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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [ ] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
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Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
TRANSAMERICA INCOME SHARES
(Name of Registrant as Specified In Its Charter)
NAME OF COMPANY
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
1150 SOUTH OLIVE STREET
LOS ANGELES, CA 90015
(800) 420-7749
NOTICE OF A SPECIAL MEETING OF CONTRACT OWNERS
To the Contract Owners:
Notice is hereby given that a Special Meeting of Contract Owners (the
"Special Meeting") of Transamerica Occidental's Separate Account Fund B (the
"Fund"), an insurance company separate account of Transamerica Occidental Life
Insurance Company, a California corporation ("TOLIC"), will be held on June 16,
1999, at 10 a.m. (Pacific Time) at TOLIC's executive offices, 1150 South Olive
Street, Los Angeles, CA 90015. At the Special Meeting, you and the other
Contract Owners will be asked to consider and vote on the following matters:
1. To approve a new investment advisory agreement between TOLIC
and the Fund as discussed in Part I of the attached Proxy
Statement.
2. To approve a new investment sub-advisory agreement relating to
the Fund between TOLIC and Transamerica Investment Services,
Inc., as discussed in Part II of the attached Proxy Statement.
3. To elect four members to the Board of Managers of the Fund, as
discussed in Part III of the attached Proxy Statement.
4. To ratify or reject the selection by the Board of Managers of
Ernst & Young LLP as independent public accountants to the
Fund for the fiscal year ending December 31, 1999, as
discussed in Part IV of the attached Proxy Statement.
5. To transact such other business as may properly come before
the Special Meeting or any adjournment(s) thereof.
By Order of the Board of Managers
Secretary
Los Angeles, California
May 6, 1999
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TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
1150 South Olive Street
Los Angeles, CA 90015
(800) 420-7749
PROXY STATEMENT
Transamerica Occidental's Separate Account Fund B (the "Fund") has
issued variable annuity contracts (the "Contracts"). Obligations under the
Contracts are obligations of Transamerica Occidental Life Insurance Company
("TOLIC"). The owner of each Contract is referred to in this Proxy Statement as
a "Contract Owner" (collectively, the "Contract Owners").
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Managers (the "Board") of the Fund for use at the
Special Meeting of Contract Owners, to be held at the executive offices of
TOLIC, 1150 South Olive Street, Los Angeles, California 90015, on June 16, 1999
at 10 a.m. (Pacific Time), and at any and all adjournments thereof (the "Special
Meeting").
This Proxy Statement, the Notice of Special Meeting and the proxy card
are first being mailed to Contract Owners on or about May 17, 1999 or as soon as
practicable thereafter. Any Contract Owner giving a proxy has the power to
revoke it by mail (addressed to the Secretary at the principal executive office
of the Fund, c/o Transamerica Occidental Life Insurance Company, at the address
shown at the beginning of this Proxy Statement) or in person at the Special
Meeting, by executing a superseding proxy or by submitting a notice of
revocation to the Fund. All properly executed proxies received in time for the
Special Meeting will be voted as specified in the proxy or, if no specification
is made, in favor of the Proposals referred to in the Proxy Statement.
Contract Owners will vote together as a single class on Proposal 1
(approval of a new investment advisory agreement), Proposal 2 (election of Board
members) and Proposal 3 (ratification of independent public accountants).
The presence at the Special Meeting, in person or by proxy, of the
holders of [a majority] of the votes entitled to be cast shall be necessary and
sufficient to constitute a quorum for the transaction of business. For purposes
of determining the presence of a quorum, abstentions will be counted as present.
Broker "nonvotes" occur when the Fund receives a proxy 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 Contracts represented by the proxy. Proposal 1
requires the approval of a "majority of the outstanding voting securities" of
the Fund, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). Abstentions and broker "nonvotes" will have the effect of a vote
against Proposal 1. See "Proposal 1 -- Required Vote." Proposal 2 requires a
plurality vote for
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the election of each Board member, and Proposal 3 requires a majority of the
votes cast at the Special Meeting for approval. Abstentions and broker nonvotes
will not be counted in favor of or against Proposals 2 and 3. See "Proposal 2 --
Required Vote" and "Proposal 3 -- Required Vote."
The solicitation will be made primarily by mail, but may be
supplemented by telephone calls, telegrams, personal interviews and other
communications by officers, employees and agents of the Fund, TOLIC and their
affiliates. Authorization to execute proxies may be obtained telephonically or
by electronically transmitted instructions. The Fund has retained Georgeson &
Company Inc., 88 Pine Street, New York, NY 10005 to aid in the solicitation of
proxies. The costs of retaining Georgeson & Company Inc., which are anticipated
to be approximately $10,000, and other expenses incurred in connection with the
solicitation of proxies and the holding of the Special Meeting, will be borne by
Transamerica Corporation ("Transamerica") or its affiliates and not by the Fund.
To be entitled to vote, a Contract Owner must have been a Contract
Owner as of the close of business on May 10, 1999 (the "Valuation Date"). Each
eligible Contract Owner, as to any matter on which such Contract Owner is
entitled to vote, on all business of the Special Meeting, will be entitled to
cast a number of votes that is calculated based on such Contract's Accumulation
Account Value established on the Valuation Date. The Accumulation Account 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 Valuation Date is
prior to the date on which the first annuity payment is payable under a Contract
(the "Retirement Date" with respect to that 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 Valuation date is on or after a
Contract's Retirement Date, the number of votes attributable to the Contract
will be the amount of the reserve established as of the Valuation Date to meet
variable annuity obligations related to the Contract divided by 100. The number
of votes so calculated will be rounded to the nearest vote; provided, however,
that each Contract Owner will have at least one vote. Contract Owners will be
entitled to cast in the aggregate [_________] votes at the Special Meeting,
calculated as of the Valuation Date.
Appendix 1 sets forth the Contract Owners entitled to cast at least 5%
of the Fund's votes. To the best of the Fund's knowledge, as of May 10, 1999, no
Contract Owner was entitled to cast more than 5% of the Fund's votes, except as
stated in Appendix 1.
Appendix 2 hereto sets forth the number of votes of the Fund
attributable to Contracts owned by the Board members, nominees for Board
membership or executive officers of the Fund. To the best of the Fund's
knowledge, as of May 10, 1999, no Board member, nominee for Board membership or
executive officer of the Fund owned Contracts entitling such person to cast any
votes of the Fund, except as stated in Appendix 2.
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The Fund provides periodic reports to all of its Contract Owners which
highlight relevant information, including investment results and a review of
portfolio changes. You can receive an additional copy of the most recent annual
report and a copy of any more recent semi-annual report, without charge, by
calling 800-420-7749 or writing the Transamerica Annuity Service Center at 401
North Tryon Street, Suite 700, Charlotte, North Carolina 28202.
I. APPROVAL OF NEW
INVESTMENT ADVISORY AGREEMENT
(PROPOSAL 1)
INTRODUCTION
Transamerica Occidental Life Insurance Company acts as the investment
adviser to the Fund pursuant to an investment advisory agreement entered into by
the Fund and TOLIC. The investment advisory agreement in effect between the Fund
and TOLIC prior to the consummation of the transaction described below between
AEGON N.V. ("AEGON"), Tony Merger Corp. ("Merger Sub") and Transamerica (the
"AEGON-Transamerica Transaction" or the "Transaction") is referred to in this
Proxy Statement as the "Former Investment Advisory Agreement." The investment
advisory agreement proposed to become effective between the Fund and TOLIC as of
the consummation of the AEGON-Transamerica Transaction is referred to in this
Proxy Statement as the "New Investment Advisory Agreement" (together with the
Former Investment Advisory Agreement, the "Investment Advisory Agreements," and
each an "Investment Advisory Agreement").
The AEGON-Transamerica Transaction. TOLIC is an indirect wholly-owned
subsidiary of Transamerica. On February 17, 1999, AEGON, Merger Sub, a
wholly-owned subsidiary of AEGON, and Transamerica entered into an Agreement and
Plan of Merger and Reorganization (the "Merger Agreement"). Pursuant to the
Merger Agreement, Transamerica will merge with and into Merger Sub. Merger Sub
will be the surviving corporation in the Transaction, and the separate corporate
existence of Transamerica will cease. The Certificate of Incorporation of Merger
Sub will be amended to change the name of Merger Sub from Tony Merger Corp. to
Transamerica Corporation. The result of the Transaction will be that
Transamerica will become a wholly-owned subsidiary of AEGON.
Consummation of the Transaction may be deemed to constitute an
"assignment," as that term is defined in the 1940 Act, of the Former Investment
Advisory Agreement with TOLIC. As required by the 1940 Act, the Former
Investment Advisory Agreement provides for its automatic termination in the
event of its assignment. Accordingly, a New Investment Advisory Agreement
between the Fund and TOLIC was approved by the Board and is now being proposed
for approval by the Contract Owners. TOLIC is seeking an exemptive order (the
"Exemptive Order") from the Securities and Exchange Commission (the "SEC" or the
"Commission") permitting the Fund to obtain Contract Owner approval of its New
Investment Advisory Agreement within 150 days after the consummation of the
Transaction, which is expected to
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occur in mid-June (and, consequently, within 150 days after the termination of
its Former Investment Advisory Agreement). Pursuant to the Exemptive Order,
should TOLIC choose to rely on it, the investment advisory fees would be held in
escrow until the earlier of (i) Contract Owner approval of the New Investment
Advisory Agreement and (ii) the expiration of the 150-day period. A copy of the
form of New Investment Advisory Agreement is attached hereto as Exhibit A. THE
NEW INVESTMENT ADVISORY AGREEMENT IS SUBSTANTIALLY IDENTICAL TO THE FORMER
INVESTMENT ADVISORY AGREEMENT, EXCEPT FOR THE DATE OF EXECUTION AND THE
TERMINATION DATE. The material terms of the Investment Advisory Agreement are
described under "Description of the Investment Advisory Agreement" below.
BOARD'S RECOMMENDATION
The Board met on May 6, 1999, and the Board members, including the
Board members who are not parties to the New Investment Advisory Agreement or
"interested persons" (as defined in the 1940 Act) (the"Non-Interested Board
members") of any such party, voted to approve the New Investment Advisory
Agreement and to recommend approval to the Contract Owners.
BOARD'S EVALUATION
On May 6, 1999, the Board met with senior management personnel of
TOLIC. As a result of its review and consideration of the Transaction and the
proposed New Investment Advisory Agreement, the Board voted unanimously to
approve the New Investment Advisory Agreement and to recommend it to the
Contract Owners for their approval.
In connection with its review, TOLIC and AEGON represented to the Board
that: although integration of the businesses of Transamerica and AEGON may occur
and therefore some changes may result, it is the current intention that the
Transaction will have no material effect on the operational management of the
Fund and that it will not result in any material change in the management or
operations of TOLIC as they relate to the Fund; there will not be any increase
in the advisory fee or any change in any other provision, other than the date of
execution and the termination date, of the Investment Advisory Agreement as a
result of the Transaction; and the Transaction will not adversely affect TOLIC's
financial condition.
In connection with its deliberations, the Board obtained such
information as it deemed reasonably necessary to evaluate the New Investment
Advisory Agreement and other agreements, including certain assurances from each
of AEGON, Transamerica and TOLIC, including the following:
- The Transaction will not result in any change in the Fund's
investment objectives or policies.
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- It is the current intention that the Transaction will not
result in any material change in the management or operations
of TOLIC as they relate to the Fund.
- There is a commitment to the continuance, without
interruption, of services to the Fund of the type and quality
currently provided by TOLIC.
- The current plan is to maintain TOLIC's facilities and
organization.
Transamerica informed the Board that it intends to comply with Section
15(f) of the 1940 Act, which provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of the investment adviser's
affiliated persons (as defined in the 1940 Act) to receive any amount or benefit
in connection with a change in control of the investment adviser so long as two
conditions are met. First, for a period of three years after the transaction, at
least 75% of the board members of the investment company must not be "interested
persons" of the investment company's investment adviser or its predecessor
adviser. On or prior to the consummation of the Transaction, the Board will be
in compliance with this provision of Section 15(f). Second, an "unfair burden"
must not be imposed upon the investment company as a result of such transaction
or any express or implied terms, conditions or understandings applicable
thereto. The term "unfair burden" is defined in Section 15(f) to include any
arrangement during the two-year period after the transaction whereby the
investment adviser, or any interested person of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its shareholders (other than fees for bona fide investment
advisory or other services) or from any person in connection with the purchase
or sale of securities or other property to, from or on behalf of the investment
company (other than bona fide ordinary compensation as principal underwriter for
such investment company). Transamerica has advised the Board that it is not
aware of any express or implied term, condition, arrangement or understanding
that would impose an "unfair burden" on the Fund as a result of the Transaction.
Transamerica has agreed that it, and its affiliates, will take no action that
would have the effect of imposing an "unfair burden" on the Fund as a result of
the Transaction. In furtherance thereof, Transamerica has undertaken to pay the
costs of preparing and distributing proxy materials to, and of holding the
meeting of, the Contract Owners, as well as other fees and expenses in
connection with the Transaction.
In evaluating the New Investment Advisory Agreement, the Board took
into account that the fees and expenses payable by the Fund under its New
Investment Advisory Agreement are the same as under its Former Investment
Advisory Agreement, that the services provided to the Fund are the same and that
the other terms are, except for the date of execution and the termination date,
identical. The Board noted that, in previously approving the Former Investment
Advisory Agreement, the Board had considered a number of factors, including the
nature and quality of services provided by TOLIC; investment performance, both
that of the Fund itself and relative to that of competitive investment
companies; the investment advisory fees and expense ratios of the Fund and
competitive investment companies; TOLIC's profitability from managing the Fund;
fallout benefits to TOLIC from its relationship to the Fund, including
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revenues derived from services provided to the Fund by affiliates of TOLIC; and
the potential benefits to TOLIC and its affiliates and to the Fund and the
Contract Owners of receiving research services from broker-dealer firms in
connection with the allocation of portfolio transactions to such firms.
The Board discussed the Transaction with the senior management of
TOLIC, Transamerica and AEGON and among themselves. The Board considered that
AEGON and Transamerica are large, well-established companies with substantial
resources.
AS A RESULT OF ITS REVIEW AND CONSIDERATION OF THE TRANSACTION
AND THE NEW INVESTMENT ADVISORY AGREEMENT, AT ITS MEETING
THE BOARD VOTED TO APPROVE THE NEW INVESTMENT ADVISORY
AGREEMENT AND TO RECOMMEND ITS APPROVAL
TO THE CONTRACT OWNERS.
DESCRIPTION OF THE INVESTMENT ADVISORY AGREEMENT
Except as disclosed below, the Former Investment Advisory Agreement and
New Investment Advisory Agreement are substantially identical.
Pursuant to the Investment Advisory Agreement, the Fund employs TOLIC
to manage the investment and reinvestment of the assets of the Fund and to
perform other services, subject to the supervision of the Board. The Agreement
provides that TIS shall: (a) obtain and evaluate pertinent economic, statistical
and financial data and other information relevant to the Fund; (b) develop and
implement an investment program for the Fund; (c) provide necessary personnel to
assist the Board in managing the affairs of the Fund, including clerical,
bookkeeping, accounting and other personnel; (d) provide for expenses (including
all fees) incurred in connection with the registration and qualification of the
Fund and the Contracts under the securities laws; (e) provide for the charges
and expenses of the Fund's custodian; (f) bear the expenses of calling and
holding meetings of Contract Owners; (g) bear the fees and expenses of Board
members and Fund officers; and (h) bear all ordinary expenses of the Fund
incurred in the ordinary course of business.
Under the Former Investment Advisory Agreement, TOLIC has entered into
an investment sub-advisory agreement with Transamerica Investment Services, Inc.
("TIS"), an affiliate of TOLIC. It is expected that TOLIC and TIS will enter
into a substantially identical investment sub-advisory agreement under the New
Investment Advisory Agreement, provided the Contract Owners approve such
agreement as discussed and proposed in Part II of this Proxy Statement. Those
services and obligations not delegated to TIS remain the primary responsibility
of TOLIC.
In return for the services provided by TOLIC and the expenses it
assumes under the Investment Advisory Agreement, the Fund pays TOLIC an advisory
fee at the annual rate of
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0.30% of the value of the Fund. The advisory fee is payable weekly. As of the
Fund's last fiscal year ended December 31, 1998, the value of the Fund was
$[__________] and the Fund paid an aggregate advisory fee to TOLIC during such
fiscal year of $4,471.
Under the Investment Advisory Agreement, the Fund pays the following
expenses, in addition to the advisory fee: (a) brokerage commissions on
transactions involving portfolio assets of the Fund; (b) all taxes, including
issuance and transfer taxes; and (c) all extraordinary expenses that may be
incurred by or on behalf of the Fund in connection with matters not in the
ordinary course of business.
The Investment Advisory Agreement provides that it may be terminated
without penalty upon sixty (60) days' written notice by the Board or by vote of
the Contract Owners. The Agreement also provides that it may not be terminated
by TOLIC without the prior approval of a new investment advisory agreement by
the Contract Owners. As stated above, the Agreement also provides that it will
automatically terminate in the event of its assignment.
TOLIC has acted as the investment adviser for the Fund since its
commencement of operations on June 26, 1968. The effective date of the Former
Investment Advisory Agreement was April 20, 1971. The Board last approved the
continuance of the Former Investment Advisory Agreement on February 4, 1999. The
Contract Owners last approved the Former Investment Advisory Agreement on April
20, 1971 for the purpose of rendering initial approval of the Agreement as
required by the 1940 Act.
THE NEW INVESTMENT ADVISORY AGREEMENT
The New Investment Advisory Agreement, if approved by the Contract
Owners, would be dated the date of the consummation of the Transaction, which is
expected to occur in mid-June. The New Investment Advisory Agreement would be in
effect from year to year provided such continuance is specifically approved at
least annually by the vote of a "majority of the outstanding voting securities"
of the Fund, or by the Board and, in either event, the vote of a majority of the
Non-Interested Board members, cast in person at a meeting called for such
purpose. In the event that the Contract Owners do not approve the New Investment
Advisory Agreement, the Board will take such action as it deems to be in the
best interests of the Fund and the Contract Owners.
DIFFERENCES BETWEEN THE FORMER AND NEW INVESTMENT ADVISORY AGREEMENT
The New Investment Advisory Agreement is identical to the Former
Investment Advisory Agreement, except for the date of execution and the
termination date.
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TOLIC AND OTHER SERVICE PROVIDERS
TOLIC is a California corporation that is an investment adviser
registered under the Investment Advisers Act of 1940, as amended. TOLIC has been
in existence since 1906. TOLIC is a direct wholly-owned subsidiary of
Transamerica Insurance Corporation of California ("Transamerica Insurance").
TOLIC's address is 1150 South Olive Street, Los Angeles, California 90015.
Appendix 3 includes information regarding each Board member and officer of the
Fund who is associated with TOLIC. TOLIC acts as investment adviser and TIS acts
as sub-adviser to the Growth Portfolio of Transamerica Variable Insurance Fund,
Inc., a management investment company registered under the 1940 Act which has a
similar objective to that of the Fund. (See "Description of the Investment
Advisory Agreement" for information regarding the advisory fee rate, asset value
and aggregate advisory fee paid for the Fund.)
<TABLE>
<CAPTION>
ANNUAL
ADVISORY
FEE RATE
PAYABLE TO ANNUAL SUB-ADVISORY FEE APPROXIMATE
TOLIC RATE PAYABLE TO TIS (AS A NET ASSETS
FUND AND YEAR (AS A % OF % OF AS OF
ORGANIZED NET ASSETS NET ASSETS) 4/30/99
----------- ----------- ----------- -------
<S> <C> <C> <C>
Growth Portfolio (1996) 0.75% 0.30% of first $50 million $111,421,955
0.25% of next $150 million
0.20% over $200 million
</TABLE>
* For the fiscal year ended 12/31/98, Transamerica Occidental Life
Insurance Company, the investment adviser to each of the Portfolios,
waived a portion of the advisory fee payable by the Growth Portfolio
such that the resulting advisory fee amounted to 0.64% of average net
assets and aggregate advisory fees paid by the Growth Portfolio for the
fiscal year ended 12/31/98 amounted to $440,099 after the waiver.
The following table shows the address and principal occupation of the
principal executive officer and each director of TOLIC:
NAME ADDRESS PRINCIPAL OCCUPATION
Thomas J. Cusak * Chairman, President and Chief Executive Officer
Nooruddin S. Veerjee * Director & President Insurance Products
Division
Richard N. Latzer * Director & Chief Investment Officer
Gary U. Rolle * Director & Chief Investment Officer
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Edgar H. Grubb * Director
Frank C. Herringer * Director
* c/o Transamerica Occidental Life Insurance Company, 1150 South Olive
Street, Los Angeles, CA 90015
Transamerica Insurance is a direct wholly-owned subsidiary of
Transamerica. Its address is c/o Transamerica Occidental Life Insurance Company,
1150 South Olive Street, Los Angeles, California 90015.
Transamerica is a financial services company with approximately $58.5
billion in assets. Its principal offices are located at The Transamerica
Pyramid, 600 Montgomery Street, 24th Floor, San Francisco, California 94111.
Transamerica's two major lines of business are life insurance (including asset
management) and finance. As a result of the AEGON-Transamerica Transaction,
Transamerica will become a direct wholly-owned subsidiary of AEGON.
AEGON is headquartered in The Hague, The Netherlands, and is a holding
corporation of one of the world's ten largest life insurance groups ranked by
market capitalization and assets. Over 80% of AEGON's existing business is in
life insurance, pensions and related savings and investment products. AEGON's
address is Mariahoeveplain 50, 2591 TV The Hague, The Netherlands.
Vereniging AEGON ("Association AEGON") controls a majority voting
interest in AEGON through its minority holding of common stock plus its holding
of all the issued and outstanding preferred stock of AEGON. Association AEGON
currently intends to increase gradually its ownership of AEGON common stock to
40% by purchasing shares of common stock on the open market. At the same time,
Association AEGON intends to decrease its holding of preferred stock. It is
currently contemplated that, at all times, Association AEGON will maintain the
majority of voting rights of AEGON. Association AEGON is registered in The
Hague, The Netherlands.
Directors, officers and employees of TOLIC from time to time may enter
into transactions with various banks, including the Fund's custodian bank. It is
TOLIC's opinion that the terms and conditions of those transactions will not be
influenced by existing or potential custodial or other Fund relationships.
Transamerica Financial Resources, Inc. ("TFR") is the principal
underwriter for the Contracts. TFR is a direct wholly-owned subsidiary of
Transamerica Insurance and an indirect wholly-owned subsidiary of Transamerica.
TFR's address is 1150 South Olive Street, Los Angeles, California 90015. For the
fiscal year ended December 31, 1998, TFR received from the sales of the
Contracts total payments of $4,471.
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TFR will continue to provide its services to the Fund, as described
above, to the extent such services are necessary, under the current arrangements
if the New Investment Advisory Agreement is approved.
Boston Safe Deposit and Trust Company of California, located at 1
Embarcadero Center, San Francisco, California 94111, serves as the Fund's
custodian.
Ernst & Young LLP, 725 South Figueroa Street, Los Angeles, California
90017 acts as the Fund's independent certified public accountants.
REQUIRED VOTE
Approval of the New Investment Advisory Agreement will require the
affirmative vote of a "majority of the outstanding voting securities" of the
Fund (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 by all Contract
Owners or (ii) 67% or more of the votes entitled to be cast by Contract Owners
present at the meeting if more than 50% of the votes entitled to be cast by all
Contract Owners are represented at the meeting in person or by proxy.
THE BOARD MEMBERS RECOMMEND THAT THE
CONTRACT OWNERS VOTE IN FAVOR OF THIS PROPOSAL 1.
II. APPROVAL OF NEW
INVESTMENT SUB-ADVISORY AGREEMENT
(PROPOSAL 2)
TOLIC has contracted with Transamerica Investment Services, Inc., a
direct wholly-owned subsidiary of Transamerica, to render investment services to
the Fund as the sub-adviser. The investment sub-advisory agreement in effect
with respect to the Fund and TIS prior to the consummation of the
AEGON-Transamerica Transaction is referred to in this Proxy Statement as the
"Former Investment Sub-Advisory Agreement." The investment sub-advisory
agreement proposed to become effective with respect to the Fund and TIS as of
the consummation of the Transaction is referred to in this Proxy Statement as
the "New Investment Sub-Advisory Agreement" (together with the Former Investment
Sub-Advisory Agreement, the "Investment Sub-Advisory Agreements," and each an
"Investment Sub-Advisory Agreement").
As discussed in Proposal 1 with respect to the Former Investment
Advisory Agreement, consummation of the Transaction may be deemed to constitute
an "assignment," as that term is defined in the 1940 Act, of the Former
Investment Sub-Advisory Agreement with TIS. The Former Investment Sub-Advisory
Agreement provides for its automatic termination in the event of its assignment,
as required by the 1940 Act. Accordingly, a New Investment Sub-Advisory
Agreement with respect to the Fund and TIS was approved by the Board and is now
being proposed for approval by the Contract Owners. TIS has joined TOLIC in
requesting the
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Exemptive Order discussed in Proposal 1, and the same conditions would apply to
TIS under the New Investment Sub-Advisory Agreement if TIS relies on the
Exemptive Order, including the escrow of sub-advisory fees, as would apply to
TOLIC under the New Investment Advisory Agreement. A copy of the form of New
Investment Sub-Advisory Agreement is attached hereto as Exhibit B. THE NEW
INVESTMENT SUB-ADVISORY AGREEMENT IS SUBSTANTIALLY IDENTICAL TO THE FORMER
INVESTMENT SUB-ADVISORY AGREEMENT, EXCEPT FOR THE DATE OF EXECUTION AND THE
TERMINATION DATE. The material terms of the Investment Sub-Advisory Agreement
are described under "Description of the Investment Sub-Advisory Agreement"
below.
The Board met on May 6, 1999, and the Board members, including the
Non-Interested Board members, voted to approve the New Investment Sub-Advisory
Agreement and to recommend approval to the Contract Owners. In considering
whether to approve such agreement, the Board considered similar factors to those
it considered in approving the New Investment Advisory Agreement, to the extent
applicable. See "Proposal 1--Board's Evaluation." The Board also took into
consideration that the current intention is that the portfolio managers and
research personnel would continue their functions with TIS after the
Transaction.
AS A RESULT OF ITS REVIEW AND CONSIDERATION OF THE TRANSACTION
AND THE NEW INVESTMENT SUB-ADVISORY AGREEMENT, AT ITS MEETING
THE BOARD VOTED TO APPROVE THE NEW INVESTMENT SUB-ADVISORY
AGREEMENT AND TO RECOMMEND ITS APPROVAL
TO THE CONTRACT OWNERS.
DESCRIPTION OF THE INVESTMENT SUB-ADVISORY AGREEMENT
Except as disclosed below, the Former Investment Sub-Advisory Agreement
and New Investment Sub-Advisory Agreement are substantially identical.
Under the Investment Sub-Advisory Agreement, TIS provides
recommendations and advice with respect to the management of Fund assets,
furnishes investment research reports and information, determines those
securities to be bought or sold by the Fund and places orders for the purchase
or sale of securities. Investment decisions regarding the composition of the
Fund's portfolio and the nature and timing of changes in the portfolio are
subject to the supervision of the Board and to the investment policies and
restrictions established for the Fund by the Board.
Under the Investment Sub-Advisory Agreement, TIS is also responsible
for the selection of brokers or dealers to execute portfolio transactions and
for the negotiation of brokerage commission rates on portfolio transactions. The
Agreement provides that securities orders will be placed with brokers or dealers
selected for their ability to give prompt execution at prices and commission
rates favorable to the Fund and, in some instances, for their ability to provide
statistical, investment research and other services. As part of the process of
brokerage
-12-
<PAGE> 14
allocation, TIS is authorized to pay commissions that may exceed what another
broker might have charged. To the extent that preference is given in the
allocation of portfolio business to brokers and dealers that provide
statistical, research or other services, the Fund will bear any cost of
obtaining such services, and TIS, TOLIC, their affiliates and their clients may
benefit from such services.
Under the Investment Sub-Advisory Agreement, TIS pays its own expenses
in performing its duties. In return for the services that TIS provides and the
expenses it assumes, TIS receives a quarterly fee from TOLIC at the annual rate
of 0.15% of the value of the Fund. As of the Fund's last fiscal year ended
December 31, 1998, the value of the Fund was $[______] and TOLIC paid TIS an
aggregate sub-advisory fee during such fiscal year of $[2,236].
The Investment Sub-Advisory Agreement provides that it may be
terminated without penalty upon sixty (60) days' written notice by TOLIC, TIS or
the Fund (and in the case of the Fund, by the Board or by vote of the Contract
Owners). As stated above, the Agreement provides that it will automatically
terminate in the event of its assignment, unless such automatic termination
shall be prevented by an exemptive order of the SEC.
TIS has acted as the investment sub-advisor to the Fund since 1981. The
effective date of the Former Investment Sub-Advisory Agreement was January 1,
1981. The Board last approved the continuance of the Former Investment
Sub-Advisory Agreement on February 4, 1999. The Contract Owners last approved
the Former Investment Sub-Advisory Agreement on [__________, 19__] for the
purpose of rendering initial approval of the Agreement as required by the 1940
Act.
THE NEW INVESTMENT SUB-ADVISORY AGREEMENT
The New Investment Sub-Advisory Agreement, if approved by the Contract
Owners, would be dated the date of the consummation of the Transaction, which is
expected to occur in mid-June. The New Investment Sub-Advisory Agreement would
be in effect from year to year provided such continuance is specifically
approved at least annually by the vote of a "majority of the outstanding voting
securities" of the Fund, or by the Board and, in either event, the vote of a
majority of the Non-Interested Board members, cast in person at a meeting called
for such purpose. In the event that the Contract Owners do not approve the New
Investment Sub-Advisory Agreement, the Board will take such action as it deems
to be in the best interests of the Fund and the Contract Owners.
DIFFERENCES BETWEEN THE FORMER AND NEW INVESTMENT SUB-ADVISORY AGREEMENT
The New Investment Sub-Advisory Agreement is identical to the Former
Investment Sub-Advisory Agreement, except for the date of execution and the
termination date.
-13-
<PAGE> 15
TIS
TIS is a Delaware corporation that is an investment adviser registered
under the Investment Advisers Act of 1940, as amended. TIS has been in existence
since 1967 and has provided investment services to investment companies since
1968 and to Transamerica and affiliated companies since 1981. TIS is a direct
wholly-owned subsidiary of Transamerica. TIS's address is 1150 South Olive
Street, Los Angeles, California 90015. Appendix 3 includes information regarding
each Board member and officer of the Fund who is associated with TIS. TIS also
provides sub-advisory services to the Growth Portfolio of Transamerica Variable
Insurance Fund, Inc., which has a similar investment objective to the Fund. See
Proposal 1 --"TOLIC and Other Service Providers" regarding the sub-advisory fee
rate and net assets of the Growth Portfolio. TIS has not waived, reduced or
otherwise agreed to reduce its compensation for this portfolio.
The following table shows the address and principal occupation of the
principal executive officer and each director of TIS:
NAME ADDRESS PRINCIPAL OCCUPATION
Richard N. Latzer * Director, President & Chief Executive Officer
Gary U. Rolle * Director & Executive Vice President
Thomas J. Cusak * Director
Edgar H. Grubb * Director
Frank C. Herringer * Director
*c/o Transamerica Investment Services, Inc., 1150 South Olive Street, Los
Angeles, CA 90015
Directors, officers and employees of TIS from time to time may enter
into transactions with various banks, including the Fund's custodian bank. It is
TIS's opinion that the terms and conditions of those transactions will not be
influenced by existing or potential custodial or other Fund relationships.
REQUIRED VOTE
Approval of the New Investment Sub-Advisory Agreement will require the
affirmative vote of a "majority of the outstanding voting securities" of the
Fund (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 by all Contract
Owners or (ii) 67% or more of the votes entitled to be cast by Contract Owners
present at the meeting if more than 50% of the votes entitled to be cast by all
Contract Owners are represented at the meeting in person or by proxy.
-14-
<PAGE> 16
THE BOARD MEMBERS RECOMMEND THAT THE
CONTRACT OWNERS VOTE IN FAVOR OF THIS PROPOSAL 2.
III. ELECTION OF BOARD MEMBERS
(PROPOSAL 3)
It is proposed that the three persons currently serving as members of
the Board of Managers of the Fund ("Managers") be re-elected and that a fourth
person be newly elected to the Board. The nominees for Manager (the "Nominees")
who are proposed for election at the Special Meeting are Jon C. Strauss, Gary U.
Rolle, Peter J. Sodini and [Nominee].
The term of office of each person elected as a Manager will be until
the next meeting held for the purpose of electing Managers and until his
successor is elected and qualified (or until such Manager's earlier retirement,
resignation, death or disqualification). The Nominees have agreed to serve as
Managers if elected. If any of the Nominees should be unavailable for election
at the time of the Special Meeting (which is not presently anticipated), the
persons named as proxies may vote for another person in their discretion.
The principal occupations and business experience for the last five
years of each Nominee, each Manager, and each executive officer of the Fund are
as indicated in the table below.
-15-
<PAGE> 17
NOMINEES, MANAGERS AND EXECUTIVE OFFICERS INFORMATION
<TABLE>
<CAPTION>
Position Principal Occupation
Name, Address** and Age with the Corporation During the Past Five Years
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Gary U. Rolle (58) * President, Chairman, Board of Executive Vice President and Chief
Managers Investment Officer of Transamerica
Investment Services, Inc.; Director and
Chief Investment Officer of Transamerica
Occidental Life Insurance Company; Director,
Transamerica Investors, Inc.
Peter J. Sodini (58) Board of Managers Associate, Freeman Spogli & Co. (a private
investor); President, Chief Executive
Officer and Director, The Pantry, Inc. (a
supermarket); Director Pamida Holdings Corp.
(a retail merchandiser) and Buttrey Food and
Drug Co. (a supermarket).
Jon C. Strauss (59) Board of Managers President of Harvey Mudd College; Previously
Vice President and Chief Financial Officer
of Howard Hughes Medical Institute;
President of Worcester Polytechnic
Institute; Vice President and Professor of
Engineering at University of Southern
California; Vice President Budget and
Finance, Director of Computer Activities and
Professor of Computer and Decision Sciences
at University of Pennsylvania.
[Nominee] Board of Managers [Principal Occupation]
</TABLE>
-16-
<PAGE> 18
<TABLE>
<CAPTION>
Position Principal Occupation
Name, Address** and Age with the Corporation During the Past Five Years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Matt Coben (38) *** Vice President Vice President, Broker/Dealer
Channel of the Institutional
Marketing Services Division of
Transamerica Life Insurance and
Annuity Company and prior to
1994, Vice President and National
Sales Manager of the Dreyfus
Service Organization
Susan R. Hughes (43) Assistant Treasurer Vice President and Chief Financial
Officer, Transamerica Investment
Services, Inc., since 1997;
Independent Financial Consultant
1992-1997.
Regina M. Fink (43) Secretary Counsel for Transamerica
Occidental Life Insurance
Company and prior to 1994
Counsel and Vice President for
Colonial Management Associates,
Inc.
Sally S. Yamada (48) Treasurer Vice President and Treasurer of
Transamerica Occidental Life
Insurance Company and Treasurer
of Transamerica Life Insurance and
Annuity Company.
Thomas M. Adams (64) Assistant Secretary Partner in the law firm of Lanning,
Adams & Peterson
</TABLE>
* Manager who is an "interested person" (as defined in the 1940 Act) of
the Fund, TOLIC or TIS. Mr. Rolle is an "interested person" by reason of his
positions with TOLIC and TIS.
** Except as otherwise noted, the mailing address for each Nominee,
Manager and executive officer is Box 2438, Los Angeles, California 90015.
*** The mailing address of this officer is 401 North Tryon Street,
Suite 700, Charlotte, North Carolina 28202.
The principal occupations of the Nominees, Managers and executive
officers for the last five years have been with the employers as shown in the
table above, although in some cases they have held different positions with such
employers.
Appendix 3 hereto sets forth, as of May 10, 1999, the votes entitled to
be cast that are known to be attributable to Contracts owned by Nominees,
Managers and executive officers of the Fund. As of May 10, 1999, the Managers
and executive officers of the Fund as a group owned Contracts entitling them to
cast votes as also set forth in Appendix 3.
-17-
<PAGE> 19
The Board of Managers met [ ] times during the fiscal year ended
December 31, 1998. Each Manager attended at least 75% of such meetings, except
for [ ], who attended [ ] of the [ ] meetings. [The Fund has a standing
audit committee composed of Messrs. [ ], which is responsible for the
selection of the Fund's auditors and for the monitoring of the audit process and
its results. Messrs. [ ] attended [ ] audit committee meetings held during
the fiscal year ended December 31, 1998.]
The Fund pays the Managers, other than those who are interested persons
of TOLIC or TIS, an annual fee of $[ ] plus $[ ] for each meeting attended. The
Fund does not pay any pension or retirement benefits for its Managers.
The following table sets forth the amount of the compensation paid to
the Managers (or deferred in lieu of current payment) by the Fund during its
fiscal year ended December 31, 1998:
COMPENSATION TABLE
(2) (3)
(1) AGGREGATE COMPENSATION TOTAL COMPENSATION
NAME OF PERSON, POSITION FROM CORPORATION FROM COMPLEX*
Donald E. Cantlay $1,500 $6,000
Richard N. Latzer -0- -0-
DeWayne W. Moore $1,500 $6,250
Gary U. Rolle -0- -0-
Peter J. Sodini $1,500 $4,750
Jon C. Strauss $500 -0-
* During fiscal year 1998, each Board member was also a member of the
Board of Transamerica Variable Insurance Fund, Inc. and of Transamerica
Income Shares, Inc., a closed-end management company advised by
Transamerica Investment Services, Inc. Mr. Rolle is a director of
Transamerica Investors, Inc. These registered investment companies
comprise the "Fund Complex."
REQUIRED VOTE
The election of members of the Board of Managers of the Fund will be by
a plurality of the votes entitled to be cast by Contract Owners present at the
Special Meeting in person or by proxy. Contracts represented by duly-executed
proxies will be voted for the election of the persons named herein as Nominees,
unless such authority has been withheld in accordance with the instructions on
the form of proxy. If no instructions are made, the proxy will be voted for such
Nominees.
THE BOARD MEMBERS RECOMMEND A VOTE FOR THE ELECTION OF THE NOMINEES.
-18-
<PAGE> 20
IV. RATIFICATION OF ACCOUNTANTS
(PROPOSAL 4)
The Board of Managers has selected Ernst & Young LLP as the auditors
for the Fund for the fiscal year ending December 31, 1999, subject to removal by
a majority of the outstanding voting securities of the Fund. Upon the reasonable
request of any Contract Owner, representatives of Ernst & Young LLP will attend
the meeting, and will, as they see fit, make a statement and/or respond to
appropriate questions.
REQUIRED VOTE
The ratification of the selection of Ernst & Young LLP as the
independent public accountants for the Fund will require a majority of votes
cast at the Special Meeting in person or by proxy, if a quorum is present.
THE BOARD MEMBERS RECOMMEND THAT CONTRACT OWNERS VOTE
FOR THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FUND.
ADDITIONAL INFORMATION
PROPOSALS OF CONTRACT OWNERS
Contract Owners wishing to submit proposals for inclusion in a Proxy
Statement for a meeting of Contract Owners subsequent to the Special Meeting, if
any, should send their written proposals to the Secretary of the Fund, c/o
Transamerica Occidental Life Insurance Company at the address shown at the
beginning of this Proxy Statement, within a reasonable time before the
solicitation of proxies for such meeting. The timely submission of a proposal
does not guarantee its inclusion.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
No Board member is aware of any matters that will be presented for
action at the Special Meeting other than the matters set forth herein. Should
any other matters requiring a vote of the Contract Owners arise, the proxy in
the accompanying form will confer upon the person or persons entitled to vote
the Contracts represented by such proxy the discretionary authority to vote the
Contracts as to any such other matters in accordance with their best judgment in
the interest of the Fund.
ADJOURNMENT
In the event that sufficient votes in favor of any of the proposals set
forth in the Notice of a Special Meeting of Contract Owners are not received by
the time scheduled for the Special Meeting, the persons named as proxies may
propose one or more adjournments of the Special Meeting after the date set for
the original Special Meeting to permit further solicitation of proxies
-19-
<PAGE> 21
with respect to any such proposals. In addition, if, in the judgment of the
persons named as proxies, it is advisable to defer the action on one or more
proposals, the persons named as proxies may propose one or more adjournments of
the Special Meeting. Any such adjournments will require the affirmative vote of
a majority of the votes cast on the question in person or by proxy at the
session of the Special Meeting as permitted by the Fund's Rules and Regulations.
The persons named as proxies will vote in favor of such adjournment those
proxies which they are entitled to vote in favor of such proposals. They will
vote against any such adjournment those proxies required to be voted against any
of such proposals. The costs of any additional solicitation and of any adjourned
session will be borne by Transamerica or its affiliates. Any proposals for which
sufficient favorable votes have been received by the time of the Special Meeting
will be acted upon and such action will be final regardless of whether the
Special Meeting is adjourned to permit additional solicitation with respect to
any other proposal.
IMPORTANT--WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN
THE ENCLOSED ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE AND IS INTENDED FOR
YOUR CONVENIENCE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD MAY SAVE THE
NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT THE SPECIAL
MEETING. IF YOU CAN ATTEND THE SPECIAL MEETING AND WISH TO VOTE YOUR CONTRACTS
IN PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
-20-
<PAGE> 22
APPENDIX 1
CONTRACT OWNERS ENTITLED TO CAST
5% OR MORE OF FUND VOTES
Name and Address Number of Percent of
of Contract Owner Votes Fund
-21-
<PAGE> 23
APPENDIX 2
BOARD MEMBERS, NOMINEES FOR BOARD MEMBERSHIP AND EXECUTIVE OFFICERS
ENTITLED TO CAST FUND VOTES
Name and Address Number of Percent of
of Contract Owner Votes Fund
[All Board members and executive officers of the Fund as a group...]
-22-
<PAGE> 24
APPENDIX 3
BOARD MEMBERS AND OFFICERS
ASSOCIATED WITH TOLIC AND TIS
Board Members and Officers Associated with TOLIC
Name Position with the Fund
Board Members and Officers Associated with TIS
Name Position with the Fund
-23-
<PAGE> 25
Exhibit A
INVESTMENT ADVISORY AGREEMENT
between
OCCIDENTAL'S SEPARATE ACCOUNT FUND B
and
OCCIDENTAL LIFE INSURANCE COMPANY OF CALIFORNIA
<PAGE> 26
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made this ___ day of ________, 1999,
between Occidental Life Insurance Company of California, a California
corporation (hereinafter called the "Company"), and Occidental's Separate
Account Fund B, a separate account of the Company established by a resolution of
the Company's Board of Directors on June 26, 1968, pursuant to Section 10506 of
the California Insurance Code (hereinafter called the "Fund").
WHEREAS, the Fund has been organized for the purpose of providing a
separate account for the benefit of equity investment fund contracts and
desires to avail itself of the investment experience, assistance and facilities
available to the Company and to have the Company perform for it various
management and clerical services, and the Company is willing to furnish such
advice, facilities and services on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. The Fund hereby employs the Company to manage the investment and
reinvestment of the assets of the Fund to perform the other services herein set
forth, subject to the supervision of the Board of Managers of the Fund
(hereinafter called the "Board") for the period and on the
<PAGE> 27
terms herein set forth. The Company hereby accepts such employment and agrees
during such period, at its own expense, to render the services and to assume the
obligations herein set forth for the compensation herein provided.
2. In carrying out its obligations to manage the investment and
reinvestment of the assets of the Fund, the Company shall:
(a) obtain and evaluate pertinent economic, statistical and financial data
and other information relevant to the investment policy of the Fund, affecting
the economy generally, and individual companies or industries the securities of
which are included in the Fund's portfolio or are under consideration for
inclusion therein and make such data and information reasonably available to the
Board of Managers of the Fund at its request;
(b) develop and implement an investment program for the Fund, which shall
be subject to the overall review from time to time of the Board of Managers;
(c) provide necessary personnel to assist the Board in managing the
affairs of the Fund, including clerical, bookkeeping, accounting and other
office personnel;
(d) provide for expenses (including all fees) incurred in connection with
the registration and qualification of the Fund and contracts issued by the Fund
under the Investment Company Act of 1940, the Securities Act of 1933 and state
laws;
-2-
<PAGE> 28
(e) provide for the charges and expenses of any custodian or
depository appointed for the safekeeping of the Fund's cash, securities or other
property;
(f) authorize and permit any of its directors, officers and employees,
who may be elected as directors or officers of the Fund, to serve in the
capacities in which they are elected;
(g) bear the expenses of calling and holding of meetings of Contract
Owners, the fees and expenses of members of the Board of Managers, and all
ordinary expenses incurred in the ordinary course of business.
3. Any investment program undertaken by the Company pursuant to this
Agreement and any other activities undertaken by the Company on behalf of the
Fund shall at all times be subject to any directives of the Board or any duly
constituted committee thereof acting pursuant to like authority.
4. For the services rendered hereunder, the Company shall receive an
amount for each valuation period of the Fund, equal to .30% per annum of the
value of the Fund as of the end of the period, such amount to be paid to the
Company weekly.
5. With respect to the Fund's portfolio securities, the Company shall
purchase such securities from or through and sell such securities to or through
such persons, brokers or dealers, as it may deem appropriate. Such persons,
brokers
-3-
<PAGE> 29
or dealers may include those affiliated with the Company.
6. The services of the Company to the Fund hereunder are not to be deemed
exclusive and the Company shall be free to render similar services to others so
long as its services hereunder are not impaired or interfered with thereby.
7. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Company who may also be a director,
officer or employee of the Fund to engage in any other business or to devote
his time and attention in part to the management or other aspects of any other
business or to render services of any kind to any other corporation, firm,
individual or association.
8. This Agreement shall be submitted for approval of the Contract Owners
and if then approved this Agreement:
(a) shall continue in effect only so long as its continuance is
specifically approved annually by the Board of Managers of the Fund as required
by the Investment Company Act of 1940 or by Contract Owners casting a majority
of the votes entitled to be cast by all of Contract Owners;
(b) may not be terminated by the Company without the prior approval
of a new investment advisory agreement by Contract Owners casting a majority of
the votes entitled to be cast by all Contract Owners and shall be subject to
termination without the payment of any penalty, on sixty days' written
- 4 -
<PAGE> 30
notice, by the Board or by vote of Contract Owners casting a majority of the
votes entitled to be cast;
(c) shall not be amended without prior approval by Contract Owners
casting a majority of the votes entitled to be cast; and
(d) shall automatically terminate in the event of its assignment by
either party.
9. The Fund shall pay:
(a) brokers' commissions in connection with portfolio asset
transactions to which the Fund is a party;
(b) all taxes, including issuance and transfer taxes, which may
become payable to federal, state or other governmental entities, with respect
to the operation of the Fund; and
(c) all extraordinary expenses which may be incurred by or on behalf
of the Fund in connection with matters not in the ordinary course of business.
10. This Agreement is subject to the provisions of the Investment Company
Act of 1940, as amended, and the rules and regulations of the Securities and
Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have caused
-5-
<PAGE> 31
this Agreement to be signed by their respective officials thereunto duly
authorized as of the day and year first above written.
OCCIDENTAL'S SEPARATE ACCOUNT OCCIDENTAL LIFE INSURANCE
FUND B COMPANY OF CALIFORNIA
By By
--------------------------- ------------------------
President President
By
------------------------
Secretary
<PAGE> 32
Exhibit B
INVESTMENT SERVICES AGREEMENT
REGARDING OCCIDENTAL SEPARATE ACCOUNT B
THIS AGREEMENT is made between OCCIDENTAL LIFE INSURANCE COMPANY OF
CALIFORNIA, a California corporation, "Occidental", and TRANSAMERICA INVESTMENT
SERVICES, INC., a Delaware corporation, "the Services Company".
WHEREAS, Occidental pursuant to a separate written Investment Advisory
Agreement provides investment management and various other services to
Occidental's Separate Account Fund B, the "Fund", which Fund is registered as a
management investment company under the Investment Company Act of 1940; and
WHEREAS, the Services Company is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of providing
investment services to a number of clients, including other investment
companies; and
WHEREAS, the Services Company provides Occidental with investment
advisement and other services in connection with the management of Occidental's
financial resources under an Investment Advisement and Service Agreement between
the two parties; and
WHEREAS, Occidental desires to retain the Services Company to render
certain investment services pertaining to the Fund in the manner and on the
terms and conditions hereinafter set forth; and
WHEREAS, the Manager desires to perform such services in the manner and on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties agree as follows:
1. INVESTMENT ADVICE AND OTHER SERVICES
(a) The Services Company shall, to the extent required in the conduct of
the investment activities of Occidental with respect to the Fund, place at the
disposal of Occidental its judgment and experience and provide Occidental advice
and recommendations with respect to the management of the assets of the Fund,
including but not limited to the purchase and sale of common stock, convertible
preferred stock, notes, bonds, debentures, short term investments and other
securities in which the Fund may invest. The Services Company shall also, from
time to time, furnish to or place at the disposal of Occidental such reports and
information relating to industries, businesses, corporations, or securities as
may be reasonably required by Occidental or as the Services Company may deem to
be helpful to Occidental in the administration of these investments.
-1-
<PAGE> 33
(b) The Services Company agrees to use its best efforts in providing such
advice and recommendations and in the preparation of such reports and
information, and for this purpose the Services Company shall at all times
maintain a staff of officers and other trained personnel for the performance of
its obligations under this Agreement. The Services Company may employ other
persons to furnish to it statistical and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as it
may desire.
(c) The Fund and Occidental will from time to time furnish to the Services
Company detailed statements of the objectives and investments of the Fund and
will provide to the Services Company such information relating to the
investments of the Fund as may be available to the Fund or Occidental.
(d) The Services Company shall take, on behalf of Occidental and the Fund,
all actions which it deems necessary to implement the investment policies with
respect to stocks, bonds and money market instruments as determined by the Board
of Managers of the Fund, the Board of Directors of Occidental, or any committee
thereof, and in particular within the limits of those guidelines will determine
those securities to be bought or sold and will place all orders for the purchase
or sale of such securities for the Fund's account. To that end the Services
Company is authorized as the agent of Occidental and of the Fund to give
instructions as to deliveries of securities and other documents and as to
payments of cash for the account of the Fund in connection with the placing of
such orders. Selection of the brokers or dealers with which transactions are
executed and negotiation of commission rates will be made by the Services
Company.
Securities orders will be placed with brokers or dealers selected for their
ability to give prompt execution at prices and commissions rates (if any)
favorable to the Fund, and, in some instances, for their ability to provide
statistical, investment research and other services. As part of the process of
brokerage allocation, the Services Company is authorized to pay commissions
which may exceed what another broker might have charged. To the extent that
preference is given in the allocation of portfolio business to those brokers and
dealers which provide statistical, investment research, pricing quotations, or
other services the Fund will bear any cost of obtaining such services, and the
Services Company and other clients advised by the Services Company, including
Occidental, may benefit from those services. Under the provisions of Section
28(e) of the Securities Exchange Act of 1934, the Services Company may determine
in good faith that the amount of a commission paid was reasonable in relation to
the value of the "brokerage and research services" provided by the executing
broker or dealer viewed in terms of the particular transaction or the Services
Company's overall responsibilities with respect to accounts as to which it is
exercising investment discretion.
-2-
<PAGE> 34
2. ALLOCATION OF CHARGES AND EXPENSES
(a) The Services Company shall furnish at its own expense executive,
supervisory and other personnel and services, office space, equipment, utilities
and telephone services in connection with supplying the investment advice,
statistical and research services contemplated by this Agreement.
(b) It is understood that either the Fund or Occidental will pay pursuant
to the separate Agreement between them, for all other expenses in connection
with operation of the Fund, including, without limitation, maintenance of
accounting and securities records, governmental fees, interest charges, taxes,
fees and expenses of independent auditors, legal fees, brokerage and other
expenses connected with the execution of security transactions, and custodian
and transfer agent fees. Should the Services Company advance or pay any of these
or similar expenses, it will be reimbursed by the appropriate party.
3. COMPENSATION
Occidental agrees to pay to the Services Company, as full compensation for
all services rendered hereunder, a fee at an annual rate of 0.15% (15/100ths of
one percent), or such other amount as the parties mutually agree in writing
from time to time, of the value of the Fund, as calculated by Occidental on
each Valuation Date of the Fund, which fee is to be paid by Occidental to the
Services Company quarterly, or more frequently should Occidental elect to do
so. Occidental and the Services Company may mutually choose to calculate an
estimated quarterly fee, with any applicable fee adjustment being made after
the end of the applicable quarter. Fee calculation and payment is solely a
matter between Occidental and the Services Company; the Fund has no obligation
to pay or take other acts in connection therewith.
Compensation under this Agreement will only be said as specified in Section
5 of this Agreement.
4. NON-EXCLUSIVE AGREEMENT
This Agreement is non-exclusive as to Occidental, the Fund and the Services
Company. Occidental or the Fund may, in its discretion, purchase or obtain
information, reports and other services from other sources, including other
affiliates of Transamerica Corporation and outside consultants. The Services
Company may engage in any other business and may provide similar services to
other clients, so long as its services under this Agreement are not impaired;
and the Services Company may purchase or obtain information, reports and other
services from outside sources, including other affiliates of Transamerica
Corporation and outside consultants. The Services Company assumes no
responsibility under this Agreement other than to render the services called
for hereunder in good faith, and shall not be responsible for any action of the
Board of Managers of the Fund, the Board of Directors of Occidental, or any
committee thereof, in following or
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<PAGE> 35
declining to follow any advice or recommendation of the Services Company.
Nothing in this Agreement shall limit or restrict the right of any director,
officer or employee of the Services Company, whether or not he is also a
director, officer or employee of Occidental or the Fund, to engage in any other
business or to devote his time and attention in part to the management or other
aspects of any other business, whether of a similar or dissimilar nature.
5. EFFECTIVE DATE
This Agreement shall become effective on , 1999 as to the services
and other obligations in this Agreement, provided, however, that the fee
specified in Section 3 will accrue but will not be paid unless and until initial
approval of and continuance of this Agreement shall have been approved by a vote
of a majority of the outstanding voting securities of the Fund (which matter is
expected to be considered at the Special Meeting of Contract Owners scheduled to
be held in , 1999) or by a vote of the Board of Managers of the Fund,
and by a majority of the Managers who are not parties to this Agreement or
"interested persons" (as defined in the Investment Company Act of 1940) of any
party to this Agreement, and provided further that said fee will in no event be
paid prior to , 1999. In the event the Fund does not approve this
Agreement and its continuance as specified above, the Services Company will if
so requested continue to provide on a temporary basis the services contemplated
by this Agreement for a reasonable period until the Fund and Occidental make
other arrangements.
6. CONTINUANCE AND TERMINATION
This Agreement shall continue in effect from year to year after the
initial approval and continuance as specified in Section 5, provided it is
approved annually 1) by vote of a majority of the outstanding voting securities
of the Fund or by vote of the Board of Managers of the Fund, and 2) by a
majority of the Managers of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Investment Company Act of 1940) of any
party to this Agreement; provided, however, that (a) Occidental, either on its
own motion or at the direction of the Fund upon a majority vote of the Board of
Managers of the Fund or by the vote of a majority of the outstanding voting
securities of the Fund, may, at any time and without the payment of any
penalty, terminate this Agreement upon sixty days' written notice to the
Services Company; (b) this Agreement shall immediately terminate in the event
of its assignment (within the meaning of the Investment Company Act of 1940)
unless such automatic termination shall be prevented by an exemptive order of
the Securities and Exchange Commission; and (c) the Services Company may
terminate this Agreement without payment of penalty on sixty days' written
notice to Occidental and the Fund. Any notice under this Agreement shall be
given in writing, addressed and delivered, or mailed postpaid, to the other
party at the principal office of such party. Any amendment to this Agreement
may be made at any time by mutual written con-
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<PAGE> 36
sent of the parties.
7. APPLICABLE LAW
______________
This Agreement shall be construed in accordance with the laws of the State
of California and the applicable provisions of the Investment Company Act of
1940.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
in Los Angeles, California on this day of , 1999.
OCCIDENTAL LIFE INSURANCE COMPANY
ATTEST: OF CALIFORNIA
__________________________________ By_____________________________________
Title: Title:
ATTEST: TRANSAMERICA INVESTMENT SERVICES,
__________________________________ By_____________________________________
Title: Title:
<PAGE> 37
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
1150 South Olive Street
Los Angeles, CA 90015
The undersigned hereby appoints [____________] and [____________], and each of
them, as proxies of the undersigned (the "Proxies"), each with full power to
appoint his substitute, and hereby authorizes each of them to represent and vote
all the Contracts of Transamerica Occidental's Separate Account Fund B (the
"Fund") owned as of May 10, 1999 at the Special Meeting of Contract Owners to be
held at the executive offices of Transamerica Occidental Life Insurance Company,
1150 South Olive Street, Los Angeles, CA 90015 on June 16, 1999, at 10 a.m.
(Pacific Time), and at any and all of the adjournments(s) or postponements(s)
thereof.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF MANAGERS OF THE FUND. WHEN
PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED CONTRACT OWNER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT, FOR APPROVAL OF THE
NEW INVESTMENT SUB-ADVISORY AGREEMENT, FOR ELECTION OF THE BOARD MEMBERS AND FOR
RATIFICATION OF THE SELECTION OF THE INDEPENDENT PUBLIC ACCOUNTANTS. In their
discretion, the Proxies are each authorized to vote upon such other business as
may properly come before the meeting and any adjournments or postponements of
the meeting unless otherwise prohibited by the undersigned. A Contract Owner
wishing to vote in accordance with the Board of Managers' recommendation need
only sign and date this proxy and return it in the envelope provided.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of a Special Meeting of Contract Owners and the Proxy Statement with
respect thereto and hereby revoke(s) any proxy or proxies heretofore given. This
proxy may be revoked at any time before it is exercised.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND PROMPTLY RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
Note: Please sign exactly as the name(s) appear(s) on this proxy card. When
signing as attorney, executor, administrator, trustee, or guardian, please give
full title as such. If signing for a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------------------
- --------------------------------------
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<PAGE> 38
<TABLE>
<S> <C> <C> <C> <C>
PLEASE MARK VOTES AS IN THIS
EXAMPLE /X/
FOR AGAINST ABSTAIN
TRANSAMERICA OCCIDENTAL'S 1. To approve the new investment advisory / / / / / /
SEPARATE ACCOUNT FUND B agreement Date between the Fund and
Transamerica Occidental Life Insurance Company.
- ------------------------------------------------------
2. To approve the new investment sub-advisory / / / / / /
agreement between the Fund and Transamerica
Investment Services, Inc.
Mark box at right if an address change / /
or comment has been noted on the
reverse side of this card
FOR THE
NOMINEE ABSTAIN
3. To elect as Board members the nominees
listed below:
GARY U. ROLLE / / / /
PETER J. SODINI / / / /
JON C. STRAUSS / / / /
[Nominee] / / / /
FOR AGAINST ABSTAIN
4. To ratify the selection by the Board of / / / / / /
Managers of Ernst & Young LLP as independent
public accountants for the fiscal year
ending December 31, 1999.
Please be sure to sign and date proxy. Date
- -------------------------------------------------------
Please sign exactly as name appears to the
left. When signing as attorney, executor,
administrator, trustee, or guardian, please
give full title as such. If signing for a
corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
RECORD DATE SHARES:
Contract Owner signs here Co-owner signs here
- ------------------------------------------------------
</TABLE>
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