INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 9th day of October, 2003, by and between
XXXXXXXXXXX PRINCIPAL PROTECTED TRUST II (the "Trust"), and OPPENHEIMERFUNDS,
INC. ("OFI").
WHEREAS, the Trust is an open-end series 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, the Trust is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act") as an open-end management
investment company and may issue shares of common stock in separately
designated series representing separate funds with their own investment
objectives, policies and purposes; and
WHEREAS, the Trust desires that OFI shall act as its investment
adviser with respect to the Xxxxxxxxxxx Principal Protected Main Street
Fund II(R)(the "Fund") series pursuant to this Agreement;
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.
The Trust hereby employs OFI and OFI hereby undertakes to act as the
investment adviser of the Fund and to perform for the Trust on behalf of
the Fund such other duties and functions as are hereinafter set forth. OFI
shall, in all matters, give to the Trust and its 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 Trust as amended from time to time; (iv) policies and determinations
of the Board of Trustees of the Trust; (v) the fundamental policies and
investment restrictions of the Fund as reflected in the Trust'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 Trust with respect to any matters dealing with the
business and affairs of the Trust including the valuation of the portfolio
securities of the Fund which are either not registered for public sale or
not being traded on any securities market.
2. Investment Management.
(a) OFI shall, subject to the direction and control by the Trust's
Board of Trustees, (i) 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 "7" hereof,
for the purchase of securities and other investments for the Fund and the
sale of securities and other investments held in the portfolio of the Fund.
(b) Provided that the Trust 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 "7" 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 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
and under the Investment Advisers Act of 1940.
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 corporate 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 its
operations for the shareholders of the Fund; composition of proxy
materials for meetings of the Fund's shareholders and the composition
of such registration statements as may be required by federal
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 Trust as the Trust'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 Trust, including, but not
limited to (i) interest and taxes; (ii) brokerage commissions; (iii)
premiums for fidelity and other insurance coverage requisite to its
operations; (iv) the fees and expenses of its Trustees; (v) legal and
audit expenses; (vi) custodian and transfer agent fees and expenses;
(vii) expenses incident to the redemption of its shares; (viii)
expenses incident to the issuance of its shares against payment
therefor by or on behalf of the subscribers thereto; (ix) fees and
expenses, other than as hereinabove provided, incident to the
registration under federal securities laws of shares of the Fund for
public sale; (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; and (xii) such extraordinary non-recurring expenses as
may arise, including litigation affecting the Fund and any legal
obligation which the Trust may have on behalf of the Fund 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 may also serve as officers, Trustees or
employees of the Trust shall not receive any compensation from the
Trust for their services.
5. Compensation of OFI and Expense Reimbursement by OFI.
The Trust 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 total net asset value of each Fund of the Trust as of the close
of each business day and payable monthly at the annual rate for each
Fund set forth on Schedule A hereto. The Trust's obligation under this
paragraph will become effective following the close of the "Offering
Period," as defined in the Fund's prospectus.
OFI shall reimburse the Fund for the amount of normal operating
expenses (other than extraordinary expenses) paid by Xxxxxxxxxxx Xxxx
Xxxxxx Fund relating to the Fund's assets invested in Xxxxxxxxxxx Xxxx
Xxxxxx Fund during the payment period.
6. Use of Name "Xxxxxxxxxxx" and of the name "Main Street."
OFI hereby grants to the Trust a royalty-free, non-exclusive
license to use the name "Xxxxxxxxxxx" or the name "Main Street"
in the name of the Trust and the Fund for the duration of this
Agreement and any extensions or renewals thereof. To the extent
necessary to protect OFI's rights to the name "Xxxxxxxxxxx" or
the name "Main Street" under applicable law, such license shall
allow OFI to inspect, and subject to control by the Trust's
Board, control the name and quality of services offered by the
Fund under either such name. Such license may, upon termination
of this Agreement, be terminated by OFI, in which event the Trust
shall promptly take whatever action may be necessary to change
its name and the name of the Fund and discontinue any further use
of the name "Xxxxxxxxxxx" or the name "Main Street" in the name
of the Trust or the Fund or otherwise. The name "Xxxxxxxxxxx" or
the name "Main Street" may be used by OFI in connection with any
of its activities or licensed by OFI to any other party.
7. Portfolio Transactions and Brokerage.
(a) OFI is authorized, in arranging the Fund's portfolio
transactions, to employ or deal with such members of securities
or commodities exchanges, brokers or dealers, including
"affiliated" broker dealers (as that term is defined in the
Investment Company Act) (hereinafter "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
Fund's portfolio transactions as well as to obtain, consistent
with the provisions of subparagraph "(c)" of this paragraph "7,"
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 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 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
23(e)(3) of the Securities Exchange Act of 1934) for the Fund
and/or other accounts for which OFI and 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 and its
investment advisory 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 the 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 its Board of Trustees and the provisions of
this paragraph "7."
(e) The Trust 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 Trust; 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.
(f) Subject to the foregoing provisions of this paragraph
"7", OFI may also consider sales of Fund shares and shares of
other investment companies managed by OFI or its affiliates as a
factor in the selection of broker-dealers for the Fund's
portfolio transactions.
8. Duration.
This Agreement will take effect on the date first set forth
above. Unless earlier terminated pursuant to paragraph 9 hereof,
this Agreement shall remain in effect for two years from the date
of execution hereof, and thereafter will continue in effect from
year to year, so long as such continuance shall be approved at
least annually by the Trust's Board of Trustees, including the
vote of the majority of the trustees of the Trust who are not
parties to this Agreement or "interested persons" (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 Trust's Board of Trustees.
9. Termination.
This Agreement may be terminated (i) by OFI at any time
without penalty upon giving the Fund sixty days' written notice
(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" (as defined in the
Investment Company Act) of the outstanding voting securities of
the Fund.
10. Assignment or Amendment.
This Agreement may not be amended without the affirmative
vote or written consent of the holders of a "majority" of the
outstanding voting securities of the Fund, and shall
automatically and immediately terminate in the event of its
"assignment," as defined in the Investment Company Act.
11. Disclaimer of Shareholder Liability.
OFI understands that the obligations of the Trust under this
Agreement are not binding upon any Trustee or shareholder of the
Trust or Fund personally, but bind only the Trust, but only with
respect to the Fund's property. OFI represents that it has notice
of the provisions of the Declaration of Trust of the Trust
disclaiming trustee or shareholder liability for acts or
obligations of the Trust.
12. Definitions.
The terms and provisions of this Agreement shall be
interpreted and defined in a manner consistent with the
provisions and definitions of the Investment Company Act.
Xxxxxxxxxxx Principal Protected Trust II
/s/ Xxxxxx X. Xxxx
By: __________________________________________
Xxxxxx X. Xxxx, Vice President and Secretary
OppenheimerFunds, Inc.
/s/ Xxxxxx X. Xxxx
By: ___________________________________________
Xxxxxx X. Xxxx, Vice President and General Counsel
Schedule A
To
Investment Advisory Agreement
Between
Xxxxxxxxxxx Principal Protected Trust II
and
OppenheimerFunds, Inc.
------------------------------ ----------------------------------
Name of Series Annual Fee as a Percentage of
Daily Total Net Assets
============================== ==================================
============================== ==================================
Xxxxxxxxxxx Principal 0.50% per annum of average
Protected Main Street Fund II annual net assets of the Fund.
The investment advisory fee
shall be reduced to 0.40% per
annum of average annual net
assets of the Fund in any month
during the Warranty Period (as
defined in the Fund's
prospectus) following a month
where the Fund's average daily
investment in equity securities
(including shares of Xxxxxxxxxxx
Main Street Fund) is less than
10% of net assets.
---------------------------------------
The investment advisory fee
shall be reduced to 0.25% of
average annual net assets of the
Fund if 100% of the Fund's
assets are irreversibly invested
in debt securities; and in that
case OFI will reduce its
management fee to the extent
necessary so that total annual
operating expenses of the Fund
(other than Extraordinary
Expenses and other expenses such
as litigation costs) are limited
to 1.30% for Class A shares,
2.05% for Class B shares and
2.05% for Class C shares (except
that the advisory fee shall not
be reduced below zero and shall
not require OFI to subsidize
expenses in excess of the amount
that its fee would have
otherwise been).
------------------------------ ----------------------------------
