<PAGE>
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:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[_] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
OCC CASH RESERVES, INC.
(Name of Registrant as Specified in Its Charter)
Elliot M. Weiss, Secretary
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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>
OCC CASH RESERVES, INC.
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
MARCH 3, 2000
TO THE SHAREHOLDERS:
A special meeting of the shareholders of OCC Cash Reserves, Inc. (the
"Fund") will be held at the principal executive offices of the Fund, 1345 Avenue
of the Americas, New York, New York 10105-4800, on March 3, 2000 at 10:00 a.m.,
New York time for the following purposes:
1. To approve a new investment advisory agreement between OpCap Advisors
and the Fund;
2. To approve the continuance of the Distribution Assistance and
Administrative Services Plan upon consummation of the Allianz
acquisition, as described in the Proxy Statement;
3. To elect six directors to hold office until their successors are
elected and qualified;
4. To ratify the selection of PricewaterhouseCoopers LLP as independent
auditor of the Fund for the fiscal year ending November 30, 2000;
You will be entitled to notice of, and to vote at, the meeting and any
adjournments thereof, if you owned shares of the Fund at the close of business
on December 20, 1999. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN
PERSON. IF YOU DO NOT EXPECT TO ATTEND THE MEETING PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE
PR0MPTLY.
If you have any questions regarding the enclosed proxy materials, please
contact our proxy solicitors, D.F. King & Co., Inc., at 1-800-488-8035.
By Order of the Board of Directors
/s/ Elliot M. Weiss
-------------------------------------------------
Secretary
February 3, 2000
1345 Avenue of the Americas
New York, New York 10105-4800
<PAGE>
YOUR VOTE IS IMPORTANT
PLEASE RETURN YOUR PROXY CARD PROMPTLY
Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy card for each of the
Portfolios of the Fund in which they own shares and to date, sign and return it
in the envelope provided, which needs no postage if mailed in the United States.
We ask for your cooperation in mailing your voting instruction form no matter
how large or small your holding may be.
PLEASE RESPOND -- YOUR VOTE IS IMPORTANT
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OCC CASH RESERVES, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105-4800
- -----------------
PROXY STATEMENT
- -----------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 3, 2000
- -----------------
GENERAL
This Proxy Statement is furnished to the shareholders of OCC Cash Reserves,
Inc. (the "Fund"), in connection with the solicitation by management of proxies
to be used at a special meeting (the "Meeting") of shareholders to be held on
March 3, 2000, or any adjournment or adjournments thereof. The Notice of
Meeting, Proxy Statement and Proxy Card will first be mailed on or about
February 7, 2000.
The Fund consists of five portfolios (the "Portfolios"), each of which is a
separate class of capital stock; these are the Primary Portfolio, the Government
Portfolio, the General Municipal Portfolio, the California Municipal Portfolio
and the New York Municipal Portfolio. Shares of each Portfolio have been
registered with the Securities and Exchange Commission ("SEC"). As of December
20, 1999, the record date, there were outstanding 2,550,229,420 shares of the
Primary Portfolio, 75,045,309 shares of the Government Portfolio, 129,826,547
shares of the General Municipal Portfolio, 66,325,570 shares of the California
Municipal Portfolio, and 60,828,283 shares of the New York Municipal Portfolio.
The purpose of the Meeting is to permit shareholders of each Portfolio of
the Fund to consider a new advisory agreement to take effect upon consummation
of the transaction (the "Acquisition") contemplated by an Implementation and
Merger Agreement, dated as of October 31, 1999 (the "Merger Agreement"), by and
among PIMCO Advisors L.P. ("PIMCO Advisors"), its two general partners, PIMCO
Advisors Holdings L.P. ("PAH") and
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PIMCO Partners G.P. ("Partners GP"), certain of their affiliates, Allianz of
America, Inc. ("Allianz of America") and certain other parties named therein.
Pursuant to the Merger Agreement, Allianz of America will acquire a controlling
interest in PIMCO Advisors, whose wholly owned indirect subsidiary, OpCap
Advisors, serves as investment adviser to the Fund. For a discussion of the
Acquisition, see "The Acquisition" under Proposal 1 below. As required by the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
consummation of the Acquisition will cause the automatic termination of the
Fund's advisory agreement with OpCap Advisors. Therefore, in order to ensure
continuity in the management of the Fund, shareholders of each Portfolio of the
Fund are being asked to approve a new advisory agreement.
The second purpose of the Meeting is to permit the shareholders of each
Portfolio of the Fund to consider the reapproval of the Distribution Assistance
and Administrative Services Plan for each Portfolio of the Fund to take effect
upon consummation of the Acquisition.
The third purpose of the Meeting is to elect six Directors to hold office
until their successors are elected and qualified.
The fourth purpose of the Meeting is to ratify the selection of
PricewaterhouseCoopers LLP as independent auditor for the Fund for the fiscal
year ending November 30, 2000.
Shares of the Portfolios will be voted separately, with each Portfolio
voting as a single class, on the first two proposals and will be voted together
on the third and fourth proposal. Each full share of the Portfolios outstanding
is entitled to one vote and each fractional share of the Portfolios outstanding
is entitled to a proportionate fractional share of one vote for such purposes.
In order that you may be represented at the Meeting or any adjournment or
adjournments thereof, you are requested to indicate your voting instructions on
the enclosed proxy card, to date and sign the proxy card, and to
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mail the proxy card promptly in the enclosed postage paid envelope, allowing
sufficient time for the proxy card to be received before the Meeting.
If the enclosed form of proxy is properly executed and returned, the shares
represented thereby will be voted at the meeting as indicated thereon with
respect to the Proposal. In the absence of choices, the shares represented by
the proxy will be voted in favor of the Proposal.
The proxy confers discretionary authority upon the persons named therein to
vote on other business, not currently contemplated, which may come before the
Meeting. In the event that a quorum (the presence in person or by proxy of the
holders of a majority of the Fund's shares entitled to vote) cannot be obtained,
an adjournment or adjournments of the Meeting may be sought by the Board of
Directors. In the event that a quorum is present at the Meeting but sufficient
votes to approve the Proposal are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment would require the affirmative vote of the
holders of a majority of the shares of the Fund present at the Meeting or any
adjournment thereof, in person or by proxy. The persons named as proxies will
vote those proxies which they are entitled to vote FOR any matter in favor of
such an adjournment and will vote those proxies required to be voted AGAINST any
matter that comes before the Meeting against any such adjournment.
The proxy may be revoked at any time prior to the voting thereof by: (i)
written instructions addressed to the Secretary of the Fund at 1345 Avenue of
the Americas, New York, New York 10105-4800; (ii) attendance at the Meeting and
voting in person or (iii) properly executing and returning a new proxy card (if
received in time to be voted).
All expenses of the preparation and distribution of these proxy materials
will be borne equally by PIMCO Advisors and by Allianz of America. In addition
to the solicitation of voting instructions by the use of the mails, voting
instructions may be solicited by officers and employees of OpCap Advisors or its
respective affiliates, personally or by telephone or telegraph. Brokerage
houses, banks and other fiduciaries may be requested to forward
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soliciting material to their principals and to obtain authorization for the
execution of voting instruction forms. For those services, they will be
reimbursed by the PIMCO Advisors and Allianz of America for their out-of-pocket
expenses. In addition, the PIMCO Advisors and Allianz of America have retained
D.F. King & Co., Inc. to assist in the solicitation of proxies primarily by
contacting shareholders by telephone and telegram for a fee not to exceed $3,000
plus reasonable out-of-pocket expenses. Representatives of the Fund or D.F. King
& Co., Inc. may call shareholders 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 voting instruction form.
To the knowledge of the Fund, the only shareholder owning of record or
beneficially more than 5% of the outstanding shares of the Portfolios of the
Fund as of December 20, 1999 was CIBC World Markets ("CIBC"), which held in an
omnibus account for clients 2,505,120,173 shares (98.23%) of the Primary
Portfolio, 68,455,121 shares (91.22%) of the Government Portfolio, 125,095,960
shares (96.36%) of the General Municipal Portfolio, 66,174,319 shares (99.77%)
of the California Municipal Portfolio and 53,615,214 shares (88.14%) of the New
York Municipal Portfolio.
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PROPOSAL NO. 1
APPROVAL OF A NEW ADVISORY AGREEMENT BETWEEN OPCAP ADVISORS AND THE FUND
INTRODUCTION
OpCap Advisors serves as investment adviser to the Fund pursuant to an
Advisory Agreement dated November 5, 1997 (the "Existing Agreement"). The
Existing Agreement was approved initially by the Board of Directors at a special
meeting held on February 28, 1997 and approved by the Fund's shareholders on
October 14, 1997.
The Existing Agreement provides that it shall automatically terminate in
the event of its assignment as defined in the Investment Company Act.
Consummation of the Acquisition will constitute an assignment of the Existing
Agreement. Therefore, in anticipation of the Acquisition, the Board of
Directors of the Fund is proposing that its shareholders approve a new advisory
agreement between the Fund and OpCap Advisors (the "New Agreement"). The New
Agreement is substantially identical, except for the date, to the Existing
Agreement.
INFORMATION ABOUT OPCAP ADVISORS
OpCap Advisors is a majority-owned subsidiary of Oppenheimer Capital, a
registered investment adviser with approximately $56 billion in assets under
management on September 30, 1999. Oppenheimer Capital is an indirect wholly-
owned subsidiary of PIMCO Advisors, a registered investment adviser. The
general partners of PIMCO Advisors are PIMCO Partners G.P. and PIMCO Advisors
Holdings L.P. PIMCO Partners G.P. is a general partnership between PIMCO
Holding LLC, a Delaware limited liability company and an indirect wholly-owned
subsidiary of Pacific Life Insurance Company, and PIMCO Partners LLC, a
California limited liability company controlled by the current Managing
Directors and two former Managing Directors of Pacific Investment Management.
PIMCO Partners, G.P. is the sole general partner of PIMCO Advisors Holdings L.P.
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The principal business address of OpCap Advisors, Oppenheimer Capital, OCC
Distributors, the Fund's distributor, and their affiliates is 1345 Avenue of the
Americas, New York, New York 10105-4800. The principal business address of
OpCap Advisors would not change following the Acquisition. Joseph La Motta is
Chairman Emeritus of Oppenheimer Capital. Kenneth Poovey is Chief Executive
Officer of Oppenheimer Capital and OpCap Advisors.
The officers of the Fund who are officers or employees of OpCap Advisors or
its affiliate, Oppenheimer Capital, are as follows:
<TABLE>
<CAPTION>
Name Position with Fund
- ---- ------------------
<S> <C>
Joseph M. La Motta President and Chairman of the Board of Directors
William McDaniel Vice President
John C. Giusio, Jr. Vice President
Benjamin Gutstein Vice President and Portfolio Manager
Matthew Greenwald Vice President and Portfolio Manager
Elliot M. Weiss Secretary
Brian S. Shlissel Treasurer
Maria Camacho Assistant Secretary
</TABLE>
INFORMATION CONCERNING ALLIANZ AG AND ITS AFFILIATES. Allianz of America is a
holding company that owns several insurance and financial service companies and
is a subsidiary of Allianz AG, a publicly traded German Aktiengesellschaft and
which, together with its subsidiaries, comprise the world's second largest
insurance group as
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measured by premium income. The Allianz group 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 Acquisition, 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.
THE ACQUISITION
On October 31, 1999, PIMCO Advisors, its two general partners, PAH and
Partners GP, certain of their affiliates, Allianz of America and certain other
parties named therein entered into the Merger Agreement pursuant to which
Allianz of America will acquire majority ownership of PIMCO Advisors, whose
wholly-owned subsidiary, OpCap Advisors, serves as investment adviser to the
Fund.
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 subadvisery fees for all accounts managed by
PIMCO advisers 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 an indirect 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
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general partner interest in Partners GP from PIMCO Partners LLC (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 possible 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 Acquisition, Allianz of America will control PIMCO
Advisors, having acquired approximately 70% of the outstanding partnership
interest in PIMCO Advisors, for a total consideration of approximately $3.3
billion, while the remainder will continue to be indirectly owned by Pacific
Life. Through PIMCO Advisors, Allianz of America will also control OpCap
Advisors. The Acquisition is expected to be completed by the end of the first
quarter of 2000, although there is no assurance that the Acquisition will be
completed.
OpCap Advisors serves as investment adviser to the Fund and will undergo a
change of control as a result of the consummation of the Acquisition, resulting
in the automatic termination of its current advisory agreement with the Fund
(the "Existing Agreement"). The Board of Directors of the Fund have approved
the new investment management agreement and have recommended that Shareholders
approve it as well. Therefore, in connection with the Acquisition and as
required by the Investment Company Act, shareholders of each Portfolio of the
Fund are being asked in Proposal 1 to approve a new investment management
agreement between the Fund and OpCap
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Advisors which is substantially identical to the Existing Management Agreement
(the "New Agreement"). If the Acquisition is not completed for any reason, the
Existing Agreement will remain in effect.
Completion of the Acquisition is subject to a number of conditions
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 Acquisition,
the approval of the New Agreement by the shareholders of each Portfolio of the
Fund. In the event the New Agreement is not approved by the Fund's shareholders
and the Acquisition is completed, the Board of Directors of the Fund will
consider appropriate action.
Pursuant to the Merger Agreement, PIMCO Advisors and Pacific Investment
Management Company, a subsidiary partnership of PIMCO Advisors, will enter into
employment, retention and incentive arrangements with key employees of PIMCO
Advisors and Pacific Investment Management Company, respectively. These
benefits include new employment agreements, retention and incentive awards
vesting over a term of years and restricted stock grants. In addition, certain
key employees of Oppenheimer Capital and OpCap Advisors will receive payments in
respect of previously existing non-competition arrangements in connection with
the acquisition by Allianz of America of the PA Units on which such arrangements
were based.
EFFECTS OF THE ACQUISITION. Upon completion of the Acquisition, OpCap Advisors,
its parent Oppenheimer Capital, and Oppenheimer Capital's parent, PIMCO
Advisors, will be controlled by Allianz of America. Allianz of America will
control PIMCO Advisors through its managing member interest in Pacific-Allianz
Partners LLC ("PacPartners LLC"), which will be the sole general partner of
PIMCO Advisors following the Acquisition. 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, PIMCO Advisors is expected to become a unit of Allianz Asset
Management ("AAM"), the division of Allianz AG that coordinates global Allianz
AG asset management activities. The equity operations of PIMCO Advisors, OpCap
Advisors and Oppenheimer Capital will remain separately branded and managed.
PIMCO Advisors, Oppenheimer Capital and OpCap Advisors are currently expected to
continue to operate in the United States under their existing names.
Both William S. Thompson Jr., the current Chief Executive Officer of PIMCO
Advisors, and William H. Gross, the current Chief Investment Officer of Pacific
Investment Management Company, will have roles on the Executive Committee of
AAM, with Mr. Thompson serving as the Executive Committee's Deputy Chairman.
Messrs. Thompson and Gross will enter into employment contracts with a term of
seven years following the Acquisition. Other key employees of the Advisors have
also contractually agreed to remain with their respective employers following
the Acquisition.
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, Deutsche
Bank Securities, Inc. and Dresdner Kleinwort Benson North America LLC, may be
considered as "Affiliated Brokers". Once the Acquisition is completed, absent
an SEC exemption or other relief, the Fund 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. OpCap Advisors does not believe that the restrictions on
transactions with the Affiliated Brokers described above will materially
adversely affect its ability, post-closing, to provide services to the Fund, the
Fund's ability to take advantage of market opportunities, or the Fund's overall
performance. Other
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investment companies for which OpCap Advisors does not serve as investment
adviser would not, in general, be subject to these same restrictions post-
closing.
SECTION 15(F) OF THE INVESTMENT COMPANY ACT
Section 15(f) of the Investment Company Act is available to PIMCO Advisors
in connection with the Allianz of America's acquisition of a controlling
interest in PIMCO Advisors and its subsidiary OpCap Advisors. Section 15(f)
provides in substance that when a sale of a controlling interest in an
investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any amount or benefit in connection therewith as long as two
conditions are satisfied. First, an "unfair burden" must not be imposed on the
investment company as a result of the transaction relating to the sale of such
interest, or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" (as defined in the Investment
Company 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 Investment Company Act)
of any such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its security holders
(other than fees for bona fide investment advisory or other services) or from
any person in connection with the purchase or sale of securities or other
property to, from or on behalf of the investment company. The Fund's Board of
Directors is aware of no circumstances arising from the Acquisition that might
result in an unfair burden being imposed on the Fund. Allianz of America 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 Acquisition during such two-year period.
The second condition of Section 15(f) is that during the three-year period
following the consummation of the Acquisition, at least 75% of the investment
company's board of directors must not be "interested persons" of the investment
adviser or predecessor adviser. The composition of the Board of Directors is
presently in compliance with the 75% requirement and Allianz of America has
agreed with the Advisors that it will use its reasonable best efforts to comply
with such 75% requirement during such three-year period through one or more
intermediaries.
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EXISTING AND NEW AGREEMENT
The Existing Agreement and the New Agreement are substantially identical.
The following description of the New Agreement is qualified in its entirety by
reference to the form of the New Agreement attached hereto as Exhibit A.
SERVICES TO BE PERFORMED
Under both the Existing and New Agreements, OpCap Advisors is required to:
(i) regularly provide investment advice and recommendations to each Portfolio of
the Fund with respect to its investments, investment policies and the purchase
and sale of securities; (ii) supervise continuously and determine the securities
to be purchased or sold by the Fund and the portion, if any, of the assets of
each Portfolio of the Fund to be held uninvested; and (iii) arrange for the
purchase of securities and other investments by each Portfolio of the Fund and
the sale of securities and other investments held by each Portfolio of the Fund.
The Existing and New Agreements also require OpCap Advisors to provide
administrative services for the Fund, including (i) coordination of the
functions of accountants, counsel and other parties performing services for the
Fund and (ii) preparation and filing reports required by federal securities
laws, shareholder reports and proxy materials.
FEES AND EXPENSES
The fees payable to OpCap Advisors under the New Agreement will be at the
same rate as the fees payable under the Existing Agreement. Under the Existing
Agreement, each Portfolio of the Fund pays OpCap Advisors at the annual rate of
.50% of the first $100 million of average net assets, .45% on the next $200
million of average net assets and .40% of assets in excess of $300 million.
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Under the Existing and New Agreement, expenses not expressly assumed by
OpCap Advisors or by OCC Distributors, the Fund's principal underwriter, are
paid by the Fund. The Agreement lists examples of expenses paid by the Fund, of
which the major categories relate to interest, taxes, fees to non-interested
trustees, legal and audit expenses, custodian and transfer agent expenses, stock
issuance costs, certain printing and registration costs, and non-recurring
expenses including litigation.
Under the Existing and New Agreement, OpCap Advisors will waive its
management fee and reimburse expenses so that the total operating expenses (net
of any expense offsets and excluding the amount of any interest, taxes,
brokerage commissions and extraordinary expenses) of each Portfolio of the Fund
do not exceed 1.00% of its respective average daily net assets.
For the fiscal year ended November 30, 1999, the total advisory fee accrued
or paid by the Primary Portfolio was $9,867,390 and the total advisory fees
accrued or paid by the Government, General Municipal, California Municipal and
New York Municipal Portfolios were $478,975, $653,803, $335,555 and $344,235,
respectively.
The Fund may pay certain broker-dealers, including CIBC or other financial
intermediaries whose customers are Fund shareholders for performing shareholder
servicing functions, such as opening new shareholder accounts, processing
purchase and redemption transactions and responding to inquiries regarding the
Portfolios' current yields and the status of shareholder accounts. The Fund may
pay for the electronic communications equipment maintained at the broker-
dealers' offices that permits access to the Fund's computer files and, in
addition, reimburses the broker-dealers at cost for personnel expenses involved
in providing these services. All such payments and reimbursements must be
approved in advance by the Fund's Board of Directors. Currently, any such
payments to CIBC are capped at 2 basis points of average daily net assets of
CIBC's customers. The following amounts were paid to CIBC as reimbursement for
shareholder services: for the fiscal year ended November 30, 1999 -- $477,012,
$18,299, $27,648, $12,841 and $13,462, respectively, by the Primary, Government,
General Municipal, California Municipal and New York Municipal Portfolios.
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The Fund also may pay certain broker-dealers including CIBC, for performing
certain administrative services for accounts in the Fund including providing
beneficial owners with statements showing their positions in the Fund, posting
dividend payments to beneficial owners' accounts and providing shareholder
information to enable the Fund to mail prospectuses, annual and semi-annual
reports to beneficial owners. Such payments are limited to 5 basis points of
average daily net assets of each broker-dealer's customers. CIBC also is paid
an annual fee of $9.25 per shareholder account for performing recordkeeping.
LIMITATION OF LIABILITY. The New Agreement provides that in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties or obligations, OpCap Advisors shall not be liable to the Fund for any
act or omission in the course of or connected with rendering services under the
New 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 Agreement.
TERMINATION. The termination provisions of the New Agreement and the Existing
Agreement are identical. The New Agreement may be terminated by the Fund at any
time without penalty upon 60 days' written notice to OpCap Advisors and may be
terminated by OpCap Advisors at any time without penalty upon 90 days' written
notice to the Fund. 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 Agreement will terminate in the event of an "assignment," as
required by the Investment Company Act.
EVALUATION BY THE BOARD OF DIRECTORS. The Board of Directors has determined
that continuity and efficiency of portfolio management services after the
Acquisition can best be assured by approving the New Agreement. The Board
believes that the New Agreement will enable the Fund to continue to obtain
advisory services of high quality at costs which it deems appropriate and
reasonable and that approval of the New Agreement is in the best interests of
the Fund and its shareholders.
15
<PAGE>
In evaluating the New Agreement, the Board of Directors requested and
reviewed, with the assistance of independent legal counsel, materials furnished
by OpCap Advisors, PIMCO Advisors and Allianz of America. These materials
included financial statements as well as other written information regarding
OpCap Advisors, PIMCO Advisors and Allianz of America and their personnel,
operations, and financial condition. The Board also reviewed information about
OpCap Advisors, 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 Agreement and compared it to the
Existing 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 OpCap Advisors would obtain from its relationship
with the Fund and the economies of scale in costs and expenses to OpCap Advisors
associated with its providing such services. The Board also met with a
representative of Allianz of America to discuss its current intentions with
respect to PIMCO Advisors and OpCap Advisors.
Allianz has advised Oppenheimer Capital, OpCap Advisors, and the Board that
it does not presently intend for the Acquisition to affect the future management
of Oppenheimer Capital and its subsidiary OpCap Advisors. In addition, Allianz
has advised Oppenheimer Capital, OpCap Advisors, and the Board that it presently
anticipates that the senior portfolio management teams of Oppenheimer Capital
and OpCap Advisors will continue in their present capacities 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. Allianz has represented to Oppenheimer Capital, OpCap Advisors, and
the Board that the eligibility of OpCap Advisors, under the Investment Advisers
Act of 1940, to serve as an adviser will not be affected by the Acquisition and
that the Acquisition will not affect the ability of OpCap Advisors to fulfill
its obligations under the Advisory Agreements.
The Board considered, with its counsel, (i) the quality of the operations
and service which have been provided to the Fund by OpCap Advisors and which are
expected to continue to be provided after the Acquisition,
16
<PAGE>
with no change in fee rates, (ii) the overall experience and reputation of OpCap
Advisors in providing such services to investment companies, and the likelihood
of its continued financial stability, (iii) the capitalization of OpCap
Advisors, PIMCO Advisors and Allianz of America, (iv) the aspects of the
Acquisition that would affect the ability of OpCap Advisors to retain and
attract qualified personnel and (v) the benefits of continuity in the services
to be provided under the New Agreement. Based upon its review, the Board of
Directors concluded that the terms of the New 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 investment
manager to the Fund after the Acquisition 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 Agreement and its submission
to shareholders for their approval. The New Agreement will become effective on
the date that the Acquisition is consummated or the date shareholders approve
the New Agreement, whichever occurs later. The New 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 Acquisition is not consummated, the Existing
Agreement will remain in effect according to its terms.
VOTE REQUIRED. As provided under the Investment Company Act, approval of the
New Agreement will require the vote of a majority of the outstanding voting
securities of each Portfolio. 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, PIMCO ADVISORS, ALLIANZ OF AMERICA OR THEIR AFFILIATES,
17
<PAGE>
UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF EACH PORTFOLIO OF THE FUND VOTE
TO APPROVE THE NEW AGREEMENT BETWEEN THE FUND AND OPCAP ADVISORS.
PROPOSAL NO. 2
APPROVAL OF NEW DISTRIBUTION ASSISTANCE
AND ADMINISTRATIVE SERVICES PLAN
INTRODUCTION
OpCap Advisors promotes the distribution of shares of each Portfolio of the
Fund and arranges for the provision of administrative services for Fund
shareholders pursuant to a Distribution Assistance and Administrative Services
Plan dated November 5, 1997 (the "Existing Plan") adopted pursuant to Rule 12G-1
under the Investment Company Act. The Existing Plan was approved initially by
the Board of Directors at a special meeting held on February 28, 1997 and
renewed most recently on October 4, 1999 and was approved by the Fund's
shareholders on October 14, 1997.
The Existing Plan provides that to the extent it constitutes an agreement
between the Fund and OpCap Advisors under a plan of distribution it shall
automatically terminate in the event of its assignment as defined in the
Investment Company Act. Consummation of the Acquisition will constitute an
assignment of the Existing Plan in this regard. Therefore, in anticipation of
the Acquisition, the Board of Directors of the Fund is proposing that its
shareholders approve a new Distribution Assistance and Administrative Services
Plan by and among the Fund and OpCap Advisors (the "New Plan"). The New Plan is
substantially identical, except for the date, to the Existing Plan.
EXISTING AND NEW PLAN
The Existing Plan and the New Plan are substantially similar. The
following description of the New Plan is qualified in its entirety by reference
to the form of the New Plan attached hereto as Exhibit B.
SERVICES TO BE PERFORMED
Under both the Existing and New Plans, OpCap Advisors is authorized to:
(i) promote the distribution of the shares of each Portfolio of the Fund through
broker-dealers, financial intermediaries, and others and (ii) arrange
18
<PAGE>
with financial intermediaries, including depository institutions, for the
provision of administrative services to Fund shareholders. OpCap Advisors is
also responsible for monitoring the performance of those distributors and
service providers, including recommending their termination and replacement
where appropriate.
FEES PAYABLE
The fees payable to OpCap Advisors under the New Plan will be at the same
rate as the fees payable under the Existing Plan. Under the Existing Plan, the
Fund pays OpCap Advisors at the annual rate of .25% of the average net assets of
each Portfolio of the Fund.
For the fiscal year ended November 30, 1999, the total fees accrued or paid
by and percentage of average net assets of the Primary, Government, General
Municipal, California Municipal and New York Municipal Portfolios were
$6,042,119, (0.25%), $239,980, (0.25%), $335,446, (0.25%), 167,778, (0.25%) and
$172,391, (0.25%), respectively. Although the Existing Plan compensates OpCap
Advisors for expenses incurred in performing its obligations under the Plan,
OpCap Advisors has spent more on distribution and administrative expenses for
the Fund than it has received in fees during each fiscal year the Fund has been
in operation.
LIMITATION OF LIABILITY. The New Plan provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations, OpCap Advisors shall not be liable to the Fund or any Fund
shareholders for any act or omission in the course of or connected with
rendering services under the New Plan. This provision is identical to the
provision on limitation of liability in the Existing Plan.
TERMINATION. The termination provisions of the New Plan and the Existing Plan
are identical. The New Plan may be terminated by the Fund at any time without
penalty upon 30 days' written notice to OpCap Advisors. Termination by the Fund
must be approved by the vote of a majority of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the New Plan. With respect to a Portfolio, the New
Plan may be terminated by the vote of a majority of the outstanding shares of
that Portfolio.
19
<PAGE>
To the extent that the New Plan constitutes a plan of distribution adopted
pursuant to Rule 12b-1 under the Investment Company Act with respect to a
Portfolio, it will remain in effect to permit the continued deduction and
payment of fees for distribution and administrative services on behalf of that
Portfolio in the event of an assignment, as defined under the Investment Company
Act. To the extent the New Plan constitutes an agreement between the Fund and
OpCap Advisors, the New Plan will terminate automatically in the event of such
assignment and the Fund may continue to make payments pursuant to the New Plan
with respect to a Portfolio only (i) upon the vote of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the New Plan, at a meeting, cast in person, and
(ii) if the obligations of OpCap Advisors are to be performed by any other
organization, upon such organization adopting and assuming in writing all
provisions of the New Plan as a party thereto.
EVALUATION BY THE BOARD OF DIRECTORS. The Board of Directors has determined
that continuity and efficiency of distribution and administrative services after
the Acquisition can best be assured by approving the New Plan. The Board
believes that the New Plan will enable the Fund to continue to obtain
distribution and administrative services of high quality at costs which it deems
appropriate and reasonable. Implementation of the New Plan will continue to
assist in attracting investment professionals for the sale of shares of each
Portfolio of the Fund, thereby increasing Portfolio assets which in turn will
lower fixed costs per Portfolio share and increase investment opportunities.
For these reasons, the Board of Directors believes that approval of the New Plan
is in the best interests of the Fund and its shareholders.
In evaluating the New Plan, the Board of Directors requested and reviewed,
with the assistance of independent legal counsel, materials furnished by OpCap
Advisors. These materials included comparative sales and cost information
concerning other mutual funds with similar distribution and administrative
service plans, including information prepared by Lipper Analytical Services,
Inc. The Board of Directors also reviewed and discussed the terms and
provisions of the New Plan and compared it to the Existing Plan as well as the
arrangements of other mutual funds.
20
<PAGE>
The Board considered, with its counsel, (i) the quality of services which
have been provided to the Fund by OpCap Advisors and service providers under the
Existing Plan and which are expected to continue to be provided after the
Acquisition, with no change in fee rate, (ii) the overall experience and
reputation of OpCap Advisors in providing services under the Existing Plan, and
the likelihood of its continued financial stability, (iii) the aspects of the
Acquisition that may affect the ability of OpCap Advisors to attract qualified
personnel and service providers, (iv) the manner in which the New Plan would
alleviate distribution and administrative service problems, including the nature
and approximate amount of expenditures contemplated by the New Plan, the
relationship of those expenditures to the overall cost structure of the Fund and
the nature of the anticipated benefits, (v) the causes of distribution and
administrative problems, (vi) the merits of possible alternatives to the New
Plan, (vii) the interrelationship between the New Plan and the activities of
OpCap Advisors in financing the distribution of Fund shares, (viii) the benefits
of the New Plan for OpCap Advisors relative to the Fund, (ix) the effects of the
New Plan on existing shareholders, (x) the benefits of the Existing Plan for the
Fund and shareholders and (xi) the benefits of continuity in the services to be
provided under the New Plan. Based upon its review, the Board of Directors
concluded that the terms of the New Plan are reasonable, fair 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 Plan and
its submission to shareholders for their approval. The New Plan will become
effective on the date that the Acquisition is consummated or the date
shareholders approve the New Plan, whichever occurs later. The New Plan will
continue in effect until one year 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 Acquisition is not consummated, the
Existing Plan will remain in effect according to its terms.
VOTE REQUIRED. As provided under the Investment Company Act, approval of the
New Plan with respect to each Portfolio of the Fund will require the vote of a
majority of the outstanding voting securities of that Portfolio. 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.
21
<PAGE>
THE DIRECTORS, INCLUDING THE DIRECTORS WHO ARE NOT INTERESTED PERSONS OF THE
FUND AND WHO HAVE NO DIRECT OR INDIRECT FINANCIAL INTEREST IN THE OPERATION OF
THE NEW PLAN OR ANY AGREEMENT RELATED TO THE NEW PLAN, UNANIMOUSLY RECOMMEND
THAT THE SHAREHOLDERS OF EACH PORTFOLIO OF THE FUND VOTE TO APPROVE THE NEW
PLAN.
PROPOSAL NO. 3
ELECTION OF DIRECTORS TO THE FUND'S BOARD
INTRODUCTION
The Board currently consists of four Directors, all of whom are standing
for re-election. Messrs. Joseph M. La Motta, Paul Y. Clinton, Thomas W.
Courtney and Lacy B. Herrmann are the members of the current Board. Two other
nominees, Mssrs. V. Lee Barnes and Theodore T. Mason, have been approved by the
Board of Directors to stand for election to the Board to hold office until their
successors are elected and qualified.
The following table sets forth certain information regarding each nominee.
It is the intention of the persons named in the accompanying Proxy to vote for
the election of the persons named below. Each nominee has indicated a
willingness to serve if elected. If any nominee should not be available for
election due to unforseen circumstances, it is the intention of the persons
named in the accompanying Proxy to vote for such other persons as the Board may
recommend.
22
<PAGE>
NOMINEE INFORMATION
<TABLE>
<CAPTION>
POSITIONS WITH BUSINESS EXPERIENCE
NAME AND AGE FUND AND TERM DURING THE LAST FIVE YEARS
------------ ------------- ---------------------------
<S> <C> <C>
Joseph M. La Motta/*/ Chairman of the Chairman Emeritus of Oppenheimer Capital since 1997;
Age: 66 Board of Directors Chairman of the Board and President of OCC Accumulation
and President since Trust.
1989
Paul Y. Clinton Director since 1989 Principal of Clinton Management Associates, a financial
Age: 68 and venture capital consulting firm. Former Director,
External Affairs, Kravco Corporation, a national real estate owner and property
management corporation; Trustee of Capital Cash Management Trust, a money market fund
and Director of Narragansett Tax-Free Fund, a tax-exempt bond fund; Director of
Oppenheimer Quest Value Fund, Inc., Oppenheimer Quest Global Value Fund, Inc.,
Oppenheimer Quest Capital Value Fund, Inc., Rochester Fund Municipals, Rochester
Portfolio Series Limited Term New York Municipals and Bond Fund Series, Oppenheimer
Convertible Securities Fund, Oppenheimer Mid Cap Fund, Trustee of OCC Accumulation
Trust and Oppenheimer Quest for Value Funds, each of which is an open-end investment
company.
Lacy B. Herrmann Director since 1989 President and Chairman of the Board of Aquila Management Corporation since 1984, the
Age: 69 sponsoring organization and administrator and/or advisor or sub-advisor to the
following open-end investment companies, and Chairman of the Board of Trustees and
President of each: Churchill Cash Reserves Trust since 1985, Pacific Capital U.S.
Treasuries Cash Assets Trust since 1988, Pacific Capital Tax-Free Cash Assets Trust
since 1988, and Prime Cash Fund from 1982 to 1996, each of which is a money market
fund, and of Churchill Tax-Free Fund of Kentucky since 1986, Tax-Free Fund of Colorado
since 1986, Tax-Free Trust of Oregon since 1985, Tax-Free Trust of Arizona since 1985,
Tax-Free Fund for Utah since 1992, Narragansett Insured Tax Free Income Fund since
1992, and Hawaiian Tax-Free Trust since 1984, each of which is a tax-free municipal
bond fund; Vice President, Director, Secretary, and formerly Treasurer of Aquila
Distributors, Inc. since 1981, distributor of each of the above funds; President and
Chairman of the Board of Trustees of Capital Cash Management Trust (CCMT), a money
market fund, since 1981 and an Officer and Trustee/Director of its predecessors since
1974; President and Director of STCM Management Company, Inc., sponsor and Sub-Advisor
to CCMT; Director of Oppenheimer Quest Value Fund, Inc., Oppenheimer Quest Capital
Value Fund, Inc., Oppenheimer Quest Global Value Fund, Inc., Rochester Fund
Municipals, Rochester Portfolio Series Limited Term New York Municipals and Bond Fund
Series, Oppenheimer Convertible Securities Fund, Oppenheimer Mid Cap Fund, Trustee of
Oppenheimer Quest for Value Funds, and OCC Accumulation Trust, each of which is an
open-end investment company.
Thomas W. Courtney Director since 1989 Principal of Courtney Associates, Inc., a venture capital business; former General
Age: 65 Partner of Trivest Venture Fund, a private venture capital fund; former President of
Federated Investment Counseling, Inc. from; Trustee of Cash Assets Trust, a money
market fund, since;
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH BUSINESS EXPERIENCE
NAME AND AGE FUND AND TERM DURING THE LAST FIVE YEARS
------------ ------------- ---------------------------
<S> <C> <C>
Director of Oppenheimer Quest Value Fund, Inc., Oppenheimer Quest Capital Value Fund,
Inc., Oppenheimer Quest Global Value Fund, Inc., Rochester Fund Municipals, Rochester
Portfolio Series Limited Term New York Municipals and Bond Fund Series, Oppenheimer
Mid Cap Fund, Oppenheimer Convertible Securities Fund, Trustee of Oppenheimer Quest
for Value Funds and OCC Accumulation Trust, each of which is an open-end investment
company; Trustee of Hawaiian Tax-Free Trust and Tax-Free Trust of Arizona, tax-exempt
bond funds; Director of several privately owned corporations; and former Director of
Financial Analysts Federation.
V. Lee Barnes Nominee for Director President and Chief Executive Officer of Net Learning Inc. since January 1999;
Age: 64 Director of Davis International Banking Consultants since July 1993; previously a
consultant and acting Executive Vice President of Smyth, Sanford & Gerard L.L.C., an
insurance underwriting agency.
Theodore T. Mason Nominee for Director Executive Director of Louisiana Power Partners, LLC since 1999 and of East Wind Power
Age: 64 Partners since 1994; Second Vice President of the Alumni Association of SUNY Maritime
College since 1998 and Director for the same organization since 1997; Director of
Cogeneration Development of Willamette Industries, Inc., a forest products company,
1991-1993; Vice Chairman of the Board of Trustees of CCMT since 1981; Vice Chairman of
the Board of Trustees and Trustee of Prime Cash Fund (which is inactive) since 1982;
Trustee of Short Term Asset Reserves, 1984-1986 and 1988-1996, of Hawaiian Tax-Free
Trust and Pacific Capital Cash Assets Trust since 1984, of Churchill Cash Reserves
Trust since 1985, of Pacific Capital Tax-Free Cash Assets Trust and Pacific Capital
U.S. Government Securities Cash Assets Trust since 1988 and of Churchill Tax-Free Fund
of Kentucky since 1992.
</TABLE>
/*/ Considered an "interested person" of the Fund, as defined in
Section 2(a)(19) of the Investment Company Act specifically because of
his capacity as an officer of the Fund.
No nominee beneficially owns more than one percent of the Fund's
outstanding shares.
BOARD OF DIRECTOR COMMITTEES AND MEETINGS
The Board has appointed an Audit Committee, but has not appointed a
Nominating Committee and a Compensation Committee. Selection and nomination of
disinterested directors has been reserved to the other disinterested directors.
Shareholders may submit written recommendations to the Board regarding nominees
for Director, although the Board expects to be able to identify an ample number
of qualified candidates.
The Audit Committee selects, and recommends for approval by the Board and
the shareholders, the audit
24
<PAGE>
firm to be retained as independent auditor by the Fund. The Audit Committee
consults with the Fund's independent auditor regarding the plan and scope of the
audit, the adequacy of the Fund's internal accounting procedures and controls
and all matters relevant to the audit services provided to the Fund. The Audit
Committee also reviews the fees charged by the auditor and the results of the
audit.
The Audit Committee currently consists of Messrs. Clinton, Courtney and
Herrmann. The Board anticipates the election of Mssrs. Barnes and Mason as
additional Members of the Audit Committee following the election of new
Directors.
During the fiscal year ended November 30, 1999, the Board met four times at
regularly scheduled meetings. During the year ended November 30, 1999, the
Audit Committee met once. There are no incumbent members of the Board who,
during the last fiscal year of the Fund, attended fewer than 75% of the
aggregate meetings of the Board of Directors or its committees on which they
serve.
EXECUTIVE COMPENSATION
Members of the Board of Directors receive an annual retainer of $40,050 and
$350 per fund for each Board meeting attended./**/ Audit Committee members
receive an additional $250 per fund for each Audit Committee meeting attended.
Directors who are officers of the Fund are not compensated for their service on
the Board. No officer of the Fund received a salary or fee from the Fund.
- -------------------------
/**/ The annual retainer and meeting fees are based upon the combined number of
Portfolios for OCC Accumulation Trust and the Fund and the combined net
assets of such Portfolios. The schedule set forth below illustrates the
annual retainer and meeting fees for one or more Portfolios with combined
net assets ranging from $50 to $250 million.
<TABLE>
<CAPTION>
NET ASSETS OF ANNUAL RETAINER BOARD AUDIT
$50 - 250 MILLION PER PORTFOLIO MEETING FEE COMMITTEE FEE
<S> <C> <C> <C>
First five Portfolios $4,500 $500 $250
First six Portfolios $4,400 $450 $250
First seven Portfolios $4,300 $400 $250
First eight Portfolios $4,200 $350 $250
First nine Portfolios $4,100 $300 $250
Ten or more Portfolios $4,000 $250 $250
</TABLE>
For Portfolios with net assets of $25 million or less, no annual retainer or
meeting fees would be paid the Directors for the first two years of the
Portfolio's operations and half of the annual retainer and meeting fees
described in the above schedule would be paid thereafter. For Portfolios with
net assets ranging from $25 to $50 million, half of the annual retainer and
meeting fees described in the above schedule would be paid to each Director. For
Portfolios with net assets ranging from $250 million to $1 billion, the annual
retainer and meeting fees described in the above schedule plus an additional
$750 annual retainer would be paid to each Director. For Portfolios with net
assets over $1 billion, the annual retainer and meeting fees described in the
above schedule plus an additional $1,500 annual retainer would be paid to each
Director.
At December 31, 1999, OCC Accumulation Trust and the Fund together offered
eleven Portfolios: two Portfolios with net assets of $25 million or less; six
Portfolios with net assets ranging from $50 to $250 million; one Portfolio with
net assets ranging from $25 to $50 million; one Portfolio with net assets
ranging from $250 million to $1 billion; and one Portfolio with net assets
over $1 billion.
25
<PAGE>
FISCAL YEAR ENDED NOVEMBER 30, 1999
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR RETIREMENT TOTAL COMPENSATION
NAME OF AGGREGATE BENEFITS ACCRUED AS FROM FUND AND FUND
DIRECTOR COMPENSATION PART OF FUND COMPLEX PAID TO
AND AGE FROM FUND EXPENSES/***/ DIRECTORS
------- --------- ------------- ---------
<S> <C> <C> <C>
Paul Clinton $33,037 $24,524 $113,826
Thomas Courtney $33,037 $24,524 $113,826
Lacy Herrmann $32,537 $24,524 $112,926
Joseph La Motta 0 0 0
</TABLE>
/***/ Under the retirement plan adopted by the Board in 1998, a retired
Director may receive up to 80% of his or her average compensation paid
during that Director's five years of service in which the highest
compensation was paid. A Director must serve in that capacity for the
Fund or OCC Accumulation Trust for at least 15 years to be eligible for
the maximum payment.
For the purpose of the Compensation Table, "Fund Complex" includes the Fund
and other funds advised by OpCap Advisors.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
<TABLE>
<CAPTION>
POSITION(S) WITH BUSINESS EXPERIENCE
NAME AND AGE FUND AND TERM DURING THE LAST 5 YEARS
------------ ------------- -----------------------
<S> <C> <C>
William McDaniel Vice President since 1999 Managing Director of Oppenheimer Capital since 1995;
Age: 54 Senior Vice President of Oppenheimer Capital 1988-1995.
Maria Camacho Assistant Secretary since 1995 Vice President of Oppenheimer Capital since 1997.
Age: 45 Assistant Vice President from 1994 to 1997 and Registrations
Department Administrator with Oppenheimer Capital since 1989.
John L. Giusio, Jr. Vice President since 1993 Vice President, Oppenheimer Capital since 1992.
Age: 56
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) WITH BUSINESS EXPERIENCE
NAME AND AGE FUND AND TERM DURING THE LAST 5 YEARS
------------ ------------- -----------------------
<S> <C> <C>
Matthew Greenwald Vice President since 1993 Senior Vice President, Oppenheimer Capital since 1997;
Age: 45 Vice President from 1992 to 1997; Executive Vice President of
Municipal Advantage Fund Inc., a closed-end investment company,
since 1997.
Benjamin Gutstein Vice President and Portfolio Manager Assistant Vice President, Oppenheimer Capital since 1996;
Age: 31 since 1997 joined Oppenheimer Capital in 1993.
Elliot M. Weiss Secretary since 1999 Vice President of OpCap Advisors since March 1996;
Age: 37 Vice President of Oppenheimer Capital from 1995 to 1996;
Assistant Vice President of Oppenheimer Capital from 1991 to
1995. Secretary of the OCC Accumulation Trust and Municipal
Advantage Fund Inc. and Assistant Secretary of The Central
European Value Fund, Inc. since 1999.
Brian S. Shlissel Treasurer since February 2000 Vice President of Oppenheimer Capital since July 1999;
Age: 35 Vice President of Mitchell Hutchins Asset Management Inc., from
1993 to 1999. Treasurer of OCC Accumulation Trust,
Municipal Advantage Fund, Inc. and the Central European Value
Fund since August 1999. Treasurer and Secretary Jardine Fleming
India Fund from 1997 to 1999. Assistant Treasurer PaineWebber
PACE Select Advisers Trust from 1998 to 1999.
</TABLE>
The business address of each officer is 1345 Avenue of the Americas,
New York, New York 10105.
VOTE REQUIRED. As provided under the Investment Company Act, the election of
the Nominees to the office of Director will require the vote of a majority of
the outstanding voting securities of the Fund. Under the Investment
27
<PAGE>
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, UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF EACH PORTFOLIO OF
THE FUND VOTE FOR
ALL NOMINEES TO THE BOARD
PROPOSAL NO. 4
RATIFICATION OF PRICEWATERHOUSECOOPERS LLP
AS INDEPENDENT AUDITOR
The Board, including a majority of the Independent Directors, has selected
PricewaterhouseCoopers LLP to continue to serve as independent auditors of the
Fund for the fiscal year ending November 30, 2000, subject to ratification by
the Fund's shareholders.
PricewaterhouseCoopers LLP has served as the Fund's independent auditor
since December 1989 and has no direct financial interest or material indirect
financial interest in the Fund. Representatives of PricewaterhouseCoopers LLP
are not expected to be present at the Meeting but will be available if required
and will have the opportunity, at their discretion, to make a statement and to
respond to appropriate shareholder questions.
PricewaterhouseCoopers LLP's audit services for the fiscal year ended
November 30, 1999 included: auditing the Fund's annual financial statements;
reviewing the Fund's federal and state income tax returns; reviewing the Fund's
federal excise tax return; consulting with the Fund's Audit Committee; engaging
in routine consultations on financial accounting and reporting matters.
28
<PAGE>
The Audit Committee authorized all services performed by
PricewaterhouseCoopers LLP on behalf of the Fund. In addition, the Audit
Committee reviews the scope of services to be provided by PricewaterhouseCoopers
LLP annually and considers the effect, if any, that performance of any non-audit
services might have on audit independence.
VOTE REQUIRED. As provided under the Investment Company Act, the ratification
of PricewaterhouseCoopers LLP as independent auditor for the Fund will require
the vote of a majority of the outstanding voting securities of the Fund. 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, UNANIMOUSLY RECOMMEND THAT
THE SHAREHOLDERS OF EACH PORTFOLIO OF THE FUND
VOTE TO APPROVE PRICEWATERHOUSECOOPERS LLP
AS INDEPENDENT AUDITOR
RECEIPT OF SHAREHOLDERS PROPOSALS, QUORUM AND VOTING
Under the proxy rules of the SEC, shareholder proposals meeting tests
contained in those rules may, under certain conditions, be included in the
Fund's proxy statement and proxy for a particular annual meeting. Those rules
require that at the time the shareholder submits the proposal the shareholder be
a record or beneficial owner of at least 1% or $1,000 in market value of
securities entitled to be voted on the proposal and have held such securities
for a least one year prior thereto, and continue to hold such shares through the
date on which such meeting is held.
29
<PAGE>
Another of these conditions relates to the timely receipt by the Fund of any
such proposal. Under these rules, proposals submitted for inclusion in the
Fund's proxy material for the next annual meeting after the meeting to which
this proxy statement relates must be received by the Fund not less than 120 days
before the first anniversary of the date stated on the first page of this Proxy
Statement relating to the first mailing of this Proxy Statement. The date for
such submission could change, depending on the scheduled date for the next
annual meeting.
The fact that the Fund receives a shareholder proposal in timely manner
does not insure its inclusion in its proxy material, since there are other
requirements in the proxy rules relating to such inclusion.
Shareholders should be aware that under the law of the state in which the
Fund is established, Maryland, annual meetings of shareholders are not required
as long as there is no particular requirement under the Investment Company Act
which must be met by convening such a shareholder's meeting. As it is the
intention of the Board of Directors not to hold annual shareholder meetings in
the future unless required to do so under the Investment Company Act, there can
be no assurance that shareholder proposals validly submitted to the Fund will be
acted upon at a regularly scheduled annual shareholders' meeting.
Shares represented in person or by proxy (including shares which abstain or
do not vote with respect to the Proposal presented for shareholder approval
including "broker nonvotes") will be counted for purposes of determining whether
a quorum is present at the Meeting. Abstentions will be treated as shares that
are present and entitled to vote for purposes of determining the number of
shares that are present and entitled to vote with respect to the Proposal, but
will not be counted as a vote in favor of the Proposal. Accordingly, an
abstention from voting on a legal effect as a vote against the Proposal.
"Broker non-votes" exist where a proxy received from a broker indicates that the
broker does not have discretionary authority to vote the shares on that matter.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP are the independent auditors of the Fund.
A representative of the firm is not expected to be present at the Meeting.
30
<PAGE>
MAILING OF ANNUAL REPORT
The Fund will furnish, without charge, a copy of its Annual Report for the
year ended November 30, 1999 to a shareholder upon request. Such request should
be made to Elliot M. Weiss, OpCap Advisors, 1345 Avenue of the Americas, New
York, NY 10105-4800, or by calling 1-800-600-5487. The report will be sent by
first class mail within three business days of the request.
OTHER BUSINESS
The Fund's management knows of no business other than the matter specified
above which will be presented at the Meeting. Inasmuch as matters not known at
the time of the solicitation may come before the Meeting, the proxy as solicited
confers discretionary authority with respect to such matters as may properly
come before the Meeting and it is the intention of the person named in the proxy
to vote in accordance with their judgment on such matters.
By Order of the Board of Directors
Elliot M. Weiss
Secretary
31
<PAGE>
OCC CASH RESERVES, INC.
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints _______________, _______________, and
_______________ as proxies, each with the powers to act alone and to appoint his
or her substitute, and hereby authorizes them to represent and vote, as
designated herein, all of the Shares of OCC Cash Reserves, Inc. which the
undersigned is entitled to vote as of December 20, 1999, the record date, at the
Meeting of Shareholders to be held on March 3, 2000, or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSAL IN ITEM 1, FOR THE PROPOSAL IN ITEM 2, FOR THE NOMINEES NAMED
IN ITEM 3, AND FOR THE SELECTION OF THE INDEPENDENT AUDITOR NAMED IN ITEM 4.
ALL ITEMS ARE PROPOSED BY THE OCC CASH RESERVES, INC. (THE "FUND").
THE BOARD OF DIRECTORS RECOMMENDS THAT THE FUND'S SHAREHOLDERS VOTE "FOR" EACH
OF THE FOLLOWING PROPOSALS:
Item 1 - Proposal to approve a new investment advisory agreement between OpCap
Advisors and the Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
Item 2 - Proposal to approve the continuance of the Distribution Assistance and
Administrative Services Plan upon consummation of the Alllianz
acquisition.
FOR AGAINST ABSTAIN
[_] [_] [_]
Item 3 - Election of the following nominees as Director:
[A] Joseph M. La Motta [D] Thomas W. Courtney
[B] Paul Y. Clinton [E] V. Lee Barnes
[C] Lacy B. Herrmann [F] Theodore T. Mason
YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY LINING THROUGH OR
OTHERWISE STRIKING OUT THE NAME OF ANY NOMINEE.
<PAGE>
Item 4 - Proposal to ratify the appointment of PricewaterhouseCoopers LLP as
the independent auditor of the Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
Please sign as name appears herein. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
Dated:_____________, 2000
___________________________
Signature
___________________________
Signature
PLEASE SIGN, DATE AND MAIL YOUR PROXY CARD BY _________________, 2000.
2
<PAGE>
EXHIBIT A
ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of ___________, 2000 by and between OCC
CASH RESERVES, INC., a Maryland corporation (the "Fund") and OPCAP ADVISORS, a
Delaware general partnership (the "Advisor").
WHEREAS, the Fund is an open-end investment company registered with the
Securities and Exchange Commission (the "SEC") pursuant to the Investment
Company Act of 1940 (the "1940 Act");
WHEREAS, the Fund is organized in series form and each of the Primary,
Government, General Municipal, California Municipal and New York Municipal
Portfolios is a separately capitalized series ("Portfolio") of shares of common
stock to be issued by the Fund ("Shares") pursuant to the Fund's registration
statement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the Fund and the Advisor agree as follows:
1. General Provisions
------------------
The Fund hereby employs the Advisor and the Advisor hereby undertakes to
act as the investment advisor of the Fund in connection with and f or the
benefit of each Portfolio, including any Portfolio hereafter created, and to
perform for the Fund such other duties and functions in connection with each
Portfolio for the period and on such terms as are set forth in this Agreement.
The Advisor shall in all matters give to the Fund and its Board of Directors
(the "Directors") the benefit of its best judgment, effort, advice and
recommendations and shall at all times conform to and use its best efforts to
enable the Fund to conform to:
(a) The provisions of the 1940 Act and any rules or regulations promulgated
thereunder;
(b) Any other applicable provisions of state or federal law;
(c) The provisions of the Articles of Incorporation and By-Laws of the Fund
as amended from time to time;
(d) The policies and determinations of the Directors;
(e) The investment objectives, policies and investment restrictions of each
Portfolio as reflected in the registration statement of the Fund under the 1940
Act or as such objectives, policies and restrictions may from time to time be
amended; and
1
<PAGE>
(f) The prospectus, if any, relating to each Portfolio in effect from time
to time.
The appropriate officers and employees of the Advisor shall be available
upon reasonable notice for consultation with any of the Directors or officers
with respect to any matters dealing with the Fund's business affairs, including
the valuation of any securities held by the Fund for the benefit of any of its
Portfolios that are either not registered for public sale or not being traded on
any securities market.
2. Investment Management
---------------------
(a) The Advisor shall, subject to the direction and control by the
Directors, separately with respect to each Portfolio: (i) Regularly provide
investment advice and recommendations to the Fund with respect to investments,
investment policies and the purchase and sale of securities and other
investments; (ii) Supervise continuously and determine the securities and other
investments to be purchased or sold by the Fund and the portion, if any, of the
Fund's assets to be held uninvested; and (iii) Arrange for the purchase and sale
of securities and other investments by the Fund.
(b) The Advisor may obtain investment information, research or assistance
from any other person, firm or corporation to supplement, update or otherwise
improve its investment management services, including entering into subadvisory
agreements with other affiliated or unaffiliated registered investment advisors
in order to obtain specialized services, provided, however, that the Fund shall
not be required to pay any compensation other than as provided by the terms of
this Agreement and subject to the provisions of Section 5 hereof.
(c) So long as the Advisor shall have acted with due care and in good
faith, the Advisor shall not be liable to the Fund or its shareholders for any
error in judgment, mistake of law or any other act or omission in the course of
or connected with rendering services hereunder, including without limitation any
losses which may be sustained by the Fund or its shareholders as a result of the
purchase, retention, redemption or sale of any security or other investment by
the Fund irrespective of whether the determinations of the Advisor relative
thereto shall have been based, in whole or in part, upon the investigation,
research or recommendation of any other individual, firm or corporation believed
by the Advisor to be reliable. Nothing contained herein, however, shall be
construed to protect the Advisor against any liability to the Fund or its
shareholders arising out of the Advisor's willful misfeasance, bad faith or
gross negligence in the performance of its duties, or reckless disregard of its
obligations and duties under this Agreement.
(d) Nothing in this Agreement shall prevent the Advisor, any parent,
subsidiary or affiliate, or any director or officer thereof, from acting as
investment advisor for any other person, firm or corporation and shall not in
any way limit or restrict the Advisor or any of its directors, officers,
stockholders or employees from buying, selling or trading any securities or
commodities
2
<PAGE>
for its or their own account or for the accounts of others for whom it or they
may be acting, if such activities will not adversely affect or otherwise impair
the performance by the Advisor of its duties and obligations under this
Agreement.
3. Other Duties of the Advisor
---------------------------
The Advisor shall provide and supervise all administrative and clerical
activities undertaken for the benefit of each Portfolio of the Fund and shall
provide effective corporate administration for the Fund, including (1) the
overseeing of accountants, legal counsel, custodians, transfer agents,
shareholder servicing agents and other parties performing services for the Fund,
(2) the preparation and filing of such reports related to the Fund or to any
Portfolio as shall be required by federal securities laws and by various state
"blue sky" laws, (3) the composition of periodic reports with respect to the
operations of each Portfolio for distribution to shareholders, (4) composition
of proxy materials for and the organization of meetings of the shareholders of
each Portfolio as required under applicable laws, and (5) continuous
distribution and redemption of the shares of each Portfolio and the continuous
servicing of shareholders of the Fund both directly and through appropriate
intermediaries.
The Advisor's duties under this Agreement will include preparation and
maintenance of separate books, records and other documents for each Portfolio,
as follows: (1) journals containing daily itemized records of all purchases and
sales and receipts and deliveries of securities, all receipts and disbursements
of cash and all other debits and credits, in the form required by Rule 31a-
1(b)(1) under the 1940 Act; (2) general and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income and expense accounts, in the form
required by Rules 31a-1(b)(2)(i) and (ii) under the 1940 Act; (3) a securities
record or ledger reflecting separately for each portfolio security as of the
trade date all "long" and "short" positions, if any, carried by the Fund for the
account of such Portfolio and showing the location of all such securities long
and the offsetting position to all such securities short, in the form required
by Rule 31a-1(b)(3) under the 1940 Act; (4) a record of all purchases or sales
of portfolio assets, in the form required by Rule 31a-1(b)(6) under the 1940
Act; and (5) a record of the proof of money balances in all ledger accounts
maintained pursuant to this Agreement, in the form required by Rule 31a-1(b)(8)
under the 1940 Act. The foregoing books and records shall be maintained by the
Advisor in accordance with and for the time periods specified by applicable
rules and regulations, including Rule 31a-2 under the 1940 Act. All such books
and records shall be the property of the Fund and upon request therefor the
Advisor shall surrender to the Fund such of the books and records as are
requested.
4. Allocation of Expenses
----------------------
All expenses shall be paid by the Fund, allocated as appropriate to each
Portfolio, including but not limited to:
(a) the fee of the Advisor;
3
<PAGE>
(b) interest expense, taxes and governmental fees;
(c) brokerage commissions (if any) and other expenses incurred in acquiring
or disposing of the Fund's portfolio securities and other investments;
(d) insurance premiums for fidelity and other coverage requisite to the
Fund's operations;
(e) fees of the Directors who are not interested persons of the Fund, out-
of-pocket travel expenses for all Directors and other expenses incurred by the
Fund in connection with Directors' meetings;
(f) outside legal, accounting and audit expenses;
(g) custodian and dividend disbursing fees;
(h) transfer agent fees and other shareholder servicing expenses;
(i) expenses in connection with the issuance, offering, sale or
underwriting of securities issued by the Fund, including preparation of stock
certificates;
(j) fees and expenses incident to the registration or qualification of the
Fund's shares for sale with the SEC and in various states and foreign
jurisdictions;
(k) expenses of printing and mailing reports, notices and proxy material to
the shareholders of each Portfolio;
(l) all other expenses incidental to holding meetings of the shareholders
of each Portfolio including fees and expenses of proxy solicitation;
(m) expenses of organizing the Fund and trade association dues and fees;
(n) such extraordinary non-recurring expenses as may arise, including
litigation affecting the Fund and the obligation the Fund may have to indemnify
its officers and Directors with respect thereto; and
(o) expenses incident to servicing Fund shareholders by broker-dealers
(including CIBC Oppenheimer Corp.), banks and other organizations and
individuals.
The Advisor, in return for its fee, will bear all costs and expenses
incurred in connection with its investment management services to the Fund. The
Advisor will also bear the expense of its business management and other
management and supervisory duties and functions assumed by it under this
Agreement, but the Fund itself will bear the costs of the services managed and
supervised;
4
<PAGE>
e.g., the Advisor will arrange for and supervise, among other services, the
provision of outside audit, custodian and transfer agency services to the Fund,
but the Fund will pay for each of these provided services.
The Advisor at its expense will provide persons satisfactory to the
Directors to perform the duties of officers of the Fund.
5. Compensation of the Advisor
---------------------------
(a) The Fund agrees to pay the Advisor, and the Advisor agrees to accept as
full compensation for the performance of all its functions and duties to be
performed hereunder, a fee based on the total net assets of each Portfolio at
the end of each business day at an annual rate of .50% of the first $100 million
of average daily net assets, .45% of the next $200 million of average daily net
assets and .40% of average daily net assets in excess of $300 million of each
Portfolio. Determination of the net asset value of each Portfolio will be made
in accordance with the policies disclosed in the Fund's registration statement
under the 1940 Act. The fee is payable as of the close of business on the last
day of each calendar month and shall be made on the following business day. The
payment due on such day shall be computed by (1) adding together the results of
multiplying (i) the total net assets of each Portfolio on each day of the month
by (ii) the applicable daily fraction (based upon a 365-day year) of the annual
advisory fee percentage rate for such Portfolio and then (2) adding together the
total monthly amounts computed for each Portfolio.
(b) In the event that the operating expenses (net of any expense offsets)
of the Fund exceed 1%, including amounts payable to the Advisor pursuant to
subsection (a) hereof, but excluding the amount of any interest, taxes,
brokerage commissions and extraordinary expenses (including but not limited to
legal claims and liabilities and litigation costs and any indemnification
related thereto) paid or payable with respect to a Portfolio for any fiscal year
ending on a date during which this Agreement is in effect, the Advisor will pay
or refund for the account of that Portfolio any such excess amount.
6. Duration
--------
This Agreement will become effective with respect to each Portfolio of the
Fund upon approval by the Directors and by the shareholders of each Portfolio.
This Agreement will continue in effect for two years from the initial effective
date and thereafter (unless sooner terminated in accordance with this Agreement)
for successive periods of twelve months so long as each continuance shall be
specifically approved at least annually with respect to each Portfolio by the
vote of (1) a majority of those Directors who are not parties to this Agreement
or interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval and (2) a majority of the Directors or a
majority of the outstanding voting securities of the respective Portfolio. Such
vote will be deemed to have continued this Agreement if it takes place within 60
days of the Anniversary date of this Agreement.
5
<PAGE>
7. Termination
-----------
This agreement may be terminated with respect to one or more Portfolios (i)
by the Advisor at any time, without payment of any penalty, upon giving the Fund
ninety (90) days' written notice (which notice may be waived by the Fund); or
(ii) by the Fund at any time, without payment of any penalty, upon sixty (60)
days' written notice to the Advisor (which notice may be waived by the Advisor),
provided that such termination by the Fund shall be directed or approved by the
vote of the majority of all of the Directors or by the vote of a majority of the
outstanding voting securities of the Portfolio with respect to which notice of
termination has been given to the Advisor.
8. Amendment or Assignment
-----------------------
This Agreement may be amended with respect to a Portfolio only if such
amendment is specifically approved by (i) the vote of the outstanding voting
securities of such Portfolio and (ii) a majority of the Directors, including a
majority of those Directors who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, provided that this Agreement may be amended to add a
new series of Shares or delete an existing series of Shares without a vote of
the holders of Shares of any other Portfolio covered by this Agreement. This
Agreement shall automatically and immediately terminate in the event of its
assignment, as that term is defined in the 1940 Act and the rules thereunder.
9. Governing Law
-------------
This Agreement shall be interpreted in accordance with the laws of the
State of New York and the applicable provisions of the 1940 Act, other
securities laws, and the rules thereunder. To the extent that the applicable
laws of the State of New York, other securities laws or any of the provisions
herein. conflict with the applicable provisions of the 1940 Act, the latter
shall control.
10. Severability
------------
If any provisions of this Agreement shall be held or made unenforceable by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
11. Definitions
-----------
As used in this Agreement, the terms "interested persons" and "vote of a
majority of the outstanding voting securities" shall have the respective
meanings set forth in Sections 2(a)(19) and 2(a)(42) of the 1940 Act.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
OCC Cash Reserves, Inc.
By:
---------------------------------
Title:
------------------------------
Attest:
----------------------
OpCap Advisors
By:
---------------------------------
Title:
------------------------------
Attest:
----------------------
7
<PAGE>
EXHIBIT B
DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
PURSUANT TO RULE 12b-1
DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN (the "Plan")
made as of the ___ day of __________, 2000, by and among OCC Cash Reserves,
Inc., a Maryland corporation (the "Fund"), and OpCap Advisors ("Adviser"), a
Delaware general partnership:
WHEREAS, the Fund engages in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended (the "Act");
WHEREAS, the Fund issues its common shares ("Shares") in separately
capitalized series ("Portfolios");
WHEREAS, the Fund desires to adopt a Distribution Assistance and
Administrative Services Plan pursuant to Rule 12b-1 under the Act and;
WHEREAS, the Board of Directors has determined that there is a reasonable
likelihood that adoption of the Plan will benefit the Fund and its shareholders;
and
WHEREAS, the Fund desires that the Adviser promote the sale of Shares of
each Portfolio and arrange for the provision of continuous service to Fund
shareholders in accordance with this plan and the Adviser is willing to provide
such services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the Fund hereby adopts the Plan in accordance with Rule
12b-1 under the Act, and the parties hereto enter into this Agreement, as
amended, on the following terms and conditions:
1. The Fund is hereby authorized to use its assets to finance certain
activities in connection with distribution of its shares.
2. Under the Plan, subject to the supervision of the Board of
Directors, the Fund hereby authorizes and directs the Adviser (1) to
promote the distribution of Shares through broker-dealers, other financial
intermediaries, and others and (2) to arrange with financial
intermediaries, including depository institutions, for the provision of
administrative services to Fund shareholders.
3. The Fund agrees to pay the Adviser, and the Adviser agrees to
accept as full compensation for the performance of all its functions and
duties to be performed hereunder, a fee at an annual rate of .25 of 1% of
net assets of each Portfolio, as calculated each business day.
Determination of net asset value of each Portfolio will be made in
accordance with the policies disclosed in the Fund's registration statement
under the 1940 Act. The fee is payable as of the close of business on the
last day of each calendar month and shall be made on the following
<PAGE>
business day. The payment due on such day shall be computed by (1) adding
together the results of multiplying (i) the total net assets of each
Portfolio on each day of the month by (ii) the applicable daily fraction
(based upon a 365 day year) of .25 of 1% and then (2) adding together the
total monthly amounts computed for each Portfolio. To the extent that any
expenditures by the Advisor or its affiliates to support the objectives of
this Plan may be deemed by anyone to constitute the use of Fund assets,
such use is hereby authorized.
4. The Fund shall, from time to time, furnish or otherwise make
available to the Adviser such financial reports, proxy statements and other
information relating to the business and affairs of the Fund and of each
Portfolio as the Adviser may reasonably require in order to discharge its
duties and obligations hereunder.
5. The Adviser will use its best efforts in rendering services to the
Fund, but in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations hereunder, the Adviser
shall not be liable to the Fund or any of its shareholders.
6. Nothing contained in this Plan shall prevent the Adviser or any
affiliated person thereof from performing services similar to those to be
performed hereunder for any other person, firm or corporation or for its or
their own accounts or for the accounts of others.
7. After the end of each fiscal quarter, the Adviser shall provide the
Fund for review by the Board, and the Board shall review, a written report
regarding the distribution activities undertaken on behalf of the Fund and,
separately, on behalf of each Portfolio as required by law, during such
fiscal quarter.
8. This Plan shall become effective with respect to any Portfolio upon
approval by a vote of at least a majority, as defined in the Act, of the
outstanding voting securities of that Portfolio and upon approval by a vote
of the Board, and of the Directors who are not interested persons of the
Fund, as defined in the Act, and who have no direct or indirect financial
interest in the operation of this Plan and Agreement, cast in person at a
meeting called for the purpose of voting on this Plan.
9. This Plan shall remain in effect until one year from its date and
from year to year thereafter, provided such continuance is approved
annually by a vote of the Board and of the Directors who are not interested
persons of the Fund, as defined in the Act, and who have no direct or
indirect financial interest in the operation of this Plan, cast in person
at a meeting called for the purpose of voting on this Plan. This Plan may
not be amended materially without shareholder approval, and all material
amendments of this Plan must be approved by the Board in the manner
provided in the foregoing sentence.
10. The Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Directors who are not interested
persons of the Fund and who have no direct or indirect financial interest
in the operation of this Plan or, with respect to a particular Portfolio,
by a vote of a majority, as defined in the Act, of the outstanding voting
securities of
- 2 -
<PAGE>
that Portfolio, on not more than 30 days' written notice to any other party
to this Plan. Any Agreement(s) entered into in furtherance of the
objectives of the Plan may be terminated by any party thereto upon at least
30 days written notice to any other party to such agreement(s).
11. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons of the Fund shall be committed to
the discretion of the Directors who are not interested persons.
12. To the extent that this Plan constitutes a Plan of Distribution
adopted pursuant to Rule 12b-1 under the Act with respect to a particular
Portfolio, it shall remain in effect as such, so as to authorize the use of
assets for the purposes set forth herein, notwithstanding the occurrence of
an "assignment", as defined by the Act and the rules thereunder. To the
extent it constitutes an agreement pursuant to a plan, it shall terminate
automatically in the event of such "assignment," and the Fund may continue
to make payments pursuant to this Plan with respect to that Portfolio only
(1) upon the approval of the Fund's Board in accordance with the procedures
set forth in paragraph 9 above and (2) if the obligations of the Adviser
under this Plan are to be performed by any organization other than the
Adviser, upon such organization adopting and assuming in writing all
provisions of this Plan as a party hereto.
13. The Fund shall preserve copies of this Plan and all reports made
pursuant to paragraph 7 hereof, for a period of not less than six years
from the date of this Plan or any such report, as the case may be, the most
recent two years in an easily accessible place.
14. This Plan shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the Act. To the extent
the applicable law of the State of New York or any of the provisions
herein, conflict with the applicable provisions of the Act, the latter
shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Plan on the day and year first above written in New York, New York.
OCC CASH RESERVES, INC.
By: Elliot M. Weiss
--------------------------
Secretary
Attest: Howard Smith
----------------
OPCAP ADVISORS
Attest: Sandra Hauges By: Frank Poli
---------------- --------------------------
Secretary
- 3 -
