SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ] Confidential, for use of the Commission only (as permitted by Rule
14(a)-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14(a)-11(c) or Sec.
240.14(a)-12
Rupay - Barrington Total Return Fund, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14(a)-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date Filed:
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RUPAY-BARRINGTON TOTAL
RETURN FUND, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
July ____, 1998
TO THE STOCKHOLDERS
RUPAY-BARRINGTON
TOTAL RETURN FUND, INC.
Notice is hereby given that an annual meeting of stockholders of
Rupay-Barrington Total Return Fund, Inc., (the "Company") will be held on July
___, 1998 at 9:00 a.m., local time, at the offices of The Rupay-Barrington
Financial Group, Inc., 1000 Ballpark Way, Suite 302, Arlington, Texas 76011 for
the following purposes:
1. To ratify the terms and conditions under which Rupay-Barrington
Advisors, Inc. (the "Advisor") has been providing services since
January 4, 1997 and continuing through the date on which the New
Advisory Agreement (as defined in Item 2 below) is approved by the
Stockholders.
2. To approve the new investment advisory agreement (the "New
Advisory Agreement") between the Company and the Advisor.
3. To elect four persons to the Company's Board of Directors to serve
until the next annual meeting or until their successors shall have
been elected and qualified.
4. To approve a change of the name of the Company to Rupay-
Barrington Funds, Inc.
5. To ratify the action of the Board of Directors in selecting Tait,
Weller & Baker as auditors to examine the books and financial
statements of the Company for the period commencing January 1,
1998, and ending December 31, 1998.
6. To transact such other business as may properly be brought before
the meeting.
Stockholders of record at the close of business on July ___, 1998, will
be entitled to vote at the meeting. We hope that you will attend the meeting,
but if you cannot do so, please fill in and sign the enclosed proxy, and return
it in the accompanying envelope as promptly as possible. Any stockholder
attending the meeting can vote in person even though a proxy has already been
returned.
In order to save your Company the additional expense of further solicitation,
please be kind enough to complete and return your proxy card today.
Fritz Bensler
President
July __, 1998
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RUPAY-BARRINGTON TOTAL
RETURN FUND, INC.
---------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
by or on behalf of the Board of Directors of Rupay-Barrington Total Return Fund,
Inc. (the "Company") for use at an Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the offices of The Rupay-Barrington Financial Group,
Inc., 1000 Ballpark Way, Suite 302, Arlington, Texas 76011, on July ___, 1998 at
9:00 a.m., local time.
Proxy Solicitation
All proxies in the enclosed form which are properly executed and
returned to the Company will be voted as provided therein at the Annual Meeting
or at any adjournments thereof. A stockholder executing and returning a proxy
has the power to revoke it at any time before it is exercised by giving written
notice of such revocation to the Secretary of the Company. Signing and mailing
the proxy will not affect your right to give a later proxy or to attend the
Annual Meeting and vote your shares in person. Proxies which abstain are counted
to determine the presence of a quorum only. Broker non-votes are not counted for
any purpose.
The Board of Directors (the "Board") intends to bring before the
meeting the matters set forth in Items 1, 2, 3, 4 and 5 of the Notice of Annual
Meeting of Stockholders that accompanies this Proxy Statement. The persons named
in the enclosed proxy and acting thereunder will vote with respect to Items 1,
2, 3, 4 and 5 in accordance with the directions of the stockholder as specified
on the proxy card. If no choice is specified, the shares will be voted (i) FOR
ratification of the terms and conditions under which Rupay-Barrington Advisors,
Inc. (the "Advisor") has provided services to the Company since January 4, 1997
and continuing through the date on which the New Advisory Agreement is approved
by the stockholders as described in Item 1 (such terms and conditions are
referred to herein as the "Interim Advisory Agreement"); (ii) FOR approval of
the New Advisory Agreement between the Company and the Advisor as described in
Item 2; (iii) FOR election of the four (4) directors named in Item 3; (iv) FOR
approval to change the name of the Company to the Rupay-Barrington Funds, Inc.
as described in Item 4; and (v) FOR ratification of Tait, Weller & Baker as
auditors for 1998 in Item 5. If any other matters are properly presented to the
meeting for action, it is intended that the persons named in the enclosed Proxy
and acting thereunder will vote in accordance with the views of management
thereon. This Proxy Statement and form of Proxy are being first sent to
stockholders on or about [July ___, 1998].
The affirmative vote of a majority of the outstanding shares of the
Company, which means the lesser of (a) 67% of the shares of the Company present
at a meeting when more than 50% of the outstanding shares are present in person
or by proxy or (b) more than 50% of the outstanding shares of the Company, is
required for the ratification of the Interim Advisory Agreement (Item 1) and
approval of the New Advisory Agreement (Item 2). With respect to the election of
Directors (Item 4) and ratification of the Company's engagement of Tait, Weller
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& Baker as the Company's auditors for 1998, provided a quorum is present at the
meeting, the affirmative vote of a majority of the votes validly cast is
required to elect each of the four (4) nominees and for ratification of the
selection of Tait, Weller & Baker as auditors (Item 5). The affirmative vote of
more than 50% of the outstanding shares of the Company is required for the
approval of the Company's proposed name change (Item 4).
The Company will bear the entire cost of preparing, printing and
mailing this Proxy Statement, the Proxies and any additional materials which may
be furnished to stockholders. Solicitations may be undertaken by mail,
telephone, telegraph and personal contact. The Annual Report of the Company for
its fiscal year ending December 31, 1997, has been mailed to stockholders prior
to the date hereof. The Company will furnish, without charge, a copy of the 1997
Annual Report to stockholders upon request by calling 1-800-688-1688.
Voting Securities and Principal Holders Thereof
Holders of Common Stock of the Company of record at the close of
business on [July ___, 1998], will be entitled to vote at the Annual Meeting or
any adjournment thereof. As of June 25, 1998, the Company had outstanding
163,386.893 shares of Common Stock. The stockholders are entitled to one vote
per share on all business to come before the meeting. The shares of the Company
do not have cumulative voting rights. The officers and directors of the Company
as a group beneficially own, in the aggregate, 5,519.61 shares (approximately
3.38%) of the outstanding Common Stock of the Company, excluding shares held by
the Parent, and 14,315.053 shares (approximately 8.76%) of the outstanding
common stock of the Company, including shares held by the Parent.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of June 25, 1998, the following persons are known by the Company to
be beneficial owners of more than five percent (5%) of the Company's outstanding
shares:
Number of Shares Percentage
Name & Address Beneficially Owned of Company
- -------------- ------------------ ---------------
Fritz Bensler* -0- -0-
Judy A. Champine* 3,528.28 .216%
Glen Wilkerson* 1,000.71 .061%
Dixon Holman* 990.62 .061%
Anchor Bay Dental 58,385.066 35.734%
25050-23 Mile Road, Suite A
New Baltimore, Michigan 48047
Attn: Donald J. Burkhardt
The Rupay-Barrington Financial
Group, Inc. 8,795.443 5.383%
1000 Ballpark Way, Suite 302
Arlington, Texas 76011
Attn: Dixon Holman
All Officers and
Directors as a Group 14,315,053 8.761%
(including shares held
by The Rupay-Barrington
Financial Group, Inc.)
* The address is % the Rupay-Barrington Financial Group, Inc., 1000
Ballpark Way, Suite 302, Arlington, Texas 76011
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BACKGROUND
Pursuant to a Stock Purchase Agreement dated as of January 4, 1997, JPJ
Asset Group, Inc. ("JPJ"), a wholly-owned subsidiary of JPJ Investment
Management, Inc., acquired an interest equal to approximately eighty-four
percent (84%) in Valley Forge Capital Holdings, Inc. (the "Parent"), the parent
of the Advisor and other affiliated subsidiaries, including Valley Forge
Distributors, Inc., (now known as Rupay-Barrington Securities Corporation,
herein, the "Distributor"). The name of the Parent was thereafter changed to The
Rupay-Barrington Financial Group, Inc. Under the Investment Company Act of 1940,
as amended (the "1940 Act"), and rules and regulations promulgated thereunder,
as interpreted by the Securities and Exchange Commission (the "SEC"), this
acquisition of a controlling interest in the Parent constituted a deemed change
in control of the Advisor, and, because the change in control operated as an
"assignment" (as defined in the 1940 Act) of the Old Advisory Agreement,
resulted in the automatic termination of the original Investment Advisory
Agreement dated as of February 24, 1995 between the Company and the Advisor (the
"Old Advisory Agreement"). The Advisor has continued to provide investment
advisory services to the Company under the terms and conditions of the Old
Advisory Agreement subject to the supervision of, and annual review by, the
Board (as described in Item 1 below, the terms and conditions under which the
Advisor has provided services since January 4, 1997 are referred to herein as
the "Interim Advisory Agreement"). Because the Company does not have substantial
assets, the Advisor has provided such services at less than its costs insofar as
fees received under the Old Advisory Agreement and the Interim Advisory
Agreement (equal to an annual rate of 0.80% of the Company's average net assets)
have been insufficient to cover said costs. As the New Advisory Agreement
includes substantially the same terms and conditions as the Old Advisory
Agreement and the Interim Advisory Agreement, until or unless the Company
increases significantly in size, it is anticipated that the Advisor's costs of
providing services will continue to exceed fees received.
The Board is proposing that the stockholders of the Company ratify the
Company's payment of such fees to the Advisor effective as of January 4, 1997
pursuant to and in accordance with the Interim Advisory Agreement. Details of
the proposal are set forth below under "Item 1--Ratification of Interim Advisory
Agreement."
The Board has approved a new investment advisory agreement between the
Company and the Advisor (the "New Advisory Agreement") on substantially the same
terms and conditions as the Old Advisory Agreement and the Interim Advisory
Agreement and has recommended that the stockholders of the Company approve the
Company's New Advisory Agreement. The New Advisory Agreement will go into effect
upon or shortly after its approval by the stockholders and will take the place
of the Interim Advisory Agreement.
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ITEM 1--RATIFICATION OF INTERIM ADVISORY AGREEMENT
INTRODUCTION. As discussed above, under the 1940 Act and Rules and
Regulations promulgated thereunder, as interpreted by the SEC, the consummation
of the Stock Purchase Agreement constituted a deemed change in control of the
Advisor, and, because such change in control operated as an "assignment" (as
defined in the 1940 Act) of the Old Advisory Agreement, resulted in the
automatic termination of the Old Advisory Agreement, effective as of January 4,
1997. Since such termination, the Advisor has continued to provide services in
accordance with the terms and conditions of the Old Advisory Agreement. The
Board is proposing that the stockholders of the Company ratify the continued
provision of services by the Advisor after termination of the Old Advisory
Agreement (the terms and conditions under which the Advisor has been providing
services since January 4, 1997, are referred to herein as the "Interim Advisory
Agreement"). The continued provision of services under the Interim Advisory
Agreement was not approved by the stockholders when the Old Advisory Agreement
was deemed to have terminated and, accordingly, ratification of the Interim
Advisory Agreement is being sought as described herein. If ratified, the Interim
Advisory Agreement will continue in effect only until the New Advisory Agreement
(discussed below under "Item 2--Approval of New Advisory Agreement") is approved
by stockholders. In the event that the Interim Advisory Agreement is not
ratified, the Advisor has informed the Company that it would consider its
options, including a possible right of action to recover the cost of providing
services to the Company, which amount could exceed the amount of fees earned
under the Interim Advisory Agreement. The outcome of any such action cannot be
determined at this time. From termination of the Old Advisory Agreement through
the date of this Proxy Statement, the Advisor has accrued fees equal to
approximately $27,342.95, all of which fees have been offset against Company
expenses reimbursements due from the Advisor. Because the Company is a small
mutual fund, the Board believes that it is unlikely that another investment
advisor could be engaged on the terms and conditions under which the Advisor
provides services.
TERMS OF THE INTERIM ADVISORY AGREEMENT. The terms of the Interim
Advisory Agreement, which are more fully described below, are substantially
identical to the terms of the Old Advisory Agreement, except for (i) the
effective date and, (ii) the termination date. The advisory fee rates payable
under the Interim Advisory Agreement are identical to those payable under the
Old Advisory Agreement. A copy of the Old Advisory Agreement is attached to this
Proxy Statement as Exhibit A. The following summary of the Interim Advisory
Agreement is qualified in its entirety by reference to this exhibit.
Pursuant to the Interim Advisory Agreement, the Advisor has been,
subject to the supervision of, and review by, the Board, furnishing the Company
with investment advice and has been supervising the management and investment
program of the Company. Under such Interim Advisory Agreement, the Advisor has
furnished at its own expense all necessary services, office space, equipment and
clerical personnel for servicing the investments of the Company. The Advisor
also provides investment advisory facilities and executive and supervisory
personnel for managing the investments and effecting the portfolio transactions
of the Company. In addition, the Advisor, directly or through its Parent, has
been paying the salaries and fees of all officers and directors of the Company
who are affiliated with the Advisor.
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The terms of the Old Advisory Agreement were reviewed and approved by
the Board, including all of the Directors who are not "interested persons" (as
that term is defined in the 1940 Act) of the Advisor (the "Non-Interested
Directors"), for an additional one year term in March 1998; however, because of
the deemed change in control which resulted in a termination of the Old Advisory
Agreement, the Interim Advisory Agreement must be ratified by the majority vote
of the stockholders of the Company.
BOARD DELIBERATIONS: As described above, the Old Advisory Agreement
that was previously in effect for the Company automatically terminated on
January 4, 1997, as a result of the consummation of the Stock Purchase
Agreement. The Board has continued to supervise the provision of services by the
Advisor. However, because of the deemed changes in control of the Advisor, the
stockholders are being asked to ratify the Interim Advisory Agreement. If
approved by the stockholders at the Annual Meeting, the Interim Advisory
Agreement will continue in effect only until stockholder approval of the New
Advisory Agreement between the Company and Advisor, as described below under
"Item 2--Approval of New Advisory Agreement."
In considering whether to approve the continued provision of services
by the Advisor under the terms of the Interim Advisory Agreement and,
thereafter, to submit it to the stockholders for their ratification, the Board
considered the following factors: (i) the representation of the Advisor that it
would provide investment advisory and other services to the Company of at least
the scope and quality previously provided by it to the Company under the Old
Advisory Agreement; (ii) the substantially identical terms and conditions
contained in the Interim Advisory Agreement as compared to the Old Advisory
Agreement; and (iii) the representation of the Advisor that in the event of any
material change in the Advisor, the Board would be consulted for the purpose of
assuring itself that the services provided would not be diminished in scope or
quality. The Board also considered the benefits that would be obtained by the
Company in maintaining continuity of investment advisory services for the
Company and believed such continuity was advantageous to the Company as it would
minimize any potential interruption in the advisory services provided to the
Company. The Board further concluded that ratification of the Interim Advisory
Agreement would be appropriate and fair considering that (i) the fees paid, the
services to be provided therefor, were unchanged from the Old Advisory
Agreement; (ii) given the present size of the Company, and that the fees paid to
the Advisor as a result were insufficient to cover its costs of providing such
services and that accordingly, it would be unlikely that another advisor could
be engaged on such terms; and (iii) the non-payment of investment advisory fees
would be an unduly harsh result to the Advisor in view of the services provided
by the Advisor under the Interim Advisory Agreement.
Based on the foregoing factors, the Board has concluded that
ratification of the Interim Advisory Agreement is in the best interest of the
Company and its stockholders. The Board considered the confluence of all the
factors mentioned above in arriving at its decision to approve the Interim
Advisory Agreement and no one factor was given any greater weight than any of
the others.
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THE BOARD RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY RATIFY THE
COMPANY'S INTERIM ADVISORY AGREEMENT AND THE RECEIPT OF INVESTMENT ADVISORY FEES
BY THE ADVISOR FOR THE PERIOD FROM JANUARY 4, 1997, UNTIL THE NEW ADVISORY
AGREEMENT IS APPROVED. Ratification of this Item 1, requires the favorable vote
of a majority of the outstanding shares of the Company, as defined in the 1940
Act, which means the lesser of the vote of (a) 67% of the shares of the Company
present at a meeting where more that 50% of the outstanding shares are present
in person or by proxy, or (b) more than 50% of the outstanding shares of the
Company. Unless otherwise instructed, the proxies will vote for the approval of
the Interim Advisory Agreement and the receipt of advisory fees by the Advisor.
ITEM 2--APPROVAL OF NEW ADVISORY AGREEMENT
As discussed above, the Board has approved a New Advisory Agreement
between the Company and the Advisor (the "New Advisory Agreement") and has
recommended that the stockholders of the Company approve the Company's New
Advisory Agreement. If the New Advisory Agreement is approved by the
stockholders, it will go into effect upon or shortly after such approval, and
will take the place of the Interim Advisory Agreement.
THE NEW ADVISORY AGREEMENT. The terms of the New Advisory Agreement are
identical to the terms of the Old Advisory Agreement and Interim Advisory
Agreement, except for (i) the effective date, and (ii) the termination date. The
advisory fee rates payable under the New Advisory Agreement are identical to
those payable under the Old Advisory Agreement and the Interim Advisory
Agreement. For a description of the terms of the New Advisory Agreement, see the
description of the Old Advisory Agreement discussed above under "Item
1--Approval of the Interim Advisory Agreement" and below in "Investment
Management Services" and the form of New Advisory Agreement attached to this
Proxy Statement as Exhibit B.
BOARD DELIBERATIONS. In considering whether to approve the New Advisory
Agreement and submit it to stockholders for their approval, the Board reviewed,
among other things: (i) the investment management capabilities of the Advisor;
(ii) the systems capabilities of the Advisor to provide stockholder services,
reporting and systems integration with related programs for Company
stockholders; (iii) the level, scope and quality of the advisor services to be
provided by the Advisor, and (iv) the substantially identical terms and
conditions contained in the New Advisory Agreement as compared to the Interim
Advisory Agreement and the Old Advisory Agreement. The Board also noted that the
Company's current portfolio manager, Mr. Bensler, who has served as the
Company's President since September 1997 and has served as a Company director
since March 1998 (see "Item 3 - Election of Directors" below) will continue to
act as the Company's portfolio manager under the New Advisory Agreement. The
Board further concluded that approval of the New Advisory Agreement would be
appropriate and fair considering that (i) the fees paid, the services to be
provided therefor, were unchanged from the Old Advisory Agreement and the
Interim Advisory Agreement; and (ii) until and unless the size of the Company
increases significantly, the fees paid to the Advisor will be insufficient to
cover its costs of providing such services and that accordingly, it would be
unlikely that another advisor could be engaged on terms more favorable to the
Company.
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Based upon the foregoing factors, the Board concluded that approval of
the New Advisory Agreement was in the best interests of the Company and its
stockholders. The Board considered the confluence of all the factors mentioned
above in arriving at its decision to approve the New Advisory Agreement and no
one factor was given any greater weight than any of the others.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY APPROVE THE
COMPANY'S NEW ADVISORY AGREEMENT. Approval of the item requires the favorable
vote of a majority of the outstanding shares of the Company, as defined in the
1940 Act, which means the lesser of the vote of (a) 67% of the shares of the
Company present at a meeting where more than 50% of the outstanding shares are
present in person or by proxy, or (b) more than 50% of the outstanding shares of
the Company. Unless otherwise instructed, the proxies will vote for the approval
of the New Advisory Agreement.
ITEM 3--ELECTION OF DIRECTORS
At the Annual Meeting, four (4) Directors are to be elected to hold
office until the next annual meeting or until their successors are elected and
shall have been qualified. All of the nominees have been members of the Board
since being appointed to fill vacancies on September 27, 1997, and re-elected at
the Company's 1997 annual meeting held on November 21, 1997, with the exception
of Mr. Bensler who was appointed on March 21, 1998 to fill a vacancy created by
the resignation of Mr. Wolf. Each nominee has consented to serve if elected. If
any nominee for any reason becomes unable to serve, the persons named as proxies
will vote for the election of such other persons as they believe will carry on
the present policies of the Company and as they deem to be qualified. The ages,
principal occupations during the past five years and certain other affiliations
of the nominees, the amount of stock owned beneficially, directly or indirectly,
in the Company and the years they first became Directors of the Company are as
follows:
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Age ( ), Shares Owned
Principal Bemeficially
Occupation First Directory or Percent
and Other Became Indirectly at of Class
Name and Address Affiliations Director 06/25/98 06/25/98
- ------------------------------------ ----------------------------- ------------
Fritz Bensler (41) President and 3/21/98 0 0
3551 S. Monaco Parkway, Treasurer of the
#116 Company and
Denver, CO, 80237 President and
Portfolio Manager
of the Advisor from
January 1997 to
present; Director
of the Company from
March 1998 to present;
From November 1995
until joining the
Company and the
Advisor in January
1997, Mr. Bensler
was an equity
securities analyst
and portfolio
manager for JPJ; from
1993 until joining
JPJ, Mr. Bensler was
a self-employed
consultant.
Bradley D. Newman * (38) Property Tax 9/27/98 3,528.28 * *
5429 Dana Point Drive Agent for Union
Arlington, TX 76017 Pacific Resources
Group, Fort Worth,
TX, 1986-present;
certified public
accountant, member
of Council of Petroleum
Accountant's Society
and Institute of
Professionals in
Taxation.
Glen Wilkerson * (59)Various sales and 9/27/98 990.62 * *
5518 Oak Branch Drive sales management
Arlington, TX 76016 positions with Hormel
Food Corporation,
Austin, MN for 33 years.
Judy A. Champine * (51)Vice President and 9/27/98 1,000.71 * *
3516 Beagle Drive Co-Owner-- Town Center
Commerce, MI 48382 Gallery, Novi, MI, 1992
to present; Graphic
Services Manager --
National Board for
Professional Teaching
Standards, Detroit, MI,
1991 to 1992.
- ---------------------------------------
* Designates member of the Audit Committee
** Represents less than 1%
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All directors are elected to terms of one year or until their
successors are duly elected and qualified. All directors also may be reached
% The Rupay-Barrington Financial Group, Inc., 1000 Ballpark Way, Suite 302,
Arlington, Texas 76011. The Board held four regular meetings in fiscal year
1997. No director standing for re-election attended less than 75% of the
meetings held while he or she was a director.
Unless instructed by the stockholders to refrain from so voting, it is the
intention of the persons named as proxies to vote for election of the four
nominees listed above as Directors. Provided that a quorum is present, a
plurality of votes validly cast at the meeting is required to elect the
Directors. THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR ALL NOMINEES.
Other Remuneration and Affiliations of Officers and Directors
Directors of the Company who are not considered "interested persons"
(as defined in the 1940 Act) of the Company currently do not receive any
compensation for their attendance at meetings of the Board, but may in the
future receive a fee for their services. Executive officers of the Company and
directors of the Company who are considered "interested persons" (presently,
only Mr. Bensler, President and a Director) do not receive compensation from the
Company.
ITEM 4--APPROVAL OF NAME CHANGE
The Board has approved Articles of Amendment to the Amended Articles of
Incorporation of the Company (the "Amendment") which would change the Company's
name from "Rupay-Barrington Total Return Fund, Inc." to "Rupay-Barrington Funds,
Inc." To be effective, Maryland Corporate law requires that the Amendment be
approved by a majority of the outstanding shares of the Company.
The proposed change of name reflects the Board's determination to
reclassify the Company's shares into three series including a reclassification
of the Company's outstanding shares into a new Total Return Fund Series. A
post-effective amendment to the Company's registration statement (the
"Registration Statement") covering two other new series, the Growth Fund Series
and the Value Equity Fund Series, was filed with the SEC on May 5, 1998.
Concurrently with or immediately following the date on which the SEC declares
the registration statement effective, the Company will file, with the State
Department of Assessments and Taxation of the State of Maryland, Articles
Supplementary to its Articles, which Articles Supplementary will designate each
of the three series of the Company. On the later of (i) the date on which the
Registration Statement is declared effective by the SEC or (ii) the date of the
Company's Annual Meeting subject to the Stockholders' approval of the proposed
name change, the Company also will amend its Articles of Incorporation to change
its name to Rupay-Barrington Funds, Inc. in accordance with the Amendment. If
and when that occurs, the Company also will supplement its prospectus to reflect
the reclassification of its outstanding shares into the Total Return Fund series
shares. Such reclassification of the Company's shares into series is permitted
under the Company's Articles with Board approval and without any action being
required by the stockholders. The Board believes that by changing the name to
"Rupay-Barrington Funds, Inc." investors will be able to better distinguish the
9
Company from its Total Return Fund Series, the Growth Fund Series and Value
Equity Fund Series. There can be no assurance as to the date on which the
Company's Registration Statement will be declared effective.
For the reasons set forth above, the Board believes that it is in the
interest of the Company to change its corporate name to Rupay-Barrington Funds,
Inc. and THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE AMENDMENT OF THE
ARTICLES TO CHANGE THE NAME OF THE COMPANY.
ITEM 5--RATIFICATION OF APPOINTMENT OF AUDITORS
At a meeting held on March 21, 1998, the Board, including a majority of
those Directors who are not interested persons of the Company, selected Tait,
Weller & Baker as auditors to examine the Company's books and securities and to
certify from time to time the Company's financial statements for the period
January 1, 1998, to December 31, 1998, subject to ratification of such selection
by the stockholders of the Company. That firm has no direct or indirect material
interest in the Company. Representatives of Tait, Weller & Baker are not
expected to be present at the Annual Meeting. Tait, Weller & Baker also served
as independent auditors for the Company for the fiscal year ending December 31,
1997. Deloitte & Touche LLP served as independent auditors for the Company for
the fiscal years ending December 31, 1995 and 1996.
The Board has established an Audit Committee to evaluate financial
management, meet with the auditors, and deal with other matters of a financial
nature that they deem appropriate. Members of the Audit Committee are Ms.
Champine and Messrs. Newman and Wilkerson.
The favorable vote of a majority of the voting securities represented
at the Annual Meeting is necessary for the ratification of the selection of
Tait, Weller & Baker as the Company's independent accountant for the year ending
December 31, 1998.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE SELECTION OF TAIT, WELLER & BAKER
INVESTMENT MANAGEMENT SERVICES
Rupay-Barrington Advisors, Inc. (the "Advisor;" the Advisor was
formerly known as Valley Forge Advisors, Inc.), 3551 S. Monaco Parkway, #116,
Denver, CO 80237, a wholly owned subsidiary of The Rupay-Barrington Financial
Group, Inc. ("Rupay-Barrington" or the "Parent;" the Parent was formerly known
as Valley Forge Capital Holdings, Inc.), has managed the investments of the
Company since its inception under a management agreement (the "Old Advisory
Agreement") originally entered into as of February 24, 1995, which was approved
by the stockholders on that date for a period of two years. Although the Board
subsequently approved continuation of the Old Advisory Agreement, as previously
indicated, the acquisition by JPJ of a controlling interest in the Advisor's
Parent as of January 4, 1997, constituted a deemed change in control of the
Advisor which resulted in an automatic termination of the Old Advisory Agreement
because the deemed change in control operated as an "assignment" (as defined in
the 1940 Act) of the Old Advisory Agreement. Although the Advisor has continued
since then to provide the same services on the same terms as under the Old
Advisory Agreement under the supervision of the Company's Board, it has done so
without a written contract between the Company and the Advisor being effective.
10
The term "Advisory Agreement" when used in this discussion, refers equally to
the Old Advisory Agreement, the Interim Advisory Agreement and the New Advisory
Agreement.
The Advisory Agreement provides that the Advisor shall supervise and
manage the Company's investments and shall determine the Company's portfolio
transactions, subject to periodic review and ratification by the Board. The
Advisor is also responsible for effecting all securities transactions with
respect to the Company's portfolio on behalf of the Company, including the
negotiation of commissions and the allocation of principal business and
portfolio brokerage.
Pursuant to the Advisory Agreement, the Advisor manages the assets of
the Company in accordance with its stated objective, policies and restrictions
(subject to the supervision of the Company's Board and officers). The Advisor
will also keep certain books and records in connection with its services to the
Company, and furnish facilities required by the Company for investment
activities. The Advisor has also authorized any of its directors, officers and
employees who have been elected as directors or officers of the Company to serve
in the capacities in which they have been elected or appointed without
consideration. Services furnished by the Advisor under the Advisory Agreement
may be furnished through any such directors, officers and employees.
The Advisor also administers the Company's general business affairs
subject to the supervision of the Company's Board and its officers. The Advisor,
through Commonwealth Stockholder Services, Inc. ("CSS") and certain of CSS's
affiliates will furnish the Company with ordinary clerical, administrative,
accounting and bookkeeping services, including facilities for the completion of
these activities.
As compensation for its services the Advisor receives a management fee,
computed daily and payable monthly, at the annualized rate of .80% of the
Company's average daily net assets (the "Management Fee"). For the fiscal year
ended December 31, 1997, the Advisor had accrued but had not yet received
$26,828 in Management Fees from the Company. See, however, the discussion of the
expense reimbursement due from the Advisor, below.
. The Advisory Agreement between the Company and the Advisor provides
that the Company will bear all expenses of its operations not specifically
assumed by the Advisor. In the interest of limiting the expenses of the Company
during its initial period of operation, the Parent has agreed to bear any
expenses for the Company's first five years of operations, which would cause the
Company's ratio of operating expenses to average net assets to exceed 1.95%. In
any year following such five-year period, the Company's expenses will not be
subject to limitation. For the purpose of determining whether the Company is
entitled to reimbursement, the expenses of the Company are calculated on a
monthly basis. If the Company is entitled to reimbursement, that month's
Management Fee will be reduced or postponed, with any adjustment made after the
end of the year. An expense reimbursement of $71,381 was required for the fiscal
year ended December 31, 1997.
11
The New Advisory Agreement will be effective for an initial period of
two years if approved by the Company's Stockholders and thereafter will continue
in effect from year to year only if such continuance is approved annually by a
majority vote of (i) the Company's Board or (ii) by a vote of a majority of the
outstanding voting securities of the Company; provided that in order to give
effect to such continuance the New Advisory Agreement, in either case, must also
be approved by the vote of a majority of the directors who are not parties to
the New Advisory Agreement or "interested persons" (as such term is defined in
the 1940 Act) of any party to the New Advisory Agreement, voting in person at a
meeting called for the purpose of voting on such approval. The New Advisory
Agreement may be terminated at any time without penalty by the Company's Board
or by a majority vote of the outstanding shares of the Company, or by the
Advisor, in each instance on not less than 60 days written notice and shall
automatically terminate in the event of its assignment.
DISTRIBUTION AND BROKERAGE
Rupay-Barrington also owns 100% of Rupay-Barrington Securities
Corporation (f/k/a Valley Forge Distributors, Inc.), which serves as the
Company's distributor (the "Distributor"). The Distributor began effecting
portfolio transactions for the Company in February 1998 and, through May 31,
1998, had received aggregate brokerage commissions of $2,115.46. For the
Company's fiscal year ended December 31, 1997, none of the Company's aggregate
dollar amount of portfolio transactions involving the payment of brokerage
commissions were effected by Rupay-Barrington Securities Corporation.
Portfolio transactions will be placed with a view to receiving best
price and execution. In addition, the Advisor seeks to pay commission rates
which are reasonable in relation to those paid by other similar institutional
investors. The Advisor periodically checks the rates of commission being paid by
the Company to brokers to ascertain that they are competitive with those charged
by other brokers for similar services and to similar institutional accounts.
Transactions may also be placed with brokers, other than Rupay-Barrington
Securities, who provide research and brokerage services. Research and brokerage
services may include (a) advice, furnished either directly or through
publications or writings in other media, as to the value of securities, the
advisability of investing in securities, or the availability of securities or
purchasers or sellers of securities; (b) analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio
strategy, or the performance of accounts; or (c) effecting securities
transactions or performing related functions (such as clearance, settlement and
custody). The Advisory Agreement authorizes the Advisor to place portfolio
transactions for the Company and permits the Advisor to cause the Company to pay
commissions on such transactions, when executed through non-affiliated brokers,
which are greater than another broker or dealer might charge if the Advisor, in
good faith, determines that the commissions paid are reasonable in relation to
the research or brokerage services provided by the broker, when viewed in terms
of either a particular transaction or the Advisor's overall responsibilities to
the Company and other investment accounts over which the Advisor exercises
investment discretion.
12
<PAGE>
PROXY
RUPAY-BARRINGTON
TOTAL RETURN FUND, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
THE UNDERSIGNED HEREBY APPOINTS FRITZ BENSLER AND DIXON HOLMAN AS PROXIES, EACH
WITH THE POWER TO APPOINT HIS SUBSTITUTE; AND HEREBY AUTHORIZES THEM, OR ANY OF
THEM, TO REPRESENT AND VOTE ALL THE SHARES OF COMMON STOCK OF RUPAY-BARRINGTON
TOTAL RETURN FUND, INC. HELD OF RECORD BY THE UNDERSIGNED ON [JUNE 30, 1998], AT
AN ANNUAL MEETING OF STOCKHOLDERS ON JULY ___, 1998, OR ANY ADJOURNMENT THEREOF:
Please check this box if you plan to attend the
meeting
1. On ratification of the Interim Advisory Agreement:
FOR AGAINST ABSTAIN
2. On approval of the New Advisory Agreement:
FOR AGAINST ABSTAIN
3. On the Election of Directors: FOR all nominees listed (except as
marked to the contrary below)
WITHHOLD AUTHORITY to vote for all
nominees listed below
ABSTAIN
Fritz Bensler Bradley D. Newman Glen Wilkerson Judy Champine
(Instruction: to withhold authority to vote for any individual nominees,
place a line through nominee's name.)
4 On approval of the change of name to Rupay-Barrington Funds, Inc.
FOR AGAINST ABSTAIN
5. On verification of the selection of Tait, Weller & Baker as
auditors for the period January 1, 1998 through December 31, 1998.
FOR AGAINST ABSTAIN
6. In their discretion, upon the transaction of any other matters
which may properly come before the meeting or any adjournment
thereof.
13
The shares represented by this proxy, when properly executed, will be voted as
specified in the foregoing items 1, 2, 3, 4 and 5 by the undersigned
stockholder(s). If no direction is made, this proxy will be voted (i) FOR
ratification of the Interim Advisory Agreement; (ii) FOR approval of the New
Advisory Agreement; (iii) FOR the election of the four (4) nominees for
directors named in the proxy statement; (iv) FOR the approval of the name
change; and (v) FOR the ratification of the selection of Tait, Weller & Baker,
and is the discretion of the management as to any other matter which may come
before the meeting.
------------------------------------
[ ] ------------------------------------
Name (Signature(s) of Stockholder(s)
[ ] Dated: ___________________________
Please sign exactly as the name
appears below. When shares are
held by joint tenants, both should
sign. When signing as attorney,
executor, administraotr, trustee,
or guardian, please give full
title as such. If a corporation,
please sign the corporate name
by the President or other
authorized officer. If a
partnership, please sign in the
partnership name by an
authorized person.
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 24th day of February 1995, by and between Valley Forge
Capital Holdings Total Return Fund, Inc. a Maryland corporation (the "Fund"),
and Valley Forge Advisors, Inc., a Nevada corporation (the "Advisor").
W I T N E S S E T H:
WHEREAS, the Fund was formed to engage in business as a diversified
open-end management investment company and is registered as such under the
Investment Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Advisor will engage principally in rendering advisory services
and is registered as an investment advisor under the Investment Advisers Act of
1940;
WHEREAS, The Fund desires to retain the Advisor to render investment
supervisory and corporate administrative services to the Fund in the manner and
on the terms hereinafter set forth; and
WHEREAS, the Fund has also retained the Marshall Plan L.P., a Delaware
limited partnership (the "Marshall Plan") to render investment supervisory
services in the manner and on the terms described in the investment advisory
agreement by and between the Fund and the Marshall Plan, dated February 24th,
1995 (the "Marshall Plan Investment Advisory Agreement").
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Advisor hereby agree as follows:
ARTICLE 1.
Duties of the Advisor
The fund hereby employs the Advisor to act as the investment adviser to
and manager of the Fund and to manage the investment and reinvestment of the
assets of the Fund and to administer its affairs, subject to the supervision of
the Board of Directors of the Fund, on the terms and conditions set forth in
this Agreement and he statements relating to the Fund's investment objectives,
investment policies and investment restrictions as the same are set forth in the
currently effective prospectus of the Fund under the Securities Act of 1933 (the
"Prospectus"). The Advisor hereby accepts such employment and agrees during such
period, at its own expense, to render the services and to assume the obligations
herein set forth for the compensation provided for herein.
1
<PAGE>
The Advisor shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
(a) Investment Advisory Services. In acting as investment advisor to
the Fund, the Advisor shall regularly provide the Fund with such investment
research, advice and supervision as the latter may from time to time consider
necessary for the proper supervision of the Fund and shall furnish continuously
an investment program and shall determine from time to time what securities
shall be purchased, sold or exchanged and what portion of the assets of the Fund
shall be held in various securities in which it may invest, subject always to
the restrictions set forth in the Fund's Articles of Incorporation and By-Laws,
asamended from time to time, the provisions of the Investment Company Act, and
the statements relating to the Fund's investment objectives, investment policies
and investment restrictions as the same are set forth in the Prospectus. Should
the Board of Directors of the Fund at any time, however, make any definite
determinations as to investment policy and notify the Advisor thereof, the
Advisor shall be bound by such determination for the period, if any, specified
in such notice or until similarly notified that such determination has been
revoked. The Advisor shall take, on behalf of the Fund, all actions which it
deems necessary to implement the investment policies, as such policies relate to
the Advisor, determined as provided above, and in particular to place all orders
for the purchase or sale of securities for the Fund with brokers or dealers
selected by it. In connection with the selection of such brokers or dealers and
the placing of such orders, the Advisor is directed at all times to seek to
obtain for the Fund the most favorable net results for the Fund as determined by
the Board of Directors and set forth in the Prospectus. Subject to this
requirement and the provisions of the Investment Company Act, the Securities
Exchange Act of 1934 (the "1934 Act"), and other applicable provisions of law,
nothing shall prohibit the Advisor from selecting brokers or dealers with which
it or the Fund is affiliated. The Advisor is authorized to recommend placement
of, and the Fund is authorized to place, brokerage and principal business with
brokers or dealers who have provided brokerage and research services, as such
services are defined in Section 28(e) of the 1934 Act, for the Fund and/or other
accounts, if any, for which the Advisor exercised investment discretion. The
Advisor is authorized to pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for the
Fund which is in excess of the amount of commission another broker or dealer
would have charged for effecting the transactions if the Advisor determines in
good faith that such amount of commission is reasonable in relation to the value
of the brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction or
the overall responsibilities which the Advisor and its affiliates have with
respect to accounts over which they exercise investment discretion. The Board of
Directors of the Fund shall periodically review the commissions paid by the Fund
to determine if the commissions paid over representatives periods of time were
reasonable in relation to the benefits to the Fund.
(b) Other Advisors. The Advisor acknowledges that the Marshall Plan
will also be acting as an investment advisor the Fund, and that statements in
the Prospectus relating to that portion of the Fund's assets to be managed by
the Marshall Plan are separate and independent
2
<PAGE>
from and do not have any effect upon that portion of the Fund's assets to be
managed by the Advisor. The Advisor further acknowledges that it is responsible
for effecting all securities transactions with respect to the portion of the
Fund's assets it is authorized to manage and the Marshall Plan is responsible
for effecting all securities transactions with respect to the portion of the
Fund's assets it is authorized to manage.
(c) Administrative Services. In addition to the performance of
investment advisory services, the Advisor shall perform, or supervise the
performance of, administrative services in connection with the management of the
Fund. In this connection, the Advisor agrees to: (i) assist in supervising all
aspects of the Fund's operations, including the co-ordination of all matters
relating to the functions of the custodian, transfer agent, administrative and
accounting servicer, other shareholder service agents, accountants, attorneys
and other parties performing services or operational functions for the Fund;
(ii) maintain the Fund's corporate existence and records; (iii) provide the
Fund, at the Advisor's expense, with services of persons competent to perform
such administrative and clerical functions as are necessary in order to provide
effective administration of the Fund, including duties in connection with
shareholder relations, redemption requests and account adjustments and the
maintenance of certain books and records of the Fund; (iv) prepare all general
shareholder communications, including shareholder reports; (v) during such times
as shares are publicly offered, maintain the registration and qualification of
the Fund's shares under federal and state law; (vi) provide the Fund, at the
Advisor's expense, with adequate office space and related services necessary for
its operations as contemplated in this Agreement; (vii) investigate the
development of and develop and implement, if appropriate, management and
shareholder services designed to enhance the value or convenience of the
Portfolios as an investment vehicle; (viii) permit the Advisor's employees to
serve as officers, directors and committee members of the Fund, without cost to
the Fund; and (ix) reimburse the Fund for any loss incurred as a result of the
Fund's receipt of NSF checks from investors if said funds cannot be recovered
from the investors.
ARTICLE 2.
Compensation of the Advisor
(a) Investment Advisory Fee. For the services rendered hereunder, the
Fund shall pay to the Advisor and the Marshall Plan monthly on the first
business day of the next succeeding calendar month a fee based upon the average
daily value of the aggregate net assets of the Fund, as determined and computed
in accordance with the description of the method of determination of net asset
value contained in the Prospectus, at the annual rate of 0.80% of the average
daily value of the aggregate net assets of the Fund, less the amounts described
below.
The Advisor and the Marshall Plan shall pay, from the
investment advisory fee as calculated in the manner described above, certain
expenses, the amount of which expenses shall be determined in accordance with
the provisions set forth in paragraphs (b) and (c) below. The investment
advisory fee, net of said expenses, shall then be split equally between the
Advisor and the Marshall Plan without reference to that portion of the Fund's
assets managed by the Advisor and the Marshall Plan, respectively.
3
<PAGE>
(b) Expenses. The Fund assumes and shall pay all expenses of the operation
of the Fund, unless any of such expenses are specifically assumed by Valley
Forge Capital Holdings Inc. (Valley Forge Capital) pursuant to that certain
agreement between the Fund and Valley Forge Capital or assumed jointly by the
Advisors, including, without limitation: costs relating to the organization of
the Fund, insurance, taxes, expenses for legal and auditing services, costs of
printing proxies, stock certificates, shareholder reports and prospectuses
(except to the extent paid by the Distributor, Valley Forge Brokerage, Inc.),
charges of the Custodian, Transfer Agent and the Administrative and Accounting
Services, expenses of and fees associated with registering the shares under
Federal and stae securities laws, fees and expenses of directors who are not
affiliated persons of Valley Forge Capital Holdings, Inc. or its subsidiaries,
accounting and pricing costs (including the daily calculation of net asset
value), interest, brokerage costs, litigation and other extraordinary or
non-recurring expenses, and any other expenses properly payable by the Fund.
(c) Expense Limitations. In the event the operating expenses of the
Fund, including the investment advisory fee payable to the Advisor and the
Marshall Plan, for any fiscal year ending on a date on which this Agreement is
in effect exceed, after payment to Valley Forge Capital of amounts due under
that certain agreement referenced in paragraph (b) hereof, the expense
limitations under state securities laws or regulations thereunder, as such
limitations may be raised or lowered from time to time, the Advisors shall
reduce their investment advisory fee by the extent of such excess and, if
required under any such laws or regulations, will reimburse the Fund in the
amount of such excess; provided, however, to the extent permitted by law, the
Advisor and the Marshall Plan shall be reimbursed for any such excess payments
made to the Fund in subsequent years. For purposes of determining whether the
Fund is entitled to reimbursement, the expenses of the Fund are calculated on a
monthly basis, and the Fund's distribution plan expenses are excluded. Whenever
the expenses of the Fund exceed the applicable annual expense limitations, the
estimated amounts of reimbursement under such limitations shall be applicable as
an offset against the monthly payment of the advisory fee due to the Advisor and
the Marshall Plan.
ARTICLE 3.
Limitation of Liability of the Advisor
The Advisor and its directors, officers or employees shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with any investment policy or the purchase, sale or
redemption of any securities on the recommendation of the Advisor. Nothing
herein contained shall be construed to protect the Advisor against any liability
to the Fund or its security holders to which the Advisor shall otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence in the
performance of its duties on behalf of the Fund, reckless disregard of the
Advisor's obligations and duties under this Agreement or the violation of any
applicable law.
4
<PAGE>
ARTICLE 4.
Activities of the Advisor
The services of the Advisor under this Agreement are not to be deemed
exclusive, and the Advisor shall be free to render similar services to others so
long as its services hereunder are not impaired thereby. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Advisor, as directors, officers, employees or shareholders or
otherwise and that directors, officers, employees or shareholders of the Advisor
are or may become similarly interested in the Fund, and that the Advisor is or
may become interested in the Fund as shareholder or otherwise.
ARTICLE 5.
Duration and Termination of This Agreement
This Agreement shall become effective as of the date first above
written and shall remain in force until two years from the date of its execution
and thereafter, but only so long as such continuance is specifically approved at
least annually by: (i) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding shares of the Fund; and (ii) a majority of those
directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Directors of the Fund or by vote of a majority of
the outstanding shares of the Fund, or by the Advisor, on sixty days' written
notice to the other party. This Agreement shall automatically terminate in the
event of its assignment.
ARTICLE 6.
Definitions
The terms "assignment," "affiliated person" and "interested person,"
when used in this Agreement, shall have the respective meanings specified in the
Investment Company Act. As used with respect to the Fund or any of its
Portfolios, the term "majority of the outstanding shares" means the lesser of:
(i) 67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented; or (ii) more than 50% of the outstanding
shares.
ARTICLE 7.
Amendments of This Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved by: (i) the Board of Directors of the Fund, or by the vote
of a majority of outstanding shares of the Fund; and (ii) a majority of those
directors of the Fund who are not parties to this
5
<PAGE>
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
ARTICLE 8.
Notices
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given: (i) when mailed by
registered or certified mail, return receipt requested, postage prepaid; (ii)
when telecopies, provided that a copy of such notice is mailed by registered or
certified mail, return receipt requested, postage prepaid, within one business
day following transmission of the telecopy; or (iii) when hand delivered to the
party to whom it is to be given at the address of such party set forth below, as
follows:
If to the Fund: Valley Forge Capital Holdings Total Return Fund, Inc.
595 Market Street
Suite 1980
San Francisco, California 94105
If to the Advisor: Valley Forge Advisors, Inc.
595 Market Street
Suite 1980
San Francisco, California 94105
ARTICLE 9.
Governing Law
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of California as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of California or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers and their respective corporate
seals to be hereunto duly affixed and attested.
VALLEY FORGE CAPITAL HOLDINGS
TOTAL RETURN FUND, INC.
By: /s/ Victoria S Gong
---------------------------------
Authorized Signatory
Attest:
/s/ Larry S. Mao
- -------------------------------------------------
Secretary
VALLEY FORGE ADVISORS, INC.
By: /s/ Deborah Mello
-------------------------------
Authorized Signatory
Attest:
/s/ Larry S. Mao
- -------------------------------------------------
Secretary
7
<PAGE>
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
This AGREEMENT made this ___ day of_____ 1998, by and between
Rupay-Barrington Total Return Fund, Inc. a Maryland corporation (the
"Corporation"), and Rupay-Barrington Advisors, Inc., a Nevada corporation (the
"Advisor").
W I T N E S S E T H:
WHEREAS, the Corporation was formed to engage in business as a
diversified open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "Investment Company
Act");
WHEREAS, the Corporation is authorized to issue shares of capital stock
(the "Shares") in the Rupay-Barrington Total Return Fund (the "Fund"), a
separate series of the Corporation, the Shares of which represent interests in a
separate portfolio of securities and other assets ("Fund Shares");
WHEREAS, the Advisor is engaged principally in the business of
rendering advisory services and is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended;
WHEREAS, the Corporation desires to retain the Advisor to render
investment supervisory and corporate administrative services to the Fund in the
manner and on the terms hereinafter set forth; and
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the parties hereby agree as follows:
ARTICLE 1.
Duties of the Advisor
The Corporation hereby employs the Advisor to act as the investment
advisor to, and manager of, the Fund and to manage the investment and
reinvestment of the assets of the Fund and to administer its affairs, subject to
the supervision of the Board of Directors of the Corporation, on the terms and
conditions set forth in this Agreement and the statements relating to the Fund's
investment objective, investment policies and investment restrictions as the
same are set forth in the currently effective prospectus of the Fund (the
"Prospectus"). The Advisor hereby accepts such employment and agrees during such
period, at its own expense, to render the services and to assume the obligations
herein set forth for the compensation provided for herein.
1
<PAGE>
The Advisor shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
(a) Investment Advisory Services. In acting as investment advisor to
the Fund, the Advisor shall regularly provide the Fund with such investment
research, advice and supervision as the latter may from time to time consider
necessary for the proper supervision of the Fund and shall furnish continuously
an investment program and shall determine from time to time what securities
shall be purchased, sold or exchanged and what portion of the assets of the Fund
shall be held in the various securities in which it may invest, subject to the
restrictions set forth in the Corporation's Articles of Incorporation and
By-Laws, as amended from time to time, the Articles Supplementary, the
provisions of the Investment Company Act, and the statements relating to the
Fund's investment objectives, investment policies and investment restrictions as
the same are set forth in the Prospectus. Should the Board of Directors of the
Corporation at any time, however, make any definite determinations as to
investment policy and notify the Advisor thereof, the Advisor shall be bound by
such determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Advisor shall
take, on behalf of the Fund, all actions which it deems necessary to implement
the investment policies, as such policies relate to the Advisor, determined as
provided above, and in particular to place all orders for the purchase or sale
of securities for the Fund with brokers or dealers selected by it. In connection
with the selection of such brokers or dealers and the placing of such orders,
except as otherwise expressly set forth herein, the Advisor is directed at all
times to seek to obtain for the Fund the most favorable net results for the Fund
as determined by the Board of Directors and set forth in the Prospectus. Subject
to this requirement and the provisions of the Investment Company Act, the
Securities Exchange Act of 1934 (the "1934 Act"), and other applicable
provisions of law, nothing shall prohibit the Advisor from selecting brokers or
dealers with which it or the Fund is affiliated, including, without limitation,
Rupay-Barrington Securities, Inc. This determination may be viewed in terms of
either that particular transaction or the overall responsibilities which the
Advisor and its affiliates have with respect to accounts over which they
exercise investment discretion. The Board of Directors of the Corporation shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
(b) Brokerage. Subject to the approval of the Board of Directors, the
Advisor, in carrying out its duties under Paragraph 1(a), may cause the
Corporation, with respect to the Fund, to pay a broker-dealer which furnishes
brokerage or research services (as such services are defined under Section 28(e)
of the 1934 Act, a higher commission than that which might be charged by another
broker-dealer which does not furnish brokerage or research services or which
furnishes brokerage or research services deemed to be of lesser value, if such
commission is deemed reasonable in relation to the brokerage and research
services provided by the broker-dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Advisor with
respect to the accounts as to which it exercises investment discretion (as such
term is defined under Section 3(a)(35) of the 1934 Act). This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Advisor and its affiliates have with respect to
accounts over which they exercise investment discretion.
2
<PAGE>
(c) Advisor's Use of the Services of Others. The Advisor may (at its cost)
employ, retain or otherwise avail itself of the services or facilities of other
persons or organizations for the purpose of providing the Advisor or the
Corporation or the Fund, as appropriate, with such statistical and other factual
information, such advice regarding economic factors and trends, such advice as
to occasional transactions in specific securities or such other information,
advice or assistance as the Advisor may deem necessary, appropriate or
convenient for the discharge of its obligations hereunder or otherwise helpful
to the Corporation or the Fund, as appropriate, or in the discharge of the
Advisor's overall responsibilities with respect to the other accounts which it
serves as investment advisor.
(d) Ownership of Records. All records required to be maintained and
preserved by the Corporation or the Fund pursuant to the provisions of rules or
regulations of the Securities and Exchange Commission under Section 31(a) of the
Securities Act of 1933 and maintained and preserved by the Advisor on behalf of
the Corporation or the Fund, as appropriate, are the property of the Corporation
or the Fund, as appropriate, and will be surrendered by the Advisor promptly on
request by the Corporation or the Fund, as appropriate.
(e) Reports to the Advisor. The Corporation or the Fund, as
appropriate, shall furnish or otherwise make available to the Advisor such
prospectuses, financial statements, proxy statements, reports, and other
information relating to the business and affairs of the Corporation or the Fund,
as appropriate, as the Advisor may, at any time or from time to time, reasonably
require in order to discharge its obligations under this Agreement.
(f) Administrative Services. In addition to the performance of
investment advisory services, the Advisor shall perform, or supervise the
performance of, administrative services in connection with the management of the
Fund. In this connection, the Advisor agrees to: (i) assist in supervising all
aspects of the Fund's operations, including the co-ordination of all matters
relating to the functions of the Corporation's custodian, transfer agent,
administrative and accounting servicer, other shareholder service agents,
accountants, attorneys and other parties performing services or operational
functions for the Fund or the Corporation; (ii) maintain the corporate existence
and records of the Corporation; (iii) provide the Fund, at the Advisor's
expense, with services of persons competent to perform such administrative and
clerical functions as are necessary in order to provide effective administration
of the Fund, including duties in connection with shareholder relations,
redemption requests and account adjustments and the maintenance of certain books
and records of the Fund; (iv) prepare all general shareholder communications,
including shareholder reports for the Fund; (v) during such times as shares are
publicly offered, maintain the registration and qualification of the Fund Shares
under federal and state law; (vi) provide the Fund, at the Advisor's expense,
with adequate office space and related services necessary for its operations as
contemplated in this Agreement; (vii) investigate the development of and develop
and implement, if appropriate, management and shareholder services designed to
enhance the value or convenience of the Fund as an investment vehicle; (viii)
permit the Advisor's employees to serve as officers, directors and committee
members of the Corporation, without cost to the Corporation; and (ix) reimburse
the Fund for any loss incurred as a result of the Fund's receipt of NSF checks
from investors if said funds cannot be recovered from the investors.
3
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ARTICLE 2.
Compensation of the Advisor
(a) Investment Advisory Fee. For the services rendered hereunder, the
Fund shall pay to the Advisor monthly on the first business day of the next
succeeding calendar month a fee based upon the average daily value of the
aggregate net assets of the Fund, as determined and computed in accordance with
the description of the method of determination of net asset value contained in
the Prospectus, at the annual rate of 0.80% of the average daily value of the
aggregate net assets of the Fund, less the amounts described below.
The Advisor shall pay, from the investment advisory fee as
calculated in the manner described above, certain expenses, the amount of which
expenses shall be determined in accordance with the provisions set forth in
paragraphs (b) and (c) below.
(b) Expenses. The Fund assumes and shall pay all expenses of the
operation of the Fund, unless any of such expenses are specifically assumed by
The Rupay-Barrington Financial Group, Inc. ("RPFG") pursuant to that certain
agreement between the Fund and RPFG or assumed by the Advisor, including,
without limitation: costs relating to the organization of the Fund, insurance,
taxes, expenses for legal and auditing services, costs of printing proxies,
stock certificates, shareholder reports and prospectuses (except to the extent
paid by the Distributor, Rupay-Barrington Securities, Corporation), charges of
the Custodian, Transfer Agent and the Administrative and Accounting Services,
expenses of redemption of shares, expenses and fees associated with registering
the shares under Federal and state securities laws, fees and expenses of
directors who are not affiliated persons of RPFG or its subsidiaries, accounting
and pricing costs (including the daily calculation of net asset value),
interest, brokerage costs, litigation and other extraordinary or non-recurring
expenses, and any other expenses properly payable by the Fund or the
Corporation.
(c) Expense Limitations. In the event the operating expenses of the
Fund, including the investment advisory fee payable to the Advisor for any
fiscal year ending on a date on which this Agreement is in effect exceed, after
payment to RPFG of amounts due under that certain agreement referenced in
paragraph (b) hereof, the expense limitations under state securities laws or
regulations thereunder, as such limitations may be raised or lowered from time
to time, the Advisor shall reduce its investment advisory fee by the extent of
such excess and, if required under any such laws or regulations, will reimburse
the Fund in the amount of such excess; provided, however, to the extent
permitted by law, the Advisor shall be reimbursed for any such excess payments
made to the Fund in subsequent years. For purposes of determining whether the
Fund is entitled to reimbursement, the expenses of the Fund are calculated on a
monthly basis, and the Fund's distribution plan expenses are excluded. Whenever
the expenses of the Fund exceed the applicable annual expense limitations, the
estimated amounts of reimbursement under such limitations shall be applicable as
an offset against the monthly payment of the advisory fee due to the Advisor.
4
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ARTICLE 3.
Limitation of Liability of the Advisor
The Advisor and its directors, officers or employees shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with any investment policy or the purchase, sale or
redemption of any securities on the recommendation of the Advisor. Nothing
herein contained shall be construed to protect the Advisor against any liability
to the Fund or its security holders to which the Advisor shall otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence in the
performance of its duties on behalf of the Fund, reckless disregard of the
Advisor's obligations and duties under this Agreement or the violation of any
applicable law.
ARTICLE 4.
Activities of the Advisor
The services of the Advisor under this Agreement are not to be deemed
exclusive, and the Advisor shall be free to render similar services to others so
long as its services hereunder are not impaired thereby. It is understood that
directors, officers, employees and shareholders of the Fund have, or may
acquire, interests in the Advisor, as directors, officers, employees or
shareholders or otherwise and that directors, officers, employees or
shareholders of the Advisor have, or may acquire, similar interests in the Fund,
and that the Advisor has, or may acquire, interests in the Fund as a shareholder
or otherwise.
ARTICLE 5.
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first above
written and, unless sooner terminated as hereinafter provided, shall remain in
force until December 31, 1999 and thereafter shall continue in effect from year
to year, but only so long as such continuance is specifically approved at least
annually by: (a) the Board of Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Fund and, concurrently with
such approval by the Board of Directors or prior to such approval by the holders
of the outstanding voting securities of the Fund, as the case may be, by the
vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the directors of the Corporation, with respect to the
Fund, who are not parties to this Agreement or interested persons of any such
party; and (b) the Advisor shall not have notified the Corporation, in writing,
at least 60 days prior to December 31, 1999 or prior to December 31st of any
year thereafter, that it does not desire such continuation. The Advisor shall
furnish to the Corporation, promptly upon its request, such information as may
reasonably be necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment hereof.
This Agreement may be terminated by either party hereto, without the
payment of any penalty, on sixty days' prior written notice to the other party;
provided, that in the case of termination by the Corporation, with respect to
the Fund, such action shall have been authorized
5
<PAGE>
by resolution of a majority of the directors of the Corporation who are not
parties to this Agreement or interested persons of any such party, or by a vote
of a majority of the outstanding voting securities of the Fund. This Agreement
shall automatically terminate in the event of its assignment.
ARTICLE 6.
Definitions
The terms "assignment," "affiliated person" and "interested person,"
when used in this Agreement, shall have the respective meanings specified in the
Investment Company Act. As used with respect to the Corporation or any of its
Funds, the term "majority of the outstanding voting securities" means the lesser
of: (i) 67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented; or (ii) more than 50% of the outstanding
voting securities.
ARTICLE 7.
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved by: (i) the Board of Directors of the Corporation, or by
the vote of a majority of outstanding shares of the Fund; and (ii) a majority of
those directors of the Corporation who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
ARTICLE 8.
Notices
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given: (i) when mailed by
registered or certified mail, return receipt requested, postage prepaid; (ii)
when telecopied, provided that a copy of such notice is mailed by registered or
certified mail, return receipt requested, postage prepaid, within one business
day following transmission of the telecopy; or (iii) when hand delivered to the
party to whom it is to be given at the address of such party set forth below, as
follows:
If to the Fund: Rupay-Barrington Total Return Fund, Inc.
1000 Ballpark Way
Suite 302
Arlington, TX 76011
If to the Advisor: Rupay-Barrington Advisors, Inc.
3551 S. Monaco Parkway, #116
Denver, CO 80237
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<PAGE>
ARTICLE 9.
Governing Law
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of Texas as at the time in effect and the
applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of Texas or any of the provisions herein, conflict
with the applicable provisions of the Investment Company Act, the latter shall
control.
ARTICLE 10.
Miscellaneous
(a) Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
(b) Interpretation. Nothing herein contained shall be deemed to require
the Corporation to take any action contrary to its Articles of Incorporation or
By-Laws, as amended from time to time, or any applicable statutory or regulatory
requirement to which it is subject or by which it is bound, or to relieve or
deprive the Board of Directors of the Corporation of its responsibility for and
control of the conduct of the affairs of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers and their respective corporate
seals to be hereunto duly affixed and attested.
RUPAY-BARRINGTON TOTAL RETURN
FUND, INC.
By:
--------------------------------
Attest: Authorized Signatory
- -------------------------------------------------
Secretary
RUPAY-BARRINGTON ADVISORS, INC.
By:
-------------------------------
Attest: Authorized Signatory
- -------------------------------------------------
Secretary
7
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(312) 207-6423
July 9, 1998
VIA EDGAR
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W., Mail Stop 4-8
Washington, D.C. 20549
Re: Rupay-Barrington Total Return Fund, Inc. (the "Company") Preliminary
Proxy
Ladies and Gentlemen:
On behalf of the Company, we have transmitted via EDGAR for filing with
the Securities and Exchange Commission, a Preliminary Proxy Statement.
Please contact Misty S. Gruber, (312) 207-6463, or the undersigned at
the direct dial number referenced above with any questions or comments.
Very truly yours,
Kristine A. Hemlock
Legal Assistant for
SACHNOFF & WEAVER,
LTD.
KAH/tfk
cc: Kevin Rupert/SEC
<PAGE>
