<PAGE>
Preliminary Copy -- To Be Filed With the
Securities and Exchange Commission
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
________________________________________________________________________________
OPPENHEIMER QUEST FOR VALUE FUNDS
________________________________________________________________________________
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________
(5) Total fee paid:
______________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
___________________________________
(2) Form, Schedule or Registration Statement No.:
___________________________________
(3) Filing Party:
___________________________________
(4) Date Filed:
___________________________________
<PAGE>
OPPENHEIMER QUEST FOR VALUE FUNDS
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
Two World Trade Center, New York, New York 10048-0203
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held March 10, 2000
----------------
Notice is hereby given that a Special Meeting of Shareholders of
Oppenheimer Quest Opportunity Value Fund (the "Fund"), a series of Oppenheimer
Quest For Value Funds (the "Company"), will be held (the "Meeting") at 6803
South Tucson Way, Englewood, Colorado, 80112, March 10, 2000, at 10:00 a.m.,
Denver time, for the following purposes:
1. To approve or disapprove a new subadvisory agreement between
OppenheimerFunds, Inc. (the "Manager") and OpCap Advisors (the
"Subadviser"); and
2. To transact such other business as may properly come before the Meeting,
or any adjournments thereof.
Shareholders of record of the Fund as of the close of business on February
8, 2000 are entitled to notice of and to vote at the Meeting. If you cannot be
present in person, management would greatly appreciate your filling in,
signing and returning the enclosed proxy promptly in the envelope provided for
that purpose. To avoid unnecessary duplicate mailings, we ask your cooperation
in promptly mailing your proxy no matter how large or small your holdings may
be.
In the event that the necessary quorum to transact business or the vote
required to approve or reject Proposal 1 is not obtained at the Meeting, the
persons named as proxies may propose one or more adjournments of the Meeting,
to permit further solicitation of proxies. Any such adjournment will require
the affirmative vote of the holders of a majority of the shares present in
person or by proxy at the Meeting. The persons named as proxies will vote in
favor of such adjournment those proxies which they are entitled to vote in
favor of Proposal 1 and will vote against any such adjournment those proxies
to be voted against that Proposal.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
February , 2000
<PAGE>
OPPENHEIMER QUEST FOR VALUE FUNDS
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
Two World Trade Center, New York, New York 10048-0203
----------------
SPECIAL MEETING OF SHAREHOLDERS
To Be Held March 10, 2000
This Proxy Statement is being furnished to the shareholders
("Shareholders") of Oppenheimer Quest Opportunity Value Fund (the "Fund"), a
series of Oppenheimer Quest For Value Funds (the "Company"), in connection
with the solicitation by the Board of Trustees of the Fund (the "Board") of
proxies to be used at 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 March 10, 2000 (the "Meeting"), or any adjournments thereof. It is expected
that the mailing of this Proxy Statement will be made on or about February 10,
2000.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Unmarked proxies will be voted in favor of Proposal 1 set forth in the
attached Notice of Special Meeting of Shareholders. A proxy may be revoked at
any time prior to its exercise by any of the following: written notice of
revocation to the Secretary of the Fund, execution and delivery of a later
dated proxy to the Secretary of the Fund (if returned and received in time to
be voted), or attendance and voting at the Meeting. Attendance at the Meeting
will not in and of itself revoke a proxy.
All expenses relating to the Meeting will be borne by PIMCO Advisors L.P.
("PIMCO Advisors"), and Allianz of America, Inc. ("Allianz of America"). None
of the expenses relating to the Meeting will be borne by the Fund. Expenses of
the Meeting are expected not to exceed $ and 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 Company has retained D.F.
King, a proxy solicitor, to assist in the solicitation of proxies primarily by
contacting Shareholders by telephone and telecopy. The cost of such proxy
solicitor shall be $3,000 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. 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. Shareholders may also call D.F. King at 1-800-
714-3305 to vote their shares by telephone.
Shares Outstanding and Entitled to Vote. The Board has fixed the close of
business on February 8, 2000 as the record date (the "Record Date") for the
determination of Shareholders entitled to notice of, and to vote at, the
Meeting. The table below sets forth the number of shares outstanding for each
Class of the Fund as of the Record Date.
As of the Record Date, the following persons were known to own of record or
beneficially 5% or more of the outstanding shares of a Class of the Fund:
Class A--[ ]; Class B--[ ]; and Class C--[ ]. As
of the Record Date, the Trustees and the officers of the Company as a group
<PAGE>
owned less than 1% of [ ] the Fund. The Fund currently has Class A,
Class B, Class C and Class Y shares outstanding. The percentage ownership of
shares of each Class of shares of the Fund changes from time to time depending
on purchases and redemptions by Shareholders and the total number of shares
outstanding.
<TABLE>
<CAPTION>
Number of Shares
Outstanding as
of
February 8, 2000
Class of the Fund: (Record Date)
------------------ ----------------
<S> <C>
Class A...................................................
Class B...................................................
Class C...................................................
Class Y...................................................
</TABLE>
APPROVAL OR DISAPPROVAL OF NEW SUBADVISORY AGREEMENT
Background. The Fund has entered into an investment advisory agreement with
OppenheimerFunds, Inc. (the "Manager"), the business address of which is Two
World Trade Center, New York, New York 10048. The distributor of the Fund is
OppenheimerFunds Distributor, Inc., at the same address as the Manager.
The Manager has entered into a subadvisory agreement (the "Current
Subadvisory Agreement") with OpCap Advisors (the "Subadviser").
The Subadviser is a wholly-owned subsidiary of Oppenheimer Capital which,
in turn, is a wholly-owned subsidiary of PIMCO Advisors, a registered
investment adviser.
The Current Subadvisory Agreement, as required by Section 15 of the
Investment Company Act of 1940, as amended (the "1940 Act" or, the "Investment
Company Act"), provides for its automatic termination in the event of its
assignment. Any change in control of the Subadviser is deemed to result in an
assignment of the Current Subadvisory Agreement. The Subadviser will undergo a
change in control as a result of the consummation of a proposed transaction
(the "Transaction") pursuant to which Allianz of America, a wholly-owned
subsidiary of Allianz AG, the world's second largest insurance group as
measured by premium income, would acquire majority ownership of the
Subadviser's parent, PIMCO Advisors. A more detailed description of the
Transaction is attached as Exhibit A. The Transaction would cause the
automatic termination of the Subadviser's Current Subadvisory Agreement. The
Board of Trustees has approved the Manager's entering into a new subadvisory
agreement with the Subadviser (the "New Subadvisory Agreement") with respect
to the Fund. The Investment Company Act requires that the New Subadvisory
Agreement be approved by the Fund's Shareholders in order for it to become
effective. As more fully explained below, the Board of Trustees, including all
of the independent trustees, recommends that the Shareholders of the Fund
approve the New Subadvisory Agreement between the Manager and the Subadviser.
The New Subadvisory Agreement is substantially identical to the Current
Subadvisory Agreement. If the Transaction is not completed for any reason, the
Current Subadvisory Agreement will remain in effect. The Subadviser does not
anticipate that the Transaction will have any adverse effect on the
performance by the Subadviser of its obligations as subadviser to the Fund.
Approval of New Subadvisory Agreement. The Board met in person for the
purpose of considering whether it would be in the best interests of the Fund
and its Shareholders to approve the New Subadvisory Agreement between the
Manager and the Subadviser. Assuming the Fund's Shareholders approve the New
Subadvisory Agreement, the agreement would become effective upon the
consummation of the Transaction. At its meeting and for reasons discussed
below (see "The Board's Considerations"), the Board, including all of the
Trustees who are not "interested persons," as defined in the 1940 Act, of the
Fund, the Manager or the Subadviser (the "Independent Trustees"), by the
unanimous vote of those present, approved the New Subadvisory Agreement and
recommended its approval by the Shareholders, in order to assure continuity of
investment advisory services to the Fund after the Transaction. The New
Subadvisory Agreement is attached hereto as Exhibit B.
The terms of the New Subadvisory Agreement, including fees payable to the
Subadviser by the Manager thereunder, are identical, in all material respects,
to those of the Current Subadvisory
2
<PAGE>
Agreement, except for the dates of effectiveness and termination. There is no
change in the fees payable by the Fund. The terms of the Current Subadvisory
Agreement are fully described below. If approved by Shareholders, the New
Subadvisory Agreement will expire on December 31, 2000. The New Subadvisory
Agreement will continue in effect from year to year thereafter if such
continuance is granted by the Board or by a majority of the outstanding voting
securities (as defined below) of the Fund, and, in either event, by the vote
cast in person of a majority of the Independent Trustees. In the event that
Shareholders of the Fund do not approve a New Subadvisory Agreement, the
Current Subadvisory Agreement will remain in effect until the Transaction is
consummated and the Board will take such action, if any, as it deems to be in
the best interests of the Fund and its Shareholders. In the event that the
Transaction is not consummated, the Subadviser will continue to provide
services to the Fund in accordance with the terms of the Current Subadvisory
Agreement for such periods as may be approved at least annually by the Board,
including a majority of the Independent Trustees.
The Current Subadvisory Agreement. The Current Subadvisory Agreement
provides that the Subadviser shall regularly provide investment advice for the
Fund and supervise the investment and reinvestment of the Fund's assets,
including, but not limited to, placing purchase and sale orders for the Fund's
securities transactions. The Subadviser pays the expenses incurred in
providing services in connection with the Current Subadvisory 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, including, without limitation, office space, office equipment,
telephone and postage costs and other expenses.
In return for the services it renders under the Current Subadvisory
Agreement, the Subadviser is paid by the Manager monthly compensation equal to
40% of the investment advisory fee collected by the Manager from the Fund with
respect to the total net assets of the Fund up to those existing on November
22, 1995 (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.
Under the Fund's investment advisory agreement, the Fund accrues to the
Manager an annual investment advisory fee, calculated daily and payable
monthly, of 1.00% of the first $400 million of the Fund's net assets, 0.90% of
the next $400 million of the Fund's net assets, and 0.85% of the Fund's net
assets over $800 million. For the fiscal year ended October 31, 1999, the
Subadviser was paid a fee of $11,985,215 with respect to the Fund.
The Current Subadvisory Agreement provides that in the absence of willful
misfeasance, bad faith, negligence or reckless disregard of its duties or
obligations, the Subadviser shall not be liable to the Manager for any act or
omission in the course of or connected with rendering services under the
Current Subadvisory Agreement or for any losses that may be sustained in the
purchase, holding or sale of any security.
The Current 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 Trustees or by
vote of a majority of the outstanding shares of the Fund. The Current
Subadvisory Agreement will terminate in the event of an "assignment," as
required by the Investment Company Act. Under certain circumstances, the
Manager would be obligated to pay the Subadviser an amount equal to the
subadvisory fee until November 22, 2005.
The Current Subadvisory Agreement was last approved by the Board on December
7, 1999 and last approved by the Shareholders on April 30, 1997.
The Subadviser. The Subadviser is an indirect wholly-owned subsidiary of
PIMCO Advisors, a registered investment adviser with approximately $260
billion in assets under management through various subsidiaries and
affiliates.
Exhibit C to this Proxy Statement lists the investment companies for which
the Subadviser serves as an investment adviser and which have investment
objectives similar to those of the Fund, and sets forth the advisory fees
payable by such companies, as well as their approximate net assets as of most
recent fiscal year end.
3
<PAGE>
The principal Executive Officers and Trustees of the Subadviser and their
principal occupations are respectively as follows: Joseph M. LaMotta, Chairman
Emeritus of the Board of Trustees; Kenneth Poovey, Chief Executive Officer;
Collin Glinsman, Chief Investment Officer; Mark Degenhart, Vice President and
Portfolio Manager; Louis Goldstein, Vice President and Portfolio Manager;
Bernard H. Garil, Vice President; Richard Glasebrook, Vice President and
Portfolio Manager; Alan Gutmann, Vice President and Portfolio Manager; James
Sheldon, Vice President and Portfolio Manager; Vikki Hanges, Vice President
and Portfolio Manager; Timothy McCormack, Vice President and Portfolio
Manager; Elliot Weiss, Secretary; Maria Camacho, Assistant Secretary; Brian
Shlissel, Assistant Treasurer and Lawrence Becker, Treasurer. Mr. Shlissel is
expected to replace Mr. Becker as treasurer at or prior to the consummation of
the Transaction. The business address of the Subadviser and each of the
foregoing individuals is 1345 Avenue of the Americas, New York, New York
10105-4800.
The Board's Considerations. The Board has determined that continuity and
efficiency of portfolio management services after the Transaction can best be
assured by approving the New Subadvisory Agreement. 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 requested and
reviewed, with the assistance of independent legal counsel, materials
furnished by the Subadviser, Allianz AG ("Allianz") and Lipper Analytical
Services, Inc. ("Lipper"). These materials included financial statements as
well as other written information regarding Allianz and its personnel,
operations, and financial condition. Consideration was given to comparative
performance and cost information concerning other mutual funds with similar
investment objectives, including information prepared by Lipper. The Board
also reviewed and discussed the terms and provisions of the New Subadvisory
Agreement and compared it to the Current 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 Subadviser obtains from its relationship with the Fund and the
economies of scale in costs and expenses to the Subadviser associated with its
providing such services. The Board also met with a representative of Allianz
to discuss their current intentions with respect to Oppenheimer Capital and
the Subadviser.
Allianz has advised Oppenheimer Capital, the Subadviser, the Manager and
the Board that it does not presently intend for the Transaction to affect the
future management of Oppenheimer Capital and its subsidiary, the Subadviser.
In addition, Allianz has advised Oppenheimer Capital, the Subadviser, the
Manager and the Board that it presently anticipates that the senior portfolio
management teams of Oppenheimer Capital and the Subadviser will continue in
their present capacities and that Oppenheimer Capital and the Subadviser will
be able to continue to provide advisory and management services with no
material changes in operating conditions. Allianz has represented to
Oppenheimer Capital, the Subadviser, the Manager and the Board that the
eligibility of the Subadviser, under the Investment Advisers Act of 1940, to
serve as a subadviser will not be affected by the Transaction and that the
Transaction will not affect the ability of the Subadviser to fulfill its
obligations under the Subadvisory Agreement.
The Board considered, with their counsel: (i) the quality of the operations
and services which have been provided to the Fund by the Subadviser 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 Subadviser in
providing such services to investment companies, and the likelihood of its
continued financial stability, (iii) the capitalization of Allianz, (iv) the
aspects of the Transaction that would affect the ability of the Subadviser 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 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.
4
<PAGE>
Accordingly, the Board concluded that continuing to retain OpCap Advisors as
subadviser 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 the Shareholders for their
approval. Assuming the Fund's Shareholders approve the New Subadvisory
Agreement, the agreement would become effective upon the consummation of the
Transaction. The New Subadvisory Agreement will continue in effect until
December 31, 2000, and thereafter may be renewed as described above.
Vote Required. The New Subadvisory Agreement cannot be implemented unless
approved at the Meeting by a majority of the outstanding voting securities of
the Fund; the Classes do not vote separately. Such a majority means the
affirmative vote of the holders of (a) 67% or more of the shares of the Fund
present in person or by proxy at the Meeting, if the holders of more than 50%
of the outstanding shares are so present, or (b) more than 50% of the
outstanding shares of the Fund, whichever is less.
The Board unanimously recommends that Shareholders vote FOR approval of the
New Subadvisory Agreement.
ADDITIONAL INFORMATION
In the event that the necessary quorum to transact business or the vote
required to approve or reject the Proposal described in this Proxy Statement
is not obtained at the Meeting, the persons named as proxies may propose one
or more adjournments of the Meeting, to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of the holders
of a majority of the Fund's shares present in person or by proxy at the
Meeting. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of the Proposal and
will vote against any such adjournment those proxies required to be voted
against the 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 rules) as record holder vote
such shares on the Proposal 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.
SHAREHOLDER PROPOSALS
The Fund does not hold regular Shareholders' meetings. Proposals of
Shareholders intended to be presented at the next meeting of Shareholders must
be received a reasonable time prior to the mailing of the proxy materials sent
in connection with the meeting, for inclusion in the proxy statement for that
meeting.
REPORTS TO SHAREHOLDERS
The Annual Report for the Fund's fiscal year ended October 31, 1999 has
been sent previously to Shareholders and is available without charge upon
request by telephone--call OppenheimerFunds Services toll-free: 1-800-525-
7048, by mail--write to: OppenheimerFunds Services, P.O. Box 5270, Denver,
Colorado 80217-5270, or on the Internet--send a request by e-mail to:
www.oppenheimerfunds.com.
5
<PAGE>
INTEREST OF CERTAIN PERSONS
The Subadviser and certain of its trustees, officers, and employees,
including the Fund's portfolio managers, may be deemed to have an interest in
the Proposal described in this Proxy Statement to the extent that failure to
approve it may affect its and their compensation. In addition, certain
officers of the Subadviser and its parents have ownership or compensation
arrangements such that they would benefit if the Transaction is consummated.
Such companies and persons may thus be deemed to derive benefits from the
approval by Shareholders of such Proposal.
OTHER BUSINESS
The management of the Fund knows of no other matters which may be presented
at the Meeting. However, if any matters not now known properly come before the
Meeting, it is the intention of the persons named in the enclosed form of
proxy to vote all shares that they are entitled to vote on any such matter,
utilizing such proxy in accordance with their best judgment on such matters.
By Order of the Board of Trustees
Andrew J. Donohue, Secretary
6
<PAGE>
EXHIBIT A
Description of the Transaction. On October 31, 1999, PIMCO Advisors, its
two general partners, PIMCO Advisors Holdings L.P. ("PAH") and Partners GP,
certain of their affiliates, Allianz of America and certain other parties
named therein entered into an Implementation and Merger Agreement (the "Merger
Agreement") pursuant to which Allianz of America will acquire majority
ownership of PIMCO Advisors.
The Merger Agreement provides for the acquisition of PAH by Allianz of
America through a merger of a subsidiary of Allianz of America with and into
PAH . In the merger, each of the outstanding limited partnership and general
partner units in PAH will be converted into the right to receive cash in an
amount per unit equal to $38.75, subject to downward adjustment if the
aggregate annualized investment advisory and subadvisory fees for all accounts
managed by PIMCO Advisors and its subsidiaries, expressed as a "revenue run
rate," declines (excluding market-based changes) below a specified level (the
"Unit Transaction Price"). In no event will the Unit Transaction Price be
reduced below $31.00 per unit. As a result of the merger, PAH will become a
wholly-owned subsidiary of Allianz of America.
Following the merger, subsidiaries of Allianz of America will, in a series
of transactions, acquire for cash additional partnership interests in PIMCO
Advisors (the "PA Units"), bringing its ownership interest in PIMCO Advisors
to approximately 70%, including the approximately 44% interest held through
PAH. As part of these transactions, a subsidiary of Allianz of America will
acquire Partners GP through an acquisition of the managing general partner
interest in Partners GP from PPLLC (the managing general partner of Partners
GP) for approximately $5.5 million and of the member interests in Partners GP
that are indirectly owned by Pacific Life Insurance Company ("Pacific Life").
Pacific Life, which through subsidiaries owns approximately a 30% interest in
PIMCO Advisors, will maintain an indirect interest in PIMCO Advisors following
the closing. In connection with the closing, Allianz of America will enter
into a put/call arrangement for the eventual disposition of Pacific Life's
indirect interest in PIMCO Advisors.
The put option held by Pacific Life will allow it to require Allianz of
America, on the last business day of each calendar quarter following the
closing, to purchase at a formula-based price all of the PIMCO Advisors' units
owned directly or indirectly by Pacific Life. The call option held by Allianz
of America will allow it, beginning January 31, 2003 or upon a change of
control of Pacific Life, to require Pacific Life to sell or cause to be sold
to Allianz of America, at the same formula-based price, all of the PIMCO
Advisors' units owned directly or indirectly by Pacific Life.
As a result of the Transaction, as contemplated by the Merger Agreement,
Allianz of America will control PIMCO Advisors, having acquired approximately
70% of the outstanding partnership interests in PIMCO Advisors while the
remainder will continue to be held indirectly by Pacific Life. The Transaction
is expected to be completed by the end of the first quarter of 2000, although
there is no assurance that the Transaction will be completed.
Completion of the Transaction is subject to a number of conditions
customary to transactions of this kind, including, among others, (i) the
approval of the public unitholders of PAH, (ii) the receipt of certain
regulatory approvals and (iii) PIMCO Advisors' revenue run-rate for all
accounts managed by PIMCO Advisors and its subsidiaries being at least 75% of
the September 30, 1999 amount. PIMCO Advisors has agreed to use its reasonable
best efforts to obtain, prior to completion of the Transaction, the approval
of the New Subadvisory Agreements by the Shareholders of each Fund. In the
event the New Subadvisory Agreements are not approved by the Funds'
Shareholders and the Transaction is completed, the Board of Trustees of the
Company will consider appropriate action with respect to each Fund.
Certain key employees of Oppenheimer Capital and the Subadviser will
continue to receive payments in respect of previously existing non-competition
arrangements following the acquisition by Allianz of America of the PA Units
on which such arrangements were based.
A-1
<PAGE>
Description of Allianz and Its Affiliates. Allianz AG, the parent of
Allianz of America, is a publicly traded German Aktiengesellschaft and which,
together with its subsidiaries, comprises the world's second largest insurance
group as measured by premium income. Allianz AG is a leading provider of
financial services, particularly in Europe, and is represented in 68 countries
world-wide through subsidiaries, branch and representative offices, and other
affiliated entities. The Allianz group currently has assets under management
of more than $390 billion, and in its last fiscal year wrote approximately $50
billion in gross insurance premiums. After completion of the Transaction,
PIMCO Advisors and the Allianz Group combined will have over $650 billion in
assets under management. Allianz AG's address is: Koniginstrasse 28, D-80802,
Munich, Germany.
Affiliates of Allianz AG currently include Dresdner Bank AG, Deutsche Bank
AG, Munich Re, and HypoVereinsbank. These entities, as well as certain broker-
dealers that might be deemed to be controlled by or affiliated with these
entities, such as Bankers Trust Company, BT Alex. Brown Incorporated, and
Deustche Bank Securities, Inc. and Dresdner Kleinwort Benson North America
LLC, may be considered as "Affiliated Brokers". Once the Transaction is
completed, absent an SEC exemption or other relief, the Funds would generally
be precluded from effecting principal transactions with the Affiliated
Brokers, and its ability to purchase securities from underwriting syndicates
including an Affiliated Broker or to utilize the Affiliated Brokers for agency
transactions would be subject to restrictions. The Subadviser does not believe
that applicable restrictions on transactions with the Affiliated Brokers
described above will materially adversely affect its ability, post-closing, to
provide services to the Funds, the Funds' ability to take advantage of market
opportunities, or the Funds' overall performance.
Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe
harbor for an investment adviser or any affiliated persons to receive any
amount or benefit in connection with a change of control of the investment
adviser to an investment company as long as two conditions are satisfied.
First, an "unfair burden" must not be imposed on investment company clients of
the adviser as a result of the transaction, or any express or implied terms,
conditions or understandings applicable to the transaction. The term "unfair
burden" (as defined in the 1940 Act) includes any arrangement during the two-
year period after the transaction whereby the investment adviser (or
predecessor or successor adviser), or any "interested person" (as defined in
the 1940 Act) (an "Interested Person") of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from such an
investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any other person in connection
with the purchase or sale of securities or other property to, from or on
behalf of such investment company. The Board of Trustees of the Company has
been advised that neither the Subadviser nor Oppenheimer Capital is aware of
any circumstances arising from the Transaction that might result in an unfair
burden being imposed on the Funds. Allianz and each of the other parties to
the Merger Agreement have agreed to use their reasonable best efforts to
assure compliance with Section 15(f) as it applies to the Transaction during
such two-year period.
The second condition of Section 15(f) is that during the three-year period
after the transaction, at least 75% of each such investment company's board of
trustees or directors must not be Interested Persons of the investment adviser
(or predecessor or successor adviser). The composition of the Company's Board
of Trustees currently satisfies this condition. Moreover, Allianz has agreed
with other parties to the Merger Agreement that they will use their reasonable
best efforts to comply with such 75% requirement during such three-year period
through one or more intermediaries.
Post-Transaction Structure and Operations. Upon completion of the
Transaction, PIMCO Advisors and its subsidiaries, including Oppenheimer
Capital and the Subadviser, will be controlled by Allianz of America. Allianz
of America will control PIMCO Advisors through its managing member interest in
PacPartners LLC, which will be the sole general partner of PIMCO Advisors
following the Transaction. While Allianz of America will control PacPartners
LLC, Pacific Life will hold a portion of its continuing interest in PIMCO
Advisors through an interest in PacPartners LLC. Allianz of America, through
subsidiaries, will be the managing member of PacPartners LLC and will have
full authority and control over all actions taken by PacPartners LLC as the
general partner of PIMCO Advisors, provided that Pacific Life's consent is
required for certain extraordinary actions.
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Operationally, Oppenheimer Capital and the Subadviser are expected to
become a unit of Allianz Asset Management ("AAM"), the division of Allianz
that coordinates global Allianz asset management activities. PIMCO Advisors
and its subsidiaries are currently expected to continue to operate in the
United States under their existing names.
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EXHIBIT B
SUBADVISORY AGREEMENT
THIS AGREEMENT is made 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 For Value Funds (the "Company") is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, 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 Company's Declaration of Trust authorizes the Board of
Trustees of the Company to classify or reclassify authorized but unissued
shares of the Company into series of shares representing interests in various
investment portfolios;
WHEREAS, pursuant to such authority, the Company has established the
Opportunity Value Fund (the "Fund");
WHEREAS, the Adviser has entered into an Investment Advisory Agreement as
of November 5, 1997 with the Company (the "Investment Advisory Agreement"),
pursuant to which the Adviser acts as investment adviser with respect to the
Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory Agreement, the
Adviser has retained and wishes to continue 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 Company's Board of Trustees (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
Company or the Fund in any way or otherwise to serve as or be deemed an agent
of the Company or the Fund.
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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;
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b. it will not make loans to any person to purchase or carry units of
beneficial interest in 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 November 22, 1995, and subject to the Adviser's fiduciary
obligations to the Fund and its shareholders, the Adviser will not recommend
to the Board that the
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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 Company, 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 Company's Declaration of Trust or other
governing document, as amended from time to time;
D. the provisions of the By-laws of the Company, 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 Company, 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
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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 November 22, 1995 (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.
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X. Non-Exclusivity.
The services of the Subadviser with respect to the Company and 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 Company 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 Company or 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, until December 31, 2000.
XII. Renewal.
Following the expiration of its initial term, the Agreement shall continue
in full force and effect from year to year until November 22, 2005, 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 Trustees who
are not parties to this Agreement or interested persons of a party to this
Agreement (other than as a Trustee 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 Company. 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 November 22, 1995, 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 Company 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
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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 1995) and earns a Morningstar three-year rating of
less than three (3) stars at the time of such termination; or
2. Any of the Subadviser, OpCap, their respective partners, subsidiaries,
affiliates, directors, officers, employees or agents engages in an action
or omits to take an action that would cause the Subadviser or OpCap to be
disqualified in any manner under Section 9(a) of the 1940 Act, if the SEC
were not to grant an exemptive order under Section 9(c) thereof or that
would constitute grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment adviser with the SEC;
3. Any of OpCap, the Subadviser, their respective partners, subsidiaries,
affiliates, directors, officers, employees or agents causes a material
violation of the Agreement Not to Compete which is not cured in accordance
with the provisions of that agreement; or
4. The Subadviser breaches the representations contained in Paragraph
III.A.4.i. of this Agreement or any other material provision of this
Agreement, and any such breach is not cured within a reasonable period of
time after notice thereof from the Adviser to the Subadviser. However,
consistent with its fiduciary obligations, for a period of seven months the
Adviser will not terminate this Agreement solely because the Subadviser has
failed to designate an acceptable permanent replacement to a Portfolio
Manager whose services are no longer available to the Subadviser due to
circumstances beyond the reasonable control of the Subadviser, provided
that the Subadviser uses its reasonable best efforts to promptly obtain the
services of a Portfolio Manager acceptable to the Adviser and further
provided that the Adviser has not unreasonably withheld approval of such
replacement Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser and Subadviser
will cooperate with each other to ensure that portfolio or other transactions
in progress at the date of termination of this Agreement shall be completed by
the Adviser in accordance with the terms of such transactions, and to this end
the Subadviser 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
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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 17, 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: Francis C. Poli
Secretary
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.
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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 the ________ day of
______________________ , 2000.
OPPENHEIMERFUNDS, INC.
By: _________________________________
OPCAP ADVISORS
By: _________________________________
B-9
<PAGE>
SCHEDULE XIII.D.1
The universe of funds to which Class A shares of funds 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 categories for the funds are:
<TABLE>
<CAPTION>
Fund Lipper Category
- ---- ---------------
<S> <C>
Oppenheimer Quest Value Fund, Inc...............................
Oppenheimer Quest Global Value Fund, Inc........................
Oppenheimer Quest Opportunity Value Fund........................
Oppenheimer Quest Small Cap Value Fund..........................
Oppenheimer Quest Balanced Value Fund...........................
Oppenheimer Quest Capital Value Fund, Inc.......................
</TABLE>
B-10
<PAGE>
EXHIBIT C
INFORMATION ON OTHER FUNDS SUBADVISED
BY OPCAP ADVISORS ("OPCAP")
<TABLE>
<CAPTION>
Management Fee Rate
Approximate Net Assets as of as of Most Recent
Name of Fund Most Recent Fiscal Year End Fiscal Year End/1/
------------ ------------------------------ ---------------------
<S> <C> <C>
Oppenheimer Quest Value
Fund, Inc.............. $1,574,090,508 (as of 10/31/99) .90% (as of 10/31/99)
Oppenheimer Quest Global
Value Fund, Inc........ $ 547,623,880 (as of 11/30/99) .74% (as of 11/30/99)
Oppenheimer Quest
Capital Value Fund,
Inc.................... $ 245,260,344 (as of 10/31/99) 1.00% (as of 10/31/99)
</TABLE>
- --------
(/1/) With respect to each of Oppenheimer Quest Value Fund, Inc. and
Oppenheimer Quest Global Value Fund, Inc., the subadvisory fee paid by
the Manager to OpCap is equal to 40% of the investment advisory fee
collected by the Manager from the Fund based on the total net assets of
the Fund as of November 22, 1995 (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.
With respect to Oppenheimer Quest Capital Value Fund, Inc., the fee paid
to OpCap is equal to 40% of the investment advisory fee collected by the
Manager from the Fund based on the total net assets of the Fund as of
February 28, 1997 (and the 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.
C-1
<PAGE>
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
SPECIAL MEETING OF SHAREHOLDERS - MARCH 10, 2000
PROXY
The undersigned hereby appoints Andrew J. Donohue, Robert Bishop, Scott
Farrar and Brian W. Wixted, or any of them, proxies, each with the power of
substitution, to vote on behalf of the undersigned at the Special Meeting of
Shareholders of the Oppenheimer Quest Opportunity Value Fund, on March 10, 2000
at 10:00 a.m., Denver time, 6803 South Tucson Way, Englewood, Colorado, 80112,
and at any adjournment thereof, on the proposal set forth in the Notice of
Special Meeting of Shareholders dated February ___, 2000:
This Proxy is solicited by the Trustees. The Trustees recommend a vote
FOR the proposal listed on the reverse side hereof. The shares represented
- ---
hereby will be voted as indicated or FOR if no choice is indicated.
---
(Continued, and to be dated and signed on reverse side.)
<PAGE>
1. TO APPROVE OR DISAPPROVE A NEW SUBADVISORY AGREEMENT BETWEEN
OPPENHEIMERFUNDS, INC. AND OPCAP ADVISORS:
[_] FOR [_] AGAINST [_] ABSTAIN
and in their discretion in the transaction of any other business which may
properly come before the meeting.
Please sign personally. If the share is
registered in more than one name, each joint
owner or each fiduciary should sign personally.
Only authorized officers should sign for
corporations.
Dated:________________________________________
______________________________________________
(Signature)
_______________________________________________
(Signature)
IMPORTANT: Please Mark, Sign, Date and Return the Proxy Card in the Enclosed
Envelope.
