SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, For use of the Commission Only (as permitted
by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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ADVISORS SERIES TRUST
(Name of Registrant as Specified in Charter)
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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
(a) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(b) Aggregate number of securities to which transaction applies
- --------------------------------------------------------------------------------
(c) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule -11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(d) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(e) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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.
- --------------------------------------------------------------------------------
(a) Amount previously paid:
- --------------------------------------------------------------------------------
(b) Form, Schedule or Registration Statement No.:
SCHEDULE 14A; 333-17391; 811-07959
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(c) Filing Party: ADVISORS SERIES TRUST
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(d) Date Filed: FEBRUARY 23, 1999
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<PAGE>
[LETTERHEAD OF VAN DEVENTER & HOCH]
MARCH __, 1999
DEAR VAN DEVENTER & HOCH AMERICAN VALUE FUND SHAREHOLDER:
We are seeking your approval to reorganize the Van Deventer &
Hoch American Value Fund, a series of the Advisors Series Trust, into the
Allegiance American Value Fund, a newly created series of the Allegiance
Investment Trust. Van Deventer & Hoch is the investment adviser to both Funds.
We proposed this transaction because we believe it makes sense
to make our American Value Fund part of our new fund group. We expect to gain
certain efficiencies and increased control over services provided to the funds
and their shareholders. We have agreed to pay all expenses of the reorganization
so shareholders will not bear those costs.
The Board of Trustees of the Advisors Series Trust has
approved the transaction and we urge your approval.
Please read the enclosed proxy materials and consider the
information provided. We encourage you to complete and mail your proxy card
promptly.
Sincerely,
VAN DEVENTER & HOCH
Richard A. Snyders, President
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
ADVISORS SERIES TRUST
800 North Brand Boulevard, Suite 300
Glendale, California 91203
(800) 548-7787
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF
VAN DEVENTER & HOCH AMERICAN VALUE FUND SHAREHOLDERS
TO BE HELD MARCH ___, 1999
To the Shareholders of the Van Deventer & Hoch American Value Fund:
Your Fund will host a special meeting of shareholders at the
offices of Van Deventer & Hoch American Value Fund, 800 North Brand Boulevard,
Suite 300 Glendale, California 91203 on March ___, 1999, at 10:00 a.m., local
time. At the meeting, we will ask you to vote on:
1. A proposal to reorganize the Van Deventer & Hoch American
Value Fund, a series of the Advisors Series Trust, into the
Allegiance American Value Fund, a newly created series of the
Allegiance Investment Trust.
2. Any other business that properly comes before the meeting.
Only shareholders of record at the close of business on
February 26, 1999 (the Record Date), will be entitled to receive this notice and
to vote at the meeting.
By Order of the Board of Trustees
Chris O. Kissack
Secretary
YOUR VOTE IS IMPORTANT REGARDLESS OF HOW MANY
SHARES YOU OWNED ON THE RECORD DATE.
-------------------
PLEASE VOTE ON THE ENCLOSED PROXY FORM, DATE AND SIGN IT, AND RETURN IT IN THE
PRE-ADDRESSED ENVELOPE PROVIDED. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES. IN ORDER TO AVOID THE ADDITIONAL EXPENSE AND DISRUPTION OF FURTHER
SOLICITATION, WE REQUEST YOUR COOPERATION IN VOTING PROMPTLY.
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
ADVISORS SERIES TRUST
800 North Brand Boulevard, Suite 300
Glendale, California 91203
(800) 548-7787
PROXY STATEMENT
Dated: March ___, 1999
WHAT IS THIS DOCUMENT AND WHY DID WE SEND IT TO YOU?
The Board of Trustees approved a plan to reorganize the Van Deventer &
Hoch American Value Fund (the "AST Fund") that is part of Advisors Series Trust
(the "Trust") into the newly created Allegiance American Value Fund (the "New
Fund") (that transaction is referred to as the "Reorganization"). Shareholder
approval is needed to proceed with the Reorganization. The shareholder meeting
will be held on March ___, 1999 (the "Shareholder Meeting"). We are sending this
document to you for your use in deciding whether to approve the Reorganization
at the Shareholder Meeting.
This document includes a Notice of Special Meeting of Shareholders, a
Proxy Statement and a form of Proxy.
As a technical matter, the Reorganization will have three steps:
+ the transfer of the assets and liabilities of the AST Fund to the
New Fund in exchange for shares of the New Fund (the "New Fund
Shares") of equivalent value to the net assets transferred,
+ the pro rata distribution of those New Fund Shares to shareholders
of record of the AST Fund as of the effective date of the
Reorganization (the "Effective Date") in full redemption of those
shareholders' shares in the AST Fund, and
+ the immediate liquidation and termination of the AST Fund.
As a result of the Reorganization, each shareholder of the AST Fund
would instead hold New Fund Shares having the same total value as the shares of
the AST Fund held immediately before the Reorganization. Lawyers for the AST
Fund and the New Fund have advised the Trust that, for federal income tax
purposes, the Reorganization will be treated as a tax-free reorganization that
will not cause the AST Fund's shareholders to recognize a gain or loss for
federal income tax purposes.
This Proxy Statement sets forth the basic information that you should
know before voting on the proposal. You should read it and keep it for future
reference.
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WHAT OTHER IMPORTANT DOCUMENTS SHOULD I KNOW ABOUT?
The AST Fund is a series of the Trust, an open-end management
investment company. The following documents are on file with the Securities and
Exchange Commission (the "SEC") and are deemed to be legally part of this
document:
+ Prospectus for the AST Fund dated May 1, 1998
+ Statement of Additional Information relating to the AST Fund also
dated May 1, 1998
Those documents are available without charge by writing to the AST Fund
at 800 North Brand Boulevard, Suite 300, Glendale, California 91203, or by
calling (800) 548-7787.
The Annual Report to Shareholders of the AST Fund for the fiscal year
ended October 31, 1998, containing audited financial statements of the AST Fund,
has been previously mailed to shareholders. If you do not have a copy,
additional copies of that Annual Report are available without charge by writing
or calling the AST Fund at its address and telephone number listed above. It is
expected that this Proxy Statement will be mailed to shareholders on or about
March ___, 1999.
3
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TABLE OF CONTENTS
I. INTRODUCTION........................................................ 5
A. GENERAL......................................................... 5
B. THE PROPOSAL.................................................... 5
C. SHARES AND VOTING............................................... 6
II. THE PROPOSAL........................................................ 8
A. DESCRIPTION OF THE PROPOSED REORGANIZATION...................... 8
1. THE REORGANIZATION........................................... 8
2. EFFECT OF THE REORGANIZATION................................. 9
3. FEDERAL INCOME TAX CONSEQUENCES.............................. 9
4. DESCRIPTION OF THE ALLEGIANCE FUND SHARES.................... 10
B. COMPARISON OF THE FUNDS......................................... 10
C. COMPARISON OF EXPENSES.......................................... 11
C. RECOMMENDATION OF THE BOARD OF TRUSTEES......................... 12
D. DISSENTERS'RIGHTS OF APPRAISAL.................................. 12
E. FURTHER INFORMATION ABOUT THE ACQUIRED FUND AND THE
ACQUIRING FUND.................................................. 13
F. VOTE REQUIRED................................................... 13
III. MISCELLANEOUS ISSUES................................................ 14
A. OTHER BUSINESS.................................................. 14
B. NEXT MEETING OF SHAREHOLDERS.................................... 14
C. LEGAL MATTERS................................................... 14
D. EXPERTS......................................................... 14
4
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I. INTRODUCTION
A. GENERAL
The Board of Trustees called this shareholder meeting (the "Shareholder
Meeting") to allow shareholders to consider and vote on the proposed
Reorganization of the AST Fund. The Board of Trustees (including a majority of
the independent trustees, meaning those trustees who are not "interested"
persons under the Investment Company Act of 1940, as amended (the "Investment
Company Act")) approved the Reorganization by written consent, subject to the
approval of the AST Fund's shareholders.
B. THE PROPOSAL
At the Shareholder Meeting, the shareholders of the AST Fund will be
asked to approve the proposed Reorganization of the AST Fund into the New Fund.
The Reorganization will include the transfer of all of the assets and
liabilities of the AST Fund to the New Fund. All remaining AST Fund shareholders
will receive New Fund Shares in exchange. The AST Fund will then be terminated
and liquidated.
The net asset value per share of the New Fund and the number of shares
owned by each New Fund shareholder immediately after the Reorganization will be
identical to the net asset value per share of the AST Fund and the number of
shares owned by each AST Fund shareholder immediately before the Reorganization.
Van Deventer & Hoch (the "Adviser") currently serves as the adviser of
the AST Fund and will serve as the adviser to the New Fund. The New Fund will
have substantially similar investment objectives and policies to the AST Fund.
The investment objective of the AST Fund is to seek to maximum total return,
consisting of capital appreciation (both realized and unrealized) and income, by
investing primarily in the equity securities of well-established U.S. companies
(I.E., companies with at least a five-year operating history) which, in the
opinion of the AST Fund's adviser, are undervalued by the market. The investment
objective of the New Fund similarly seeks to achieve long-term growth of capital
and above average current income with investments primarily in equity securities
of U.S. companies. DESPITE THIS CHANGE IN THE WORDING OF THE INVESTMENT
OBJECTIVE, THE AST FUND AND THE NEW FUND WILL BE MANAGED IN ESSENTIALLY THE SAME
MANNER.
Investments in the New Fund will be subject to identical risks as
investments are currently subject to in the AST Fund. The purchase and
redemption arrangements of the New Fund will be identical to the current
purchase and redemption arrangements of the AST Fund. The New Fund will have the
identical distribution arrangements as the AST Fund currently has.
The Adviser and the Board of Trustees believe that the proposed
Reorganization is in the best interests of the AST Fund and its shareholders,
and that the interests of
5
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existing shareholders of the AST Fund will not be diluted as a result of the
proposed Reorganization.
The Adviser will pay the costs of the Reorganization, the Shareholder
Meeting and solicitation of proxies, including the cost of copying, printing and
mailing proxy materials. In addition to solicitations by mail, the Adviser and
the Board also may solicit proxies, without special compensation, by telephone,
facsimile or otherwise.
C. SHARES AND VOTING
The Trust is a Delaware business trust and is registered with the SEC
as an open-end management investment company. The Trust currently has 18
operating series, or funds, including the AST Fund. Each fund has its own
identify, investment adviser, investment objective and policies and operates
independently for purposes of investments, dividends, other distributions and
redemptions.
The AST Fund has only one class of shares, with one fee and expense
structure. The AST Fund's shareholders will receive shares of the New Fund in
exchange for their shares if the Reorganization is approved and completed.
Each whole or fractional share of the AST Fund is entitled to one vote
or corresponding fraction at the Shareholder Meeting. At the close of business
on February 26, 1999, the record date for the determination of shareholders
entitled to vote at the Shareholder Meeting (the "Record Date"), there were
_____________ shares outstanding held by __________ record holders (including
omnibus accounts representing multiple underlying beneficial owners such as
those in the names of brokers).
All shares represented by each properly signed proxy received before
the meeting will be voted at the Shareholder Meeting. If a shareholder specifies
how the proxy is to be voted on any business properly to come before the
Shareholder Meeting, it will be voted in accordance with instruction given. If
no choice is indicated on the proxy, it will be voted FOR approval of the
Reorganization, as more fully described in this Prospectus. A proxy may be
revoked by a shareholder at any time before its use by written notice to the AST
Fund, by submission of a later-dated proxy or by voting in person at the
Shareholder Meeting. If any other matters come before the Shareholder Meeting,
proxies will be voted by the persons named as proxies in accordance with their
best judgment.
The holders of 40% of the outstanding shares entitled to vote present
in person or by proxy will constitute a quorum. When a quorum is present,
approval of the proposal will require the affirmative vote of a "majority of the
outstanding voting securities" of the AST Fund. The term "majority of the
outstanding voting securities" of the AST Fund, as defined in the Investment
Company Act, means: the affirmative vote of the lesser of (i) 67% of the voting
securities of the AST Fund present at the meeting if more than 50% of the
outstanding shares of the AST Fund are present in person or by proxy or (ii)
more than 50% of the outstanding shares of the AST Fund. This approval is
required (rather
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than a simple majority of those votes present) because the Reorganization
requires approval of a new investment management agreement for the New Fund.
The Shareholder Meeting may be adjourned from time to time by a
majority of the votes properly cast upon the question of adjourning the
Shareholder Meeting to another date and time, whether or not a quorum is
present, and the Shareholder Meeting may be held as adjourned without further
notice. The persons named in the proxy will vote in favor of such adjournment
those shares which they are entitled to vote if such adjournment is necessary to
obtain a quorum or to obtain a favorable vote on any proposal.
Proxies must be voted by mail or facsimile transmission.
All proxies voted, including abstentions and broker non-votes (where
the underlying holder has not voted and the broker does not have discretionary
authority to vote the shares), will be counted toward establishing a quorum.
Approval of the Reorganization will occur only if a sufficient number of votes
are cast FOR that proposal. Abstentions do not constitute a vote "for" and
effectively result in a vote "against." Broker non-votes do not represent vote
"for" or "against"" and are disregarded in determining whether the proposal has
received enough votes.
As of the Record Date, the AST Fund's shareholders of record and (to
the Trust's knowledge) beneficial owners who owned more than five percent of the
AST Fund's shares are as follows:
Percentage of the Fund's
SHAREHOLDER OUTSTANDING SHARES
----------- ------------------------
Balsa & Co.
P.O. Box 1768
Grand Central Station
New York, NY 10163-1760 [44.04%]
Charles Schwab & Co. Inc.
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122 [31.17%]
The Officers and Trustees of the Trust, as a group, owned of record and
beneficially less than one percent of the outstanding voting securities of the
AST Fund as of the Record Date. The Officers and Directors of the Adviser, as a
group, owned of record and beneficially __% of the outstanding voting securities
of the AST Fund.
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II. THE PROPOSAL
A. DESCRIPTION OF THE PROPOSED REORGANIZATION
1. THE REORGANIZATION
If the Reorganization is approved, on the Effective Date the New Fund
will acquire all of the assets and liabilities of the AST Fund. At that time,
the New Fund will issue to the AST Fund the same number of shares as the
shareholders of the AST Fund held of record on the day before the Effective
Date.
At the same time as that asset transfer, the AST Fund will distribute
the New Fund Shares it receives pro rata to each remaining shareholder of the
AST Fund, distributing the same number of shares as the outstanding shares of
the AST Fund held of record by that shareholder on the day before the Effective
Date.
This distribution of the New Fund Shares to the AST Fund's shareholders
will be accomplished by the establishment of accounts on the New Fund's share
records in the names of those shareholders, representing the respective pro rata
number of New Fund Shares deliverable to them. Fractional shares will be carried
to the third decimal place. Certificates evidencing the New Fund Shares will not
be issued to the AST Fund's shareholders.
Immediately following the AST Fund's pro rata liquidating distribution
of the New Fund Shares to the AST Fund shareholders, the AST Fund will liquidate
and terminate.
Completion of the Reorganization is subject to approval by the
shareholders of the AST Fund. The Reorganization may be abandoned at any time
before the Effective Date by a majority of the Trust's Board of Trustees.
The Adviser will pay all costs and expenses of the Reorganization,
including those associated with the Shareholder Meeting, the copying, printing
and distribution of this Combined Proxy Statement and Prospectus, and the
solicitation of proxies for the Shareholder Meeting.
The above is a summary of the Reorganization. The summary is not a
complete description of the terms of the Reorganization, which are set forth in
the Agreement and Plan of Reorganization attached as EXHIBIT A to this document.
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2. EFFECT OF THE REORGANIZATION
If the Reorganization is approved by the AST Fund's shareholders and
completed, shareholders of the AST Fund as of the Effective Date will become
shareholders of the New Fund. The total net asset value of the New Fund Shares
held by each Shareholder of the AST Fund immediately after completion of the
Reorganization will be equivalent to the total net asset value of the AST Fund
Shares held by that same shareholder immediately before completion of the
Reorganization.
After the Reorganization, the investment adviser for the New Fund will
continue to be Van Deventer & Hoch. First Fund Distributors, Inc. will be the
New Fund's Distributor. Investment Company Administration, L.L.C. will continue
as the administrator for the New Fund. McGladrey & Pullen LLP also will serve as
auditors for the New Fund.
3. REASONS FOR THE REORGANIZATION
The Reorganization is intended to facilitate the consolidation of all
mutual funds advised by Van Deventer & Hoch in the same family of funds, the
Allegiance Investment Trust (the "New Trust"). As a result of the
Reorganization, the New Fund and the three current series of the New Trust, will
all be separate series of the same New Trust. Shareholders of the New Fund would
be able to exchange into the other series of the New Trust, and into other
series which are subsequently established and advised by the Adviser. Including
the New Fund as a series of the New Trust should more clearly establish the
identity of the New Fund as a member of the family of funds advised by the
Adviser, and allow the Adviser more direct oversight of the responsibility for
the operations of the New Fund. This is because, among other reasons, the New
Fund would be governed by the same Board of Trustees as the other funds. In
addition, the total operating expenses of the New Fund, as a percentage of
average daily net assets, will be reduced slightly. There can be no guarantee
that the total operating expenses of the New Fund will be as specified.
4. FEDERAL INCOME TAX CONSEQUENCES
Management of the AST Fund and the New Fund has been advised by its
counsel, Paul, Hastings, Janofsky & Walker LLP, that the Reorganization will
constitute a tax-free reorganization for federal income tax purposes under
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended, and will not
affect the federal tax status of AST Fund shares held before the Reorganization.
Therefore, shareholders should not recognize any gain or loss on the AST Fund
shares for federal income tax purposes as a result of the Reorganization. The
Trust has not obtained an Internal Revenue Service ("IRS") private letter
ruling, and the IRS is not bound by advice of counsel. While the Trust is not
aware of any adverse state or local tax consequences of the proposed
Reorganization, it has not made any investigation as to those consequences.
Shareholders may wish to consult their own tax advisers.
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5. DESCRIPTION OF THE NEW FUND SHARES
Each New Fund Share issued to AST Fund shareholders pursuant to the
Reorganization will be duly authorized, validly issued, fully paid and
nonassessable when issued, will be transferable without restriction and will
have no preemptive or conversion rights. Each New Fund Share will represent an
equal interest in the assets of the New Fund. The New Fund Shares will be sold
and redeemed based upon the net asset value of the New Fund next determined
after receipt of the purchase or redemption request, as described in the New
Fund's Prospectus.
B. COMPARISON OF THE FUNDS
1. OBJECTIVE, STRATEGY AND POLICIES
The New Fund will have substantially similar investment objectives and
policies to the AST Fund. The investment objective of the AST Fund is to seek to
maximum total return, consisting of capital appreciation (both realized and
unrealized) and income, by investing primarily in the equity securities of
well-established U.S. companies (I.E., companies with at least a five-year
operating history) which, in the opinion of the AST Fund's Adviser, are
undervalued by the market. The investment objective of the New Fund similarly
seeks to achieve long-term growth of capital and above average current income
with investments primarily in equity securities of U.S. companies. DESPITE THIS
CHANGE IN THE WORDING OF THE INVESTMENT OBJECTIVE, THE AST FUND AND THE NEW FUND
WILL BE MANAGED IN ESSENTIALLY THE SAME MANNER.
The fundamental investment restrictions of the New Fund are identical
to that of the AST Fund, and cannot be changed without the affirmative vote of a
majority of each Fund's outstanding voting securities as defined in the
Investment Company Act.
The Trust and the New Trust are both Delaware business trusts with
substantially similar Agreements and Declarations of Trust and By-Laws.
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2. COMPARISON OF FEES AND EXPENSES
The following table shows the comparative fees and expenses you may pay
if you buy and hold shares of these Funds. The Funds do not impose any front-end
or deferred sales loads and they do not charge shareholders for exchanging
shares or reinvesting dividends.
Fees and Expenses of the Funds
AST Fund
(reduced 1998 AST Fund New Fund
EXPENSES) (AFTER 1998) (PRO FORMA)
--------- ------------ -----------
SHAREHOLDER FEES (fees paid
directly from your investment)
Redemption Fee 0.00% 0.00% 0.00%
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from
Fund assets)+
Management Fee 0.70% 0.70% 0.70%
Distribution/Service 0.50% 0.50% 0.25%
(12b-1) Fee
Administrative -- -- 0.35%
Services Fee
Other Expenses 1.05% 1.05% 0.00%
----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 2.25% 2.25% 1.30%
=====
Fee Reduction and/or 1.20% 0.93%
Expense Reimbursement
----- -----
NET EXPENSES 1.05% 1.32%
===== =====
+ The Adviser reduced its fees and/or absorbed expenses to limit total annual
operating expenses in 1998 to 1.05%. For 1999, the Adviser has contractually
agreed to reduce its fees and/or absorb expenses to limit total annual operating
expenses for the AST Fund to 1.32%. This contract has a one-year term, renewable
at the end of each fiscal year.
EXAMPLE OF FUND EXPENSES: This example is intended to help you compare the cost
of investing in the Funds with the cost of investing in other mutual funds. The
table below shows what you would pay in expenses over time, whether or not you
sold your shares at the end of each period. It assumes a $10,000 initial
investment, 5% total return each year and the changes specified above. This
example is for comparison purposes only. It does not necessarily represent a
Fund's actual expenses or returns.
Fund 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
AST Fund (reduced 1998 expenses) $107 $586 $1,092 $2,480
- --------------------------------------------------------------------------------
AST Fund (after 1998) $134 $612 $1,117 $2,501
- --------------------------------------------------------------------------------
Not Not
New Fund (pro forma) $132 $411 applic. applic.
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The figures in the Example after the first year assume that the fees reduced or
expenses absorbed during the first year are not reduced or absorbed in later
years.
The Adviser has agreed to pay out of its own resources any remaining unamortized
organizational expenses of the AST Fund at the time of the Reorganization. These
expenses are estimated to be $____________. The New Fund will have its own
deferred organizational expenses that will be paid by the Adviser out of its own
resources.
3. INVESTMENTS, REDEMPTIONS AND EXCHANGES
Both Funds generally requires a minimum initial investment of $1,000,
and subsequent investments of $100 or more. They offer an automatic investment
plan under which selected amounts are electronically withdrawn from
shareholders' accounts with banks and are applied to purchase shares of the
applicable Fund. Redemption procedures are identical for both Funds.
Shareholders in the AST Fund are not able to exchange their shares for shares of
any other mutual fund (unless their shares are held through an independent
intermediary such as a broker-dealer who would effect the exchange).
Shareholders in the New Fund (after the Reorganization) would be able to
exchange their shares for other funds offered by the New Trust (in addition to
exchanges of shares permitted through an intermediary broker or mutual fund
market place).
C. RECOMMENDATION OF THE BOARD OF TRUSTEES
The Board of Trustees of the Trust (including a majority of the
noninterested Trustees), after due consideration, has unanimously determined
that the Reorganization is in the best interests of the shareholders of the AST
Fund and that the interests of the existing shareholders of the AST Funds would
not be diluted.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE ADOPTION OF THE PROPOSAL.
D. DISSENTERS' RIGHTS OF APPRAISAL
Shareholders of the AST Fund who object to the proposed Reorganization
will not be entitled to any "dissenters' rights" under Delaware law. However,
those shareholders have the right at any time up to when the Reorganization
occurs to redeem shares of the AST Fund at net asset value. After the
Reorganization, shareholders of the AST Fund will hold shares of the New Fund,
which may also be redeemed at net asset value in accordance with the procedures
substantially similar to those described in the AST Fund's Prospectus dated May
1, 1998, subject to applicable redemption procedures.
E. FURTHER INFORMATION ABOUT THE ACQUIRED FUND AND THE ACQUIRING FUND
Further information about the AST Fund is contained in the following
documents:
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+ AST Fund Prospectus dated May 1, 1998.
+ AST Fund Statement of Additional Information also dated May 1,
1998.
+ Documents that relate to the AST Fund are available, without
charge, by writing to the AST Fund, 800 North Brand Boulevard,
Suite 300, Glendale, California 91203.
The Trust is subject to the informational requirements of the
Securities Exchange Act of 1934 and the Investment Company Act, and it files
reports, proxy materials and other information with the SEC. These reports,
proxy materials and other information can be inspected and copied at the Public
Reference Room maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the SEC's regional offices at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of these materials can be obtained at prescribed rates from the
Public Reference Branch, Office of Consumer Affairs and Information Services, of
the SEC, Washington, D.C. 20549.
F. VOTE REQUIRED
Approval of the proposed Reorganization requires the affirmative vote
of the holders of a "majority of the outstanding voting securities" of the AST
Fund within the meaning of the Investment Company Act. If the shareholders of
the AST Fund do not approve the proposed Reorganization, or if the
Reorganization is not consummated for any other reason, then the Board of
Trustees will take any further action as it deems to be in the best interest of
the AST Fund and its shareholders, including liquidation, subject to approval by
the shareholders of the AST Fund if required by applicable law.
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III. MISCELLANEOUS ISSUES
A. OTHER BUSINESS
The Board of Trustees of the Trust knows of no other business to be
brought before the Shareholder Meeting. If any other matters come before the
Shareholder Meeting, it is the Board's intention that proxies that do not
containing specific restrictions to the contrary will be voted on those matters
in accordance with the judgment of the persons named in the enclosed form of
proxy.
B. NEXT MEETING OF SHAREHOLDERS
The Trust is not required and does not intend to hold annual or other
periodic meetings of shareholders except as required by the Investment Company
Act. If the Reorganization is not completed, the next meeting of the
shareholders of the AST Fund will be held at such time as the Board of Trustees
may determine or at such time as may be legally required. Any shareholder
proposal intended to be presented at such meeting must be received by the Trust
at its office at a reasonable time before the meeting, as determined by the
Board of Trustees, to be included in the Trust's proxy statement and form of
proxy relating to that meeting, and must satisfy all other legal requirements.
C. LEGAL MATTERS
Certain legal matters in connection with the issuance of the New Fund
Shares will be passed upon for the Trust by Paul, Hastings, Janofsky & Walker
LLP.
D. EXPERTS
The financial statements of the AST Fund for the year ended October 31,
1998, contained in the Trust's 1998 Annual Report to Shareholders, has been
audited by McGladney & Pullen, LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and has been so incorporated
in reliance upon the report of such firm given their authority as experts in
accounting and auditing.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as
of this 6th day of February, 1999, by and between Allegiance Investment Trust, a
Delaware business trust ("AIT"), for itself and on behalf of the Allegiance
American Value Fund (the "Acquiring Fund"), a series of AIT, and Advisors Series
Trust, a Delaware business trust ("AST"), on behalf of the Van Deventer & Hoch
American Value Fund (the "Acquired Fund"), a series of AST.
In accordance with the terms and conditions set forth in this
Agreement, the parties desire that all of the assets of the Acquired Fund be
transferred to the Acquiring Fund, and that the Acquiring Fund assume the Stated
Liabilities (as defined in paragraph 1.3) of the Acquired Fund, in exchange for
shares of the Acquiring Fund ("Acquiring Fund Shares"), and that these Acquiring
Fund Shares be distributed immediately after the Closing, as defined in this
Agreement, by the Acquired Fund to its shareholders in liquidation of the
Acquired Fund. This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code").
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
covenant and agree as follows:
1. REORGANIZATION OF ACQUIRED FUND
1.1 Subject to the terms and conditions herein set forth, and on the
basis of the representations and warranties contained herein, the Acquired Fund
shall assign, deliver and otherwise transfer its assets as set forth in
paragraph 1.2 (the "Fund Assets") to the Acquiring Fund and the Acquiring Fund
shall assume the Acquired Fund's Stated Liabilities. The Acquiring Fund shall,
as consideration therefor, on the Closing Date (as defined in paragraph 3.1),
deliver to the Acquired Fund full and fractional Acquiring Fund Shares, the
number of which shall be determined by dividing (a) the value of the Acquired
Fund Assets, net of the Acquired Fund's Stated Liabilities, computed in the
manner and as of the time and date set forth in paragraph 2.1, by (b) the net
asset value of one share of the Acquiring Fund computed in the manner and as of
the time and date set forth in paragraph 2.2. Such transfer, delivery and
assumption shall take place at the closing provided for in paragraph 3.1
(hereinafter sometimes referred to as the
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"Closing"). Immediately following the Closing, the Acquired Fund shall
distribute the Acquiring Fund Shares to the shareholders of the Acquired Fund in
liquidation of the Acquired Fund as provided in paragraph 1.4 hereof. These
transactions are hereinafter sometimes collectively referred to as the
"Reorganization."
1.2 (a) With respect to the Acquired Fund, the Acquired Fund Assets
shall consist of all property and assets of any nature whatsoever, including,
without limitation, all cash, cash equivalents, securities, instruments, claims
and receivables (including dividend and interest receivables) owned by the
Acquired Fund, and any prepaid expenses shown as an asset on the Acquired Fund's
books on the Closing Date.
(b) Before the Closing Date, the Acquired Fund will provide
the Acquiring Fund with a schedule of its assets and its known liabilities, and
the Acquiring Fund will provide the Acquired Fund with a copy of the current
investment objective and policies applicable to the Acquiring Fund. The Acquired
Fund reserves the right to sell or otherwise dispose of any of the securities or
other assets shown on the list of the Acquired Fund's Assets before the Closing
Date but will not, without the prior approval of the Acquiring Fund, acquire any
additional securities other than securities which the Acquiring Fund is
permitted to purchase in accordance with its stated investment objective and
policies. Before the Closing Date, the Acquiring Fund will advise the Acquired
Fund of any investments of the Acquired Fund shown on such schedule which the
Acquiring Fund would not be permitted to hold, pursuant to its stated investment
objective and policies or otherwise. If the Acquired Fund holds any investments
that the Acquiring Fund would not be permitted to hold under its stated
investment objective or policies, the Acquired Fund, if requested by the
Acquiring Fund, will dispose of those securities before the Closing Date to the
extent practicable. In addition, if it is determined that the portfolios of the
Acquired Fund and the Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations to which the Acquiring Fund is or will
be subject with respect to such investments, the Acquired Fund, if requested by
the Acquiring Fund, will dispose of and/or reinvest a sufficient amount of such
investments as may be necessary to avoid violating such limitations as of the
Closing Date.
1.3 The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Fund will
assume all liabilities and obligations reflected on an unaudited statement of
assets and liabilities of the Acquired Fund prepared by the administrator of AST
as of the Applicable Valuation Date (as defined in paragraph 2.1), in accordance
with generally accepted accounting principles consistently applied from the
prior audited period ("Stated Liabilities"). The Acquiring Fund shall assume
only the Stated Liabilities of the Acquired Fund, and no other
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liabilities or obligations, whether absolute or contingent, known or unknown,
accrued or unaccrued.
1.4 Immediately following the Closing, the Acquired Fund will
distribute the Acquiring Fund Shares received by the Acquired Fund pursuant to
paragraph 1.1 pro rata to its shareholders of record determined as of the close
of business on the Closing Date ("Acquired Fund Investors") in complete
liquidation of the Acquired Fund. That distribution will be accomplished by an
instruction, signed by an appropriate officer of AST, to transfer the Acquiring
Fund Shares then credited to the Acquired Fund's account on the books of the
Acquiring Fund to open accounts on the books of the Acquiring Fund established
and maintained by the Acquiring Fund's transfer agent in the names of record of
the Acquired Fund Investors and representing the respective pro rata number of
shares of the Acquiring Fund due such Acquired Fund Investor based on the net
asset value per share of the shares of the Acquired Fund. All issued and
outstanding shares of the Acquired Fund will be cancelled simultaneously
therewith on the Acquired Fund's books, and any outstanding share certificates
representing interests in the Acquired Fund will represent only the right to
receive such number of Acquiring Fund Shares after the Closing as determined in
accordance with paragraph 1.l.
1.5 If any request is made for a change of the registration of shares
of the Acquiring Fund to another person from the account of the stockholder in
which name the shares are registered in the records of the Acquired Fund, it
shall be a condition of such registration of shares that there be furnished to
the Acquiring Fund an instrument of transfer properly endorsed, accompanied by
appropriate signature guarantees and otherwise in proper form for transfer and
that the person requesting such registration shall pay to the Acquiring Fund any
transfer or other taxes required by reason of such registration or establish to
the reasonable satisfaction of the Acquiring Fund that such tax has been paid or
is not applicable.
1.6 Following the transfer of assets by the Acquired Fund to the
Acquiring Fund, the assumption of the Acquired Fund's Stated Liabilities by the
Acquiring Fund, and the distribution by the Acquired Fund of the Acquiring Fund
Shares received by it pursuant to paragraph 1.4, AST shall terminate the
qualification, classification and registration of the Acquired Fund with all
appropriate federal and state agencies. Any reporting or other responsibility of
AST is and shall remain the responsibility of AST up to and including the date
on which the Acquired Fund is terminated and deregistered, subject to any
reporting or other obligations described in paragraph 4.8.
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2. VALUATION
2.1 The value of the Acquired Fund's Fund Assets shall be the value of
those assets computed as of the time at which its net asset value is calculated
pursuant to the valuation procedures set forth in the Acquiring Fund's
then-current Prospectus and Statement of Additional Information on the business
day immediately preceding the Closing Date, or at such time on such earlier or
later date as may mutually be agreed upon in writing among the parties hereto
(such time and date being herein called the "Applicable Valuation Date").
2.2 The net asset value of each share of the Acquiring Fund shall be
the net asset value per share computed on the Applicable Valuation Date, using
the market valuation procedures set forth in the Acquiring Fund's then-current
Prospectus and Statement of Additional Information.
2.3 All computations of value contemplated by this Article 2 shall be
made by the Acquiring Fund's administrator in accordance with its regular
practice as pricing agent. The Acquiring Fund shall cause its administrator to
deliver a copy of its valuation report to AST and to the Acquired Fund at the
Closing.
3. CLOSING(S) AND CLOSING DATE
3.l The Closing for the Reorganization shall occur on March 26, 1999,
and/or on such other date(s) as may be mutually agreed upon in writing by the
parties hereto (each, a "Closing Date"). The Closing(s) shall be held at the
offices of Paul, Hastings, Janofsky & Walker LLP, 345 California Street, San
Francisco, California 94104 or at such other location as is mutually agreeable
to the parties hereto. All acts taking place at the Closing(s) shall be deemed
to take place simultaneously as of 10:00 a.m., local time on the Closing Date
unless otherwise provided.
3.2 The Acquiring Fund's custodian shall deliver at the Closing a
certificate of an authorized officer stating that: (a) the Fund Assets have been
delivered in proper form to the Acquiring Fund on the Closing Date and (b) all
necessary taxes including all applicable federal and state stock transfer
stamps, if any, have been paid, or provision for payment shall have been made,
by the Acquired Fund in conjunction with the delivery of portfolio securities.
3.3 Notwithstanding anything herein to the contrary, if on the
Applicable Valuation Date (a) the New York Stock Exchange shall be closed to
trading or trading thereon shall be restricted or (b) trading or the reporting
of trading on such exchange or
4
<PAGE>
elsewhere shall be disrupted so that, in the judgment of AST, accurate appraisal
of the value of the net assets of the Acquiring Fund or the Acquired Fund is
impracticable, the Applicable Valuation Date shall be postponed until the first
business day after the day when trading shall have been fully resumed without
restriction or disruption and reporting shall have been restored.
4. COVENANTS WITH RESPECT TO THE ACQUIRING FUND AND THE ACQUIRED FUND
4.1 With respect to the Acquired Fund, AST has called or will call a
meeting of Acquired Fund shareholders to consider and act upon this Agreement
and to take all other actions reasonably necessary to obtain the approval of the
transactions contemplated herein, including approval for the Acquired Fund's
liquidating distribution of Acquiring Fund Shares contemplated hereby, and for
AST to terminate the Acquired Fund's qualification, classification and
registration if requisite approvals are obtained with respect to the Acquired
Fund. AST, on behalf of the Acquired Fund, shall prepare the notice of meeting,
form of proxy and proxy statement (collectively, "Proxy Materials") to be used
in connection with that meeting.
4.2 AST, on behalf of the Acquired Fund, covenants that the Acquiring
Fund Shares to be issued hereunder are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms of this
Agreement.
4.3 AST, on behalf of the Acquired Fund, will assist the Acquiring Fund
in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of shares of the Acquired Fund.
4.4 Subject to the provisions hereof, AIT, on its own behalf and on
behalf of the Acquiring Fund, and AST, on its own behalf and on behalf of the
Acquired Fund, will take, or cause to be taken, all actions, and do, or cause to
be done, all things reasonably necessary, proper or advisable to consummate and
make effective the transactions contemplated herein.
4.5 AST, on behalf of the Acquired Fund, shall furnish to the Acquiring
Fund on the Closing Date, a final statement of the total amount of the Acquired
Fund's assets and liabilities as of the Closing Date.
4.6 As soon after the Closing Date as is reasonably practicable, AST,
on behalf of the Acquired Fund: (a) shall prepare and file all federal and other
tax returns and reports of the Acquired Fund required by law to be filed with
respect to all periods
5
<PAGE>
ending on/or before the Closing Date but not theretofore filed and (b) shall pay
all federal and other taxes shown as due thereon and/or all federal and other
taxes that were unpaid as of the Closing Date.
4.7 Following the transfer of Fund Assets by the Acquired Fund to the
Acquiring Fund and the assumption of the Stated Liabilities of the Acquired Fund
in exchange for Acquiring Fund Shares as contemplated herein, AST will file any
final regulatory reports, including but not limited to any Form N-SAR and Rule
24f-2 filings with respect to the Acquired Fund, promptly after the Closing Date
and also will take all other steps as are necessary and proper to effect the
termination or declassification of the Acquired Fund in accordance with the laws
of the State of Delaware and other applicable requirements.
5. REPRESENTATIONS AND WARRANTIES
5.1 AIT, on behalf of the Acquiring Fund, represents and warrants to
the Acquired Fund as follows:
(a) ATI was duly created pursuant to its Agreement and
Declaration of Trust by the Trustees for the purpose of acting as a management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and is validly existing under the laws of the State of Delaware,
and the Declaration of Trust directs the Trustees to manage the affairs of AIT
and grants them all powers necessary or desirable to carry out such
responsibility, including administering AIT's business as currently conducted by
AIT and as described in the current prospectuses of AIT. AIT is registered as an
investment company classified as an open-end management company, under the 1940
Act and its registration with the SEC as an investment company is in full force
and effect;
(b) The Registration Statement on Form N-1A filed by AIT (the
"Registration Statement"), with the Securities and Exchange Commission ("SEC"),
including the current prospectus and statement of additional information of the
Acquiring Fund, conforms or will conform, at all times up to and including the
Closing Date, in all material respects to the applicable requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act and the
regulations thereunder and does not include or will not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
6
<PAGE>
(c) The Acquiring Fund is not in violation of, and the
execution, delivery and performance of this Agreement by AIT for itself and on
behalf of the Acquiring Fund does not and will not (i) violate AIT's Declaration
of Trust or By-Laws, or (ii) result in a breach or violation of, or constitute a
default under, any material agreement or material instrument, to which AIT is a
party or by which its properties or assets are bound;
(d) Except as previously disclosed in writing to the Acquired
Fund, no litigation or administrative proceeding or investigation of or before
any court or governmental body is presently pending or, to AIT's knowledge,
threatened against AIT or its business, the Acquiring Fund or any of its
properties or assets, which, if adversely determined, would materially and
adversely affect AIT or the Acquiring Fund's financial condition or the conduct
of their business. AIT knows of no facts that might form the basis for the
institution of any such proceeding or investigation, and the Acquiring Fund is
not a party to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely affects, or is
reasonably likely to materially and adversely affect, its business or its
ability to consummate the transactions contemplated herein;
(e) All issued and outstanding shares, including shares to be
issued in connection with the Reorganization, of the Acquiring Fund will, as of
the Closing Date, be duly authorized and validly issued and outstanding, fully
paid and nonassessable, the shares of each class of the Acquiring Fund issued
and outstanding before the Closing Date were offered and sold in compliance with
the applicable registration requirements, or exemptions therefrom, of the 1933
Act, and all applicable state securities laws, and the regulations thereunder,
and the Acquiring Fund does not have outstanding any option, warrants or other
rights to subscribe for or purchase any of its shares nor is there outstanding
any security convertible into any of its shares;
(f) The execution, delivery and performance of this Agreement
on behalf of the Acquiring Fund will have been duly authorized prior to the
Closing Date by all necessary action on the part of AIT, the Trustees and the
Acquiring Fund, and this Agreement will constitute a valid and binding
obligation of AIT and the Acquiring Fund enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general applicability relating
to or affecting creditors, rights and to general equity principles;
(g) On the effective date of the Registration Statement, at
the time of the meeting of the Acquired Fund shareholders and on the Closing
Date, any written information furnished by AIT with respect to the Acquiring
Fund for use in the Proxy Materials, the Registration Statement or any other
materials provided in connection with
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<PAGE>
the Reorganization does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the information
provided not misleading;
(h) No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the Securities Exchange Act of 1934
(the "1934 Act"), the 1940 Act or Delaware law for the execution of this
Agreement by AIT, for itself and on behalf of the Acquiring Fund, or the
performance of the Agreement by AIT for itself and on behalf of the Acquiring
Fund, except for such consents, approvals, authorizations and filings as have
been made or received, and except for such consents, approvals, authorizations
and filings as may be required after the Closing Date;
(i) The Statement of Assets and Liabilities as of December 31,
1998 audited by McGladney & Pullen LLP (copies of which have been or will be
furnished to the Acquired Fund) fairly present, in all material respects, the
Acquiring Fund's financial condition as of such date in accordance with
generally accepted accounting principles consistently applied, and as of such
dates there were no liabilities of the Acquiring Fund (contingent or otherwise)
known to AIT that were not disclosed therein but that would be required to be
disclosed therein in accordance with generally accepted accounting principles;
(j) Since the date of the most recent audited financial
statements, there has not been any material adverse change in the Acquiring
Fund's financial condition, assets, liabilities or business, other than changes
occurring in the ordinary course of business; or any incurrence by the Acquiring
Fund of indebtedness maturing more than one year from the date such indebtedness
was incurred, except as otherwise disclosed in writing to and accepted by the
Acquired Fund, prior to the Closing Date (for the purposes of this subparagraph
(j), neither a decline in the Acquiring Fund's net asset value per share nor a
decrease in the Acquiring Fund's size due to redemptions shall be deemed to
constitute a material adverse change); and
(k) All federal and other tax returns and reports of AIT and
the Acquiring Fund required by law to be filed on or before the Closing Date
shall have been filed, and all taxes owed by AIT or the Acquiring Fund shall
have been paid so far as due, and to the best of AIT's knowledge, no such return
is currently under audit and no assessment has been asserted with respect to any
such return.
5.2 AST, on behalf of the Acquired Fund, represents and warrants to the
Acquiring Fund as follows:
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(a) AST was duly created pursuant to its Agreement and Declaration of
Trust by the Trustees for the purpose of acting as a management investment
company under the 1940 Act and is validly existing under the laws of the State
of Delaware, and the Agreement and Declaration of Trust directs the Trustees to
manage the affairs of AST and grants them all powers necessary or desirable to
carry out such responsibility, including administering AST's business as
currently conducted by AST and as described in the current prospectuses of AST.
AST is registered as an investment company classified as an open-end management
company, under the 1940 Act and its registration with the SEC as an investment
company is in full force and effect;
(b) All of the issued and outstanding shares of the Acquired Fund have
been offered and sold in compliance in all material respects with applicable
registration or notice requirements of the 1933 Act and state securities laws;
all issued and outstanding shares of each class of the Acquired Fund are, and on
the Closing Date will be, duly authorized and validly issued and outstanding,
and fully paid and non-assessable, and the Acquired Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any of its shares, nor is there outstanding any security convertible into any of
its shares;
(c) The Acquired Fund is not in violation of, and the execution,
delivery and performance of this Agreement by AST for itself and on behalf of
the Acquired Fund does not and will not (i) violate AST's Agreement and
Declaration of Trust or By-Laws, or (ii) result in a breach or violation of, or
constitute a default under, any material agreement or material instrument to
which AST is a party or by its properties or assets are bound;
(d) Except as previously disclosed in writing to the Acquiring Fund, no
litigation or administrative proceeding or investigation of or before any court
or governmental body is presently pending or, to AST's knowledge, threatened
against the Acquired Fund or any of its properties or assets which, if adversely
determined, would materially and adversely affect the Acquired Fund's financial
condition or the conduct of its business, AST knows of no facts that might form
the basis for the institution of any such proceeding or investigation, and the
Acquired Fund is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body that materially and
adversely affects, or is reasonably likely to materially and adversely affect,
its business or its ability to consummate the transactions contemplated herein;
(e) The Statement of Assets and Liabilities, Statements of Operations
and Statements of Changes in Net Assets of the Acquired Fund as of and for the
period ended December 31, 1998, audited by McGladrey & Pullen LLP (copies of
which have been or
9
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will be furnished to the Acquiring Fund) fairly present, in all material
respects, the Acquired Fund's financial condition as of such date and its
results of operations for such period in accordance with generally accepted
accounting principles consistently applied, and as of such date there were no
liabilities of the Acquired Fund (contingent or otherwise) known to AST that
were not disclosed therein but that would be required to be disclosed therein in
accordance with generally accepted accounting principles;
(f) Since the date of the most recent audited financial statements,
there has not been any material adverse change in the Acquired Fund's financial
condition, assets, liabilities or business, other than changes occurring in the
ordinary course of business, or any incurrence by the Acquired Fund of
indebtedness maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, prior to the Closing Date (for the purposes of this subparagraph
(f), neither a decline in the Acquired Fund's net asset value per share nor a
decrease in the Acquired Fund's size due to redemptions shall be deemed to
constitute a material adverse change);
(g) All federal and other tax returns and reports of AST and the
Acquired Fund required by law to be filed on or before the Closing Date shall
have been filed, and all taxes owed by AST or the Acquired Fund shall have been
paid so far as due, and to the best of AST's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to any
such return;
(h) For each full and partial taxable year from its inception through
the Closing Date, the Acquired Fund has qualified as a separate regulated
investment company under the Code and has taken all necessary and required
actions to maintain such status;
(i) At the Closing Date, the Acquired Fund will have good and
marketable title to the Fund Assets and full right, power and authority to
assign, deliver and otherwise transfer such Fund Assets hereunder, and upon
delivery and payment for such Fund Assets as contemplated herein, the Acquiring
Fund will acquire good and marketable title thereto, subject to no restrictions
on the ownership or transfer thereof other than such restrictions as might arise
under the 1933 Act;
(j) The execution, delivery and performance of this Agreement on behalf
of the Acquired Fund will have been duly authorized prior to the Closing Date by
all necessary action on the part of AST, the Trustees and the Acquired Fund, and
this Agreement will constitute a valid and binding obligation AST and the
Acquired Fund enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency,
10
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reorganization, arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors, rights and to general equity
principles;
(k) From the effective date of the Registration Statement, through the
time of the meeting of the Acquired Fund Investors, and on the Closing Date, the
Proxy Materials (exclusive of the portions of the Acquiring Fund's Prospectus
contained or incorporated by reference therein, and exclusive of any written
information furnished by AST with respect to the Acquiring Fund): (i) will
comply in all material respects with the applicable provisions of the 1933 Act,
the 1934 Act and the 1940 Act and the regulations thereunder and (ii) do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and as of such dates and times, any written information furnished by
AST, on behalf of the Acquired Fund, for use in the Registration Statement or in
any other manner that may be necessary in connection with the transactions
contemplated hereby does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the information provided not
misleading; and
(l) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the 1934 Act, the 1940 Act or Delaware law for the
execution of this Agreement by AST, for itself and on behalf of the Acquired
Fund, or the performance of the Agreement by AST for itself and on behalf of the
Acquired Fund, except for such consents, approvals, authorizations and filings
as have been made or received, and except for such consents, approvals,
authorizations and filings as may be required subsequent to the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED FUND
The obligations of AST to consummate the Reorganization with respect to
the Acquired Fund shall be subject to the performance by AIT, for itself and on
behalf of the Acquiring Fund, of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions with respect to the Acquiring Fund:
6.1 All representations and warranties of AIT with respect to the
Acquiring Fund contained herein shall be true and correct in all material
respects as of the date hereof and, except as they may be affected by the
transactions contemplated herein, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2 AIT, on behalf of the Acquiring Fund, shall have delivered to the
Acquired Fund at the Closing a certificate executed on behalf of the Acquiring
Fund by AIT's
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President, Vice President, Assistant Vice President, Secretary or Assistant
Secretary in a form reasonably satisfactory to the Acquired Fund and dated as of
the Closing Date, to the effect that the representations and warranties of AIT
with respect to the Acquiring Fund made herein are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated herein, and as to such other matters as the Acquired Fund shall
reasonably request.
6.3 Unless waived by the Acquired Fund, the Acquired Fund shall have
received at the Closing a favorable opinion of Paul, Hastings, Janofsky & Walker
LLP, counsel to AIT, dated as of the Closing Date, in a form reasonably
satisfactory to the Acquired Fund, substantially to the effect that:
(a) AIT is a duly registered, open-end, management investment
company, and its registration with the SEC as an investment company under the
1940 Act is in full force and effect;
(b) the Acquiring Fund is a separate portfolio of AIT, which
is a business trust duly created pursuant to its Agreement and Declaration of
Trust, is legally existing and in good standing under the laws of the State of
Delaware, and the Agreement and Declaration of Trust directs the Trustees to
manage the affairs of AIT and grants them all powers necessary or desirable to
carry out such responsibility, including administering AIT's business as
described in the current prospectuses of AIT;
(c) this Agreement has been duly authorized, executed and
delivered by AIT on behalf of AIT and the Acquiring Fund and, assuming due
authorization, execution and delivery of this Agreement on behalf of the
Acquired Fund, is a valid and binding obligation of AIT, enforceable against AIT
in accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other similar laws of
general applicability relating to or affecting creditors, rights and to general
equity principles;
(d) the Acquiring Fund Shares to be issued to the Acquired
Fund and then distributed to the Acquired Fund Investors pursuant to this
Agreement are duly registered under the 1933 Act on the appropriate form, and
are duly authorized and upon such issuance will be validly issued and
outstanding and fully paid and non-assessable, and no shareholder of the
Acquiring Fund has any preemptive rights to subscription or purchase in respect
thereof;
(e) the Registration Statement has become effective with the
SEC and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness thereof
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has been issued and no proceedings for that purpose have been instituted or are
pending or threatened;
(f) no consent, approval, authorization, filing or order of
any court or governmental authority of the United States or any state is
required for the consummation of the Reorganization with respect to the
Acquiring Fund, except for such consents, approvals, authorizations and filings
as have been made or received, and except for such consents, approvals,
authorizations and filings as may be required after the Closing Date; and
(g) to the best knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to AIT or the Acquiring
Fund or any of their properties or assets and neither AIT nor the Acquiring Fund
is a party to or subject to the provisions of any order, decree or judgment of
any court or governmental body that materially and adversely affects its
business.
6.4 As of the Closing Date, there shall have been no material change in
the investment objective, policies and restrictions nor any material change in
the investment management fees, fee levels payable pursuant to any 12b-1 plan of
distribution, other fees payable for services provided to the Acquiring Fund,
fee waiver or expense reimbursement undertakings, or sales loads of the
Acquiring Fund from those fee amounts, undertakings and sales load amounts
described in the prospectus of the Acquiring Fund delivered to the Acquired Fund
pursuant to paragraph 4.1 and in the Proxy Materials.
6.5 With respect to the Acquiring Fund, the Board of Trustees of AIT
shall have determined that the Reorganization is in the best interests of the
Acquiring Fund and that the interests of the existing shareholders of the
Acquiring Fund would not be diluted as a result of the Reorganization.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUND
The obligations of AIT to consummate the Reorganization with respect to
the Acquiring Fund shall be subject to the performance by AST of all the
obligations to be performed by it hereunder, with respect to the Acquired Fund,
on or before the Closing Date and, in addition thereto, the following
conditions:
7.1 All representations and warranties of AST with respect to the
Acquired Fund contained herein shall be true and correct in all material
respects as of the date
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hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date.
7.2 AST, on behalf of the Acquired Fund, shall have delivered to the
Acquiring Fund at the Closing a certificate executed on behalf of the Acquired
Fund, by AST's President, Vice President, Assistant Vice President, Secretary or
Assistant Secretary, in form and substance satisfactory to the Acquiring Fund
and dated as of the Closing Date, to the effect that the representations and
warranties of AST with respect to the Acquired Fund made herein are true and
correct at and as of the Closing Date, except as they may be affected by the
transactions contemplated herein and as to such other matters as the Acquiring
Fund shall reasonably request.
7.3 Unless waived by the Acquiring Fund, the Acquiring Fund shall have
received at the Closing a favorable opinion from Paul, Hastings, Janofsky &
Walker LLP, counsel to AST, dated as of the Closing Date, in a form reasonably
satisfactory to the Acquiring Fund, substantially to the effect that:
(a) AST is a duly registered, open-end, management investment
company, and its registration with the SEC as an investment company under the
1940 Act is in full force and effect;
(b) the Acquired Fund is a separate portfolio of AST, which is
a business trust duly created pursuant to its Agreement and Declaration of
Trust, is validly existing and in good standing under the laws of the State of
Delaware, and the Agreement and Declaration of Trust directs the Trustees to
manage the affairs of AST and grants them all powers necessary or desirable to
carry out such responsibility, including administering AST's business as
described in the current prospectuses of AST;
(c) this Agreement has been duly authorized, executed and
delivered by AST on behalf of AST and the Acquired Fund and, assuming due
authorization, execution and delivery of this Agreement on behalf of the
Acquiring Fund, is a valid and binding obligation of AST, enforceable against
AST in accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other similar laws of
general applicability relating to or affecting creditors, rights and to general
equity principles;
(d) no consent, approval, authorization, filing or order of
any court or governmental authority of the United Sates or any state is required
for the consummation of the Reorganization with respect to the Acquired Fund,
except for such consents,
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approvals, authorizations and filings as have been made or received, and except
for such consents, approvals, authorizations and filings as may be required
subsequent to the Closing Date; and
(e) to the best knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to AST or the Acquired
Fund or any of their properties or assets and neither AST nor the Acquired Fund
is a party to or subject to the provisions of any order, decree or judgment of
any court or governmental body that materially and adversely effects its
business.
7.4 With respect to the Acquired Fund, the Board of Trustees of AST
shall have determined that the Reorganization is in the best interests of the
Acquired Fund.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
The obligations of the Acquiring Fund and of the Acquired Fund herein
are each subject to the further conditions that on or before the Closing Date
with respect to the Acquiring Fund and the Acquired Fund:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of AST's Agreement and
Declaration of Trust and the requirements of the 1940 Act, and certified copies
of the resolutions evidencing such approval shall have been delivered to the
Acquiring Fund.
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or any of the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders,
approvals and permits of federal, state and local regulatory authorities
(including, without limitation, those of the SEC and of state securities
authorities) deemed necessary by AIT, on behalf of the Acquiring Fund, or AST,
on behalf of the Acquired Fund, to permit consummation, in all material
respects, of the transactions contemplated herein shall have been obtained,
except where failure to obtain any such consent, order or permit would not, in
the opinion of the party asserting that the condition to closing has not been
satisfied, involve a risk of
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a material adverse effect on the assets or properties of the Acquiring Fund or
the Acquired Fund.
8.4 The Registration Statement shall have become effective under the
1933 Act, no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5 The Acquired Fund shall have declared and paid a dividend or
dividends which, together with all previous such dividends, shall have the
effect of distributing to the Acquired Fund's shareholders substantially all of
the Acquired Fund's investment company taxable income for all taxable years
ending on or prior to the Closing Date (computed without regard to any deduction
for dividends paid) and substantially all of its net capital gain realized in
all taxable years ending on or prior to the Closing Date (after reduction for
any capital loss carryover).
8.6 AST shall have received satisfactory assurances from Paul,
Hastings, Janofsky & Walker LLP counsel to both the Acquiring Fund and the
Acquired Fund (and if deemed appropriate by that firm, based on customary
representation certificates from AIT, AST and the Acquired Fund) substantially
to the effect that, for federal income tax purposes:
(a) the transfer by the Acquired Fund of the Fund Assets in
exchange for the Acquiring Fund Shares and the assumption by the Acquiring Fund
of the Stated Liabilities will constitute a "reorganization" within the meaning
of Section 368(a)(1) of the Code and the Acquiring Fund and the Acquired Fund
each are a "party to a reorganization" within the meaning of Section 368(b) of
the Code;
(b) no gain or loss will be recognized by the Acquiring Fund
upon the receipt of the Fund Assets solely in exchange for the Acquiring Fund
Shares and the assumption by the Acquiring Fund of the Stated Liabilities;
(c) no gain or loss will be recognized by the Acquired Fund
upon the transfer of the Fund Assets to the Acquiring Fund and the assumption by
the Acquiring Fund of the Stated Liabilities in exchange for the Acquiring Fund
Shares or upon the distribution (whether actual or constructive) of the
Acquiring Fund Shares to the Acquired Fund shareholders in exchange for their
shares of the Acquired Fund;
(d) no gain or loss will be recognized by the Acquired Fund
Investors upon the exchange of their Acquired Fund Shares for the Acquiring Fund
Shares;
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(e) the aggregate tax basis for the Acquiring Fund Shares
received by each of the Acquired Fund Investors pursuant to the Reorganization
will be the same as the aggregate tax basis of the Acquired Fund shares held by
such shareholder immediately prior to the Reorganization, and the holding period
of the Acquiring Fund Shares to be received by each Acquired Fund Investors will
include the period during which the Acquired Fund shares exchanged therefor were
held by such shareholder (provided the Acquired Fund shares were held as capital
assets on the date of the Reorganization); and
(f) the tax basis of the Acquired Fund assets acquired by the
Acquiring Fund will be same as the tax basis of such assets to the Acquired Fund
immediately prior to the Reorganization, and the holding period of the assets of
the Acquired Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Acquired Fund.
9. EXPENSES
9.1 Except as may be otherwise provided herein, each of the Acquired
Fund and the Acquiring Fund shall be liable for its respective expenses incurred
in connection with entering into and carrying out the provisions of this
Agreement, whether or not the transactions contemplated hereby are consummated.
The expenses payable by the Acquired Fund hereunder shall include (i) fees and
expenses of its counsel and independent auditors incurred in connection with the
Reorganization; (ii) expenses associated with printing and mailing the
Prospectus/Proxy Statement and soliciting proxies in connection with the meeting
of shareholders of the Acquired Fund referred to in paragraph 4.1 hereof; (iii)
all fees and expenses related to the liquidation of the Acquired Fund; (iv) fees
and expenses of the Acquired Fund's custodian and transfer agent(s) incurred in
connection with the Reorganization; and (v) any special pricing fees associated
with the valuation of the Acquired Fund's portfolio on the Applicable Valuation
Date. Van Deventer & Hoch has agreed to reimburse the Acquired Fund for the
expenses listed in items (i), (ii), (iii) (iv) and (v) above. The expenses
payable by the Acquiring Fund hereunder shall include (i) fees and expenses of
its counsel and independent auditors incurred in connection with the
Reorganization; (ii) expenses associated with preparing this Agreement and
preparing and filing the Registration Statement under the 1933 Act; (iii)
registration or qualification fees and expenses of preparing and filing such
forms, if any, as are necessary under applicable state securities laws to
qualify the Acquiring Fund Shares to be issued in connection with the
Reorganization; (iv) any fees and expenses of the Acquiring Fund's custodian and
transfer agent(s) incurred in connection with the Reorganization; and (v) any
special pricing fees associated with the valuation of the Acquiring Fund's
portfolio on the
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Applicable Valuation Date. Van Deventer & Hoch has agreed to reimburse the
Acquiring Fund for the expenses listed in items (i), (ii), (iii), (iv) and (v)
above.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 This Agreement constitutes the entire agreement between the
parties and supersedes any prior or contemporaneous understanding or arrangement
with respect to the subject matter hereof.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated herein.
11. TERMINATION
11.1 This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time before the Closing by the mutual written
consent of the Acquiring Fund and the Acquired Fund.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of AST,
acting on behalf of the Acquired Fund and AIT, acting on behalf of the Acquiring
Fund; provided, however, that following the meeting of the shareholders of the
Acquired Fund, no such amendment may have the effect of changing the provisions
for determining the number of shares of the Acquiring Fund to be to the Acquired
Fund Investors under this Agreement to the detriment of such Acquired Fund
Investors, or otherwise materially and adversely affecting the Acquired Fund,
without the Acquired Fund obtaining the Acquired Fund Investors= further
approval except that nothing in this paragraph 12 shall be construed to prohibit
the Acquiring Fund and the Acquired Fund from amending this Agreement to change
the Closing Date or Applicable Valuation Date by mutual agreement.
13. NOTICES
Any notice, report, statement or demand required or permitted by any provision
of this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy, certified mail or overnight express courier addressed to:
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For AIT, on behalf of itself and the Acquiring Fund:
Allegiance Investment Trust
c/o Van Deventer & Hoch
800 North Brand Boulevard, Suite 300
Glendale, California 91203
Attention: Richard A. Snyders,
President and Chief Executive Officer
With a copy to:
David A. Hearth, Esq.
Paul, Hastings, Janofsky & Walker LLP
345 California St., 29th Floor
San Francisco, California 94104
For AST, on behalf of itself and the Acquired Fund:
Advisors Series Trust
4455 E. Camelback Road, Suite 261E
Phoenix, Arizona 85018
Attention: Robert H. Wadsworth
With a copy to:
Julie Allecta, Esq.
Paul, Hastings, Janofsky & Walker LLP
345 California St., 29th Floor
San Francisco, California 94104
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
14.1 The article and paragraph headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All references herein to Articles, paragraphs,
subparagraphs or Exhibits shall be construed as referring to Articles,
paragraphs or subparagraphs hereof or Exhibits hereto, respectively. Whenever
the terms "hereto", "hereunder", "herein" or "hereof" are
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<PAGE>
used in this Agreement, they shall be construed as referring to this entire
Agreement, rather than to any individual Article, paragraph, subparagraph or
sentence.
14.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other parties. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized officer.
AIT AND ACQUIRING FUND:
- -----------------------
Allegiance Investment Trust,
for itself and on behalf of
the Allegiance
American Value Fund
By: /s/ RICHARD A. SNYDERS
------------------------------------
Richard A. Snyders
President and Executive Officer
AST AND ACQUIRED FUND:
- ----------------------
Advisors Series Trust,
for itself and on behalf of
Van Deventer & Hoch
American Value Fund
By: /s/ ERIC M. BANHAZL
------------------------------------
Eric M. Banhazl
President
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<PAGE>
PROXY
FOR SPECIAL MEETING OF SHAREHOLDERS OF
VAN DEVENTER & HOCH AMERICAN VALUE FUND
ON MARCH ___, 1999
THE UNDERSIGNED HEREBY APPOINTS RICHARD A. SNYDERS AND CHARLES L. BOCK,
AND EACH OF THEM, PROXIES FOR THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION,
TO REPRESENT THE UNDERSIGNED AND TO VOTE ALL OF THE SHARES OF VAN DEVENTER &
HOCH AMERICAN VALUE FUND, WHICH THE UNDERSIGNED IS ENTITLED TO VOTE AT THE
SPECIAL MEETING OF SHAREHOLDERS OF THE VAN DEVENTER & HOCH AMERICAN VALUE FUND
TO BE HELD ON MARCH ___, 1999 AND AT ANY ADJOURNMENT THEREOF.
+ PROPOSAL TO APPROVE OR DISAPPROVE A REORGANIZATION OF THE VAN DEVENTER
& HOCH AMERICAN VALUE FUND PROVIDING FOR (I) THE TRANSFER OF
SUBSTANTIALLY ALL OF THE ASSETS AND LIABILITIES OF THE VAN DEVENTER &
HOCH AMERICAN VALUE FUND TO THE ALLEGIANCE AMERICAN VALUE FUND, A
SERIES OF THE ALLEGIANCE INVESTMENT TRUST, IN EXCHANGE FOR SHARES OF
THE NEW FUND (THE "NEW FUND SHARES") OF IDENTICAL NUMBER AND VALUE,
(II) THE PRO RATA DISTRIBUTION OF THOSE NEW FUND SHARES TO THE
SHAREHOLDERS OF THE VAN DEVENTER & HOCH AMERICAN VALUE FUND IN FULL
REDEMPTION OF THOSE SHAREHOLDERS' SHARES IN THE VAN DEVENTER & HOCH
AMERICAN VALUE FUND, AND (III) THE IMMEDIATE LIQUIDATION AND
TERMINATION OF THE VAN DEVENTER & HOCH AMERICAN VALUE FUND, ALL AS
DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
AND, IN THEIR DISCRETION, TO TRANSACT ANY OTHER BUSINESS THAT MAY LAWFULLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT(S) THEREOF.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES AND WILL BE
VOTED AS YOU DIRECT ON THIS FORM. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE PROPOSAL.
Dated: ___________________, 1999
----------------------------------
Signature of Shareholder
----------------------------------
Signature of Shareholder
When shares are registered jointly in the names of two or more persons, ALL must
sign. Signature(s) must correspond exactly with the name(s) shown. Please sign,
date and return promptly in the enclosed envelope.
2
