INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of _______, 1997, by and
between XXXXXXXXXXX INTERNATIONAL SMALL COMPANY FUND (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;
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 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 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 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 its
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 any of
the Fund's portfolio securities 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
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 "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 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 "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 the 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 and shall not in any way limit or restrict OFI
or any of its directors, officers 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.
4. Allocation of Expenses.
All other costs and expenses not expressly assumed by OFI
under this Agreement, or to be paid by the General 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) 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 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
may 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.
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
rates:
.80% of the first $250 million of aggregate net
assets;
.77% of the next $250 million;
.75% of the next $500 million;
.69% of the next $1 billion; and
.67% of aggregate net assets over $2 billion.
6. 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.
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 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.
(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 and will continue in effect until November 30, 1996, and
thereafter, from year to year, so long as such continuance shall be
approved at least annually in the manner contemplated by Section 15
of the Investment Company Act.
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 Fund under this
Agreement are not binding upon any Trustee or shareholder 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
Declaration of Trust of the Fund disclaiming shareholder liability
for acts or obligations of the Fund.
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 INTERNATIONAL SMALL
COMPANY FUND
By: __________________________
Xxxxxx X. Xxxxxxx, Secretary
OPPENHEIMERFUNDS, INC.
By: __________________________
Xxxxxx X. Xxxxxxx
Executive Vice President
