SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to 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):
x 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:
o Fee paid previously with preliminary materials.
o 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:
LEXINGTON CONVERTIBLE SECURITIES FUND
Park 80 West/Plaza Two
Saddle Brook, New Jersey 07663
March 24, 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
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: March 24, 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.
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
March 26, 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 consists of 14 distinct
investment portfolios currently offering shares to the public.
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 Fees .10% 0.10%
Other Expenses 1.22% 0.03%1
Total Fund Operating Expenses 2.32% 2.25%
1 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 Capital
Management Corporation, 40 Lake Bellevue Drive, Suite 220, Bellevue,
Washington 98005, is your Fund's sub-adviser and has provided
day-to-day portfolio management since your Fund's inception. Richard
B. Russell, the controlling shareholder of Ariston, is the President
and Chief Executive Officer of Ariston and the President of your Fund.
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 0.10% 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
between 9:00 am and 5:00 pm, Eastern Time. 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 574,246 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 5.21% 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:
Richard B. Russell, President and Trustee, 4.82%
Allen H. Stowe, Trustee, 0.39%
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: Joseph B. Mohr, 2157 Lapaz Way, Palm Springs,
CA 92264, 11.63%; State Street Bank and Trust IRA A/C Louis Baroh, 555
116th Ave., N.E., Bellevue, Washington 98004, 10.43%.
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, New Jersey 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 Peat Marwick 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, New Jersey 07663. Representatives of
KPMG Peat Marwick 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.
* As a shareholder of your Fund, you are entitled to object to the
Reorganization. Upon written notice to your Fund, we must pay you the
fair value of your shares in cash. Because your Fund is a mutual
fund, management believes that the fair value of the shares is net
asset value. The net asset value per share of your Fund is determined
each day the New York Stock Exchange is open for business. You can
receive the net asset value for the shares you own simply by redeeming
those shares rather than going through any formal objection
procedures. If you choose to redeem, it is important that you follow
the redemption procedures outlined in the current prospectus for your
Fund. The New Fund has no similar objection procedure, but like your
Fund, shares are redeemable at net asset value.
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
[Logo]
IMPORTANT NOTICE: Please take a moment now to vote your shares. You
may vote directly over the phone by calling 800-526-0056 -The Trust
Representatives are available from 9:00 a.m. to 5:00 p.m. eastern
time. You may also fax your ballot to 201-845-3534 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, New Jersey 07663, on April 26, 1999, at
3:00 p.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.
2. 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 24th day of March, 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 April 30, 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 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.
4.12 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:
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
By:_____________________________ Title: President
Name: Lisa Curcio
Title: Secretary
AmeriPrime Funds,
for itself and on behalf of
Ariston Convertible Securities Fund
ATTEST: By:
____________________________________
Name: Kenneth D. Trumpfheller
By:______________________________ Title: President
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 Convertible Securities
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 (a) interest and (b) divided expense on
securities sold short), 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) 12b-1
Expenses and fees and expenses of the non-interested person trustees.
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
Corporation
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, deem 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.
