SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the Commissioner
[X] Definitive proxy statement. only (as permitted by Rule 14a-6(e)(2).
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
Transamerica Occidental's Separate Account Fund B
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: $0
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
570 Carillon Parkway
St. Petersburg, Florida 33716
NOTICE OF SPECIAL MEETING OF CONTRACT OWNERS
To be Held on December 16, 2003
To the Contract Owners of Transamerica Occidental's Separate Account Fund B:
NOTICE IS HEREBY GIVEN THAT a special meeting of the Contract Owners of
Transamerica Occidental's Separate Account Fund B ("Fund B"), a separate account
of Transamerica Occidental Life Insurance Company, will be held on December 16,
2003 at the offices of Fund B at 570 Carillon Parkway, St. Petersburg, Florida
33716 at 10:00 a.m. Eastern time, as adjourned from time to time (the "Special
Meeting") for the following purposes:
1. To approve an Agreement and Plan of Reorganization providing
for the reorganization of Fund B as a unit investment trust
that will invest in Transamerica Equity II, a series of
AEGON/Transamerica Series Fund, Inc.; and
2. To transact such other business as may properly come before
the Special Meeting.
After careful consideration, the Board of Managers unanimously approves
this proposal and recommends that Contract Owners vote "For" the proposal.
The matters referred to above are discussed in detail in the proxy
statement attached to this notice. The Board of Managers has fixed the close of
business on September 18, 2003 as the record date for determining Contract
Owners entitled to notice of and to vote at the Special Meeting.
By order of the Board of Managers
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
October 16, 2003
CONTRACT OWNERS OF RECORD AT THE CLOSE OF BUSINESS ON SEPTEMBER 18, 2003 ARE
ENTITLED TO NOTICE OF, AND TO VOTE AT, THE SPECIAL MEETING. REGARDLESS OF
WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO
POSTAGE IF MAILED IN THE UNITED STATES, OR FOLLOW THE INSTRUCTIONS IN THE
MATERIALS RELATING TO TELEPHONIC OR INTERNET VOTING. IT IS IMPORTANT THAT YOUR
VOTING INSTRUCTIONS BE RETURNED PROMPTLY SO THAT A QUORUM WILL BE PRESENT AND
THE MAXIMUM NUMBER OF VOTES MAY BE CAST AND IN ORDER TO AVOID THE UNNECESSARY
EXPENSE OF FURTHER SOLICITATION.
YOUR VOTING INSTRUCTIONS ARE VERY IMPORTANT REGARDLESS OF THE NUMBER
OF UNITS THAT YOU OWNED ON THE RECORD DATE.
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
570 Carillon Parkway
St. Petersburg, Florida 33716
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PROXY STATEMENT
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Special Meeting of Contract Owners
To be held on December 16, 2003
Transamerica Occidental's Separate Account Fund B ("Fund B") issues
variable annuity contracts (the "Contracts"), which are obligations of
Transamerica Occidental Life Insurance Company ("TOLIC"). The owners of the
Contracts are referred to in this Proxy Statement as "Contract Owners".
This Proxy Statement and enclosed proxy are furnished in connection
with the solicitation of proxies by the Board of Managers of Fund B for use at a
special meeting of Contract Owners of Fund B to be held at 10:00 a.m. Eastern
time on December 16, 2003 at the offices of Fund B, 570 Carillon Parkway, St.
Petersburg, Florida 33716, as adjourned from time to time (the "Special
Meeting"). The Special Meeting is called for the purpose of voting on the
proposals set forth in the notice of the Special Meeting accompanying this Proxy
Statement.
It is anticipated that this Proxy Statement and the accompanying Notice
of Special Meeting and proxy card(s) will first be mailed to Contract Owners on
or about October 17, 2003.
CONTRACT OWNER REPORTS
Contract Owners can find important information about Fund B in Fund B's
most recent annual and semi-annual reports, which have been mailed previously to
Contract Owners. If you have not received these reports, or would like to
receive additional copies, please contact Fund B by writing to 570 Carillon
Parkway, St. Petersburg, Florida 33716 or by calling 877-717-8861. Copies of the
reports will be provided free of charge.
PROPOSAL
APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
OVERVIEW
The Special Meeting is being called to ask Contract Owners to approve
an Agreement and Plan of Reorganization (the "Plan") among Fund B and
AEGON/Transamerica Series Fund, Inc. ("ATSF"), on behalf of Transamerica Equity
II (the "Acquiring Fund"), a newly formed series of ATSF. The Plan provides for
the reorganization ("Reorganization") of Fund B as a unit investment trust that
will invest in the Acquiring Fund. Both Fund B and the Acquiring Fund are
advised by AEGON/ Transamerica Fund Advisers, Inc. ("ATFA"), located at 570
Carillon Parkway, St. Petersburg, Florida 33716, and sub-advised by Transamerica
Investment Management, LLC ("TIM"), located at 1150 South Olive Street, Los
Angeles, California 90015-2211. Further, Fund B and the Acquiring Fund have
investment objectives, policies, strategies and restrictions that are
substantially similar. The Reorganization is intended to produce a more
integrated fund group, provide administrative and operational efficiencies, and
reduce Fund B's expenses.
At a meeting of the Board of Managers of Fund B (the "Managers") held
on June 10, 2003, the Managers, including all Managers who are not "interested
persons" of Fund B (the "Independent Managers"), unanimously voted to approve
the Plan and to recommend that Contract Owners of Fund B approve the
Reorganization. In reaching this decision, the Managers concluded that the
Reorganization would be in the best interest of Fund B and its Contract Owners
and that the interests of existing Contract Owners would not be diluted as a
result of the Reorganization. If Contract Owners of Fund B do not approve the
Reorganization, the Managers of Fund B will consider other possible courses of
action that may be in the best interests of Contract Owners.
2
DESCRIPTION OF THE REORGANIZATION
The detailed terms and conditions of the Reorganization are contained
in the Plan, which is attached to the Proxy Statement as Exhibit A. The
information in this Proxy Statement about the Plan is qualified in its entirety
by reference to the complete text of the Plan.
If the Plan is approved by the Contract Owners, the assets and
liabilities (other than liabilities attributable to insurance charges) of Fund B
will be transferred, free and clear of all liens and encumbrances, to the
Acquiring Fund in exchange for shares of the Acquiring Fund equivalent in value
to the assets received from Fund B, less the liabilities assumed. To effectuate
the Reorganization, in addition to this proxy solicitation, the following steps
have or will be taken: (i) a registration statement was filed to register the
Acquiring Fund as a series of ATSF and to register shares of the Acquiring Fund
to be issued in the Reorganization; and (ii) an amendment to the current
registration statement of Fund B was filed to change the classification of Fund
B from a management investment company to a unit investment trust. Immediately
before the Reorganization, the investments of Fund B will be direct investments
in stocks, bonds and other investments. Immediately after the Reorganization,
Fund B's investments will be investments in shares of the Acquiring Fund, which
will invest directly in the same portfolio of securities and other investments.
With the change in classification to a unit investment trust, Fund B
will no longer have a Board of Managers. This is not a significant change since,
as further discussed below, ATSF will have a Board of Directors with the same
members as the Board of Managers of Fund B. With respect to Contract Owner
voting rights, Contract Owners currently have the right to vote directly on
various matters in accordance with applicable law, including the election and
dismissal of members of the Board of Managers and approval of advisory
agreements. After the Reorganization, Contract Owners will be entitled to
instruct TOLIC as to the voting of shares of the Acquiring Fund on the same
matters, to the extent required under applicable law. This ensures that Contract
Owners will have the same voting rights as they previously had prior to the
Reorganization or would have as direct shareholders of ATSF.
If approved by Contract Owners of Fund B, it is expected that the
Reorganization will become effective as to Fund B as of immediately after the
close of business (generally 4:00 p.m., Eastern time) on December 22, 2003.
However, the Reorganization may become effective at another time and date should
the Special Meeting be adjourned to a later date or should any other condition
to the Reorganization not be satisfied at that time. Even if Contract Owners of
Fund B approve the Plan, the Plan may be terminated as to Fund B at any time
prior to its implementation by the mutual agreement of the parties.
DESCRIPTION OF TOLIC AND FUND B
TOLIC is a stock life insurance company, which was incorporated in the
state of California on June 30, 1906. On December 31, 2000, the state of
domicile for TOLIC was changed to Iowa. TOLIC is principally engaged in the sale
of life insurance and annuity policies. Its home office is at 1150 South Olive
Street, Los Angeles, California 90015-2211. It is an indirect, wholly owned
subsidiary of AEGON N.V., an international insurance group. Transamerica
Investment Services, Inc., an affiliate of Fund B and ATSF, serves as
administrator to Fund B.
Fund B was established under California law on June 26, 1968, as a
separate account by the Board of Directors of TOLIC. The assets of Fund B are
owned by TOLIC, but they are held separately from other assets of TOLIC.
California law requires Fund B's assets to be held in TOLIC's name, but TOLIC is
not a trustee with respect to Fund B's assets. Income, gains and losses, whether
or not realized, from assets allocated to Fund B are, in accordance with the
Contracts, credited to or charged against Fund B without regard to other income,
gains or losses of TOLIC. Fund B is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940 ("1940
Act"), and meets the definition of a separate account under the federal
securities laws. As such, it operates as a separate legal entity distinct from
TOLIC.
Fund B offers three Contracts: Annual Deposit, Single Deposit Deferred
and Single Deposit Immediate. These Contracts are for tax-qualified plans only.
New Contracts are no longer being issued, but additional deposits may be made to
existing Contracts.
Fund B's investment objective is long-term capital growth. Fund B is
managed by the Board of Managers, which is responsible for the general
supervision of the investments and assets held by Fund B.
3
DESCRIPTION OF ATSF AND THE ACQUIRING FUND
ATSF was incorporated under the laws of the State of Maryland on August
21, 1985 and is registered with the SEC as an open-end management investment
company under the 1940 Act. ATSF is intended to be sold to the separate accounts
of life companies to fund benefits under variable life insurance policies or
variable annuity contracts issued by such insurance companies. As such, these
insurance companies are the only shareholders of the investment portfolios
offered by ATSF. The Acquiring Fund is a duly organized and validly existing
series of ATSF. The Acquiring Fund has the same investment objective and
policies as Fund B.
The Board of Directors of ATSF is responsible for the general
supervision of ATFS business. Shareholders are entitled to vote for the election
and removal of the members of the Board of Directors and to vote on certain
other matters as mandated by the 1940 Act. Following the Reorganization, when
matters are submitted by ATFS to a vote of shareholders, TOLIC will provide
Contract Owners with the opportunity to instruct TOLIC as to how to vote the
shares of ATSF held in the Acquiring Fund, to the extent required under
applicable law. Account shares which may not be attributable to Contracts or for
which no timely instructions are received by TOLIC will be voted in the same
proportions as shares that are voted pursuant to voting instructions.
CERTAIN COMPARATIVE INFORMATION ABOUT FUND B AND ATSF
CAPITALIZATION. Contract Owners receive units based on the cash value
of their product. ATSF is authorized to issue shares of common stock, $0.01 par
value per share. The Board of Directors of ATSF is authorized to issue shares in
series or classes without shareholder approval.
VOTING RIGHTS AND ELECTION OF MANAGERS AND DIRECTORS. Each unit of Fund
B has one vote, with fractional shares voting proportionally. The Rules and
Regulations of Fund B do not require it to hold annual meetings of Contract
Owners. However, Contract Owners' meetings will be held in connection with the
following matters: 1) the election or removal of a member or members of the
Board if a meeting is called for such purpose; 2) the approval of any investment
advisory agreement for which approval is required by the 1940 Act; (3) any
changes in fundamental investment objectives, policies or restrictions; and 4)
such additional matters as may be required by law, the Rules and Regulations of
Fund B, or any registration of Fund B with the Securities and Exchange
Commission or any state, or as the Board may consider necessary or desirable.
Contract Owners may apply to the Board to hold a meeting under circumstances
provided for in the Rules and Regulations.
Each share of ATSF has one vote, and each fractional share has a
proportionate vote. ATSF is not required to hold annual meetings of
shareholders. A Director of ATSF may be removed by a vote of majority of the
outstanding shares; and holders of 25% or more of the outstanding shares can
require the holding of a meeting of shareholders for any purpose, including to
vote on the removal of one or more Directors. ATSF shareholders are entitled to
vote under comparable circumstances as Contract Owners of Fund B.
AMENDMENTS TO GOVERNING INSTRUMENT. The Rules and Regulations of Fund B
permit the Managers of Fund B to amend the Rules and Regulations only with the
vote of a majority of Fund B's outstanding units, except that the Managers may,
by majority vote, adopt amendments that have the purpose of changing the name of
Fund B, supplying an omission, removing an ambiguity, or correcting a defective
or inconsistent provision.
The Articles of Incorporation of ATSF permit the Board of Directors to
amend the Articles of Incorporation as permitted by Maryland law. Under Maryland
law, all changes, except for limited exceptions such as a change in name or
changes in series of shares, require approval of a majority of the outstanding
shares of ATSF.
LIABILITY OF CONTRACT OWNERS. Under California law, Contract Owners of
Fund B are not personally liable for the obligations of Fund B. The
Reorganization will not change this. Under Maryland law, shareholders of ATSF
are not personally liable for the obligations of ATSF.
LIABILITY AND INDEMNIFICATION OF MANAGERS AND DIRECTORS. The Rules and
Regulations of Fund B provide that a Manager is liable to Fund B and Contract
Owners only for the Manager's own willful misfeasance, bad faith, gross
negligence or reckless disregard of his or her duties. A Manager is entitled to
indemnification for expenses of litigation against the Manager except with
respect to any matter as to which the individual has been determined (1) not to
have acted in good faith in the reasonable belief that his or her action was in
the best interests of Contract Owners or (2) to be liable to Fund B or Contract
Owners by reason of willful misfeasance, bad faith or reckless disregard of the
individual's duties.
4
The Articles of Incorporation of ATSF provide that each Director is
indemnified against liability arising out of his or her service as a director,
except where the liability arises out of the director's willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
MEMBERS OF THE BOARD OF DIRECTORS AND BOARD OF MANAGERS. The Board of
Directors of ATSF and the Board of Managers of Fund B are comprised of the same
members: Larry N. Norman; Peter R. Brown; Daniel Calabria; Janice B. Case;
Charles C. Harris; Leo J. Hill; John R. Kenney; Russell A. Kimball, Jr.; and
William W. Short, Jr. Messrs. Norman and Kenney are "interested persons," for
regulatory purposes, of the Acquiring Fund and Fund B (the "Funds").
The foregoing is only a summary of certain of the similarities and
differences between the governing instruments of Fund B and ATSF. It is not a
complete list of differences. Contract Owners should refer directly to the
provisions of the governing instruments and applicable law for more complete
information.
SUMMARY OF INVESTMENT ADVISORY AGREEMENTS
As a result of the Reorganization, the Acquiring Fund will be subject
to a new investment advisory agreement (the "ATSF Advisory Agreement") between
ATSF, on behalf of the Acquiring Fund, and ATFA. The investment advisory
agreement between Fund B and ATFA (the "Fund B Advisory Agreement") and the ATSF
Advisory Agreement are substantially the same, except for the dates, terms of
effectiveness, and parties to the Agreements. Each provides that ATFA, with
oversight by the Board, has overall supervisory responsibility for the general
management and investment of the respective Fund's assets and has full
investment discretion with respect to the assets of a Fund not then being
managed by ATFA. ATFA is expressly authorized to delegate day-to-day investment
management of each Fund's assets to an investment sub-adviser. ATFA has retained
TIM to provide day-to-day investment sub-advisory services to the Funds. Thus,
the Acquiring Fund will have the same investment adviser and sub-adviser as does
Fund B.
Each Agreement provides that ATFA is responsible for providing the Fund
with office facilities, statistical and research data, data processing services,
clerical, accounting and bookkeeping services and for preparation of shareholder
reports, tax returns, and other government filings, and ATFA is authorized to
hire third parties to provide any of these services.
Each Agreement provides that Fund B or ATSF remains responsible for all
expenses other than those expressly assumed by ATFA. Fund B and ATSF are
responsible for, among other things, (1) ATFA's fees; (2) legal and audit
expenses; (3) fees for registration of shares; (4) fees of the transfer agent,
registrar, custodian, dividend disbursing agent, and shareholder servicing
agent; (5) taxes; (6) brokerage and other transaction expenses; (7) interest
expenses; (8) expenses of shareholders/contract owners and Managers/Directors
meetings; (9) printing of share certificates and prospectuses; (10) mailing of
prospectuses to existing shareholders/contract owners; (11) insurance premiums;
(12) charges of an independent pricing service; (13) expenses related to the
purchase and redemption of shares; (14) the expenses of a third-party
administrator; and (15) nonrecurring expenses, such as the cost of litigation.
Each Agreement provides that ATFA will be paid a fee for its services
at an annual rate equal to 0.30% of the Fund's daily net assets. If the Plan is
approved, the amount of the management fee and overall Fund operating expenses
are not expected to change. Each Agreement also provides that ATFA is not liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which the applicable Agreement relates, except
a loss resulting from willful misfeasance, bad faith, or gross negligence on the
part of ATFA in the performance of its duties, or reckless disregard of its
duties.
Each Agreement provides (1) that it will continue in effect with
respect to the Fund for a period of two years from its effective date and
thereafter from year to year if approved at least annually by a majority vote of
the shares of the Fund or a majority of the Managers or Directors and by a
majority of the Independent Managers or Directors; (2) that it may be terminated
as to the Fund, without penalty, by the Managers or Directors or by the vote of
a majority of the outstanding voting securities of the Fund upon 60 days' prior
written notice; (3) that it may be terminated by ATFA on 90 days' prior written
notice to the Fund; and (4) that it will terminate automatically in the event of
its "assignment" as such term is defined in the 1940 Act.
The Fund B Advisory Agreement and the sub-advisory agreement with TIM,
were last approved by the Board of Managers of Fund B, including the Independent
Managers, on February 10, 2003.
5
FEES AND EXPENSES
Currently, Fund B bears all fees and expenses associated with its operations.
Following the Reorganization, insurance charges paid to TOLIC, in the form of
mortality and expense risk charge, will continue to be borne by Fund B. However,
non-insurance charges and fees, such as fees related to managing a portfolio of
securities, will be borne by the Acquiring Fund. Total insurance charges and
non-insurance charges and fees, however, will remain the same.
As a comparison, in order to show the consequences of the Reorganization on
Contract Owners, the current fees, charges and expenses of Fund B as of December
31, 2002, as well as the estimated pro forma fees, charges and expenses of Fund
B and the Acquiring Fund giving effect to the Reorganization as of December 31,
2002, are shown in the tables below. Pro forma numbers are estimated in good
faith and are hypothetical.
COMPARATIVE CONTRACT OWNER TRANSACTION EXPENSES
The following table sets forth the comparative expense information with respect
to insurance charges under the Contracts for Fund B as a management investment
company, and as a unit investment trust investing in the Acquiring Fund, giving
effect to the Reorganization. The standardized tables assume the highest
deductions possible under the Contracts, whether or not such deductions actually
would be made from a particular Contract.
Fund B as a Management Fund B as a
Investment Company Unit Investment Trust
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SALES LOAD IMPOSED ON PURCHASES 6.50% 6.50%
Total Deposits under the Contract Sales Expense as a Percentage of Deposit
First $15,000 6.50% 6.50%
Next $35,000 4.50% 4.50%
Next $100,000 2.00% 2.00%
Excess 0.50% 0.50%
ADMINISTRATION EXPENSE IMPOSED ON 2.00% 2.00%
PURCHASES
Total Deposits under the Contract Administration Expense as a Percentage of Deposit
First $15,000 2.00% 2.00%
Next $35,000 1.50% 1.50%
Next $100,000 0.75% 0.75%
Excess None None
MAXIMUM CONTRACT OWNER TRANSACTION 8.50% 8.50%
EXPENSES*
Total Deposits under the Contract Total Contract Owner Transaction Expenses as a Percentage of Total Deposit
First $15,000 8.50% 8.50%
Next $35,000 6.00% 6.00%
Next $100,000 2.75% 2.75%
Excess 0.50% 0.50%
* Premium taxes are not shown. Charges for premium taxes, if any, are
deducted when paid, which may be upon annuitization.
In certain states, a premium tax may be deducted from each deposit.
6
COMPARATIVE ANNUAL EXPENSES (Insurance Charges)
(as a percentage of average daily net assets)
The following table sets forth comparative fees for insurance charges with
respect to Fund B.
Fund B as a Management Investment Fund B as a Unit Investment Trust
Company
--------------------------------- ---------------------------------
Mortality and Expense Risk Charge 1.00% 1.00%
COMPARATIVE ANNUAL EXPENSES (Non-Insurance Charges)
(as a percentage of average daily net assets)
The following table sets forth comparative fee and expense information for
non-insurance charges with respect to Fund B and the Acquiring Fund.
Fund B Acquiring Fund
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Management Fee 0.30% 0.30%
Other Expenses None None
TOTAL ANNUAL EXPENSES 0.30%* 0.30%
* Total Annual Expenses of Fund B do not reflect the insurance-related
mortality and expense risk charge of 1%.
EXAMPLE - This example is intended to help you compare the cost of purchasing
Contracts currently, and giving effect to the Reorganization, on a pro forma
basis. Your actual costs may be higher or lower. The example assumes you invest
$10,000 in a Contract for the time periods indicated.(1) The example also
assumes a 5% annual return on assets and that the Contract is surrendered at the
end of each period shown. This example should not be considered a representation
of past or future expenses and charges. Actual expenses may be greater or less
than those shown. Similarly, the assumed 5% annual rate of return is not an
estimate or a guarantee of future investment performance.
1 year 3 years 5 years 10 years
------ ------- ------- --------
PRIOR TO REORGANIZATION $ 971 $ 1,227 $ 1,502 $ 2,284
PRO FORMA
GIVING EFFECT TO REORGANIZATION $ 971 $ 1,227 $ 1,502 $ 2,284
(1) The Contracts are designed for retirement planning. Surrenders prior to
the retirement date are not consistent with the long-term purposes of
the Contracts and income tax and tax penalties may apply. Premium tax
charges may be applicable.
CURRENT AND SUCCESSOR DISTRIBUTION ARRANGEMENTS
Transamerica Financial Advisors, Inc. ("TFA"), located at 1150 South
Olive Street, Los Angeles, California 90015-2211, serves as principal
underwriter for Fund B. It is a wholly owned subsidiary of Transamerica
Insurance Corporation of California, which is wholly owned by Transamerica
Corporation. AFSG Securities Corporation ("AFSG"), located at 4333 Edgewood Road
N.E., Cedar Rapids, Iowa 52499, serves as principal underwriter for ATSF. AFSG
is an affiliate of Fund B and ATSF. As a result of the Reorganization, the
Acquiring Fund will be subject to the distribution agreement between ATSF and
AFSG. ATSF has entered into, in accordance with the substantive provisions of
Rule 12b-1 under the 1940 Act, a Distribution Agreement with AFSG that permits
the use of Fund assets to help finance the distribution of shares. Fund B will
not participate in a 12b-1 Plan.
CERTAIN APPROVALS IN CONNECTION WITH THE REORGANIZATION
Approval of the Reorganization will be deemed to be authorization by
Contract Owners for the re-classification of Fund B as a unit investment trust
and for Fund B, or any other initial shareholder of the Acquiring Fund to
approve the Acquiring Fund's new investment advisory and sub-advisory
agreements.
7
FEDERAL INCOME TAX CONSEQUENCES
It is anticipated that the transactions contemplated by the Plan will
be tax-free. Dechert LLP, outside counsel to Fund B and ATSF, has informed the
Managers and Directors that if substantially all of the assets of Fund B are
transferred to the Acquiring Fund, it will issue an opinion that the
Reorganization will not give rise to the recognition of income, gain or loss to
Contract Owners of Fund B or the Acquiring Fund for federal income tax purposes.
This opinion will be based upon customary representations of Fund B and ATSF and
certain customary assumptions. The receipt of such an opinion is a condition to
the consummation of the Reorganization. Contract Owners should consult their own
tax advisers with respect to the state and local tax consequences of the
proposed transaction.
RECOMMENDATION OF MANAGERS
The Managers of Fund B requested, received and considered such
information as they deemed reasonably necessary to enable them to evaluate the
Reorganization, and were advised by counsel, including counsel to the
Independent Managers. At a meeting of the Managers on June 10, 2003, the
Managers reviewed the potential benefits associated with the proposed
Reorganization. In this regard, the Managers considered, among other things: (1)
the potential advantages and operating efficiencies which may apply to operating
the Acquiring Fund as a series of a larger entity, while continuing to have the
same investment adviser and sub-adviser, and substantially similar investment
objectives, policies, strategies and investment restrictions; (2) the agreement
of ATFA to maintain the current advisory fee of 0.30% of average daily net
assets; (3) the agreement of ATFA to pay all costs of the Reorganization; (4)
the expected federal tax consequences of the proposed Reorganization, and the
likelihood that no recognition of income, gain or loss for Contract Owners will
occur as a result thereof; and (5) the reduction of the administrative burdens
and costs associated with maintaining Fund B as a separate open-end management
investment company.
Based on the above considerations, the Managers voted to approve the
proposed Reorganization and determined that participation in the Reorganization
is in the best interests of Fund B and that the interests of existing Contract
Owners will not be diluted as a result of the Reorganization.
THE MANAGERS, INCLUDING THE INDEPENDENT MANAGERS, UNANIMOUSLY RECOMMEND
THAT CONTRACT OWNERS APPROVE THE PLAN.
VOTING INFORMATION
REQUIRED VOTE
Approval of the Plan with respect to Fund B will require the
affirmative vote of a "majority of the outstanding voting securities" of Fund B
(as defined in the 1940 Act), which means the affirmative vote of the lesser of
(i) more than 50% of the votes entitled to be cast, or (ii) 67% or more of the
votes entitled to be cast present at the Special Meeting if more than 50% of the
votes entitled to be cast are represented at the Special Meeting in person or by
proxy.
PROXY SOLICITATION
In addition to solicitations by mail, solicitations may also be made by
telephone, e-mail or personal interviews conducted by officers of Fund B,
regular employees of ATFA, or other representatives of Fund B. ATFA has retained
Management Information Services ("MIS"), located at 60 Research Road, Hingham,
MA 02043 to aid in the solicitation of proxies. The costs of retaining MIS,
which is anticipated to be approximately $1,500.00, and other expenses incurred
in connection with preparing this Proxy Statement and its enclosures will be
paid by ATFA.
CONTRACT OWNER VOTING
You have the right under your Contract to vote in person or by proxy
with respect to the units of Fund B attributable to your Contract.
To be entitled to vote, a Contract Owner must have been a Contract
Owner as of the close of business on September 18, 2003 (the "Record Date").
Each eligible Contract Owner will be entitled to cast a number of votes that is
calculated based, directly or indirectly, on such Contract's accumulation
account value established on the Record Date. The accumulation account value for
a Contract is the account maintained under the Contract comprising all
accumulation units purchased under the Contract and, if applicable, any net
deposit not yet applied to purchase accumulation units. If the
8
Record Date is prior to the date on which the first annuity payment is payable
under a Contract (the "Retirement Date" with respect to the Contract), the
number of votes attributable to the Contract will be the Contract's accumulation
account value as of the valuation date divided by 100.
If the enclosed proxy card is properly executed and returned in time to
be voted at the Special Meeting, the units represented by the proxy card will be
voted in accordance with the instructions marked therein. Unless instructions to
the contrary are marked on the proxy card, it will be voted FOR the matters
listed in the accompanying Notice of Special Meeting of Contract Owners. Any
Contract Owner who has given a proxy card has the right to revoke it at any time
prior to its exercise either by attending the Special Meeting and voting his or
her units in person, or by submitting a letter of revocation or a later-dated
proxy card to Fund B at the above address prior to the date of the Special
Meeting. However, attendance at the meeting, by itself, will not revoke a
previously tendered proxy.
Under Fund B's Rules and Regulations, dated February 26, 1969, the
presence at the Special Meeting, in person or by proxy, of the holders of 33% of
the votes entitled to be cast shall be necessary and sufficient to constitute a
quorum for the transaction of business. If a quorum is not present at the
Special Meeting, or if a quorum is present but sufficient votes to approve each
proposal are not received, a majority of votes represented may adjourn the
meeting to some later time, to permit further solicitation of proxies. In
determining whether to adjourn the Special Meeting, the following factors may be
considered: the nature of the proposals that are the subject of the Special
Meeting, the percentage of votes actually cast, the percentage of negative votes
actually cast, the nature of any further solicitation and the information to be
provided to Contract Owners with respect to the reasons for the solicitation.
Any adjournment will require the affirmative vote of a majority of those units
represented at the Special Meeting in person or by proxy (excluding abstentions,
as described below). A vote may be taken on any of the proposals in this Proxy
Statement prior to any such adjournment if sufficient votes have been received
for approval.
Abstentions (voting instructions that are properly executed and
returned and are accompanied by instructions to withhold authority to vote) and
broker "non-votes" (those that occur when a proxy is received from a broker or
nominee who does not have discretionary power to vote on a particular matter and
the broker or nominee has not received instructions from the beneficial owner or
other person entitled to vote the units represented by proxy) will be considered
present for purposes of determining the existence of a quorum for the
transaction of business, but, not being cast, will have the effect of a vote
against the proposal.
As of the Record Date, Fund B had approximately 2,730,763.5174_ units
outstanding, representing a market value of $80,558,946, of which 593,306.563
units are owned by Contract Owners and 2,137,456.954 units are owned by TOLIC.
Exhibit B sets forth the Contract Owners that, to the best of Fund B's
knowledge, were entitled to cast 5% or more of Fund B's votes as of the Record
Date. TOLIC holds in excess of 25% of Fund B's outstanding units, and
accordingly, may be deemed to be a "controlling" person of Fund B as that term
is defined in the 1940 Act. TOLIC intends to vote the units representing its
investment in Fund B in proportion to the voting instructions received with
respect to units of Fund B owned by the Contract Owners.
As of the Record Date, the officers and Managers of Fund B as a group
beneficially owned less than 1% of the units of Fund B.
In order that your units may be represented at the Special Meeting, you
are requested to:
-- indicate your instructions on the enclosed proxy card;
-- date and sign the proxy card;
-- mail the proxy card promptly in the enclosed envelope, which
requires no postage if mailed in the United States; and
-- allow sufficient time for the proxy card to be received on or
before 10:00 a.m. Eastern time on December 16, 2003.
You may also vote by telephone or the Internet. Instructions for voting
by telephone or the Internet are enclosed.
9
IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY. CONTRACT OWNERS WHO DO
NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE THEREFORE URGED TO COMPLETE, SIGN,
DATE, AND RETURN THE PROXY CARDS AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
OTHER MATTERS
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
The Managers do not intend to present any other business at the Special
Meeting other than as described in this Proxy Statement, nor are the Managers
aware that any Contract Owner intends to do so. If, however, any other matters
are properly brought before the Special Meeting, the persons named in the
accompanying proxy card will vote thereon in accordance with their judgment.
SUBMISSION OF PROPOSALS
Fund B is not generally required to hold annual or special meetings of
Contract Owners. If the Reorganization does not occur, Contract Owners wishing
to submit proposals for inclusion in a proxy statement for a subsequent Contract
Owners' meeting should send their written proposals to John K. Carter, Esq.,
Secretary of Fund B, 570 Carillon Parkway, St. Petersburg, Florida 33716.
Proposals must be received a reasonable time prior to the date of a
meeting of shareholders prior to be considered for inclusion in the proxy
materials for a meeting. Timely submission of a proposal does not, however,
necessarily mean that the proposal will be included. Persons named as proxies
for any subsequent Contract Owners' meeting will vote in their discretion with
respect to proposals submitted on an untimely basis.
By Order of the Board of Managers,
John K. Carter, Esq., Secretary
St. Petersburg, Florida
10
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") is adopted as of this
10th day of June 2003, by AEGON/Transamerica Series Fund, Inc. ("ATSF"), with
its principal place of business at 570 Carillon Parkway, St. Petersburg, Florida
33716, on behalf of Transamerica Equity II (the "Acquiring Fund"), a separate
series of ATSF, and Transamerica Occidental's Separate Account Fund B. ("Fund
B") (the "Acquired Fund"), also with its principal place of business at 570
Carillon Parkway, St. Petersburg, Florida 33716. ATSF and Fund B will be known
herein collectively as the "Companies".
The reorganization (the "Reorganization") will consist of the transfer of all of
the assets of the Acquired Fund to the Acquiring Fund in exchange solely for
voting shares ($1.00 par value per share) of the Acquiring Fund (the "Acquiring
Fund Shares"), the assumption by the Acquiring Fund of all liabilities (other
than liabilities attributable to insurance charges) of the Acquired Fund, all
upon the terms and conditions hereinafter set forth in this Plan.
WHEREAS, the Companies are open-ended registered investment companies of the
management type and the Acquired Fund owns securities, which generally are
assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Directors of ATSF have determined that the exchange of all of the
assets of the Acquired Fund for Acquiring Fund Shares and the assumption of all
liabilities (other than liabilities attributable to insurance charges) of the
Acquired Fund by the Acquiring Fund is in the best interests of the Acquiring
Fund and its shareholders and that the interests of shareholders of the
Acquiring Fund would not be diluted as a result of this transaction; and
WHEREAS, the Managers of Fund B have determined, with respect to the Acquired
Fund, that the exchange of all of the assets of the Acquired Fund for Acquiring
Fund Shares and the assumption of all liabilities (other than liabilities
attributable to insurance changes) of the Acquired Fund by the Acquiring Fund is
in the best interests of the Acquired Fund and its shareholders and that the
interests of the existing shareholders of the Acquired Fund would not be diluted
as a result of this transaction;
NOW, THEREFORE, the Companies, on behalf of the Acquiring Fund and the Acquired
Fund separately, hereby approves the Plan on the following terms and conditions:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN
EXCHANGE FOR THE ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED
FUND LIABILITIES (OTHER THAN INSURANCE CHARGES) AND THE LIQUIDATION OF
THE ACQUIRED FUND
1.1 Subject to the requisite approvals of the shareholders of the
Acquired Fund and the other terms and conditions herein set
forth and on the basis of the representations and warranties
contained herein, the Acquired Fund will transfer all of its
assets, as set forth in paragraph 1.2, to the Acquiring Fund,
and the Acquiring Fund agrees in exchange therefor: (i) to
deliver to the Acquired Fund the number of full and fractional
Acquiring Fund Shares determined by dividing the value of the
Acquired Fund's net assets, computed in the manner and as of
the time and date set forth in paragraph 2.1, by the net asset
value of one Acquiring Fund Share, computed in the manner and
as of the time and date set forth in paragraph 2.2; and (ii)
to assume all liabilities (other than liabilities attributable
to insurance changes) of the Acquired Fund. 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 assets and property,
including, without limitation, all cash, securities,
commodities and futures interests and dividends or interests
receivable that are owned by the Acquired Fund and any
deferred or prepaid expenses shown as an asset on the books of
the Acquired Fund on the closing date provided for in
paragraph 3.1 (the "Closing Date").
1.3 The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The
Acquiring Fund shall also assume all of the liabilities (other
than liabilities attributable to insurance changes) of the
Acquired Fund, whether accrued or contingent, known or
unknown, existing at the Valuation Date.
1.4 Ownership of Acquiring Fund Shares will be shown on the books
of the Acquiring Fund's transfer agent. Shares of the
Acquiring Fund will be issued in the manner described in the
Acquiring Fund's then-current
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prospectus and statement of additional information. The
Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with such exchange.
1.5 Any reporting responsibility of the Acquired Fund including,
but not limited to, the responsibility for filing of
regulatory reports, tax returns, or other documents with the
Securities and Exchange Commission (the "Commission"), any
state securities commission, and any federal, state or local
tax authorities or any other relevant regulatory authority, is
and shall remain the responsibility of the Acquired Fund.
2. VALUATION
2.1 The value of the Acquired Fund's assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets
computed as of immediately after the close of business of the
New York Stock Exchange and after the declaration of any
dividends on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation
procedures set forth in the then-current prospectus or
statement of additional information with respect to the
Acquiring Fund, and valuation procedures established by the
Board of Directors of ATSF.
2.2 The net asset value of an Acquiring Fund Share shall be the
net asset value per share computed as of immediately after the
close of business of the New York Stock Exchange and after the
declaration of any dividends on the Valuation Date, using the
valuation procedures set forth in the then-current prospectus
or statement of additional information with respect to the
Acquiring Fund, and valuation procedures established by the
Board of Directors of ATSF.
2.3 The number of the Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the
Acquired Fund's assets shall be determined by dividing the
value of the net assets of the Acquired Fund determined using
the same valuation procedures referred to in paragraph 2.1, by
the net asset value of an Acquiring Fund Share, determined in
accordance with paragraph 2.2.
2.4 All computations of value shall be made by the Acquiring
Fund's designated record keeping agent.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be December 22, 2003, or such other
date as the parties may agree to in writing. All acts taking
place at the Closing shall be deemed to take place
simultaneously as of immediately after the close of business
on the Closing Date unless otherwise agreed to by the parties.
The close of business on the Closing Date shall be as of 4:00
p.m., Eastern time. The Closing shall be held at the offices
of the Companies or at such other time and/or place as may be
designated by the Companies.
3.2 The Acquired Fund shall direct Investors Bank & Trust Company,
as custodian for the Acquired Fund (the "Custodian"), to
deliver, at the Closing, a certificate of an authorized
officer stating that (i) the Acquired Fund's portfolio
securities, cash, and any other assets ("Assets") shall have
been delivered in proper form to the Acquiring Fund within two
business days prior to or on the Closing Date, and (ii) all
necessary taxes in connection with the delivery of the Assets,
including all applicable federal and state stock transfer
stamps, if any, have been paid or provision for payment has
been made. The Acquired Fund's portfolio securities
represented by a certificate or other written instrument shall
be transferred and delivered by the Acquired Fund as of the
Closing Date for the account of the Acquiring Fund duly
endorsed in proper form for transfer in such condition as to
constitute good delivery thereof. The Acquired Fund shall
direct the Custodian to deliver portfolio securities and
instruments deposited with a securities depository, as defined
in Rule 17f-4 under the Investment Company Act of 1940, as
amended (the "1940 Act") as of the Closing Date by book entry
in accordance with the customary practices of such
depositories and the custodian for Acquiring Fund.
3.3 The transfer agent of the Acquired Fund shall deliver, on
behalf of the Acquired Fund, at the Closing a certificate of
an authorized officer stating that its records contain the
names and addresses of the Acquired Fund Shareholders and the
number and percentage ownership of outstanding interests in
the Acquired Fund owned by each such shareholder immediately
prior to the Closing.
3.4 In the event that on the Valuation Date (a) the New York Stock
Exchange or another primary trading market for portfolio
securities of the Acquiring Fund or the Acquired Fund shall be
closed to trading or trading thereupon shall be restricted, or
(b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the
Board of Managers of Fund B and the Board of Directors of
ATSF, accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable,
A-2
the Closing 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.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Acquired Fund represents and warrants to the Acquiring
Fund as follows:
(a) The Acquired Fund is duly organized and validly
existing under the laws of the state of California,
with power under its Rules and Regulations to own all
of its properties and assets and to carry on its
business as it is now being conducted;
(b) The Acquired Fund is a registered investment company
currently classified as a management company of the
open-end type, and its registration with the
Commission as an investment company under the 1940
Act, and the registration of its interests under the
Securities Act of 1933, as amended ("1933 Act"), are
in full force and effect;
(c) 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 herein, except such as have been
obtained under the 1933 Act, the Securities Exchange
Act of 1934, as amended (the "1934 Act") and the 1940
Act, and such as may be required by state securities
laws;
(d) The current prospectus and statement of additional
information of the Acquired Fund and each prospectus
and statement of additional information of the
Acquired Fund used during the three years previous to
the date of this Plan conforms or conformed at the
time of its use in all material respects to the
applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission
thereunder and does not or did not at the time of its
use include any untrue statement of a material fact
or omit to state any material fact required to be
stated therein or necessary to make the statements
therein, in light of the circumstances under which
they were made, not materially misleading;
(e) On the Closing Date, the Acquired Fund will have good
and marketable title to the Acquired Fund's assets to
be transferred to the Acquiring Fund pursuant to
paragraph 1.2 and full right, power, and authority to
sell, assign, transfer and deliver such assets
hereunder free of any liens or other encumbrances,
and upon delivery and payment for such assets, the
Acquiring Fund will acquire good and marketable title
thereto, subject to no restrictions on the full
transfer thereof, including such restrictions as
might arise under the 1933 Act, other than as
disclosed to the Acquiring Fund;
(f) The Acquired Fund is not engaged currently, and the
execution, delivery and performance of this Plan will
not result, in (i) a material violation of the
Acquired Fund's Rules and Regulations or of any
agreement, indenture, instrument, contract, lease or
other undertaking to which the Acquired Fund is a
party or by which it is bound, or (ii) the
acceleration of any obligation, or the imposition of
any penalty, under any agreement, indenture,
instrument, contract, lease, judgment or decree to
which the Acquired Fund is a party or by which it is
bound;
(g) The Acquired Fund has no material contracts or other
commitments (other than this Plan) that will be
terminated with liability to it prior to the Closing
Date;
(h) Except as otherwise disclosed in writing to and
accepted by the Acquiring Fund, no litigation or
administrative proceeding or investigation of or
before any court or governmental body is presently
pending or, to its knowledge, threatened against the
Acquired Fund or any of its properties or assets
that, if adversely determined, would materially and
adversely affect its financial condition or the
conduct of its business. 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 the provisions of 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 herein
contemplated;
(i) The Statement of Assets and Liabilities, including
the Schedule of Investments, at December 31, 2002 of
the Acquired Fund, and the Statements of Operations
and of Changes in Net Assets and the Financial
Highlights for the periods then ended, have been
audited by Ernst & Young LLP, independent certified
public accountants. Such statements are in accordance
with generally accepted accounting principles
("GAAP") consistently applied, and such statements
(copies of which have been furnished to the
A-3
Acquiring Fund) present fairly, in all material
respects, the financial condition of the Acquired
Fund as of such date in accordance with GAAP, and
there are no known contingent liabilities of the
Acquired Fund required to be reflected on the balance
sheet or in the notes thereto;
(j) 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 maturing more than one year from the
date such indebtedness was incurred, except as
otherwise disclosed to and accepted by the Acquiring
Fund. For the purposes of this subparagraph (j), a
decline in net asset value per share of the Acquired
Fund due to declines in market values of securities
in the Acquired Fund's portfolio, the discharge of
Acquired Fund liabilities, or the redemption of
Acquired Fund interests shall not constitute a
material adverse change;
(k) On 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 (including any
extensions) shall have been filed and are or will be
correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as
due on said returns and reports shall have been paid
or 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
such returns;
(l) All issued and outstanding interests of the Acquired
Fund are, and on the Closing Date will be, duly and
validly issued and outstanding, fully paid and
non-assessable by Acquired Fund and have been offered
and sold in every state and the District of Columbia
in compliance in all material respects with
applicable registration requirements of the 1933 Act
and state securities laws. All of the issued and
outstanding interests of the Acquired Fund will, at
the time of Closing, be held by the persons and in
the amounts set forth in the records of the Transfer
Agent, on behalf of the Acquired Fund, as provided in
paragraph 3.3. The Acquired Fund does not have
outstanding any options, warrants or other rights to
subscribe for or purchase any of the interests of the
Acquired Fund, nor is there outstanding any security
convertible into any of the Acquired Fund interests;
(m) The adoption and performance of this Plan will have
been duly authorized prior to the Closing Date by all
necessary action, if any, on the part of the Managers
of the Acquired Fund, and, subject to the approval of
the shareholders of the Acquired Fund ("Acquired
Shareholders"), this Plan will constitute a valid and
binding obligation of the Acquired Fund, enforceable
in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to
or affecting creditors' rights and to general equity
principles;
(n) The information to be furnished by the Acquired Fund
for use in registration statements, proxy materials
and other documents filed or to be filed with any
federal, state or local regulatory authority
(including the National Association of Securities
Dealers, Inc.) which may be necessary in connection
with the transactions contemplated hereby shall be
accurate and complete in all material respects and
shall comply in all material respects with federal
securities and other laws and regulations thereunder
applicable thereto.
4.2 ATSF, on behalf of the Acquiring Fund, represents and warrants
to the Acquired Fund as follows:
(a) The Acquiring Fund is duly organized as a series of
ATSF, which is a corporation duly organized and
validly existing under the laws of the State of
Maryland, with power under the Company's Articles of
Incorporation to own all of its properties and assets
and to carry on its business as it is now being
conducted;
(b) ATSF is a registered investment company classified as
a management company of the open-end type, and its
registration with the Commission as an investment
company under the 1940 Act and the registration of
its shares under the 1933 Act, including the shares
of the Acquiring Fund, are in full force and effect;
(c) 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 herein, except such as have
been obtained under the 1933 Act, the 1934 Act and
the 1940 Act and such as may be required by state
securities laws;
A-4
(d) The current prospectus and statement of additional
information of the Acquiring Fund conforms in all
material respects to the applicable requirements of
the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and does 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 are
made, not materially misleading;
(e) On the Closing Date, the Acquiring Fund will have
good and marketable title to the Acquiring Fund's
assets, free of any liens or other encumbrances,
except those liens or encumbrances as to which the
Acquired Fund has received notice and necessary
documentation at or prior to the Closing;
(f) The Acquiring Fund is not engaged currently, and the
execution, delivery and performance of this Plan will
not result, in (i) a material violation of the
Articles of Incorporation or Bylaws of ATSF or of any
agreement, indenture, instrument, contract, lease or
other undertaking to which the Acquiring Fund is a
party or by which it is bound, or (ii) the
acceleration of any obligation, or the imposition of
any penalty, under any agreement, indenture,
instrument, contract, lease, judgment or decree to
which the Acquiring Fund is a party or by which it is
bound;
(g) Except as otherwise disclosed in writing to and
accepted by the Acquired Fund, no litigation or
administrative proceeding or investigation of or
before any court or governmental body is presently
pending or, to its knowledge, threatened against the
Acquiring Fund or any of its properties or assets
that, if adversely determined, would materially and
adversely affect its financial condition or the
conduct of its business. 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 the provisions of 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 herein
contemplated;
(h) The Acquiring Fund intends to meet the requirements
of Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code") for qualification as a
regulated investment company and intends to elect to
be treated as such;
(i) All issued and outstanding Acquiring Fund Shares are,
and on the Closing Date will be, duly and validly
issued and outstanding, fully paid and non-assessable
by the Company. The Acquiring Fund does not have
outstanding any options, warrants or other rights to
subscribe for or purchase any Acquiring Fund Shares,
nor is there outstanding any security convertible
into any Acquiring Fund Shares;
(j) The adoption and performance of this Plan will have
been fully authorized prior to the Closing Date by
all necessary action, if any, on the part of the
Directors of ATSF on behalf of the Acquiring Fund and
this Plan will constitute a valid and binding
obligation of the Acquiring Fund, enforceable in
accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to
or affecting creditors' rights and to general equity
principles;
(k) The Acquiring Fund Shares to be issued and delivered
to the Acquired Fund, for the account of the Acquired
Fund Shareholders, pursuant to the terms of this
Plan, will on the Closing Date have been duly
authorized and, when so issued and delivered, will be
duly and validly issued Acquiring Fund Shares, and
will be fully paid and non-assessable by ATSF; and
(l) The information to be furnished by the Acquiring Fund
for use in the registration statements, proxy
materials and other documents filed or to be filed
with any federal state or local regulatory (including
the National Association of Securities Dealers, Inc.)
that may be necessary in connection with the
transactions contemplated hereby shall be accurate
and complete in all material respects and shall
comply in all material respects with federal
securities and other laws and regulations applicable
thereto.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 The Acquiring Fund and the Acquired Fund each 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 will include the declaration and payment of
customary dividends and distributions, and any other
distribution that may be advisable.
A-5
5.2 To the extent required by applicable law, a meeting of the
shareholders of the Acquired Fund will be called to consider
and act upon this Plan and to take all other action necessary
to obtain approval of the transactions contemplated herein.
5.3 The Acquired Fund covenants that the Acquiring Fund Shares to
be issued hereunder are not being acquired for the purpose of
making any distribution thereof, other than in accordance with
the terms of this Plan.
5.4 The Acquired Fund will assist the Acquiring Fund in obtaining
such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund
shares.
5.5 Subject to the provisions of this Plan, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Plan.
5.6 The Acquiring Fund and the Acquired Fund shall each use its
reasonable best efforts to fulfill or obtain the fulfillment
of the conditions precedent to effect the transactions
contemplated by this Plan as promptly as practicable.
5.7 The Acquired Fund covenants that it will, from time to time,
as and when reasonably requested by the Acquiring Fund,
execute and deliver or cause to be executed and delivered all
such assignments and other instruments, and will take or cause
to be taken such further action as the Acquiring Fund may
reasonably deem necessary or desirable in order to vest in and
confirm the Acquiring Fund's title to and possession of all
the assets and otherwise to carry out the intent and purpose
of this Plan.
5.8 The Acquiring Fund will use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the
1940 Act and such of the state blue sky or securities laws as
may be necessary in order to continue its operations after the
Closing Date.
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 the Acquired Fund's election,
to the performance by the Acquiring Fund of all the obligations to be
performed by it hereunder on or before the Closing Date, and, in
addition thereto, the following further conditions:
6.1 All representations and warranties of the Acquiring Fund and
ATSF contained in this Plan shall be true and correct in all
material respects as of the date hereof and, except as they
may be affected by the transactions contemplated by this Plan,
as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date;
6.2 ATSF and the Acquiring Fund shall have performed all of the
covenants and complied with all of the provisions required by
this Plan to be performed or complied with by ATSF and the
Acquiring Fund on or before the Closing Date; and
6.3 The Acquired Fund and the Acquiring Fund shall have agreed on
the number of full and fractional Acquiring Fund Shares to be
issued in connection with the Reorganization after such number
has been calculated in accordance with paragraph 1.1.
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 the Acquiring Fund's election,
to the performance by the Acquired Fund of all of the obligations to be
performed by it hereunder on or before the Closing Date and, in
addition thereto, the following conditions:
7.1 All representations and warranties of the Acquired Fund
contained in this Plan shall be true and correct in all
material respects as of the date hereof and, except as they
may be affected by the transactions contemplated by this Plan,
as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date;
7.2 The Acquired Fund shall have performed all of the covenants
and complied with all of the provisions required by this Plan
to be performed or complied with by the Acquired Fund on or
before the Closing Date; and
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7.3 The Acquired Fund and the Acquiring Fund shall have agreed on
the number of full and fractional Acquiring Fund Shares to be
issued in connection with the Reorganization after such number
has been calculated in accordance with paragraph 1.1.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND
THE ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund,
the other party to this Plan shall, at its option, not be required to
consummate the transactions contemplated by this Plan:
8.1 The Plan and the transactions contemplated herein shall have
been approved by the requisite vote, if any, of the holders of
the outstanding interests of the Acquired Fund in accordance
with the provisions of Acquired Fund's Rules and Regulations,
Bylaws, applicable California law and the 1940 Act, and
certified copies of the resolutions evidencing such approval
shall have been delivered to the Acquiring Fund.
Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the conditions
set forth in this paragraph 8.1;
8.2 On the Closing Date, no action, suit or other proceeding shall
be pending or, to the knowledge of any party, threatened
before any court or governmental agency in which it is sought
to restrain or prohibit, or obtain damages or other relief in
connection with, this Plan or the transactions contemplated
herein;
8.3 All consents of other parties and all other consents, orders
and permits of federal, state and local regulatory authorities
deemed necessary by the Acquiring Fund or the Acquired Fund 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, provided that either party hereto may for
itself waive any of such conditions;
8.4 The Acquired Fund shall have amended its registration
statement to reflect that the Acquired Fund will operate as a
unit investment trust following the consummation of the
transaction contemplated herein, and no stop orders 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; and
8.5 Dechert LLP shall deliver an opinion addressed to ATSF and
Acquired Fund substantially to the effect that, based upon
certain facts, assumptions, and representations, the
transaction contemplated by this Plan shall constitute a
tax-free reorganization for federal income tax purposes,
unless, based on the circumstances existing at the time of the
Closing, Dechert LLP determines that the transaction
contemplated by this Plan does not qualify as such. The
delivery of such opinion is conditioned upon receipt by
Dechert LLP of representations it shall request of the
Companies. Notwithstanding anything herein to the contrary,
the Companies may not waive the condition set forth in this
paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1 The Acquiring Fund 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.
9.2 The expenses relating to the proposed Reorganization will be
paid by AEGON/Transamerica Fund Advisers, Inc. ("ATFA") as of
the close of business on the record date for determining the
shareholders of the Acquired Fund entitled to vote on the
Reorganization. The costs of the Reorganization shall include,
but not be limited to, costs associated with obtaining any
necessary order of exemption from the 1940 Act, preparation
of, printing and distributing the Acquired Fund's proxy
materials, legal fees, accounting fees, securities
registration fees, and expenses of holding the shareholders'
meeting. 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 the other
party of such expenses would result in the disqualification of
such party as a "regulated investment company" within the
meaning of Section 851 of the Code.
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10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
The representations, warranties and covenants contained in this Plan or
in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated
hereunder. The covenants to be performed after the Closing shall
survive the Closing.
11. TERMINATION
This Plan and the transactions contemplated hereby may be terminated
and abandoned by resolution of the Board of Directors of ATSF and the
Board of Managers of Acquired Fund, at any time prior to the Closing
Date, if circumstances should develop that, in the opinion of the
Boards, make proceeding with the Plan inadvisable.
12. AMENDMENTS
This Plan may be amended, modified or supplemented in such manner as
may be set forth in writing by the authorized officers of the Companies
provided, however, that following any meeting of the shareholders
called by the Acquired Fund pursuant to paragraph 5.2 of this Plan, no
such amendment may have the effect of changing the provisions for
determining the number of the Acquiring Fund Shares to be issued to the
Acquired Fund Shareholders under this Plan to the detriment of such
shareholders without their further approval.
13. HEADINGS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Plan are
for reference purposes only and shall not affect in any way
the meaning or interpretation of this Plan.
13.2 This Plan shall be governed by and construed in accordance
with the laws of the State of Maryland without regard to its
principles of conflicts of laws.
13.3 This Plan shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written
consent of the other 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 Plan.
13.4 It is expressly agreed that the obligations of the parties
hereunder shall not be binding upon any of the Directors,
Managers, shareholders, nominees, officers, agents, or
employees of the Companies personally, but shall bind only
property of such party. The execution and delivery by such
officers shall not be deemed to have been made by any of them
individually or to impose any liability on any of them
personally, but shall bind only the property of each party.
IN WITNESS WHEREOF, the Board of Directors and the Board of Managers of the
Companies have caused this Plan to be approved on behalf of the Acquiring Fund
and the Acquired Fund, respectively.
AEGON/Transamerica Series Fund, Inc.
By: /s/ John K. Carter
-------------------------------------
Name: John K. Carter, Esq.
Title: Senior Vice President and
General Counsel
Transamerica Occidental's Separate
Account Fund B
By: /s/ Brian C. Scott
-------------------------------------
Name: Brian C. Scott
Title: President and Chief
Executive Officer
A-8
EXHIBIT B
CONTRACT OWNERS* ENTITLED TO CAST 5% OR MORE OF FUND B'S VOTES
Name and Address of Contract Owner Number of Votes % of Fund B
- ---------------------------------- --------------- -----------
Transamerica Occidental Life Insurance
Company 2,137,456.954 78%
1150 South Olive Street
Los Angeles, CA 90015
* As used in this Proxy Statement, "Contract Owners" includes
Transamerica Occidental Life Insurance Company with respect to its
investment in Fund B.
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