SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
[ ] Confidential for Use of the Commission Only (as permitted by Rule
14a-6(c)(2))
QUEST FOR VALUE FUND, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
DEBORAH KABACK, ESQ.
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(Name of Person(s) Filing Proxy Statement)
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14-a6(i)(3).
[ ] 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:(1)
_______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________
---------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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:
___________________________________________________
PRELIMINARY COPY
FOR THE INFORMATION OF THE
SECURITIES AND EXCHANGE COMMISSION ONLY
QUEST FOR VALUE FUND, INC.
ONE WORLD FINANCIAL CENTER, NEW YORK, N.Y. 10281
---------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 3,1995
---------------
TO THE SHAREHOLDERS:
Notice is hereby given that a special meeting of shareholders of the Quest
for Value Fund , Inc. (the "Fund") will be held at One World Financial Center,
New York, New York 10281 on the 40th floor on November 3, 1995, at 10:00 a.m.,
Eastern Time, for the following purposes:
1. To approve a new investment advisory agreement with Oppenheimer Management
Corporation;
2. To approve a new Subadvisory Agreement between Oppenheimer Management
Corporation and Quest for Value Advisors, the current advisor to the Fund;
3. To approve new Distribution and Service Plans and Agreements with
Oppenheimer Funds Distributor, Inc.;
4. To elect Directors; and
5. To act upon such other matters as may properly come before the meeting or
any adjournment or adjournments thereof.
The close of business on September 7, 1995 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting. A list of shareholders entitled to vote at the meeting will be
available for inspection by shareholders at the Fund office for ten days prior
to the meeting date.
BY ORDER OF THE BOARD OF DIRECTORS,
DEBORAH KABACK
SECRETARY
September 14, 1995
1
IMPORTANT
THE BOARD OF TRUSTEES URGES YOU TO MARK, SIGN AND RETURN THE ENCLOSED PROXY AS
SOON AS POSSIBLE WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON. THE
ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND IS PROVIDED FOR YOUR
CONVENIENCE. YOUR PROMPT RESPONSE WILL ELIMINATE THE NEED FOR ADDITIONAL AND
UNNECESSARY MAILINGS. QUEST FOR VALUE ADVISORS HAS RETAINED D. F. KING & CO.,
INC. TO ASSIST IN THE SOLICITATION OF PROXIES. SHAREHOLDERS WHO HAVE NOT VOTED
THEIR PROXIES IN A TIMELY MANNER MAY RECEIVE A TELEPHONE CALL FROM D. F. KING &
CO., INC. IN AN EFFORT TO URGE THEM TO VOTE.
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QUEST FOR VALUE FUND, INC.
ONE WORLD FINANCIAL CENTER, NEW YORK, N.Y. 10281
PROXY STATEMENT
---------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 3, 1995
This statement is furnished to the shareholders of the Quest for Value
Fund, Inc. (the "Fund") in connection with the solicitation by management of
proxies to be used at a special meeting (the "meeting") of shareholders of the
Fund to be held on November 3, 1995, or any adjournment or adjournments thereof.
This statement will first be mailed to shareholders on or about September 14,
1995.
The Fund has three class of capital stock: A, B and C. Shareholders of
each will vote together with respect to approval of Proposals one, two and four
and shareholders of each class will vote separately with respect to Proposal
three. As of September 7, 1995, the record date, there were outstanding
________ Class A shares, ________ Class B shares and ________ Class C shares of
the Fund. Each shareholder will be entitled to one vote for each share held on
the record date.
If the enclosed form of proxy is properly executed and returned, the shares
represented thereby will be voted at the meeting as indicated thereon with
respect to the Proposals stated therein. In the absence of choices, the shares
represented by the proxy will be voted in favor of the Proposals.
In order that your shares may be represented at the meeting or any
adjournment or adjournments thereof, you are requested to: indicate your voting
instructions on the proxy card; date and sign the proxy card; mail the proxy
card promptly in the enclosed postage-paid envelope; and allow sufficient time
for the proxy to be received on or before 10:00 a.m. on November 3, 1995.
The proxy confers discretionary authority upon the persons named therein to
vote on other business, not currently contemplated, which may come before the
meeting. In the event that a quorum (the presence in person or by proxy of the
holders of a majority of the Fund's shares entitled to vote) cannot be obtained,
an adjournment or adjournments of the meeting may be sought by the Board of
Directors. In the event that a quorum is present at the meeting but sufficient
votes to approve a particular Proposal are not received, the persons named as
proxies may propose one or more adjournments of the meeting to permit further
solicitation of proxies. Any such adjournment would require the affirmative
vote of the holders of a majority of the shares of the Fund present at the
meeting or any adjournment thereof, in person or by proxy. The persons named as
proxies will vote those proxies which they are entitled to vote FOR any matter
in favor of such an
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adjournment and will vote those proxies required to be voted AGAINST any matter
that comes before the meeting against any such adjournment.
The proxy may be revoked at any time prior to the voting thereof by: (i)
written instructions addressed to the Secretary of the Fund at One World
Financial Center, New York, New York 10281; (ii) attendance at the meeting and
voting in person; or (iii) signing and returning a new proxy (if returned and
received in time to be voted).
It is anticipated that proxy solicitation will be made principally by mail,
although employees of Quest for Value Advisors may, without special
compensation, contact shareholders by telephone or wire. Arrangements have been
made with brokers and custodians, nominees and fiduciaries to send proxy
material to beneficial owners. In addition, Quest for Value Advisors has
retained D. F. King & Co., Inc. to assist in the solicitation of proxies
primarily by contacting shareholders by telephone and telegram. The expenses of
the solicitation and meeting will be shared by Quest for Value Advisors and
Oppenheimer Management Corporation.
To the knowledge of the Fund, the following shareholders held as beneficial
or record owners 5% or more of each specified class of shares of the Fund as of
the record date:
Number and Class of Shares
Beneficially Owned Name and Address Percentage of Class
------------------ ---------------- -------------------
The officers and Directors of the Fund, as a group, owned beneficially less than
1% of the shares of any class of the Fund as of the record date.
Summary of the Proposed Transaction
Oppenheimer Capital formed its subsidiary Quest for Value Advisors to offer
its institutional investment advisory services to the retail market. Its
flagship fund, the Quest for Value Fund, Inc., was established in 1980. Since
that time, Quest for Value Advisors has steadily added to its product line
through the development of new funds and by acquisitions. Quest for Value
Distributors has marketed these products through an expanding network of third
party broker dealers and with an emphasis on the retirement market. Although
Oppenheimer Capital is proud of the performance of its mutual fund products and
the benefits they have brought to shareholders, it is increasingly difficult for
a relatively small mutual fund operation, with assets under $10 billion, to
compete in the current marketplace. Oppenheimer Capital and Quest for Value
Advisors believe that the proposed transaction with Oppenheimer Management
Corporation ("OMC") described in this Proxy Statement holds the potential for
continued benefits for shareholders.
4
Oppenheimer Capital, the parent of Quest for Value Advisors, the current
Advisor to the Fund, in the course of a review of its business, recently
concluded that it should concentrate on its core investment management business
and not continue in the retail distribution of mutual funds. The retail mutual
fund market requires significant assets per fund and in the aggregate for a
mutual fund family to cover normal costs, significant capital investment in new
products and services, financing for Class B and Class C shares and sales
support. Sometime after this determination was made, representatives of OMC
approached Oppenheimer Capital about acquiring certain of its mutual fund
assets. Representatives of OMC, Oppenheimer Capital, Quest for Value
Distributors and Quest for Value Advisors held meetings beginning in April 1995
and the parties negotiated the terms of an Acquisition Agreement (the
"Acquisition Agreement") and related agreements. The Acquisition Agreement was
executed by OMC, Oppenheimer Capital, Quest for Value Distributors and Quest for
Value Advisors on August 17, 1995. It is proposed that, subject to approval by
the shareholders of the Fund and the satisfaction of certain other conditions,
OMC become the investment adviser to the Fund and that a subsidiary of OMC,
Oppenheimer Funds Distributor, Inc., become the Fund's general distributor and
enter into a distribution agreement with the Fund pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "1940 Act") and that OMC and Quest for
Value Advisors enter into a Subadvisory Agreement with respect to the Fund,
pursuant to which Quest for Value Advisors will continue to provide investment
advisory services to the Fund. Accordingly, the portfolio of the Fund will
continue to be managed by Quest for Value Advisors, although overall management
and distribution and shareholder services will be provided by OMC and its
subsidiaries. In this way, although the Fund will become part of the
OppenheimerFunds, a much larger mutual fund group, there will be continuity of
portfolio management.
OMC and its subsidiaries are engaged principally in the business of
managing, distributing and servicing registered investment companies. OMC owns
all of the outstanding stock of Oppenheimer Funds Distributor, Inc., Shareholder
Services, Inc. and Shareholder Financial Services, Inc. OMC is a wholly-owned
subsidiary of Oppenheimer Acquisition Corp. ("OAC"), which is controlled by
Massachusetts Mutual Life Insurance Company ("MassMutual"), a mutual life
insurance company located at 1295 State Street, Springfield, MA 01111, that also
advises pension plans and investment companies. OAC acquired OMC on October 22,
1990. As indicated below, the common stock of OAC is owned by (i) certain
officers and/or directors of OMC, (ii) MassMutual and (iii) another investor.
No institution or person holds 5% or more of OAC's outstanding common stock
except MassMutual. MassMutual has engaged in the life insurance business since
1851. It is the nation's twelfth largest life insurance company by assets and
has an A.M. Best Co. rating of "A++".
The common stock of OAC is divided into three classes. At June 30, 1995,
MassMutual held (i) all of the 2,160,000 shares of Class A voting stock, (ii)
470,021 shares of Class B voting stock, and (iii) 940,067 shares of Class C non-
voting stock. This collectively represented 81.3% of the voting power of OAC as
of that date. Certain
5
officers and/or directors of OMC held (i) 654,788 shares of the Class B voting
stock, representing 14.9% of the outstanding common stock and 10.2% of the
voting power, and (ii) options acquired without cash payment which, when they
become exercisable, allow the holders to purchase up to 810,771 shares of Class
C non-voting stock. That group includes persons who will serve as officers of
the Fund if the proposed transaction described in this Proxy Statement is
consummated (Ms. Bridget A. Macaskill, Messrs. George C. Bowen, Andrew J.
Donohue and Robert C. Doll, Jr) and one of whom (Ms. Bridget A. Macaskill) is a
nominee to the Board of Directors of the Fund. Holders of OAC Class B and Class
C common stock may put (sell) their shares and vested options to OAC or
MassMutual at a formula price (based on earnings of OMC). MassMutual may
exercise call (purchase) options on all outstanding shares of both such classes
of common stock and vested options at the same formula price, according to a
schedule that will commence on September 30, 1995. During the period commencing
November 1, 1994 to date, Ms. Macaskill surrendered to OAC 20,000 stock
appreciation rights issued in tandem with the Class B OAC options, for cash
payments aggregating $1,375,800 (subject to adjustment of the formula price) by
OAC or MassMutual to be made as follows: one-third of the amount due (i) within
30 days of the transaction, (ii) by the first anniversary following the
transaction (with interest), and (iii) by the second anniversary following the
transaction (with interest).
The principal executive officers and directors of OMC are as follows: Jon
S. Fossel, Chairman of the Board, Chief Executive Officer and Director; Bridget
A. Macaskill, President and Director; Donald W. Spiro, Chairman Emeritus and
Director; Robert G. Galli, Vice Chairman; James C. Swain, Vice Chairman of the
Board and Director; Robert C. Doll, O. Leonard Darling and James Ruff, Executive
Vice Presidents; Tilghman G. Pitts III, Executive Vice President and Director;
Andrew J. Donohue, Executive Vice President and General Counsel; Kenneth C.
Eich, Executive Vice President and Chief Financial Officer; George C. Bowen,
Senior Vice President and Treasurer; Victor Babin, Robert A. Densen, Loretta
McCarthy, Robert Patterson, Nancy Sperte, Arthur Steinmetz, Ralph Stillmacher,
William L. Wilby and Robert B. Zack, Senior Vice Presidents. The business
location of all such persons is Two World Trade Center, New York, NY except for
Mr. Swain, who is located at OMC's office at 3410 S. Galena Street, Denver,
Colorado 80231.
Shareholders of the Fund are being asked to approve the new Investment
Advisory Agreement with OMC and the new Subadvisory Agreement between OMC and
Quest for Value Advisors. A favorable shareholder vote on Proposal 1 also will
constitute a vote to approve the termination of the Fund's existing Investment
Advisory Agreement with Quest for Value Advisors.
The Terms of the Acquisition Agreement
The Acquisition Agreement contemplates the sale to OMC of substantially all
the assets (the "Purchased Assets") of Quest for Value Advisors, Quest for Value
Distributors and Oppenheimer Capital (collectively, the "Companies") relating to
twelve
6
Quest for Value mutual funds (the "Acquired Funds") and the assumption by OMC of
certain liabilities of the Companies with respect to the Acquired Funds (the
"Assumed Liabilities") (the foregoing is referred to as the "Acquisition"). OMC
is not affiliated with the Companies. The Acquisition Agreement contemplates
that six of the Acquired Funds will be reorganized with certain mutual funds
currently advised by OMC (the "Reorganized Funds") and the remaining six
Acquired Funds (including the Fund) will enter into investment advisory
agreements with OMC (or its designee) and OMC (or its designee) will thereupon
enter into subadvisory agreements with Quest for Value Advisors for the benefit
of each such fund (the "Continuing Funds").
The purchase price for the Purchased Assets will be calculated pursuant to
the formula set forth on Exhibit A hereto. If the Acquisition had been
consummated on July 31, 1995, Quest for Value Advisors estimates that the
purchase price would have been approximately $50 million. The actual purchase
price may be lower depending upon changes in the net asset value of the Acquired
Funds.
A condition to the obligation of OMC to close under the Acquisition
Agreement (the "Closing") is the approval of the reorganizations of the
Reorganized Funds and the approval of the investment advisory agreements and
subadvisory agreements with the Continuing Funds by shareholders of the Acquired
Funds that have in the aggregate at least 75% of the closing net assets of all
Acquired Funds. A condition to the obligation of the Companies to close under
the Acquisition Agreement is that the directors or trustees of the Continuing
Funds and the Reorganized Funds have adopted a resolution that for a period of
three years after the Acquisition Closing, at least 75% of the members of the
board of each such fund will not be interested persons of the investment adviser
or subadviser for such funds or interested persons of Quest for Value Advisors,
the predecessor investment adviser, as to the Continuing Funds. The Acquisition
Agreement sets forth certain other closing conditions.
The Companies have each agreed pursuant to a Non Compete Agreement (the
"Non Compete Agreement") not to sponsor, manage or distribute any open-end or
closed-end management investment company registered under the 1940 Act or any
similar law in Canada (except for certain identified investment companies or
types of investment companies) and not to sell, underwrite or assist in the
distribution of shares of any such funds for a period to end on the earlier of
(i) the third anniversary of the date on which there is no effective Subadvisory
Agreement between OMC and Quest for Value Advisors or (ii) the eighth
anniversary of the Closing. OMC and the Companies have agreed to indemnify the
other party for certain liabilities.
PROPOSALS NO. 1 AND 2
CONSIDERATION OF NEW INVESTMENT ADVISORY AGREEMENT WITH OPPENHEIMER MANAGEMENT
CORPORATION AND NEW SUBADVISORY AGREEMENT BETWEEN OPPENHEIMER MANAGEMENT
CORPORATION AND QUEST FOR VALUE ADVISORS
7
The Proposed New Investment Advisory and Subadvisory Agreements
If approved by the shareholders of the Fund, the new Investment Advisory
Agreement (the "New Investment Advisory Agreement") and the New Subadvisory
Agreement (the "New Subadvisory Agreement") will become effective at the
Closing, which is anticipated to be held promptly after the shareholders
meeting. The following summary of the New Investment Advisory and New
Subadvisory Agreements is qualified in its entirety by reference to the form of
such agreements which are attached to this proxy statement as Exhibits B and C,
respectively.
Services to be Performed
Under the New Investment Advisory Agreement, OMC will act as the investment
adviser for the Fund and will supervise the investment program of the Fund. The
New Investment Advisory Agreement provides that OMC will provide administrative
services for the Fund including the completion and maintenance of records,
preparation and filing of reports required by the Securities and Exchange
Commission, reports to shareholders and composition of proxy statements and
registration statements required by Federal and state securities laws. OMC will
furnish the Fund with office space, facilities and equipment and arrange for its
employees to serve as officers of the Fund. The administrative services to be
provided by OMC under the New Investment Advisory Agreement will be at its own
expense.
Expenses not assumed by OMC under the New Investment Advisory Agreement or
paid by Oppenheimer Funds Distributor, Inc. will be paid by the Fund including
interest, taxes, brokerage commissions, insurance premiums, compensation,
expenses and fees of non-interested Directors, legal and audit expenses,
transfer agent and custodian fees and expenses, registration fees, expenses of
printing and mailing reports and proxy statements to shareholders, expenses of
shareholders meetings and non-recurring expenses including litigation. The New
Investment Advisory Agreement contains no expense limitation. However,
independently of the New Investment Advisory Agreement, OMC has undertaken to
reimburse the Fund to the extent that the total expenses of Fund in any fiscal
year (including the investment advisory fee but exclusive of taxes, interest,
brokerage commissions, distribution plan payments and any extraordinary non-
recurring expenses, including litigation) exceeds the most stringent state
regulatory limitation application to each Fund. At present, that limitation is
imposed by California and limits expenses (with specified exclusions) to 2.5% of
the first $30 million of average annual net assets, 2% of the next $70 million
and 1.5% of average annual net assets in excess of $100 million. The current
Investment Advisory Agreement contains a similar expense limitation.
The New Investment Advisory Agreement provides that OMC may enter into sub
advisory agreements with other affiliated or unaffiliated registered investment
advisers in order to obtain specialized services for the Fund provided that the
Fund is not required to
8
pay any additional fees for such services. The New Subadvisory Agreement
provides that Quest for Value Advisors shall regularly provide investment advice
with respect to the Fund and continuously supervise the investment and
reinvestment of cash, securities and the property comprising the assets of the
Fund. Under the New Subadvisory Agreement, Quest for Value Advisors agrees not
to change the Portfolio Manager of the Fund without the written approval of OMC
and to provide assistance in the distribution and marketing of the Fund.
Advisory and Subadvisory Fees
For the services and facilities to be provided by OMC under the New
Investment Advisory Agreement the Fund will pay a monthly fee computed as a
percentage of the Fund's average daily net assets. The fee applicable to the
Fund will be an annual fee, payable monthly, at the rate of 1.00% of the first
$400 million of net assets, .90% of the next $400 million of net assets and .85%
of net assets over $800 million. The existing advisory fee for the Fund is
1.00% of net assets with no breakpoints. Under the New Subadvisory Agreement,
OMC will pay Quest for Value Advisors an annual fee payable monthly, based on
the average daily net assets of the Fund, equal to 40% of the investment
advisory fee collected by OMC from the Fund based on the total net assets of the
Fund as of the effective date of the New Subadvisory Agreement (the "base
amount") plus 30% of the investment advisory fee collected by OMC based on the
total net assets of the Fund that exceed the base amount. On the record date,
the net assets of the Fund were $_____.
Limitation of Liability
The New Investment Advisory Agreement provides that in the absence of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or reckless disregard for its obligations and duties under the New
Investment Advisory Agreement, OMC will not be liable for any loss sustained by
reason of good faith errors or omissions in connection with any matters to which
the New Investment Advisory Agreement relates. The existing Investment Advisory
Agreement contains a similar provision. The New Subadvisory Agreement provides
that in the absence of willful misfeasance, bad faith, negligence or reckless
disregard of its duties or obligations, Quest for Value Advisors shall not be
liable to OMC for any act or omission in the course of or connected with
rendering services under the New Subadvisory Agreement or for any losses that
may be sustained in the purchase, holding or sale of any security.
Termination
The New Investment Advisory Agreement may be terminated by OMC or by the
Fund at any time without penalty upon 60 days written notice to the other party.
Termination by the Fund must be approved by the vote of a majority of the
Directors or by vote of a majority of the outstanding shares of the Fund. The
New Investment Advisory
9
Agreement will terminate in the event of an "assignment," as required by the
1940 Act. The existing Investment Advisory Agreement contains a similar
provision except that Quest for Value Advisors may terminate the agreement on 90
days' notice. The New Subadvisory Agreement contains similar provisions to the
New Investment Advisory Agreement with respect to termination in the event of an
"assignment" and termination by the Fund.
In addition, the New Subadvisory Agreement provides that if the agreement
is terminated prior to the tenth anniversary thereof, OMC will be obligated to
pay Quest for Value Advisors the subadvisory fee until the tenth anniversary
unless the New Investment Advisory Agreement has been terminated or the New
Subadvisory Agreement has been terminated upon the occurrence of any of the
following events:
(1) The Fund's performance ranks in the bottom quartile for two
consecutive calendar years and earns a Morningstar, Inc. three year
rating of less than three stars;
(2) Quest for Value Advisors is disqualified from serving as an investment
adviser to the Fund under Section 9(a) of the 1940 Act;
(3) Quest for Value Advisors, Quest for Value Distributors, Oppenheimer
Capital or persons under their control violate a material provision of
the Non Compete Agreement; or
(4) Quest for Value Advisors breaches a material provision of the New
Subadvisory Agreement.
Portfolio Transactions and Brokerage
The New Investment Advisory Agreement contains provisions relating to the
selection of broker-dealers ("brokers") for the Fund's portfolio transactions.
OMC and any Subadvisor may use such brokers as may, in its best judgment based
on all relevant factors, implement the policy of the Fund to achieve best
execution of portfolio transactions. While OMC need not seek advance
competitive bidding or base its selection on posted rates, it is expected to be
aware of the current rates of most eligible brokers and to minimize the
commissions paid to the extent consistent with the interests and policies of the
Fund as established by their Board and the provisions of the New Investment
Advisory Agreement.
The New Investment Advisory Agreement also provides that, consistent with
obtaining the best execution of the Fund's portfolio transactions, OMC and any
Subadvisor, in the interest of the Fund, may select brokers other than
affiliated brokers, because they provide brokerage and/or research services to
the Fund and/or other accounts of OMC or any Subadvisor. The commissions paid
to such brokers may be higher than another qualified broker would have charged
if a good faith determination is
10
made by OMC or any Subadvisor that the commissions are reasonable in relation to
the services provided, viewed either in terms of that transaction or OMC's or
any Subadvisor's overall responsibilities to all its accounts. No specific
dollar value need be put on the services, some of which may or may not be used
by OMC or any Subadvisor for the benefit of the Fund or other of its advisory
clients. To show that the determinations were made in good faith, OMC or any
Subadvisor must be prepared to show that the amount of such commissions paid
over a representative period selected by the Board was reasonable in relation to
the benefits to the Fund. The New Investment Advisory Agreement recognizes that
an affiliated broker-dealer may act as one of the regular brokers for the Fund
provided that any commissions paid to such broker are calculated in accordance
with procedures adopted by the Fund's Board under applicable SEC rules. The
existing Investment Advisory Agreement contains similar provisions.
The New Subadvisory Agreement permits Quest for Value Advisors to enter
into "soft dollar" arrangements through the agency of third parties to obtain
services for the Fund. Pursuant to these arrangements, Quest for Value Advisors
will undertake to place brokerage business with broker-dealers who pay third
parties that provide services. Any such "soft dollar" arrangements will be made
in accordance with policies adopted by the Board of the Fund and in compliance
with applicable law.
The Existing Investment Advisory Agreement with Quest for Value Advisors
Quest for Value Advisors provides investment advisory and management
services to each Fund pursuant to an Investment Advisory Agreement dated
November 1, 1988. The existing Investment Advisory Agreement was renewed most
recently by the Board of Directors of the Fund, including a majority of the non-
interested Directors, for a period of one year on October 25, 1994. The
shareholders of the Fund approved the existing Investment Advisory Agreement at
a meeting held on October 17, 1988.
The advisory fees accrued or paid to Quest for Value Advisors with respect
to the Fund for the fiscal year ended October 31, 1994 was $2,479,887.
The following tables compare current and pro forma fees based on assets and
expenses for the six months ended April 30, 1995 and for the fiscal year ended
October 31, 1994. The pro forma fees are those estimated to be incurred under
the New Investment Advisory Agreement, 12b-1 plans and other agreements if the
proposed transaction is consummated.
11
Period: Six months ended April 30, 1995 Current
SUMMARY OF FUND EXPENSES
CLASS OF SHARES: A B C
---------------- --- --- ---
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load Imposed on Purchase (as a % 5.50% none none
of offering price) . . . . . . . . . . . . . . . . . .
Maximum Deferred Sales Load(1) . . . . . . . . . . . . none 5.00% 1.00%
Maximum Sales Load Imposed On Reinvested Dividends . . none none none
Redemption Fee . . . . . . . . . . . . . . . . . . . . none none none
Exchange Fee . . . . . . . . . . . . . . . . . . . . . $5.00 $5.00 $5.00
ANNUAL FUND OPERATING EXPENSES (AS % OF AVERAGE NET
ASSETS)
Management Fee . . . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00%
12b-1 Fee (including service fees of .25%) . . . . . . .50% 1.00% 1.00%
Other Expenses . . . . . . . . . . . . . . . . . . . . .19% .21% .24%
---- ---- ----
TOTAL FUND OPERATING EXPENSES . . . . . . . . . . . . . 1.69% 2.21% 2.24%
---- ---- ----
---- ---- ----
(1) Purchases of Class A shares of $1 million or more are not subject to front-
end sales charges but a contingent deferred sales charge of 1% is imposed if the
shares are redeemed within the first 12 months after the end of the calendar
month of their purchase.
Pro Forma
SUMMARY OF FUND EXPENSES
CLASS OF SHARES: A B C
---------------- --- --- ---
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load Imposed on Purchase (as a % 5.75 none none
of offering price)(1) . . . . . . . . . . . . . . . . .
Maximum Deferred Sales Load(1) . . . . . . . . . . . . none 5.00% 1.00%
Maximum Sales Load Imposed On Reinvested Dividends . . none none none
Redemption Fee . . . . . . . . . . . . . . . . . . . . none none none
Exchange Fee . . . . . . . . . . . . . . . . . . . . . none none none
ANNUAL FUND OPERATING EXPENSES (AS % OF AVERAGE NET
ASSETS)
Management Fee . . . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00%
12b-1 Fee (including service fees of .25%) . . . . . . .50% 1.00% 1.00%
Other Expenses . . . . . . . . . . . . . . . . . . . . .19% .21% .24%
---- ---- ----
TOTAL FUND OPERATING EXPENSES . . . . . . . . . . . . . 1.69% 2.21% 2.24%
---- ---- ----
---- ---- ----
(1) Purchases of Class A shares of $1 million or more will not be subject to
front-end sales charges but a contingent deferred sales charge of 1% will be
imposed if the shares are redeemed withing the first 18 months after the end of
the calendar month of their purchase.
12
CURRENT
EXAMPLE 1: YOU WOULD PAY THE FOLLOWING EXPENSES OVER THE INDICATED PERIODS IN
THE FUND ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM SALES
CHARGE, (B) A 5% ANNUAL RETURN, AND (C) RETENTION OF SHARES AT THE END OF THE
TIME PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A
SHARES AFTER EIGHT YEARS.
A B C
1 Year . . . . . . . . . . . . . . . . . . . . . . . . $71.23 $22.41 $22.71
3 Years . . . . . . . . . . . . . . . . . . . . . . . . 105.33 69.12 70.03
5 Years . . . . . . . . . . . . . . . . . . . . . . . . 141.72 118.48 119.99
10 Years . . . . . . . . . . . . . . . . . . . . . . . 243.79 241.32 257.48
EXAMPLE 2: YOU WOULD PAY THE FOLLOWING EXPENSES OVER THE INDICATED PERIODS IN
THE FUND ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM SALES
CHARGE, (B) A 5% ANNUAL RETURN, AND (C) REDEMPTION AT THE END OF THE TIME
PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A
SHARES AFTER EIGHT YEARS.
A B C
1 Year . . . . . . . . . . . . . . . . . . . . . . . . $71.23 $72.41 $32.71
3 Years . . . . . . . . . . . . . . . . . . . . . . . . 105.33 99.12 70.03
5 Years . . . . . . . . . . . . . . . . . . . . . . . . 141.72 138.48 119.99
10 Years . . . . . . . . . . . . . . . . . . . . . . . 243.79 241.32 257.48
PRO FORMA
EXAMPLE 1: YOU WOULD PAY THE FOLLOWING EXPENSES OVER THE INDICATED PERIODS IN
THE FUND ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM SALES
CHARGE, (B) A 5% ANNUAL RETURN, AND (C) RETENTION OF SHARES AT THE END OF THE
TIME PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A
SHARES AFTER SIX YEARS.
1 Year . . . . . . . . . . . . . . . . . . . . . . $73.69 $22.41 $22.71
3 Years . . . . . . . . . . . . . . . . . . . . . . 107.70 69.12 70.03
5 Years . . . . . . . . . . . . . . . . . . . . . . 143.99 118.48 119.99
10 Years . . . . . . . . . . . . . . . . . . . . . 245.80 229.35 257.48
EXAMPLE 2: YOU WOULD PAY THE FOLLOWING EXPENSES OVER THE INDICATED PERIODS IN
THE FUND ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM SALES
CHARGE, (B) A 5% ANNUAL RETURN, AND (C) REDEMPTION AT THE END OF THE TIME
PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A SHARES
AFTER SIX YEARS.
1 Year . . . . . . . . . . . . . . . . . . . . . . $73.69 $72.41 $32.71
3 Years . . . . . . . . . . . . . . . . . . . . . . 107.70 99.12 70.03
5 Years . . . . . . . . . . . . . . . . . . . . . . 143.99 138.48 119.99
10 Years . . . . . . . . . . . . . . . . . . . . . 245.80 229.35 257.48
13
Period: Fiscal Year Ended October 31, 1994 Current
SUMMARY OF FUND EXPENSES
CLASS OF SHARES: A B C
---------------- --- --- ---
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load Imposed on Purchase (as a % 5.50% none none
of offering price) . . . . . . . . . . . . . . . . . .
Maximum Deferred Sales Load(1) . . . . . . . . . . . . none 5.00% 1.00%
Maximum Sales Load Imposed On Reinvested Dividends . . none none none
Redemption Fee . . . . . . . . . . . . . . . . . . . . none none none
Exchange Fee . . . . . . . . . . . . . . . . . . . . . $5.00 $5.00 $5.00
ANNUAL FUND OPERATING EXPENSES (AS % OF AVERAGE NET
ASSETS)
Management Fee . . . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00%
12b-1 Fee (including service fees of .25%) . . . . . . .50% 1.00% 1.00%
Other Expenses . . . . . . . . . . . . . . . . . . . . .21% .24% .28%
---- ---- ----
TOTAL FUND OPERATING EXPENSES . . . . . . . . . . . . . 1.71% 2.24% 2.28%
---- ---- ----
---- ---- ----
(1) Purchases of Class A shares of $1 million or more are not subject to front-
end sales charges but a contingent deferred sales charge of 1% is imposed if the
shares are redeemed within the first 12 months after the end of the calendar
month of their purchase.
Pro Forma
SUMMARY OF FUND EXPENSES
CLASS OF SHARES: A B C
---------------- --- --- ---
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load Imposed on Purchase (as a % 5.75 none none
of offering price)(1) . . . . . . . . . . . . . . . . .
Maximum Deferred Sales Load(1) . . . . . . . . . . . . none 5.00% 1.00%
Maximum Sales Load Imposed On Reinvested Dividends . . none none none
Redemption Fee . . . . . . . . . . . . . . . . . . . . none none none
Exchange Fee . . . . . . . . . . . . . . . . . . . . . none none none
ANNUAL FUND OPERATING EXPENSES (AS % OF AVERAGE NET
ASSETS)
Management Fee (2) . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00%
12b-1 Fee (including service fees of .25%) (4) . . . . .50% 1.00% 1.00%
Other Expenses . . . . . . . . . . . . . . . . . . . . .21% .24% .28%
TOTAL FUND OPERATING EXPENSES . . . . . . . . . . . . . 1.71% 2.24% 2.28%
---- ---- ----
---- ---- ----
(1) Purchases of Class A shares of $1 million or more will not be subject to
front-end sales charges but a contingent deferred sales charge of 1% will be
imposed if the shares are redeemed within the first 18 months after the end of
the calendar month of their purchase.
14
CURRENT
EXAMPLE 1: YOU WOULD PAY THE FOLLOWING EXPENSES OVER THE INDICATED PERIODS IN
THE FUND ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM SALES
CHARGE, (B) A 5% ANNUAL RETURN, AND (C) RETENTION OF SHARES AT THE END OF THE
TIME PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A
SHARES AFTER EIGHT YEARS.
A B C
1 Year . . . . . . . . . . . . . . . . . . . . . . . . $71.43 $22.71 $23.11
3 Years . . . . . . . . . . . . . . . . . . . . . . . . 105.92 70.03 71.23
5 Years . . . . . . . . . . . . . . . . . . . . . . . . 142.72 119.99 122.01
10 Years . . . . . . . . . . . . . . . . . . . . . . . 245.84 244.16 261.54
EXAMPLE 2: YOU WOULD PAY THE FOLLOWING EXPENSES OVER THE INDICATED PERIODS IN
THE FUND ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM SALES
CHARGE, (B) A 5% ANNUAL RETURN, AND (C) REDEMPTION AT THE END OF THE TIME
PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A
SHARES AFTER EIGHT YEARS.
A B C
1 Year . . . . . . . . . . . . . . . . . . . . . . . . $71.43 $72.71 $33.11
3 Years . . . . . . . . . . . . . . . . . . . . . . . . 105.92 100.03 71.23
5 Years . . . . . . . . . . . . . . . . . . . . . . . . 142.72 139.99 122.01
10 Years . . . . . . . . . . . . . . . . . . . . . . . 245.84 244.16 261.54
PRO FORMA
EXAMPLE 1: YOU WOULD PAY THE FOLLOWING EXPENSES OVER THE INDICATED PERIODS IN
THE FUND ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM SALES
CHARGE, (B) A 5% ANNUAL RETURN, AND (C) RETENTION OF SHARES AT THE END OF THE
TIME PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A
SHARES AFTER SIX YEARS.
1 Year . . . . . . . . . . . . . . . . . . . . . . $73.88 $22.71 $23.11
3 Years . . . . . . . . . . . . . . . . . . . . . . 108.28 70.03 71.23
5 Years . . . . . . . . . . . . . . . . . . . . . . 144.98 119.99 122.01
10 Years . . . . . . . . . . . . . . . . . . . . . 247.82 232.00 261.54
EXAMPLE 2: YOU WOULD PAY THE FOLLOWING EXPENSES OVER THE INDICATED PERIODS IN
EACH OF THE FUNDS ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM
SALES CHARGE, (B) A 5% ANNUAL RETURN, AND (C) REDEMPTION AT THE END OF THE TIME
PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A SHARES
AFTER SIX YEARS.
1 Year . . . . . . . . . . . . . . . . . . . . . . $73.88 $72.71 $33.11
3 Years . . . . . . . . . . . . . . . . . . . . . . 108.28 100.03 71.23
5 Years . . . . . . . . . . . . . . . . . . . . . . 144.98 139.99 122.01
10 Years . . . . . . . . . . . . . . . . . . . . . 247.82 232.00 261.54
15
For the fiscal year ended October 31, 1994, Oppenheimer & Co, Inc., an
affiliated broker-dealer of the Fund, was paid a total of $162,914 in brokerage
commissions by the Fund, which amount was 51.2% of the Fund's total brokerage
commissions during the period.
Other Matters in Connection with or Subsequent to the Closing
It is a condition to the Closing that the Fund enter into a transfer agency
agreement with Shareholder Services, Inc. ("SSI"), a wholly owned subsidiary of
OMC. The fees to be paid to SSI for transfer agency and dividend disbursing
services are set at the same schedule as is currently in effect pursuant to the
Transfer Agent Agreement between the Fund and State Street Bank and Trust
Company. The Board of Directors of the Fund approved the terms of the proposed
transfer agency agreement with SSI at a meeting held on June 22, 1995. It is
expected that on or about the time of the Closing, the Fund will elect new
officers and will appoint The Bank of New York as custodian. The Fund's current
custodian is State Street Bank and Trust Company. The Transfer Agent Agreement
and the Custodian Contract are not required to be approved by shareholders of
the Fund.
Evaluation By The Board of Directors
The Board of Directors has determined that continuity and efficiency of
management services after the Acquisition can best be assured by approving the
New Investment Advisory and Subadvisory Agreements on behalf of the Fund. The
Board believes that the new Investment Advisory and Subadvisory Agreements will
enable the Fund to obtain services of high quality at costs which they deem
appropriate and reasonable and that approval of the Agreements is in the best
interests of the Fund and its shareholders.
In evaluating the New Investment Advisory and Subadvisory Agreements, the
Board of Directors requested and reviewed, with the assistance of independent
legal counsel, materials furnished by OMC and Quest for Value Advisors. These
materials included financial statements as well as other written information
regarding OMC and its personnel, operations, and financial condition. The Board
also reviewed the same type of information about Quest for Value Advisors. The
Board also retained Management Practice, Inc., an independent consultant, to
provide data on comparable advisory fee structures. Consideration was given to
comparative information concerning other mutual funds with similar investment
objectives including information prepared by Lipper Analytical Services, Inc.
Attached to this Proxy Statement as Exhibit D is a list of other funds managed
by OMC that have similar investment objectives to those of the Fund, their net
assets and the rate of the advisory fee paid to OMC. The Board of Directors
also reviewed and discussed the terms and provisions of the New Investment
Advisory and Subadvisory Agreements and compared them to the existing management
arrangements as well as the management arrangements of other mutual funds,
particularly with respect to the allocation of various types of expenses, levels
of fees and resulting expense ratios.
16
The Board evaluated the nature and extent of services provided by other
investment advisers to their respective funds and also considered the benefits
OMC would obtain from its relationship with the Funds and the economies of scale
in costs and expenses to OMC associated with its providing such services.
The Board of Directors also considered the terms of the Acquisition
Agreement and the possible effects of the Acquisition upon OMC and its ability
to provide services to the Fund. In this regard, in May and July 1995, the non-
interested Directors visited OMC's offices in New York to meet with OMC's senior
executives and Board members of the OppenheimerFunds and in August 1995 the non-
interested Directors visited Shareholder Services, Inc.'s offices in Denver,
Colorado, to assess in person OMC's and its subsidiaries' capabilities and
facilities. All the non-interested Directors participated in such visits. The
Board evaluated such factors as OMC's experience in providing various financial
services to investment companies, its experience in the investment company
business, its distribution and shareholder servicing capabilities and its
reputation, integrity, financial responsibility and stability. The Board also
considered the following factors in determining to approve the New Investment
Advisory Agreement: shareholders of the Fund would be able to exchange their
shares after the Closing for a wider variety of portfolios within the
OppenheimerFunds family than are currently available to shareholders of the Fund
within the Quest family; the annual operating expenses of the Fund on a pro
forma basis are no higher than the Fund's expenses for the most recent fiscal
year ended October 31, 1994 and six month period ended April 30, 1995; Class B
shareholders would benefit from the earlier conversion (after six years rather
than after eight years) to Class A shares that have a lower asset based sales
charge; and breakpoints were established at the request of the Board in the
advisory fee to be paid to OMC. The Board of Directors determined that OMC's
assumption of the investment management function for the Fund would in all
likelihood offer the Fund continued effective advisory services and
capabilities.
The Board of Directors was advised by OMC that currently it was not
recommending changes in the Fund's investment objectives and policies. The
Board also noted the assurances it received from OMC that it is adequately
capitalized to enable it to provide high quality investment management services.
Based upon its review, the Board of Directors concluded that the terms of
the New Investment Advisory and Subadvisory Agreements are reasonable, fair and
in the best interests of the Fund and its shareholders, and that the fees
provided therein are fair and reasonable in light of the usual and customary
charges made by others for services of the same nature and quality.
Accordingly, the Board concluded that retaining OMC to serve as investment
adviser and Quest for Value Advisors as Subadvisor to the Fund after the
Acquisition is desirable and in the best interests of the Fund and its
shareholders.
17
Vote Required
As provided under the 1940 Act, approval of the New Investment Advisory and
Subadvisory Agreements will require the vote of a majority of the outstanding
shares of the Fund with respect to the New Investment Advisory Agreement and New
Subadvisory Agreement. Under the 1940 Act, the vote of a "majority of the
outstanding voting securities" of an investment company means the vote, at a
duly-called annual or special meeting of shareholders, of 67% or more of the
shares present at such meeting, if the holders of more than 50% of the
outstanding shares of such company or series are present or represented by
proxy, or of more than 50% of the total outstanding shares of such company or
series, whichever is less.
THE DIRECTORS, INCLUDING THE DIRECTORS WHO ARE NOT INTERESTED PERSONS OF QUEST
FOR VALUE ADVISORS OR OPPENHEIMER MANAGEMENT CORPORATION OR THEIR AFFILIATES,
UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO APPROVE THE NEW
INVESTMENT ADVISORY AGREEMENT WITH OPPENHEIMER MANAGEMENT CORPORATION AND THAT
THE SHAREHOLDERS OF THE FUND VOTE TO APPROVE THE NEW SUBADVISORY AGREEMENT
BETWEEN OPPENHEIMER MANAGEMENT CORPORATION AND QUEST FOR VALUE ADVISORS WITH
RESPECT TO THE FUND.
PROPOSAL NO. 3
APPROVAL OF NEW DISTRIBUTION PLANS FOR CLASS A, CLASS B
AND CLASS C SHARES
It is proposed that the Fund enter into an Amended and Restated
Distribution and Service Plan and Agreement (a "Plan") with Oppenheimer Funds
Distributor, Inc. with respect to each Class of shares (the "New Plans"). The
Plan for Class A shares is attached as Exhibit E; the Plan for Class B shares is
attached as Exhibit F; and the Plan for Class C shares is attached as Exhibit G
to this Proxy Statement. The New Plans were approved on June 22, 1995 by the
Directors, including the non-interested Directors, subject to the approval by
the shareholders. Shareholders of each Class of shares of each Fund will vote
separately on the approval of the Plan with respect to that class. The
following is a summary of the terms of the New Plans.
If the New Plans are approved by shareholders, the Plans will become
effective at the Closing and the corresponding current distribution plans
("Current Plans") with Quest for Value Distributors will terminate. The
Acquisition is conditioned upon approval of the New Plans by shareholders that
have in the aggregate at least 75% of the closing net assets of the Acquired
Funds.
The fees payable by each class of shares of the Fund under the New Plans
will be at the same rate as is provided in the Current Plans. The fees under
each New Plan will
18
consist of a service fee at the annual rate of .25% of the average net assets of
the shares and a distribution fee which will be at the annual rate of .25% of
the average net assets of Class A shares of the Fund and at the annual rate of
.75% of the average net assets of Class B and Class C shares of the Fund.
Oppenheimer Funds Distributor, Inc. will be authorized under the New Plans
to pay broker dealers, banks or other entities (the "Recipients") that render
assistance in the distribution of shares or provide administrative support with
respect to shares held by customers. The service fee payments made under the
Plans will compensate Oppenheimer Funds Distributor, Inc. and the Recipients for
providing administrative support with respect to shareholder accounts. The
distribution fee payments made under the Plans will compensate Oppenheimer Funds
Distributor, Inc. and the Recipients for providing distribution assistance in
connection with the sale of Fund shares.
The New Plans provide that payments may be made by OMC or by Oppenheimer
Funds Distributor, Inc. from its own resources or from borrowings. Like the
Current Plans, the New Plans may not be amended to increase materially the
amount of payments to be made without the approval of the relevant class of
shareholders of the Fund.
If the New Plans are approved by a separate vote of Class A, Class B and
Class C shareholders, each Plan will remain in effect only if its continuance is
specifically approved at least annually by the vote of both a majority of the
Directors and a majority of the non-interested Directors who have no direct or
indirect individual financial interest in the operation of the New Plans or any
agreements related thereto (the "Qualified Directors"). The New Plans may be
terminated at any time by vote of a majority of the Qualified Directors or by a
vote of a majority of the relevant class of Shares of the Fund. In the event of
such termination, the Board and the Qualified Directors shall determine whether
Oppenheimer Funds Distributor, Inc. is entitled to payment by the Fund of all or
a portion of the service fee and/or the distribution fee with respect to shares
sold prior to the effective date of such termination.
The service fee and the distribution fee payable under the New Plans, like
the fees payable under the Current Plans, are subject to reduction or
elimination under the limits imposed by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. ("NASD Rules"). The Plans are
intended to comply with NASD Rules and Rule 12b-1 adopted under the 1940 Act.
Rule 12b-1 requires that the selection and nomination of Directors who are not
"interested persons" of the Fund be committed to the discretion of the Qualified
Directors and that the Directors receive quarterly reports on the payments made
under the Plans and the purposes for those payments.
The Current Plans
Each existing 12b-1 Plan was reviewed most recently by the Board of
Directors on October 25, 1994. At that meeting the Directors evaluated all
information deemed reasonably necessary to make an informed determination that,
in the exercise of their
19
reasonable business judgment and in view of their fiduciary duties, there was a
reasonable likelihood that continuation of each 12b-1 Plan would benefit the
applicable class of shares of the Fund and their shareholders.
For the fiscal year ended October 31, 1994, each class of shares accrued or
paid the following fees under the current 12b-1 Plans both in the aggregate and
as a percentage of average net assets:
Class A Class B Class C
------- ------- -------
$1,189,613 .50 % $83,411 1.00 % $17,249 1.00%
For the fiscal year ended October 31, 1994, Quest for Value Distributors
paid $276,738 in distribution and service fees to Oppenheimer & Co., Inc., an
affiliated broker-dealer, with respect to the Fund.
Current and Proposed Sales Arrangements
Class A shares of the Fund are sold with an initial sales load except that
purchases of Class A shares in the amount of $1 million or more are sold without
an initial sales load but are subject to a contingent deferred sales charge
("CDSC") of 1% if the shares are redeemed within the first twelve months after
the end of the calendar month of their purchase. Class B shares of the Fund are
sold without an initial sales load but are subject to a maximum CDSC of 5.00% if
redeemed within one year after the end of the calendar month of the purchase.
The CDSC declines to 0 after the shares have been held for 6 years. Class C
shares are sold without an initial sales load but are subject to a CDSC of 1% if
the shares are redeemed within one year after the end of the calendar month in
which they were purchased. Class B shares automatically convert to Class A
shares of the Fund eight years after the end of the calendar month in which the
shares were purchased. Class A shares of the Fund may be exchanged for Class A
shares of any other Quest Fund, Class B shares of the Fund may be exchanged for
Class B shares of any other Quest Fund and Class C shares may be exchanged for
Class C shares of any other Quest Fund.
After the Closing, the CDSC applicable to Class B and Class C shares of the
Fund will remain the same. The maximum initial sales load applicable to
purchases of less than $25,000 of Class A shares will be 5.75% (rather than
5.50%) and purchases of Class A shars in the amount of $1 million or more will
not be charged an initial sales load but will be subject to a contingent
deferred sales charge if the shares are redeemed within 18 months (rather than
12 months) after the month of their purchase.
In addition, Class B shares will convert to Class A shares automatically
after 6 years. Class A shares of the Fund may be exchanged for Class A shares
of any Oppenheimer Fund, Class B shares of the Fund may be exchanged for Class B
shares of any Oppenheimer Fund and Class C shares of the Fund may be exchanged
for Class C shares of any Oppenheimer Fund. Any shareholders of the Fund who
are entitled to purchase Class A shares at net asset value in accordance with
the provisions of the Fund's
20
prospectus will have the right, after the Closing, to purchase any Class A
shares of the Acquired fudns at net asset value and will have the right to
purchase any Class A shares of other OppenheimerFunds at net asset value as soon
as the prospectus for each OppenheimerFund is updated to include such purchase
provisions.
Evaluation by the Board of Directors
The Directors, including the Qualified Directors, believe the adoption of a
distribution plan under Rule 12b-1 is essential to and a part of the purpose of
each class of Shares of the Fund in selling its Shares to those persons who wish
to avail themselves of the services of a broker-dealer. In addition, the
Directors believe past experience with the Current Plans has shown that
maintaining a plan under Rule 12b-1 has been in the best interests of the Fund
and its shareholders. In their deliberations, the Directors considered many
pertinent factors such as the levels of fees prescribed by the Current Plans and
the New Plans. The Board also considered the potential benefit to the Fund of
the proposed method of distribution through Oppenheimer Funds Distributor, Inc.;
the potential conflicts of interest inherent in the use of Fund assets to pay
for distribution expenses; the relationship of the fees under the New Plans to
the overall cost structure of the Fund; and the potential benefits to existing
shareholders of continued asset growth, including the potential to benefit from
economies of scale.
Vote Required
Approval of each New Plan for each class of Shares of the Fund will require
the vote of a "majority of the outstanding voting securities" of that class of
Shares of the Fund, as defined in the next to last paragraph of Proposal 1 and 2
of this Proxy Statement.
THE DIRECTORS, INCLUDING THE QUALIFIED DIRECTORS, UNANIMOUSLY
RECOMMEND THAT THE NEW CLASS A PLAN, THE NEW CLASS B PLAN AND THE NEW
CLASS C PLAN BE APPROVED BY SHAREHOLDERS OF EACH RESPECTIVE CLASS.
PROPOSAL NO. 4
ELECTION OF DIRECTORS
If Proposals 1,2 and 3 are approved, proxies not indicating a contrary
intention will be voted in favor of the election of the five persons named below
as Directors, to hold office for an indefinite period and until their successors
are elected and qualified.
OMC, Quest for Value Advisors, Quest for Value Distributors and Oppenheimer
Capital have agreed to comply and use all reasonable efforts to cause compliance
with the provisions of Section 15(f) of the 1940 Act. Section 15(f) provides,
in pertinent part, that an investment adviser and its affiliates may receive any
amount or benefit in connection with a sale of such investment adviser which
results in an assignment of an investment
21
advisory contract if (1) for a period of three years after the time of such
event, 75% of the members of the board of trustees or directors of the
investment company which it advises are not "interested persons" (as defined in
the 1940 Act) of the new or old investment adviser, and (2) during the two-year
period after the date on which the transactions occurs, there is no "unfair
burden" imposed on the investment company as a result of the transaction. For
this purpose, "unfair burden" is defined to include any arrangement during the
two-year period after the transactions whereby the investment adviser or
predecessor or successor investment advisers, or any interested person of any
such adviser, receives or is entitled to receive any compensation directly or
indirectly (i) 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
company, or (ii) from the investment company or its security holders for other
than bona fide investment advisory or other services. No compensation
arrangements of the types described above are contemplated in the proposed
transaction. The composition of the Board of Directors of the Fund is presently
in compliance with the 75% requirement and will continue to be so if all the
nominees named in Proposal 4 are elected.
The Board is recommending the election of four Directors who are currently
Directors of the Fund and are not "interested persons" of OMC, Quest for Value
Advisors, Quest for Value Distributors or Oppenheimer Capital and one Director,
Bridget A. Macaskill, who is an "interested person" of OMC but not of Quest for
Value Advisors. Joseph M. La Motta, who is currently the Chairman of the Board
of the Fund, is not standing for re-election and, upon the Closing, will resign.
Each nominee has consented to being named as a nominee in this Proxy
Statement. Should any nominee become unable or unwilling to serve, the persons
appointed as proxies shall vote for the election of such other person or persons
as the Board of Directors of the Fund shall recommend. The Board of Directors
has no reason to believe that any person nominated will be unable or unwilling
to serve if elected to office.
The following table shows the nominees who are standing for election and
their principal occupation which, unless specific dates are shown, are of more
than five years duration, although the titles held may not have been the same
throughout. The table also shows how long the nominee has served on the Board
of Directors of the Fund; if no date is shown, the nominee is standing for
election for the first time at this Meeting.
DIRECTOR
--------
NAME, AGE AND ADDRESS SINCE PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ----- ----------------------------------------
Paul Y. Clinton 1983 Director, External Affairs, Kravco
Age: 64 Corporation, a national real estate
946 Morris Avenue owner and property management
Bryn Mawr, PA 19010 corporation; formerly President of Essex
Management Corporation, a management
consulting company; Trustee
22
of Capital Cash Management Trust, Prime
Cash Fund and Short Term Asset Reserves,
each of which is a money-market fund;
Director of Quest for Value Global Equity
Fund, Inc., Quest for Value Global Funds,
Inc. and Quest Cash Reserves, Inc.,
Trustee of Quest for Value Accumulation
Trust and Quest for Value Family of Funds
all of which are open-end investment
companies. Formerly a general partner of
Capital Growth Fund, a venture capital
partnership; formerly a general partner of
Essex Limited Partnership, an investment
partnership; formerly President of Geneve
Corp., a venture capital fund; formerly
Chairman of Woodland Capital Corp., a
small business investment company;
formerly Vice President of W.R. Grace &
Co.
Thomas W. Courtney, C.F.A. 1985 Principal of Courtney Associates, Inc.,
Age: 61 a venture capital firm; former General
P.O. Box 580 Partner of Trivest Venture Fund, a
Sewickley, PA 15143 private venture capital fund; former
President of Investment Counseling
Federated Investors, Inc.; Trustee of
Cash Assets Trust, a money market fund;
Director of Quest Cash Reserves, Inc.,
Quest for Value Global Equity Fund, Inc.
and Quest for Value Global Funds, Inc.,
Trustee of Quest for Value Accumulation
Trust and Quest for Value Family of
Funds all of which are open-end
investment companies; former President
of Boston Company Institutional
Investors; Trustee of Hawaiian Tax-Free
Trust and Tax Free Trust of Arizona,
tax-exempt bond funds; Director of
several privately owned corporations;
former Director of Financial Analysts
Federation.
Lacy B. Herrmann 1984 President and Chairman of the Board of
Age: 66 Aquila Management Corporation (since
380 Madison Avenue 1984) and of Incap Management
Suite 2300 Corporation (since 1982), the sponsoring
New York, NY 10017 organizations and Administrator and/or
Sub-Advisor to the following open-end
investment companies,
23
and Chairman of the Board of Trustees and
President of each: Churchill Cash Reserves
Trust (since 1985), Short Term Asset
Reserves (since 1984), Cash Assets Trust
(since 1984), U.S. Treasuries Cash Assets
Trust (since 1988), Tax-Free Cash Assets
Trust (since 1988), Prime Cash Fund (since
1982), Oxford Cash Management Fund
(1982-1988) and Trinity Liquid Assets
Trust (1982-1985), each of which is a
money market fund, and of Churchill Tax-
Free Fund of Kentucky (since 1986), Tax-
Free Fund of Colorado (since 1986), Tax-
Free Trust of Oregon (since 1985), Tax-
Free Fund of Arizona (since 1985), and
Hawaiian Tax-Free Trust (since 1984), each
of which is a tax-free municipal bond
fund; Vice President, Director, Secretary,
and formerly Treasurer of Aquila
Distributors, Inc. (since 1981),
distributor of most of the above funds;
President and Chairman of the Board of
Trustees of Capital Cash Management Trust
("CCMT") a money market fund (since 1981)
and an Officer and Trustee/Director of its
predecessors (since 1974); President and
Director of STCM Management Company, Inc.,
sponsor and Sub-Advisor to CCMT; General
Partner of Tamarack Associates
(1966-1984), a private investment
partnership and Chairman of the Board and
President of various of its subsidiaries
through 1986. Director of Quest Cash
Reserves, Inc., Quest for Value Global
Equity Fund, Inc. and Quest for Value
Global Funds, Inc., Trustee of Quest for
Value Accumulation Trust, Quest for Value
Family of Funds and The Saratoga Advantage
Trust, each of which is an open-end
investment company.
George Loft 1982 Private Investor; Director of Quest Cash
Age: 80 Reserves, Inc., Quest for Value Global
51 Herrick Road Equity Fund, Inc. and Quest for Value
Sharon, CT 06069 Global Funds, Inc., Trustee of Quest for
Value Accumulation Trust, Quest for
Value Family of Funds and The Saratoga
Advantage Trust,
24
all of which are open- end investment
companies, and Director of Quest for Value
Dual Purpose Fund, Inc., a closed-end
investment company.
Bridget A. Macaskill President and Chief Operating Officer of
Age: 47 Oppenheimer Management Corporation since
Two World Trade Center 1991; prior thereto, Chief Operating
New York, NY 10048 Officer of OMC from 1989 to 1991 and
Executive Vice President of OMC from
1987-1989. Vice President, Director of
Oppenheimer Acquisition Corp, Director
of Oppenheimer Partnership Holdings,
Inc., Chairman and a Director of
Shareholder Services, Inc. Director of
Main Street Advisers, Inc., Director of
Harbourview Asset Management
Corporation, all of which are
subsidiaries of OMC.
If all five nominees are elected, four of the five Directors (over 75%)
will not be "interested persons" of OMC, Quest for Value Advisors, Quest for
Value Distributors or Oppenheimer Capital or any of their affiliates.
As of August 15, 1995, each nominee for Director and the current officers
and Directors of the Fund held shares of each specified class of the Fund as set
forth below:
Number of Number of
Number of Number of Shares as to Shares as to
Shares as to Shares as to which owners which owners
which owners which owners have sole have shared
have sole have shared investment investment
Name voting power voting power power power
---- ------------ ------------ ----- -----
3611 3611
Paul Y. Clinton 0 Class A 0 Class A
350 350
Thomas W. Courtney Class A 0 Class A 0
7506 7506
Lacy B. Herrmann Class A 0 ClassA 0
4185 3413 4185 3413
George Loft Class A Class A Class A Class A
Bridget A. Macaskill 0 0 0 0
All current officers 21,650 7,024 53,028 7,024
and directors as a Class A Class A Class A Class A
group
25
During the last fiscal year of the Fund the Board of Directors held four
regular quarterly meetings and one special meeting. The Board of Directors
audit committee, which consists of all Directors who are not "interested
persons," held two meetings during the Fund's last fiscal year. That committee
reviews audits, audit procedures, financial statements and other financial and
operational matters of the Fund. The Board has neither a standing nominating
committee nor a standing compensation committee. Each Director attended at
least 75% of the meetings of the Board of Directors and the meetings held by the
committee of the Board on which such Director served during the last fiscal
year.
Remuneration of Directors
Mr. La Motta and the officers of the Fund receive no salary from the Fund.
The following table sets forth the aggregate compensation received from the Fund
and Quest for Value Advisors' Fund Complex by the Fund's non-interested
directors during the fiscal year ended October 31, 1994.
Name of Person Aggregate Pension or Estimated Total
Compensation Retirement Annual Compensation
from the Fund Benefits Benefits Upon from Fund
Accrued as Retirement and Fund
Part of Fund Complex
Expenses
Paul Y. Clinton $4,200 None None $68,100
Thomas W. 4,200 None None 66,600
Courtney
Lacy B. 4,200 None None 67,350
Herrmann
George Loft 4,200 None None 74,800
Messrs. Clinton, Courtney and Herrmann earned directors fees with respect
to 18 investment companies in Quest for Value Advisors' Fund Complex and the
fees earned by Mr. Loft were with respect to 19 investment companies in the
Complex. During such periods the non-interested Directors received fees from
three investment companies for which they no longer serve as directors and which
are no longer part of the Complex but for which Quest for Value Advisors
currently serves as subadviser. In addition, during such periods, Mr. Clinton
and Mr. Courtney each served as director with respect to three investment
companies in the Complex for which they received no fees and Mr. Loft and Mr.
Herrmann each served as director with respect to 10 investment companies in the
Complex for which they received no fees. For the purpose of this paragraph, a
portfolio of an investment company organized in series form is considered to be
an investment company. Under the fee schedule in effect for the Complex, until
a portfolio has net assets of $25 million, no Directors fees are paid by that
portfolio. When a portfolio has net assets of at least $25 million but not more
than $50 million, the Directors, other than Mr. La Motta, are paid an annual fee
of $1,750 plus $250 for each Directors meeting attended and $100 for each
committee meeting attended. When a portfolio has net assets in excess
26
of $50 million, the Directors, other than Mr. La Motta, are paid an annual fee
of $3,500 plus $500 for each Directors meeting attended and $100 for each
committee meeting attended. These fees are reduced when more than five funds
managed by Quest for Value Advisors have net assets in excess of $50 million.
The following table sets forth information about the current officers of
the Fund who are not Directors.
Name and Age Principal Occupation Title with the Fund
During Past Five Years
Bernard H. Garil President since 1994 and Vice President since 1991
Age: 55 Chief Operating Officer
since 1990 of Quest for
Value Advisors; Executive
Vice President of Quest
for Value Advisors from
1990-1994.
Eileen Rominger Managing Director of Vice President and
Age: 41 Oppenheimer Capital since Portfolio Manager since
1994; Senior Vice 1989.
President of Oppenheimer
from 1986 to 1994.
Sheldon M. Siegel Managing Director of Treasurer since 1987
Age: 53 Oppenheimer Capital
Deborah Kaback Senior Vice President Secretary since 1992
Age: 44 since 1993 and Vice
President from 1990 to
1993 of Oppenheimer
Capital
Leslie Klein Vice President of Assistant Treasurer since
Age: 43 Oppenheimer Capital 1987
Thomas E. Duggan Managing Director and Assistant Secretary since
Age: 51 General Counsel of 1992
Oppenheimer Capital
Maria Camacho Assistant Vice President Assistant Secretary since
Age: 40 since 1994 and blue sky 1995
administrator of
Oppenheimer Capital
27
Upon the Closing, it is anticipated that the foregoing officers of the Fund
will resign and that OMC will propose to the Directors that Bridget A. Macaskill
be elected Chairman of the Board and President, that George Bowen be elected
Treasurer, that Robert Doll be elected Vice President and that Andrew J. Donohue
be elected Secretary. Information about Ms. Macaskill, who is a nominee for
Director, is provided in the table on nominees. The address of all such
proposed officers is Oppenheimer Management Corporation, 2 World Trade Center,
NY, NY. The following table provides information about the other proposed
officers:
Name and Age Principal Occupation During Past Five Years
------------ -------------------------------------------
George C. Bowen Senior Vice President and Treasurer of OMC; Vice
Age: 59 President and Treasurer of Oppenheimer Funds
Distributor, Inc., and Harbour View Asset Management
Corporation; President, Treasurer and Director of
Centennial Capital Corporation; Senior Vice
President, Treasurer and Secretary of Shareholder
Services, Inc.; Vice President, Treasurer and
Secretary of Shareholder Financial Services, Inc. and
an officer of various Oppenheimer Funds.
Robert T. Doll Executive Vice President and Director of Equity
Age: 41 Investments of OMC; officer of various Oppenheimer
Funds.
Andrew J. Donohue Executive Vice President and General Counsel of OMC
Age: 45 and Oppenheimer Funds Distributor, Inc.; officer of
various Oppenheimer Funds.
Vote Required
A plurality of all the votes cast at the meeting, if a quorum is present at
the meeting, is sufficient to elect the nominees. If Proposals 1, 2 and 3 are
not approved by the shareholders, no election of Directors will be held and the
slate of officers first named above will continue in office.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE TO
ELECT EACH OF THE NOMINEES
OTHER INFORMATION
The Current Advisor
Quest for Value Advisors and Oppenheimer Capital are located at One World
Financial Center, New York, New York, and all executive officers of the Advisor
have business addresses at that location.
28
The Advisor is a general partnership of which Oppenheimer Capital, an
investment management firm, holds a 99% interest and Oppenheimer Financial Corp.
holds a 1% interest. Oppenheimer Capital is a general partnership of which
Oppenheimer Financial Corp., a holding company, holds a 33.0% interest and
Oppenheimer Capital, L.P., a limited partnership of which Oppenheimer Financial
Corp. is the sole general partner, holds a 67.0% interest. Oppenheimer Capital
L.P. acquired a 32.3% interest in Oppenheimer Capital on July 9, 1987 for
$99,032,000 in connection with a public offering of units of limited partnership
interest in Oppenheimer Capital. L.P. (see Registration Statement No. 33-14364
and Amendments). Additional interests were acquired subsequently as a result of
the issuance of units pursuant to the Restricted Unit and Restricted Option
Plans. An additional interest of 33.6% in Oppenheimer Capital was acquired by
Oppenheimer Capital, L.P. on April 23 and May 1, 1991 in connection with a
public offering of 6.6 million units of limited partnership interest in
Oppenheimer Capital, L.P. (see Registration Statement No. 33-39345 and
Amendments). All such units were sold by Oppenheimer Financial Corp., which is
owned by Oppenheimer Group, Inc. Oppenheimer & Co., L.P., an investment limited
partnership, owns 100% of the common stock of Oppenheimer Group, Inc. Mr. La
Motta is Chairman of the Advisor and President of Oppenheimer Capital, Executive
Vice President of Oppenheimer & Co., Inc., and Director and Executive Vice
President of Oppenheimer Financial Corp., Oppenheimer Group, Inc., and
Oppenheimer Holdings, Inc.
Mr. La Motta and Mr. Siegel both hold general partnership and limited
partnership interests in Oppenheimer & Co., L.P.; Mr. Duggan, Mr. Garil and Ms.
Rominger hold limited partnership interests in Oppenheimer & Co., L.P.
RECEIPT OF SHAREHOLDER PROPOSALS, QUORUM AND VOTING
Under the proxy rules of the SEC, shareholder proposals meeting tests
contained in those rules may, under certain conditions, be included in the
Fund's proxy statement and proxy for a particular annual meeting. Those rules
require that at the time the shareholder submits the proposal the shareholder be
a record or beneficial owner of at least 1% or $1,000 in market value of
securities entitled to be voted on the proposal and have held such securities
for at least one year prior thereto, and continue to hold such shares through
the date on which such meeting is held. Another of these conditions relates to
the timely receipt by the Fund of any such proposal. Under these rules,
proposals submitted for inclusion in the Fund's proxy material for the next
annual meeting after the meeting to which this proxy statement relates must be
received by the Fund not less than 120 days before the first anniversary of the
date stated on the first page of this Proxy Statement relating to the first
mailing of this Proxy Statement. The date for such submission could change,
depending on the scheduled date for the next annual meeting.
The fact that the Fund receives a shareholder proposal in a timely manner
does not insure its inclusion in its proxy material, since there are other
requirements in the proxy rules relating to such inclusion.
29
Shareholders should be aware that under the law of the state in which the
Fund is established, Maryland, corporations need hold no annual meetings of
shareholders as long as there is no particular requirement under the Investment
Company Act of 1940 which must be met by convening such a shareholders' meeting.
As it is the intention of the Board of Directors not to hold annual shareholder
meetings in the future unless required to do so under that Act, there can be no
assurance that shareholder proposals validly submitted to the Fund will be acted
upon at a regularly scheduled annual shareholders' meeting.
Shares represented in person or by proxy (including shares which abstain or
do not vote with respect to one or more of the proposals presented for
shareholder approval including "broker non-votes") will be counted for purposes
of determining whether a quorum is present at the Meeting. Abstentions will be
treated as shares that are present and entitled to vote for purposes of
determining the number of shares that are present and entitled to vote with
respect to any particular proposal, but will not be counted as a vote in favor
of such proposal. Accordingly, an abstention from voting on a proposal has the
same legal effect as a vote against the proposal. "Broker non votes" have the
same legal effect as a vote against the proposal. "Broker non-votes" exist
where a proxy received from a broker indicates that the broker does not have
discretionary authority to vote the shares on that matter.
MAILING OF ANNUAL REPORT
The Fund will furnish, without charge, a copy of its Annual Report for the
year ended October 31, 1994 to a shareholder upon request. Such request should
be made to Bernard H. Garil, Quest for Value Advisors, One World Financial
Center, New York, NY 10281, or by calling 1-800-232-3863. The report will be
sent by first class mail within three business days of the request.
OTHER BUSINESS
The management knows of no business other than the matters specified above
which will be presented at the meeting. Inasmuch as matters not known at the
time of the solicitation may come before the meeting, the proxy as solicited
confers discretionary authority with respect to such matters as may properly
come before the meeting and it is the intention of the persons named in the
proxy to vote the proxy in accordance with their judgment on such matters.
By Order of the Board of Directors
DEBORAH KABACK
SECRETARY
30
EXHIBIT A
The aggregate purchase price for the Purchased Assets and Assumed Liabilities
will be an amount equal to the sum of (i) the Initial Purchase Payment (as
hereinafter defined) payable in cash at the Closing, (ii) the aggregate amount
of all unamortized prepaid commissions as of the business day immediately
preceding the Acquisition Closing which relate to the Acquired Funds (excluding
those with respect to Citibank, N.A.) payable in cash at the Closing, (iii) the
amount payable by OMC in respect of the right, title and interest of Citibank,
N.A. to certain commissions, (iv) the Deferred Purchase Payment (as hereinafter
defined) and (v) the aggregate amount of the Assumed Liabilities.
The "Initial Purchase Payment" shall be an amount equal to the sum of (x) 225%
of the Annualized Fee Amount (as hereinafter defined) of each Reorganized Fund
and (y) 270% of the Annualized Fee Amount of each Continuing Fund (excluding the
Quest for Value Officers Fund). The "Annualized Fee Amount" of an Acquired Fund
shall equal the product of (i) such Acquired Fund's Closing Net Assets (as
hereinafter defined) and (ii) the annual advisory fee payable to Quest for Value
Advisors by such Acquired Fund at the rate indicated in the most recent
prospectus for such Acquired Fund at the Closing (plus any applicable annual
administrative fee). "Closing Net Assets" for an Acquired Fund shall mean the
aggregate net asset value of such Acquired Fund as of the close of business on
the last business date preceding the Closing.
The "Deferred Purchase Payment" shall be an amount equal to the aggregate
amounts determined for all Reorganized Funds pursuant to the following formula:
the Closing Payment (as hereinafter defined) times the Applicable Percentage (as
hereinafter defined). The "Closing Payment" shall be the aggregate amount
calculated for all Reorganized Funds pursuant to clause (x) of the Initial
Purchase Payment formula. The "Applicable Percentage" shall be 100% if the
Continuing Net Asset Percentage (as hereinafter defined) is 75% or more, 0% if
the Continuing Net Asset Percentage is 50% or less and the percentage determined
in accordance with the following formula if the Continuing Net Asset Percentage
is between 75% and 50%: 100% - (4) (75% - Continuing Net Asset Percentage).
The "Continuing Net Asset Percentage" shall equal the percentage obtained by
dividing the Anniversary Net Assets (as hereinafter defined) by the Closing Net
Assets. The "Anniversary Net Assets" shall mean the most recently determined
aggregate net asset values of all Reorganized Funds as of 8:00 p.m. on the first
anniversary of the Closing of each account of the Reorganized Funds which are
eligible to be included in Anniversary Net Assets in accordance with the
principles set forth in the Acquisition Agreement.
31
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the ____ day of October, 1995, by and between
OPPENHEIMER/QUEST FOR VALUE FUND, INC., a Maryland corporation (hereinafter
referred to as the ("Company"), and OPPENHEIMER MANAGEMENT CORPORATION
(hereinafter referred to as "OMC").
WHEREAS, the Company is an open-end, diversified management investment
company registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "Investment
Company Act"), and OMC is an investment adviser registered as such with the
Commission under the Investment Advisors Act of 1940;
WHEREAS, the Company desires that OMC shall act as its investment adviser
with respect to each Series pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. GENERAL PROVISIONS:
The Company hereby employs OMC and OMC hereby undertakes to act as the
investment adviser of the Company in connection with and for the benefit of each
Series, including any Series hereafter created and to perform for the Company
such other duties and functions in connection with each Series for the period
and on such terms as set forth in this Agreement. OMC shall, in all matters,
give to the Company and its Board of Directors (the "Directors") the benefit of
its best judgement, effort, advice and recommendations and shall, at all times
conform to, and use its best efforts to enable the Company to conform to (i) the
provisions of the Investment Company Act and any rules or regulations
thereunder; (ii)
1
any other applicable provisions of state or Federal law; (iii) the provisions of
the Certificate of Incorporation and By-Laws of the Company as amended from
time to time; (iv) policies and determinations of the Directors; (v) the
fundamental policies and investment restrictions of each Series as reflected in
the registration statement of the Company under the Investment Company Act or as
such policies may, from time to time, be amended and (vi) the Prospectus and
Statement of Additional Information of each Series in effect from time to time.
The appropriate officers and employees of OMC shall be available upon reasonable
notice for consultation with any of the Directors and officers of the Company
with respect to any matters dealing with the business and affairs of the Company
including the valuation of portfolio securities of the Company which are either
not registered for public sale or not traded on any securities market.
2. INVESTMENT MANAGEMENT:
(a) OMC shall, subject to the direction and control by the Directors,
(i) regularly provide investment advise and recommendations to the Company with
respect to the investments, investment policies and the purchase and sale of
securities for each Series; (ii) supervise continuously the investment program
of each Series of the Company and the composition of its portfolio and determine
what securities shall be purchased or sold by; and (iii) arrange, subject to the
provisions of paragraph 7 hereof, for the purchase of securities and other
investments for each Series of the Company and the sale of securities and other
investments held in the portfolio of each Series.
(b) Provided that the Company shall not be required to pay any
compensation for services under this Agreement other than as provided by the
terms of the Agreement and subject to the provisions of paragraph 7 hereof, OMC
may obtain investment information, research or assistance from any other person,
firm or corporation to supplement, update or otherwise improve its investment
management
2
services including entering into sub-advisory agreements with other affiliated
or unaffiliated registered investment advisors to obtain specialized services.
(c) Provided that nothing herein shall be deemed to protect OMC from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties under this
Agreement, OMC shall not be liable for any loss sustained by reason of good
faith errors or omissions in connection with any matters to which this Agreement
relates.
(d) Nothing in this Agreement shall prevent OMC or any entity
controlling, controlled by or under common control with OMC or any officer
thereof from acting as investment adviser for any other person, firm or
corporation or in any way limit or restrict OMC or any of its directors,
officers, stockholders or employees from buying, selling or trading any
securities for its or their own account or for the account of others for whom it
or they may be acting, provided that such activities will not adversely affect
or otherwise impair the performance by OMC of its duties and obligations under
this Agreement.
3. OTHER DUTIES OF OMC:
OMC shall, at its own expense, provide and supervise the activities of
all administrative and clerical personnel as shall be required to provide
effective corporate administration for the Company, including the compilation
and maintenance of such records with respect to its operations as may reasonably
be required; the preparation and filing of such reports with respect thereto as
shall be required by the Commission; composition of periodic reports with
respect to operations of each Series of the Company for its shareholders;
composition of proxy materials for meetings of the Company's shareholders; and
the composition of such registration statements as may be required by Federal
and state securities laws for continuous public sale of Shares of each Series
and the Company. OMC shall, at its own cost and expense,
3
also provide the Company with adequate office space, facilities and equipment.
OMC shall, at its own expense, provide such officers for the Company as the
Board of Directors may request.
4. ALLOCATION OF EXPENSES:
All other costs and expenses of the Fund not expressly assumed by OMC
under this Agreement, or to be paid by the Distributor of the Shares of the
Fund, shall be paid by the Fund, including, but not limited to: (i) interest,
taxes and governmental fees; (ii) brokerage commissions
and other expenses incurred in acquiring or disposing of the portfolio
securities and other investments of each Series; (iii) insurance premiums for
fidelity and other coverage requisite to its operations; (iv) compensation and
expenses of its Directors other than those affiliated with OMC; (v) legal and
audit expenses; (vi) custodian and transfer agent fees and expenses; (vii)
expenses incident to the redemption of its Shares; (viii) expenses incident to
the issuance of its Shares against payment therefor by or on behalf of the
subscribers thereto; (ix) fees and expenses, other than as hereinabove provided,
incident to the registration under Federal and state securities laws of Shares
of the Company and Series for public sale; (x) expenses of printing and mailing
reports, notices and proxy materials to shareholders of the Company and each
Series; (xi) except as noted above, all other expenses incidental to holding
meetings of the Company's shareholders; and (xii) such extraordinary non-
recurring expenses as may arise, including litigation, affecting the Company or
any Series thereof and any legal obligation which the Company, or any Series of
the Company, may have to indemnify its officers and Directors with respect
thereto. Any officers or employees of OMC or any entity controlling, controlled
by, or under common control with, OMC who also serve as officers, Directors or
employees of the Company shall not receive any compensation from the Company or
any Series thereof for their services.
4
5. COMPENSATION OF OMC:
The Company agrees to pay OMC and OMC agrees to accept as full
compensation for the performance of all functions and duties on its part to be
performed pursuant to the provisions hereof, a fee computed on the total net
asset value of each Series of the Company as of the close of each business day
and payable monthly at the annual rate for each Series set forth on Schedule A
hereto.
6. USE OF NAME "OPPENHEIMER" OR "QUEST FOR VALUE":
OMC hereby grants to the Company a royalty-free, non-exclusive license
to use the name "Oppenheimer" or "Quest For Value" in the name of the Company
for the duration of this Agreement and any extensions or renewals thereof. To
the extent necessary to protect OMC's rights to the name "Oppenheimer" or "Quest
For Value" under applicable law, such license shall allow OMC to inspect and,
subject to control by the Company's Board, control the nature and quality of
services offered by the Company under such name and may, upon termination of
this Agreement, be terminated by OMC, in which event the Company shall promptly
take whatever action may be necessary to change its name and discontinue any
further use of the name "Oppenheimer" or "Quest For Value" in the name of the
Company or otherwise. The name "Oppenheimer" and "Quest For Value" may be used
or licensed by OMC in connection with any of its activities, or licensed by OMC
to any other party.
7. PORTFOLIO TRANSACTIONS AND BROKERAGE:
(a) OMC (and any Sub Advisor) is authorized, in arranging the
purchase and sale of the portfolio securities of each Series of the Company to
employ or deal with such members of securities or commodities exchanges, brokers
or dealers (hereinafter "broker-dealers"), including "affiliated" broker-dealers
(as that term is defined in the Investment Company Act), as may, in its best
judgment, implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution
5
at the most favorable security price obtainable) of the portfolio transactions
of each Series of the Company as well as to obtain, consistent with the
provisions of subparagraph (c) of this paragraph 7, the benefit of such
investment information or research as will be of significant assistance to the
performance by OMC of its investment management functions.
(b) OMC (and any Sub Advisor) shall select broker-dealers to effect
the portfolio transactions of each Series of the Company on the basis of its
estimate of their ability to obtain best execution of particular and related
portfolio transactions. The abilities of a broker-dealer to obtain best
execution of particular portfolio transaction(s) will be judged by OMC (or any
Sub Advisor) on the basis of all relevant factors and considerations including,
insofar as feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to facilitate the
portfolio transactions of each Series of the Company by participating therein
for its own account; the importance to the Company of speed, efficiency or
confidentiality; the broker-dealer's apparent familiarity with sources from or
to whom particular securities might be purchased or sold; as well as any other
matters relevant to the selection of a broker-dealer for particular and related
transactions of each Series of the Company.
(c) OMC (and any Sub Advisor) shall have discretion, in the interest
of the Company and each Series, to allocate brokerage on the portfolio
transactions of each Series of the Company to broker-dealers, other than an
affiliated broker-dealers, qualified to obtain best execution of such
transactions who provide brokerage and/or research services (as such services
are defined in Section 28(e)(3) of the Securities Exchange Act of 1934) for the
Fund and/or other accounts for which OMC or its affiliates (or any Sub Advisor)
exercise "investment discretion" (as that term is defined in Section 3(a)(35) of
the Securities Exchange Act of 1934) and to cause the Company or a Series to
pay such broker-dealers a commission for effecting a portfolio transaction for
the Company or a Series that is in excess of the amount
6
of commission another broker-dealer adequately qualified to effect such
transaction would have charged for effecting that transaction, if OMC (or any
Sub Advisor) determines, in good faith, that such commission is reasonable in
relation to the value of the brokerage and/or research services provided by such
broker-dealer viewed in terms of either that particular transaction or the
overall responsibilities of OMC or its affiliates (or any Sub Advisor) with
respect to accounts as to which they exercise investment discretion. In
reaching such determination, OMC (or any Sub Advisor) will not be required to
place or attempt to place a specific dollar value on the brokerage and for
research services provided or being provided by such broker-dealer. In
demonstrating that such determinations were made in good faith, OMC (and any Sub
Advisor) shall be prepared to show that all commissions were allocated for
purposes contemplated by this Agreement and that the total commissions paid by
the Company and each Series over a representative period selected by the
Company's Directors were reasonable in relation to the benefits to the Company
and each Series.
(d) OMC (or any Sub Advisor) shall have no duty or obligation to
seek advance competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to select any broker-
dealer on the basis of its purported or "posted" commission rate but will, to
the best of its ability, endeavor to be aware of the current level of the
charges of eligible broker-dealers and to minimize the expense incurred by the
Company and each Series for effecting its portfolio transactions to the extent
consistent with the interests and policies of the Company and each Series as
established by the determinations of the Board of Directors of the Company and
the provisions of this paragraph 7.
(e) The Company recognizes that an affiliated broker-dealer: (i) may
act as one of the Company's regular brokers for the Company or a Series thereof
so long as it is lawful for it so to act; (ii) may be a major recipient of
brokerage commissions paid by the Company or a Series; and (iii) may effect
7
portfolio transactions for the Company or a Series thereof only if the
commissions, fees or other renumeration received or to be received by it are
determined in accordance with procedures contemplated by any rule, regulation or
order adopted under the Investment Company Act for determined the permissible
level of such commissions.
(f) Subject to the foregoing provisions of this paragraph 7, OMC
(and any Sub Advisor) may also consider sales of Shares of the Company, each
Series thereof and the other funds advised by OMC and its affiliates as a
factor in the selection of broker-dealers for its portfolio transactions.
8. DURATION:
This Agreement will take effect on the date first set forth above.
Unless earlier terminated pursuant to paragraph 10 hereof, this Agreement shall
remain in effect from year to year, so long as such continuance shall be
approved at least annually by the Company's Board of Directors, including the
vote of the majority of the Directors of the Company who are not parties to this
Agreement or "interested persons" (as defined in the Investment Company Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, or by the holders of a "majority" (as defined in the Investment
Company Act) of the outstanding voting securities of the Company, or each Series
thereof, and by such a vote of the Company's Board of Directors.
9. TERMINATION.
This Agreement may be terminated (i) by OMC at any time without
penalty upon sixty days' written notice to the Company (which notice may be
waived by the Company); or (ii) by the Company at any time without penalty upon
sixty days' written notice to OMC (which notice may be waived by OMC) provided
that such termination by the Company shall be directed or approved by the vote
of a
8
majority of all of the Directors of the Company then in office or by the vote of
the holders of a "majority" of the outstanding voting securities of the Company
(as defined in the Investment Company Act).
10. ASSIGNMENT OR AMENDMENT:
This Agreement may not be amended or the rights of OMC hereunder sold,
transferred, pledged or otherwise in any manner encumbered without the
affirmative vote or written consent of the holders of the "majority" of the
outstanding voting securities of the Company. This Agreement shall
automatically and immediately terminate in the event of its "assignment," as
defined in the Investment Company Act.
11. DEFINITIONS:
The terms and provisions of the Agreement shall be interpreted and
defined in a manner consistent with the provisions and definitions contained in
the Investment Company Act.
9
OPPENHEIMER/QUEST FOR VALUE
FUND, INC.
Attest: ______________________ By: _______________________
Title: _______________________
OPPENHEIMER MANAGEMENT
CORPORATION
Attest: ______________________ By: _______________________
Katherine P. Feld Andrew J. Donohue
Secretary Executive Vice President
1
SCHEDULE A
TO
INVESTMENT ADVISORY AGREEMENT
BETWEEN
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
AND
OPPENHEIMER MANAGEMENT CORPORATION
NAME OF SERIES ANNUAL FEE AS A PERCENTAGE OF DAILY
TOTAL NET ASSETS
Oppenheimer/Quest For Value Fund, Inc. 1.00% of first $400 million of all net
assets
0.90% of next $400 million of all net
assets
0.85% of net assets over $800 million
2
EXHIBIT C
FORM OF
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between Oppenheimer Management
Corporation, a Colorado corporation (the "Adviser"), and
Advisors, a Delaware general partnership (the "Subadviser"), as of the date set
forth below.
RECITAL
WHEREAS, Oppenheimer/Quest For Value Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end, diversified management investment company;
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment adviser and engages in
the business of acting as an investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act as an
investment adviser and engages in the business of acting as an investment
adviser;
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
as of the date hereof with the Fund (the "Investment Advisory Agreement"),
pursuant to which the Adviser shall act as investment adviser with respect to
the Fund; and
WHEREAS, pursuant to Paragraph ___ of the Investment Advisory Agreement,
the Adviser wishes to retain the Subadviser for purposes of rendering investment
advisory services to the Adviser in connection with the Fund upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which are hereby
acknowledged, the parties hereto agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADVISER.
The Adviser hereby appoints the Subadviser to render, to the Adviser
with respect to the Fund, investment research and advisory services as set forth
below in Section II, under the supervision of the Adviser and subject to the
approval and direction of the Fund's Board of Directors (the "Board"), and the
Subadviser hereby accepts such appointment, all subject to the terms and
conditions contained herein. The Subadviser shall, for all purposes herein, be
deemed an independent contractor and shall not have, unless otherwise expressly
provided or authorized, any authority to act for or represent the Fund in any
way or otherwise to serve as or be deemed an agent of the Fund.
II. DUTIES OF THE SUBADVISER AND THE ADVISER.
A. DUTIES OF THE SUBADVISER.
The Subadviser shall regularly provide investment advice with respect to
the Fund and shall, subject to the terms of this Agreement, continuously
supervise the investment and reinvestment of cash, securities and instruments or
other property comprising the assets of the Fund, and in furtherance thereof,
the Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about
significant developments and economic, statistical and financial
data, domestic, foreign or otherwise, whether affecting the economy
generally or the Fund, and whether concerning the individual
issuers whose securities are included in the Fund or the activities
in which such issuers engage, or with respect to securities which
the Subadviser considers desirable for inclusion in the Fund's
investment portfolio;
2. Determining which securities shall be purchased, sold or
exchanged by the Fund or otherwise represented in the Fund's
investment portfolio and regularly reporting thereon to the Adviser
and, at the request of the Adviser, to the Board;
3. Formulating and implementing continuing programs for the
purchases and sales of the securities of such issuers and regularly
reporting thereon to the Adviser and, at the request of the
Adviser, to the Board; and
4. Taking, on behalf of the Fund, all actions that appear to the
Subadviser necessary to carry into effect such investment program,
including the placing of purchase and sale orders, and making
appropriate reports thereon to the Adviser and the Board.
B. DUTIES OF THE ADVISER.
The Adviser shall retain responsibility for, among other things,
providing the following advice and services with respect to the Fund:
1. Without limiting the obligation of the Subadviser to so
comply, the Adviser shall monitor the investment program
maintained by the Subadviser for the Fund to ensure that the
Fund's assets are invested in compliance with this Agreement
and the Fund's Registration Statement, as currently in effect
from time to time; and
-2-
2. The Adviser shall oversee matters relating to Fund promotion,
including, but not limited to, marketing materials and the
Subadviser's reports to the Board.
III. REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBADVISER.
1. ORGANIZATION. The Subadviser is now, and will continue to be,
a general partnership duly formed and validly existing under the
laws of its jurisdiction of formation, fully authorized to enter
into this Agreement and carry out its duties and obligations
hereunder.
2. REGISTRATION. The Subadviser is registered as an investment
adviser with the Securities and Exchange Commission (the "SEC")
under the Advisers Act, and is registered or licensed as an
investment adviser under the laws of all jurisdictions in which its
activities require it to be so registered or licensed, except where
the failure to be so licensed would not have a material adverse
effect on the Subadviser. The Subadviser shall maintain such
registration or license in effect at all times during the term of
this Agreement.
3. BEST EFFORTS. The Subadviser at all times shall provide its
best judgment and effort to the Adviser and the Fund in carrying
out its obligations hereunder.
4. OTHER COVENANTS. The Subadviser further agrees that:
a. it will use the same skill and care in providing such
services as it uses in providing services to other
accounts for which it has investment management
responsibilities;
b. it will not make loans to any person to purchase or carry
shares of the Fund or make loans to the Fund;
c. it will report regularly to the Fund and to the Adviser
and will make appropriate persons available for the
purpose of reviewing with representatives of the Adviser
on a regular basis the management of the Fund, including,
without limitation, review of the general investment
strategy of the Fund, economic considerations and general
conditions affecting the marketplace;
d. as required by applicable laws and regulations, it will
maintain books and records with respect to the Fund's
securities transactions and it will furnish to the
Adviser and to the Board such periodic and special
reports as the Adviser or the Board may reasonably
request;
e. it will treat confidentially and as proprietary
information of the Fund all records and other information
relative to the Fund, and will not use records and
information for any purpose other than
-3-
performance of its responsibilities and duties hereunder,
except after prior notification to and approval in
writing by the Fund or when so requested by the Fund or
required by law or regulation;
f. it will, on a continuing basis and at its own expense,
(1) provide the distributor of the Fund (the
"Distributor") with assistance in the distribution and
marketing of the Fund in such amount and form as the
Adviser may reasonably request from time to time, and (2)
use its best efforts to cause the portfolio manager or
other person who manages or is responsible for overseeing
the management of the Fund's portfolio (the "Portfolio
Manager") to provide marketing and distribution
assistance to the Distributor, including, without
limitation, conference calls, meetings and road trips,
provided that each Portfolio Manager shall not be
required to devote more than 10% of his or her time to
such marketing and distribution activities;
g. it will use its reasonable best efforts (i) to retain the
services of the Portfolio Manager who manages the
portfolio of the Fund, from time to time and (ii) to
promptly obtain the services of a Portfolio Manager
acceptable to the Adviser if the services of the
Portfolio Manager are no longer available to the
Subadviser;
h. it will, from time to time, assure that each Portfolio
Manager is acceptable to the Adviser;
i. it will obtain the written approval of the Adviser prior
to designating a new Portfolio Manager; provided,
however, that, if the services of a Portfolio Manager are
no longer available to the Subadviser due to
circumstances beyond the reasonable control of the
Subadviser (e.g., voluntary resignation, death or
disability), the Subadviser may designate an interim
Portfolio Manager who (a) shall be reasonably acceptable
to the Adviser and (b) shall function for a reasonable
period of time until the Subadviser designates an
acceptable permanent replacement; and
j. it will promptly notify the Adviser of any impending
change in Portfolio Manager, portfolio management or any
other material matter that may require disclosure to the
Board, shareholders of the Fund or dealers.
B. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ADVISER.
1. ORGANIZATION. The Adviser is now, and will continue to be,
duly organized and in good standing under the laws of its state of
incorporation, fully authorized to enter into this Agreement and
carry out its duties and obligations hereunder.
-4-
2. REGISTRATION. The Adviser is registered as an investment
adviser with the SEC under the Advisers Act, and is registered or
licensed as an investment adviser under the laws of all
jurisdictions in which its activities require it to be so
registered or licensed. The Adviser shall maintain such
registration or license in effect at all times during the term of
this Agreement.
3. BEST EFFORTS. The Adviser at all times shall provide its best
judgment and effort to the Fund in carrying out its obligations
hereunder. For a period of five years from the date hereof, and
subject to the Adviser's fiduciary obligations to the Fund and its
shareholders, the Adviser will not recommend to the Board that the
Fund be reorganized into another Fund unless the total net assets
of the Fund are less than $100 million at the time of such
reorganization.
IV. COMPLIANCE WITH APPLICABLE REQUIREMENTS.
In carrying out its obligations under this Agreement, the Subadviser
shall at all times conform to:
A. all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
B. the provisions of the registration statement of the Fund, as the
same may be amended from time to time, under the Securities Act of
1933, as amended, and the 1940 Act;
C. the provisions of the Fund's Certificate of Incorporation or other
governing document, as amended from time to time;
D. the provisions of the By-laws of the Fund, as amended from time to
time;
E. any other applicable provisions of state or federal law; and
F. guidelines, investment restrictions, policies, procedures or
instructions adopted or issued by the Fund or the Adviser from time
to time.
The Adviser shall promptly notify the Subadviser of any changes or
amendments to the provisions of B., C., D. and F. above when such changes or
amendments relate to the obligations of the Subadviser.
V. CONTROL BY THE BOARD.
Any investment program undertaken by the Subadviser pursuant to this
Agreement, as well as any other activities undertaken by the Subadviser with
respect to the Fund, shall at all times be subject to any directives of the
Adviser and the Board.
-5-
VI. BOOKS AND RECORDS.
The Subadviser agrees that all records which it maintains for the Fund
on behalf of the Adviser are the property of the Fund and further agrees to
surrender promptly to the Fund or to the Adviser any of such records upon
request. The Subadviser further agrees to preserve for the periods prescribed
by applicable laws, rules and regulations all records required to be maintained
by the Subadviser on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably request from
time to time.
VII. BROKER-DEALER RELATIONSHIPS.
A. PORTFOLIO TRADES.
The Subadviser, at its own expense, and to the extent appropriate,
in consultation with the Adviser, shall place all orders for the purchase and
sale of portfolio securities for the Fund with brokers or dealers selected by
the Subadviser, which may include, to the extent permitted by the Adviser and
the Fund, brokers or dealers affiliated with the Subadviser. The Subadviser
shall use its best efforts to seek to execute portfolio transactions at prices
that are advantageous to the Fund and at commission rates that are reasonable in
relation to the benefits received.
B. SELECTION OF BROKER-DEALERS.
With respect to the execution of particular transactions, the
Subadviser may, to the extent permitted by the Adviser and the Fund, select
brokers or dealers who also provide brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as
amended) to the Fund and/or the other accounts over which the Subadviser or its
affiliates exercise investment discretion. The Subadviser is authorized to pay
a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund that is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction if the Subadviser determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities that the Subadviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Adviser,
Subadviser and the Board shall periodically review the commissions paid by the
Fund to determine, among other things, if the commissions paid over
representative periods of time were reasonable in relation to the benefits
received.
-6-
C SOFT DOLLAR ARRANGEMENTS.
The Subadviser may enter into "soft dollar" arrangements through
the agency of third parties on behalf of the Adviser. Soft dollar arrangements
for services may be entered into in order to facilitate an improvement in
performance in respect of the Subadviser's service to the Adviser with respect
to the Fund. The Subadviser makes no direct payments but instead undertakes to
place business with broker-dealers who in turn pay third parties who provide
these services. Soft dollar transactions will be conducted on an arm's-length
basis, and the Subadviser will secure best execution for the Adviser. Any
arrangements involving soft dollars and/or brokerage services shall be effected
in compliance with Section 28(e) of the Securities Exchange Act of 1934, as
amended, and the policies that the Adviser and the Board may adopt from time to
time. The Subadviser agrees to provide reports to the Adviser as necessary for
purposes of providing information on these arrangements to the Board.
VIII COMPENSATION.
A. AMOUNT OF COMPENSATION. The Adviser shall pay the Subadviser, as
compensation for services rendered hereunder, from its own assets,
an annual fee, payable monthly, equal to 40% of the investment
advisory fee collected by the Adviser from the Fund, based on the
total net assets of the Fund existing as of the date hereof (the
"base amount"), plus 30% of the advisory fee collected by the
Adviser, based on the total net assets of the Fund that exceed the
base amount (the "marginal amount"), in each case calculated after
any waivers, voluntary or otherwise.
B. CALCULATION OF COMPENSATION. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued
on the same basis as the advisory fee paid to the Adviser by the
Fund. If this Agreement becomes effective subsequent to the first
day of a month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in effect
shall be prorated in a manner consistent with the calculation of
the fees set forth above.
C. PAYMENT OF COMPENSATION: Subject to the provisions of this
paragraph, payment of the Subadviser's compensation for the
preceding month shall be made within 15 days after the end of the
preceding month.
-7-
D. REORGANIZATION OF THE FUND. If the Fund is reorganized with
another investment company for which the Subadviser does not serve
as an investment adviser or subadviser, and the Fund is the
surviving entity, the subadvisory fee payable under this section
shall be adjusted in an appropriate manner as the parties may
agree.
IX. ALLOCATION OF EXPENSES.
The Subadviser shall pay the expenses incurred in providing services in
connection with this Agreement, including, but not limited to, the salaries,
employment benefits and other related costs of those of its personnel engaged in
providing investment advice to the Fund hereunder, including, without
limitation, office space, office equipment, telephone and postage costs and
other expenses. In the event of an "assignment" of this Agreement, other than
an assignment resulting solely by action of the Adviser or an affiliate thereof,
the Subadviser shall be responsible for payment of all costs and expenses
incurred by the Adviser and the Fund relating thereto, including, but not
limited to, reasonable legal, accounting, printing and mailing costs related to
obtaining approval of Fund shareholders.
X. NON-EXCLUSIVITY.
The services of the Subadviser with respect to the Fund are not to be
deemed to be exclusive, and the Subadviser shall be free to render investment
advisory and administrative or other services to others (including other
investment companies) and to engage in other activities, subject to the
provisions of a certain Agreement Not to Compete dated as of _______, 1995 among
the Adviser, Oppenheimer Capital, the Subadviser and Quest For Value
Distributors (the "Agreement Not to Compete"). It is understood and agreed
that officers or directors of the Subadviser may serve as officers or directors
of the Adviser or of the Fund; that officers or directors of the Adviser or of
the Fund may serve as officers or directors of the Subadviser to the extent
permitted by law; and that the officers and directors of the Subadviser are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies (subject to the provisions of the Agreement Not to Compete), provided
it is permitted by applicable law and does not adversely affect the Fund.
XI. TERM.
This Agreement shall become effective at the close of business on the
date hereof and shall remain in force and effect, subject to Paragraphs XII.A
and XII.B hereof and approval by the Fund's shareholders, for a period of two
years from the date hereof.
XII. RENEWAL.
Following the expiration of its initial two-year term, the Agreement
shall continue in full force and effect from year to year for a period of eight
years, provided that such continuance is specifically approved:
A. at least annually (1) by the Board or by the vote of a majority of
the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), and
-8-
(2) by the affirmative vote of a majority of the directors who are
not parties to this Agreement or interested persons of a party to
this Agreement (other than as a director of the Fund), by votes
cast in person at a meeting specifically called for such purpose;
or
B. by such method required by applicable law, rule or regulation then
in effect.
XIII. TERMINATION.
A. TERMINATION BY THE FUND. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or
by vote of a majority of the Fund's outstanding voting securities,
on sixty (60) days' written notice. The notice provided for herein
may be waived by the party required to be notified.
B. ASSIGNMENT. This Agreement shall automatically terminate in the
event of its "assignment," as defined in Section 2 (a) (4) of the
1940 Act. In the event of an assignment that occurs solely due to
the change in control of the Subadviser (provided that no condition
exists that permits, or, upon the consummation of the assignment,
will permit, the termination of this Agreement by the Adviser
pursuant to Section XIII. D. hereof), the Adviser and the
Subadviser, at the sole expense of the Subadviser, shall use their
reasonable best efforts to obtain shareholder approval of a
successor Subadvisory Agreement on substantially the same terms as
contained in this Agreement.
C. PAYMENT OF FEES AFTER TERMINATION. Notwithstanding the termination
of this Agreement prior to the tenth anniversary of the date
hereof, the Adviser shall continue to pay to the Subadviser the
subadvisory fee for the term of this Agreement and any renewals
thereof through such tenth anniversary, if: (1) the Adviser or the
Fund terminates this Agreement for a reason other than the reasons
set forth in Section XIII.D. hereof, provided the Investment
Advisory Agreement remains in effect; (2) the Fund reorganizes with
another investment company advised by the Adviser (or an affiliate
of the Adviser) and for which the Subadviser does not serve as an
investment adviser or subadviser and such other investment company
is the surviving entity; or (3) the Investment Advisory Agreement
terminates (i) by reason of an "assignment;" (ii) because the
Adviser is disqualified from serving as an investment adviser; or
(iii) by reason of a voluntary termination by the Adviser;
provided that the Subadviser does not serve as the investment
adviser or subadviser of the Fund after such termination of the
Investment Advisory Agreement. The amount of the subadvisory fee
paid pursuant to this section shall be calculated on the basis of
the Fund's net assets measured at the time of such termination or
such reorganization. Notwithstanding anything to the contrary, if
the Subadviser terminates this Agreement or if this Agreement is
terminated by operation of law, due solely to an act or omission by
the Subadviser, Oppenheimer Capital ("OpCap") or their respective
partners, subsidiaries, directors, officers, employees or agents
(other than by reason of an "assignment"of this Agreement), then
the Adviser shall not be liable for any further payments under this
Agreement, provided, however, that if at any time prior to the end
of the
-9-
term of the Agreement Not to Compete any event that would have
permitted the termination of this Agreement by the Adviser pursuant
to Section XIII. D. (3) hereof occurs, the Adviser shall be under
no further obligation to pay any subadvisory fees.
D. TERMINATION BY THE ADVISER. The Adviser may terminate this
Agreement without penalty and without the payment of any fee or
penalty, immediately after giving written notice, upon the
occurrence of any of the following events:
1. The Fund's investment performance of the Fund's Class A shares
compared to the appropriate universe of Class A shares (or
their equivalent), as set forth on Schedule D-1, as amended
from time to time, ranks in the bottom quartile for two
consecutive calendar years (beginning with the calendar year
1995) and earns a Morningstar three-year rating of less than
three (3) stars at the time of such termination; or
2. Any of the Subadviser, OpCap, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents engages in an action or omits to take an action that
would cause the Subadviser or OpCap to be disqualified in any
manner under Section 9(a) of the 1940 Act, if the SEC were
not to grant an exemptive order under Section 9(c) thereof or
that would constitute grounds for the SEC to deny, revoke or
suspend the registration of the Subadviser as an investment
adviser with the SEC;
3. Any of OpCap, the Subadviser, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents causes a material violation of the Agreement Not to
Compete which is not cured in accordance with the provisions
of that agreement; or
4. The Subadviser breaches the representations contained in
Paragraph III.A.4.i. of this Agreement or any other material
provision of this Agreement, and any such breach is not cured
within a reasonable period of time after notice thereof from
the Adviser to the Subadviser. However, consistent with its
fiduciary obligations, for a period of seven months the
Adviser will not terminate this Agreement solely because the
Subadviser has failed to designate an acceptable permanent
replacement to a Portfolio Manager whose services are no
longer available to the Subadviser due to circumstances beyond
the reasonable control of the Subadviser, provided that the
Subadviser uses its reasonable best efforts to promptly obtain
the services of a Portfolio Manager acceptable to the Adviser
and further provided that the Adviser has not unreasonably
withheld approval of such replacement Portfolio Manager.
E. TRANSACTIONS IN PROGRESS UPON TERMINATION. The Adviser and
Subadviser will cooperate with each other to ensure that portfolio
or other transactions in progress at the date of termination of
this Agreement shall be completed by the Adviser in accordance with
the terms of such transactions, and to this end the Subadviser
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shall provide the Adviser with all necessary information and
documentation to secure the implementation thereof.
XIV. NON-SOLICITATION.
During the term of this Agreement, the Adviser (and its affiliates under
its control) shall not solicit or knowingly assist in the solicitation of any
Portfolio Manager of the Fund or any portfolio assistant of the Fund then
employed by the Subadviser or OpCap, provided, however, that the Adviser (or its
affiliates) may solicit or hire any such individual who (A) the Subadviser or
OpCap (or its affiliates) has terminated or (B) has voluntarily terminated his
or her employment with the Subadviser, OpCap (or its affiliates) without
inducement of the Adviser (or its affiliates under its control) prior to the
time of such solicitation. Advertising in general circulation newspapers or
industry newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. LIABILITY OF THE SUBADVISER.
In the absence of willful misfeasance, bad faith, negligence or reckless
disregard of obligations or duties hereunder on the part of the Subadviser or
any of its officers, directors or employees, the Subadviser shall not be subject
to liability to the Adviser for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security; PROVIDED, HOWEVER,
that the foregoing shall not be construed to relieve the Subadviser of any
liability it may have arising under the Agreement Not to Compete or the
Acquisition Agreement dated August 15, 1995, among the Subadviser, the Adviser
and certain affiliates of the Subadviser.
XVI NOTICES.
Any notice or other communication required or that may be given
hereunder shall be in writing and shall be delivered personally, telecopied,
sent by certified, registered or express mail, postage prepaid or sent by
national next-day delivery service and shall be deemed given when so delivered
personally or telecopied, or if mailed, two days after the date of mailing, or
if by next-day delivery service, on the business day following delivery thereto,
as follows or to such other location as any party notifies any other party:
-11-
if to the Adviser, to:
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
if to the Subadviser, to:
Quest For Value Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of New York
applicable to agreements made and to be performed entirely within the State of
New York (without regard to any conflicts of law principles thereof). Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
XVIII. FORM ADV - DELIVERY.
The Adviser hereby acknowledges that it has received from the Subadviser
a copy of the Subadviser's Form ADV, Part II as currently filed, at least 48
hours prior to entering into this Agreement and that it has read and understood
the disclosures set forth in the Subadviser's Form ADV, Part II.
XIX. MISCELLANEOUS.
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors.
-12-
XX. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which, collectively, shall constitute one
agreement.
-13-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the _____ day of
October, 1995.
OPPENHEIMER MANAGEMENT CORPORATION
By:___________________________________
Name: Andrew J. Donohue
Title: Executive Vice President
ADVISORS
By: OPPENHEIMER FINANCIAL CORP.
a general partner
By:____________________________________
Name:
Title:
EXHIBIT D
INFORMATION ON COMPARABLE FUNDS
MANAGED BY OPPENHEIMER
MANAGEMENT CORPORATION
Assets as
Name of Fund of 6/30/95 Fee Schedule
------------ ---------- ------------
Oppenheimer $137.3 1% of the first $50 million of average annual
Global net assets; .75% of the next $150 million.;
Emerging Growth .72% of the next $200 million; .69% of the
Fund next $200 million; .66% of the next $200
million and .60% of net assets in excess of
$800 million.
Oppenheimer 734.7 .75% of the first $200 million of aggregate
Discovery Fund net assets; .72% of the next $200 million;
.69% of the next $200 million; .66% of the
next $200 million; and .60% of aggregate net
assets over $800 million.
Oppenheimer Fund 272.5 .75% of the first $200 million of aggregate
net assets; .72% of the next $200 million;
.69% of the next $200 million; .66% of the
next $200 million; and .60% of aggregate net
assets over $800 million.
Oppenheimer 684.0 .75% of the first $200 million of aggregate
Target Fund net assets; .72% of next $200 million; .69% of
next $200 million; .66% of next $200 million;
and .60% of aggregate net assets over $800
million.
Oppenheimer 902.7 .75% of first $200 million of aggregate net
Growth Fund assets; .72% of the next $200 million; .69% of
the next $200 million; .66% of the next $200
million; and .60% of aggregate net assets over
$800 million.
Oppenheimer Value 143.6 .75% of the first $100 million of average
Stock Fund annual net assets; .72% of the next $200
million; .69% of the next $200 million; and
.66% of average annual net assets in excess of
$500 million.
Oppenheimer 237.9 .75% of the first $200 million of average
Variable Account annual net assets; .72% of the next $200
Funds/ million; .69% of the next $200 million; .66%
Oppenheimer of the next $200 million; and .60% of average
Capital annual net assets in excess of $800 million.
Appreciation Fund
Oppenheimer 89.8 .75% of the first $200 million of average
Variable Account annual net assets; .72% of the next $200
Funds/ million; .69% of the next $200 million; .66%
Oppenheimer of the next $200 million; and .60% of average
Growth Fund annual net assets in excess of $800 million.
EXHIBIT E
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
FOR CLASS A SHARES OF
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the ___ day of _______, 1995, by and between OPPENHEIMER/QUEST FOR
VALUE FUND, INC. (the "Corporation") for the account of its OPPENHEIMER/QUEST
FOR VALUE FUND, INC. (the "Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. THE PLAN. This Plan is the Fund's written distribution plan for Class
A shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the "Rule")
under the Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Fund will compensate the Distributor for its services incurred in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor (the "NASD
Rules of Fair Practice") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing,
a majority of the Corporation's Board of Directors (the "Board") who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any agreements
relating to this Plan (the "Independent Directors") may remove any broker,
dealer, bank or other person or entity as a Recipient, whereupon such person's
or entity's rights as a third-party beneficiary hereof shall terminate.
-1-
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such customers,
clients and/or accounts as to which such Recipient is a fiduciary or custodian
or co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or entity would otherwise
qualify as Recipients as to the same Shares, the Recipient which is the dealer
of record on the Fund's books as determined by the Distributor shall be deemed
the Recipient as to such Shares for purposes of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SUPPORT
SERVICES.
(a) The Fund will make payments to the Distributor (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate 0.020833% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the Shares
computed as of the close of each business day (the "Asset-Based Sales Charge").
Such Service Fee payments received from the Fund will compensate the Distributor
and Recipients for providing administrative support services with respect to
Accounts. Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution assistance
in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares to entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Directors still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
-2-
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option, make service fee
payments ("Advance Service Fee Payments") to any Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate not to
exceed (i) 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to the
Distributor on demand a pro rata portion of such Advance Service Fee Payments,
based on the ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor may make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers. However, no such service fee or
asset-based sales charge payments (collectively, the "Recipient Payments") shall
be made to any Recipient for any such quarter in which its Qualified Holdings
do not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Directors.
A majority of the Independent Directors may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Article III, Section 26, of the
NASD Rules of Fair Practice. The distribution assistance and administrative
support services
-3-
to be rendered by the Distributor in connection with the Shares may include, but
shall not be limited to, the following: (i) paying sales commissions to any
broker, dealer, bank or other person or entity that sells Shares, and\or paying
such persons Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii) paying
compensation to and expenses of personnel of the Distributor who support
distribution of Shares by Recipients; (iii) obtaining financing or providing
such financing from its own resources, or from an affiliate, for interest and
other borrowing costs of the Distributor's unreimbursed expenses incurred in
rendering distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including without limitation
the costs of sales literature, advertising and prospectuses (other than those
furnished to current Shareholders) and state "blue sky" registration expenses;
and (v) providing any service rendered by the Distributor that a Recipient may
render pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services rendered in
connection with Shares acquired (i) by purchase, (ii) in exchange for shares of
another investment company for which the Distributor serves as distributor or
sub-distributor, or (iii) pursuant to a plan of reorganization to which the Fund
is a party. In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution assistance or
administrative support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is providing
appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OMC), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in effect,
the selection and nomination of those persons to be Directors of the Corporation
who are not "interested persons" of the Fund or the Corporation ("Disinterested
Directors") shall be committed to the discretion of such Disinterested
Directors. Nothing herein shall prevent the Disinterested Directors from
soliciting the views or the involvement of others in such selection or
nomination if the final decision on any such selection and nomination is
approved by a majority of the incumbent Disinterested Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the
Corporation shall provide at least quarterly a written reports to the
Corporation's Board for its review, detailing services rendered in connection
with the distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be provided
quarterly and shall state whether all provisions of Section 3 of this Plan have
been complied with.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Directors or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days written notice to any other party to the
-4-
agreement; (ii) such agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into effect when
approved by a vote of the Board and its Independent Directors cast in person at
a meeting called for the purpose of voting on such agreement; and (iv) it shall,
unless terminated as herein provided, continue in effect from year to year only
so long as such continuance is specifically approved at least annually by a vote
of the Board and its Independent Directors cast in person at a meeting called
for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Directors cast in person at a meeting called on June 22, 1995 for the purpose of
voting on this Plan, and shall take effect after approval by Class A
shareholders of the Fund, at which time it shall replace the Fund's Plan and
Agreement of Distribution for the Shares made as of November 1, 1988 as amended
as of July 27, 1992 and September 1, 1993. Unless terminated as hereinafter
provided, it shall continue in effect from year to year from the date first set
forth above or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Directors cast in person at a meeting called for the purpose
of voting on such continuance. This Plan may not be amended to increase
materially the amount of payments to be made without approval of the Class C
Shareholders, in the manner described above, and all material amendments must be
approved by a vote of the Board and of the Independent Directors. This Plan may
be terminated at any time by vote of a majority of the Independent Directors or
by the vote of the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of such
termination, the Board and its Independent Directors shall determine whether the
Distributor is entitled to payment from the Fund of all or a portion of the
Service Fee and/or the Asset-Based Sales Charge in respect of Shares sold prior
to the effective date of such termination.
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
By: ____________________________________
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:____________________________________
Andrew J. Donohue
Executive Vice President
-5-
Exhibit F
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
FOR CLASS B SHARES OF
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the ____ day of ________, 1995, by and between OPPENHEIMER/QUEST
FOR VALUE FUND, INC. (the "Corporation") for the account of its
OPPENHEIMER/QUEST FOR VALUE FUND, INC. (the "Fund") and OPPENHEIMER FUNDS
DISTRIBUTOR, INC. (the "Distributor").
1. THE PLAN. This Plan is the Fund's written distribution and service
plan for Class B shares of the Fund (the "Shares"), contemplated by Rule 12b-1
(the "Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant
to which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor (the "NASD
Rules of Fair Practice") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing,
a majority of the Corporation's Board of Directors (the "Board") who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any agreements
relating to this Plan (the "Independent Directors") may remove any broker,
dealer, bank or other person or entity as a Recipient, whereupon such person's
or entity's rights as a third-party beneficiary hereof shall terminate.
-1-
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such customers,
clients and/or accounts as to which such Recipient is a fiduciary or custodian
or co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or entity would otherwise
qualify as Recipients as to the same Shares, the Recipient which is the dealer
of record on the Fund's books as determined by the Distributor shall be deemed
the Recipient as to such Shares for purposes of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SUPPORT
SERVICES.
(a) The Fund will make payments to the Distributor, (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares computed as
of the close of each business day (the "Asset-Based Sales Charge") outstanding
for six years or less (the "Maximum Holding Period"). Such Service Fee payments
received from the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts. Such Asset-
Based Sales Charge payments received from the Fund will compensate the
Distributor and Recipients for providing distribution assistance in connection
with the sales of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in the establishment
and maintenance of accounts or sub-accounts in the Fund and processing Share
redemption transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services in
connection with the rendering of personal services and/or the maintenance of
Accounts, as the Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and Recipients may include, but shall not be limited
to, the following: distributing sales literature and prospectuses other than
those furnished to current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares to entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the Distributor, at
the request of the Board, shall require the Recipient to provide a written
report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Directors still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
-2-
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option, make service fee
payments ("Advance Service Fee Payments") to any Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate not to
exceed (i) 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to the
Distributor on demand a pro rata portion of such Advance Service Fee Payments,
based on the ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this paragraph
(b) may, at the Distributor's sole option, be made more often than quarterly,
and sooner than the end of the calendar quarter. However, no such payments
shall be made to any Recipient for any such quarter in which its Qualified
Holdings do not equal or exceed, at the end of such quarter, the minimum amount
("Minimum Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Directors.
A majority of the Independent Directors may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rate set forth above,
and/or direct the Distributor to increase or decrease the Maximum Holding
Period, the Minimum Holding Period or the Minimum Qualified Holdings. The
Distributor shall notify all Recipients of the Minimum Qualified Holdings,
Maximum Holding Period and Minimum Holding Period, if any, and the rate of
payments hereunder applicable to Recipients, and shall provide each Recipient
with written notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The Distributor
may make Plan payments to any "affiliated person" (as defined in the 1940 Act)
of the Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Article III, Section 26, of the
NASD Rules of Fair Practice. The distribution assistance and administrative
support services to be rendered by the Distributor in connection with the Shares
may include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity that sells
Shares, and\or paying such persons Advance Service Fee Payments in advance of,
and\or greater than, the amount provided for in Section 3(b) of this Agreement;
(ii) paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Recipients; (iii) obtaining financing or
providing such financing from its own resources, or from an affiliate, for
interest and other borrowing costs on the Distributor's
-3-
unreimbursed expenses incurred in rendering distribution assistance and
administrative support services to the Fund; (iv) paying other direct
distribution costs, including without limitation the costs of sales literature,
advertising and prospectuses (other than those furnished to current
Shareholders) and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render pursuant to part
(a) of this Section 3. Such services include distribution assistance and
administrative support services rendered in connection with Shares acquired (i)
by purchase, (ii) in exchange for shares of another investment company for which
the Distributor serves as distributor or sub-distributor, or (iii) pursuant to a
plan of reorganization to which the Fund is a party. In the event that the
Board should have reason to believe that the Distributor may not be rendering
appropriate distribution assistance or administrative support services in
connection with the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other information to
verify that the Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OMC), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in effect, the
selection and nomination of those persons to be Directors of the Corporation who
are not "interested persons" of the Fund or the Corporation ("Disinterested
Directors") shall be committed to the discretion of such Disinterested
Directors. Nothing herein shall prevent the Disinterested Directors from
soliciting the views or the involvement of others in such selection or
nomination if the final decision on any such selection and nomination is
approved by a majority of the incumbent Disinterested Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the Corporation
shall provide written reports to the Corporation's Board for its review,
detailing services rendered in connection with the distribution of the Shares,
the amount of all payments made and the purpose for which the payments were
made. The reports shall be provided quarterly, and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Directors or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its assignment (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Directors cast in person at a meeting called
for the purpose of voting on such agreement; and (iv) it shall, unless
terminated as herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by a vote of the
Board and its Independent Directors cast in person at a meeting called for the
purpose of voting on such continuance.
-4-
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This Amended and
Restated Plan has been approved by a vote of the Board and its Independent
Directors cast in person at a meeting called on June 22, 1995, for the purpose
of voting on this Plan, and shall take effect after approval by Class B
shareholders of the Fund, at which time it shall replace the Fund's Amended and
Restated Distribution Plan adopted as of December 23, 1994 and Amended and
Restated Distribution Agreement for the Shares dated December 23, 1994. Unless
terminated as hereinafter provided, it shall continue in effect from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Directors cast in person at a meeting called for the purpose
of voting on such continuance. This Plan may not be amended to increase
materially the amount of payments to be made without approval of the Class B
Shareholders, in the manner described above, and all material amendments must be
approved by a vote of the Board and of the Independent Directors. This Plan may
be terminated at any time by vote of a majority of the Independent Directors or
by the vote of the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of such
termination, the Board and its Independent Directors shall determine whether the
Distributor shall be entitled to payment from the Fund of all or a portion of
the Service Fee and/or the Asset-Based Sales Charge in respect of Shares sold
prior to the effective date of such termination.
OPPENHEIMER QUEST FOR VALUE FUND, INC
By:____________________________________
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:___________________________________
Andrew J. Donohue
Executive Vice President
-5-
EXHIBIT G
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND OPPENHEIMER/QUEST FOR VALUE FUND, INC.
FOR CLASS C SHARES OF
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the ___ day of _______, 1995, by and between OPPENHEIMER/QUEST FOR
VALUE FUND, INC. (the "Corporation") for the account of its OPPENHEIMER/QUEST
FOR VALUE FUND, INC. (the "Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. THE PLAN. This Plan is the Fund's written distribution plan for Class
C shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the "Rule")
under the Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Fund will compensate the Distributor for its services incurred in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor (the "NASD
Rules of Fair Practice") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing,
a majority of the Corporation's Board of Directors (the "Board") who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any agreements
relating to this Plan (the "Independent Directors") may remove any broker,
dealer, bank or other person or entity as a Recipient, whereupon such person's
or entity's rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such customers,
clients and/or accounts as to which such Recipient is a fiduciary or
-1-
custodian or co-fiduciary or co-custodian (collectively, the "Customers"), but
in no event shall any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or entity would
otherwise qualify as Recipients as to the same Shares, the Recipient which is
the dealer of record on the Fund's books as determined by the Distributor shall
be deemed the Recipient as to such Shares for purposes of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SUPPORT
SERVICES.
(a) The Fund will make payments to the Distributor, within forty-five (45)
days of the end of each calendar quarter, in the aggregate amount (i) of 0.0625%
(0.25% on an annual basis) of the average during the calendar quarter of the
aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) 0.1875% (0.75% on an annual basis)
of the average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day (the "Asset-Based Sales
Charge"). Such Service Fee payments received from the Fund will compensate the
Distributor and Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments received from the
Fund will compensate the Distributor and Recipients for providing distribution
assistance in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares to entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Directors still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each
-2-
business day, constituting Qualified Holdings owned beneficially or of record by
the Recipient or by its Customers for a period of more than the minimum period
(the "Minimum Holding Period"), if any, to be set from time to time by a
majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option, make service fee
payments ("Advance Service Fee Payments") to any Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate not to
exceed (i) 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to the
Distributor on demand a pro rata portion of such Advance Service Fee Payments,
based on the ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor shall make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers for a period of more than one (1)
year. However, no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any Recipient for any
such quarter in which its Qualified Holdings do not equal or exceed, at the end
of such quarter, the minimum amount ("Minimum Qualified Holdings"), if any, to
be set from time to time by a majority of the Independent Directors.
A majority of the Independent Directors may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Article III, Section 26, of the
NASD Rules of Fair Practice. The distribution assistance and administrative
support services to be rendered by the Distributor in connection with the Shares
may include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity that sells
Shares, and\or paying such persons Advance Service Fee Payments in advance of,
and\or greater than, the amount
-3-
provided for in Section 3(b) of this Agreement; (ii) paying compensation to and
expenses of personnel of the Distributor who support distribution of Shares by
Recipients; (iii) obtaining financing or providing such financing from its own
resources, or from an affiliate, for interest and other borrowing costs of the
Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative support services to the Fund; (iv) paying other
direct distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished to current
Shareholders) and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render pursuant to part
(a) of this Section 3. Such services include distribution assistance and
administrative support services rendered in connection with Shares acquired (i)
by purchase, (ii) in exchange for shares of another investment company for which
the Distributor serves as distributor or sub-distributor, or (iii) pursuant to a
plan of reorganization to which the Fund is a party. In the event that the
Board should have reason to believe that the Distributor may not be rendering
appropriate distribution assistance or administrative support services in
connection with the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other information to
verify that the Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OMC), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in effect,
the selection and nomination of those persons to be Directors of the Corporation
who are not "interested persons" of the Fund or the Corporation ("Disinterested
Directors") shall be committed to the discretion of such Disinterested
Directors. Nothing herein shall prevent the Disinterested Directors from
soliciting the views or the involvement of others in such selection or
nomination if the final decision on any such selection and nomination is
approved by a majority of the incumbent Disinterested Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the
Corporation shall provide at least quarterly a written reports to the
Corporation's Board for its review, detailing services rendered in connection
with the distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be provided
quarterly and shall state whether all provisions of Section 3 of this Plan have
been complied with.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Directors or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its assignment (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Directors cast in person at a meeting called
for the purpose of voting on such agreement; and (iv) it shall, unless
terminated as
-4-
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Directors cast in person at a meeting called for the purpose
of voting on such continuance.
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Directors cast in person at a meeting called on June 22, 1995 for the purpose of
voting on this Plan, and shall take effect after approval by Class C
shareholders of the Fund, at which time it shall replace the Fund's Plan and
Agreement of Distribution for the Shares made as of September 1, 1993 as amended
February 1, 1995. Unless terminated as hereinafter provided, it shall continue
in effect from year to year from the date first set forth above or as the Board
may otherwise determine only so long as such continuance is specifically
approved at least annually by a vote of the Board and its Independent Directors
cast in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially the amount of
payments to be made without approval of the Class C Shareholders, in the manner
described above, and all material amendments must be approved by a vote of the
Board and of the Independent Directors. This Plan may be terminated at any time
by vote of a majority of the Independent Directors or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
securities of the Class. In the event of such termination, the Board and its
Independent Directors shall determine whether the Distributor is entitled to
payment from the Fund of all or a portion of the Service Fee and/or the Asset-
Based Sales Charge in respect of Shares sold prior to the effective date of such
termination.
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
By: ____________________________________
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:____________________________________
Andrew J. Donohue
Executive Vice President
-5-
QUEST FOR VALUE FUND, INC.
PO BOX 8505
BOSTON, MA 02266-8505
TAX I.D. OR SOC. SEC. NO.
ACCOUNT NO.
FUND NO.
RECORD DATE SHARES
--------------------------------------------------------------------------------
QUEST FOR VALUE FUND, INC.
PROXY FOR SHAREHOLDERS MEETING NOVEMBER 3, 1995
The undersigned shareholder of QUEST FOR VALUE FUND, INC. does hereby appoint
Thomas E. Duggan and Maria Camacho and each of them, as the attorneys and
proxies of the undersigned, with full power of substitution, to attend the
Special Meeting of Shareholders of Quest for Value Fund, Inc. to be held on
November 3, 1995 at the offices of Oppenheimer & Co., Inc., 40th Floor, One
World Financial Center at 10:00 a.m. New York time and at all adjournments
thereof, to vote the number of shares of stock in the name of the undersigned on
the record date for said meeting on the matters specified in the proxy
statement. As to any other matter or if any of said nominees are not available
for election, said attorneys shall vote in accordance with their best judgment.
PROPOSAL(S)
1) Approval of the New Investment Advisory Agreement with Oppenheimer
Management Corporation
2) Approval of the New Subadvisory Agreement with Quest for Value
Advisors
3) Approval of the New Distribution and Service Plan and Agreement with
Oppenheimer Funds Distributor, Inc.
4) Election of Directors
5) To act upon such other matters as may come before the meeting or any
adjournment or adjournments thereof.
PROXY SOLICITED ON BEHALF OF MANAGEMENT
MANAGEMENT RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND
FOR THE ABOVE PROPOSALS. THE SHARES REPRESENTED HEREBY WILL BE
VOTED AS INDICATED OR FOR IF NO CHOICE IS INDICATED.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN
THE ENCLOSED ENVELOPE AND RETAIN THE TOP PORTION.
PLEASE DO NOT USE BLUE PEN WHEN MARKING THIS BALLOT.
QUEST FOR VALUE FUND, INC.
RECORD DATE SHARES
NOTE: PLEASE SIGN EXACTLY AS YOU NAME(S)
APPEARS HEREON. When signing as custodian, attorney, executor, administrator,
trustee, guardian, etc., please give your full title as such.
Joint owners should each sign this Proxy.
PROXY VOTING MAIL-IN-STUB
PROPOSAL(S)
1) / / FOR / / AGAINST / / ABSTAIN
2) / / FOR / / AGAINST / / ABSTAIN
3) / / FOR / / AGAINST / / ABSTAIN
PROPOSAL 4: ELECTION OF DIRECTORS
TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, LINE OUT THE NOMINEE'S
NAME BELOW
/ / FOR all nominees listed below
/ / Vote withheld for all nominees listed below
/ / FOR all nominees listed below (except as marked to the contrary below)
P. Clinton T.Courtney L. Herrmann G. Loft B. Macaskill
5) / / FOR / / AGAINST / / ABSTAIN
DATED: __________________________, 19____
__________________________________________
__________________________________________
Signature(s) of Shareholder(s)
September 14, 1995
Dear Quest for Value Fund Shareholder:
Last month we advised you that Quest for Value Advisors, the adviser of
your Fund, had entered into an agreement with Oppenheimer Management Corporation
("OMC") for the sale to OMC of mutual fund assets of Quest for Value Advisors.
The agreement contemplates that, subject to shareholder approval, OMC will enter
into an Investment Advisory Agreement with the Fund and that OMC and Quest for
Value Advisors will enter into a Subadvisory Agreement so that the Fund's
portfolio would continue to be managed by Quest for Value Advisors.
Distribution services would be provided by Oppenheimer Funds Distributor, Inc.,
a subsidiary of OMC. A shareholder meeting has been scheduled in November and
all shareholders of record on September 7 are being asked to vote either in
person or by proxy. Enclosed you will find several items, including a notice of
the meeting, a proxy statement detailing the proposals, a ballot card and a
postage-paid return envelope for your convenience.
WHAT IS BEING PROPOSED?
In June, your Board of Directors, which represents your interests in the
day-to-day management of the Fund, approved the proposed transaction with OMC
and the new contracts with the Fund and recommended that Fund shareholders
approve the new Investment Advisory Agreement, Subadvisory Agreement and
Distribution and Service Plans and Agreements.
WHY DOES THE BOARD AND QUEST FOR VALUE ADVISORS RECOMMEND THIS CHANGE?
The Board of Directors believes that the proposed changes are in the best
interest of shareholders. The Fund would benefit from OMC's outstanding
distribution and shareholder servicing capabilities while maintaining continuity
of portfolio management through Quest for Value Advisors' role as Subadvisor.
The proposed transaction will allow Quest for Value Advisors to concentrate
on what it does best - portfolio management.
Your vote is very important because these decisions will affect your
investment. So we urge you to consider these issues carefully, and to make your
vote count.
HOW DO YOU VOTE?
No matter how large or small your investment, your vote is important, so
please review the proxy statement carefully. To cast your vote, simply mark,
sign and date the enclosed proxy ballot and return it in the postage-paid
envelope today.
Please contact your financial adviser or call us at 1-800-232-FUND if you
have any questions.
As always, we appreciate your confidence in the Quest for Value Funds.
Sincerely
Joseph M. La Motta
Chairman of the
Board and President
Quest for Value Fund, Inc.