AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 9th day of June, 2005, by and between
XXXXXXXXXXX TREMONT OPPORTUNITY FUND, LLC, a Delaware limited liability
company (the "Fund"), and OPPENHEIMERFUNDS, INC., a Delaware corporation
(hereinafter referred to as "OFI").
WHEREAS, the Fund is a closed-end management investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and OFI is an investment adviser
registered as such with the Commission under the Investment Advisers Act
of 1940;
WHEREAS, the Fund desires that OFI shall act as its investment
adviser pursuant to this Agreement which amends and restates the
Investment Advisory Agreement dated January 1, 2005, by and between the
Fund and OFI;
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 PROVISIONS.
The Fund hereby employs OFI and OFI hereby undertakes to act as the
investment adviser 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 Board of Managers of the Fund (the
"Board") 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 Limited Liability Company Agreement of the Fund, as amended from
time to time (the "LLC Agreement"); (iv) policies and determinations of
the Board, (v) the investment policies and investment restrictions of the
Fund as reflected in the registration statement of the Fund under the
Investment Company Act or as such policies may, from time to time, be
amended; and (v) the Prospectus and Statement of Additional Information of
the Fund in effect, as may be amended from time to time. The appropriate
officers and employees of OFI shall be available upon reasonable notice
for consultation with any members of the Board or officers of the Fund
with respect to any matters dealing with the business and affairs of the
Fund including the valuation of any of the portfolio securities of the
Fund.
2. INVESTMENT MANAGEMENT.
(a) OFI shall, subject to the direction and control by the Fund, (i)
regularly provide investment advice and recommendations to the Fund with
respect to its investments, investment policies and the purchase and sale
of securities for the Fund; (ii) develop, implement and supervise
continuously the investment program of the Fund and the composition of its
portfolio and determine what securities shall be purchased and 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 or redemption of securities and other investments held in the
portfolio of the Fund.
(b) Provided that the Fund shall not be required to pay any
compensation for services other than as provided by the terms of this
Agreement, including the provisions of paragraph 6 hereof, OFI may: (i)
obtain investment information, research or assistance from any other
person, firm or corporation to supplement, update or otherwise improve its
investment management services; and (ii) enter into investment
sub-advisory agreements with any registered investment advisers affiliated
with OFI, subject to such approvals of the Board and Members as may be
required to comply with applicable provisions of the Investment Company
Act, to provide any or all of the investment advisory services required to
be provided by OFI under this Agreement.
(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 of OFI or any affiliate of OFI, or their
respective directors, officers or employees, in connection with any
matters to which this Agreement relates.
(d) Nothing in this Agreement shall prevent OFI or any affiliate
thereof from acting as investment adviser for any other person, firm,
fund, corporation or other entity and shall not in any way limit or
restrict OFI, or any of its affiliates, or their respective directors,
officers, stockholders or employees from buying, selling or trading any
securities or other investments for its or their own account or for the
account of others for whom it or they may be acting, provided that such
activities do not adversely affect or otherwise impair the performance by
OFI of its duties and obligations under this Agreement and under the
Investment Advisers Act of 1940 and further provided that such activities
do not violate any provisions of the codes of ethics of OFI and its
affiliates governing personal securities trading by persons who are
"access persons," as defined by such codes, of the Fund.
3. ALLOCATION OF EXPENSES.
All costs and expenses of the Fund not expressly assumed by OFI
under this Agreement, shall be paid by the Fund, including, but not
limited to: (i) interest and commitment fees on loan and debit balances;
(ii) brokerage commissions and other expenses incurred in acquiring or
disposing of the portfolio securities and other investments of the Fund;
(iii) borrowing charges on securities hold short; (iv) custodial fees; (v)
margin fees; (vi) transfer taxes and premiums; (vii) taxes withheld on
foreign dividends; (viii) fees and expenses incident to the operation and
registration of the Fund; (ix) offering costs, (x) costs of compliance
with Federal and state securities laws; (xi) all costs and expenses
associated with the organization and operation of separate investment
funds managed by portfolio managers retained by the Fund; (xii) all
expenses incident to holding meetings of the Board and Members, including
costs associated with the preparation and dissemination of proxy
materials; (xiii) the fees and disbursements of Fund counsel and counsel
to the Managers who are not "interested persons," as defined by the
Investment Company Act and the rules thereunder, of the Fund; independent
accountants for the Fund and other consultants and professionals engaged
on behalf of the Fund; (xiv) fees payable to custodians and other persons
providing administrative services to the Fund; (xv) insurance premiums for
fidelity and other coverage requisite to the Fund's operations; (xvi)
expenses of printing and distributing reports and notices to Members and
proxy materials; and such extraordinary non-recurring expenses as may
arise, including litigation, affecting the Fund and any legal obligation
as to which the Fund may be required to indemnify any Manager or other
person. Any officers or employees of OFI (or any entity controlling,
controlled by, or under common control with OFI) who may also serve as
officers, Managers or employees of the Fund shall not receive any
compensation from the Fund for their services.
4. COMPENSATION OF OFI.
(a) Management Fee: In consideration of the services provided by
OFI under this Agreement, the Fund agrees to pay OFI a monthly management
fee computed at the annual rate of 1.20% of the aggregate value of
outstanding Interests determined as of the last day of the month (before
any repurchases of Interests or incentive allocations).
(b) Incentive Allocation or Incentive Fee. For so long as the Fund
operates as partnership for Federal tax purposes, OFI (or an affiliated
company that it designates) shall have the right as provided by the LLC
Agreement to serve as the Special Advisory Member of the Fund and to
receive in such capacity incentive allocations in accordance with the
terms of the LLC Agreement (the "Incentive Allocation"). The Incentive
Allocation, if any, will be computed and credited to the capital account
of the Special Advisory Member as provided by the LLC Agreement. Should
the Fund at any time in the future elect to be treated as a corporation
for Federal tax purposes (such an election to be a "Tax Transition"), upon
the effectiveness of such Tax Transition no further Incentive Allocations
shall be so credited. In lieu thereof, OFI then shall have the right to
receive from the Fund the Incentive Fee described in Appendix A to this
Agreement.
5. USE OF NAME "XXXXXXXXXXX."
OFI hereby grants to the Fund a royalty-free, non-exclusive license
to use the name "Xxxxxxxxxxx" in the name of the Fund for the duration of
this Agreement and any extensions or renewals thereof. Such license may,
upon termination of this Agreement, be terminated by OFI, in which event
the Fund shall promptly take whatever action may be necessary to change
its name and discontinue any further use of the name "Xxxxxxxxxxx" in the
name of the Fund or otherwise. The name "Xxxxxxxxxxx" may be used or
licensed by OFI in connection with any of its activities, or licensed by
OFI to any other party.
6. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) OFI is authorized, in arranging the purchase and sale of the
portfolio securities and other investments of the Fund to employ or deal
with such members of securities or commodities exchanges, brokers or
dealers, including "affiliated" broker-dealers, 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 portfolio transactions of the
Fund 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 may be of significant assistance to the performance by OFI of
its investment management functions.
(b) OFI shall select broker-dealers to effect the portfolio
transactions of the Fund 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 transactions 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 portfolio transactions
of the Fund 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 or
other investments 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 portfolio transactions of the Fund to
broker-dealers, other than an affiliated broker-dealer, qualified to
obtain best execution of such transactions who provide research services
(as such services are defined in Section 28(e)(3) of the Securities
Exchange Act of 1934) to OFI, which may assist OFI in managing the assets
of the Fund or other accounts for which OFI or any affiliate of OFI
exercises "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 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 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 Board 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.
(e) The Fund recognizes that an affiliated broker-dealer: (i) may
act as one of the Fund's regular brokers for the Fund 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 to be within the permissible level of such commissions.
(f) The provisions of this paragraph 6 shall apply to any affiliate
of OFI that is retained to provide investment advisory services to the
Fund.
7. DURATION.
This Agreement will take effect on the date first set forth above.
Unless earlier terminated pursuant to paragraph 10 hereof, this Agreement
shall continue in effect from year to year, so long as such continuance
shall be approved at least annually by the Board, including the vote of
the majority of the Managers who are not parties to this Agreement or
"interested persons" (as defined in the Investment Company Act and the
rules thereunder) 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 of the outstanding voting securities of the Fund" (as defined in
the Investment Company Act), subject in such case to the approval by a
vote of the majority of the Managers who are not parties to this Agreement
or "interested persons" (as defined in the Investment Company Act and the
rules thereunder) of any such party, cast in person at a meeting called
for the purpose of voting on such approval.
8. DISCLAIMER OF MEMBER OR MANAGER LIABILITY.
OFI understands and agrees that the obligations of the Fund under
this Agreement are not binding upon any Member or Manager of the Fund
personally, but bind only the Fund and the Fund's property; OFI represents
that it has notice of the provisions of the LLC Agreement disclaiming
Member and Manager liability for acts and obligations of the Fund.
9. ASSIGNMENT OR AMENDMENT.
Any amendment to this Agreement shall be in writing and shall be
subject to: (i) the approval of the Board, including the vote of a
majority of the Managers who are not "interested persons," as defined by
the Investment Company Act and the rules thereunder; and (ii) the
affirmative vote or written consent of the holders of a "majority of the
outstanding voting securities" of the Fund," as defined by the Investment
Company Act, to the extent such a vote of security holders is required by
the Investment Company Act. This Agreement shall automatically and
immediately terminate in the event of its "assignment," as defined in the
Investment Company Act.
10. 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 Board or by the vote of the holders of a "majority of the
outstanding voting securities" of the Fund, as defined by the Investment
Company Act.
11. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of New
York applicable to agreements made and to be performed entirely within the
State of New York (without regard to any conflicts of law principles
thereof). Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the Investment Company Act shall be resolved by reference to
such term or provision of the Investment Company Act and to
interpretations thereof, if any, by the United States courts or, in the
absence of any controlling decision of any such court, by rules,
regulations or orders of the Commission issued pursuant to the Investment
Company Act. In addition, where the effect of a requirement of the
Investment Company Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the Commission, such provision
shall be deemed to incorporate the effect of such rule, regulation or
order.
12. DEFINITIONS.
The terms and provisions of the Agreement shall be interpreted and
defined in a manner consistent with the terms and provisions of the
Investment Company Act and the rules thereunder.
XXXXXXXXXXX TREMONT OPPORTUNITY
FUND, LLC
By: /s/ Xxxxxx X. Xxxx
___________________________________
Xxxxxx X. Xxxx, Secretary
OPPENHEIMERFUNDS, INC.
By: /s/ Xxxx X. Xxxxxx
___________________________________
Xxxx X. Xxxxxx
Chairman, President and
Chief Executive Officer
Appendix A to the Amended and Restated Investment Advisory Agreement between
Xxxxxxxxxxx Tremont Opportunity Fund, LLC and Xxxxxxxxxxx Funds, Inc.
dated June 9, 2005 (the "Agreement")
Dated: June 9, 2005
Upon the occurrence of a Tax Transition, OppenheimerFunds Inc. shall be
paid as of the end of each Incentive Period the Incentive Fee determined
with respect to each such Incentive Period. In the interim, although not
paid, the Incentive Fee shall be accrued independently for each Fiscal
Period (i.e., typically monthly).
For purposes of this Appendix, the following terms have the following
meanings:
"Applicable Fraction" shall mean the fraction determined by dividing a
Member's Loss Recovery Account by the balance of the Member's Capital
Account.
"Incentive Fee" means, with respect to an Incentive Period, an amount
equal to 10% of the excess if any of (i) the sum of Net Gains and Net
Losses for such Incentive Period over (ii) the Preferred Return for such
Incentive Period plus the balance of the Fund Loss Recovery Account as of
the close of such Incentive Period.
"Incentive Period" means the calendar year or, with respect to the
calendar year in which the Fund liquidates, the period beginning on
January 1 and ending upon completion of the liquidation of the Fund.
"Fund Loss Recovery Account" means a memorandum account maintained on the
Fund's books and records the balance of which, as of the Transition Date,
shall equal the Net Assets of the Fund as of the close of the Fiscal
Period immediately preceding the Transition Date multiplied by the highest
Applicable Fraction determined for any Member as of the close of such
preceding Fiscal Period. The Fund Loss Recovery Account shall be adjusted
as of the close of each Fiscal Period (prior to the determination of any
Incentive Fee as of each such date) by (i) increasing the Fund Loss
Recovery Account by any Net Loss for such Fiscal Period and (ii)
decreasing the Fund Loss Recovery Account by any Net Gain for such Fiscal
Period. The Fund Loss Recovery Account also shall be adjusted by (i)
increasing the Fund Loss Recovery Account as of any purchase of Shares,
such that the ratio represented by the Fund Loss Recovery Account divided
by the total number of Shares outstanding, measured immediately after any
such purchase, is the same as the corresponding ratio measured immediately
prior to the purchase and (ii) decreasing the Fund Loss Recovery Account
as of any repurchase of Shares, such that the ratio represented by the
Fund Loss Recovery Account divided by the total number of Shares
outstanding, measured immediately after any such repurchase, is the same
as the corresponding ratio measured immediately prior to the repurchase.
Notwithstanding the operation of the preceding two sentences, the balance
of the Fund Loss Recovery Account cannot be less than zero as of the close
of any Incentive Period (i.e., while the Fund Loss Recovery Account can be
below zero as of the close of any Fiscal Period that is not also the close
of an Incentive Period, if the Fund Loss Recovery Account would otherwise
be less than zero as of the close of an Incentive Period, the Fund Loss
Recovery Account shall be zero as of such time).
"Net Assets" means the total value of all assets of the Fund, less an
amount equal to all accrued debts, liabilities and obligations of the
Fund, calculated before giving effect to any repurchases of Shares.
"Net Gain" means the excess, if any, of (i) the Net Assets of the Fund as
of the close of a Fiscal Period (decreased by amounts representing
purchases of Shares during the Fiscal Period, increased by any
distributions to Shareholders during the Fiscal Period and prior to
reduction for any repurchases of Shares (or Interests) as of the close of
such Fiscal Period) over (ii) the Net Assets of the Fund at the beginning
of such Fiscal Period. For this purpose, Net Assets as of the close of a
Fiscal Period takes into account accrued Management Fees for the Fiscal
Period but does not take into account the accrual of any Incentive Fee for
such period. Solely for purposes of calculating Net Gain during an
Incentive Period, Net Gain means the sum of the Net Gains, if any,
calculated for each Fiscal Period ending during such Incentive Period
(i.e., in most cases, Net Gain for an Incentive Period can be expected to
be equal to the sum of the Net Gain calculations as to each calendar month
comprising the Incentive Period).
"Net Loss" means the excess, if any, of (i) the Net Assets of the Fund at
the beginning of a Fiscal Period over (ii) the Net Assets of the Fund as
of the close of such Fiscal Period (decreased by amounts representing
purchases of Shares during the Fiscal Period, increased by any
distributions to Shareholders during the Fiscal Period and prior to
reduction for any repurchases of Shares (or Interests) as of the close of
such Fiscal Period). For this purpose, Net Assets as of the close of a
Fiscal Period takes into account accrued Management Fees for the Fiscal
Period but does not take into account the accrual of any Incentive Fee for
such period. Solely for purposes of calculating Net Loss during an
Incentive Period, Net Loss for the relevant Incentive Period means the sum
of the Net Losses, if any, calculated for each Fiscal Period ending during
such Incentive Period (i.e., in most cases, Net Loss for an Incentive
Period can be expected to be equal to the sum of the Net Loss calculations
as to each calendar month comprising the Incentive Period).
"Preferred Return" means the amount determined by applying an annual
percentage rate equal to 8% to the Fund's Net Assets as of the beginning
of each Fiscal Period (Incentive Period in the case of an Incentive Fee
calculation).
"Transition Date" means the effective date of a Tax Transition.
As used herein, the following terms have the meanings attributed to them
in the LLC Agreement: "Fiscal Period," "Interest," "Loss Recovery
Account," "Member," and "Shares."
Acknowledged:
XXXXXXXXXXX TREMONT OPPORTUNITY
FUND, LLC
By: /s/ Xxxxxx X. Xxxx
___________________________________
Xxxxxx X. Xxxx, Secretary
OPPENHEIMERFUNDS, INC.
By: /s/ Xxxx X. Xxxxxx
___________________________________
Xxxx X. Xxxxxx
Chairman, President and
Chief Executive Officer
