AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT made the 1st day of January 2005, by
and between Xxxxxxxxxxx Limited-Term Government Fund, a Massachusetts business
trust (the "Fund"), and OppenheimerFunds, Inc. ("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, the Fund wishes to employ OFI as investment adviser of the Fund
for that series of the Fund's shares called the U.S. Government Series
(hereinafter, the term "Fund" shall refer to the Fund and such series, as the
context may require) on the terms and conditions set forth below;
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 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) 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 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 (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 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:
0.500% of the first $100 million of net assets;
0.450% of the next $150 million;
0.425% of the next $250 million; and
0.400% 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 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.
(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. 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 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 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.
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 Limited-Term Government Fund
By: /s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
Secretary
OppenheimerFunds, Inc.
By: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Chairman, President, Chief Executive
Officer & Director
