SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. ____)
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
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 Section 240.14a-11(c) or 240.14a-12
Lexington Convertible Securities Fund
(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):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
PRELIMINARY PROXY MATERIAL
FOR THE INFORMATION OF
THE SECURITIES AND EXCHANGE COMMISSION ONLY
LEXINGTON CONVERTIBLE SECURITIES FUND
Park 80 West/Plaza Two
Saddle Brook, New Jersey 07663
___________________, 1999
Dear Fellow Shareholder:
You are invited to attend a Special Meeting of Shareholders of
Lexington Convertible Securities Fund ("your Fund") to be held at the
offices of your Fund, Park 80 West/Plaza Two, Saddle Brook, New Jersey
07663, on April 26, 1999 at 3:00 p.m. Eastern Time.
At this meeting, you will be asked to approve a proposal that
would permit your Fund's portfolio manager, Ariston Capital Management
Corporation, to assume full management responsibility for Fund
operations. The proposal would achieve this by transferring all of the
assets of your Fund through a tax-free reorganization (the
"Reorganization") into a newly-organized fund called the Ariston
Convertible Securities Fund (the "New Fund"), that is sponsored and
managed solely by Ariston Capital Management Corporation.
The New Fund will be substantially identical to your Fund in its
philosophy, investment objective and policies and day-to-day portfolio
management. In addition, upon approval and completion of the
Reorganization, the number of shares you own will not change and the New
Fund's net asset value per share will be the same as your Fund's net
asset value per share on that date.
The Board of Trustees of your Fund has given full and careful
consideration to the proposed Reorganization and has concluded that this
proposal is in the best interests of shareholders. The Reorganization
of your Fund is anticipated to provide the Fund's shareholders:
Assumption by Ariston of full Fund management responsibility
Retention of your Fund's core portfolio strategies
Reduction in annual Fund operating expenses
Neither you nor your Fund will be liable for any federal income tax as a
result of the Reorganization.
The enclosed proxy statement describes the proposal in greater detail.
We welcome your attendance at the Special Meeting. If you are unable
to attend, please sign, date and return the enclosed proxy card promptly
in order to spare additional proxy solicitation expenses.
Sincerely,
________________________
Richard B. Russell
President
PRELIMINARY PROXY MATERIAL
FOR THE INFORMATION OF
THE SECURITIES AND EXCHANGE COMMISSION ONLY
LEXINGTON CONVERTIBLE SECURITIES FUND
Park 80 West/Plaza Two
Saddle Brook, New Jersey 07663
1-800-526-0056
Notice of Special Meeting of Shareholders
to be held April 26, 1999
A Special Meeting of Shareholders of the Lexington Convertible
Securities Fund (your "Fund") will be held on April 26, 1999. The
Meeting will be held at the offices of your Fund, Park 80 West/Plaza
Two, Saddle Brook, New Jersey. At the Meeting, we will ask shareholders
to vote on:
1. approving or disapproving an Agreement and Plan of Reorganization and
Liquidation (the "Plan") and the transactions contemplated in the Plan
to reorganize your Fund into Ariston Convertible Securities Fund (the
"New Fund"), a newly-created series of AmeriPrime Funds and to
subsequently dissolve your Fund.
2. any other business properly brought before the meeting.
Any shareholder who owned shares of your Fund on March 19, 1999 (the
"Record Date") will receive notice of the Meeting and will be entitled
to vote at the Meeting or any adjournment of the Meeting. Please read
the full text of the Proxy Statement for a complete understanding of our
proposal.
Dated: ______, 1999 By Order of the Board of
Trustees,
Lisa Curcio
Secretary
You can help avoid the necessity and expense of sending follow-up
letters to ensure a quorum by promptly returning the enclosed proxy. If
you are unable to attend the Meeting, please mark, sign, date, and
return the enclosed proxy by mail or by fax so that the necessary quorum
may be represented at the Meeting. The enclosed envelope requires no
postage if mailed in the United States.
PRELIMINARY PROXY MATERIALS
FOR THE INFORMATION OF
THE SECURITIES AND EXCHANGE COMMISSION ONLY
LEXINGTON CONVERTIBLE SECURITIES FUND
Park 80 West/Plaza Two
Saddle Brook, New Jersey 07663
1-800-526-0056
Special Meeting of Shareholders
to be held
April 26, 1999
General Information
The Board of Trustees of Lexington Convertible Securities Fund, a
Massachusetts business trust ("your Fund") has sent you this Proxy
Statement to ask you to vote on a proposal affecting your Fund. Your
Fund will hold a Special Meeting of Shareholders on April 26, 1999 at
3:00 p.m., Eastern Time, at its offices located at Park 80 West/Plaza
Two, Saddle Brook, New Jersey 07663 in order to consider the proposal
described below.
At the Special Meeting, you will be asked to approve or disapprove an
Agreement and Plan of Reorganization and Liquidation, and to consider
any other business that comes before the Special Meeting. We describe
this Reorganization proposal below.
The Board of Trustees has fixed the close of business on March 19, 1999
as the record date to determine the shareholders who are entitled to
notice of the Special Meeting and to vote their shares. Shareholders are
entitled to cast one vote for each full share, and a fractional vote for
each fractional share held. We are first mailing this Proxy Statement,
Notice of Meeting and Proxy Card on or about ______________, 1999.
AmeriPrime Funds and your Fund are both required by federal law to
file reports, proxy statements and other information with the Securities
and Exchange Commission (the "SEC"). The SEC maintains a Web site that
contains information about your Fund and the AmeriPrime Funds. Any such
proxy material, reports and other information can be inspected and
copied at the public reference facilities of the SEC, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the SEC's New York Regional Office,
Seven World Trade Center, New York, NY 10048. Copies of such materials
can be obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
Proposal 1
Approval or Disapproval of the
Agreement and Plan of Reorganization and Liquidation
Introduction
The purpose of this proposal is to reorganize your Fund into the Ariston
Convertible Securities Fund (the "New Fund"). Your Fund's investment
objective would not change and your Fund's investment policies would be
substantially identical to the New Fund. Your portfolio manager would
not change. The amount of fees and expenses that the New Fund pays
would be less than what your Fund currently pays. Neither you nor your
Fund would be liable for federal income tax solely as a result of the
Reorganization.
The Proposed Reorganization
Your Fund is currently the only portfolio of Lexington Convertible
Securities Fund. Lexington Management Corporation ("Lexington"), the
investment adviser of your Fund, and Ariston Capital Management
Corporation ("Ariston"), the sub-adviser to your Fund, have proposed to
reorganize your Fund to make it a part of AmeriPrime Funds (the
"Trust"). The Trust currently consists of __ distinct investment
portfolios.
In order to accomplish this Reorganization, you are being asked to
approve an Agreement and Plan of Reorganization and Liquidation (the
"Plan"). In this Proxy Statement, we refer to the transactions
contemplated in the Plan as the "Reorganization." Significant
provisions of the Plan are summarized below; however this is just a
summary. The Plan, a copy of which is attached as Exhibit A to this
Proxy Statement and should be read, contains all of the details.
If shareholders approve the Plan, your Fund would reorganize and
become a separate portfolio of the Trust. The Reorganization would
occur approximately on April 30, 1999.
Among other things, the Plan provides that,
On the Reorganization date, your Fund would transfer all its assets
and liabilities to the New Fund, a newly-created portfolio of the
Trust.
In exchange, the New Fund would issue to your Fund shares of
beneficial interest of the New Fund. Your Fund would then
distribute to you the same number of shares of the New Fund that
you own of your Fund as of the Reorganization date.
You would then become a shareholder of the New Fund.
Your Fund would then dissolve.
You should know the following about the proposed Reorganization:
The New Fund was created to continue the operations of your Fund. It
does not currently operate, and will begin operations only when
the Reorganization occurs.
The New Fund has the same investment objective and substantially
identical investment policies as your Fund.
The New Fund will be advised by your Fund's Sub-Adviser and will have
the same portfolio manager.
You will not pay any commissions or fees as part of the
Reorganization.
Neither you nor your Fund will be liable for any federal income tax
as a result of the Reorganization.
The amount of fees and expenses that you pay as a shareholder of the
New Fund will be lower than the amount you currently pay as a
shareholder of your Fund.
Why We Are Asking You to Approve the Reorganization
Lexington and Ariston believe that reorganizing your Fund as part
of the Trust will benefit shareholders. Your Fund currently operates as
a separate entity and is responsible for all of the expenses of
operating a business trust, including legal and general administrative
costs. Due to its relatively small size, your Fund's expenses (as a
percentage of assets) have been relatively high. The New Fund's
management agreement with Ariston will require that Ariston pay most of
the New Fund's operating expenses. Some fund expenses, like the fees
and expenses of the Trustees, will remain a New Fund expense, but will
be lower than your Fund's. The table below compares the New Fund's
estimated expenses with your Fund's expenses for the year ended December
31, 1998. Total New Fund annual expenses will not exceed 2.25% of
average net assets.
Annual Fund Operating Expenses
(as a percentage of average net assets) Your Fund New Fund
Management Fees 1.00% 2.12%
12b-1 Fee 0.10% 0.10%
Other Expenses 0.22% 0.03%*
Total Fund Operating Expenses 2.32% 2.25%
* Ariston estimates that 12b-1 expenses, which may not exceed
0.25% annually, will be 0.10% of the New Fund's net assets.
In addition to the benefits of the new expense structure, Lexington and
Ariston believe that your Fund (with its focus on convertible
securities) has not, from a marketing and distribution perspective,
fit well within the "Lexington family of funds." As part of the
AmeriPrime Funds, it is anticipated that the New Fund will grow in
assets, thereby allowing more efficient management of the New Fund's
portfolio.
Considerations by the Board of Trustees
On March 2, 1999, the Board of Trustees of your Fund approved the
Plan. The Board of Trustees concluded that the Reorganization would not
result in any dilution of interests of shareholders and would be in the
best interests of shareholders.
In approving the Plan, the Board of Trustees relied upon representations
of Lexington concerning the operation of your Fund and the New Fund.
The Board of Trustees considered a number of factors, including:
New Fund has the same investment objective and substantially
identical investment policies as your Fund.
New Fund has the same portfolio manager and the portfolio will be
managed in the same way as your Fund's portfolio.
You will not pay any commissions or fees as part of the
Reorganization.
Neither you nor your Fund will be liable for any federal income tax
as a result of the Reorganization.
The amount of fees and expenses that you pay as a shareholder of the
New Fund will be lower than the amount you currently pay as a
shareholder of your Fund.
The Trustees also discussed the likelihood of your Fund
growing if it were not reorganized, and considered the benefits to
shareholder if the New Fund grows in assets.
Information About the Trust and your Fund
Your Fund is a Massachusetts business trust. The Trust is an Ohio
business trust. Shareholders of your Fund and the Trust have similar
rights. Information about shareholder rights of the New Fund are
described below under "Information about AmeriPrime Funds" on page ___.
The investment objective of both your Fund and the New Fund is
total return. Unlike your Fund, the New Fund's objective is not a
"fundamental policy" and therefore could be changed without shareholder
approval. Many of the New Fund's policies are identical to your Fund's
and Ariston intends to manage the New Fund's portfolio in the same way
it has managed your Fund's portfolio. For example, both funds invest
primarily in securities convertible into common stock, and both may
invest without limitation in lower rated debt securities.
Some of the New Fund's policies are the same as your Fund's but
are not fundamental and could be changed by the Trustees without
shareholder approval. This includes the New Fund's policies on illiquid
securities, warrants, short sales and purchases made on "margin." For
example, neither Fund can invest more than 10% of its assets in illiquid
securities, but the New Fund could change this policy without
shareholder approval. By keeping certain investment policies non-fundamental,
Ariston has greater flexibility to respond to changing markets.
The Investment Adviser and Sub-adviser
Lexington is your Fund's investment adviser. Ariston is your
Fund's sub-adviser and has provided day-to-day portfolio management
since your Fund's inception.
Currently, Lexington is entitled to receive an investment
management fee computed daily and payable monthly at an annual rate of
1.0% or your Fund's average daily net assets, and Lexington pays Ariston
a sub-advisory fee computed daily and payable monthly at an annual rate
of 0.75% of your Fund's average daily net assets up to $7 million and
0.50% of such assets equal to and in excess of $7 million. As of March
1, 1999, your Fund had total net assets of approximately $ 8.8 million.
In addition to Lexington's advisory fee, your Fund pays all of its own
operating expenses and 12b-1 fees. For the year ended December 31,
1998, your Fund paid total expenses of 2.32%.
If shareholders approve the Reorganization, Ariston will enter
into a new Management Agreement with the Trust on behalf of New Fund.
The Management Agreement will provide that Ariston will be entitled to
receive a management fee, computed daily and payable monthly, equal to
2.25% of the New Fund's average daily net assets, less the amount of the
New Fund's 12b-1 expenses and trustee fees and expenses. This means
that absent any extraordinary expenses, your Fund's total annual
expenses will equal 2.25% of average daily net assets.
Unlike most other mutual funds, Ariston will pay most of the New
Fund's operating expenses, including transfer agency, pricing,
custodial, auditing and legal services. The New Fund will only pay 12b-1
fees, brokerage, taxes, borrowing costs, fees and expenses of trustees
and extraordinary expenses. If the proposed fee structure had been in
effect in 1998, your Fund's expenses would have been 2.25%, not 2.32%.
If you approve Proposal 1, you will be ratifying the new
Management Agreement between Ariston and the Trust. Significant
provisions of the Management Agreement are summarized above; however
this is just a summary. The Management Agreement, a copy of which is
attached as Exhibit B to this Proxy Statement and should be read,
contains all of the details.
Distribution Plan
Your Fund has adopted a Distribution Plan under Rule 12b-1 of the
Investment Company Act of 1940. Under the Distribution Plan, your Fund
may pay distribution fees, including payments to the distributor,
Lexington Funds Distributor, Inc., for services principally intended to
result in the sale of shares, and to compensate third parties for
providing similar services. Payments may also be made for advertising
and promotional expenses. Your Fund pays an annual distribution fee,
calculated daily and paid monthly, of up to 0.25% of your Fund's average
daily net assets. For the year ended December 31, 1998, your Fund's
distribution expenses equaled ___% of average daily net assets.
The New Fund's Distribution Plan is substantially similar to your
Fund's current Distribution Plan. Ariston estimates that distribution
expenses for the first fiscal year of the New Fund will not exceed 0.10%
of the New Fund's average daily net assets. The New Fund's total
expenses will not increase or decrease as distribution expenses vary
because the New Fund's management fee is reduced by the amount of the
New Fund's distribution expenses.
If you approve Proposal 1, you will be ratifying the New Fund's
Distribution Plan. Significant provisions of the Distribution Plan are
summarized above; however this is only a summary. The Distribution
Plan, a copy of which is attached as Exhibit C to this Proxy Statement
and should be read, contains all of the details.
Federal Income Tax Liability
Neither you nor your Fund will be liable for federal income taxes
solely as a result of the Reorganization. Your Fund will receive an
opinion of counsel concerning federal income taxes. This opinion, of
course, is not binding on the IRS or any court and does not preclude the
IRS from adopting a contrary position. You should consult your own tax
adviser concerning the potential tax consequences of the Reorganization,
including any applicable state and local income tax consequences.
Recommendation of the Board of Trustees
For the reasons stated above, in particular because, at current
asset levels, the shareholders of your Fund will benefit from lower
total expenses if the Reorganization is approved, the Board of Trustees
of your Fund unanimously approved the proposed Reorganization.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS APPROVE
THE PLAN.
Other Information
General information about proxy voting. The Board of Trustees of
your Fund is soliciting your proxy to vote on the matters described in
this proxy statement. We expect to solicit proxies primarily by mail,
but representatives of Lexington or its affiliates, Ariston or others
may communicate with you by mail or by telephone or other electronic
means to discuss your vote. We will ask broker-dealers and other
institutions that hold shares for the benefit of their customers to send
the proxy materials to the beneficial owners and to obtain authorization
to vote on their behalf.
You may vote directly over the telephone by calling (800) 526-0056. You
may also fax your ballot to (201) 845-3534 or return it by mail.
Only shareholders of record of your Fund at the close of business
on the record date, March 19, 1999 may vote at the special meeting.
As of the record date, your Fund had ____________ shares issued and
outstanding, each share being entitled to one vote:
As of March 19, 1999 the record date, the Trustees and officers of
your Fund, as a group, owned____% of the outstanding shares of your
Fund. As of March 19, 1999, the Trustees and officers of your Fund
beneficially owned shares of your Fund as described below:
To the best of the knowledge of your Fund, the following shareholders
beneficially owned 5% or more of the outstanding shares of your Fund as of
March 19, 1999:
You may cast one vote for each proposal for each whole share that you
own of your Fund. We count your fractional shares as fractional votes.
If we receive your proxy before the special meeting date, we will vote
your shares as you instruct the proxies. If you sign and return your
proxy, but do not specify instructions, we will vote your shares in
favor of each proposal. You may revoke your proxy at any time before
the special meeting if you notify us in writing, or if you attend the
special meeting in person and vote in person.
If a broker or nominee returns a proxy indicating that it did not
receive voting instructions from the beneficial owner, or if the
beneficial owner marked an abstention, we will count those shares when
we determine if a quorum is present, but those proxies, in effect, will
count as a vote "against".
If shareholders do not approve the Reorganization, then the
Reorganization will not proceed, and the Board of Trustees will consider
other alternatives. your Fund would continue operating as an investment
company and would not dissolve.
Quorum and adjournments. Your Fund requires that a quorum at the
special meeting be present, in person or by proxy, to conduct the
Special Meeting. A simple majority of all of the shares outstanding on
the record date will be a quorum. If a quorum is not present at the
special meeting, the persons named as proxies may propose one or more
adjournments of the special meeting to permit further solicitation of
proxies. An affirmative vote of a majority of the shares of your Fund
present at the Special Meeting may adjourn the Special Meeting without
further notice, until your Fund obtains a quorum. In the event a quorum
is present but sufficient votes to approve a proposal are not received,
the persons named as proxies may propose one or more adjournments to
permit further solicitation of proxies. If this should occur, we will
vote proxies for or against a motion to adjourn in the same proportion
to the votes received in favor or against the proposal.
Required Vote. Approval of the proposed Reorganization requires
the affirmative vote of not less than two-thirds of all the outstanding
shares of your Fund. Lexington is unaware of any federal or state
regulatory requirement or approval that must be complied with or
obtained in connection with the Reorganization.
Other Business. The Board of Trustees of your Fund knows of no other
business to be brought before the Special Meeting. If any other matters
come before the Special Meeting, the named proxies intend to vote on
other matters according to their best judgment unless you have
instructed the proxies to the contrary.
Future Shareholder Proposals. Your Fund is not required to hold annual
meetings, unless required to do so by law. If you have a proposal you
wish to be considered by shareholders, send your proposal to your Fund
at Park 80 West Plaza Two, Saddle Brook, NJ 07663. We must receive
your proposal in sufficient time before the next meeting of shareholders
for it to be included. We do not guarantee that we will be able to
include any proposal in a proxy statement.
Financial Statements. KPMG LLP, independent auditors of your Fund,
has audited the financial statements included in the Statement of
Additional Information for the year ended December 31, 1998. Your
Fund's most recent annual and semiannual reports to shareholders are
available at no cost. To request a report, please call us toll-free at
1-800-526-0056 or write to us at Park 80 West Plaza Two, Saddle Brook, NJ
07663. Representatives of KPMG LLP are not expected to be present
at the Special Meeting.
Information About AmeriPrime Funds
The New Fund is a separate series of AmeriPrime Funds (the "Trust"),
1793 Kingswood Drive, Suite 200, Southlake, Texas 76092. The Trust's
telephone number is 800-298-1995. The Trust is a business trust
established under Ohio law. The operations of the Trust are governed by
a Declaration of Trust dated August 8, 1995, as amended. Shareholders
of the Trust have rights that are similar to the rights of your Fund's
shareholders under its Declaration of Trust and applicable Massachusetts
Law. You should be aware of the following features of the Trust:
Shares of each class of the Trust participate equally in dividends and
other distributions attributable to that class, including any
distributions in the event of a liquidation.
Each share of each portfolio of the Trust is entitled to one vote for
all purposes.
Shares of all portfolios of the Trust vote for the election of Trustees
and on any other matter that affects each portfolio of the Trust in
substantially the same manner, except as otherwise required by law.
As to matters that affect each portfolio differently, such as approval
of an investment advisory or management agreement, shares of each
portfolio vote as separate portfolios.
Ohio law does not require registered investment companies, such as the
Trust or its portfolios, to hold annual meetings of shareholders and it
is anticipated that shareholder meetings will be held only when
specifically required by federal or state law.
Any Trustee of the Trust may be removed by a vote of two-thirds of the
outstanding shares of the Trust.
The Trust indemnifies Trustees and officers to the fullest extent
permitted under federal and Ohio law.
There are some differences between Ohio trust law and
Massachusetts trust law. For example, under Ohio law shareholders of a
business trust are not liable for the obligations of the New Fund.
Under Massachusetts law shareholders of a business trust could, under
certain circumstances, be personally liable for the obligations of your
Fund. There are also difference in shareholder rights, as determined
by each Fund's Declaration of Trust. For example:
A shareholder meeting of your Fund may be called upon the written
request of 10% of the shareholders. The New Fund requires a
written request of 25% of the shareholders to call a
shareholder meeting.
One-third of the outstanding shares present at a shareholder
meeting constitutes a quorum for your Fund. A majority of the
outstanding shares entitled to vote constitutes a quorum for
the New Fund
If shareholder approval is required to fill a vacancy on the
Board of Trustees, your Fund requires a vote of a majority of
the shareholders, while the New Fund requires a plurality.
Your Fund requires that two-thirds of the shareholders approve a
merger or sale of assets. The New Fund requires that only a
majority of the shareholders approve a merger or sale of
assets.
Your Fund requires a vote of two-thirds of the shareholders to
terminate the Trust. The New Fund may be terminated by a
majority vote of the Trustees, subject to the approval of a
majority of the shareholders.
[Appraisal Rights.]
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD
PROMPTLY AND RETURN IT IN THE ENCLOSED ENVELOPE TO AVOID UNNECESSARY
EXPENSE AND DELAY. NO POSTAGE IS NECESSARY.
By Order of the Board of Trustees,
Lisa Curcio
Secretary
IMPORTANT NOTICE: Please take a
moment now to vote your shares.
You may vote directly over the
phone by calling 800-____________
- -The Trust Representatives are
available from 9:00 a.m. to 11:00
p.m. eastern time. You may also
fax your ballot to 800-________or
return it in the enclosed postage
paid envelope. Thank you for your
prompt action.
LEXINGTON CONVERTIBLE
SECURITIES FUND
SPECIAL MEETING OF SHAREHOLDERS SCHEDULED
TO BE HELD ON APRIL 26, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF Lexington Convertible Securities
Fund (the "Fund") for use at a Special
Meeting of Shareholders to be held at the
offices of your Fund, Park 80 West Plaza
Two, Saddle Brook, NJ 07663, on March 19,
1999, at 10:00 a.m., eastern time.
The undersigned hereby appoints Richard
Lavery and Enrique Faust, and each of them
with full power of substitution, as Proxies
of the undersigned to vote at the above-stated
Special Meeting, and at all
adjournments thereof, all shares of
beneficial interest of your Fund that are
held of record by the undersigned on the
record date for the Special Meeting upon the
matter enumerated below.
IF THIS PROXY CARD IS RETURNED, AND NO
CHOICE IS INDICATED AS TO ANY MATTER, THIS
PROXY WILL BE VOTED AFFIRMATIVELY ON THE
MATTERS PRESENTED. THE BOARD OF TRUSTEES
RECOMMENDS THAT YOU VOTE "FOR" THE FOLLOWING
PROPOSALS.
Please sign exactly as your name appears on
this card. When account is joint tenants,
all should sign. When signing as executor,
administrator, trustee, or guardian, please
give title. If a corporation or partnership,
sign entity's name and by authorized person.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
Lexington Convertible Securities Fund
Vote On Proposals For Against Abstain
1. To approve the Agreement
and Plan of Reorganization and
Liquidation as is more fully
described in the accompanying
Proxy Statement together with
the transactions contemplated
thereby.
1.In their discretion the
Proxies are authorized to vote
upon such other business as may
properly come before the
meeting.
Signature [PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners) Date
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
AND LIQUIDATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION (the
"Agreement") is made as of the ____ day of _______, 1999, by and among
Lexington Convertible Securities Fund, a Massachusetts business trust (the
"Acquired Portfolio"), and AmeriPrime Funds, an Ohio business trust (the
"Trust"), for itself and on behalf of its newly created investment
portfolio the Ariston Convertible Securities Fund (the "Acquiring
Portfolio").
In accordance with the terms and conditions set forth in this
Agreement, the parties desire that all or substantially all of the assets
of the Acquired Portfolio be transferred to the Acquiring Portfolio in
exchange for shares of the Acquiring Portfolio ("Acquiring Portfolio
Shares") and the assumption by the Acquiring Portfolio of the Liabilities
(as defined in paragraph 1.3) of the Acquired Portfolio, and that such
Acquiring Portfolio Shares be distributed pro rata by the Acquired
Portfolio to its shareholders of record in complete liquidation of the
Acquired Portfolio immediately following the "Closing" as defined in this
Agreement and in complete cancellation of its shares.
In consideration of the premises and of the covenants and agreements
herein contained, the parties hereto agree as follows:
1. Reorganization of the Acquired Portfolio and Subsequent Liquidation
1.1 Subject to the terms and conditions of, and based on the
representations and warranties contained in this Agreement, on the Closing
Date, as described in paragraph 3.1, the Acquired Portfolio shall assign,
deliver and otherwise transfer its assets as described in paragraph 1.2
(the "Acquired Portfolio Assets") to the Acquiring Portfolio, free and
clear of all liens and encumbrances, and the Acquiring Portfolio shall, as
consideration therefor, (i) deliver to the Acquired Portfolio the number
of Acquiring Portfolio Shares equal to the aggregate number and value of
shares (including fractional shares) of the Acquired Portfolio then
outstanding ("Acquired Portfolio Shares"), all computed in the manner and
as of the time and date set forth in paragraph 2.2, and (ii) assume all of
the Acquired Portfolio's Liabilities, if any.
1.2 With respect to the Acquired Portfolio, the Acquired Portfolio
Assets shall consist of all property and assets of any nature whatsoever,
including, without limitation, all cash, cash equivalents, securities,
claims and receivables (including dividend and interest receivables) owned
by the Acquired Portfolio, and any deferred or prepaid expenses shown as
an asset on the Acquired Portfolio's books on the Closing Date, as defined
in paragraph 3.1, and any claims and rights of action and rights to
registered shares under applicable securities laws.
At least fifteen (15) days prior to the Closing Date, the Acquired
Portfolio will provide the Acquiring Portfolio with (i) a list of the
Portfolio Assets and (ii) a list of the Acquired Portfolio's known
Liabilities, and the Acquiring Portfolio will provide the Acquired
Portfolio with a copy of the investment objective, policies and
restrictions applicable to it. The Acquired Portfolio reserves the right
to sell any of the securities or other assets shown on the list of the
Acquired Portfolio's Assets prior to the Closing Date provided such
transactions are executed in the ordinary course of business and in
accordance with the Acquired Portfolio's investment objective, policies and
restrictions.
1.3 Liabilities include all liabilities and obligations whether absolute
or contingent, known or unknown, accrued or not accrued, arising in the
ordinary course of business, excluding the reporting and other obligations
described in paragraph 1.6.
1.4 Upon the Acquired Portfolio's consummation of the transaction
described in paragraph 1.1, the Acquired Portfolio will distribute the
Acquiring Portfolio Shares it receives pursuant to paragraph 1.1 to its
shareholders of record determined as of the close of business on the
Valuation Date ("Participating Shareholders of Record"). The distribution
will be made by opening accounts on the books of the Acquiring Fund in the
names of the Participating Shareholders of Record and crediting to each
account the number of Acquiring Fund Shares equal in number and value to
the Acquired Portfolio Shares owned of record by the Participating
Shareholder of Record as of the Closing Date. Fractional shares will be
carried to the third decimal place. In exchange for Acquiring Portfolio
Shares distributed, all issued and outstanding shares of the Acquired
Portfolio will be canceled simultaneously therewith on the Acquired
Portfolio's books; [any outstanding share certificates representing
interests in the Acquired Portfolio thereafter will represent the right to
receive such number of Acquiring Portfolio Shares after the Closing as
determined in accordance with paragraph 1.1.]
1.5 The transactions described in paragraphs 1.1 and 1.4 above as
they relate to the Acquired Portfolio and the Acquiring Portfolio are
collectively referred to as the "Reorganization." It is intended by the
parties hereto that the Reorganization constitute a reorganization within
the meaning of section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"). The parties hereto hereby adopt this Agreement as
a "plan of reorganization" within the meaning of Treasury regulation
sections 1.368-2(g) and 1.368-3(a).
1.6 As soon as reasonably practicable after the Closing (as defined
in paragraph 3.1) of the Reorganization of the Acquired Portfolio, the
Acquired Portfolio will take all necessary steps under and subject to its
By-laws and Massachusetts law to effect a termination of the Acquired
Portfolio, to terminate the qualification, classification and registration
of the Acquired Portfolio at all appropriate federal and state agencies.
All reporting and other obligations of the Acquired Portfolio shall remain
the exclusive responsibility of the Acquired Portfolio up to and including
the date on which the Acquired Portfolio is terminated and deregistered,
subject to any reporting or other obligations described in paragraph 4.10.
2. Valuation
2.1 With respect to the Acquired Portfolio, the value of the
Acquired Portfolio Assets shall be the value of such assets computed as of
the close of business on the date of the Closing (such time and date being
referred to as the "Valuation Date"), using the valuation procedures set
forth in the Acquired Portfolio's then-current Prospectus and Statement of
Additional Information.
2.2 The net asset value of each share of beneficial interest of the
Acquiring Portfolio shall be its net asset value per share computed on the
Valuation Date, using the valuation procedures set forth in the Acquiring
Portfolio'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 Portfolio's fund accountant (Unified Funds
Services, Inc.). The Acquiring Portfolio shall cause its fund accountant
to deliver a copy of its valuation report to the Acquired Portfolio and to
the Trust at the Closing.
3. Closing and Closing Date
3.1 The closing for the Reorganization ("Closing") shall occur on
____, 1999, or on such other date as may be mutually agreed upon by the
parties to such Reorganization (the "Closing Date"). The Closing shall be
held at the offices of the Trust or at any other location mutually
agreeable to the parties hereto. All transactions taking place at the
Closing shall be deemed to take place simultaneously as of the close of
business, generally 4:00 p.m. Eastern time, on the Closing Date unless
otherwise provided.
3.2 The custodian of the Acquiring Portfolio (the "Custodian") shall
be given access to the portfolio securities held by the Acquired Portfolio
for the purpose of examination no later than five (5) business days prior
to the Valuation Date. The Acquired Portfolio's securities (together with
any cash or other assets) shall be delivered by the Acquired Portfolio to
the Custodian for the account of the Acquiring Portfolio on the Closing
Date, in accordance with applicable custody provisions under the Investment
Company Act of 1940, as amended ("1940 Act"), and duly endorsed in proper
form for transfer in such condition as to constitute good delivery thereof.
The portfolio securities shall be accompanied by any necessary federal and
state stock transfer stamps or a check for the appropriate purchase price
of such stamps. The cash delivered shall be in any such form as is
reasonably directed by the Acquiring Portfolio. Custodian for the Acquired
Portfolio shall deliver to the Acquiring Fund at the Closing a certificate
of an authorized officer stating that (a) the Acquired Portfolio's
portfolio securities, cash and any other assets have been transferred in
proper form to the Custodian on the Closing Date and (b) all necessary
taxes, if any, have been paid, or provision for payment has been made, in
conjunction with the delivery of portfolio securities.
3.3 Notwithstanding anything herein to the contrary, in the event
that on the 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 the Trust or the Acquired Portfolio, accurate
appraisal of the value of the net assets of the Acquiring Portfolio or
Acquired Portfolio is impracticable, the Valuation Date for the
Reorganization shall be postponed until the first business day when trading
shall have been fully resumed without restriction or disruption and
reporting shall have been restored and the Closing Date shall be postponed
to the Valuation Date as so postponed.
3.4 The Acquired Portfolio shall deliver at the Closing: (a) a
list, certified by its Secretary, of the names, addresses and taxpayer
identification numbers of all Participating Shareholders of Record and the
number and percentage ownership of outstanding shares of the Acquired
Portfolio owned by each such shareholder, all as of the Valuation Date, and
(b) such other documentation relating to such shareholders as is reasonably
requested. The Acquiring Portfolio shall issue and deliver to such
Secretary a confirmation evidencing the Acquiring Portfolio Shares to be
credited on the Closing Date or shall provide evidence satisfactory to the
Acquired Portfolio that such Acquiring Portfolio Shares have been credited
to the Acquired Portfolio's account on the books of the Acquiring
Portfolio. At the Closing, each party shall deliver to the other such
bills of sale, checks, assignments, share certificates, if any, receipts
or other documents of transfer, assignment or conveyance as such other
party or its counsel may reasonably request.
4. Covenants with Respect to the Acquiring Portfolio and the Acquired
Portfolio
4.1 The Acquired Portfolio will call a special meeting of
shareholders (the "Meeting") for the purposes of (i) considering the
approval of this Agreement and the transaction contemplated by this
Agreement by the shareholders of the Acquired Portfolio; and (ii)
considering such other business as may properly come before such Meeting.
4.2 The Acquired Portfolio covenants that the Acquiring Portfolio
Shares to be issued hereunder are not being acquired for the purpose of
making any distribution thereof, other than in connection with the
Reorganization contemplated by this Agreement.
4.3 The Acquired Portfolio will assist the Acquiring Portfolio in
obtaining such information as the Acquiring Portfolio reasonably requests
concerning the beneficial ownership of the shares of the Acquired
Portfolio.
4.4 Subject to the provisions hereof, the Trust, on its own behalf
and on behalf of the Acquiring Portfolio, and the Acquired Portfolio 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, including the obtaining of
any required regulatory approvals.
4.5 The Acquired Portfolio shall furnish to the Acquiring Portfolio
within 5 days after the Closing Date, a final statement of the Acquired
Portfolio's assets and liabilities as of the Closing Date, which statement
shall be certified by the Acquired Portfolio as being determined in
accordance with generally accepted accounting principles consistently
applied or in accordance with another mutually agreed upon standard.
4.6 The Trust has prepared and filed, or will prepare and file, with
the Securities and Exchange Commission (the "SEC") a registration statement
on Form N-1A under the Securities Act of 1933, as amended (the "1933 Act"),
registering the Acquiring Fund shares (the "Registration Statement"). The
Acquired Portfolio shall file on Schedule 14A a proxy statement, form of
proxy and materials related thereto with respect to the Acquired Portfolio
to be reorganized into the newly created Acquiring Portfolio. The Acquired
Portfolio has provided or will provide the Trust with such information and
documents relating to such Acquired Portfolio as are requested by the Trust
and as are reasonably necessary for the preparation of the Registration
Statement and Proxy Statement, and information relating to the notice of
meeting and form of proxy, other information needed for the Registration
Statement and any other proxy solicitation materials to be used in
connection with the Meeting (collectively, the "Proxy Materials"). The
Trust will use all reasonable efforts to have the Registration Statement
become effective under the 1933 Act as soon as practicable, and will take
all actions, if any, required by law to qualify the Acquiring Portfolio
Shares to be issued in the Reorganization under the laws of the states in
which such qualification is required.
4.7 The Acquired Portfolio: (a) as soon after the Closing Date as
is reasonably practicable, shall prepare and file all federal and other tax
returns and reports of the Acquired Portfolio as may be 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 submit for payment to the Acquiring
Portfolio the amount of any federal and other taxes, if any, shown as due
thereon which were not paid on or before the Closing Date and shall reflect
on the unaudited statement of assets and liabilities of the Acquired
Portfolio referred to in paragraphs 1.3 and 4.5 all federal and other
taxes, if any, that remain unpaid as of the Closing Date.
4.8 With respect to the Acquiring Portfolio, the Trust agrees to use
all reasonable efforts to obtain the approvals and authorizations required
by the 1933 Act, the 1940 Act and such of the state securities laws as may
be necessary and as it may deem appropriate in order to consummate the
Reorganization, as contemplated herein. The Trust agrees to use all
reasonable efforts to operate the Acquiring Portfolio substantially in
accordance with its then current Prospectus and Statement of Additional
Information, including qualifying as a regulated investment company under
Subchapter M of the Code through the Closing Date and for at least one (1)
year thereafter, although the Acquiring Portfolio may merge or consolidate
during such one-year period with an investment company with investment
objectives, policies and restrictions and other characteristics comparable
to those of the Acquiring Portfolio.
4.9 If the Acquired Portfolio consummates the Reorganization, then
the Acquired Portfolio will file with the SEC as soon as reasonably
practicable thereafter an application for deregistration under the 1940 Act
and will seek to obtain an order declaring that the Acquired Portfolio has
ceased to be an investment company under the 1940 Act, and will file any
final regulatory reports, including, but not limited to, any Form N-SAR and
Rule 24f-2 filings, and also will take all other steps as are necessary and
proper to effect the termination of the Acquired Portfolio in accordance
with the laws of the State of Massachusetts and other applicable
requirements. Any reporting or other responsibility of the Acquired
Portfolio is and shall remain the responsibility of the Acquired Portfolio
up to and including the date on which the Acquired Portfolio is terminated
and deregistered.
4.10 With respect to the Acquired Portfolio, the Acquiring Fund
agrees to indemnify and hold harmless each trustee of the Acquired
Portfolio at the time of execution of this Agreement, whether or not such
person is or becomes a trustee of the Trust subsequent to the Closing Date
of the Reorganization, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such trustee in connection with any claim that is asserted
against such director arising out of such person's service as a trustee of
the Acquired Portfolio, provided that such indemnification shall be limited
to (and subject to the same exclusions as) the indemnification that is
available to the trustees of the Trust pursuant to the provisions of the
Trust's Declaration of Trust and applicable law.
[4.11 For the period beginning at the Closing Date of the last
Reorganization to occur and ending not less than three years thereafter,
the Trust shall provide at the Acquiring Fund's expense for a liability
policy covering the actions of the current Trustees of the Acquired
Portfolio for the period they served as such, which may be accomplished by
causing such persons to be added as insured under the liability policy of
the Trust.] [To be discussed with D/O carrier]
4.12 The Acquiring Portfolio and the Acquired Portfolio each will
operate its respective business in the ordinary course between the date
hereof and the Closing Date, it being understood that the ordinary course
of business will include declaring and paying customary dividends and other
distributions.
4.13 Each of the Acquired Portfolio and the Trust will, from time
to time, as and when requested by the other, execute and deliver or cause
to be executed and delivered all such assignments and other instruments,
and will take or cause to be taken such further action, as the other may
deem necessary or desirable in order to (a) vest in and confirm to the
Acquiring Portfolio title to and possession of all the assets of the
Acquired Portfolio to be sold, assigned, transferred and delivered to the
Acquiring Portfolio pursuant to this Agreement, (b) vest in and confirm to
the Acquired Portfolio title to and possession of all the Acquiring
Portfolio Shares to be transferred to the Acquired Portfolio pursuant to
this Agreement, (c) assume all of the Acquired Portfolio's liabilities in
accordance with this Agreement, and (d) otherwise to carry out the intent
and purpose of this Agreement.
5. Representations and Warranties
5.1 The Trust, on behalf of itself and the Acquiring Portfolio,
represents and warrants to the Acquired Portfolio, whose assets will be
transferred to the Acquiring Portfolio, as follows:
(a) The Trust is a business trust validly existing under the
laws of the State of Ohio and is duly registered as an open-end,
management investment company under the 1940 Act, and the Acquiring
Portfolio is a validly existing series of shares of the Trust
representing interests in the Acquiring Portfolio under the laws of
the State of Ohio;
(b) The Trust is not in violation of, and the execution,
delivery and performance of this Agreement will not result in a
violation of, Ohio law or any provision of the Trust's Declaration
of Trust or By-Laws, each as amended to date, or result in a material
breach or violation of, or constitute a material default under, any
agreement or other undertaking to which the Trust or the Acquiring
Portfolio is a party or by which any of them or their assets is
bound;
(c) The execution, delivery and performance of this Agreement
has been duly authorized by all necessary action on the part of the
Trust and the Acquiring Portfolio (including the determinations
required by Rule 17a-8(a) under the 1940 Act), and assuming this
Agreement is enforceable against the Acquired Portfolio, this
Agreement is a valid and binding obligation of the Trust and the
Acquiring Portfolio enforceable in accordance with its terms, subject
as to enforcement to bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights and to general equity principles;
(d) Except as disclosed in writing to and accepted by the
Acquired Portfolio, no litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or to its knowledge threatened against the Trust
or the Acquiring Portfolio or any of their properties or assets, and
the Trust knows of no facts that might form the basis for the
institution of any such proceedings (other than routine inquiries and
examinations), and neither the Trust nor the Acquiring Portfolio 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, or is reasonably likely to materially and
adversely affect, its business or its ability to consummate the
transactions contemplated herein;
(e) The Acquiring Portfolio Shares to be issued and delivered
by the Trust to the Acquired Portfolio pursuant to the terms hereof
will have been duly authorized as of the Closing Date and, when so
issued and delivered, will be duly authorized and validly issued,
fully paid and non-assessable, and have been or will be duly
registered under the 1933 Act and qualified for sale under the laws
of such states where such qualification is required;
(f) Any written information furnished by the Trust to the
Acquired Portfolio for use in the Proxy Materials does not contain
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;
(g) All federal and other tax returns and reports of the
Acquiring Portfolio required by law to be filed on or before the
Closing Date, if any, shall have been filed, and all federal and
other taxes owed by the Acquiring Portfolio shall have been paid so
far as due, and to the best of the Trust's knowledge, no such return
is as of the date hereof under audit and no material assessment has
been asserted with respect to any such return;
(h) The Trust will provide to the Acquired Portfolio the Form
N-1A registration statement(s) concerning the Acquiring Portfolio,
which will 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 any statements therein, in light of the
circumstances under which such statements were made, not materially
misleading;
(i) There are no broker's or finder's fees payable on behalf
of the Acquiring Portfolio in connection with the transactions
provided herein; and
(j) The Acquiring Portfolio has no plan or intention to sell
or otherwise dispose of any of the Acquired Portfolio Assets
transferred to the Acquiring Portfolio pursuant to the
Reorganization, except for dispositions made in the ordinary course
of its business as a regulated investment company under Subchapter
M ("RIC"), and dispositions necessary to maintain its status as a
RIC, and expects to retain substantially all of the Assets in the
same form as it receives them in the Reorganization, unless and until
subsequent investment circumstances reasonable suggest the
desirability of change or it becomes necessary to make dispositions
to maintain RIC status.
5.2 The Acquired Portfolio represents and warrants to the Trust and
to the Acquiring Portfolio that will receive the assets of the Acquired
Portfolio, as follows:
(a) The Acquired Portfolio is a business trust validly
existing under the laws of the State of Massachusetts, and is duly
registered as an open-end, management investment company under the
1940 Act;
(b) The Acquired Portfolio is not in violation of, and the
execution, delivery and performance of this Agreement will not result
in a violation of, Massachusetts law or any provision of the Acquired
Portfolio's Declaration of trust or By-Laws each as amended to date,
or result in a material breach or violation of, or constitute a
material default under, any agreement or other undertaking to which
the Acquired Portfolio is a party or by which any of them or their
assets are bound;
(c) The execution, delivery and performance of this Agreement
has been duly authorized by all necessary action on the part of the
Acquired Portfolio (including the determinations required by Rule
17a-8(a) under the 1940 Act), and assuming this Agreement is
enforceable against the Trust, this Agreement is a valid and binding
obligation of the Acquired Portfolio, enforceable in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights and to general equity principles;
(d) Except as otherwise disclosed in writing to and accepted
by the Trust, no litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or to its knowledge threatened against the Acquired
Portfolio or any of their properties or assets, and the Acquired
Portfolio knows of no facts that might form the basis for the
institution of any such proceedings (other than routine inquiries and
examinations), and the Acquired Portfolio 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) All of the Acquired Portfolio's issued and outstanding
shares representing interests in the Acquired Portfolio are, and on
the Closing Date will be, duly authorized and validly issued and
outstanding, and fully paid and non-assessable and all such shares
will, at the time of the Closing, be held by the Participating
Shareholders of Record as set forth on the books and records of the
Acquired Portfolio's transfer agent (and in the amounts set forth
therein) and as set forth in any list of Participating Shareholders
of Record provided to the Trust pursuant to paragraph 3.4, and no
Participating Shareholders of Record will have any preemptive rights
to purchase any of such shares and the Acquired Portfolio does not
have outstanding any options, warrants or other rights to subscribe
for or purchase any of its shares (other than dividend reinvestment
plans of the Acquired Portfolio or as set forth in this Agreement),
nor are there outstanding any securities convertible into any shares
of the Acquired Portfolio (except pursuant to exchange privileges
described in the current Prospectus and Statement of Additional
Information of the Acquired Portfolio);
(f) All of the Acquired Portfolio's issued and outstanding
shares representing interests in the Acquired Portfolio have been
offered and sold in compliance in all material respects with
applicable registration requirements of the 1933 Act and applicable
state securities laws;
(g) From the effective date of the Registration Statement
through the time of the Meeting and the Closing Date, the Acquired
Portfolio's Prospectus and Statement of Additional Information, and
the Acquired Portfolio's Proxy Materials (exclusive of any written
information furnished by the Trust for use in the Proxy Materials
which fully and fairly discloses such information) (i) comply in all
material respects with the applicable provisions of the 1934 Act and
the 1940 Act and the rules and regulations thereunder and (ii) do not
and will not contain 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 not misleading, and as of such dates
and time, any written information furnished by the Acquired Portfolio
to the Trust for use in the Registration Statement 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) The Statement of Assets and Liabilities, Statements of
Operations, Statement of Changes in Net Assets, Financial Highlights
and Schedule of Investments of the Acquired Portfolio as of and for
the Acquired Portfolio's most recent fiscal year, certified by
Deloitte & Touche LLP and the unaudited Statement of Assets and
Liabilities, Statement of Operations, Statement of Changes in Net
Assets, Financial Highlights and Schedule of Investments for the
Acquired Portfolio's most recently completed six month semi-annual
fiscal period (copies of which have been or will be furnished to the
Trust) fairly present, in all material respects, such Acquired
Portfolio's financial condition as of such dates and its results of
operations for such periods in accordance with generally accepted
accounting principles consistently applied, and as of such dates
there were no liabilities of the Acquired Portfolio (contingent or
otherwise) known to the Acquired Portfolio that were not disclosed
therein but that would be required to be disclosed therein in
accordance with generally accepted accounting principles;
(i) Since the date of the most recent audited financial
statements, there has not been any material adverse change in the
Acquired Portfolio's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of
business, nor has the Acquired Portfolio incurred any indebtedness
maturing more than one year from the date of such indebtedness,
except as otherwise disclosed in writing to and accepted by the Trust
prior to the Closing Date (for the purposes of this subparagraph (i),
neither a decline in the Acquired Portfolio's net asset value per
share nor a decrease in the Acquired Portfolio's size due to
redemptions shall be deemed to constitute a material adverse change);
(j) All federal and other tax returns and reports of the
Acquired Portfolio and the Acquired Portfolio required by law to be
filed on or before the Closing Date shall have been filed, and all
federal and other taxes owed by the Acquired Portfolio or the
Acquired Portfolio shall have been paid so far as due, and to the
best of the Acquired Portfolio's knowledge, no such return is as of
the date hereof under audit and no material assessment has been
asserted with respect to any such return;
(k) For each full and partial taxable year from its inception
through the Closing Date, the Acquired Portfolio has qualified as a
regulated investment company under Subchapter M of the Code and
intends to so qualify for the current taxable year;
(l) At the Closing Date, the Acquired Portfolio will have good
and marketable title, through its custodian, to its Portfolio Assets
and full right, power and authority to assign, deliver and otherwise
transfer such Portfolio Assets hereunder, and upon delivery and
payment for such Portfolio Assets as contemplated herein, the
Acquiring Fund will acquire good and marketable title thereto, free
of any liens or encumbrances, subject to no restrictions on the
ownership or transfer thereof other than such restrictions as might
arise under the 1933 Act;
(m) There are no broker's or finder's fees payable on behalf
of the Acquired Portfolio in connection with the transactions
provided for herein; and
(n) The Acquired Portfolio has no material contracts or other
commitments (except this Agreement) that will not be terminated on
or prior to the Closing Date without any liability or penalty to the
Acquired Portfolio or the Acquiring Portfolio.
6. Conditions Precedent to Obligations of the Acquired Portfolio
The obligations of the Acquired Portfolio to complete the
Reorganization with respect to the Acquired Portfolio shall be subject, at
the Acquired Portfolio's election (subject to the limitations of paragraph
11), to the performance by the Trust (and by the Acquiring Portfolio), of
all the obligations to be performed by it hereunder on or before the
Closing Date, and in addition thereto, the satisfaction of the following
conditions with respect to the Trust (and the Acquiring Portfolio):
6.1 All representations and warranties of the Trust 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 The Trust shall have delivered to the Acquired Portfolio at the
Closing a certificate executed by one of its officers, dated as of the
Closing Date, to the effect that the representations and warranties of the
Trust 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 Portfolio shall reasonably
request.
6.3 The Acquired Portfolio shall have received at the Closing an
opinion of legal counsel to the Trust, dated as of the Closing Date, in
form (including reasonable and customary qualifications and assumptions)
reasonably satisfactory to the Acquired Portfolio, substantially to the
effect that:
(i) the Trust is a business trust validly existing under the
laws of the State of Ohio and is duly registered as an open-end,
management investment company under the 1940 Act, and the Acquiring
Portfolio is a validly existing series of shares of the Trust
representing interests in the Acquiring Portfolio under the laws of
the State of Ohio; (ii) to such counsel's knowledge, the execution,
delivery and performance of this Agreement will not result in a
violation of the Trust's Declaration of Trust or By-Laws, each as
amended to date; (iii) the execution, delivery and performance of
this Agreement have been duly authorized by all necessary action on
the part of the Trust and the Acquiring Portfolio, and this Agreement
has been duly executed and delivered by the Trust and, assuming due
authorization, execution and delivery of the Agreement by the
Acquired Portfolio, is a valid and binding obligation of the Trust
and the Acquiring Portfolio, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights or
remedies and to general equity principles (regardless of whether
considered at a proceeding in law or equity), equitable defenses or
waivers and the discretion of the court before which any proceeding
for specific performance, injunctive and other forms of equitable
relief may be brought; and (iv) the Acquiring Portfolio Shares to be
issued and delivered pursuant to the terms of this Agreement will
have been duly authorized as of the Closing Date and, when so issued
and delivered, will be validly issued, fully paid and non-assessable
(except as disclosed in the Acquiring Portfolio's then current
Prospectus and Statement of Additional Information).
In rendering such opinion, legal counsel to the Trust may rely
on certificates of officers or Trustees of the Trust, in each case
reasonably acceptable to the Acquired Portfolio.
6.4 As of the Closing Date, there shall have been no material change
in the investment objective, policies and restrictions of the Acquiring
Portfolio nor any increase in the rate of permissible investment advisory
or other fees or charges payable by any Acquiring Portfolio or its
shareholders to the Acquiring Portfolio's investment adviser, distributor
and/or administrator from those fees and charges described in the Proxy
Materials and there shall have been no change in any fee waiver or expense
reimbursement undertakings described in the Proxy Materials.
6.5 The Board of Trustees of the Trust, including a majority of its
Trustees who are not "interested persons" of the Trust (as defined in the
1940 Act), shall have determined that this Agreement and the transactions
contemplated hereby are in the best interests of the Acquiring Portfolio
and that the interest of shareholders of the Acquiring Portfolio would not
be diluted as a result of such transactions.
7. Conditions Precedent to Obligations of the Trust
The obligations of the Trust to complete the Reorganization with
respect to the Acquiring Portfolio shall be subject, at the Trust's
election (subject to the limitations of paragraph 11), to the performance
by the Acquired Portfolio, of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the
satisfaction of the following conditions with respect to the Acquired
Portfolio:
7.1 All representations and warranties of the Acquired Portfolio
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.
7.2 The Acquired Portfolio shall have delivered, in accordance with
Article 1 hereof, to the Trust on behalf of the Acquired Portfolio a
Statement of Portfolio Assets and Liabilities of the Acquired Portfolio,
together, if required by the Trust, with a list of such Acquired
Portfolio's securities and other assets showing the respective adjusted
bases and holding periods thereof for income tax purposes, as of the
Closing Date, certified by an appropriate officer of the Acquired
Portfolio.
7.3 The Acquired Portfolio shall have delivered to the Trust at the
Closing a certificate executed by one of its officers, and dated as of the
Closing Date, to the effect that the representations and warranties of the
Acquired Portfolio 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 Trust shall
reasonably request.
7.4 The Trust shall have received at the Closing an opinion of legal
counsel to the Acquired Portfolio, dated as of the Closing Date, in form
(including reasonable and customary qualifications and assumptions)
reasonably satisfactory to the Trust, substantially to the effect that:
(i) the Acquired Portfolio is a business trust duly organized
and validly existing under the laws of the State of Massachusetts and
is duly registered as an open-end, management investment company
under the 1940 Act; (ii) to such counsel's knowledge, the execution,
delivery and performance of this Agreement will not result in a
violation of the Acquired Portfolio's Declaration of Trust or By-laws,
each as amended to date; (iii) the execution, delivery and
performance of this Agreement have been duly authorized by all
necessary action on the part of the Acquired Portfolio, and this
Agreement has been duly authorized and delivered by the Acquired
Portfolio and, assuming due authorization, execution and delivery of
the Agreement by the Trust, is a valid and binding obligation of the
Acquired Portfolio, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights or remedies and to general
equity principles (regardless of whether considered in a proceeding
in law or equity), equitable defenses or waivers and the discretion
of the court before which any proceeding for specific performance,
injunctive and other forms of equitable relief may be brought; and
(iv) either (a) no Participating Shareholder of Record will have
exerciseable rights of appraisal as a result of the transactions
contemplated by this Agreement or (b) the description of such rights
in the Proxy Materials 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.
In rendering such opinion, legal counsel to the Acquired
Portfolio may rely on an opinion of Massachusetts counsel (with respect to
matters of Massachusetts law) and on certificates of officers or Trustees
of the Acquired Portfolio, in each case reasonably acceptable to the Trust.
7.5 On the Closing Date, the Acquired Portfolio Assets of the
Acquired Portfolio shall include no assets that the Acquiring Portfolio,
by reason of the Trust's Declaration of Trust, 1940 Act requirements or
otherwise, may not legally acquire.
7.6 The Board of Trustees of the Acquired Portfolio, including a
majority of the Trustees who are not "interested persons" of the Acquired
Portfolio (as defined by the 1940 Act) shall have determined that this
Agreement and the transactions contemplated hereby are advisable and in the
best interests of the Acquired Portfolio and that the interests of the
shareholders in the Acquired Portfolio would not be diluted as a result of
such transactions, and the Acquired Portfolio shall have delivered to the
Trust at the Closing, a certificate, executed by an officer, to the effect
that the condition described in this subparagraph has been satisfied.
7.7 Prior to the Valuation Date, the Acquired Portfolio shall have
declared a dividend or dividends, with a record date and ex-dividend date
prior to the Valuation Date, which together with all previous dividends,
shall have the effect of distributing to its shareholders all of its net
investment company taxable income, if any, for the taxable periods or years
ending on or before the Closing (computed without regard to any deduction
for dividends paid), and all of its net capital gain, if any, realized in
taxable periods or years ending on or before the Closing Date.
8. Further Conditions Precedent to Obligations of the Acquired Portfolio
and the Trust
The obligations herein of the Acquired Portfolio, and of the Trust,
with respect to the Acquiring Portfolio, to effect the Reorganization are
each subject to the further conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the shareholders of the
Acquired Portfolio, and insofar as such transactions are to be consummated
and require the approval of the shareholders of the Acquired Portfolio
voting together as a single class, the requisite vote of the shareholders
of the Acquired Portfolio, all in accordance with the applicable provisions
of the Acquired Portfolio's Declaration of Trust and By-laws and the
requirements of the 1940 Act, and evidence of such approval shall have been
delivered to the Trust.
8.2 No action, suit or other proceeding shall be pending or
threatened 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 as it relates to the Reorganization or any of the
transactions related thereto.
8.3 All consents of other parties and all other consents, approvals
and permits of federal, state and local regulatory authorities (including,
without limitation, those of the SEC and of state securities authorities,
including "no-action" positions of or exemptive orders from such federal
and state authorities, and those of the Office of the Comptroller of the
Currency ("OCC") and the Department of Labor with respect to the Employee
Retirement Income Security Act of 1974 ("ERISA") or the Internal Revenue
Service with respect to the Code), deemed necessary by the Acquired
Portfolio or the Trust to permit consummation, in all material respects,
of the Reorganization and transactions related thereto shall have been
obtained, except where failure to obtain any such consent, order or permit
would not, in the reasonable 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 Portfolio or
the Acquired Portfolio involved in the Reorganization.]
8.4 The Registration Statement on Form N-1A covering the continuous
offering of shares of the Acquiring Portfolio shall have become and shall
be effective under the 1933 Act, no stop orders suspending the
effectiveness thereof shall have been issued and, to the best knowledge of
the Trust and the Acquired Portfolio, 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 Portfolio and the Trust shall receive an opinion
of legal counsel of the Trust, dated the Closing Date of the
Reorganization, with respect to the Acquired Portfolio and the Acquiring
Portfolio, addressed to, and in form and substance satisfactory to, the
Acquired Portfolio and the Trust, to the effect that the Reorganization
will constitute a reorganization within the meaning of section 368(a)(1)
of the Code, and the Acquired Portfolio and the Acquiring Portfolio will
each be a "party to a reorganization" within the meaning of section 368(b)
of the Code. Each party agrees to make reasonable covenants and
representations as to factual matters that are true and correct as of the
Closing Date in connection with the rendering of such opinion.
8.6 Prior to the closing, (i) the Trust shall have issued one
Acquiring Fund Share to AmeriPrime Financial Securities, Inc. (Acquiring
Fund's distributor), in consideration of the payment of $1.00, for the
purpose of enabling AmeriPrime Financial Securities, Inc. to approve the
management agreement, the distribution plan and to take such other actions
as are necessary or desirable to consummate the Reorganization and (ii)
after such vote, AmeriPrime Financial Securities, Inc. shall redeem the
share so issued.
9. Expenses
The Acquired Portfolio and the Trust confirm their understanding that
each party will be responsible for its own expenses in connection with the
Reorganization.
10. Entire Agreement; Survival of Provisions of this Agreement
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 and warranties contained in this Agreement
or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated herein.
The covenants contained in this agreement shall not survive the
consummation of such transactions, except as otherwise provided herein.
11. Termination
11.1 With respect to the Acquired Portfolio and the Acquiring
Portfolio, this Agreement may be terminated, and the Reorganization and any
related transactions involving the Acquired Portfolio and Acquiring
Portfolio contemplated hereby may be abandoned, at any time prior to the
Closing:
(a) by the mutual written consent of the Acquired Portfolio
and the Trust;
(b) by either the Acquired Portfolio or the Trust by written
notice to the other, without liability to the terminating party on
account of such termination (provided the terminating party is not
otherwise in material default or breach of this Agreement) if (i) the
other party shall fail to perform in any material respect its
agreements contained herein required to be performed prior to the
Applicable Closing Date, (ii) the other party materially breaches or
shall have materially breached any of its representations, warranties
or covenants contained herein, or (iii) any other condition herein
expressed to be precedent to the obligations of the terminating party
has not been met and it reasonably appears that it will not or cannot
be met.
11.2 Termination of this Agreement pursuant to paragraph 11.1(a)
shall terminate all obligations of the parties hereto with respect to the
Acquired Portfolio and Acquiring Portfolio affected by such termination and
there shall be no liability for damages on the part of the Trust (or the
Acquiring Portfolio), the Acquired Portfolio, or any of their trustees,
officers or employees, to any other party or its trustees, directors,
officers or employees.
12. Amendments and Waivers
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers
of the Acquired Portfolio and the Trust; provided, however, that following
the approval of this Agreement by shareholders with respect to the Acquired
Portfolio, no such amendment may have the effect of changing the provisions
for determining the number of Acquiring Portfolio Shares to be issued to
Participating Shareholders of Record, or otherwise materially and adversely
affecting the Acquired Portfolio, without further approval by shareholders
of the Acquired Portfolio in accordance with paragraph 8.1 hereof and the
approval of the Boards of Trustees of the Acquired Portfolio and Trust
(including the determinations required by Rule 17a-8(a) and the 1940 Act).
The parties may not waive the opinion described in paragraph 8.5, and no
waiver may materially and adversely affect the rights of the shareholders
of the Acquired Portfolio without the approval by the shareholders of the
Acquired Portfolio in accordance with paragraph 8.1 hereof.
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 certified mail or overnight express courier, addressed as follows:
a. if to the Trust or the Acquiring Portfolio:
AmeriPrime Funds
Suite 200
1793 Kingswood Drive
Southlake, Texas 76092
Attention: Kenneth Trumpfheller
with a copy to:
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower
Cincinnati, Ohio 45202
Attention: Donald S. Mendelsohn
b. if to the Acquired Portfolio:
b. Lexington Convertible Securities Fund
Park 80 West/Plaza Two
Saddle Brook, New Jersey 07663
Attention: Lisa Curcio
with copies to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
NewYork, New York 10022
Attention: Elliott Cohan
or to such other person or address as the Acquired Portfolio or the Trust,
respectively, shall furnish to the other in writing.
14. Headings; Counterparts; Governing Law; Assignment; Limitation of
Liability
14.1 The headings of Articles 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 Schedules or Exhibits shall be construed as referring to
the Articles, paragraphs and subparagraphs hereof, or Schedules or Exhibits
hereto, respectively, except as is otherwise expressly provided. Whenever
the terms hereto, hereunder, herein or hereof are used in the Agreement,
they shall be construed as referring to this entire Agreement, rather than
to any individual 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 law of the State of Ohio, without reference to the conflict of
laws provisions or principles of its laws.
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.
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.
14.5 It is expressly agreed that the obligations of the Acquired
Portfolio and the Trust hereunder shall not be binding upon any of the
trustees, nominees, officers, agents or employees of the Acquired Portfolio
or the Trust, personally, but shall bind only the assets and property of
the Acquired Portfolio and the Trust as provided in their respective
Declarations of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first set forth above by their duly authorized
representatives.
Lexington Convertible Securities Fund
ATTEST: By:_____________________________________
Name: Richard B. Russell
Title: President
By:_____________________________
Name: Lisa Curcio
Title: Secretary
AmeriPrime Funds,
for itself and on behalf of
Ariston Convertible Securities Fund
ATTEST: By:
____________________________________
Name: Kenneth D. Trumpfheller
Title: President
By:______________________________
Name: Paul S. Bellany
Title: Secretary
Exhibit B
MANAGEMENT AGREEMENT
TO: Ariston Capital Management Corporation
40 Lake Bellevue Drive, Suite 220
Bellevue, Washington 98005
Dear Sirs:
AmeriPrime Funds (the "Trust") herewith confirms our agreement with
you.
The Trust has been organized to engage in the business of an
investment company. The Trust currently offers several series of shares to
investors, one of which is Ariston ConvertibleSecurities Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below,
and you are willing to act as such investment adviser and to perform such
services under the terms and conditions hereinafter set forth.
Accordingly, the Trust agrees with you as follows effective upon the date
of the execution of this Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment advice
as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with the Fund's investment
objectives and policies. You will determine the securities to be purchased
for the Fund, the portfolio securities to be held or sold by the Fund and
the portion of the Fund's assets to be held uninvested, subject always to
the Fund's investment objectives, policies and restrictions, as each of the
same shall be from time to time in effect, and subject further to such
policies and instructions as the Board may from time to time establish.
You will advise and assist the officers of the Trust in taking such steps
as are necessary or appropriate to carry out the decisions of the Board and
the appropriate committees of the Board regarding the conduct of the
business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other
persons rendering any services to the Fund; clerical and shareholder
service staff salaries; office space and other office expenses; fees and
expenses incurred by the Fund in connection with membership in investment
company organizations; legal, auditing and accounting expenses; expenses
of registering shares under federal and state securities laws, including
expenses incurred by the Fund in connection with the organization and
initial registration of shares of the Fund; insurance expenses; fees and
expenses of the custodian, transfer agent, dividend disbursing agent,
shareholder service agent, plan agent, administrator, accounting and
pricing services agent and underwriter of the Fund; expenses, including
clerical expenses, of issue, sale, redemption or repurchase of shares of
the Fund; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or preparing prospectuses and statements
of additional information for delivery to the Fund's current and
prospective shareholders; the cost of printing or preparing stock
certificates or any other documents, statements or reports to shareholders;
expenses of shareholders' meetings and proxy solicitations; advertising,
promotion and other expenses incurred directly or indirectly in connection
with the sale or distribution of the Fund's shares excluding expenses which
the Fund is authorized to pay pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the"1940 Act"); and all other operating
expenses not specifically assumed by the Fund.
The Fund will pay all brokerage fees and commissions, taxes,
borrowing costs (such as divided expense on securities sold short and
interest), fees and expenses of the non-interested person trustees and such
extraordinary or non-recurring expenses as may arise, including litigation
to which the Fund may be a party and indemnification of the Trust's
trustees and officers with respect thereto. The Fund will also pay
expenses which it is authorized to pay pursuant to Rule 12b-1 under the
1940 Act ("12b-1 Expenses"). You may obtain reimbursement from the Fund,
at such time or times as you may determine in your sole discretion, for any
of the expenses advanced by you, which the Fund is obligated to pay, and
such reimbursement shall not be considered to be part of your compensation
pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month,
the Fund will pay you a fee at the annual rate of a) 2.25% of the average
value of its daily net assets; minus (b) the 12b-1 Expenses and fees and
expenses of the non-interested person trustees incurred by the Fund.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of
Trust of the Trust or a resolution of the Board, if required. If, pursuant
to such provisions, the determination of net asset value of the Fund is
suspended for any particular business day, then for the purposes of this
paragraph, the value of the net assets of the Fund as last determined shall
be deemed to be the value of the net assets as of the close of the business
day, or as of such other time as the value of the Fund's net assets may
lawfully be determined, on that day. If the determination of the net asset
value of the Fund has been suspended for a period including such month,
your compensation payable at the end of such month shall be computed on the
basis of the value of the net assets of the Fund as last determined
(whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for
the account with brokers or dealers selected by you, subject to review of
this selection by the Board from time to time. You will be responsible for
the negotiation and the allocation of principal business and portfolio
brokerage. In the selection of such brokers or dealers and the placing of
such orders, you are directed at all times to seek for the Fund the best
qualitative execution, taking into account such factors as price (including
the applicable brokerage commission or dealer spread), the execution
capability, financial responsibility and responsiveness of the broker or
dealer and the brokerage and research services provided by the broker or
dealer.
You should generally seek favorable prices and commission rates
that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which you exercise investment discretion. You are authorized
to pay a broker or dealer who provides such brokerage and research services
a commission for executing a Fund portfolio transaction which is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction if you determine in good faith that the amount
of the commission is reasonable in relation to the value of the brokerage
and research services provided by the executing broker or dealer. The
determination may be viewed in terms of either a particular transaction or
your overall responsibilities with respect to the Fund and to accounts over
which you exercise investment discretion. The Fund and you understand and
acknowledge that, although the information may be useful to the Fund and
you, it is not possible to place a dollar value on such information. The
Board shall periodically review the commissions paid by the Fund to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best
qualitative execution as described above, you may give consideration to
sales of shares of the Fund as a factor in the selection of brokers and
dealers to execute Fund portfolio transactions.
Subject to the provisions of the 1940 Act, and other applicable
law, you, any of your affiliates or any affiliates of your affiliates may
retain compensation in connection with effecting the Fund's portfolio
transactions, including transactions effected through others. If any
occasion should arise in which you give any advice to clients of yours
concerning the shares of the Fund, you will act solely as investment
counsel for such client and not in any way on behalf of the Fund. Your
services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice,
management and other services to others, including other registered
investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the 1940 Act
or the rules thereunder, neither you nor your shareholders, members,
officers, directors, employees, agents, control persons or affiliates of
any thereof shall be subject to any liability for, or any damages, expenses
or losses incurred by the Trust in connection with, any error of judgment,
mistake of law, any act or omission connected with or arising out of any
services rendered under, or payments made pursuant to, this Agreement or
any other matter to which this Agreement relates, except by reason of
willful misfeasance, bad faith or gross negligence on the part of any such
persons in the performance of your duties under this Agreement, or by
reason of reckless disregard by any of such persons of your obligations and
duties under this Agreement.
Any person, even though also a director, officer, employee,
member, shareholder or agent of you, who may be or become an officer,
director, trustee, employee or agent of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust
(other than services or business in connection with your duties hereunder),
to be rendering such services to or acting solely for the Trust and not as
a director, officer, employee, member, shareholder or agent of you, or one
under your control or direction, even though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
and shall remain in force for a period of two (2) years from the date of
its execution, and from year to year thereafter, subject to annual approval
by (i) the Board or (ii) a vote of a majority of the outstanding voting
securities of the Fund, provided that in either event continuance is also
approved by a majority of the trustees who are not interested persons of
you or the Trust, by a vote cast in person at a meeting called for the
purpose of voting such approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will
continue to serve or act in such capacity for the Fund for the period of
time pending required approval of the Agreement, of a new agreement with
you or a different adviser or other definitive action; provided that the
compensation to be paid by the Fund to you for your services to and
payments on behalf of the Fund will be equal to the lesser of your actual
costs incurred in furnishing such services and payments or the amount you
would have received under this Agreement for furnishing such services and
payments.
This Agreement may, on sixty days written notice, be terminated
with respect to the Fund, at any time without the payment of any penalty,
by the Board, by a vote of a majority of the outstanding voting securities
of the Fund, or by you. This Agreement shall automatically terminate in
the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name
"Ariston" or any variation thereof belong to you, and that the Trust is
being granted a limited license to use such words in its Fund name or in
any class name. In the event you cease to be the adviser to the Fund, the
Trust's right to the use of the name "Ariston" shall automatically cease
on the ninetieth day following the termination of this Agreement. The
right to the name may also be withdrawn by you during the term of this
Agreement upon ninety (90) days' written notice by you to the Trust.
Nothing contained herein shall impair or diminish in any respect, your
right to use the name "Ariston" in the name of, or in connection with, any
other business enterprises with which you are or may become associated.
There is no charge to the Trust for the right to use this name.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall
be effective until approved by the Board, including a majority of the
trustees who are not interested persons of you or of the Trust, cast in
person at a meeting called for the purpose of voting on such approval, and
(if required under interpretations of the 1940 Act by the Securities and
Exchange Commission or its staff) by vote of the holders of a majority of
the outstanding voting securities of the series to which the amendment
relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "AmeriPrime Funds" means and refers to the Trustees
from time to time serving under the Trust's Declaration of Trust as the
same may subsequently thereto have been, or subsequently hereto be,
amended. It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the trustees, shareholders,
nominees, officers, agents or employees of the Trust personally, but bind
only the trust property of the Trust, as provided in the Declaration of
Trust of the Trust. The execution and delivery of this Agreement have been
authorized by the trustees and shareholders of the Trust and signed by
officers of the Trust, acting as such, and neither such authorization by
such trustees and shareholders nor such execution and delivery by such
officers shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
trust property of the Trust as provided in its Declaration of Trust. A
copy of the Agreement and Declaration of Trust of the Trust is on file with
the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder
of this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) For the purpose of this Agreement, the terms "majority of
the outstanding voting securities," "control" and "interested person" shall
have their respective meanings as defined in the 1940 Act and rules and
regulations thereunder, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under the 1940 Act; and
the term "brokerage and research services" shall have the meaning given in
the Securities Exchange Act of 1934.
(c) Any question of interpretation of any term or provision
of this Agreement having a counterpart in or otherwise derived from a term
or provision of the 1940 Act shall be resolved by reference to such term
or provision of the 1940 Act and to interpretation thereof, if any, by the
United States courts or in the absence of any controlling decision of any
such court, by the Securities and Exchange Commission or its staff. In
addition, where the effect of a requirement of the 1940 Act, reflected in
any provision of this Agreement, is revised by rule, regulation, order or
interpretation of the Securities and Exchange Commission or its staff, such
provision shall be deemed to incorporate the effect of such rule,
regulation, order or interpretation.
12. NOTICES
Any notices under this Agreement shall be in writing, addressed
and delivered or mailed postage paid to the other party at such address as
such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the
Trust is 1793 Kingswood Drive, Suite 200, Southlake, Texas 76092, and your
address for this purpose shall be 40 Lake Bellevue Drive, Suite 220,
Bellevue, Washington 98005.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party
indicated to the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and
return such counterpart to the Trust, whereupon this letter shall become
a binding contract upon the date thereof.
Yours very truly,
ATTEST:
AmeriPrime Funds
By: By:
Name/Title: Name/Title:
Dated: ___________, 1999
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
Ariston Capital Management
Corporatoion
By: By:
Name/Title: Name/Title:
Dated: ___________, 1999
Exhibit C
Ariston Convertible Securities Fund
Distribution Plan
WHEREAS, The AmeriPrime Funds, an Ohio business trust (the
"Trust"), engages in business as an open-end management investment
company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of
shares of beneficial interest without par value (the "Shares"), which
may be divided into one or more series of Shares ("Series"); and
WHEREAS, the Trust currently offers several Series, one of which
is the Ariston Convertible Securities Fund (the "Fund"); and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees
who are not interested persons of the Trust (as defined in the 1940 Act)
and who have no direct or indirect financial interest in the operation
of this Plan or in any agreement relating hereto (the "Qualified
Trustees"), having determined, in the exercise of reasonable business
judgment and in light of their fiduciary duties under state law and
under Section 36(a) and (b) of the 1940 Act, that there is a reasonable
likelihood that this Plan will benefit the Fund and its shareholders,
have approved this Plan by votes cast in person at a meeting called for
the purpose of voting hereon and on any agreements related hereto;
NOW THEREFORE, the Trust hereby adopts this Plan for the Fund,
subject to shareholder approval, in accordance with Rule 12b-1 under the
1940 Act, on the following terms and conditions:
1. Distribution Activities. Subject to the supervision of the
Trustees of the Trust, the Trust may, directly or indirectly, engage in
any activities related to the distribution of Shares of the Fund, which
activities may include, but are not limited to, the following: (a)
payments, including incentive compensation, to securities dealers or
other financial intermediaries, financial institutions, investment
advisors and others that are engaged in the sale of Shares, or that may
be advising shareholders of the Trust regarding the purchase, sale or
retention of Shares; (b) payments, including incentive compensation, to
securities dealers or other financial intermediaries, financial
institutions, investment advisors and others that hold Shares for
shareholders in omnibus accounts or as shareholders of record or provide
shareholder support or administrative services to the Fund and its
shareholders; (c) expenses of maintaining personnel (including personnel
of organizations with which the Trust has entered into agreements
related to this Plan) who engage in or support distribution of Shares or
who render shareholder support services, including, but not limited to,
allocated overhead, office space and equipment, telephone facilities and
expenses, answering routine inquiries regarding the Trust, processing
shareholder transactions, and providing such other shareholder services
as the Trust may reasonably request; (d) costs of preparing, printing
and distributing prospectuses and statements of additional information
and reports of the Fund for recipients other than existing shareholders
of the Fund; (e) costs of formulating and implementing marketing and
promotional activities, including, but not limited to, sales seminars,
direct mail promotions and television, radio, newspaper, magazine and
other mass media advertising; (f) costs of preparing, printing and
distributing sales literature; (g) costs of obtaining such information,
analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, dem advisable; and (h)
costs of implementing and operating this Plan. The Trust is authorized
to engage in the activities listed above, and in any other activities
related to the distribution of Shares, either directly or through other
persons with which the Trust has entered into agreements related to this
Plan.
2. Maximum Expenditures. The expenditures to be made by the
Trust pursuant to this Plan and the basis upon which payment of such
expenditures will be made shall be determined by the Trustees of the
Trust, but in no event may such expenditures exceed in any fiscal year
an amount calculated at the rate of 0.25% of the average daily net asset
value of the Fund. The Trust may pay such distribution expenses
directly or the Fund's investment adviser or distributor may pay such
distribution expenses and obtain reimbursement from the Trust.
3. Term and Termination.
(a) This Plan shall become effective upon the commencement
of the operations of the Fund.
(b) Unless terminated as herein provided, this Plan shall
continue in effect for one year from the effective date and shall
continue in effect for successive periods of one year thereafter, but
only so long as each such continuance is specifically approved by votes
of a majority of both (i) the Trustees of the Trust and (ii) the
Qualified Trustees, cast in person at a meeting called for the purpose
of voting on such approval.
(c) This Plan may be terminated at any time by the vote of
a majority of the Qualified Trustees or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund.
If this Plan is terminated, the Fund will not be required to make any
payments for expenses incurred after the date of termination.
4. Amendments. All material amendments to this Plan must be
approved in the manner provided for annual renewal of this Plan in
Section 3(b) hereof. In addition, this Plan may not be amended to
increase the amount of expenditures provided for in Section 2 hereof
unless such amendment is approved by a vote of the majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act).
5. Selection and Nomination of Trustees. While this Plan is in
effect, the selection and nomination of Trustees who are not interested
persons (as defined in the 1940 Act) of the Trust shall be committed to
the discretion of the Trustees who are not interested persons of the
Trust.
6. Quarterly Reports. The Treasurer of the Trust shall provide
to the Trustees and the Trustees shall review, at least quarterly, a
written report of the amounts expended pursuant to this Plan and any
related agreement and the purposes for which such expenditures were
made.
7. Recordkeeping. The Trust shall preserve copies of this Plan
and any related agreement and all reports made pursuant Section 6
hereof, for a period of not less than six years from the date of this
Plan, the agreements or such reports, as the case may be, the first two
years in an easily accessible place.
8. Limitation of Liability. A copy of the Agreement and
Declaration of Trust of the Trust, as amended, is on file with the
Secretary of the State of Ohio and notice is hereby given that this Plan
is executed on behalf of the Trustees of the Trust as trustees and not
individually and that the obligations of this instrument are not binding
upon the Trustees, the shareholders of the Trust individually or the
assets or property of any other series of the Trust, but are binding
only upon the assets and property of the Fund.
