SUB-ADVISORY AGREEMENT
THIS AGREEMENT dated as of June 30, 2006, by and between OppenheimerFunds,
Inc. ("OFI"), a United States registered investment advisor, and Xxxxxxxxxxx
Real Asset Management, Inc. ("ORAMI"), a United States registered investment
advisor and a registered commodity trading advisor (the "Sub-Advisor") with
respect to RAF Fund Ltd. ("the Fund"), an exempt company organised under the
Companies Law (2004 Revision).
WHEREAS, the Directors of the Fund have appointed OFI as the investment
advisor for the Fund, pursuant to the terms of an Investment Advisory Agreement
dated June 30, 2006 (the "Advisory Agreement");
WHEREAS, OFI desire to appoint the Sub-Advisor as sub-advisor for the Fund
and the Sub-Advisor is willing to act in such capacity upon the terms herein set
forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. General Provision.
OFI hereby appoints the Sub-Advisor and the Sub-Advisor hereby undertakes
to act as the investment sub-advisor of the Fund to provide investment advice
and to perform for the Fund such other duties and functions as are hereinafter
set forth. The Sub-Advisor shall, in all matters, give to the Fund and the
Fund's board of directors (the "Board of Directors"), directly or through OFI,
the benefit of the Sub-Advisor's 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 Cayman Islands law and the
Investment Company Act and any rules or regulations thereunder to the extent not
prohibited by Cayman Islands law; (ii) the provisions of the Memorandum of
Association and Articles of Association of the Fund as amended from time to
time; (iii) policies and determinations of the Board of Directors of the Fund;
(iv) the fundamental policies and investment restrictions of the Fund as
communicated in writing to the Sub-Advisor from time to time. The appropriate
officers and employees of the Sub-Advisor shall be available upon reasonable
notice for consultation with OFI or any of the Directors 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 are
either not registered for public sale or not traded on any securities market.
OFI shall provide these services pursuant to the policies and procedures
applicable to the investment management of Oppenheimer Real Asset Fund to the
extent such policies and procedures are in the judgment of OFI relevant to the
Fund and are permitted by Island law.
2. Authority of the Sub-Advisor.
In connection with its obligations hereunder, the Sub-Advisor will have the
authority for and in the name of the Fund, subject to the overall direction and
control of the Fund's board of directors, to:
(a) invest and reinvest the Fund's assets, on margin or otherwise, in
securities and other financial instruments of United States and foreign
entities, including, without limitation, capital stock; shares of beneficial
interest; partnership interests and similar financial instruments; bonds, notes
and debentures (whether subordinated, convertible or otherwise); currencies;
commodities; interest rate, currency, commodity, equity and other derivative
products, including, without limitation, (i) futures contracts (and options
thereon) relating to stock indices, currencies, United States Government
securities and securities of foreign governments, other financial instruments
and all other commodities, (ii) swaps, options, warrants, caps, collars, floors
and forward rate agreements, (iii) spot and forward currency transactions and
(iv) agreements relating to or securing such transactions; equipment lease
certificates; equipment trust certificates; loans; accounts and notes receivable
and payable held by trade or other creditors; trade acceptances; contract and
other claims; executory contracts; participations; mutual funds, exchange traded
funds and similar financial instruments; money market funds; obligations of the
United States or any state thereof, foreign governments and instrumentalities of
any of them; commercial paper; certificates of deposit; bankers' acceptances;
choses in action; trust receipts; and any other obligations and instruments or
evidences of indebtedness of whatever kind or nature; in each case, of any
person, corporation, government or other entity whatsoever, whether or not
publicly traded or readily marketable (all such items being called herein a
"Security" or "Securities"), and to sell Securities short and cover such sales;
(b) provide research and analysis and direct the formulation of investment
policies and strategies for the Fund;
(c) acquire a long position or a short position with respect to any
Security and to make purchases or sales increasing, decreasing or liquidating
such position or changing from a long position to a short position or from a
short position to a long position, without any limitation as to the frequency of
the fluctuation in such positions or as to the frequency of the changes in the
nature of such positions;
(d) purchase Securities and hold them for investment;
(e) enter into contracts for or in connection with investments in Securities;
(f) invest in other pooled investment vehicles for any purpose, which
investments shall be subject in each case to the terms and conditions of the
respective governing document for such vehicle;
(g) possess, transfer, mortgage, pledge or otherwise deal in, and exercise
all rights, powers, privileges and other incidents of ownership or possession
with respect to, Securities and other property and funds held or owned by the
Fund;
(h) lend, either with or without security, any Securities, funds or other
properties of the Fund, including by entering into reverse repurchase
agreements, and, from time to time, without limit as to the amount, borrow or
raise funds, including by entering into repurchase agreements, and secure the
payment of obligations of the Fund by mortgage upon, or pledge or hypothecation
of, all or any part of the property of the Fund;
(i) open, maintain and close accounts, including futures, margin and
custodial accounts, with brokers, including brokers affiliated with the
Sub-Advisor, which power shall include the authority to issue all instructions
and authorisations to brokers regarding the Securities and/or money therein; to
pay, or authorise the payment and reimbursement of, commissions that may be in
excess of the lowest rates available that are paid to brokers who execute
transactions for the account of the Fund and who supply, or pay for (or rebate a
portion of the Fund's brokerage commissions to the Fund for payment of) the cost
of, brokerage, research or execution services utilised by the Fund, OFI and its
affiliates, members, partners, officers and employees (collectively, excluding
the Sub-Advisor, "Affiliates"); provided that the Fund does not pay a rate of
commissions in excess of what is competitively available from comparable
brokerage firms for comparable services, taking into account various factors,
including commission rates, reliability, financial responsibility, strength of
the broker and ability of the broker to efficiently execute transactions, the
broker's facilities, and the broker's provision or payment of the costs of
research and other services or property that are of benefit to the Fund, OFI and
Affiliates;
(j) open, maintain and close accounts, including custodial accounts, with
banks, including banks located outside the United States, and draw checks or
other orders for the payment of monies as authorised by the Board of Directors;
(k) combine purchase or sale orders on behalf of the Fund with orders for
other accounts to whom the Sub-Advisor or any of its affiliates provide
investment services ("Other Accounts") and allocate the Securities or other
assets so purchased or sold, on an average-price basis or by any other method of
fair allocation, among such accounts;
(l) enter into arrangements with brokers to open "average price" accounts
wherein orders placed during a trading day are placed on behalf of the Fund and
Other Accounts and are allocated among such accounts using an average price;
(m) organise one or more corporations or other entities formed to hold
record title, as nominee for the Fund (whether alone or together with the Other
Accounts), to Securities or funds of the Fund as authorised by the Board of
Directors;
(n) cause the Fund to engage in agency, agency cross and principal
transactions with affiliates to the extent permitted by applicable securities
laws;
(o) supply the administrator of, or other service providers to, the Fund
with such information and instructions as may be necessary to enable such person
or persons to perform their duties in accordance with the applicable agreements;
(p) engage personnel, whether part-time or full-time, and sub-advisors,
attorneys, independent accountants, or such other persons as the Sub-Advisor may
deem necessary or advisable;
(q) authorise any employee or other agent of the Sub-Advisor or any
employee or other agent of the Fund to act for and on behalf of the Fund in all
matters incidental to the foregoing; and
(r) do any and all acts on behalf of the Fund as it may deem necessary or
advisable in connection with the maintenance and administration of the Fund, and
exercise all rights of the Fund, with respect to its interest in any person,
including, without limitation, the voting of Securities (including voting of
proxies), participation in arrangements with creditors, the institution and
settlement or compromise of suits and administrative proceedings and other like
or similar matters.
3. Liability.
The Sub-Adviser will be liable for the losses to the Fund which are the
direct result of the Sub-Adviser's bad faith, gross negligence, wilful default
or breach of the express terms of this Agreement. Except as set forth in the
foregoing sentence, neither the Sub-Advisor nor its officers, employees or
agents shall be liable hereunder for any act or omission or for any error of
judgment in managing the Fund. The Sub-Advisor shall not be responsible for any
special, indirect or consequential damages, or any loss incurred by reasons of
any act or omission of the Fund or any broker, dealer or custodian used
hereunder or any authorised representative of the foregoing. Notwithstanding the
foregoing, nothing herein shall in any way constitute a waiver or limitation of
any rights which the Fund may have under the federal securities or other
applicable law.
4. Duties of OFI.
OFI shall provide the Sub-Advisor with the following information about the Fund:
(a) cash flow estimates on request;
(b) notice of the Fund's "investable funds" by 11:00 a.m. each
business day;
(c) as they are modified, from time to time, current versions of
the documents and policies referred to in subparagraphs (iii),
(iv), (v) and (vi) of paragraph 1., above.
5. Compensation of the Sub-Advisor.
OFI agrees to pay the Sub-Advisor and the Sub-Advisor 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 asset value of the Fund as of the close of each business day and payable
monthly by the tenth business day of the following month, at the following
annual rate:
0.50% of the first $200 million of average annual net assets;
0.45% of the next $200 million of average annual net assets;
0.425% of the next $200 million of average annual net assets;
0.40% of the next $200 million of average annual net assets; and
0.375% of average annual net assets in excess of $800 million.
6. Portfolio Transactions and Brokerage.
(a) The Sub-Advisor is authorised, in arranging the purchase and sale of
the Fund's publicly-traded portfolio securities, to employ or deal with such
members of securities or commodities exchanges, brokers or dealers or futures
commission merchants (hereinafter "broker-dealers"), including "affiliated"
broker-dealers, as that term is defined in the U. S. 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.
(b) The Sub-Advisor may effect the purchase and sale of securities (which
are otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker in such to
effect said transactions, and may enter into a contract in which the broker acts
either as principal or as agent.
(c) The Sub-Advisor 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 the Sub-Advisor 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.
(d) The Sub-Advisor shall have discretion, in the interests of the Fund, to
allocate brokerage on the Fund's portfolio transactions to broker-dealers, other
than affiliated broker-dealers, 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 U.S. Securities Exchange Act of 1934) for
the Fund and/or other accounts for which the Sub-Advisor or its affiliates
exercise "investment discretion" (as that term is defined in Section 3(a)(35) of
the U.S. 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 the Sub-Advisor 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 the Sub-Advisor or its affiliates
with respect to the accounts as to which they exercise investment discretion. In
reaching such determination, the Sub-Advisor 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, the Sub-Advisor 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 Directors were reasonable in relation to the benefits to
the Fund.
(e) The Sub-Advisor 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 minimise 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
Directors and the provisions of this paragraph 6.
7. Duration.
This Agreement will take effect on the date first set forth above. Unless
earlier terminated pursuant to paragraph 8 hereof, this Agreement shall remain
in effect so long as OFI remains the investment advisor for the Fund and for
Xxxxxxxxxxx Real Asset Fund.
8. Termination.
This Agreement shall terminate automatically in the event of its
assignment, in the event the Fund terminates the Advisory Agreement or in the
event that the Investment Advisory Agreement between OFI and the Xxxxxxxxxxx
Real Asset Fund is terminated; it may also be terminated: (i) for cause or with
the consent of the parties and the Fund, by OFI or the Sub-Advisor at any time
without penalty upon sixty days' written notice to the other parties; or (ii) by
the Fund at any time without penalty upon sixty days' written notice to OFI and
the Sub-Advisor provided that such termination by the Fund shall be directed or
approved by the vote of a majority of all of the directors 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 U.S. Investment Company Act).
9. Notice.
Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party, with a copy to the
Fund, at the addresses below or such other address as such other party may
designate for the receipt of such notice.
If to OFI:
OppenheimerFunds, Inc.
2 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx
If to the Sub-Advisor:
Oppenheimer Real Asset Management, Inc.
2 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx
If to the Fund:
RAF Fund Ltd.
c/o M and C Corporate Services Limited
Xxxxxx Xxxxx, Xxxxx Xxxxxx Xxxxxx
P.O. Box 309GT
Xxxxxx Town, Grand Cayman
Cayman Islands
British West Indies
If to any party, copy to:
Xxxxxxxxxxx Real Asset Fund
0000 Xxxxx Xxxxxx Xxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
IN WITNESS WHEREOF, the Fund, OFI and the Sub-Advisor have caused this
Agreement to be executed on the day and year first above written.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN
CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE CLIENTS, ANY BROCHURE OR ACCOUNT
DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE
COMMODITY FUTURES TRADING PLACENAMEPLACECOMMISSION PLACENAMEDOES PLACENAMENOT
PLACETYPEPASS UPON THE MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE
ADEQUACY OR ACCURACY OF COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE
COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING
PROGRAM OR ANY BROCHURE OR ACCOUNT DOCUMENT.
OPPENHEIMERFUNDS, INC.
By: /s/ Xxxxxx X. Xxxx
____________________________
Xxxxxx X. Xxxx
Executive Vice President
XXXXXXXXXXX REAL ASSET MANAGEMENT, INC.
By: /s/ Xxxx X. Xxxxxx
__________________________________________
Xxxx X. Xxxxxx
President
