The Board knows of no other business to be brought before the Meeting. However, if any other matters come before the Meeting, it is the intention that voting instructions that do not contain specific restrictions to the contrary will be voted on such matters in accordance with the judgment of the proxies named in the enclosed Voting Instruction Card.
Contract owner inquiries may be addressed to the Trust in writing to Phoenix Variable Products Mail Operations, P.O. Box 8027, Boston, Massachusetts 02266-8027, or by calling 1-800-541-0171.
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this 15th day of February, 2005, by and among Lazard Retirement Series, Inc., a Maryland corporation (the "Acquiring Company"), with respect to Lazard Retirement Small Cap Portfolio, a separate series of the Acquiring Company (the "Acquiring Fund"); The Phoenix Edge Series Fund, a Massachusetts business trust (the "Phoenix Trust"), with respect to Phoenix-Lazard Small Cap Value Series, a separate series of the Phoenix Trust (the "Phoenix Fund"); and Phoenix Variable Advisors, Inc. ("PVA"), the investment adviser to the Phoenix Fund. The principal place of business of the Acquiring Company is 30 Rockefeller Plaza, New York, New York 10112. The principal place of business of the Phoenix Trust and PVA is One American Row, Hartford, Connecticut 06102. The Acquiring Company (on behalf of the Acquiring Fund), the Phoenix Trust (on behalf of the Phoenix Fund) and PVA are collectively referred to herein as the "Parties."
The Parties intend this Agreement to be, and it 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"), and the Treasury Regulations promulgated thereunder. The reorganization will consist of: (i) the transfer of all of the assets of the Phoenix Fund to the Acquiring Fund in exchange for shares of common stock, par value $0.001 per share, of the Acquiring Fund ("Acquiring Fund Shares"); (ii) the assumption by the Acquiring Company, on behalf of the Acquiring Fund, of the Stated Liabilities of the Phoenix Fund as defined in paragraph 1.3; and (iii) the distribution, after the Closing Date as defined in paragraph 3.1, of the Acquiring Fund Shares to the Phoenix Fund shareholders and the termination, dissolution and complete liquidation of the Phoenix Fund as provided herein, all upon the terms and conditions set forth in this Agreement (the "Reorganization").
WHEREAS, the Acquiring Fund is a separate series of the Acquiring Company, and the Phoenix Fund is a separate series of the Phoenix Trust; and the Acquiring Company and the Phoenix Trust are open-end, registered management investment companies within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Phoenix Fund owns securities that generally are assets of the character in which the Acquiring Fund is permitted to invest; and
WHEREAS, the Acquiring Fund is authorized to issue its shares of common stock to separate accounts of life insurance companies to support investment under variable annuities and variable life insurance contracts issued by such companies; and
WHEREAS, the Board of Directors of the Acquiring Company (the "Acquiring Company Board"), including a majority of Directors who are not "interested persons" (as defined in the 1940 Act) of the Acquiring Company, has determined with respect to the Acquiring Fund that (i) participation in the Reorganization is in the best interests of the owners of variable annuity contracts or variable life insurance contracts, the cash value of which is invested in the Acquiring Fund ("Acquiring Fund Contract Owners"), and (ii) the interests of the existing Acquiring Fund Contract Owners will not be diluted as a result of the Reorganization; and
WHEREAS, the Board of Trustees of the Phoenix Trust (the "Phoenix Board"), including a majority of Trustees who are not "interested persons" (as defined in the 1940 Act) of the Phoenix Trust, has determined with respect to the Phoenix Fund that (i) participation in the Reorganization is in the best interests of the owners of the variable annuity contracts or variable life insurance contracts issued by Phoenix Life Insurance Company ("PLIC") or its affiliates, the cash value of which is invested in the Phoenix Fund (the "Phoenix Contract Owners"), and (ii) the interests of the existing Phoenix Contract Owners will not be diluted as a result of the Reorganization.
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the Parties hereto covenant and agree as follows:
ARTICLE I
TRANSFER OF ASSETS OF THE PHOENIX FUND TO THE ACQUIRING FUND
IN EXCHANGE FOR ACQUIRING FUND SHARES
AND THE ASSUMPTION OF PHOENIX FUND STATED LIABILITIES
AND LIQUIDATION OF THE PHOENIX FUND
1.1 THE EXCHANGE. Subject to the requisite approval of the Phoenix Fund shareholders and the other terms and conditions contained herein, and on the basis of the representations and warranties contained herein, the Phoenix Fund agrees to assign, transfer and convey all of its Assets, as set forth in paragraph 1.2, to the Acquiring Fund. In exchange, the Acquiring Fund agrees to (i) deliver to the Phoenix Fund the number of full and fractional Acquiring Fund Shares, determined by dividing the value of the Phoenix Fund's assets net of any liabilities of the Phoenix Fund, computed in the manner and as of the time and date set forth in paragraph 2.1, by the net asset value of one Acquiring Fund Share, computed in the manner and as of the time and date set forth in paragraph 2.2; and (ii) assume the Stated Liabilities of the Phoenix Fund described in paragraph 1.3. Such transactions shall take place at the closing (the "Closing") provided for in paragraph 3.1. In lieu of delivering certificates for the Acquiring Fund Shares, the Acquiring Fund shall credit the Acquiring Fund Shares to the Phoenix Fund's account on the books of the Acquiring Fund and shall deliver a confirmation thereto to the Phoenix Fund.
1.2 ASSETS TO BE ACQUIRED.
(a) The assets of the Phoenix Fund to be transferred and acquired by the Acquiring Fund shall consist of all assets and property owned by the Phoenix Fund, including, without limitation, all cash, securities, commodities, interests in futures, claims (whether absolute or contingent, known or unknown), receivables (including dividends, interest and other receivables), goodwill and other intangible property, and any deferred or prepaid expenses shown as an asset on the books of the Phoenix Fund on the Closing Date, and all interests, rights, privileges and powers, other than (1) cash in an amount necessary to pay dividends and distributions as provided in paragraph 8.6 and the Phoenix Fund's rights under this Agreement, and (2) a separate cash reserve, in an amount agreed to by the Parties to discharge liabilities not transferred to the Acquiring Fund (the "Assets").
(b) The Phoenix Fund has provided the Acquiring Fund with its most recent audited financial statements, which contain a list of all of the Phoenix Fund's assets, including portfolio securities, as of the date of such statements. The Phoenix Fund hereby represents that, as of the date of the execution of this Agreement, there have been no changes in its financial position as reflected in such financial statements other than those occurring in the ordinary course of business in connection with the purchase and sale of securities, the issuance and redemption of Phoenix Fund shares and the payment of normal operating expenses, dividends and capital gains distributions.
The Phoenix Fund will, within a reasonable period of time before the Closing Date, furnish the Acquiring Fund with a list of the Phoenix Fund's portfolio securities and other investments. The Acquiring Fund will, within a reasonable time before the Closing Date, furnish the Phoenix Fund with a list of the securities, if any, on the Phoenix Fund's list referred to above that do not conform to the Acquiring Fund's investment objective, policies and restrictions. If requested by the Acquiring Fund, the Phoenix Fund will dispose of securities on the Acquiring Fund's list before the Closing Date. In addition, if it is determined that the portfolios of the Phoenix Fund and the Acquiring Fund, when aggregated, would contain investments exceeding certain percentage limitations imposed upon the Acquiring Fund with respect to such investments, the Phoenix Fund, if requested by the Acquiring Fund, will dispose of a sufficient amount of such investments as may be necessary to avoid violating such limitations as of the Closing Date. Notwithstanding the foregoing, nothing herein will require the Phoenix Fund to dispose of any investments or securities if, in the reasonable judgment of the Phoenix Trust Board or PVA and the Phoenix Trust's or PVA's tax counsel (as applicable), such disposition would adversely affect the tax-free nature of the Reorganization for federal income tax purposes.
(c) The Assets of the Phoenix Fund to be transferred to the Acquiring Fund on the Closing Date shall be delivered to State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02266, the Acquiring Fund's custodian ("State Street"), for the account of the Acquiring Fund, with all securities not in bearer or book entry form duly endorsed, or accompanied by duly executed separate assignments or stock powers, in proper form for transfer with signatures guaranteed, and with all necessary stock transfer stamps, sufficient to transfer good and marketable title thereto (including all accrued interest and dividends and rights pertaining thereto) to State Street for the account of the Acquiring Fund free and clear of all liens, encumbrances, rights, restrictions and claims. All cash delivered shall be in the form of immediately available funds payable to the order of State Street for the account of the Acquiring Fund.
1.3 LIABILITIES TO BE ASSUMED. The Phoenix Fund will endeavor to discharge all of its known liabilities and obligations to the extent possible before the Closing Date, and will maintain the cash reserve referenced in paragraph 1.2(a)(2) for certain other liabilities not accounted for as of the Closing Date. The Acquiring Fund shall assume only the liabilities of the Phoenix Fund reflected on an unaudited statement of assets and liabilities of the Phoenix Fund prepared by the Phoenix Fund and reviewed and approved by the Acquiring Fund, as of the Closing Date, in accordance with generally accepted accounting principles consistently applied from the prior audited period. The Acquiring Fund shall assume only those liabilities of the Phoenix Fund reflected in that unaudited statement of assets and liabilities and shall not assume any other liabilities, whether absolute or contingent (the "Stated Liabilities"). The Phoenix Fund will, within a reasonable time before the Closing Date, furnish the Acquiring Fund with an unaudited statement of the Phoenix Fund's assets and liabilities as of such date.
For the avoidance of doubt, except for those Stated Liabilities that are either shown on the statement of assets and liabilities reviewed and approved by the Acquiring Fund or as may be set forth on a separate schedule and specifically assumed by the Acquiring Fund, in no event shall the Acquiring Fund be deemed to have assumed any liability, contingent or otherwise, (i) not expressly related to an Asset, (ii) arising under any federal, state or foreign securities, insurance, consumer protection or similar laws or from any action or proceeding or order resulting from the actions of PVA, the Phoenix Trust or the Phoenix Fund or any of their respective affiliates, or (iii) as may be described in a separate schedule (the foregoing items (i), (ii) and (iii) referred to collectively as the "Excluded Liabilities").
1.4 TRANSFER OF DIVIDENDS AND DISTRIBUTIONS; CASH RESERVE AMOUNT. The Phoenix Fund will pay or cause to be paid to the Acquiring Fund any dividends and interest received on or after the Closing Date with respect to the Assets transferred to the Acquiring Fund pursuant to the Reorganization. The Phoenix Fund will transfer to the Acquiring Fund any distributions, rights or other assets received by the Phoenix Fund after the Closing Date as distributions on or with respect to the securities transferred. Such assets shall be deemed included in the Assets transferred to the Acquiring Fund on the Closing Date and shall not be separately valued.
1.5 ASSUMPTION OF EXCLUDED LIABILITIES. As soon as conveniently practicable after the distribution of Acquiring Fund Shares pursuant to paragraph 1.7 has been made, the Phoenix Fund shall take appropriate action to pay or make provision for payment of any Excluded Liabilities.
1.6 STATE FILINGS. Prior to the Closing Date, the Phoenix Trust shall make any filings with the Commonwealth of Massachusetts that may be required under the laws of the Commonwealth of Massachusetts, effective as of the Closing Date.
1.7 LIQUIDATION AND DISTRIBUTION, DISSOLUTION AND TERMINATION. As soon as is reasonably practicable after the Closing Date: (a) the Phoenix Fund will distribute in complete liquidation of the Phoenix Fund, pro rata to the Phoenix Fund shareholders of record, determined as of the close of business on the Closing Date, all of the Acquiring Fund Shares received by the Phoenix Fund pursuant to paragraph 1.1; and (b) the Phoenix Fund will thereupon promptly proceed to dissolve and terminate. Such distribution and liquidation will be accomplished by the transfer of Acquiring Fund Shares credited to the account of the Phoenix Fund on the books of the Acquiring Fund to open accounts on the share records of the Phoenix Fund, and representing the respective pro rata number of Acquiring Fund Shares due such Phoenix Fund shareholders. All issued and outstanding shares of the Phoenix Fund will simultaneously be canceled on the books of the Phoenix Fund.
1.8 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund's transfer agent, Boston Financial Data Services, Inc. ("BFDS"). Acquiring Fund Shares will be issued simultaneously to the Phoenix Fund, in an amount equal in value to the aggregate net asset value of the Phoenix Fund's shares, to be distributed to the Phoenix Fund shareholders.
1.9 REPORTING RESPONSIBILITY. Any reporting responsibility of the Phoenix Fund, including, without limitation, the responsibility for filing of regulatory reports, tax returns or other documents with the Securities and Exchange Commission (the "SEC"), any state securities commission, and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Phoenix Fund, or the Phoenix Trust on behalf of the Phoenix Fund.
1.10 BOOKS AND RECORDS. All books and records of the Phoenix Fund, including all books and records required to be maintained under the 1940 Act and the rules and regulations thereunder, shall be available to the Acquiring Fund from and after the Closing Date, within a reasonable period of time after written request of the Acquiring Fund.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Phoenix Fund's Assets to be acquired by the Acquiring Fund hereunder shall be the value of such Assets computed as of the close of regular trading on the New York Stock Exchange ("NYSE") (usually 4:00 p.m., Eastern time) on the Closing Date, after the declaration and payment of any dividends on that date, using the valuation procedures set forth in the Articles of Incorporation or By-laws of the Acquiring Company (the "Acquiring Company Charter Documents") and the Acquiring Fund's then-current prospectus and statement of additional information (together, the "Acquiring Fund Prospectus") or such other valuation procedures as shall be mutually agreed upon by the Parties.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring Fund Shares shall be the net asset value per share computed on the Closing Date (to six decimal places), using the valuation procedures set forth in the Acquiring Company Charter Documents and Acquiring Fund Prospectus or such other valuation procedures as shall be mutually agreed upon by the Parties.
2.3 SHARES TO BE ISSUED. The number of Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for the Assets shall be determined by dividing the value of the Assets with respect to shares of the Phoenix Fund determined in accordance with paragraph 2.1 by the net asset value of an Acquiring Fund Share determined in accordance with paragraph 2.2.
2.4 DETERMINATION OF VALUE. All computations of value of Assets, including the prices used in such computations, shall be made by or under the direction of PVA, as investment adviser for the Phoenix Fund, using the valuation procedures set forth in the Acquiring Fund Charter Documents and the Acquiring Fund Prospectus, and shall be subject to review by the Acquiring Fund and the Acquiring Fund's investment adviser.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The Closing shall occur on April 29, 2005, or such other date as the parties may agree to in writing (the "Closing Date"). Unless otherwise agreed to by the Parties, all acts taking place at the Closing shall be deemed to take place as of immediately after the close of regular trading on the NYSE on the Closing Date. The Closing shall be held at the offices of the Phoenix Trust, One American Row, Hartford, Connecticut 06102, or at such other time and/or place as the Parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. The Phoenix Fund shall instruct its custodian, State Street, to deliver at the Closing a certificate of an authorized officer stating that: (a) the Phoenix Fund's Assets have been delivered in proper form to the Acquiring Fund on the Closing Date; and (b) all necessary taxes including all applicable federal and state stock transfer stamps, if any, have been paid, or provision for payment shall have been made, in conjunction with the delivery of portfolio securities by the Phoenix Fund. The Phoenix Fund's portfolio securities represented by a certificate or other written instrument shall be examined by State Street on behalf of the Acquiring Fund no later than five (5) business days preceding the Closing Date and transferred and delivered by the Phoenix Fund as of the Closing Date for the account of the Acquiring Fund, duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof. The Phoenix Fund's securities and instruments deposited with a securities depository (as defined in Rule 17f-4 under the 1940 Act) or a futures commission merchant (as defined in Rule 17f-6 under the 1940 Act) shall be delivered as of the Closing Date by book entry in accordance with the customary practices of such depositories and futures commission merchants and State Street. The cash to be transferred by the Phoenix Fund shall be transferred and delivered by the Phoenix Fund as of the Closing Date for the account of the Acquiring Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that, on the Closing Date, either: (a) the NYSE or another primary exchange on which the portfolio securities of the Acquiring Fund or the Phoenix Fund are purchased or sold shall be closed to trading or trading on such exchange shall be restricted; or (b) trading or the reporting of trading on the NYSE or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of the Acquiring Fund or the Phoenix Fund is impracticable, the Closing shall be postponed until the first Friday that is a business day after the day when trading is fully resumed and reporting is restored.
3.4 TRANSFER AGENT'S CERTIFICATE. The Phoenix Fund shall instruct the variable products unit of PLIC to deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of the Phoenix Fund shareholders as of the Closing Date, and the number and percentage ownership (to three decimal places) of outstanding shares owned by each such Phoenix Fund shareholder immediately prior to the Closing. The Acquiring Fund shall issue and deliver or instruct BFDS to issue and deliver a confirmation evidencing Acquiring Fund Shares to be credited on the Closing Date to the Phoenix Fund, or provide evidence satisfactory to the Phoenix Fund that such Acquiring Fund Shares have been credited to the Phoenix Fund's account on the books of the Acquiring Fund.
3.5 DELIVERY OF ADDITIONAL ITEMS. At the Closing, each Party shall deliver to the other Parties such bills of sale, checks, assignments, receipts and other documents, if any, as such other Party or its counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE PHOENIX FUND. The Phoenix Trust, on behalf of the Phoenix Fund, represents and warrants to the Acquiring Company, on behalf of the Acquiring Fund, as follows:
(a) The Phoenix Trust is a voluntary association with transferable shares of the type commonly referred to as a Massachusetts business trust that is duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts. The Phoenix Fund is a duly established and designated series of the Phoenix Trust.
(b) The Phoenix Trust is registered as an open-end management investment company under the 1940 Act, and the Phoenix Fund's shares are registered under the Securities Act of 1933, as amended (the "Securities Act"), and such registrations have not been revoked or rescinded and are in full force and effect.
(c) The current prospectus and statement of additional information of the Phoenix Fund (collectively, the "Phoenix Fund Prospectus") and each prospectus and statement of additional information of the Phoenix Fund used since the inception of the Phoenix Fund conform or conformed at the time of its use in all material respects to the applicable requirements of the Securities Act and the 1940 Act, and the rules and regulations thereunder, and do not and did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading.
(d) The Phoenix Fund is not in violation of, and the execution, delivery and performance of this Agreement (subject to shareholder approval) by the Phoenix Trust on behalf of the Phoenix Fund will not result in the violation of, Massachusetts law or any provision of the Phoenix Trust's Agreement and Declaration of Trust (the "Phoenix Declaration of Trust") or of any material agreement, indenture, instrument, contract, lease or other undertaking to which the Phoenix Trust or the Phoenix Fund is a party or by which it is bound, nor will the execution, delivery and performance of this Agreement by the Phoenix Trust on behalf of the Phoenix Fund result in the acceleration of any obligation, or the imposition of any penalty, under any material agreement, indenture, instrument, contract, lease or other undertaking to which the Phoenix Trust or the Phoenix Fund is a party or by which it is bound.
(e) The Phoenix Fund has no material contracts or other commitments (other than this Agreement) that will be terminated with liability to it before the Closing Date, except for liabilities, if any, to be discharged or reflected in the statement of assets and liabilities as provided in paragraph 1.3 hereof.
(f) Except as otherwise disclosed in writing to and accepted by the Acquiring Fund, no litigation, administrative proceeding or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Phoenix Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition, the conduct of its business or the ability of the Phoenix Fund to carry out the transactions contemplated by this Agreement. The Phoenix Fund knows of no facts that might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions contemplated herein.
(g) The financial statements of the Phoenix Fund as of December 31, 2004 and for the fiscal year then ended have been prepared in accordance with accounting principles generally accepted in the United States of America consistently applied and have been audited by an independent registered public accounting firm, and such statements (copies of which have been furnished to the Acquiring Fund) fairly present in all material respects the financial condition of the Phoenix Fund as of such date, and there are no known contingent liabilities of the Phoenix Fund as of such date that are not disclosed in such statements.
(h) Since the date of the financial statements referred to in paragraph (g) above, there have been no material adverse changes in the Phoenix Fund's financial condition, assets, liabilities or business (other than changes occurring in the ordinary course of business), or any incurrence by the Phoenix Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted in writing by the Acquiring Fund. For the purposes of this paragraph (h), a decline in the net asset value of the Phoenix Fund due to declines in the Phoenix Fund's portfolio, the discharge of Phoenix Fund liabilities or the redemption of Phoenix Fund shares by Phoenix Fund shareholders shall not constitute a material adverse change.
(i) As of the date hereof and at the Closing Date, all federal and other tax returns and reports of the Phoenix Fund required by law to be filed have or shall have been timely filed by such dates (including any extensions) and are or will be correct in all material respects, and all federal and other taxes shown payable pursuant to such returns and reports have been paid, or provision shall have been made for the payment thereof. To the best of the Phoenix Fund's knowledge, no such return is currently under audit, and no assessment has been asserted with respect to such returns.
(j) All issued and outstanding shares of the Phoenix Fund have been offered and sold in compliance in all material respects with applicable registration requirements of the Securities Act and applicable state securities laws and are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and nonassessable by the Phoenix Fund. All of the issued and outstanding shares of the Phoenix Fund will, at the time of the Closing Date, be held by the persons and in the amounts set forth in the records of the Phoenix Fund's transfer agent as provided in paragraph 3.4. The Phoenix Fund has no outstanding options, warrants or other rights to subscribe for or purchase any of the Phoenix Fund shares and has no outstanding securities convertible into any of the Phoenix Fund shares.
(k) At the Closing Date, the Phoenix Trust, on behalf of the Phoenix Fund, will have good and marketable title to the Assets to be transferred to the Acquiring Fund pursuant to paragraph 1.2, and full right, power and authority to sell, assign, transfer and deliver such Assets hereunder, free of any lien or other encumbrance, except those liens or encumbrances to which the Acquiring Fund has received notice, and, upon delivery and payment for such Assets, the Acquiring Fund will acquire good and marketable title, subject to no restrictions on the full transfer of such Assets, other than such restrictions as might arise under the Securities Act and other than as disclosed to and accepted by the Acquiring Fund.
(l) The execution, delivery and performance of this Agreement by the Phoenix Trust, on behalf of the Phoenix Fund, and the consummation of the transactions contemplated hereunder have been duly and validly authorized by the Phoenix Trust Board, and the Phoenix Trust Board has approved the Reorganization and has resolved to recommend the Reorganization to the Phoenix Contract Owners and to call a special meeting of the Phoenix Contract Owners for the purpose of approving the Reorganization and this Agreement. Other than the affirmative vote of a majority (as defined in the 1940 Act) of the outstanding Phoenix Fund shares eligible to be cast, no other corporate action on the part of the Phoenix Trust, the Phoenix Fund, the Phoenix Fund shareholders or the Phoenix Contract Owners is necessary to authorize the execution, delivery and performance of this Agreement by the Phoenix Trust, on behalf of the Phoenix Fund, or the consummation of the Reorganization. This Agreement has been duly and validly executed and delivered by the Phoenix Trust, on behalf of the Phoenix Fund, and is a legal, valid and binding agreement and obligation of the Phoenix Trust, as it relates to the Phoenix Fund, enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights and to general equity principles.
(m) The information to be furnished by the Phoenix Trust on behalf of the Phoenix Fund for use in no-action letters, applications for orders, registration statements, proxy materials and other documents that may be necessary in connection with the transactions contemplated herein shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations.
(n) From the effective date of the Registration Statement (as defined in paragraph 5.8) through the time of the meeting of the Phoenix Contract Owners and on the Closing Date, any written information furnished by the Phoenix Trust with respect to the Phoenix Fund for use in the Proxy Materials (as defined in paragraph 5.8) or any other materials provided in connection with the Reorganization does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which such statements were made, not misleading.
(o) The Phoenix Fund has elected to qualify and has qualified as a "regulated investment company" under Subchapter M of the Code (a "RIC") as of and since its first taxable year; has been a RIC under the Code at all times since the end of its first taxable year when it so qualified; and qualifies and will continue to qualify as a RIC under the Code for its taxable year ending upon its liquidation.
(p) Immediately before the Reorganization, not more than 25% of the value of the total assets of the Phoenix Fund will be invested in the stock or securities of any one issuer, and not more than 50% of the value of the Phoenix Fund will be invested in the stock or securities of five or fewer issuers.
(q) With the exception of the initial capital funding requirement pursuant to Section 14(a)(1) of the 1940 Act, the Phoenix Fund is aware of no information that would indicate that (i) the Phoenix Fund has, or ever had, any shareholder that is not a segregated asset account within the meaning of Section 1.817-5(f)(2)(i)(A) of the regulations under the Code, or any entity referred to in (and holding its shares in compliance with the terms of) Section 1.817-5(f)(3)(i), (ii) or (iii) of such regulations; (ii) any public investor is participating or has ever participated in the Phoenix Fund through such a segregated asset account other than through the purchase of a variable contract within the meaning of Section 1.817-5(f)(2)(i)(B) of such regulations; and (iii) the Phoenix Fund does not satisfy, and at all times during its existence has not satisfied, the percentage diversification tests contained in Section 1.817-5(b)(1)(i) and (ii) of such regulations.
(r) All Phoenix Fund shares are currently held, and since the date of inception of the Phoenix Fund have been held, by one or more separate accounts established solely for the purpose of offering certain individual and group variable annuity and/or life insurance contracts, and no Phoenix Fund shares have been held by any other party during such period, and that such separate accounts qualify to purchase Phoenix Fund shares under Section 817(h) of the Code and the regulations thereunder.
(s) The Phoenix Trust has adopted and implemented compliance policies and procedures to comply with all money laundering and currency transaction reporting laws, regulations, requirements and guidance applicable to the Phoenix Fund, including those relating to identification and verification of Phoenix Contract Owners; monitoring for Specifically Designated Nationals and Blocked Persons named on the U.S. Treasury Department's Office of Foreign Assets Control list or other similar governmental lists; suspicious activity reporting; and related recordkeeping requirements.
(t) No consent, approval, authorization or order of any court or governmental authority is required for the consummation by the Phoenix Trust, on behalf of the Phoenix Fund, of the transactions contemplated herein, except such as may be required under the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the 1940 Act or state securities law, it being understood, however, that this Agreement and the transactions contemplated herein must be approved by the Phoenix Contract Owners of the Phoenix Fund as described in paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring Company, on behalf of the Acquiring Fund, represents and warrants to the Phoenix Trust, on behalf of the Phoenix Fund, as follows:
(a) The Acquiring Company is a corporation that is duly organized, validly existing and in good standing under the laws of the State of Maryland. The Acquiring Fund is a duly established and designated series of the Acquiring Company.
(b) The Acquiring Company is registered as an open-end management investment company under the 1940 Act, and the Acquiring Fund's shares are registered under the Securities Act, and such registrations have not been revoked or rescinded and are in full force and effect.
(c) The Acquiring Fund Prospectus conforms in all material respects to the applicable requirements of the Securities Act and the 1940 Act, and the rules and regulations thereunder, and does not include any untrue statement of a material fact or omit to state any material fact required to be stated or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading.
(d) The Acquiring Fund is not in violation of, and the execution, delivery and performance of this Agreement by the Acquiring Company on behalf of the Acquiring Fund will not result in the violation of, Maryland law or any provision of the Acquiring Company Charter Documents or of any material agreement, indenture, instrument, contract, lease or other undertaking to which the Acquiring Company or the Acquiring Fund is a party or by which it is bound, nor will the execution, delivery and performance of this Agreement by the Acquiring Company on behalf of the Acquiring Fund result in the acceleration of any obligation, or the imposition of any penalty, under any material agreement, indenture, instrument, contract, lease or other undertaking to which the Acquiring Company or the Acquiring Fund is a party or by which it is bound.
(e) Except as otherwise disclosed in writing to and accepted by the Phoenix Fund, no litigation, administrative proceeding or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Acquiring Fund or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition, the conduct of its business or the ability of the Acquiring Fund to carry out the transactions contemplated by this Agreement. The Acquiring Fund knows of no facts that might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions contemplated herein.
(f) The financial statements of the Acquiring Fund as of December 31, 2004 and for the fiscal year then ended have been prepared in accordance with accounting principles generally accepted in the United States of America consistently applied and have been audited by an independent registered public accounting firm, and such statements (copies of which have been furnished to the Phoenix Fund) fairly present in all material respects the financial condition of the Acquiring Fund as of such date, and there are no known contingent liabilities of the Acquiring Fund as of such date that are not disclosed in such statements.
(g) Since the date of the financial statements referred to in paragraph (f) above, there have been no material adverse changes in the Acquiring Fund's financial condition, assets, liabilities or business (other than changes occurring in the ordinary course of business), or any incurrence by the Acquiring Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted in writing by the Phoenix Fund. For the purposes of this paragraph (g), a decline in the net asset value of the Acquiring Fund due to declines in the Acquiring Fund's portfolio, the discharge of Acquiring Fund liabilities or the redemption of Acquiring Fund shares by Acquiring Fund shareholders shall not constitute a material adverse change.
(h) As of the date hereof and at the Closing Date, all federal and other tax returns and reports of the Acquiring Fund required by law to be filed have or shall have been timely filed by such dates (including any extensions) and are or will be correct in all material respects, and all federal and other taxes shown payable pursuant to such returns and reports have been paid, or provision shall have been made for the payment thereof. To the best of the Acquiring Fund's knowledge, no such return is currently under audit, and no assessment has been asserted with respect to such returns.
(i) All issued and outstanding Acquiring Fund Shares are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and nonassessable by the Acquiring Fund. The Acquiring Fund has no outstanding options, warrants or other rights to subscribe for or purchase any Acquiring Fund Shares, and there are no outstanding securities convertible into any Acquiring Fund Shares.
(j) The execution, delivery and performance of this Agreement by the Acquiring Company, on behalf of the Acquiring Fund, have been duly authorized by all necessary action on the part of the Acquiring Company Board, and this Agreement constitutes a valid and binding obligation of the Acquiring Company on behalf of the Acquiring Fund, enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights and to general equity principles.
(k) Acquiring Fund Shares to be issued and delivered to the Phoenix Fund for the accounts of the Phoenix Fund shareholders pursuant to the terms of this Agreement will, at the Closing Date, have been duly authorized. When so issued and delivered, such shares will be duly and validly issued Acquiring Fund Shares and will be fully paid and nonassessable.
(l) The information to be furnished by the Acquiring Company on behalf of the Acquiring Fund for use in no-action letters, applications for orders, registration statements, proxy materials and other documents that may be necessary in connection with the transactions contemplated herein shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations.
(m) From the effective date of the Registration Statement (as defined in paragraph 5.8) through the time of the meeting of the Phoenix Contract Owners and on the Closing Date, any written information furnished by the Acquiring Company with respect to the Acquiring Fund for use in the Proxy Materials (as defined in paragraph 5.8), or any other materials provided in connection with the Reorganization, does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which such statements were made, not misleading.
(n) The Acquiring Fund has elected to qualify and has qualified as a RIC under Subchapter M of the Code as of and since its first taxable year; has been a RIC under the Code at all times since the end of its first taxable year when it so qualified; and qualifies and shall continue to qualify as a RIC under the Code.
(o) Immediately before the Reorganization, not more than 25% of the value of the total assets of the Acquiring Fund will be invested in the stock or securities of any one issuer, and not more than 50% of the value of the Acquiring Fund will be invested in the stock or securities of five or fewer issuers.
(p) With the exception of the initial capital funding requirement pursuant to Section 14(a)(1) of the 1940 Act, the Acquiring Fund is aware of no information that would indicate that (i) the Acquiring Fund has, or ever had, any shareholder that is not a segregated asset account within the meaning of Section 1.817-5(f)(2)(i)(A) of the regulations under the Code, or any entity referred to in (and holding its shares in compliance with the terms of) Section 1.817-5(f)(3)(i), (ii) or (iii) of such regulations; (ii) any public investor is participating or has ever participated in the Acquiring Fund through such a segregated asset account other than through the purchase of a variable contract within the meaning of Section 1.817-5(f)(2)(i)(B) of such regulations; and (iii) the Acquiring Fund does not satisfy, and at all times during its existence has not satisfied, the percentage diversification tests contained in Section 1.817-5(b)(1)(i) and (ii) of such regulations.
(q) The Acquiring Fund is available to act as an investment vehicle for separate accounts established for variable annuity and variable life insurance contracts offered by insurance companies that have entered into participation agreements ("Participation Insurance Companies") with the Acquiring Company and the Acquiring Fund's investment adviser, Lazard Asset Management LLC ("Lazard"); and Acquiring Fund Shares currently are offered only to Participation Insurance Companies and their separate accounts that communicate to the Acquiring Company, that they qualify to purchase Acquiring Fund Shares under Section 817(h) of the Code and the regulations thereunder.
(r) No consent, approval, authorization or order of any court or governmental authority is required for the consummation by the Acquiring Company, on behalf of the Acquiring Fund, of the transactions contemplated herein, except such as may be required under the Securities Act, the Exchange Act, the 1940 Act or state securities law.
(s) The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and authorizations required by the Securities Act, the 1940 Act and any state blue sky or securities laws as it may deem appropriate in order to continue its operations after the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE PHOENIX FUND
5.1 OPERATION IN ORDINARY COURSE. Subject to paragraph 8.6, each of the Acquiring Fund and Phoenix Fund will operate its business in the ordinary course between the date of this Agreement and the Closing Date, it being understood that such ordinary course of business will include payment of customary dividends and distributions, and shareholder purchases and redemptions. No party shall take any action that would, or reasonably would be expected to, result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect.
5.2 APPROVAL OF PHOENIX CONTRACT OWNERS. The Phoenix Trust will call a special meeting of Phoenix Contract Owners to consider and act upon this Agreement (or transactions contemplated hereby) and to take all other action necessary to obtain approval of the transactions contemplated herein, and the Phoenix Trust Board will recommend a favorable vote thereon. Such meeting shall be scheduled for no later than April 26, 2005 (or such other date as the parties may agree to in writing). PLIC or its affiliates, on behalf of the Phoenix Trust and the Phoenix Fund, will solicit voting instructions from Phoenix Contract Owners and, in accordance with such instructions, vote on the matters to be acted upon at such meeting. PLIC or an affiliate will vote any Phoenix Fund shares over which it has voting power in a manner consistent with each variable annuity or life insurance contract that uses the Phoenix Fund as an underlying investment medium, its fiduciary duties and applicable law. In the event that insufficient instructions are received by PLIC or an affiliate to approve this Agreement and the Reorganization, the meeting may be adjourned in order to permit further solicitation of voting instructions.
5.3 INVESTMENT REPRESENTATION. The Phoenix Trust and the Phoenix Fund covenant that the Phoenix Fund is not acquiring the Acquiring Fund Shares to be issued pursuant to this Agreement for the purpose of making any distribution thereof, other than in connection with the Reorganization and in accordance with the terms of this Agreement.
5.4 ACCESS TO BOOKS AND RECORDS. Upon reasonable notice, the Acquiring Company's officers and agents shall have reasonable access to the Phoenix Fund's books and records necessary to maintain current knowledge of the Phoenix Fund and to ensure that the representations and warranties made by the Phoenix Fund are accurate.
5.5 ADDITIONAL INFORMATION. The Phoenix Fund will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests concerning interests of Phoenix Contract Owners in the separate accounts holding the Phoenix Fund's shares.
5.6 FURTHER ACTION. Subject to the provisions of this Agreement, the Acquiring Fund and the Phoenix Fund will take or cause to be taken all action and do or cause to be done all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement, including any actions required to be taken after the Closing Date. In particular, each of the Phoenix Trust and the Phoenix Fund covenants that it will, from time to time, as and when reasonably requested by the Acquiring Fund, execute and deliver or cause to be executed and delivered all such assignments and other instruments and will take or cause to be taken such further action as the Acquiring Fund may reasonably deem necessary or desirable in order to vest in and confirm the Acquiring Fund's title to and possession of all the Assets and otherwise to carry out the intent and purpose of this Agreement.
5.7 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in any case within sixty (60) days after the Closing Date, the Phoenix Fund shall furnish to the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring Fund, a statement of the earnings and profits of the Phoenix Fund for federal income tax purposes, as well as any net operating loss carryovers and capital loss carryovers, that will be carried over by the Acquiring Fund as a result of Section 381 of the Code, and which will be certified by the Treasurer or Assistant Treasurer of the Phoenix Trust.
5.8 PREPARATION OF REGISTRATION STATEMENT AND PROXY STATEMENT. The Acquiring Company will prepare and file with the SEC a registration statement on Form N-14 (the "Registration Statement") relating to the Acquiring Fund Shares to be issued to shareholders of the Phoenix Fund. The Registration Statement shall include a proxy statement of the Phoenix Fund and a prospectus of the Acquiring Fund relating to the transactions contemplated by this Agreement. The Registration Statement shall be in compliance with the Securities Act, the Exchange Act and the 1940 Act, as applicable. Each party will provide the other party with the materials and information necessary to prepare the proxy statement of the Phoenix Fund contained in the Registration Statement (the "Proxy Materials"), for inclusion therein, in connection with the meeting of the Phoenix Contract Owners to consider the approval of this Agreement and the transactions contemplated herein.
5.9 BEST EFFORTS. Each of the Acquiring Company, the Acquiring Fund, the Phoenix Trust and the Phoenix Fund shall use its reasonable efforts to fulfill or obtain the fulfillment of the conditions precedent to effect the transactions contemplated by this Agreement.
5.10 TAX FREE REORGANIZATION. From and after the date of this Agreement, each Party shall use commercially reasonable efforts to cause the Reorganization to qualify, and will not knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken, which action or failure to act could prevent the Reorganization from qualifying as a reorganization under the provisions of Section 368(a) of the Code.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PHOENIX FUND
The obligations of the Phoenix Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Acquiring Fund of all the obligations to be performed by the Acquiring Fund pursuant to this Agreement on or before the Closing Date and, in addition, subject to the following conditions:
6.1 All representations, covenants and warranties of the Acquiring Company, on behalf of itself and the Acquiring Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date, with the same force and effect as if made on and as of the Closing Date.
6.2 The Acquiring Fund shall have delivered to the Phoenix Fund a certificate executed in the Acquiring Fund's name by the Acquiring Company's President or Vice President and its Treasurer or Assistant Treasurer, in form and substance reasonably satisfactory to the Phoenix Fund and dated as of the Closing Date, to the effect that the representations and warranties made in this Agreement by or on behalf of the Acquiring Fund are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated herein, and as to such other matters as the Phoenix Fund shall reasonably request.
6.3 The Acquiring Fund or Acquiring Company, as the case may be, shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Acquiring Fund or Acquiring Company, as the case may be, on or before the Closing Date.
6.4 The Phoenix Fund shall have received on the Closing Date a favorable opinion from Stroock & Stroock & Lavan LLP, counsel to the Acquiring Fund, dated as of the Closing Date, in a form reasonably satisfactory to the Phoenix Fund, covering the following points:
(a) The Acquiring Company is a duly organized and validly existing corporation under the laws of the State of Maryland and has the corporate power to own all of its properties and assets and to carry on its business as a registered investment company, and the Acquiring Fund is a duly authorized class of Common Stock under the Acquiring Company Charter Documents;
(b) To such counsel's knowledge, and without any independent investigation, the Acquiring Company is registered as an open-end management investment company under the 1940 Act and the Acquiring Company's registration with the SEC as an investment company under the 1940 Act is in full force and effect;
(c) This Agreement has been duly authorized, executed and delivered by the Acquiring Company on behalf of the Acquiring Fund and, assuming due authorization, execution and delivery of this Agreement by the Phoenix Trust on behalf of the Phoenix Fund and PVA, is a valid and binding obligation of the Acquiring Company on behalf of the Acquiring Fund, enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and to general equity principles;
(d) Assuming that the Acquiring Fund Shares are issued in accordance with the terms of this Agreement, Acquiring Fund Shares to be issued and delivered to the Phoenix Fund, for distribution to the Phoenix Fund shareholders, as provided by this Agreement, are duly authorized and upon such delivery will be validly issued and outstanding and fully paid and nonassessable, and no shareholder of the Acquiring Fund has any preemptive rights with respect to Acquiring Fund Shares under the Acquiring Company Charter Documents, or to such counsel's knowledge otherwise;
(e) The Registration Statement has been declared effective by the SEC, and to such counsel's knowledge, no stop order under the Securities Act pertaining thereto has been issued, and to the knowledge of such counsel, and without any independent investigation, all regulatory consents, authorizations, approvals or filings required to be obtained or made by the Acquiring Fund under the federal laws of the United States or the laws of the State of Maryland for the issuance of Acquiring Fund Shares in exchange for the Phoenix Fund's Assets pursuant to this Agreement have been obtained or made;
(f) The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated herein will not, result in a violation of the Acquiring Company Charter Documents; and
(g) To such counsel's knowledge, and without any independent investigation, the Acquiring Company is not subject to any litigation or other proceedings that might have a materially adverse effect on the operations of the Acquiring Fund.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Phoenix Fund of all the obligations to be performed by the Phoenix Fund pursuant to this Agreement on or before the Closing Date and, in addition, subject to the following conditions:
7.1 All representations, covenants and warranties of the Phoenix Trust, on behalf of itself and the Phoenix Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date, with the same force and effect as if made on and as of the Closing Date.
7.2 The Phoenix Fund shall have delivered to the Acquiring Fund a certificate executed in the Phoenix Fund's name by the Phoenix Trust's President or Vice President and its Treasurer or Assistant Treasurer, in form and substance reasonably satisfactory to the Acquiring Fund and dated as of the Closing Date, to the effect that the representations and warranties made in this Agreement by or on behalf of the Phoenix Fund are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated herein, and as to such other matters as the Acquiring Fund shall reasonably request.
7.3 The Phoenix Fund shall have delivered to the Acquiring Fund a statement of the Phoenix Fund's assets and liabilities, together with a list of the Phoenix Fund's portfolio securities showing the tax costs of such securities by lot and the holding periods of such securities, as of the Closing Date, certified by the Treasurer or Assistant Treasurer of the Phoenix Trust.
7.4 The Phoenix Fund or Phoenix Trust, as the case may be, shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Phoenix Fund or the Phoenix Trust, as the case may be, on or before the Closing Date.
7.5 The Acquiring Fund shall have received on the Closing Date a favorable opinion of Matthew A. Swendiman, Esq., counsel to the Phoenix Fund, dated as of the Closing Date, in a form reasonably satisfactory to the Acquiring Fund, covering the following points:
(a) The Phoenix Trust is a duly organized and validly existing business trust under the laws of the Commonwealth of Massachusetts and has the power to own all of its properties and assets and to carry on its business as a registered investment company, and the Phoenix Fund is a duly established series of the Phoenix Trust;
(b) To such counsel's knowledge, and without any independent investigation, the Phoenix Trust is registered as an open-end management investment company under the 1940 Act and such registration with the SEC as an investment company under the 1940 Act is in full force and effect;
(c) This Agreement has been duly authorized, executed and delivered by the Phoenix Trust on behalf of the Phoenix Fund and, assuming due authorization, execution and delivery of this Agreement by the Acquiring Company on behalf of the Acquiring Fund and subject to approval by the Phoenix Contract Owners, is a valid and binding obligation of the Phoenix Trust on behalf of the Phoenix Fund, enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and to general equity principles;
(d) To the knowledge of such counsel, and without any independent investigation, all regulatory consents, authorizations, approvals or filings required to be obtained or made by the Phoenix Fund under the federal laws of the United States or the laws of the Commonwealth of Massachusetts for the exchange of the Phoenix Fund's Assets for Acquiring Fund Shares pursuant to this Agreement have been obtained or made;
(e) The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby will not, result in a violation of the Phoenix Declaration of Trust (assuming shareholder approval has been obtained); and
(f) To such counsel's knowledge, and without any independent investigation, the Phoenix Trust is not subject to any litigation or other proceedings that might have a materially adverse effect on the operations of the Phoenix Fund.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH OF THE ACQUIRING FUND AND PHOENIX FUND
If any of the conditions set forth below do not exist on or before the Closing Date with respect to the Phoenix Fund or the Acquiring Fund, the Acquiring Fund or the Phoenix Fund, respectively, shall, at its option, not be required to consummate the transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with respect to the Phoenix Fund, shall have been approved by the requisite vote of the holders of the outstanding shares of the Phoenix Fund in accordance with the provisions of the Phoenix Declaration of Trust, applicable Massachusetts law and the 1940 Act. Certified copies of the resolutions evidencing such approval shall have been delivered to the Acquiring Fund. Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Phoenix Fund may waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the SEC shall not have issued an unfavorable report under Section 25(b) of the 1940 Act, or instituted any proceeding seeking to enjoin the consummation of the transactions contemplated by this Agreement under Section 25(c) of the 1940 Act. Furthermore, no action, suit or other proceeding shall be, to either party's knowledge, threatened or pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein.
8.3 All required consents of other parties and all other consents, orders and permits of federal, state and local regulatory authorities (including those of the SEC and of state securities authorities, including any necessary "no-action" positions and exemptive orders from such federal authorities) to permit consummation of the transactions contemplated herein shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Acquiring Fund or the Phoenix Fund, provided that either party hereto may waive any such conditions for itself.
8.4 The Phoenix Fund and the Acquiring Fund shall have agreed on the number of full and fractional Acquiring Fund Shares to be issued in connection with the Reorganization after such number has been calculated in accordance with paragraph 2.3.
8.5 The Registration Statement shall have become effective under the Securities Act, and no stop orders suspending the effectiveness thereof shall have been issued. To the best knowledge of the parties to this Agreement, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the Securities Act.
8.6 The Phoenix Fund shall have declared and paid a dividend or dividends that, together with all previous such dividends, shall have the effect of distributing to its shareholders all of the Phoenix Fund's investment company taxable income (as defined in Code Section 852) for all taxable periods ending on or before the Closing Date (computed without regard to any deduction for dividends paid), if any, plus the excess of its interest income, if any, excludable from gross income under Section 103(a) of the Code over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for all taxable periods ending on or before the Closing Date and all of its net capital gains realized in all taxable periods ending on or before the Closing Date (after reduction for any capital loss carry forward). Further, each of the Acquiring Fund and Phoenix Fund will have satisfied the investment diversification requirements of Section 817(h) of the Code for all taxable quarters since its inception, including the last short taxable period of the Phoenix Fund ending on the Closing Date and taxable quarter of the Acquiring Fund that includes the Closing Date.
8.7 As of the Closing Date, there shall be (a) no pending or threatened litigation brought by any person against the Phoenix Trust, the Phoenix Fund, the Acquiring Company or the Acquiring Fund or any of the investment advisers, trustees, directors or officers of the foregoing, arising out of this Agreement, and (b) no facts known to the Phoenix Trust, the Phoenix Fund, the Acquiring Company or the Acquiring Fund, which any of such persons reasonably believes might result in such litigation.
8.8 The Phoenix Trust shall have received an opinion from McDermott Will & Emery LLP addressed to the Phoenix Trust, on behalf of the Phoenix Fund, and the Acquiring Company shall have received an opinion from Stroock & Stroock & Lavan LLP addressed to the Acquiring Company, on behalf of the Acquiring Fund, substantially to the effect that, based on certain facts, qualifications, assumptions and representations, and conditioned on consummation of the Reorganization in accordance with this Agreement, for federal income tax purposes:
(a) the transfer of all of the Phoenix Fund's Assets to the Acquiring Fund in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of the Stated Liabilities of the Phoenix Fund followed by the distribution by the Phoenix Fund of Acquiring Fund Shares to the Phoenix Fund shareholders in complete liquidation of the Phoenix Fund will constitute a "reorganization" within the meaning of Section 368(a)(1) of the Code, and the Acquiring Fund and the Phoenix Fund will each be "a party to a reorganization" within the meaning of Section 368(b) of the Code;
(b) no gain or loss will be recognized by the Acquiring Fund upon the receipt of all of the Assets of the Phoenix Fund solely in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of the Stated Liabilities of the Phoenix Fund;
(c) no gain or loss will be recognized by the Phoenix Fund upon the transfer of the Phoenix Fund's Assets to the Acquiring Fund solely in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of the Stated Liabilities of the Phoenix Fund or upon the distribution (whether actual or constructive) of Acquiring Fund Shares to Phoenix Fund shareholders in exchange for such shareholders' shares of the Phoenix Fund in liquidation of the Phoenix Fund pursuant to the Reorganization;
(d) no gain or loss will be recognized by the Phoenix Fund shareholders upon the exchange of their Phoenix Fund shares solely for Acquiring Fund Shares in the Reorganization;
(e) the aggregate tax basis of Acquiring Fund Shares received by each Phoenix Fund shareholder pursuant to the Reorganization will be the same as the aggregate tax basis of the Phoenix Fund shares held by such shareholder immediately prior to the Reorganization. The holding period of the Acquiring Fund Shares to be received by each Phoenix Fund shareholder pursuant to the Reorganization will include the period during which the Phoenix Fund shares exchanged therefor were held by such shareholder, provided such Phoenix Fund shares were held as capital assets at the time of the Reorganization; and
(f) the tax basis of the Phoenix Fund's Assets acquired by the Acquiring Fund pursuant to the Reorganization will be the same as the tax basis of such assets to the Phoenix Fund immediately before the Reorganization. The holding period of the Assets of the Phoenix Fund in the hands of the Acquiring Fund will include the period during which those Assets were held by the Phoenix Fund.
In rendering such opinion, McDermott Will & Emery LLP and Stroock & Stroock & Lavan LLP each may rely upon such certificates as they shall reasonably request of the Acquiring Company on behalf of the Acquiring Fund, the Phoenix Trust on behalf of the Phoenix Fund and PVA and each Phoenix Fund and Acquiring Fund will cooperate to make and certify the accuracy of such representations.
ARTICLE IX
EXPENSES
9.1 The Funds will pay no expenses associated with their participation in the Reorganization. PLIC has separately entered into an agreement with Lazard to set forth how the Reorganization expenses will be allocated. Pursuant to such agreement, PLIC and Lazard or their affiliates have agreed that all fees, costs and expenses associated with the Reorganization will be shared between them on an equal basis including those attorneys' fees, costs and expenses relating to the preparation of proxy materials, regulatory filings and related tax opinions, the printing and distribution of prospectus materials, the preparation for and conduct of shareholder meetings and other similar shareholder communications to the Phoenix Fund shareholders and Phoenix Contract Owners.
9.2 The Acquiring Company, on behalf of the Acquiring Fund, and the Phoenix Trust, on behalf of the Phoenix Fund, represent and warrant that they have no obligations to pay any brokers' or finders' fees in connection with the transactions provided for herein.
ARTICLE X
INDEMNIFICATION
10.1 The Acquiring Company agrees to indemnify and hold harmless, PVA, the Phoenix Fund, the Phoenix Trust, and their respective board members and officers, and their affiliates from and against any and all losses, claims, damages, liabilities or expenses (including, without limitation, the payment of reasonable legal fees and reasonable costs of investigation) to which any such indemnified party may become subject, insofar as any such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based upon:
(a) any breach by the Acquiring Company or the Acquiring Fund of any of its representations, warranties, covenants or agreements set forth in this Agreement; or
(b) any misrepresentation in or omission from any certificate or other document furnished or to be furnished by the Acquiring Company or an officer of the Acquiring Company hereunder; or
(c) the gross negligence, willful misconduct, bad faith or reckless disregard for its obligations or the obligations of the Acquiring Company or Acquiring Fund under this Agreement, applicable law or otherwise.
10.2 PVA agrees to indemnify and hold harmless the Acquiring Company and its directors and officers, the Acquiring Fund, and their affiliates from and against any and all losses, claims, damages, liabilities or expenses (including, without limitation, the payment of reasonable legal fees and reasonable costs of investigation) to which any such indemnified party may become subject, insofar as any such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based upon:
(a) any breach by the Phoenix Trust or the Phoenix Fund of any of their representations, warranties, covenants or agreements set forth in this Agreement;
(b) any misrepresentation in or omission from any certificate or other document furnished or to be furnished by the Phoenix Trust or an officer of the Phoenix Trust hereunder; or
(c) any Excluded Liability of the Phoenix Fund (described in paragraphs 1.3 and 1.5 hereof) or the gross negligence, willful misconduct, bad faith or reckless disregard for its obligations or the obligations of the Phoenix Trust, the Phoenix Fund, PVA or PLIC under this Agreement, applicable law or otherwise.
ARTICLE XI
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1 The Acquiring Company, on behalf of the Acquiring Fund, and the Phoenix Trust, on behalf of the Phoenix Fund, agree that no party has made to the other party any representation, warranty and/or covenant not set forth herein and that this Agreement constitutes the entire agreement between the Parties.
11.2 Except as specified in the next sentence set forth in this paragraph 11.2, the representations, warranties and covenants contained in this Agreement or in any document delivered pursuant to or in connection with this Agreement shall not survive the consummation of the transactions contemplated hereunder. The covenants to be performed after the Closing Date, the indemnification obligations of Article X and the obligations of the Acquiring Fund and the Phoenix Fund in paragraph 5.6 shall continue in effect beyond the consummation of the transactions contemplated hereunder.
ARTICLE XII
TERMINATION
12.1 This Agreement may be terminated and the transactions contemplated hereby may be abandoned by (i) the mutual agreement of the Acquiring Company and the Phoenix Trust or (ii) if the Closing has not occurred as of June 30, 2005, unless such date is extended by mutual agreement of the parties. In addition, either the Acquiring Company or the Phoenix Trust may at their option terminate this Agreement at or before the Closing Date due to:
(a) a material breach or intentional misrepresentation by the other Party of any obligation, representation, warranty or agreement contained herein or in connection herewith, to be performed at or before the Closing Date, if not cured within 30 days; or
(b) a condition herein expressed to be precedent to the obligations of the terminating Party that has not been met if it reasonably appears that it will not or cannot be met.
12.2 In the event of any such termination, this Agreement shall become void and in the absence of willful default, there shall be no liability for damages on the part of the Acquiring Fund, the Phoenix Fund, the Acquiring Company or the Phoenix Trust, or their respective board members or officers, to the other Party or its board members or officers, or of PVA, as applicable. In the event of willful default, all remedies at law or in equity of the Party adversely affected shall survive.
12.3 The termination of this Agreement shall be effectuated by the delivery by the terminating Party to the other Party of a written notice of such termination.
ARTICLE XIII
AMENDMENTS
13.1 This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in writing by the officers of the Acquiring Company and the Phoenix Trust; provided, however, that following the meeting of the Phoenix Contract Owners called by the Phoenix Fund pursuant to this Agreement, no such amendment may have the effect of changing the provisions for determining the number of Acquiring Fund Shares to be issued to the Phoenix Fund shareholders under this Agreement to the detriment of such Phoenix Fund shareholders without their further approval.
ARTICLE XIV
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
14.1 The article and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.
14.3 This Agreement shall be governed and construed in accordance with the internal laws of the State of New York, without giving effect to principles of conflict of laws; provided, however, that the due authorization, execution and delivery of this Agreement by the Phoenix Trust and the Acquiring Company shall be governed and construed in accordance with the internal laws of the Commonwealth of Massachusetts and the State of Maryland, respectively, without giving effect to principles of conflict of laws.
14.4 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but, except as provided in this paragraph, no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.
14.5 It is expressly agreed that the obligations of the Phoenix Fund hereunder shall not be binding upon any of the trustees, shareholders, nominees, officers, agents or employees of the Phoenix Trust personally, but shall bind only the trust property of the Phoenix Fund, as provided in the Phoenix Declaration of Trust. Moreover, no series of the Phoenix Trust other than the Phoenix Fund shall be responsible for the obligations of the Phoenix Trust hereunder, and all persons shall look only to the assets of the Phoenix Fund to satisfy the obligations of the Phoenix Fund hereunder. The execution and delivery of this Agreement have been authorized by the Phoenix Trust Board on behalf of the Phoenix Fund and signed by authorized officers of the Phoenix Trust, acting as such. Neither the authorization by such trustees nor the 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 Phoenix Fund as provided in the Phoenix Declaration of Trust.
ARTICLE XV
NOTICES
15.1 Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be deemed duly given if delivered by hand (including by FedEx or similar express courier) or transmitted by facsimile or three days after being mailed by prepaid registered or certified mail, return receipt requested, addressed to the applicable party:
| The Phoenix Edge Series Fund
One American Row, Hartford, Connecticut 06102
Attention: Matthew A. Swendiman, Esq. |
| If to the Acquiring Company: |
| Lazard Retirement Series, Inc.
30 Rockefeller Plaza, New York, New York 10112
Attention: Brian D. Simon, Esq. |
| Janna Manes, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane, New York, New York 10038-4982 |
or to any other address that the Acquiring Company or the Phoenix Trust shall have last designated by notice to the other Party.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.
Attest:
By:
Name:
Title:
| LAZARD RETIREMENT SERIES, INC.,
on behalf of Lazard Retirement Small Cap
Portfolio
By:
Name:
Title: |
Attest:
By:
Name:
Title:
| THE PHOENIX EDGE SERIES FUND, on
behalf of Phoenix-Lazard Small-Cap Value
Series
By:
Name:
Title: |
Attest:
By:
Name:
Title:
| The Undersigned is a party to this
Agreement:
PHOENIX VARIABLE ADVISORS, INC.
By:
Name:
Title: |
Exhibit B
FINANCIAL HIGHLIGHTS: LAZARD RETIREMENT SMALL CAP PORTFOLIO
Selected Data For a Share of Capital Stock Outstanding Throughout Each Year:
Year Ended
--------------------------------------------------------------------
12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
-------- -------- -------- -------- --------
Net asset value, beginning of year $14.71 $10.72 $13.08 $11.75 $9.82
------ ------ ------ ------ -----
Income (loss) from investment operations:
Net investment income (loss) -- (b) -- (b) 0.01 0.01 0.03
Net realized and unrealized gain (loss) 2.19 3.99 (2.32) 2.15 2.03
------ ------ ------ ------ -----
Total from investment operations 2.19 3.99 (2.31) 2.16 2.06
------ ------ ------ ------ -----
Less distributions from:
Net investment income -- -- -- (0.01) (0.03)
Net realized gains -- -- (0.05) (0.82) (0.10)
------ ------ ------ ------ -----
Total distributions -- -- (0.05) (0.83) (0.13)
------ ------ ------ ------ -----
Net asset value, end of year $16.90 $14.71 $10.72 $13.08 $11.75
====== ====== ====== ====== ======
Total Return (a) 14.89% 37.22% (17.68)% 18.63% 21.05%
Ratios and Supplemental Data:
Net assets, end of year (in thousands) $110,982 $76,636 $47,453 $42,164 $15,205
Ratios to average net assets:
Net expenses 1.25% 1.25% 1.25% 1.25% 1.25%
Gross expenses 1.28% 1.37% 1.42% 1.67% 2.76%
Net investment income (loss) (0.35)% 0.03% (0.17)% 0.09% 0.42%
Portfolio turnover rate 98% 78% 108% 78% 67%
| (a) | Total returns reflect reinvestment of all dividends and distributions, if any. Certain expenses of the Portfolio have been waived or reimbursed by Lazard Asset Management LLC, the Portfolio's investment adviser; without such waiver/reimbursement of expenses, the Portfolio's returns would have been lower. Performance information does not reflect the fees and charges imposed by participating insurance companies at the separate account level, and such charges will have the effect of reducing performance. |
| (b) | Amount is less than $0.01 per share. |
Subject to Completion, March 11, 2005
STATEMENT OF ADDITIONAL INFORMATION
March 28, 2005
Acquisition of the Assets of
PHOENIX-LAZARD SMALL-CAP VALUE SERIES
(A series of The Phoenix Edge Series Fund)
101 Munson Street
Greenfield, Massachusetts 01301
1-800-541-0171
By and in Exchange for Shares of
LAZARD RETIREMENT SMALL CAP PORTFOLIO
(A series of Lazard Retirement Series, Inc.)
30 Rockefeller Plaza
New York, New York 10112
212-632-6000
This Statement of Additional Information, which is not a prospectus, supplements and should be read in conjunction with the Prospectus/Proxy Statement dated March 28, 2005 relating specifically to the proposed transfer of all of the assets and liabilities of Phoenix-Lazard Small Cap Value Series (the "Phoenix Portfolio"), a series of The Phoenix Edge Series Fund (the "Trust"), in exchange for shares of common stock of Lazard Retirement Small Cap Portfolio (the "Lazard Portfolio"), a series of Lazard Retirement Series, Inc. ("LRS"). The transfer is to occur pursuant to a Plan of Reorganization. This Statement of Additional Information consists of this cover page and the following documents attached hereto:
| 1. | The Trust's Statement of Additional Information dated May 1, 2004. |
| 2. | LRS' Statement of Additional dated May 1, 2004, as revised December 30, 2004. |
| 3. | The Phoenix Portfolio's Annual Report for the fiscal year ended December 31, 2004. |
| 4. | The Lazard Portfolio's Annual Report for the fiscal year ended December 31, 2004. |
| 5. | Pro forma financials for the Lazard Portfolio, Phoenix Portfolio and Combined Portfolio as of December 31, 2004. |
LRS' Statement of Additional Information, and the financial statements included in the Lazard Portfolio's Annual Report are incorporated herein by reference. The Prospectus/Proxy Statement dated March 28, 2005 may be obtained by writing to LRS at 30 Rockefeller Plaza, New York, New York 10112.
DOCUMENTS INCORPORATED BY REFERENCE
LRS' Statement of Additional Information dated May 1, 2004, as revised December 30, 2004, is incorporated herein by reference to LRS' Post-Effective Amendment No. 14 to its Registration Statement on Form N-1A, filed on December 3, 2004 (File No. 333-22309). The financial statements of the Lazard Portfolio are incorporated herein by reference to its Annual Report for the fiscal year ended December 31, 2004, filed March 4, 2005.
The Trust's Statement of Additional Information dated May 1, 2004 is incorporated herein by reference to the Trust's Post-Effective Amendment No. 47 to its Registration Statement on Form N-1A, filed on April 30, 2004 (File No. 33-5033). The financial statements of the Phoenix Portfolio are incorporated herein by reference to its Annual Report for the fiscal year ended December 31, 2004, filed March 9, 2005.
PRO-FORMA SCHEDULE OF INVESTMENTS
DECEMBER 31, 2004
S H A R E S V A L U E
---------------------------------------- ----------------------------------------
LRS Phoenix-Lazard LRS Small Cap LRS Phoenix-Lazard LRS Small Cap
Small Cap Small-Cap Portfolio Small Cap Small-Cap Portfolio
Portfolio Value Pro-Forma Portfolio Value Pro-Forma
Series Combined Series Combined
Common Stocks--95.2%
Aerospace & Defense--2.3%
DRS Technologies, Inc. (a) $27,600 $3,250 $30,850 $1,178,796 $138,807 $1,317,603
Esterline Technologies Corp. (a) 12,400 1,400 13,800 404,860 45,710 450,570
The Titan Corp. (a) 55,100 7,900 63,000 892,620 127,980 1,020,600
95,100 12,550 107,650 2,476,276 312,497 2,788,773
Agriculture--0.8%
Delta & Pine Land Co. 33,900 3,550 37,450 924,792 96,844 1,021,636
Apparel & Textiles--4.8%
AnnTaylor Stores Corp. (a) 28,200 3,100 31,300 607,146 66,743 673,889
Hot Topic, Inc. (a) 51,900 5,900 57,800 892,161 101,421 993,582
K-Swiss, Inc., Class A 19,400 2,300 21,700 564,928 66,976 631,904
The Gymboree Corp. (a) 59,000 5,550 64,550 756,380 71,151 827,531
The Sports Authority, Inc. (a) 34,600 3,500 38,100 890,950 90,125 981,075
The Timberland Co., Class A (a) 13,000 1,500 14,500 814,710 94,005 908,715
The Warnaco Group, Inc. (a) 39,500 4,400 43,900 853,200 95,040 948,240
245,600 26,250 271,850 5,379,475 585,461 5,964,936
Automotive--2.2%
CSK Auto Corp. (a) 43,500 3,900 47,400 728,190 65,286 793,476
Rush Enterprises, Inc., Class A (a) 26,600 2,800 29,400 431,718 45,444 477,162
TBC Corp. (a) 27,300 3,300 30,600 758,940 91,740 850,680
Winnebago Industries, Inc. 13,600 1,600 15,200 531,216 62,496 593,712
111,000 11,600 122,600 2,450,064 264,966 2,715,030
Banking--7.3%
Bank of the Ozarks, Inc. 2,200 2,200 74,866 74,866
First Community Bancorp 13,200 2,000 15,200 563,640 85,400 649,040
First Midwest Bancorp, Inc. 20,600 2,400 23,000 747,574 87,096 834,670
First Republic Bank 11,700 1,300 13,000 620,100 68,900 689,000
Hudson United Bancorp 7,800 1,000 8,800 307,164 39,380 346,544
MB Financial, Inc. 13,500 700 14,200 569,025 29,505 598,530
Provident Bankshares Corp. 18,900 2,000 20,900 687,393 72,740 760,133
Sterling Bancshares, Inc. 69,200 7,800 77,000 987,484 111,306 1,098,790
Texas Regional Bancshares, Inc., Class A 17,400 1,850 19,250 568,632 60,458 629,090
Umpqua Holdings Corp. 18,800 2,300 21,100 473,948 57,983 531,931
United Bankshares, Inc. 25,700 2,250 27,950 980,455 85,838 1,066,293
W Holding Co., Inc. 26,068 3,103 29,171 598,003 71,179 669,182
Westamerica Bancorporation 16,100 2,000 18,100 938,791 116,620 1,055,411
261,168 28,703 289,871 8,117,075 886,405 9,003,480
Building & Construction--1.5%
Chicago Bridge & Iron Co. NV, NY Shares 19,800 2,350 22,150 792,000 94,000 886,000
The Shaw Group, Inc. (a) 48,500 5,600 54,100 865,725 99,960 965,685
68,300 7,950 76,250 1,657,725 193,960 1,851,685
Business Services & Supplies--8.4%
ADVO, Inc. 38,900 3,775 42,675 1,386,785 134,579 1,521,364
Arbitron, Inc. (a) 30,700 3,700 34,400 1,202,826 144,966 1,347,792
BearingPoint, Inc. (a) 72,400 6,600 79,000 581,372 52,998 634,370
Herman Miller, Inc. 38,000 3,200 41,200 1,049,940 88,416 1,138,356
MPS Group, Inc. (a) 76,000 10,300 86,300 931,760 126,278 1,058,038
ProQuest Co. (a) 22,100 2,650 24,750 656,370 78,705 735,075
Tetra Tech, Inc. (a) 64,300 7,900 72,200 1,076,382 132,246 1,208,628
The BISYS Group, Inc. (a) 49,000 4,400 53,400 806,050 72,380 878,430
Veritas DGC, Inc. (a) 35,400 4,500 39,900 793,314 100,845 894,159
Watson Wyatt & Co. Holdings 32,000 4,300 36,300 862,400 115,885 978,285
458,800 51,325 510,125 9,347,199 1,047,298 10,394,497
Chemicals--2.6%
Ferro Corp. 19,300 2,250 21,550 447,567 52,178 499,745
Olin Corp. 41,900 4,850 46,750 922,638 106,797 1,029,435
PolyOne Corp. (a) 67,500 10,200 77,700 611,550 92,412 703,962
Spartech Corp. 30,500 3,600 34,100 826,245 97,524 923,769
159,200 20,900 180,100 2,808,000 348,911 3,156,911
Coal--0.7%
Foundation Coal Holdings, Inc. 31,500 3,500 35,000 726,390 80,710 807,100
Computer Software--2.5%
Avocent Corp. (a) 13,800 1,600 15,400 559,176 64,832 624,008
Catapult Communications Corp. (a) 6,200 800 7,000 149,792 19,328 169,120
JDA Software Group, Inc. (a) 32,000 3,400 35,400 435,840 46,308 482,148
SERENA Software, Inc. (a) 41,500 4,700 46,200 898,060 101,708 999,768
Verity, Inc. (a) 52,200 6,500 58,700 684,864 85,280 770,144
145,700 17,000 162,700 2,727,732 317,456 3,045,188
Computers & Business Equipment--2.5%
Advanced Digital Information Corp. (a) 54,300 6,350 60,650 544,086 63,627 607,713
Black Box Corp. 1,600 100 1,700 76,832 4,802 81,634
Foundry Networks, Inc. (a) 50,700 6,200 56,900 667,212 81,592 748,804
Komag, Inc. (a) 46,300 5,200 51,500 869,514 97,656 967,170
Photon Dynamics, Inc. (a) 27,500 3,100 30,600 667,700 75,268 742,968
180,400 20,950 201,350 2,825,344 322,945 3,148,289
Consumer Products--1.1%
Jarden Corp. (a) 8,300 600 8,900 360,552 26,064 386,616
The Scotts Co., Class A (a) 12,200 1,500 13,700 896,944 110,280 1,007,224
20,500 2,100 22,600 1,257,496 136,344 1,393,840
Diversified--0.8%
The Liberty Corp. 21,800 1,900 23,700 958,328 83,524 1,041,852
Drugs & Health Care--6.6%
Able Laboratories, Inc. (a) 28,000 3,600 31,600 637,000 81,900 718,900
Andrx Corp. (a) 43,200 5,300 48,500 943,056 115,699 1,058,755
Beverly Enterprises, Inc. (a) 115,700 15,400 131,100 1,058,655 140,910 1,199,565
Kindred Healthcare, Inc. (a) 34,000 4,100 38,100 1,018,300 122,795 1,141,095
LifePoint Hospitals, Inc. (a) 39,300 3,500 42,800 1,368,426 121,870 1,490,296
MIM Corp. (a) 85,800 8,900 94,700 544,830 56,515 601,345
Select Medical Corp. 63,600 7,300 70,900 1,119,360 128,480 1,247,840
Taro Pharmaceutical Industries, Ltd. (a) 17,100 1,800 18,900 581,913 61,254 643,167
426,700 49,900 476,600 7,271,540 829,423 8,100,963
Education--2.0%
Corinthian Colleges, Inc. (a) 40,700 6,100 46,800 766,992 114,954 881,946
DeVry, Inc. (a) 31,400 3,400 34,800 545,104 59,024 604,128
Leapfrog Enterprises, Inc. (a) 1,500 1,200 2,700 20,400 16,320 36,720
Learning Tree International, Inc. (a) 67,900 5,200 73,100 909,860 69,680 979,540
141,500 15,900 157,400 2,242,356 259,978 2,502,334
Electrical Equipment--2.8%
Coherent, Inc. (a) 26,000 3,000 29,000 791,440 91,320 882,760
General Cable Corp. (a) 12,300 1,300 13,600 170,355 18,005 188,360
GrafTech International, Ltd. (a) 56,800 8,000 64,800 537,328 75,680 613,008
Plexus Corp. (a) 52,700 6,800 59,500 685,627 88,468 774,095
Rogers Corp. (a) 20,700 2,300 23,000 892,170 99,130 991,300
168,500 21,400 189,900 3,076,920 372,603 3,449,523
Electronics--1.8%
Metrologic Instruments, Inc. (a) 33,700 4,200 37,900 716,125 89,250 805,375
TTM Technologies, Inc. (a) 104,400 10,400 114,800 1,231,920 122,720 1,354,640
138,100 14,600 152,700 1,948,045 211,970 2,160,015
Environmental--0.5%
Waste Connections, Inc. (a) 15,950 1,850 17,800 546,288 63,362 609,650
Equipment Rental--0.4%
United Rentals, Inc. (a) 25,200 2,600 27,800 476,280 49,140 525,420
Financial Services--5.0%
Calamos Asset Management, Inc., Class A 23,300 2,500 25,800 629,100 67,500 696,600
eSPEED, Inc., Class A (a) 67,300 8,500 75,800 832,501 105,145 937,646
Financial Federal Corp. (a) 17,000 1,450 18,450 666,400 56,840 723,240
IndyMac Bancorp, Inc. 13,200 1,550 14,750 454,740 53,398 508,138
Knight Trading Group, Inc., Class A (a) 103,700 8,700 112,400 1,135,515 95,265 1,230,780
MAF Bancorp, Inc. 20,100 2,800 22,900 900,882 125,496 1,026,378
The South Financial Group, Inc. 28,200 3,100 31,300 917,346 100,843 1,018,189
272,800 28,600 301,400 5,536,484 604,487 6,140,971
Food & Beverages--0.6%
Performance Food Group Co. (a) 25,400 2,300 27,700 683,514 61,893 745,407
Forest & Paper Products--0.5%
Packaging Corp. of America 22,400 2,650 25,050 527,520 62,408 589,928
Household Products & Home Furnishings--0.4%
Cost Plus, Inc. (a) 14,100 1,900 16,000 453,033 61,047 514,080
Industrial & Machinery--1.9%
Roper Industries, Inc. 18,100 1,650 19,750 1,099,937 100,270 1,200,207
Tecumseh Products Co., Class A 21,300 2,100 23,400 1,018,140 100,380 1,118,520
39,400 3,750 43,150 2,118,077 200,650 2,318,727
Insurance--3.3%
Arch Capital Group, Ltd. (a) 28,800 3,100 31,900 1,114,560 119,970 1,234,530
Assured Guaranty, Ltd. 49,200 6,200 55,400 967,764 121,954 1,089,718
Bristol West Holdings, Inc. 7,800 700 8,500 156,000 14,000 170,000
Max Re Capital, Ltd. 30,700 2,850 33,550 654,831 60,790 715,621
Reinsurance Group of America, Inc. 15,900 1,350 17,250 770,355 65,408 835,763
132,400 14,200 146,600 3,663,510 382,122 4,045,632
Leisure & Entertainment--1.1%
Alliance Gaming Corp. (a) 57,400 6,200 63,600 792,694 85,622 878,316
WMS Industries, Inc. (a) 13,200 1,600 14,800 442,728 53,664 496,392
70,600 7,800 78,400 1,235,422 139,286 1,374,708
Medical Products & Services--3.5%
Bio-Rad Laboratories, Inc., Class A (a) 800 200 1,000 45,896 11,474 57,370
Charles River Laboratories International,
Inc. (a) 6,288 816 7,104 289,311 37,544 326,855
Cutera, Inc. 7,900 800 8,700 98,592 9,984 108,576
DJ Orthopedics, Inc. (a) 42,000 4,800 46,800 899,640 102,816 1,002,456
Hanger Orthopedic Group, Inc. (a) 12,900 900 13,800 104,490 7,290 111,780
INAMED Corp. (a) 15,950 1,575 17,525 1,008,837 99,619 1,108,456
Martek Biosciences Corp. (a) 8,600 1,000 9,600 440,320 51,200 491,520
PSS World Medical, Inc. (a) 72,400 7,500 79,900 906,086 93,862 999,948
Respironics, Inc. (a) 800 300 1,100 43,488 16,309 59,797
Viasys Healthcare, Inc. (a) 4,000 700 4,700 76,000 13,300 89,300
171,638 18,591 190,229 3,912,660 443,398 4,356,058
Oil & Gas--7.0%
Bill Barrett Corp. 7,300 900 8,200 233,527 28,791 262,318
Denbury Resources, Inc. (a) 20,500 2,400 22,900 562,725 65,880 628,605
Energy Partners, Ltd. (a) 21,200 2,300 23,500 429,724 46,621 476,345
Forest Oil Corp. (a) 20,900 2,000 22,900 662,948 63,440 726,388
Grey Wolf, Inc. (a) 104,300 12,000 116,300 549,661 63,240 612,901
Hanover Compressor Co. (a) 51,400 5,900 57,300 726,282 83,367 809,649
Key Energy Services, Inc. (a) 108,800 12,850 121,650 1,283,840 151,630 1,435,470
Kinder Morgan Management, LLC (a) 21,484 3,053 24,537 874,399 124,257 998,656
Maverick Tube Corp. (a) 13,800 2,500 16,300 418,140 75,750 493,890
Range Resources Corp. 28,500 2,700 31,200 583,110 55,242 638,352
The Houston Exploration Co. (a) 12,000 1,800 13,800 675,720 101,358 777,078
Whiting Petroleum Corp. (a) 22,700 2,000 24,700 686,675 60,500 747,175
432,884 50,403 483,287 7,686,751 920,076 8,606,827
Printing & Publishing--1.9%
Journal Register Co. (a) 56,668 7,200 63,868 1,095,392 139,176 1,234,568
R. H. Donnelley Corp. (a) 17,700 1,900 19,600 1,045,185 112,195 1,157,380
74,368 9,100 83,468 2,140,577 251,371 2,391,948
Real Estate--3.1%
Alexandria Real Estate Equities, Inc. 5,500 600 6,100 409,310 44,652 453,962
Capital Automotive REIT 10,400 1,100 11,500 369,460 39,078 408,538
CarrAmerica Realty Corp. 15,100 1,950 17,050 498,300 64,350 562,650
Inland Real Estate Corp. 21,800 1,600 23,400 347,710 25,520 373,230
Lexington Corporate Properties Trust 25,300 2,400 27,700 571,274 54,192 625,466
Prentiss Properties Trust 8,200 900 9,100 313,240 34,380 347,620
The Mills Corp. 14,500 1,650 16,150 924,520 105,204 1,029,724
100,800 10,200 111,000 3,433,814 367,376 3,801,190
Restaurants--0.6%
CBRL Group, Inc. 15,900 1,800 17,700 665,415 75,330 740,745
Retail--1.5%
99 Cents Only Stores (a) 50,500 3,600 54,100 816,080 58,176 874,256
Tractor Supply Co. (a) 22,300 2,500 24,800 829,783 93,025 922,808
72,800 6,100 78,900 1,645,863 151,201 1,797,064
Semiconductors & Components--3.5%
AMIS Holdings, Inc. (a) 53,300 4,400 57,700 880,516 72,688 953,204
Benchmark Electronics, Inc. (a) 20,700 2,300 23,000 705,870 78,430 784,300
Brooks Automation, Inc. (a) 41,400 5,000 46,400 712,908 86,100 799,008
ChipMOS TECHNOLOGIES Ltd. 12,400 12,400 78,988 78,988
Exar Corp. (a) 81,000 8,000 89,000 1,149,390 113,520 1,262,910
Ultratech, Inc. (a) 22,600 2,000 24,600 426,010 37,700 463,710
219,000 34,100 253,100 3,874,694 467,426 4,342,120
Steel--0.6%
Schnitzer Steel Industries, Inc., Class A 9,400 1,100 10,500 318,942 37,323 356,265
Steel Dynamics, Inc. 8,400 1,000 9,400 318,192 37,880 356,072
17,800 2,100 19,900 637,134 75,203 712,337
Telecommunications--2.9%
C-COR, Inc. (a) 109,500 12,800 122,300 1,018,350 119,040 1,137,390
CommScope, Inc. (a) 52,900 5,000 57,900 999,810 94,500 1,094,310
Ditech Communications Corp. (a) 28,700 2,600 31,300 429,065 38,870 467,935
Oplink Communications, Inc. (a) 104,000 12,000 116,000 204,880 23,640 228,520
Wireless Facilities, Inc. (a) 56,800 6,600 63,400 536,192 62,304 598,496
351,900 39,000 390,900 3,188,297 338,354 3,526,651
Transportation--4.2%
AirTran Holdings, Inc. (a) 72,500 7,700 80,200 775,750 82,390 858,140
Forward Air Corp. (a) 17,100 1,900 19,000 764,370 84,930 849,300
OMI Corp. 40,900 5,900 46,800 689,165 99,415 788,580
Overnite Corp. 18,500 2,000 20,500 688,940 74,480 763,420
Pacer International, Inc. (a) 55,800 6,400 62,200 1,186,308 136,064 1,322,372
Swift Transportation Co., Inc. (a) 26,200 3,050 29,250 562,776 65,514 628,290
231,000 26,950 257,950 4,667,309 542,793 5,210,102
Utilities--2.0%
AGL Resources, Inc. 22,000 2,550 24,550 731,280 84,762 816,042
Cleco Corp. 39,400 5,000 44,400 798,244 101,300 899,544
New Jersey Resources Corp. 15,100 60,676 75,776 654,434 60,676 715,110
76,500 68,226 144,726 2,183,958 246,738 2,430,696
Total Common Stocks
(Identified cost $91,811,517) 5,090,608 642,298 5,732,906 105,471,357 11,854,956 117,326,313
Short-Term Investments---6.1% PAR / PRINCIPAL AMOUNT (000)
----------------------------------------
U.S. Treasury Bills---0.5%
U.S.Treasury Bill 1.79%, 1/6/05 $ 2 $ 2 1,999 1,999
U.S.Treasury Bill 1.857%, 1/6/05 115 115 114,970 114,970
U.S.Treasury Bill 1.983%, 1/6/05 61 61 60,983 60,983
U.S.Treasury Bill 1.80%, 2/10/05 94 94 93,812 93,812
U.S.Treasury Bill 1.915%, 2/10/05 81 81 80,828 80,828
U.S.Treasury Bill 1.95%, 2/10/05 127 127 126,725 126,725
U.S.Treasury Bill 2.08%, 2/10/05 68 68 67,847 67,847
U.S.Treasury Bill 2.09%, 2/10/05 81 81 80,818 80,818
627,982 627,982
Repurchase Agreement--5.6%
State Street Bank and Trust Co., 1.40%, 01/03/05,
(Dated 12/31/04, collateralized by $6,995,000 United States Treasury
Note, 2.50%, 09/30/06, with a value of $6,976,897)
$ 6,840 $ 6,840 $ 6,840,000 6,840,000
Total Short-Term Investments
(Identified cost $) $ 6,840 $ 629 $ 7,469 $ 6,840,000 $ 627,982 $ 7,467,982
Total Investments----101.3%
(Identified cost $) 112,311,357 12,482,938 124,794,295
Liabilities in Excess of Cash and Other Assets---(1.3)% (1,329,486) (227,032) (1,556,518)
-----------------------------------------
Net Assets---100.00% $110,981,871 $12,255,906 $123,237,777
=========================================
(a) Non-income producing security.
(b) For federal income tax purposes, the aggregate cost, aggregate gross unrealized appreciation, aggregate gross unrealized
depreciation and the net unrealized appreciation is as follows:
Aggregate Aggregate
Gross Gross Net
Aggregate Unrealized Unrealized Unrealized
Portfolio Cost Appreciation Depreciation Depreciation
- --------- ---- ------------ ------------ ------------
Phoenix-Lazard Small-Cap
Value Series $ 10,603,484 $ 2,055,632 $ 176,178 $ 1,879,454
LRS Small Cap Portfolio $ 98,857,945 $ 15,407,233 $ 1,953,821 $ 13,453,412
THE LAZARD FUNDS, INC.
Statements of Assets and Liabilities
December 31, 2004
Lazard Phoenix-Lazard Lazard Retirement
Retirement Small Small Cap Value Small Cap
Cap Portfolio Portfolio Adjustments Pro-Forma
-------------------------------------------------------------------------------------
ASSETS
Investments in Securities, at value $ 112,311,357 $ 12,482,938 $ 124,794,295
Cash 752 36,018 36,770
Foreign Currency -- -- --
Receivables for: -- --
Investments sold 570,618 53,871 624,489
Dividends and interest 56,374 6,074 62,448
Capital stock sold 52,675 35,571 88,246
Due from Investment Manager -- 3,503 3,503
Prepaid expenses -- 237 237
---------------------------------------------------------------------------------
Total assets 112,991,776 12,618,212 -- 125,609,988
---------------------------------------------------------------------------------
LIABILITIES
Payables for:
Investments purchased 1,769,911 306,092 2,076,003
Capital stock repurchased 135,640 7,188 142,828
Dividends payable -- -- --
Gross depreciation on foreign
currency contracts -- -- --
Payable upon return of securities on
loan -- -- --
Management fees payable 56,271 -- 56,271
Accrued directors' / trustees' fee
payable 427 147 574
Accrued distribution fee payable 22,761 -- 22,761
Accrued Merger expenses -- -- --
Other accrued expenses and payables 24,895 48,879 73,774
--------------------------------------------------------------------------------
Total liabilities 2,009,905 362,306 -- 2,372,211
--------------------------------------------------------------------------------
Net assets $ 110,981,871 12,255,906 123,237,777
=====================================================================================
NET ASSETS
Paid in capital $ 88,038,952 $ 10,117,023 98,155,975
Undistributed net investment income 39,674 -- 39,674
Net unrealized appreciation
(depreciation) on investments 13,659,840 1,935,938 15,595,778
Accumulated undistributed net realized
gain (loss) 9,243,305 202,945 9,446,250
-------------------------------------------------------------------------------------
Net assets $ 110,981,771 $ 12,255,906 $ 123,237,677
=====================================================================================
Shares of capital stock outstanding 6,567,766 866,036 (140,747) 7,293,055
Net asset value, offering and
redemption price per share $ 16.90 $ 14.15 $ 16.90
Cost of investments in securities $ 98,651,517 $ 10,547,000 $ 109,198,517
See notes to pro forma financial statements
STATEMENTS OF
OPERATIONS
For the year ended
December 31, 2004
Lazard
Lazard Phoenix-Lazard Small Cap
Small Cap Small-Cap Value Portfolio
Portfolio Portfolio Adjustments Pro-Forma Combined
INVESTMENT INCOME
Income:
Interest $ 742,437 $ 3,923 $ 746,360
Dividends 58,173 82,787 140,960
---------------------------------------------------------- --------------------------
Total investment income* 800,610 86,710 -- 887,320
---------------------------------------------------------- --------------------------
Expenses:
Management Fees $ 667,426 104,105 (17,351) (a) $ 754,180
Distribution Fees 222,475 - 28,918 (b) 251,393
Custodian Fees 94,933 27,766 (36,229) (a) 86,470
Professional Services 61,307 32,330 (29,837) (a) 63,800
Administration Fees 55,453 45,999 (43,554) (a) 57,898
Shareholders' services 14,868 - (468) (a) 14,400
Shareholders' reports 9,411 16,848 (17,259) (a) 9,000
Directors'/Trustees' fees and
expenses 6,749 9,466 (7,558) (a) 8,657
Other 3,595 9,697 (9,542) (a) 3,750
Registration Fees 2,250 -- 662 2,912
---------------------------------------------------------- --------------------------
Gross expenses 1,138,467 246,211 (132,217) 1,252,461
Management Fees Waived/Expense
Reimbursement (26,295) (124,748) 151,043 0
Expense reductions (116) (6) --
---------------------------------------------------------- --------------------------
Total net expenses 1,112,056 121,457 18,826 1,252,461
---------------------------------------------------------- --------------------------
Investment income-net (311,446) (34,747) (18,826) (365,141)
---------------------------------------------------------- --------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on
investments 12,747,580 1,175,015 13,922,595
Net change in unrealized
appreciation on investments 987,411 215,581 1,202,492
---------------------------------------------------------- --------------------------
Realized and unrealized gain
(loss) on investments 13,734,991 1,390,596 -- --
---------------------------------------------------------- --------------------------
Net increase in net assets
resulting from operations $ 13,423,545 1,355,849 (18,826) 15,125,587
========================================================== ==========================
* Net of foreign withholding
taxes of $ 1,352 246 1,598
(a) Reflects anticipated savings as a result of the merger.
(b) Reflects 0.25% distribution fee applicable to shares issued as result of merger; Phoenix shares do not impose a
distribution fee.
See notes to pro forma financial statements.
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)NOTE 1. Basis of Merger
The Board of Trustees of The Phoenix Edge Series Fund (the "Trust") has approved, subject to shareholder approval, an Agreement and Plan of Reorganization (the "Plan") between the Phoenix-Lazard Small-Cap Value Series (the "Phoenix Portfolio") and Lazard Retirement Small Cap Portfolio (the "Lazard Portfolio" and, together with the Phoenix Portfolio, the "Portfolios"), a series of Lazard Retirement Series, Inc. ("LRS"). The Plan provides for the transfer of all of the assets of the Phoenix Portfolio, subject to its stated liabilities, to the Lazard Portfolio in a tax-free exchange for shares of the Lazard Portfolio and the distribution of such shares to the shareholders of the Phoenix Portfolio (the "Exchange"). The Exchange will be accounted for as a tax-free merger of investment companies. The unaudited pro forma statement of investments and statement of assets and liabilities reflect the financial position of the Portfolios at December 31, 2004.
The unaudited pro forma statement of operations reflects the results of operations of the Portfolios for the twelve months ended December 31, 2004. These statements have been derived from the books and records of the Portfolios utilized in calculating daily net asset value at the dates indicated above under accounting principles generally accepted in the United States of America. The historical cost of investment securities will be carried forward to the Lazard Portfolio as the surviving entity. The fiscal year for both Portfolios is December 31st.
The pro forma statements of investments, assets and liabilities and operations should be read in conjunction with the historical financial statements of the Phoenix Portfolio and the Lazard Portfolio included or incorporated by reference in its respective Statement of Additional Information. The pro forma combined financial statements are presented for information only and may not necessarily be representative of what the actual combined financial statements would have been had the Exchange occurred on December 31, 2004. Following the Exchange, the Lazard Portfolio will be the accounting survivor.
NOTE 2. Portfolio Valuation
Phoenix-Lazard Small-Cap Value Series:
The Phoenix Portfolio's investments are valued at market value or, where market quotations are not available, at fair value as determined in good faith by the Board of Trustees of the Trust or its delegates. Equity securities are valued at the last official closing price (typically sale) on the exchange on which the securities are principally traded, or, if no closing price is available at the last bid price. Debt securities (other than short-term investments) are valued on the basis of broker quotations or valuations provided by a pricing service, which in determining value utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities, approved by the Board of Trustees of the Trust when such prices are believed to reflect the fair value of such securities. As required, some securities and assets are valued at fair value as determined in good faith by or under the direction of the Board of Trustees of the Trust.
Certain foreign common stocks may be fair valued in cases where closing prices are not readily available or are deemed not reflective of readily available market prices. For example, significant events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that the series calculates its net asset value (generally, the close of the New York Stock Exchange, the "NYSE") that may impact the value of securities traded in these foreign markets. In these cases, information from an external vendor may be utilized to adjust closing market prices of certain foreign common stocks to reflect their fair value. Because the frequency of significant events is not predictable, fair valuation of certain foreign common stocks may occur on a frequent basis.
Lazard Retirement Small Cap Portfolio:
Market values for equity securities listed on the NYSE, NASDAQ national market or other U.S. exchanges or markets are based on the closing market price on the principal exchange or market on which the security is traded, generally as of the close of regular trading on the NYSE (normally 4:00 p.m. Eastern time) on each valuation date; securities not traded on the valuation date are valued at the closing bid price. Any securities not listed, for which current over-the-counter market quotations or bids are readily available, are valued at the last quoted bid price or, if available, the mean of two such prices. Securities listed on foreign exchanges are valued at the last reported sales price, except as described below.
If events materially affecting the value of securities occur between the close of the exchange or market on which the security is principally traded and the time when the Lazard Portfolio's net asset value is calculated, such securities will be valued at their fair values as determined by, or in accordance with procedures approved by, the Board of Directors of LRS. Fair valuing of foreign securities may be determined with the assistance of a pricing service, using correlations between the movement of prices of such securities and indices of domestic securities and other appropriate indicators, such as closing market prices of relevant American depositary receipts or futures contracts. The effect of using fair value pricing is that the net asset value of the Lazard Portfolio will be subject to the judgment of the Board of Directors of LRS or its designee instead of being determined by the market. Using a fair value pricing methodology to price securities may result in a value that is different from the most recent closing price of a security and from the prices used by other investment companies to calculate their portfolios' net asset values.
Securities for which current market quotations are not readily available are valued at fair value as determined in good faith in accordance with procedures approved by the Board of Directors of LRS. Under these procedures, in the event that Lazard Asset Management LLC, LRS' investment manager (the "Investment Manager"), determines that a significant event has occurred after the close of a market on which a foreign security is traded but before the close of regular trading on the NYSE, such that current market quotations for a security or securities are not readily available, a Valuation Committee of the Investment Manager will evaluate a variety of factors to determine the fair value of the affected securities. These factors include, but are not limited to, the type of security, the value of comparable securities, observations from financial institutions and relevant news events. Input from the Investment Manager's analyst will also be considered.
NOTE 3. Capital Shares
The pro forma number of shares that would be issuable was calculated by dividing the net assets of the Phoenix Portfolio at December 31, 2004 by the net asset value per share of the Lazard Portfolio on December 31, 2004.
NOTE 4. Pro Forma Operating Expenses
The accompanying pro forma financial statements reflect changes in expenses of the Lazard Portfolio as if the Exchange was consummated on December 31, 2004. While it is anticipated that there will be an elimination of certain duplicative expenses as a result of this Exchange, the actual amount of such future expenses is impossible to predict.
NOTE 5. Federal Income Taxes
If the Exchange is consummated, the Lazard Portfolio would seek to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and to distribute all its taxable income, including any realized net capital gains, to shareholders, thereby relieving the Lazard Portfolio from all, or substantially all, federal income taxes.
The identified cost of investments for the Portfolios is substantially the same for both accounting and tax purposes. The tax cost of investments will remain unchanged after the Exchange.
VOTING INSTRUCTIONS CARD
Instructions of Policyholder/Contractowner for Voting Shares of The Phoenix Edge Series Fund
These proposals are discussed in detail in the attached Proxy Statement. The Board of Trustees of The Phoenix Edge Series Fund (the "Trust") is soliciting the enclosed proxy. As a convenience, you can now vote in any one of four ways:
| | • | Through the Internet at www.proxyweb.com; |
| | • | By telephone, with a toll-free call to the Trust's proxy tabulator, at 1-800-690-6903; |
| | • | By mail, using the enclosed Voting Instructions Card(s) and postage paid envelope; or |
| | • | In person at the Special Meeting. |
We encourage you to vote by Internet or telephone. These voting methods will reduce the time and costs associated with this proxy solicitation. Whichever method you choose please read the enclosed proxy statement before you vote.
PLEASE RESPOND—IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK THAT YOU VOTE PROMPTLY. YOUR VOTE IS IMPORTANT.
The undersigned, being the owner of a variable life insurance policy ("Policyholder") or variable annuity contract ("Contractowner") issued by Phoenix Life Insurance Company and its subsidiaries (together "Phoenix"), hereby instructs Phoenix to cause the shares of Phoenix-Lazard Small-Cap Value Series (the "Phoenix Portfolio"), a series of the Trust, allocable to Policyholder's or Contractowner's account identified on this Voting Instructions Card, to be voted at the Special Meeting of Shareholders of the Phoenix Portfolio to be held on Tuesday, April 26, 2005, at One American Row, Hartford, Connecticut 06102, and at any and all adjournments or postponements thereof, in the manner directed below with respect to the matters described in the notice and accompanying Proxy Statement for said meeting which have been received by the undersigned.
THE PROXY FOR WHICH VOTING INSTRUCTIONS ARE BEING REQUESTED IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST WHO RECOMMEND A VOTE "FOR" EACH OF THE PROPOSALS.
The voting instruction will be voted as marked. IF NOT MARKED, THIS VOTING INSTRUCTION WILL BE VOTED FOR THE PROPOSAL. If you do not vote or this voting instruction is not returned properly executed, your votes will be cast by Phoenix on behalf of the pertinent separate account in the same proportion as it votes shares held by that separate account for which it has received instructions.
Please fill in box(es) as shown using black or blue ink or number 2 pencil. Please do not use fine point pens. [X]
Name of Series: Phoenix-Lazard Small-Cap Value Series
| Proposal 1: | To approve an Agreement and Plan of Reorganization providing for the transfer of all assets and stated liabilities of the Phoenix-Lazard Small-Cap Value Series in exchange for shares of Lazard Retirement Small Cap Portfolio, and the shares so received will be distributed to shareholders of the Phoenix-Lazard Small-Cap Value Series. |
[ ] For [ ] Against [ ] Abstain
| Proposal 2: | To consider and act upon any other business as may properly come before the meeting and any adjournments thereof. |
[ ] For [ ] Against [ ] Abstain
PLEASE MARK, SIGN, DATE AND RETURN THE VOTING INSTRUCTIONS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
_____________________________________ _____________________________________
Signature of Participant Date Signature of Joint Owner(s) Date
Please date and sign exactly as your name appears hereon. If shares are registered in more than one name, all participants should sign this voting instruction, but if one participant signs, this signature binds the other participant(s). When signing as an attorney, executor, administrator, agent, trustee, guardian, or custodian for a minor, please give full title as such. If a corporation, please sign in full corporate name by an authorized person. If a partnership, please sign in partnership name by an authorized person.
THE PHOENIX EDGE SERIES FUND
These proposals are discussed in detail in the attached Proxy Statement. The Board of Trustees of The Phoenix Edge Series Fund (the "Trust") is soliciting the enclosed proxy. As a convenience, you can now vote in any one of four ways:
| | • | Through the Internet at www.proxyweb.com; |
| | • | By telephone, with a toll-free call to the Trust's proxy tabulator, at 1-800-690-6903; |
| | • | By mail, using the enclosed Voting Instructions Card(s) and postage paid envelope; or |
| | • | In person at the Special Meeting. |
We encourage you to vote by Internet or telephone, using the control number that appears at left. These voting methods will reduce the time and costs associated with this proxy solicitation. Whichever method you choose please read the enclosed proxy statement before you vote.
PLEASE RESPOND - - IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK THAT YOU VOTE PROMPTLY. YOUR VOTE IS IMPORTANT.
The undersigned shareholder of Phoenix-Lazard Small-Cap Value Series (the "Phoenix Portfolio"), a series of the Trust, hereby appoints Matthew A. Swendiman and Philip K. Polkington and any and each of them, proxies of the undersigned, with power of substitution to each, for and in the name of the undersigned to vote and act upon all matters (unless and except as expressly limited below) at the Special Meeting of Shareholders of the Phoenix Portfolio to be held on Thursday, April 26, 2005, at One American Row, Hartford, Connecticut, notice of which meeting and the Proxy Statement accompanying the same have been received by the undersigned, or at any and all adjournments or postponements thereof, with respect to all shares of the Phoenix Portfolio for which the undersigned is entitled to vote or with respect to which the undersigned would be entitled to vote or act, with all the powers the undersigned would possess if personally present voting with respect to the specific matters set forth below. Any proxies heretofore given by the undersigned with respect to said meeting are hereby revoked.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST WHO RECOMMEND A VOTE "FOR" EACH OF THE PROPOSALS.
Specify desired action by check mark in the appropriate space. In the absence of such specification, the persons named as proxies have discretionary authority, which they intend to exercise by voting shares represented by this proxy in favor of each of the proposals.
Please fill in box(es) as shown using black or blue ink or number 2 pencil. Please do not use fine point pens. [X]
Name of Series: Phoenix-Lazard Small-Cap Value Series
| Proposal 1: | To approve an Agreement and Plan of Reorganization providing for the transfer of all assets and stated liabilities of the Phoenix-Lazard Small-Cap Value Series in exchange for shares of Lazard Retirement Small Cap Portfolio, and the shares so received will be distributed to shareholders of the Phoenix-Lazard Small-Cap Value Series. |
[ ] For [ ] Against [ ] Abstain
| Proposal 2: | To consider and act upon any other business as may properly come before the meeting and any adjournments thereof. |
[ ] For [ ] Against [ ] Abstain
PLEASE MARK, SIGN, DATE AND RETURN THE VOTING INSTRUCTIONS CARD PROMPTLY USING THE ENCLOSED ENVELOPE. BY SIGNING THIS PROXY CARD, RECEIPT OF THE ACCOMPANYING NOTICE OF SPECIAL MEETING AND PROXY STATEMENT IS ACKNOWLEDGED.
_____________________________________ _____________________________________
Signature of Participant Date Signature of Joint Owner(s) Date
PLEASE DATE AND SIGN EXACTLY AS YOUR NAME APPEARS HEREON. CORPORATE PROXIES SHOULD BE SIGNED BY AN AUTHORIZED OFFICER.
LAZARD RETIREMENT SERIES, INC.
PART C
OTHER INFORMATION
All references to the "Registration Statement" are to Post-Effective Amendment No. 14 to the Registrant's Registration Statement on Form N-1A, filed December 3, 2004 (File No. 333-22309) (the "Registration Statement") unless otherwise noted.
| | The response to this item is incorporated by reference to Item 24 of Part C of the Registration Statement. |
| (1)(a) | Registrant's Articles of Incorporation are incorporated by reference to Exhibit (1)(a) to Pre-Effective Amendment No. 1 of the Registrant's Registration Statement on Form N-1A filed with the Securities and Exchange Commission (the "SEC") on May 19, 1997. |
| (1)(b) | Registrant's Articles of Amendment are incorporated by reference to Exhibit (1)(b) to Pre-Effective Amendment No. 1 of the Registrant's Registration Statement on Form N-1A filed with the SEC on May 19, 1997. |
| (1)(c) | Registrant's Articles Supplementary are incorporated by reference to Exhibit (a)(3) to Post-Effective Amendment No. 9 of the Registrant's Registration Statement on Form N-1A filed with the SEC on April 30, 2001. |
| (1)(d) | Registrant's Articles Supplementary are incorporated by reference to Exhibit (a)(4) to the Registration Statement. |
| (2) | Registrant's By-Laws, as amended are incorporated by reference to Exhibit (b) to Post-Effective Amendment No. 13 of the Registrant's Registration Statement on Form N-1A filed with the SEC on October 15, 2004. |
| (4) | Agreement and Plan of Reorganization (included as Exhibit A to the Proxy Statement/Prospectus). |
| (5) | Reference is made to Exhibits (1) and (2) hereof. |
| (6) | Investment Management Agreements are incorporated by reference to Exhibit (d) to the Registration Statement. |
| (7)(a) | Distribution Agreement, as revised is incorporated by reference to Exhibit (e) to the Registration Statement. |
| (9) | Custodian Contract is incorporated by reference to Exhibit (g) to Post-Effective Amendment No. 11 of the Registrant's Registration Statement on Form N-1A filed with the SEC on April 30, 2003. |
| (10)(a) | Distribution and Servicing Plan, as revised is incorporated by reference to Exhibit (m)(1) to the Registration Statement. |
| (10)(b) | Form of Distribution and Servicing Plan Agreement is incorporated by reference to Exhibit (m)(2) to the Registration Statement. |
| (12) | Opinion and consent of counsel regarding tax matters.** |
| (13)(a) | Administration Agreement is incorporated by reference to Exhibit (h)(2) to Pre-Effective Amendment No. 1 of the Registrant's Registration Statement on Form N-1A filed with the SEC on May 19, 1997. |
| (13)(b) | Form of Fund Participation Agreement, as revised is incorporated by reference to Exhibit (h)(2) to the Registration Statement. |
| (13)(c) | Transfer Agency and Service Agreement is incorporated by reference to Exhibit (h)(3) to Post-Effective Amendment No. 11 of the Registrant's Registration Statement on Form N-1A filed with the SEC on April 30, 2003. |
| (14)(a) | Consent of Independent Registered Public Accounting Firm of Registrant.* |
| (14)(b) | Consent of Independent Registered Public Accounting Firm.* |
| (16) | Power of Attorney.*** |
| (17)(b) | Registrant's Prospectus and Statement of Additional Information dated May 1, 2004, as revised on December 30, 2004, are incorporated by reference to the Registration Statement. |
__________________________________
| ** | To be filed by amendment. |
| *** | Filed as part of signature page to Registrant's Registration Statement on Form N-14 (File No. 333-122944) filed with the SEC on February 22, 2005. |
| (1) | The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
| (2) | The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933 each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. |
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has been signed on behalf of the Registrant, in the City of New York, and State of New York on the 11th day of March, 2005.
| LAZARD RETIREMENT SERIES, INC.
By: /s/ Charles Carroll
Charles Carroll, Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following p-erson in the capacities and on the dates indicated.
/s/ Charles Carroll
Charles Carroll | President and Director | March 11, 2005 |
/s/ Stephen St. Clair
Stephen St. Clair | Treasurer and Chief Financial Officer | March 11, 2005 |
/s/ Norman Eig
Norman Eig | Director | March 11, 2005 |
/s/ John J. Burke*
John J. Burke | Director | March 11, 2005 |
/s/ Lester Z. Lieberman*
Lester Z. Lieberman | Director | March 11, 2005 |
/s/ Richard Reiss, Jr.*
Richard Reiss, Jr. | Director | March 11, 2005 |
Kenneth S. Davidson*
Kenneth S. Davidson | Director | March 11, 2005 |
/s/ William Katz
William Katz | Director | March 11, 2005 |
/s/ Robert M. Solmson*
Robert M. Solmson | Director | March 11, 2005 |
/s/ Nathan A. Paul
Attorney-in-fact, Nathan A. Paul | | |
