M I FUND, INC.
1384 Broadway
New York, New York 10018
February 15, 1994
Dear Shareholder:
Enclosed for your consideration are proxy materials relating to the
proposed reorganization (the "Reorganization") of M I Fund, Inc. (the
"Fund") involving the transfer of the Fund's assets to Oppenheimer Tax-
Free Bond Fund ("OTFBF") in exchange for class A shares of OTFBF, the
distribution of those OTFBF shares to Fund shareholders in a complete
liquidation of the Fund, the dissolution of the Fund and the cancellation
of its outstanding shares. As described in the accompanying materials,
the value of the OTFBF shares received will be equivalent to the net asset
value of the Fund assets sold to OTFBF.
As a result of the Reorganization, shareholders of the Fund would become
shareholders of OTFBF. As more fully described in the accompanying proxy
materials, the shares of OTFBF would be received by Fund shareholders
without payment of a sales charge and may be redeemed by shareholders on
any business day.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Shareholders are urged to carefully review the accompanying proxy
materials, including all exhibits thereto, in considering the proposed
transaction.
Very truly yours,
M I FUND, INC.
By: __________________
Steven Meltzer
President
<PAGE>
M I FUND, INC.
1384 Broadway
New York, New York 10018
212-398-1066
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 18, 1994
To the Shareholders of M I Fund, Inc.:
Notice is hereby given that a Special Meeting of the Shareholders of
M I Fund, Inc. (the "Fund") will be held at 1384 Broadway, New York, New
York, at 11:00 A.M., New York time, on March 18, 1994, or any adjournments
thereof (the "Meeting"), for the following purposes:
1. To consider and vote upon an agreement and plan of reorganization,
dated October 22, 1993 (the "Reorganization Agreement"), by and between
the Fund and Oppenheimer Tax-Free Bond Fund ("OTFBF"), and the
transactions contemplated thereby (the "Reorganization"), including the
transfer of substantially all the assets of the Fund to OTFBF in exchange
for Class A shares of OTFBF, the distribution of such OTFBF shares to the
shareholders of the Fund (other than shareholders who have properly
exercised their dissenters' rights under New York law) in complete
liquidation of the Fund and the cancellation of the outstanding shares of
the Fund. A vote in favor of the Reorganization by a shareholder of the
Fund will also constitute a vote in favor of the liquidation and
dissolution of the Fund and the termination of its registration under the
Investment Company Act of 1940, as amended.
2. To act upon such other matters as may properly come before the
Meeting.
The Reorganization is more fully described in the accompanying Proxy
Statement and Prospectus and a copy of the Reorganization Agreement is
attached as Exhibit A thereto. A copy of Section 623 of the Business
Corporation Law of the State of New York, which sets forth the procedures
to be followed by Fund shareholders who choose to exercise dissenters'
rights under New York law, is attached as Exhibit B to the accompanying
Proxy Statement and Prospectus. Shareholders of record at the close of
business on February 15, 1994 are entitled to notice of, and to vote at,
the Meeting. Please read the Proxy Statement and Prospectus carefully in
considering the proposed Reorganization. The Board of Directors of the
Fund recommends a vote in favor of the Reorganization. WE URGE YOU TO
SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Directors,
Harvey Silverman,
Secretary
February 15, 1994
Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy and to sign, date and
return it in the accompanying postage-paid envelope. To avoid unnecessary
duplicate mailings, we ask your cooperation in promptly mailing your proxy
no matter how large or small your holdings may be.
<PAGE>
M I FUND, INC.
1384 Broadway
New York, New York 10018
212- 398-1066
PROXY STATEMENT
OPPENHEIMER TAX-FREE BOND FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PROSPECTUS
FOR A SPECIAL MEETING OF SHAREHOLDERS OF
M I FUND, INC. TO BE HELD ON MARCH 18, 1994
M I Fund, Inc. (the "Fund"), a New York corporation registered with the
Securities and Exchange Commission (the "SEC") as a closed-end investment
company, is furnishing this Proxy Statement and Prospectus to its
shareholders in connection with the solicitation by the Board of Directors
of the Fund (the "Board") of proxies to be used at the Special Meeting of
Shareholders of the Fund to be held at 1384 Broadway, New York, New York,
at 11:00 A.M., New York time, on March 18, 1994, and any adjournments
thereof (the "Meeting"). It is expected that this Proxy Statement and
Prospectus will be mailed on or about February 16, 1994.
At the Meeting, shareholders of the Fund will be asked to consider and
vote upon an agreement and plan of reorganization, dated October 22, 1993
(the "Reorganization Agreement"), by and between the Fund and Oppenheimer
Tax-Free Bond Fund ("OTFBF"), a Massachusetts business trust registered
with the SEC as an open-end investment company, and the transactions
contemplated by the Reorganization Agreement (the "Reorganization"). The
Reorganization Agreement provides for the transfer of substantially all
of the assets of the Fund to OTFBF in exchange for Class A shares of
OTFBF, the distribution of such OTFBF shares to the shareholders of the
Fund (other than shareholders who have properly exercised their
dissenters' rights under New York law) in complete liquidation of the
Fund, the deregistration of the Fund as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), the
dissolution of the Fund as a corporation and the cancellation of the
outstanding shares of common stock, par value $.10 per share, of the Fund
(the "Common Shares"). A copy of the Reorganization Agreement is attached
hereto as Exhibit A and is incorporated by reference herein.
OTFBF is an open-end management investment company with the investment
objective of seeking as high a level of current income which is exempt
from Federal income taxes as is available from investing in Municipal
Securities (as hereinafter defined), while attempting to preserve capital.
OTFBF currently offers two classes of shares: (a) Class A shares, with
a sales charge imposed at the time of purchase subject to certain
exceptions; and (b) Class B shares, with a sales charge imposed on a
contingent deferred basis on most redemptions of such shares within six
years of their purchase. Class B shares are also subject to an asset-
based sales charge. The shares to be issued by OTFBF pursuant to the
Reorganization will be issued at net asset value without a sales charge.
Such shares will be Class A shares and will not be subject to a contingent
deferred sales charge applicable to future redemptions. Unless otherwise
specified herein and unless the context otherwise requires, all further
references in this Proxy Statement and Prospectus to shares of OTFBF and
shareholders of OTFBF shall be deemed to refer to Class A shares of OTFBF
and holders of Class A shares of OTFBF, respectively. Further information
relating to Class B shares of OTFBF is set forth in the current Prospectus
of OTFBF accompanying this Proxy Statement and Prospectus and is
incorporated herein by reference.
The net asset value of OTFBF shares issued in the exchange will equal
the value of the assets of the Fund received by OTFBF. As a result of the
Reorganization, each Fund shareholder will receive that number of full and
fractional OTFBF shares equal in value to such shareholder's pro rata
interest in the assets transferred to OTFBF as of the close of business
of the New York Stock Exchange on the business day immediately preceding
the closing date (the "Valuation Time") scheduled for the Reorganization
(the "Closing Date"). The Fund has received a ruling of the Internal
Revenue Service confirming that the Reorganization will constitute a tax-
free reorganization for Federal income tax purposes; as a result, no gain
or loss will be recognized by the Fund, OTFBF, or the non-dissenting
shareholders of the Fund as a result of the Reorganization. See "The
Reorganization."
As described elsewhere in this Proxy Statement and Prospectus, holders
of Common Shares outstanding at the Valuation Time who have not voted in
favor of the Reorganization and who have elected to receive payment with
respect thereto pursuant to Sections 623 and 910 of the New York Business
Corporation Law (the "NYBCL") will not be entitled to receive OTFBF shares
as provided above but will only be entitled to receive payment of the
"fair value" of Common Shares as to which they have dissented. See "The
Reorganization - Statutory Rights to Receive Payment for Shares."
OTFBF has filed with the SEC a Registration Statement on Form N-14 (the
"Registration Statement") relating to the registration of shares of OTFBF
to be offered to the shareholders of the Fund pursuant to the
Reorganization. This Proxy Statement and Prospectus relating to the
Reorganization also constitutes a Prospectus of OTFBF filed as part of the
Registration Statement. Information contained or incorporated by
reference herein relating to the Fund has been prepared by and is the
responsibility of the Fund. Information contained or incorporated by
reference herein relating to OTFBF has been prepared by and is the
responsibility of OTFBF.
This Proxy Statement and Prospectus sets forth concisely information
about OTFBF that shareholders of the Fund should know before voting on the
Reorganization. Shareholders are urged to read and carefully consider the
information contained in this Proxy Statement and Prospectus and the
Exhibits attached hereto. A copy of the Prospectus for OTFBF dated March
15, 1993, as supplemented May 1, 1993 and as further supplemented
September 16, 1993 (the "OTFBF Prospectus"), is enclosed, and is
incorporated herein by reference. A Statement of Additional Information
of OTFBF dated March 16, 1993 that contains more detailed information
about OTFBF and its management and a Statement of Additional Information
relating to the Reorganization, described in this Proxy Statement and
Prospectus (the "Additional Statement"), dated February 15, 1994, have
each been filed with the SEC and are incorporated by reference herein.
Such Statements are available without charge upon written request to the
transfer and shareholder servicing agent for OTFBF, Oppenheimer
Shareholder Services ("OSS"), P.O. Box 5270, Denver, Colorado 80217 or by
calling the toll-free number shown above.
Investors are advised to read and retain this Proxy Statement and
Prospectus for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement and Prospectus is dated February 15, 1994.
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
Page
Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Meeting . . . . . . . . . . . . . . . . . . . . . . . . 1
Parties to the Reorganization. . . . . . . . . . . . . . . . 1
The Reorganization . . . . . . . . . . . . . . . . . . . . . 2
Tax Consequences of the
Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . 2
Investment Objectives and Policies . . . . . . . . . . . . . 2
Investment Advisory and Distribution
Plan Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Purchases, Exchanges and
Redemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Principal Risk Factors . . . . . . . . . . . . . . . . . . . 5
The Reorganization . . . . . . . . . . . . . . . . . . . . . . . 5
Reasons for the Reorganization . . . . . . . . . . . . . . . 5
The Reorganization Agreement . . . . . . . . . . . . . . . . 6
Tax Aspects of the Reorganization. . . . . . . . . . . . . . 8
Statutory Rights to Receive Payment
for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Description of Securities to be
Issued; Comparison of Stockholder
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Capitalization Table (Unaudited) . . . . . . . . . . . . . . 13
Comparison of Investment Objectives and
Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Investment Objectives and Policies . . . . . . . . . . . . . 13
Special Investment Methods . . . . . . . . . . . . . . . . . 14
Investment Restrictions. . . . . . . . . . . . . . . . . . . 14
Additional Information . . . . . . . . . . . . . . . . . . . . . 15
OTFBF Performance . . . . . . . . . . . . . . . . . . . . . 15
Portfolio Transactions and Turnover. . . . . . . . . . . . . 16
Expense Ratios and Performance . . . . . . . . . . . . . . . 16
Shareholder Services . . . . . . . . . . . . . . . . . . . . 16
Management and Distribution
Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Information Concerning the Meeting . . . . . . . . . . . . . . . 18
The Special Meeting . . . . . . . . . . . . . . . . . . . . 18
Record Date; Vote Required; Share
Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Expenses of Solicitation . . . . . . . . . . . . . . . . . . 19
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 20
Financial Information . . . . . . . . . . . . . . . . . . . 20
Public Information . . . . . . . . . . . . . . . . . . . . . 20
Other Business . . . . . . . . . . . . . . . . . . . . . . . . . 21
Exhibit A - Agreement and Plan of
Reorganization, dated October 22, 1993,
by
and between M I Fund, Inc. and
Oppenheimer Tax-Free Bond Fund . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Section 623 of the New York
Business Corporation Law . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Investment Restrictions of
M I Fund, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D - Performance Graph. . . . . . . . . . . . . . . . D-1
<PAGE>
SYNOPSIS
The following is a synopsis of certain information contained in or
incorporated by reference in this Proxy Statement and Prospectus. This
synopsis is only a summary and is qualified in its entirety by the more
detailed information contained or incorporated by reference in this Proxy
Statement and Prospectus and the Exhibits hereto. Shareholders should
carefully review this Proxy Statement and Prospectus and the Exhibits
hereto in their entirety and, in particular, the current Prospectus of
OTFBF which accompanies this Proxy Statement and Prospectus and is
incorporated herein.
The Meeting
This Proxy Statement and Prospectus is being furnished to the
shareholders of the Fund in connection with the solicitation by the Board
of proxies to be used at the Special Meeting of Shareholders of the Fund
to be held at 1384 Broadway, New York, New York, at 11:00 A.M., New York
time, on March 18, 1994, and any adjournments thereof. At the Meeting,
Fund shareholders will consider and vote upon the Reorganization
Agreement, and the transactions contemplated thereby, including the
transfer of substantially all of the assets of the Fund to OTFBF in
exchange for shares of OTFBF, the distribution of such OTFBF shares to the
shareholders of the Fund (other than shareholders who have properly
exercised their dissenters' rights under New York law) in complete
liquidation of the Fund, the deregistration of the Fund as an investment
company under the 1940 Act, the dissolution of the Fund as a corporation
and the cancellation of the Common Shares.
The Board has fixed the close of business on February 15, 1994 as the
record date (the "Record Date") for the determination of the holders of
Common Shares entitled to notice of, and to vote at, the Meeting. As of
the Record Date, there were 1,626,594 Common Shares issued and
outstanding; the Common Shares are the only authorized shares of capital
stock of the Fund. The holders of record of Common Shares on the Record
Date are entitled to one vote per share on each matter submitted to a vote
at the Meeting. Under the NYBCL, two-thirds of the outstanding Common
Shares entitled to vote, represented in person or by proxy, will
constitute a quorum for the transaction of business at the Meeting and the
affirmative vote of such holders is required for approval of the
Reorganization. Shareholders owning an aggregate of 1,590,500 Common
Shares, or approximately 97.8% of the issued and outstanding Common Shares
as of the Record Date, have informed the Fund that they intend to vote all
of these shares in favor of the Reorganization, which will assure approval
of the Reorganization.
Parties to the Reorganization
The Fund was incorporated in 1947 as a New York corporation and since
1980 has operated as a closed-end investment company registered with the
SEC. Prior to October 31, 1979, the Fund (formerly, Marlene Industries
Corporation) was principally engaged through its subsidiaries in the
manufacture and sale of a diversified line of women's apparel and
children's sleepwear. As of October 31, 1979, Marlene Industries
Corporation sold substantially all of its assets (including the stock of
its active subsidiaries and its name) subject to substantially all of its
liabilities, and changed its name to M I Fund, Inc. and the purpose for
which it was organized. The Fund is managed by a four-person Board of
Directors, who are elected annually by the shareholders of the Fund. The
Fund is located at 1384 Broadway, New York, New York 10018.
OTFBF is registered with the SEC as an open-end management investment
company and is presently organized as a Massachusetts business trust.
OTFBF was initially organized in 1976 as a Maryland corporation. OTFBF's
13-person Board of Trustees has overall responsibility for the management
of OTFBF. OTFBF is not required to hold annual shareholder meetings.
OTFBF is located at Two World Trade Center, New York, New York 10048-0203.
There are certain differences between open-end and closed-end investment
companies and between New York corporations and Massachusetts business
trusts. Such differences, as well as additional information about the
parties, is set forth below. See "Description of Securities to be Issued;
Comparison of Stockholder Rights," "Comparison of Investment Objectives
and Policies," "Additional Information" and "Miscellaneous."
The Reorganization
The Reorganization Agreement provides for the transfer of substantially
all the assets of the Fund to OTFBF in exchange for shares of OTFBF. The
net asset value of OTFBF shares issued in the exchange will equal the
value of the assets of the Fund received by OTFBF. Following the Closing
Date, the Fund will distribute the shares of OTFBF received by the Fund
on the Closing Date to holders of Common Shares issued and outstanding as
of the Valuation Time (other than those holders that have properly
exercised dissenter's rights under New York law) in complete liquidation
of the Fund and the Fund will thereafter be dissolved and deregistered
under the 1940 Act. As a result of the Reorganization, each Fund
shareholder will receive that number of full and fractional OTFBF shares
equal in value to such shareholder's pro rata interest in the assets
transferred to OTFBF as of the Valuation Time. The Board has determined
that the interests of existing Fund shareholders will not be diluted as
a result of the Reorganization. For the reasons set forth below under
"The Reorganization - Reasons for the Reorganization," the Board,
including the directors ("Independent Directors") who are not "interested
persons" of the Fund, as that term is defined in the 1940 Act, has
concluded that the Reorganization is in the best interests of the Fund and
its shareholders and recommends approval of the Reorganization by Fund
shareholders. If the Reorganization is not approved, the Fund will
continue in existence and the Board will determine whether to pursue
alternative actions.
Tax Consequences of the Reorganization
The Fund has received a ruling of the Internal Revenue Service that,
among other things, the Reorganization will constitute a tax-free
reorganization for Federal income tax purposes so that no gain or loss
will be recognized for those purposes by the Fund, OTFBF, or the non-
dissenting shareholders of the Fund as a result of the Reorganization.
For further information about the tax consequences of the Reorganization,
see "The Reorganization - Tax Aspects of the Reorganization" below.
Investment Objectives and Policies
While the investment objectives and restrictions of the Fund and OTFBF
are similar, there are differences that should be considered by Fund
shareholders.
As its investment objective, the Fund seeks as high a level of current
interest income exempt from Federal income taxes as is consistent with
preserving its capital. The Fund seeks to achieve its objective by
investing substantially all of its assets in Municipal Bonds (as defined
in "Comparison of Investment Objectives and Policies"). The Fund invests
all of its assets in a diversified portfolio of Municipal Bonds rated
within the four highest rating categories of Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's Corporation ("S&P"), provided
however that not more than 20% of its assets may be invested in Municipal
Bonds rated "A" by Moody's or S&P and not more than 10% of its assets may
be invested in Municipal Bonds rated "Baa" by Moody's or "BBB" by S&P.
The Fund may invest in short-term tax-exempt notes on a temporary basis.
The investment objective of OTFBF is to seek as high a level of current
income which is exempt from Federal income taxes as is available from
investing in Municipal Securities (as defined in "Comparison of Investment
Objectives and Policies"), while attempting to preserve capital. As a
matter of fundamental policy, under normal market conditions OTFBF
attempts to invest at least 80% of its assets in Municipal Securities.
Municipal Securities purchased by OTFBF will not be rated lower than "Baa"
by Moody's or "BBB" by S&P or, if unrated, judged to be of comparable
quality by Oppenheimer Management Corporation ("OMC"), the investment
adviser to OTFBF. Investment in unrated Municipal Securities will not
exceed 20% of OTFBF's total assets. Not more than 25% of OTFBF's total
assets will be invested in Municipal Securities that are rated "Baa" or
"MIG-2" by Moody's or "BBB" or "SP-2" by S&P or, if unrated, judged by OMC
to be of comparable quality to Municipal Securities in those categories.
In times of unstable market or economic conditions, when OMC deems it
appropriate to do so, OTFBF may assume a temporary defensive position and
invest an unlimited amount of its assets in certain taxable obligations.
To the extent OTFBF assumes a temporary defensive position, a significant
portion of its distributions may be subject to federal and state income
taxes. OTFBF uses certain special investment methods not employed by the
Fund. For further discussion, see "Comparison of Investment Objectives
and Policies."
Investment Advisory and Distribution Plan Fees
The Fund receives investment advisory services from Citibank, N.A.
("Citibank") pursuant to a management-custodian agreement dated June 1,
1988. Under that agreement, Citibank reviews the Fund's portfolio and
recommends to Fund management any changes Citibank deems desirable.
Securities transactions may also be initiated by Fund management. Upon
approval of any security transaction by Fund management, Citibank selects
brokers, dealers or agents to effect that transaction. Citibank also
serves as custodian of the Fund's securities. For its activities as
custodian and investment adviser, Citibank receives a monthly fee
calculated at the annual rate of two-tenths of 1% of the market value of
the securities held by Citibank on behalf of the Fund.
OTFBF obtains investment management services from OMC. OTFBF pays a
management fee monthly to OMC computed on the net assets of OTFBF as of
the close of business each day at the following annual rate: 0.60% of the
first $200 million of net assets; 0.55% of the next $100 million; 0.50%
of the next $200 million; 0.45% of the next $250 million; 0.40% of the
next $250 million and 0.35% of net assets over $1 billion.
OTFBF has adopted separate distribution plans pursuant to Rule 12b-1
under the 1940 Act for its Class A and Class B shares, pursuant to which
OTFBF will reimburse or compensate Oppenheimer Funds Distributor, Inc.
(the "Distributor"), the distributor of OTFBF's shares, quarterly for all
or a portion of the Distributor's costs incurred in connection with the
distribution of the shares of that class and distribution-related
services. The Distributor will use the fees received from OTFBF (i) to
compensate dealers, brokers, banks or other institutions ("Recipients")
each quarter for providing personal service and maintenance of accounts
that hold Class A shares purchased on or after April 1, 1988 and Class B
shares and (ii) as to Class A shares to reimburse itself (to the extent
authorized by OTFBF's Board of Trustees) for its other expenditures under
the plan and for its direct service costs. The services to be provided
under both plans include, but are not limited to, the following:
answering routine inquiries from the Recipient's customers concerning
OTFBF, providing such customers with information on their investment in
shares, assisting in the establishment and maintenance of accounts or sub-
accounts in OTFBF, making OTFBF's investment plans and dividend payment
options available, and providing such other information and customer
liaison services and maintenance of accounts as the Distributor or OTFBF
may reasonably request. The current maximum annual fee payable by OTFBF
pursuant to its distribution plans for Class A shares and Class B shares
is 0.25% and 1.00%, respectively, of average annual net assets. The Fund
does not have a distribution plan. See "Additional Information - Expense
Ratios and Performance" for additional information.
Purchases, Exchanges and Redemptions
OTFBF, through the Distributor, continuously offers redeemable
securities to investors at a price based on OTFBF's net asset value at the
time of issuance plus a sales charge as described in the OTFBF Prospectus.
Pursuant to the Reorganization, however, shares of OTFBF issued to
shareholders of the Fund will be issued at net asset value and sold
without a sales charge. In addition, such shareholders will be entitled
to purchase additional shares of OTFBF at net asset value without a sales
charge (the Prospectus of OTFBF in effect at the Closing Date will be
supplemented to reflect this entitlement). The holders of redeemable
securities have the right to surrender those securities to OTFBF and
obtain in return an amount based on their proportionate share of the value
of OTFBF's net assets. OTFBF's net asset value per share is calculated
by dividing the value of OTFBF's portfolio securities plus all cash and
other assets (including accrued interest and dividends received) less all
liabilities (including accrued expenses) by the number of shares of OTFBF
outstanding. OTFBF's net asset value is published daily by leading
financial publications.
Shareholders of OTFBF may exchange their shares of OTFBF for shares of
any of over 30 equity, fixed-income and money market funds for which the
Distributor or an affiliate acts as the distributor. Shares of OTFBF
received by Fund shareholders pursuant to the Reorganization, and
additional shares of OTFBF purchased by such shareholders subsequent to
the Reorganization, will not be eligible for exchanges at net asset value,
without sales charge, pursuant to the OTFBF "Exchange Privilege" as
described in the OTFBF Prospectus. Upon any exchange of such OTFBF shares
for shares of an "Eligible Fund" within the OppenheimerFunds complex, such
shareholder will be required to pay any applicable sales charge imposed
by the "Eligible Fund". Exchanges are subject to a $5 fee.
Shareholders of OTFBF may redeem their shares through check writing
privileges, by written request, or by telephone request in an amount up
to $50,000 in any seven-day period, or they may arrange to have share
redemption proceeds wired to a pre-designated account at another financial
institution that is an Automated Clearing House member ("AccountLink
redemption") or through Federal Funds wire. Shareholders of OTFBF may
reinvest redemption proceeds within six months of a redemption at net
asset value in shares of OTFBF or any of numerous "Eligible Funds" within
the OppenheimerFunds complex. OTFBF may redeem accounts valued at less
than $200 if the account has fallen below such stated amount for reasons
other than market value fluctuations and may redeem shares in amounts
sufficient to compensate the Distributor for any loss due to cancellation
of a share purchase order. Generally, payment for redeemed shares is made
in cash; however, under certain unusual circumstances, shares may be
redeemed in kind. Pursuant to the notification of election filed by OTFBF
with the SEC pursuant to Rule 18f-1 under the 1940 Act, cash payment for
redeemed shares made to any one shareholder during any 90-day period may
be limited to the lesser of $250,000 or 1% of the net asset value of OTFBF
at the beginning of the 90-day period; all excess amounts may be paid by
OTFBF in assets other than cash. OTFBF also offers an Automatic
Withdrawal Plan.
Unlike OTFBF, the Fund is a closed-end investment company which does not
redeem its shares or offer to exchange them for shares of any other
investment company, and does not engage in the continuous offering of new
shares. Although shares of the Fund may be traded in the over-the-counter
market, there is virtually no market for the purchase or sale of Common
Shares.
PRINCIPAL RISK FACTORS
The values of the debt securities in which the Fund and OTFBF may invest
(i.e., Municipal Bonds and Municipal Securities, respectively) will vary
as a result of changing evaluations by rating services and investors of
the ability of issuers of such securities to meet interest and principal
payments. Such values will also change in response to changes in interest
rates. If interest rates rise, the values of such outstanding debt
securities generally will decline. Changes in the value of such debt
securities held in either fund's portfolio arising from these or other
factors will not affect income derived from those securities but will
cause changes in the asset value per share of the fund. There can be no
assurance that either the Fund or OTFBF will achieve its investment
objective, and the value of a share of the Fund or OTFBF upon sale or
redemption could be more or less than the investor's cost. Since the Fund
and OTFBF invest in similar types of securities and have substantially
similar investment objectives, the Board believes that the investment
risks in the Fund and OTFBF are substantially similar. However, OTFBF has
the ability to invest a greater percentage of its assets in Municipal
Securities of the lower grades of investment grade than the Fund. Such
flexibility creates both greater investment opportunity and greater risk.
Bonds rated "Baa" or "BBB" may have speculative characteristics and
changes in economic conditions or other circumstances are more likely to
lead to a weakened capacity of the issuer to make principal and interest
payments than is the case with higher grade bonds. OTFBF is permitted to
invest in certain taxable securities; distributions derived from net
interest income on such taxable investments will be taxable when
distributed to OTFBF shareholders. The Fund does not invest in taxable
securities (although it may do so on a temporary basis). OTFBF may also
engage in various investment activities in which the Fund does not, such
as hedging techniques. Hedging techniques may reduce investment risks but
entail transaction costs and provide no benefit if securities prices or
interest rates move in an unanticipated manner. OTFBF is organized as a
Massachusetts business trust and, pursuant to Massachusetts law,
beneficial owners of the business trust could be held personally liable
as partners for OTFBF's obligations; however, the risk of an OTFBF
shareholder incurring any financial loss is limited to the relatively
remote circumstances in which the Fund is unable to meet its obligations.
See "The Reorganization - Description of Securities to be Issued;
Comparison of Stockholder Rights."
THE REORGANIZATION
Reasons for the Reorganization
The Board, including the Independent Directors, has determined that the
Reorganization is in the best interests of the Fund and its shareholders.
In recommending the Reorganization to the shareholders of the Fund, the
Board considered that the Reorganization would have the following
potential benefits for shareholders of the Fund:
1. Shareholders of the Fund would, without recognizing a taxable capital
gain, have a continued participation in the tax-free bond markets through
investment in OTFBF which, like the Fund, is permitted to invest in debt
obligations of states, the District of Columbia, commonwealths,
territories or possessions of the United States and their respective
political subdivisions, agencies, instrumentalities or authorities and the
interest from which is not subject to Federal individual income tax, and
which has a substantially similar investment objective to that of the
Fund. If the Fund were liquidated, shareholders could recognize gains for
tax purposes.
2. Due to the open-end structure of OTFBF, shareholders will have the
option of redeeming their OTFBF shares at net asset value on any business
day, without brokerage commissions, as provided in the OTFBF Prospectus.
3. Shareholders of the Fund will be able to purchase shares of OTFBF at
net asset value, without a sales charge, and pursue substantially similar
investment objectives in a larger fund.
4. The Reorganization would secure for shareholders of the Fund the
capabilities and resources of OMC and its affiliates in the areas of
investment management, distribution, shareholder servicing and marketing.
5. While the aggregate of the investment management fee and the
distribution fee payable by OTFBF would be greater, on a percentage basis,
than the investment management fee currently paid by the Fund (see
"Advisory and Distribution Fees and Expense Ratios" above), it could
reasonably be anticipated that the Reorganization would not result in a
material increase, and may result in a decrease, of the total expenses
borne on a percentage basis by the Fund's shareholders, although there can
be no assurance that this will be the case. In this connection, the Board
further concluded that the Reorganization of the Fund with OTFBF, a fund
having a distribution plan as permitted by Rule 12b-1 under the Investment
Company Act (see "Advisory and Distribution Fees and Expense Ratios"
above), will be of benefit to the shareholders of the combined funds,
because such plan will permit sufficient funding of ongoing distribution
expenses so as to permit net assets to remain at a level which will permit
the combined fund to be operated at a competitively low expense ratio.
The Reorganization Agreement
At a meeting held on September 14, 1993, the Board adopted and
recommended to the shareholders of the Fund that they approve the
Reorganization, including the Reorganization Agreement. The terms and
conditions under which the Reorganization would be consummated are set
forth in the Reorganization Agreement and are summarized below. This
summary is qualified in its entirety by reference to the Reorganization
Agreement, a copy of which is attached as Exhibit B to this Proxy
Statement and Prospectus.
The Reorganization Agreement contemplates a reorganization under which
(i) the assets of the Fund consisting of portfolio securities, cash (other
than cash amounts retained by the Fund as a "Cash Reserve" in the amount
estimated by the Fund as sufficient to discharge its liabilities and the
payment by the Fund, if any, in respect of dissenting shares), and
receivables (other than any unpaid portion of the $35,000 validly due and
owing to the Fund as Reorganization expense reimbursement) would be
transferred, free and clear of all liens (other than the obligation, if
any, to pay the purchase price of portfolio securities purchased by the
Fund which have not settled (the "Permitted Liens")) to OTFBF on the
Closing Date in exchange for shares of OTFBF, (ii) such OTFBF shares would
be distributed to the shareholders of the Fund at the Valuation Time
(other than those shareholders who have properly exercised dissenters'
rights under New York law), (iii) the Fund would be liquidated and (iv)
the outstanding shares of the Fund would be cancelled. OTFBF will not
assume and will not otherwise be responsible for any of the Fund's
liabilities except for the Permitted Liens, if any.
The number of OTFBF shares to be delivered to the Fund will be
determined by dividing the value of the Fund assets acquired by OTFBF by
the net asset value of an OTFBF share; these values will be calculated as
of the Valuation Time after the Fund's declaration and payment of any
distribution by such date, using the valuation procedures consistently
used by OTFBF in the ordinary course and based on information extracted
from an independent portfolio pricing service. As an illustration, if at
the Valuation Time the Fund were to have securities with a market value
of $95,000 and cash in the amount of $10,000 (of which $5,000 was to be
retained by it as the Cash Reserve), the value of the assets which would
be transferred to OTFBF would be $100,000. If the net asset value per
share of OTFBF were $10 per share at the close of business at the
Valuation Time, the number of shares to be issued to the Fund would be
10,000 ($100,000 divided by $10). These 10,000 shares of OTFBF would be
distributed by the Fund to its shareholders. This illustration does not
necessarily bear any relationship to the dollar amounts or shares expected
to be involved in the Reorganization.
As soon as practicable after the Closing Date, the Fund will distribute
pro rata to its shareholders of record, except as hereinafter discussed,
the OTFBF shares it receives. OTFBF will, in accordance with a
shareholder list supplied by the Fund, cause its transfer agent to credit
and confirm an appropriate number of shares of OTFBF to shareholders of
the Fund who have not elected to receive payment in accordance with
Section 623 of the NYBCL. Certificates for shares of OTFBF will be issued
upon written request of a former shareholder of the Fund but only for
whole shares with fractional shares credited to the name of the
shareholder on the books of OTFBF. Shareholders of the Fund who wish
certificates representing their shares of OTFBF must, after receipt of
their confirmations, make a written request to OSS, P.O. Box 5270, Denver,
Colorado 80217. Shareholders of the Fund holding certificates
representing their shares of the Fund will not be required to surrender
their certificates to anyone in connection with the Reorganization. After
the Reorganization, however, it will be necessary for such shareholders
to surrender such certificates (or provide indemnities reasonably
acceptable to OTFBF in respect of lost certificates) in order to receive
certificates representing shares of OTFBF or to redeem, transfer or
exchange the shares of OTFBF received.
Holders of Common Shares outstanding at the Valuation Time who have not
voted in favor of the Reorganization and who have elected to receive
payment with respect thereto pursuant to Sections 623 and 910 of the NYBCL
will not be entitled to receive OTFBF shares as provided above but will
only be entitled to receive payment of the "fair value" of Common Shares
as to which they have dissented. See "Statutory Rights to Receive Payment
for Shares" below.
The Closing Date will be the 20th business day following the later to
occur of (i) approval of the Reorganization by the shareholders of the
Fund or (ii) receipt of favorable rulings from the Internal Revenue
Service as to, among other things, the tax-free nature of the
Reorganization (which condition has been satisfied), or at such other time
as the Fund and OTFBF may agree; provided, however, that the
Reorganization Agreement may be terminated by either party if, among other
things, the Closing Date shall not have occurred by March 31, 1994. The
consummation of the Reorganization is contingent upon the approval of the
Reorganization by the shareholders of the Fund, the receipt of the above-
mentioned Internal Revenue Service rulings (which condition has been
satisfied), the receipt of the opinions and certificates set forth in
Sections 10 and 11 of the Reorganization Agreement and the occurrence of
the other events described in those Sections, certain of which may be
waived by the Fund or OTFBF.
The costs of printing and mailing the proxies and proxy statements
associated with the Reorganization will be paid by the Fund. Any
documents such as existing prospectuses, annual reports or semi-annual
reports that are included in that mailing will be a cost of the fund
issuing the document. Any other out-of-pocket expenses of the Fund and
OTFBF associated with the Reorganization, including legal, accounting, tax
and transfer agent expenses, will be borne by the Fund and OTFBF,
respectively. Notwithstanding the foregoing, provided the Reorganization
is consummated, OTFBF will cause one of its affiliates to reimburse the
Fund those of its expenses solely and directly related to the
Reorganization in an amount not to exceed $35,000. Management estimates
that such expenses associated with the Reorganization to be borne by the
Fund will not exceed $100,000.
Under the Reorganization Agreement, within one year after the Closing
Date, the Fund shall: (a) either pay or make provision for all of its
liabilities; and (b) distribute any remaining amount of the Cash Reserve
(after paying or making provision for such liabilities and the estimated
cost of making the distribution) to shareholders of the Fund who received
OTFBF shares. If the foregoing cannot be effectuated within such one-year
period, the Fund will, at the end of such period, transfer the remaining
amount of the Cash Reserve to a liquidating trust upon terms reasonably
acceptable to OTFBF. Within one year after the Closing Date, the Fund
expects to complete its liquidation and will thereupon dissolve as a
corporation and deregister as an investment company under the 1940 Act.
The effect of the Reorganization will be that shareholders of the Fund
who vote their shares in favor of the Reorganization will be electing to
exchange their interests in the Fund for shares of OTFBF having a net
asset value equal to the net asset value of their Common Shares at the
Valuation Time calculated after subtracting the Cash Reserve. This
exchange would be effected without a sales charge and, it is expected,
without recognition of taxable gain or loss for Federal income tax
purposes. See "Tax Aspects of the Reorganization" below. The
Reorganization Agreement provides that on the Closing Date the Fund will
transfer to OTFBF only those assets the acquisition of which will permit
OTFBF to be in compliance with all of its investment policies and
restrictions. The Fund will recognize capital gain or loss on any sales
of securities made prior to the Closing Date in order to comply with the
foregoing. As noted in "Tax Aspects of the Reorganization" below, if the
Fund realizes net capital gain from the sale of securities prior to the
Closing Date, such gain, to the extent not offset by capital loss
carryforwards, will be distributed to shareholders prior to the Closing
Date and will be taxable to shareholders as capital gain.
Tax Aspects of the Reorganization
The Reorganization is intended to qualify for Federal income tax
purposes as a tax-free reorganization under Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Fund has
received a private letter ruling from the Internal Revenue Service
relating to the tax-free nature of the Reorganization, which letter
included the following rulings:
1. The acquisition by OTFBF of substantially all of the assets of the
Fund to OTFBF solely in exchange for shares of OTFBF followed by the
distribution of the shares to shareholders of the Fund in complete
liquidation and dissolution of the Fund, as set forth in the
Reorganization Agreement, will constitute a reorganization within the
meaning of Section 368(a)(1)(C) of the Code;
2. Under Section 361(a) of the Code, no gain or loss will be recognized
by the Fund by reason of the transfer of substantially all of its assets
to OTFBF solely in exchange for shares of OTFBF; in addition, no gain or
loss will be recognized by the Fund on the distribution by it to its
shareholders of the shares of OTFBF (including fractional shares) received
pursuant to the Reorganization (Section 361(c)(1)) of the Code;
3. Under Section 1032(a) of the Code, no gain or loss will be recognized
by OTFBF upon receipt of substantially all the assets of the Fund solely
in exchange for shares of OTFBF (including fractional shares) as set forth
in the Reorganization Agreement;
4. Under Section 354(a)(1) of the Code, no gain or loss will be
recognized by any shareholder of the Fund upon the exchange of such
shareholder's Common Shares solely for shares of OTFBF, including any
fractional share to which such shareholder may be entitled; provided,
however, that if a shareholder of the Fund receives cash in addition to
shares of OTFBF, the shareholder will recognize gain, but not in excess
of the cash received (Section 356(a)(1) of the Code); if the exchange has
the effect of the distribution of a dividend (determined with the
application of the rules relating to constructive ownership under the
Code), then the amount of gain recognized that is not in excess of the
shareholder's ratable share of undistributed earnings and profits will be
treated as a dividend (Section 356(a)(2) of the Code);
5. The basis of the shares of OTFBF received by each shareholder of the
Fund (including any fractional shares to which such shareholder may be
entitled) will be the same as such shareholder's basis of the Common
Shares exchanged therefore, decreased by the amount of any cash received
by such shareholder and increased by the amount treated as a dividend and
the amount of gain required to be recognized by the shareholder on the
exchange (not including any portion of such gain that is treated as a
dividend) (Section 358(a)(1) of the Code);
6. The holding period of shares of OTFBF received by each Fund
shareholder (including any fractional shares to which such shareholder may
be entitled) will include the period during which the stock surrendered
in exchange therefor was held by the Fund shareholder, provided the Common
Shares surrendered were held by such shareholder as a capital asset at the
time of the exchange (Section 1223(1) of the Code); and
7. Cash received by a dissenting shareholder of the Fund in exchange for
such shareholder's Common Shares will be treated as having been received
by such shareholder as a distribution in redemption of such shareholder's
Common Shares, subject to the provisions and limitations of Section 302
of the Code.
At least one but not more than 20 business days prior to the Valuation
Date, the Fund will declare and pay a dividend or dividends which,
together with all previous such dividends, will have the effect of
distributing to the Fund's shareholders all of the Fund's investment
company taxable income for all periods since 1979 through and including
the Closing Date (computed without regard to any dividends paid
deduction), all of the Fund's net capital gain, if any, realized in such
periods (after reduction for any capital loss carryforward) and at least
90% of the excess, if any, of the Fund's interest income excludable from
gross income under Section 103(a) of the Code, over its deductions
disallowed under Section 265 or Section 171(a)(2) of the Code for the
period from January 1, 1993 through the Closing Date. Such dividends will
be treated as ordinary income, capital gain and exempt income,
respectively, to the Fund's shareholders.
Shareholders of the Fund should consult their tax advisers regarding the
effect, if any, of the proposed transaction in light of their individual
circumstances. Since the foregoing discussion only relates to the Federal
income tax consequences of the proposed transaction, shareholders of the
Fund should also consult their tax advisers as to state and local tax
consequences, if any, of the proposed transaction.
Statutory Rights to Receive Payment for Shares
Under Section 623 of the NYBCL ("Section 623") and Section 910 of the
NYBCL, if the Reorganization is consummated, holders of record of Common
Shares outstanding at the Valuation Time who make an election in
accordance with Section 623 may be entitled to be paid the "fair value"
of their Common Shares. The following summary of Section 623 sets forth
the procedures for demanding these statutory rights. This summary is
qualified in its entirety by reference to Section 623, the text of which
is attached to this Proxy Statement and Prospectus as Exhibit B.
Filing Written Objection. Prior to the Fund shareholder vote with
respect to the Reorganization, a holder of Common Shares who intends to
enforce his or her rights under the NYBCL to receive payment of the "fair
value" of such shares if the Reorganization is consummated must file with
the Fund a written objection to the proposed Reorganization. The written
objection must include a notice of such shareholder's election to dissent,
his or her name and residence address, the number of shares as to which
he or she dissents and a demand for payment of the "fair value" of his or
her shares if the Reorganization is consummated. Such written objection
may be sent to the Fund at 1384 Broadway, New York, New York 10018,
Attention: Secretary. The return of a proxy or proxies by a Fund
shareholder with instructions to vote the shares represented thereby
against the Reorganization (or an abstention from voting) is not
sufficient to satisfy the requirement of delivering written objection to
the Fund. At the time of filing the notice of election to dissent or
within one month thereafter, a Fund shareholder whose shares are
represented by certificates shall submit such certificates to the Fund,
or to its transfer agent, which shall forthwith note conspicuously thereon
that a notice of election has been filed and shall return the certificates
to the shareholder or other person who submitted them on behalf of such
shareholder.
No Vote in Favor of the Reorganization. Shares for which dissenters'
rights are sought must not be voted in favor of the proposal to approve
the Reorganization. The submission of a signed blank proxy card will be
counted as a vote in favor of the Reorganization and, therefore, will
serve to waive dissenters' rights. Failure to return a proxy card or to
vote or an abstention from voting, however, will not waive dissenters'
rights.
Notice by the Fund. Within fifteen days after the consummation of the
Reorganization, the Fund is required to make a written offer (the "Offer")
by registered mail to each shareholder of the Fund who has filed a notice
of election to dissent and whose Common Shares were not voted in favor of
the Reorganization to pay for his or her shares at a specified price which
the Fund considers to be their "fair value". The Offer must be
accompanied by (i) advance payment to each such shareholder who has
submitted share certificates to the Fund of an amount equal to 80% of the
amount of the Offer or (ii) as to each shareholder who has not submitted
share certificates a statement that advance payment of an amount equal to
80% of the amount of the Offer will be made by the Fund promptly upon
submission of such certificates.
Payment for Common Shares. If within 30 days after the making of the
Offer the Fund and the shareholder agree upon the price to be paid for
such shareholder's Common Shares (which agreement shall be evidenced by
the shareholder sending to the Fund written notice of acceptance of the
Offer), payment therefor shall be made by the Fund within 60 days after
the later of the making of the Offer or the consummation of the
Reorganization, upon the surrender of share certificates for any such
shares represented by certificates.
Loss of Dissenter's Rights. Any dissenting shareholder of the Fund will
have the right to withdraw his or her notice of election of dissenters'
rights at any time prior to his or her acceptance in writing of the Offer
(but in no case later than 60 days from the date of consummation of the
Reorganization) and to accept the terms offered in the Reorganization
Agreement, including the exchange of Common Shares for shares of OTFBF.
Upon expiration of such time, withdrawal of a notice of election will
require the written consent of the Fund. For the withdrawal of the notice
of election to be effective, it must be accompanied by the return to the
Fund of any advance payment previously made. In addition to withdrawal
of a notice of election, a dissenting shareholder will not have the right
to receive payment of the "fair value" of his or her shares if the
Reorganization is not consummated, if a court determines that the
shareholder is not entitled to receive payment for his or her shares, if
the shareholder fails to submit his share certificates to the Fund in
accordance with Section 623 or if the shareholder otherwise loses his or
her dissenters' rights. In the event of a loss of dissenters' rights, the
shareholder will be reinstated to all rights as a shareholder of the Fund
as of the date of consummation of the Reorganization, including any
intervening preemptive rights and the right to payment of any intervening
dividend or other distribution, and will be obligated to exchange his or
her Common Shares for OTFBF shares based on the net asset value of an
OTFBF share at the close of business on the effective day of the loss of
dissenters' rights, or if such day is not a business day, the next
succeeding business day.
Judicial Settlement of Dissenters' Rights. In the event the Fund fails
to make the Offer within the aforementioned 15-day period, or if during
the 30-day period discussed in "Payment for Shares" the Fund and any Fund
shareholder seeking dissenters' rights have not agreed upon the fair value
of such shareholder's shares, the Fund is required, within 20 days after
the expiration of the applicable time period, to institute a special
proceeding in the Supreme Court, New York County, New York, to determine
the rights of dissenting shareholders and to fix the "fair value" of their
shares. Should the Fund fail to institute such proceeding within the 20-
day period, any dissenting shareholder may institute such proceeding for
the same purpose within 30 days after the expiration of the 20-day period.
If such proceeding is not instituted by a dissenting shareholder during
such time, all dissenter's rights shall be lost unless otherwise directed
by the Court. All dissenting shareholders that have not accepted the
Offer will be made parties to the judicial proceeding. The Fund is
required to serve a copy of the petition in such proceeding upon each such
dissenting shareholder. The Court shall determine whether each dissenting
shareholder, as to whom the Fund requested the Court to make such
determination, is entitled to receive payment for his or her shares. If
the Fund does not request any such determination or if the Court finds
that any dissenting shareholder is so entitled, it shall proceed to fix
the value of the shares which shall be the "fair value" as of the close
of business on the day prior to the Meeting. Such determination will be
binding on all dissenting shareholders. Within 60 days after the final
determination of the proceeding, the Fund will pay to each dissenting
shareholder the amount found to be due him or her, including interest as
the Court determines, upon surrender of the certificates for any such
shares represented by certificates. Each party to the proceeding shall
bear its own costs and expenses, provided, however, that the Court may,
in its discretion, apportion and assess the costs, expenses and fees
incurred by the Fund and any or all dissenting shareholders against the
other party.
Insolvency. No payment will be made to a dissenting shareholder
pursuant to Section 623 at a time when the Fund is insolvent or when such
payment would render it insolvent. In such case, the dissenting
shareholder shall, at his or her option, withdraw his or her notice of
election or retain his or her status as an unsecured claimant against the
Fund.
Exclusive Remedy. The enforcement by a shareholder of his or her right
to receive payment for his or her shares in the manner provided by Section
623 shall exclude the enforcement by such shareholder of any other right
to which he or she might otherwise be entitled by virtue of share
ownership, except as provided in "Loss of Dissenters' Rights" above and
except that Section 623 shall not exclude the right of such shareholder
to bring or maintain an appropriate action to obtain relief on the ground
that such corporate action will be or is unlawful or fraudulent as to him
or her.
Loss of Rights as Shareholder. Any shareholder who has elected to
dissent pursuant to Section 623 shall not thereafter be entitled to notice
of any meeting of shareholders of the Fund or to vote his or her Common
Shares for any purpose and shall not be entitled to the payment of
dividends or other distributions on the Common Shares.
The receipt of cash pursuant to the enforcement of dissenters' rights
will be a taxable event for federal income tax purposes. See "Tax Aspects
of the Reorganization" above. Any Fund shareholder who desires to enforce
dissenters' rights should carefully review the NYBCL and is urged to
consult his or her legal advisor before electing or attempting to exercise
such rights.
Description of Securities to be Issued; Comparison of Stockholder Rights
The Fund is a corporation incorporated under the laws of the State of
New York. The Fund's certificate of incorporation authorizes 5,000,000
shares of capital stock, designated as common stock, par value $.10 per
share. There were 1,626,594 Common Shares issued and outstanding as of
the Record Date.
Each Common Share is entitled to one vote on all matters submitted to
the vote of shareholders, and the Fund's bylaws provide that at all
meetings at which a quorum is present, a majority vote of the shares
present shall constitute the act of the shareholders unless a greater
number is required under the Fund's certificate of incorporation or
applicable law. Under New York law, a majority vote of the Fund's
shareholders is required for the corporation to amend its certificate of
incorporation, and a two-thirds vote of the Fund's shareholders is
required for the Fund to merge or consolidate, to sell all or
substantially all of its assets or to dissolve.
Under New York law, a meeting of the Fund's shareholders is held
annually to elect directors and to conduct any other business of the Fund.
For this purpose, directors are elected by the vote of a plurality of
Common Shares represented at the meeting. In addition, under the Fund's
by-laws, a special meeting of the shareholders will be called whenever so
requested in writing by shareholders holding not less than one-half of the
outstanding Common Shares.
OTFBF is a Massachusetts business trust established in 1987 pursuant to
a Declaration of Trust. It was initially organized in 1976 as a Maryland
corporation. OTFBF's authorized capital consists of an unlimited number
of shares of beneficial interest without par value. The Board of Trustees
of OTFBF is empowered to issue full and fractional shares of one or more
series and classes of series. Series have separate assets and
liabilities. Classes of a series represent an identical interest in a
particular series but each class has different dividends, distributions
and expenses, and may have different net asset values. Shares of one
series having two classes (Class A and Class B) have been authorized.
Shares of OTFBF represent an interest in OTFBF proportionately equal to
the interest of each other share of the same class and entitle their
holders to one vote per share (and a fractional vote for a fractional
share) on matters submitted to their vote. Only shareholders of a
particular class vote on matters affecting only that class. The Trustees
may divide or combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interest in OTFBF.
Shares do not have cumulative voting rights or preemptive or subscription
rights.
OTFBF's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for OTFBF's obligations, and provides for
indemnification and reimbursement of expenses out of its property for any
shareholder held personally liable for its obligations. The Declaration
of Trust also provides that OTFBF shall, upon request, assume a defense
of any claim made against any shareholder for any act or obligation of
OTFBF and shall satisfy any judgment thereon. Thus, while Massachusetts
law permits a shareholder of a trust (such as OTFBF) to be held personally
liable as a "partner" under certain circumstances, the risk of an OTFBF
shareholder incurring financial loss on account of shareholder liability
is highly unlikely and is limited to the relatively remote circumstances
in which OTFBF would be unable to meet the obligations described above.
Any person doing business with OTFBF and any shareholder of OTFBF agrees
under OTFBF's Declaration of Trust to look solely to the assets of OTFBF
for satisfaction of any claim or demand which may arise out of any
dealings with OTFBF, and the Trustees shall have no personal liability to
any such person, to the extent permitted by law.
It is not contemplated that regular annual meetings of OTFBF
shareholders will be held. OTFBF will hold meetings when required to do
so by the 1940 Act or other applicable law, or when a shareholder meeting
is called by the Trustees or upon proper request of the shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of OTFBF, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal of a
Trustee upon the written request of the shareholders of 10% of its
outstanding shares. In addition, if the Trustees receive a request from
at least 10 shareholders (who have been shareholders for at least six
months) holding in the aggregate shares of OTFBF valued at $25,000 or more
or holding 1% or more of OTFBF's outstanding shares, whichever is less,
that they wish to communicate with other shareholders to request a meeting
to remove a Trustee, the Trustees will then either give the applicants
access to OTFBF's shareholder list, mail their communication to all other
shareholders at the applicants' expense, or take alternative action as set
forth in Section 16(c) of the 1940 Act.
OTFBF shareholders are entitled to various services that, although
currently not available to Fund shareholders, will become available to
Fund shareholders if the Reorganization is effected and they become
shareholders of OTFBF. These services include the right to redeem OTFBF
shares for cash at any time at the net asset value per share calculated
and reported daily; the option to exchange shares, subject to payment of
any applicable sales charge, between OTFBF and other funds in the
"OppenheimerFunds" complex consisting of more than 30 open-end equity and
fixed-income funds having different investment guidelines and objectives;
availability of tax-advantaged retirement plans; toll-free access to
knowledgeable investor information and service representatives; low
minimum investment requirements; and the ability to effect some or all of
the above transactions by telephone and other expedited means. The cost
of such services is normally borne by OTFBF rather than by individual
shareholders.
Because the Fund is a closed-end investment company its shares, unlike
OTFBF's shares, do not have redemption and exchange rights. The net asset
value of the Fund's shares is determined and reported weekly; the net
asset value of OTFBF's shares is determined and reported daily.
<PAGE>
Capitalization Table (Unaudited)
The following table sets forth the capitalization of the Fund and OTFBF
as of December 31, 1992 and on a pro forma combined basis as if the
Reorganization had occurred on that date.
Net Asset
Shares Value
Net Assets Outstanding Per Share
Oppenheimer Tax-Free
Bond Fund $496,628,478 49,964,400 $ 9.94
M I Fund, Inc. $30,481,665 1,626,594 $18.74
Oppenheimer Tax-Free
Bond Fund as the
Surviving Fund
(Pro Forma
Combined) $527,110,143 53,031,037 $ 9.94
The pro forma ratio of expenses to average annual net assets of the
combined funds at December 31, 1992 would have been 0.94%.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
Investment Objectives and Policies
As its investment objective, each of the Fund and OTFBF seeks as high
a level of current income which is exempt from Federal income taxes as is
available from investing in Municipal Bonds and Municipal Securities,
respectively, while attempting to preserve capital. The Fund will invest
substantially all of its assets in a diversified portfolio of municipal
bonds issued by or on behalf of states, the District of Columbia, any
commonwealths, territories or possessions of the United States, or their
respective political subdivisions, agencies, instrumentalities or
authorities, the interest from which is not subject to Federal individual
income tax in the opinion of bond counsel to the respective issuer at the
time of issue ("Municipal Bonds"). The Fund invests all of its assets in
Municipal Bonds that are rated within the four highest rating categories
of Moody's or S&P, provided however that not more than 20% of its assets
may be invested in Municipal Bonds rated "A" by Moody's or S&P and not
more than 10% of its assets may be invested in Municipal Bonds rated "Baa"
by Moody's or "BBB" by S&P. The Fund may invest in short-term tax-exempt
notes on a temporary basis.
As a matter of fundamental policy, under normal market conditions OTFBF
attempts to invest at least 80% of its assets in municipal bonds and
municipal notes (including tax anticipation notes, construction loan
notes, revenue anticipation notes, bond anticipation notes and other
short-term loans), tax-exempt commercial paper and other debt obligations
issued by or on behalf of states, the District of Columbia, any
commonwealths, territories or possessions of the United States, or their
respective political subdivisions, agencies, instrumentalities or
authorities, the interest from which is not subject to Federal individual
income tax in the opinion of bond counsel to the respective issuer at the
time of issue (collectively "Municipal Securities"). Municipal Securities
purchased by OTFBF will not be rated lower than "Baa" by Moody's or "BBB"
by S&P or, if unrated, judged to be of comparable quality by OMC.
Investment in unrated Municipal Securities will not exceed 20% of OTFBF's
total assets. Not more than 25% of OTFBF's total assets will be invested
in Municipal Securities that are rated "Baa" or "MIG-2" by Moody's or
"BBB" or "SP-2" by S&P or, if unrated, judged by OMC to be of comparable
quality to Municipal Securities in those categories. In times of unstable
market or economic conditions, when OMC deems it appropriate to do so,
OTFBF may assume a temporary defensive position and invest an unlimited
amount of its assets in certain taxable obligations. To the extent OTFBF
assumes a temporary defensive position, a significant portion of its
distributions may be subject to federal and state income taxes.
Special Investment Methods
OTFBF uses the special investment methods summarized below. The Fund
does not engage in any special investment methods.
When-Issued Securities. OTFBF may invest in securities offered on a
"when-issued" or "delayed delivery" basis. The price, which on debt
securities is generally expressed in yield terms, is fixed at the time the
commitment is made, but delivery and payment for when-issued securities
take place at a later date (normally within 45 days of purchase). No
income accrues to OTFBF until it takes delivery of when-issued securities.
OTFBF is subject to the risk of adverse market fluctuations between
purchase and settlement. OMC does not believe that OTFBF's net asset
value or income will be significantly adversely affected by its purchase
of securities on a "when-issued" or "delayed delivery" basis.
Covered Calls and Hedging. OTFBF may write (i.e., sell) covered call
options ("covered calls") on up to 25% of its total assets to generate
income for liquidity purposes provided the calls are listed on a domestic
securities exchange or quoted on the automated quotation system of the
National Association of Securities Dealers, Inc. For hedging purposes as
a temporary defensive maneuver, OTFBF may purchase put options on debt
securities, Interest Rate Futures or Municipal Bond Index Futures (both
as hereinafter defined) held by it or municipal bond indices; OTFBF may
purchase calls only as to debt securities, Interest Rate Futures,
Municipal Bond Index Futures or to effect a closing purchase transaction
if, after such purchase, the value of all put and call options held by
OTFBF would not exceed 5% of the fund's total assets. OTFBF may buy and
sell futures contracts on debt securities ("Interest Rate Futures") and
municipal bond indices ("Municipal Bond Index Futures").
Loans of Portfolio Securities. To attempt to increase income, OTFBF may
lend its portfolio securities (other than in repurchase transactions) to
brokers, dealers and other financial institutions meeting specified credit
conditions if the loan is collateralized in accordance with applicable
regulatory requirements and if, after any loan, the value of the
securities loaned does not exceed 25% of the value of OTFBF's total
assets. OTFBF presently does not intend that the value of securities
loaned in the current fiscal year will exceed 5% of the value of its total
assets.
Repurchase Agreements. OTFBF may acquire securities subject to repurchase
agreements to generate income while providing liquidity. If the vendor
fails to pay the agreed-upon resale price on the delivery date, OTFBF's
risks may include any costs of disposing of such collateral, and any loss
from any delay in foreclosing on the collateral. OTFBF's repurchase
agreements will be fully collateralized. There is no limit on the amount
of OTFBF's net assets that may be subject to repurchase agreements having
a maturity of seven days or less. OTFBF will not enter into a repurchase
agreement which will cause more than 15% of its net assets to be subject
to repurchase agreements having a maturity beyond seven days.
Investment Restrictions
Each of the Fund and OTFBF has certain investment restrictions that,
together with its respective investment objectives, are fundamental
policies changeable only by shareholder approval. Set forth below is a
summary of these investment restrictions, which summary as to the Fund is
qualified in its entirety by the investment policies and restrictions of
the Fund contained in Exhibit C attached hereto and as to OTFBF is
qualified in its entirety by the investment policies and restrictions
contained in the OTFBF Prospectus and its Statement of Additional
Information.
Each of the Fund and OTFBF cannot: invest in any securities other than
Municipal Bonds (as to the Fund) or Municipal Securities (as to OTFBF),
provided that, on a temporary basis, the Fund may also invest in certain
municipal notes and OTFBF may also invest in certain taxable obligations,
repurchase agreements, covered calls, private activity municipal
securities and hedging instruments; make loans, except through the
purchase of debt securities in accordance with its investment policies and
restrictions and, as to OTFBF, through investment in repurchase agreements
and loans of portfolio securities; borrow money in excess of 5% (as to the
Fund) or 10% of the value of its total assets and then only from banks as
a temporary or emergency measure and not for investment purposes; pledge,
mortgage or otherwise encumber its assets, provided that, as to OTFBF,
escrow or other collateral arrangements in connection with hedging
instruments are permitted and, as to the Fund, a pledge of securities
having a market value not exceeding 15% of its total assets is permitted;
invest more than 5% of the value of its total assets in the securities of
any one issuer nor acquire more than 5% of any class of securities (as to
the Fund) or 10% of the total value of all outstanding securities (as to
OTFBF) of any one issuer (in both cases, the restriction does not apply
to securities of the U.S. Government or its agencies or
instrumentalities); concentrate investments to the extent of 10% (as to
the Fund) or 25% (as to OTFBF) of its total assets in any industry,
provided, that, there is no limitation as to investment in Municipal Bonds
(as to the Fund) or Municipal Securities (as to OTFBF) or in obligations
issued by the U.S. Government and its agencies or instrumentalities;
invest in real estate, but this will not prevent the Fund and OTFBF from
investing in Municipal Bonds and Municipal Securities, respectively, or
other permitted securities secured by real estate or interests therein;
make short sales of securities or purchase securities on margin, provided
that, OTFBF may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities and, in addition, OTFBF may
make margin deposits in connection with the use of hedging instruments as
permitted by any of its other fundamental policies; invest in securities
subject to restrictions on resale; or underwrite securities.
In addition, the Fund cannot: purchase or sell commodities or commodity
contracts or invest in oil, gas, or other mineral exploration or
development programs; and purchase an industrial revenue bond if as a
result of such purchase more than 5% of the Fund's total assets would be
invested in industrial revenue bonds where the payment of principal and
interest are the responsibility of a company with less than five years of
operating history.
In addition, OTFBF cannot: invest in or hold securities of any issuer
if those officers and trustees of OTFBF or OMC beneficially owning
individually more than 1/2 of 1% of the securities of such issuer together
own more than 5% of the securities of such issuer; invest in securities
of any other investment company, except in connection with a merger with
another investment company; or issue any bonds, debentures or senior
equity securities.
ADDITIONAL INFORMATION
OTFBF Performance
During OTFBF's fiscal year ended December 31, 1992, OTFBF maintained the
practice, to the extent consistent with the amount of OTFBF's net
investment income and other distributable income, of attempting to pay
dividends on Class A shares at a constant level, although the amount of
such dividends was subject to change from time to time depending on market
conditions, the composition of OTFBF's portfolio and expenses borne by it.
The practice of attempting to pay dividends on Class A shares at a
constant level required OMC, consistent with OTFBF's investment objective
and investment restrictions, to monitor OTFBF's portfolio and select
higher yielding securities when deemed appropriate to maintain necessary
net investment income levels. This practice did not affect the net asset
value of OTFBF's Class A shares. The Board of Trustees may change OTFBF's
targeted dividend level at any time, without prior notice to shareholders;
OTFBF does not otherwise have a fixed dividend rate and there can be no
assurance as to the payment of any dividends or the realization of any
capital gains.
The general municipal bond market during OTFBF's fiscal year ended
December 31, 1992 turned in a strong performance, benefitting from the
expectation of low inflation and stable interest rates, as well as
heightened investor demand for tax-exempt securities offering after-tax
yields higher than those offered by other fixed-income alternatives.
During the fiscal year, the Fund remained fully invested in a diversified
portfolio concentrating on higher quality municipal bonds, predominantly
in the essential service sectors (utilities, water and electric).
Set forth on Exhibit D hereto is a performance graph that compares
OTFBF's total return at the end of each of its most recently completed 10
fiscal years against the performance of the Lehman Brothers Municipal Bond
Index, an unmanaged index of a broad range of investment grade municipal
bonds that is widely regarded as a measure of the performance of the
general municipal bond market. The Index includes a factor for the
reinvestment of interest but does not reflect expenses or taxes. OTFBF's
return reflects the deduction of the current maximum sales charge of 4.75%
and includes reinvestment of all dividends and capital gains
distributions, but does not consider taxes. Fund shareholders receiving
OTFBF shares in the Reorganization will not pay a sales charge on OTFBF
shares. OTFBF's Class B shares were not publicly sold during OTFBF's
fiscal year ended December 31, 1992 and, accordingly, average annual total
return information for such shares is not included in the performance
graph.
Portfolio Transactions and Turnover
Brokerage practices are the same for the Fund and OTFBF. As most
purchases made by the Fund and OTFBF are principal transactions at net
prices, both funds incur little or no brokerage costs. For the fiscal
year ended December 31, 1992 and the six months ended June 30, 1993
(unaudited), the Fund's portfolio turnover rates were 51.7% and 9.5%,
respectively, and OTFBF's portfolio turnover rates were 34.2% and 24.6%,
respectively.
Expense Ratios and Performance
The ratios of expenses to average net assets for the Fund for the fiscal
year ended December 31, 1992 and the six months ended June 30, 1993
(unaudited) were 0.49% and 0.50% (annualized), respectively. The ratios
of expenses to average net assets for OTFBF for the fiscal year ended
December 31, 1992 and the six months ended June 30, 1993 (unaudited) were
0.94% and 0.87% (annualized), respectively. Further details are set forth
under "Fund Expenses" and "Condensed Financial Information" in the OTFBF
Prospectus accompanying this Proxy Statement and Prospectus, and in the
Fund's and OTFBF's respective Annual Report as of December 31, 1992 and
Semi-Annual Report as of June 30, 1993, which are included in the
Additional Statement. The Fund's average annual total return at net asset
value for the ten-year period ended December 31, 1992, the year ended
December 31, 1992 and year-to-date 1993 (at June 30, 1993) was 10.2%, 8.5%
and 6.7%, respectively. OTFBF's average annual total return at net asset
value for the ten-year period ended December 31, 1992, the year ended
December 31, 1992 and year-to-date (at June 30, 1993) was 10.8%, 9.2% and
7.6%, respectively.
Shareholder Services
Generally, the minimum initial investment in OTFBF is $1,000 ($25 if
made pursuant to an Asset Builder Plan or military allotment plan), with
subsequent purchases in a minimum amount of $25. The minimum initial and
subsequent purchase requirements are waived on purchases made by
reinvesting dividends from any of the other OppenheimerFunds listed in the
OTFBF prospectus as "Eligible Funds" or by reinvesting distributions from
unit investment trusts for which reinvestment arrangements have been made
with the Distributor. Pursuant to the Reorganization, shareholders of the
Fund will be deemed to have met the minimum investment requirement upon
the exchange of their shares for shares of OTFBF. OTFBF offers the
following privileges: (i) Rights of Accumulation, (ii) Letters of Intent,
(iii) reinvestment of dividends and distributions at net asset value, (iv)
net asset value purchases by certain individuals and entities, (v) Asset
Builder (Automatic Investment) Plans, (vi) Automatic Withdrawal Plans for
shareholders who own shares of the fund valued at $5,000 or more, (vii)
reinvestment of net redemption proceeds at net asset value within six
months of a redemption, (viii) AccountLink (TeleTransfer) Arrangements,
(ix) exchanges of shares for shares of certain other funds which, as to
shareholders of the Fund receiving OTFBF shares, must be accompanied by
the sales charge applicable to the fund for which OTFBF shares are to be
exchanged, (x) checkwriting ($100 minimum check amount), and (xi)
telephone exchange privileges.
Management and Distribution Arrangements
The Fund receives investment advisory services from Citibank pursuant
to a management-custodian agreement dated June 1, 1988. Under that
agreement, Citibank reviews the Fund's portfolio and recommends to Fund
management any changes Citibank deems desirable. Securities transactions
may also be initiated by Fund management. Upon approval of any security
transaction by Fund management, Citibank selects brokers, dealers or
agents to effect that transaction. Citibank also serves as custodian of
the Fund's securities. For its activities as custodian and investment
advisor, Citibank receives a monthly fee calculated at the annual rate of
two-tenths of 1% of the market value of the securities held by Citibank
on behalf of the Fund. For the fiscal year ended December 31, 1992 and
the six months ended June 30, 1993 (unaudited), the fees paid by the Fund
to Citibank pursuant to this agreement were $59,076 and $30,357,
respectively.
OMC, located at Two World Trade Center, New York, New York 10048-0203,
acts as the investment adviser for OTFBF pursuant to an investment
advisory agreement. The monthly management fee payable to OMC by OTFBF
and the 12b-1 distribution fees paid by OTFBF to the Distributor are set
forth above under "Synopsis - Investment Advisory and Distribution Plan
Fees."
Under the investment advisory agreement, OMC provides investment
management services, including the making of investment decisions and the
placing of purchase and sale orders for portfolio transactions. OMC also
provides OTFBF with adequate office space, facilities and equipment and
provides, and supervises the activities of, all administrative and
clerical personnel required to provide effective administration, including
the compilation and maintenance of records with respect to its operations,
the preparation and filing of specified reports, and composition of proxy
materials and registration statements for continuous public sale of shares
of OTFBF.
For the fiscal year ended December 31, 1992 and the six months ended
June 30, 1993 (unaudited), the management fees paid by OTFBF were
$2,443,445 and $1,466,304, respectively. The investment advisory
agreement contains no expense limitation. However, independently of the
agreement, OMC has undertaken that the total expenses of the Fund in any
fiscal year (exclusive of taxes, interest, brokerage commissions,
distribution plan payments and any extraordinary non-recurring expenses,
including litigation) shall not exceed the most stringent applicable state
regulatory limitation. At present, those limitations are imposed by
California.
OMC is controlled by a holding company owned in part by senior
management of OMC and ultimately controlled by Massachusetts Mutual Life
Insurance Company ("MassMutual"), a mutual life insurance company that
also advises pension plans and investment companies. MassMutual is
located at 1295 State Street, Springfield, Massachusetts 01111. OMC has
operated as an investment company adviser since 1959. OMC and its
affiliates currently advise investment companies with combined net assets
aggregating over $25 billion as of September 30, 1993, with more than 1.8
million shareholder accounts. OSS, a division of OMC, acts as transfer
and shareholder servicing agent on an at-cost basis for OTFBF and for
certain other open-end funds managed by OMC and its affiliates.
The Distributor, a wholly-owned subsidiary of OMC, acts as the general
distributor of OTFBF's shares under a General Distributor's Agreement
dated October 13, 1992. The General Distributor's Agreement is subject
to the same annual renewal requirements and termination provisions as in
the investment advisory agreement. For the fiscal year ended December 31,
1992, selling charges paid by investors on shares of OTFBF amounted to
$3,542,900, of which $1,077,669 was retained by the Distributor and an
affiliated broker-dealer.
INFORMATION CONCERNING THE MEETING
The Special Meeting
The Meeting will be held at 1384 Broadway, New York, New York, at 11:00
A.M., New York time, on March 18, 1994, and any adjournments thereof. At
the Meeting, Fund shareholders will consider and vote upon the
Reorganization Agreement, and the transactions contemplated thereby,
including the transfer of substantially all of the assets of the Fund to
OTFBF in exchange for shares of OTFBF, the distribution of such OTFBF
shares to the shareholders of the Fund (other than shareholders who have
properly exercised their dissenters' rights under New York law) in
complete liquidation of the Fund, the deregistration of the Fund as an
investment company under the 1940 Act, the dissolution of the Fund as a
corporation and the cancellation of the Common Shares.
Record Date; Vote Required; Share Information
The Board has fixed the close of business on February 15, 1994 as the
record date (the "Record Date") for the determination of the holders of
Common Shares entitled to notice of, and to vote at, the Meeting. As of
the Record Date, there were 1,626,594 Common Shares issued and
outstanding; the Common Shares are the only authorized shares of capital
stock of the Fund. The holders of record of Common Shares on the Record
Date are entitled to one vote per share on each matter submitted to a vote
at the Meeting. A majority of the outstanding Common Shares entitled to
vote, represented in person or by proxy, will constitute a quorum for the
transaction of business at the Meeting. Under the NYBCL, the affirmative
vote of the holders of two-thirds of the outstanding Common Shares is
required for approval of the Reorganization. On the Record Date, the
Estate of Charles Meltzer (the "Estate"), the testamentary trust created
under the last will and testament of Samuel Meltzer (the "Trust") and
Steven Meltzer, President of the Fund, beneficially owned an aggregate of
1,590,500 Common Shares (55,100 Common Shares as to Mr. Meltzer),
representing approximately 97.7% of the issued and outstanding Common
Shares. Pursuant to such Common Share ownership, each of the Estate and
the Trust could be deemed to "control" the Fund. The personal
representative of the Estate, the trustees of the Trust and Mr. Meltzer
have informed the Fund that they intend to vote all of these shares in
favor of the Reorganization. If those shares are so voted at the Meeting,
approval of the Reorganization will be assured.
To the knowledge of the Fund, as of the Record Date, no person owned of
record or beneficially 5% or more of the outstanding Common Shares except
as follows: Ronald Meltzer, as personal representative of the Estate of
Charles Meltzer, c/o Pressly & Pressly, P.A., 222 Lakeview Avenue, Suite
910, West Palm Beach, Florida 33401, who beneficially owned 774,000 Common
Shares (approximately 47.6% of the Common Shares outstanding on the Record
Date); and Juliette Meltzer and Theodore Rosenberg, as co-trustees of the
testamentary trust under the Last Will and Testament of Samuel Meltzer,
c/o Meltzer Industries Corp., 1384 Broadway, New York, New York 10018, who
beneficially owned 760,400 Common Shares (approximately 46.8% of the
Common Shares outstanding on the Record Date). Such shareholders have
indicated that they intend to vote all such Common Shares in favor of the
Reorganization. The Fund anticipates that, based on the pro forma number
of OTFBF shares to be outstanding after the Reorganization (see
"Capitalization Table (Unaudited)"), the aforementioned Estate of Charles
Meltzer will own approximately 2.75% of the shares of OTFBF; the
aforementioned Trust of Samuel Meltzer will own approximately 2.70% of the
shares of OTFBF; Mr. Steven Meltzer will own approximately 0.20% of the
shares of OTFBF; all other shareholders of the Fund will own an aggregate
of approximately 0.13% of the shares of OTFBF; and all of the shareholders
of the Fund, as mentioned above, will own an aggregate of approximately
5.78% of the shares of OTFBF.
To the knowledge of OTFBF, as of the Record Date, no person owned of
record or beneficially 5% or more of the outstanding Class A and Class B
OTFBF shares. As of the Record Date, the Trustees and officers of OTFBF,
as a group, owned less than 1% of the outstanding Class A and Class B
shares of OTFBF.
Proxies
The enclosed form of proxy, if properly executed and returned, will be
voted (or counted as an abstention) in accordance with the choice
specified thereon. The proxy will be voted in favor of the Reorganization
unless a choice is indicated to vote against or to abstain from voting on
the Reorganization. Shareholders who return executed proxies with
abstentions marked thereon will have their shares counted in determining
whether a quorum is present, but their shares will not be counted either
for or against the Reorganization.
Shares owned of record by broker-dealers for the benefit of their
customers ("street account shares") will be voted by the broker-dealer
based on instructions received from its customers. If no instructions are
received, the broker-dealer may (if permitted under applicable stock
exchange rules), as record holder, vote such shares on certain proposals
in the same proportion as that broker-dealer votes street account shares
for which voting instructions were received in time to be voted. If a
shareholder executes and returns a proxy but fails to indicate how the
votes should be cast, the proxy will be voted in favor of the
Reorganization. The proxy may be revoked at any time prior to the voting
thereof by: (i) delivering written notice of revocation to the Secretary
of the Fund at 1384 Broadway, New York, New York 10018; (ii) attending
the Meeting and voting in person; or (iii) signing and returning a new
proxy (if returned and received in time to be voted). Mere attendance at
the Meeting will not in and of itself revoke a proxy.
Expenses of Solicitation
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement and Prospectus, will be borne by the Fund
subject to the reimbursement described under "The Reorganization" of Fund
expenses solely and directly related to the Reorganization in an amount
not to exceed $35,000 providing the Reorganization is consummated. In
addition to the solicitation of proxies by mail, proxies may be solicited
by officers and regular employees of the Fund, without compensation other
than regular compensation, personally or by mail, telephone, telegraph or
otherwise. Brokerage houses, banks and other fiduciaries may be requested
to forward soliciting material to the beneficial owners of Common Shares
and to obtain authorization for the execution of proxies. For those
services, if any, they will be reimbursed by the Fund for their reasonable
out-of-pocket expenses.
MISCELLANEOUS
Financial Information
The transaction will be accounted for by OTFBF as the surviving fund in
its financial statements similar to a pooling. Further financial
information as to the Fund is contained in its Registration Statement on
Form N-2, as amended by amendment no. 12 thereto, dated March 18, 1992
(the "Form N-2") which is available without charge from Harvey Silverman,
c/o M I Fund, Inc., 1384 Broadway, New York, New York 10018 and is
incorporated herein, and in its audited financial statements as of
December 31, 1992, and unaudited financial statements as of June 30, 1993,
which are included in the Additional Statement. Financial information for
OTFBF is contained in the OTFBF Prospectus accompanying this Proxy
Statement and Prospectus and incorporated herein, and in its audited
financial statements as of December 31, 1992 and unaudited financial
statements as of June 30, 1993, which are included in the Additional
Statement.
Public Information
Additional information about the Fund and OTFBF is available, as
applicable, in the following documents which are incorporated herein by
reference: (i) the OTFBF Prospectus, accompanying this Proxy Statement and
Prospectus and incorporated herein; (ii) the Form N-2 which may be
obtained without charge by writing to Harvey Silverman, c/o M I Fund,
Inc., 1384 Broadway, New York, New York 10018; (iii) OTFBF's Annual Report
as of December 31, 1992 and Semi-Annual Report as of June 30, 1993, which
may be obtained without charge by writing to Oppenheimer Shareholder
Services, P.O. Box 5270, Denver, Colorado 80217; and (iv) the Fund's
Annual Report as of December 31, 1992 and Semi-Annual Report as of June
30, 1993, which may be obtained without charge by writing to Harvey
Silverman, c/o M I Fund, Inc., 1384 Broadway, New York, New York 10018.
The foregoing documents with respect to OTFBF may also be obtained by
calling, toll-free, 1-800-525-7048 and with respect to the Fund may be
obtained by calling, collect, 212-398-1066.
Additional information about the following matters is contained in the
Additional Statement, which incorporates by reference OTFBF's Statement
of Additional Information dated March 16, 1993 and the Fund's Form N-2:
the organization and operation of OTFBF and the Fund; more information on
investment policies and practices; information about the Fund's and
OTFBF's respective Boards of Directors and Trustees and their
responsibilities; a further description of the services provided by
OTFBF's and the Fund's investment adviser, distributor (as to OTFBF), and
transfer and shareholder servicing agent; dividend policies; tax matters;
an explanation of the method of determining the offering price of the
shares of OTFBF and the Fund; purchase, redemption and exchange programs;
and distribution arrangements.
The Fund and OTFBF are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith,
file reports and other information with the SEC. Proxy material, reports
and other information about the Fund and OTFBF which are of public record
can be inspected and copied at public reference facilities maintained by
the SEC in Washington, D.C. and certain of its regional offices, and
copies of such materials can be obtained at prescribed rates from the
Public Reference Branch, Office of Consumer Affairs and Information
Services, SEC, Washington, D.C. 20549.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters
specified above and in the Notice of Special Meeting accompanying this
Proxy Statement and Prospectus which will be presented at the Meeting.
Matters to be considered at the Meeting are limited to those specified in,
or related to, the matters set forth in the Notice of Special Meeting.
The proxy as solicited confers discretionary authority with respect to
such matters as properly come before the Meeting, including any
adjournment or adjournments thereof, and it is the intention of the
persons named as attorneys-in-fact in the proxy to vote this proxy in
accordance with their judgment on such matters.
By Order of the Board of Directors,
Harvey Silverman,
Secretary
February 15, 1994
<PAGE>
APPENDIX TO PROXY STATEMENT OF M I FUND, INC. AND
PROSPECTUS OF OPPENHEIMER TAX-EXEMPT BOND FUND
Graphic material to be included in the Proxy Statement of M I Fund,
Inc. and Prospectus of Oppenheimer Tax-Exempt Bond Fund: "Comparison of
Total Return of Oppenheimer Tax-Exempt Bond Fund and the Lehman Brothers
Municipal Bond Index - Change in Value of a $10,000 Hypothetical
Investment"
A linear graph will be included in the Proxy Statement of M I Fund,
Inc. and Prospectus of Oppenheimer Tax-Exempt Bond Fund ("OTFBF")
depicting the initial account value and subsequent account value of a
hypothetical $10,000 investment in Class A shares of OTFBF at the end of
each of its most recently completed 10 fiscal years and comparing such
values with the same investments over the same time periods in the Lehman
Brothers Municipal Bond Index. Set forth below are the relevant data
points that will appear on the linear graph. Additional information with
respect to the foregoing, including a description of the Lehman Brothers
Municipal Bond Index, is set forth in the Proxy Statement and Prospectus
under "Additional Information - OTFBF Performance."
Oppenheimer
Tax-Free Bond Lehman Bros.
Fiscal Fund Class A Municipal
Year Ended Shares Bond Index
12/31/82 $9,525 (1) $10,000
12/31/83 $11,136 $10,996
12/31/84 $12,317 $12,156
12/31/85 $14,949 $14,591
12/31/86 $17,902 $17,408
12/31/87 $17,902 $17,671
12/31/88 $19,605 $19,467
12/31/89 $21,460 $21,567
12/31/90 $22,719 $23,139
12/31/91 $25,476 $25,949
12/31/92 $27,951 $28,237
(1) Reflects payment of the maximum sales load of 4.75% applicable to
Class A shares of OTFBF.
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated this 22nd day of October,
1993, by and between M I Fund, Inc. (the "Fund"), a New York corporation,
and Oppenheimer Tax-Free Bond Fund ("OTFBF"), a Massachusetts business
trust.
W I T N E S S E T H:
WHEREAS, the Fund is a closed-end investment company and OTFBF is an open-
end investment company, each of the management type and registered under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the parties hereto desire to provide for the reorganization
pursuant to Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"), of the Fund through the acquisition by OTFBF of
substantially all of the assets of the Fund solely in exchange for Class
A shares of beneficial interest of OTFBF ("Class A Shares"), and the
subsequent distribution by the Fund of those Class A Shares pro rata to
its shareholders in complete liquidation of the Fund;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. The parties hereto hereby adopt a Plan of Reorganization pursuant
to Section 368(a)(1)(C) of the Code as follows: The reorganization will
be comprised of the acquisition of substantially all of the assets (as
hereinafter described) of the Fund solely in exchange for a certain number
(to be determined in accordance with Section 2, Section 3 and Section 5
hereof) of Class A Shares (the number of Class A Shares so determined, the
"Consideration Shares") followed by the distribution of the Consideration
Shares to the shareholders of the Fund at the Valuation Time (as defined
in Section 3 hereof) who have not elected dissenter's rights as set forth
in Section 5 hereof (the "Shareholders") in complete liquidation of the
Fund, all upon and subject to the terms of this agreement and plan of
reorganization (the "Agreement") hereinafter set forth.
2. On the Closing Date (as hereinafter defined), (i) the Fund shall
transfer and deliver (or cause to be so transferred and delivered) to
OTFBF, free and clear of all liens, encumbrances, restrictions and claims
(other than Permitted Liens (defined in Section 8 hereof)), the assets of
the Fund consisting of portfolio securities, cash (excluding the Cash
Reserve as defined below) and receivables (other than any unpaid portion
of the $35,000 referred to in Section 8 hereof validly due and owing to
the Fund) as the same shall exist on that date (the "Assets") and (ii)
OTFBF shall deliver to the Fund (in accordance with Section 5 hereof) in
exchange therefor, the Consideration Shares. The Assets shall exclude a
cash reserve (the "Cash Reserve") which shall be retained by the Fund for
the payment by it in respect of Dissenting Shares (as discussed in Section
5 hereof), and the Liabilities (as hereinafter defined) of the Fund, if
any, and which Cash Reserve shall not exceed the amount contemplated by
Section 10E. The aggregate number of Consideration Shares to be delivered
by OTFBF at the closing shall be such number as shall have, as of the
Valuation Time, an aggregate net asset value equal to the value of the
Assets so transferred and delivered. The issuance of Consideration
Shares to the Fund pursuant to this Agreement shall be without any sales
charge or sales load.
3. The net asset value of the Consideration Shares of OTFBF and the
value of the Assets shall in each case be determined as of the close of
business of the New York Stock Exchange on the business day immediately
preceding the Closing Date (the "Valuation Time"). The foregoing
valuation shall be prepared using the method consistently used by OTFBF
in the ordinary course prior to the date of this Agreement to compute the
net asset value of its shares and shall be based on information extracted
from Interactive Data, an independent portfolio pricing service
("Interactive"). OTFBF agrees that, promptly after receipt of a listing
of the Fund's portfolio securities and cusip or ticket numbers therefor,
which listing shall be delivered by the Fund at the Valuation Time and
contain information as of such time, OTFBF shall obtain from Interactive
the market value for each such portfolio security; the Fund acknowledges
that OTFBF shall take such action as a convenience to the Fund only at the
Fund's request, and that OTFBF makes no representation or warranty as to
the accuracy or completeness of any such information. In accordance with
the foregoing, OTFBF and the Fund shall each respectively prepare a report
setting forth, as of the Valuation Time, its respective total net assets,
the number of its shares outstanding, the net asset value of the Class A
shares or the net asset value of the Fund's shares, respectively, and as
to each of its portfolio securities, the cusip or ticket number,
description thereof, units held and market value determined as aforesaid
(the "Valuation Report"). A Valuation Report shall be delivered by each
of OTFBF and the Fund to the other on the Closing Date.
The Fund shall declare and pay, at least one but not more than 20
business days prior to the Closing Date, a dividend or dividends which,
together with all previous such dividends, shall have the effect of
distributing to the Fund's shareholders all of the Fund's investment
company taxable income for all periods since 1979 through and including
the Closing Date (computed without regard to any dividends paid
deduction), all of the Fund's net capital gain, if any, realized in such
periods (after reduction for any capital loss carry-forward) and at least
90% of the excess, if any, of the Fund's interest income excludable from
gross income under Section 103(a) of the Code over its deductions
disallowed under Section 265 or Section 171(a)(2) of the Code for the
period from January 1, 1993 through the Closing Date.
4. The closing shall be held at the offices of Oppenheimer
Management Corporation, Two World Trade Center, Suite 3400, New York, New
York 10048, at 2:00 P.M. (New York time) on the 20th business day
following the later to occur of: (i) the receipt of favorable rulings
from the Internal Revenue Service as to the matters set forth in Items 1
through 10 under "Rulings Requested" in the private letter ruling request
by the Fund, a copy of which is attached hereto as Exhibit 4 (the "IRS
Rulings"); and (ii) the receipt of the requisite approval by the
shareholders of the Fund of the Agreement and the transactions
contemplated hereby, or at such other time or place as the parties may
designate (the "Closing Date").
In the event that, as of the Valuation Time scheduled pursuant to the
prior paragraph, the valuation referred to in Section 3 cannot be effected
for any reason beyond the control of the affected party, including, but
not limited to, a suspension in trading or if OTFBF has, pursuant to the
1940 Act or any rule, regulation or order thereunder, suspended the
redemption of its shares or postponed payment therefor, the Closing Date
shall be postponed until the third business day after the date when the
affected party shall have notified the other that a valuation can be
effected or that, as to OTFBF, it has ceased such suspension or
postponement; provided, however, that if such condition preventing the
valuation, or such suspension, shall continue for a period of 60 days
beyond the Valuation Time, then the non-affected party shall be permitted
to terminate this Agreement without liability to the other for such
termination.
5. As soon as practicable after the closing, the Fund shall
distribute on a pro rata basis to its Shareholders the Consideration
Shares in liquidation of the Fund. For the purpose of the distribution
by the Fund of the Consideration Shares to the Shareholders, OTFBF will
promptly cause its transfer and shareholder servicing agent (the "Agent")
to: (a) credit an appropriate number of shares of OTFBF on the books of
OTFBF to each Shareholder of the Fund in accordance with a list (the
"Shareholder List") of the Shareholders received at or prior to closing
from the Fund; and (b) confirm the issuance of an appropriate number of
shares of OTFBF to each Shareholder; certificates for shares of OTFBF will
be issued only upon written request of a Shareholder but only for whole
shares with fractional shares credited to the name of the Shareholder on
the books of OTFBF.
The Shareholder List shall indicate, as of the Valuation Time, the
name, address and taxpayer I.D. number of each Shareholder, indicating his
or her share balance and whether such shares are represented by
certificates and, if so, the certificate numbers thereof and such other
information as the Agent may reasonably request. The Fund agrees to
supply the Shareholder List to OTFBF not later than the Closing Date. The
Fund further agrees to deliver to OTFBF on or before the Closing Date all
such other information and documents available to the Fund relating to
Shareholders as may be necessary for OTFBF and the Agent to perform all
necessary shareholder accounting, communication and related services
subsequent to the reorganization. No Shareholder holding certificates
representing shares in the Fund shall be required to surrender his, her
or its certificates to anyone in connection with the reorganization.
After the reorganization, however, it will be necessary for such
Shareholders to surrender such certificates (or provide indemnities
reasonably acceptable to OTFBF in respect of lost certificates) in order
to receive certificates representing Class A Shares or to redeem, transfer
or exchange the Class A Shares which they received.
Notwithstanding anything in this Agreement to the contrary, holders
of shares of the Fund outstanding at the Valuation Time who have not voted
in favor of this Agreement and the transactions contemplated hereby,
including the reorganization, and who have elected to receive payment with
respect thereto under Section 910 and in accordance with Section 623 of
the New York Business Corporation Law (the "NYBCL") shall not be
considered Shareholders and shall not be entitled to receive shares of
OTFBF as provided above, but shall only be entitled to receive from the
Fund payment of the "fair value" of the shares of the Fund held on the
Valuation Date as to which they have dissented (the "Dissenting Shares")
in accordance with the provisions of such Section 623; except that each
Dissenting Share held by a shareholder who shall thereafter withdraw such
election to receive payment or otherwise lose the right to receive payment
(such event, the "Loss of Payment Right") as provided in Section 623,
shall thereupon be deemed to have been converted into the right to receive
(promptly following receipt of the payment referred to in the second
following sentence) and OTFBF shall thereupon issue the number of Class
A Shares determined by dividing the Deemed Value of a Dissenting Share (as
defined below) by the net asset value of one Class A Share at the close
of business on the day of the Loss of Payment Right (or, if such day shall
not be a business day, the next succeeding business day) and such
shareholder shall thereafter have the rights of a "Shareholder" for the
purposes of this Agreement. The term "Deemed Value of a Dissenting Share"
means the quotient determined by dividing the value of the Assets
transferred at the Closing by the number of outstanding shares of the Fund
(excluding the number of Dissenting Shares) on the Valuation Date. A
portion of the Cash Reserve equal to the Deemed Value of a Dissenting
Share shall be paid by the Fund to OTFBF in consideration of the issuance
of such shares for each share of the Fund subject to a Loss of Payment
Right. Any amounts determined to be payable for Dissenting Shares shall
be paid by the Fund out of the Cash Reserve. Except for any issuance of
additional Class A Shares in respect of Dissenting Shares subject to a
Loss of Payment Right, OTFBF shall not be liable for any obligations,
claims or liabilities incurred in connection with the subject matter of
this paragraph. The Fund shall give OTFBF prompt notice of any elections
to receive payment, withdrawals or attempted withdrawals of such
elections, of amounts determined to be payable for Dissenting Shares
subject to a Loss of Payment Right and the bases therefor and any other
instruments served pursuant to the NYBCL or otherwise received by the Fund
relating to shareholders' rights under Sections 910 and 623 of the NYBCL.
6. Within one year after the closing, the Fund shall (a) pay or make
provision for payment of all of its Liabilities and (b) distribute any
remaining amount of the Cash Reserve (after paying or making provisions
for such Liabilities and the estimated cost of making the distribution)
to the Shareholders. If the foregoing cannot be effectuated within one
year after the closing, despite good faith efforts of the Fund, the Fund
will, at the end of such one-year period, transfer the remaining amount
of the Cash Reserve to a liquidating trust upon terms reasonably
acceptable to OTFBF.
7. Portfolio securities or written evidence acceptable to OTFBF of
record ownership thereof by The Depository Trust Company or through the
Federal Reserve Book Entry System or any other depository approved by the
Fund pursuant to Rule 17f-4 under the 1940 Act shall be endorsed and
delivered, or transferred by appropriate transfer or assignment documents,
by the Fund on the Closing Date to OTFBF, or at its direction, to OTFBF's
custodian bank, in proper form for transfer and in such condition as to
constitute good delivery thereof in accordance with the custom of brokers
and shall be accompanied by all necessary state transfer stamps, if any,
or funds for the appropriate purchase price thereof. Prior to the Closing
Date, the Fund shall make the portfolio securities available for
inspection by the custodian. Any cash included in the Assets shall, at
the Fund's option, be delivered in the form of certified or bank cashiers'
checks, by bank wire or other method of transfer acceptable to OTFBF
payable to the order of OTFBF for the account of OTFBF. The Consideration
Shares registered in the name of the Fund, shall be transferred to the
Fund on the Closing Date and shall thereupon be assigned and distributed
by the Fund to its shareholders as provided in Section 5 hereof.
If, at the Closing Date, the Fund is unable to make delivery under
this Section 7 to OTFBF of any of its portfolio securities or cash for the
reason that any of such securities purchased by the Fund, or the cash
proceeds of a sale of portfolio securities, prior to the Closing Date have
not yet been delivered to it or the Fund's custodian, then the delivery
requirements of this Section 7 with respect to said undelivered securities
or cash will be waived and the Fund will deliver to OTFBF by or on the
Closing Date and with respect to said undelivered securities or cash
executed copies of an agreement or agreements of assignment of such
securities or cash to OTFBF in a form satisfactory to OTFBF, together with
such other documents, including a due bill or due bills and brokers'
confirmation slips as may reasonably be required by OTFBF.
8. OTFBF shall not assume and shall not otherwise be responsible for
any liabilities (except the obligations, if any, to pay the purchase price
of portfolio securities purchased by the Fund which have not settled
("Permitted Liens")), taxes, obligations, expenses, contracts,
commitments, agreements and arrangements relating to (i) the Assets or
(ii) the Fund, the Fund's predecessors and the Fund's affiliates,
directors, officers, employees and agents, in each case, whether fixed,
contingent, accrued or otherwise ("Liabilities"). The Fund expressly
agrees to remain liable for and discharge all its Liabilities whether
incurred prior to or subsequent to the Closing Date. The cost of filing,
printing and mailing the Proxy Statement and Prospectus (as defined in
Section 14) and related solicitation material associated with this
reorganization will be paid by the Fund. Any documents such as existing
prospectuses or annual reports that are included in that mailing will be
a cost of the fund issuing the document. Any other out-of-pocket expenses
associated with this reorganization, including legal, accounting and tax,
and transfer agent expenses, will be borne by the party that incurred such
expense. Notwithstanding the foregoing, at the closing OTFBF shall cause
one of its affiliates to pay to the Fund on behalf of OTFBF, promptly
after receipt by OTFBF of reasonably detailed vouchers therefor, the
Fund's reasonable and necessary expenses which are solely and directly
related to this reorganization in an aggregate amount not to exceed
$35,000; provided, that, if for any reason the reorganization shall not
be consummated, any of such expenses previously reimbursed to the Fund
shall be repaid to OTFBF on behalf of its affiliate and any further right
of the Fund to reimbursement under this Section 8 shall cease.
9. The obligations of OTFBF hereunder shall be subject to the
following conditions, unless waived in writing by OTFBF, and the Fund
shall use its best efforts to cause the following conditions to be
satisfied in a timely manner:
A. The Board of Directors of the Fund shall have authorized the
execution of this Agreement and the transactions contemplated hereby, and
the shareholders of the Fund shall have approved the Agreement and the
transactions contemplated herein; such shareholder approval shall have
been by the vote of the holders of two-thirds of the outstanding shares
of the Fund in conformity with the provisions of the NYBCL at a meeting
for which proxies have been solicited by the Proxy Statement and
Prospectus; and the Fund shall have furnished to OTFBF copies of
resolutions with respect to each of the foregoing certified by the
Secretary or an Assistant Secretary of the Fund.
B. OTFBF shall have received an opinion dated the Closing Date of
counsel to the Fund, to the effect that: (i) the Fund is a corporation
duly organized, validly existing and in good standing under the laws of
the State of New York with full corporate power to enter into and perform
this Agreement; (ii) all corporate action necessary to make this
Agreement, according to its terms, valid, binding and enforceable on the
Fund and to authorize the transactions contemplated by this Agreement have
been taken by the Fund; (iii) the Agreement has been duly executed and
delivered by the Fund and constitutes a valid and binding obligation of
the Fund, enforceable against the Fund in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and similar laws affecting creditors rights and
remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity (the "Bankruptcy Exception")); and (iv) the
execution and delivery of this Agreement does not, and the consummation
of the transactions contemplated by the Agreement will not, conflict with,
or result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under (a) the Certificate of
Incorporation or By-Laws of the Fund, or (b) any loan, credit agreement,
note, bond, mortgage, indenture, lease or contract applicable to the Fund,
its assets and properties as identified to such counsel by the Fund (other
than any such conflicts, violations or defaults that individually or in
the aggregate would not have a material adverse effect on the Fund or
prevent consummation of the transactions contemplated hereby), or (c) any
judgment, order or decree known to such counsel to which the Fund is
subject or any state or federal law or regulation applicable to the Fund
or its assets and properties.
C. The representations and warranties of the Fund contained herein
shall be true and correct in all material respects at and as of the
Closing Date and the Fund shall have performed, in all material respects,
each of the covenants required to be performed by the Fund at or prior to
closing, and OTFBF shall have been furnished with a certificate of the
President or the Vice President of the Fund, dated the Closing Date, to
that effect.
D. On the Closing Date, the Fund shall have furnished to OTFBF a
certificate of the Treasurer or Assistant Treasurer of the Fund as to the
amount of the capital loss carry-over and net unrealized appreciation or
depreciation, if any, with respect to the Fund as of the Closing Date.
E. The Cash Reserve shall not exceed 5% of the value of the net
assets, nor 5% in value of the gross assets, of the Fund at the Valuation
Time.
F. A Registration Statement filed by OTFBF under the Securities Act
of 1933, as amended (the "Securities Act"), on Form N-14 and containing
a preliminary form of the Proxy Statement and Prospectus shall have become
effective under the Securities Act not later than December 31, 1993 and
shall remain in effect through to the Closing Date with no stop order
being issued thereon.
G. OTFBF shall have received a letter of an executive officer of the
Fund in form reasonably acceptable to OTFBF stating that between the date
hereof and the Closing Date there has been no material adverse change in
the Assets, the operations or the financial condition of the Fund (it
being understood that a decrease in the size of the Fund due to a
diminution in the value of its portfolio shall not be considered a
material adverse change) and that nothing has come to his attention which
would indicate that as of the Closing Date there were any Liabilities of
the Fund not fully covered by the Cash Reserve or expected not to be so
covered or litigation with respect to the Fund not set forth on Exhibit
11.M.
H. OTFBF shall have received a copy of the IRS Rulings.
I. OTFBF shall have received at the closing all of the Assets to be
conveyed hereunder, free and clear of all liens, encumbrances, security
interests, restrictions and limitations whatsoever except the Permitted
Liens.
J. No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of the
reorganization shall be in effect.
K. At or prior to the Closing Date, the Fund shall have delivered
to OTFBF two copies of a list setting forth the securities then owned by
the Fund and the respective federal income tax bases thereof.
10. The obligations of the Fund hereunder shall be subject to the
following conditions, unless waived in writing by the Fund, and OTFBF
shall use its best efforts to cause the following conditions (excluding
Section 11B, 11E and 11F) to be satisfied in a timely manner:
A. The Board of Trustees of OTFBF shall have authorized the
execution of this Agreement, and the transactions contemplated hereby, and
OTFBF shall have furnished to the Fund copies of resolutions to that
effect certified by the Secretary or an Assistant Secretary of OTFBF.
B. The Fund's shareholders shall have approved this Agreement and
the transactions contemplated hereby, by an affirmative vote of the
holders of two-thirds of the outstanding voting shares of the Fund.
C. The Fund shall have received an opinion dated the Closing Date
of counsel to OTFBF, to the effect that: (i) OTFBF is a Massachusetts
business trust duly organized, validly existing and in good standing under
the laws of the Commonwealth of Massachusetts; (ii) all action necessary
to make this Agreement, according to its terms, valid, binding and
enforceable upon OTFBF and to authorize effectively the transactions
contemplated thereby have been taken by OTFBF; (iii) except as otherwise
set forth in the Proxy Statement and Prospectus under "Additional
Information - Description of the Fund and its Shares" and the Statement
of Additional Information under "Additional Information" for OTFBF, the
Consideration Shares to be issued hereunder are duly authorized and when
ssued will be validly issued, fully-paid and non-assessable; and (iv) the
Agreement has been duly executed and delivered by OTFBF and constitutes
a valid and binding obligation of OTFBF, enforceable against OTFBF in
accordance with its terms, subject to the Bankruptcy Exception.
D. The representations and warranties of OTFBF contained herein
shall be true and correct in all material respects at and as of the
Closing Date and OTFBF shall have performed, in all material respects,
each of the covenants required to be performed by OTFBF at or prior to the
closing, and the Fund shall have been furnished with a certificate of the
President or the Vice President of OTFBF to that effect dated the Closing
Date.
E. The Fund shall have received the IRS Rulings.
F. The Cash Reserve shall not exceed 5% of the value of the net
assets, nor 5% in value of the gross assets, of the Fund at the Valuation
Time.
G. A Registration Statement filed by OTFBF under the Securities Act
on Form N-14, containing a preliminary form of the Proxy Statement and
Prospectus shall have become effective under the Securities Act not later
than December 31, 1993 and shall remain in effect through to the Closing
Date with no stop order being issued thereon.
H. No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of the
reorganization shall be in effect.
11. The Fund hereby represents and warrants that:
A. The financial statements of the Fund as at December 31, 1992
(audited), March 31, 1993 (unaudited) and June 30, 1993 (unaudited)
heretofore furnished to OTFBF, present fairly the financial position,
results of operations, and changes in net assets of the Fund as of their
respective dates and for their respective periods, as applicable, in
conformity with generally accepted accounting principles applied on a
basis consistent with the preceding year; and from December 31, 1992
through the date hereof there has not been, and through the Closing Date
there will not be, any material adverse change in the business or
financial condition of the Fund, it being agreed that a decrease in the
size of the Fund due to a diminution in the value of its portfolio shall
not be considered a material adverse change.
B. Exhibit 11.B. sets forth the assets of the Fund as of the date
hereof including, with respect to the Fund's portfolio securities, a
description thereof, the number of units held and the corresponding cusip
or ticket number. Contingent upon approval of this Agreement by the
Fund's shareholders, the Fund has authority to transfer all of the assets
of the Fund to be conveyed hereunder free and clear of all liens,
encumbrances, security interests, restrictions and limitations whatsoever
excluding the Permitted Liens.
C. The Registration Statement of the Fund on Form N-2, as amended,
was, as of the date of the filing of the last Post-Effective Amendment,
true, correct and complete, conformed to the requirements of the
Securities Act and the 1940 Act and did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
D. Except as set forth on Exhibit 11.D., there are no Liabilities
in existence as of the date hereof.
E. Except as set forth on Exhibit 11.E., there are no contracts,
agreements or commitments in existence, whether written or oral, to which
the Fund (or a predecessor) is a party or has succeeded to a party by
assumption or assignment or in which it has a beneficial interest other
than those entered into by the Fund in the ordinary conduct of its
business and the Fund has delivered or made available to OTFBF, as to each
such contract, agreement or other commitment, a true and complete copy or
description thereof and as to any oral contract, agreement or other
commitment, a true and complete description thereof.
F. The Fund is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York, with the
requisite corporate power and authority to enter into and perform this
Agreement and, subject to approval of its shareholders, to consummate the
transactions contemplated hereby; all corporate action necessary to make
this Agreement, according to its terms, valid, binding and enforceable on
the Fund and to authorize the transactions contemplated by this Agreement
have been taken by the Fund subject to approval of this Agreement by the
shareholders of the Fund; the Agreement has been duly executed and
delivered by the Fund and constitutes a valid and binding obligation of
the Fund, enforceable against the Fund in accordance with its terms,
subject to the approval of its shareholders and the Bankruptcy Exception;
the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by the Agreement will not,
conflict with, or result in any violation of, or constitute a default
(with or without notice or lapse of time, or both) under (a) the
Certificate of Incorporation or By-Laws of the Fund, or (b) any loan,
credit agreement, note, bond, mortgage, indenture, lease or contract
applicable to the Fund, its assets and properties (other than any such
conflicts, violations or defaults that individually or in the aggregate
would not have a material adverse effect on the Fund or prevent
consummation of the transactions contemplated hereby), or (c) any
judgment, order or decree to which the Fund is subject or any state or
federal law or regulation applicable to the Fund or its assets and
properties; and the Fund is duly registered under the 1940 Act (and such
registration has not been revoked or rescinded and is in full force and
effect).
G. All Federal and other tax returns and reports of the Fund
required by law to be filed have been filed, and all Federal and other
taxes shown to be due on said returns and reports have been paid or
provision shall have been made for the payment thereof and to the best of
the knowledge of the Fund no such return is currently under audit and no
assessment has been asserted with respect to such returns and to the
extent such tax returns with respect to the taxable year of the Fund ended
December 31, 1992 have not been filed, such returns will be filed when
required and the amount of tax shown as due thereon shall be paid when
due.
H. The Fund has elected to be treated as a regulated investment
company and, since its election in 1980 to the present, the Fund has met
the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and the Fund intends to meet
such requirements with respect to its current taxable year.
I. There are 1,626,594 shares of common stock of the Fund, par value
$.10 per share, issued and outstanding, which shares constitute the only
outstanding shares of the Fund. There are no outstanding rights, options,
warrants, conversion rights, preemptive rights or agreements with respect
to shares of the Fund. Set forth on Exhibit 11.I. hereto are the names,
addresses and share ownership amounts of each shareholder of the Fund that
beneficially (as that term is defined under the federal securities laws)
owns 1% or more of the Fund's outstanding shares.
J. The copies of the Certificate of Incorporation and By-laws of the
Fund, and all amendments thereto, previously delivered to OTFBF are true,
complete and correct.
K. There is no plan or intention by any Fund shareholder who owns
1% or more of the Fund's outstanding shares, and, to the Fund's best
knowledge, there is no plan or intention on the part of the remaining Fund
shareholders, to redeem, sell, exchange or otherwise dispose of a number
of Consideration Shares received in the transaction that would reduce the
Fund shareholders' ownership of OTFBF shares to a number of shares having
a value, as of the Closing Date, of less than 50% of the value of all of
the formerly outstanding Fund shares as of the same date. With respect
to the foregoing representation, attached hereto as Exhibit 11.K. are true
and complete copies of representation letters signed by each such 1% or
greater shareholder.
L. No consent, approval, governmental filing, authorization or
permit from any person or entity is necessary for the execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement.
M. Except as set forth on Exhibit 11.M., there are no claims,
actions, suits, proceedings or investigations pending, or, to the best of
the Fund's knowledge, threatened, by or against or involving the Fund or
any predecessor or affiliate of the Fund, or any director, officer,
employee or agent of the Fund.
12. OTFBF hereby represents and warrants that:
A. The financial statements of OTFBF as at December 31, 1992
(audited) and June 30, 1993 (unaudited) heretofore furnished to the Fund,
present fairly the financial position, results of operations, and changes
in net assets of OTFBF, as of their respective dates and for their
respective periods, as applicable, in conformity with generally accepted
accounting principles applied on a basis consistent with the preceding
year; and from December 31, 1992 through the date hereof there have not
been, and through the Closing Date there will not be, any material adverse
changes in the business or financial condition of OTFBF, it being
understood that a decrease in the size of OTFBF due to a diminution in the
value of its portfolio and/or redemption of its shares shall not be
considered a material or adverse change.
B. The prospectus of OTFBF contained in the most recent Post-
Effective Amendment to its Registration Statement on Form N-1A under the
Securities Act, as subsequently amended or supplemented, is true, correct
and complete, conforms to the requirements of the Securities Act and does
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Registration Statement of OTFBF
under the Securities Act was, as of the date of the filing of the last
Post-Effective Amendment, true, correct and complete, conformed to the
requirements of the Securities Act and did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
C. OTFBF is a Massachusetts business trust duly organized, validly
existing and in good standing under the laws governing Massachusetts
business trusts with the requisite power and authority granted to business
trusts to enter into and perform this Agreement and consummate the
transactions contemplated hereby; all necessary action necessary to make
this Agreement, according to its terms, valid, binding and enforceable on
OTFBF and to authorize the transactions contemplated by this Agreement
have been taken by OTFBF; the Agreement has been duly executed and
delivered by OTFBF and constitutes a valid and binding obligation of
OTFBF, enforceable against OTFBF in accordance with its terms, subject to
the Bankruptcy Exception; the execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by the
Agreement will not, conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both)
under (a) the Declaration of Trust or By-Laws of OTFBF, or (b) any loan,
credit agreement, note, bond, mortgage, indenture, lease or contract
applicable to OTFBF, its assets and properties (other than any such
conflicts, violations or defaults that individually or in the aggregate
would not have a material adverse effect on the Fund or prevent
consummation of the transactions contemplated hereby), or (c) any
judgment, order or decree to which OTFBF is subject or any state or
federal law or regulation applicable to OTFBF or its assets and
properties; the Consideration Shares which it issues to the Fund pursuant
to this Agreement will be duly authorized, validly issued, fully-paid and
non-assessable, except as otherwise set forth in the Prospectus of OTFBF
dated March 16, 1993, supplemented May 1, 1993, under "Additional
Information - Description of the Fund and its Shares" and the Statement
of Additional Information of OTFBF dated March 16, 1993 under "Additional
Information"; will conform to the description thereof contained in OTFBF's
Registration Statement on Form N-1A (except that the Consideration Shares
will be issued pursuant to this Agreement without any sales load or sales
charge), and will be duly registered under the Securities Act and in the
states where registration is required; and OTFBF is duly registered under
the 1940 Act (and such registration has not been revoked or rescinded and
is in full force and effect).
D. All Federal and other tax returns and reports of OTFBF required
by law to be filed have been filed, and all Federal and other taxes shown
due on said returns and reports have been paid or provision shall have
been made for the payment thereof and to the best of the knowledge of
OTFBF no such return is currently under audit and no assessment has been
asserted with respect to such returns and to the extent such tax returns
with respect to the taxable year of OTFBF ended December 31, 1992 have not
been filed, such returns will be filed when required and the amount of tax
shown as due thereon shall be paid when due.
E. OTFBF has elected to be treated as a regulated investment company
and, for each fiscal year of its operations, OTFBF has met the
requirements of Subchapter M of the Code for qualification and treatment
as a regulated investment company and OTFBF intends to meet such
requirements with respect to its current taxable year.
F. OTFBF has no plan or intention to reacquire any shares of its
capital stock issued in the transaction, other than pursuant to a valid
request of a shareholder in accordance with OTFBF's normal redemption
policy.
G. OTFBF has no plan or intention to sell or otherwise dispose of
any of the Assets acquired in the reorganization contemplated by this
Agreement, except for dispositions made in the ordinary course of
business.
H. Following the transactions contemplated by this Agreement, OTFBF
will continue the historic business of the Fund or use a significant
portion of the Fund's historic business assets in a business.
I. There is no intercorporate indebtedness existing between OTFBF
and the Fund that was issued or acquired, or will be settled, at a
discount.
J. OTFBF does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any shares of the
capital stock of the Fund.
13. Each party hereby represents and warrants to the other that the
information concerning it in the Proxy Statement and Prospectus will not
as of its date or at any time thereafter and through the Closing Date
contain any untrue statement of a material fact or omit to state a fact
necessary to make the statements concerning it therein not misleading and
that the financial statements concerning it will present the information
shown fairly in accordance with generally accepted accounting principles
applied on a basis consistent with the preceding year. OTFBF hereby
represents to and covenants with the Fund that, if the reorganization
becomes effective, OTFBF will treat each shareholder of the Fund who
received any of its shares as a result of the reorganization as having
made the minimum initial investment of shares of OTFBF for the purpose of
making additional investments in shares of OTFBF, regardless of the value
of the shares of OTFBF received.
14. OTFBF agrees that it will prepare and file a Registration
Statement under the Securities Act on Form N-14 and which shall contain
a preliminary form of proxy statement and prospectus contemplated by Rule
145 under the Securities Act. The final form of such proxy statement and
prospectus is referred to in this Agreement as the "Proxy Statement and
Prospectus" and that term shall include any prospectus to shareholders of
OTFBF which is included in the material mailed to the shareholders of the
Fund. Each party agrees that it will use its best efforts to have such
Registration Statement declared effective and to supply such information
concerning itself for inclusion in the Proxy Statement and Prospectus as
may be necessary or desirable in this connection.
15. (a) The Fund covenants and agrees to afford to OTFBF, its
counsel, accountants and other representatives reasonable access, during
normal business hours throughout the period prior to the Closing Date, to
the books, records, employees and representatives of the Fund.
Simultaneously with the execution of this Agreement, the parties shall
execute a confidentiality agreement in the form of Exhibit 15(a) hereto.
(b) The Fund represents and warrants that set forth on Exhibit 15(b)
hereto is a true and complete description of its investment objectives,
investment policies and investment restrictions, all of which are in full
force and effect as of the date hereof, and the Fund covenants and agrees
that during the period from the date hereof until the Closing Date such
investment objectives, investment policies and investment restrictions
will not be changed in any manner whatsoever except pursuant to a
statutory amendment or regulatory requirement during such time.
(c) The Fund covenants that during the period from the date hereof
until the Closing Date, except as otherwise consented to, or approved in
writing by OTFBF or expressly provided for in this Agreement, the Fund (i)
will not conduct its business other than in the ordinary course
substantially in the manner heretofore conducted and consistent with the
Fund's investment objectives, policies and restrictions as set forth on
Exhibit 15(b) hereto, (ii) will not permit or allow any of the Assets to
be subjected to any encumbrance other than Permitted Liens, (iii) will not
enter into any material transaction or otherwise incur any material
Liability other than in the normal course of business consistent with past
practice, (iv) will not declare, set aside or pay any dividend or make any
other distribution except for payment of its regular quarterly dividends
consistent with past practice, and (v) will not agree, whether in writing
or otherwise, to do any of the foregoing. Notwithstanding the foregoing,
the Fund covenants that (x) between the date of this Agreement and the
Closing Date, promptly following any transaction involving an acquisition
or disposition by the Fund of portfolio securities, the Fund shall provide
to OTFBF a written report detailing such transaction and (y) upon the
request of OTFBF, to promptly sell one or more portfolio securities
acquired by the Fund between the date of this Agreement and the Closing
Date and (z) to transfer to OTFBF on the Closing Date only those Assets
the acquisition of which will permit OTFBF to be in compliance with all
of its investment policies and restrictions.
(d) Each of the parties covenants and agrees to use its best efforts
(which will not include the payment of money or expenditures in excess of
nominal amounts) to obtain at the earliest practicable date and prior to
the closing all notices, consents, approvals, governmental filings,
authorizations and permits and to take all other action necessary to the
consummation of the transactions contemplated by this Agreement; the Fund
covenants and agrees to use its best efforts to cause as of the Closing
Date the discharge and satisfaction of such Liabilities and other
obligations as may reasonably be discharged as of such date.
(e) The Fund covenants and agrees to comply with the provisions of
Sections 910 and 623 of the NYBCL.
(f) The Fund covenants and agrees to maintain in the ordinary course
consistent with past practice its books and records through to the date
of its dissolution and liquidation and to prepare and file all documents,
reports and instruments and take such action, including, without
limitation, under the federal securities laws and state laws, that is
required or appropriate to be filed or taken by it prior to, and/or in
connection with, its dissolution and liquidation.
16. The obligations of the parties under this Agreement shall be
subject to the right of either party to abandon and terminate this
Agreement without liability, including pursuant to Section 8 hereof, if
(i) the other party breaches any material provision of this Agreement and
fails to cure such breach within a reasonable period of time after
reasonable notice, (ii) if any legal, administrative or other proceeding
shall be instituted or threatened between the date of this Agreement and
the Closing Date (a) seeking to restrain or otherwise prohibit the
transactions contemplated hereby and/or (b) asserting a material liability
of either party, which proceeding or liability has not been terminated or
the threat thereof removed prior to the Closing Date or (c) the Closing
Date shall not have occurred by March 31, 1994 as a result of a failure
to obtain requisite shareholder approval or a favorable IRS Ruling.
17. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all taken together shall constitute
one Agreement. The rights and obligations of each party pursuant to this
Agreement shall not be assignable.
18. All prior or contemporaneous agreements and representations are
merged into this Agreement, which constitutes the entire contract between
the parties hereto. No amendment or modification hereof shall be of any
force and effect unless in writing and signed by the parties and no party
shall be deemed to have waived any provision herein for its benefit unless
it executes a written acknowledgement of such waiver.
19. The Fund understands that the obligations of OTFBF under this
Agreement are not binding upon any Trustee or shareholder of OTFBF
personally, but bind only OTFBF and OTFBF's property. The Fund represents
that it has notice of the provisions of the Declaration of Trust of OTFBF
disclaiming shareholder and Trustee liability for acts or obligations of
OTFBF.
20. Neither of the parties shall make any press release of the
transactions contemplated by this Agreement, or any discussion in
connection therewith, without the prior written consent of the other
party. The preceding sentence shall not apply to any disclosures required
to be made by applicable laws, as determined by counsel; however, the
applicable party shall consult with the other party concerning the timing
and content of such disclosure before making it.
21. The representations, warranties and covenants set forth in this
Agreement shall survive the closing.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed and attested by its officers thereunto duly authorized on the
date first set forth above.
M I FUND, INC.
Attest: _______________________ By: _______________________
Name: Harvey Silverman Name: Steven Meltzer
Title: Secretary Title: President
OPPENHEIMER TAX-FREE
BOND FUND
Attest: ________________________ By: ___________________________
Name: Andrew J. Donohue Name: Robert E. Patterson
Title: Secretary Title: Vice President
<PAGE>
EXHIBIT B
Section 623. Procedure to enforce shareholder's right to receive
payment for shares. (a) A shareholder intending to enforce his right
under a section of this chapter to receive payment for his shares if the
proposed corporate action referred to therein is taken shall file with the
corporation, before the meeting of shareholders at which the action is
submitted to a vote, or at such meeting but before the vote, written
objective to the action. The objection shall include a notice of his
election to dissent, his name and residence address, the number and
classes of shares as to which he dissents and a demand for payment of the
fair value of his shares if the action is taken. Such objection is not
required from any shareholder to whom the corporation did not give notice
of such meeting in accordance with this chapter or where the proposed
action is authorized by written consent of shareholders without a meeting.
(b) Within ten days after the shareholders' authorization date,
which term as used in this section means the date on which the
shareholders' vote authorizing such action was taken, or the date on which
such consent without a meeting was obtained from the requisite
shareholders, the corporation shall give written notice of such
authorization or consent by registered mail to each shareholder who filed
written objection or from whom written objection was not required,
excepting any shareholder who voted for or consented in writing to the
proposed action and who thereby is deemed to have elected not to enforce
his right to receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any
shareholder from whom written objection was not required and who elects
to dissent shall file with the corporation a written notice of such
election, stating his name and residence address, the number and classes
of shares as to which he dissents and a demand for payment of the fair
value of his shares. Any shareholder who elects to dissent from a merger
under section 905 (Merger of subsidiary corporation) or paragraph (c) of
section 907 (Merger or consolidation of domestic and foreign corporations)
or from a share exchange under paragraph (g) of Section 913 (Share
exchanges) shall file a written notice of such election to dissent within
twenty days after the giving to him of a copy of the plan of merger or
exchange or an outline of the material features thereof under section 905
or 913.
(d) A shareholder may not dissent as to less than all of the shares,
as to which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of such owner, as to
which such nominee or fiduciary has a right to dissent, held of record by
such nominee or fiduciary.
(e) Upon consummation of the corporate action, the shareholder shall
cease to have any of the rights of a shareholder except the right to be
paid the fair value of his shares and any other rights under this section.
A notice of election may be withdrawn by the shareholder at any time prior
to his acceptance in writing of an offer made by the corporation, as
provided in paragraph (g), but in no case later than sixty days from the
date of consummation of the corporate action except that if the
corporation fails to make a timely offer, as provided in paragraph (g),
the time for withdrawing a notice of election shall be extended until
sixty days from the date an offer is made. Upon expiration of such time,
withdrawal of a notice of election shall require the written consent of
the corporation. In order to be effective, withdrawal of a notice of
election must be accompanied by the return to the corporation of any
advance payment made to the shareholder as provided in paragraph (g). If
a notice of election is withdrawn, or the corporate action is rescinded,
or a court shall determine that the shareholder is not entitled to receive
payment for his shares, or the shareholder shall otherwise lose his
dissenters' rights, he shall not have the right to receive payment for his
shares and he shall be reinstated to all his rights as a shareholder as
of the consummation of the corporation action, including any intervening
preemptive rights and the right to payment of any intervening dividend or
other distribution or, if any such rights have expired or any such
dividend or distribution other than in cash has been completed, in lieu
thereof, at the election of the corporation, the fair value thereof in
cash as determined by the board as of the time of such expiration or
completion, but without prejudice otherwise to any corporate proceedings
that may have been taken in the interim.
(f) At the time of filing the notice of election to dissent or
within one month thereafter the shareholder of shares represented by
certificates shall submit the certificates representing his shares to the
corporation, or to its transfer agent, which shall forthwith note
conspicuously thereon that a notice of election has been filed and shall
return the certificates to the shareholder or other person who submitted
them on his behalf. Any shareholder of shares represented by certificates
who fails to submit his certificates for such notation as herein specified
shall, at the option of the corporation exercised by written notice to him
within forty-five days from the date of filing of such notice of election
to dissent, lose his dissenter's rights unless a court, for good cause
shown, shall otherwise direct. Upon transfer of a certificate bearing
such notation, each new certificate issued therefor shall bear a similar
notation together with the name of the original dissenting holder of the
shares and a transferee shall acquire no rights in the corporation except
those which the original dissenting shareholder had at the time of
transfer.
(g) Within fifteen days after the expiration of the period within
which shareholders may file their notices of election to dissent, or
within fifteen days after the proposed corporate action is consummated,
whichever is later (but in no case later than ninety days from the
shareholders' authorization date), the corporation or, in the case of a
merger or consolidation, the surviving or new corporation, shall make a
written offer by registered mail to each shareholder who has filed such
notice of election to pay for his shares at a specified price which the
corporation considers to be their fair value. Such offer shall be
accompanied by a statement setting forth the aggregate number of shares
with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares. If the corporate
action has been consummated, such offer shall also be accompanied by (1)
advance payment to each such shareholder who has submitted the
certificates representing his shares to the corporation, as provided in
paragraph (f), of an amount equal to eighty percent of the amount of such
offer, or (2) as to each shareholder who has not yet submitted his
certificates a statement that advance payment to him of an amount equal
to eighty percent of the amount of such offer will be made by the
corporation promptly upon submission of his certificates. If the
corporate action has not been consummated at the time of the making of the
offer, such advance payment or statement as to advance payment shall be
sent to each shareholder entitled thereto forthwith upon consummation of
the corporate action. Every advance payment or statement as to advance
payment shall include advice to the shareholder to the effect that
acceptance of such payment does not constitute a waiver of any dissenters'
rights. If the corporate action has not been consummated upon the
expiration of the ninety day period after the shareholders' authorization
date, the offer may be conditioned upon the consummation of such action.
Such offer shall be made at the same price per share to all dissenting
shareholders of the same class, or if divided into series, of the same
series and shall be accompanied by a balance sheet of the corporation
whose shares the dissenting shareholder holds as of the latest available
date, which shall not be earlier than twelve months before the making of
such offer, and a profit and loss statement or statements for not less
than a twelve-month period ended on the date of such balance sheet or, if
the corporation was not in existence throughout such twelve month period,
for the portion thereof during which it was in existence. Notwithstanding
the foregoing, the corporation shall not be required to furnish a balance
sheet or profit and loss statement or statements to any shareholder to
whom such balance sheet or profit and loss statement or statements were
previously furnished, nor if in connection with obtaining the
shareholders' authorization for or consent to the proposed corporate
action the shareholders were furnished with a proxy or information
statement, which included financial statements, pursuant to Regulation 14A
or Regulation 14C of the United States Securities and Exchange Commission.
If within thirty days after the making of such offer, the corporation
making the offer and any shareholder agree upon the price to be paid for
his shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate action,
whichever is later, upon the surrender of the certificates for any such
shares represented by certificates.
(h) The following procedure shall apply if the corporation fails to
make such offer within such period of fifteen days, or if it makes the
offer and any dissenting shareholder or shareholders fail to agree with
it within the period of thirty days thereafter upon the price to be paid
for their shares:
(1) The corporation shall, within twenty days after the expiration
of whichever is applicable of the two periods last mentioned, institute
a special proceeding in the supreme court in the judicial district in
which the office of the corporation is located to determine the rights of
dissenting shareholders and to fix the fair value of their shares. If,
in the case of merger or consolidation, the surviving or new corporation
is a foreign corporation without an office in this state, such proceeding
shall be brought in the county where the office of the domestic
corporation, whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding within
such period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not
instituted within such thirty day period, all dissenter's rights shall be
lost unless the supreme court, for good cause shown, shall otherwise
direct.
(3) All dissenting shareholders, excepting those who, as provided
in paragraph (g), have agreed with the corporation upon the price to be
paid for their shares, shall be made parties to such proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon
each dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon each nonresident
dissenting shareholder either by registered mail and publication, or in
such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination,
is entitled to receive payment for his shares. If the corporation does
not request any such determination or if the court finds that any
dissenting shareholder is so entitled, it shall proceed to fix the value
of the shares, which, for the purposes of this section, shall be the fair
value as of the close of business on the day prior to the shareholders'
authorization date. In fixing the fair value of the shares, the court
shall consider the nature of the transaction giving rise to the
shareholder's right to receive payment for shares and its effects on the
corporation and its shareholders, the concepts and methods then customary
in the relevant securities and financial markets for determining fair
value of shares of a corporation engaging in a similar transaction under
comparable circumstances and all other relevant factors. The court shall
determine the fair value of the shares without a jury and without referral
to an appraiser or referee. Upon application by the corporation or by any
shareholder who is a party to the proceeding, the court may, in its
discretion, permit pretrial disclosure, including, but not limited to,
disclosure of any expert's reports relating to the fair value of the
shares whether or not intended for use at the trial in the proceeding and
notwithstanding subdivision (d) of section 3101 of the civil practice laws
and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to the
proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at such
rate as the court finds to be equitable, from the date the corporate
action was consummated to the date of payment. In determining the rate
of interest, the court shall consider all relevant factors, including the
rate of interest which the corporation would have had to pay to borrow
money during the pendency of the proceeding. If the court finds that the
refusal of any shareholder to accept the corporate offer of payment for
his shares was arbitrary, vexatious or otherwise not in good faith, no
interest shall be allowed to him.
(7) Each party to such proceeding shall bear its own costs and
expenses, including the fees and expenses of its counsel and of any
experts employed by it. Notwithstanding the foregoing, the court may, in
its discretion, apportion and assess all or any part of the costs,
expenses and fees incurred by the corporation against any or all of the
dissenting shareholders who are parties to the proceeding, including any
who have withdrawn their notices of election as provided in paragraph (e),
if the court finds that their refusal to accept the corporate offer was
arbitrary, vexatious or otherwise not in good faith. The court may, in
its discretion, apportion and assess all or any part of the costs,
expenses and fees incurred by any or all of the dissenting shareholders
who are parties to the proceeding against the corporation if the court
finds any of the following: (A) that the fair value of the shares as
determined materially exceeds the amount which the corporation offered to
pay; (B) that no offer or required advance payment was made by the
corporation; (C) that the corporation failed to institute the special
proceeding within the period specified therefor; or (D) that the action
of the corporation in complying with its obligations as provided in this
section was arbitrary, vexatious or otherwise not in good faith. In
making any determination as provided in clause (A), the court may consider
the dollar amount or the percentage, or both, by which the fair value of
the shares as determined exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding,
the corporation shall pay to each dissenting shareholder the amount found
to be due him, upon surrender of the certificates for any such shares
represented by certificates.
(i) Shares acquired by the corporation upon the payment of the
agreed value therefor or of the amount due under the final order, as
provided in this section, shall become treasury shares or be cancelled as
provided in section 515 (Reacquired shares), except that, in the case of
a merger or consolidation, they may be held and disposed of as the plan
of merger or consolidation may otherwise provide.
(j) No payment shall be made to a dissenting shareholder under this
section at a time when the corporation is insolvent or when such payment
would make it insolvent. In such event, the dissenting shareholder shall,
at his option:
(1) Withdraw his notice of election, which shall in such event be
deemed withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if
it is liquidated, be subordinated to the rights of creditors of the
corporation, but have rights superior to the non-dissenting shareholders,
and if it is not liquidated, retain his right to be paid for his shares,
which right the corporation shall be obliged to satisfy when the
restrictions of this paragraph do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation
within thirty days after the corporation has given him written notice that
payment for his shares cannot be made because of the restrictions of this
paragraph. If the dissenting shareholder fails to exercise such option
as provided, the corporation shall exercise the option by written notice
given to him within twenty days after the expiration of such period of
thirty days.
(k) The enforcement by a shareholder of his right to receive payment
for his shares in the manner provided herein shall exclude the enforcement
by such shareholder of any other right to which he might otherwise be
entitled by virtue of share ownership, except as provided in paragraph
(e), and except that this section shall not exclude the right of such
shareholder to bring or maintain an appropriate action to obtain relief
on the ground that such corporate action will be or is unlawful or
fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any
notice to be given by a corporation to a shareholder under this section
shall be given in the manner provided in section 605 (Notice of meetings
of shareholders).
(m) This section shall not apply to foreign corporations except as
provided in subparagraph (e)(2) of section 907 (Merger or consolidation
of domestic and foreign corporations). (Amended by L. 1962, Ch. 834,
Section 40; L. 1963, Ch. 746, Section 15; L. 1965, Ch. 803, Sections 20-
22; L. 1982, Ch. 202, Sections 3-9; L. 1982, Ch. 928, Sections 38-40; L.
1986, Ch. 117, Section 3.)
<PAGE>
EXHIBIT C
M I FUND, INC. INVESTMENT OBJECTIVE AND POLICIES
The objective of M I Fund, Inc. (the "Company") is to seek as high a level
of current interest income exempt from federal income taxes as is
consistent with preserving its capital. This objective is a fundamental
policy which is changeable only by shareholder vote. There is no
assurance that this objective will be achieved.
The Company will seek to achieve its objective by investing substantially
all of its assets in a diversified portfolio of debt obligations issued
by or on behalf of states, territories and possessions of the United
States and the District of Columbia and their political subdivisions,
agencies and instrumentalities, or multi-state agencies or authorities,
the interest from which is exempt from federal income tax in the opinion
of bond counsel to the issuers. These securities are generally known as
"Municipal Bonds." The Company will invest substantially all of its net
assets (not including assets invested in Temporary Investments) in
Municipal Bonds. No debt obligations rated lower than Aa by Moody's
Investors Services, Inc. ("Moody's") or AA by Standard & Poor's
Corporation ("S&P") may be purchased unless, immediately after such a
purchase, at least 85% of the portfolio consists of debt obligations of
at least such grade ratings, or of Temporary Investments of the quality
described below. However, the Company may invest up to 20% of its assets
in Municipal Bonds which are rated A by Moody's or S&P and may invest up
to 10% of its assets in Municipal Bonds rated either Baa by Moody's or BBB
by S&P. The Company will not invest more than 15% of its assets in
industrial development bonds (described below) which relate to similar
projects such as hospitals or shopping centers or more than 30% of its
assets in Municipal Bonds whose issuers are located in a single state.
Except as otherwise noted herein, the identification of an "issuer" for
purposes of the Company's investment objective and policies will be based
upon a determination of the source of the assets and revenues committed
to meeting interest and principal payments on each security. Any bonds
guaranteed by the United States government shall not be included in any
computations of the aforesaid limitations.
From time to time on a temporary basis the Company may invest in short-
term Temporary Investments the interest on which is exempt from federal
income tax in the opinion of bond counsel. Generally, Temporary
Investments will consist of notes backed by the federal government and
issued by or on behalf of municipal issuers, notes of issuers having, at
the time of purchase, a rating within the two highest grades of Moody's
or S&P or, if not rated, having an issue of outstanding Municipal Bonds
rated within the two highest grades by Moody's or S&P, or notes guaranteed
by the federal government for interim financing of public housing projects
(commonly known as "project notes"). The Company will not invest in any
short-term investments which would result in income to the Company subject
to federal income tax (e.g., obligations of the U.S. Government, its
agencies or instrumentalities, commercial paper, or certificates of
deposit issued by banks) and all cash will be kept in a non-interest
bearing account.
Subsequent to its purchase by the Company, an issue of Municipal Bonds may
cease to be rated or its rating may be reduced below the minimum required
for purchase by the Company. Neither event will require the elimination
of such obligation from the Company's portfolio, but the Company will
consider such an event in its determination of whether the Company should
continue to hold such obligation in its portfolio. To the extent that the
ratings given by Moody's or S&P for Municipal Bonds or Temporary
Investments may change as a result of changes in such organizations, or
to use comparable ratings as standards for its investments in Municipal
Bonds or Temporary Investments in accordance with the investment policies
contained herein. If a percentage restriction is adhered to at the time
an investment is made, a later increase or decrease in percentage
resulting from a change in market value of an issue, or of net assets, or
in any ratings, will not be deemed to result in a violation of this
restriction.
The investment restrictions described below are fundamental policies of
the Company and may not be changed without the affirmative vote of the
holders of a majority (as defined in the Investment Company Act of 1940,
as amended) of the outstanding shares of common stock of the Company. The
Company may not:
1. Invest in any securities other than the Municipal Bonds and Temporary
Investments described above and subject to the percentage limitations
there stated.
2. Purchase the securities of any issuer (except securities guaranteed
by the United States government, its agencies or instrumentalities) if as
a result thereof more than 5% of its total assets would be invested in the
securities of such issuer or if the Company would own more than 5% of any
class of its outstanding securities. For purposes of this limitation, the
Company will regard the entity which has the ultimate responsibility for
the payment of interest and principal as the issuer.
3. Borrow money, except from a bank for temporary or emergency purposes
and not for investment purposes, and then only in an amount not exceeding
5% of the current value of its total assets (including the amount
borrowed) less liabilities (not including the amount borrowed) at the time
the borrowing is made. The payment of interest on such borrowings will
reduce the Company's net income during the period of such borrowings.
4. Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (3) above, it may pledge securities
having a market value at the time of pledge not exceeding 15% of the value
of the Company's total assets.
5. Knowingly purchase or otherwise acquire any securities which are
subject to legal or contractual restrictions on resale or for which there
is no readily available market.
6. Underwrite any issue of securities, except to the extent that the
purchase of Municipal Bonds directly from the issuer thereof in accordance
with the Company's investment objective, policies and limitations may be
deemed to be underwriting.
7. Purchase or sell real estate, but this shall not prevent the Company
from investing in Municipal Bonds or other permitted investments secured
by real estate or interests therein.
8. Purchase or sell commodities or commodity contracts or invest in oil,
gas or other mineral exploration or development programs.
9. Make loans, except through the purchase of a portion of an issue of
debt securities in accordance with its investment objective, policies and
limitations.
10. Make short sales of securities or purchase any securities on margin.
In addition to the foregoing restrictions, the Company will not (i)
purchase securities (other than Municipal Bonds and obligations issued or
guaranteed by the United States government, its agencies or
instrumentalities) if as a result thereof more than 10% of total Company
assets would be invested in any one industry or (ii) purchase an
industrial revenue bond if as a result of such purchase more than 5% of
total Company's assets would be invested in industrial revenue bonds where
the payment of principal and interest are the responsibility of a company
with less than five years of operating history.
<PAGE>
EXHIBIT
Comparison of Total Return of Oppenheimer Tax-Free Bond Fund
with the Lehman Brothers Municipal Bond Index - Change in Value
of a $10,000 Hypothetical Investment
Past performance is not predictive of future performance.
Oppenheimer Tax-Free Bond Fund
Average Annual Total Returns
at 12/31/92 at Maximum Offering Price
1 Year 5 Years 10 Years
Class A shares 4.0% 7.83% 10.83%
<PAGE>
M I Fund, Inc.
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD MARCH 18, 1994
The undersigned shareholder of M I Fund, Inc. (the "Fund"), does
hereby appoint Steven Meltzer and Harvey Silverman, and each of them
acting individually, as attorneys-in-fact and proxies of the undersigned,
with full power of substitution, to attend the Special Meeting of
Shareholders of the Fund to be held on March 18, 1994, at 1384 Broadway,
New York, New York, at 11:00 A.M., New York time, and at all adjournments
thereof, and to vote the shares held in the name of the undersigned on the
record date for said meeting for the Proposal specified on the reverse
side. Said attorneys-in-fact shall vote in accordance with their best
judgment as to any other matter.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WHO
RECOMMENDS A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES
REPRESENTED HEREBY WILL BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR
IF NO CHOICE IS INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
The Proposal:
Approval of the Reorganization, including the Reorganization
Agreement, which contemplates the transfer of substantially all the
assets of the Fund to Oppenheimer Tax-Free Bond Fund ("OTFBF") in
exchange for Class A shares of OTFBF and the distribution of such
shares of OTFBF to the shareholders of the Fund (other than those
that have properly exercised dissenter's rights under New York law)
in complete liquidation of the Fund, the dissolution of the Fund as
a corporation, the deregistration of the Fund as an investment
company under the Investment Company Act of 1940, as amended, and the
cancellation of the outstanding shares of the Fund.
FOR____ AGAINST____ ABSTAIN____
Dated: ___________________________, 1994
(Month) (Day)
_________________________________
Signature(s)
_________________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership or
other entity, a duly authorized individual must sign on its behalf and
give his or her title.
<PAGE>
OPPENHEIMER TAX-FREE BOND FUND
Supplement dated February 15, 1994
to the Prospectus dated March 15, 1993
The Prospectus is amended as follows:
1. The Prospectus supplement dated May 1, 1993 is hereby rescinded.
2. The effective date under "Oppenheimer Tax-Free Bond Fund" on the back
cover page is amended to read:
Effective March 16, 1993
Expires May 1, 1994
Unless Earlier Amended
3. The second sentence of the third paragraph on page 1 is deleted and
replaced by the following:
A Statement of Additional Information about the Fund (the
"Additional Statement") dated March 16, 1993, has been filed with
the Securities and Exchange Commission ("SEC") and is available
without charge upon written request to Oppenheimer Shareholder
Services (the "Transfer Agent"), P.O. Box 5270, Denver, Colorado
80217, or by calling the Transfer Agent at the toll-free number
shown above.
4. The sentence below the "Table Of Contents" on the cover page is
deleted and replaced by the following:
This Prospectus is effective March 16, 1993
Unless earlier amended, this Prospectus expires
May 1, 1994
The table captioned "Annual Fund Operating Expenses" on page 2 is replaced
with the following:
Annual Fund Operating Expenses
(as a percentage of average net assets)
Class A Class B
Shares Shares
Management Fees .56% .56%
12b-1 (Distribution Plan) Fees .18% 1.00%
Other Expenses .20% .20%
Total Fund Operating Expenses .94% 1.76%
6. The second sentence in the first paragraph under the section entitled
"Condensed Financial Information" on page 4 is deleted and replaced by the
following:
No Class B shares were publicly offered prior to March 16, 1993, and
therefore no information on Class B shares is reflected in the table
below or in the Fund's other financial statements.
7. The first full paragraph on page 11 is deleted and replaced with the
following:
In addition to paying dealers the regular commission for sales of Class
A shares stated in the sales charge table in "Class A Shares," and the
commission for sales of Class B shares described in the second
paragraph of "Class B Distribution Plan," below, the Distributor will
pay the following additional commission for shares of the Fund sold in
"qualifying transactions" from March 1, 1994, through May 31, 1994: (i)
1.00% of the offering price of Class A and/or Class B shares sold by
a representative of a broker or dealer at a branch not in a "financial
institution," such as a bank, savings and loan association or credit
union; and (ii) .50% of the offering price of Class B shares, and the
Distributor's entire retained commission on Class A shares, sold by a
sales representative of a financial institution or by a representative
or a broker or dealer firm at a branch in a financial institution.
"Qualifying transactions" are sales by a registered representative of
a broker or dealer at a branch not in a financial institution of
$200,000 or more (calculated at offering price), and sales in any
amount by a sales representative of a financial institution or
registered representative of a broker or dealer at a branch in a
financial institution, of Class A and/or Class B shares of any one or
more of the following OppenheimerFunds: the Fund, Oppenheimer Insured
Tax-Exempt Bond Fund, Oppenheimer New York Tax-Exempt Fund, Oppenheimer
California Tax-Exempt Fund, Oppenheimer Pennsylvania Tax-Exempt Fund,
Oppenheimer Florida Tax-Exempt Fund, and Oppenheimer New Jersey Tax-
Exempt Fund. "Qualifying transactions" do not include sales of Class
A shares (1) at net asset value without sales charge, (2) subject to
a contingent deferred sales charge, or (3) intended under a Letter of
Intent.
8. The first sentence under the heading "Dividends, Distributions and
Taxes - Dividends and Distributions" on page 22 is deleted and replaced
with the following:
The Fund intends to declare dividends separately for Class A and
Class B shares from net investment income on each regular business
day and to pay such dividends monthly on a date set by the Board of
Trustees, which normally will be the tenth business day of each
month.
February 15, 1994 PS310
<PAGE>
OPPENHEIMER TAX-FREE BOND FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PART B
STATEMENT OF ADDITIONAL INFORMATION
________, 1994
This Statement of Additional Information of Oppenheimer Tax-Free Bond
Fund ("OTFBF") consists of this cover page and the following documents:
1. OTFBF's Statement of Additional Information dated March 16,
1993, which has been previously filed and is incorporated
herein by reference.
2. OTFBF's Annual Report as of December 31, 1992, which has been
previously filed and is incorporated herein by reference.
3. OTFBF's Semi-Annual Report as of June 30, 1993, which has been
previously filed and is incorporated herein by reference.
4. Amendment No. 12 to the Registration Statement on Form N-2 of
M I Fund, Inc. ("M I") dated March 18, 1992, which has been
previously filed and is incorporated herein by reference.
5. Annual Report as of December 31, 1992 of M I, which has been
previously filed and is incorporated herein by reference.
6. Semi-Annual Report as of June 30, 1993 of M I, which has been
previously filed and is incorporated herein by reference.
This Statement of Additional Information (the "Additional Statement")
is not a Prospectus. This Additional Statement should be read in
conjunction with the Proxy Statement and Prospectus of OTFBF dated
________, 1994, which may be obtained by written request to Oppenheimer
Shareholder Services ("OSS"), P.O. Box 5270, Denver, Colorado 80217, or
by calling OSS at the toll-free number shown above.
