directors, or
any committee or officer authorized by the Board to do so. No officer shall
be precluded from receiving such compensation by reason of the fact that he
is also a director of the Corporation.
Additional compensation, fixed as above provided, may be paid to any
officers or employees for any year or years, based upon the success of the
operations of the Corporation during such year.
Section 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 5.01. Right to Indemnification. The Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is
or was a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, as follows:
(a) if the action, suit or proceeding is not by or in the right of the
Corporation
(1) against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith to the extent that he has
been successful on the merits or otherwise in defense of such action, suit or
proceeding, or of any claim, issue or matter therein, and
(2) against expenses (including attorneys' fees), judgements, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection therewith if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgement, order, settlement, conviction, or upon a
plea of nolo contendere or it equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe his conduct was unlawful.
<PAGE>
(b) if the action, suit or proceeding is by or in the right of the
Corporation
(1) against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith to the extent that he has
been successful on the merits or otherwise in defense of such action, suit or
proceeding, or of any claim, issue or matter therein, and
(2) against expenses (including attorneys' fees), judgements and
amounts paid in settlement actually and reasonably incurred by him in
connection with the defense or settlement thereof if he acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation for negligence or misconduct in the
performance of his duty to the Corporation unless and only to the extent that
a court of common pleas of the county in which the registered office of the
Corporation is located or the court in which such action, suit or proceeding
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity.
Section 5.02. Procedure to be Followed. Any indemnification under
paragraph (a) (2) or (b) (2) of Section 5.01. (unless ordered by a court or
made pursuant to a determination by a court hereinafter provided) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in
the circumstances because he has met the applicable standard of conduct set
forth in such paragraph (a) (2) or (b) (2). Such determination shall be made
(a) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (b) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel not in the
employ of the corporation (who may be retained as general counsel for the
corporation) in a written opinion, or (c) by the shareholders. In absence of
a determination that indemnification is proper as aforesaid, the director or
officer may apply to a court of common pleas of the county in which the
registered office of the Corporation is located or the court in which the
action, suit or proceeding was brought, which shall determine whether the
director or officer has met the applicable standard of conduct set forth in
such paragraph (a) (2) or (b) (2). If the court shall determine that he has,
indemnification shall be made under such paragraph (a) (2) or (b) (2).
<PAGE>
Section 5.03. Payment of Expense in Advance. Expenses incurred in
defending an action, suit or proceeding referred to in Section 5.01 may be
paid by the Corporation in advance of the final disposition of such action,
suit or proceeding as authorized by the Board of Directors or by a court, in
a manner provided in Section 5.02, upon receipt of an undertaking by or on
behalf of the director or officer (regardless of his financial
responsibility) to repay such amount unless it shall ultimately be determined
that he is entitled to be indemnified by the Corporation as authorized in
this section.
Section 5.04. Other Rights. The indemnification provided by these By-Laws
shall not be deemed exclusive of any other rights to which a person seeking
indemnification may be entitled under any agreement, vote of shareholders or
disinterested directors, or otherwise both as to action in another capacity
while holding such office, and shall continue as to a person who has ceased
to be a director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 5.05 Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
or employee or agent of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation , partnership, joint venture, trust or other enterprise, against
any liability asserted against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not the Corporation would
have the power to indemnify him against such liability under the provisions
of these By-Laws.
Section 5.06. Exception. Anything in this Section _% to the contrary
notwithstanding, no indemnification shall be required or permitted hereunder
in the case of an action against a defendant for profits realized from
purchases and sales within a period of less than 6 months under Section 16(b)
of the Securities Exchange Act of 1934.
Section 6. BORROWING, DEPOSITS, PROXIES, ETC.
Section 6.01. Borrowing, etc. No officer, agent or employee of the
Corporation shall have any power or authority to borrow money on its behalf,
to pledge its credit, or to mortgage or pledge its real or personal property,
except within the scope and to the extent of the authority delegated by
resolution of the Board of Directors. Authority may be given by the Board for
any of the above purposes and may be general or limited to specific
instances.
<PAGE>
Section 6.02. Deposits. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies, or other depositaries as the Board of Directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by
such one or more officers or employees as the Board shall from time to time
determine.
Section 6.03. Proxies. Unless otherwise ordered by the Board of
Directors, any officer of the Corporation may appoint an attorney or
attorneys (who may include such officer himself), in the name and behalf of
the Corporation, to cast the votes which the Corporation may be entitled to
cast as a shareholder or otherwise in any other corporation any of whose
shares or other securities are held by or for the Corporation, at meetings of
the holders of the shares or other securities of such other corporation, or,
in connection with the ownership of such shares or other securities, to
consent in writing to any action by such other corporation, and may instruct
the person or persons so appointed as to the manner of casting such votes or
giving such consent, and may execute or cause to be executed in the name and
on behalf of the Corporation and under its seal such written proxies or other
instruments as he may deem necessary or proper in the premises.
Section 7. SHARE CERTIFICATES; TRANSFER
Section 7.01. Share Certificates. Share certificates shall be signed by
the President or a Vice President and by the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer of the Corporation, but, to the
extent permitted by law, such signatures may be facsimiles, engraved or
printed.
Section 7.02. Transfer of Shares. Transfer of share certificates and the
shares represented thereby shall be made only on books of the Corporation by
the owner thereof or by his attorney thereunto authorized, by a power of
attorney duly executed and filed with the Secretary or a Transfer Agent of
the Corporation, and on surrender of the share certificates.
Section 7.03. Transfer Agent and Registrar; Regulations. The Corporation
may, if and whenever the Board of Directors so determines, maintain, in the
Commonwealth of Pennsylvania, or any other state of the United States, one or
more transfer offices or agencies, each in charge of a Transfer Agent
designated by the Board, where the shares of the Corporation shall be
transferable, and also one or more registry offices, each in charge of a
Registrar designated by the Board, where such shares shall be registered; and
no certificates for shares of the Corporation in respect of which a Transfer
Agent and Registrar shall have been designated shall be valid unless
countersigned by such Transfer
<PAGE>
Agent and registered by such Registrar. The Board may also make such
additional rules and regulations as it may deem expedient concerning the
issue, transfer and registration of share certificates.
Section 7.04. Lost, Destroyed and Mutilated Certificates. The Board of
Directors, by standing resolution or by resolutions with respect to
particular cases, may authorized the issue of new share certificates in lieu
of share certificates lost, destroyed or mutilated, upon such terms and
conditions as the Board may direct.
Section 8. FINANCIAL REPORTS
Section 8.01. The directors of the Corporation shall not be required to
cause to be sent to the shareholders annual financial statements under
Section 318 of the Business Corporation Law of the Commonwealth of
Pennsylvania; and any financial statements which the directors in their
discretion may cause to be sent to the shareholders need not be examined by
an independent certified public accountant or by a firm thereof, or
accompanied by such accountant's or firm's opinion thereon.
Section 9. AMENDMENTS
Section 9.01. Any or all of the provisions of these By-Laws, whether
contractual in nature or merely regulatory of the internal affairs of the
Corporation, may be amended or repealed (a) except as otherwise provided in
the Business Corporation Law, by a majority vote of the members of the Board
of Directors, or (b) by vote of the shareholders entitled to cast at least a
majority of the votes which all shareholders are entitled to cast thereon, at
any regular or special meeting duly convened after notice of such purpose to
the directors or shareholders, as the case may be.
No provision of these By-Laws shall vest any property right in any
shareholder.
Section 10. MISCELLANEOUS
Nothing in these By-Laws shall protect or purport to protect any
director of officer of the Corporation against any liability to the
Corporation or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
NRM INVESTMENT COMPANY
(A Pennsylvania Corporation)
UNANIMOUS CONSENT OF DIRECTORS
Pursuant to Section 402(7) of the Pennsylvania Business Corporation Law,
the Undersigned, being all of the directors of the above-named Corporation
hereby consent and agree that the following action be taken, and that the
following resolution be, and it hereby is, adopted by the Board of Directors,
as follows:
RESOLVED that it is advisable and in the best interests of this
Corporation that Section 2.01 of the By-Laws of the Corporation, which reads
as follows:
Section 2.01. Number and Term of Office. The number of
directors of the Corporation shall be three. Each director
shall be elected for the term of one year, except that the
first directors of the Corporation shall serve only until the
first annual meeting.
be amended to read in full as follows:
Section 2.01. Number and Term of Office. The number of
directors of the Corporation shall be four. Each director
shall be elected for the term of one year, except that the
first directors of the Corporation shall serve only until the
first annual meeting.
All signatures need not appear on the same copy of this instrument.
Dated:
--------------------------- ------------------------------
John H. McCoy
-------------------------------
Joan T. Cox
-------------------------------
Joseph V. Somers
RESOLVED, that Paragraph 5th of the Articles of Incorporation of
the Corporation which reads as follows:
"5th. The aggregate number of shares which the Corporation shall
have authority to issue is ten million common shares of the par value of
$.01 each. Upon filing of appropriate Articles of Amendment with the
Department of State of Pennsylvania, each previously authorized and then
issued share of common stock (par value $.10 per share) shall be
reclassified and converted into ten common shares (par value $.01 per
share)."
be amended to read in full as follows:
"5th. The aggregate number of shares which the Corporation shall have
authority to issue is ten million common shares of the par value of $.01
each. Each recordholder of common shares of the Corporation, who shall
surrender his certificate in good delivery from to the Corporation or who, if
the shares in question are not represented by certificates, shall deliver to
the Corporation a written request in good order signed by the shareholder,
shall be entitled to require the Corporation, to the extent that the shares
in question have assets lawfully available therefor and out of such assets,
but not otherwise, to redeem all or any part of such shares standing in the
name of such holder on the books of the Corporation, at the net asset value
of such shares, determined in the manner and as of the time, and payable as
provided in the Investment Company Act of 1940. The Corporation shall make
payment for any such shares to be redeemed, as aforesaid, in cash, or if in
the opinion of the Board of Directors, which shall be conclusive, conditions
exist which make payment wholly in cash unwise or undesirable, the
Corporation may make payment wholly or partly in securities or other property
valued in accordance with the Investment Company Act of 1940. The Corporation
may, to the extent necessary, sell or cause to be sold any securities to
provide cash for the redemption of common shares. Notwithstanding the
foregoing:
(1) The Board of Directors of the Corporation may, in accordance with
the Investment Company Act of 1940, suspend the right of the holders of any
class of stock of the Corporation to require the Corporation to redeem shares
of such class.
(2) The Corporation reserves the right to redeem the shares of any
holder of record if the value of such shares in the holder's account
maintained by the Corporation or its transfer agent is $1,000.00 (One
Thousand Dollars) or less; provided, however, that each shareholder shall be
notified that the value of his account is $1,000.00 or less and allowed sixty
days to make additional purchases of shares before such redemption is
processed by the Corporation.
RITTENHOUSE
Rittenhouse Financial Services, Inc.
November 30, 1992
Mr. John H. McCoy
NRM Investment Company
919 Conestoga Road
Suite 201
Rosemont, PA 19010
Re: NRM Investment Company
$17,000,000 Bond Portfolio
This letter is to confirm the basis upon which you have retained
Rittenhouse Financial Services, Inc. ("RFS, "we" or "our"), as an Investment
Adviser.
We shall from time to time make recommendations to you with respect to
purchases and sales on a nondiscretionary basis in accordance with the
investment policy and guidelines specified in Section IV of Schedule A
attached hereto. Unless otherwise notified by you, we shall advise you on the
basis that requisite liquidity will be achieved by investment in accordance
with the investment guidelines and investment restrictions specified in
Section IV of Schedule A, and unless you have advised us in writing that all
of your financial assets are included in the portfolio as set forth in
Section I of Schedule A attached hereto (the "Portfolio"), RFS does not
assume diversification responsibility for your assets.
Should there be any changes of your investment objectives or investment
restrictions, such changes must be brought to the attention of RFS in order
to allow RFS to revise your Schedule A accordingly. Unless you notify RFS in
writing of specific restrictions, the investments recommended for your
Portfolios shall be deemed not to be restricted under any current or future
laws or by virtue of the terms of any other contract or instrument purporting
to bind you or RFS.
Following the effective date of this agreement and in consideration of
our investment advisory services, you will pay RFS $10,000.00 annually. Such
fee will be pro-rated for any portion of a billing period during which this
agreement is in effect.
<PAGE>
Mr. John McCoy November 30, 1992
You acknowledge that the advisory fees to be charged to you may differ
from the fee charged to some other clients of RFS based upon account size,
the relationship among accounts, investment objectives, services rendered or
available and other factors.
At your request and otherwise whenever we deem it appropriate, we will
prepare and provide you with schedules of securities or statistical data
regarding the activity and positions in your Portfolios.
We have assumed no responsibility under this agreement other than to
render the services called for hereunder. We shall be liable, in carrying out
our duties hereunder, for actions and omissions constituting violations of
the Investment Advisers Act of 1940 and other securities laws to the extent
provided in such laws, but shall not otherwise be liable with respect to the
services rendered or not rendered hereunder for any mistake of judgment or
otherwise.
You understand that RFS will be acting in a similar capacity for other
institutional and individual customers (including customers with
discretionary accounts and customers with whom it may be affiliated) and that
recommendations regarding investments and reinvestments for your Portfolios
may differ from those made or recommended with respect to other portfolios
and customers even though the investment objectives may be the same or
similar.
You represent and warrant that you are authorized to enter into this
agreement, that the engagement of RFS as described herein is authorized by
law and by corporate action (or, if you are not a corporation, by other
appropriate and legally effective action) and that there are no restrictions
or limitations on the investment of your assets, their management or any
other activity contemplated by this agreement other than as may be set forth
in Section IV of Schedule A to this agreement. You further represent and
warrant that our advice and recommendations will be treated with the
strictest confidence and used only with respect to the Portfolios. You shall
indemnify RFS and hold it harmless against any and all losses, costs, claims
and liabilities which it may suffer or incur arising out of a breach of such
representations and warranties.
We shall have no obligation to seek to obtain any material non-public
information about any issuer of securities, or to recommend for purchase or
sale, for your Portfolios the securities of any issuer on the basis of any
such information as may come into our possession.
You hereby acknowledge that you have received a copy of Part II of RFS's
Form ADV Registration Statement. Not withstanding any terms to the contrary
herein, if you have received RFS's Form ADV Registration Statement less than
48 hours before entering into this agreement, you shall have the right to
terminate this agreement within five business days after your execution of
this agreement without penalty.
2
<PAGE>
Mr. John McCoy November 30, 1992
This agreement may not be amended except by a writing signed by both the
parties hereto. By vote of your Board of Directors, or by a majority vote of
the outstanding shares of the Company, you may terminate this agreement
without the payment of any penalty at any time, by written notice to RFS, and
we may terminate this agreement upon 30 days written notice. This agreement
shall terminate in the event of an assignment by either party.
Schedule A may be revised by mutual consent from time to time and shall
constitute an amendment to this agreement replacing the then current Schedule
A when and as initialed for identification by the parties and attached
hereto.
Any controversy arising out of or relating to this agreement shall be
finally settled by arbitration in Philadelphia, Pennsylvania, in accordance
with the rules then in effect, of the American Arbitration Association. This
agreement to arbitrate does not constitute a waiver by the undersigned of the
right to seek a judicial forum where such a waiver would be void under the
federal securities law.
The effective date of this agreement is January 2, 1993 or upon approval
by the vote of a majority of the outstanding voting securities of the
Company, whichever is later.
If the agreement set forth herein is acceptable to you, please so
indicate by signing the enclosed copy of this letter, whereupon this letter
shall constitute a binding agreement between you and RFS as of the date of
such acceptance, and return it to the undersigned.
Sincerely,
RITTENHOUSE FINANCIAL SERVICES, INC.
By
---------------------------------
George W. Connell, President
NRM INVESTMENT COMPANY
By
---------------------------------
John H. McCoy, Chairman
3
<PAGE>
Mr. John McCoy November 30, 1992
RITTENHOUSE FINANCIAL SERVICES, INC.
SCHEDULE A
I. The Portfolio is as set forth on Exhibit I as attached hereto and all
subsequent additions thereto of which RFS is given notice, and all
other property acquired as earnings thereon, proceeds therefrom, or in
substitution therefor, less authorized payment by the Custodian (if
applicable).
II. The persons authorized to give consents, approvals and otherwise bind
the Portfolio in all respects are each of the individuals listed below
or, if none is indicated, each of the individuals signing this
agreement, each of whom may act alone:
NAME ADDRESS
John H. McCoy 919 Conestoga Rd.
Rosemont, Pa. 19010
Thomas Kilcullen 4 Carriage Way
Berwyn, Pa. 19312
III. Type of Portfolio
[ ] Equity and Cash Equivalent
[ ] Equity Only
[ ] Fixed Income and Cash Equivalent
[ ] Fixed Income Only
[ ] Balanced
[ ] --------------------------------
4
<PAGE>
Mr. John McCoy November 30, 1992
IV. The investment policy, investment guidelines and investment restrictions
are:
Rittenhouse Financial Services, Inc. will be guided by NRM
Investment Company's prospectus and the Investment Company Act of
1940.
V. The fee shall be: $10,000.00 a year payable in four equal installments
at the close of every calendar quarter.
Who is to be billed:
Attached to and forming part of an Agreement date: 1/2/93
------
INITIALED FOR IDENTIFICATION:
RFS:
-----------------------------------------
NRM INVESTMENT COMPANY:
-----------------------------------------
5
The Rittenhouse Trust Company
ADDENDUM TO THE ADVISORY CONTRACT
FOR THE ACCOUNT OF
NRM INVESTMENT COMPANY
This addendum will serve as authorization to transfer the investment
advisory account and agreement from Rittenhouse Financial Services, Inc. to
The Rittenhouse Trust Company.
Approved:
- ----------------------------- --------------------------
John H. McCoy Date
CUSTODIAN AGREEMENT
This Agreement, dated the day of , 2000, made by and
between NRM INVESTMENT Company (the "Company"), a corporation operating
as an open-end investment company, duly organized and existing under the laws
of the Commonwealth of Pennsylvania and Laurel Trust Company ("Laurel"), a
Pennsylvania state chartered trust company and wholly owned subsidiary of BT
Financial Corporation, Johnstown Pennsylvania, duly organized and existing
under the laws of the United States of America;
WITNESSETH THAT:
WHEREAS, the Company desires to appoint Laurel as custodian of its
Securities and principal cash, and Laurel is willing to act in such capacity
upon the terms and conditions herein set forth; and
WHEREAS, Laurel qualifies as a "Bank" within the meaning of Section
2(a)(5) of The Investment Company Act of 1940 (the "Act") and qualifies as a
Custodian of the Company's securities and similar investments under Section
17 (f) of the Act and Rule 17f-2 of the rules and regulations thereunder; and
WHEREAS, Laurel in its capacity as custodian hereunder will also collect
and apply the dividends and interest on said Securities in the manner and to
the extent herein set forth; and
WHEREAS, pursuant to separate agreement, Laurel will perform the duties
of Administrator, Transfer Agent and Dividend Disbursing Agent.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
do hereby agree as
<PAGE>
follows:
Section 1. The terms as defined in this Section wherever used in this
Agreement, or in any amendment or supplement hereto, shall have the meanings
herein specified unless the context otherwise requires.
The Company: The term Company shall mean NRM INVESTMENT Company.
Custodian: The term Custodian shall mean Laurel in its capacity as
custodian under this Agreement.
Securities: The term Securities shall mean bonds, debentures, notes,
stocks, shares, evidences of indebtedness, and other securities and
investments from time to time owned by the Company.
Share Certificates: The term Share Certificates shall mean the stock
certificates for the Shares of the Company.
Shareholders: The term Shareholders shall mean the registered owners
from time to time of the Shares of the Company in accordance with the stock
registry records of the Company.
Shares: The term Shares mean the issued and outstanding shares of common
stock of the Company whether in certificate or noncertificated form.
Oral instructions: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of
any kind transmitted to the Custodian in person or by telephone, facsimile
transmission, electronic mail, telecopy or other mechanical or documentary means
lacking original signature, by a person or persons believed in good faith by the
Custodian to be a person or persons authorized by a
2
<PAGE>
resolution of the Board of Directors of the Company to give Oral Instructions on
behalf of the Company.
Written Instructions: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of
any kind transmitted to the Custodian in original writing containing original
signatures or a copy of such document transmitted by telecopy or facsimile
transmission including transmission of such signature, believed in good faith
by the Custodian to be the signature of a person authorized by a resolution
of the Board of Directors of the Company to give Written Instructions on
behalf of the Company.
Securities Depository: The term Securities Depository shall mean a
system for the central handling of securities where all securities of any
particular class or series of any issuer deposited within the system are
treated as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of the securities.
Book-Entry Securities: The term Book-Entry Securities shall mean
securities issued by the Treasury of the United States of America and federal
agencies of the United States of America which are maintained in the
book-entry system as provided in Subpart O of Treasury Circular No. 300, 31
CFR 306, Subpart B of 31 CFR Part 350, and the book-entry regulations of
federal agencies substantially in the form of subpart O and the term
Book-Entry Account shall mean an account maintained by a Federal Reserve Bank
in accordance with the aforesaid Circular and regulations.
Section 2. The Company shall from time to time file with Custodian a
certified copy of each resolution of its Board of Directors authorizing
execution of Written Instructions and the number of signatories required,
together with certified
3
<PAGE>
signatures of the officers and other signatories authorized to sign,
which shall constitute conclusive evidence of the authority of the officers
and other signatories designated therein to act, and shall be considered in
full force and effect with the Custodian fully protected in acting in
reliance thereon until it receives a new certified copy of a resolution
adding or deleting a person or persons with authority to give Written
Instructions. If the certifying officer is authorized to sign Written
Instructions, the certification shall also be signed by a second officer of
the Company.
The Company shall from time to time file with the Custodian a certified
copy of each resolution of its Board of Directors authorizing the transmittal
of Oral Instructions and specifying the person or persons authorized to give
Oral Instructions in accordance with this Agreement. Any resolution so filed
with the Custodian shall be considered in full force and effect and the
Custodian shall be fully protected in acting in reliance thereon until it
actually receives a new certified copy of a resolution adding or deleting a
person or persons with authority to give Oral Instructions. If the certifying
officer is authorized to give Oral Instructions, the certification shall also
be signed by a second officer of the Company.
Section 3. For all purpose under this Agreement, the Custodian is
authorized to act upon receipt of the first of any Written or Oral
Instruction it receives. In cases where the first Instruction is an Oral
Instruction that is not in the form of a document or written record, the
Company shall be responsible for delivering, or having delivered to the
Custodian, a confirmatory Written Instruction in the form of a document or
written record, and in cases where the Custodian receives an Instruction,
whether Written or Oral, with respect to a portfolio transaction, the Company
shall cause the broker or dealer
4
<PAGE>
to send a written confirmation to the Custodian. The Custodian shall be
entitled to rely on the first Instruction received, and for any act or
omission undertaken in compliance therewith shall be free of liability and
fully indemnified and held harmless by the Company. The Custodian shall act
upon and comply with any subsequent Written or Oral Instruction which
modified such first Instruction. The sole obligation of the Custodian with
respect to any follow-up or confirmatory Written Instruction, Oral
Instruction in documentary or written form, or broker-dealer written
confirmation shall be to make reasonable efforts to detect any discrepancy
between the original Instruction and such confirmation and to report such
discrepancy to the Company. The Company shall be responsible, at the
Company's expense, for taking any action, including any reprocessing,
necessary to correct any discrepancy or error, and to the extent such action
requires the Custodian to act the Company shall give the Custodian specific
Written Instructions as to the action required.
Section 4. The Company hereby appoints the Custodian as custodian of the
Securities and principal and income cash from time to time on deposit
hereunder, to be held by the Custodian and applied as provided in this
Agreement. The Custodian hereby accepts such appointment subject to the terms
and conditions hereinafter provided. The Securities held by the Custodian
shall, unless payable to bearer or maintained in a Securities Depository or
Book-Entry Account pursuant to Section 5, be registered in the name of the
Custodian or in the name of its nominee, or if directed by Written
Instructions, in the name of the Company or its nominee. Securities,
excepting bearer securities, delivered from time to time to the Custodian
upon purchase or otherwise shall in all cases be in due form for transfer or
already registered as above provided. Such
5
<PAGE>
Securities and principal and income cash of the Company shall, however,
be and remain the sole property of the Company and the Custodian shall have
only the bare custody thereof.
Section 5. The Company hereby authorizes the Custodian to (a) deposit in
its account(s) with any Securities Depository registered as a Clearing Agency
under Section 17A of the Securities Exchange Act of 1934, all or any part of
the Securities as may from time to time be held for the Company, and (b)
deposit Book-Entry Securities belonging to the Company in a Book-Entry
Account which is maintained for the Custodian by a Federal Reserve Bank. So
long as any deposit referred to in (a) and (b) above is maintained for the
Company, the Custodian:
(i) shall deposit the Securities in an account that includes only
assets held by it for customers;
(ii) shall send the Company a confirmation (i.e. an advice or notice of
a transaction) of any transfers to or from the account of the
Company;
(iii) shall, with respect to Securities transferred to the account of
the Company, identify them as belonging to the Company, a quantity
of securities in a fungible bulk of securities (a) registered in
the name of the Custodian or its nominee, or (b) shown on the
Custodian's account on the books of the Securities Depository, the
Book-Entry System, or the Custodian's agent;
(iv) shall promptly send to the Company reports it receives from the
appropriate Federal Reserve Bank or Securities Depository or its
respective system of internal accounting control; and
6
<PAGE>
(v) shall send to the Company such reports of the systems of internal
accounting control of the Custodian and its agents through which
such Securities are deposited as are available and as the Company
may reasonably request from time to time.
The Company will provide the Custodian a certified copy of Resolutions of its
Board of Directors approving the arrangement for the deposit of Securities in a
Securities Depository and the Book-Entry System.
Section 6. The Company will initially transfer and deposit or cause to
be transferred and deposited with the Custodian all of the Securities and
principal and income cash owned by the Company at the time this Agreement
becomes effective. Such transfer and deposit shall be evidence by appropriate
schedules duly executed by the Company ("Schedules"). The Company will cause
to deposited with the Custodian additional Securities of the Company as the
same are purchased or otherwise acquired from time to time and dividends or
interest collected on such Securities.
Thereafter the Company will cause to be deposited with the Custodian
hereunder (i) the net proceeds of Securities sold from time to time and (ii)
the applicable net asset value of Shares sold from time to time whether
representing initial issue, treasury stock or reinvestments of dividends
and/or distributions payable to Shareholders as well as any other securities
and cash as may be acquired from time to time. Deposits with respect to sales
of Shares shall be accompanied by Written or Oral Instructions stating the
number of Shares to be issued or reissued, and the amount to be deposited
with the Custodian. Any such Written or Oral Instructions shall also include
or be accompanied by registration instructions.
7
<PAGE>
The Company shall promptly turn over to the Custodian all of the
accounts and records previously maintained by or for it as are necessary for the
Custodian to perform its functions under this Agreement ("Accounts and
Records"). The Company authorized the Custodian to rely on such Accounts and
Records and the Schedules and hereby indemnifies and holds the Custodian, its
successors and assigns, harmless of and from any and all expenses, damages,
claims, suits, liabilities, actions, demands and losses whatsoever arising out
of or in connection with any error, omission, inaccuracy or other deficiency of
such Accounts and Records and Schedules or in the failure of the Company to
provide any portion of such or to provide any information needed by the
Custodian to knowledgeably perform its functions.
Attached hereto is a list of all inaccuracies, omissions, discrepancies,
and other deficiencies in the Accounts and Records and Schedules known to the
Company or INVESTORS TRUST COMPANY ("Investors Trust") until the close of
business on , 2000. The Company agrees to promptly advise the
Custodian in writing of all additions or deletions from such list
necessary to maintain the list in the current status. The Custodian shall
make reasonable efforts to isolate and correct any inaccuracies, omissions,
discrepancies, or other deficiencies in the Accounts and Records and
Schedules delivered to the Custodian to the extent such matters are disclosed
to the Custodian or are discovered by the Custodian and are relevant to the
Custodian's performance under this Agreement. The Company shall provide the
Custodian with such assistance as the Custodian reasonably requests in
connection with the Custodian's efforts to correct such matters. The
Custodian expressly makes no warranty or representation that any error,
omission or deficiency in the Accounts and Records and
8
<PAGE>
Schedules can be satisfactorily corrected.
With respect to any matter involving a possible assertion of any past,
present or future potential or contingent liability of the Custodian the Company
warrants that it has not committed and shall not commit any act or omission that
constitutes a waiver, release, estoppel or other impairment of any kind or any
rights it may heretofore have had, may now have, or may hereafter have against
Investors Trust and that it shall do everything necessary to preserve, and, if
appropriate, enforce all of such rights against Investors Trust. Without
limitation of the foregoing, the Company agrees that if any suit is instituted
against the Custodian arising, in the Custodian's sole reasonable judgment, out
of any act or omission of Investors Trust which created a deficiency of the
Accounts and Records and Schedules delivered hereunder, or out of any failure of
Investors Trust to deliver material information, or assistance contemplated
hereunder, then the Company shall take whatever steps are necessary to join
Investors Trust as party defendant or additional defendant is said litigation.
Section 7. The Custodian is hereby authorized and directed to disburse
principal cash from time to time as follows:
(a) for the purpose of payment for the purchase of Securities
purchased by the Company, upon receipt by the Custodian of both (i)
Written or Oral Instructions specifying the Securities and stating the
purchase price, and the name of the broker, investment banker and other
party to or upon whose order the purchase price is to be paid, and (ii)
the Securities so purchased in due form for transfer or already
registered as provided in Section 4, provided, however, that the
Custodian may make payment for
9
<PAGE>
Securities on deposit with a Securities Depository and Book-Entry
Securities at such time as the Custodian enters a credit in the account
it maintains for the Company to the effect that it has accepted delivery
of such Securities on behalf of the Company;
(b) for the purpose of transferring funds in connection with a
repurchase agreement, upon receipt by the Custodian of (i) Written or
Oral Instructions specifying the Securities, the purchase price and the
party to whom the purchase price is to be paid and (ii) the Securities
so purchased in due form for transfer or already registered as provided
in Section 4, provided, however, that the Custodian may make payment for
Securities on deposit with a Securities Depository and Book-Entry
Securities at such time as the Custodian enters a credit in the account
it maintains for the Company to the effect that it has accepted delivery
of such Securities on behalf of the Company;
(c) for the purpose of redeeming or transferring funds to a duly
designated redemption paying agent to redeem or repurchase Shares, upon
receipt of both (i) Share Certificates in due form for transfer or
proper processing of Shares for which no Share Certificates are
outstanding, and (ii) Written or Oral Instructions stating the
applicable redemption price which will be based upon the Custodian's
computation of the Company's portfolio;
(d) for the purpose of exercising warrants and rights received upon
the Securities, upon timely receipt of Written or Oral Instructions
authorizing the exercise of such warrants and rights and stating the
consideration to be paid;
(e) for the purpose of repaying in whole or in part any loan of the
Company upon receipt of Written or Oral Instructions directing payment
and stating the Securities, if any, to be received against payment;
10
<PAGE>
(f) for the purpose of paying dividends or paying over to a duly
designated Dividend Disbursing Agent such amounts as may be stated in
Written or Oral Instructions, representing proceeds of the sale of
warrants, rights, stock dividends, profit and increases in values of the
Securities, as the Company may determine to include in dividends and/or
distributions declared on the Shares;
(g) for the purpose of making other corporate expenditures upon
receipt of Written or Oral Instructions stating that such expenditures
were authorized by resolution of the Board of Directors of the Company
and are or were for proper corporate purposes, and specifying the amount
of payment, the purpose for which such payment is to be made, and naming
the person or persons to whom payment is to be made;
(h) for the purpose of transferring funds to any Sub-Custodian,
upon receipt of Written or Oral Instructions from the Company;
(i) for the purpose of payment for the purchase of regulated
investment Company Securities purchased by the Company, upon receipt by
the Custodian of Written or Oral Instructions specifying the Securities
and stating the purchase price and the name of the broker, investment
banker or other party to or upon whose order the purchase price is to be
paid.
Section 8. The Custodian is hereby authorized and directed to deliver
Securities of the Company from time to time as follows:
(a) for the purpose of completing sales of Securities sold by the
Company, upon receipt of both (i) the net proceeds of sale and (ii)
Written or Oral Instructions specifying the Securities sold and stating
the amount to be received;
(b) for the purpose of exchanging Securities for other Securities
and/or cash
11
<PAGE>
upon timely receipt of (i) Written or Oral Instructions stating the
Securities to be delivered and the Securities and/or cash to be received
in exchange and the manner in which the exchange is to be made, and (ii)
against receipt of the other Securities and/or cash as specified in the
Written or Oral Instructions;
(c) for the purpose of exchanging or converting Securities pursuant
to their terms or pursuant to any plan of conversion, consolidation,
recapitalization, reorganization, readjustment or otherwise, upon timely
receipt of (i) Written or Oral Instructions authorizing such exchange or
conversion and stating the manner in which such exchange or conversion
is to be made, and (ii) the Securities, certificates of deposit, interim
receipts, and/or cash to be received as specified in the Written or Oral
Instructions;
(d) for the purpose of presenting Securities for payment which have
matured or have been called for redemption;
(e) for the purpose of delivery of Securities upon redemption of
Shares in kind, upon receipt (i) of Share Certificates in due form for
transfer, or proper processing of Shares for which no Share Certificates
are outstanding, and (ii) appropriate Written or Oral Instructions;
(f) for the purpose of depositing with the lender Securities to be
held as collateral for a loan to the Company upon receipt of Written or
Oral Instructions directing delivery to the lender; or
(g) upon receipt of Written or Oral Instructions stating (i) the
securities to be delivered and the payment to be received and (ii)
payment, in connection with any repurchase agreement related to such
Securities.
12
<PAGE>
Section 9. The Custodian will collect from time to time the dividends
and interest on the Securities held by it hereunder and will deposit the same
in a separate income account until disbursed as hereinafter provided.
The Custodian is authorized to advance or pay out of said income account
accrued interest on bonds purchased and dividends on stocks sold and like
items. In the event that any Securities are registered in the name of the
Company or its nominee, the Company will endorse to the Custodian, or cause
to be endorsed, dividend and interest checks or will issue appropriate orders
to the issuers of the Securities to pay dividends and interest to the
Custodian.
Subject to proper reserves for dividends owing on stocks sold and like
items, the Custodian will disburse the money from time to time on deposit in
the income account to or upon the order of the Company as it may from time to
time direct for the following purposes:
(a) to pay the proper compensation and expenses of the Custodian;
(b) to pay dividends or to transfer funds to a duly designated
Dividend Disbursing Agent to pay dividends and/or distributions which
may be declared by the Board of Directors of the Company upon receipt of
appropriate Written or Oral Instructions;
(c) to pay, or provide the Company with money to pay taxes upon
receipt of appropriate Written or Oral Instructions;
(d) to transfer funds to a separate checking account maintained by
the Company pursuant to Section 17 (f) of the Investment Company Act of
1940, as amended;
13
<PAGE>
(e) to pay interest, management or supervisory fees,
administration, dividend and transfer agency fees and costs,
compensation of personnel, or operating expenses (including, without
limitation thereto, fees for legal, accounting and auditing services),
and to disburse cash for other proper corporate purposes. Before making
any such payment or disbursement, however, the Custodian shall receive
(and may conclusively rely upon) Written or Oral Instructions requesting
such payment or disbursement and stating that it is for one or more of
the purposes hereinabove enumerated, provided that if such payment or
disbursement is for other proper corporate purposes, the Written or Oral
Instructions shall state that such payment or disbursement was
authorized by resolution of the Board of Directors of the company and is
for a proper corporate purpose.
The determination of the Board of Directors of the Company as to what
shall constitute income derived from the Securities from time to time held
hereunder as distinguished from principal or capital, shall be final and
conclusive upon the Company, the Custodian and the Shareholders.
The Company if it elects so to do, may direct the Custodian by Written
or Oral Instructions to make transfers from the income account in its hands,
to be held as cash principal and applied as provided in this Agreement.
Section 10. The Company will cause any bank (including the Custodian)
from which it borrows money using securities as collateral to deliver to the
Custodian a notice or undertaking in the form currently employed by such bank
setting forth the amount which such bank will loan to the Company against
delivery of a stated amount of collateral. The company shall promptly deliver
to the Custodian Written or Oral Instructions for each loan stating: (a) the
name of the bank, (b) the amount and terms
14
<PAGE>
of the borrowing, which may be sent forth by incorporating by reference
an attached promissory note, duly endorsed by the Company, or other loan
agreement, (c) the time and date, if known, on which the loan is to be
entered into ( the "borrowing date"), (d) the date on which the loan becomes
due and payable, (e) the total amount payable to the Company on the borrowing
date, and (f) the market value of Securities to be delivered as collateral
for such loan, including the name of the issuer, the title and the number of
shares or the principal amount of any particular securities. The Custodian
shall deliver on the borrowing date such specified collateral and the
executed promissory note, if any, against delivery by the lending bank of the
total amount of the loan payable, provided that the same conforms to the
total amount set forth in the Written or Oral Instruction. The Custodian may,
at the option of the lending bank, keep such collateral in its possession,
but such collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement.
The Custodian shall deliver from time to time such Securities as
additional collateral as may be specified in Written or Oral Instructions, to
collateralize further any transaction described in this Section. The Company
shall cause all Securities released from collateral status to be returned
directly to the Custodian.
In the event that Written or Oral Instructions fail to specify the name
of the issuer the title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any particular
Securities.
Section 11. If the Custodian should in its sole discretion advance funds
on the behalf of the Company which results in an overdraft because the moneys
held by the
15
<PAGE>
Custodian for the account of the Company shall be insufficient to pay
the total amount payable upon purchase of securities or which results in an
overdraft for some other reason indebted to the Custodian, such overdraft or
indebtedness shall be deemed to be a loan made by the Custodian to the
Company payable on demand and bearing interest at the current rate charged by
the Custodian for such loans. The Company hereby agrees that the Custodian
shall have a continuing lien and security interest in and to any property at
any time held by it for the benefit of the Company or in which the Company
may have an interest which is then in the Custodian's possession or control
or in possession or control of any third party acting on the Custodian's
behalf to the extent of any such or indebtedness. The Company authorizes the
Custodian, in its sole discretion, at any time to charge any such overdraft
or indebtedness together with interest due thereon against any balance of
account standing to the Company's credit on the Custodian's books.
Section 12. The Company shall deliver Written or Oral Instructions to
the Custodian, within 24 hours after each loan of portfolio Securities by the
Company, stating: (a) the name of the issuer and the title of the Securities,
(b) the number of shares or the principal amount loaned, (c) the date of the
loan and delivery of Securities, (d) the total amount to be delivered to the
Custodian against the loan of the Securities including the amount of cash
collateral and the premium, if any, separately identified, and (e) the name
of the broker or other person to whom the loan was made. The Custodian shall
deliver the Securities loaned to the person designated in (e) above against
receipt of the total amount to be delivered against the loan of the
Securities. The Custodian may accept payment only in the form of a certified
or bank cashier's check payable to the order of the
16
<PAGE>
Company or the Custodian and may deliver Securities in accordance with
the customs prevailing among dealers in securities.
The Company shall promptly deliver Written or Oral Instructions to the
Custodian after each termination of a loan of Securities by the Company
stating: (a) the name of the issuer and the title of the Securities to be
returned, (b) the number of shares or the principal amount to be returned,
(c) the date of termination, (d) the total amount to be delivered by the
Custodian (including the cash collateral for such securities minus any
offsetting credits as described in the Written or Oral Instructions), and (e)
the name of the broker or other person from whom the Securities will be
received. The Custodian shall receive all Securities returned and upon
receipt thereof shall pay, out of the money's held for the account of the
Company, the total amount payable upon such return of Securities as set forth
in the Written or Oral Instructions.
Section 13. The Custodian assumes no duty, obligation or responsibility
whatsoever to exercise any voting or consent powers with respect to the
Securities held by it from time to time hereunder, it being understood that
the Company or such person or persons as it may designate, shall have the
right to vote, or consent or otherwise act with respect to such Securities.
The Custodian will exercise its best efforts to furnish the Company proxies
or other appropriate authorizations with respect to Securities registered in
the name of the Custodian or its nominee so that such voting powers, or
powers to consent or otherwise act may be exercised by the Company or
pursuant to its discretion.
Section 14. The Custodian's compensation shall be as set forth in
Schedule A hereto attached, or as shall be set forth in amendments to such
Schedule approved in writing by the Company and the Custodian.
17
<PAGE>
Section 15. The Custodian shall exercise its best efforts to handle,
forward, or process in any way notices of stockholder meetings, proxy
statements, annual reports, conversion notices, call notices, or other
notices or written materials of any kind sent to the registered owners of
securities (hereinafter referred to as "notices and materials"), excluding
only stock certificates and dividend and interest payments, it being
understood that the Company and its investment adviser have primary
responsibility for obtaining such notices and materials, and for taking
action thereon. The Custodian will make reasonable efforts to comply with
Rule 14b-2 under the Securities Exchange Act of 1934 and is so doing to
forward such notices and materials as it receives them to the Company, but
makes no warranty or representation that all notices and materials will be
forwarded, and the Company hereby agrees that it shall make no claim
whatsoever against the custodian for any expense, damage, or loss of any kind
arising out of failure to forward notices and materials.
Upon receipt by the Custodian of warrants or rights issued in connection
with the assets of the Company, the Custodian shall enter into its ledgers
appropriate notations indicating such receipt and shall notify the Company of
such receipt, but shall not have any obligation to take any action of any
kind with respect to such warrants or rights except upon receipt of Written
or Oral Instructions from the Company.
Section 16. The Custodian assumes no duty, obligation, or responsibility
whatsoever with respect to Securities not deposited with the Custodian.
Common stocks or other Securities exchanged for Shares shall not be
considered deposited with the Custodian until physically received and
registered in accordance with the provisions of this Agreement.
18
<PAGE>
Section 17. The Custodian acknowledges and agrees that all books and
records maintained for the Company in any capacity under this Agreement are
the property of the Company and may be inspected by the Company, or any
authorized regulatory agency, at any reasonable time, and that upon request
will be surrendered promptly to the Company. The Custodian agrees to make
available upon request and to preserve for the periods prescribed in Rule
31a-2 under the Investment Company Act any records relating to services
provided under this Agreement which are required to be maintained by Rule
31a-1 under said act.
Section 18. The Custodian assumes only the usual duties and obligations
normally performed by custodians of mutual funds. It specifically assumes no
responsibility for the management, investment or reinvestment of the
Securities from time to time owned by the Company whether or not on deposit
hereunder, it being understood that the responsibility for the proper and
timely management, investment and reinvestment of said Securities shall be
that of the Company and its investment advisor.
The Custodian shall not be liable for any taxes, assessments or
governmental charges which may be levied or assessed upon the Securities held
by it hereunder, or upon the income therefrom or otherwise whatsoever. The
Custodian may pay any such tax, assessment or charge and reimburse itself out
of the moneys of the Company or out of the Securities held hereunder;
provided, however, the Custodian shall consult the officers of the Company
before making any such payment.
The Custodian may rely upon the advice of counsel, who may be counsel
for the Company, and upon statements of accountants, brokers or other persons
believed by it in good faith to be expert in the matters upon which they are
consulted; and for any action
19
<PAGE>
taken or suffered in good faith based upon such advice or statements the
Custodian shall not be liable to anyone. The Custodian shall not be liable
for anything done or suffered to be done in good faith in accordance with any
Written or Oral Instructions, request or advice of, or based upon information
furnished by, the Company or its officers. The Custodian is authorized to
accept a certificate of the President, Secretary or Assistant Secretary of
the Company to the effect that a resolution in the form submitted has been
duly adopted and is in full force and effect. The Custodian shall not be
liable for any action done in good faith and believed to be within the powers
conferred upon it by this Agreement.
Section 19. Upon receipt of Written or Oral Instructions, the Custodian
shall appoint one or more U.S. banking institutions as Sub-Custodian
(including but not limited to, U.S. banks located in foreign countries) of
Securities and moneys at any time owned by the Company.
The Custodian shall have no liability to the Company or any other person
by reason of any act or omission of any Sub Custodian and the Company shall
indemnify the Custodian and save it harmless from any and against any and all
actions, suits and claims, whether groundless or otherwise and from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising directly or indirectly out of or in connection
with the performance of any Sub Custodian. The Custodian shall not be under
any obligation to prosecute or to defend any action, suit or claim arising
out of or in connection with the performance of any Sub Custodian, which, in
the opinion of its counsel, may involve it in expense or liability, and the
Company shall, so often as reasonably requested, furnish the Custodian with
satisfactory indemnity against such
20
<PAGE>
expense or liability, and upon request of the Custodian, the Company shall
assume the entire defense of any action, suit, or claim subject to the
foregoing indemnity.
The Company shall pay fees and expenses of any Sub Custodian.
Section 20. The Custodian shall be liable to the Company for any
negligence, bad faith, or willful misconduct by the Custodian in the
performance of its duties as specifically set forth in this Agreement and
shall not be entitled to reimbursement out of the Company's assets.
Section 21. This Agreement may be amended from time to time without
notice to or approval of the Shareholders by a written supplemental agreement
executed by the Company and the Custodian and amending and supplementing this
Agreement in a manner mutually agreed.
Section 22. Either the Company or the Custodian may give written notice
to the other of the termination of this Agreement, such termination to take
effect at the time specified in the notice which shall not be earlier than
(60) days after the date of giving such notice. In case such notice of
termination is given either by the Company or by the Custodian, the Company
shall use its best efforts to obtain a successor custodian, and the Board of
Directors of the Company shall, by resolution duly adopted, promptly either
designate the Company as its own custodian or appoint a successor custodian.
Each successor custodian shall be a person qualified to so act under the
Investment Company Act of 1940, as amended. Upon receipt of written notice
from the Company of the appointment of such successor and upon receipt of
Written or Oral Instructions, the Custodian shall deliver such Securities and
cash as it may then be holding directly to and only to the successor
custodian. Unless or until a successor Custodian has been
21
<PAGE>
appointed as above provided, the Custodian then acting shall continue to
act as Custodian under this Agreement. Every successor Custodian appointed
hereunder shall execute and deliver an appropriate written acceptance of its
appointment and shall thereupon become vested with the rights, powers,
obligations and custody of its predecessor Custodian. The Custodian ceasing
to act shall nevertheless, upon request of the Company and successor
custodian and upon payment of its charges and disbursements, execute an
instrument in form approved by its counsel transferring to the successor
custodian all the predecessor Custodian's rights, duties, obligations and
custody.
In the case the Custodian shall consolidate with or merge into any other
corporation, the corporation remaining after or resulting from such
consolidation or merger shall ipso facto, without the execution or filing of
any papers or other documents, succeed to and be substituted for the
Custodian with like effect as though originally named as such.
Section 23. Nothing contained in this Agreement is intended to or shall
require the Custodian in any capacity hereunder to perform any functions or
duties on any holiday, day of special observance or any other day on which
the Custodian or the New York Stock Exchange is closed. Functions or duties
normally scheduled to be performed on such days shall be performed on, and as
of, the next succeeding business day on which both the New York Stock
Exchange and the Custodian are open.
Section 24. This Agreement shall take effect on the date hereof or on
such other date as the parties agree to transfer the Company's assets to the
Custodian.
22
<PAGE>
Section 25. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 26. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Company without
the written consent of the Custodian, or by the Custodian without the written
consent of the Company, authorized or approved by a resolution of its Board
of Directors.
Section 27. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
23
<PAGE>
IN WITNESS WHEREOF, the Company and the Custodian have caused this
Agreement to be signed by their respective Presidents or Vice Presidents and
their corporate seals hereunto duly affixed, and attested by their respective
Secretaries or Assistant Secretaries, as of the day and year above written.
NRM INVESTMENT COMPANY
BY:
-----------------------------
Title:
(SEAL)
Attest:
-----------------------------
LAUREL TRUST COMPANY
BY:
-----------------------------
Title:
(SEAL)
Attest:
-----------------------------
24
LAUREL TRUST COMPANY PRIVATE
AGREEMENT FOR THE TRANSFER AND REGISTRATION OF
STOCK, AND THE DISBURSEMENT OF DIVIDENDS
THIS AGREEMENT dated as of between Laurel Trust
Company ("Trust Company") and NRM Investment Company (the "Issuer").
WITNESSETH
WHEREAS, the Issuer desires to appoint Trust Company Transfer Agent,
Dividend Disbursing Agent, and Registrar; and
WHEREAS, the parties desire to set forth their respective rights and
obligations concerning this appointment.
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
covenant and agree as follows:
I. GENERAL
1. Documents to be Filed with Resolution of Appointment
With a copy of this Agreement executed by a duly authorized officer of
the Issuer and the resolutions of Issuer's Board of Directors (in the form
annexed hereto) appointing Trust Company as Transfer Agent, Dividend
Disbursing Agent and Registrar, and adopting procedures with respect to lost
securities, the Issuer shall file with Trust Company:
(a) Issuer's complete, current registration statement;
(b) a specimen share certificate certified by the Secretary or
Assistant Secretary of the Issuer to be a specimen of the duly
authorized share certificate of the Issuer, and to be the only form
of share certificate for the outstanding shares;
(c) a signature card bearing a list of names and specimen signatures of
all officers of the Issuer whose signatures may appear on stock
certificates now outstanding, or to be issued, or who are
authorized to
<PAGE>
give instructions to Trust Company as provided in this Agreement;
(d) an opinion of the Issuer's counsel as to (i) the valid organization
and existence of the Issuer, (ii) the due authorization and
issuance of the stock for which Trust Company is appointed, (iii)
the proper form of the stock certificates under the laws of the
state of incorporation, (iv) the due registration of such stock
under the Securities Act of 1933 and the Investment Company Act of
1940, as amended, (v) whether there are any restrictions on
transfer of Issuer's shares (vi) that no order or consent of a
governmental or regulatory authority other than disclosed in the
registration statement is required in connection with the issuance
of such stock; (vii) whether a prospectus must be delivered in
connection with the sale of any of Issuer's shares; (viii) whether
Pennsylvania, as the state of incorporation permits the use of
facsimile signature by the Transfer Agent and (ix) whether there
are transfer taxes associated with the issuance of shares.
(e) A list of stockholders showing names, addresses, amounts and
certificates;
(f) A certificate of the Secretary or Assistant Secretary of the
Issuer; (i) stating that there are no shares of stock of the Issuer
outstanding, the transfer of which is restricted by applicable
securities laws and regulations, by agreement or (ii) where the
opinion of the Issuer's counsel referred to in subparagraph (d)
above indicates that a prospectus must be delivered in connection
with the issuance of stock, naming the party or parties who will be
responsible for the delivery of the prospectus, and undertaking to
notify Trust Company in writing in the event any such prospectus
ceases to be current under the Securities Act of 1933 or the
Investment Company Act of 1940, each as amended.
2. Limit of Authority
The authority of Trust Company as Transfer Agent or Registrar shall,
unless expressly limited by the resolution of appointment or subsequently by
corporate action, extend to all of the shares authorized to be issued at the
time of such appointment and subsequent thereto. Specifically, as of the date
hereof the Issuer has 4,291,307 shares outstanding and has registered an
indefinite number of additional shares under Rule 24f-2 of the Securities Act
<PAGE>
of 1933. The Trust Company's authority extends to outstanding shares and any
shares issued pursuant to 24f-2.
3. Death, Resignation or Removal of Officers of Issuer
Trust Company shall not be charged with notice of any change in the
officers of the Issuer until the Issuer gives notice in writing of such
change to the Stock Transfer Department of Trust Company.
In case any officer of the Issuer who shall have signed blank stock (or
whose facsimile signature shall have been used) shall die, resign, or be
removed prior to the issuance of such certificates, Trust Company, as
Transfer Agent and Registrar may issue or register such stock certificates as
the stock certificates of the Issuer, notwithstanding such death, resignation
or removal, unless specifically directed to the contrary by the Issuer in
writing, and the Issuer shall file promptly with Trust Company such approval,
adoption, or ratification as may be required by law.
4. Future Amendments of Charter and Bylaws and Registration Statement
The Issuer will promptly file with Trust Company copies of all
amendments to its Certificate of Incorporation, certified by the Secretary of
State of the State of Incorporation; to its Bylaws, certified by the
Secretary or Assistant Secretary of the Issuer, subsequent to the date of
certification of such documents previously filed; and to its registration
statement certified to by its counsel.
5. Material Mailed by Trust Company
Material mailed by Trust Company shall, wherever possible, be designed
to suit any mechanical equipment Trust Company employs for mailing purposes.
6. Resignation or Removal
Trust Company may resign at any time following thirty days written
notice by mailing, postage prepaid, written notice of such resignation to the
Issuer at its last known address, and thereupon its duties as Transfer Agent
and Registrar shall cease. Trust Company may at any time, by a resolution of
the Board of Directors of the Issuer, be removed as Transfer Agent and
<PAGE>
Registrar, such removal to become effective upon receipt by Trust Company of
a certified copy of such resolution and upon the payment of all amounts due
Trust Company in connection with such agency. Upon resignation or removal,
Trust Company may, to the extent permitted by law, deliver to its successor
or to the Issuer its records as agent. If the Issuer made prepayments, they
shall be apportioned to the day of termination and the amount not earned
shall be refunded promptly.
7. Limitation of Liability; Indemnification
Trust Company may, but need not, rely conclusively and act or refuse to
act without further investigation upon any list, instruction, certification,
authorization, stock certificate, or other instrument or paper believed by it
in good faith to be genuine and unaltered, and to have been signed,
countersigned or executed by any duly authorized person or persons, or upon
the instruction of any officer of the Issuer or the advice of counsel for the
Issuer. Trust Company may make any transfer or registration of certificates
for such shares which is believed by it in good faith to be duly authorized
or to be required by law or may refuse to make or delay any such transfer or
registration if in good faith Trust Company deems such refusal necessary in
order to avoid any liability upon either the Issuer or itself. The Issuer
shall indemnify and hold harmless Trust Company and, if Trust Company so
requests, shall defend Trust Company from and against any and all losses,
costs, and expenses including, without limitation, reasonable attorneys'
fees, claims, and liability which it may suffer or incur (a) by reason of so
relying or acting or refusing to act, (b) by reason of any act or omission of
the Issuer and (c) by reason of any non-negligent action or inaction by Trust
Company in accordance with this Agreement or in accordance with the
provisions of the Uniform Commercial Code or any other applicable statutes.
8. Fees
In consideration of Trust Company acting as Transfer Agent, Registrar,
and Dividend Disbursing Agent, the Issuer shall pay to Trust Company such
fees as designated on the standard fee schedule in effect at the time the
services are performed.
<PAGE>
9. Notices
Any notice or other communication required by or permitted to be given in
connection with this Agreement shall be in writing and shall be delivered in
person or sent by first class mail or overnight delivery to the parties as
follows:
To the Issuer:
Edward Fackenthal, Esq.
One Montgomery Plaza, Suite 902
P.O. Box 751
Norristown, PA 19404
To the Trust Company:
Laurel Trust Company
551 Main Street
BT Financial Plaza
Johnstown, PA 15901
II. AS TRANSFER AGENT
1. Original Issue of Share Certificates
Trust Company will perform such duties as Transfer Agent as designated
on Schedule A. Trust Company as Transfer Agent will make original issues of
stock certificates upon the written requisition of any authorized officer or
create non-certificated accounts for shareholders of the Issuer in accordance
with the Issuer's current registration statement, the Securities Act of 1933
and the Investment Act of 1940.
2. Issue, Redemption and Transfer of Stock
Shares of stock will be issued, redeemed or transferred in compliance
with the Investment Company Act of 1940 and the Issuer's registration
statement, together with satisfactory evidence of compliance with all
applicable laws relating to the collection of taxes or funds necessary for
the payment of such taxes. In its capacity as custodian for the Issuer, Trust
<PAGE>
Company shall calculate the net asset value in accordance with the current
registration statement and Rule 2a-4 under the Investment Company Act of 1940
and issue shares or credit accounts or make redemptions in accordance such
calculation. The Trust Company shall mail to each shareholder a confirmation
of each purchase or redemption. Such confirmation will show the prior share
balance, the new share balance, the shares for which certificates are
outstanding, the amount invested or redeemed and the price paid for the newly
purchased shares or the redemption proceeds for shares redeemed.
3. Transfer of Restricted Stock
All requests for transfer of shares of stock subject to transfer
restrictions under securities laws and regulations or otherwise shall be
accompanied by either (a) an opinion of the Issuer's counsel stating that the
proposed transfer is exempt from registration requirements of the Securities
Act of 1933, as amended, and identifying the facts and the applicable section
(and rule, if applicable) of the Act relied upon for such opinion or that the
shares have been duly registered (stating the effective date thereof) under
the Securities Act of 1933, as amended, or (b) an opinion of other counsel as
to the above under cover of a letter from an officer of the Issuer or the
Issuer's counsel authorizing Trust Company to make the transfer on the basis
of said opinion. Said opinion shall be accompanied by copies of
correspondence and documentation relied upon by counsel to express such
opinion.
4. Removal of Legend on Restricted Stock
All requests for removal of legends on shares of stock indicating
restrictions on transfer under securities laws and regulations or otherwise
shall be accompanied by either (a) an opinion of the Issuer's counsel stating
that the shares may be freely sold without registration under the Securities
Act of 1933, as amended, and identifying the applicable section (and rule, if
applicable) of the Act relied upon for such opinion or (b) an opinion of
other counsel as to the above under cover of a letter from an officer of the
Issuer or the Issuer's counsel authorizing Trust Company to remove the legend
on the basis of said opinion.
<PAGE>
5. Lost Stock Certificates
Trust Company may issue replacement certificates for certificates
represented to have been lost, stolen, or destroyed upon the fulfillment of
such requirements as shall be deemed appropriate by Trust Company subject at
all times to provisions of law of the Bylaws of the Issuer governing such
matters and of resolutions adopted by the Issuer with respect to lost
securities. Trust Company may issue new certificates in exchange for and upon
the cancellation of mutilated certificates.
6. Disposition of Cancelled Certificates; Record Retention
Trust Company will retain stock certificates that have been cancelled in
transfer or in exchange and records of non-certificated accounts and
accompanying documentation in accordance with applicable Rules and
Regulations of the Securities and Exchange Commission for one calendar year.
Upon the expiration of this one-year period, Trust Company will retain the
certificates and documentation on microfilm and properly dispose of the
originals.
7. Inspection of Stock Books
In case of any request or demand for the inspection of the stock books
of the Issuer or any other books in the possession of Trust Company, Trust
Company will endeavor to notify the Issuer and to secure instructions as to
permitting or refusing such inspection. Trust Company reserves the right,
however, to exhibit the stock books or other books to any person in case it
is advised by its counsel that it may be held responsible for its failure to
do so.
8. Small Estates
In the case of small estates where no administration is contemplated,
Trust Company may, under an agreement for indemnity acceptable to it and
without further approval of the Issuer, redeem shares standing in the name of
a decedent where the current value of the shares being transferred does not
exceed the amount permitted under applicable state law with respect to small
estates or, in the absence of any such law, $2,500 (or any other limit the
Issuer regards as appropriate).
<PAGE>
III. AS REGISTRAR
1. Registration or Original Issue of Stock
Trust Company will maintain stock registry records in the usual form and
will perform such other duties as Registrar as designated on Schedule B.
Trust Company, as Registrar, will register original issues of stock upon the
presentation to it for that purpose by the authorized Transfer Agent of
signed and countersigned stock certificates or stock powers for
non-certificated accounts, in accordance with the Investment Company Act of
1940 and the Issuer's prospectus, and when accompanied by such other
documents or consents as may be reasonably required by Trust Company.
2. Registration of Issuance or Transfer
Stock will be issued, redeemed, surrendered or transferred upon the
presentation to Trust Company by the Transfer Agent of cancelled certificates
or other appropriate documentation for non-certificated accounts as provided
in the Issuer's registration statement. Trust Company as Registrar will not
be responsible for the validity of the issuance, redemption, transfer of
stock, the genuineness or effectiveness of any endorsement, the authority of
the transferor, or the payment of taxes.
3. Trust Company will issue share certificates for shares of the Issuer only
upon receipt of a written request from a shareholder. In all other cases, the
Issuer authorizes Trust Company to dispense with the issuance and
countersignature of share certificates whenever shares are purchased. In such
case Trust Company as Transfer Agent shall merely note on its stock registry
records the issuance of the shares.
4. Lost Stock Certificates
Trust Company may register replacement certificates for certificates
represented to have been lost, stolen or destroyed upon the fulfillment of
such requirements as shall be deemed appropriate by the Trust Company,
subject at all times to provisions of law, of the Bylaws of the Issuer
governing such matters and of resolutions adopted by the Issuer with respect
<PAGE>
to lost securities. Trust Company may register new certificates in exchange
for and upon the cancellation of mutilated certificates.
IV. AS DIVIDEND DISBURSING AGENT
1. Notice of and Payment of Cash Dividends
Trust Company will perform such duties as Dividend Disbursing Agent as
designated on Schedule C. Trust Company will pay cash dividends upon receipt
of a certified copy of the Board resolution advising Trust Company of a
declaration of dividend and the payment to Trust Company of the necessary
funds with which to pay the cash dividend. The Issuer will notify the Trust
Company of the date of declaration, the net asset value, the amount payable
per share, and the record date for determining the shareholders entitled to
payment.
2. Checks and Enclosures
Trust Company will, at the expense of the Issuer, provide checks for the
disbursement of cash dividends in form and size acceptable to the Issuer and
suited for use by Trust Company. If an enclosure is to be mailed with the
dividend check, the Issuer will, so far as possible, meet the wishes of Trust
Company as to form and size of such enclosure.
3. Banking Account for the Payment of Dividends
Trust Company will maintain a banking account in the name of Trust
Company, subject to the regulations of the Banking Department, for the
payment of the dividends.
4. Availability of Dividend Funds
The full amount of the cash dividend must be available to Trust Company
in collected funds on or before the payable date.
<PAGE>
5. Unclaimed Funds
Trust Company shall return to the Issuer all monies deposited and held
for the payment of dividends which have not been claimed by the stockholder
entitled thereto six months after the dividend payment date without interest.
Noting in this section or by reason of any action taken by Trust Company
shall relieve the Issuer of its liability for payment of such dividends.
6. Reinvestment Program
Issuer shall furnish Trust Company with a list of shareholders who have
elected to reinvest dividends in additional shares. With respect to those
shareholders, Trust Company shall on the designated payment date for the
dividend, automatically reinvest all such dividends in additional shares for the
benefit of the electing shareholders. In its capacity as Transfer Agent and
Registrar Trust Company will issue certificates or credit the accounts of
shareholders not holding certificates representing the amount of the dividends
reinvested. For the purpose of paying dividends in the form of stock, Issuer
shall calculate the net asset value in accordance with the current registration
statement and Rule 2a-4 under the Investment Company Act of 1940 and Trust
Company shall issue shares or credit accounts in accordance therewith.
V. ADMINISTRATIVE SERVICES
In addition to the foregoing, Trust Company, as part of the fee shall perform
the following services:
1. Prepare and mail federal tax information forms to the shareholders.
2. Mail semi-annual and annual reports of the Issuer to the shareholders.
3. Prepare annual lists of shareholders.
4. Mail notices of shareholders' meetings, proxies statements, and
information statements to the shareholders.
<PAGE>
SCHEDULE A
TRANSFER AGENT SCHEDULE OF
OPTIONAL SERVICES
LAUREL TRUST COMPANY
Duties which you hereby elect to have performed by us as Transfer Agent
(Place a check by desired duties.)
1. Trust Company will receive certificates by mail, ____
messenger, and window delivery in Johnstown,
Pennsylvania.
2. Trust Company will examine certificate and issue ____
instructions for good order delivery.
3. Trust Company will reject certificates and issue ____
instructions to presenter when incomplete and return
with letter stating additional requirements.
4. Trust Company will establish, maintain, and review stop ____
transfer files covering lost and restricted
certificates.
5. Trust Company will prepare various affidavits required ____
to replace lost certificates and forward to the record
holder for approval.
6. Trust Company will debit each certificate to be ____
cancelled from the shareholder's account.
7. Trust Company will issue new certificates in strict ____
numerical sequence in accordance with instructions by
posting to existing accounts when registrations and tax
identification numbers are compatible or by establishing
<PAGE>
a new account and posting to it.
8. Trust Company will authenticate newly issued ____
certificates as Transfer Agent.
9. Trust Company will furnish daily reports showing the ____
ownership and shares of each certificate cancelled and
issued for each corporate stock transfer affected.
10. When mail is used for delivery of certificates, Trust ____
Company will forward certificates in "non-negotiable"
form by first-class mail and certificates in "negotiable"
form by registered mail all such mail deliveries to be
covered while in transit to the addressees by insurance
arranged for by Trust Company as agent for the Issuer.
11. Trust Company will issue, transfer, and split up scrip ____
certificates and will issue a certificate representing a
full share of stock upon the surrender of scrip
certificates representing one full share upon receiving
written instructions from an officer of the Issuer and
such other documents as Trust Company may deem necessary.
12. Trust Company will issue and mail subscription ____
warrants, certificates representing stock dividends,
exchanges or split-ups or act as conversion agent upon
receiving written instructions from an officer of the
Issuer, and such other documents as Trust Company may
deem necessary.
13. Trust Company will maintain shareholder accounts, both ___
active and inactive, for the current year by: changing
addresses when notified and preparing Form W-9 to obtain
shareholders' tax identification numbers if not on file.
14. Trust Company will provide various utility reports upon ____
request such as shareholder lists, etc.
<PAGE>
15. Trust Company will respond as appropriate to ____
correspondence from shareholders.
16. Trust Company will provide labels for mailings. ____
Labels will be prepared a maximum of one (1)
time per quarter as part of the annual fee.
17. Trust Company will imprint a tabulation card suitable ____
for use as a proxy card with shareholder name, address,
and shares held and will produce a certified shareholder
proxy register upon request.
18. Trust Company will coordinate preparation of proxy ____
material for mailing.
19. Trust Company will tabulate proxies including examina- ____
tion of voted proxy cards, counting of votes by
proposition, and preparation of related tabulation
reports.
20. Trust Company will distribute sets of proxy material to ____
banks, brokers, and nominees.
SCHEDULE B
REGISTRAR SCHEDULE
OPTIONAL SERVICES
LAUREL TRUST COMPANY
Duties which you hereby elect to have performed by us as Registrar (Place a
check by desired duties.)
1. Trust Company will register scrip certificates and will ____
register a certificate representing one full share after
having received written instructions from an officer of
<PAGE>
the Issuer and other such documents as Trust Company may
deem necessary.
2. Trust Company will balance shares cancelled to shares ____
issued and reconcile any discrepancy.
3. Trust Company will insure that each consecutive ____
certificate number is sequentially issued or properly
accounted for in accordance with established procedures.
4. Trust Company will sign each newly issued certificate ____
as Registrar.
5. Trust Company will mail issued certificates in ____
accordance with instructions.
SCHEDULE C
DIVIDEND DISBURSING AGENT SCHEDULE
OPTIONAL SERVICES
LAUREL TRUST COMPANY
Duties which you hereby elect to have performed by us as Dividend
Disbursing Agent (Place a check by desired duties.)
1. Trust Company will, if desired, mail an enclosure(s) ____
with the dividend check, and the Issuer will, so far as
possible, meet the wishes of Trust Company as to form
<PAGE>
and size of such enclosure.
2. Trust Company will provide a dividend check register in ____
hard copy.
3. Trust Company will reconcile the cash dividend account ____
each month.
4. Trust Company will prepare stop payment orders and ____
replacement checks when originally issued dividend
checks are reported lost.
5. Trust Company will maintain undeliverable dividend ____
checks and stock certificates in safekeeping in
accordance with Trust Company procedures.
6. Trust Company will prepare and mail Internal Revenue ____
Service Form 1099 separately for all active
shareholders.
7. Trust Company will prepare and mail Internal Revenue ____
Service Form 1099 for shareholders whose checks are
mailed to permanent dividend addresses and for accounts
that were closed during the year.
8. Trust Company will prepare and enclose Internal Revenue ____
Service Forms 1042 and 1042-S for tax withheld from
non-resident aliens.
9. Trust Company will prepare and submit, via magnetic ____
tape, information required each calendar year by the
Internal Revenue Service.
10. Trust Company will prepare and issue duplicate Internal ____
Revenue Service forms for shareholders upon request.
11. Trust Company will mail a Dividend Reinvestment and ____
Stock Purchase Plan Prospectus and Authorization Form
to each new shareholder, if appropriate.
<PAGE>
IN WITNESS WHEREOF, the Company and the Custodian have caused this
Agreement to be signed by their respective Presidents or Vice Presidents and
their corporate seals hereunto duly affixed, and attested by their respective
Secretaries or Assistant Secretaries, as of the day and year above written.
NRM INVESTMENT COMPANY
BY:
------------------------------
Title:
(SEAL)
Attest:
---------------------------
LAUREL TRUST COMPANY
BY:
------------------------------
Title:
(SEAL)
Attest:
---------------------------
Will Sign Assistant Vice President
Will Sign Assistant Vice President
Will Sign Secretary and Assistant Treasurer
Will Sign Treasurer and Assistant Secretary
October 26, 1999
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street N.W.
Washington, DC 20549
OPINION OF COUNSEL
It is the opinion of the undersigned counsel for the Company that the shares
being registered and referred to herein, will, when sold, be legally issued,
fully paid and nonassessable.
HENDERSON, WETHERILL, O'HEY & HORSEY
BY: /s/ Edward Fackenthal
------------------------
Edward Fackenthal
CONSENT OF COUNSEL
------------------
We hereby consent to the use of our name and to the references to our
firm under the caption "counsel" included in and made part of Part B of
Post-Effective Amendment No. 25 to the Registration Statement (No. 2-66073)
on Form N-1A under Securities act of 1933, as amended, of NRM Investment
Company.
HENDERSON, WETHERILL, O'HEY & HORSEY
By: /s/Edward Fackenthal
--------------------------------
Edward Fackenthal
Dated: 10/26/99
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the references to our Firm under the captions "Financial
Highlights" in the Prospectus and "Auditors" in the Statement of Additional
Information and to the incorporation by reference in this Post-Effective
Amendment No. 25 to the Registration Statement (Form N-1A No. 2-66073) dated
October 27, 1999 of NRM Investment Company of our report dated October 11,
1999, included in the 1999 annual report to shareholders of NRM Investment
Company.
/s/ Beard & Company, Inc.
--------------------------
BEARD & COMPANY, INC.
Harrisburg, Pennsylvania
October 25, 1999
