AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of January, 2005, by and between XXXXXXXXXXX
MUNICIPAL FUND, a Massachusetts business trust (hereinafter referred to as the
"Fund"), and OPPENHEIMERFUNDS, INC. (hereinafter referred to as "OFI").
WHEREAS, the Fund is an open-end, diversified management investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "Investment
Company Act"), and OFI is a registered investment adviser;
WHEREAS, XXXXXXXXXXX LIMITED TERM MUNICIPAL FUND (the "Fund") is a series of the
Trust having a separate portfolio, investment policies and investment
restrictions;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. GENERAL PROVISION.
(a) The Fund hereby employs OFI and OFI hereby undertakes to act as the
investment adviser of the Income Series of the Fund and to perform for the Fund
such other duties and functions as are hereinafter set forth. OFI shall, in all
matters, give to the Fund and the Fund's Board of Trustees 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 (i) the
provisions of the Investment Company Act and any rules or regulations
thereunder; (ii) any other applicable provisions of state or Federal law; (iii)
the provisions of the Declaration of Trust and By-Laws of the Fund as amended
from time to time; (iv) policies and determinations of the Board of Trustees of
the Fund; (v) the fundamental policies and investment restrictions of the Fund
as reflected in the Fund's registration statement under the Investment Company
Act or as such policies may, from time to time, be amended by the Fund's
shareholders; and (vi) the Prospectus and Statement of Additional Information of
the Fund in effect from time to time. The appropriate officers and employees of
OFI shall be available upon reasonable notice for consultation with any of the
Trustees and officers of the Fund with respect to any matters dealing with the
business and affairs of the Fund including the valuation of portfolio securities
of the Fund which securities are either not registered for public sale or not
traded on any securities market.
(b) At its option, OFI may appoint a subadviser to perform all or such
responsibilities of OFI under this Agreement as shall be delegated by OFI to
such subadviser, provided, however, that the appointment of any subadviser and
the assumption by such subadviser of any responsibilities of OFI shall be
subject to the approval of the Board of Trustees of the Fund, and, to the extent
necessary, the shareholders of the Series. OFI agrees to give the Fund prompt
written notice of the termination of, or any notice to terminate, any subadviser
agreement.
2. INVESTMENT MANAGEMENT.
(a) OFI shall, subject to the direction and control by the Fund's Board
of Trustees, (i)
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regularly provide investment advice and recommendations to the Fund with respect
to its investments, investment policies and the purchase and sale of securities;
(ii) supervise continuously the investment program of the Fund and the
composition of its portfolio and determine what securities shall be purchased or
sold by the Fund; and (iii) arrange, subject to the provisions of paragraph 6
hereof, for the purchase of securities and other investments for the Fund and
the sale of securities and other investments held in the Fund's portfolio.
(b) Provided 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 paragraph 6 hereof, OFI may obtain investment information,
research or assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect OFI from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties under this
Agreement, OFI shall not be liable for any loss sustained by reason of good
faith errors or omissions in connection with any matters to which this Agreement
relates.
(d) Nothing in this Agreement shall prevent OFI or any officer thereof
from acting as investment adviser for any other person, firm or corporation or
in any way limit or restrict OFI or any of its directors, officers, stockholders
or employees from buying, selling or trading any securities for its or their own
account or for the account of others for whom it or they may be acting, provided
that such activities will not adversely affect or otherwise impair the
performance by OFI of its duties and obligations under this Agreement.
3. OTHER DUTIES OF OFI.
OFI shall, at its own expense, provide and supervise the activities of
all administrative and clerical personnel as shall be required to provide
effective administration for the Fund, including the compilation and maintenance
of such records with respect to its operations as may reasonably be required;
the preparation and filing of such reports with respect thereto as shall be
required by the Commission; composition of periodic reports with respect to
operations of the Fund for its shareholders; composition of proxy materials for
meetings of the Fund's shareholders; and the composition of such registration
statements as may be required by Federal and state securities laws for
continuous public sale of shares of the Fund. OFI shall, at its own cost and
expense, also provide the Fund with adequate office space, facilities and
equipment. OFI shall, at its own expense, provide such officers for the Fund as
the Fund's Board may request.
4. ALLOCATION OF EXPENSES.
All other costs and expenses of the Fund not expressly assumed by OFI
under this Agreement, or to be paid by the Distributor of the shares of the
Fund, shall be paid by the Fund, including, but not limited to: (i) interest and
taxes; (ii) brokerage commissions; (iii) insurance premiums for fidelity and
other coverage requisite to its operations; (iv) compensation and expenses of
its trustees other than those associated or affiliated with OFI; (v) legal and
audit expenses; (vi) custodian and transfer agent fees and expenses; (vii)
expenses incident to the
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redemption of its shares; (viii) expenses incident to the issuance of its shares
against payment therefor by or on behalf of the subscribers thereto including
without limitation the cost of share certificates; (ix) fees and expenses, other
than as hereinabove provided, incident to the registration under Federal law of
shares of the Fund for public sale and for qualifying additional shares of the
Fund for sale under the securities laws of the various states after the initial
registration of the Fund's shares in such states; (x) expenses of printing and
mailing reports, notices and proxy materials to shareholders of the Fund; (xi)
except as noted above, all other expenses incidental to holding meetings of the
Fund's shareholders; (xii) expenses incurred in connection with the valuation of
portfolio securities and the calculation of its net asset value; (xiii)
membership dues in the Investment Company Institute or any similar organization;
and (xiv) such extraordinary non-recurring expenses as may arise, including
litigation, affecting the Fund and any legal obligation which the Fund may have
to indemnify its officers and trustees with respect thereto. Any officers or
employees of OFI or any entity controlling, controlled by or under common
control with OFI who also serve as officers, trustees or employees of the Fund
shall not receive any compensation from the Fund for their services.
5. COMPENSATION OF OFI.
(a) The Fund agrees to pay OFI and OFI agrees to accept as full
compensation for the performance of all functions and duties on its part to be
performed pursuant to the provisions hereof, a fee computed on the aggregate net
assets of the Fund as of the close of each business day and payable monthly at
the following annual rate:
0.50% of the first $100 million of net assets;
0.45% of the next $150 million;
0.425% of the next $250 million; and
0.40% of the net assets in excess of $500 million.
(b) OFI's compensation for any fiscal year of the Fund shall be reduced
by the amount, if any, by which the Series' expenses for such fiscal year exceed
the most stringent applicable expense limitation prescribed by any statute or
regulatory authority of any jurisdiction in which the Series' shares are
qualified for offer and sale, as such limitation is set forth in the most recent
notice thereof furnished by OFI to the Series. For purposes of this paragraph
there shall be excluded from the computation of the Series' expenses any amount
borne directly or indirectly by the Series which is permitted to be excluded
from the computation of such limitation by such statute or regulatory authority.
If for any month the expenses of the Series properly included in such
calculation exceed 1/12 of the amount permitted annually by such expense
limitation, the payment to OFI for that month shall be reduced or eliminated, as
necessary, and, if necessary, OFI shall reimburse the Fund for the amount of its
fee which exceeds such limitation. Such computations and payments shall be
adjusted at the end of the Fund's fiscal year so that the aggregate fee payable
to OFI for the year is equal to the fee calculated under subparagraph (a) of
this section, reduced by the amount required so that such fee does not exceed
such expense limitation on an annual basis.
6. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) OFI is authorized, in arranging the purchase and sale of the Fund's
portfolio
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securities, to employ or deal with such members of securities or commodities
exchanges, brokers or dealers (hereinafter "broker-dealers") including
"affiliated" broker-dealers (as that term is defined in the Investment Company
Act), as may, in its best judgment, implement the policy of the Fund to obtain,
at reasonable expense, the "best execution" (prompt and reliable execution at
the most favorable security price obtainable) of the Fund's portfolio
transactions as well as to obtain, consistent with the provisions of
subparagraph (c) of this paragraph 6, the benefit of such investment information
or research as will be of significant assistance to the performance by OFI of
its investment management functions.
(b) OFI shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. The abilities of a
broker-dealer to obtain best execution of particular portfolio transaction(s)
will be judged by OFI on the basis of all relevant factors and considerations
including, insofar as feasible, the execution capabilities required by the
transaction or transactions; the ability and willingness of the broker-dealer to
facilitate the Fund's portfolio transactions by participating therein for its
own account; the importance to the Fund of speed, efficiency or confidentiality;
the broker-dealer's apparent familiarity with sources from or to whom particular
securities might be purchased or sold; as well as any other matters relevant to
the selection of a broker-dealer for particular and related transactions of the
Fund.
(c) OFI shall have discretion, in the interests of the Fund, to
allocate brokerage on the Fund's portfolio transactions to broker-dealers, other
than an affiliated broker-dealer, qualified to obtain best execution of such
transactions who provide brokerage and/or research services (as such services
are defined in Section 28(e)(3) of the Securities Exchange Act of 1934) for the
Fund and/or other accounts for which OFI or its affiliates exercise "investment
discretion" (as that term is defined in Section 3(a)(35) of the Securities
Exchange Act of 1934) and to cause the Fund to pay such broker-dealers a
commission for effecting a portfolio transaction for the Fund that is in excess
of the amount of commission another broker-dealer adequately qualified to effect
such transaction would have charged for effecting that transaction, if OFI
determines, in good faith, that such commission is reasonable in relation to the
value of the brokerage and/or research services provided by such broker-dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of OFI or its affiliates with respect to the accounts as to
which they exercise investment discretion. In reaching such determination, OFI
will not be required to place or attempt to place a specific dollar value on the
brokerage and/or research services provided or being provided by such
broker-dealer. In demonstrating that such determinations were made in good
faith, OFI shall be prepared to show that all commissions were allocated for
purposes contemplated by this Agreement and that the total commissions paid by
the Fund over a representative period selected by the Fund's trustees were
reasonable in relation to the benefits to the Fund.
(d) OFI shall have no duty or obligation to seek advance competitive
bidding for the most favorable commission rate applicable to any particular
portfolio transactions or to select any broker-dealer on the basis of its
purported or "posted" commission rate but will, to the best of its ability,
endeavor to be aware of the current level of the charges of eligible
broker-dealers and to minimize the expense incurred by the Fund for effecting
its portfolio transactions to the extent consistent with the interests and
policies of the Fund as established by the determinations of the Board of
Trustees of the Fund and the provisions of this paragraph 6.
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(e) The Fund recognizes that an affiliated broker-dealer (i) may act as
one of the Fund's regular brokers so long as it is lawful for it so to act; (ii)
may be a major recipient of brokerage commissions paid by the Fund; and (iii)
may effect portfolio transactions for the Fund only if the commissions, fees or
other remuneration received or to be received by it are determined in accordance
with procedures contemplated by any rule, regulation or order adopted under the
Investment Company Act for determining the permissible level of such
commissions.
7. DURATION.
This Agreement will take effect on the date first set forth above.
Unless earlier terminated pursuant to paragraph 9 hereof, this Agreement shall
continue in effect from year to year, so long as such continuance shall be
approved at least annually by the Fund's Board of Trustees, including the vote
of the majority of the trustees of the Fund who are not parties to this
Agreement or "interested person" (as defined in the Investment Company Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, or by the holders of a "majority" (as defined in the Investment
Company Act) of the outstanding voting securities of the Fund and by such a vote
of the Fund's Board of Trustees.
8. DISCLAIMER OF SHAREHOLDER AND TRUSTEE LIABILITY.
OFI understands and agrees that this Agreement is executed and
delivered by the Fund by its duly authorized officer, and OFI is expressly put
on notice of the limitation of shareholder and Trustee liability set forth in
the Fund's Declaration of Trust which is on file with the Secretary of the
Commonwealth of Massachusetts, and that this Agreement has been executed by and
on behalf of the Fund by its officer as such officer and not individually, and
the obligations of the Fund under this Agreement are not binding upon any
shareholder, officer or Trustee of the Fund individually, but bind only the
assets and property of the Fund or a particular series of the Fund.
9. TERMINATION.
This Agreement may be terminated: (i) by OFI at any time without
penalty upon sixty days' written notice to the Fund (which notice may be waived
by the Fund); or (ii) by the Fund at any time without penalty upon sixty days'
written notice to OFI (which notice may be waived by OFI) provided that such
termination by the Fund shall be directed or approved by the vote of a majority
of all of the trustees of the Fund then in office or by the vote of the holders
of a "majority" of the outstanding voting securities of the Fund (as defined in
the Investment Company Act).
10. ASSIGNMENT OR AMENDMENT.
This Agreement may not be amended or the rights of OFI hereunder sold,
transferred, pledged or otherwise in any manner encumbered without the
affirmative vote or written consent of the holders of a "majority" of the
outstanding voting securities of the Fund. This Agreement shall automatically
and immediately terminate in the event of its "assignment," as defined in the
Investment Company Act.
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11. DEFINITIONS.
The terms and provisions of this Agreement shall be interpreted and
defined in a manner consistent with the provisions and definitions contained in
the Investment Company Act.
XXXXXXXXXXX MUNICIPAL FUND
on behalf of its series,
Xxxxxxxxxxx Limited Term Municipal Fund
By: /s/Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx,
Vice President & Secretary
OPPENHEIMERFUNDS, INC.
By: /s/Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx,
Chairman, President & Chief Executive Officer
