<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 21
File No. 811-1144
THE FINANCE COMPANY OF PENNSYLVANIA
---------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
226 Walnut Street, Philadelphia, Pennsylvania 19106
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 215-351-4778
------------
Mr. Charles Mather, III, President
226 Walnut Street
Philadelphia, Pennsylvania 19106
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(Name and Address of Agent for Service)
<PAGE> 2
THE FINANCE COMPANY OF PENNSYLVANIA
CONTENTS OF FORM N-1A
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<TABLE>
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Page
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<S> <C> <C>
PART A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page 3
Item 2. Synopsis 3
Item 3. Supplementary Financial Information 3
Item 4. General Information and History 3
Item 5. Management of the Company 4
Item 6. Capital Stock 4
Item 7. Purchase of Securities Being Offered 4
Item 8. Redemption or Repurchase 4
Item 9. Pending Legal Proceedings 4
PART B INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
Item 10. Statement of Additional Information 5
Item 11. Table of Contents 5
Item 12. General Information and History 5
Item 13. Investment Objectives and Policies 5-7
Item 14. Management of the Company 7
Item 15. Control Persons and Principal Holders
of Securities 8
Item 16. Investment Advisory Services 8
Item 17. Brokerage Allocation 8-9
Item 18. Capital Stock 9
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered 9-10
Item 20. Tax Status 10
Item 21. Underwriters 10
Item 22. Calculation of Yield Quotations of Money
Market Funds 10
Item 23. Financial Statements and Independent Auditors'
Report 11-22
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits 23
Item 25. Persons Controlled by or Under Common Control 23
Item 26. Number of Holders of Securities 23
Item 27. Indemnification 23-24
Item 28. Business and Other Connections of
Investment Adviser 24
Item 29. Principal Underwriters 24
Item 30. Location of Accounts and Records 24
Item 31. Management Services 24
Item 32. Undertakings 24
SIGNATURES 25
EXHIBIT INDEX 26
</TABLE>
<PAGE> 3
THE FINANCE COMPANY OF PENNSYLVANIA
FORM N-1A
PART A
ITEM 1. Cover Page (Prospectus Only) - INAPPLICABLE
ITEM 2. Synopsis (Prospectus Only) - INAPPLICABLE
ITEM 3. Supplementary Financial Information - INAPPLICABLE
ITEM 4. General Information and History
General Information
Registrant was organized as a corporation by a special act of the
General Assembly of the Commonwealth of Pennsylvania, approved
May 12, 1871.
Development of Business
Registrant until December 29, 1961, carried on its business under
a special charter granted by the General Assembly of the
Commonwealth of Pennsylvania, approved May 12, 1871. It was
until December 29, 1961, engaged in the business of banking; it
also held certain investments and parcels of real estate. On
December 29, 1961, Registrant filed Articles of Amendment with
the Bureau of Corporations, Commonwealth of Pennsylvania,
amending its charter in its entirety and providing in substance
that Registrant henceforward will have as its principal purpose
that of an investment company, and on that date an agreement with
the Secretary of Banking of the Commonwealth of Pennsylvania was
entered into under which the Commonwealth recognized that the
Registrant was no longer engaged in the banking business.
Subclassification of Registrant
(a) - Registrant is an open-end investment company.
(b) - Registrant operates as a nondiversified investment
company.
The objective or objectives of the Company are: to own, purchase
and sell securities of business enterprises of any nature
whatsoever; to own, hold, use, purchase and sell real and
personal property of any nature whatsoever as principal and not
as agent; and to carry on the business of an open-end investment
company, as defined under the provisions of the Pennsylvania
Business Corporation Law, (as in effect on December 29, 1961).
The authority to make, alter, amend or repeal these objectives
shall be vested in the Board of Directors, subject always to the
power of the stockholders to change such action.
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<PAGE> 4
ITEM 5. Management of the Company
The Directors of the Company consist of five individuals, three
of whom are not "interested persons" of the Company as defined in
the Investment Company Act of 1940. The Directors of the Company
are responsible for the overall supervision of the operations of
the Company and perform the various duties imposed on the
Directors of investment companies by the Investment Company Act
of 1940.
The Company's investment adviser is Cooke & Bieler, Inc.,
Philadelphia, Pennsylvania 19102. Cooke & Bieler, Inc. is
retained to furnish reports, statistical and research services,
and advice and recommendations with respect to the Company's
portfolio of securities and investments. Cooke & Bieler, Inc. is
paid an annual fee equal to .5% of monthly portfolio value less
the value of certain investments.
United Missouri Bank, N.A. is the Company's Custodian. The
Company acts as its own transfer agent, dividend paying agent,
and registrar.
Total expenses for the Company during 1996 were $382,949 or .86%
of average net assets.
ITEM 6. Capital Stock
The authorized capital stock of the Company consists of 232,000
shares of capital stock, par value $10 each. Each share has
equal dividend, distribution and liquidation rights. All
dividends and distributions are payable in cash. Each holder of
capital stock has one vote for each share held. Voting rights
are cumulative for directors. The registrant met the
requirements of Subchapter M of the Internal Revenue Code during
the last fiscal year and does not anticipate any change in such
status. The Company has adopted the policy of paying out in
dividends each year substantially all net investment income. The
Company pays the applicable Federal capital gains tax for
shareholders and retains the net balance for reinvestment, except
to the extent that such gains are considered distributed to
redeeming shareholders. Shareholder inquiries should be directed
to the Company by writing or telephoning the Company at the
address or telephone number indicated on the cover of this
statement.
ITEM 7. Purchase of Securities Being Offered
INAPPLICABLE
ITEM 8. Redemption or Repurchase
Shares of the Company may be redeemed by mail by writing directly
to the Company. The redemption request must be signed exactly as
the shareholder's name appears on the form of registration and
must include the account number. If shares are owned by more
than one person, the redemption request must be signed by all
owners exactly as their names appear in the registration. Stock
certificates must be tendered along with the signed redemption
request.
ITEM 9. Pending Legal Proceedings
None
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<PAGE> 5
PART B
ITEM 10. Statement of Additional Information
The Finance Company of Pennsylvania is a nondiversified, open-end
investment company which seeks long-term appreciation of its
shareholders' capital.
The Company does not sell shares in its Fund. The Company does,
however, hold itself ready to redeem any of its outstanding
shares at net asset values as determined on the day of final
tender of the shares or on the next day on which the New York
Stock Exchange is open.
<TABLE>
<CAPTION>
ITEM 11. Table of Contents Page
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<S> <C>
Investment Objectives and Policies 5-7
Management of the Company 7
Investment Advisory Services 8
Brokerage Allocation 8-9
Capital Stock 9
Purchase, Redemption and Pricing of Securities Being Offered 9-10
Tax Status 10
Financial Statements and Independent Auditors' Report 11-22
</TABLE>
ITEM 12. General Information and History
INAPPLICABLE
ITEM 13. Investment Objectives and Policies
In addition to the investment objectives and policies set forth
under Item #4 of Part A, the Company has adopted the following
policies relating to the investment of its assets and its
activities, which are fundamental policies and may not be changed
without the approval of the holders of a majority of the
Company's outstanding voting securities as defined in the
Investment Company Act of 1940.
Fundamental Policies of the Registrant
(a) - The issuance of senior securities: the Registrant has not
issued any senior securities, and it does not propose to
issue any senior securities.
(b) - The borrowing of money: the Registrant has not borrowed
money, and it does not propose to borrow money.
(c) - The underwriting of securities of other issuers: the
Registrant has not underwritten securities of other
issuers, and it does not propose to underwrite securities
of other issuers.
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<PAGE> 6
(d) - The concentration of investments in particular industries:
Consistent with its policy to diversify its investments
among various industries, the Registrant will nonetheless
concentrate its investments in the banking industry.
Registrant has held shares of PNCBank Corp. for many years
but has no intention of increasing the number of shares it
owns. Because of the growth in the market value of the
PNCBank stock relative to the market value of its other
holdings, PNCBank represented as of the end of its most
recent year more than 25% of the assets in its portfolio.
On this basis alone, the Registrant may be deemed to be
concentrating in the banking industry. Registrant may
determine that attractive opportunities exist to purchase
securities in other banking organizations. In no event,
however, will the Registrant invest more than 50% of its
assets at any time in the banking industry.
(e) - The purchase and sale of commodities or commodity
contracts: the Registrant has neither purchased nor sold
commodities or commodity contracts, nor does it propose to
do so in the future.
(f) - Other fundamental policies: Registrant reserves freedom
of action to, and from time to time, may invest in any
type of security or property whatever, to the extent
permitted by law. It is the policy of Registrant to
engage as its principal activity in the business of
investing and reinvesting its capital in a widely
diversified portfolio of securities with a view to holding
those which appear to offer sound possibilities of current
income and future growth of principal.
Registrant will not write or purchase options, including
puts, calls, straddles, spreads or any combination
thereof. Nor will Registrant purchase or sell commodities,
commodity contracts, oil, gas or mineral exploration or
development programs, or real estate (although
investments in marketable securities of companies engaged
in such activities are not precluded in this restriction).
To the extent that Registrant presently owns securities of
various corporations, it is its policy to retain those
investments, adding to them if deemed advisable by the Board of
Directors, so long as they appear to meet the criteria set forth
above.
Policies with Respect to Security Investments
(a) - Registrant may invest in bonds, preferred stocks and
common stocks of other issuers. It reserves the right to
invest in such securities in any proportion deemed
advisable by its Board of Directors.
(b) - Registrant may invest no more than 25% of its assets in
the securities of any one issuer.
(c) - Registrant may acquire up to 100% of the voting securities
of any one issuer if deemed advisable by its Board of
Directors.
(d) - It is not the present policy of Registrant to invest in
companies for the purpose of exercising control or
management.
(e) - Registrant reserves the right to invest in securities of
other investment companies if deemed advisable by its
Board of Directors.
(f) - Registrant has no restrictions upon portfolio turnover of
its investments. However, it is not Registrant's policy
to engage in portfolio transactions with the objective of
seeking profits from short-term trading. It does reserve
the right, if deemed advisable or necessary by its Board
of Directors, to sell any asset at any time, regardless of
the holding period.
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<PAGE> 7
(g) - The charter of Registrant sets forth its powers and
purposes, in their entirety, as follows:
"The purpose or purposes of the corporation are: To own,
purchase and sell securities of business enterprises of
any nature whatsoever; to carry on the business of an
investment company; and to own, hold, use, purchase and
sell real and personal property of any nature
whatsoever; provided that this corporation shall not
engage in the business of banking or in any activity
other than those permitted to corporations incorporated
under the Pennsylvania Business Corporation Law."
ITEM 14. Management of the Company
Listed below are the Directors of the Company and the date at
which they first became a Director of the Company. The persons
indicated by the * are Directors who are or may be deemed to be
"interested persons" of the Company as defined in the Investment
Company Act of 1940.
<TABLE>
<CAPTION>
Name and Year
He First Became
a Director Principal Occupation
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<S> <C>
Charles E. Mather, III* President of the Company; he is President and Director of Mather &
1981 Co. (insurance brokers), with which he has been associated for more
than five years; he is also a Director of Quaker City Insurance Co.,
American Shipbuilders and Shipowners Mutual Assurance Company,
Christiana Bank & Trust Company, Greenville, DE and Addison Capital
Shares, Inc., an investment company. He is 62 years old.
Frank A. Wood, Jr.* Secretary/Treasurer of the Company; retired as Vice President,
1975 Provident National Bank on August 1, 1986, with which he had been
associated for more than five years; President and Director,
Pennsylvania Warehousing and Safe Deposit Company, an
affiliate as defined in the Investment Company Act of 1940, and
Director, South Chester Tube Co. He is 76 years old.
Jonathan D. Scott Senior Vice President, PNC Bank Corp., with which he has been
1990 associated since June 1985; he is also a Director of the Pennsylvania
Warehousing and Safe Deposit Company. He is 44 years old.
Herbert S. Riband, Jr. Partner in the Law firm Saul, Ewing, Remick & Saul since 1971. He is
1994 60 years old.
Shaun F. O'Malley Chairman Emeritus Price Waterhouse LLP; retired June 30, 1995 as Chairman
1996 of Price Waterhouse World Organization and U.S. Firm, with which he had
been associated for more than five years; Director of Philadelphia
Contributionship. He is 61 years old.
</TABLE>
The Company pays each Director who is not a salaried officer an annual fee and a
fee for each meeting of the Board and each meeting of the Executive Committee
and Audit Committee actually attended. Aggregate remuneration for all officers
and directors as a group (7 persons) during the year was $144,275, including
$41,150 paid to directors who were not salaried officers of the Company. The
Company rented office space from Mr. Mather's employer, Mather & Co., for an
annual rent of $5,100. The Board, with Mr. Mather abstaining, approved such
rental payments as being in the Company's best interests.
The aggregate compenstion paid by the Company to each of its directors for the
fiscal year ended December 31, 1996 is set forth in the table below. None of the
Company's directors is a director of any other investment company in a "fund
complex" with the Company (that is, an investment company that receives
investment advisory services from the Company's investment adviser or any
affiliated person of the Company's investment adviser).
<TABLE>
<CAPTION>
NAME AGGREGATE COMPENSATION
FROM THE COMPANY
<S> <C>
Charles E. Mather III $ 0*
Frank A. Wood, Jr. $ 10,400
Jonathan D. Scott $ 10,250**
Herbert S. Riband, Jr. $ 10,875
Shaun F. O'Malley $ 9,625
</TABLE>
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* Mr. Mather receives no compensation for serving as director of the
Company. Mr. Mather's salary for serving as President of the Company
was less than $60,000 for the fiscal year ended December 31, 1996.
** Mr. Scott's compenstion is paid to his employer.
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<PAGE> 8
ITEM 15. Control Persons and Principal Holders of Securities
INAPPLICABLE
ITEM 16. Investment Advisory Services
The Company's Investment Adviser, Cooke & Bieler, Inc., is
retained to furnish reports, statistical and research services,
and advice and recommendations with respect to the Company's
portfolio of securities and investments. Investment decisions
are made by the Company. Cooke & Bieler, Inc. is not a broker
and therefore the Investment Advisory Contract provides that,
with the approval of the Company's management, Cooke & Bieler,
Inc. may select such brokers, from time to time, as may appear to
be in the best interest of the Company.
The Investment Advisory Contract, unless terminated, continues
until April 30 of each year, provided that such continuance is
specifically approved at least annually either by the Board of
Directors of the Company or by the vote of a majority of the
Company's outstanding shares and, in either case, by the vote of
a majority of the Company's directors who are not parties to the
contract or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval.
The contract may be terminated at any time without penalty by
either party on sixty (60) days' written notice and will
automatically terminate in the event of any assignment. No
director of the Company is an interested party of Cooke & Bieler,
Inc.
Under the contract the Company agrees to pay monthly to the
Investment Adviser a fee equal to one-twelfth (1/12) of fifty one
hundredths of one percent (.5%) of the monthly portfolio value of
the Company (an aggregate of fifty one hundredths of one percent
(.5%) per year), it being agreed that in the determination of
monthly portfolio value, there shall not be included the holdings
of the Company in PNC Bank Corp. (formerly PNC Financial
Corporation), Pennsylvania Warehousing & Safe Deposit Company and
Penn Virginia Corporation, their successors, United States
Treasury Notes and Bonds, and such other holdings as may be
mutually agreed upon by the Company and the Investment Adviser.
The exclusion of these holdings is appropriate as they are all
holdings either without any regular trading market or without an
active regular market and/or with respect to each of which the
officers and directors have particularly close knowledge.
The total dollar amount paid by the Company under the investment
advisory contract for the last three years was $80,731, $88,647
and $100,026.
ITEM 17. Brokerage Allocation
During the past year the Company had transactions in the ordinary
course of business with respect to its investments. Brokerage
commissions in connection with the purchase and sale of
securities for the Company's portfolio during the years 1994,
1995 and 1996 amounted to $8,146 and $5,930 and $7,275,
respectively. The Company has been advised that certain brokers
who receive commissions from the Company in connection with such
transactions make statistical and research services available to
the Investment Adviser. Such services consist of items such as
basic reports on specific companies, quarterly updates on
specific companies, statistical analyses of a specific industry,
reports on the outlook for a particular industry, economic
analyses of the domestic and foreign economies and analyses of
standard portfolios (for example, diversification and beta
factors) and reports of economic statistics. To the extent that
they have value, these services may benefit not only the Company
but also the Investment
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<PAGE> 9
Adviser and its other clients. However, the expenses of the
Company will not necessarily be reduced as a result of the
receipt of such services. The Company has been further advised
that it is the policy of the Investment Adviser to recommend for
transactions of the Company those brokers who in its judgment
will provide the best price and execution. In reaching its
decision, the Investment Adviser considers such factors as the
rate of commission to be paid by the Company with rates paid by
other institutional investors, the price of the security, the
size, type and difficulty of the transaction and the brokers'
general execution and operational facilities. Consistent with
the overall policy of obtaining the best price and execution, the
Company may from time to time pay brokerage commissions in excess
of those which another broker might have charged in effecting the
same transaction in recognition of the value of research services
provided by the broker. For the years 1994, 1995 and 1996, the
Company paid aggregate brokerage commissions of $8,146, $5,930 and
$7,275.
ITEM 18. Capital Stock
In addition to the information set forth under Item #6 of Part A,
the following information applies to the capital stock authorized
by the Company:
Capital Stock
Common stock (only class)
(1) Dividend rights: each share has equal dividend rights,
such rights to be determined by the Board of Directors.
(2) Voting rights: one vote per share, cumulative for
directors.
(3) Liquidation rights: each share has equal liquidation
rights, pro rata, after payment of all liabilities.
(4) Preemptive rights: holders shall have preemptive rights
in any issue for cash.
(5) Conversion rights: none.
(6) Redemption provisions: See Item #8 of Part A.
(7) Sinking fund provisions: none.
(8) Liability to further calls or assessment: none.
ITEM 19. Purchase, Redemption and Pricing of Securities Being Offered
The redemption price for shares upon written request will be the
net asset value per share as next computed after receipt of such
request in good order by the Company. Payment for shares
redeemed will be made typically within several days after
receipt, if in good order, but no later than seven days after the
valuation date.
The net asset value per share is computed by dividing the total
value of the assets of the Fund, less its liabilities, by the
total number of outstanding shares. Computations are made in
accordance with generally accepted accounting principles, valuing
each listed security at its last sale price. On the day on which
the determination is made, or if no price is available, the
latest bid price is used. Securities traded over-the-counter are
valued at the mean of the latest
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<PAGE> 10
available bid and asked prices. Securities for which quotations
are not readily available, restricted securities and other assets
are valued at fair value as determined in good faith by the Board
of Directors.
The Company does not offer shares for purchase.
ITEM 20. Tax Status
The Company has elected to be taxed as a regulated investment
company meeting the requirements of the Internal Revenue Code.
As such, the Company has adopted the policy of paying out in
dividends each year substantially all net investment income.
Consistent with existing policy, the Company is paying the
applicable Federal capital gains tax for shareholders and
retaining the net balance for reinvestment, except to the extent
that such gains are considered to have been distributed to
redeeming shareholders.
ITEM 21. Underwriters
INAPPLICABLE
ITEM 22. Calculation of Yield Quotations of Money Market Funds
INAPPLICABLE
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<PAGE> 11
ITEM 23. Financial Statements and Independent Auditors' Report
[Deloitte & Touche LLP Letterhead]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
of The Finance Company of Pennsylvania:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of The Finance Company of Pennsylvania as
of December 31, 1996, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended December 31,
1996 and 1995, and the condensed financial information for each of the years in
the five-year period ended December 31, 1996. These financial statements and the
condensed financial information are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the condensed financial information based on our audits.
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 the condensed
financial information are free of material misstatement. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at December 31, 1996 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, such financial statements and condensed financial
information present fairly, in all material respects, the financial position of
The Finance Company of Pennsylvania at December 31, 1996, the results of its
operations, the changes in its net assets, and the condensed financial
information for the respective stated periods in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
January 24, 1997
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
INVESTMENTS-AT MARKET OR FAIR VALUE (NOTE 1):
U.S. TREASURY NOTES (IDENTIFIED COST
$4,413,663)................................... $ 4,555,796
MUTUAL FUNDS & OTHER SHORT-TERM INVESTMENTS
(IDENTIFIED COST $5,194,124)............... 5,188,167
COMMON STOCKS (IDENTIFIED COST $8,770,422)
INCLUDING AFFILIATE (NOTE 2)............... 39,425,873
-----------
TOTAL INVESTMENTS..................... 49,169,836
CASH.................................................. 17,224
ACCRUED INTEREST AND DIVIDENDS RECEIVABLE............. 237,305
PREPAID EXPENSES...................................... 17,270
OTHER ASSETS.......................................... 2,250
-----------
TOTAL................................. 49,443,885
-----------
LIABILITIES
DIVIDENDS PAYABLE (NOTE 6)............................ 1,010,399
ACCRUED EXPENSES AND TAXES (NOTE 1)................... 663,200
-----------
TOTAL................................. 1,673,599
-----------
NET ASSETS
NET ASSETS (WITH INVESTMENTS AT MARKET OR FAIR VALUE)
EQUIVALENT TO $827.81 PER SHARE ON 57,707 SHARES
OF $10 PAR VALUE CAPITAL STOCK OUTSTANDING AT
DECEMBER 31, 1996 (AUTHORIZED 232,000 SHARES).... $47,770,286
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
2
<PAGE> 13
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
U.S. TREASURY OBLIGATIONS -- 9.27%
<TABLE>
<CAPTION>
Aggregate
Quoted
Principal Identified Market Price
Amount Cost (Note 1)
- --------- ---------- ------------
<C> <S> <C> <C>
1,000,000 U.S. TREASURY NOTES 9 1/4% DUE
8/15/98.................... $1,000,079 $ 1,050,312
900,000 U.S. TREASURY NOTES 8 7/8% DUE
2/15/99.................... 900,705 952,031
700,000 U.S. TREASURY NOTES 7 3/4% DUE
1/31/00.................... 699,296 732,594
1,000,000 U.S. TREASURY NOTES 7 7/8% DUE
8/15/01.................... 1,052,670 1,065,937
750,000 U.S. TREASURY NOTES 6 3/8% DUE
8/15/02.................... 760,913 754,922
---------- -----------
TOTAL................... 4,413,663 4,555,796
---------- -----------
</TABLE>
MUTUAL FUNDS AND OTHER SHORT-TERM
SECURITIES -- 10.55%
<TABLE>
<CAPTION>
Face Value/
Principal Amount
- --------------------------
<C> <S> <C> <C>
10,000 TREASURY TRUST FUND............. 10,000 10,000
1,972,470 FEDERAL TRUST FUND.............. 1,972,470 1,972,470
2,212,291 FED FUND........................ 2,212,291 2,212,291
500,000 U.S. TREASURY BILL 5.09% DUE
1/9/97..................... 499,391 493,250
500,000 U.S. TREASURY NOTES 8% DUE
1/15/97.................... 499,972 500,156
---------- -----------
TOTAL................... 5,194,124 5,188,167
---------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE> 14
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
COMMON STOCKS -- 80.18%
<TABLE>
<CAPTION>
Aggregate
Quoted
Number Identified Market Price
of Shares Cost (Note 1)
- --------- ---------- ------------
<C> <S> <C>
PETROLEUM AND MINING -- 7.10%
16,000 EXXON CORP...................... $ 91,444 $ 1,568,000
10,000 MOBIL CORP. .................... 62,715 1,222,500
15,000 PENN VIRGINIA CORP. ............ 22,382 701,250
---------- -----------
TOTAL.................. 176,541 3,491,750
---------- -----------
BANKING, INSURANCE AND FINANCIAL
HOLDING COMPANIES -- 40.62%
9,500 MARSH & MCLENNAN, INC. ......... $ 522,710 988,000
484,000 PNC BANK CORP. ................. 292,417 18,210,500
12,000 STATE STREET BOSTON CORP. ...... 376,689 775,500
---------- -----------
TOTAL.................. 1,191,816 19,974,000
---------- -----------
MANUFACTURING AND DIVERSIFIED -- 19.89%
16,000 AMP, INC. ...................... 422,130 614,000
2,500 BOEING CO. ..................... 93,363 266,250
21,000 CORNING INC. ................... 631,845 971,250
14,500 DOVER CORP. .................... 261,750 732,250
6,000 DOW CHEMICAL CO. ............... 116,338 470,250
6,000 EMERSON ELECTRIC................ 181,980 581,250
19,000 GENUINE PARTS CO. .............. 469,072 845,500
3,500 INT'L BUSINESS MACHINE.......... 363,995 530,250
8,000 INT'L FLAVORS & FRAGRANCES...... 327,606 360,000
10,000 MINNESOTA MINING & MFG. CO. .... 170,764 830,000
10,000 MOTOROLA ....................... 516,200 612,500
21,500 READERS DIGEST A................ 882,941 865,375
15,000 RUBBERMAID INC. ................ 361,425 339,375
15,000 SHERWIN WILLIAMS CO. ........... 481,800 840,000
11,000 UNION CAMP CORP. ............... 386,515 525,250
7,500 XEROX CORP. .................... 351,150 394,688
-------------------------------- ---------- -----------
TOTAL.................. 6,018,874 9,778,188
-------------------------------- ---------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE> 15
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
COMMON STOCKS -- CONCLUDED
<TABLE>
<CAPTION>
Aggregate
Quoted
Number Identified Market Price
of Shares Cost (Note 1)
- --------- ----------- ------------
<C> <S> <C>
DRUGS AND PHARMACEUTICALS -- 5.60%
9,000 BRISTOL-MYERS SQUIBB CO. ...... $ 506,137 $ 981,000
8,000 JOHNSON & JOHNSON.............. 88,070 398,000
7,500 MERCK & CO. ................... 168,925 597,188
12,000 SCHERING-PLOUGH................ 342,795 777,000
----------- -----------
TOTAL................. 1,105,927 2,753,188
----------- -----------
COMMUNICATIONS -- 1.32%
10,000 BELL ATLANTIC CORP. ........... 178,287 647,500
----------- -----------
FOOD/RETAIL MERCHANDISING -- 2.46%
23,000 COCA-COLA CO. ................. 27,578 1,210,375
----------- -----------
DIVERSIFIED HOLDING -- 3.19%
732 PENNSYLVANIA WAREHOUSING AND
SAFE DEPOSIT COMPANY (NOTE
2)........................ 71,399 1,570,872
----------- -----------
TOTAL COMMON STOCKS... 8,770,422 39,425,873
----------- -----------
TOTAL INVESTMENTS..... $18,378,209 $49,169,836
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 16
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
DIVIDENDS (INCLUDING DIVIDENDS FROM
AFFILIATE -- NOTE 2)..................... $1,463,075
INTEREST...................................... 390,497
----------
TOTAL.................................... 1,853,572
EXPENSES:
COMPENSATION.................... $ 103,125
TAXES OTHER THAN INCOME TAXES... 22,105
DIRECTORS' FEES (NOTE 5)........ 41,150
INVESTMENT ADVISORY FEES (NOTE
5)............................ 100,026
LEGAL........................... 6,375
AUDITING & ACCOUNTING........... 46,980
CUSTODIAN....................... 14,252
INSURANCE....................... 20,296
OTHER OFFICE AND
ADMINISTRATIVE................ 28,640
-----------
TOTAL.................................... 382,949
----------
NET INVESTMENT INCOME............................... 1,470,623
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
(NOTE 3):
REALIZED GAIN FROM SECURITY
TRANSACTIONS
(EXCLUDING SHORT-TERM
INVESTMENTS):
PROCEEDS FROM SALES............. $ 3,675,509
COST OF SECURITIES SOLD......... 1,852,207
-----------
NET REALIZED GAIN........................ 1,823,302
UNREALIZED APPRECIATION OF
INVESTMENTS:
AT JANUARY 1, 1996.............. 26,719,524
AT DECEMBER 31, 1996............ 30,791,626
-----------
INCREASE IN NET UNREALIZED APPRECIATION............. 4,072,102
----------
NET GAIN ON INVESTMENTS.................................. 7,366,027
CAPITAL GAINS TAX PAYABLE ON BEHALF OF SHAREHOLDERS
(NOTE 1)............................................... (631,197)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..... $6,734,830
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 17
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
NET INVESTMENT INCOME................ $ 1,470,623 $ 1,455,706
NET REALIZED GAIN ON INVESTMENTS..... 1,823,302 1,559,359
INCREASE IN NET UNREALIZED
APPRECIATION ON INVESTMENTS....... 4,072,102 8,942,162
CAPITAL GAINS TAX PAYABLE ON BEHALF
OF SHAREHOLDERS (NOTE 1).......... (631,197) (499,377)
----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................... 6,734,830 11,457,850
UNDISTRIBUTED INVESTMENT INCOME
INCLUDED IN PRICE OF SHARES
REDEEMED.......................... (2,860) (14,095)
REALIZED GAIN FROM SECURITY
TRANSACTIONS INCLUDED IN PRICE OF
SHARES REDEEMED................... (4,509) (18,569)
DIVIDENDS TO SHAREHOLDERS FROM NET
INVESTMENT INCOME................. (1,482,730) (1,555,512)
CAPITAL SHARE TRANSACTIONS:
(EXCLUSIVE OF AMOUNTS ALLOCATED TO
INVESTMENT INCOME AND NET REALIZED
GAIN FROM SECURITY TRANSACTIONS)
(NOTE 1):
COST OF SHARES OF CAPITAL STOCK
REDEEMED..................... (181,342) (855,906)
----------- -----------
TOTAL INCREASE IN NET ASSETS......... 5,063,389 9,013,768
NET ASSETS:
BEGINNING OF YEAR.................... 42,706,897 33,693,128
----------- -----------
END OF YEAR [INCLUDING UNDISTRIBUTED
NET INVESTMENT LOSS OF ($269,130)
AND ($269,069) RESPECTIVELY]...... $47,770,286 $42,706,896
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
1. SIGNIFICANT ACCOUNTING POLICIES
The Company is registered under the Investment Company Act of 1940, as
amended, as a regulated open-end investment company. On April 21, 1964, the
stockholders approved amendments to the Articles of Incorporation whereby, since
that date, the Company has held itself ready to redeem any of its outstanding
shares at net asset value. Net asset value for redemptions is determined at the
close of business on the day of formal tender of shares or the next day on which
the New York Stock Exchange is open. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
Number Aggregate
of Shares amount
--------- ---------
<S> <C> <C>
Shares redeemed:
Year Ended December 31, 1996............. 248 $188,711
Year Ended December 31, 1995............. 1,287 $888,570
</TABLE>
The following is a summary of significant accounting policies consistently
followed by the Company in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
Portfolio Valuation
Investments are valued using published bid quotes as of December 31, 1996.
Costs used to determine realized gain or loss from securities transactions are
those of the specific securities sold. Investments in non-marketable securities
are valued at fair value as determined by the Board of Directors (see Note 2).
Federal Income Taxes
No provision has been made for Federal income taxes other than capital
gains tax because the Company has elected to be taxed as a regulated investment
company meeting certain requirements of the Internal Revenue Code. As such, the
Company is paying the applicable Federal capital gains tax for shareholders and
retaining the net balance for reinvestment, except to the extent that such gains
are considered to have been distributed to redeeming shareholders.
8
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. The Company's financial statements include amounts that are based on
management's best estimates and judgments. Actual results could differ from
those estimates.
Other
As is common in the industry, security transactions are accounted for on
the trade date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date.
2. NON-MARKETABLE SECURITY OF AFFILIATE
There is no ready market for the below listed security. Fair value is
established by the Board of Directors of The Finance Company of Pennsylvania.
The Pennsylvania Warehousing and Safe Deposit Company is defined as an
affiliate under the Investment Company Act of 1940 in that the Company owns 5%
or more of the outstanding voting securities of such company. Further, if at the
time of public sale of any of these shares the Company would be deemed a
"control person," it would be necessary to register said shares under the
Securities Act of 1933 prior to their sale.
<TABLE>
<CAPTION>
For the
year ended
December 31, 1996 December 31,
------------------------------------- 1996
Percent Identified Fair Dividend
Shares Owned Cost Value Income
- ------- ------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
732 Pennsylvania
Warehousing
and Safe
Deposit
Company 16.92% $71,399 $1,570,872 $82,716
======= ======= ========== =======
</TABLE>
9
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of securities purchased, the proceeds from sales and
maturities of investments, and the cost of securities sold (excluding U.S.
Government short-term securities) for the year ended December 31, 1996 were:
<TABLE>
<CAPTION>
Historical Cost of
Cost of Proceeds from Securities
Investments Sales and Sold and
Purchased Maturities Matured
----------- ------------- -------------
<S> <C> <C> <C>
Common stocks................ $2,116,888 $3,675,509 $1,852,207
Mutual funds and other short-
term securities............ 4,715,863 4,109,693 4,109,693
---------- ---------- ----------
Total................... $6,832,751 $7,785,202 $5,961,900
========== ========== ==========
</TABLE>
4. LEASE
The Company rents office space under a lease expiring in April 1997. The
lessor Company's President also serves on the Board of Directors of the Company.
Minimum annual rental for this space is $5,100.
5. OTHER INFORMATION FOR THE YEAR ENDED
DECEMBER 31, 1996
Directors of the Company, who are not also employees, are paid a fee for
attendance at meetings of the Board of Directors and its committees.
Compensation of officers amounted to $103,125.
Investment advisory fees payable monthly to Cooke & Bieler, Inc., are based
on the monthly closing portfolio value, less the value of certain investments at
an annual rate of .5 of 1%.
6. SUBSEQUENT EVENT
A dividend from net investment income of $1,005,256 was declared on
December 11, 1996 payable at $17.42 per share on January 31, 1997 to
shareholders of record on December 31, 1996.
10
<PAGE> 21
CONDENSED FINANCIAL INFORMATION
Selected data for each share of capital stock outstanding throughout each
period:
<TABLE>
<CAPTION>
Year Ended December 31
1996 1995 1994 1993 1992
---------------------------------------------------
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income........... $ 32.33 $ 30.77 $ 28.64 $ 27.52 $ 26.48
Expenses.................... 6.68 5.97 5.59 5.38 5.58
------- ------- ------- ------- -------
Net investment income....... 25.65 24.80 23.05 22.14 20.90
Dividends from net
investment
income.................... (25.67) (26.73) (22.99) (22.09) (20.89)
Net realized gain (loss) and
increase (decrease) in
unrealized appreciation... 90.93 170.09 (77.72) 13.19 35.21
------- ------- ------- ------- -------
Net increase (decrease) in
net asset value........... 90.91 168.16 (77.66) 13.24 35.22
Net asset value:
Beginning of year......... 736.90 568.74 646.40 633.16 597.94
------- ------- ------- ------- -------
End of year............... $827.81 $736.90 $568.74 $646.40 $633.16
======= ======= ======= ======= =======
Annual ratio of expenses to
average net assets........ 0.86% 0.89% 0.89% 0.81% 0.91%
Annual ratio of net
investment income to
average net assets........ 3.32% 3.72% 3.68% 3.34% 3.40%
Annual portfolio turnover
rate...................... 5.29% 4.67% 9.17% 9.16% 7.65%
Number of shares outstanding
at end of period
(in thousands)............ 58 58 .59 60 61
</TABLE>
See Notes to Financial Statements
11
<PAGE> 22
CHANGES IN THE PORTFOLIO OF INVESTMENTS
(EXCLUSIVE OF SHORT-TERM INVESTMENTS)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
PURCHASES
<TABLE>
<CAPTION>
Changes Balance
During December 31,
the Period 1996
---------- ------------
Number of Shares
--------------------------
<S> <C> <C>
AMP Inc.................................. 6,000 16,000
Int'l Business Machines.................. 1,000 3,500
Motorola................................. 6,000 10,000
Readers Digest A......................... 3,000 21,500
Rubbermaid............................... 15,000 15,000
Xerox Corp. ............................. 7,500 7,500
</TABLE>
SALES
<TABLE>
<CAPTION>
Number of Shares
--------------------------
<S> <C> <C>
American Greetings....................... 20,000 -0-
Avery Dennison Corp. .................... 5,000 -0-
Boeing Co. .............................. 1,000 2,500
Coca Cola................................ 5,000 23,000
Dun & Bradstreet......................... 11,000 -0-
Imation.................................. 1,000 -0-
State Street Boston Corp. ............... 4,000 12,000
</TABLE>
12
<PAGE> 23
PART C
ITEM 24. Financial Statements and Exhibits
a. Financial Statements
1) Financial Statements filed in Part B:
Independent Auditors' Report
Statement of Assets and Liabilities -
December 31, 1996
Portfolio of Investments - December 31, 1996
Statement of Operations for the
Year Ended December 31, 1996
Statements of Changes in Net Assets for the
Years Ended December 31, 1996 and 1995
Notes to Financial Statements
Condensed Financial Information
for the Five Years Ended December 31, 1996
Changes in Portfolio of Investments
for the Six Months Ended December 31, 1996
(Unaudited)
2) All required financial statements are included in
Part B hereof, all other financial statements and
schedules are inapplicable
b. Exhibits
1) See index on page 26
ITEM 25. Persons Controlled by or Under Common Control
None
ITEM 26. Number of Holders of Securities
As of December 31, 1996, there were 129 shareholders owning
57,707 shares of capital stock of the Registrant.
ITEM 27. Indemnification
Sections 1741 et seq. of the Pennsylvania Business Corporation
Law (the PBCL) provide that a business corporation may indemnify
directors and officers against liabilities they may incur in
such capacities provided certain standards are met, including
good faith and the reasonable belief that the particular action
is in, or not opposed to, the best interests of the corporation.
In general, this power to indemnify does not exist in the case
of actions against a director or officer by or in the right of
the corporation if the person entitled to indemnification shall
have been adjudged to be liable unless a court determines upon
application that the person is fairly and reasonably entitled to
indemnification despite the adjudication of liability. However,
Section 1746 of the PBCL provides that the other sections of
the law are not exclusive and that further indemnification may
be provided by by-law, agreement or otherwise except where the
act or failure to act giving rise to a claim for indemnification
is determined by a court to have constituted willful misconduct
or recklessness. The corporation is required to indemnify
directors and officers against expenses they may incur in
defending actions against themselves as such directors or
officers if they are successful on the merits or otherwise in
the defense of such actions.
The Company's By-Laws also provide indemnification to the
directors and officers of the Company to the fullest extent
permitted by law. The Company maintains, on behalf of its
directors and officers, insurance protection against certain
liabilities arising out of the discharge of their duties, as
well as insurance covering the Company for indemnification
payments made to directors and officers for liabilities.
- 23 -
<PAGE> 24
ITEM 28. Business and Other Connections of Investment Adviser
None
ITEM 29. Principal Underwriters
INAPPLICABLE
ITEM 30. Location of Accounts and Records
Mr. Charles Mather, III, President, The Finance Company of
Pennsylvania, 226 Walnut Street, Philadelphia, Pennsylvania 19106
ITEM 31. Management Services
None
ITEM 32. Undertakings
INAPPLICABLE
- 24 -
<PAGE> 25
S I G N A T U R E S
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant (certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to
paragraph (a) of rule 485 under the Securities Act of 1933) and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in this City of Philadelphia and Commonwealth of
Pennsylvania on the 25th day of April 1997.
The Finance Company of Pennsylvania
-----------------------------------
(Registrant)
By /s/ CHARLES MATHER, III
---------------------------------
(Charles Mather, III, President)
- 25 -
<PAGE> 26
EXHIBIT INDEX
EX-99.B1 (1) Articles of Incorporation as amended December 29, 1961
and April 21, 1964 are included herein.
EX-99.B2(A) 2(a) By-Laws as amended through February 19, 1997 are included
herein.
EX-99.B5 (5) Investment Advisory Contract between Registrant and Cooke
& Bieler, Inc. Dated February 4, 1987 is included herein.
EX-99.B8A 8(a) Custodian Agreement between Registrant and United
Missouri Bank, N.A. dated October 24, 1994 is incorporated
by reference to Exhibit (8)(a) of the Registrant's Post
Effective Amdendment No. 20 to its Registration Statement
on Form N-1A.
EX-99.B17 (17) Financial Data Schedules are included herein.
<PAGE> 1
EX-99.B1
EXHIBIT 1
THE FINANCE COMPANY OF PENNSYLVANIA
ARTICLES OF INCORPORATION AS AMENDED
DECEMBER 29, 1961 AND APRIL 21, 1964
CHARTER
1. The name of the corporation is THE FINANCE COMPANY OF PENNSYLVANIA
2. The location and post office address of the corporation's current
registered office is Finance Building, South Penn Square,
Philadelphia, Pennsylvania.
3. The purpose or purposes of the corporation are: to own, purchase and
sell securities of business enterprises of any nature whatsoever; to
own, hold, use, purchase and sell real and personal property of any
nature whatsoever as principal and not as agent; and to carry on the
business of an open-end investment company, as defined under the
provisions of the Pennsylvania Business Corporation Law.
4. The term of its existence is perpetual.
5. The aggregate number of shares which the corporation shall have
authority to issue is 232,000 and the par value of such shares shall
be $10. All such shares are of one class and are designated as
"Common Stock". Subject to the limitations contained in the
Pennsylvania Business Corporation Law, the corporation may, by
resolution of its Board of Directors, purchase or redeem its own
shares, if offered for repurchase or redemption, for such
consideration and upon such other terms and conditions as may be fixed
from time to time by the Board of Directors. The Board of Directors
shall have authority, without action or consent of
<PAGE> 2
the shareholders, subject to applicable provisions of law, the
Articles of Incorporation as amended, and the by-laws, from time to
time to issue or re-issue Common Stock of the corporation or any part
thereof, for such consideration and upon such other terms and
conditions as may be fixed from time to time by the Board of
Directors.
6. Subject to the provisions of the Pennsylvania Business Corporation
law, the corporation may issue stock, option rights, or securities
having conversion or option rights, without first offering them to
stockholders of any class or classes; provided that the corporation
shall not issue for cash any Common Stock, option rights to purchase
Common Stock for cash, or securities convertible into Common Stock,
without first offering the same to the holders of the Common Stock
then outstanding.
7. The authority to make, alter, amend and repeal by-laws of the
corporation, including provisions for the classification of the
directors of the corporation in respect to the time for which they
shall severally hold office, all in accordance with the Pennsylvania
Business Corporation Law, shall be vested in the Board of Directors,
subject always to the power of the stockholders to change such action.
<PAGE> 1
EX-99.B2(A)
Exhibit 2(a)
THE FINANCE COMPANY OF PENNSYLVANIA
BY-LAWS
(Amended through February 19, 1997)
ARTICLE I
SHAREHOLDERS MEETINGS
SECTION 1. THE ANNUAL MEETING. The Annual Meeting of the
shareholders of the Company shall be held at such place in the City of
Philadelphia as may be fixed by the Board of Directors at 11 A.M. on the third
Wednesday of April in each year if not a legal holiday, and if a legal holiday,
then on the next succeeding Wednesday not a legal holiday, for the purpose of
electing directors and for the transaction of such other business as may be
brought before the meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the
shareholders shall be held at the registered office of the Company, or at such
other place as the Board of Directors may designate in the notice of any such
meeting, and may be called at any time by order of the President or the Board
of Directors or by the holders of not less than one-fifth of all the shares
outstanding and entitled to vote at the particular meeting.
SECTION 3. NOTICES. Written notice of every meeting of the
shareholders shall be given, by or at the direction of the person or persons
authorized to call the meeting, to each shareholder of record entitled to vote
at the meeting at least ten (10) days prior to the day named for the meeting.
Notice of each special meeting shall state the purpose or purposes for which
such meeting is called. The business transacted at all special meetings shall
be confined to the purpose stated in the call.
SECTION 4. QUORUM. A shareholders meeting duly called shall
not be organized for the transaction of business unless a quorum is present.
The presence in person or by proxy of the holders of a majority of the
outstanding shares entitled to vote shall constitute a quorum. The
shareholders present in person or by proxy at a duly organized meeting can
<PAGE> 2
continue to do business until adjournment notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
SECTION 5. ADJOURNMENTS. Adjournment or adjournments of any
annual or special meeting at which a quorum is present may be taken by
affirmative vote of a majority of the shares present, or represented at such
meeting to such time as they may determine, but any meeting at which directors
are to be elected shall be adjourned only from day to day until such directors
have been elected.
SECTION 6. PROXIES. Every holder of record of shares
entitled to vote at any meeting shall have the right to one vote for every such
share standing in his name on the books of the Company. Every shareholder may
vote in person or by proxy. Every Proxy shall be executed in writing by the
shareholder or by his duly authorized attorney in fact, and filed with the
Secretary of the Company.
SECTION 7. VOTING. Elections for directors need not be by
ballot except upon demand made by a shareholder at the election and before the
voting begins. In all elections for directors, every shareholder entitled to
vote shall have the right, in person or by proxy, to multiply the number of
votes to which he may be entitled by the number of directors to be elected and
he may cast the whole number of such votes for one candidate or he may
distribute them among any two or more candidates. The candidates receiving the
highest number of votes up to the number of directors to be elected shall be
elected.
SECTION 8. JUDGES OF ELECTION.
A. In advance of any meeting of shareholders, the Board of
Directors may appoint judges of election, who need not be shareholders, to act
at such meeting or any adjournment thereof. If judges of election be not so
appointed, the chairman of any such meeting may, and on the request of any
shareholder or his proxy, shall make such appointment at the meeting. The
number of judges shall be one or three. If appointed at a meeting on the
request of one or more shareholders or proxies, the majority of shares present
and entitled to vote shall determine whether one or three judges are to be
appointed. No person who is a candidate for office shall act as a judge.
B. In case any person appointed as judge fails to appear or
fails or refuses to act, the vacancy may be filled by appointment made by the
Board of Directors in advance of the convening of the meeting, or at the
meeting by the person or officer acting as chairman.
C. The judges of election shall determine the number of
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, the authenticity, validity, and effect of
proxies, receive votes or ballots, hear and determine all challenges and
questions in any way arising in connection with the right to vote, count, and
tabulate all votes, determine the result, and do such acts as may be proper to
conduct the election
-2-
<PAGE> 3
or vote with fairness to all shareholders. The judges of election shall
perform their duties impartially, in good faith, to the best of their ability,
and as expeditiously as is practical. If there be three judges of election,
the decision, acts or certificate of a majority shall be effective in all
respects as the decision, act or certificate of all.
D. On request of the chairman of the meeting, or of any
shareholder or his proxy, the judges shall make a report in writing of any
challenge or question or matter determined by them, and execute a certificate
of any fact found by them. Any report or certificate made by them shall be
prima facie evidence of the facts stated therein.
SECTION 9. VOTING LISTS. The Secretary or other officer or
agent having charge of the transfer books for shares of the Company, shall make
at least five days before each meeting of shareholders, a complete list of
shareholders entitled to vote at the meeting, arranged in alphabetical order,
with the address of and the number of shares held by each, which list shall be
kept on file at the principal office of the Company, and shall be subject to
inspection by any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. POWERS, ELECTION AND ELIGIBILITY. The Board of
Directors shall have full power to conduct, manage, and direct the business of
the Company, and all powers of the Company, except those specifically reserved
or granted to the shareholders by law, by the Articles, or by these By-Laws,
are hereby granted and vested in the Board of Directors.
SECTION 2. NUMBER AND TERM OF OFFICE. The number of
Directors of the Company shall be five - three of whom will be not "interested
persons" as the 1940 Act defines this term. At the Annual Meeting of
shareholders in 1993, one Director shall be elected for a term of three years.
At each annual meeting after 1993, two Directors shall be
elected, each for a term of three years, except that at those meetings falling
on the three year anniversary of 1993, one Director shall be elected for a term
of three years. Directors shall hold office for the term for which they are
elected and until their successors shall have been elected and qualified,
unless otherwise provided by applicable law.
Directors shall be natural persons of full age, but need not
be residents of the Commonwealth of Pennsylvania or shareholders in the
Company. A Director may also be a salaried officer or employee of the Company.
-3-
<PAGE> 4
SECTION 3. VACANCIES. Vacancies in the Board of Directors,
occurring by reason of an amendment to the By-Laws increasing the number of
Directors, or by reason of resignation, disqualification, removal, death or
otherwise, shall be filled by a majority of the remaining members of the Board
through less than a quorum; and each person so elected shall be a Director
until the next annual meeting of the shareholders and until his successor shall
have been elected and qualified unless otherwise provided by applicable law.
SECTION 4. QUORUM. A majority of the Directors in office
shall be necessary to constitute a quorum for the transaction of business,
other than the filling of vacancies as hereinbefore provided in Section 3 of
this Article II, but if a quorum is not present the Directors present may
adjourn the meeting to such time and place as they may determine. The acts of
a majority of the Directors present at a meeting at which a quorum is present
shall be the acts of the Board of Directors; provided that if all the Directors
shall severally or collectively consent in writing to any action to be taken by
the Company, such action shall be as valid corporate action as though it had
been authorized at a meeting of the Board of Directors.
SECTION 5. REGULAR MEETINGS. Regular meetings of the Board
of Directors shall be held on the second Wednesday in each month or on such
other day and at such place or places within or without the Commonwealth of
Pennsylvania and at such time as the Board of Directors shall determine, except
that the regular meeting in April shall be held immediately following the
annual meeting of shareholders of the Company as set forth in Section 1 of
Article I of these By-Laws.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board
of Directors shall be held at such time and place as shall be designated in the
notice calling said meeting. Special meetings shall be called by the Secretary
at the direction of the President or of a majority of the Directors in office.
Written notice of the time, place and purpose of every special meeting shall be
given to each Director at least one day prior to the day named for the meeting.
SECTION 7. COMPENSATION OF DIRECTORS. Directors may, by
resolution of the Board, receive a fixed sum and expenses of attendance, if
any, for attendance at each regular or special meeting of the Board of
Directors and for attendance at any meeting of any committee appointed by the
Board; provided, that nothing herein contained shall be construed to preclude
any Director from serving the Company in any other capacity and receiving
compensation therefor.
SECTION 8. RECORD DATES. The Board of Directors may fix in
advance a date, not more than seventy (70) days preceding the date of any
meeting of shareholders, or the date for the payment of any dividend, or the
date for allotment of rights, or the date when any change or conversion, or
exchange of shares shall go into effect, as a record date, for the
determination of the shareholders entitled to receive notice of and to vote at
any such meeting, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of shares.
-4-
<PAGE> 5
SECTION 9. CONTRIBUTIONS. The Board of Directors may make
contributions from the income of the Company for public and charitable purposes
authorized by the laws of the Commonwealth of Pennsylvania in such amounts as
may from time to time be approved by the Board, not exceeding, however, in
total amount in any one taxable year an amount equivalent to 1% of the
Company's earned surplus as of the end of the preceding taxable year.
ARTICLE III
NOTICE OF MEETINGS
SECTION 1. NOTICE. Whenever written notice is required by
law or by the By-Laws to be given to any director or shareholder, it may be
given to such person either personally or by sending a copy thereof through the
mail or by telegram, charges prepaid, to his address appearing on the books of
the Company, or supplied by him to the Company for the purpose of notice. If
the notice is sent by mail or by telegram, it shall be deemed to have been
given to the person entitled thereto when deposited in the United States mail
or with a telegraph office for the transmission to such person. Such notice
shall specify the place, day and hour of the meeting, and in the case of a
special meeting the general nature of the business to be transacted.
SECTION 2. WAIVER OF NOTICE. Whenever any written notice is
required to be given by law or by the By-Laws to any Director or shareholder, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Except in the case of a special
meeting neither the business to be transacted at nor the purpose of the meeting
need be specified in the waiver of notice of such meeting.
ARTICLE IV
OFFICERS AND AGENTS
SECTION 1. OFFICERS. The executive officers of the Company
shall be a President, one or more Vice Presidents, a Treasurer and a Secretary,
and, at the discretion of the Board of Directors, a Chairman of the Board, all
of whom shall be elected by the Board of Directors. Any two or more offices
may be held by the same person, except the offices of President and Secretary.
The Board of Directors may appoint a Comptroller and such
other officers as they shall deem necessary, who shall have such authority and
shall perform such duties as from time to time may be prescribed by the Board
of Directors.
-5-
<PAGE> 6
All officers and agents shall be subject to removal at any
time by affirmative vote of a majority of the Directors in office. All agents
and employees, other than officers appointed by the Board of Directors, shall
hold office at the discretion of the officer appointing them.
SECTION 2. POWERS AND DUTIES OF THE PRESIDENT. The President
shall be the chief executive officer of the Company and shall have general
direction and supervision of all of the business of the Company, and shall
perform all acts incidental to his office as prescribed by the Board. He shall
preside at all meetings of the shareholders and, in the absence of the Chairman
of the Board, shall preside at all meetings of the Board of Directors.
Unless otherwise ordered by the Board of Directors, the
President shall have full power and authority on behalf of the Company to
attend and to act and to vote at any meeting of shareholders of any corporation
in which the Company may hold shares, and at any such meeting shall possess and
may exercise any and all rights, and powers incident to the ownership of such
shares, which, as the owner thereof, the Company might have possessed and
exercised if present. The Board of Directors, by resolution, from time to
time, may confer like powers upon any other person or persons.
SECTION 3. VICE PRESIDENTS. Each Vice President shall have
such powers and perform such duties as may be assigned to him by the Board of
Directors or the President.
SECTION 4. POWERS AND DUTIES OF THE TREASURER. The Treasurer
shall have custody of all the funds and securities of the Company which may
have come into his hands; when necessary or proper he shall endorse on behalf
of the Company for collection, checks, notes and other instruments, and shall
deposit the same to the credit of the Company in such bank or banks as the
Board of Directors may designate as depositories for funds of the Company; he
shall sign receipts and vouchers for payments made to the Company; jointly with
such other officers as may be designated by the Board of Directors, he shall
sign checks drawn by the Company, and shall disburse the same; he shall sign
with the President, or such other person or persons as may be designated for
the purpose by the Board of Directors, promissory notes of the Company and
shall accept drafts or bills of exchange drawn in the Company. Whenever
required by the Board of Directors he shall render a statement of his cash
account; he shall enter regularly, in books of account to be kept by him for
that purpose, full and accurate accounts of all moneys received and paid by him
on account of the Company; he shall, at all reasonable times, exhibit his books
and accounts to any Director of the Company upon application at the principal
office of the Company during business hours; he shall perform all acts incident
to the position of Treasurer; and he shall give a bond for the faithful
discharge of his duties, in such sum as the Board of Directors may require.
SECTION 5. ASSISTANT TREASURERS. The Board of Directors may
appoint one or more than one Assistant Treasurer. Each Assistant Treasurer
shall have such power and shall perform such duties as may be assigned to him
by the Board of Directors, or delegated to him by the Treasurer.
-6-
<PAGE> 7
SECTION 6. POWERS AND DUTIES OF THE SECRETARY. The Secretary
shall keep the minutes of all meetings of the Board of Directors, and the
minutes of all meetings of the shareholders, and also (unless otherwise
directed by the Board of Directors) the minutes of all committees, in books
provided for that purpose; he shall attend to the giving of all notices
required to be given by the Company; he may sign, with the President, contracts
in the name of the Company and affix the seal of the Company thereto; he shall
have charge of the certificate books, transfer books and stock ledgers, and
such other books and papers as the Board of Directors may direct, all of which
shall at all reasonable times be open to the examination of any Director, upon
application at the office of the Company during business hours; and he shall in
general perform all the duties incident to the office of Secretary.
SECTION 7. ASSISTANT SECRETARIES. The Board of Directors may
appoint one or more than one Assistant Secretary. Each Assistant Secretary
shall have such powers and shall perform such duties as may be assigned to him
by the Board of Directors or delegated to him by the Secretary.
ARTICLE V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. Each Director and officer (and his heirs,
executors, and administrators) shall be indemnified by the Corporation against
reasonable costs and expenses incurred by him in connection with any action,
suit or proceeding to which he may be made a party by reason of his being or
having been a Director or officer of the Corporation, except in relation to any
action, suits or proceedings in which he has been adjudged liable because of
negligence or misconduct, which shall be deemed to include willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. In the absence of an adjudication which expressly
absolves the Director or officer of liability to the Corporation or its
stockholders for negligence and misconduct, within the meaning thereof as used
herein, or in the event of a settlement, each Director and officer (and his
heirs, executors and administrators) shall be indemnified by the Corporation
against payments made, including reasonable costs and expenses, provided that
such indemnity shall be conditioned upon the prior determination by a
resolution of two-thirds of those members of the Board of Directors of the
Corporation who are not involved in the action, suit or proceeding that the
Director or officer has no liability by reason of negligence or misconduct,
within the meaning thereof as used herein, and provided further that if a
majority of the members of the Board of Directors of the Corporation are
involved in the action, suit, or proceeding, such determination shall have been
made by a written opinion of independent counsel. Amounts paid in settlement
shall not exceed cost, fees and expenses which have been reasonably incurred if
the action, suit or proceeding had been litigated to conclusion. (Such
determination by the Board of Directors or by independent counsel, and the
payments of amounts by the Corporation on the basis thereof shall not prevent a
-7-
<PAGE> 8
stockholder from challenging such indemnification by appropriate legal
proceedings on the grounds that the person indemnified was liable to the
Corporation or its security holders by reason of negligence or misconduct,
within the meaning thereof as used herein.) The foregoing rights and
indemnification shall not be exclusive of any other rights to which the
officers and Directors may be entitled according to law.
-8-
<PAGE> 9
ARTICLE VI
CAPITAL STOCK
SECTION 1. CERTIFICATES. The certificates for shares of the
capital stock of the Company shall be numbered and registered as they are
issued. They shall be signed by the President or any Vice President and by the
Treasurer or an Assistant Treasurer and shall have the corporate seal impressed
thereon, provided, that the signatures and seal, or any of them, required to be
affixed to any share certificate, may be executed in facsimile, engraved or
printed, if such certificate is signed or countersigned by a transfer agent or
an assistance transfer agent and by a registrar, or assistant registrar.
SECTION 2. TRANSFER ON BOOKS. Transfers of shares shall be
made on the books of the Company only by the person named in the share
certificate as holder or by his duly constituted attorney and upon surrender
and cancellation of such certificate.
SECTION 3. REGULATIONS. The Board of Directors may make such
rules and regulations as it may deemed expedient concerning the issue, transfer
and registration of the share certificates, and may appoint a transfer agent or
agents and registrar or registrars for each or any class of shares.
SECTION 4. LOST OR DESTROYED CERTIFICATES. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates, heretofore issued by the corporation, alleged
to have been lost or destroyed upon the making of an affidavit of that fact by
the person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such a
manner as it shall require and/or give the corporation a bond in such sum and
with such surety of sureties as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate
alleged to have been lost or destroyed.
SECTION 5. PURCHASE OR REDEMPTION. The Board of Directors
may from time to time establish the terms and conditions pursuant to which the
Company may purchase or redeem its own shares, if offered for repurchase or
redemption.
SECTION 6. ISSUANCE OR RE-ISSUANCE. The Board of Directors
may from time to time issue or re-issue common stock of the Company, or any
part thereof, for such consideration and upon such other terms and conditions
as they may fix from time to time.
ARTICLE VII
-9-
<PAGE> 10
EXECUTIVE COMMITTEE
SECTION 1. MEMBERSHIP. The Board of Directors, by resolution
duly adopted, may appoint an Executive Committee consisting of at least three
Directors. A majority of the members of the Executive Committee shall
constitute a quorum. Each member of the Executive Committee shall continue to
be a member thereof until the expiration of his term of office as a Director,
unless otherwise ordered by the Board of Directors.
SECTION 2. VACANCIES. The Executive Committee may fill any
vacancy in the Committee by the election of a member of the Board, subject to
the confirmation by the Board at its next meeting, and in the event of
protracted absence of any member of the Executive Committee, the Committee may
in its discretion appoint a member of the Board to fill the place of such
absent member to serve during his absence.
SECTION 3. MEETINGS. The Executive Committee shall meet at
such time and place as the said Committee shall from time to time determine.
Meetings shall be held on the call of the President or any two members of the
Executive Committee at such time and place as may be stated in the call for any
such meeting.
The acts of a majority of the members of the Executive
Committee present at a meeting at which a quorum of the Committee is present
shall be the acts of the Committee; provided, that if all of the members of the
Executive Committee shall severally or collectively consent in writing to any
action to be taken by the Company, such action shall be as valid corporate
action as though it had been authorized at a meeting of the Committee.
SECTION 4. POWERS. During intervals between the meetings of
the Board of Directors, the Executive Committee shall possess and may exercise
all of the powers of the Board of Directors in the management of the affairs of
the Company, including the purchase and sale of property and securities and the
execution of legal instruments with or without corporate seal, in such manner
as said Committee shall deem to be in the best interest of the Company, in all
cases in which specific directions shall not have been given by the Board of
Directors.
The Executive Committee shall keep a record of its proceedings
and report the same to the next meeting of the Board.
SECTION 5. COMPENSATION. The members of the Executive
Committee shall be paid such compensation for their services as members of said
Committee, as the Board of Directors may from time to time determine.
-10-
<PAGE> 11
ARTICLE VIII
MISCELLANEOUS
SECTION 1. REGISTERED OFFICE. The registered office of the
Company in the Commonwealth of Pennsylvania shall be 7 East Lancaster Avenue,
Ardmore, Montgomery County, Pennsylvania, 19003, provided that the location of
the registered office may be changed from time to time by the vote of a
majority of the Board of Directors in office and the filing of a statement of
such change with the Department of State.
SECTION 2. CORPORATE SEAL. The Board of Directors shall
provide a suitable seal, containing the name of the Company, which seal shall
be in the charge of the Secretary. If and when so directed by the Board of
Directors, a duplicate of the seal may be kept and be used by the Treasurer or
by an Assistant Secretary or any Assistant Treasurer. Said seal may be used by
causing it, or a facsimile thereof, to be impressed or affixed or otherwise
reproduced.
SECTION 3. EXECUTION OF INSTRUMENTS. Except as otherwise
authorized in the By-Laws, all checks, drafts, bills of exchange and
acceptances, notes or other obligations or evidences of indebtedness, and all
deeds, conveyances, bills of sale, assignments or other instruments of transfer
and all other instruments in writing of any nature, shall be signed, executed,
accepted, endorsed, verified, acknowledged and delivered by such officer or
officers or other person or persons as the Board of Directors may from time to
time direct. Except where provision for the manner of execution thereof is
specifically made in the By-Laws, the Board of Directors at its discretion may
authorize the execution of the signature of any such officer or person in
facsimile in lieu of his signature in person.
SECTION 4. AMENDMENTS. Except as otherwise required by law,
the Board of Directors shall have power to make, amend and repeal the By-Laws
of the Company, by vote of a majority of all of the Directors in office, at any
regular or special meeting of the Board, provided that notice of intention to
make, amend or repeal the By-Laws in whole or in part shall have been given at
the next preceding meeting; or without any such notice, by a vote of two-thirds
of all of the Directors in office. Such action by the Board of Directors is
subject, however, to the general right of the shareholders to amend or repeal
any provision of the By-Laws whether made, amended, repealed or added to by the
Board of Directors or otherwise.
-11-
<PAGE> 12
ARTICLE IX
EMERGENCY BY-LAWS
SECTION 1. WHEN OPERATIVE. The emergency by-laws provided by
the following sections shall be operative during any emergency resulting from
warlike damage or an attack on the United States or any nuclear or atomic
disaster, notwithstanding any different provision in the preceding sections of
the By-Laws or in the Articles of Incorporation of the Company or in the
Pennsylvania Business Corporation Law. To the extent not inconsistent with the
emergency by-laws, the By-Laws provided in the preceding sections shall remain
in effect during such emergency and upon termination of such emergency the
emergency by-laws shall cease to be operative unless and until another such
emergency shall occur.
SECTION 2. MEETINGS. During any such emergency:
(a) Any meeting of the Board of Directors may be called
by any Director. Whenever any officer of the Company who is not a Director has
reason to believe that no Director is available to participate in a meeting,
such officer may call a meeting to be held under the provisions of this
section.
(b) Notice of each meeting called under the provisions of
this section shall be given by the person calling the meeting or at his request
by any officer of the Company. The notice shall specify the time and the place
of the meeting, which shall be the head office of the Company at the time if
feasible and otherwise any other place specified in the notice. Notice need be
given only to such of the Directors as it may be feasible to reach at the time
and may be given by such means as may be feasible at the time, including
publication or radio. If given by mail, messenger, telephone or telegram, the
notice shall be addressed to the Director at his residence or business address
or such other place as the person giving the notice shall deem suitable. In
the case of meetings called by an officer who is not a Director, notice shall
also be given similarly, to the extent feasible, to the persons named on the
list referred to in part (c) of this section. Notice shall be given at least
two (2) days before the meeting if feasible in the judgment of the person
giving the notice and otherwise the meeting may be held on any shorter notice
he shall deem suitable.
(c) At any meeting called under the provisions of this
section, the Director or Directors present shall constitute a quorum for the
transaction of business. If no Director attends a meeting called by an officer
who is not a Director and if there are present at least three of the persons
named on a numbered list of personnel approved by the Board of Directors before
the emergency, those present (but not more than the five (5) appearing highest
in priority on such list) shall be deemed Directors for such meeting and shall
constitute a quorum for the transaction of business.
-12-
<PAGE> 13
SECTION 3. LINES OF SUCCESSION. The Board of Directors,
during as well as before any such emergency, may provide, and from time to time
modify, lines of succession in the event that during such emergency any or all
officers or agents of the Company shall for any reason be rendered incapable of
discharging their duties.
SECTION 4. OFFICES. The Board of Directors, during as well
as before any such emergency, may, effective in the emergency, change the head
office or designate several alternative head offices or regional offices, or
authorize the officers to do so.
SECTION 5. LIABILITY. No officer, Director or employee
acting in accordance with these emergency by-laws shall be liable except for
willful misconduct.
SECTION 6. REPEAL OR CHANGE. The emergency by-laws shall be
subject to repeal or change by action of the Board of Directors or by action of
the shareholders, except that no such repeal or change shall modify the
provisions of the next preceding section with regard to action or inaction
prior to the time of such repeal or change.
-13-
<PAGE> 1
EX-99.B5
Exhibit 5
The Finance Company of Pennsylvania
226 Walnut Street
Philadelphia, PA 19106
Charles E. Mather III, President (215) 351-4778
Wm. Richard Gordon, Secretary-Treasurer
Thomas J. McGinty, Assistant Secretary-Treasurer
February 25, 1987
Cooke & Bieler, Inc.
1435 Walnut Street
Philadelphia, Pennsylvania 19102
We herewith confirm our agreement with you as follows. The
following reflects amendments to our Investment Advisory Contract dated
February 4, 1986 and restates such Contract, as so amended, in its entirety.
We desire to employ our capital by investing and reinvesting
the same in securities of the type and in accordance with the policies and
limitations specified in our registration statement, Articles of Incorporation
and By-Laws, as they may be amended from time to time, copies of each of which
we have previously given you, and in such manner and to such extent as may from
time to time be approved by our Board of Directors. We desire to employ you in
the capacity of an investment adviser to supervise and assist us in the
portfolio management of our business as indicated below.
You will advise us with a view to safeguarding and increasing
principal and with due regard to income requirements. You will prepare
tabulations of the securities and review them at regular intervals and your
officers and the members of your staff will be available for consultation. You
will, upon request, as
<PAGE> 2
well as at regular intervals, prepare and submit valuations of our portfolio.
You will also furnish, when you think it appropriate or upon request, memoranda
and statistical data in connection with our account. Any final decisions with
regard to our investments will, of course, rest with us.
Subject to the approval of our officers and/or Board of
Directors, you may select as broker for purchases and sales of portfolio
securities those persons, partnerships or corporations who, in your best
judgment, should so act as broker.
For your services under this Contract you are to receive from
the Company a fee at the rate of one half of one percent (.5%) per annum,
payable to you monthly on the last day of each month, said fee to be computed
upon the value of the assets of the Company which you are managing ("Portfolio
Value") at the end of the month immediately preceding the date of the payment.
Portfolio Value shall equal the market value of the securities held in the
Company's investment portfolio computed by the Company in the same manner as
used by it for the purpose of redeeming its shares, less (a) the value of the
holdings of the Company at the applicable dates in PNC Financial Corp.,
Pennsylvania Warehousing & Safe Deposit Company, and their successors, and of
United States Treasury Notes and Bonds; (b) the value of holdings of the
Company at the applicable dates in such other companies as may from time to
time be agreed upon by you and the Company; and (c) the amount of any accrued
liability for the payment of taxes on the net gains from the sales of the
Company's portfolio securities. In any event, the amount payable for any month
shall not exceed one-twelfth (1/12) of one half of one percent (.5%) of the
Portfolio Value at the end of the month immediately preceding the date of the
payment. Your compensation for the period from the effective date hereof to
the last day of April 1987 shall be prorated according to the proportion which
such period bears to the full month, such compensation for the period from the
end of the last month prior to such termination to the date of termination
shall be prorated accordingly.
This Contract shall continue until April 30, 1988, and
thereafter shall continue automatically for successive annual periods ending
April 30 of each year, provided that such continuance is specifically approved
at least annually by our Board of Directors or by vote of a majority of our
outstanding
<PAGE> 3
voting securities (used herein as defined in the Investment Company Act of
1940) and provided that any such continuance is approved by the vote of a
majority of our directors, who are not parties to this Contract or interested
persons of any such party, cast in person at a meeting called for the purpose
of voting on such approval. This Contract may be terminated at any time,
without the payment of any penalty, by our Board of Directors or by vote of a
majority of our outstanding voting securities on sixty days' written notice to
you, or by you on sixty days' written notice to us, and it shall be
automatically terminated in the event of its assignment (as defined in said
Act).
This Contract may not be transferred, assigned, sold or in any
manner hypothecated or pledged by you, but it may be amended by agreement
between us when authorized by the affirmative vote of a majority of all the
shares of our capital stock at the time outstanding and entitled to vote.
This Contract shall be effective upon the approval of a
majority of the Company's outstanding voting securities, assuming such approval
is obtained prior to April 30, 1987.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
THE FINANCE COMPANY OF PENNSYLVANIA
By: /s/ Charles E. Mather III
--------------------------------
President
Accepted:
COOKE & BIELER, INC.
By: /s/ John J. Medveckis
--------------------------------------
Vice President and Director
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<PERIOD-START> JAN-01-1996
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<EQUALIZATION> 188,711
<DISTRIBUTIONS-OF-INCOME> 1,482,730
<DISTRIBUTIONS-OF-GAINS> 631,197
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<PER-SHARE-NAV-BEGIN> 736.90
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