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[On Xxxxxxx, Xxxxxxx & Xxxxxxxx letterhead]
October 4, 1996
Re: Agreement and Plan of Reorganization
dated as of September 27, 1996,
between Manulife Series Fund, Inc.
and NASL Series Trust
Manulife Series Fund, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
NASL Series Trust
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
You have requested our opinion with respect to the federal income
tax consequences of certain aspects of the proposed transfer by each Manulife
Portfolio(1) of all of its assets to its Corresponding NASL Portfolio solely in
exchange for NASL Portfolio Shares of the Corresponding NASL Portfolio and the
assumption of all its obligations and liabilities by the Corresponding NASL
Portfolio (as described in Section 1(a) of the Reorganization Agreement)
followed by the liquidation of each Manulife Portfolio and the distribution pro
rata of such NASL Portfolio Shares to the shareholders of the Corresponding
Manulife Portfolio. The series of steps that will occur to effect such
transaction are hereinafter referred to as the
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(1) Where relevant, capitalized terms not otherwise defined herein have the
meanings they have for the purposes of the Agreement and Plan of
Reorganization dated as of September 27, 1996, between the Manulife Series
Fund, Inc. and NASL Series Trust (the "Reorganization Agreement").
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Manulife Series Fund, Inc. -2- October 4, 1996
NASL Series Trust
"Reorganization." This opinion is being delivered pursuant to Section 6(d) of
the Reorganization Agreement.
Manulife Series Fund, Inc. ("Manulife") is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "Act"), as
an open-end investment company of the management type and is comprised of the
following separate investment portfolios: The Money-Market Fund, the Common
Stock Fund, the International Fund, the Emerging Growth Equity Fund, the
Balanced Assets Fund, the Pacific Rim Emerging Markets Fund, the Real Estate
Securities Fund, the Capital Growth Bond Fund, and the Equity Index Fund (each,
a "Manulife Portfolio"). The authorized capital stock of Manulife as of the
date hereof consists of one billion shares of common stock, each having a par
value of $.01 per share. As of June 24, 1996, there were outstanding
4,121,516.894 shares of the Money-Market Fund, 4,270,608.943 shares of the
Common Stock Fund, 2,571,534.851 shares of the International Fund,
8,770,698.390 shares of the Emerging Growth Equity Fund, 7,304,913.80 shares of
the Balanced Assets Fund, 1,908,435.152 shares of the Pacific Rim Emerging
Markets Fund, 3,801,682.955 shares of the Real Estate Securities Fund,
3,838,453.285 shares of the Capital Growth Bond Fund, and 325,263.287 shares of
the Equity Index Fund.
NASL Series Trust ("NASL") is registered under the Act as a no-load,
open-end investment company of the management type and is organized
as a Massachusetts business trust comprised of separate investment portfolios,
which include Money Market Trust, and which are expected to include, at the
Effective Time of the Reorganization, International Stock Trust, Emerging
Growth Trust, Balanced Trust, Common Stock Trust, Pacific Rim Emerging Markets
Trust, Real Estate Securities Trust, Capital Growth Bond Trust, and Equity
Index Trust (each, a "NASL Portfolio"). NASL's investment portfolios other than
the NASL Portfolios (consisting of Small/Mid Cap Trust, International Small Cap
Trust, Global Equity Trust, Pasadena Growth Trust, Equity Trust, Growth Trust,
Value Equity Trust, Growth and Income Trust, International Growth and Income
Trust, Strategic Bond Trust, Global Government Bond Trust, Investment Quality
Bond Trust, U.S. Government Securities Trust, and three Automatic Asset
Allocation Trusts (Aggressive, Moderate and Conservative)) are not parties to
the Reorganization.
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Manulife Series Fund, Inc. -3- October 4, 1996
NASL Series Trust
NASL has an unlimited number of authorized shares of beneficial
interest, with a par value of $.01 per share, of which as of June 24, 1996 there
were outstanding 33,815,940.278 shares of Money Market Trust. There are no
outstanding shares of International Stock Trust, Emerging Growth Trust, Balanced
Trust, Common Stock Trust, Pacific Rim Emerging Markets Trust, Real Estate
Securities Trust, Capital Growth Bond Trust, or Equity Index Trust.
The Manulife Portfolio Shares are not offered directly to the
public but are sold only to The Manufacturers Life Insurance Company of America
("Manulife America"), a stock life insurance company organized under the laws of
Pennsylvania and redomesticated under the laws of Michigan, in connection with
the issuance of variable life insurance and variable annuity contracts. Manulife
America holds Manulife Portfolio Shares attributable to variable life contracts
in Separate Accounts One, Three and Four and variable annuity contracts in
Separate Account Two, each a separate account registered under the Act. One
hundred percent of the Manulife Portfolio Shares are owned by Manulife America.
The Reorganization Agreement was approved by the Board of Trustees
of NASL on September 27, 1996 and by the Board of Directors of Manulife on
September 27, 1996.
Upon satisfaction of all conditions precedent set forth in the
Reorganization Agreement, the Reorganization will be effected as set forth in
the following summary:
1. Pursuant to the Reorganization Agreement, Manulife will cause
each Manulife Portfolio to convey, transfer and deliver at the Closing
to the NASL Portfolio set forth opposite its name in the table included
in the recitals to the Reorganization Agreement (each such NASL
Portfolio being the "Corresponding NASL Portfolio" of the Manulife
Portfolio set forth opposite its name, and each such Manulife Portfolio
being the "Corresponding Manulife Portfolio" of the NASL Portfolio set
forth opposite its name) all of the then existing assets of such
Manulife Portfolio. In consideration thereof, XXXX agrees at the Closing
to cause each NASL Portfolio (i) to assume and pay, to the extent that
they exist on or after the Effective Time of the Reorganization, all of
the obligations and liabilities of the Corresponding Manulife Portfolio
and (ii) to issue and deliver to the
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Manulife Series Fund, Inc. -4- October 4, 1996
NASL Series Trust
Corresponding Manulife Portfolio full and fractional shares of
beneficial interest of the Corresponding NASL Portfolio, with respect to
each Corresponding NASL Portfolio equal to that number of full and
fractional shares of the NASL Portfolios (the "NASL Portfolio Shares")
as determined in Section 1(c) of the Reorganization Agreement. Any
shares of capital stock (if any), par value $.01 per share, of the
Manulife Portfolios ("Manulife Portfolio Shares") held in the treasury
of Manulife on the Effective Time of the Reorganization shall thereupon
be retired.
2. At the Effective Time of the Reorganization, each Manulife
Portfolio will liquidate and distribute pro rata to Manulife America, as
sole shareholder of the Manulife Portfolio Shares, as of the Effective
Time of the Reorganization, the NASL Portfolio Shares of the
Corresponding NASL Portfolio received by such Manulife Portfolio
pursuant to Section 1(a)(i) of the Reorganization Agreement in actual or
constructive exchange for the shares of the Manulife Portfolio held by
Manulife America, as sole shareholder of the Manulife Portfolio Shares.
Such liquidation and distribution will be accomplished by the transfer
of the Corresponding NASL Portfolio Shares then credited to the account
of each Manulife Portfolio on the books of the Corresponding NASL
Portfolio, to open accounts on the share records of the Corresponding
NASL Portfolio in the names of the Manulife Portfolio shareholders and
representing the respective pro rata number of the NASL Portfolio Shares
due such shareholders. The NASL Portfolios will not issue certificates
representing the NASL Portfolio Shares in connection with such exchange.
3. As soon as practicable after the Effective Time of the
Reorganization, Manulife shall take all the necessary steps under
Maryland law and Manulife's Articles of Incorporation, as amended and
supplemented, to effect a complete dissolution of Manulife and to
deregister Manulife under the Act.
In acting as special counsel to XXXX and Manulife with respect to
the Reorganization, we have, among other things, reviewed the following
documents:
1. The Reorganization Agreement;
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Manulife Series Fund, Inc. -5- October 4, 1996
NASL Series Trust
2. NASL's Registration Statement on Form N-14 under the
Securities Act of 1933, as filed with the Securities and
Exchange Commission (the "Registration Statement on Form
N-14"); and
3. The current prospectuses and statements of additional
information of Manulife and NASL.
For purposes of this opinion, as hereinafter set forth, we have
reviewed such other documents relating to the Reorganization as we have deemed
relevant under the circumstances and have relied upon representations contained
in certain certificates (the "Certificates") provided to us by Manulife, NASL,
and Manulife America.
For purposes of the opinions expressed in this letter, it is
expressly assumed (1) that the Separate Accounts are properly treated for
federal income tax purposes as assets of Manulife America and are not separate
taxable entities for federal income tax purposes; and (2) that the
contractholders of variable life and variable annuity contracts are not
considered for federal income tax purposes to be the owners of the assets held
in the Separate Accounts and after the Reorganization will not be considered for
such purposes to be the owners of the assets in the Separate Accounts.
If the Merger is effected on a factual basis different from that
contemplated above, any or all of the opinions expressed herein may be
inapplicable. Further, our opinion is based on (i) the Internal Revenue Code of
1986, as amended (the "Code"), (ii) Treasury Regulations, (iii) judicial
precedents and (iv) administrative interpretations (including the current ruling
practice of the Internal Revenue Service) as of the date hereof. If there is any
subsequent change in the applicable law or regulations, or if there are
subsequently any new administrative or judicial interpretations of the law or
regulations, any or all of the individual opinions expressed herein may become
inapplicable.
Based on the foregoing, and assuming that the Reorganization is
effected in accordance with the terms of the Reorganization Agreement (and
exhibits thereto) and that the representations made pursuant thereto by the
parties are true at the Effective Time, it is our opinion that for federal
income tax purposes:
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Manulife Series Fund, Inc. -6- October 4, 1996
NASL Series Trust
(i) the Reorganization will constitute a reorganization within
the meaning of section 368(a)(1) of the Code with respect to each
Manulife Portfolio and its Corresponding NASL Portfolio;
(ii) no gain or loss will be recognized by any of the Manulife
Portfolios or the Corresponding NASL Portfolios upon the transfer of all
the assets and liabilities, if any, of each Manulife Portfolio to its
Corresponding NASL Portfolio solely in exchange for NASL Portfolio
Shares or upon the distribution of the NASL Portfolio Shares to the
holders of Manulife Portfolio Shares solely in exchange for all of their
Manulife Portfolio Shares;
(iii) no gain or loss will be recognized by shareholders of any
of the Manulife Portfolios upon the exchange of such Manulife Portfolio
Shares solely for NASL Portfolio Shares;
(iv) the holding period and tax basis of the NASL Portfolio
Shares received by each holder of Manulife Portfolio Shares pursuant to
the Reorganization will be the same as the holding period (provided the
Manulife Portfolio Shares were held as a capital asset on the date of
the Reorganization) and tax basis of the Manulife Portfolio Shares held
by the shareholder immediately prior to the Reorganization; and
(v) the holding period and tax basis of the assets of each of
the Manulife Portfolios acquired by its Corresponding NASL Portfolio
will be the same as the holding period and tax basis of those assets to
each of the Manulife Portfolios immediately prior to the Reorganization.
The payment by NASL Financial Services, Inc. ("NASL Financial") or
its affiliates of certain expenses of Manulife and NASL which are directly
related to the Reorganization (referred to in section 9 of the Reorganization
Agreement) will not affect the opinions set forth above regarding the federal
income tax consequences of the exchanges by Manulife and the shareholders of
Manulife. However, no opinion is expressed as to any other federal income tax
consequences to any of the parties of the payment of such expenses by NASL
Financial or its affiliates.
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Manulife Series Fund, Inc. -7- October 4, 1996
NASL Series Trust
We express our opinion herein only as to those matters
specifically set forth above and such opinion may be relied upon solely by you
for the exclusive purpose of ascertaining the federal income tax consequences of
the Reorganization contemplated in the Reorganization Agreement to the Manulife
Portfolios, the NASL Portfolios and the shareholders of the Corresponding
Manulife Portfolios on their receipt of the NASL Portfolio Shares pursuant to
the Reorganization Agreement.
Very truly yours,
/s/ XXXXXXX XXXXXXX & XXXXXXXX
