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 ss.240.14a-12
AMERIPRIME FUNDS
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
___________________________________________________________________
2) Aggregate number of securities to which transaction applies:
___________________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
___________________________________________________________________
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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|_| 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:
___________________________________________________________________
AAM Equity Fund
1018 Kanawha Blvd., Suite 301
Charleston, West Virginia 25301
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held August 5, 2004
Dear Shareholders:
The Board of Trustees of AmeriPrime Funds (the "Trust"), an open-end
investment company organized as an Ohio business trust, has called a special
meeting of the shareholders of the AAM Equity Fund series of the Trust, to be
held at the principal executive offices of the Trust, 431 North Pennsylvania
Street, Indianapolis, Indiana 46204, on August 5, 2004 at 10:00 a.m., central
time, for the following purpose:
1. Approval of a new advisory agreement between the Trust and Appalachian
Asset Management, Inc., the Fund's investment advisor. No fee increase
is proposed.
2. Transaction of such other business as may properly come before the
meeting or any adjournments thereof.
Shareholders of record at the close of business on June 15, 2004 are
entitled to notice of, and to vote at, the special meeting and any
adjournment(s) or postponement(s) thereof.
By Order of the Board of Trustees
Carol J. Highsmith, Secretary
June 29, 2004
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE WHETHER OR NOT YOU EXPECT TO
BE PRESENT AT THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY
AND VOTE YOUR SHARES IN PERSON.
1
AAM EQUITY FUND
1018 Kanawha Blvd., Suite 301
Charleston, West Virginia 25301
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
To Be Held August 5, 2004
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INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of AmeriPrime Funds (the "Trust"), on behalf of
the AAM Equity Fund (the "Fund") for use at the Special Meeting of Shareholders
of the Fund (the "Meeting") to be held at the principal executive offices of the
Trust, 431 North Pennsylvania Street, Indianapolis, Indiana 46204, on August 5,
2004 at 10:00 a.m., central time, and at any and all adjournments thereof. The
Notice of Meeting, Proxy Statement and accompanying form of proxy will first be
mailed to shareholders on or about June 29, 2004.
Appalachian Asset Management, Inc. ("AAM") serves as the Fund's investment
advisor. KI&T Holdings, Inc. ("KI&T") and Argent Financial Group, Inc.
("Argent") previously controlled AAM, each owning 50% of its outstanding shares.
As of May 17, 2004, AAM Investments, LLC acquired all of the outstanding shares
of AAM. As a result of the transaction, AAM Investments, LLC is deemed to
"control" AAM.
Pursuant to the Investment Company Act of 1940, as amended (the "Investment
Company Act"), a transaction that results in a change of control of an
investment advisor may be deemed an "assignment." The Investment Company Act
further provides that a management agreement will automatically terminate in the
event of an assignment. As a result, the shareholders are being asked to
consider the approval of a new agreement for the Fund with AAM.
A copy of the Fund's most recent annual report, and most recent semi-annual
report succeeding the annual report, including financial statements and
schedules, is available at no charge by sending a written request to AmeriPrime
Funds at 431 North Pennsylvania Street, Indianapolis, Indiana 46204 or by
calling the Fund at 888-905-2283.
2
PROPOSAL
APPROVAL OF A NEW MANAGEMENT AGREEMENT BETWEEN
THE TRUST AND APPALACHIAN ASSET MANAGEMENT, INC.
Background
AAM previously served as the Fund's investment advisor pursuant to a
management agreement dated May 30, 2002. AAM previously was controlled by KI&T
and Argent, each owning 50% of its outstanding shares. AAM Investments, LLC
acquired 100% of the outstanding shares of AAM pursuant to a Stock Purchase
Agreement dated as of May 17, 2004. Pursuant to the Stock Purchase Agreement,
Argent sold, assigned, transferred, conveyed and delivered to AAM Investments,
LLC, and AAM Investments, LLC purchased and acquired from Argent, all right,
title and interest in and to those outstanding common shares, without par value
(the "Shares"), of AAM owned by Argent. At the same time, AAM Investments, LLC
assigned, transferred, conveyed and delivered to KI&T 43,168 shares of KI&T in
exchange for all right, title and interest in and to those Shares of AAM owned
by KI&T. As a result of the transaction, AAM Investments, LLC is deemed to
"control" AAM.
Under the Investment Company Act, a transaction that results in a change of
control of an investment advisor may be deemed an "assignment." The Investment
Company Act further provides that a management agreement automatically
terminates in the event of its assignment. The transaction described above
resulted in a "change in control" of AAM for purposes of the Investment Company
Act and caused the "assignment" and resulting termination of the old management
agreement.
On March 15, 2004, the Board of Trustees of the Fund approved an interim
management agreement. The interim management agreement took effect on May 17,
2004 following the change of control of AAM. Subject to shareholder approval,
the Board of Trustees on June 7, 2004 approved a new management agreement for
the Fund. As a result, the shareholders of the Fund are being asked to consider
the approval of the new management agreement with AAM. The primary purpose of
this proposal is to allow AAM to continue to serve as the investment manager to
the Fund.
Approval of the new management agreement will not raise the fees paid by
the shareholders of the Fund. The new management agreement is materially
identical to the previous management agreement, including the management fee the
Fund pays to AAM, except for the effective date. The effective date of the new
management agreement will be the date shareholders of the Fund approve the new
management agreement. Under the Stock Purchase Agreement, KI&T and Argent have
agreed for themselves and their subsidiaries and affiliates, to vote any shares
they own, control or have the right to vote by proxy in favor of the new
management agreement.
The Previous Management Agreement
AAM previously served as the investment advisor to the Fund pursuant to a
management agreement, dated May 30, 2002, between the Trust and AAM. The
previous agreement was approved by shareholders of the Fund on March 15, 2002.
The previous agreement was renewed by the Board of Trustees on March 15, 2004,
and would continue from year to year thereafter, subject to annual approval by
the Board of Trustees.
Under the terms of the previous management agreement, AAM was required to
provide the Fund with such investment advice as it deemed advisable, to furnish
a continuous investment program for the Fund consistent with the Fund's
investment objective and policies, and to determine the securities to be
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purchased for the Fund, the portfolio securities to be held or sold by the Fund
and the portion of the Fund's assets to be held uninvested, subject always to
the Fund's investment objective, policies and restrictions as in effect from
time to time and subject further to such policies and instructions as the Board
of Trustees may from time to time establish. The agreement also provided that
AAM would advise and assist the officers of the Trust in taking such steps as
were necessary or appropriate to carry out the decisions of the Board and the
appropriate committees of the Board regarding the conduct of the business of the
Fund.
The management agreement required AAM to pay all operating expenses of the
Fund except brokerage, taxes, borrowing costs (such as (a) interest and (b)
dividend expenses on securities sold short), fees and expenses of non-interested
person trustees and such extraordinary and non-recurring expenses as may arise.
The Trust bore all other expenses that were not assumed by AAM. As compensation
for its management services, the Fund was obligated to pay AAM a fee computed
and accrued daily and paid monthly at an annual rate of 1.15% of its average
daily net assets. AAM had contractually agreed through February 28, 2005 to
reimburse the Fund for the fees and expenses of the disinterested Trustees and
any Fund deferred organizational costs amortized during the period, but only to
the extent necessary to maintain the Fund's total annual operating expenses at
1.15%.
For the fiscal year ended October 31, 2003, the aggregate amount of the
investment advisor's fee paid to AAM was $146,055. For the fiscal year ended
October 31, 2003, AAM reimbursed Trustees fees and organizational expenses of
$6,840.
The Interim Management Agreement
Ordinarily, shareholder approval must be obtained before a management
agreement takes effect. With respect to a voluntary assignment as described in
Rule 15a-4(b)(2) under the Investment Company Act, however, an investment
manager is permitted to serve temporarily under an interim agreement that is
approved by a fund's board of trustees but that has not received shareholder
approval, if the following conditions are met:
(i) The compensation under the interim agreement is no greater than under the
previous agreement;
(ii) The fund's board of trustees, including a majority of the disinterested
trustees, has voted in person to approve the interim agreement before the
previous agreement is terminated;
(iii)The fund's board of trustees, including a majority of the disinterested
trustees, determines that the scope and quality of services to be provided
to the fund under the interim agreement will be at least equivalent to the
scope and quality of services provided under the previous agreement;
(iv) The interim agreement provides that the fund's board of trustees or a
majority of the fund's outstanding voting securities may terminate the
agreement at any time, without payment of any penalty, on not more than 10
calendar days written notice to the investment manager;
(v) The interim agreement contains the same provisions as the previous
agreement with the exception of effective and termination dates, provisions
required by Rule 15a-4, and other differences determined to be immaterial
by the board of trustees, including a majority of the directors who are not
interested persons of the fund;
(vi) The interim agreement provides, in accordance with the specific provisions
of Rule 15a-4, for the establishment of an escrow account for fees received
under the interim agreement pending approval of a new management agreement
by shareholders;
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(vii)A majority of the trustees of the fund are disinterested trustees and
those trustees select and nominate any other disinterested trustee; and
(viii)Legal counsel for the disinterested trustees is an independent legal
counsel.
A change of control of AAM occurred on May 17, 2004. Prior to the change of
control, the Board of Trustees approved an interim management agreement,
identical in all material respects to the previous management agreement, that
took effect upon the change of control. AAM will serve as investment manager
pursuant to the interim agreement for 150 days after the change in control or,
if earlier, until a new management agreement is approved by shareholders. If
shareholders do not approve the new management agreement, AAM will be paid the
lesser of the costs incurred in performing its services under the interim
agreement or the total amount in the escrow account, plus interest earned.
The New Management Agreement.
At a meeting on June 7, 2004, the Board of Trustees considered and
approved, subject to approval by the shareholders of the Fund, a proposed new
management agreement for the Fund. The new management agreement will become
effective as to the Fund upon approval by shareholders. The new management
agreement is identical in all material respects to the previous management
agreement, with the exception of technical amendments arising from changes in
the date of its execution, effectiveness and termination.
The new agreement provides that it will remain in force for an initial term
of two years, and from year to year thereafter, subject to annual approval by
(a) the Board of Trustees or (b) a vote of a majority (as defined in the
Investment Company Act) of the outstanding shares of the Fund; provided that in
either event continuance is also approved by a majority of the trustees who are
not affiliated with AAM (the "Independent Trustees"), by a vote cast in person
at a meeting called for the purpose of voting on such approval. The new
agreement may be terminated at any time, on sixty days written notice, without
the payment of any penalty, by the Board of Trustees, by a vote of the majority
of the outstanding voting securities of the Fund, or by AAM. The new management
agreement automatically and immediately terminates in the event of an assignment
(as defined in the Investment Company Act).
The new management agreement provides that in connection with purchases or
sales of portfolio securities for the account of the Fund, AAM will arrange for
the placing of all orders with brokers or dealers selected by AAM, subject to
review of these selections by the Board from time to time. AAM is responsible
for the negotiation and allocation of principal business and portfolio
brokerage. In the selection of such brokers or dealers and the placing of such
orders, AAM must at all times seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer. Like the previous agreement, the new
management agreement permits AAM to select brokers and dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which AAM exercises investment discretion.
The liability provisions of the new management agreement are the same as
the previous management agreement. The new management agreement provides that
AAM and its shareholders, members, officers, directors, employees, agents,
control persons or affiliates of any thereof shall not be liable for any
damages, expenses or losses incurred by the Trust in connection with any error
of judgment, mistake of law, any act or omission connected with or arising out
of any services rendered under, or payments made pursuant to, the new management
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agreement or any other matter to which the agreement relates, except by reason
of willful misfeasance, bad faith or gross negligence on the part of any such
persons in the performance of AAM's duties under the new management agreement,
or by reason of reckless disregard by any such persons of AAM's obligations and
duties under the new management agreement.
AAM retains the right to use the name "AAM" in connection with another
investment company or business enterprise with which AMM is or may become
associated. The Trust's right to use the name "AAM" automatically ceases ninety
(90) days after termination of the new management agreement and may be withdrawn
by AAM on ninety days written notice.
The new management agreement for the Fund is attached as Exhibit A. You
should read the new management agreement. The description in this Proxy
Statement of the new management agreement is only a summary.
Information Concerning AAM
AAM is located at 1018 Kanawha Blvd., Suite 301, Charleston, West Virginia
25301. AAM Investments, LLC, also located at 1018 Kanawha Blvd., Suite 301,
Charleston, West Virginia 25301, owns 100% of AAM and is deemed to control AAM.
The names, addresses and principal occupations of the principal executive
officers and directors of AAM are set forth below:
<table>
- ------------------------------- ----------------------------- ----------------------------- ----------------------------
Name Title Address Principal Occupation
- ------------------------------- ----------------------------- ----------------------------- ----------------------------
- ------------------------------- ----------------------------- ----------------------------- ----------------------------
Knox H. Fuqua President, Secretary, 1018 Kanawha Blvd., Suite Asset Management
Treasurer and Director 301, Charleston, West
Virginia 25301
- ------------------------------- ----------------------------- ----------------------------- ----------------------------
- ------------------------------- ----------------------------- ----------------------------- ----------------------------
AAM Investment, LLC. Managing Member 1018 Kanawha Blvd., Suite Asset Management
301, Charleston, West
Virginia 25301
- ------------------------------- ----------------------------- ----------------------------- ----------------------------
The following persons own 10% or more of AAM Investments, LLC.
- --------------------------------------------------- ---------------------------------- ---------------------------------
Name Address Ownership
- --------------------------------------------------- ---------------------------------- ---------------------------------
- --------------------------------------------------- ---------------------------------- ---------------------------------
Mark Hatfield 1621 Woodvale Dr. 12.34%
Charleston, WV 25314
- --------------------------------------------------- ---------------------------------- ---------------------------------
- --------------------------------------------------- ---------------------------------- ---------------------------------
Monica Hatfield 1621 Woodvale Dr. 24.67%
Charleston, WV 25314
- --------------------------------------------------- ---------------------------------- ---------------------------------
- --------------------------------------------------- ---------------------------------- ---------------------------------
Davenport and Co. LLC
Robert Pulliam IRA 901 East Cary Street 18.26%
Richmond, VA 23219
- --------------------------------------------------- ---------------------------------- ---------------------------------
</table>
Evaluation By The Board Of Trustees.
At its June 7, 2004 meeting, the Board of Trustees determined that
continuity and efficiency of portfolio investment advisory services after the
change of control of AAM could best be assured by approving the new management
agreement. The Board believed that the new management agreement would enable the
Fund to continue to obtain management services of high quality at costs that it
deems appropriate and reasonable and that approval of the new management
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agreement was in the best interests of the Fund and its shareholders. The Board,
including the Independent Trustees, evaluated the new management agreement with
AAM for the Fund and the impact on the Fund of retaining AAM as the investment
manager. Mr. Fuqua of AAM discussed with the Trustees the reasons for the change
of control at AAM, the experience and background of AAM, the ability of AAM to
perform under the terms of the proposed new agreement, and AAM's financial
condition. In evaluating the impact of the acquisition, the Board, including the
Independent Trustees, requested and reviewed, with the assistance of legal
counsel, information about the performance of the Fund and discussed the
proposed new agreement.
In making the recommendation to approve the new Management Agreement, the
Trustees expressed their satisfaction with the experience, reputation,
qualifications and background of AAM and the nature and quality of operations
and services that AAM will continue to provide the Fund with no change in fees.
The Board viewed it significant that Mr. Fuqua, the one individual that has
consistently been involved in the portfolio management of the Fund, will be the
person primarily responsible for portfolio management following the change in
control, that no changes in AAM's methods of operations or location are
expected, and that no diminution of the scope and quality of advisory services
provided to the Fund will result from the change of control.
The Trustees also gave careful consideration to factors deemed relevant to
the Fund, including, but not limited to (i) the performance of the Fund since
the commencement of its operations, (ii) the investment objective and policies
of the Fund, (iii) the financial condition of AAM, and (iv) the fact that the
terms of the new agreement are substantially identical to the previous agreement
and the interim agreement.
As a result of their considerations, the Board of Trustees, including all
of the independent Trustees, determined that the new management agreement is in
the best interests of the Fund and its shareholders. Accordingly, the Board of
Trustees unanimously approved the new agreement and voted to recommend it to
shareholders for approval.
THE BOARD OF TRUSTEES OF THE TRUST, INCLUDING THE INDEPENDENT
TRUSTEES, UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE PROPOSED MANAGEMENT AGREEMENT.
OPERATION OF THE FUND
The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Trust retains various organizations to perform
specialized services. As described above, the Trust currently retains AAM, 1018
Kanawha Blvd., East, Suite 301, Charleston, West Virginia 25301 as the Fund's
investment advisor. The Trust retains Unified Fund Services, Inc. to manage the
Fund's business affairs, provide the Fund with administrative services, and to
act as the Fund's transfer agent and fund accountant. The Trust retains Unified
Financial Securities, Inc., 431 North Pennsylvania Street, Indianapolis, Indiana
46204 to act as the principal distributor of the Fund's shares.
7
THE PROXY
The Board of Trustees solicits proxies so that each shareholder has the
opportunity to vote on the proposals to be considered at the Meeting. A proxy
for voting your shares at the Meeting is enclosed. The shares represented by
each valid proxy received in time will be voted at the meeting as specified. If
no specification is made, the shares represented by a duly executed proxy will
be voted for approval of the proposed new agreement between the Trust and AAM
and at the discretion of the holders of the proxy on any other matter that may
come before the meeting that the Trust did not have notice of a reasonable time
prior to the mailing of this Proxy Statement. You may revoke your proxy at any
time before it is exercised by (1) submitting a duly executed proxy bearing a
later date, (2) submitting a written notice to the President of the Trust
revoking the proxy, or (3) attending and voting in person at the Meeting.
VOTING SECURITIES AND VOTING
The close of business on June 15, 2004 is the record date for determining
the shareholders entitled to notice of and to vote at the Meeting or any
adjournment(s) thereof (the "Record Date"). There were 1,152,880.678 shares of
beneficial interest of the Fund issued and outstanding as of the Record Date.
Only shareholders of record on the Record Date are entitled to vote at the
Meeting. Each shareholder is entitled to one (1) vote per share held, and
fractional votes for fractional shares held, on any matter submitted to a vote
at the Meeting. The presence, in person or by proxy, of the holders of at least
a majority of the aggregate number of shares of the Fund entitled to vote is
necessary to constitute a quorum for the Fund at the Meeting.
An affirmative vote of the holders of a majority of the outstanding shares
of the Fund is required for the approval of the proposed new agreement. As
defined in the Investment Company Act, a vote of the holders of a majority of
the outstanding shares of a Fund means the vote of (1) 67% or more of the voting
shares of the Fund present at the Meeting, if the holders of more than 50% of
the outstanding shares of the Fund are present in person or represented by
proxy, or (2) more than 50% of the outstanding voting shares of the Fund,
whichever is less.
Broker non-votes and abstentions will be considered present for purposes of
determining the existence of a quorum and the number of shares of the Fund
represented at the meeting, but they are not affirmative votes for any proposal.
As a result, with respect to approval of the proposed management agreement,
non-votes and abstentions will have the same effect as a vote against the
proposal because the required vote is a percentage of the shares present or
outstanding.
SECURITY OWNERSHIP OF MANAGEMENT
As of the Record Date, the Trustees and officers of the Trust beneficially
owned no shares of the Fund.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of June 15, 2004, RSBCO, 107 N. Trenton St., Ruston, LA 71270 was the
record owner of 89.62% of the outstanding shares of the Fund. Shares held by
RSBCO are beneficially owned by discretionary investment advisory clients of
KI&T and Argent Advisors, Inc., a subsidiary of Argent. As a result, KI&T and
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Argent may be deemed to beneficially own these shares and may be deemed to
control the Fund. Under the Stock Purchase Agreement, KI&T and Argent have
agreed for themselves and their subsidiaries and affiliates, to vote any shares
they own, control or have the right to vote in favor of the new management
agreement.
As of June 15, 2004, the Trust knows of no other person (including any
"group" as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended) who beneficially owns more than 5% of the outstanding
shares of the Fund.
SHAREHOLDER PROPOSALS
The Trust has not received any shareholder proposals to be considered for
presentation at the Meeting. Under the proxy rules of the Securities and
Exchange Commission, shareholder proposals may, under certain conditions, be
included in the Trust's proxy statement and proxy for a particular meeting.
Under these rules, proposals submitted for inclusion in the Trust's proxy
materials must be received by the Trust within a reasonable time before the
solicitation is made. The fact that the Trust receives a shareholder proposal in
a timely manner does not insure its inclusion in its proxy materials, because
there are other requirements in the proxy rules relating to such inclusion. You
should be aware that annual meetings of shareholders are not required as long as
there is no particular requirement under the Investment Company Act, which must
be met by convening such a shareholder meeting. Any shareholder proposal should
be sent to Ms. Carol J. Highsmith, Secretary, Ameriprime Funds, 431 North
Pennsylvania Street, Indianapolis, Indiana 46204.
AFFILIATED BROKERS
For fiscal year ended October 31, 2003, the Trust did not pay brokerage
commissions to affiliated brokers.
COST OF SOLICITATION
The Board of Trustees of the Trust is making this solicitation of proxies.
The cost of preparing and mailing this Proxy Statement, the accompanying Notice
of Special Meeting and proxy and any additional materials relating to the
meeting and the cost of soliciting proxies will be borne by AAM. In addition to
solicitation by mail, the Trust will request banks, brokers and other custodial
nominees and fiduciaries to supply proxy materials to the beneficial owners of
shares of the Fund of whom they have knowledge, and AAM will reimburse them for
their expenses in so doing. Certain officers, employees and agents of the Trust
and AAM may solicit proxies in person or by telephone, facsimile transmission or
mail, for which they will not receive any special compensation.
OTHER MATTERS
The Trust's Board of Trustees knows of no other matters to be presented at
the Meeting other than as set forth above. If any other matters properly come
before the meeting that the Trust did not have notice of a reasonable time prior
to the mailing of this Proxy Statement, the holders of the proxy will vote the
shares represented by the proxy on such matters in accordance with their best
judgment, and discretionary authority to do so is included in the proxy.
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PROXY DELIVERY
If you and another shareholder share the same address, the Trust may only
send one proxy statement unless you or the other shareholder(s) request
otherwise. Call or write to the Trust if you wish to receive a separate copy of
the proxy statement, and the Trust will promptly mail a copy to you. You may
also call or write to the Trust if you wish to receive a separate proxy in the
future, or if you are receiving multiple copies now, and wish to receive a
single copy in the future. For such requests, call 800-905-2283, or write the
Trust's transfer agent, Unified Fund Services, Inc., at 431 North Pennsylvania
Street, Indianapolis, Indiana 46204.
BY ORDER OF THE BOARD OF TRUSTEES
Carol J. Highsmith
Secretary
June 29, 2004
Please date and sign the enclosed proxy and return it promptly in the
enclosed reply envelope.
10
EXHIBIT A
PROPOSED MANAGEMENT AGREEMENT
TO: Appalachian Asset Management, Inc.
1018 Kanawha Blvd., East, Suite 301
Charleston, WV 25301
Dear Sirs:
AmeriPrime Funds (the "Trust") herewith confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is the AAM Equity Fund (the "Fund").
You have been selected to act as the sole investment advisor of the Fund
and to provide certain other services, as more fully set forth below, and you
are willing to act as such investment advisor and to perform such services under
the terms and conditions hereinafter set forth. Accordingly, the Trust agrees
with you as follows effective upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment advice as you in
your discretion deem advisable and will furnish a continuous investment program
for the Fund consistent with the Fund's investment objectives and policies. You
will determine the securities to be purchased for the Fund, the portfolio
securities to be held or sold by the Fund and the portion of the Fund's assets
to be held uninvested, subject always to the Fund's investment objectives,
policies and restrictions, as each of the same shall be from time to time in
effect, and subject further to such policies and instructions as the Board may
from time to time establish. You will advise and assist the officers of the
Trust in taking such steps as are necessary or appropriate to carry out the
decisions of the Board and the appropriate committees of the Board regarding the
conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the compensation
and expenses of any employees of the Fund and of any other persons rendering any
services to the Fund; clerical and shareholder service staff salaries; office
space and other office expenses; fees and expenses incurred by the Fund in
connection with membership in investment company organizations; legal, auditing
and accounting expenses; expenses of registering shares under federal and state
securities laws, excluding expenses incurred by the Fund in connection with the
organization and initial registration of shares of the Fund; insurance expenses;
fees and expenses of the custodian, transfer agent, dividend disbursing agent,
shareholder service agent, plan agent, administrator, accounting and pricing
services agent and underwriter of the Fund; expenses, including clerical
expenses, of issue, sale, redemption or repurchase of shares of the Fund; the
cost of preparing and distributing reports and notices to shareholders, the cost
of printing or preparing prospectuses and statements of additional information
for delivery to the Fund's current and prospective shareholders; the cost of
printing or preparing stock certificates or any other documents, statements or
reports to shareholders; expenses of shareholders' meetings and proxy
solicitations; advertising, promotion and other expenses incurred directly or
indirectly in connection with the sale or distribution of the Fund's shares
(excluding expenses which the Fund is authorized to pay pursuant to Rule 12b-1
under the 1940 Act, as amended); and all other operating expenses not
specifically assumed by the Fund.
The Fund will pay all brokerage fees and commissions, taxes, borrowing
costs (such as (a) interest and (b) dividend expenses on securities sold short),
fees and expenses of the non-interested person trustees and such extraordinary
or non-recurring expenses as may arise, including organizational expenses, and
litigation to which the Fund may be a party and indemnification of the Trust's
trustees and officers with respect thereto. The Fund will also pay expenses
which it is authorized to pay pursuant to Rule 12b-1 under the 1940 Act. You may
obtain reimbursement from the Fund, at such time or times as you may determine
in your sole discretion, for any of the expenses advanced by you, which the Fund
is obligated to pay, and such reimbursement shall not be considered to be part
of your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISOR
For all of the services to be rendered and payments to be made as provided
in this Agreement, as of the last business day of each month, the Fund will pay
you a fee at the annual rate of 1.15% of the average value of its daily net
assets.
The average value of the daily net assets of the Fund shall be determined
pursuant to the applicable provisions of the Declaration of Trust of the Trust
or a resolution of the Board, if required. If, pursuant to such provisions, the
determination of net asset value of the Fund is suspended for any particular
business day, then for the purposes of this paragraph, the value of the net
assets of the Fund as last determined shall be deemed to be the value of the net
assets as of the close of the business day, or as of such other time as the
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value of the Fund's net assets may lawfully be determined, on that day. If the
determination of the net asset value of the Fund has been suspended for a period
including such month, your compensation payable at the end of such month shall
be computed on the basis of the value of the net assets of the Fund as last
determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities for the
account of the Fund, it is understood that you will arrange for the placing of
all orders for the purchase and sale of portfolio securities for the account
with brokers or dealers selected by you, subject to review of this selection by
the Board from time to time. You will be responsible for the negotiation and the
allocation of principal business and portfolio brokerage. In the selection of
such brokers or dealers and the placing of such orders, you are directed at all
times to seek for the Fund the best qualitative execution, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer.
You should generally seek favorable prices and commission rates that are
reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which you exercise investment discretion. You are authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise investment
discretion. The Fund and you understand and acknowledge that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution as
described above, you may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute Fund portfolio
transactions.
Subject to the provisions of the Investment Company Act of 1940, as
amended, and other applicable law, you, any of your affiliates or any affiliates
of your affiliates may retain compensation in connection with effecting the
Fund's portfolio transactions, including transactions effected through others.
If any occasion should arise in which you give any advice to clients of yours
concerning the shares of the Fund, you will act solely as investment counsel for
such client and not in any way on behalf of the Fund. Your services to the Fund
pursuant to this Agreement are not to be deemed to be exclusive and it is
understood that you may render investment advice, management and other services
to others, including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISOR
You may rely on information reasonably believed by you to be accurate and
reliable. Except as may otherwise be required by the Investment Company Act of
1940 or the rules thereunder, neither you nor your shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee, shareholder or
agent of you, who may be or become an officer, director, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee,
shareholder or agent of you, or one under your control or direction, even though
paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution, and shall
remain in force for a period of two (2) years from the date of its execution,
and from year to year thereafter, subject to annual approval by (i) the Board or
(ii) a vote of a majority (as defined in the Investment Company Act of 1940) of
the outstanding voting securities of the Fund, provided that in either event
continuance is also approved by a majority of the trustees who are not
"interested persons," as defined in the Investment Company Act of 1940, of you
or the Trust, by a vote cast in person at a meeting called for the purpose of
voting such approval.
If the shareholders of the Fund fail to approve the Agreement in the manner
set forth above, upon request of the Board, you will continue to serve or act in
such capacity for the Fund for the period of time pending required approval of
the Agreement, of a new agreement with you or a different advisor or other
definitive action; provided that the compensation to be paid by the Fund to you
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for your services to and payments on behalf of the Fund will be equal to the
lesser of your actual costs incurred in furnishing such services and payments or
the amount you would have received under this Agreement for furnishing such
services and payments.
This Agreement may, on sixty days written notice, be terminated with
respect to the Fund, at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting securities of the Fund,
or by you. This Agreement shall automatically terminate in the event of its
assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name "AAM" belongs to
you, and that the Trust is being granted a limited license to use such words in
its Fund name or in any class name. In the event you cease to be the advisor to
the Fund, the Trust's right to the use of the name "AAM" shall automatically
cease on the ninetieth day following the termination of this Agreement. The
right to the name may also be withdrawn by you during the term of this Agreement
upon ninety (90) days' written notice by you to the Trust. Nothing contained
herein shall impair or diminish in any respect, your right to use the name "AAM"
in the name of, or in connection with, any other business enterprises with which
you are or may become associated. There is no charge to the Trust for the right
to use these names.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by the Board, including a majority of the trustees who are not
interested persons of you or of the Trust, cast in person at a meeting called
for the purpose of voting on such approval, and (if required under current
interpretations of the Act by the Securities and Exchange Commission) by vote of
the holders of a majority of the outstanding voting securities of the series to
which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "AmeriPrime Funds" means and refers to the Trustees from time to
time serving under the Trust's Declaration of Trust as the same may subsequently
thereto have been, or subsequently hereto be, amended. It is expressly agreed
that the obligations of the Trust hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of the Trust
personally, but bind only the trust property of the Trust, as provided in the
Declaration of Trust of the Trust. The execution and delivery of this Agreement
have been authorized by the trustees and shareholders of the Trust and signed by
officers of the Trust, acting as such, and neither such authorization by such
trustees and shareholders nor such execution and delivery by such officers shall
be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in its Declaration of Trust. A copy of the Agreement and
Declaration of Trust of the Trust is on file with the Secretary of the State of
Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State of
Ohio.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a
term or provision of the Investment Company Act of 1940, as
amended (the "Act") shall be resolved by reference to such term
or provision of the Act and to interpretation thereof, if any, by
the United States courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of
the Securities and Exchange Commission issued pursuant to said
Act. In addition, where the effect of a requirement of the Act,
reflected in any provision of this Agreement is revised by rule,
regulation or order of the Securities and Exchange Commission,
such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
12. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust is 1725 E.
Southlake Blvd., Suite 200, Southlake, Texas 76092, and your address for this
purpose shall be 1018 Kanawha Blvd., East, Suite 209, Charleston, WV 25301.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
14. BINDING EFFECT
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Each of the undersigned expressly warrants and represents that he has the
full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
AmeriPrime Funds
By:_________________________
Timothy Ashburn, President
Dated: ___________, 2004
ACCEPTANCE
The foregoing Agreement is hereby accepted.
Appalachian Asset Management, Inc.
By:__________________________
Name:
Title:
Dated: _____________, 2004
PROXY
AAM EQUITY FUND
SPECIAL MEETING OF SHAREHOLDERS
August 5, 2004
The undersigned shareholder of the AAM Equity Fund (the "Fund"), a series
of AmeriPrime Funds (the "Trust"), hereby nominates, constitutes and appoints
Freddie Jacobs and Holly Brower, and each of them, the attorney, agent and proxy
of the undersigned, with full powers of substitution, to vote all the shares of
the Fund which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Fund to be held at 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, on August 5, 2004 at 10:00 a.m., central time, and
at any and all adjournments thereof, as fully and with the same force and effect
as the undersigned might or could do if personally present as follows:
Approval of a new Management Agreement between the Trust and Appalachian
Asset Management, Inc.
|_| FOR |_| AGAINST |_| ABSTAIN
The Board of Trustees recommends a vote "FOR" on the above proposal. The
Proxy shall be voted in accordance with the recommendations of the Board of
Trustees unless a contrary instruction is indicated, in which case the Proxy
shall be voted in accordance with such instructions. In all other matters, if
any, presented at the meeting, this Proxy shall be voted in the discretion of
the Proxy holders, in accordance with the recommendations of the Board of
Trustees, if any.
DATED:________, 2004
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(Signature of Shareholder)
(Please date this proxy and sign your
name as it appears on the label. Executors,
administrators, trustees, etc. should
give their full titles. All joint owners
should sign.)
This Proxy is solicited on behalf of the Trust's Board of Trustees, and may be
revoked prior to its exercise by filing with the President of the Trust an
instrument revoking this Proxy or a duly executed Proxy bearing a later date, or
by appearing in person and voting at the meeting.