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-12
ALLEGIANCE INVESTMENT TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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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VAN DEVENTER & HOCH
800 NORTH BRAND BOULEVARD, SUITE 300
GLENDALE, CALIFORNIA 91203
(800) 548-7787
APRIL 26, 2000
DEAR ALLEGIANCE AMERICAN VALUE FUND SHAREHOLDER:
We are seeking your approval to reorganize the Allegiance American Value
Fund (the "AIT Fund"), a series of the Allegiance Investment Trust (the
"Trust"), into the Van Deventer & Hoch American Value Fund (the "New Fund"), a
newly created series of the Advisors Series Trust ("AST"). Van Deventer & Hoch
is the investment adviser to both Funds. As you may recall, the AIT Fund
formerly was a series of AST.
We propose this transaction because when we launched the Trust, and
reorganized the AIT Fund from AST, our intention was to combine the AIT Fund
with other proprietary funds into our own fund group. We believed that we could
more effectively control costs and efficiencies through our own fund group. For
various reasons, that has not happened and we have determined that it would be
in the best interests of the Fund to reorganize back into AST - a complex
familiar to us, and that has previously served the AIT Fund well. The transition
would be a smooth one as the New Fund would have the same administrator as the
AIT Fund. We have agreed to pay all expenses of the reorganization so
shareholders will not bear those costs.
The Board of Trustees of the Allegiance Investment 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
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ALLEGIANCE AMERICAN VALUE FUND
ALLEGIANCE INVESTMENT TRUST
800 North Brand Boulevard, Suite 300
Glendale, California 91203
(800) 548-7787
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF
ALLEGIANCE AMERICAN VALUE FUND SHAREHOLDERS
TO BE HELD May 22, 2000
To the Shareholders of the Allegiance American Value Fund:
Your Fund will host a special meeting of shareholders at the offices of
Allegiance American Value Fund, 800 North Brand Boulevard, Suite 300, Glendale,
California 91203 on Monday, May 22, 2000, at 10:00 a.m., local time. At the
meeting, we will ask you to vote on:
1. A proposal to reorganize the Allegiance American Value Fund, a series
of the Allegiance Investment Trust, into the Van Deventer & Hoch
American Value Fund, a newly created series of the Advisors Series
Trust.
2. Any other business that properly comes before the meeting.
Only shareholders of record at the close of business on April 3, 2000 (the
Record Date), will be entitled to receive this notice and to vote at the
meeting.
By Order of the Board of Trustees
Charles L. Bock
Secretary
YOUR VOTE IS IMPORTANT REGARDLESS OF HOW MANY
SHARES YOU OWNED ON THE RECORD DATE.
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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.
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ALLEGIANCE AMERICAN VALUE FUND
ALLEGIANCE INVESTMENT TRUST
800 North Brand Boulevard, Suite 300
Glendale, California 91203
(800) 548-7787
PROXY STATEMENT
Dated: April 26, 2000
WHAT IS THIS DOCUMENT AND WHY DID WE SEND IT TO YOU?
The Board of Trustees approved a plan to reorganize the Allegiance American
Value Fund (the "AIT Fund") that is part of Allegiance Investment Trust (the
"Trust") into the newly created Van Deventer & Hoch American Value Fund (the
"New Fund"), a series of Advisors Series Trust (the "AST Trust") (that
transaction is referred to as the "Reorganization"). Shareholder approval is
needed to proceed with the Reorganization. The shareholder meeting will be held
on May 22, 2000 (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 AIT 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 AIT Fund as of the effective date of the Reorganization
(the "Effective Date") in full redemption of those shareholders'
shares in the AIT Fund; and
* the immediate liquidation and termination of the AIT Fund.
As a result of the Reorganization, each shareholder of the AIT Fund would
instead hold New Fund Shares having the same total value as the shares of the
AIT Fund held immediately before the Reorganization. Lawyers for the AIT 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 AIT Fund's shareholders to recognize a gain or loss for federal income
tax purposes.
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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.
WHAT OTHER IMPORTANT DOCUMENTS SHOULD I KNOW ABOUT?
The AIT 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 AIT Fund dated March 1, 2000.
* Statement of Additional Information relating to the AIT Fund also
dated March 1, 2000.
Those documents are available without charge by writing to the AIT Fund at
800 North Brand Boulevard, Suite 300, Glendale, California 91203, or by calling
(800) 548-7787.
The Annual Report to Shareholders of the AIT Fund for the fiscal year ended
October 31, 1999, containing audited financial statements of the AIT 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 AIT Fund at its address and telephone number listed above.
The New Fund is not now an operating mutual fund nor does it have a
prospectus that has been declared effective by the SEC. Shareholders may,
however, obtain a preliminary prospectus and Statement of Additional Information
relating to the New Fund without charge by writing to the New Fund at 800 North
Brand Boulevard, Suite 300, Glendale, California 91203, or by calling (800)
548-7787. Those documents are subject to completion and revision before becoming
effective with the SEC.
All of these documents are available through the SEC's web site at
www.sec.gov. (Information about the AIT Fund can be found under Allegiance
Investment Trust and information about the New Fund can be found under Advisors
Series Trust.)
It is expected that this Proxy Statement will be mailed to shareholders on
or about April 26, 2000.
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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 NEW FUND SHARES................................10
B. COMPARISON OF THE FUNDS..............................................10
C. COMPARISON OF THE EXPENSES...........................................10
D. RECOMMENDATION OF THE BOARD OF TRUSTEES..............................12
E. DISSENTERS' RIGHTS OF APPRAISAL......................................12
F. FURTHER INFORMATION ABOUT THE AIT FUND AND THE NEW FUND..............12
G. VOTE REQUIRED........................................................13
III. MISCELLANEOUS ISSUES....................................................14
A. OTHER BUSINESS.......................................................14
B. NEXT MEETING OF SHAREHOLDERS.........................................14
C. LEGAL MATTERS........................................................14
D. EXPERTS..............................................................14
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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 AIT 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 at a meeting held on March 13, 2000,
subject to the approval of the AIT Fund's shareholders.
B. THE PROPOSAL
At the Shareholder Meeting, the shareholders of the AIT Fund will be asked
to approve the proposed Reorganization of the AIT Fund into the New Fund. The
Reorganization will include the transfer of all of the assets and liabilities of
the AIT Fund to the New Fund. All remaining AIT Fund shareholders will receive
New Fund Shares in exchange. The AIT 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 AIT Fund and identical to the
number of shares owned by each AIT Fund shareholder immediately before the
Reorganization.
Van Deventer & Hoch (the "Adviser") currently serves as the investment
adviser of the AIT Fund and will also serve as the adviser to the New Fund. The
New Fund will have substantially similar investment objective and policies to
the AIT Fund. The AIT Fund's investment objective is long-term growth of capital
and above average current income with investments primarily in the equity
securities of U.S. companies. The AIT Fund seeks to achieve its investment
objective by investing primarily in the equity securities of seasoned U.S.
companies that the Adviser believes are undervalued relative to their assets and
potential earnings and dividends.
Investments in the New Fund will be subject to identical risks as
investments are currently subject to in the AIT Fund. The purchase and
redemption arrangements of the New Fund will be identical to the current
purchase and redemption arrangements of the AIT Fund. The New Fund will have the
identical distribution arrangements as the AIT Fund.
The Adviser and the Board of Trustees believe that the proposed
Reorganization is in the best interests of the AIT Fund and its shareholders,
and that the interests of existing shareholders of the AIT Fund will not be
diluted as a result of the proposed Reorganization.
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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 two operating
series, or funds, including the AIT Fund. Each series has its own identity,
investment objective and policies and operates independently for purposes of
investments, dividends, other distributions and redemptions.
The AIT Fund has only one class of shares, with one fee and expense
structure. The AIT 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 AIT Fund is entitled to one vote or
corresponding fraction at the Shareholder Meeting. At the close of business on
April 3, 2000, 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 AIT 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 AIT Fund. The term "majority of the
outstanding voting securities" of the AIT Fund, as defined in the Investment
Company Act, means: the affirmative vote of the lesser of (i) 67% of the voting
securities of the AIT Fund present at the meeting if more than 50% of the
outstanding shares of the AIT Fund are present in person or by proxy or (ii)
more than 50% of the outstanding shares of the AIT Fund. This approval is
required (rather 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
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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 AIT Fund's shareholders of record and (to the
Trust's knowledge) beneficial owners who owned more than five percent of the AIT
Fund's shares are as follows:
Percentage of the Fund's
Shareholder Outstanding Shares
----------- ------------------------
Charles Schwab & Co. Inc. [ ]%
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
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
AIT 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 AIT 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 AIT Fund. At that time, the New
Fund will issue to the AIT Fund the same number of shares as the shareholders of
the AIT Fund held of record on the day before the Effective Date.
At the same time as that asset transfer, the AIT Fund will distribute the
New Fund Shares it receives pro rata to each remaining shareholder of the AIT
Fund, distributing the same number of shares as the outstanding shares of the
AIT Fund held of record by that shareholder on the day before the Effective
Date.
This distribution of the New Fund Shares to the AIT 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 AIT Fund's shareholders.
Immediately following the AIT Fund's pro rata liquidating distribution of
the New Fund Shares to the AIT Fund shareholders, the AIT Fund will liquidate
and terminate.
Completion of the Reorganization is subject to approval by the shareholders
of the AIT 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 AIT Fund's shareholders and
completed, shareholders of the AIT 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 AIT Fund immediately after completion of the
Reorganization will be equivalent to the total net asset value of the AIT 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 continue
as the New Fund's Distributor. Investment Company Administration, L.L.C. will
continue as the administrator for the New Fund. PricewaterhouseCoopers LLP also
will serve as auditors for the New Fund.
3. REASONS FOR THE REORGANIZATION
The Board of Trustees has determined that the cost of operating the AIT
Fund under its current and anticipated size is prohibitively expensive and that
the goals of the Trust to start new funds under a new investment management
company have not been met. Further, the Board of Trustees recognizes that the
AIT Fund, and its Adviser, have a strong and positive history with the AST
Trust.
4. FEDERAL INCOME TAX CONSEQUENCES
Management of the AIT Fund and the New Fund has been advised by its
counsel, Paul, Hastings, Janofsky & Walker LLP (although no formal tax opinion
has been requested), 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 AIT Fund shares held before the Reorganization. Therefore,
shareholders should not recognize any gain or loss on the AIT Fund shares for
federal income tax purposes as a result of the Reorganization. Subject to
limited exceptions, most states use federal taxable income as a taxable base for
this purpose. Consequently, the Trust believes that the state income tax
treatment of the proposed Reorganization for most shareholders is more likely
than not to be the same as the federal tax consequences. Although the Trust is
not aware of any adverse state income tax consequences, the Trust has not made
any investigation as to those consequences for the shareholders. Because each
shareholder's tax situation may have unique issues, shareholders should consult
their own tax advisers.
5. DESCRIPTION OF THE NEW FUND SHARES
Each New Fund Share issued to AIT 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
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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 objective and
policies to the AIT Fund. The AIT Fund's investment objective is long-term
growth of capital and above average current income with investments primarily in
the equity securities of U.S. companies. The AIT Fund seeks to achieve its
investment objective by investing primarily in the equity securities of seasoned
U.S. companies that the Adviser believes are undervalued relative to their
assets and potential earnings and dividends.
The fundamental investment restrictions of the New Fund are identical to
that of the AIT Fund, and cannot be changed by a Fund without the affirmative
vote of a majority of that Fund's outstanding voting securities as defined in
the Investment Company Act.
The Trust and the AST Trust are both Delaware business trusts with
substantially similar Agreements and Declarations of Trust and By-Laws.
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 the AIT Fund as compared to the New Fund. The Funds
do not impose any front-end or deferred sales loads and they do not charge
shareholders for exchanging shares or reinvesting dividends.
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FEES AND EXPENSES OF EACH FUND
New Fund
AIT Fund (pro forma)
-------- -----------
SHAREHOLDER FEES (fees paid
directly from your investment)
Redemption Fee 0.00% 0.00%
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from
Fund assets)
Management Fee 0.70% 0.70%
Distribution/Service
(12b-1) Fee 0.25% 0.25%
Administrative Services Fee 0.35% 0.70%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.30% 1.65%
===== =====
The Administrative Services Fee compensates the Adviser for retaining other
service providers needed by a Fund and paying all of its operating costs of the
Fund, regardless whether those costs are more or less than the Administrative
Services Fee. Should the shareholders of the AIT Fund approve the
Reorganization, the Administrative Service Fee will increase from 0.35% of
annual net assets to 0.70%. The Boards of the Trust and of AST have determined
that the increase of the Administrative Services Fee is reasonable given that
the Adviser will continue to be responsible for paying all of the New Fund's
operating costs including the costs of certain service providers to the New Fund
- - I.E., fund accounting, transfer agency and printing fees. The Board has
determined that the Administrative Services Fee increase is designed to
adequately ensure that the Adviser has the ability to pay the New Fund's
operating costs while still giving the Shareholder's a fixed cost limitation of
1.65% of annual net assets.
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
- ---- ------ ------- ------- --------
AIT Fund $ 132 $ 412 $ 713 $1,568
New Fund (pro forma) $ 167 $ 519 $ 895 $1,947
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3. INVESTMENTS, REDEMPTIONS AND EXCHANGES
Both Funds generally require a minimum initial investment of $2,500 ($1,000
for retirement plans), 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 AIT 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 AIT
Fund and that the interests of the existing shareholders of the AIT Funds would
not be diluted.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ADOPTION OF THE REORGANIZATION.
D. DISSENTERS' RIGHTS OF APPRAISAL
Shareholders of the AIT 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 AIT Fund at net asset value. After the Reorganization,
shareholders of the AIT 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 AIT Fund's Prospectus dated March 1, 2000,
subject to applicable redemption procedures.
E. FURTHER INFORMATION ABOUT THE ACQUIRED FUND AND THE ACQUIRING FUND
Further information about the AIT Fund is contained in the following
documents:
* AIT Fund Prospectus dated March 1, 2000.
* AIT Fund Statement of Additional Information also dated March 1, 2000.
* Documents that relate to the AIT Fund are available, without charge,
by writing to the AIT Fund, 800 North Brand Boulevard, Suite 300,
Glendale, California 91203.
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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.
The New Fund is not now an operating mutual fund nor does it have a
prospectus that has been declared effective by the SEC. Shareholders may,
however, obtain a preliminary prospectus and Statement of Additional Information
relating to the New Fund without charge by writing to the New Fund at 800 North
Brand Boulevard, Suite 300, Glendale, California 91203, or by calling (800)
548-7787. Those documents are subject to completion and revision before becoming
effective with the SEC.
All of these documents are available through the SEC's web site at
www.sec.gov. (Information about the AIT Fund can be found under Allegiance
Investment Trust and information about the New Fund can be found under Advisors
Series Trust.)
It is expected that this Proxy Statement will be mailed to shareholders on
or about April 26, 2000.
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 AIT Fund
within the meaning of the Investment Company Act. If the shareholders of the AIT
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 AIT Fund and its
shareholders, including liquidation, subject to approval by the shareholders of
the AIT 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 contain 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 AIT 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 AIT Fund for the year ended October 31,
1999, contained in the Trust's 1999 Annual Report to Shareholders, has been
audited by PricewaterhouseCoopers, LLP, independent auditors, as stated in their
report dated November 30, 1999, 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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PROXY CARD
ALLEGIANCE INVESTMENT TRUST - AMERICAN VALUE FUND
SPECIAL MEETING OF SHAREHOLDERS
MAY 22, 2000
The undersigned hereby appoints Richard A. Snyders as proxy, with the power to
appoint his substitute, and hereby authorizes him to represent and to vote, as
designated below, all shares of the American Value Fund (the "Fund"), a series
of the Allegiance Investment Trust (the "Trust"), held of record by the
undersigned on April 3, 2000 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|
PROPOSAL FOR AGAINST ABSTAIN
- -------- --- ------- -------
1. Proposal to approve a reorganization of the [ ] [ ] [ ]
Allegiance American Value Fund providing for (i)
the transfer of substantially all of the assets
and liabilities of the Allegiance American Value
Fund to the Van Deventer & Hoch American Value
Fund, a series of the Advisors Series 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 Allegiance American Value
Fund in full redemption of those shareholders'
shares in the Allegiance American Value Fund, and
(iii) the immediate liquidation and termination of
the Allegiance American Value Fund, all as
described in the accompanying Proxy Statement.
2. To transact such other business as may properly [ ] [ ] [ ]
come before the Special Meeting, or any
adjournment thereof.
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 Proxy 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 Proxy Card at one in
the enclosed envelope.
- ------------------------------------ ---------------------------------------
Signature Date Signature Date
- --------------------------------------------------------------------------------
NOTE: PLEASE SIGN YOUR NAME EXACTLY AS YOUR SHAREHOLDER NAME OR NAMES APPEAR ON
THE ACCOUNT. THIS WILL 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.
- --------------------------------------------------------------------------------
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of
this ___ day of April, 2000, by and between Advisors Series Trust, a Delaware
business trust ("AST"), for itself and on behalf of the Van Deventer & Hoch
American Value Fund (the "Acquiring Fund"), a series of AST, and Allegiance
Investment Trust, a Delaware business trust ("AIT"), on behalf of the Allegiance
American Value Fund (the "Target Fund"), a series of AIT.
In accordance with the terms and conditions set forth in this Agreement,
the parties desire that all of the assets of the Target Fund be transferred to
the Acquiring Fund, and that the Acquiring Fund assume the Stated Liabilities
(as defined in paragraph 1.3) of the Target 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 Target Fund to its shareholders in liquidation of the Target 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 TARGET FUND
1.1 Subject to the terms and conditions herein set forth, and on the basis
of the representations and warranties contained herein, the Target 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 Target Fund's Stated Liabilities. The Acquiring Fund shall, as consideration
therefor, on the Closing Date (as defined in paragraph 3.1), deliver to the
Target Fund full and fractional Acquiring Fund Shares, the number of which shall
be determined by dividing (a) the value of the Target Fund Assets, net of the
Target 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
"Closing"). Immediately following the Closing, the Target Fund shall distribute
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the Acquiring Fund Shares to the shareholders of the Target Fund in liquidation
of the Target 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 Target Fund, the Target 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 Target
Fund, and any prepaid expenses shown as an asset on the Target Fund's books on
the Closing Date.
(b) Before the Closing Date, the Target Fund will provide the Acquiring
Fund with a schedule of its assets and its known liabilities, and the Acquiring
Fund will provide the Target Fund with a copy of the current investment
objective and policies applicable to the Acquiring Fund. The Target Fund
reserves the right to sell or otherwise dispose of any of the securities or
other assets shown on the list of the Target 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 Target
Fund of any investments of the Target 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 Target Fund holds any investments
that the Acquiring Fund would not be permitted to hold under its stated
investment objective or policies, the Target 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 Target
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 Target 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 Target 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 Target 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 Target Fund, and no other liabilities or obligations,
whether absolute or contingent, known or unknown, accrued or unaccrued.
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<PAGE>
1.4 Immediately following the Closing, the Target Fund will distribute the
Acquiring Fund Shares received by the Target Fund pursuant to paragraph 1.1 pro
rata to its shareholders of record determined as of the close of business on the
Closing Date ("Target Fund Investors") in complete liquidation of the Target
Fund. That distribution will be accomplished by an instruction, signed by an
appropriate officer of AIT, to transfer the Acquiring Fund Shares then credited
to the Target 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 Target Fund Investors and
representing the respective pro rata number of shares of the Acquiring Fund due
such Target Fund Investor based on the net asset value per share of the shares
of the Target Fund. All issued and outstanding shares of the Target Fund will be
cancelled simultaneously therewith on the Target Fund's books, and any
outstanding share certificates representing interests in the Target 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 Target 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 Target Fund to the Acquiring
Fund, the assumption of the Target Fund's Stated Liabilities by the Acquiring
Fund, and the distribution by the Target Fund of the Acquiring Fund Shares
received by it pursuant to paragraph 1.4, AIT shall terminate the qualification,
classification and registration of the Target Fund with all appropriate federal
and state agencies. Any reporting or other responsibility of AIT is and shall
remain the responsibility of AIT up to and including the date on which the
Target Fund is terminated and deregistered, subject to any reporting or other
obligations described in paragraph 4.8.
2. VALUATION
2.1 The value of the Target 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
3
<PAGE>
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 AIT and to the Target Fund at the Closing.
3. CLOSING(S) AND CLOSING DATE
3.l The Closing for the Reorganization shall occur on June 1, 2000, 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
the Acquiring Fund, 4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 85018
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 Target 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 elsewhere shall be disrupted so that, in the judgment of
AIT, accurate appraisal of the value of the net assets of the Acquiring Fund or
the Target 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
<PAGE>
4. COVENANTS WITH RESPECT TO THE ACQUIRING FUND AND THE TARGET FUND
4.1 With respect to the Target Fund, AIT has called or will call a meeting
of Target 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 Target Fund's
liquidating distribution of Acquiring Fund Shares contemplated hereby, and for
AIT to terminate the Target Fund's qualification, classification and
registration if requisite approvals are obtained with respect to the Target
Fund. AIT, on behalf of the Target 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 AIT, on behalf of the Target Fund, covenants that the Acquiring Fund
Shares to be issued hereunder are not being Target for the purpose of making any
distribution thereof, other than in accordance with the terms of this Agreement.
4.3 AIT, on behalf of the Target Fund, will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of shares of the Target Fund.
4.4 Subject to the provisions hereof, AST, on its own behalf and on behalf
of the Acquiring Fund, and AIT, on its own behalf and on behalf of the Target
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 AIT, on behalf of the Target Fund, shall furnish to the Acquiring Fund
on the Closing Date, a final statement of the total amount of the Target Fund's
assets and liabilities as of the Closing Date.
4.6 As soon after the Closing Date as is reasonably practicable, AIT, on
behalf of the Target Fund: (a) shall prepare and file all federal and other tax
returns and reports of the Target Fund required by law to be filed with respect
to all periods 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 Target Fund to the
Acquiring Fund and the assumption of the Stated Liabilities of the Target Fund
in exchange for Acquiring Fund Shares as contemplated herein, AIT will file any
5
<PAGE>
final regulatory reports, including but not limited to any Form N-SAR and Rule
24f-2 filings with respect to the Target 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 Target Fund in accordance with the laws
of the State of Delaware and other applicable requirements.
5. REPRESENTATIONS AND WARRANTIES
5.1 AST, on behalf of the Acquiring Fund, represents and warrants to the
Target Fund as follows:
(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 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 AST and
grants them all powers necessary or desirable to carry out such responsibility,
including administering AST's business as currently conducted by AIT 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) The Registration Statement on Form N-1A filed by AST (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;
(c) The Acquiring Fund is not in violation of, and the execution,
delivery and performance of this Agreement by AST for itself and on behalf of
the Acquiring Fund does not and will not (i) violate AST'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 Target Fund, no
litigation or administrative proceeding or investigation of or before any court
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<PAGE>
or governmental body is presently pending or, to AST's knowledge, threatened
against AST or its business, the Acquiring Fund or any of its properties or
assets, which, if adversely determined, would materially and adversely affect
AST or the Acquiring Fund's financial condition or the conduct of their
business. AST 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 AST, the Trustees and the Acquiring Fund,
and this Agreement will constitute a valid and binding obligation of AST 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 Target Fund shareholders and on the Closing Date, any written
information furnished by AST with respect to the Acquiring Fund for use in the
Proxy Materials, the Registration Statement or any other materials provided in
connection with 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 AST,
for itself and on behalf of the Acquiring Fund, or the performance of the
Agreement by AST for itself and on behalf of the Acquiring Fund, except for such
7
<PAGE>
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) 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 Target
Fund, prior to the Closing Date (for the purposes of this subparagraph (i),
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
(j) All federal and other tax returns and reports of AST 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 AST or the Acquiring 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.
5.2 AIT, on behalf of the Target Fund, represents and warrants to the
Acquiring Fund as follows:
(a) AIT 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 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) All of the issued and outstanding shares of the Target 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 Target Fund are, and on
the Closing Date will be, duly authorized and validly issued and outstanding,
and fully paid and non-assessable, and the Target 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;
8
<PAGE>
(c) The Target Fund is not in violation of, and the execution, delivery
and performance of this Agreement by AIT for itself and on behalf of the Target
Fund does not and will not (i) violate AIT'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 AIT 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 AIT's knowledge, threatened
against the Target Fund or any of its properties or assets which, if adversely
determined, would materially and adversely affect the Target Fund's financial
condition or the conduct of its business, AIT knows of no facts that might form
the basis for the institution of any such proceeding or investigation, and the
Target 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 Target Fund as of and for the
period ended December 31, 1999, audited by Price Waterhouse-Coopers LLP (copies
of which have been or will be furnished to the Acquiring Fund) fairly present,
in all material respects, the Target 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 Target 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;
(f) Since the date of the most recent audited financial statements,
there has not been any material adverse change in the Target Fund's financial
condition, assets, liabilities or business, other than changes occurring in the
ordinary course of business, or any incurrence by the Target 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 Target Fund's net asset value per share nor a
decrease in the Target 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 AIT and the Target
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 Target Fund shall have been paid so far
9
<PAGE>
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;
(h) For each full and partial taxable year from its inception through
the Closing Date, the Target 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 Target 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 Target Fund will have been duly authorized prior to the Closing Date by
all necessary action on the part of AIT, the Trustees and the Target Fund, and
this Agreement will constitute a valid and binding obligation AIT and the Target
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;
(k) From the effective date of the Registration Statement, through the
time of the meeting of the Target 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 AIT 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
AIT, on behalf of the Target 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 AIT, for itself and on behalf of the Target Fund,
or the performance of the Agreement by AIT for itself and on behalf of the
Target Fund, except for such consents, approvals, authorizations and filings as
10
<PAGE>
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 TARGET FUND
The obligations of AIT to consummate the Reorganization with respect to the
Target Fund shall be subject to the performance by AST, 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 AST 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 AST, on behalf of the Acquiring Fund, shall have delivered to the
Target Fund at the Closing a certificate executed on behalf of the Acquiring
Fund by AST's President, Vice President, Assistant Vice President, Secretary or
Assistant Secretary in a form reasonably satisfactory to the Target Fund and
dated as of the Closing Date, to the effect that the representations and
warranties of AST 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 Target
Fund shall reasonably request.
6.3 Unless waived by the Target Fund, the Target Fund shall have received
at the Closing a favorable opinion of Paul, Hastings, Janofsky & Walker LLP,
counsel to AST, dated as of the Closing Date, in a form reasonably satisfactory
to the Target 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 Acquiring Fund is a separate portfolio of AST, 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 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;
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(c) this Agreement has been duly authorized, executed and delivered by
AST on behalf of AST and the Acquiring Fund and, assuming due authorization,
execution and delivery of this Agreement on behalf of the Target 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) the Acquiring Fund Shares to be issued to the Target Fund and then
distributed to the Target 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 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 AST or the Acquiring
Fund or any of their properties or assets and neither AST 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
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described in the prospectus of the Acquiring Fund delivered to the Target Fund
pursuant to paragraph 4.1 and in the Proxy Materials.
6.5 With respect to the Acquiring Fund, the Board of Trustees of AST shall
have determined that the Reorganization is in the best interests of the
Acquiring Fund and that the interests of any 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 AST to consummate the Reorganization with respect to the
Acquiring Fund shall be subject to the performance by AIT of all the obligations
to be performed by it hereunder, with respect to the Target Fund, on or before
the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of AIT with respect to the Target
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 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 AIT, on behalf of the Target Fund, shall have delivered to the
Acquiring Fund at the Closing a certificate executed on behalf of the Target
Fund, by AIT'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 AIT with respect to the Target 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 AIT, dated as of the Closing Date, in a form reasonably
satisfactory to the Acquiring 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 Target Fund is a separate portfolio of AIT, 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,
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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 Target Fund and, assuming due authorization,
execution and delivery of this Agreement on behalf of the Acquiring 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) 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 Target 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; 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 AIT or the Target
Fund or any of their properties or assets and neither AIT nor the Target 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 Target Fund, the Board of Trustees of AIT shall
have determined that the Reorganization is in the best interests of the Target
Fund.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
TARGET FUND
The obligations of the Acquiring Fund and of the Target Fund herein are
each subject to the further conditions that on or before the Closing Date with
respect to the Acquiring Fund and the Target 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
Target Fund in accordance with the provisions of AIT'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.
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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 AST, on behalf of the Acquiring Fund, or AIT, on behalf of the
Target 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 a material adverse effect on the assets or properties of the Acquiring
Fund or the Target Fund.
8.4 The Registration Statement shall have become effective under the 1933
Act with respect to the Target Fund, 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 Target 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 Target Fund's shareholders substantially all of the Target
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 AIT shall have received satisfactory assurances from Paul, Hastings,
Janofsky & Walker LLP counsel to both the Acquiring Fund and the Target Fund
(and if deemed appropriate by that firm, based on customary representation
certificates from AST, AIT and the Target Fund) substantially to the effect
that, for federal income tax purposes:
(a) the transfer by the Target 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 Target Fund each are a
"party to a reorganization" within the meaning of Section 368(b) of the Code;
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(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 Target 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 Target Fund shareholders in exchange for their
shares of the Target Fund;
(d) no gain or loss will be recognized by the Target Fund Investors
upon the exchange of their Target Fund Shares for the Acquiring Fund Shares;
(e) the aggregate tax basis for the Acquiring Fund Shares received by
each of the Target Fund Investors pursuant to the Reorganization will be the
same as the aggregate tax basis of the Target 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 Target Fund Investors will
include the period during which the Target Fund shares exchanged therefor were
held by such shareholder (provided the Target Fund shares were held as capital
assets on the date of the Reorganization); and
(f) the tax basis of the Target Fund assets Target by the Acquiring
Fund will be same as the tax basis of such assets to the Target Fund immediately
prior to the Reorganization, and the holding period of the assets of the Target
Fund in the hands of the Acquiring Fund will include the period during which
those assets were held by the Target Fund.
9. EXPENSES
9.1 Except as may be otherwise provided herein, each of the Target 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 Target 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 Target Fund referred to in paragraph 4.1 hereof; (iii)
all fees and expenses related to the liquidation of the Target Fund; (iv) fees
and expenses of the Target 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 Target Fund's portfolio on the Applicable Valuation
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Date. Van Deventer & Hoch, the investment adviser to the Target Fund, has agreed
to reimburse the Target 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 Applicable Valuation Date. Van Deventer & Hoch, the investment
adviser to the Acquiring Fund, 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 Target 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 AIT, acting
on behalf of the Target Fund and AST, acting on behalf of the Acquiring Fund;
provided, however, that following the meeting of the shareholders of the Target
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 Target Fund
Investors under this Agreement to the detriment of such Target Fund Investors,
or otherwise materially and adversely affecting the Target Fund, without the
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Target Fund obtaining the Target Fund Investors' further approval except that
nothing in this paragraph 12 shall be construed to prohibit the Acquiring Fund
and the Target 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:
For AST, on behalf of itself and the Acquiring 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
For AIT, on behalf of itself and the Target 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
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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 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 State of Delaware.
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.
AST AND ACQUIRING FUND:
Advisors Series Trust,
for itself and on behalf of
Van Deventer & Hoch
American Value Fund
By:
------------------------------------
Eric M. Banhazl
President
AIT AND TARGET FUND:
Allegiance Investment Trust,
for itself and on behalf of
the Allegiance
American Value Fund
By:
------------------------------------
Richard A. Snyders
President and Chairman of the Board
of Trustees
Van Deventer & Hoch,
for purposes of Section 9.1 only
By:
------------------------------------
Richard A. Snyders
Chief Executive Officer
