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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 sec.240.14a-11(c) or sec.240.14a-12
THE RIVERFRONT FUNDS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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THE RIVERFRONT FUNDS, INC.
3435 STELZER ROAD
COLUMBUS, OHIO 43219
June 30, 1998
To Shareholders of The Riverfront Funds, Inc.:
Enclosed you will find a Notice of Special Meeting of Shareholders, a
Proxy Statement and proxy card(s) for your use in connection with the upcoming
Special Meeting of Shareholders to be held on August 7, 1998. These materials
describe the proposed conversion of each portfolio of The Riverfront Funds, Inc.
(the "Company") from a separate portfolio of a Maryland corporation to a
separate portfolio of The Riverfront Funds, an Ohio business trust (the
"Conversion").
The Conversion, as proposed, and its description in the enclosed proxy
materials, are identical in all material respects to the proposal submitted to
shareholders in June of 1997. The Conversion was approved last year by
shareholders holding a majority of the shares of each Riverfront Fund except the
Stock Appreciation Fund. Shareholders of the Stock Appreciation Fund who voted
overwhelmingly approved the Conversion. However, because such a small percentage
of shares of the Stock Appreciation Fund were voted, the Company was unable to
obtain the required favorable vote of an absolute majority of the outstanding
shares of such Fund. As a consequence, the requisite vote to approve the
Conversion was not obtained for each portfolio and it is necessary again to seek
approval from all shareholders for the Conversion to an Ohio business trust.
The Board of Directors continues to believe that the Conversion is in
the best interests of all shareholders, including shareholders of The Riverfront
Stock Appreciation Fund portfolio. Therefore, the Board has once again
unanimously approved the Conversion and strongly urges the shareholders of each
portfolio, particularly the shareholders of The Riverfront Stock Appreciation
Fund, to fulfill their right and responsibility of ownership regarding the
Company by VOTING, and further strongly urges all shareholders to vote FOR the
Conversion.
Should you have any questions regarding the Conversion or any of the
materials that are included with this letter, please do not hesitate to contact
the Company at (800) 424-2295. If you would like to vote telephonically, please
call D.F. King & Co. at 1-800-769-4414 in accordance with the procedures more
fully described on page 11 of the attached proxy statement. We appreciate your
prompt consideration of these matters.
Sincerely,
/s/ Walter B. Grimm
Walter B. Grimm, President
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THE RIVERFRONT U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
THE RIVERFRONT BALANCED FUND
THE RIVERFRONT INCOME EQUITY FUND
THE RIVERFRONT LARGE COMPANY SELECT FUND
THE RIVERFRONT STOCK APPRECIATION FUND
PORTFOLIOS OF THE RIVERFRONT FUNDS, INC.
3435 STELZER ROAD, COLUMBUS, OHIO 43219
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of The Riverfront Funds, Inc.:
Notice is hereby given that a Special Meeting of Shareholders of The
Riverfront U.S. Government Securities Money Market Fund, The Riverfront U.S.
Government Income Fund, The Riverfront Balanced Fund, The Riverfront Income
Equity Fund, The Riverfront Large Company Select Fund and The Riverfront Stock
Appreciation Fund (collectively the "Portfolios"), constituting all of the
portfolios of The Riverfront Funds, Inc., a Maryland corporation (the
"Company"), will be held on Friday, August 7, 1998, at 10:00 a.m., Eastern
Daylight Savings Time, at 3435 Stelzer Road, Columbus, Ohio 43219. The purpose
of the Meeting is to consider and act on the following matters:
1. To approve an Agreement and Plan of Reorganization and Liquidation
providing for the conversion of the Portfolios from separate
portfolios of a Maryland corporation to separate portfolios of an
Ohio business trust; and
2. To consider and act upon any matters incidental to the foregoing and
to transact such other business as may properly come before the Meeting
and any adjournment or adjournments thereof.
The close of business of June 19, 1998, has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the Meeting.
All shareholders are cordially invited to attend the Meeting in person.
If you are unable to do so, please complete the enclosed proxy and return it in
the enclosed envelope.
By Order of the Directors,
[Signature]
June 30, 1998 C. David Bunstine, Secretary
YOUR VOTE IS IMPORTANT
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF A SECOND SOLICITATION, WE URGE YOU
TO COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY. FOR YOUR CONVENIENCE,
THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE.
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
THE RIVERFRONT U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND,
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND,
THE RIVERFRONT BALANCED FUND,
THE RIVERFRONT INCOME EQUITY FUND,
THE RIVERFRONT LARGE COMPANY SELECT FUND AND
THE RIVERFRONT STOCK APPRECIATION FUND
PORTFOLIOS OF THE RIVERFRONT FUNDS, INC.
TO BE HELD AUGUST 7, 1998
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Directors of The Riverfront Funds, Inc., a Maryland
corporation (the "Company"), to be used in connection with a Special Meeting of
Shareholders (the "Meeting") of the Company to be held on August 7, 1998.
The Directors have fixed the close of business on June 19, 1998, as the
record date (the "Record Date") for the determination of shareholders entitled
to notice of and to vote at the Meeting. Shareholders of record are entitled to
one vote for each share and a proportionate fractional vote for any fraction of
a share as to each issue on which such shareholders are entitled to vote. Each
of the portfolios of the Company, other than The Riverfront U.S. Government
Securities Money Market Fund (the "Money Market Fund"), offers and has issued
and outstanding two classes of shares, Investor A Shares and Investor B Shares.
The Money Market Fund offers and has issued and outstanding only Investor A
Shares. The following sets forth, as of the Record Date, the number of shares of
capital stock, $.001 par value (the "Shares"), of each of the Company's series
or funds (singly a "Portfolio" and collectively the "Portfolios") which were
outstanding and are entitled to vote at the Meeting: the Money Market Fund -
154,777,356.670 Investor A Shares; The Riverfront U.S. Government Income Fund
(the "Income Fund") - 4,825,768.024 Investor A Shares and 119,491.577 Investor B
Shares; The Riverfront Balanced Fund (the "Balanced Fund") - 743,630.406
Investor A Shares and 871,760.192 - Investor B Shares; The Riverfront Income
Equity Fund (the "Income Equity Fund") - 6,976,805.177 Investor A Shares and
1,575,207.291 Investor B Shares; The Riverfront Large Company Select Fund (the
"Large Company Fund") - 3,076,392.854 Investor A Shares and 396,651.054 Investor
B Shares; and The Riverfront Stock Appreciation Fund (the "Stock Appreciation
Fund") - 2,372,444.846 Investor A Shares and 154,903.591 Investor B Shares. At
the Meeting, shareholders will be voting on the proposal separately by
Portfolio, but will not be voting by class.
Only shareholders of record at the close of business on the Record Date
will be entitled to notice of and to vote at the Meeting. Shares represented by
management proxies, unless previously revoked, will be voted at the Meeting in
accordance with the instructions of the shareholders. If no instructions are
given, the proxies will be voted in favor of the proposal. To revoke a
management proxy, the shareholder giving such proxy must either submit to the
Company a subsequently dated proxy, deliver to the Company a written notice of
revocation or otherwise give notice of revocation in open Meeting, in all cases
prior to the exercise of the authority granted in the management proxy.
In the event that (1) sufficient votes are not received by the Meeting
date or (2) a quorum as to Proposal 1 is present, but sufficient votes to
approve the Proposal with respect to one or more Portfolios
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are not received, a person named as proxy may propose one or more adjournments
of the Meeting for a reasonable period or periods to permit further solicitation
of proxies, provided he determines that such an adjournment and additional
solicitation is reasonable and in the interest of shareholders. Any such
adjournment will require the affirmative vote of the holders of a majority of
the Company's Shares present at the Meeting in person or by proxy. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of Proposal 1 and will vote against any such
adjournment those proxies required to be voted against Proposal 1.
The mailing address of the principal executive offices of the Company
is: 3435 Stelzer Road, Columbus, Ohio 43219. The approximate date on which this
Proxy Statement and forms of proxy are first sent to shareholders is on or about
June 30, 1998.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF THE COMPANY'S MOST
RECENT ANNUAL REPORT UPON REQUEST, WHICH REQUEST MAY BE MADE EITHER BY WRITING
TO THE COMPANY AT THE ADDRESS ABOVE OR BY CALLING TOLL-FREE (800) 424-2295. THE
ANNUAL REPORT WILL BE MAILED TO YOU BY FIRST-CLASS MAIL WITHIN THREE BUSINESS
DAYS OF RECEIPT OF YOUR REQUEST.
The Company knows of no business other than that mentioned in Proposal
1 described in the Notice which will be presented for consideration at the
Meeting. If any other matters are properly presented, it is the intention of the
persons named on the enclosed proxies to vote proxies in accordance with their
best judgment.
PROPOSAL 1 - APPROVAL OF AN AGREEMENT AND PLAN OF
REORGANIZATION AND LIQUIDATION PROVIDING FOR THE
CONVERSION OF THE PORTFOLIOS FROM SEPARATE SERIES
OF A MARYLAND CORPORATION TO SEPARATE
SERIES OF AN OHIO BUSINESS TRUST.
The Directors of the Company have unanimously approved an Agreement and
Plan of Reorganization and Liquidation (the "Plan of Conversion") in the form
attached to this Proxy Statement as Exhibit A. The Plan of Conversion provides
for a conversion (the "Conversion") of the Money Market Fund, the Income Fund,
the Balanced Fund, the Income Equity Fund, the Large Company Fund and the Stock
Appreciation Fund (the "current Portfolios") from separate series or portfolios
of The Riverfront Funds, Inc., a Maryland corporation (the "Company"), to
separate series or portfolios of The Riverfront Funds, an Ohio business trust
(the "Trust").
The individual investment objectives, policies and limitations of the
current Portfolios will not change. A separate portfolio of the Trust will carry
on the business of each current Portfolio following the Conversion (the
"successor Portfolios"). Each successor Portfolio will have investment
objectives, policies and limitations identical to those of its corresponding
current Portfolio. The name of the successor Portfolio for the Stock
Appreciation Fund will be The Riverfront Small Company Select Fund. Other than
this difference in name, the name of each successor Portfolio will be identical
to that of its respective current Portfolio. For a discussion of the principal
differences between the Company's and the Trust's forms of organization, see
"CERTAIN COMPARATIVE INFORMATION ABOUT THE COMPANY AND THE TRUST" below.
The Provident Bank, each current Portfolio's investment adviser
("Provident"), will be responsible, either directly or indirectly through a
sub-investment adviser, for the investment management of each successor
Portfolio, subject to the supervision of the Board of Trustees of the Trust (the
"Trustees") under an Investment Advisory Agreement substantially identical to
the agreement currently in
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effect between Provident and the Company (the "current Investment Advisory
Agreement"). DePrince, Race & Zollo, Inc., the Income Equity Fund's
sub-investment adviser ("DRZ"), will be responsible for the management of a
portion of the portfolio securities of such successor Portfolio, subject to the
supervision of Provident and the Trustees, under a Sub-Investment Advisory
Agreement substantially identical to the agreement currently in effect between
DRZ and Provident (the "current Sub-Advisory Agreement").
BISYS Fund Services Limited Partnership ("BISYS") will serve as the
principal underwriter of shares of each successor Portfolio pursuant to a
Distribution Agreement substantially identical to the agreement currently in
effect between BISYS and the Company.
REASONS FOR THE PROPOSED CONVERSION
The Company is presently organized as a Maryland corporation with
multiple portfolios. The Directors of the Company unanimously recommend
conversion of each current Portfolio to a separate corresponding portfolio of an
Ohio business trust (i.e., into a successor Portfolio) which will succeed to the
business of its corresponding current Portfolio. The Directors have determined
that Ohio law as it relates to business trusts affords certain advantages to the
operations of a mutual fund that are unavailable to mutual funds organized as
corporations under Maryland law.
In general, Ohio business trust law will provide greater flexibility to
the Company than Maryland corporation law in structuring the Company's
operations and will eliminate both the need to obtain shareholder approval for
certain routine or nonmaterial actions and the expense and delays involved in
doing so. For example, under Maryland corporation law, routine or nonmaterial
changes to the charter of the Company, such as those in response to regulatory
developments or changes to the name of a Portfolio, would typically require
shareholder approval; Ohio law permits such changes to the Declaration of Trust
to be made without first seeking shareholder approval. Under Ohio law and the
Trust's Declaration of Trust, the Trust and the successor Portfolios may be
required to have fewer shareholder meetings, potentially reducing costs,
although neither Maryland corporations nor Ohio business trusts are required to
hold annual shareholder meetings. Of course, the fundamental investment
objectives and restrictions of both the current Portfolios and the successor
Portfolios will remain fundamental, and may be changed only by shareholder vote.
For a more detailed comparison of the Company's current Articles of
Incorporation and the Declaration of Trust of the Trust, see "CERTAIN
COMPARATIVE INFORMATION ABOUT THE COMPANY AND THE TRUST" below.
SUMMARY OF THE PLAN OF CONVERSION
The following discussion summarizes the important terms of the Plan of
Conversion. This summary is qualified in its entirety by reference to the Plan
of Conversion itself, which is included as Exhibit A to this Proxy Statement.
In order to accomplish the Conversion, the Company organized the Trust
as an Ohio business trust pursuant to a Declaration of Trust dated as of October
11, 1996. On the closing date of the Conversion (the "Closing Date"), each
current Portfolio will transfer all of its assets to the corresponding successor
Portfolio in exchange for (1) the assumption by the successor Portfolio of all
the liabilities of that current Portfolio and (2) shares of beneficial interest
of that successor Portfolio ("successor Portfolio shares") equal to the net
asset value on the date of the exchange of that current Portfolio. Immediately
thereafter, each current Portfolio will be liquidated and each Shareholder of
the current Portfolio will receive for his or her Shares an equal number of full
and fractional shares of the corresponding successor
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Portfolio. Immediately after this distribution of successor Portfolio shares,
each current Portfolio will be terminated and, as soon as practicable
thereafter, will be dissolved. UPON COMPLETION OF THE CONVERSION, EACH CURRENT
PORTFOLIO SHAREHOLDER WILL BE THE OWNER OF FULL AND FRACTIONAL SUCCESSOR
PORTFOLIO SHARES EQUAL IN NUMBER, DENOMINATION, CLASS AND AGGREGATE NET ASSET
VALUE TO HIS OR HER CURRENT PORTFOLIO SHARES.
To facilitate the Conversion, the Plan of Conversion authorizes the
Company, on behalf of the current Portfolios, as the then sole initial
shareholder of the Trust (1) to elect as Trustees of the Trust, the persons who
then currently serve as Directors of the Company; (2) to approve or disapprove
the selection of the independent accountants who currently serve as independent
accountants of the Company; and (3) to approve (i) the Investment Advisory
Agreement with Provident for each successor Portfolio (the "New Advisory
Agreement") and (ii) the Sub-Investment Advisory Agreement between Provident and
DRZ, with respect to the Income Equity Fund only (the "New Sub-Advisory
Agreement").
The newly elected Trustees of the Trust will hold office without limit
in time except that (a) any Trustee may resign, (b) any Trustee may be removed
by written instrument signed by at least two-thirds of the number of Trustees
prior to removal; and (c) a Trustee may be removed at any Special Meeting of the
shareholders by a vote of a majority of the votes of the Trust at such meeting.
In case a vacancy shall for any reason exist, the remaining Trustees may fill
such vacancy by appointing another Trustee, so long as, immediately after such
appointment, at least two-thirds of the Trustees have been elected by
shareholders. If at any time, less than a majority of the Trustees holding
office has been elected by shareholders, the Trustees then in office will
promptly call a shareholders' meeting for the purpose of electing a Board of
Trustees. Otherwise, there normally will be no meeting of shareholders for the
purpose of electing Trustees.
The New Advisory Agreement and the New Sub-Advisory will take effect on
the Closing Date. The New Advisory Agreement and the New Sub-Advisory Agreement
will continue in force until December, 1998. Each Agreement will continue in
force thereafter from year to year so long as its continuance is approved at
least annually (i) by the vote of a majority of the Trustees who are not
"interested persons" of the Trust, or Provident or DRZ, as the case may be, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by vote of a majority of the Trustees or by the vote of a majority of the
outstanding shares of the appropriate successor Portfolio. The New Advisory
Agreement and New Sub-Advisory Agreement will be terminable without penalty on
sixty days' written notice either by the Trust, Provident or DRZ, as the case
may be, and each will terminate automatically in the event of its assignment.
Assuming the Plan of Conversion is approved, it is currently
contemplated that the Conversion will become effective at the close of business
on October 30, 1998. However, the Conversion may become effective at another
time and date if circumstances so warrant.
The obligations of the Company and the Trust under the Plan of
Conversion are subject to various conditions as stated therein, including
receipt from the U.S. Securities and Exchange Commission (the "SEC") of an
exemption order from the provisions of Sec.17(a) of the 1940 Act. The Company
and the Trust received such an order on July 31, 1997. The Company and the Trust
may at any time waive compliance with any of the conditions contained in the
Plan of Conversion, or amend or modify the Plan of Conversion; provided,
however, that, following the Meeting, the Plan of Conversion may not be amended
or modified nor any condition waived to the extent that such amendment,
modification or waiver would materially adversely affect the current Portfolio
shareholders without their further approval.
If shareholders of one or more current Portfolios do not approve its
Conversion, the Company will continue its existence as a Maryland corporation
and all current Portfolios will continue in business
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as series of the Maryland corporation. Consummation of the Conversion is
contingent upon its approval by each current Portfolio.
It will not be necessary for holders of certificates for Shares of the
current Portfolios to exchange their certificates, if any, for new certificates
for shares of the corresponding successor Portfolios following consummation of
the Conversion. Certificates for Shares of the current Portfolios issued prior
to the Conversion will represent outstanding shares of the corresponding
successor Portfolio after the Conversion. New certificates will not be issued by
the successor Portfolios after the Conversion.
CONTINUATION OF PORTFOLIO SHAREHOLDER ACCOUNTS AND PLANS
The Company's transfer agent will establish an account for each
successor Portfolio shareholder containing the appropriate number and
denominations of successor Portfolio shares to be received by that shareholder
under the Plan of Conversion. Such accounts will be identical in all material
respects to the accounts currently maintained by the current Portfolios'
transfer agent for each current Portfolio shareholder. Current Portfolio
shareholders who are participating in special purchase or withdrawal plans will
retain the same rights and privileges as the successor Portfolio shares.
Likewise, current Portfolio shareholders who hold Investor B Shares will retain
the same rights and privileges, including those relating to the conversion of
such Shares into Investor A Shares, as the successor Investor B Portfolio
shares. In addition, no action will be necessary in order to continue any
automatic investment plan or retirement plan currently maintained by a current
Portfolio shareholder with respect to current Portfolio shares.
CERTAIN COMPARATIVE INFORMATION ABOUT THE COMPANY AND THE TRUST
Summary of the Declaration of Trust. The Trust has been established
pursuant to the Declaration of Trust under the laws of the State of Ohio. The
investment objective, policies, and limitations of each successor Portfolio of
the Trust will be the same as those of the respective current Portfolios. The
Trust's fiscal year will be the same as that of the Company, although the
Trustees may change the fiscal year in their discretion. Prior to the
Conversion, each successor Portfolio will not have any assets or liabilities.
During the Conversion, the Company will be the sole shareholder of the successor
Portfolios immediately prior to distribution of successor Portfolio shares to
current Portfolio shareholders.
As an Ohio business trust, the Trust's operations will be governed by
its Declaration of Trust, its By-Laws and applicable Ohio law. The Company's
operations are governed by its Articles of Incorporation, its By-Laws and
Maryland corporate law. Like the Company, the operations of the Trust will
continue to be subject to the provisions of the 1940 Act and the rules and
regulations of the SEC thereunder and applicable state securities laws.
Trustees and Officers of the Trust. Subject to the provisions of the
Trust's Declaration of Trust, the business of the Trust is supervised by its
Trustees, who serve indefinite terms and who have all powers necessary or
convenient to carry out that responsibility. The responsibilities, powers, and
fiduciary duties of the Trustees of the Trust will be substantially the same as
those of the Directors of the Company. The Trustees of the Trust will be those
persons who are the current Directors of the Company. The Directors and officers
of the Company are as follows:
J. VIRGIL EARLY, Age 60, Director; Principal in J. Virgil Early &
Associates (business consulting); Vice President of Synovus Trust Company since
September, 1997; former Chief Financial Officer of Integrated Motor Tech
(manufacturing) from February, 1996 to November, 1996; former Executive Vice
President of Huntington Bankshares, Inc. Mr. Early's business address is J.
Virgil Early & Associates, 11 Bliss Lane, Jekyll Island, Georgia 31527.
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*WALTER B. GRIMM, Age 52, Director and President; employee of BISYS
Fund Services Limited Partnership since June, 1992.
WILLIAM M. HIGGINS, Age 54, Director; Senior Vice President and
Director of Sena Weller Rohs Williams Inc. (investment advisory services). Mr.
Higgins' business address is Sena Weller Rohs Williams, Inc., 300 Main Street,
3rd Fl., Cincinnati, OH 45202.
*HARVEY M. SALKIN, PH.D., Age 53, Director; Professor, Case Western
Reserve University, and President of Marshall Plan Advisers, Inc. (investment
advisory services); former President and major shareholder of Mathematical
Investing Systems, Inc. Dr. Salkin's business address is Case Western Reserve
University, Department of Operations Research, 10900 Euclid Avenue, Cleveland,
Ohio 44106-7235.
DONALD C. SIEKMANN, Age 59, Director; retired; former partner of Arthur
Andersen (independent public accountants). Mr. Siekmann's business address is
425 Walnut Street, Cincinnati, Ohio 45243.
*WILLIAM N. STRATMAN, Age 55, Director; co-owner of Mariners Inn
Banquet Halls since 1995; former owner of Bohlender Engraving Company. Mr.
Stratman's business address is 7949 Graves Road, Cincinnati, Ohio 45243.
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*These Directors are interested persons of the Company as defined under the 1940
Act.
It is anticipated that the Trustees of the Trust will ratify the
initial Trustee's election of the then present officers of the Company to serve
as officers of the Trust and that such persons will perform the same functions
following the Conversion that they now perform on behalf of the Company.
Series of Shares of the Company and the Trust. The Trust's Declaration
of Trust permits the Trustees to create one or more series or portfolios of the
Trust and, with respect to each series, to issue an unlimited number of full or
fractional shares of that series or of one or more of that series' classes. The
Directors of the Company have substantially similar rights under the Company's
Articles of Incorporation and Maryland law, except that they are required, under
Maryland law, to specify a fixed number of shares authorized for issuance. After
the Conversion, the Trust will have six series. Each share of each series of the
Trust, like each share of each series of the Company, represents an equal
proportionate interest with each other share in that series, none having
priority or preference over another except that there are some differences in
dividend, exchange and voting rights as between the two classes of shares of
each series. Additional series or classes thereof may be added in the future.
Maryland Corporation and Ohio Trust Shareholder Liability. One area of
difference between the two forms of organizations is the potential liability of
shareholders. Generally, Ohio business trust shareholders are not personally
liable for the obligations of the Trust under Ohio law. Chapter 1746 of the Ohio
Revised Code governs business trusts (the "Ohio Act"). Specifically, Sec.1746.13
of the Ohio Act provides that a shareholder of an Ohio business trust will not
be liable to any third person for any act, omission or obligation of that
business trust. However, no similar statutory or other authority limiting
business trust shareholder liability exists in many other states. As a result,
to the extent that the Trust or a shareholder is subject to the jurisdiction of
courts in those states, the courts may not apply Ohio law and may thereby
subject the Trust's shareholders to liability. To guard against this risk, the
Declaration of Trust (i) contains an express disclaimer of shareholder liability
for claims made against the Trust and provides that notice of such disclaimer
may be given in each note, bond, contract, instrument, certificate or
undertaking made or issued by the Trust or its Trustees or any officer, employee
or agent (although the
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Declaration of Trust provides that failure to include such a disclaimer shall
not operate to bind any trustee, officer, employee, agent or shareholder
individually) and (ii) provides for indemnification out of Trust property of any
shareholder held personally liable for the obligations of the Trust. Thus, the
risk of a Trust shareholder incurring financial loss beyond his investment
because of shareholder liability is limited to circumstances in which (1) a
court refused to apply Ohio law, (2) no contractual limitation of liability was
in effect, and (3) the Trust itself would be unable to meet its obligations. In
light of Ohio law, the nature of the Trust's business and the nature of its
assets, Provident and BISYS each believe that the risk of personal liability to
a Trust shareholder is extremely remote. After the Conversion, shareholders of
the Trust will bear this risk, however remote, that they currently do not bear.
Shareholders of a Maryland corporation currently have no personal
liability for the corporation's acts or obligations, except that a shareholder
may be liable to the extent that: (1) the dividends he receives exceed the
amount which properly could have been paid under Maryland law, (2) the
consideration paid to him by the Maryland corporation for his stock was paid in
violation of Maryland law or (3) he otherwise receives any distribution, payment
or release which exceeds the amount which he could properly receive under
Maryland law.
Voting Rights of Company and Trust Shareholders. Neither the Company
nor the Trust is required to hold an annual shareholder meeting. The Company's
Bylaws provide that a special meeting of shareholders may be called by the
holders of 10% or more of the shares of the Company. The Trust's Declaration of
Trust provides that a special meeting of shareholders may be called by the
holders of 20% or more of all votes attributable to the outstanding shares of
the Trust. Prior to the Conversion, the Trust will undertake to the SEC that it
will hold a special meeting of shareholders of the Trust for the purpose of
considering the removal of one or more of the Trust's Trustees upon written
request therefor from shareholders owning not less than 10% of the outstanding
votes of the Trust entitled to vote. In each case the Directors/Trustees shall
cooperate with such shareholders as required under Section 16(c) of the 1940
Act.
The Trust, like the Company, will operate as an open-end management
investment company registered with the SEC under the 1940 Act. Shareholders of
each successor Portfolio will, therefore, have the power to vote at special
meetings with respect to, among other things, changes in fundamental investment
policies and limitations of the successor Portfolio, ratification of the
selection by the Trustees of the independent accountants for the Trust, and such
additional matters relating to the Trust as may be required by law or the
Trustees consider desirable. If, at any time, less than a majority of the
Trustees holding office has been elected by shareholders, the Trustees then in
office will promptly call a meeting of shareholders of the Trust for the purpose
of electing a Board of Trustees. The Company intends to notify the SEC that the
Trust will adopt the existing registration statement of the Company under the
Securities Act of 1933 with respect to its shares.
Each shareholder of the Company is entitled to one vote for each full
Share held and a proportionate fractional vote for each fractional Share held on
each matter submitted to the vote of shareholders, regardless of the net asset
value of such Share. Each shareholder of the Trust, however, is entitled to one
vote for each dollar of value invested and a proportionate fractional vote for
any fraction of a dollar invested. Therefore, the number of full and fractional
votes per share of a successor Portfolio will change depending upon the net
asset value of that successor Portfolio's shares.
The Declaration of Trust provides that shareholders shall have the
power to vote only with respect to (1) the election or removal of Trustees, (2)
the approval of investment advisory agreements and any other agreements for
which shareholder approval is required by the 1940 Act, and (3) with respect to
certain other matters, including such additional matters as may be required by
law or the Trustees may consider desirable. Shareholders of one Portfolio may
only vote on matters affecting that Portfolio. The
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Declaration of Trust also permits the Trustees to amend the Declaration of Trust
to (1) establish and name any new portfolio or class of shares of a portfolio,
(2) change the rights of the shares of any existing or new portfolio, (3) under
certain circumstances abolish any portfolio or any class of shares of a
portfolio, (4) change the name of the Trust or any existing portfolio, (5)
conform the provision of the Declaration of Trust to federal or state law or (6)
cure or correct any provision of the Declaration of Trust to be consistent with
the 1940 Act or the requirements of the Internal Revenue Code of 1986. The
Articles of Incorporation, on the other hand, provide that shareholders of the
Company have the power to vote only with respect to substantially the same
matters as shareholders of the Trust and certain other matters as may be
required by law (including but not limited to approval of certain extraordinary
actions such as a consolidation, merger or share exchange involving the Company
or its stock, a transfer of substantially all of the Company's assets or the
dissolution of the Company) or otherwise may be considered desirable by the
Board of Directors. Shares of the Company are generally voted in the aggregate,
without regard to class or series, except when (i) applicable law requires the
shares to be voted by separate class or series or (ii) the matter being voted on
affects one or more classes or series and not all others, in which case only the
affected classes or series are entitled to vote on the matter.
The Articles of Incorporation, together with the Bylaws, empower the
Board of Directors, among other things, to (1) increase or decrease the total
number of shares of capital stock or the number of shares of capital stock of
any class or series that the Company has authority to issue without any action
of the shareholders, (2) subject to certain limitations imposed by the Articles
of Incorporation and applicable law, classify and reclassify any authorized but
unissued shares of capital stock by setting or changing in any one or more
respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms or conditions
of redemption of the capital stock, (3) declare or not declare dividends and
distributions in its sole discretion, provided there are sufficient lawfully
available assets therefor, (4) grant preemptive or other similar preferential
rights to any holder or holders of shares of capital stock or class or series of
the Company, (5) establish the basis or method for determining the net asset
value of the assets of any series or any share of capital stock of each series
and class for any purpose and (6) change any provision of the Bylaws.
Under Maryland law, the board of directors of a Maryland corporation
are not authorized to remove any director for any reason unless the
corporation's charter provides otherwise. The Company's Articles of
Incorporation currently reserve such removal power to the shareholders while the
Trust would permit the removal of a trustee with or without cause by action of
two-thirds of the other trustees.
The Declaration of Trust provides that a majority of the votes
attributable to the outstanding Shares voting on that matter shall constitute a
quorum; the Articles of Incorporation require the presence of holders of
one-third of the Shares voting at a meeting to establish quorum for that
meeting.
Liability of Directors and Trustees. The Declaration of Trust provides
that the Trustees shall not be liable to any person other than the Trust or a
shareholder and that a Trustee shall not be liable for any act as a Trustee; but
nothing in the Declaration of Trust protects a Trustee against any liability to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The Articles of Incorporation provide that its Directors shall not
be liable to the Company or its shareholders for money damages and the Company
shall indemnify its directors to the full extent required or permitted by the
laws of Maryland, but neither of those protections extends to any liability to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. Maryland law does, however, provide that in addition to any other
liability imposed by law, directors of a Maryland corporation may be liable to
the corporation (1) for voting or assenting to the declaration of any dividend
or other distribution of assets to shareholders which is contrary to Maryland
law, (2) for voting or assenting to certain distributions of assets to
shareholders
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during liquidation of the corporation and (3) for voting or assenting to a
repurchase of shares of the corporation in violation of Maryland law.
Subject to certain conditions, the Trust's Declaration of Trust
requires the Trust to indemnify each of its Trustees and officers against all
liabilities and expenses incurred by them in connection with any action or
proceeding in which they are involved or threatened to be involved by reason of
being a trustee or officer, as the case may be. However, the Trust's
indemnification obligation does not extend to instances where such trustee or
officer is liable as a result of his willful misfeasance, bad faith, gross
negligence or reckless disregard of his duties involving the Trust. With respect
to the Company's indemnification obligations to its directors, Maryland law
permits the Company to indemnify a director against certain expenses and to
advance money for such expenses in the event of any litigation against the
director, but only if he demonstrates that he acted in good faith and reasonably
believed that his conduct was in the best interest of the corporation.
Rights of Inspection. The Articles of Incorporation of the Company
provide that, except to the extent otherwise provided by statute or the Bylaws,
the Board of Directors has sole discretion to determine the inspection rights of
the Company's shareholders with respect to its books, accounts and documents.
Maryland law provides that persons who have been shareholders of record for six
months or more and who own at least five percent of the shares of the
outstanding stock of any class of a corporation may inspect the books of account
and stock ledger of the corporation. The Bylaws currently do not contain any
provisions governing such inspection rights. Trust shareholders shall have the
right to inspect the records of the Trust to the same extent as is permitted
stockholders of a for-profit corporation organized under the laws of the State
of Ohio. Ohio law provides that any shareholder of a corporation, upon written
demand stating the specific purpose thereof, has the right to examine the books
and records of account of the corporation at any reasonable time and for any
reasonable and proper purpose.
EXPENSES
The expenses of the Conversion will be borne pro-rata by each current
Portfolio.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS
Certain fundamental investment restrictions of each current Portfolio,
which prohibit that current Portfolio from acquiring more than a stated
percentage of ownership of another company, might be construed as restricting
that current Portfolio's ability to carry out the Conversion. By approving the
Plan of Conversion, current Portfolio shareholders will be agreeing to waive,
only for the purpose of the Conversion, those fundamental investment
restrictions that could prohibit or otherwise impede the transaction.
TAX CONSEQUENCES OF THE CONVERSION
As a condition to the Conversion, the Company and the Trust will each
receive an opinion from its counsel, Baker & Hostetler LLP, that no gain or loss
will be recognized for federal income tax purposes by each current Portfolio,
the Company or the current Portfolio shareholders upon (1) the transfer of that
current Portfolio's assets in exchange solely for the successor Portfolio shares
and the assumption by the Trust on behalf of the successor Portfolio of that
current Portfolio's liabilities or (2) the distribution of successor Portfolio
shares to the current Portfolio shareholders in liquidation of their current
Portfolio shares. The opinion further provides, among other things, that (a) the
basis for tax purposes of the successor Portfolio shares to be received by each
current Portfolio shareholder will be the same as that of his or her current
Portfolio shares; and (b) each current Portfolio shareholder's holding period
for his or her successor Portfolio shares will include the current Portfolio
shareholder's holding period for his or her
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current Portfolio shares, provided that said current Portfolio shares were
held as capital assets on the date of the exchange.
REQUIRED VOTE
The Directors recommend that current Portfolio shareholders vote FOR
the approval of the Plan of Conversion described above. Such a vote encompasses
approval of the conversion of each current Portfolio to a separate series of the
Trust; each current Portfolio shall vote separately. The Company may proceed
with the conversion of current Portfolios only if shareholders of each current
Portfolio vote for the conversion of that current Portfolio. A vote FOR further
encompasses temporary waiver of certain investment limitations of each current
Portfolio to permit the Conversion (see "TEMPORARY WAIVER OF INVESTMENT
RESTRICTIONS" above); authorization of the Company, as sole shareholder of the
Trust, to elect as Trustees of the Trust the persons who then currently serve as
Directors of the Company (as set forth above under "Trustees and Officers of the
Trust," to approve or disapprove the selection of Ernst & Young LLP as the
independent accountants who currently serve as such for the Company, and to
approve (i) an Investment Advisory Agreement for each successor Portfolio with
Provident, and (ii) a Sub-Investment Advisory Agreement between DRZ and
Provident with respect to the Income Equity Fund only.
The affirmative vote of the holders of a majority of the outstanding
voting securities of each current Portfolio entitled to vote at the Meeting is
required for approval of the Plan of Conversion with respect to that current
Portfolio. If the Plan of Conversion is not approved by each current Portfolio,
the current Portfolios will continue to operate as separate series of the
Company.
FURTHER INFORMATION REGARDING THE COMPANY
ADVISER, CUSTODIAN, FUND ACCOUNTANT AND TRANSFER AGENT
As discussed above, Provident, an Ohio banking corporation, One East
Fourth Street, Cincinnati, Ohio 45202, serves as the investment adviser to each
current Portfolio. In addition, Provident provides custody, fund accounting and
transfer agency services to each current Portfolio. For the fiscal year ended
December 31, 1997, the current Portfolios incurred the following fees for such
services:
Current Portfolio Investment Advisory Custody and Fund Transfer Agency
----------------- Fees Accounting Fees Fee
--------------- ---------------- ---------------
Money Market $242,900 $ 81,531 $ 33,896
Income 200,909 55,655 50,879
Balanced 185,950 33,160 61,796
Income Equity 898,800 144,048 96,037
Stock Appreciation 214,758 42,139 118,492
Large Company 251,705 49,119 41,424
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DISTRIBUTOR AND ADMINISTRATOR
BISYS serves as the principal underwriter of Shares of the current
Portfolios pursuant to a Distribution Agreement with the Company. In its
capacity as principal underwriter, BISYS is available to receive purchase orders
and redemption requests relating to Shares of the current Portfolios. BISYS also
serves as administrator of each current Portfolio pursuant to an Administration
Agreement with the Company. BISYS' address is 3435 Stelzer Road, Columbus, Ohio
43219.
The sole general partner of BISYS is BISYS Fund Services, Inc. and its
sole limited partner is WC Subsidiary Corporation, each of whose address is 150
Clove Road, Little Falls, New Jersey 07424. BISYS Fund Services, Inc. and WC
Subsidiary Corporation are both wholly owned by The BISYS Group, Inc., 150 Clove
Road, Little Falls, New Jersey 07424, a publicly held corporation.
BISYS receives no compensation under its Distribution Agreement with
the Company, but may retain some or all of any sales charge imposed upon the
sale of Shares and may receive compensation under the Investor A and Investor B
Distribution and Shareholder Service Plans adopted by each current Portfolio
(collectively, the "Plans"). Pursuant to the Plans, a current Portfolio may bear
some of the costs of selling its Shares under a Plan adopted pursuant to Rule
12b-1 under the 1940 Act. Under the Plans, the current Portfolio is authorized
to pay BISYS for payments it makes to banks, including Provident, other
institutions and broker-dealers, and for expenses BISYS and any of its
affiliates or subsidiaries incur for providing distribution or shareholder
service assistance. Payments to such institutions may be made pursuant to
agreements entered into with BISYS. As authorized by the Plans, BISYS has
entered into a Dealer Agreement with Provident Securities & Investment Company,
an affiliate of Provident ("PSI"), to provide certain distribution and
shareholder services in connection with the distribution of the Shares of the
current Portfolios.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth certain information as of June 19, 1998,
for the Money Market Fund, the Income Fund, the Balanced Fund, the Income Equity
Fund, the Large Company Fund, and the Stock Appreciation Fund, with respect to
each person or group known by the Company to be the beneficial owner of more
than 5% of any class of the Company's outstanding voting securities:
AMOUNT AND
----------
NAME AND ADDRESS OF BENEFICIAL NATURE OF THE PERCENT
------------------------------ ------------- -------
TITLE OF CLASS OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------- ----- -------------------- --------
Investor A Shares of the The Provident Bank Trust Department 103,574,987.25 (1) 66.92%
Money Market Fund P.O. Box 691198
Cincinnati, OH 45202
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Investor A Shares of the The Provident Bank Trust Department 1,829,949.04(1) 37.92%
Income Fund P.O. Box 691198
Cincinnati, OH 45202
The Provident Bank 2,515,059.55 52.12%
One East Fourth Street
Cincinnati, OH 45202
Investor B Shares of the The Fifth Third Bank, FBO 25,816.94 21.61%
Income Fund Cincinnati Institute of Fine Arts
P.O. Box 630074
Cincinnati, OH 45263
Investor A Shares of the The Provident Bank RPO Provident Bancorp 115,213.69(1) 15.49%
Balanced Fund Retirement Plan
One East Fourth Street
Cincinnati, Ohio 45202
The Provident Bank as Trustee FBO 112,043.60(1) 15.07%
Provident Bancorp
401(k) Equity
P.O. Box 691196
Cincinnati, Ohio 45269-1198
Investor A Shares of the The Chase Manhattan Bank as Trustee for 3,357,187.00 48.12%
Income Equity Fund The General Cable Corporation
4 Tesseneer Drive
Highland Heights, KY 41076
The Provident Bank RPO Provident 420,731.63(1) 6.03%
Retirement Plan
P.O. Box 691198
Cincinnati, OH 45269-1198
Investor A Shares of the Provident Bank Trust Department 2,806,648.24(1) 91.23%
Large Company Fund P. O. Box 691198
Cincinnati, Ohio 45269-1198
(1) The designated beneficial owner possesses on behalf of its underlying
accounts voting or investment power with respect to these shares.
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As of May 29, 1998, the Directors and officers of the Company as a
group owned beneficially fewer than 1% of the outstanding Shares of the Company
or of any of the current Portfolios.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at any future Meeting
of Shareholders must be received by the Company at its principal office a
reasonable time before the Company's solicitation of proxies for such meeting in
order for such proposal to be considered for inclusion in the Company's Proxy
Statement and form or forms of Proxy relating to such meeting.
ADDITIONAL INFORMATION
With respect to the actions to be taken by the shareholders of the
Company on the matters described in this Proxy Statement, (i) the presence in
person or by proxy of shareholders entitled to cast one-third of the shares of
capital stock of the Company entitled to be cast at the Meeting on a particular
matter shall constitute a quorum for purposes of voting upon such matters at the
Meeting, provided that no action required by law or the Company's Articles of
Incorporation to be taken by the holders of a designated proportion of Shares
may be authorized or taken by a lesser proportion; and (ii) abstentions and
broker non-votes, as described below, shall be treated as votes present for
purposes of determining whether a quorum exists, and for purposes of determining
whether an issue has been approved, abstentions and broker non-votes are treated
as against votes. As used above, broker non-votes are Shares for which a broker
holding such Shares for a beneficial owner has not received instructions from
the beneficial owner and may not exercise discretionary voting power with
respect thereto, although such broker may have been able to vote such Shares on
other matters at the Meeting for which it has discretionary authority or
instructions from the beneficial owner.
In addition to the solicitation of proxies by use of the mail, proxies
may be solicited by officers of the Company, or by officers and employees of
Provident or BISYS, as the Company's Administrator, personally or by telephone,
without special compensation. Additionally, D.F. King & Co., Inc., an
independent shareholder communications firm ("D.F. King"), has been retained to
assist in solicitation of proxies.
Representatives of D.F. King may call shareholders to ask if they would
like to have their votes cast by telephone. Alternatively, shareholders may call
D.F. King directly at 1-800-769-4414 and authorize D.F. King to cast their vote.
Telephone authorizations will be recorded in accordance with the procedures
summarized below. These procedures are designed to authenticate shareholders'
identities, to allow shareholders to authorize the voting of their Shares in
accordance with their instructions and to confirm that their instructions have
been recorded properly.
In all cases where a telephonic proxy is solicited or given, the D.F.
King representative is required to ask the shareholders for such shareholder's
full name, social security number or employer identification number, title (if
the person giving the proxy is authorized to act on behalf of an entity, such as
a corporation), and the number of Shares owned, and to confirm that the
shareholder has received the Proxy Statement and proxy card in the mail. If the
information solicited agrees with the information provided to D.F. King by the
Company, the D.F. King representative has the responsibility to explain the
process, read the proposal listed on the proxy card, and ask for the
shareholder's instructions on the proposal. Although he or she is permitted to
answer questions about the process, the D.F. King representative is not
permitted to recommend to the shareholder how to vote, other than to read any
recommendation set forth in the Proxy Statement. D.F. King will record the
shareholder's instructions on the card. Within 72 hours, D.F. King will send the
shareholder a letter or mailgram confirming the shareholder's vote and asking
the shareholder to call D.F. King immediately if the shareholder's instructions
are not correctly reflected in the confirmation. A toll-free number will be
available in case the information contained in the confirmation is incorrect.
The Company will bear all costs in connection with the solicitation of
proxies from shareholders, including the use of D.F. King. Such costs of D.F.
King are expected to range from $16,000 to $28,000.
By Order of the Directors
June 30, 1998 C. David Bunstine, Secretary
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
----------------------------------------------------
Agreement and Plan of Reorganization and Liquidation ("Agreement")
dated as of May 29, 1998, by and between The Riverfront Funds, Inc., a Maryland
corporation ("Company") and The Riverfront Funds, an Ohio business trust
("Trust").
WHEREAS, Company is registered under the Investment Company Act of
1940, as amended ("1940 Act") as an open-end investment company of the
management type and has issued and outstanding shares of capital stock, par
value $.001, of the following six series: The Riverfront U.S. Government
Securities Money Market Fund ("Company Money Market Fund"), The Riverfront U.S.
Government Income Fund ("Company Government Income Fund"), The Riverfront Income
Equity Fund ("Company Income Equity Fund"), The Riverfront Balanced Fund
("Company Balanced Fund"), The Riverfront Stock Appreciation Fund ("Company
Stock Appreciation Fund") and The Riverfront Large Company Select Fund ("Company
Large Company Select Fund," and, together with each of the Company's other five
series described above, the "Acquired Series"); and
WHEREAS, On or before the Exchange Date (as defined below) Trust is
expected to become registered under the 1940 Act as an open-end investment
company of the management type, and is expected to have issued and outstanding a
nominal number of shares of beneficial interest, without par value, of the
following six series: The Riverfront U.S. Government Securities Money Market
Fund ("Trust Money Market Fund"), The Riverfront U.S. Government Income Fund
("Trust Government Income Fund"), The Riverfront Income Equity Fund ("Trust
Income Equity Fund"), The Riverfront Balanced Fund ("Trust Balanced Fund"), The
Riverfront Small Company Select Fund ("Trust Small Company Select Fund") and The
Riverfront Large Company Select Fund ("Trust Large Company Select Fund," and,
together with each of the Trust's other five series described above, the
"Acquiring Series"); and
WHEREAS, Each of the Company and the Trust has authorized the issuance
of two classes of shares, Investor A Shares and Investor B Shares, each series
of Company other than Company Money Market Fund has issued and outstanding both
Investor A Shares and Investor B Shares, each series of Trust other than Trust
Money Market Fund, on or before the Valuation Time (as defined below), is
expected to have issued and outstanding a nominal number of both Investor A
Shares and Investor B Shares, Company Money Market Fund has issued and
outstanding Investor A Shares only, and Trust Money Market Fund, on or before
the Valuation Time (as defined below), is expected to have issued and
outstanding a nominal number of Investor A Shares only; and
WHEREAS, Each of the Acquired Series plans to transfer all assets
belonging to such series, and to assign all of the liabilities belonging to such
series, to the corresponding Acquiring Series, in exchange for Investor A Shares
and Investor B Shares (Investor A Shares only in the case of Trust Money Market
Fund) of the corresponding Acquiring Series ("Acquiring Series Shares"),
followed by the constructive distribution of the Acquiring Series Shares by each
Acquired Series to the shareholders of the Acquired Series in connection with
the dissolution of the Company and the Acquired Series, all upon the terms and
provisions of this Agreement (individually and together, the "Reorganization");
and
WHEREAS, The Acquired Series and the Acquiring Series correspond to one
another as follows: Company Money Market Fund corresponds to Trust Money Market
Fund, Company Government Income
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Fund corresponds to Trust Government Income Fund, Company Income Equity Fund
corresponds to Trust Income Equity Fund, Company Balanced Fund corresponds to
Trust Balanced Fund, Company Stock Appreciation Fund corresponds to Trust Small
Company Select Fund and Company Large Company Select Fund corresponds to Trust
Large Company Select Fund; and
WHEREAS, This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of the
United States Internal Revenue Code of 1986, as amended (the "Code") for each
Acquired Series and its corresponding Acquiring Series; and
WHEREAS, The Board of Directors of the Company has determined that the
Reorganization is in the best interests of Company, and that the interests of
its shareholders will not be diluted as a result thereof; and
WHEREAS, The Trustee of the Trust has determined that the
Reorganization is in the best interests of the Trust and that the interests of
its shareholders will not be diluted as a result thereof;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto covenant and agree as follows:
1. Plan of Reorganization and Liquidation
--------------------------------------
(a) SALE OF ASSETS, ASSUMPTION OF LIABILITIES. Subject to the
prior approval of shareholders of Company and to the other terms and
conditions contained herein (including the condition that each Acquired
Series shall distribute to its shareholders all of its investment
company taxable income and net capital gain as described in Section
9(h) herein), Company agrees to assign, convey, transfer and deliver to
the Acquiring Series, and the Acquiring Series agree to acquire from
Company on the Exchange Date (as defined below), all of the Investments
(as defined below), cash and other assets of Company in exchange for
that number of full and fractional Acquiring Series Shares of the
Acquiring Series having an aggregate net asset value equal to the value
of all assets of Company transferred to the Acquiring Series, as
provided in Section 4, less the liabilities of Company assumed by the
Acquiring Series.
(b) ASSETS ACQUIRED. The assets to be acquired by the
Acquiring Series from Company shall consist of all of Company's
property, including, without limitation, all Investments (as defined
below), cash and dividends or interest receivables which are owned by
Company and any deferred or prepaid expenses shown as an asset on the
books of Company as of the Valuation Time described in Section 4.
(c) LIABILITIES ASSUMED. Prior to the Exchange Date Company
will endeavor to discharge or cause to be discharged, or make provision
for the payment of, all of its known liabilities and obligations. The
Acquiring Series shall assume all liabilities, expenses, costs, charges
and reserves of Company, contingent or otherwise, including liabilities
reflected in the unaudited statement of assets and liabilities of
Company as of the Valuation Time, prepared by or on behalf of Company
in accordance with generally accepted accounting principles
consistently applied from and after December 31, 1997, and including
all liabilities of the Company under its registration statement on Form
N-1A filed with the Securities and Exchange Commission ("Commission")
under the Securities Act of 1933, as amended ("1933 Act").
(d) MATTERS REGARDING TRUST. To the extent deemed necessary
and appropriate, immediately upon delivery to the Company of the
Acquiring Series Shares, the Company, as the then sole shareholder of
the Trust, shall (l) elect as trustees of the Trust the persons then
serving
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as directors of the Company, and (2) approve or disapprove (i) a
separate Investment Advisory Agreement between the Trust and The
Provident Bank ("Provident") with respect to each of the Acquiring
Series, (ii) a separate Sub-Investment Advisory Agreement between
Provident and DePrince, Race & Zollo, Inc. with respect to the Trust
Income Equity Fund, (iii) the independent accountants who currently
serve in that capacity for the Company, and (iv) such other matters as
deemed necessary and appropriate, voting in the same manner as the
shareholders of the Acquired Series have voted in connection with the
Agreement.
(e) LIQUIDATION AND DISSOLUTION. Upon consummation of the
transactions described in Section 1(a), 1(b), 1(c) and 1(d) above,
Company shall constructively distribute in complete liquidation to its
shareholders of record as of the Exchange Date the Acquiring Series
Shares received by it, each Company shareholder of record being
entitled constructively to receive that number and class of Acquiring
Series Shares equal to the proportion which the number and class of
shares of capital stock, par value $.001, of Company held by such
shareholder bears to the total number and class of such shares of
Company outstanding on such date, and shall take such further action as
may be required, necessary or appropriate under Company's Articles of
Incorporation, Maryland law and the Code to effect the complete
liquidation and dissolution of Company. Company will fulfill all
reporting requirements under the 1940 Act, both before and after the
Reorganization.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF COMPANY. Company
represents and warrants to and agrees with Trust and the Acquiring
Series that:
(a) Company is a corporation validly existing under the laws
of the State of Maryland and has power to own all of its properties and
assets and to carry out its obligations under this Agreement.
(b) Company is registered under the 1940 Act as an open-end
investment company of the management type, and such registration has
not been revoked or rescinded and is in full force and effect. Company
has elected to qualify and has qualified, or intends to elect and
qualify, each of the Acquired Series as a regulated investment company
under Part I of Subchapter M of the Code as of and since its first
taxable year, and each such Acquired Series qualifies, or intends to
elect and qualify, and intends to continue to qualify as a regulated
investment company for its taxable year ending upon its liquidation.
Each Acquired Series has been a regulated investment company under such
sections of the Code, or intends to elect and qualify, at all times
since its inception.
(c) The statements of assets and liabilities, including the
schedules of portfolio investments as of December 31, 1997, and the
related statements of operations for the year then ended, and
statements of changes in net assets for each of the two years in the
period then ended, for Company, such statements (for periods after
December 31, 1995) having been audited by Ernst & Young LLP,
independent auditors of Company, have been furnished to Trust. Such
statements of assets and liabilities fairly present the financial
position of Company as of such date and such statements of operations
and changes in net assets fairly reflect the results of operations and
changes in net assets for the periods covered thereby in conformity
with generally accepted accounting principles, and there are no known
material liabilities of Company as of such dates which are not
disclosed therein.
(d) The Prospectus of Company dated April 30, 1998 (the
"Company Prospectus") and its related Statement of Additional
Information dated April 30, 1998, in the forms filed under the 1933 Act
with the Commission and previously furnished to Trust, did not as of
their date and do not as of the date hereof contain any untrue
statement of a material fact or omit to state a
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material fact required to be stated therein or necessary to make the
statements therein not misleading.
(e) Except as may have been previously disclosed to Trust,
there are no material legal, administrative or other proceedings
pending or, to the knowledge of Company, threatened against Company.
(f) There are no material contracts outstanding to which
Company is a party, other than as disclosed in the Company Prospectus
and the corresponding Statement of Additional Information, and there
are no such contracts or commitments (other than this Agreement) which
will be terminated with liability to Company on or prior to the
Exchange Date.
(g) Company has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on
its statements of assets and liabilities at December 31, 1997 and those
incurred in the ordinary course of Company's business as an investment
company since that date.
(h) As used in this Agreement, the term "Investments" shall
mean Company's investments shown on the statements of assets and
liabilities at December 31, 1997 referred to in Section 2(g) hereof, as
supplemented with such changes as Company shall make after December 31,
1997 in the ordinary course of its business.
(i) Company has filed or will file all federal and state tax
returns which, to the knowledge of Company's officers, are required to
be filed by Company and has paid or will pay all federal and state
taxes shown to be due on said returns or on any assessments received by
Company. All tax liabilities of Company have been adequately provided
for on its books, and no tax deficiency or liability of Company has
been asserted, and no question with respect thereto has been raised, by
the Internal Revenue Service or by any state or local tax authority for
taxes in excess of those already paid.
(j) As of both the Valuation Time and the Exchange Date and
except for shareholder approval and otherwise as described in Section
2(1), Company will have full right, power and authority to assign,
transfer and deliver the Investments and any other of its assets and
liabilities to be transferred to Trust and the Acquiring Series
pursuant to this Agreement. On the Exchange Date, subject only to the
delivery of the Investments and any such other assets and liabilities
as contemplated by this Agreement, Trust and the Acquiring Series will
acquire the Investments and any such other assets subject to no
encumbrances, liens or security interests in favor of any third party
creditor of Company and, except as described in Section 2(k), without
any restrictions upon the transfer thereof.
(k) No registration under the 1933 Act of any of the
Investments would be required if they were, as of the time of such
transfer, the subject of a public distribution by either of Company or
Trust, except as previously disclosed to Trust by Company prior to the
date hereof.
(l) No consent, approval, authorization or order of any court
or governmental authority is required for the consummation by Company
of the transactions contemplated by this Agreement, except such as may
be required under the 1933 Act, Securities Exchange Act of 1934, as
amended (the "1934 Act"), or 1940 Act, state securities or blue sky
laws (which term as used herein shall include the laws of the District
of Columbia and of Puerto Rico) or state corporation laws.
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21
(m) The Company will call a Special Meeting of Shareholders
("Special Meeting") to consider and act upon this Agreement, the
Reorganization and related matters. In connection with such meeting,
the Company will solicit proxies from its shareholders pursuant to
proxy solicitation materials complying in all material respects with
the 1934 Act and the Rules and Regulations of the Commission thereunder
("1934 Act Regulations") and the 1940 Act and the Rules and Regulations
of the Commission thereunder ("1940 Act Regulations").
(n) The Company will notify the Commission that the Trust will
adopt and succeed to the Company's existing registration statement on
Form N-1A (the "Registration Statement") under the 1933 Act with
respect to the shares of the Acquired Series. At the time the adoption
of such Registration Statement becomes effective, the Registration
Statement (i) will comply in all material respects with the provisions
of the 1933 Act and the Rules and Regulations of the Commission
thereunder (the "Regulations") and (ii) will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and at the time Registration Statement becomes effective,
at the time of the Special Meeting and on the Exchange Date (as defined
below) the Company Prospectus and Statement of Additional Information,
as amended or supplemented by any amendments or supplements filed by
the Company, will not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF TRUST. Trust represents
and warrants to and agrees with Company that:
(a) Trust is a business trust validly existing under the laws
of the State of Ohio and has power to carry on its business as it is
now being conducted and to carry out its obligations under this
Agreement.
(b) On the Exchange Date and upon adopting and succeeding to
the Registration Statement the Trust will be registered under the 1940
Act as an open-end investment company of the management type. The
Acquiring Series expect to qualify as regulated investment companies
under Part I of Subchapter M of the Code.
(c) The Acquiring Series will have no assets or liabilities as
of the Valuation Time.
(d) There are no material legal, administrative or other
proceedings pending or, to the knowledge of Trust or its Acquiring
Series, threatened against Trust or the Acquiring Series, which assert
liability on the part of Trust or the Acquiring Series.
(e) There are no material contracts outstanding to which Trust
or the Acquiring Series is a party, other than this Agreement and
material contracts disclosed in the Registration Statement.
(f) The Trust and the Acquiring Series will file all federal
and state tax returns which, to the knowledge of Trust's officers, are
required to be filed by Trust and the Acquiring Series and will pay all
federal and state taxes shown to be due on such returns or on any
assessments received by Trust of the Acquiring Series.
(g) No consent, approval, authorization or order of any
governmental authority is required for the consummation by Trust or the
Acquiring Series of the transactions contemplated by this Agreement,
except such as may be required under the 1933 Act, 1934 Act, 1940 Act,
state securities or blue sky laws or state business trust laws.
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(h) As of both the Valuation Time and the Exchange Date and
otherwise as described in Section 3(g), Trust and the Acquiring Series
will have full right, power and authority to acquire the Investments
and any other assets and assume the liabilities of Company to be
transferred to the Acquiring Series pursuant to this Agreement.
(i) In connection with the Reorganization, the Trust will
adopt and succeed to the Registration Statement. At the time the
Registration Statement becomes effective, the Registration Statement
(i) will comply in all material respects with the provisions of the
1933 Act and the Regulations and (ii) will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and at the time the Registration Statement becomes
effective, at the time of the Special Meeting and on the Exchange Date
(as defined below) the Company Prospectus and Statement of Additional
Information, as amended or supplemented by any amendments or
supplements filed by the Company, will not contain an untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading.
(j) The Trust has no plan or intention to issue additional
Trust shares following the Reorganization except for shares issued in
the ordinary course of the Trust's business as an open-end investment
company; nor does the Trust have any plan or intention to redeem or
otherwise reacquire any Trust shares issued to Company shareholders
pursuant to the Reorganization, other than through redemptions arising
in the ordinary course of that business. The Trust will actively
continue the Company's business in the same manner that the Company
conducted it immediately before the Reorganization and has no plan or
intention to sell or otherwise dispose of any of the assets to be
acquired by the Trust in the Reorganization, except for dispositions
made in the ordinary course of its business and dispositions necessary
to maintain the status of each Acquiring Series as a regulated
investment company under Subchapter M of the Code.
(k) The Acquiring Series Shares to be issued by Trust have
been duly authorized and when issued and delivered by Trust to Company
pursuant to this Agreement will be legally and validly issued by Trust
and will be fully paid and nonassessable, and no shareholder of Trust
will have any preemptive right of subscription or purchase in respect
thereof.
(l) The issuance of Acquiring Series Shares pursuant to this
Agreement will be in compliance with all applicable federal and state
securities laws.
(m) Each Acquiring Series, upon filing of its first income tax
return at the completion of its first taxable year, will elect to be a
regulated investment company and until such time will take all steps
necessary to ensure its qualification as a regulated investment
company.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, Trust will deliver
to Company a number of Acquiring Series Shares having an aggregate net
asset value equal to the value of the assets of Company acquired by
the Acquiring Series, less the value of the liabilities of Company
assumed, determined as hereafter provided in this Section 4.
(a) The net assets of Company and each Acquired Series will be
computed as of the Valuation Time, using the valuation procedures set
forth in the Company Prospectus.
(b) The net asset value of each of the Acquiring Series Shares
will be determined to the nearest full cent as of the Valuation Time,
and shall be set at the net asset value per share of the corresponding
Acquired Series as of the Valuation Time.
A-6
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(c) The Valuation Time shall be 4:00 P.M., Eastern Standard
Time, on October 30, 1998, or such earlier or later day as may be
mutually agreed upon in writing by the parties hereto (the "Valuation
Time").
(d) The Acquiring Series shall issue its Acquiring Series
Shares to Company on one share deposit receipt registered in the name
of Company. Company shall constructively distribute in liquidation the
Acquiring Series Shares received by it hereunder pro rata to its
shareholders by redelivering such share deposit receipt to Trust's
transfer agent, which will as soon as practicable make such
modifications to the accounts for each Trust shareholder as may be
necessary and appropriate.
(e) The Acquiring Series shall assume all liabilities of
Company, whether accrued or contingent, described in subsection 1(c)
hereof in connection with the acquisition of assets and subsequent
dissolution of Company or otherwise, except that recourse for assumed
liabilities relating to an Acquired Series shall be limited to the
corresponding Acquiring Series.
5. EXPENSES, FEES, ETC. Each of Company and Trust shall be responsible for
its respective fees and expenses of the Reorganization. The Trust will be
responsible for its organization costs. Company will be responsible for proxy
solicitation and other costs associated with the Special Meeting.
6. EXCHANGE DATE. Delivery of the assets of Company to be transferred,
assumption of the liabilities of Company to be assumed, and the delivery of
Acquiring Series Shares to be issued shall be made at the offices of the
Company, 309 Vine Street, Cincinnati, Ohio at 9:00 A.M. on October 31, 1998, or
at such other time, date, and location agreed to by Company and Trust, the date
and time upon which such delivery is to take place being referred to herein as
the "Exchange Date."
7. Special Meeting of Shareholders; Dissolution.
--------------------------------------------
(a) Company agrees to call a Special Meeting of its
shareholders as soon as is practicable for the purpose of considering
the transfer of all of the assets of Company to, and the assumption of
all of the liabilities of Company by,the Acquiring Series as herein
provided, authorizing and approving this Agreement, and authorizing and
approving the liquidation and dissolution of Company, and it shall be a
condition to the obligations of each of the parties hereto that the
holders of capital stock, par value $.001, of Company shall have
approved this Agreement, and the transactions contemplated herein,
including the liquidation and dissolution of Company, in the manner
required by law and Company's Articles of Incorporation at such a
meeting on or before the Valuation Time.
(b) Company agrees that the liquidation and dissolution of
Company will be effected in the manner provided in Company's Articles
of Incorporation and in accordance with applicable law, and that it
will not make any constructive distribution of any Acquiring Series
Shares to the shareholders of Company without first paying or
adequately providing for the payment of all of Company's known debts,
obligations and liabilities.
(c) Each of Company and Trust will cooperate with the other,
and each will furnish to the other the information relating to itself
required by the 1934 Act and 1940 Act and the rules and regulations
thereunder to be set forth in the proxy solicitation materials to be
prepared by Company and utilized in connection with the Special
Meeting.
8. CONDITIONS OF COMPANY'S OBLIGATIONS. The obligations of Company
hereunder shall be subject to the following conditions:
A-7
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(a) This Agreement shall have been authorized and the
transactions contemplated hereby, including the liquidation and
dissolution of Company, shall have been approved by the directors and
shareholders of Company in the manner required by law.
(b) Trust shall have executed and delivered to Company an
Assumption of Liabilities dated as of the Exchange Date pursuant to
which the Acquiring Series will assume all of the liabilities,
expenses, costs, charges and reserves of Company, contingent or
otherwise, including liabilities existing at the Valuation Time and
described in Section 1(c) hereof in connection with the transactions
contemplated by this Agreement; provided that recourse for assumed
liabilities relating to an Acquired Series shall be limited to the
corresponding Acquiring Series.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Trust made in this Agreement are true
and correct in all material respects as if made at and as of such
dates, Trust and the Acquiring Series have complied with all of the
agreements and satisfied all of the conditions on their part to be
performed or satisfied at or prior to each of such dates, and Trust
shall have furnished to Company a statement, dated the Exchange Date,
signed by Trust's President (or any Vice President) and Treasurer (or
other financial officer) certifying those facts as of such dates.
(d) There shall not be any material litigation pending or
overtly threatened with respect to the matters contemplated by this
Agreement.
(e) Company shall have received an opinion of Baker &
Hostetler LLP, in form reasonably satisfactory to Company and dated the
Exchange Date, to the effect that (i) Trust is a business trust validly
existing under the laws of the State of Ohio, (ii) the Acquiring Series
Shares to be delivered to Company as provided for by this Agreement are
duly authorized and upon such delivery will be validly issued and will
be fully paid and nonassessable by Trust and no shareholder of Trust
has any preemptive right to subscription or purchase in respect
thereof, (iii) this Agreement has been duly authorized, executed and
delivered by Trust, and assuming due authorization, execution and
delivery of this Agreement by Company, is a valid and binding
obligation of Trust enforceable in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights
generally and other equitable principles, (iv) the execution and
delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, violate Trust's Declaration
of Trust or its By-Laws or any provision of any agreement known to such
counsel to which Trust or the Acquiring Series is a party or by which
it is bound, (v) to the knowledge of such counsel no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by Trust or the Acquiring Series of the
transactions contemplated herein, except such as have been obtained
under the 1933 Act, 1934 Act and 1940 Act and such as may be required
under state securities or blue sky laws or as may be required under
state business trust laws. In rendering such opinion Baker & Hostetler
LLP may rely on certain reasonable assumptions and certifications of
fact received from Company, Trust and certain of its shareholders.
(f) Company shall have received an opinion of Baker &
Hostetler LLP addressed to Company, Trust and each Acquiring Series and
in a form reasonably satisfactory to Company dated the Exchange Date,
with respect to the matters specified in Section 9(e) of this
Agreement. In rendering such opinion Baker & Hostetler LLP may rely on
certain reasonable assumptions and certifications of fact received from
Company, Trust and certain of its shareholders.
A-8
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(g) All necessary proceedings taken by Trust in connection
with the transactions contemplated by this Agreement and all documents
incidental thereto reasonably shall be satisfactory in form and
substance to Company and Baker & Hostetler LLP.
(h) The Registration Statement shall have become effective
under the 1933 Act and applicable Blue Sky provisions, and no stop
order suspending such effectiveness shall have been instituted or, to
the knowledge of Company, contemplated by the Commission or any state
regulatory authority.
(i) Trust and Company shall have received from the Commission,
if necessary, a written order of exemption, satisfactory in form and
substance to Trust and Company, exempting the Reorganization from the
provisions of Section 17(a) of the 1940 Act.
(j) Trust shall have authorized and entered into service
provider agreements, including an Investment Advisory Agreement and
Distribution Agreement, and adopted Distribution and Shareholder
Service Plans and Agreements, identical in all material respects to
those entered into and adopted by the Company.
(k) Trust shall have taken all necessary action so that it
shall be a registered open-end management investment company under the
1940 Act.
9. CONDITIONS OF TRUST'S OBLIGATIONS. The obligations of Trust and the
Acquiring Series hereunder shall be subject to the following conditions:
(a) This Agreement shall have been authorized and the
transactions contemplated hereby, including the liquidation and
dissolution of Company, shall have been approved by the directors and
shareholders of Company in the manner required by law.
(b) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Company made in this Agreement are
true and correct in all material respects as if made at and as of such
dates, Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
each of such dates, and Company shall have furnished to Trust a
statement, dated the Exchange Date, signed by Company's President (or
any Vice President) and Treasurer (or other financial officer)
certifying those facts as of such dates.
(c) There shall not be any material litigation pending or
overtly threatened with respect to the matters contemplated by this
Agreement.
(d) Trust shall have received an opinion of Baker & Hostetler
LLP, in form reasonably satisfactory to Trust and dated the Exchange
Date, to the effect that (i) Company is a corporation validly existing
under the laws of the State of Maryland, (ii) this Agreement has been
duly authorized, executed and delivered by Company and, assuming due
authorization, execution and delivery of this Agreement by Trust, is a
valid and binding obligation of Company, enforceable in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and other equitable principles, (iii)
Company has power to assign, convey, transfer and deliver the
Investments and other assets contemplated hereby and, upon consummation
of the transactions contemplated hereby in accordance with the terms of
this Agreement, Company will have duly assigned, conveyed, transferred
and delivered such Investments and other assets to Trust, (iv) the
A-9
26
execution and delivery of this Agreement did not and the consummation
of the transactions contemplated hereby will not, violate Company's
Articles of Incorporation or its By-Laws, as amended, or any provision
of any agreement known to such counsel to which Company is a party or
by which it is bound, and (v) to the knowledge of such counsel no
consent, approval, authorization or order of any court or governmental
authority is required for the consummation by Company of the
transactions contemplated herein, except such as have been obtained
under the 1933 Act, 1934 Act and 1940 Act and such as may be required
under state securities or blue sky laws or state corporation laws. In
rendering such opinion, Baker & Hostetler LLP may rely upon certain
reasonable and customary assumptions and certifications of fact
received from Trust, Company and certain of its shareholders.
(e) Trust shall have received an opinion of Baker & Hostetler
LLP, addressed to Trust, each Acquiring Series and Company, in form
reasonably satisfactory to Trust and dated the Exchange Date, to the
effect that for Federal income tax purposes (i) the transfer of all or
substantially all of Acquired Series' assets in exchange for the
Acquiring Series Shares and the assumption by the Acquiring Series of
liabilities of Acquired Series will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and each of the
Acquiring Series and Acquired Series is a "party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss
will be recognized by Acquired Series upon the transfer of the assets
of the Acquiring Series in exchange for Acquiring Series Shares and the
assumption by the Acquiring Series of the liabilities of Acquired
Series or upon the constructive distribution of Acquiring Series Shares
by Acquired Series to its shareholders in liquidation; (iii) no gain or
loss will be recognized by the shareholders of Acquired Series upon the
exchange of their shares for Acquiring Series Shares, (iv) the basis of
the Acquiring Series Shares an Acquired Series shareholder receives in
connection with the Reorganization will be the same as the basis of his
or her shares exchanged therefor; (v) an Acquired Series shareholder's
holding period for his or her Acquiring Series Shares will be
determined by including the period for which he or she held Acquired
Series shares exchanged therefor, provided that he or she held such
shares as capital assets; (vi) no gain or loss will be recognized by
the Acquiring Series upon the receipt of the assets of the
corresponding Acquired Series in exchange for Acquiring Series Shares
and the assumption by the Acquiring Series of the liabilities of the
corresponding Acquired Series (vii) the basis in the hands of the
Acquiring Series the assets of the corresponding Acquired Series
transferred to the Acquiring Series will be the same as the basis of
the assets in the hands of the corresponding Acquired Series
immediately prior to the transfer and (viii) the Acquiring Series'
holding periods of the assets of the corresponding Acquired Series will
include the period for which such assets of the corresponding Acquired
Series were held by the corresponding Acquired Series. In rendering
such opinion, Baker & Hostetler LLP may rely upon certain reasonable
and customary assumptions and certifications of fact received from
Trust, Company, and certain of its shareholders.
(f) The Registration Statement shall have become effective
under the 1933 Act and applicable Blue Sky provisions, and no stop
order suspending such effectiveness shall have been instituted or, to
the knowledge of Trust, contemplated by the Commission or any state
regulatory authority.
(g) All necessary proceedings taken by Company in connection
with the transactions contemplated by this Agreement and all documents
incidental thereto reasonably shall be satisfactory in form and
substance to Trust and Baker & Hostetler LLP.
(h) Prior to the Exchange Date, each Acquired Series shall
have declared a dividend or dividends which, together with all previous
such dividends, shall have the effect of distributing to
A-10
27
its shareholders all of its investment company taxable income for its
taxable year ended December 31, 1997 and the short taxable year
beginning on January 1, 1998 and ending on the Valuation Time (computed
without regard to any deduction for dividends paid), and all of its net
capital gain realized in its taxable year ended December 31, 1997 and
the short taxable year beginning January 1, 1998 and ending on the
Valuation Time (after reduction for any capital loss carryover).
(i) Company shall have duly executed and delivered to Trust a
bill of sale, assignment, certificate and other instruments of transfer
("Transfer Documents") as Trust may deem necessary or desirable to
transfer all of Company's entire right, title and interest in and to
the Investments and all other assets of Company to the Acquiring
Series.
(j) Trust and Company shall have received from the Commission,
if necessary, a written order of exemption, satisfactory in form and
substance to Trust and Company, exempting the Reorganization from the
provisions of Section 17(a) of the 1940 Act.
(k) The Trust shall have taken all necessary action so that it
shall be a registered open-end management investment company under the
1940 Act.
10. TERMINATION. Trust and Company may, by mutual consent of their
respective trustees or directors, terminate this Agreement, and Trust or
Company, after consultation with counsel and by consent of their respective
trustees or directors or an officer authorized by such trustees or directors,
may, subject to Section 11 of this Agreement, waive any condition to their
respective obligations hereunder.
11. SOLE AGREEMENT; GOVERNING LAW; AMENDMENTS. This Agreement supersedes
all previous correspondence and oral communications between the parties
regarding the subject matter hereof, constitutes the only understanding with
respect to such subject matter and shall be construed in accordance with and
governed by the laws of the State of Ohio.
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officer of Trust and
Company; provided, however, that following the Special Meeting of Company's
shareholders called by Company pursuant to Section 7 of this Agreement, no such
amendment may have the effect of altering or changing the amount or kind of
shares received by Company, or altering or changing to any material extent the
amount or kind of liabilities assumed by Trust and the Acquiring Series, or
altering or changing any other terms and conditions of the Reorganization if any
of the alterations or changes, alone or in the aggregate, would materially
adversely affect Company's shareholders without their further approval.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
THE RIVERFRONT FUNDS, INC.
By /s/Walter B. Grimm
---------------------------
Walter B. Grimm, President
THE RIVERFRONT FUNDS
By /s/Walter B. Grimm
---------------------------
Walter B. Grimm, President
A-11
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PROXY
THE RIVERFRONT FUNDS, INC.
THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE COMPANY
The undersigned hereby appoints Walter B. Grimm, C. David Bunstine and
Charles L. Booth and each of them, with full power of substitution, proxies to
vote and act with respect to all Shares of The Riverfront U.S. Government
Securities Money Market Fund (the "Fund"), a series of The Riverfront Funds,
Inc. (the "Company"), which the undersigned is entitled to vote, at the Special
Meeting of Shareholders of the Company to be held on Friday, August 7, 1998, at
3435 Stelzer Road, Columbus, Ohio 43219, at 10:00 A.M., EDST, and at any and all
adjournments thereof, on the following proposal and any other matters that may
properly come before the Meeting.
PROPOSAL 1 FOR / / AGAINST / / ABSTAIN / / - Approval of an Agreement and
Plan of Reorganization and Liquidation providing for the
conversion of the Fund from a separate series of a Maryland
corporation to a separate series of an Ohio business trust.
The Shares represented by this Proxy will be voted upon the proposal
listed above in accordance with the instruction given by the Shareholder, but if
no instruction is given and this Proxy is properly executed and returned to the
Company, this Proxy will be voted FOR the proposal and in accordance with the
best judgment of the proxies on any other matter which properly comes before the
Meeting.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders dated June 30, 1998, and the Proxy Statement attached
thereto.
Dated _________________________
_______________________________
(Signature of Shareholder)
_______________________________
(Signature of Shareholder)
NOTE: Please sign legibly and exactly as name appears on this card.
If Shares are registered in the name of joint owners, each must sign
the proxy. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in partnership name.
*** Please mark, sign, date and return the proxy card
promptly using the enclosed envelope. ***
29
PROXY
THE RIVERFRONT FUNDS, INC.
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE COMPANY
The undersigned hereby appoints Walter B. Grimm, C. David Bunstine and
Charles L. Booth and each of them, with full power of substitution, proxies to
vote and act with respect to all Shares of The Riverfront U.S. Government Income
Fund (the "Fund"), a series of The Riverfront Funds, Inc. (the "Company"), which
the undersigned is entitled to vote, at the Special Meeting of Shareholders of
the Company to be held on Friday, August 7, 1998, at 3435 Stelzer Road,
Columbus, Ohio 43219, at 10:00 A.M., EDST, and at any and all adjournments
thereof, on the following proposal and any other matters that may properly come
before the Meeting.
PROPOSAL 1 FOR / / AGAINST / / ABSTAIN / / - Approval of an Agreement
and Plan of Reorganization and Liquidation providing for the
conversion of the Fund from a separate series of a Maryland
corporation to a separate series of an Ohio business trust.
The Shares represented by this Proxy will be voted upon the proposal
listed above in accordance with the instruction given by the Shareholder, but if
no instruction is given and this Proxy is properly executed and returned to the
Company, this Proxy will be voted FOR the proposal and in accordance with the
best judgment of the proxies on any other matter which properly comes before the
Meeting.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders dated June 30, 1998, and the Proxy Statement attached
thereto.
Dated _________________________
_______________________________
(Signature of Shareholder)
_______________________________
(Signature of Shareholder)
NOTE: Please sign legibly and exactly as name appears on this card.
If Shares are registered in the name of joint owners, each must sign
the proxy. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in partnership name.
*** Please mark, sign, date and return the proxy
card promptly using the enclosed envelope. ***
30
PROXY
THE RIVERFRONT FUNDS, INC.
THE RIVERFRONT BALANCED FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE COMPANY
The undersigned hereby appoints Walter B. Grimm, C. David Bunstine and
Charles L. Booth and each of them, with full power of substitution, proxies to
vote and act with respect to all Shares of The Riverfront Balanced Fund (the
"Fund"), a series of The Riverfront Funds, Inc. (the "Company"), which the
undersigned is entitled to vote, at the Special Meeting of Shareholders of the
Company to be held on Friday, August 7, 1998, at 3435 Stelzer Road, Columbus,
Ohio 43219, at 10:00 A.M., EDST, and at any and all adjournments thereof, on the
following proposal and any other matters that may properly come before the
Meeting.
PROPOSAL 1 FOR / / AGAINST / / ABSTAIN / / - Approval of an Agreement
and Plan of Reorganization and Liquidation providing for the
conversion of the Fund from a separate series of a Maryland
corporation to a separate series of an Ohio business trust.
The Shares represented by this Proxy will be voted upon the proposal
listed above in accordance with the instruction given by the Shareholder, but if
no instruction is given and this Proxy is properly executed and returned to the
Company, this Proxy will be voted FOR the proposal and in accordance with the
best judgment of the proxies on any other matter which properly comes before the
Meeting.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders dated June 30, 1998, and the Proxy Statement attached
thereto.
Dated _________________________
_______________________________
(Signature of Shareholder)
_______________________________
(Signature of Shareholder)
NOTE: Please sign legibly and exactly as name appears on this card.
If Shares are registered in the name of joint owners, each must sign
the proxy. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in partnership name.
*** Please mark, sign, date and return the proxy
card promptly using the enclosed envelope. ***
31
PROXY
THE RIVERFRONT FUNDS, INC.
THE RIVERFRONT INCOME EQUITY FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE COMPANY
The undersigned hereby appoints Walter B. Grimm, C. David Bunstine and
Charles L. Booth and each of them, with full power of substitution, proxies to
vote and act with respect to all Shares of The Riverfront Income Equity Fund
(the "Fund"), a series of The Riverfront Funds, Inc. (the "Company"), which the
undersigned is entitled to vote, at the Special Meeting of Shareholders of the
Company to be held on Friday, August 7, 1998, at 3435 Stelzer Road, Columbus,
Ohio 43219, at 10:00 A.M., EDST, and at any and all adjournments thereof, on the
following proposal and any other matters that may properly come before the
Meeting.
PROPOSAL 1 FOR / / AGAINST / / ABSTAIN / / - Approval of an Agreement
and Plan of Reorganization and Liquidation providing for the
conversion of the Fund from a separate series of a Maryland
corporation to a separate series of an Ohio business trust.
The Shares represented by this Proxy will be voted upon the proposal
listed above in accordance with the instruction given by the Shareholder, but if
no instruction is given and this Proxy is properly executed and returned to the
Company, this Proxy will be voted FOR the proposal and in accordance with the
best judgment of the proxies on any other matter which properly comes before the
Meeting.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders dated June 30, 1998, and the Proxy Statement attached
thereto.
Dated _________________________
_______________________________
(Signature of Shareholder)
_______________________________
(Signature of Shareholder)
NOTE: Please sign legibly and exactly as name appears on this card.
If Shares are registered in the name of joint owners, each must sign
the proxy. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in partnership name.
*** Please mark, sign, date and return the proxy
card promptly using the enclosed envelope. ***
32
PROXY
THE RIVERFRONT FUNDS, INC.
THE RIVERFRONT LARGE COMPANY SELECT FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE COMPANY
The undersigned hereby appoints Walter B. Grimm, C. David Bunstine and
Charles L. Booth and each of them, with full power of substitution, proxies to
vote and act with respect to all Shares of The Riverfront Large Company Select
Fund (the "Fund"), a series of The Riverfront Funds, Inc. (the "Company"), which
the undersigned is entitled to vote, at the Special Meeting of Shareholders of
the Company to be held on Friday, August 7, 1998, at 3435 Stelzer Road,
Columbus, Ohio 43219, at 10:00 A.M., EDST, and at any and all adjournments
thereof, on the following proposal and any other matters that may properly come
before the Meeting.
PROPOSAL 1 FOR / / AGAINST / / ABSTAIN / / - Approval of an Agreement
and Plan of Reorganization and Liquidation providing for the
conversion of the Fund from a separate series of a Maryland
corporation to a separate series of an Ohio business trust.
The Shares represented by this Proxy will be voted upon the proposal
listed above in accordance with the instruction given by the Shareholder, but if
no instruction is given and this Proxy is properly executed and returned to the
Company, this Proxy will be voted FOR the proposal and in accordance with the
best judgment of the proxies on any other matter which properly comes before the
Meeting.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders dated June 30, 1998, and the Proxy Statement attached
thereto.
Dated _________________________
_______________________________
(Signature of Shareholder)
_______________________________
(Signature of Shareholder)
NOTE: Please sign legibly and exactly as name appears on this card.
If Shares are registered in the name of joint owners, each must sign
the proxy. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in partnership name.
*** Please mark, sign, date and return the proxy
card promptly using the enclosed envelope. ***
33
PROXY
THE RIVERFRONT FUNDS, INC.
THE RIVERFRONT STOCK APPRECIATION FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE COMPANY
The undersigned hereby appoints Walter B. Grimm, C. David Bunstine and
Charles L. Booth and each of them, with full power of substitution, proxies to
vote and act with respect to all Shares of The Riverfront Stock Appreciation
Fund (the "Fund"), a series of The Riverfront Funds, Inc. (the "Company"), which
the undersigned is entitled to vote, at the Special Meeting of Shareholders of
the Company to be held on Friday, August 7, 1998, at 3435 Stelzer Road,
Columbus, Ohio 43219, at 10:00 A.M., EDST, and at any and all adjournments
thereof, on the following proposal and any other matters that may properly come
before the Meeting.
PROPOSAL 1 FOR / / AGAINST / / ABSTAIN / / - Approval of an Agreement
and Plan of Reorganization and Liquidation providing for the
conversion of the Fund from a separate series of a Maryland
corporation to a separate series of an Ohio business trust.
The Shares represented by this Proxy will be voted upon the proposal
listed above in accordance with the instruction given by the Shareholder, but if
no instruction is given and this Proxy is properly executed and returned to the
Company, this Proxy will be voted FOR the proposal and in accordance with the
best judgment of the proxies on any other matter which properly comes before the
Meeting.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders dated June 30, 1998, and the Proxy Statement attached
thereto.
Dated _________________________
_______________________________
(Signature of Shareholder)
_______________________________
(Signature of Shareholder)
NOTE: Please sign legibly and exactly as name appears on this card.
If Shares are registered in the name of joint owners, each must sign
the proxy. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in partnership name.
*** Please mark, sign, date and return the proxy
card promptly using the enclosed envelope. ***