SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant / X /
Filed by a party other than the registrant / /
Check the appropriate box:
/ X /Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
- ------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
/ / Fee Computed on table below per Exchange Act Rules 14a
-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: 1
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form
or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing Party:
(4) Date Filed:
- --------------------
1 - Set forth the amount on which the filing fee is calculated and
state how it was determined.
<PAGE>
DRAFT #2
PRELIMINARY COPY
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Two World Trade Center, New York, New York 10048-0203
Notice Of Meeting Of Shareholders To Be Held
April 30, 1997
To The Shareholders of Oppenheimer Quest Capital Value Fund, Inc.:
Notice is hereby given that a Meeting of the Shareholders of
Oppenheimer Quest Capital Value Fund, Inc. (the "Fund"), will be
held at 6803 South Tucson Way, Englewood, Colorado, 80112, at 10:00
A.M., Denver time, on April 30, 1997, or any adjournments thereof,
for the following purposes:
To be voted on by holders of:
Class A Class B Class C
Shares Shares Shares
X X X (a) To approve changes to certain of the
Fund's fundamental investment policies
(Proposal No. 1);
X X X (b) To approve a Subadvisory Agreement
between the Manager and OpCap Advisors
(Proposal No. 4);
X X X (c) To transact such other business as may
properly come before the Meeting, or any
adjournments thereof.
Shareholders of record at the close of business on March 14, 1997,
are entitled to vote at the Meeting. The Proposals are more fully
discussed in the Proxy Statement. Please read it carefully before
telling us, through your proxy or in person, how you wish your
shares to be voted. The Board of Directors of the Fund recommends
a vote and in favor of each Proposal. WE URGE YOU TO MARK, SIGN,
DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Directors,
Andrew J. Donohue, Secretary
April __, 1997
_________________________________________________________________
Shareholders who do not expect to attend the Meeting are asked to
indicate voting instructions on the enclosed proxy and to date,
sign 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.
835
<PAGE>
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Two World Trade Center, New York, New York 10048-0203
PROXY STATEMENT
Meeting of Shareholders
To Be Held April 30, 1997
This Proxy Statement is being furnished to the shareholders of
Oppenheimer Quest Capital Value Fund, Inc. (the "Fund"), in
connection with the solicitation by the Board of Directors of the
Fund (the "Board of Directors") of proxies to be used at a meeting
(the "Meeting") of shareholders of the Fund to be held at 6803
South Tucson Way, Englewood, Colorado, 80112, at 10:00 A.M., Denver
time, on April 30, 1997, or any adjournments thereof. It is
expected that the mailing of this Proxy Statement will be made on
or about March 31, 1997. For a free copy of the Fund's annual
report for its most recent fiscal year ended December 31, 1996,
call OppenheimerFunds Services, the Fund's transfer agent, at 1-
800-525-7048.
The enclosed proxy, if properly executed and returned, will be
voted (or counted as an abstention or withheld from voting) in
accordance with the choices specified thereon, and will be included
in determining whether there is a quorum to conduct the Meeting.
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
each Proposal.
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 the Proposals in the same proportion as that broker-
dealer votes street account shares for which voting instructions
were received in time to be voted. A "broker non-vote" is deemed to
exist when a proxy received from a broker indicates that the broker
does not have discretionary authority to vote the shares on that
matter. Abstentions and "broker non-votes" will be counted as
present for purposes of determining a quorum and will have the same
effect as a vote against the Proposal.
The proxy may be revoked at any time prior to the voting by: (1)
writing to the Secretary of the Fund at Two World Trade Center, New
York, New York, 10048-0203; (2) attending the Meeting and voting in
person; or (3) signing and returning a new proxy (if returned and
received in time to be voted).
In the event a quorum does not exist as to one or more classes of
shares of the Fund on the date originally scheduled for the Meeting
or, subject to approval of the Board of Directors, for other
reasons, one or more adjournments of the Meeting may be sought by
the Board of Directors. Any adjournment would require a vote in
favor of the adjournment by the holders of a majority of the shares
present at the Meeting (or any adjournment thereof) in person or by
proxy. The persons named as proxies will vote all shares
represented by proxies which they are required to vote in favor of
the Proposal, in favor of adjournment, and will vote all shares
which they are required to vote against the Proposal, against an
adjournment.
The expenses of the Meeting relating to the approval of the
Subadvisory Agreement between the Fund's investment adviser,
OppenheimerFunds, Inc. (the "Manager"), and the Fund's sub-adviser
OpCap Advisors (the "Sub-Adviser"), will be borne by the Sub-
Adviser. The remainder of the expenses of the Meeting will be
paid by the Fund. Expenses of the Meeting are expected to include:
the cost of printing and distributing these proxy materials; the
solicitation of proxies by mail and by officers or employees of the
Fund's transfer agent, personally or by telephone or telegraph; and
any requirement that brokers, banks and other fiduciaries forward
soliciting material to their principals and obtain authorization
for the execution of proxies. The Fund may retain a proxy
solicitor to assist in the solicitation of proxies primarily by
contacting shareholders by telephone and telecopy for a fee plus
reasonable out-of-pocket expenses. The cost of such proxy
solicitor will be deemed an expense of the Meeting.
Shareholders may be called to ask if they would be willing to have
their votes recorded by telephone. The telephone voting procedure
is designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance
with their instructions and to confirm that their instructions have
been recorded properly. The Fund has been advised by counsel that
these procedures are consistent with the requirements of applicable
law. Shareholders voting by telephone would be asked for their
social security number or other identifying information and would
be given an opportunity to authorize proxies to vote their shares
in accordance with their instructions. To ensure that the
shareholders' instructions have been recorded correctly they will
receive a confirmation of their instructions in the mail. A
special toll-free number will be available in case the information
contained in the confirmation is incorrect. Although a
shareholder's vote may be taken by telephone, each shareholder will
receive a copy of this Proxy Statement and may vote by mail using
the enclosed proxy card.
Shares Outstanding and Entitled to Vote. The Board of Directors
has fixed the close of business on March 14, 1997 as the record
date (the "Record Date") for the determination of shareholders
entitled to notice of, and to vote at, the Meeting. On the Record
Date, there were ______________ shares of the Fund issued and
outstanding, consisting of ______________ Class A shares,
___________ Class B shares and _____________ Class C shares. Each
Class A, Class B and Class C share of the Fund has voting rights as
stated in this Proxy Statement and is entitled to one vote for each
share (and a fractional vote for a fractional share) held of record
on the Record Date. On the Record Date, the only entity owning of
record or known by management of the Fund to be the beneficial
owner of 5% or more of the outstanding shares of any class of the
Fund's shares was: __________________________.
APPROVAL OF CHANGES TO CERTAIN OF THE
FUND'S FUNDAMENTAL INVESTMENT POLICIES
(Proposal No. 1)
The Fund has an investment objective and certain investment
policies that are fundamental and are therefore changeable only by
the vote of a "majority" (as defined in the Investment Company Act)
of the outstanding voting securities of the Fund. It is proposed
that the Fund's investment objective be revised to more accurately
reflect the Fund's actual objective. The investment objective, as
revised, will remain a fundamental policy. With respect to the
fundamental investment policies set forth below, the Manager
proposes that certain be considered non-fundamental and others be
revised or eliminated, all as discussed below.
A vote in favor of this Proposal shall be a vote in favor of all
proposed changes described in this Proposal. If approved, the
effective date of this Proposal may be delayed until the Fund's
Prospectus or Statement of Additional Information is updated to
reflect these changes. If shareholders do not approve this
Proposal, the proposed changes with respect to the Fund's
investment objective and the investment policies described below
will not be implemented at this time. The Board of Directors,
including a majority of the Directors who are not "interested
persons" of the Fund, at a meeting held on February 28, 1997,
determined that the proposed changes described below are
appropriate and recommends approval by the Fund's shareholders.
Change of Fundamental Investment Policies to Non-Fundamental
Investment Policies. With respect to the following fundamental
investment policies, the Manager proposes that each investment
policy be considered non-fundamental. In addition, it is proposed
that the investment policy relating to investment in illiquid and
restricted securities be revised, as discussed below. The reason
for making the investment policies non-fundamental is to provide
the Fund with the ability to modify or eliminate these policies at
a later date to respond to changes in regulatory restrictions or
changes in the markets and market conditions without the delay and
expense of seeking shareholder approval. Changes to non-
fundamental investment policies only require approval of the Board
of Directors.
Investments. As stated in the Fund's Prospectus, the Fund
invests in securities (primarily equity securities) of companies
believed by the Manager to be undervalued in the marketplace in
relation to factors such as the companies' assets, earnings, growth
potential and cash flows. The Fund may invest its assets in equity
securities of companies with no limit as to market capitalization.
The Fund may invest up to 25% of its net assets in high-yield,
lower-grade bonds (or high-yielding unrated bonds)rated below Baa3
by Moody's or BBB- by S&P(commonly known as "junk bonds"). For the
purposes of this Prospectus the term equity securities is defined
as common stocks and preferred stocks; bonds, debentures and notes
convertible into common stocks; and depository receipts for such
securities. To provide liquidity for the purchase of new
instruments and to effect redemptions of shares, the Fund typically
invests a part of its assets in various types of U.S. Government
securities and high quality, short-term debt securities with
remaining maturities of one year or less, such as government
obligations, certificates of deposit, bankers' acceptances,
commercial paper, short-term corporate securities and repurchase
agreements ("money market instruments"). For temporary defensive
purposes the Fund may invest up to 100% of its assets in money
market instruments. The foregoing investment policies are
fundamental policies. As noted above, it is being proposed that
these investment policies be considered non-fundamental.
Illiquid and Restricted Securities. Currently, the Fund
will not invest more than 10% of its total assets in illiquid
securities, including securities for which there is no readily
available market, repurchase agreements which have a maturity of
longer than seven days, securities subject to legal or contractual
restrictions and certain over-the-counter options if such
acquisition will cause the current value of such securities to
exceed 10% of the value of the Fund's net assets. The Fund's
percentage limitation on illiquid and restricted investments does
not apply to certain restricted securities that are eligible for
resale to qualified institutional purchasers. The foregoing
investment policy is a fundamental policy. As noted above, it is
being proposed that this investment policy be considered non-
fundamental.
Shareholders are also being asked to approve a change to this
investment policy increasing the amount of the Fund's assets that
may be invested in such illiquid securities from 10% of total
assets to 15% of the Fund's net assets. This change would be
consistent with the limitation on investment in such securities set
forth in the disclosure rules governing the Fund's Prospectus and
Statement of Additional Information. As revised, the new non-
fundamental investment policy would read as follows: "The Fund
will not invest in illiquid securities, including securities for
which there is no readily available market, repurchase agreements
which have a maturity of longer than seven days, securities subject
to legal or contractual restrictions and certain over-the-counter
options if such acquisition will cause the current value of such
securities to exceed 10% of the value of the Fund's net assets. The
Fund's percentage limitation on illiquid and restricted investments
does not apply to certain restricted securities that are eligible
for resale to qualified institutional purchasers.
Margin Purchases. Currently, the Fund may not purchase
securities on margin except for such short-term loans as are
necessary for the clearance of purchases of transactions). As
noted above, it is being proposed that this restriction be
considered non-fundamental.
Foreign Securities. Currently, the Fund may not invest more
than 25% of its net assets (at time of purchase) in securities of
issuers located in any single foreign country. As noted above, it
is being proposed that this restriction be considered non-
fundamental.
Warrants. Currently, the Fund will not invest more than 5%
of its net assets at the time of purchase in warrants (other than
those that have been acquired in units or attached to other
securities) or more than 2% of its net assets at the time of
purchase in warrants not listed on the New York or American Stock
Exchange. As noted above, it is being proposed that this
restriction be considered non-fundamental.
Revisions to Fundamental Investment Policies. The Fund currently
has fundamental investment policies with respect to borrowing,
investment in commodities and investment in other investment
companies. The Manager proposes that these investment policies be
revised or eliminated for the reasons described below. As revised,
the investment policies relating to borrowing and investment in
commodities would remain fundamental investment policies changeable
only by the vote of a "majority" (as defined in the Investment
Company Act) of the outstanding voting securities of the Fund; the
investment policy relating to investment in other investment
companies would be eliminated.
Commodities. Currently, the Fund may not purchase or sell
commodities or commodity futures contracts, except stock index
futures and options on such futures under policies adopted by the
Fund's Board of Directors and disclosed to shareholders. However,
this investment policy could be read to prohibit the Fund from
buying or selling options, futures, securities or other instruments
backed by, or the investment return from which is linked to changes
in the price of, physical commodities, including "commodity-
linked" notes. Although the Fund does not currently invest in
options, futures, securities or other instruments backed by, or the
investment return from which is linked to changes in the price of,
physical commodities, including "commodity-linked" notes, the
Manager proposes that this investment policy be revised to resolve
any ambiguity as to whether the Fund may invest in those
instruments in the future. As revised, the new fundamental
investment policy would read as follows: "The Fund cannot invest in
physical commodities or physical commodity contracts; however, the
Fund may: (i) buy and sell hedging instruments to the extent
specified in its Prospectus from time to time, and (ii) buy and
sell options, futures, securities or other instruments backed by,
or the investment return from which is linked to changes in the
price of, physical commodities."
Investments in Other Investment Companies. Currently, the
Fund may not purchase shares of other investment companies in an
amount exceeding the limitations set forth in Section 12(d) of the
1940 Act and the rules thereunder, except as part of a plan of
reorganization, merger, consolidation or an offer of exchange. The
Manager proposes that this fundamental policy be eliminated. Until
the recent enactment of the National Securities Markets Improvement
Act of 1996 (the "Securities Markets Improvement Act"), the ability
of investment companies to invest in other investment companies had
been significantly limited. With the passage of the Securities
Markets Improvement Act the ability to invest in other investment
companies has been greatly expanded and the Securities and Exchange
Commission has been granted broad exemptive authority to permit
other arrangements. Accordingly, the elimination of this
fundamental restriction will allow the fund to purchase securities
of other investment companies to the extent permitted by law and
exemptions subject to the approval by the Board of Directors. This
change would also permit the Fund, subject to approval by the Board
of Directors, to adopt a "master-feeder" or a "fund of funds"
structure. The Board of Directors does not presently expect to
convert to a "master-feeder" or a "fund of funds" structure or to
engage in significant purchases of shares of other investment
companies. To do either would require approval of the Fund's Board
and, to the extent necessary, an update of the Fund's Prospectus
and Statement of Additional Information.
Vote Required. An affirmative vote of the holders of a "majority"
(as defined in the Investment Company Act) of all outstanding
voting securities of the Fund is required for approval of this
Proposal; the classes do not vote separately. The requirement for
such "majority" is defined in the Investment Company Act as the
vote of the holders of the lesser of: (i) 67% or more of the voting
securities present or represented by proxy at the shareholders
meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy; or (ii) more than
50% of the outstanding voting securities. THE DIRECTORS, INCLUDING
THE DIRECTORS WHO ARE NOT INTERESTED PERSONS OF THE FUND,
UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO
APPROVE CHANGES TO CERTAIN OF THE FUND'S FUNDAMENTAL INVESTMENT
POLICIES.
APPROVAL OF PROPOSED SUBADVISORY AGREEMENT
(Proposal No. 2)
As discussed under Proposal No. 3, the Manager has retained OpCap
Advisors (the Sub-Adviser ) as Sub-Adviser to the Fund pursuant to
a Subadvisory Agreement dated November 22, 1995 (the existing
Subadvisory Agreement ), which was approved initially by the Board
of Directors, including a majority of the Independent Directors on
June 22, 1995 and most recently on November 29, 1995 and by the
shareholders at a meeting held on November 3, 1995.
The existing Subadvisory Agreement provides that it shall
automatically terminate in the event of its assignment as defined
in Section 2(a)(4) of the Investment Company Act and that in the
event of an assignment that occurs solely due to the change in
control of the Sub-Adviser, the Manager and the Sub-Adviser will,
at the sole expense of the Sub-Adviser, use their reasonable best
efforts to obtain shareholder approval of a successor subadvisory
agreement on substantially the same terms as contained in the
existing Subadvisory Agreement.
The Sub-Adviser is a majority-owned subsidiary of Oppenheimer
Capital, a registered investment adviser with approximately $50.6
billion in assets under management on January 31, 1997. Oppenheimer
Financial Corp. ( Opfin ), a holding company, is a 1.0% general
partner of the Sub-Adviser. Opfin also holds a one-third managing
general partner interest in Oppenheimer Capital, and Oppenheimer
Capital, L.P., a Delaware limited partnership whose units are
traded on the New York Stock Exchange and of which Opfin is the
sole 1.0% general partner, owns the remaining two-thirds interest.
On February 13, 1997, PIMCO Advisors L.P. ( PIMCO Advisors ), a
registered investment adviser with approximately $110 billion in
assets under management through various subsidiaries, signed an
Agreement and Plan of Merger with Oppenheimer Group, Inc. ( OGI )
and its subsidiary Opfin pursuant to which PIMCO Advisors and its
affiliate, Thomson Advisory Group Inc. ( TAG ), will acquire the
one-third managing general partner interest in Oppenheimer Capital,
its 1.0% general partnership interest in OpCap Advisors, and its
1.0% general partner interest in Oppenheimer Capital L.P. (the
Transaction ) and OGI will be merged with and into TAG. The
aggregate purchase price is approximately $265 million in
convertible preferred stock of TAG and assumption of certain
indebtedness. The amount of TAG preferred stock comprising the
purchase price is subject to reduction in certain circumstances.
The Manager is not affiliated with any of the parties to the
Transaction. The Transaction is subject to certain conditions
being satisfied prior to closing, including consents from certain
lenders, approvals from regulatory authorities, including a
favorable tax ruling from the Internal Revenue Service, and
consents of certain clients, which are expected to take up to six
months to obtain. If the Transaction is consummated, it will
involve a change in control of Oppenheimer Capital and its
subsidiary OpCap Advisors which will constitute an assignment and
termination of the Subadvisory Agreement. Therefore, the Board of
Directors is proposing that the shareholders approve a new
subadvisory contract (the new Subadvisory Agreement ) to take
effect upon the consummation of the Transaction. A description of
the new Subadvisory Agreement and the services to be provided by
the Sub-Adviser is set forth below. With the exception of the
commencement and termination dates, the new Subadvisory Agreement
is substantially identical to the existing Subadvisory Agreement.
The principal business address of the Sub-Adviser, Oppenheimer
Capital and their affiliates is Oppenheimer Tower, 200 Liberty
Street, One World Financial Center, New York, New York 10281. The
principal business address of the Sub-Adviser would not change
following the Transaction. Joseph La Motta is Chairman of
Oppenheimer Capital and the Sub-Adviser. George Long is President
of Oppenheimer Capital and Bernard H. Garil is President of OpCap
Advisors.
At a meeting held on February 28, 1997, the Fund s Board of
Directors, including all of the Independent Directors, approved and
determined to submit to shareholders for approval at this Meeting,
a new Subadvisory Agreement with the Sub-Adviser, substantially
upon the same terms and conditions as the existing Subadvisory
Agreement. The new Subadvisory Agreement is attached to this Proxy
Statement as Exhibit A.
Effects of the Transaction. Upon consummation of the Transaction,
Oppenheimer Capital and OpCap Advisors will be controlled by PIMCO
Advisors. PIMCO Advisors has advised OGI that it anticipates that
the senior portfolio management team of Oppenheimer Capital will
continue in their present capacities; that the eligibility of OpCap
Advisors to serve as an investment adviser or subadviser will not
be affected by the Transaction; and that Oppenheimer Capital and
OpCap Advisors will be able to continue to provide advisory and
management services with no material changes in operating
conditions. PIMCO Advisors has further advised OGI and the Board
of Directors that it currently anticipates that the Transaction
will not affect the ability of Oppenheimer Capital and OpCap
Advisors to fulfill their obligations under their investment
advisory or subadvisory agreements.
Information Concerning PIMCO. PIMCO Advisors, with approximately
$110 billion in assets under management as of December 31, 1996, is
one of the largest publicly traded money management firms in the
United States. PIMCO Advisors address is 800 Newport Center Drive,
Suite 100, Newport Beach, California 92660.
PIMCO Partners, G.P. ( PIMCO GP ) owns approximately 42.83% and
66.37%, respectively (and will at the closing of the Transaction
own a majority of the voting stock of TAG which owns approximately
14.94% and 25.06%, respectively), of the total outstanding Class A
and Class B units of limited partnership interest ( Units ) of
PIMCO Advisors and is PIMCO Advisors sole general partner. PIMCO
GP is a California general partnership with two general partners.
The first of these is an indirect wholly-owned subsidiary of
Pacific Mutual Life Insurance Company ( Pacific Mutual ).
PIMCO Partners L.L.C. ( PPLLC ), a California limited liability
company, is the second, and managing, general partner of PIMCO GP.
PPLLC s members are the Managing Directors (the PIMCO Managers )
of Pacific Investment Management Company, a subsidiary of PIMCO
Advisors (the PIMCO Subpartnership ). The PIMCO Managers are:
William H. Gross, Dean S. Meiling, James F. Muzzy, William F.
Podlich, III, Frank B. Rabinovitch, Brent R. Harris, John L. Hague,
William S. Thompson Jr., William C. Powers, David H. Edington,
Benjamin Trosky, William R. Benz, II and Lee R. Thomas, III.
PIMCO Advisors is governed by an Operating Board and an Equity
Board. Governance matters are allocated generally to the Operating
Board and the Operating Board delegates to the Operating Committee
the authority to manage day-to-day operations of PIMCO Advisors.
The Operating Board is composed of twelve members, including the
chief executive officer of the PIMCO Subpartnership as Chairman and
six PIMCO Managers designated by the PIMCO Subpartnership.
The authority of PIMCO Advisors Operating Board and Operating
Committee to take certain specified actions is subject to the
approval of PIMCO Advisors Equity Board. Equity Board approval is
required for certain major transactions (e.g., issuance of
additional PIMCO Advisors Units and appointment of PIMCO Advisors
chief executive officer). In addition, the Equity Board has
jurisdiction over matters such as actions which would have a
material effect upon PIMCO Advisors business taken as a whole and
(after an appeal from an Operating Board decision) matters likely
to have a material adverse economic effect on any subpartnership of
PIMCO Advisors. The Equity Board is composed of twelve members,
including the chief executive officer of PIMCO Advisors, three
members designated by a subsidiary of Pacific Mutual, the chairman
of the Operating Board and two members designated by PPLLC.
Because of its power to appoint (directly or indirectly) seven of
the twelve members of the Operating Board as described above, the
PIMCO Subpartnership may be deemed to control PIMCO Advisors.
Because of the direct or indirect power to appoint 25% of the
members of the Equity Board, (i) Pacific Mutual and (ii) the PIMCO
Managers and/or the PIMCO Subpartnership may each be deemed, under
applicable provisions of the Investment Company Act, to control
PIMCO Advisors. Pacific Mutual, PIMCO Subpartnership and the PIMCO
Managers disclaim such control.
Services and Fees under the Subadvisory Agreement. Under the new
Subadvisory Agreement, the Sub-Adviser shall regularly provide
investment advice with respect to the Fund and invest and reinvest
cash, securities and the property comprising the assets of the
Fund. The fee payable by the Manager to the Sub-Adviser under the
new Subadvisory Agreement will be at the same rate as the fee
payable under the existing Subadvisory Agreement - 40% of the
investment advisory fee collected by the Manager from the Fund
based on the total net assets of the Fund as of the effective date
of the Subadvisory Agreement and remaining 120 days later (the
base amount ) plus 30% of the investment advisory fee collected by
the Manager based on the total net assets of the Fund that exceed
the base amount in each case calculated after any waivers,
voluntary or otherwise.
Limitation of Liability. The new Subadvisory Agreement provides
that in the absence of willful misfeasance, bad faith, negligence
or reckless disregard of its duties or obligations, the Sub-Adviser
shall not be liable to the Manager for any act or omission in the
course of or connected with rendering services under the new
Subadvisory Agreement or for any losses that may be sustained in
the purchase, holding or sale of any security. This provision is
identical to the provision on limitation of liability in the
existing Subadvisory Agreement.
Termination. The termination provisions of the new Subadvisory
Agreement and the existing Subadvisory Agreement are identical. The
new Subadvisory Agreement may be terminated by the Fund at any time
without penalty upon 60 days written notice to the other party.
Termination by the Fund must be approved by the vote of a majority
of the Directors or by vote of a majority of the outstanding shares
of the Fund. The new Subadvisory Agreement will terminate in the
event of an assignment, as required by the Investment Company
Act.
The new Subadvisory Agreement provides that if the agreement is
terminated by the Manager prior to the tenth anniversary of
November 22, 1995 (the date of the existing Subadvisory Agreement),
the Manager will be obligated to pay the Subadviser an amount equal
to the subadvisory fee until such tenth anniversary unless the
Investment Advisory Agreement has been terminated or the new
Subadvisory Agreement has been terminated upon the occurrence of
any of the following events:
(1) Performance of the Fund s Class A shares, compared to
other mutual funds having the same investment objective, ranks in
the bottom quartile for two consecutive calendar years and earns a
Morningstar, Inc. three year rating of less than three stars;
(2) The Sub-Adviser is disqualified from serving as an
investment adviser to the Fund under Section 9(a) of the 1940 Act;
(3) The Sub-Adviser, OCC Distributors, Oppenheimer Capital
or persons under their control cause a material violation of the
Non-Compete Agreement dated November 22, 1995 among those companies
and the Manager; or
(4) The Sub-Adviser breaches a material provision of the new
Subadvisory Agreement.
Portfolio Transactions and Brokerage. Provisions of the new
Subadvisory Agreement relating to portfolio transactions and
brokerage are identical to those provisions in the existing
Subadvisory Agreement and are described under Proposal 3. During
the fiscal year ended December 31, 1996, Oppenheimer & Co., Inc.,
an affiliate of the Sub-Adviser, was paid a total of $319,406 in
brokerage commissions by the Fund which amount was 30.7% of the
Fund s total brokerage commissions during the period.
Evaluation By The Board of Directors. The Board of Directors has
determined that continuity and efficiency of portfolio management
services after the Transaction can best be assured by approving the
new Subadvisory Agreement on behalf of the Fund. The Board
believes that the new Subadvisory Agreement will enable the Fund to
continue to obtain subadvisory services of high quality at costs
which it deems appropriate and reasonable and that approval of the
new Subadvisory Agreement is in the best interests of the Fund and
its shareholders.
In evaluating the new Subadvisory Agreement, the Board of Directors
requested and reviewed, with the assistance of independent legal
counsel, materials furnished by the Sub-Adviser and PIMCO Advisors.
These materials included financial statements as well as other
written information regarding PIMCO Advisors and its personnel,
operations, and financial condition. The Board also reviewed
information about the Sub-Adviser, including its brokerage policies
described above. Consideration was given to comparative
performance and cost information concerning other mutual funds with
similar investment objectives, including information prepared by
Lipper Analytical Services, Inc. The Board of Directors also
reviewed and discussed the terms and provisions of the new
Subadvisory Agreement and compared it to the existing Subadvisory
Agreement as well as the arrangements of other mutual funds,
particularly with respect to the allocation of various types of
expenses, levels of fees and resulting expense ratios. The Board
evaluated the nature and extent of services provided by other
investment advisers to their respective funds and also considered
the benefits the Sub-Adviser would obtain from its relationship
with the Fund and the economies of scale in costs and expenses to
the Sub-Adviser associated with its providing such services. The
Board also met with representatives of PIMCO Advisors to discuss
their current intentions with respect to Oppenheimer Capital and
the Sub-Adviser.
The Board considered, with its counsel, (i) the quality of the
operations and services which have been provided to the Fund by the
Sub-Adviser and which are expected to continue to be provided after
the Transaction, with no change in fee rates, (ii) the overall
experience and reputation of the Sub-Adviser in providing such
services to investment companies, and the likelihood of its
continued financial stability, (iii) the capitalization of PIMCO
Advisors, (iv) the aspects of the Transaction that would affect the
ability of the Sub-Adviser to retain and attract qualified
personnel and (v) the benefits of continuity in the services to be
provided under the new Subadvisory Agreement. Based upon its
review, the Board of Directors concluded that the terms of the new
Subadvisory Agreement are reasonable, fair and in the best
interests of the Fund and its shareholders, and that the fees
provided therein are fair and reasonable in light of the usual and
customary charges made by others for services of the same nature
and quality. Accordingly, the Board concluded that continuing to
retain OpCap Advisors as Sub-Adviser to the Fund after the
Transaction is desirable and in the best interests of the Fund and
its shareholders. Based on these and other considerations, the
Board unanimously recommended approval of the new Subadvisory
Agreement and its submission to shareholders for their approval.
The new Subadvisory Agreement will become effective on the date
that the Transaction is consummated or the date shareholders
approve the new Subadvisory Agreement, whichever occurs later. The
new Subadvisory Agreement will continue in effect until two years
from its effective date, and thereafter for successive annual
periods as long as such continuance is approved in accordance with
the Investment Company Act. If the Transaction is not consummated,
the existing Subadvisory Agreement will remain in effect according
to its terms.
PIMCO Advisors, OpCap Advisors, OGI and Oppenheimer Capital have
agreed to comply and use all commercially reasonable efforts to
cause compliance with the provisions of Section 15(f) of the
Investment Company Act. Section 15(f) provides, in pertinent part,
that an investment adviser and its affiliates may receive any
amount or benefit in connection with a sale of an interest in such
investment adviser which results in an assignment of an investment
advisory contract if (1) for a period of three years after the time
of such event, 75% of the members of the Board of Directors or
Directors of the investment company which it advises are not
interested persons (as defined in the Investment Company Act) of
the new or old investment adviser, and (2) during the two-year
period after the date on which the transactions occurs, there is no
unfair burden imposed on the investment company as a result of
the transaction. For this purpose, unfair burden is defined to
include any arrangement during the two-year period after the
transaction whereby the investment adviser or predecessor or
successor investment advisers, or any interested person of any such
adviser, receives or is entitled to receive any compensation
directly or indirectly (i) from any person in connection with the
purchase or sale of securities or other property to, from, or on
behalf of the investment company other than bona fide ordinary
compensation as principal underwriter for such company, or (ii)
from the investment company or its security holders for other than
bona fide investment advisory or other services. No compensation
arrangements of the types described above are contemplated in the
proposed Transaction. The composition of the Board of Directors is
presently in compliance with the 75% requirement and will continue
to be so if the Transaction is consummated.
Vote Required. As provided under the Investment Company Act,
approval of the new Subadvisory Agreement will require the vote of
a majority of the outstanding Shares of the Fund; the classes do
not vote separately. Under the Investment Company Act, the vote of
a majority of the outstanding voting securities of an investment
company (or a series thereof) means the vote, at a duly-called
annual or special meeting of shareholders, of 67% or more of the
shares present at such meeting, if the holders of more than 50% of
the outstanding shares of such company or series are present or
represented by proxy, or of more than 50% of the total outstanding
shares of such company or series, whichever is less. THE
DIRECTORS, INCLUDING THE DIRECTORS WHO ARE NOT INTERESTED PERSONS
OF THE FUND, OPCAP ADVISORS, OPPENHEIMERFUNDS, INC., PIMCO ADVISORS
L.P. OR THEIR AFFILIATES, UNANIMOUSLY RECOMMEND THAT THE
SHAREHOLDERS OF THE FUND VOTE TO APPROVE THE NEW SUBADVISORY
AGREEMENT BETWEEN OPPENHEIMERFUNDS, INC., AND OPCAP ADVISORS.
RECEIPT OF SHAREHOLDER PROPOSALS
The Fund is not required to hold shareholder meetings on a regular
basis. Special meetings of shareholders may be called from time to
time by either the Fund or the shareholders (under special
conditions described in the Fund's Statement of Additional
Information). Under the proxy rules of the Securities and Exchange
Commission, shareholder proposals which meet certain conditions may
be included in the Fund's proxy statement and proxy for a
particular meeting. Those rules require that for future meetings
the shareholder must be a record or beneficial owner of Fund shares
with a value of at least $1,000 at the time the proposal is
submitted and for one year prior thereto, and must continue to own
such shares through the date on which the meeting is held. Another
requirement relates to the timely receipt by the Fund of any such
proposal. Under those rules, a proposal submitted for inclusion in
the Fund's proxy material for the next meeting after the meeting to
which this proxy statement relates must be received by the Fund a
reasonable time before the solicitation is made. The fact that the
Fund receives a proposal from a qualified shareholder in a timely
manner does not ensure its inclusion in the proxy material, since
there are other requirements under the proxy rules for such
inclusion.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters
specified above that will be presented at the Meeting. Since
matters not known at the time of the solicitation may come before
the Meeting, the proxy as solicited confers discretionary authority
with respect to such matters as 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 the proxy in accordance with their judgment on such matters.
By Order of the Board of Directors,
Andrew J. Donohue, Secretary
April __, 1997
proxy\835wpd.#2<PAGE>
Exhibit A
SUBADVISORY AGREEMENT
THIS AGREEMENT is made the 28th day of , 1997, by and between
OppenheimerFunds, Inc., a Colorado corporation (the "Adviser"), and
OpCap Advisors, a Delaware general partnership (the "Subadviser"),
as of the date set forth below.
RECITAL
WHEREAS, Oppenheimer Quest Capital Value Fund, Inc. (the
"Fund") is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Adviser is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as an
investment adviser and engages in the business of acting as an
investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act
as an investment adviser and engages in the business of acting as
an investment adviser;
WHEREAS, the Adviser has entered into an Investment Advisory
Agreement as of the date hereof with the Fund (the "Investment
Advisory Agreement"), pursuant to which the Adviser shall act as
investment adviser with respect to the Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory
Agreement, the Adviser wishes to retain the Subadviser for purposes
of rendering investment advisory services to the Adviser in
connection with the Fund upon the terms and conditions hereinafter
set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of
which are hereby acknowledged, the parties hereto agree as follows:
I. Appointment and Obligations of the Adviser.
The Adviser hereby appoints the Subadviser to render to the
Adviser with respect to the Fund, investment research and advisory
services as set forth below in Section II, under the supervision of
the Adviser and subject to the approval and direction of the Fund's
Board of Directors (the "Board"), and the Subadviser hereby accepts
such appointment, all subject to the terms and conditions contained
herein. The Subadviser shall, for all purposes herein, be deemed
an independent contractor and shall not have, unless otherwise
expressly provided or authorized, any authority to act for or
represent the Fund in any way or otherwise to serve as or be deemed
an agent of the Fund.
II. Duties of the Subadviser and the Adviser.
A. Duties of the Subadviser.
The Subadviser shall regularly provide investment advice with
respect to the Fund and shall, subject to the terms of this
Agreement, continuously supervise the investment and reinvestment
of cash, securities and instruments or other property comprising
the assets of the Fund, and in furtherance thereof, the
Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are
included in the Fund or the activities in which such
issuers engage, or with respect to securities which the
Subadviser considers desirable for inclusion in the
Fund's investment portfolio;
2. Determining which securities shall be purchased,
sold or exchanged by the Fund or otherwise represented in
the Fund's investment portfolio and regularly reporting
thereon to the Adviser and, at the request of the
Adviser, to the Board;
3. Formulating and implementing continuing programs for
the purchases and sales of the securities of such issuers
and regularly reporting thereon to the Adviser and, at
the request of the Adviser, to the Board; and
4. Taking, on behalf of the Fund, all actions that
appear to the Subadviser necessary to carry into effect
such investment program, including the placing of
purchase and sale orders, and making appropriate reports
thereon to the Adviser and the Board.
B. Duties of the Adviser.
The Adviser shall retain responsibility for, among other
things, providing the following advice and services with respect to
the Fund:
1. Without limiting the obligation of the Subadviser
to so comply, the Adviser shall monitor the
investment program maintained by the Subadviser for
the Fund to ensure that the Fund's assets are
invested in compliance with this Agreement and the
Fund's Registration Statement, as currently in
effect from time to time; and
2. The Adviser shall oversee matters relating to Fund
promotion, including, but not limited to,
marketing materials and the Subadviser's reports to
the Board.
III. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of the
Subadviser.
1. Organization. The Subadviser is now, and will
continue to be, a general partnership duly formed and
validly existing under the laws of its jurisdiction of
formation, fully authorized to enter into this Agreement
and carry out its duties and obligations hereunder.
2. Registration. The Subadviser is registered as an
investment adviser with the Securities and Exchange
Commission (the "SEC") under the Advisers Act, and is
registered or licensed as an investment adviser under the
laws of all jurisdictions in which its activities require
it to be so registered or licensed, except where the
failure to be so licensed would not have a material
adverse effect on the Subadviser. The Subadviser shall
maintain such registration or license in effect at all
times during the term of this Agreement.
3. Best Efforts. The Subadviser at all times shall
provide its best judgment and effort to the Adviser and
the Fund in carrying out its obligations hereunder.
4. Other Covenants. The Subadviser further agrees
that:
a. it will use the same skill and care in
providing such services as it uses in
providing services to other accounts for which
it has investment management responsibilities;
b. it will not make loans to any person to
purchase or carry shares of the Fund or make
loans to the Fund;
c. it will report regularly to the Fund and to
the Adviser and will make appropriate persons
available for the purpose of reviewing with
representatives of the Adviser on a regular
basis the management of the Fund, including,
without limitation, review of the general
investment strategy of the Fund, economic
considerations and general conditions
affecting the marketplace;
d. as required by applicable laws and
regulations, it will maintain books and
records with respect to the Fund's securities
transactions and it will furnish to the
Adviser and to the Board such periodic and
special reports as the Adviser or the Board
may reasonably request;
e. it will treat confidentially and as
proprietary information of the Fund all
records and other information relative to the
Fund, and will not use records and information
for any purpose other than performance of its
responsibilities and duties hereunder, except
after prior notification to and approval in
writing by the Fund or when so requested by
the Fund or required by law or regulation;
f. it will, on a continuing basis and at its own
expense, (1) provide the distributor of the
Fund (the "Distributor") with assistance in
the distribution and marketing of the Fund in
such amount and form as the Adviser may
reasonably request from time to time, and (2)
use its best efforts to cause the portfolio
manager or other person who manages or is
responsible for overseeing the management of
the Fund's portfolio (the "Portfolio Manager")
to provide marketing and distribution
assistance to the Distributor, including,
without limitation, conference calls, meetings
and road trips, provided that each Portfolio
Manager shall not be required to devote more
than 10% of his or her time to such marketing
and distribution activities;
g. it will use its reasonable best efforts (i) to
retain the services of the Portfolio Manager
who manages the portfolio of the Fund, from
time to time and (ii) to promptly obtain the
services of a Portfolio Manager acceptable to
the Adviser if the services of the Portfolio
Manager are no longer available to the
Subadviser;
h. it will, from time to time, assure that each
Portfolio Manager is acceptable to the
Adviser;
i. it will obtain the written approval of the
Adviser prior to designating a new Portfolio
Manager; provided, however, that, if the
services of a Portfolio Manager are no longer
available to the Subadviser due to
circumstances beyond the reasonable control of
the Subadviser (e.g., voluntary resignation,
death or disability), the Subadviser may
designate an interim Portfolio Manager who (a)
shall be reasonably acceptable to the Adviser
and (b) shall function for a reasonable period
of time until the Subadviser designates an
acceptable permanent replacement; and
j. it will promptly notify the Adviser of any
impending change in Portfolio Manager,
portfolio management or any other material
matter that may require disclosure to the
Board, shareholders of the Fund or dealers.
B. Representations, Warranties and Covenants of the Adviser.
1. Organization. The Adviser is now, and will continue
to be, duly organized and in good standing under the laws
of its state of incorporation, fully authorized to enter
into this Agreement and carry out its duties and
obligations hereunder.
2. Registration. The Adviser is registered as an
investment adviser with the SEC under the Advisers Act,
and is registered or licensed as an investment adviser
under the laws of all jurisdictions in which its
activities require it to be so registered or licensed.
The Adviser shall maintain such registration or license
in effect at all times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall
provide its best judgment and effort to the Fund in
carrying out its obligations hereunder. For a period of
five years from the date hereof, and subject to the
Adviser's fiduciary obligations to the Fund and its
shareholders, the Adviser will not recommend to the Board
that the Fund be reorganized into another Fund unless the
total net assets of the Fund are less than $100 million
at the time of such reorganization.
IV. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the
Subadviser shall at all times conform to:
A. all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
B. the provisions of the registration statement of the Fund,
as the same may be amended from time to time, under the
Securities Act of 1933, as amended, and the 1940 Act;
C. the provisions of the Fund's Articles of Incorporation or
other governing document, as amended from time to time;
D. the provisions of the By-laws of the Fund, as amended
from time to time;
E. any other applicable provisions of state or federal law;
and
F. guidelines, investment restrictions, policies, procedures
or instructions adopted or issued by the Fund or the
Adviser from time to time.
The Adviser shall promptly notify the Subadviser of any
changes or amendments to the provisions of B., C., D. and F. above
when such changes or amendments relate to the obligations of the
Subadviser.
V. Control by the Board.
Any investment program undertaken by the Subadviser pursuant
to this Agreement, as well as any other activities undertaken by
the Subadviser with respect to the Fund, shall at all times be
subject to any directives of the Adviser and the Board.
VI. Books and Records.
The Subadviser agrees that all records which it maintains for
the Fund on behalf of the Adviser are the property of the Fund and
further agrees to surrender promptly to the Fund or to the Adviser
any of such records upon request. The Subadviser further agrees to
preserve for the periods prescribed by applicable laws, rules and
regulations all records required to be maintained by the Subadviser
on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably
request from time to time.
VII. Broker-Dealer Relationships.
A. Portfolio Trades.
The Subadviser, at its own expense, and to the extent
appropriate, in consultation with the Adviser, shall place all
orders for the purchase and sale of portfolio securities for the
Fund with brokers or dealers selected by the Subadviser, which may
include, to the extent permitted by the Adviser and the Fund,
brokers or dealers affiliated with the Subadviser. The Subadviser
shall use its best efforts to seek to execute portfolio
transactions at prices that are advantageous to the Fund and at
commission rates that are reasonable in relation to the benefits
received.
B. Selection of Broker-Dealers.
With respect to the execution of particular transactions,
the Subadviser may, to the extent permitted by the Adviser and the
Fund, select brokers or dealers who also provide brokerage and
research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934, as amended) to the Fund
and/or the other accounts over which the Subadviser or its
affiliates exercise investment discretion. The Subadviser is
authorized to pay a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio
transaction for the Fund that is in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction if the Subadviser determines in good
faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of
either that particular transaction or the overall responsibilities
that the Subadviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The
Adviser, Subadviser and the Board shall periodically review the
commissions paid by the Fund to determine, among other things, if
the commissions paid over representative periods of time were
reasonable in relation to the benefits received.
C. Soft Dollar Arrangements.
The Subadviser may enter into "soft dollar" arrangements
through the agency of third parties on behalf of the Adviser. Soft
dollar arrangements for services may be entered into in order to
facilitate an improvement in performance in respect of the
Subadviser's service to the Adviser with respect to the Fund. The
Subadviser makes no direct payments but instead undertakes to place
business with broker-dealers who in turn pay third parties who
provide these services. Soft dollar transactions will be conducted
on an arm's-length basis, and the Subadviser will secure best
execution for the Adviser. Any arrangements involving soft dollars
and/or brokerage services shall be effected in compliance with
Section 28(e) of the Securities Exchange Act of 1934, as amended,
and the policies that the Adviser and the Board may adopt from time
to time. The Subadviser agrees to provide reports to the Adviser
as necessary for purposes of providing information on these
arrangements to the Board.
VIII. Compensation.
A. Amount of Compensation. The Adviser shall pay the
Subadviser, as compensation for services rendered
hereunder, from its own assets, an annual fee, payable
monthly, equal to 40% of the investment advisory fee
collected by the Adviser from the Fund, based on the
total net assets of the Fund existing as of the date
hereof and remaining 120 days later (the "base amount"),
plus 30% of the advisory fee collected by the Adviser,
based on the total net assets of the Fund that exceed the
base amount (the "marginal amount"), in each case
calculated after any waivers, voluntary or otherwise.
B. Calculation of Compensation. Except as hereinafter set
forth, compensation under this Agreement shall be
calculated and accrued on the same basis as the advisory
fee paid to the Adviser by the Fund. If this Agreement
becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with
the calculation of the fees set forth above.
C. Payment of Compensation: Subject to the provisions of
this paragraph, payment of the Subadviser's compensation
for the preceding month shall be made within 15 days
after the end of the preceding month.
D. Reorganization of the Fund. If the Fund is reorganized
with another investment company for which the Subadviser
does not serve as an investment adviser or subadviser,
and the Fund is the surviving entity, the subadvisory fee
payable under this section shall be adjusted in an
appropriate manner as the parties may agree.
IX. Allocation of Expenses.
The Subadviser shall pay the expenses incurred in providing
services in connection with this Agreement, including, but not
limited to, the salaries, employment benefits and other related
costs of those of its personnel engaged in providing investment
advice to the Fund hereunder, including, without limitation, office
space, office equipment, telephone and postage costs and other
expenses. In the event of an "assignment" of this Agreement, other
than an assignment resulting solely by action of the Adviser or an
affiliate thereof, the Subadviser shall be responsible for payment
of all costs and expenses incurred by the Adviser and the Fund
relating thereto, including, but not limited to, reasonable legal,
accounting, printing and mailing costs related to obtaining
approval of Fund shareholders.
X. Non-Exclusivity.
The services of the Subadviser with respect to the Fund are
not to be deemed to be exclusive, and the Subadviser shall be free
to render investment advisory and administrative or other services
to others (including other investment companies) and to engage in
other activities, subject to the provisions of a certain Agreement
Not to Compete dated as of November 22, 1995 among the Adviser,
Oppenheimer Capital, the Subadviser and Quest For Value
Distributors (the "Agreement Not to Compete"). It is understood
and agreed that officers or directors of the Subadviser may serve
as officers or directors of the Adviser or of the Fund; that
officers or directors of the Adviser or of the Fund may serve as
officers or directors of the Subadviser to the extent permitted by
law; and that the officers and directors of the Subadviser are not
prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as
partners, officers, directors or trustees of any other firm or
trust, including other investment advisory companies (subject to
the provisions of the Agreement Not to Compete), provided it is
permitted by applicable law and does not adversely affect the Fund.
XI. Term.
This Agreement shall become effective at the close of business
on the date hereof and shall remain in force and effect, subject to
Paragraphs XII.A and XII.B hereof and approval by the Fund's
shareholders, for a period of two years from the date hereof.
XII. Renewal.
Following the expiration of its initial term, the Agreement
shall continue in full force and effect from year to year for a
period of eight years, provided that such continuance is
specifically approved:
A. at least annually (1) by the Board or by the vote of a
majority of the Fund's outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), and (2) by
the affirmative vote of a majority of the directors who
are not parties to this Agreement or interested persons
of a party to this Agreement (other than as a director of
the Fund), by votes cast in person at a meeting
specifically called for such purpose; or
B. by such method required by applicable law, rule or
regulation then in effect.
XIII. Termination.
A. Termination by the Fund. This Agreement may be
terminated at any time, without the payment of any
penalty, by vote of the Board or by vote of a majority of
the Fund's outstanding voting securities, on sixty (60)
days' written notice. The notice provided for herein may
be waived by the party required to be notified.
B. Assignment. This Agreement shall automatically terminate
in the event of its "assignment," as defined in Section
2 (a) (4) of the 1940 Act. In the event of an assignment
that occurs solely due to the change in control of the
Subadviser (provided that no condition exists that
permits, or, upon the consummation of the assignment,
will permit, the termination of this Agreement by the
Adviser pursuant to Section XIII. D. hereof), the Adviser
and the Subadviser, at the sole expense of the
Subadviser, shall use their reasonable best efforts to
obtain shareholder approval of a successor Subadvisory
Agreement on substantially the same terms as contained in
this Agreement.
C. Payment of Fees After Termination. Notwithstanding the
termination of this Agreement prior to the tenth
anniversary of the date hereof, the Adviser shall
continue to pay to the Subadviser the subadvisory fee for
the term of this Agreement and any renewals thereof
through such tenth anniversary, if: (1) the Adviser or
the Fund terminates this Agreement for a reason other
than the reasons set forth in Section XIII.D. hereof,
provided the Investment Advisory Agreement remains in
effect; (2) the Fund reorganizes with another investment
company advised by the Adviser (or an affiliate of the
Adviser) and for which the Subadviser does not serve as
an investment adviser or subadviser and such other
investment company is the surviving entity; or (3) the
Investment Advisory Agreement terminates (i) by reason of
an "assignment;" (ii) because the Adviser is disqualified
from serving as an investment adviser; or (iii) by reason
of a voluntary termination by the Adviser; provided that
the Subadviser does not serve as the investment adviser
or subadviser of the Fund after such termination of the
Investment Advisory Agreement. The amount of the
subadvisory fee paid pursuant to this section shall be
calculated on the basis of the Fund's net assets measured
at the time of such termination or such reorganization.
Notwithstanding anything to the contrary, if the
Subadviser terminates this Agreement or if this Agreement
is terminated by operation of law, due solely to an act
or omission by the Subadviser, Oppenheimer Capital
("OpCap") or their respective partners, subsidiaries,
directors, officers, employees or agents (other than by
reason of an "assignment"of this Agreement), then the
Adviser shall not be liable for any further payments
under this Agreement, provided, however, that if at any
time prior to the end of the term of the Agreement Not to
Compete any event that would have permitted the
termination of this Agreement by the Adviser pursuant to
Section XIII. D. (3) hereof occurs, the Adviser shall be
under no further obligation to pay any subadvisory fees.
D. Termination by the Adviser. The Adviser may terminate
this Agreement without penalty and without the payment of
any fee or penalty, immediately after giving written
notice, upon the occurrence of any of the following
events:
1. The Fund's investment performance of the Fund's
Class A shares compared to the appropriate universe
of Class A shares (or their equivalent), as set
forth on Schedule D-1, as amended from time to
time, ranks in the bottom quartile for two
consecutive calendar years (beginning with the
calendar year 1996) and earns a Morningstar three-
year rating of less than three (3) stars at the
time of such termination; or
2. Any of the Subadviser, OpCap, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents engages in an action
or omits to take an action that would cause the
Subadviser or OpCap to be disqualified in any
manner under Section 9(a) of the 1940 Act, if the
SEC were not to grant an exemptive order under
Section 9(c) thereof or that would constitute
grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment
adviser with the SEC; or
3. Any of OpCap, the Subadviser, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents causes a material
violation of the Agreement Not to Compete which is
not cured in accordance with the provisions of that
agreement; or
4. The Subadviser breaches the representations
contained in Paragraph III.A.4.i. of this Agreement
or any other material provision of this Agreement,
and any such breach is not cured within a
reasonable period of time after notice thereof from
the Adviser to the Subadviser. However, consistent
with its fiduciary obligations, for a period of
seven months the Adviser will not terminate this
Agreement solely because the Subadviser has failed
to designate an acceptable permanent replacement to
a Portfolio Manager whose services are no longer
available to the Subadviser due to circumstances
beyond the reasonable control of the Subadviser,
provided that the Subadviser uses its reasonable
best efforts to promptly obtain the services of a
Portfolio Manager acceptable to the Adviser and
further provided that the Adviser has not
unreasonably withheld approval of such replacement
Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser
and Subadviser will cooperate with each other to ensure
that portfolio or other transactions in progress at the
date of termination of this Agreement shall be completed
by the Adviser in accordance with the terms of such
transactions, and to this end the Subadviser shall
provide the Adviser with all necessary information and
documentation to secure the implementation thereof.
XIV. Non-Solicitation.
During the term of this Agreement, the Adviser (and its
affiliates under its control) shall not solicit or knowingly assist
in the solicitation of any Portfolio Manager of the Fund or any
portfolio assistant of the Fund then employed by the Subadviser or
OpCap, provided, however, that the Adviser (or its affiliates) may
solicit or hire any such individual who (A) the Subadviser or OpCap
(or its affiliates) has terminated or (B) has voluntarily
terminated his or her employment with the Subadviser, OpCap (or its
affiliates) without inducement of the Adviser (or its affiliates
under its control) prior to the time of such solicitation.
Advertising in general circulation newspapers or industry
newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. Liability of the Subadviser.
In the absence of willful misfeasance, bad faith, negligence
or reckless disregard of obligations or duties hereunder on the
part of the Subadviser or any of its officers, directors or
employees, the Subadviser shall not be subject to liability to the
Adviser for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security;
provided, however, that the foregoing shall not be construed to
relieve the Subadviser of any liability it may have arising under
the Agreement Not to Compete or the Acquisition Agreement dated
August 15, 1995, among the Subadviser, the Adviser and certain
affiliates of the Subadviser.
XVI. Notices.
Any notice or other communication required or that may be
given hereunder shall be in writing and shall be delivered
personally, telecopied, sent by certified, registered or express
mail, postage prepaid or sent by national next-day delivery service
and shall be deemed given when so delivered personally or
telecopied, or if mailed, two days after the date of mailing, or if
by next-day delivery service, on the business day following
delivery thereto, as follows or to such other location as any party
notifies any other party:
A. if to the Adviser, to:
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
OpCap Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. Questions of Interpretation.
This Agreement shall be governed by the laws of the State of
New York applicable to agreements made and to be performed entirely
within the State of New York (without regard to any conflicts of
law principles thereof). Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and
to interpretations thereof, if any, by the United States Courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the SEC issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is revised by
rule, regulation or order of the SEC, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
XVIII. Form ADV - Delivery.
The Adviser hereby acknowledges that it has received from the
Subadviser a copy of the Subadviser's Form ADV, Part II as
currently filed, at least 48 hours prior to entering into this
Agreement and that it has read and understood the disclosures set
forth in the Subadviser's Form ADV, Part II.
XIX. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors.
XX. Counterparts.
This Agreement may be executed in counterparts, each of which
shall constitute an original and both of which, collectively, shall
constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers
as of the28th day of February, 1997.
OPPENHEIMERFUNDS, INC.
By:/s/ Andrew J. Donohue
Name: Andrew J. Donohue
Title: Executive Vice President
OPCAP ADVISORS
By: OPPENHEIMER FINANCIAL CORP.
a general partner
By:/s/ Thomas E. Duggan
Name: Thomas E. Duggan
Title: Assistant Secretary
<PAGE>
SCHEDULE XIII.D.1
The universe of funds to which Class A shares of Oppenheimer
Quest Capital Value Fund, Inc. (the "Fund") subadvised by OpCap
Advisors will be compared to so that it can be determined in which
quartile the performance ranks shall consist of those funds with
the same Lipper investment objective being offered as the only
class of shares of such fund or, in the case where there is more
than one class of shares being offered, with a front-end load
(typically referred to as Class A shares).
The present Lipper investment objective category for the fund
is:
Fund Lipper Category
Oppenheimer Quest Capital CA - Capital Appreciation
Value Fund, Inc.
quest\qstdpf\quest#4<PAGE>
Oppenheimer Quest Capital Proxy for Shareholders Meeting to be
Value Fund, Inc. Class A Shares held April 30, 1997
Your shareholder Your prompt response can save your
vote is important! Fund the expense of another mailing.
Please mark your proxy on the reverse side, date and
sign it, and return it promptly in the accompanying
envelope, which requires no postage if mailed in the
United States.
Please detach at perforation before mailing.
Oppenheimer Quest Capital Value Fund, Inc. - Class A Shares
Proxy For Shareholders Meeting to be held April 30, 1997
The undersigned shareholder of Oppenheimer Quest Capital Value Fund, Inc.
(the "Fund"), does hereby appoint Robert Bishop, George C. Bowen, Andrew J.
Donohue and Scott Farrar, and each of them, as attorneys-in-fact and proxies of
the undersigned, with full power of substitution, to attend the Meeting of
Shareholders of the Fund to be held April 30, 1997, at 6803 South Tucson Way,
Englewood, Colorado 80112 at 10:00 A.M., Denver 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 proposals specified on the reverse side.
Said attorneys-in-fact shall vote in accordance with their best judgment
as to any other matter.
Proxy solicited on behalf of the Board Of Directors, which recommends a vote
FOR each 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.
(over)
835
Oppenheimer Quest Capital Proxy for Shareholders Meeting to
Value Fund, Inc. Class A Shares be held April 30, 1997
Your shareholder Your prompt response can save your Fund money.
vote is important!
Please vote, sign and mail your proxy ballot (this card)
in the enclosed postage-paid envelope today, no matter
how many shares you own. A majority of the Fund's
shares must be represented in person or by proxy.
Please vote your proxy so your Fund can avoid the
expense of another mailing.
Please detach at perforation before mailing.
1. Approval of changes to the Fund's fundamental investment policies
(Proposal No. 1)
For ____ Against ____ Abstain ____
2. Approval of proposed Subadvisory Agreement (Proposal No. 2)
For ____ Against ____ Abstain ____
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 title.
Dated: ______________________, 1997
(Month) (Day)
____ ______________________
Signature(s)
____________________________
Signature(s)
Please read both sides of this ballot.
835
<PAGE>
Oppenheimer Quest Capital Proxy for Shareholders Meeting to be
Value Fund Class B Shares held April 30, 1997
Your shareholder Your prompt response can save your
vote is important! Fund the expense of another mailing.
Please mark your proxy on the reverse side, date and
sign it, and return it promptly in the accompanying
envelope, which requires no postage if mailed in the
United States.
Please detach at perforation before mailing.
Oppenheimer Quest Capital Value Fund, Inc. - Class B Shares
Proxy For Shareholders Meeting to be held April 30, 1997
The undersigned shareholder of Oppenheimer Quest Capital Value Fund, Inc.
(the "Fund"), does hereby appoint Robert Bishop, George C. Bowen, Andrew J.
Donohue and Scott Farrar, and each of them, as attorneys-in-fact and proxies of
the undersigned, with full power of substitution, to attend the Meeting of
Shareholders of the Fund to be held April 30, 1997, at 6803 South Tucson Way,
Englewood, Colorado 80112 at 10:00 A.M., Denver 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 proposals specified on the reverse side.
Said attorneys-in-fact shall vote in accordance with their best judgment
as to any other matter.
Proxy solicited on behalf of the Board Of Directors, which recommends a vote
FOR each 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.
(over)
836
Oppenheimer Quest Capital Proxy for Shareholders Meeting to
Value Fund, Inc. Class B Shares be held April 30, 1997
Your shareholder Your prompt response can save your Fund money.
vote is important!
Please vote, sign and mail your proxy ballot (this card)
in the enclosed postage-paid envelope today, no matter
how many shares you own. A majority of the Fund's
shares must be represented in person or by proxy.
Please vote your proxy so your Fund can avoid the
expense of another mailing.
Please detach at perforation before mailing.
1. Approval of changes to the Fund's fundamental investment policies
(Proposal No. 1)
For ____ Against ____ Abstain ____
2. Approval of proposed Subadvisory Agreement (Proposal No. 2)
For ____ Against ____ Abstain ____
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 title.
Dated: ______________________, 1997
(Month) (Day)
____ ______________________
Signature(s)
____________________________
Signature(s)
Please read both sides of this ballot.
836
<PAGE>
Oppenheimer Quest Capital Proxy for Shareholders Meeting to be
Value Fund, Inc. Class C Shares held April 30, 1997
Your shareholder Your prompt response can save your
vote is important! Fund the expense of another mailing.
Please mark your proxy on the reverse side, date and
sign it, and return it promptly in the accompanying
envelope, which requires no postage if mailed in the
United States.
Please detach at perforation before mailing.
Oppenheimer Quest Capital Value Fund, Inc. - Class C Shares
Proxy For Shareholders Meeting to be held April 30, 1997
The undersigned shareholder of Oppenheimer Quest Capital Value Fund, Inc.
(the "Fund"), does hereby appoint Robert Bishop, George C. Bowen, Andrew J.
Donohue and Scott Farrar, and each of them, as attorneys-in-fact and proxies of
the undersigned, with full power of substitution, to attend the Meeting of
Shareholders of the Fund to be held April 30, 1997, at 6803 South Tucson Way,
Englewood, Colorado 80112 at 10:00 A.M., Denver 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 proposals specified on the reverse side.
Said attorneys-in-fact shall vote in accordance with their best judgment
as to any other matter.
Proxy solicited on behalf of the Board Of Directors, which recommends a vote
FOR each 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.
(over)
837
Oppenheimer Quest Capital Proxy for Shareholders Meeting to
Value Fund, Inc. Class C Shares be held April 30, 1997
Your shareholder Your prompt response can save your Fund money.
vote is important!
Please vote, sign and mail your proxy ballot (this card)
in the enclosed postage-paid envelope today, no matter
how many shares you own. A majority of the Fund's
shares must be represented in person or by proxy.
Please vote your proxy so your Fund can avoid the
expense of another mailing.
Please detach at perforation before mailing.
1. Approval of changes to the Fund's fundamental investment policies
(Proposal No. 1)
For ____ Against ____ Abstain ____
2. Approval of proposed Subadvisory Agreement (Proposal No. 2)
For ____ Against ____ Abstain ____
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 title.
Dated: ______________________, 1997
(Month) (Day)
____ ______________________
Signature(s)
____________________________
Signature(s)
Please read both sides of this ballot.
837
