NEW ENGLAND ZENITH FUND
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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NEW ENGLAND ZENITH FUND
(Name of Registrant as Specified In Its Charter)
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New England Zenith Fund
501 Boylston Street, Boston, Massachusetts 02116
Dear Life Insurance Policy and Annuity Contract Owners:
The New England Zenith Fund (the "Zenith Fund") will hold a special meeting
of shareholders of each of its Series on April 25, 2003 at 2:00 p.m. Eastern
Time at the offices of MetLife Advisers, LLC, 501 Boylston Street, Boston,
Massachusetts 02116. At the meeting, shareholders of each Series will be asked
to vote on the reorganization of each Series into corresponding newly created
Portfolios of the Metropolitan Series Fund, Inc. (the "Met Fund"). A formal
Notice of Special Meeting of Shareholders appears on the next page, followed by
the Proxy Statement, which explains in more detail the proposal to be
considered.
The reorganization of the Zenith Fund has been proposed as part of an
overall plan of the insurance companies in the MetLife enterprise (the
"Insurance Companies") to streamline and rationalize the investment offerings
underlying variable life insurance and variable annuity contracts offered by
the Insurance Companies. Like each Series of the Zenith Fund, each portfolio of
the Met Fund is currently offered only to separate accounts of the Insurance
Companies and is advised by the same adviser, MetLife Advisers, LLC. Each
subadviser of the Zenith Fund is expected to continue to act as subadviser of
the corresponding new Portfolio of the Met Fund upon completion of the
reorganization. Please review the enclosed Proxy Statement for a more detailed
description of the proposed reorganization and the specific reasons it is being
proposed.
Although you are not a shareholder of the Zenith Fund, as an owner of a
variable life insurance or variable annuity contract issued by separate
accounts of the Insurance Companies, you have the right to instruct your
Insurance Company how to vote at the meeting. You may give voting instructions
for the number of shares of each Series attributable to your life insurance
policy or annuity contract as of the record time of 4:00 p.m. Eastern Time on
January 31, 2003.
YOUR VOTE IS IMPORTANT. PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED
INSTRUCTIONS FORM PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT
YOU PLAN TO BE PRESENT AT THE MEETING. YOU CAN ALSO VOTE BY PHONE OR BY
INTERNET BY FOLLOWING THE SIMPLE INSTRUCTIONS THAT APPEAR ON THE ENCLOSED VOTING
INSTRUCTION FORM. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
Please take a few moments to review the details of the proposal. If you have
any questions regarding the acquisition of the Series, please feel free to call
the contact number listed in the enclosed Proxy Statement. We urge you to vote
at your earliest convenience.
We appreciate your participation and prompt response in these matters and
thank you for your continued support.
Very truly yours,
/s/ Anne M. Goggin
Anne Goggin, President
March 24, 2003
NEW ENGLAND ZENITH FUND
State Street Research Money Market Series
Salomon Brothers Strategic Bond Opportunities Series
Salomon Brothers U.S. Government Series
State Street Research Bond Income Series
Balanced Series
MFS Total Return Series
Alger Equity Growth Series
Capital Guardian U.S. Equity Series
Davis Venture Value Series
FI Mid Cap Opportunities Series
FI Structured Equity Series
Harris Oakmark Focused Value Series
Jennison Growth Series
Loomis Sayles Small Cap Series
MFS Investors Trust Series
MFS Research Managers Series
Zenith Equity Series
501 Boylston Street
Boston, MA 02116
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
April 25, 2003
-----------------
To the beneficial owners of shares of the series of New England Zenith Fund
referred to on the preceding page (each a "Fund" and, collectively, the
"Funds"):
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of each of the Funds, each a series of New England Zenith Fund, a
Massachusetts business trust, will be held at 2:00 p.m., Eastern Time, on April
25, 2003 at the offices of MetLife Advisers, LLC, 501 Boylston Street, Boston,
Massachusetts 02116, for the following purposes:
1. To be voted on separately by shareholders of each Fund: To vote upon the
approval of an Agreement and Plan of Reorganization, in the form set
forth in Appendix A to the attached Proxy Statement, for adoption by
each Fund, pursuant to which such Fund would reorganize as a series of
Metropolitan Series Fund, Inc., a Maryland corporation, as described in
Part 1 of the attached Proxy Statement.
2. To consider and act upon any other matters which may properly come
before the Meeting or any adjournment thereof.
Shareholders of record at the close of business on January 31, 2003 (the
"Record Date") are entitled to notice of, and to vote at, the Meeting.
Although you are not a shareholder of a Fund, as an owner of a variable life
insurance or variable annuity contract issued by separate accounts of New
England Life Insurance Company, Metropolitan Life Insurance Company,
MetLifeInvestors USA Insurance Company, General American Life Insurance Company
or other insurance companies affiliated with any of these insurance companies
(the "Insurance Companies"), you have the right to instruct your Insurance
Company how to vote at the Meeting. You may give voting instructions for the
number of shares of the Fund attributable to your life insurance policy or
annuity contract as of the Record Date.
By Order of the Board of Trustees,
Thomas M. Lenz, Secretary
Boston, Massachusetts
March 24, 2003
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YOUR VOTE IS IMPORTANT
- --------------------------------------------------------------------------------
YOU ARE INVITED TO ATTEND THE MEETING. IF YOU DO NOT EXPECT TO ATTEND THE
MEETING, PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED VOTING INSTRUCTION
FORM PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. ALTERNATIVELY, YOU MAY
VOTE BY PHONE OR ON THE INTERNET BY FOLLOWING THE SIMPLE INSTRUCTIONS THAT
APPEAR ON THE ENCLOSED VOTING INSTRUCTION FORM.
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PROXY STATEMENT
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NEW ENGLAND ZENITH FUND
State Street Research Money Market Series
Salomon Brothers Strategic Bond Opportunities Series
Salomon Brothers U.S. Government Series
State Street Research Bond Income Series
Balanced Series
MFS Total Return Series
Alger Equity Growth Series
Capital Guardian U.S. Equity Series
Davis Venture Value Series
FI Mid Cap Opportunities Series
FI Structured Equity Series
Harris Oakmark Focused Value Series
Jennison Growth Series
Loomis Sayles Small Cap Series
MFS Investors Trust Series
MFS Research Managers Series
Zenith Equity Series
501 Boylston Street
Boston, MA 02116
Special Meeting of Shareholders
April 25, 2003
SOLICITATION OF VOTING INSTRUCTIONS
The enclosed voting instruction form is solicited on behalf of the Board of
Trustees of New England Zenith Fund, a Massachusetts business trust (the
"Zenith Fund"), for use at a Special Meeting of Shareholders (the "Meeting") of
each of the series referred to above (each a "Fund" and, collectively, the
"Funds"), to be held at 2:00 p.m., Eastern Time, on April 25, 2003, at the
offices of MetLife Advisers, LLC, 501 Boylston Street, Boston, Massachusetts
02116, and at any adjournment or postponement
1
thereof, for the purposes set forth in the accompanying Notice of Special
Meeting of Shareholders (the "Notice"). Shareholders of record at the close of
business on January 31, 2003 (the "Record Date") are entitled to notice of, and
to vote at, the Meeting. The Notice, this Proxy Statement and the enclosed form
of voting instructions were first mailed on or about March 24, 2003.
This Proxy Statement is being furnished to owners of variable annuity
contracts and variable life insurance policies ("Contract Owners") who have
allocated value under their variable annuity contracts and variable life
insurance policies ("Variable Contracts") to separate accounts of their
insurance companies (the "Separate Accounts") that invest in the Funds. The
Separate Accounts invest in the Funds in accordance with instructions received
from Contract Owners. Contract Owners have indirectly invested in the Funds
through the Separate Accounts and have the right to instruct their insurance
companies how to vote shares of the Funds attributable to their Variable
Contracts.
If you execute and return your voting instruction form, but do not provide
voting instructions, your insurance company will vote the shares attributable
to you in accordance with the recommendations of the Board of Trustees. Your
insurance company will vote any shares for which it does not receive voting
instructions, and any shares which it holds for its own account, in
proportionately the same manner as shares for which it has received voting
instructions.
The Zenith Fund currently offers 17 series of shares of beneficial interest,
each of which represents a separate investment portfolio. Most of the Funds
offer three separate classes of shares, designated as Class A, Class B and
Class E shares. For purposes of voting on each proposal at the Meeting, Class
A, Class B and Class E shares of each Fund will be treated as one class of
shares.
Shareholders of record of each Fund on the Record Date are entitled to one
vote for each dollar of the value of the shares of beneficial interest of the
Fund held as of that date.
Financial statements for each Fund are included in the Annual Report of the
Zenith Fund for the fiscal year ended December 31, 2002, which has been mailed
to shareholders. Shareholders may obtain copies of the Annual Report free of
charge by writing to New England Zenith Fund, 501 Boylston Street Boston, MA
02116, or by telephoning 1-800-356-5015.
2
Summary of Proposal.
This Proxy Statement relates to and describes in detail a proposal to
approve reorganizations of each Fund into a corresponding fund of Metropolitan
Series Fund, Inc., a Maryland corporation (the "Met Fund"), on which the vote
of shareholders of each Fund is solicited.
1. APPROVAL OR DISAPPROVAL OF AGREEMENT
AND PLAN OF REORGANIZATION.
Overview.
It is proposed that each Fund be reorganized into a newly organized series
of the Met Fund. The Zenith Fund and the Met Fund are diversified registered
open-end management investment companies. This restructuring of the Funds is
part of an overall plan of the insurance companies in the Metropolitan Life
enterprise -- Metropolitan Life Insurance Company ("MetLife"), New England Life
Insurance Company, MetLife Investors USA Company and General American Life
Insurance Company (together, the "Insurance Companies") -- to streamline and
rationalize the investment offerings underlying variable life insurance and
variable annuity contracts offered by the Insurance Companies. The Zenith Fund
and the Met Fund already employ a common investment adviser (MetLife Advisers,
LLC) and have many of the same executive officers. Additionally, each Fund and
its corresponding series of the Met Fund have the same subadviser. However, the
Zenith Fund and the Met Fund are separate legal entities, organized under the
laws of different jurisdictions (Massachusetts and Maryland, respectively) and
have separate governing boards. The proposed reorganization would result in a
single surviving legal entity (the Met Fund) under the oversight of a single
board of directors. The Met Fund currently consists of twenty portfolios.
Management of the Zenith Fund believes that this more rational and less
complicated structure for the common governance and oversight of investment
portfolios that underlie a common set of variable annuity and life insurance
product offerings is appropriate and in the interests of Contract Owners.
The Trustees of the Zenith Fund (the "Trustees") have unanimously approved
the reorganization of each Fund into a newly created corresponding series (each
a "New Fund" and, collectively, the "New Funds")/1/ of the Met Fund (each a
"Reorganization" and, collectively, the
- --------
/1/ The Funds would retain their current names as series of the Met Fund with
the identifier "Portfolio" added in place of "Series" (for example, the
"Balanced Series" will reorganize into the "Balanced Portfolio").
3
"Reorganizations"). Each of the Funds and the New Funds, other than the Harris
Oakmark Focused Value Series and its corresponding New Fund, is a diversified,
open-end mutual fund. The Harris Oakmark Focused Value Series and its
corresponding New Fund are non-diversified, open-end mutual funds that may hold
fewer securities than the other Funds. Shares of each Fund are currently
offered only to separate accounts established by the Insurance Companies. Each
Insurance Company is the legal owner of shares of the Funds and has the right
to vote those shares at the Meeting. Although you are not a shareholder of the
Funds, as an owner of a variable life insurance or variable annuity contract
issued by separate accounts of the Insurance Companies, you have the right to
instruct your Insurance Company how to vote at the Meeting. Each Reorganization
is proposed to be accomplished pursuant to an Agreement and Plan of
Reorganization providing for the transfer of all of the assets of the Fund to
the corresponding New Fund in exchange for shares of the New Fund and for the
assumption by the corresponding New Fund of all of the liabilities of the Fund
as described below. The completion of these transactions will result in the
liquidation of each Fund. A Reorganization will not be consummated unless at
least a majority of the outstanding shares of the applicable Fund entitled to
vote has approved the Reorganization.
Terms of the Plan.
Shareholders of each Fund are being asked to vote upon the approval of an
Agreement and Plan of Reorganization for their Fund (the "Plan," collectively
the "Plans") pursuant to which the Reorganizations would be consummated. The
following descriptions of the Plan and the features of the proposed
Reorganizations are qualified in their entirety by reference to the text of the
Plan, a form of which is set forth in Appendix A to this Proxy Statement.
The Plan provides, among other things, for the transfer of all the assets
attributable to each class of shares of each Fund to the corresponding New Fund
in exchange for (i) the assumption by the New Fund of all liabilities of the
Fund and (ii) shares of the same class of the New Fund ("New Shares"). The
Reorganizations will occur on the next business day after the time when the
assets of each Fund are valued for purposes of the Reorganizations (currently
scheduled to be the close of regular trading on the New York Stock Exchange on
April 25, 2003). The exchange, which will be effected on the basis of the net
asset value of each Fund, will be followed immediately by the distribution of
each class of the New Shares to the shareholders of such Fund in complete
liquidation of
4
the Fund. After the Reorganizations, the Zenith Fund will be terminated, and
its affairs will be wound up in an orderly fashion.
Each Reorganization requires approval by the Fund's shareholders and
satisfaction of a number of other conditions, any of which may be waived
jointly by the Trustees and the Directors of the Met Fund (the "Directors") if,
in their judgment, the waiver will not have a material adverse effect on the
interests of the shareholders of the Funds and the New Funds. The closing of
the Reorganization of each Fund is subject to the conditions set forth in the
Plan, including the approval of the Reorganization by at least a majority of
the shares of the Fund entitled to vote.
The Plan may be terminated by the mutual agreement of the Zenith Fund and
the Met Fund. In addition, either the Met Fund or the Zenith Fund may at its
option terminate the Plan at or prior to the Closing Date (as defined in the
Plan): (a) because of a material breach by the other party of any
representation, warranty, covenant or agreement contained in the Plan to be
performed by the other party at or prior to the Closing Date; (b) if a
condition expressed in the Plan to be precedent to the obligations of the
terminating party has not been met and it reasonably appears that it will not
or cannot be met; or (c) if the Directors or the Trustees, as the case may be,
determine that the termination of the Plan is in the best interests of the
shareholders of the Met Fund or Zenith Fund, respectively. If the transactions
contemplated by the Plan have not been substantially completed by July 31,
2003, the Plan shall automatically terminate on that date unless a later date
is agreed to by both the Zenith Fund and the Met Fund.
MetLife or its affiliates will bear the costs of each Reorganization, except
for portfolio transaction costs incurred by the Funds in connection with the
purchase or sale of portfolio securities that are permitted investments of the
Funds and governmental fees required in connection with the registration or
qualification under applicable state and federal laws of the shares of the Met
Fund to be issued. The costs to be borne by MetLife or its affiliates will
include, among other costs, the costs of this Proxy Statement. In the event
that a Reorganization is not consummated, MetLife will bear all of the costs
and expenses incurred by both the Zenith Fund and the Met Fund in connection
with the proposed Reorganizations.
Investment Policies and Investment Restrictions.
The investment objectives and policies of the New Funds as reorganized
series of the Met Fund will be substantially the same as those in existence for
the Funds as series of the Zenith Fund.
5
Description of New Shares.
Class A, Class B and Class E shares of the New Funds will have
characteristics substantially the same as the corresponding classes of shares
of the Funds. Full and fractional New Shares will be issued to each Fund's
shareholders in accordance with the provisions of the Plan as described above.
The classes of shares are identical, except that Class E and Class B shares pay
fees under a distribution and services plan (Rule 12b-1 fees) of 0.15% and
0.25%, respectively, of average daily net assets of the respective class.
The Distributor; Certain Payments by the Distributor.
New England Securities Corporation ("NESC") serves as principal underwriter
for shares of the Funds. MetLife serves as principal underwriter for each
series of the Met Fund.
Under the Met Fund 12b-1 Plan, MetLife will be paid, at the same rate that
NESC is currently paid by the Funds, a distribution and services fee pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"), out of the assets attributable to the shares of certain classes of the
New Funds. Accordingly, the Class B shareholders of the New Funds will pay
12b-1 fees pursuant to the Met Fund 12b-1 Plan at the annual rate of 0.25% of
the assets attributable to the Class B shares, while the Class E shareholders
will pay 12b-1 fees at the annual rate of 0.15% of the assets attributable to
Class E Shares. Note that while the Met Fund 12b-1 fees are currently limited
to payments of 0.25% for Class B shares and 0.15% for Class E shares, the Met
Fund 12b-1 Plan, like the Zenith Fund Distribution and Services Plan, allows
for a fee of up to 0.50% of average daily assets at the discretion of the
relevant fund's board.
Fee Structure/Expenses.
The fees and expenses to which each New Fund will be subject after its
Reorganization will be substantially the same as those to which the
corresponding Fund is subject immediately before the Reorganization.
Federal Income Tax Consequences.
Provided that the contracts funded through the separate accounts of the
Insurance Companies qualify as annuity contracts under Section 72 of the
Internal Revenue Code of 1986, as amended (the "Code") or as life insurance
contracts under Section 7702 of the Code, each Reorganization will not create
any tax liability for owners of the contracts.
6
The closing of each Reorganization will be conditioned on receipt of an
opinion from Ropes & Gray to the effect that, on the basis of existing law
under specified sections of the Code, for federal income tax purposes:
. the Reorganization will constitute a reorganization within the meaning of
Section 368(a) of the Code, and the Fund and the corresponding New Fund
will each be a "party to the reorganization" within the meaning of Section
368(b) of the Code;
. under Section 361 of the Code, no gain or loss will be recognized by the
Fund upon the transfer of its assets to the New Fund in exchange for the
New Shares and the assumption by the New Fund of the Fund's liabilities,
or upon the distribution of such New Shares to the shareholders of the
Fund;
. under Section 1032 of the Code, no gain or loss will be recognized by the
New Fund upon the receipt of the assets of the Fund in exchange for the
assumption of the obligations of the Fund and issuance of the New Shares;
. under Section 362(b) of the Code, the tax basis of the assets of the Fund
acquired by the New Fund will be the same as the basis of those assets in
the hands of the Fund immediately prior to the transfer;
. under Section 1223(2) of the Code, the holding period of the assets of the
Fund in the hands of the New Fund will include the period during which
those assets were held by the Fund;
. under Section 354 of the Code, the Fund shareholders will recognize no
gain or loss upon exchange of their shares of the Fund for the New Shares;
. under Section 358 of the Code, the aggregate tax basis of the New Shares
to be received by each shareholder of the Fund will be the same as the
aggregate tax basis of the shares of the Fund exchanged therefor;
. under Section 1223(l) of the Code, the holding period of the New Shares
received by each shareholder of the Fund will include the holding period
for the Fund shares exchanged for the New Shares; provided such shares of
the Fund were held as a capital asset on the date of the exchange; and
. the New Fund will succeed to and take into account the items of the Fund
described in Section 381(c) of the Code, subject to the conditions and
limitations specified in Sections 381, 382, 383 and 384 of the Code and
the regulations thereunder.
7
The opinion will be based on certain factual certifications made by officers
of the Zenith Fund and will also be based on customary assumptions. The opinion
is not a guarantee that the tax consequences of the Reorganizations will be as
described above.
Prior to the closing of the Reorganizations, the Funds will declare a
distribution, which, together with all previous distributions, will have the
effect of distributing to their shareholders all of their (i) excess investment
income excludable from gross income under Section 103 of the Code over
deductions disallowed under Sections 265 and 171 of the Code, (ii) investment
company taxable income (in each case computed without regard to the deduction
for dividends paid) and (iii) net realized capital gains, if any, through the
closing date.
Basis for the Trustees' Recommendation.
The Trustees, including all of the Trustees who are not "interested
persons," as defined in the 1940 Act (the "Independent Trustees"), voted
unanimously to approve the Reorganizations at a meeting held on December 12,
2002. The Directors of the Met Fund, including a majority of the Directors who
are not "interested persons," as defined in the 1940 Act (the "Independent
Directors"), voted unanimously to approve the Reorganizations at a meeting held
on February 4, 2003.
The Trustees considered each proposed Reorganization at meetings held on
November 14 and December 12, 2002, at which they met with representatives of
the Met Fund, MetLife and MetLife Advisers, LLC ("MetLife Advisers"). In
addition, the Independent Trustees met separately to consider the proposals on
November 14 and December 12, 2002, and were represented throughout their
deliberations by counsel independent of the Zenith Fund, MetLife and MetLife
Advisers.
In approving the Reorganizations, the Trustees determined that each proposed
Reorganization would be in the best interests of the relevant Fund and its
shareholders and that the interests of that Fund's shareholders would not be
diluted as a result of effecting the Reorganization. The principal factors
considered by the Trustees in recommending that shareholders approve the
Reorganizations were as follows:
. The Trustees believe that the Reorganizations will result in operational
benefits to shareholders. In particular, the Trustees considered the
redundancies and inefficiencies inherent in the
8
current fund structure and believe that a single legal entity rather than
multiple legal entities will enhance the ability of Fund officers, MetLife
management and MetLife Advisers to provide effective, efficient service to
the Funds, the board and the shareholders.
. The Trustees were informed that the Reorganizations would eliminate the
risk of multiple fund boards reaching inconsistent outcomes on a single
type of business proposal within the MetLife enterprise.
. The Trustees were informed that the Reorganizations would, if effected,
result in a mutual fund complex consisting of thirty-six portfolios and
total anticipated assets in excess of $16.6 billion. Elimination of
certain duplicative expenses, and the ability to spread certain fixed
costs over a larger asset base, may result in certain cost savings to the
Funds, although these savings are not expected to be material in relation
to the total assets of the complex.
. The Trustees were informed that the proposed Reorganizations would occur
only if they could be accomplished without resulting in the imposition of
federal income taxes on any Fund or its shareholders.
. In addition, the Trustees received representations from MetLife to the
effect that MetLife Advisers or its affiliates would pay the costs
associated with the proposed Reorganizations (except for (i) portfolio
transaction costs incurred by the Funds in connection with the purchase or
sale of portfolio securities that are permitted investments of the Funds
and governmental fees required in connection with the registration or
qualification under applicable state and federal laws of the shares of the
Met Fund to be issued and (ii) certain payments that would result in the
disqualification of a Fund as a regulated investment company under the
Code). In connection with their determination that the interests of each
Fund's shareholders would not be diluted as a result of its proposed
Reorganization, the Trustees noted that the shareholders of each Fund
would receive shares of the corresponding New Fund equal in value to the
value of the Fund's net assets as of the business day preceding the
closing of its Reorganization.
. The Trustees considered the experience and background of the Directors and
officers of the Met Fund, including the independence of the Independent
Directors. For more information on these Directors and certain senior
officers, see below under "2. Other Information--The Met Fund."
9
. The Trustees considered that the investment objective, policies and
restrictions of each Fund are substantially the same as those of the
corresponding New Fund and that the Reorganizations will not cause any
change in the personnel managing the portfolio or to the investment
strategies and techniques utilized in the management of the corresponding
Fund's portfolio prior to its Reorganization. The Trustees noted that the
investment advisory and subadvisory agreements of each New Fund were
identical to the investment advisory and subadvisory agreements of its
corresponding Fund except for changes necessary to reflect the change in
parties. For these reasons, the Trustees believe that an investment in
shares of the New Fund will provide shareholders with an investment
opportunity substantially the same as that afforded by the corresponding
Fund immediately prior to its Reorganization.
Required Shareholder Vote.
The affirmative vote of a majority of the outstanding shares of a Fund is
necessary for the approval of the proposed Reorganization for such Fund.
A shareholder of a Fund objecting to its proposed Reorganization is not
entitled under either Massachusetts law or the Agreement and Declaration of
Trust of the Zenith Fund (the "Zenith Declaration of Trust") to demand payment
for and an appraisal of his or her Fund shares if the Reorganization is
consummated over his or her objection. However, shareholders should be aware
that shares may be redeemed at any time prior to the consummation of the
Reorganizations. Contract Owners may exchange their investment in a Fund for an
investment in other investment options, as provided in their contracts, before
or after the Reorganizations.
If a proposed Reorganization is not approved by the shareholders of a Fund
or is not completed for any other reason, the Fund will continue to be managed
as a separate series of the Zenith Fund in accordance with its current
investment objective and policies, and the Trustees will consider such
alternatives as may be in the best interests of the Fund and its shareholders.
The Trustees of the Zenith Fund unanimously recommend that shareholders of
each Fund vote FOR approval of the proposed Reorganization of such Fund.
10
Principal Differences Between the Legal Structures of the Met Fund and the
Zenith Fund
Organization
The Met Fund is organized as a Maryland corporation and the Zenith Fund is
organized as a Massachusetts business trust. Except as otherwise noted below,
the provisions of Massachusetts law and the Zenith Declaration of Trust and
Bylaws (the "Zenith Bylaws") are substantially similar in material respects to
those of Maryland law and the Articles of Incorporation (the "Met Articles")
and Bylaws (the "Met Bylaws") of the Met Fund. Both the Zenith Fund and the Met
Fund are registered investment companies under the 1940 Act.
Shareholder Voting--Generally
Under Maryland law, the Met Articles and the Met Bylaws, shareholder voting
power is generally limited to electing directors, approving investment
management or sub-investment management agreements, ratifying the selection of
independent public accountants, approving distribution agreements, approving
amendments to the Met Articles, authorizing extraordinary corporate actions and
approving matters required to be submitted to a shareholder vote under the 1940
Act. The Met Articles provide that capital stock of the Met Fund that is
issued, outstanding and entitled to vote shall be voted in the aggregate, and
not by series or class, except when otherwise required by law or if the
Directors, in their sole discretion, determine that only one or more particular
series or classes is affected by the matter under consideration, in which case
only the affected series or classes vote. Maryland law provides that a
corporation's charter may require a lesser proportion of votes of shareholders
on matters than otherwise required by Maryland law, but not less than a
majority. Under the Met Articles and the Met Bylaws, any corporate action to be
taken by a shareholder vote may be authorized by a majority of shareholders
entitled to vote on the matter, subject to applicable laws, regulations, or
rules or orders of the Securities and Exchange Commission (the "SEC").
Under the Zenith Declaration of Trust, shareholders have the power to vote
(i) for the election of Trustees, (ii) with respect to amendment of the Zenith
Declaration of Trust, (iii) to the same extent as the shareholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Zenith Fund or its shareholders, (iv)
with respect to the termination of the Zenith
11
Fund or any series or class, (v) to remove Trustees from office in certain
circumstances and (vi) with respect to such additional matters relating to the
Zenith Fund as may be required by the Zenith Declaration of Trust, the Zenith
Bylaws or any registration with the SEC or any state, or as the Trustees may
consider necessary or desirable. The Zenith Declaration of Trust states that on
all matters submitted to a shareholder vote, all shares of the Zenith Fund
entitled to vote, except as provided by the Zenith Bylaws, are voted in the
aggregate as a single class except when (i) otherwise required by the 1940 Act
or when the Trustees determine that the matter affects one or more series or
classes materially differently, and (ii) when the matter affects only the
interests of one or more series or classes. Shareholders of any particular
series or class of the Zenith Fund are not entitled to vote on matters that do
not affect that series or class. Each whole share (or fractional share) of the
Zenith Fund outstanding on the record date is entitled to a number of votes on
any matter on which it is entitled to vote equal to the net asset value of the
share (or fractional share) in U.S. dollars determined at the Record Date. For
example, a share having a net asset value of $10.50 would be entitled to 10.5
votes. Under the Zenith Declaration of Trust, as described below, the required
vote of shareholders depends on the action to be taken.
Shareholder Meetings
The Met Bylaws require an annual meeting of shareholders only in years in
which shareholder action is needed on any one or more of the following: (1) the
election of directors; (2) approval of an investment advisory agreement; (3)
ratification of the selection of independent auditors; and (4) approval of a
distribution agreement. The Zenith Fund is not required to hold an annual
meeting of shareholders. The Met Bylaws permit a special meeting of the
shareholders to be called for any purpose by a majority of the Directors, the
Chairman of the Board or the President. In addition, the Met Bylaws allow for
shareholders to act by written consent in lieu of a meeting upon the written
consent signed by the holders of all outstanding stock having voting power. The
Zenith Declaration of Trust allows for shareholder meetings to be called by the
Trustees. The Zenith Declaration of Trust also allows shareholders to act
without a meeting upon the written consent of shareholders holding a majority
of the shares entitled to vote on the matter.
Quorums
The Met Bylaws provide that a majority of the shares entitled to vote
constitutes a quorum at shareholder meetings. The Zenith Declaration of Trust
provides that 40% of shares entitled to vote constitutes a quorum at
12
a shareholder meetings. Unlike the Met Bylaws, which provide that one-third of
the Directors (but no fewer than two) constitutes a quorum for a meeting of
Directors, the Zenith Bylaws provide that a majority of Trustees constitutes a
quorum for a meeting of Trustees.
Removal of Trustees, Directors and Officers
Pursuant to Maryland law and the Met Bylaws, any Director may be removed
with or without cause at any meeting of shareholders at which a quorum is
present by the affirmative vote of a majority of the votes entitled to be cast.
The Zenith Declaration of Trust provides that a Trustee may be removed by a
vote of holders of two-thirds of the outstanding shares, either by a written
declaration filed with the Zenith Fund's custodian or at a meeting called for
such purpose. The Trustees must call such a meeting upon the written request of
holders of at least 10% of the outstanding shares.
Indemnification of Trustees, Directors and Officers
Pursuant to the Met Bylaws, the Met Fund shall indemnify current and former
directors and officers of the Met Fund to the extent permitted by Maryland law.
Under Maryland law, a corporation may indemnify any director against
liabilities for acts incurred by reason of service as a director unless it is
established that (i) the act or omission was material to the matter giving rise
to the proceeding and (a) was committed in bad faith or (b) was the result of
active and deliberate dishonesty, (ii) the director actually received an
improper personal benefit or (iii) in the case of a criminal proceeding, the
director had reasonable cause to believe the act or omission was unlawful. In
addition, indemnification may not be made (i) in a proceeding by or in the
right of the corporation where the director is found liable to the corporation
(a "Corporate Liability") or (ii) in a proceeding charging improper personal
benefit where the director is found to be liable because such benefit was
improperly received, whether or not involving action in the director's official
capacity (a "Personal Liability").
Maryland law also provides that indemnification is not payable by a
corporation unless a determination has been made that the director has met the
standard of conduct noted in the foregoing paragraph. Such determination may be
made by (i) a vote of a majority of a quorum of directors consisting of
directors not, at the time, parties to the proceedings, or, if such a quorum
cannot be obtained, then by a majority vote of a committee of the board
(designated by a majority of the board,
13
in which designation directors who are parties may participate) consisting
solely of two or more directors not, at the time, parties to such proceedings,
(ii) special legal counsel selected by the board or a committee as set forth in
(i) above, or if the quorum of the full board cannot be obtained and the
committee cannot be established, by a majority vote of the full board in which
directors who are parties may participate, or (iii) the stockholders. Upon the
application of a director, a court may order indemnification if it determines
that (i) a director is entitled to reimbursement because such director has been
successful, on the merits or otherwise, in the defense of a proceeding in which
such director has been determined to have met the applicable standards of
conduct or (ii) whether or not the director has met the applicable standards of
conduct, the director is entitled to indemnification in view of all the
relevant circumstances, provided that the indemnification payment shall be
limited to the director's expenses in cases involving Corporate Liability or
Personal Liability.
Other than for directors, the Met Fund is required to indemnify or advance
expenses only to the extent specifically approved by resolution of the Board of
Directors. In addition, no indemnification or advance payment is provided to
directors or officers who engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of duty. The Met Fund Bylaws also provide that
no advance payment is provided unless the director or officer undertakes to
repay the advance unless (A) it is determined that such director or officer is
entitled to the indemnification, and (B)(i) the director or officer provides a
security for the undertaking, (ii) the Met Fund is insured against losses
arising from any unlawful advance, or (iii) a majority of a quorum of the
disinterested non-party directors, or an independent legal counsel by written
opinion, determines that there is no reason to believe that the person will be
found to be entitled to the indemnification.
Similarly, under the Zenith Bylaws, the Zenith Fund shall indemnify current
and former Trustees and officers against all liabilities and expenses incurred
by reason of their service as a Trustee or officer of the Zenith Fund. The
Zenith Fund will not provide indemnification to any person: (i) adjudicated by
a court not to have acted in good faith in the reasonable belief that his or
her actions were in the best interests of the Zenith Fund, (ii) held to be
liable because of willful misfeasance, bad faith, gross negligence or reckless
disregard of duty, or (iii) in the event of a settlement, unless such
settlement is found to be in the best interests of the Zenith Fund by (a) a
disinterested majority of Trustees, (b) a majority of the disinterested
Trustees (along with a written opinion of independent
14
legal counsel), (c) a disinterested person selected by the Trustees (along with
a written opinion of independent legal counsel) or (d) a vote of a majority of
the shareholders (not including the person seeking indemnification). The Zenith
Bylaws also provide that expenses may be paid in advance so long as such
amounts are repaid to the Zenith Fund if it is determined that such payments
are not authorized under such Bylaws. Also, the Zenith Bylaws provide that the
indemnification rights are not exclusive, and do not affect any other rights to
which persons seeking indemnification may be entitled.
Personal Liability
Under Maryland law, shareholders have no personal liability for acts or
obligations of the corporation. Under Massachusetts law, shareholders of a
Massachusetts business trust, such as the Zenith Fund, could, under certain
circumstances, be held personally liable for the obligations of the trust.
However, the Zenith Declaration of Trust disclaims shareholder liability for
acts or obligations of the Zenith Fund, and requires that notice of such
disclaimer be given in each agreement, undertaking or obligation entered into
or executed by the Zenith Fund or the Trustees. The Zenith Declaration of Trust
provides that any shareholder held personally liable solely by reason of his or
her being or having been a shareholder of the Zenith Fund shall be indemnified
out of the property of the series (or attributable class) of which he or she is
or was a shareholder for all such loss and expense. Thus, the risk of a
shareholder's incurring financial loss from shareholder liability is limited to
circumstances in which the Zenith Fund would be unable to meet its obligations.
The likelihood of such a circumstance is considered remote.
Termination
Under Maryland law, a corporation with stock outstanding may be voluntarily
dissolved by the affirmative vote of two-thirds of all the votes entitled to be
cast on the matter. However, the Met Articles provide that notwithstanding
Maryland law, any action by shareholders may be taken upon the vote of the
holders of a majority of the shares entitled to vote, so that the Met Fund may
be terminated upon a majority vote of its shareholders. A corporation with no
outstanding stock may be terminated upon the vote of the majority of its
directors.
Under the Met Articles, if, in the sole determination of the Board of
Directors, the continuation of the offering of a series or a class of the Met
Fund is no longer in the best interests of the Met Fund, the Met Fund may
15
cease offering such series or class and may, by a majority vote of the Board of
Directors, require the redemption of all outstanding shares of such series or
class upon thirty days' prior written notice to shareholders, subject to
applicable laws.
By contrast, the Zenith Declaration of Trust provides that the Zenith Fund
may be terminated at any time by a vote of at least 66 2/3% of the shares
entitled to vote, or by the Trustees by written notice to the shareholders. Any
series or class of the Zenith Fund may be terminated at any time by vote of at
least 66 2/3% of the shares of that series or class, or by the Trustees by
written notice to shareholders of that series or class. In addition, the Zenith
Declaration of Trust provides that at any time that there are no shares
outstanding of a particular series or class, the Trustees may amend the
Declaration of Trust to abolish the series or class.
Amendments
Maryland law generally provides that an amendment to the charter must be
ratified by a vote of at least two-thirds of all shareholders. However, the Met
Articles provide that notwithstanding Maryland law, any action by shareholders
may be taken by majority vote of the shares entitled to vote, so that the Met
Articles may be amended by a majority of the shareholders of the Met Fund.
Also, Maryland law provides that a majority of the board of directors may,
without a shareholder vote, (1) change the name of the corporation or (2)
change the name or par value of any class or series of the corporation's stock
and the aggregate par value of the corporation's stock. The Met Bylaws may be
amended by a majority shareholder vote, although certain provisions of the Met
Bylaws may also be amended by action of a majority of the Board of Directors
without a shareholder vote.
The Zenith Declaration of Trust may be amended by a vote of a majority of
the shares entitled to vote, although the Trustees may amend the Zenith
Declaration of Trust without a shareholder vote for the purpose of (i)
responding to or complying with any regulation, order, ruling or interpretation
of any governmental agency or law, or (ii) designating and establishing series
and classes. The Zenith Bylaws may be amended by action of a majority of the
Trustees.
Rights of Inspection
Under Maryland law, any shareholder of the Met Fund may inspect and copy
during usual business hours the Met Articles and the Met Bylaws
16
and the minutes, annual reports and voting trust agreements on file at the Met
Fund's principal office. Under Maryland law, shareholders owning at least 5% of
the Met Fund's shares who have been shareholders of record for at least six
months also have the right to inspect the books of account and stock ledger of
the Met Fund and request a statement of the Met Fund's affairs. Massachusetts
law, the Zenith Declaration of Trust and the Zenith Bylaws do not provide for
any inspection rights.
Distributions
Maryland law provides that a distribution may not be made by the Met Fund
if, after giving effect to it, (i) the Met Fund would not be able to pay its
indebtedness as such indebtedness becomes due in the usual course of business;
or (ii) the Met Fund's total assets would be less than the sum of the Met
Fund's total liabilities plus the amount that would be needed if the Met Fund
were to be dissolved at the time of the distribution to satisfy any
preferential rights upon dissolution of stockholders whose preferential rights
on dissolution are superior to those receiving the distribution. Massachusetts
law, the Zenith Declaration of Trust and the Zenith Bylaws contain no
comparable restrictions.
Subadvisers
The Met Fund and the Zenith Fund each rely upon an exemptive order from the
SEC that permits MetLife Advisers to enter into new subadvisory agreements with
either a current or a new subadviser that is not an affiliate of MetLife
Advisers or the Met Fund or the Zenith Fund, as the case may be, without
obtaining shareholder approval. The Directors or the Trustees, as applicable,
must approve any new subadvisory agreements under the exemptive order, and the
Met Fund or the Zenith Fund must also comply with certain other conditions.
The exemptive order also permits the Met Fund and the Zenith Fund to
continue to employ an existing subadviser, or to amend an existing subadvisory
agreement, without shareholder approval after certain events that would
otherwise require a shareholder vote. Any new or amended subadvisory agreement
must be approved by the Directors or Trustees, as applicable. The Met Fund or
the Zenith Fund will notify shareholders of any subadviser changes and any
other event of which notification is required under the order.
17
2. OTHER INFORMATION
The Met Fund.
The Met Fund is a Maryland corporation registered as an investment company
under the 1940 Act. The Met Fund was organized on November 23, 1982. The
principal executive offices of the Met Fund are located at 501 Boylston Street,
Boston, Massachusetts 02116.
Directors and Officers. The business of the Met Fund is managed under the
direction of a Board of Directors. The Met Fund's Directors review actions of
the Met Fund's investment adviser and subadvisers, and decide upon matters of
general policy. The Met Fund's officers supervise the daily business operations
of the Met Fund. Each Director is responsible for overseeing all Portfolios of
the Fund. There is no limit to the term a Director may serve. The Directors and
senior officers of the Met Fund, their ages and a description of their
principal occupations during the past five years are listed below. Except as
shown, each Director's and officer's principal occupation and business
experience for the last five years have been with the employer(s) indicated,
although in some cases the Director may have held different positions with such
employer(s). Unless otherwise indicated, the business address of the persons
listed below is 501 Boylston Street, Boston, Massachusetts 02116.
18
Interested Directors
Each Director below is an "interested person" (as defined by the 1940 Act)
in that Ms. Goggin is an employee, and Mr. Typermass, a former employee of, and
currently consulting to, MetLife, which is an affiliate of MetLife Advisers,
the investment adviser of the Met Fund.
Principal occupations over
Current position(s) Position(s) past five years, including
Name and address Age with Met Fund held since other directorships(1)
---------------- --- ------------------- ----------- --------------------------
Anne M. Goggin....... 54 Director, Chairman 2002 Chief Counsel-Individual
Metropolitan Life of the Board, Business, MetLife; Trustee
1 Madison Avenue President and Chief and Chairman of the
New York, NY 10010 Executive Officer Board, Zenith Fund*;
Senior Vice President and
General Counsel, New
England Financial
("NEF"); Chair of the
Board of Managers,
President and Chief
Executive Officer,
MetLife Advisers;
Director, NESC; formerly,
General Counsel,
Secretary and Clerk,
NESC, 1993-1999.
Arthur G. Typermass.. 65 Director 1998 Formerly, Senior Vice-
43 Chestnut Street President and Treasurer,
Garden City, NY 11530 MetLife, 1997-1998.
Non-Interested Directors
Each Director below is not an "interested person" (as defined by the 1940
Act).
Current position(s) Position(s) Principal occupations
Name and address Age with Met Fund held since over past five years(1)
---------------- --- ------------------- ----------- -------------------------
Steve A. Garban+......... 65 Director 1993 Formerly, Chief Financial
The Pennsylvania State Officer, Senior Vice
University President Finance and
208 Old Main Operations and
University Park, PA 16802 Treasurer, The
Pennsylvania State
University.
Linda B. Strumpf......... 55 Director 2000 Vice President and Chief
Ford Foundation Investment Officer, Ford
320 E. 43rd Street Foundation.
New York, NY 10017
19
Current position(s) Position(s) Principal occupations
Name and address Age with Met Fund held since over past five years(1)
---------------- --- ------------------- ----------- -----------------------
Dean O. Morton+........... 71 Director 1993 Formerly, Executive Vice
3200 Hillview Avenue President, Chief
Palo Alto, CA 94304 Operating Officer and
Director, Hewlett-Packard
Company.
Michael S. Scott Morton+ 65 Director 1993 Jay W. Forrester Professor
Massachusetts Institute of of Management
Technology ("MIT") (Emeritus) at Sloan
50 Memorial Drive School of Management,
Cambridge, MA 02138 MIT.
Toby Rosenblatt+.......... 64 Director 2001 President, since 1999, and
3409 Pacific Avenue formerly, Vice President,
San Francisco, CA 94118 Founders Investments,
Ltd.
H. Jesse Arnelle.......... 69 Director 2001 Counsel, Womble Carlyle
400 Urbano Drive ` Sandrie & Rice; formerly,
San Francisco, CA 94127 Senior Partner, Arnelle,
Hastie, McGee, Willis and
Greene.
Officers
Current position(s) Position(s) Principal occupations
Name and address Age with Fund held since over past five years(1)
---------------- --- ------------------- ----------- --------------------------
John F. Guthrie, Jr.. 59 Senior Vice 2002 Manager and Senior Vice
MetLife Advisers, LLC President President, MetLife
501 Boylston Street Advisers; Senior Vice
Boston, MA 02116 President, Zenith Fund,
Since 1995; Vice
President, NEF.
Peter Duffy.......... 47 Vice President and 2000 Senior Vice President,
MetLife Advisers, LLC Treasurer MetLife Advisers, since
501 Boylston Street December 1998; Vice
Boston, MA 02116 President, since 2002, and
Treasurer, since 1998,
Zenith Fund; Senior Vice
President; NEF; formerly
Senior Vice President,
New England Funds, L.P.
20
Current position(s) Position(s) Principal occupations
Name and address Age with Fund held since over past five years(1)
---------------- --- ------------------- ----------- --------------------------
Thomas M. Lenz....... 44 Vice President and 2002 General Counsel and
MetLife Advisers, LLC Secretary Secretary, MetLife
501 Boylston Street Advisers, since 1998;
Boston, MA 02116 Assistant General
Counsel, MetLife; Vice
President, since 2002, and
Secretary, since 1998,
Zenith Fund; formerly,
Vice President, State
Street Bank and Trust
Company.
David W. Allen....... 46 Senior Vice 2002 Head of Individual Life
Metropolitan Life President Product Management,
Insurance Company MetLife; Senior Vice
501 Boylston Street President, Zenith Fund,
Boston, MA 02116 since 2002.
Hugh McHaffie........ 44 Senior Vice 2000 Senior Vice President,
Metropolitan Life President MetLife, since 1999;
Insurance Company Senior Vice President,
501 Boylston Street Zenith Fund, since 2002;
Boston, MA 02116 formerly Vice President,
Manufacturers Life North
America.
Thomas C. McDevitt... 47 Vice President 2002 Vice President, Zenith
MetLife Advisers, LLC Fund, since 1995.
501 Boylston Street
Boston, MA 02116
Daphne Thomas-Jones.. 47 Vice President 2000 Assistant Vice President,
Metropolitan Life since 1998, and formerly,
Insurance Company Director, MetLife.
One Madison Avenue
New York, NY 10010
- --------
* Indicates a directorship with a registered investment company or a company
subject to the reporting requirements of the Securities Exchange Act of
1934, as amended.
21
(1) Previous positions during the past five years with the Met Fund,
MetLife,MetLife Advisers, the Zenith Fund, New England Financial, New
England Funds, L.P., or NESC are omitted if not materially different.
(+) Serves as a trustee, director and/or officer of one or more of the
following companies, each of which has a direct or indirect advisory
relationship with MetLife Advisers or its affiliates: State Street Research
Financial Trust, State Street Research Income Trust, State Street Research
Money Market Trust, State Street Research Tax-Exempt Trust, State Street
Research Capital Trust, State Street Research Master Investment Trust,
State Street Research Equity Trust, State Street Research Securities Trust,
State Street Research Growth Trust and State Street Research Exchange Trust
(the "State Street Research Funds").
MetLife Advisers.
MetLife Advisers is the investment adviser to the Funds and the New Funds.
The address of MetLife Advisers is 501 Boylston Street, Boston, Massachusetts
02116.
NESC.
NESC provides mutual fund distribution services to registered investment
companies, including the Funds, and is an indirect wholly owned subsidiary of
NEF. NESC's address is 399 Boylston Street, Boston, MA 02116.
MetLife.
MetLife provides mutual fund distribution services to registered investment
companies, including the Met Fund. MetLife's address is One Madison Avenue, New
York, NY 10010.
Independent Public Accountants.
Deloitte & Touche LLP presently serves as independent public accountants for
the Zenith Fund and the Met Fund.
Expenses of Reorganizations/Proxy Solicitation.
MetLife or its affiliates will bear the costs of each Reorganization, except
for portfolio transaction costs incurred by the Funds in connection
22
with the purchase or sale of portfolio securities that are permitted
investments of the Funds and governmental fees required in connection with the
registration or qualification under applicable state and federal laws of the
shares of the Met Fund to be issued. The costs to be borne by MetLife or its
affiliates will include, among other costs, the costs of this Proxy Statement.
In the event that a Reorganization is not consummated, MetLife will bear all of
the costs and expenses incurred by both the Zenith Fund and the Met Fund in
connection with the proposed Reorganizations.
Notwithstanding any of the foregoing, expenses will in any event be paid by
the party directly incurring such expenses if and to the extent that the
payment by any other party of such expenses would result in the
disqualification of the first party as a "regulated investment company" within
the meaning of Section 851 of the Code.
Outstanding Shares and Certain Ownership of Shares.
The Zenith Fund serves as the investment vehicle for variable insurance,
variable annuity and group annuity products of the Insurance Companies. Shares
of the Funds are available for purchase by separate accounts established by the
Insurance Companies and by Qualified Plans. Shares of the Funds are not offered
for direct purchase by the investing public. Shares of certain Funds are also
held by the Zenith Equity Series, one of the Funds. The Zenith Equity Series is
a fund of funds that currently invests approximately a third of its assets in
each of the Capital Guardian U.S. Equity Growth Series, Jennison Growth Series
and FI Structured Equity Series.
23
The number of shares of beneficial interest of each of the Funds issued and
outstanding as of the Record Date was as follows:
Number of Issued and
Name of Fund Class of Shares Outstanding Shares
------------ --------------- --------------------
State Street Research Money Market
Series........................... A 3,274,558.005
B 614,883.637
Salomon Brothers Strategic Bond
Opportunities Series............. A 10,743,496.660
B 210.204
E 2,483,987.033
Salomon Brothers U.S. Government
Series........................... A 14,777,887.113
B 185.264
E 6,082,221.300
State Street Research Bond Income
Series........................... A 8,315.424.226
B 456,099.747
E 186,882.207
Balanced Series.................... A 9,660,483.533
E 970,293.821
MFS Total Return Series............ A 1,102,895.081
B 67,813.796
Alger Equity Growth Series......... A 32,141,005.270
B 68.306
E 1,161,511.144
Capital Guardian U.S. Equity Series A 36,975,133.634
B 1,259,908.709
Davis Venture Value Series......... A 34,673,952.447
B 118.064
E 12,704,205.591
FI Mid Cap Opportunities Series.... A 280,134.709
B 125,032.512
E 396,709.506
FI Structured Equity Series........ A 3,896,601.633
B 49.468
E 48,629.019
24
Number of Issued and
Name of Fund Class of Shares Outstanding Shares
------------ --------------- --------------------
Harris Oakmark Focused Value Series A 2,594,149.714
B 910,843.385
E 469,490.448
Jennison Growth Series............. A 37,987,317.383
B 8,908,259.627
Loomis Sayles Small Cap Series..... A 2,002,662.672
B 8.380
E 79,468.154
MFS Research Managers Series....... A 3,948,367.823
E 317,739.191
MFS Investors Trust Series......... A 3,040,871.302
B 2,118,194.928
E 706,420.842
Zenith Equity Series............... A 3,338,796.604
Record and Beneficial Ownership
The Insurance Companies have informed the Zenith Fund that, as of the Record
Date, there were no persons owning contracts which would entitle them to
instruct the Insurance Companies with respect to 5% or more of the voting
securities of any Fund. The Officers and Trustees of the Zenith Fund owned less
than 1% of the outstanding shares of any Fund.
Except as noted above with respect to the Zenith Equity Series, because the
Insurance Companies own 100% of the shares of the Zenith Fund, they may be
deemed to control (as that term is defined in the 1940 Act) the Zenith Fund.
Solicitation of Voting Instructions.
Voting instructions will be solicited primarily by mailing this Proxy
Statement and its enclosures, but may also be solicited through further
mailings, telephone calls, personal interviews or e-mail by Trustees or
officers of the Zenith Fund or by employees or agents of MetLife or its
affiliates. The Funds do not currently anticipate retaining a proxy
solicitation firm to solicit voting instructions for the Meeting, but may do so
if deemed appropriate in their discretion as the date of the Meeting
25
approaches. Any such expense would be borne by MetLife or its affiliates, as
set forth in this Proxy Statement.
Voting Process
The shares of the Funds are currently sold to Insurance Companies as the
record owners for allocation to the corresponding investment divisions or
sub-accounts of certain of their separate accounts. Most of the shares of the
Funds are attributable to variable insurance and annuity contracts. Other
outstanding Fund shares are not attributable to variable insurance contracts,
because such shares are (a) attributable to the Insurance Company's assets in
one of the registered separate accounts, (b) held in a separate account that is
not registered as an investment company, or (c) held in the Insurance Company's
general account rather than in a separate account.
Record owners of shares of beneficial interest of each Fund as of the close
of business (4:00 p.m. Eastern Time) on January 31, 2003, will be entitled to
vote and may cast one vote for each dollar of the value of shares of the Fund
held as of that date.
In accordance with their understanding of current applicable law, the
Insurance Companies will vote the shares of the Funds that are attributable to
variable insurance or annuity contracts based on instructions received from
owners of such contracts that participate in the corresponding investment
divisions or sub-accounts of the separate accounts.
Shares of each Fund held in an investment division or sub-account of a
separate account attributable to variable insurance and annuity contracts for
which no timely instructions are received or that are not attributable to
variable insurance and annuity contracts will be represented at the Meeting by
the record owners and voted in the same proportion as the shares for which
voting instructions are received for all variable insurance and annuity
contracts participating in that investment division or sub-account. The Zenith
Fund has been advised that Fund shares held in the general account or
unregistered separate accounts of the Insurance Companies will be represented
at the Meeting by the record owners and voted in the same proportion as the
aggregate of (i) the shares for which voting instructions are received and (ii)
the other shares that are voted in proportion to such voting instructions.
If an enclosed voting instruction form is completed, executed and returned,
it may nevertheless be revoked at any time before the Meeting by a written
revocation or later voting instruction form.
26
Date for Receipt of Shareholders' Proposals for Subsequent Meetings of
Shareholders.
The Zenith Declaration of Trust and Zenith Bylaws do not provide for annual
meetings of shareholders and the Zenith Fund does not currently intend to hold
such a meeting for holders of existing classes of shares in 2003. Shareholder
proposals for inclusion in a proxy statement for any subsequent meeting of the
Zenith Fund shareholders must be received by the Zenith Fund a reasonable
period of time prior to any such meeting. If the Reorganizations are
accomplished in their entirety, it is expected that the existence of the Zenith
Fund will terminate in 2003, after which there would be no subsequent meetings
of the shareholders of the Zenith Fund.
Other Matters.
The holders of 40% of the shares of each Fund outstanding on the Record
Date, present in person or represented by proxy, constitute a quorum for the
transaction of business at the Meeting. The total number of votes cast "for"
approval of the proposal will be counted for purposes of determining whether
sufficient affirmative votes have been cast on the proposal.
All shares represented by voting instruction forms that reflect abstentions
will be counted as present for purposes of determining whether sufficient
affirmative votes have been cast. All shares represented by voting instruction
forms that reflect abstentions will be counted as present for purposes of
determining the presence of a quorum. Assuming the presence of a quorum,
abstentions have the effect of a negative vote on the proposal.
In the event that a quorum is not present for purposes of acting on the
proposal, or if sufficient votes in favor of the proposal are not received by
the time of the Meeting, the Insurance Companies named in the voting
instructions may vote on those matters for which a quorum is present and as to
which sufficient affirmative votes have been received, and may propose one or
more adjournments of the Meeting with respect to any proposal not so approved
or adopted in order to permit further solicitation of voting instruction forms.
Any such adjournment will require the affirmative vote of a majority of the
shares that (1) are entitled to vote on the proposal as to which adjournment is
proposed and (2) are present in person or represented by proxy at the session
of the Meeting to be adjourned. The Insurance Companies will vote in favor of
such
27
adjournment those voting instruction forms that they are entitled to vote in
favor of the proposal as to which adjournment is proposed. They will vote
against any such adjournment those proxies required to be voted against such
proposal as to which affirmative votes have been received and will not vote any
proxies that direct them to abstain from voting on such proposal.
Although the Meeting is called to transact any other business that may
properly come before it, the only business that management intends to present
or knows that others will present is the Proposal referred to in the Notice of
Special Meeting and described in this Proxy Statement. Nevertheless,
shareholders are being asked on the enclosed voting instruction forms to
authorize the Insurance Companies to vote in accordance with their judgment
with respect to any additional matters that properly come before the Meeting
and on all matters incidental to the conduct of the Meeting.
March 24, 2003.
28
Appendix A
MODEL
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
March 21, 2003 by and between (i) New England Zenith Fund (the "Acquired
Trust"), a Massachusetts business trust established under an Agreement and
Declaration of Trust dated December 16, 1986, as amended and restated and in
effect on the date hereof, on behalf of the [Fill In Name of Acquired Fund]
(the "Acquired Fund"), a series of the Acquired Trust, and (ii) Metropolitan
Series Fund, Inc. (the "Acquiring Company"), a Maryland corporation formed on
November 23, 1982, on behalf of the [Fill In Name of Acquiring Fund] (the
"Acquiring Fund"), a series of the Acquiring Company.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization will
consist of the transfer of all of the assets of the Acquired Fund in exchange
solely for shares of common stock of the Acquiring Fund, the assumption by the
Acquiring Fund of the liabilities of the Acquired Fund and the distribution of
such shares of the Acquiring Fund to the shareholders of the Acquired Fund in
liquidation of the Acquired Fund, all upon the terms and conditions set forth
in this Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ACQUIRING SHARES AND LIQUIDATION OF ACQUIRED FUND.
1.1 Subject to the terms and conditions herein set forth and on the basis of
the representations and warranties contained herein,
(a) The Acquired Trust, on behalf of the Acquired Fund, will transfer and
deliver to the Acquiring Fund, and the Acquiring Fund will acquire,
all the assets of the Acquired Fund as set forth in paragraph 1.2;
(b) The Acquiring Fund will assume all of the Acquired Fund's liabilities
and obligations of any kind whatsoever, whether
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absolute, accrued, contingent or otherwise in existence on the
Closing Date (as defined in paragraph 1.2 hereof), including without
limitation any indemnification obligations of the Acquired Fund
(collectively, the "Obligations"). For the avoidance of doubt, it is
hereby expressly agreed that the Obligations include the obligation
to indemnify any person who shall at any time have served as a
trustee or officer of the Acquired Trust, to the full extent
described in the Acquired Trust's By-laws as in effect on the date of
this Agreement and permitted by applicable law, provided, however,
that any findings, determinations or appointments relating to any
such indemnification that are made after the Closing Date (as defined
below) and that under the Acquired Trust's By-laws would be made by
the trustees of the Acquired Trust (or a committee or sub-group
thereof) shall instead be made by the directors of the Acquiring
Company (or a similar committee or sub-group thereof). It is hereby
further expressly agreed that such indemnification obligation shall
extend to claims made and losses, damages and costs incurred after
the Closing Date but arising from actions or omissions occurring
before the Closing Date (including but not limited to actions or
omissions relating to this Agreement, the transactions contemplated
hereby and the approval thereof by the trustees and officers of the
Acquired Fund).
(c) The Acquiring Fund will issue and deliver to the Acquired Fund in
exchange for such assets and the assumption of such liabilities the
number of full and fractional [Class A shares, Class B shares and
Class E shares] of the Acquiring Fund equal to the number of, and
having an aggregate net asset value equal to that of, the full and
fractional [Class A share, Class B share and Class E shares] of the
Acquired Fund, computed in the manner and as of the time and date set
forth in paragraph 2.1 (with the shares of the Acquiring Fund to be
issued and delivered in accordance with this subparagraph (c) being
referred to herein as the "Acquiring Shares"). Such transactions
shall take place at the closing provided for in paragraph 3.1 (the
"Closing").
1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of all cash, securities, dividends and interest
receivable, receivables for shares sold and all other assets which
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are owned by the Acquired Fund on the closing date provided in paragraph
3.1 (the "Closing Date"), including any deferred expenses, other than
unamortized organizational expenses, shown as an asset on the books of
the Acquired Fund on the Closing Date.
1.3 As provided in paragraph 3.4, as soon after the Closing Date as is
conveniently practicable (the "Liquidation Date"), the Acquired Fund
will liquidate and distribute to its shareholders of record (the
"Acquired Fund Shareholders"), determined as of the close of business on
the Valuation Date (as defined in paragraph 2.1), the Acquiring Shares
received by the Acquired Fund pursuant to paragraph 1.1. Each Acquired
Fund Shareholder shall be entitled to receive that proportion of
Acquiring Shares of any class which the number of shares of such class
of the Acquired Fund held by such Acquired Fund Shareholder bears to the
total number of shares of that class of the Acquired Fund outstanding on
the Valuation Date. Such liquidation and distribution will be
accomplished by the transfer of the Acquiring Shares then credited to
the account of the Acquired Fund on the books of the Acquiring Fund to
open accounts on the share records of the Acquiring Fund in the names of
the Acquired Fund Shareholders and representing the respective number of
Acquiring Shares due such shareholders. The Acquiring Fund shall not be
obligated to issue certificates representing Acquiring Shares in
connection with such exchange.
1.4 With respect to Acquiring Shares distributable pursuant to paragraph 1.3
to an Acquired Fund Shareholder holding a certificate or certificates
for shares of the Acquired Fund, if any, on the Valuation Date, the
Acquiring Company will not permit such shareholder to receive Acquiring
Share certificates therefor, exchange such Acquiring Shares for shares
of other investment companies, effect an account transfer of such
Acquiring Shares, or pledge or redeem such Acquiring Shares until the
Acquiring Company has been notified by the Acquired Fund or its agent
that such Shareholder has surrendered all his or her outstanding
certificates for Acquired Fund shares or, in the event of lost
certificates, posted adequate bond.
1.5 Any obligation of the Acquired Fund to make filings with governmental
authorities is and shall remain the responsibility of the Acquired Fund
through the Closing Date and up to and
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including such later date on which the Acquired Fund is terminated.
1.6 As promptly as practicable, but in any case within 60 days after the
Closing Date, the Acquired 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 Acquired Fund for federal
income tax purposes that will be carried over by the Acquiring Fund as a
result of Section 381 of the Code, which shall have been reviewed by
Deloitte & Touche LLP and certified by the Treasurer of the Acquired
Fund.
1.7 As promptly as possible after the Closing Date, the Acquired Fund shall
be terminated pursuant to the provisions of the Acquired Trust's
Declaration of Trust and the laws of the Commonwealth of Massachusetts,
and, after the Closing Date, the Acquired Fund shall not conduct any
business except in connection with its liquidation.
2. VALUATION.
2.1 For the purpose of paragraph 1, the value of the shares of each class of
the Acquired Fund shall be equal to the net asset value of such shares
of the Acquired Fund computed as of the close of regular trading on the
New York Stock Exchange on the business day next preceding the Closing
(such time and date being herein called the "Valuation Date") using the
valuation procedures as adopted by the Board of Directors of the
Acquiring Company, and shall be certified by an authorized officer of
the Acquired Trust.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be on April 28, 2003 or on such other date as the
parties may agree in writing. The Closing shall be held at 9:00 a.m. on
the Closing Date at the offices of MetLife Advisers, LLC, located at 501
Boylston Street, Boston, Massachusetts, or at such other time and/or
place as the parties may agree.
3.2 The portfolio securities of the Acquired Fund shall be made available by
the Acquired Fund to State Street Bank and Trust Company, as custodian
for the Acquiring Fund (the "Custodian"), for examination no later than
five business days
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preceding the Valuation Date. On the Closing Date, such portfolio
securities and all the Acquired Fund's cash shall be delivered by the
Acquired Fund to the Custodian for the account of the Acquiring Fund,
such portfolio securities to be duly endorsed in proper form for
transfer in such manner and condition as to constitute good delivery
thereof in accordance with the custom of brokers or, in the case of
portfolio securities held in the U.S. Treasury Department's book-entry
system or by the Depository Trust Company, Participants Trust Company or
other third party depositories, by transfer to the account of the
Custodian in accordance with Rule 17f-4 or Rule 17f-5, as the case may
be, under the Investment Company Act of 1940, as amended (the "1940
Act") and accompanied by all necessary federal and state stock transfer
stamps or a check for the appropriate purchase price of such transfer
stamps. The cash delivered shall be in the form of currency or certified
or official bank checks, payable to the order of "State Street Bank and
Trust Company, custodian for [Fill In Name of Acquiring Fund], a series
of the Metropolitan Series Fund, Inc."
3.3 In the event that on the Valuation Date (a) the New York Stock Exchange
shall be closed to trading or general trading thereon shall be
restricted, or (b) trading or the reporting of trading on said Exchange
or elsewhere shall be disrupted so that accurate appraisal of the value
of the net assets of the Acquired Fund is impracticable, the Valuation
Date shall be postponed until the first business day after the day when
trading shall have been fully resumed and reporting shall have been
restored; provided that if trading shall not be fully resumed and
reporting restored within three business days after the original
Valuation Date, this Agreement may be terminated by either of the
Acquired Trust or the Acquiring Company upon the giving of written
notice to the other party.
3.4 At the Closing, the Acquired Fund or its transfer agent shall deliver to
the Acquiring Fund or its designated agent a list of the names and
addresses of the Acquired Fund Shareholders and the number of
outstanding shares of beneficial interest of each class of the Acquired
Fund owned by each Acquired Fund Shareholder, all as of the close of
business on the Valuation Date, certified by the Secretary or Assistant
Secretary of the Acquired Trust. The Acquiring Company shall provide to
the Acquired Fund evidence satisfactory to the Acquired Fund that
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the Acquiring Shares issuable pursuant to paragraph 1.1 have been
credited to the Acquired Fund's account on the books of the Acquiring
Fund. On the Liquidation Date, the Acquiring Company shall provide to
the Acquired Fund evidence satisfactory to the Acquired Fund that such
Acquiring Shares have been credited pro rata to open accounts in the
names of the Acquired Fund Shareholders as provided in paragraph 1.3.
3.5 At the Closing each party shall deliver to the other such bills of sale,
instruments of assumption of liabilities, checks, assignments, stock
certificates, receipts or other documents as such other party or its
counsel may reasonably request in connection with the transfer of
assets, assumption of liabilities and liquidation contemplated by
paragraph 1.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Acquired Trust, on behalf of the Acquired Fund, represents and
warrants the following to the Acquiring Company and to the Acquiring
Fund as of the date hereof and agrees to confirm the continuing accuracy
and completeness in all material respects of the following on the
Closing Date:
(a) The Acquired Trust is a business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and has the power to own all of its property and assets
and to conduct its business as currently conducted;
(b) The Acquired Trust is a duly registered investment company classified
as a management company of the open-end type and its registration
with the Securities and Exchange Commission (the "SEC") as an
investment company under the 1940 Act is in full force and effect,
and the Acquired Fund is a separate series thereof duly established,
designated and existing in accordance with the applicable provisions
of the Declaration of Trust of the Acquired Trust and the 940 Act;
(c) The Acquired Trust is not in violation in any material respect of any
provision of its Declaration of Trust or By-laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which
the Acquired Trust is a party or by which the Acquired Fund is bound,
and the execution,
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delivery and performance of this Agreement will not result in any
such violation;
(d) The Acquired Trust has no material contracts or other commitments
(other than this Agreement and such other contracts as may be entered
into in the ordinary course of its business) which if terminated may
result in material liability to the Acquired Fund or under which
(whether or not terminated) any material payments for periods
subsequent to the Closing Date will be due from the Acquired Fund;
(e) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or
threatened against the Acquired Fund, any of its properties or assets
or any person whom the Acquired Fund may be obligated to indemnify in
connection with such litigation, proceeding or investigation. The
Acquired Fund knows of no facts which might form the basis for the
institution of such proceedings, and is not a party to or subject to
any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to
consummate the transactions contemplated hereby;
(f) The statement of assets and liabilities, the statement of operations,
the statement of changes in net assets and the schedule of
investments as at and for the two years ended December 31, 2002, of
the Acquired Fund, audited by Deloitte & Touche LLP, copies of which
have been furnished to the Acquiring Fund, fairly reflect the
financial condition and results of operations of the Acquired Fund as
of such dates and the results of its operations for the periods then
ended in accordance with generally accepted accounting principles
consistently applied, and the Acquired Fund has no known liabilities
of a material amount, contingent or otherwise, other than those shown
on the statement of assets referred to above or those incurred in the
ordinary course of its business since December 31, 2002;
(g) Since December 31, 2002, there has not been any material adverse
change in the Acquired Fund's financial condition, assets,
liabilities or business (other than changes occurring in the ordinary
course of business), or any incurrence by the Acquired Fund of
indebtedness, except as disclosed in
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writing to the Acquiring Fund. For the purposes of this subparagraph
(g), distributions of net investment income and net realized capital
gains, changes in portfolio securities, changes in the market value
of portfolio securities or net redemptions shall be deemed to be in
the ordinary course of business;
(h) By the Closing Date, all federal and other tax returns and reports of
the Acquired Fund required by law to have been filed by such date
(giving effect to extensions) shall have been filed, all federal and
other taxes shown to be due on said returns and reports or any
assessments received by the Acquired Fund shall have been paid so far
as due and adequate provision shall have been made for the payment
thereof, and to the best of the Acquired Fund's knowledge no such
return is currently under audit and no assessment has been asserted
with respect to any such return;
(i) For all taxable years and all applicable quarters of such years from
the date of its inception, the Acquired Fund has met the requirements
of Subchapter M of the Code for treatment as a "regulated investment
company" within the meaning of Section 851 of the Code. Neither the
Acquired Trust nor the Acquired Fund has at any time since its
inception been liable for nor is now liable for any material excise
tax pursuant to Sections 852 or 4982 of the Code, except as
previously disclosed in writing to and accepted by the Acquiring
Fund. The Acquired Fund has duly filed all federal, state, local and
foreign tax returns which are required to have been filed, and all
taxes of the Acquired Fund which are due and payable have been paid
except for amounts that alone or in the aggregate would not
reasonably be expected to have a material adverse effect. The
Acquired Fund is in compliance in all material respects with
applicable regulations of the Internal Revenue Service pertaining to
the reporting of dividends and other distributions on and redemptions
of its capital stock and to withholding in respect of dividends and
other distributions to shareholders, and is not liable for any
material penalties which could be imposed thereunder. For all taxable
years and all applicable quarters of the Acquired Fund from the date
of its inception, the assets of the Acquired Fund have been
sufficiently diversified that each segregated asset account investing
all its assets in the Acquired Fund was
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adequately diversified within the meaning of Section 817(h) of the
Code and applicable regulations thereunder;
(j) The authorized capital of the Acquired Trust consists of an unlimited
number of shares of beneficial interest, no par value, of such number
of different series as the Board of Trustees of the Acquiring Trust
may authorize from time to time. The outstanding shares of beneficial
interest in the Acquired Fund are, and at the Closing Date will be,
divided into [Class A shares, Class B shares and Class E shares],
each having the characteristics described in the Acquired Fund's
current prospectus or prospectuses and statement of additional
information or statements of additional information (collectively, as
amended or supplemented from time to time, the "Acquired Fund
Prospectus"). All issued and outstanding shares of the Acquired Fund
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and (except as set forth in the Acquired Fund
Prospectus), nonassessable by the Acquired Fund and will have been
issued in compliance with all applicable registration or
qualification requirements of federal and state securities laws. No
options, warrants or other rights to subscribe for or purchase, or
securities convertible into, any shares of beneficial interest of the
Acquired Fund are outstanding and none will be outstanding on the
Closing Date;
(k) The Acquired Fund's investment operations from inception to the date
hereof have been in compliance in all material respects with the
investment policies and investment restrictions set forth in its
prospectus and statement of additional information as in effect from
time to time, except as previously disclosed in writing to and
accepted by the Acquiring Fund;
(l) The execution, delivery and performance of this Agreement has been
duly authorized by the Trustees of the Acquired Trust, and, upon
approval thereof by the required majority of the shareholders of the
Acquired Fund, this Agreement will constitute the valid and binding
obligation of the Acquired Fund, enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and other equitable principles;
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(m) The Acquiring Shares to be issued to the Acquired Fund pursuant to
paragraph 1 will not be acquired for the purpose of making any
distribution thereof other than to the Acquired Fund Shareholders as
provided in paragraph 1.3;
(n) The information provided by the Acquired Fund for use in the
Registration Statement referred to in paragraph 5.7 and any
information provided by the Acquired Fund for use in any governmental
filings in connection with the transactions contemplated hereby,
including without limitation applications for exemption orders or
no-action letters, shall be accurate and complete in all material
respects and shall comply with federal securities and other laws and
regulations applicable thereto;
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquired Fund of the transactions contemplated by this Agreement,
except such as may be required under the Securities Act of 1933, as
amended (the "1933 Act"), the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act and state insurance,
securities or blue sky laws (which term as used in this Agreement
shall include the laws of the District of Columbia and of Puerto
Rico);
(p) At the Closing Date, the Acquired Trust, on behalf of the Acquired
Fund, will have good and marketable title to its assets to be
transferred to the Acquiring Fund pursuant to paragraph 1.1 and will
have full right, power and authority to sell, assign, transfer and
deliver the Investments (as defined below) and any other assets and
liabilities of the Acquired Fund to be transferred to the Acquiring
Fund pursuant to this Agreement. At the Closing Date, subject only to
the delivery of the Investments and any such other assets and
liabilities and payment therefor as contemplated by this Agreement,
the Acquiring Fund will acquire good and marketable title thereto and
will acquire the Investments and any such other assets and
liabilities subject to no encumbrances, liens or security interests
whatsoever and without any restrictions upon the transfer thereof,
except as previously disclosed to and accepted by the Acquiring Fund.
As used in this Agreement, the term "Investments" shall mean the
Acquired Fund's investments
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shown on the schedule of its investments as of December 31, 2002,
referred to in Section 4.1(f) hereof, as supplemented with such
changes in the portfolio as the Acquired Fund shall make, and changes
resulting from stock dividends, stock splits, mergers and similar
corporate actions through the Closing Date;
(q) At the Closing Date, the Acquired Fund will have sold such of its
assets, if any, as are necessary to assure that, after giving effect
to the acquisition of the assets of the Acquired Fund pursuant to
this Agreement, the Acquiring Fund will remain "diversified" within
the meaning of Section 5(b)(1) of the 1940 Act and in compliance with
such other mandatory investment restrictions as are set forth in the
then current prospectus or prospectuses and the statement of
additional information or statements of additional information of the
Acquired Fund, as amended through the Closing Date;
(r) No registration of any of the Investments under the Securities Act or
under any state securities or blue sky laws would be required if they
were, as of the time of such transfer, the subject of a public
distribution by either of the Acquiring Fund or the Acquired Fund,
except as previously disclosed by the Acquired Fund to and accepted
by the Acquiring Fund; and
(s) The definitive Proxy Statement of the Acquired Fund referred to in
Section 5.3 hereof, as filed with the SEC under the under the 1934
Act, and relating to the meeting of the Acquired Fund's shareholders
referred to in Section 5.2 hereof (together with the documents
incorporated therein by reference, the "Proxy Statement"), on the
date of such filing (i) complied in all material respects with the
provisions of the 1934 Act and the 1940 Act and the rules and
regulations thereunder and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and at the time of the shareholders meeting referred to
in Section 5.2 hereof and on the Closing Date, the Proxy Statement
will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading;
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provided, however, that none of the representations and warranties in
this paragraph shall apply to statements in or omissions from the
Proxy Statement made in reliance upon and in conformity with
information furnished by the Acquiring Fund for use in the Proxy
Statement.
4.2 The Acquiring Company, on behalf of the Acquiring Fund, represents and
warrants the following to the Acquired Trust and to the Acquired Fund as
of the date hereof, as applicable, and agrees to confirm the continuing
accuracy and completeness in all material respects of the following on
the Closing Date:
(a) The Acquiring Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland
and has the power to own all of its property and assets and to
conduct its business as currently conducted;
(b) The Acquiring Company is a duly registered investment company
classified as a management company of the open-end type and its
registration with the SEC as an investment company under the 1940 Act
is in full force and effect, and the Acquiring Fund is a separate
series thereof duly established, designated and existing in
accordance with the applicable provisions of the Articles of
Incorporation of the Acquiring Company and the 1940 Act;
(c) The prospectus and statement of additional information of the
Acquiring Fund (collectively, as amended or supplemented from time to
time, the "Acquiring Fund Prospectus") when filed with the SEC will
conform in all material respects with the applicable requirements of
the 1933 Act and the rules and regulations of the SEC thereunder and
will not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading, and there are no material
contracts to which the Acquiring Fund is a party that are not
referred to in the Acquiring Fund Prospectus or in the registration
statement of which it is a part;
(d) The Acquiring Fund has no operations or assets other than in
connection with its organization and the transactions contemplated by
this Agreement;
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(e) The Acquiring Company is not in violation in any material respect of
any provisions of its Articles of Incorporation or By-laws or of any
agreement, indenture, instrument, contract, lease or other
undertaking to which the Acquiring Company is a party or by which the
Acquiring Fund is bound, if any, and the execution, delivery and
performance of this Agreement will not result in any such violation;
(f) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or
threatened against the Acquiring Fund or any of its properties or
assets. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings, and is not a party to
or subject to any order, decree or judgment of any court or
governmental body which materially and adversely affects its business
or its ability to consummate the transactions contemplated hereby;
(g) The Acquiring Fund was established by the Board of Directors of the
Acquiring Company in order to effect the transaction described in
this Agreement. The Acquiring Fund has not yet filed its first
federal income tax return and, thus, has not yet elected to be
treated as a "regulated investment company" for federal income tax
purposes. However, upon filing its first income tax return at the end
of its first taxable year, the Acquiring Fund intends to elect to be
a "regulated investment company" and until such time intends to take
all steps to ensure that it qualifies for taxation as a "regulated
investment company" and that the assets of the Acquiring Fund will be
sufficiently diversified so that each segregated asset account
investing all its assets in the Acquiring Fund is adequately
diversified within the meaning of Section 817(h) of the Code and
applicable regulations thereunder;
(h) The authorized capital of the Acquiring Company consists of 3 billion
shares of common stock, par value of $0.01 per share, of which
shares are authorized for the Acquiring Fund. The outstanding shares
in the Acquiring Fund are, and at the Closing Date will be, divided
into [Class A shares, Class B shares and Class E shares], each having
the characteristics described in the Acquiring Fund Prospectus. All
issued and outstanding shares of the Acquiring Fund are,
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and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable by the Acquiring Company,
and will have been issued in compliance with all applicable
registration or qualification requirements of federal and state
securities laws. No options, warrants or other rights to subscribe
for or purchase, or securities convertible into, any shares of common
stock in the Acquiring Fund of any class are outstanding and none
will be outstanding on the Closing Date (except such rights as the
Acquiring Fund may have pursuant to this Agreement);
(i) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquiring
Company, and this Agreement constitutes the valid and binding
obligation of the Acquiring Company and the Acquiring Fund
enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and
other equitable principles;
(j) The Acquiring Shares to be issued and delivered to the Acquired Fund
pursuant to the terms of this Agreement will at the Closing Date have
been duly authorized and, when so issued and delivered, will be duly
and validly issued Class A shares, Class B shares or Class E shares,
as the case may be, in the Acquiring Fund, and will be fully paid and
non-assessable by the Acquiring Company, and no shareholder of the
Acquiring Company will have any preemptive right of subscription or
purchase in respect thereof;
(k) The information to be furnished by the Acquiring Fund for use in the
Proxy Statement referred to in paragraph 5.3 and any information
furnished by the Acquiring Fund for use in any governmental filings
in connection with the transactions contemplated hereby, including
without limitation applications for exemption orders or no-action
letters, shall be accurate and complete in all material respects and
shall comply with federal securities and other laws and regulations
applicable thereto; and
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquiring Fund of the transactions contemplated by this Agreement,
except such as may be required under 1933
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Act, the 1934 Act, the 1940 Act and state insurance, securities or
blue sky laws.
5. COVENANTS OF THE ACQUIRED FUND AND THE ACQUIRING FUND.
The Acquiring Company, on behalf of the Acquiring Fund, and the Acquired
Trust, on behalf of the Acquired Fund, each hereby covenants and agrees with
the other as follows:
5.1 The Acquired Fund will operate its business in the ordinary course
between the date hereof and the Closing Date, it being understood that
such ordinary course of business may include regular and customary
periodic dividends and distributions and any trading activities in
anticipation of the transactions contemplated hereby.
5.2 The Acquired Fund will call a meeting of its shareholders to be held
prior to the Closing Date to consider and act upon this Agreement and
take all other reasonable action necessary to obtain the required
shareholder approval of the transactions contemplated hereby.
5.3 In connection with the meeting of the Acquired Fund Shareholders
referred to in paragraph 5.2, the Acquired Fund will prepare, file with
the SEC and distribute to its shareholders entitled to vote at such
meeting a Proxy Statement for such meeting in compliance with the
applicable requirements of the 1933 Act, the 1934 Act and the 1940 Act.
5.4 The Acquiring Fund will advise the Acquired Fund promptly if at any time
prior to the Closing Date the Acquiring Fund becomes aware that the
assets of the Acquired Fund include any securities which the Acquiring
Fund is not permitted to acquire.
5.5 Subject to the provisions of this Agreement, the Acquired Fund and the
Acquiring Fund will each take or cause to be taken all actions, and do
or cause to be done all things reasonably necessary, proper or advisable
to cause the conditions to the other party's obligations to consummate
the transactions contemplated hereby to be met or fulfilled and
otherwise to consummate and make effective such transactions.
5.6 The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940
A-15
Act and such of the state securities or blue sky laws as it may deem
appropriate in order to continue its operations after the Closing Date.
5.7 The Acquiring Company will prepare and file a registration statement
under the 1933 Act to register the Acquiring Shares and under the 1940
Act (the "Registration Statement") in compliance with the applicable
requirements of the 1933 Act and the 1940 Act.
5.8 The Acquiring Company, on behalf of the Acquiring Fund, will name each
current Trustee and officer of the Acquired Trust, for a period of at
least five (5) years, as an insured under the Acquiring Company's
directors and officers insurance policy, the total coverage of which
will be in an amount no less than the amount of coverage provided from
time to time to the Directors and officers of the Acquiring Company for
such period.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the transactions provided
for herein shall be subject, at its election, to the performance by the
Acquiring Company and the Acquiring Fund of all the obligations to be performed
by them hereunder on or before the Closing Date and, in addition thereto, to
the following further conditions:
6.1 The Acquiring Company, on behalf of the Acquiring Fund, shall have
delivered to the Acquired Trust a certificate executed in its name by
its President or Vice President and its Treasurer or Assistant
Treasurer, in form satisfactory to the Acquired Trust and dated as of
the Closing Date, to the effect that the representations and warranties
of the Acquiring Company on behalf of the Acquiring Fund made in this
Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement,
and that the Acquiring Company and the Acquiring Fund have complied with
all the covenants and agreements and satisfied all of the conditions on
their parts to be performed or satisfied under this Agreement at or
prior to the Closing Date.
6.2 The Acquired Trust shall have received a favorable opinion from Ropes &
Gray, counsel to the Acquiring Company, dated the
A-16
Closing Date and in a form satisfactory to the Acquired Trust, to the
following effect:
(a) The Acquiring Company is a corporation duly organized and validly
existing under the laws of the State of Maryland and has corporate
power and authority necessary to own all of its properties and assets
and to carry on its business substantially as described in the Proxy
Statement and the Acquiring Fund is a separate series of the
Acquiring Company duly constituted in accordance with the applicable
provisions of the 1940 Act and the Articles of Incorporation of the
Acquiring Company; (b) this Agreement has been duly authorized,
executed and delivered on behalf of the Acquiring Fund and, assuming
the Proxy Statement referred to in paragraph 5.3 and the Registration
Statement referred to in paragraph 5.7 comply with all applicable
provisions of federal securities laws, this Agreement constitutes the
valid and binding obligation of the Acquiring Fund enforceable
against the Acquiring Fund in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights and
general principles of equity; (c) the Acquiring Fund has the power to
assume the liabilities to be assumed by it hereunder and upon
consummation of the transactions contemplated hereby the Acquiring
Fund will have duly assumed such liabilities; (d) the Acquiring
Shares to be issued for transfer to the shareholders of the Acquired
Fund as provided by this Agreement are duly authorized and upon such
transfer and delivery will be validly issued and outstanding and
fully paid and nonassessable Class A shares, Class B shares and Class
E shares of the Acquiring Fund, assuming that as consideration for
such shares not less than the net asset value and the par value of
such shares has been paid and that the conditions set forth in this
Agreement have been satisfied; and no shareholder of the Acquiring
Fund has any preemptive right of subscription or purchase in respect
of such shares; (e) the execution and delivery by the Acquiring
Company on behalf of the Acquiring Fund of this Agreement did not,
and the performance by the Acquiring Company and the Acquiring Fund
of their respective obligations hereunder will not, violate the
Acquiring Company's Articles of Incorporation or By-laws, or any
A-17
provision of any agreement known to such counsel to which the
Acquiring Company or the Acquiring Fund is a party or by which either
of them is bound, or, to the knowledge of such counsel, result in the
acceleration of any obligation or the imposition of any penalty under
any agreement, judgment or decree to which the Acquiring Company or
the Acquiring Fund is a party or by which either of them is bound;
(f) to the knowledge of such counsel, no consent, approval,
authorization or order of any United States federal or Maryland state
court or governmental authority is required for the consummation by
the Acquiring Company or the Acquiring Fund of the transactions
contemplated by this Agreement, except such as may be required under
state securities or blue sky laws or such as have been obtained; (g)
after inquiry of officers of the Acquiring Company by such counsel,
but without having made any other investigation, there is no legal or
governmental proceeding relating to the Acquiring Company or the
Acquiring Fund on or before the date of mailing of the Proxy
Statement or the date hereof which is required to be described in the
Proxy Statement referred to in paragraph 5.3 which is not disclosed
therein; (h) the Acquiring Company is duly registered with the SEC as
an investment company under the 1940 Act; and (i) to the knowledge of
such counsel, after having made inquiry of officers of the Acquiring
Company but without having made any other investigation, there is no
litigation or administrative proceeding or investigation of or before
any court or governmental body presently pending or threatened as to
the Acquiring Company or the Acquiring Fund or any of their
respective properties or assets that places in question the validity
or enforceability of, or seeks to enjoin the performance of, the
Acquiring Company's obligations under this Agreement, and neither the
Acquiring Company nor the Acquiring Fund is a party to or subject to
the provisions of any order, decree or judgment of any court or
governmental body, which materially and adversely affects either of
their respective businesses.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions provided
for herein shall be subject, at its election, to the performance by
A-18
the Acquired Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, to the following further
conditions:
7.1 The Acquired Trust, on behalf of the Acquired Fund, shall have delivered
to the Acquiring Company a certificate executed in its name by its
President or Vice President and its Treasurer or Assistant Treasurer, in
form and substance satisfactory to the Acquiring Company and dated the
Closing Date, to the effect that the representations and warranties of
the Acquired Fund made in this Agreement are true and correct at and as
of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and that the Acquired Trust and the
Acquired Fund have complied with all the covenants and agreements and
satisfied all of the conditions on their part to be performed or
satisfied under this Agreement at or prior to the Closing Date;
7.2 The Acquiring Company shall have received a favorable opinion from Ropes
& Gray, dated the Closing Date and in a form satisfactory to the
Acquiring Company, to the following effect:
(a) The Acquired Trust is a business trust duly organized and validly
existing under the laws of the Commonwealth of Massachusetts and has
the power and authority necessary to own all of its properties and
assets and to carry on its business substantially as described in the
Acquired Fund Prospectus and the Proxy Statement and the Acquired
Fund is a separate series of the Acquired Trust duly constituted in
accordance with the applicable provisions of the 1940 Act and the
Declaration of Trust and By-laws of the Acquired Trust; (b) this
Agreement has been duly authorized, executed and delivered on behalf
of the Acquired Fund and, assuming the Proxy Statement referred to in
paragraph 5.3 complies with all applicable provisions of federal
securities laws, this Agreement constitutes the valid and binding
obligation of the Acquired Fund enforceable against the Acquired Fund
in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights and general principles
of equity; (c) the Acquired Fund has the power to sell, assign,
transfer and deliver the assets to be transferred by it under
A-19
this Agreement, and, upon consummation of the transactions
contemplated by this Agreement, the Acquired Fund will have duly
transferred such assets to the Acquiring Fund; (d) the execution and
delivery by the Acquired Trust on behalf of the Acquired Fund of this
Agreement did not, and the performance by the Acquired Trust and the
Acquired Fund of their respective obligations hereunder will not,
violate the Acquired Trust's Declaration of Trust or By-laws, or any
provision of any agreement known to such counsel to which the
Acquired Trust or the Acquired Fund is a party or by which either of
them is bound, or, to the knowledge of such counsel, result in the
acceleration of any obligation or the imposition of any penalty under
any agreement, judgment or decree to which the Acquired Trust or the
Acquired Fund is a party or by which either of them is bound; (e) to
the knowledge of such counsel, no consent, approval, authorization or
order of any United States federal or Massachusetts state court or
governmental authority is required for the consummation by the
Acquired Trust or the Acquired Fund of the transactions contemplated
by this Agreement, except such as may be required under state
securities or blue sky laws or such as have been obtained; (f) after
inquiry of officers of the Acquired Trust by such counsel, but
without having made any other investigation, there is no legal or
governmental proceeding relating to the Acquired Trust or the
Acquired Fund on or before the date of mailing of the Proxy Statement
or the date hereof which is required to be described in such Proxy
Statement which is not disclosed therein; (g) the Acquired Trust is
duly registered with the SEC as an investment company under the 1940
Act; (h) to the knowledge of such counsel, after having made inquiry
of officers of the Acquired Trust but without having made any other
investigation, there is no litigation or administrative proceeding or
investigation of or before any court or governmental body presently
pending or threatened as to the Acquired Trust or the Acquired Fund
or any of their respective properties or assets that places in
question the validity or enforceability of, or seeks to enjoin the
performance of, the Acquired Trust's obligations under this
Agreement, and neither the Acquired Trust nor the Acquired Fund is a
party to or subject to the provisions of any order, decree or
judgment of any court or governmental body, which materially and
adversely affects
A-20
either of their respective businesses; and (i) all issued and
outstanding shares of the Acquired Fund are validly issued, fully
paid and non-assessable, assuming that as consideration for such
shares not less than the net asset value of such shares has been
paid, and assuming that such shares were issued in accordance with
the Acquired Fund's registration statement, or any amendments
thereto, in effect at the time of such issuance.
7.3 The Acquired Fund shall have furnished to the Acquiring Fund tax
returns, signed by a partner of Deloitte & Touche LLP, for the fiscal
year ended December 31, 2002 and signed pro forma tax returns for the
period from December 31, 2002 to the Closing Date (which pro forma tax
returns shall be furnished promptly after the Closing Date).
7.4 Prior to the Closing Date, the Acquired Fund shall have declared a
dividend or dividends which, together with all previous dividends, shall
have the effect of distributing all of the Acquired Fund's (i) excess
investment income excludable from gross income under section 103 of the
Code over deductions disallowed under Sections 265 and 171 of the Code,
(ii) investment company taxable income for its taxable years ending on
or after December 31, 2002 and on or prior to the Closing Date (in each
case computed without regard to any deduction for dividends paid), and
(iii) all of its net capital gains realized in each of its taxable years
ending on or after December 31, 2002 and on or prior to the Closing Date.
7.5 The Acquired Fund shall have furnished to the Acquiring Fund a
certificate, signed by the President (or any Vice President) and the
Treasurer of the Acquired Trust, as to the adjusted tax basis in the
hands of the Acquired Fund of the securities delivered to the Acquiring
Fund pursuant to this Agreement.
7.6 The custodian of the Acquired Fund shall have delivered to the Acquiring
Fund a certificate identifying all of the assets of the Acquired Fund
held by such custodian as of the Valuation Date, and the Acquired Fund
shall have delivered to the Acquiring Fund a statement of assets and
liabilities of the Acquired Fund as of the Valuation Date, prepared in
accordance with generally accepted accounting principles consistently
applied from the prior audited period, certified by the Treasurer of the
Acquired Fund.
A-21
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH OF THE ACQUIRING FUND
AND THE ACQUIRED FUND.
The respective obligations of the Acquired Trust and the Acquiring Company
hereunder are each subject to the further conditions that on or before the
Closing Date:
8.1 This Agreement and the transactions contemplated herein shall have been
approved by the vote of the required majority of the holders of the
outstanding shares of the Acquired Fund of record on the record date for
the meeting of its shareholders referred to in paragraph 5.2;
8.2 On the Closing Date no action, suit or other preceding shall be 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 hereby;
8.3 All 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 blue sky and securities authorities) deemed
necessary by the Acquired Trust or the Acquiring Company to permit
consummation, in all material respects, of the transactions contemplated
hereby 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 Acquired
Fund;
8.4 The Registration Statement referred to in paragraph 5.7 shall have
become effective under the 1933 Act and no stop order suspending the
effectiveness thereof shall have been issued and, to the best knowledge
of the parties hereto, no investigation or proceeding for that purpose
shall have been instituted or be pending, threatened or contemplated
under the 1933 Act;
8.5 The Acquired Trust and the Acquiring Company shall have received a
favorable opinion of Ropes & Gray satisfactory to the Acquired Trust and
the Acquiring Company substantially to the effect that, for federal
income tax purposes:
(a) The acquisition by the Acquiring Fund of the assets of the Acquired
Fund in exchange for the Acquiring Fund's
A-22
assumption of the Obligations of the Acquired Fund and issuance of
the Acquiring Shares, followed by the distribution by the Acquired
Fund of such Acquiring Shares to the shareholders of the Acquired
Fund in liquidation of the Acquired Fund, all as provided in
paragraph 1 hereof, will constitute a reorganization within the
meaning of Section 368(a) of the Code, and the Acquired Fund and the
Acquiring 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 Acquired Fund (i) upon the
transfer of its assets to the Acquiring Fund in exchange for the
Acquiring Shares or (ii) upon the distribution of the Acquiring
Shares to the shareholders of the Acquired Fund as contemplated in
paragraph 1 hereof;
(c) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for the
assumption of the Obligations and issuance of the Acquiring Shares as
contemplated in paragraph 1 hereof;
(d) The tax basis of the assets of the Acquired Fund acquired by the
Acquiring Fund will be the same as the basis of those assets in the
hands of the Acquired Fund immediately prior to the transfer, and the
holding period of the assets of the Acquired Fund in the hands of the
Acquiring Fund will include the period during which those assets were
held by the Acquired Fund;
(e) The Acquired Fund Shareholders will recognize no gain or loss upon
the exchange of their shares of the Acquired Fund for the Acquiring
Shares;
(f) The tax basis of the Acquiring Shares to be received by each Acquired
Fund Shareholder will be the same in the aggregate as the aggregate
tax basis of the shares of the Acquired Fund surrendered in exchange
therefor;
(g) The holding period of the Acquiring Shares to be received by each
Acquired Fund Shareholder will include the period during which the
shares of the Acquired Fund surrendered in exchange therefor were
held by such shareholder, provided such shares of the Acquired Fund
were held as a capital asset on the date of the exchange; and
A-23
(h) The Acquiring Fund will succeed to and take into account the items of
the Acquired Fund described in Section 381(c) of the Code, subject to
the conditions and limitations specified in Sections 381, 382, 383
and 384 of the Code and the regulations thereunder.
8.6 At any time prior to the Closing, any of the foregoing conditions of
this paragraph 8 may be waived jointly by the Board of Trustees of the
Acquired Trust and the Board of Directors of the Acquiring Company if,
in their judgment, such waiver will not have a material adverse effect
on the interests of the shareholders of the Acquired Fund and the
Acquiring Fund.
9. FEES AND EXPENSES.
9.1 Except as otherwise provided in this paragraph 9, MetLife Advisers, LLC,
by countersigning this Agreement, agrees that it will bear any and all
costs and expenses of the transaction incurred by the Acquiring Fund and
the Acquired Fund, including without limitation portfolio transaction
costs incurred by the Acquiring Fund or the Acquired Fund in connection
with the sale of portfolio securities that are not permitted investments
of the Acquiring Fund; provided, however, that MetLife Advisers, LLC
will not bear portfolio transaction costs incurred by the Acquiring Fund
or the Acquired Fund in connection with the purchase or sale of
portfolio securities that are permitted investments of the Acquiring
Fund or the Acquired Fund, as the case may be; provided, further, that
the Acquiring Fund will pay all governmental fees required in connection
with the registration or qualification of the Acquiring Shares under
applicable state and federal laws.
9.2 In the event the transactions contemplated by this Agreement are not
consummated, then MetLife Advisers, LLC agrees that it shall bear all of
the costs and expenses incurred by both the Acquiring Fund and the
Acquired Fund in connection with such transactions.
9.3 Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not
consummated, neither the Acquiring Fund nor the Acquired Fund shall be
liable to the other for any damages resulting therefrom, including,
without limitation, consequential damages.
A-24
9.4Notwithstanding any of the foregoing, costs and expenses will in any
event be paid by the party directly incurring them if and to the extent
that the payment by another party of such costs and expenses would
result in the disqualification of such party as a "regulated investment
company" within the meaning of Section 851 of the Code.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES.
10.1The Acquired Trust on behalf of the Acquired Fund and the Acquiring
Company on behalf of the Acquiring Fund agree that neither party has
made any representation, warranty or covenant to the other not set
forth herein and that this Agreement constitutes the entire agreement
between the parties.
10.2The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection
herewith shall not survive the consummation of the transactions
contemplated hereunder except paragraphs 1.1, 1.3, 1.4, 1.5, 1.6, 1.7,
3.4, 4.2(g), 5.8, 7.3, 9, 10, 13 and 14.
11. TERMINATION.
11.1This Agreement may be terminated by the mutual agreement of the
Acquiring Company and the Acquired Trust. In addition, either the
Acquiring Company or the Acquired Trust may at its option terminate
this Agreement at or prior to the Closing Date:
(a) Because of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be performed by
the other party at or prior to the Closing Date;
(b) If a condition herein expressed to be precedent to the obligations
of the terminating party has not been met and it reasonably appears
that it will not or cannot be met; or
(c) If the Board of Directors of the Acquiring Fund or the Board of
Trustees of the Acquired Fund, as the case may be, determines that
the termination of this Agreement is in the best interests of its
shareholders.
11.2If the transactions contemplated by this Agreement have not been
substantially completed by July 31, 2003, this Agreement shall
automatically terminate on that date unless a later date is
A-25
agreed to by both the Acquired Trust and the Acquiring Company.
12. AMENDMENTS.
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the
Acquired Trust on behalf of the Acquired Fund and the Acquiring Company on
behalf of the Acquiring Fund; provided, however, that following the
shareholders' meeting called by the Acquired Fund pursuant to paragraph 5.2, no
such amendment may have the effect of changing the provisions for determining
the number of the Acquiring Shares to be issued to the Acquired Fund
Shareholders under this Agreement to the detriment of such shareholders without
their further approval.
13. NOTICES.
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
courier, telecopy or certified mail addressed to: (i) New England Zenith Fund,
501 Boylston Street, Boston, MA 02116, attn: Secretary; or (ii) Metropolitan
Series Fund, Inc., 501 Boylston Street, Boston, MA 02116, attn: Secretary.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; NON-RECOURSE; FINDERS'
FEES.
14.1The 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.
14.2This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3This Agreement shall be governed by and construed in accordance with
the domestic substantive laws of the Commonwealth of Massachusetts,
without giving effect to any choice or conflicts of law rule or
provision that would result in the application of the domestic
substantive laws of any other jurisdiction.
14.4This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but
A-26
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.
14.5A copy of the Declaration of Trust of the Acquired Trust is on file
with the Secretary of State of the Commonwealth of Massachusetts and
the Articles of Incorporation of the Acquiring Company are on file with
the Secretary of State of the State of Maryland, and notice is hereby
given that no trustee, director, officer, agent or employee of either
the Acquired Trust or the Acquiring Company shall have any personal
liability under this Agreement, and that this Agreement is binding only
upon the assets and properties of the Acquired Fund and the Acquiring
Fund.
14.6The Acquired Trust, on behalf of the Acquired Fund, and the Acquiring
Company, on behalf of the Acquiring Fund, each represents and warrants
to the other that there are no brokers or finders entitled to receive
any payments in connection with the transactions provided for herein.
A-27
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as a sealed instrument by its President or Vice President and its
corporate seal to be affixed thereto and attested by its Secretary or Assistant
Secretary.
NEW ENGLAND ZENITH FUND,
on behalf of its
By:
Name: John F. Guthrie, Jr.
Title: Senior Vice President
ATTEST:
By:
Name: Thomas M. Lenz
Title: Secretary
METROPOLITAN SERIES FUND, INC.
on behalf of its
By:
Name: John F. Guthrie, Jr.
Title: Senior Vice President
ATTEST:
By:
Name: Thomas M. Lenz
Title: Secretary
A-28
Agreed and accepted as to paragraph 9 only:
METLIFE ADVISERS, LLC
By:
Name: John F. Guthrie, Jr.
Title: Senior Vice President
ATTEST:
By:
Name: Thomas M. Lenz
Title: Secretary
A-29
VOTING INSTRUCTION NEW ENGLAND ZENITH FUND VOTING INSTRUCTION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS ON APRIL 25, 2003
The undersigned hereby instructs the [insurance company] (the "Company") to vote
the shares of each of the Fund(s) listed herein, each a series of New England
Zenith Fund, a Massachusetts business trust, as to which the undersigned is
entitled to give instructions at the Special Meeting of Shareholders of the
Fund(s) to be held at the offices of MetLife Advisers, LLC, 501 Boylston Street,
Boston, Massachusetts 02116, at 2:00 p.m. Eastern Time on April 25, 2003 and at
any adjournments thereof.
The Company and the Board of Trustees of New England Zenith Fund solicit your
voting instructions and recommend that you instruct us to vote "FOR" the
Proposal. The Company will vote the appropriate number of Fund shares pursuant
to the instruction given. If no instruction is set forth on a returned form as
to the Proposal, the Company will vote FOR the Proposal.
VOTE VIA THE INTERNET: https://vote.proxy-direct.com
VOTE VIA THE TELEPHONE: 1-866-235-4258
-------------------------------------------------------
CONTROL NUMBER: 999 9999 9999 999
-------------------------------------------------------
Note: Please sign exactly as your name appears at left.
Joint owners each should sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such. If a
corporation, please sign in full corporate name by
president or authorized officer. If a partnership,
please sign in partnership name by authorized person.
------------------------------------------------------
Signature
------------------------------------------------------
Signature of joint owner, if any
------------------------------------------------------
Date NEZ_13039
THIS VOTING INSTRUCTION IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
FUND FUND FUND
- ---- ---- ----
Alger Equity Growth Balance Capital Guardian US Equity
Davis Venture Value FI Mid Cap Opportunities FI Structured Equity
Harris Oakmark Focused Value Jennison Growth Loomis Sayles Small Cap
MFS Investors Trust MFS Research Managers MFS Total Return
SB Strategic Bond Opportunities SB US Government SSR Bond Income
SSR Money Market Zenith Equity
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOXES BELOW. EXAMPLE: [ ]
1. To approve an Agreement(s) and Plan(s) of Reorganization, with respect to
the acquisition of the Fund(s) by the corresponding series of Metropolitan
Series Fund, Inc.
[ ] To vote all Funds FOR [ ] to vote all Funds AGAINST
[ ] to ABSTAIN votes for all Funds or vote separately by Funds below
FOR AGAINST ABSTAIN
Alger Equity Growth [ ] [ ] [ ]
Capital Guardian US Equity [ ] [ ] [ ]
FI Mid Cap Opportunities [ ] [ ] [ ]
Harris Oakmark Focused Value [ ] [ ] [ ]
Loomis Sayles Small Cap [ ] [ ] [ ]
MFS Research Managers [ ] [ ] [ ]
SB Strategic Bond Opportunities [ ] [ ] [ ]
SSR Bond Income [ ] [ ] [ ]
Zenith Equity [ ] [ ] [ ]
FOR AGAINST ABSTAIN
Balance [ ] [ ] [ ]
Davis Venture Value [ ] [ ] [ ]
FI Structured Equity [ ] [ ] [ ]
Jennison Growth [ ] [ ] [ ]
MFS Investors Trust [ ] [ ] [ ]
MFS Total Return [ ] [ ] [ ]
SB US Government [ ] [ ] [ ]
SSR Money Market [ ] [ ] [ ]
To consider and act upon any other matters which may properly come before the
Meeting or any adjournment thereof.
PLEASE SIGN, DATE AND RETURN THE VOTING INSTRUCTION FORM PROMPTLY USING THE
ENCLOSED ENVELOPE.
NEZ_13039
[GRAPHIC]
Every proxy vote is important!
Vote your proxy on the phone or Internet.
It saves money! Telephone and Internet voting saves postage costs, which can
help minimize fund expenses.
It saves time! Telephone and Internet voting is instantaneous--24 hours a day.
It's easy! Just follow these simple steps:
1. Read your proxy statement and have it at hand.
2. Call toll-free 1-866-235-4258 or go to the website:
https://vote.proxy-direct.com
3. Enter your 14-digit control number from your voting instruction card.
4. Follow the recorded or on-screen directions.
5. If you vote by Telephone or Internet it is not necessary to send in the
voting instruction card.
PROXY 2003