SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
ADVISORS SERIES TRUST
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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September 20, 1999
Shareholder Name
Shareholder Address
City, State, Zip Code
Dear Shareholder:
The Board of Trustees (the "Trustees") of the Advisors Series Trust (the
"Trust") has announced a special meeting of shareholders (the "Special Meeting")
to be held on November 5, 1999 at 10:00 a.m. Pacific time, at 465 Forest Avenue,
Suite I, Laguna Beach, California to address an issue that is pertinent to your
investment in the Al Frank Fund (the "Fund").
On August 12, 1999, AF Holdings, Inc. ("AF Holdings") entered into a stock
exchange agreement ("Exchange Agreement") to acquire all the outstanding capital
stock of Al Frank Asset Management, Inc. ("AFAM"), the current investment
advisor of the Fund. AFAM will continue to advise the Fund and AFAM's
principals, Al Frank and John Buckingham will continue to serve as the day to
day portfolio managers of the Fund. As a result of this transaction, the
Trustees of the Trust have determined that there is a change in control of the
investment advisor and therefore, a new investment advisory agreement between
the Trust on behalf of the Fund and AFAM. AF Holdings and the change in control
is outlined in detail in the enclosed proxy materials.
PLEASE REVIEW THE ENCLOSED MATERIAL AND COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD. IT IS IMPORTANT THAT YOU SUBMIT YOUR VOTE TO ENSURE THAT
YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING.
The Trustees recommend your approval of the new investment advisory
agreement. The vote of every shareholder is important and your cooperation in
returning your executed proxy promptly will be appreciated. We look forward to
your vote in favor of the attached proposal.
Sincerely,
/s/ Scott B. Warner
Scott B. Warner - Assistant Treasurer to the
Advisors Series Trust
Enclosures
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NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
SEPTEMBER 20, 1999
ADVISORS SERIES TRUST
AL FRANK FUND
To the shareholders of the Al Frank Fund (the "Fund"), a series of Advisors
Series Trust (the "Trust"), for a Special Meeting of Shareholders (the "Special
Meeting") to be held on November 5, 1999:
Notice is hereby given that a Special Meeting of the Fund will be held at
465 Forest Avenue, Suite I, Laguna Beach, California on Friday, November 5, 1999
at 10:00 a.m., Pacific time. At the Special Meeting, you and the other
shareholders of the Fund will be asked to consider and vote:
1. To approve a new Investment Advisory Agreement between the Trust on
behalf of the Fund and Al Frank Asset Management, Inc. ("AFAM"),
pursuant to which AFAM will continue to serve as the new investment
advisor with respect to the assets of the Fund, to become effective
upon the acquisition of all the outstanding capital stock of AFAM by
AF Holdings, Inc. ("AF Holdings");
2. To transact such other business as may properly come before the
Special Meeting, or any adjournment thereof.
Shareholders of record at the close of business on September 20, 1999 are
entitled to notice of, and to vote at, the Special Meeting. Please read the
accompanying Proxy Statement. Regardless of whether you plan to attend the
Special Meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY
CARD so that a quorum will be present and a maximum number of shares may be
voted. If you attend the Special Meeting, you may change your vote at that time.
By Order of the Board of Trustees
/s/ Chris O. Moser
Chris O. Moser - Secretary to the Trust
Laguna Beach, California
September 20, 1999
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PROXY STATEMENT
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 5, 1999
ADVISORS SERIES TRUST
AL FRANK FUND
INTRODUCTION
This Proxy Statement is furnished by the Advisors Series Trust (the
"Trust") to the shareholders of one its series, the Al Frank Fund (the "Fund").
This Proxy Statement is furnished on behalf of the Trust's Board of Trustees
(the "Trustees") in connection with the Fund's solicitation of voting
instructions for use at a Special Meeting of Shareholders of the Fund (the
"Special Meeting") to be held on Friday, November 5, 1999 at 10:00 a.m., Pacific
standard time, at the offices of the Fund, 465 Forest Avenue, Suite I, Laguna
Beach, California and at any and all adjournments thereof, for the purposes set
forth below and in the accompanying Notice of Special Meeting of Shareholders
(the "Notice"). The approximate mailing date of this Proxy Statement is
September 24, 1999. At the Special Meeting, the shareholders of the Fund will be
asked:
1. To approve a new Investment Advisory Agreement between the Trust on
behalf of the Fund and Al Frank Asset Management, Inc. ("AFAM"),
pursuant to which AFAM will continue to serve as the investment
advisor with respect to the assets of the Fund, to become effective
upon the acquisition of all the outstanding capital stock of AFAM by
AF Holdings, inc. ("AF Holdings");
2. To transact such other business as may properly come before the
Special Meeting, or any adjournment thereof.
Any voting instructions given to the Fund may be revoked at any time before
the Special Meeting by notifying the Secretary of the Trust.
The Trust will request broker-dealer firms, custodians, nominees and
fiduciaries to forward proxy materials to the beneficial owners of the shares of
the Fund held of record by such persons. AFAM will reimburse such broker-dealer
firms, custodians, nominees and fiduciaries for their reasonable expenses
incurred in connection with such proxy solicitation. In addition to the
solicitation of proxies by mail, officers and employees of the Trust, without
additional compensation, may solicit proxies in person or by telephone. The
costs associated with such solicitation and the Special Meeting will be borne by
AFAM and not by the Fund or the Trust.
Shareholders of the Fund at the close of business on September 20, 1999
will be entitled to be present and vote at the Special Meeting. As of that date,
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there were 570,260.766 shares of the Fund outstanding and entitled to vote,
representing total net assets of approximately $6,790,583 .
To the knowledge of the Trust's management, as of September 20, 1999 the
officers and Trustees of the Trust owned as a group, no more than 1% of the
shares of the Fund.
As of September 20, 1999, AFAM owned 14,551 shares of the Fund. This
represents 2.55% of the shares of the Fund.
To the knowledge of the Trust's management, as of September 120, 1999, the
only persons owning beneficially more than 5% of the outstanding shares of the
Fund were as follows:
SHAREHOLDER NO. OF SHARES HELD PERCENTAGE
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Charles Schwab & Co., Inc 208,067.136 36.49%
101 Montgomery Street (owned of record)
San Francisco, CA 94104
National Investor Services Corp. 46,114.417 8.09%
55 Water Street, 32nd Floor (owned of record)
New York, N.Y. 10041-3299
Carol L. Allen 28,998.148 5.09%
608 John Anderson Drive (owned of record)
Ormond Beach, Fl. 32176
The Fund's investment advisor is Al Frank Asset Management, Inc., 465
Forest Avenue, Suite I, Laguna Beach, California 92651. The Fund's distributor
is First Fund Distributors, Inc., 4455 East Camelback, Suite 261E, Phoenix,
Arizona 85018. The Fund's administrator is Investment Company Administration
LLC, 4455 East Camelback, Suite 261E, Phoenix, Arizona 85018.
The persons named in the accompanying proxy will vote in each case as
directed in the proxy, but in the absence of such direction, they intend to vote
FOR PROPOSAL 1 and may vote in their discretion with respect to other matters
not now known to the Trustees that may be presented to the Special Meeting.
The approval of the new investment advisory agreement between the Trust on
behalf of the Fund and AFAM ("New Agreement") requires the affirmative vote of a
"majority of the outstanding voting securities" of the Fund. THE TRUSTEES
RECOMMEND THAT YOU VOTE IN FAVOR OF PROPOSAL 1.
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ADDITIONAL INFORMATION ABOUT THE TRUST
The following is a listing of the executive officers and Trustees of the
Trust and their positions with the Trust. None of the executive officers or
Trustees holds any position with AFAM or AF Holdings.
OFFICERS TITLE
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Eric Banhazl President, Treasurer
Steven Paggioli Vice President, Asst. Secretary
Robert Wadsworth Vice President, Asst. Secretary
Thomas W. Marschel Assistant Treasurer
Chris O. Moser Secretary
TRUSTEES
Walter E. Auch
Eric M. Banhazl
Donald E. O'Connor
George T. Wofford, III
APPROVAL OF THE NEW AGREEMENT
The Special Meeting has been called for the purpose of approving the New
Agreement for the Fund as a result of AF Holding's acquisition of all of the
outstanding capital stock of AFAM (the "Transaction"), the investment advisor of
the Fund. The Transaction represents an ownership change of AFAM (a "change in
control") and, as a result, the existing Investment Advisory Agreement (the
"Existing Agreement") between the Trust on behalf of the Fund and AFAM will
terminate. Accordingly, shareholders of the Fund are being asked to approve the
New Agreement.
EXISTING AGREEMENT
AFAM serves as the investment advisor for the Fund under the Existing
Agreement dated December 5, 1997. The initial shareholder of the Fund approved
the Existing Agreement on January 2, 1998. The Existing Agreement provides for
its automatic termination in the event of a legal assignment. A change in
control of AFAM will constitute a legal assignment for this purpose. Under the
Existing Agreement, AFAM is entitled to receive from the Fund fees at 1.00% of
average annual net assets.
NEW AGREEMENT
Except for two exceptions noted below, the terms of the New Agreement are
identical to the terms of the Existing Agreement. A form of the New Agreement is
attached to this Proxy Statement as EXHIBIT A, and the description set forth in
this Proxy Statement of the New Agreement is qualified in its entirety by
reference to EXHIBIT A.
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The New Agreement differs from the Existing Agreement in the following two
respects:
* Different effective and termination dates; and
* Modification to language of the New Agreement which allows the
investment advisor to the Fund to recapture any waived or reduced fees
and expenses in the subsequent three years provided that total fund
expenses (including any recapture payments) do not exceed the current
expense cap limit of the Fund.
Under the New Agreement, AFAM will continue to provide certain investment
advisory services to the Fund, including deciding what securities will be
purchased and sold by the Fund, when purchases and sales are to be made, and
arranging for such purchases and sales, all in accordance with the provisions of
the Investment Company Act of 1940 (the "Investment Company Act") and any rules
thereunder, the governing documents of the Trust, the fundamental policies of
the Fund, as reflected in its registration statement, and any policies and
determinations of the Trustees.
As compensation for its services to the Fund under the New Agreement, AFAM
will be entitled to receive from the Fund fees calculated at the same rate as
those charged under the Existing Agreement. The New Agreement will continue in
effect for two years from its effective date, and will continue in effect
thereafter for successive annual periods, provided its continuance is
specifically approved by:
1. a majority vote, cast in person at a meeting called for that purpose,
of the Trustees; or
2. a vote of the holders of a majority of the outstanding voting
securities (as defined in the Investment Company Act and the rules
thereunder) of the Fund; and
3. in either event by a majority of the Trustees who are not parties to
the New Investment Advisory Agreement or interested persons of the
Trust or of any such party (the "Independent Trustees") (1).
The New Agreement provides that it may be terminated at any time, without
penalty, by either party upon 60 days' written notice, provided that such
termination by the Fund shall be directed or approved by a vote of the Trustees,
or by a vote of holders of a majority of the shares of the Fund.
AFAM will continue to provide, at its expense, office space, facilities and
equipment for carrying out its duties under the New Agreement. All other
expenses incurred in the operation of the Fund will be borne by the Fund. Fund
expenses include legal and auditing fees, fees and expenses of its custodian,
accounting services and third-party shareholder servicing agents, Trustees'
fees, the cost of communicating with shareholders and registration fees, as well
as its other operating expenses.
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1 Independent Trustees are defined in the Investment Company Act as
"non-interested trustees." Independent Trustees are not parties to the Fund's
Investment Advisory Agreement, or interested persons of the Fund, Trust or
advisor.
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The New Agreement provides that AFAM shall have no liability to the Fund or
any shareholders of the Fund for any act or omission in the course of or in
connection with rendering services under the New Agreement, including any error
of judgment, mistake of law or any loss arising out of any investment, except
for liability resulting from willful misfeasance, bad faith, gross negligence or
reckless disregard on the part of AFAM of its duties under the New Agreement
(the conduct referred to herein as "Disabling Conduct"), and except to the
extent specified in Section 36(b) of the Investment Company Act with respect to
loss resulting from the breach of fiduciary duty with respect to receipt of
compensation for services. The New Agreement provides that the Fund shall
indemnify AFAM and its employees, officers and directors from any liability
arising from AFAM's conduct under the New Agreement, except the Disabling
Conduct, to the extent permitted by the Fund's governing documents and
applicable law.
AFAM, under a separate agreement (the "Operating Expenses Limitation
Agreement") with the Trust on behalf of the Fund, has contractually agreed to,
for an indefinite period, reimburse the Fund to the extent necessary so that its
ratio of operating expenses to average net assets will not exceed 2.25%. In
addition, AFAM has voluntarily agreed to pay the leverage interest expenses of
the Fund - and may cease these payments at any time. The limitation is further
described in the prospectus of the Fund. Operating expenses, as defined in the
Operating Expenses Limitation Agreement, exclude (i) interest, (ii) taxes, (iii)
expenditures for brokerage services, (iv) any extraordinary expenses and (v)
sales charges and distribution fees.
TERMS OF THE TRANSACTION
AFAM is owned by the Al Frank Trust, the Victoria Baldwin Trust and John
Buckingham (the "Owners"). Messrs. Frank and Buckingham are also key principals
of AFAM. AF Holdings and the Owners of AFAM have entered into a Stock Exchange
Agreement dated August 12, 1999, which provides for the outstanding capital
stock of AFAM to be acquired by AF Holdings, a Minnesota corporation owned by an
investor group which includes Mr. Kenneth E. Dawkins and Mr. James J. Dlugosch
(see biographies set forth below). The Stock Exchange Agreement provides that
Mr. Frank and Mr. Buckingham, officers and shareholders of AFAM, will enter into
consulting and employment agreements, respectively, with AFAM and become
shareholders of AF Holdings to help ensure that AFAM will continue to operate in
a substantially similar manner. Messrs. Frank and Buckingham will assist in
operating the investment policies of AFAM in a substantially similar manner as
it had operated before the Transaction. Other than upgraded office space in a
nearby area, no further changes to AFAM, including its method of operation, are
contemplated.
Pursuant to the Stock Exchange Agreement, the Owners of AFAM will exchange
their equity interests in AFAM for monetary consideration and common stock in AF
Holdings. The Owners will hold significant ownership interests in AF Holdings
immediately following this exchange. As a result of the Transaction, AF Holdings
will acquire all of AFAM's outstanding capital stock. All advisory contracts,
customer lists, books, records, and the exclusive right to the name "Al Frank
Asset Management, Inc." as all or part of a trade or corporate name will
continue to be the property of AFAM. The control persons of AFAM will be Mr.
Buckingham, Mr. Kenneth E. Dawkins and Mr. James J. Dlugosch.
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INVESTMENT COMPANY ACT REQUIREMENTS
Section 15(f) of the Investment Company Act provides that, when a change in
control of an investment advisor occurs, the investment advisor or any of its
affiliated persons (I.E., AFAM and its key principals) may receive any amount or
benefit in connection with the change of control as long as the following two
conditions are satisfied:
* FIRST CONDITION. During the three-year period immediately following
the Transaction, at least 75% of the Trust's Board of Trustees must be
"Independent" of AFAM; and
* SECOND CONDITION. As a result of the Transaction, no "unfair burden"
may be imposed on the Fund. The term "unfair burden," as used in the
Investment Company Act, includes any arrangement during the two-year
period after the Transaction whereby AFAM, or any interested person of
AFAM, receives, or is entitled to receive, any direct or indirect
compensation, from the Fund or its shareholders (other than investment
advisory fees) or from any person in connection with the purchase or
sale of securities or other property to, from, or on behalf of the
Fund (other than principal underwriting services fees). No such
compensation arrangements are contemplated in the Transaction.
AFAM has assured the Board that both of these conditions will be met. There
are a number of other conditions precedent to the closing of the Transaction.
Such conditions include, among other things, that all regulatory approvals and
all third-party consents will have been duly and properly obtained, and that
consents required will have been obtained from a specified percentage of AFAM's
current clients, including the Fund, as required by applicable law.
If the conditions for the Transaction are not met and the Transaction is
not completed, the terms of the Existing Agreement will remain in effect. In the
unlikely event that the New Agreement is not approved by the Fund's
shareholders, the Trustees will promptly seek to enter into a new investment
advisory agreement for the Fund, subject to approval by the Fund's shareholders.
During the fiscal year ending December 31, 1998, AFAM earned advisory fees
under the Existing Agreement of $50,113. However, under the Operating Expenses
Limitation Agreement, AFAM reimbursed the Fund $75,246 for that year.
INFORMATION ON AFAM AND AF HOLDINGS
AFAM is a California corporation with offices 465 Forest Avenue, Suite I,
Laguna Beach, California 92651. AFAM is registered under the Investment Advisers
Act of 1940 (the "Investment Advisers Act"). AF Holdings is a Minnesota
corporation.
AFAM's key personnel after the Transaction are shown below. The address of
each, as it relates to his duties at AFAM, is the same as that of AFAM.
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NAME AND POSITION WITH AFAM PRINCIPAL OCCUPATION
- --------------------------- --------------------
Kenneth E. Dawkins Director of AFAM. Director and Executive Vice
President of Miller & Schroeder Financial,
Inc., a Minnesota based investment bank since
1997. Chief Investment Officer of Miller &
Schroeder Asset Management, Inc. since 1997.
Founder and Former Chief Investment Officer
of Voyageur Asset Management (now Delaware
Funds), a mutual fund complex.
James J. Dlugosch President of AFAM. Assistant Vice President
of Miller & Schroeder Financial, Inc. since
1997. Former financial consultant with Round
Hill Financial Group. Former financial
analyst for Bateman Eichler, Hill Richards,
Inc.
Al Frank Director of AFAM and Consultant to AFAM. Founder
of Al Frank Asset Management, Inc.
John Buckingham Director of AFAM, Director of Research and Chief
Portfolio Manager of the Fund since 1998.
TRUSTEES' CONSIDERATION
The Transaction and the proposed change in control of the investment
advisor were presented to the Trustees for consideration at the June 7, 1999
Board Meeting. In addition, the Independent Trustees met at the Board Meeting
with legal counsel to the Trust to review further information. The Trustees,
including a majority of the Independent Trustees, voted to approve the
Transaction and present a new investment advisory agreement to the vote of
shareholders of the Fund. The Board concluded that the Proposal set forth in
this Proxy Statement is in the best interest of the Fund and its shareholders.
The Trustees believe that the terms of the New Agreement are fair to, and
in the best interest of, the Trust, the Fund and the shareholders. In making
this recommendation, the Trustees exercised their independent judgment based on
a careful review of the proposed changes and potential benefits. The Trustees'
approval and recommendation that shareholders approve the Proposal were based
primarily on the following factors, among others:
* EXPERIENCE. The Board considered the experience of the key personnel
being retained by AFAM in managing investment products. The Board
concluded that AFAM, after the Transaction, and through its key
personnel, possesses extensive experience in financial advisory
services and that its appointment and anticipated level of services to
be provided are in the best interests of the shareholders of the Fund;
* FEES. AFAM has agreed, for an indefinite period, through an Operating
Expenses Limitation Agreement to maintain the Fund's annual investment
advisory fee as well as the total ordinary operating expenses of the
Fund at the same levels (after fee waivers and expense reimbursements)
as those in effect under the Operating Expenses Limitation Agreement
and the current Prospectus of the Fund during the 1998 fiscal year.
Therefore, there will not be any increase in the ordinary operating
expense ratio of the Fund as a result of this change in control of the
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investment advisor for an indefinite period or until the Trustees
determine to end the Operating Expenses Limitation Agreement. This
does not apply, however, to any other expenses (such as leverage
interest expenses) voluntarily paid by AFAM;
* PROXY EXPENSES. Shareholders do not pay any expenses related to this
Proxy Statement. AFAM or AF Holdings have agreed to bear all expenses
incurred in connection with the Transaction that affect the Fund,
including, among other things, all expenses related to the preparation
of this Proxy Statement and the solicitation of proxies for the
Special Meeting;
* GROWTH OPPORTUNITY. AFAM plans to increase the visibility of the Fund.
Moreover, with the proposed change in the control of the investment
advisor, the Fund may gain access to a broader pool of potential
investors;
* COMPLIANCE WITH INVESTMENT COMPANY ACT. AFAM has also assured the
Trustees that it intends to continue to comply with Section 15(f) of
the Investment Company Act. AFAM and AF Holdings are not aware of any
express or implied term, condition, arrangement or understanding that
would impose an unfair burden on the Fund as a result of the
Transaction or the change in control of the investment advisor. AFAM
has represented to the Trustees that it and its affiliates will take
no action that would have the effect of imposing an "unfair burden" on
the Fund as a result of the Transaction.
BASED UPON THE FACTORS ABOVE AND ITS EVALUATION OF THE INFORMATION
PRESENTED TO IT, AND IN LIGHT OF THE RELEVANT FIDUCIARY DUTIES UNDER FEDERAL AND
STATE LAW, THE BOARD OF TRUSTEES, INCLUDING A MAJORITY OF THE INDEPENDENT
TRUSTEES OF THE TRUST, DETERMINED THAT THE NEW INVESTMENT ADVISORY AGREEMENT FOR
THE FUND IS ADVISABLE AND IN THE BEST INTERESTS OF THE FUND AND ITS
SHAREHOLDERS, AND RECOMMENDED APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT
BY THE SHAREHOLDERS AT THE SPECIAL MEETING.
RECOMMENDATION AND REQUIRED VOTE
At the Special Meeting, shareholders of the Fund will vote on the New
Agreement attached to this Proxy Statement as EXHIBIT A. The affirmative vote of
the holders of a majority of the net asset value of the outstanding shares of
the Fund is required to approve the New Agreement. The term "majority of the
outstanding voting securities" of the Fund, as defined in the Investment Company
Act, means: the affirmative vote of the lesser of (i) 67% of the voting
securities of the Fund present at the Special Meeting if more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (ii) more
than 50% of the outstanding shares of the Fund.
The Agreement and Declaration of Trust of the Trust provides that the
presence at a shareholder meeting in person or by proxy of at least forty
percent (40%) of the shares of the Fund entitled to vote constitutes a quorum.
Thus, the Special Meeting cannot take place on its scheduled date if less than
forty percent (40%) of the shares of the Fund are represented at the Special
Meeting. If, by the time scheduled for the Special Meeting, a quorum of
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shareholders of the Fund is not present or if a quorum is present but sufficient
votes in favor of the Proposal have not been received, the persons named as
proxies may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies with respect to the Proposal. Any such
adjournment will require the affirmative vote of a majority of the votes cast on
the question in person or by proxy at the session of the Special Meeting to be
adjourned. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of the Proposal. They
will vote against such adjournment those proxies required to be voted against
the Proposal.
In tallying shareholder votes, abstentions (I.E., shares for which a proxy
is presented, but which abstains from voting on the Proposal) and '"broker
non-votes" (I.E., shares held by brokers or nominees for which proxies are
presented but as to which (i) instructions have not been received from the
beneficial owners or persons entitled to vote and (ii) the broker or nominee
does not have discretionary voting power on a particular matter because it is a
non-routine matter) will be counted for purposes of determining whether a quorum
is present for the conduct of business at the Special Meeting. However,
generally broker non-votes do not constitute votes for or against the Proposal,
do not constitute an abstention, and will be disregarded in determining votes
cast. However, the Proposal requires approval by a "majority of the outstanding
voting securities" of the Fund, as that term is used under the Investment
Company Act, broker non-votes and abstentions will be considered present for
determining the existence of a quorum, but will have the effect of a vote
against the Proposal.
SPECIAL MEETING COSTS
The cost and expense of authorizing, preparing, printing and mailing the
enclosed proxy, accompanying Notice and Proxy Statement and all other costs in
connection with the solicitation of proxies related to the required approvals
and the New Agreement (including related legal fees, trustees' fees and expenses
of the Special Meeting, including any additional solicitations made by letter,
telephone, telegraph, or otherwise), will be paid by AFAM or AF Holdings. In
addition to solicitation by mail, certain officers and representatives of the
Trust, officers and employees of AFAM and certain financial services firms and
their representatives, who will receive no extra compensation for their
services, may solicit proxies by telephone, telegram or personally. In addition,
AFAM may retain a firm to solicit proxies on behalf of the Board, the expenses
of which will be borne by AFAM or AF Holdings.
ANNUAL REPORT
A COPY OF THE FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY WRITING TO THE AL FRANK FUND, C/O
AMERICAN DATA SERVICES, INC., P.O. Box 5536, 150 MOTOR PARKWAY, HAUPPAUGE, NEW
YORK 11788-0132 OR BY CALLING (TOLL-FREE) 1-877-829-8413.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
The Trustees are not aware of any matters that will be presented for action
at the Special Meeting other than the matters set forth herein. Should any other
matters requiring a vote of shareholders arise, the proxy in the accompanying
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form will confer upon the person or persons entitled to vote the shares
represented by such proxy the discretionary authority to vote matters in
accordance with their best judgment. PLEASE COMPLETE, SIGN AND RETURN THE
ENCLOSED PROXY CARD. NO POSTAGE IS REQUIRED IN MAILED IN THE UNITED STATES.
By Order of the Board of Trustees of the Trust,
/s/ Chris O. Moser
Secretary to the Trust
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EXHIBIT A
FORM OF NEW INVESTMENT ADVISORY AGREEMENT
ADVISORS SERIES TRUST
INVESTMENT ADVISORY AGREEMENT
AL FRANK ASSET MANAGEMENT, INC.
THIS INVESTMENT ADVISORY AGREEMENT is made as of the _______ day of
___________________, 1999, by and between Advisors Series Trust a Delaware
business trust (hereinafter called the "Trust"), on behalf of the following
series of the Trust, The Al Frank Fund (the "Fund") and Al Frank Asset
Management, Inc., a California corporation (hereinafter called the "Advisor").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940 (the "Investment Company Act");
and
WHEREAS, the Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act") (or is exempt from
registration) and is engaged in the business of supplying investment advice as
an independent contractor; and
WHEREAS, the Trust desires to retain the Advisor to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Advisor desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISOR. The Trust hereby employs the Advisor and the
Advisor hereby accepts such employment, to render investment advice and related
services with respect to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Trust's Board of Trustees.
2. DUTIES OF ADVISOR.
(a) GENERAL DUTIES. The Advisor shall act as investment adviser to the
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objectives, policies and restrictions of the Fund
as set forth in the Fund's and Trust's governing documents, including, without
<PAGE>
limitation, the Trust's Agreement and Declaration of Trust and By-Laws; the
Fund's prospectus, statement of additional information and undertakings; and
such other limitations, policies and procedures as the Trustees may impose from
time to time in writing to the Advisor. In providing such services, the Advisor
shall at all times adhere to the provisions and restrictions contained in the
federal securities laws, applicable state securities laws, the Internal Revenue
Code, the Uniform Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Advisor shall:
(i) furnish the Funds with advice and recommendations with respect to the
investment of the Fund's assets and the purchase and sale of portfolio
securities for the Fund, including the taking of such steps as may be necessary
to implement such advice and recommendations (I.E., placing the orders); (ii)
manage and oversee the investments of the Funds, subject to the ultimate
supervision and direction of the Trust's Board of Trustees; (iii) vote proxies
for the Fund, file ownership reports under Section 13 of the Securities Exchange
Act of 1934 for the Fund, and take other actions on behalf of the Fund; (iv)
maintain the books and records required to be maintained by the Fund except to
the extent arrangements have been made for such books and records to be
maintained by the administrator or another agent of the Fund; (v) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund's assets which the Fund's
administrator or distributor or the officers of the Trust may reasonably
request; and (vi) render to the Trust's Board of Trustees such periodic and
special reports with respect to each Fund's investment activities as the Board
may reasonably request, including at least one in-person appearance annually
before the Board of Trustees.
(b) BROKERAGE. The Advisor shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Advisor shall not
direct order to an affiliated person of the Advisor without general prior
authorization to use such affiliated broker or dealer for the Trust's Board of
Trustees. The Advisor's primary consideration in effecting a securities
transaction will be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the Advisor may take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Fund on a continuing
basis. The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees of the Trust may
determine, the Advisor shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Advisor an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Advisor's overall responsibilities with respect to
the Trust. The Advisor is further authorized to allocate the orders placed by it
on behalf of the Fund to such brokers or dealers who also provide research or
statistical material, or other services, to the Trust, the Advisor, or any
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affiliate of either. Such allocation shall be in such amounts and proportions as
the Advisor shall determine, and the Advisor shall report on such allocations
regularly to the Trust, indicating the broker-dealers to whom such allocations
have been made and the basis therefor. The Advisor is also authorized to
consider sales of shares as a factor in the selection of brokers or dealers to
execute portfolio transactions, subject to the requirements of best execution,
I.E., that such brokers or dealers are able to execute the order promptly and at
the best obtainable securities price.
On occasions when the Advisor deems the purchase or sale of a security
to be in the best interest of one or more of the Fund as well as of other
clients, the Advisor, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be so purchased or sold in order to
obtain the most favorable price or lower brokerage commissions and the most
efficient execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by the
Advisor in the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Funds and to such other clients.
3. REPRESENTATIONS OF THE ADVISOR.
(a) The Advisor shall use its best judgment and efforts in rendering
the advice and services to the Funds as contemplated by this Agreement.
(b) The Advisor shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(c) The Advisor shall conduct its operations at all times in
conformance with the Advisers Act, the Investment Company Act , and any other
applicable state and/or self-regulatory organization regulations.
(d) The Advisor shall maintain errors and omissions insurance in an
amount at least equal to that disclosed to the Board of Trustees in connection
with their approval of this Agreement.
4. INDEPENDENT CONTRACTOR. The Advisor shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Advisor to the Funds under the provisions of this Agreement are
not to be deemed exclusive, and the Advisor shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. ADVISOR'S PERSONNEL. The Advisor shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Advisor shall be
deemed to include persons employed or retained by the Advisor to furnish
statistical information, research, and other factual information, advice
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<PAGE>
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Advisor or the Trust's Board of Trustees may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the Fund, the Advisor shall be
responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the operation of the Fund, (ii) the expenses of
printing and distributing extra copies of the Fund's prospectus, statement of
additional information, and sales and advertising materials (but not the legal,
auditing or accounting fees attendant thereto) to prospective investors (but not
to existing shareholders), and (iii) the costs of any special Board of Trustees
meetings or shareholder meetings convened for the primary benefit of the
Advisor. If the Advisor has agreed to limit the operating expenses of the Fund,
the Advisor shall also be responsible on a monthly basis for any operating
expenses that exceed the agreed upon expense limit.
(b) The Fund is responsible for and has assumed the obligation for
payment of all of its expenses, other than as stated in Subparagraph 6(a) above,
including but not limited to: fees and expenses incurred in connection with the
issuance, registration and transfer of its shares; brokerage and commission
expenses; all expenses of transfer, receipt, safekeeping, servicing and
accounting for the cash, securities and other property of the Trust for the
benefit of the Fund including all fees and expenses of its custodian,
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required under the
Investment Company Act; taxes, if any; a pro rata portion of expenditures in
connection with meetings of the Fund's shareholders and the Trust's Board of
Trustees that are properly payable by the Fund; salaries and expenses of
officers and fees and expenses of members of the Trust's Board of Trustees or
members of any advisory board or committee who are not members of, affiliated
with or interested persons of the Advisor; insurance premiums on property or
personnel of each Fund which inure to its benefit, including liability and
fidelity bond insurance; the cost of preparing and printing reports, proxy
statements, prospectuses and statements of additional information of the Fund or
other communications for distribution to existing shareholders; legal, auditing
and accounting fees; trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of the Funds, if any; and all other charges and costs of
its operation plus any extraordinary and non-recurring expenses, except as
herein otherwise prescribed.
(c) The Advisor may voluntarily absorb certain Fund expenses or waive
the Advisor's own advisory fee.
(d) To the extent the Advisor incurs any costs by assuming expenses
which are an obligation of a Fund as set forth herein, the Fund shall promptly
reimburse the Advisor for such costs and expenses, except to the extent the
Advisor has otherwise agreed to bear such expenses. To the extent the services
for which a Fund is obligated to pay are performed by the Advisor, the Advisor
shall be entitled to recover from such Fund to the extent of the Advisor's
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<PAGE>
actual costs for providing such services. In determining the Advisor's actual
costs, the Advisor may take into account an allocated portion of the salaries
and overhead of personnel performing such services.
7. INVESTMENT ADVISORY AND MANAGEMENT FEE.
(a) The Fund shall pay to the Advisor, and the Advisor agrees to
accept, as full compensation for all investment management and advisory services
furnished or provided to such Fund pursuant to this Agreement, an annual
management fee at the rate set forth in Schedule A to this Agreement.
(b) The management fee shall be accrued daily by each Fund and paid to
the Advisor on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Advisor shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(d) The fee payable to the Advisor under this Agreement will be
reduced to the extent of any receivable owed by the Advisor to the Fund and as
required under any expense limitation applicable to a Fund.
(e) The Advisor voluntarily may reduce any portion of the compensation
or reimbursement of expenses due to it pursuant to this Agreement and may agree
to make payments to limit the expenses which are the responsibility of a Fund
under this Agreement. Any such reduction or payment shall be applicable only to
such specific reduction or payment and shall not constitute an agreement to
reduce any future compensation or reimbursement due to the Advisor hereunder or
to continue future payments. Any such reduction will be agreed to prior to
accrual of the related expense or fee and will be estimated daily and reconciled
and paid on a monthly basis.
(f) Any such reductions made by the Advisor in its fees or payment of
expenses which are the Fund's obligation are subject to reimbursement by the
Fund to the Advisor, if so requested by the Advisor, in subsequent fiscal years
if the aggregate amount actually paid by the Fund toward the operating expenses
for such fiscal year (taking into account the reimbursement) does not exceed the
applicable limitation on Fund expenses. The Advisor is permitted to be
reimbursed only for fee reductions and expense payments made in the previous
three fiscal years, but is permitted to look back five years and four years,
respectively, during the initial six years and seventh year of the Fund's
operations. Any such reimbursement is also contingent upon Board of Trustees
review and approval at time the reimbursement is made. Such reimbursement may
not be paid prior to the Fund's payment of current ordinary operating expenses.
5
<PAGE>
(g) The Advisor may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Advisor
hereunder.
8. NO SHORTING; NO BORROWING. The Advisor agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Funds. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of the Advisor or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Advisor
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund's assets in connection with any borrowing not
directly for the Fund's benefit. For this purpose, failure to pay any amount due
and payable to the Fund for a period of more than thirty (30) days shall
constitute a borrowing.
9. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Agreement and Declaration of Trust, By-Laws, or
any applicable statute or regulation, or to relieve or deprive the Board of
Trustees of the Trust of its responsibility for and control of the conduct of
the affairs of the Trust and Funds. In this connection, the Advisor acknowledges
that the Trustees retain ultimate plenary authority over the Fund and may take
any and all actions necessary and reasonable to protect the interests of
shareholders.
10. REPORTS AND ACCESS. The Advisor agrees to supply such information to
the Fund's administrator and to permit such compliance inspections by the Fund's
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the Trustees.
11. ADVISOR'S LIABILITIES AND INDEMNIFICATION.
(a) The Advisor shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of the statements in the
Fund's offering materials (including the prospectus, the statement of additional
information, advertising and sales materials), except for information supplied
by the administrator or the Trust or another third party for inclusion therein.
(b) The Advisor shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Advisor.
(c) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Advisor, the Advisor shall not be subject to liability to the Trust
or the Fund or to any shareholder of the Fund for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Funds.
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<PAGE>
(d) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, directors, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or non-performance of any duties under this Agreement
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties under this Agreement.
(e) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or officer of the Advisor, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISOR'S OWN ACCOUNT. The Trust's
employment of the Advisor is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise, the Advisor may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from buying, selling or trading any securities for its or their own accounts or
the accounts of others for whom it or they may be acting, provided, however,
that the Advisor expressly represents that it will undertake no activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement; and provided further that the Advisor will adhere to a code of ethics
governing employee trading and trading for proprietary accounts that conforms to
the requirements of the Investment Company Act and the Advisers Act and has been
approved by the Trust's Board of Trustees.
13. TERM.
(a) This Agreement shall become effective at the time the Fund
commences operations pursuant to an effective amendment to the Trust's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (l) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of each Fund and (ii)
the vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
(b) The Fund may use the name The Al Frank Fund or any name derived
from or using the name Al Frank Asset Management, Inc. only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect.
Within sixty (60) days from such time as this Agreement shall no longer be in
effect, the Fund shall cease to use such a name or any other name connected with
the Advisor.
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<PAGE>
14. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Trust on behalf of the
Fund at any time without payment of any penalty, by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of a Fund,
upon sixty (60) days' written notice to the Advisor, and by the Advisor upon
sixty (60) days' written notice to a Fund. In the event of a termination, the
Advisor shall cooperate in the orderly transfer of the Fund's affairs and, at
the request of the Board of Trustees, transfer any and all books and records of
the Fund maintained by the Advisor on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
15. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
16. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Arizona without giving effect to the
conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Advisers Act and any rules
and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized officers, all on the day and year first above
written.
ADVISORS SERIES TRUST AL FRANK ASSET MANAGEMENT, INC.
on behalf of
The Al Frank Fund
By: By:
--------------------------- -------------------------------
Name: Robert H. Wadsworth Name:
Title: Vice President Title:
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<PAGE>
SCHEDULE A
Series or Fund of Advisors Series Trust Annual Fee rate
- --------------------------------------- ---------------
The Al Frank Fund 1.00 % of average net assets
9
<PAGE>
PROXY CARD
ADVISORS SERIES TRUST - AL FRANK FUND
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 5, 1999
The undersigned hereby appoints Al Frank and John Buckingham as proxies, each
with the power to appoint his or her substitute, and hereby authorizes them to
represent and to vote, as designated below, all shares of the Al Frank Fund (the
"Fund"), a series of Advisors Series Trust (the "Trust"), held of record by the
undersigned on September 20, 1999 or any adjournment thereof.
1. To approve a new Investment Advisory Agreement between the Trust on
behalf of the Fund and Al Frank Asset Management, Inc. ("AFAM"),
pursuant to which AFAM will continue to serve as the investment
advisor with respect to the assets of the Fund, to become effective
upon the acquisition of all of the outstanding capital stock of AFAM
by AF Holdings, Inc.;
2. To transact such other business as may properly come before the
Special Meeting, or any adjournment thereof.
You are encouraged to specify your choices by marking the appropriate boxes
BELOW. If you do not mark any boxes, your Proxy will be voted in accordance with
the Board of Trustees' recommendations. Please sign, date and return this card.
The Board of Trustees recommends a vote FOR the proposals.
Please mark your votes as in this example. [X]
1. To approve a new Investment Advisory Agreement between the Trust on behalf
of the Fund and Al Frank Asset Management, Inc. ("AFAM"), pursuant to which
AFAM will continue to serve as the investment advisor with respect to the
assets of the Fund, to become effective upon the acquisition of all of the
outstanding capital stock of AFAM by AF Holdings, Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To transact such other business as may properly come before the Special
Meeting, or any adjournment thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" PROPOSAL 1. BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU
AUTHORIZE THE PROXIES TO VOTE THE PROPOSAL AS MARKED, OR IF NOT MARKED TO VOTE
"FOR" THE PROPOSAL, AND TO TAKE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY
PROPERLY COME BEFORE THE SPECIAL MEETING. IF YOU DO NOT INTEND TO PERSONALLY
ATTEND THE SPECIAL MEETING, PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE
ENCLOSED ENVELOPE.
================================================================================
- ------------------------------------- --------------------------------------
Signature Date Signature Date
================================================================================
NOTE: PLEASE SIGN NAME OR NAMES AS PRINTED ON PROXY TO AUTHORIZE THE VOTING OF
YOUR SHARES AS INDICATED. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL
JOINT OWNERS SHOULD SIGN. PERSONS SIGNING AS EXECUTORS, ADMINISTRATORS,
TRUSTEES, ETC. SHOULD SO INDICATE.
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